I

107TH CONGRESS

1ST SESSION H. R. 1669

To provide incentives to encourage private sector efforts to reduce earthquake

losses, to establish a national disaster mitigation program, and for other

purposes.

IN THE HOUSE OF REPRESENTATIVES

MAY 1, 2001

Mr. THOMPSON of California (for himself, Mr. LEWIS of California, Mr. BACA,

Mr. BERMAN, Mrs. BONO, Mr. CALVERT, Mr. CONDIT, Mr.

CUNNINGHAM, Mrs. DAVIS of California, Mr. DOOLITTLE, Mr. DREIER,

Mr. FILNER, Ms. HARMAN, Mr. HERGER, Mr. HONDA, Mr. HORN, Mr.

HUNTER, Mr. INSLEE, Mr. ISSA, Ms. LOFGREN, Mr. GEORGE MILLER

of California, Mrs. NAPOLITANO, Mr. OSE, Mr. RADANOVICH, Ms.

SANCHEZ, Mr. SHERMAN, Mrs. TAUSCHER, Mr. WAXMAN, Ms. WOOLSEY,

Mr. MATSUI, Ms. PELOSI, Mr. BLUMENAUER, Mr. SCHIFF, Mrs. CAPPS,

Mr. LANTOS, Ms. WATERS, Ms. LEE, Ms. ESHOO, Mr. THOMAS, Mr.

FARR of California, and Mr. MCKEON) introduced the following bill;

which was referred to the Committee on Ways and Means, and in addition to the Committees on Financial Services, and Science, for a period

to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee

concerned

A BILL

To provide incentives to encourage private sector efforts to

reduce earthquake losses, to establish a national disaster

mitigation program, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. SHORT TITLE.

2 This Act may be cited as the ‘‘Earthquake Loss Re3 duction Act of 2001’’.

4 SEC. 2. FINDINGS AND PURPOSE.

5 (a) FINDINGS.—Congress finds the following:

6 (1) After 23 years of research funded by the

7 National Earthquake Hazards Reduction Program,

8 a substantial body of knowledge exists about earth

9 sciences, geotechnical, and structural engineering

10 and human behavior relating earthquakes.

11 (2) The foremost challenge as we enter the 21st

12 century is putting this knowledge to work by reduc13 ing future losses to improve the safety of Americans

14 and the performance of State and local government

15 facilities and private buildings and facilities.

16 (3) Earthquakes and tsunamis cause great dan17 ger to human life and property throughout the

18 United States and continue to threaten Americans

19 significantly in over 40 States and territories.

20 (4) Too few States and local communities have

21 sufficiently identified and assessed their risk and im22 plemented adequate measures to reduce losses from

23 such disasters and to ensure that their critical public

24 infrastructure and facilities will continue to function

25 after the disaster.
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1 (5) Too much of the Nation’s stocks of housing

2 and commercial buildings remain inherently vulner3 able to earthquake shaking. Future losses in these

4 facilities can be lessened using currently feasible

5 technology.

6 (6) Too much of local government infrastruc7 ture remain at risk and are likely to be non-func8 tional in the aftermath of foreseeable earthquake

9 events at the time when the services they provide are

10 critically necessary.

11 (7) Federal, State and local government ex12 penditures for disaster assistance and recovery have

13 increased without commensurate reduction in the

14 likelihood of future losses from such earthquakes.

15 (8) Feasible techniques for reducing future

16 earthquake losses are readily available.

17 (9) Without economic incentives, it is unlikely

18 that States and local communities and the public

19 will be able to implement available measures to re20 duce losses and ensure continued functionality of

21 their infrastructure.

22 (b) PURPOSE.—It is the purpose of this Act to estab23 lish a national disaster mitigation program that—
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1 (1) reduces the loss of life and property, human

2 suffering, economic disruption, and disaster assist3 ance costs resulting from earthquakes;

4 (2) offers financial incentives to encourage pri5 vate sector efforts to reduce earthquake losses;

6 (3) provides matching funds to encourage and

7 assist States and local governments and the private

8 sector in their efforts to implement measures de9 signed to ensure the continued functionality of pub10 lic infrastructure, commerce, and habitation after

11 earthquakes; and

12 (4) creates Federal, State and local government

13 partnerships to reduce the vulnerability of public in14 frastructure, commercial enterprises, and residential

15 buildings to earthquakes.

