TITLE II—CATASTROPHE 
OBLIGATION GUARANTEES 
SEC. 201. PURPOSES. 
The purposes of this title are to establish a pro-
gram— 
(1) to promote the availability of private capital 
to provide liquidity and capacity to State catas-
trophe insurance programs; and 
(2) to expedite the payment of claims under 
State catastrophe insurance programs and better as-
sist the financial recovery from significant natural 
catastrophes by authorizing the Secretary of the 
Treasury to guarantee debt for such purposes. 
SEC. 202. ESTABLISHMENT OF DEBT GUARANTEE PRO-
GRAM. 
(a) AUTHORITY OF SECRETARY.—The Secretary of 
the Treasury is authorized and shall have the powers and 
authorities necessary to guarantee, and to enter into com-
mitments to guarantee, holders of debt against loss of 
principal or interest, or both, on any such debt issued by 
eligible State programs for purposes of this title, provided 
that the total principal amount of debt obligations guaran-
teed by the Secretary— 
(1) for eligible State programs that cover earth-
quake peril shall not exceed $5,000,000,000; and 
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(2) for eligible State programs that cover all 
other perils shall not exceed $20,000,000,000. 
(b) CONDITIONS FOR GUARANTEE ELIGIBILITY.—A 
debt guarantee under this section may be made only if 
the Secretary has issued a commitment to guarantee to 
an eligible State program. The commitment to guarantee 
shall be for a period of 3 years and may be extended by 
the Secretary for a period of 1 year on each annual anni-
versary of the issuance of the commitment to guarantee. 
The commitment to guarantee and each extension of such 
commitment may be issued by the Secretary only if the 
following requirements are satisfied: 
(1) The eligible State program submits to the 
Secretary a report setting forth, in such form and 
including such information as the Secretary shall re-
quire, how the eligible State program plans to repay 
the debt. 
(2) Based upon the eligible State program’s re-
port submitted pursuant to paragraph (1), the Sec-
retary determines there is reasonable assurance that 
the eligible State program can meet its repayment 
obligation under the debt. 
(3) The eligible State program enters into an 
agreement with the Secretary, as the Secretary shall 
require, that the eligible State program will not use 
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Federal funds of any kind or from any Federal 
source (including any disaster or other financial as-
sistance, loan proceeds, and any other assistance or 
subsidy) to repay the debt. 
(4) The commitment to guarantee shall specify 
the fees for debt guarantee coverage. 
(5) The maximum term of the debt that shall 
be specified in a commitment issued under this sec-
tion may not exceed 30 years. 
(c) MANDATORY ASSISTANCE FOR ELIGIBLE STATE 
PROGRAMS.—The Secretary shall upon the request of an 
eligible State program and pursuant to a commitment to 
guarantee issued under subsection (b), provide a guar-
antee under subsection (d) for such eligible State program 
in the amount requested by such eligible State program, 
subject to the limitation under subsection (d)(2). 
(d) CATASTROPHIC
DEBT
GUARANTEE.—A debt 
guarantee under this subsection for an eligible State pro-
gram shall be subject to the following requirements: 
(1) PRECONDITIONS.—The eligible State pro-
gram shows to the satisfaction of the Secretary that 
insured losses in the State to the eligible State pro-
gram arising from the event or events covered by the 
commitment to guarantee are likely to exceed the eli-
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gible State program’s available cash resources, as 
calculated on the date of the event. 
(2) AMOUNT.—The aggregate principal amount 
of the debt guaranteed following an event or events 
referred to in paragraph (1) may not exceed the 
amount by which the insured losses expected to be 
sustained by the State program as a result of such 
event or events exceed 80 percent of the qualifying 
assets of the eligible State program as stated in the 
most recent quarterly financial statement filed with 
the domiciliary regulator of the program prior to the 
event or events, except that, for eligible State pro-
grams that are not required to file such quarterly fi-
nancial statements, the aggregate principal amount 
of the debt guaranteed may not exceed the amount 
by which insured losses sustained by the State pro-
gram as a result of such event or events exceed 80 
percent of the unrestricted net assets as stated in 
the annual financial statement for the program’s fis-
cal year ending immediately prior to the event or 
events. 
(3) USE OF FUNDS.—Amounts of debt guaran-
teed under this section shall be used only to pay the 
costs of issuing debt and to pay the insured losses 
and loss adjustment expenses incurred by an eligible 
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State program. Such amounts shall not be used for 
any other purpose. 
(e) FUNDING.—There are authorized to be appro-
priated such sums as may be necessary to carry out this 
section. 
