In the Senate of the United States,
July 25), 2002.
Resolved, That the bill from the House of Representa-
tives (H.R. 3210) entitled ‘‘An Act to ensure the continued
financial capacity of insurers to provide coverage for risks
from terrorism.’’, do pass with the following
AMENDMENT:
Strike out all after the enacting clause and insert:
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Terrorism Risk Insur-
ance Act of 2002’’.
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SEC. 2. CONGRESSIONAL FINDINGS AND PURPOSE.
(a) FINDINGS.—The Congress finds that—
(1) property and casualty insurance firms are
important financial institutions, the products of
which allow mutualization of risk and the efficient
use of financial resources and enhance the ability of
the economy to maintain stability, while responding
to a variety of economic, political, environmental,
and other risks with a minimum of disruption;
(2) the ability of businesses and individuals to
obtain property and casualty insurance at reasonable
and predictable prices, in order to spread the risk of
both routine and catastrophic loss, is critical to eco-
nomic growth, urban development, and the construc-
tion and maintenance of public and private housing,
as well as to the promotion of United States exports
and foreign trade in an increasingly interconnected
world;
(3) the ability of the insurance industry to cover
the unprecedented financial risks presented by poten-
tial acts of terrorism in the United States can be a
major factor in the recovery from terrorist attacks,
while maintaining the stability of the economy;
(4) widespread financial market uncertainties
have arisen following the terrorist attacks of Sep-
tember 11, 2001, including the absence of information
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from which financial institutions can make statis-
tically valid estimates of the probability and cost of
future terrorist events, and therefore the size, funding,
and allocation of the risk of loss caused by such acts
of terrorism;
(5) a decision by property and casualty insurers
to deal with such uncertainties, either by terminating
property and casualty coverage for losses arising from
terrorist events, or by radically escalating premium
coverage to compensate for risks of loss that are not
readily predictable, could seriously hamper ongoing
and planned construction, property acquisition, and
other business projects, generate a dramatic increase
in rents, and otherwise suppress economic activity;
and
(6) the United States Government should provide
temporary financial compensation to insured parties,
contributing to the stabilization of the United States
economy in a time of national crisis, while the finan-
cial services industry develops the systems, mecha-
nisms, products, and programs necessary to create a
viable financial services market for private terrorism
risk insurance.
(b) PURPOSE.—The purpose of this Act is to establish
a temporary Federal program that provides for a trans-
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parent system of shared public and private compensation
for insured losses resulting from acts of terrorism, in order
to—
(1) protect consumers by addressing market dis-
ruptions and ensure the continued widespread avail-
ability and affordability of property and casualty in-
surance for terrorism risk; and
(2) allow for a transitional period for the private
markets to stabilize, resume pricing of such insurance,
and build capacity to absorb any future losses, while
preserving State insurance regulation and consumer
protections.
SEC. 3. DEFINITIONS.
In this Act, the following definitions shall apply:
(1) ACT OF TERRORISM.—
(A) CERTIFICATION.—The term ‘‘act of ter-
rorism’’ means any act that is certified by the
Secretary, in concurrence with the Secretary of
State, and the Attorney General of the United
States—
(i) to be a violent act or an act that
is dangerous to—
(I) human life;
(II) property; or
(III) infrastructure;
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(ii) to have resulted in damage within
the United States, or outside the United
States in the case of an air carrier or vessel
described in paragraph (3)(A)(ii); and
(iii) to have been committed by an in-
dividual or individuals acting on behalf of
any foreign person or foreign interest, as
part of an effort to coerce the civilian popu-
lation of the United States or to influence
the policy or affect the conduct of the
United States Government by coercion.
(B) LIMITATION.—No act or event shall be
certified by the Secretary as an act of terrorism
if—
(i) the act or event is committed in the
course of a war declared by the Congress; or
(ii) losses resulting from the act or
event, in the aggregate, do not exceed
$5,000,000.
(C) DETERMINATIONS FINAL.—Any certifi-
cation of, or determination not to certify, an act
or event as an act of terrorism under this para-
graph shall be final, and shall not be subject to
judicial review.
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(2) BUSINESS
INTERRUPTION
COVERAGE.—The
term ‘‘business interruption coverage’’—
(A) means coverage of losses for temporary
relocation expenses and ongoing expenses, includ-
ing ordinary wages, where—
(i) there is physical damage to the
business premises of such magnitude that
the business cannot open for business;
(ii) there is physical damage to other
property that totally prevents customers or
employees from gaining access to the busi-
ness premises; or
(iii) the Federal, State, or local govern-
ment shuts down an area due to physical or
environmental damage, thereby preventing
customers or employees from gaining access
to the business premises; and
(B) does not include lost profits, other than
in the case of a small business concern (as de-
fined in section 3 of the Small Business Act (15
U.S.C. 632) and applicable regulations there-
under) in any case described in clause (i), (ii),
or (iii) of subparagraph (A).