16 SEC. 3. NONREFUNDABLE CREDIT FOR EXPENSES RE17 LATED TO SEISMIC RETROFIT OF PRINCIPAL

18 RESIDENCE.

19 (a) GENERAL RULE.—Subpart A of part IV of sub20 chapter A of chapter 1 of the Internal Revenue Code of

21 1986 (relating to nonrefundable personal credits) is

22 amended by inserting after section 25A the following:
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1 ‘‘SEC. 25B. EXPENSES RELATED TO SEISMIC RETROFIT OF

2 PRINCIPAL RESIDENCE.

3 ‘‘(a) GENERAL RULE.—In the case of an individual,

4 there shall be allowed as a credit against the tax imposed

5 by this chapter for the taxable year an amount equal to

6 50 percent of so much of the qualified seismic retrofit ex7 penses of the taxpayer for the taxable year as do not ex8 ceed $6,000.

9 ‘‘(b) QUALIFIED SEISMIC RETROFIT EXPENSES.—

10 For purposes of this section—

11 ‘‘(1) IN GENERAL.—The term ‘qualified seismic

12 retrofit expenses’ means amounts paid or incurred

13 by the taxpayer during the taxable year in relation

14 to any seismic retrofit construction of the principal

15 residence of the taxpayer.

16 ‘‘(2) SEISMIC RETROFIT CONSTRUCTION.—The

17 term ‘seismic retrofit construction’ means any addi18 tion or improvement—

19 ‘‘(A) which is certified by the State dis20 aster agency or other applicable agency—

21 ‘‘(i) as resulting in the mitigation of

22 the risk of damage to existing property

23 from an earthquake, and

24 ‘‘(ii) as being in addition to any addi25 tion or improvement required by any State
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1 or local law with respect to such property,

2 and

3 ‘‘(B) which is placed in service at least 5

4 years after the date the building is first placed

5 in service.

6 Such term does not include the cost of acquiring

7 such property (or any interest therein).

8 ‘‘(3) PRINCIPAL RESIDENCE.—The term ‘prin9 cipal residence’ has the same meaning as when used

10 in section 121.

11 ‘‘(c) DENIAL OF DOUBLE BENEFIT.—No deduction

12 shall be allowed under any other provision of this chapter

13 with respect to any amount of qualified seismic retrofit

14 expenses taken into account under subsection (a).

15 ‘‘(d) BASIS ADJUSTMENT.—For purposes of this sub16 title, if a credit is allowed under this section with respect

17 to any residence, the basis of such residence shall be re18 duced by the amount of the credit so allowed.’’.

19 (b) CONFORMING AMENDMENTS.—

20 (1) The table of sections for subpart A of part

21 IV of subchapter A of chapter 1 of the Internal Rev22 enue Code of 1986 is amended by inserting after the

23 item relating to section 25A the following new item:

‘‘Sec. 25B. Expenses related to seismic retrofit of principal residence.’’.
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1 (2) Subsection (a) of section 1016 of such Code

2 is amended by striking ‘‘and’’ at the end of para3 graph (26), by striking the period at the end of

4 paragraph (27) and inserting ‘‘, and’’, and by add5 ing at the end the following new paragraph:

6 ‘‘(28) in the case of a residence with respect to

7 which a credit was allowed under section 25B, to the

8 extent provided in section 25B(d).’’.

9 (c) EFFECTIVE DATE.—The amendments made by

10 this section shall apply to expenses paid or incurred in

11 taxable years beginning after December 31, 2000.

12 SEC. 4. RECOVERY PERIOD FOR DEPRECIATION OF CER13 TAIN SEISMIC RETROFIT EXPENSES.

14 (a) TREATMENT AS 5-YEAR PROPERTY.—Section

15 168(e)(3)(B) of the Internal Revenue Code of 1986 (relat16 ing to 5-year property) is amended by striking ‘‘and’’ at

17 the end of clause (v), by striking the period and inserting

18 ‘‘, and’’ at the end of clause (vi), and by inserting after

19 clause (vi) the following new clause:

20 ‘‘(vii) any qualified seismic retrofit

21 property.’’.

