(C) CREDITS TO TRUST FUND.—The inter-
est on, and the proceeds from the sale or re-
demption of, any obligations held in the Trust
Fund shall be credited to and form a part of
the Trust Fund.
(4) OBLIGATIONS
FROM
TRUST
FUND.—The
Secretary is hereafter authorized to obligate such
sums as are available in the Trust Fund (including
any amounts not obligated in previous fiscal years)
for—
(A) payments of claims to qualified holders
of contracts issued under this section that sub-
mit claims pursuant to this section (as the sole
source of those payments);
(B) making payments for the surcharge on
the operation of the National Commission on
Catastrophe Risk and Insurance Loss Costs as
described in section 101(n)(2);
(C) making payments for the anticipated
contribution of the Federal Government to the
Mitigation Fund under section 202(b); and
(D) making payments for administrative
expenses incurred by this section.
(i) AUTHORITY TO BORROW FUNDS.—
(1) IN GENERAL.—The Secretary of the Treas-
ury may borrow from the Treasury of the United
States such funds as may be necessary to cover any
shortfall sustained by the Trust Fund in making
payments described in subsection (h)(4).
(2) RATE.—The rate of interest charged in con-
nection with any loan made pursuant to this sub-
section shall be determined by the Secretary, taking
into account the then current market yields on out-
standing marketable obligations of the United States
of comparable maturities.
(3) PUBLIC DEBT.—All loans and repayments
made under this subsection shall be treated as public
debt transactions of the United States in a manner
consistent with chapter 31 of title 31, United States
Code.
SEC. 103. PRIVATE DISASTER INSURANCE CORPORATION.
(a) QUALIFICATIONS.—In order to qualify for the
special status provision described in subsection (c), a cor-
poration shall—
(1) be a private corporation;
(2) operate for the sole purpose of providing ex-
cess reinsurance coverage for catastrophic natural
disasters in accordance with the requirements speci-
fied in subsection (b); and
(3) be licensed by a State as an insurer to pro-
vide excess reinsurance coverage as described in sub-
section (b).
(b) EXCESS REINSURANCE COVERAGE.—In order to
qualify for the special status provision of subsection (c),
the excess reinsurance coverage provided by a corporation
shall—
(1) be provided to—
(A) private insurers; and
(B) State insurance pools,
that meet minimum criteria and financial viability
standards established by the corporation;
(2) only provide reinsurance for any amounts
that exceed the amount of reinsurance available in
the private market for—
(A) residential property losses; and
(B) commercial losses;
(3) cover losses proximately caused by—
(A) earthquakes;
(B) volcanic eruptions;
(C) tsunamis; and
(D) hurricanes;
(4) be provided at rates established, and ad-
justed if necessary, by the corporation, based on—
(A) generally accepted actuarial principles;
and
(B) the catastrophe loss costs estimates
submitted 
to 
the 
States 
under 
section
101(e)(2);
(5) include, at a minimum—
(A) eligibility requirements; and
(B) limits on the amount of coverage avail-
able; and
(6) include terms for the payment of claims
based on the losses sustained by the purchaser of
the excess reinsurance coverage.
(c) SPECIAL STATUS PROVISION.—The operations
under this section of a corporation that meets the quali-
fications of subsection (a) shall not be subject to liability
under Federal antitrust laws or State antitrust laws, if
the actions of the corporation and the board of directors
or similar governing body of the corporation in providing
excess reinsurance coverage are consistent with the re-
quirements under subsection (b).
(d) INTENT OF CONGRESS.—It is the intent of Con-
gress that the provisions of this section relate specifically
to the business of insurance.
SEC. 104. STUDY ON TAX TREATMENT OF INSURER CATA-
STROPHIC RESERVES.
(a) JOINT STUDY.—The Comptroller General of the
United States, in cooperation with the Secretary of the
Treasury, and the Secretary of Commerce shall conduct
a study to evaluate the public policy issues described in
subsection (b) associated with conferring favorable Fed-
eral tax treatment to insurance reserves set aside by pri-
vate insurers for future catastrophic natural disasters.
(b) FACTORS TO BE STUDIED.—The study con-
ducted under this section shall evaluate the likelihood and
magnitude of the following public policy objectives with re-
spect to the implementation of the tax treatment proposed
under subsection (a):
(1) The increased financial capacity of private
insurers to respond to future natural disasters.