SEC. 203. EFFECT OF GUARANTEE. 
The issuance of any guarantee by the Secretary 
under this title shall be conclusive evidence that— 
(1) the guarantee has been properly obtained; 
(2) the underlying debt qualified for such guar-
antee; and 
(3) the guarantee is valid, legal, and enforce-
able. 
SEC. 204. FULL FAITH AND CREDIT. 
The full faith and credit of the United States is 
pledged to the payment of all guarantees issued under this 
title with respect to principal and interest. 
SEC. 205. FEES FOR GUARANTEES; AMOUNT; COLLECTION. 
The Secretary shall charge and collect fees for each 
guarantee in amounts specified in the commitment to 
guarantee, which shall be in amounts sufficient in the 
judgment of the Secretary at the time of issuance of the 
commitment to guarantee to cover applicable administra-
tive costs and probable losses on the guaranteed obliga-
tions covered by the commitment to guarantee, but in any 
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event not to exceed one-half of 1 per centum per annum 
of the outstanding indebtedness covered by each guar-
antee. 
SEC. 206. PAYMENT OF LOSSES. 
(a) IN GENERAL.—The Secretary agrees to pay to 
the duly appointed paying agent or trustee (in this section 
referred to as the ‘‘Fiscal Agent’’) for the eligible State 
program that portion of the principal and interest on any 
debt guaranteed under this title that shall become due for 
payment but shall be unpaid by the eligible State program 
as a result of such program having provided insufficient 
funds to the Fiscal Agent to make such payments. The 
Secretary shall make such payments on the date such 
principal or interest becomes due for payment or on the 
business day next following the day on which the Secretary 
shall receive notice of failure on the part of the eligible 
State program to provide sufficient funds to the Fiscal 
Agent to make such payments, whichever is later. Upon 
making such payment, the Secretary shall be subrogated 
to all the rights of the ultimate recipient of the payment. 
The Secretary shall be entitled to recover from the eligible 
State program the amount of any payments made pursu-
ant to any guarantee entered into under this title. 
(b) ROLE OF THE ATTORNEY GENERAL.—The Attor-
ney General shall take such action as may be appropriate 
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to enforce any right accruing to the United States as a 
result of the issuance of any guarantee under this title. 
(c) RIGHT OF THE SECRETARY.—Notwithstanding 
any other provision of law relating to the acquisition, han-
dling, or disposal of property by the United States, the 
Secretary shall have the right in the discretion of the Sec-
retary to complete, recondition, reconstruct, renovate, re-
pair, maintain, operate, or sell any property acquired by 
the Secretary pursuant to the provisions of this title. 
SEC. 207. REGULATIONS. 
The Secretary shall issue any regulations necessary 
to carry out the debt-guarantee program established under 
this title. 
TITLE III—REINSURANCE COV-
ERAGE FOR ELIGIBLE STATE 
PROGRAMS 
SEC. 301. PROGRAM AUTHORITY. 
The Secretary of the Treasury, shall make available 
for purchase, only by eligible State programs, contracts 
for reinsurance coverage under this title. 
SEC. 302. CONTRACT PRINCIPLES. 
Contracts for reinsurance coverage made available 
under this title— 
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(1) shall not displace or compete with the pri-
vate insurance or reinsurance markets or the capital 
market; 
(2) shall minimize the administrative costs of 
the Federal Government; and 
(3) shall provide coverage based solely on in-
sured losses covered by the eligible State program 
purchasing the contract. 
SEC. 303. TERMS OF REINSURANCE CONTRACTS. 
(a) 
MINIMUM
ATTACHMENT
POINT.—Notwith-
standing any other provision of this title, a contract for 
reinsurance coverage under this title for an eligible State 
program may not be made available or sold unless the con-
tract requires that the eligible State program sustain an 
amount of retained losses from events in an amount, as 
determined by the Secretary, that is equal to the amount 
of losses projected to be incurred from a single event of 
such magnitude that it has a 0.5 percent chance of being 
equaled or exceeded in any year. 
(b) NINETY
PERCENT
COVERAGE
OF
INSURED 
LOSSES IN EXCESS OF RETAINED LOSSES.—Each con-
tract for reinsurance coverage under this title shall provide 
that the amount paid out under the contract shall be equal 
to 90 percent of the amount of insured losses of the eligi-
ble State program in excess of the amount of retained 
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losses that the contract requires, pursuant to subsection 
(a), to be incurred by such program. 
(c) MATURITY.—The term of each contract for rein-
surance coverage under this title shall not exceed 1 year 
or such other term as the Secretary may determine. 