22 (b) DEFINITION OF QUALIFIED SEISMIC RETROFIT

23 PROPERTY.—Section 168(i) of the Internal Revenue Code

24 of 1986 (relating to definitions and special rules) is
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1 amended by adding at the end the following new para2 graph:

3 ‘‘(15) QUALIFIED SEISMIC RETROFIT PROP4 ERTY.—

5 ‘‘(A) IN GENERAL.—The term ‘qualified

6 seismic retrofit property’ means any addition or

7 improvement to real property for which depre8 ciation is allowable under this section—

9 ‘‘(i) for which the expenditure is prop10 erly chargeable to the capital account, and

11 ‘‘(ii) which is a seismic retrofit.

12 ‘‘(B) SEISMIC RETROFIT.—For purposes of

13 subparagraph (A)(i), the term ‘seismic retrofit’

14 means any addition or improvement—

15 ‘‘(i) which is certified by the State

16 disaster agency or other applicable

17 agency—

18 ‘‘(I) as resulting in the mitiga19 tion of the risk of damage to existing

20 property from an earthquake, and

21 ‘‘(II) as being in addition to any

22 addition or improvement required by

23 any State or local law with respect to

24 such property, and
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1 ‘‘(ii) which is placed in service at least

2 5 years after the date the building is first

3 placed in service.

4 Such term does not include the cost of acquir5 ing such property (or any interest therein).’’.

6 (c) EFFECTIVE DATE.—The amendments made by

7 this section shall apply to qualified seismic retrofit prop8 erty placed in service after December 31, 2000.

9 SEC. 5. QUALIFIED SEISMIC RETROFITTING BONDS.

10 (a) IN GENERAL.— Section 144 of the Internal Rev11 enue Code of 1986 (relating to qualified small issue bond;

12 qualified student loan bond; qualified redevelopment bond)

13 is amended by adding at the end the following new sub14 section:

15 ‘‘(d) QUALIFIED SEISMIC RETROFITTING BOND.—

16 For purposes of this part—

17 ‘‘(1) IN GENERAL.—The term ‘qualified seismic

18 retrofitting bond’ means any bond issued as part of

19 an issue 95 percent or more of the net proceeds of

20 which are to be used—

21 ‘‘(A) for seismic retrofitting expenditures,

22 and

23 ‘‘(B) in a manner which meets the require24 ments of paragraph (3).
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1 ‘‘(2) SEISMIC RETROFITTING EXPENDITURE.—

2 For purposes of paragraph (1), the term ‘seismic

3 retrofitting expenditure’ means any amount properly

4 chargeable to capital account—

5 ‘‘(A) which is certified by the State dis6 aster agency or other applicable agency—

7 ‘‘(i) as resulting in the mitigation of

8 the risk of damage to existing property

9 from an earthquake, and

10 ‘‘(ii) as being in addition to any addi11 tion or improvement required by any State

12 or local law with respect to such property,

13 and

14 ‘‘(B) which is placed in service at least 5

15 years after the date the building is first placed

16 in service.

17 Such term does not include the cost of acquiring

18 such property (or any interest therein).

19 ‘‘(3) USE OF PROCEEDS REQUIREMENTS.—The

20 use of the proceeds of an issue meets the require21 ments of this paragraph if within the 26-month pe22 riod beginning with the date of issue—

23 ‘‘(A) at least 95 percent of the net pro24 ceeds of such issue are used for seismic retro25 fitting expenditures or are used to finance 1 or
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1 more loans to ultimate borrowers for such ex2 penditures, or

3 ‘‘(B) to the extent not so used under sub4 paragraph (A), such proceeds in excess of

5 $10,000 are used to redeem bonds which are

6 part of such issue.’’.

7 (b) BONDS TREATED AS QUALIFIED BONDS.—Para8 graph (1) of section 141(e) of the Internal Revenue Code

9 of 1986 (defining qualified bond) is amended by striking

10 ‘‘or’’ at the end of subparagraph (F), by redesignating

11 subparagraph (G) as subparagraph (H), and by inserting

12 after subparagraph (F) the following new subparagraph:

13 ‘‘(G) a qualified seismic retrofitting bond,

14 or’’.

15 (c) BONDS INCLUDED FOR PURPOSES OF SMALL

16 ISSUER EXEMPTION STATUS.—Subclause (I) of section

17 265(b)(3)(C)(ii) of the Internal Revenue Code of 1986 (re18 lating to obligations not taken into account in determining

19 status as qualified small issuer) is amended by inserting

20 ‘‘, or a qualified seismic retrofitting bond, as defined in

21 section 144(d)(1)’’ after ‘‘section 145’’.