(2) The enhanced financial ability of private in-
surers to continue providing property coverage fol-
lowing catastrophic natural disasters.
(3) The overall benefit to the competitiveness of
United States business and private insurers in the
worldwide economy.
(4) The short- and long-term revenue impact to
the United States Treasury.
(c) CONSULTATION.—The Comptroller General of the
United States, the Secretary of the Treasury, and the Sec-
retary of Commerce shall consult with recognized experts
in carrying out the study under this section. The experts
shall include representatives from State departments of in-
surance, private insurers, insurance agents, economists,
natural disaster risk modeling experts, consumers of prop-
erty and casualty insurance, and other experts that the
Comptroller General of the United States, in cooperation
with the Secretary of the Treasury, and the Secretary of
Commerce, determine to be appropriate.
(d) REPORT
TO
CONGRESS.—Not later than 9
months after the date of this Act, the Comptroller General
of the United States, in cooperation with the Secretary
of the Treasury and the Secretary of Commerce, shall sub-
mit to the Congress a report that contains—
(1) the findings of the study conducted under
this section; and
(2) any recommendations that the Comptroller
General, in consultation with the Secretary of the
Treasury and the Secretary of Commerce, consider
to be appropriate.
SEC. 105. FLOOD INSURANCE.
(a) STUDY.—The Director shall enter into an ar-
rangement with the National Academy of Sciences (or if
the National Academy of Sciences is not available, a simi-
lar entity) to conduct a study on the operation of the na-
tional flood insurance program managed by the Director
pursuant to the National Flood Insurance Act of 1968 (42
U.S.C. 4001 et seq.). The study shall evaluate and provide
specific recommendations concerning—
(1) necessary and appropriate measures, includ-
ing additional sanctions, to increase the purchase of
Federal flood insurance; and
(2) the advisability and feasibility of privatizing
the entire national flood insurance program man-
aged by the Director.
(b) CONTENT OF STUDY.—
(1) IN GENERAL.—The study described in sub-
section (a) shall be performed by a panel of recog-
nized experts appointed by the head of the National
Academy of Sciences (or similar entity).
(2) EXPERTS.—The experts appointed to the
panel under paragraph (1) shall include representa-
tives of—
(A) building constructors;
(B) real estate interests;
(C) lending institutions;
(D) private insurers;
(E) the organizations that establish model
building codes;
(F) local government zoning and land use
planning entities; and
(G) other experts that the head of the Na-
tional Academy of Sciences (or similar entity)
determines to be relevant.
(c) REPORT.—Not later than 18 months after the
date of enactment of this Act, the head of the National
Academy of Sciences (or similar entity) shall submit to
the Director a report that contains the results of the study
conducted under this section, including the recommenda-
tions described in paragraphs (1) and (2) of subsection
(a). The Director shall submit the report to Congress.
SEC. 106. INSURANCE PRICING INCENTIVES.
Each State department of insurance shall take into
account natural disaster hazard mitigation measures, such
as the strategic mitigation plan processes described in sec-
tion 201(b)(2), in setting rates and deductibles for prop-
erty insurance provided in that State.
SEC. 107. STUDY OF AVAILABILITY AND AFFORDABILITY OF
CATASTROPHE INSURANCE.
(a) JOINT STUDY.—The Director, the Secretary of
the Treasury, and the Secretary of Commerce shall con-
duct a study to evaluate—
(1) the availability and affordability of catas-
trophe insurance for natural hazards to private indi-
viduals and businesses and State and local govern-
ments; and
(2) the effect that this Act has on the availabil-
ity and affordability of such insurance to such per-
sons and entities.
(b) FACTORS TO BE STUDIED.—The study described
in subsection (a) shall include—
(1) an examination of the extent to which pri-
vate insurers have maintained, increased, or de-
creased the marketing of catastrophe insurance for
individuals and businesses;
(2) an examination of the extent to which
States have responded to market availability prob-
lems by the creation of State pools or other mecha-
nisms; and
(3) recommended legislation that includes
amendments to this Act to encourage private insur-
ers to expand voluntary marketing of catastrophe
insurance.
(c) REPORT
TO CONGRESS.—Not later than 36
months after the date of enactment of this Act, the Comp-
troller General of the United States shall submit to the
Congress a report containing the results of the study con-
ducted under subsection (a), including any recommenda-
tions that the Director, the Secretary of the Treasury, and
the Secretary of Commerce consider to be appropriate.