(d) PAYMENT CONDITION.—Each contract for rein-
surance coverage under this title shall authorize claims 
payments to the eligible State program purchasing the 
coverage only for insured losses provided under the con-
tract. 
(e) MULTIPLE EVENTS.—The contract shall cover 
any insured losses from one or more events that may occur 
during the term of the contract and shall provide that if 
multiple events occur, the retained losses requirement 
under subsection (a) shall apply on a calendar year basis, 
in the aggregate and not separately to each individual 
event. 
(f) TIMING OF CLAIMS.—Claims under a contract for 
reinsurance coverage under this title shall include only in-
surance claims that are reported to the eligible State pro-
gram within the 3-year period beginning upon the event 
or events for which payment under the contract is pro-
vided. 
(g) ACTUARIAL PRICING.—The price of coverage 
under a reinsurance contract under this title shall be an 
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amount, established by the Secretary at a level that annu-
ally produces expected premiums that shall be sufficient 
to pay the reasonably anticipated cost of all claims, loss 
adjustment expenses, all administrative costs of reinsur-
ance coverage offered under this title, and any such out-
wards reinsurance, as described in section 305(c)(3), as 
the Secretary considers prudent taking into consideration 
the demand for reinsurance coverage under this title. 
(h) INFORMATION.—Each contract for reinsurance 
coverage under this title shall contain a condition pro-
viding that the Secretary may require the eligible State 
program that is covered under the contract to submit to 
the Secretary all information on the eligible State program 
relevant to the duties of the Secretary under this title. 
(i) OTHERS.—Contracts for reinsurance coverage 
under this title shall contain such other terms as the Sec-
retary considers necessary to carry out this title and to 
ensure the long-term financial integrity of the program 
under this title. 
SEC. 304. MAXIMUM FEDERAL LIABILITY. 
(a) IN GENERAL.—Subject to subsection (b) and not-
withstanding any other provision of law, the aggregate po-
tential liability for payment of claims under all contracts 
for reinsurance coverage under this title sold in any single 
year by the Secretary shall not exceed $200,000,000,000 
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or such lesser amount as is determined by the Secretary 
based on review of the market for reinsurance coverage 
under this title. 
(b) LIMITATION.—The authority of the Secretary to 
enter into contracts for reinsurance coverage under this 
title shall be effective for any fiscal year only to such ex-
tent or in such amounts as are or have been provided in 
appropriation Acts for such fiscal year for the aggregate 
potential liability for payment of claims under all contracts 
for reinsurance coverage under this title. 
SEC. 305. FEDERAL NATURAL CATASTROPHE REINSUR-
ANCE FUND. 
(a) ESTABLISHMENT.—There is established within 
the Treasury of the United States a fund to be known 
as the Federal Natural Catastrophe Reinsurance Fund (in 
this section referred to as the ‘‘Fund’’). 
(b) CREDITS.—The Fund shall be credited with— 
(1) amounts received annually from the sale of 
contracts for reinsurance coverage under this title; 
(2) any amounts appropriated for the aggregate 
potential liability for payment of claims under all 
contracts for reinsurance coverage under this title; 
and 
(3) any amounts earned on investments of the 
Fund pursuant to subsection (d). 
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(c) USES.—Amounts in the Fund shall be available 
to the Secretary only for the following purposes: 
(1) CONTRACT PAYMENTS.—For payments to 
purchasers covered under contracts for reinsurance 
coverage for eligible losses under such contracts. 
(2) ADMINISTRATIVE EXPENSES.—To pay for 
the administrative expenses incurred by the Sec-
retary in carrying out the reinsurance program 
under this title. 
(3) 
OUTWARDS
REINSURANCE.—To 
obtain 
retrocessional or other reinsurance coverage of any 
kind to cover risk reinsured under contracts for rein-
surance coverage made available under this title. 
(d) INVESTMENT.—If the Secretary determines that 
the amounts in the Fund are in excess of current needs, 
the Secretary may invest such amounts as the Secretary 
considers advisable in obligations issued or guaranteed by 
the United States. 
SEC. 306. REGULATIONS. 
The Secretary shall issue any regulations necessary 
to carry out the program for reinsurance coverage under 
this title. 
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TITLE IV—MITIGATION GRANT 
PROGRAM 
SEC. 401. MITIGATION GRANT PROGRAM. 
(a) ESTABLISHMENT.—The Secretary of Housing 
and Urban Development shall establish and carry out a 
program to provide grants to eligible entities to develop, 
enhance, or maintain programs to prevent and mitigate 
losses from natural catastrophes. 