22 (d) EXCEPTION FROM VOLUME CAP.—Section

23 146(g) of the Internal Revenue Code of 1986 (relating to

24 exception for certain bonds) is amended by striking ‘‘and’’

25 at the end of paragraph (3), by striking the period at the
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1 end of paragraph (4) and inserting a comma, and by add2 ing after paragraph (4) the following new paragraphs:

3 ‘‘(5) any qualified mortgage bond if 95 percent

4 or more of the net proceeds of the bond are to be

5 used to provide home improvement loans in connec6 tion with seismic retrofitting expenditures (as de7 fined in section 144(d)(2) without regard to the cap8 ital account requirement), and

9 ‘‘(6) any qualified seismic retrofitting bond.’’.

10 (e) PROCEEDS OF MORTGAGE REVENUE BONDS

11 USED IN CONNECTION WITH SEISMIC RETROFITTING.—

12 (1) IN GENERAL.—Paragraph (4) of section

13 143(k) of the Internal Revenue Code of 1986 (relat14 ing to other definitions and special rules for quali15 fied mortgage bonds) is amended to read as follows:

16 ‘‘(4) QUALIFIED HOME IMPROVEMENT LOAN.—

17 The term ‘qualified home improvement loan’

18 means—

19 ‘‘(A) the financing (in an amount which

20 does not exceed $15,000)—

21 ‘‘(i) of alterations, repairs, and im22 provements on or in connection with an ex23 isting residence by the owner thereof, but
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1 ‘‘(ii) only for such items as substan2 tially protect or improve the basic livability

3 or energy efficiency of the property, and

4 ‘‘(B) the financing (in an amount which

5 does not exceed $20,000) of seismic retrofitting

6 expenditures (as defined in section 144(d)(2)

7 without regard to the capital account require8 ment) in connection with an existing residence

9 by the owner thereof.’’.

10 (2) EXCEPTION FROM INCOME REQUIRE11 MENTS.—Section 143(f) of such Code (relating to

12 income requirements) is amended by adding at the

13 end the following new paragraph:

14 ‘‘(7) EXCEPTION FOR CERTAIN QUALIFIED

15 HOME IMPROVEMENT LOANS.—Paragraph (1) shall

16 not apply with respect to any qualified home im17 provement loan (as defined in subsection

18 (k)(4)(B).’’.

19 (f) CLERICAL AMENDMENTS.—

20 (1) The heading of section 144 of the Internal

21 Revenue Code of 1986 is amended by striking

22 ‘‘BOND.’’ and inserting ‘‘BOND; QUALIFIED SEIS23 MIC RETROFITTING BOND.’’.

24 (2) The item relating to section 144 in the table

25 of sections for subpart A of part IV of subchapter
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1 B of chapter 1 of such Code is amended by striking

2 ‘‘bond.’’ and inserting ‘‘bond; qualified seismic retro3 fitting bond.’’

4 (g) EFFECTIVE DATE.—The amendments made by

5 this section shall apply to bonds issued after the date of

6 the enactment of this Act.

7 SEC. 6. TREATMENT OF PASSIVE LOSSES OF CERTAIN

8 PARTNERSHIPS ENGAGED IN SEISMIC RET9 ROFITTING.

10 (a) IN GENERAL.—Section 469 of the Internal Rev11 enue Code of 1986 (relating to passive activity losses and

12 credits limited) is amended by adding at the end the fol13 lowing new subsection:

14 ‘‘(n) EXEMPTION FOR SEISMIC RETROFITTING

15 TRADE OR BUSINESS.—

16 ‘‘(1) IN GENERAL.—In the case of any natural

17 person, subsection (a) shall not apply to that portion

18 of the passive activity loss or the deduction equiva19 lent (within the meaning of subsection (j)(5)) of the

20 passive activity credit for any taxable year which is

21 attributable to any seismic retrofitting activity which

22 such person engages in during the taxable year,

23 whether or not the taxpayer materially participates

24 in such activity.
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1 ‘‘(2) SEISMIC RETROFITTING ACTIVITY.—For

2 purposes of this subsection, the term ‘seismic retro3 fitting activity’ means any activity which involves the

4 trade or business of seismic retrofit construction (as

5 defined in section 25B(b)(2)) for residential prop6 erty.’’.