TITLE II—MULTIHAZARD
MITIGATION PROGRAM
SEC. 201. DEVELOPMENT OF STATE MITIGATION PLANS.
(a) GENERAL AUTHORITY.—Not later than the date
specified in subsection (d)(1), each State shall either—
(1) develop, in consultation with responsible
elected local officials with appropriate jurisdiction,
or the official designated representatives of appro-
priate State associations of those responsible elected
local officials, and the public, a statewide strategic
mitigation plan to reduce hazards of future natural
disasters, such as hurricanes, windstorms, earth-
quakes, volcanic eruptions, and tsunamis; or
(2) designate, in consultation with responsible
elected local officials with appropriate jurisdiction,
or the official designated representatives of appro-
priate State associations of those responsible elected
local officials, and the public, a mitigation plan that
is in effect at the time of the designation that in-
cludes the elements described in subsection (b) as
the applicable natural hazards statewide strategic
mitigation plan.
(b) ELEMENTS OF STATE MITIGATION PLANS.—
(1) IN
GENERAL.—Each statewide strategic
mitigation plan of a State under subsection (a) shall
be based on broad national criteria and priorities es-
tablished by the Director.
(2) SPECIFIC
PROCESSES.—Each statewide
strategic mitigation plan under subsection (a) shall
include, at a minimum, a process for—
(A) ensuring that structures in hazard-
prone areas are built with hazard-mitigation
techniques, by—
(i) working with appropriate govern-
mental jurisdictions to promote adoption
and enforcement of the hazard-mitigation
portions of technical construction stand-
ards and building and safety codes that
are in effect; and
(ii) making available the necessary
funding, personnel, and professional train-
ing to provide for the adequate enforce-
ment of the construction standards and
codes referred to in clause (i);
(B) improving the capabilities for emer-
gency response to natural disasters, including
capabilities for firefighting, search and rescue,
and the provision of shelters, communications,
and medical relief;
(C) developing standards and guidelines
for the regular training of emergency respond-
ers to minimize the effects of natural disasters;
(D) achieving enforcement of local commu-
nity land use ordinances;
(E) addressing further development in
high-risk, disaster-prone areas and the impact
of such development on public safety and the
environment; and
(F) identifying and prioritizing essential
critical facilities, lifelines, and public facilities
for cost-effective retrofitting that is based on
the availability of resources.
(3) DEADLINE
FOR
IMPLEMENTATION.—Each
State shall implement the processes described in
paragraph (2) by not later than the date specified in
subsection (d)(2).
(c) APPROVAL OF PLAN.—The Director shall review
each statewide strategic mitigation plan submitted under
subsection (d)(1). Upon the completion of the review of
a plan under this subsection, the Director shall approve
the plan if the Director determines that the plan meets
the requirements of subsection (b).
(d) DEADLINES.—
(1) SUBMISSION
OF
MITIGATION
PLANS
TO
FEMA.—
(A) IN GENERAL.—Not later than 2 years
after the date of enactment of this Act, the
chief executive officer of each State shall submit
to the Director a statewide strategic mitigation
plan for that State developed pursuant to this
section.
(B) 
NONCOMPLIANCE.—If, 
under 
this
paragraph, a chief executive officer—
(i) submits a statewide strategic miti-
gation plan that does not meet the require-
ments of this section; or
(ii) fails to submit the plan by the
date specified in this paragraph,
the State of that chief executive officer shall be
considered to be in noncompliance with the re-
quirements of this paragraph.
(2) IMPLEMENTATION OF MITIGATION PLANS.—
(A) IN GENERAL.—Not later than 2 years
after the Director approves a statewide strate-
gic mitigation plan pursuant to subsection (c),
the chief executive officer of the State involved
shall certify to the Director whether the State
is implementing the plan, including each ele-
ment of the plan described in subsection (b) in
accordance with the requirements of this sec-
tion.
(B) NONCOMPLIANCE.—If the chief execu-
tive officer of a State—
(i) certifies under this paragraph that
the State has not implemented an element
of the statewide strategic management
plan under subsection (b); or
(ii) fails to make a certification by the
date specified in this paragraph,
the State shall be considered to be in non-
compliance with the requirements of this para-
graph.