(b) GRANTS.—A grant provided under subsection (a) 
shall be used to reduce loss of life and property by— 
(1) encouraging awareness of risk factors and 
what steps can be taken to eliminate or reduce them; 
(2) assisting in the determination of the loca-
tion of risk by giving careful consideration to the 
natural risks for the location of a property; 
(3) providing inspections of homes to identify 
areas to strengthen such homes and reduce exposure 
to natural catastrophes; or 
(4) providing financial assistance to home-
owners to retrofit homes to reduce exposure to nat-
ural catastrophes. 
(c) CONSULTATION WITH EXPERTS.—In carrying 
out the program established under subsection (a), the Sec-
retary of Housing and Urban Development shall consult 
with— 
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(1) disaster preparedness and response organi-
zations; 
(2) homebuilders; 
(3) real estate professionals; 
(4) building code enforcement agencies; and 
(5) any other person that the Secretary con-
siders appropriate. 
(d) ELIGIBLE ENTITY DEFINED.—In this section, 
the term ‘‘eligible entity’’ means a State or local govern-
ment, or a part or program of a State or local government. 
(e) AUTHORIZATION
OF APPROPRIATIONS.—There 
are authorized to be appropriated to carry out this section 
$15,000,000 for each of fiscal years 2010 through 2014. 
TITLE V—GENERAL PROVISIONS 
SEC. 501. ELIGIBLE STATE PROGRAMS. 
(a) ELIGIBLE STATE PROGRAMS.—A State program 
shall be considered an ‘‘eligible State program’’ for pur-
poses of this Act if the Secretary certifies, in accordance 
with the procedures established under subsection (c), that 
the State program complies with the following require-
ments: 
(1) STATE PROGRAM DESIGN.—The State pro-
gram is established and authorized by State law as 
an insurance program or a reinsurance program that 
is designed to improve private insurance markets 
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and that offers residential property insurance cov-
erage for losses arising from any personal residential 
line of insurance, as defined in the Uniform Prop-
erty and Casualty Product Coding Matrix of the Na-
tional Association of Insurance Commissioners. 
(2) OPERATION.—The State program shall 
meet the following requirements: 
(A) A majority of the members of the gov-
erning body of the State program shall be pub-
lic officials or appointed by public officials. 
(B) The State shall have a financial inter-
est in the State program. 
(C) If the State has at any time appro-
priated amounts from the State program’s 
funds for any purpose other than payments for 
losses insured under the State program, or pay-
ments made in connection with any of the State 
program’s authorized activities, the State shall 
have returned such amounts to the State fund, 
together with interest on such amounts. 
(3) TAX
STATUS.—The State program shall 
have received from the Secretary (or the Secretary’s 
designee) a written determination, within the mean-
ing of section 6110(b) of the Internal Revenue Code 
of 1986, that the program either— 
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(A) constitutes an ‘‘integral part’’ of the 
State that has created it; or 
(B) is otherwise exempt from Federal in-
come taxation. 
(4) EARNINGS.—The State program may not 
provide for any distribution of any part of any net 
profits of the State program to any insurer that par-
ticipates in the State program. 
(5) PREVENTION AND MITIGATION.— 
(A) MITIGATION OF LOSSES.—The State 
program shall include provisions designed to en-
courage and support programs to mitigate 
losses from natural catastrophes for which the 
State insurance or reinsurance program was es-
tablished to provide insurance coverage. 
(B) OPERATIONAL
REQUIREMENTS.—The 
State program shall operate in a State that— 
(i) requires that an appropriate public 
body within the State shall have adopted 
adequate mitigation measures (with effec-
tive enforcement provisions) which the Sec-
retary finds are consistent with the criteria 
for construction described in the Inter-
national Code Council building codes; 
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(ii) has taken actions to establish an 
insurance rate structure that takes into ac-
count measures to mitigate insured losses; 
and 
(iii) ensures, to the extent that rein-
surance coverage made available under the 
eligible State program results in any cost 
savings in providing insurance coverage for 
risks in such State, such cost savings are 
reflected in premium rates charged to con-
sumers for such coverage; 
(6) REQUIREMENTS REGARDING COVERAGE.— 
The State program— 
(A) may not, except for charges or assess-
ments related to post-event financing or bond-
ing, involve cross-subsidization between any 
separate property and casualty insurance lines 
covered under the State program pursuant to 
paragraph (1); 
(B) shall be subject to a requirement 
under State law that for any insurance coverage 
made available under the State insurance pro-
gram or for any reinsurance coverage for such 
insurance coverage made available under the 
State reinsurance program, the premium rates 
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