7 (b) EFFECTIVE DATE.—The amendment made by

8 subsection (a) shall apply to taxable years beginning after

9 December 31, 2000.

10 SEC. 7. MORTGAGE INSURANCE INCENTIVE.

11 Section 203(b)(2) of the National Housing Act (12

12 U.S.C. 1709(b)(2)), is amended, in the second undesig13 nated paragraph, by inserting ‘‘or due to seismic retro14 fitting of the residence (within the meaning of the term

15 ‘seismic retrofit construction’ under section 25B(b)(2) of

16 the Internal Revenue Code of 1986)’’ after ‘‘Act) therein’’.

17 SEC. 8. EARTHQUAKE DISASTER MITIGATION AND RECOV18 ERY PLANNING GRANT PROGRAM.

19 (a) DEFINITIONS.—

20 (1) IN GENERAL.—Section 4 of the Earthquake

21 Hazards Reduction Act of 1977 (42 U.S.C. 7703) is

22 amended by adding at the end the following:

23 ‘‘(8) AGENCY.—The term ‘Agency’ means the

24 Federal Emergency Management Agency.
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1 ‘‘(9) CRITICAL FACILITY.—The term ‘critical

2 facility’ means—

3 ‘‘(A) a public structure (including a police

4 station, fire station, city or town hall, school, or

5 other public building) or a public or nonprofit

6 private hospital that is—

7 ‘‘(i) owned by an entity; and

8 ‘‘(ii) critical to the continuity of the

9 entity or to the conduct of the disaster re10 sponse activities of the entity; or

11 ‘‘(B) a facility that—

12 ‘‘(i) provides medical services to a spe13 cific occupational or industry segment of

14 the general public; and

15 ‘‘(ii) is operated by an organization

16 described in subsection (c) or (d) of section

17 501 of the Internal Revenue Code of 1986

18 and exempt from taxation under subsection

19 (a) of such section.

20 ‘‘(10) CRITICAL PUBLIC INFRASTRUCTURE.—

21 The term ‘critical public infrastructure’ means a

22 utility or transportation system (including a bridge,

23 energy system, water or sewer system, or commu24 nication system) that is—

25 ‘‘(A) owned by an entity; and
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1 ‘‘(B) critical to the conduct of the disaster

2 response activities of the entity.

3 ‘‘(11) EARTHQUAKE DISASTER.—

4 ‘‘(A) IN GENERAL.—The term ‘earthquake

5 disaster’ means a disaster that results from a

6 movement of the earth.

7 ‘‘(B) INCLUSIONS.—The term ‘earthquake

8 disaster’ includes a disaster that results from a

9 tsunami or an earthquake-caused landslide or

10 liquefaction (as determined by the Director of

11 the Agency).

12 ‘‘(12) GRANT PROGRAM.—The term ‘grant pro13 gram’ means the earthquake disaster mitigation and

14 recovery planning grant program established under

15 section 6.

16 ‘‘(13) INDIAN TRIBE.—The term ‘Indian tribe’

17 has the meaning given the term in section 4 of the

18 Indian Self-Determination and Education Assistance

19 Act (25 U.S.C. 450b).

20 ‘‘(14) INSTITUTION OF HIGHER EDUCATION.—

21 The term ‘institution of higher education’ has the

22 meaning given the term in section 101 of the Higher

23 Education Act of 1965 (20 U.S.C. 1001).

24 ‘‘(15) LOCAL GOVERNMENT.—The term ‘local

25 government’ means—
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1 ‘‘(A) a city, town, township, county, parish,

2 village, or other general-purpose political sub3 division of a State;

4 ‘‘(B) an Indian tribe; and

5 ‘‘(C) a geologic hazard abatement or simi6 lar special purpose district formed to carry out

7 or fund projects to reduce the vulnerability of

8 infrastructure and buildings to earthquake dis9 asters.

10 ‘‘(16) LOSS REDUCTION TRUST FUND.—The

11 term ‘Loss Reduction Trust Fund’ means the Loss

12 Reduction Trust Fund established by section 7.’’.

13 (2) CONFORMING AMENDMENT.—Section

14 5(b)(1) of the Earthquake Hazards Reduction Act of

15 1977 (42 U.S.C. 7704(b)(1)) is amended by striking

16 ‘‘(hereafter in this Act referred to as the ‘Agency’)’’.

17 (b) GRANT PROGRAM.—The Earthquake Hazards

18 Reduction Act of 1977 is amended by inserting after sec19 tion 5 (42 U.S.C. 7704) the following:

20 ‘‘SEC. 6. EARTHQUAKE DISASTER MITIGATION AND RECOV21 ERY PLANNING GRANT PROGRAM.