(3) UPDATING OF MITIGATION PLANS.—
(A) IN GENERAL.—Not later than 3 years
after the Director approves a statewide strate-
gic mitigation plan pursuant to subsection (c),
and not less frequently than every 3 years
thereafter, the chief executive officer of each
State shall submit a certification to the Direc-
tor that indicates whether the State has re-
viewed and updated, as appropriate, the state-
wide strategic mitigation plan to reflect the
most recent developments in the processes re-
quired to be included in the plan under sub-
section (b).
(B) NONCOMPLIANCE.—If the chief execu-
tive officer of a State—
(i) certifies under this paragraph that
the statewide strategic mitigation plan has
not been updated in accordance with sub-
paragraph (A); or
(ii) fails to make a certification by the
applicable date specified in this paragraph,
the State shall be considered to be in non-
compliance with the requirements of this para-
graph.
(e) NOTIFICATION AND OPPORTUNITY TO CURE.—
(1) IN GENERAL.—Upon making a determina-
tion under subsection (d) that a State is in non-
compliance, the Director shall notify the State in
writing of the noncompliance.
(2) REDUCTION IN CERTAIN ASSISTANCE.—If a
State does not take corrective action within the 180-
day period beginning on the date that the State re-
ceives notification under paragraph (1), the State
shall be denied hazard mitigation funds as specified
in subsection (f) until such date as the Director de-
termines that the State has taken the necessary cor-
rective action.
(f) DENIAL OF MITIGATION FUNDS.—During the ap-
plicable period specified in subsection (e)(2), a State that
fails to meet an applicable deadline described in subsection
(d) shall not be eligible to receive funds from the Natural
Disaster Hazard Mitigation Fund established under sec-
tion 202.
SEC. 202. NATURAL DISASTER HAZARD MITIGATION FUND.
(a) ESTABLISHMENT.—There is established within
the Treasury of the United States a trust fund to be
known as the Natural Disaster Hazard Mitigation Fund,
consisting of such amounts as may be transferred or cred-
ited to the Mitigation Fund, as provided in subsection (c).
(b) MITIGATION SET-ASIDE.—The Secretary of the
Treasury shall reserve a portion, not to exceed 5 percent,
of the proceeds of the sale of the Federal excess-of-loss
reinsurance contracts as described in section 102 for
transfer to the Mitigation Fund.
(c) DEPOSITS.—
(1) IN GENERAL.—The Secretary of the Treas-
ury shall credit on an annual basis to the Mitigation
Fund amounts—
(A) reserved under subsection (b);
(B) transferred to the Secretary under
paragraph (2); or
(C) appropriated under the authorization
under section 205(b).
(2) TRANSFER OF CERTAIN UNEXPENDED AND
UNOBLIGATED FUNDS.—The Director shall transfer
to the Secretary of the Treasury any funds made
available by appropriations to the Director under
section 404 of the Robert T. Stafford Disaster Relief
and Emergency Assistance Act (42 U.S.C. 5170c)
that have not been obligated or expended by the Di-
rector during a 2-year period beginning on the date
on which the funds are initially made available to
the Director.
(d) FUNDS TO STATES.—
(1) AUTHORITY.—On the first day of the first
full fiscal year beginning after the date of enactment
of this Act, and on the first day of every fiscal year
thereafter, the Director shall allocate, to the extent
provided in appropriations Acts, to the States (ex-
cept for any State that is denied funds under section
201(f)) all available amounts in the Mitigation
Fund.
(2) FORMULA.—
(A) IN
GENERAL.—The Director of the
Agency shall allocate amounts from the Mitiga-
tion Fund to a State based on a pro rata for-
mula of the catastrophe loss costs filed for that
State under section 101(e)(2).
(B) REGULATIONS.—Not later than 1 year
after the date of enactment of this Act, the Di-
rector shall issue final Federal regulations de-
scribing the pro rata formula described in sub-
paragraph (A).
(e) USE.—
(1) IN
GENERAL.—The amounts received by
States from the Mitigation Fund shall be used to as-
sist natural disaster hazard mitigation activities.
The assistance provided under this paragraph may
include assistance for—
(A) training of emergency responders and
building code enforcers;
(B) State revolving loan funds, if estab-
lished, to undertake financing, including the
leveraging of funds for various hazard mitiga-
tion activities;
(C) the adoption and enforcement of those
portions of established technical construction
standards and building and safety codes that
relate to hazard mitigation;
(D) low-income individuals and families to
assist in paying for the undertaking of hazard
mitigation measures;
(E) the dissemination of cost-effective
technologies—
(i) to prevent or substantially reduce
damage caused by natural disasters; and
(ii) for the establishment of geo-
graphically 
dispersed 
and 
duly-incor-
porated natural disaster damage preven-
tion and mitigation Centers for Protection
Against Natural Disasters to carry out the
dissemination of those technologies;
(F) addressing further development in
high-risk, disaster-prone areas and the impact
of such development; and
(G) prenatural disaster hazard mitigation,
including retrofitting critical facilities, lifelines,
and public facilities.