(3) INSURED LOSS.—The term ‘‘insured loss’’—
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(A) means any loss resulting from an act of
terrorism that is covered by primary property
and casualty insurance, including business
interruption coverage, issued by a participating
insurance company, if such loss—
(i) occurs within the United States; or
(ii) occurs to an air carrier (as defined
in section 40102 of title 49, United States
Code) or to a United States flag vessel (or
a vessel based principally in the United
States, on which United States income tax
is paid and whose insurance coverage is
subject to regulation in the United States),
regardless of where the loss occurs; and
(B) excludes coverage under any life or
health insurance.
(4) MARKET SHARE.—
(A) IN GENERAL.—The ‘‘market share’’ of a
participating insurance company shall be cal-
culated using the total amount of direct written
property and casualty insurance premiums for
the participating insurance company during the
2-year period preceding the year in which the
subject act of terrorism occurred (or during such
other period for which adequate data are avail-
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able, as determined by the Secretary), as a per-
centage of the aggregate of all such property and
casualty insurance premiums industry-wide dur-
ing that period.
(B) ADJUSTMENTS.—The Secretary may
adjust the market share of a participating insur-
ance company under subparagraph (A), as nec-
essary to reflect current market participation of
that participating insurance company.
(5) NAIC.—The term ‘‘NAIC’’ means the Na-
tional Association of Insurance Commissioners.
(6) PARTICIPATING INSURANCE COMPANY.—The
term ‘‘participating insurance company’’ means any
insurance company, including any subsidiary or af-
filiate thereof—
(A) that—
(i) is licensed or admitted to engage in
the business of providing primary insurance
in any State, and was so licensed or admit-
ted on September 11, 2001; or
(ii) is not licensed or admitted as de-
scribed in clause (i), if it is an eligible sur-
plus line carrier listed on the Quarterly
Listing of Alien Insurers of the NAIC, or
any successor thereto;
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(B) that receives direct premiums for any
type of commercial property and casualty insur-
ance coverage or that, not later than 21 days
after the date of enactment of this Act, submits
written notification to the Secretary of its intent
to participate in the Program with regard to
personal lines of property and casualty insur-
ance; and
(C) that meets any other criteria that the
Secretary may reasonably prescribe.
(7) PARTICIPATING
INSURANCE
COMPANY
DE-
DUCTIBLE.—The term ‘‘participating insurance com-
pany deductible’’ means—
(A) a participating insurance company’s
market share, multiplied by $10,000,000,000,
with respect to insured losses resulting from an
act of terrorism occurring during the 1-year pe-
riod beginning on the date of enactment of this
Act; and
(B) a participating insurance company’s
market share, multiplied by $15,000,000,000,
with respect to insured losses resulting from an
act of terrorism occurring during the 1-year pe-
riod beginning on the day after the date of expi-
ration of the period described in subparagraph
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(A), if the Program is extended in accordance
with section 6.
(8) PERSON.—The term ‘‘person’’ means any in-
dividual, business or nonprofit entity (including those
organized in the form of a partnership, limited liabil-
ity company, corporation, or association), trust or es-
tate, or a State or political subdivision of a State or
other governmental unit.
(9) PROGRAM.—The term ‘‘Program’’ means the
Terrorism Insured Loss Shared Compensation Pro-
gram established by this Act.
(10) PROPERTY
AND
CASUALTY
INSURANCE.—
The term ‘‘property and casualty insurance’’—
(A) means commercial lines of property and
casualty insurance, including workers’ com-
pensation insurance;
(B) includes personal lines of property and
casualty insurance, if a notification is made in
accordance with paragraph (6)(B); and
(C) does not include—
(i) Federal crop insurance issued or re-
insured under the Federal Crop Insurance
Act (7 U.S.C. 1501 et seq.);
(ii) private mortgage insurance, as
that term is defined in section 2 of the
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Homeowners Protection Act of 1998 (12
U.S.C. 4901); or
(iii) financial guaranty insurance.
(11) SECRETARY.—The term ‘‘Secretary’’ means
the Secretary of the Treasury.
(12) STATE.—The term ‘‘State’’ means any
State of the United States, the District of Columbia,
the Commonwealth of Puerto Rico, the Commonwealth
of the Northern Mariana Islands, American Samoa,
Guam, and each of the United States Virgin Islands.
(13) 
UNITED
STATES.—The 
term 
‘‘United
States’’ means the several States, and includes the ter-
ritorial sea of the United States.
(14) RULE
OF
CONSTRUCTION
FOR
DATES.—
With respect to any reference to a date in this Act,
such day shall be construed—
(A) to begin at 12:01 a.m. on that date; and
(B) to end at midnight on that date.
SEC. 4. TERRORISM INSURED LOSS SHARED COMPENSA-
TION PROGRAM.
(a) ESTABLISHMENT OF PROGRAM.—
(1) IN GENERAL.—There is established in the De-
partment of the Treasury the Terrorism Insured Loss
Shared Compensation Program.
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(2) AUTHORITY OF THE SECRETARY.—Notwith-
standing any other provision of State or Federal law,
the Secretary shall administer the Program, and shall
pay the Federal share of compensation for insured
losses in accordance with subsection (e).