22 ‘‘(a) ESTABLISHMENT.—The Director of the Agency

23 may establish a grant program to provide financial assist24 ance to eligible recipients described in subsection (b) to

25 pay the Federal share of the cost of carrying out earth-
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1 quake disaster mitigation and recovery planning measures

2 with respect to the critical facilities and critical public in3 frastructure under the jurisdiction of the recipients.

4 ‘‘(b) ELIGIBLE RECIPIENTS.—

5 ‘‘(1) IN GENERAL.—To be eligible for a grant

6 under the grant program, an entity shall be a local

7 government, public or nonprofit private hospital, or

8 public institution of higher education that—

9 ‘‘(A) has jurisdiction over, or is located in,

10 an area that is subject to earthquake disasters;

11 ‘‘(B) submits to the Director of the Agency

12 for approval an application for the grant in

13 such form as the Director shall require;

14 ‘‘(C) has completed an earthquake disaster

15 risk analysis;

16 ‘‘(D) has adopted a long-term strategic

17 earthquake disaster loss reduction plan that

18 identifies high priority earthquake disaster loss

19 reduction projects; and

20 ‘‘(E) meets criteria established by the Di21 rector under paragraph (2).

22 ‘‘(2) CRITERIA.—

23 ‘‘(A) ESTABLISHMENT.—The Director of

24 the Agency shall establish, by regulation, cri25 teria that local governments, public and non-
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1 profit private hospitals, and public institutions

2 of higher education shall meet to qualify for

3 grants under the grant program.

4 ‘‘(B) REQUIREMENT APPLICABLE TO

5 LOCAL GOVERNMENTS.—The criteria under

6 subparagraph (A) applicable to local govern7 ments shall include the requirement that a local

8 government adopt and enforce comprehensive

9 ordinances, building codes, land use measures,

10 and other measures for earthquake disaster loss

11 reduction that—

12 ‘‘(i) take into consideration the identi13 fied earthquake hazards applicable to the

14 area over which the local government has

15 jurisdiction; and

16 ‘‘(ii) reflect current, cost-effective

17 techniques designed to reduce losses from

18 earthquake disasters and ensure the con19 tinued functionality of critical facilities and

20 critical public infrastructure.

21 ‘‘(C) CONSULTATION.—The criteria under

22 subparagraph (A) shall be adopted after con23 sultation with—

24 ‘‘(i) Federal, State, and local govern25 ment officials and agencies; and
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1 ‘‘(ii) other persons knowledgeable in

2 the fields of natural disasters and hazard

3 mitigation.

4 ‘‘(c) COST SHARING.—

5 ‘‘(1) FEDERAL SHARE.—

6 ‘‘(A) IN GENERAL.—Subject to subpara7 graph (B), the Federal share of the cost of

8 measures carried out using a grant under the

9 grant program shall be 75 percent.

10 ‘‘(B) INSUFFICIENCY OF FEDERAL

11 FUNDS.—In paying the Federal share under

12 subparagraph (A) in a case in which there are

13 insufficient funds in the Loss Reduction Trust

14 Fund to fund all applications that are eligible

15 for approval, the Director of the Agency may

16 consider—

17 ‘‘(i) the desirability of geographical

18 dispersal of available funds;

19 ‘‘(ii) the extent to which any applicant

20 faces a greater risk of earthquake disas21 ters, in number or severity, than other ap22 plicants;

23 ‘‘(iii) the extent to which each appli24 cant is expending resources on addressing
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1 urgent problems concerning critical facili2 ties or critical public infrastructure; and

3 ‘‘(iv) the extent to which the measures

4 proposed to be funded using the grant are

5 expected to result in cost savings to the

6 Federal Government under the Robert T.

7 Stafford Disaster Relief and Emergency

8 Assistance Act (42 U.S.C. 5121 et seq.).

9 ‘‘(2) NON-FEDERAL SHARE.—

10 ‘‘(A) GRANTS TO LOCAL GOVERNMENTS

11 (OTHER THAN INDIAN TRIBES).—In the case of

12 a grant to a local government (other than an

13 Indian tribe) under the grant program, the non14 Federal share of the cost of measures carried

15 out using the grant shall be provided as follows:

‘‘(i) 1 16 ⁄2 by the State.

‘‘(ii) 1 17 ⁄2 by the local government.