(2) ALLOTMENTS.—Allotments made under
subsection (d) from the Mitigation Fund shall be
conditioned on a satisfactory evaluation under para-
graph (1).
(h) AUDITS.—The Director shall periodically conduct
audits to ensure that States and local communities are
using the funds from the allocations made under sub-
section (d) to support the hazard mitigation activities de-
scribed in this section and section 101.
SEC. 203. PUBLIC INFRASTRUCTURE RETROFITTING.
(a) STUDY.—The Comptroller General of the United
States shall conduct a study to identify all Federal pro-
grams that provide assistance for public facilities and life-
lines. The study shall determine which of such programs
include or could include as an eligible use of Federal as-
sistance the retrofitting or strengthening of the public fa-
cilities and lifelines to minimize damage from future natu-
ral disasters.
(b) REPORT TO CONGRESS.—Not later than 1 year
after the date of enactment of this Act, the results of the
study described in subsection (a), including the determina-
tions on retrofitting, shall be transmitted by the Director
of the Agency to Congress.
SEC. 204. WILDLAND FIRES.
(a) STUDY.—The Secretary of Agriculture, in co-
operation with the Secretary of the Interior, shall enter
into an agreement with the interagency National Wildfire
Coordinating Group to—
(1) conduct a study of the threat posed by
wildfires; and
(2) issue a report on the findings of the study
that includes recommendations on controlling that
threat.
(b) SCOPE
OF STUDY.—In conducting the study
under this section, the National Wildfire Coordinating
Group shall evaluate, and make recommendations on, the
following issues:
(1) The critical wildfire concerns in the United
States, including wildfires in urban areas that ex-
pand into wildland.
(2) Suggested approaches to achieve more effec-
tive and efficient responses to catastrophic wildfires.
(3) The effects of downsizing of Federal agen-
cies on fire emergency capabilities and experience.
(4) Funding mechanisms to address cata-
strophic wildfires.
(5) Suggested approaches to reduce hazardous
fuel loading and other mitigation measures in
wildland and urban areas that abut wildlands.
(6) Suggested approaches to improve the co-
ordination of fire prevention and suppression efforts
in wildland and urban areas that abut wildland be-
tween the Federal Government and States and local
communities.
(7) Suggested approaches to improve the orga-
nization and training assistance provided to non-
Federal governmental entities concerning the preven-
tion and suppression of wildfires.
(8) Suggested approaches for the integration of
all rural fire and emergency response activities
under a common incident management system.
(9) Suggested approaches for improving the
education of homeowners who reside near wildland
that is susceptible to wildfires and private insurers
concerning fire prevention and fire suppression, and
the responsibilities of those homeowners and private
insurers concerning those activities.
(c) REPORT.—
(1) IN GENERAL.—On completion of the study
conducted under this section, but not later than 1
year after the date of enactment of this Act, the Na-
tional Wildfire Coordinating Group shall prepare a
report on the results of the study that includes any
recommendations that the National Wildfire Coordi-
nating Group determines to be appropriate and sub-
mit a copy of that report to the Secretary of Agri-
culture and the Secretary of the Interior.
(2) SUBMISSION TO CONGRESS.—On receiving a
copy of the report under paragraph (1), the Sec-
retary of Agriculture shall transmit to the Congress
a copy of the report.
SEC. 205. AUTHORIZATION OF APPROPRIATIONS.
(a) OPERATIONS.—There are authorized to be appro-
priated to the Agency such sums as may be necessary for
the Director of the Agency to carry out this title.
(b) MITIGATION FUND.—In addition to the funds au-
thorized to be appropriated under subsection (a), there are
authorized to be appropriated to the Mitigation Fund es-
tablished under section 202 such sums as may be nec-
essary to support hazard mitigation.
(c) TREATMENT
OF SPENDING AUTHORITY.—Any
spending authority authorized by this section shall be ef-
fective only to such extent and in such amounts as are
provided in appropriation Acts.
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