18 ‘‘(B) GRANTS TO INDIAN TRIBES.—In the

19 case of a grant to an Indian tribe under the

20 grant program, the non-Federal share of the

21 cost of measures carried out using the grant

22 shall be provided as follows:

‘‘(i) 1 23 ⁄2 by the Bureau of Indian Af24 fairs.

‘‘(ii) 1 25 ⁄2 by the Indian tribe.
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1 ‘‘(C) GRANTS TO PUBLIC HOSPITALS.—In

2 the case of a grant to a public hospital under

3 the grant program, the non-Federal share of

4 the cost of measures carried out using the

5 grant shall be provided as follows:

‘‘(i) 1 6 ⁄2 by the State, from funds other

7 than general State appropriations to the

8 hospital.

‘‘(ii) 1 9 ⁄2 by the public hospital, from

10 general State appropriations to the hos11 pital or from funds donated to the hos12 pital.

13 ‘‘(D) GRANTS TO NONPROFIT PRIVATE

14 HOSPITALS.—In the case of a grant to a non15 profit private hospital under the grant program,

16 the non-Federal share of the cost of measures

17 carried out using the grant shall be provided by

18 the nonprofit private hospital.

19 ‘‘(E) GRANTS TO PUBLIC INSTITUTIONS OF

20 HIGHER EDUCATION.—In the case of a grant to

21 a public institution of higher education under

22 the grant program, the non-Federal share of

23 the cost of measures carried out using the

24 grant shall be provided as follows:
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‘‘(i) 1 1 ⁄2 by the State, from funds other

2 than general State appropriations to the

3 institution of higher education.

‘‘(ii) 1 4 ⁄2 by the public institution of

5 higher education, from general State ap6 propriations to the institution of higher

7 education or from funds donated to the in8 stitution of higher education.

9 ‘‘(d) USE OF GRANT FUNDS.—

10 ‘‘(1) IN GENERAL.—A grant under the grant

11 program may be used—

12 ‘‘(A) to retrofit critical facilities and crit13 ical public infrastructure in accordance with

14 paragraph (2);

15 ‘‘(B) to implement earthquake disaster

16 mitigation measures in accordance with para17 graph (3); or

18 ‘‘(C) to develop earthquake disaster recov19 ery plans in accordance with paragraph (4).

20 ‘‘(2) RETROFIT OF CRITICAL FACILITIES AND

21 CRITICAL PUBLIC INFRASTRUCTURE.—

22 ‘‘(A) IN GENERAL.—A grant under the

23 grant program may be used to retrofit a critical

24 facility or critical public infrastructure with

25 parts or equipment that meets current stand-
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1 ards for withstanding earthquake disasters (as

2 determined by the Director of the Agency).

3 ‘‘(B) SELECTION OF CRITICAL FACILITIES

4 AND CRITICAL PUBLIC INFRASTRUCTURE.—A

5 critical facility or critical public infrastructure

6 shall be selected for a grant under subpara7 graph (A) if the critical facility or critical public

8 infrastructure is identified in a long-term stra9 tegic earthquake disaster loss reduction plan

10 adopted under subsection (b)(1)(D) as having

11 high priority for retrofit because of the effect

12 that damage to the critical facility or critical

13 public infrastructure from an earthquake dis14 aster would have on the quality of human life

15 in the region and on recovery from the earth16 quake disaster.

17 ‘‘(3) IMPLEMENTATION OF EARTHQUAKE DIS18 ASTER MITIGATION MEASURES.—A grant under the

19 grant program may be used to implement an earth20 quake disaster mitigation measure designed to en21 sure the continued functionality of a critical facility

22 or critical public infrastructure.

23 ‘‘(4) DEVELOPMENT OF EARTHQUAKE DIS24 ASTER RECOVERY PLANS.—
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1 ‘‘(A) IN GENERAL.—A grant under the

2 grant program may be used to develop an

3 earthquake disaster recovery plan that

4 includes—

5 ‘‘(i) a plan for reestablishing govern6 ment operations and community services

7 after an earthquake disaster; and

8 ‘‘(ii) a plan for long-term recovery

9 after an earthquake disaster.

10 ‘‘(B) SCHEDULE FOR PAYMENT OF GRANT

11 FUNDS.—Of a grant for measures described in

12 subparagraph (A)—

13 ‘‘(i) 50 percent shall be paid upon ap14 proval by the Director of the Agency of the

15 application for the grant; and

16 ‘‘(ii) 50 percent shall be paid upon

17 adoption of the earthquake disaster recov18 ery plan by the local government, public

19 hospital, or public institution of higher

20 education.

21 ‘‘SEC. 7. LOSS REDUCTION TRUST FUND.

22 ‘‘(a) ESTABLISHMENT.—There is established in the

23 Treasury of the United States a fund to be known as the

24 ‘Loss Reduction Trust Fund’, consisting of—
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1 ‘‘(1) such amounts as are appropriated to the

2 Loss Reduction Trust Fund under subsection (b);

3 ‘‘(2) such amounts as are appropriated to the

4 Loss Reduction Trust Fund under section 12(e);

5 and

6 ‘‘(3) any interest earned on investment of

7 amounts in the Loss Reduction Trust Fund under

8 subsection (d).

9 ‘‘(b) TRANSFERS TO LOSS REDUCTION TRUST

10 FUND.—There are appropriated to the Loss Reduction

11 Trust Fund amounts equivalent to—

12 ‘‘(1) such amounts as the Director of the Agen13 cy determines are remaining after the close-out of

14 any active disaster declaration account under the

15 Robert T. Stafford Disaster Relief and Emergency

16 Assistance Act (42 U.S.C. 5121 et seq.);

17 ‘‘(2) such amounts as—

18 ‘‘(A) were allocated for hazard mitigation

19 assistance with respect to a major disaster

20 under section 404 of that Act (42 U.S.C.

21 5170c); and

22 ‘‘(B) the Director of the Agency deter23 mines are remaining after expiration of the

24 time limits established under subsection (c) of

25 that section; and
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1 ‘‘(3) amounts received as gifts under subsection

2 (f).

3 ‘‘(c) EXPENDITURES FROM LOSS REDUCTION TRUST

4 FUND.—Upon request by the Director of the Agency, the

5 Secretary of the Treasury shall transfer from the Loss Re6 duction Trust Fund to the Director of the Agency such

7 amounts as the Director of the Agency determines are nec8 essary to carry out section 6.

9 ‘‘(d) INVESTMENT OF AMOUNTS.—

10 ‘‘(1) IN GENERAL.—The Secretary of the

11 Treasury shall invest such portion of the Loss Re12 duction Trust Fund as is not, in the judgment of

13 the Secretary of the Treasury, required to meet cur14 rent withdrawals. Investments may be made only in

15 interest-bearing obligations of the United States.

16 ‘‘(2) ACQUISITION OF OBLIGATIONS.—For the

17 purpose of investments under paragraph (1), obliga18 tions may be acquired—

19 ‘‘(A) on original issue at the issue price; or

20 ‘‘(B) by purchase of outstanding obliga21 tions at the market price.

22 ‘‘(3) SALE OF OBLIGATIONS.—Any obligation

23 acquired by the Loss Reduction Trust Fund may be

24 sold by the Secretary of the Treasury at the market

25 price.
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1 ‘‘(4) CREDITS TO FUND.—The interest on, and

2 the proceeds from the sale or redemption of, any ob3 ligations held in the Loss Reduction Trust Fund

4 shall be credited to and form a part of the Loss Re5 duction Trust Fund.

6 ‘‘(e) TRANSFERS OF AMOUNTS.—

7 ‘‘(1) IN GENERAL.—The amounts required to

8 be transferred to the Loss Reduction Trust Fund

9 under this section shall be transferred at least

10 monthly from the general fund of the Treasury to

11 the Loss Reduction Trust Fund on the basis of esti12 mates made by the Secretary of the Treasury.

13 ‘‘(2) ADJUSTMENTS.—Proper adjustment shall

14 be made in amounts subsequently transferred to the

15 extent prior estimates were in excess of or less than

16 the amounts required to be transferred.

17 ‘‘(f) GIFTS.—The Secretary of the Treasury may ac18 cept gifts of cash for transfer to the Loss Reduction Trust

19 Fund.’’.

20 (c) AUTHORIZATION OF APPROPRIATIONS.—Section

21 12 of the Earthquake Hazards Reduction Act of 1977 (42

22 U.S.C. 7706) is amended by inserting after subsection (d)

23 the following:
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1 ‘‘(e) LOSS REDUCTION TRUST FUND.—There is au2 thorized to be appropriated to the Loss Reduction Trust

3 Fund $1,000,000,000.’’.

Æ