(b) CONDITIONS FOR FEDERAL PAYMENTS.—No pay-
ment may be made by the Secretary under subsection (e),
unless—
(1) a person that suffers an insured loss, or a
person acting on behalf of that person, files a claim
with a participating insurance company;
(2) the participating insurance company pro-
vides clear and conspicuous disclosure to the policy-
holder of the premium charged for insured losses cov-
ered by the Program and the Federal share of com-
pensation for insured losses under the Program—
(A) in the case of any policy covering an
insured loss that is issued on or after the date
of enactment of this Act, on a separate line item
in the policy, at the time of offer, purchase, and
renewal of the policy; and
(B) in the case of any policy that is issued
before the date of enactment of this Act, as a line
item described in subparagraph (A), not later
than 90 days after that date of enactment;
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(3) the participating insurance company proc-
esses the claim for the insured loss in accordance with
its standard business practices, and any reasonable
procedures that the Secretary may prescribe; and
(4) the participating insurance company sub-
mits to the Secretary, in accordance with such reason-
able procedures as the Secretary may establish—
(A) a claim for payment of the Federal
share of compensation for insured losses under
the Program;
(B) written verification and certification—
(i) of the underlying claim; and
(ii) of all payments made for insured
losses; and
(C) certification of its compliance with the
provisions of this subsection.
(c) MANDATORY PARTICIPATION; MANDATORY AVAIL-
ABILITY.—Each insurance company that meets the defini-
tion of a participating insurance company under section
3—
(1) shall participate in the Program;
(2) shall make available in all of its property
and casualty insurance policies (in all of its partici-
pating lines), coverage for insured losses; and
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(3) shall make available property and casualty
insurance coverage for insured losses that does not
differ materially from the terms, amounts, and other
coverage limitations applicable to losses arising from
events other than acts of terrorism.
(d) PARTICIPATION BY SELF INSURED ENTITIES.—
(1) DETERMINATION BY THE SECRETARY.—The
Secretary may, in consultation with the NAIC, estab-
lish procedures to allow participation in the Program
by municipalities and other governmental or quasi-
governmental entities (and by any other entity, as the
Secretary deems appropriate) operating through self
insurance arrangements that were in existence on
September 11, 2001, but only if the Secretary makes
a determination with regard to participation by any
such entity before the occurrence of an act of ter-
rorism in which the entity incurs an insured loss.
(2) PARTICIPATION.—If the Secretary makes a
determination to allow an entity described in para-
graph (1) to participate in the Program, all reports,
conditions, requirements, and standards established
by this Act for participating insurance companies
shall apply to any such entity, as determined to be
appropriate by the Secretary.
(e) SHARED INSURANCE LOSS COVERAGE.—
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(1) FEDERAL SHARE.—
(A) IN GENERAL.—Subject to the cap on li-
ability under paragraph (2) and the limitation
under paragraph (6), the Federal share of com-
pensation under the Program to be paid by the
Secretary for insured losses resulting from an act
of terrorism occurring during the 1-year period
beginning on the date of enactment of this Act—
(i) shall be equal to 80 percent of that
portion of the amount of aggregate insured
losses that—
(I) exceeds the participating in-
surance company deductibles required
to be paid for those insured losses; and
(II) 
does 
not 
exceed
$10,000,000,000; and
(ii) shall be equal to 90 percent of that
portion of the amount of aggregate insured
losses that—
(I) exceeds the participating in-
surance company deductibles required
to be paid for those insured losses; and
(II) exceeds $10,000,000,000.
(B) EXTENSION PERIOD.—If the Program is
extended in accordance with section 6, the Fed-
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eral share of compensation under the Program to
be paid by the Secretary for insured losses result-
ing from an act of terrorism occurring during
the 1-year period beginning on the day after the
date of expiration of the period described in sub-
paragraph (A), shall be calculated in accordance
with clauses (i) and (ii) of subparagraph (A),
subject to the cap on liability in paragraph (2)
and the limitation under paragraph (6).
(C) PRO RATA SHARE.—If, during the pe-
riod described in subparagraph (A) (or during
the period described in subparagraph (B), if the
Program is extended in accordance with section
6), the aggregate insured losses for that period
exceed $10,000,000,000, the Secretary shall deter-
mine the pro rata share for each participating
insurance company of the Federal share of com-
pensation for insured losses calculated under
subparagraph (A).
(D) PROHIBITION
ON
DUPLICATIVE
COM-
PENSATION.—The Federal share of compensation
for insured losses under the Program shall be re-
duced by the amount of compensation provided
by the Federal Government for those insured
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losses under any other Federal insurance or rein-
surance program.
(2) 
CAP
ON
ANNUAL
LIABILITY.—Notwith-
standing paragraph (1), or any other provision of
Federal or State law, if the aggregate insured losses
exceed $100,000,000,000 during any period referred to
in subparagraph (A) or (B) of paragraph (1)—
(A) the Secretary shall not make any pay-
ment under this Act for any portion of the
amount 
of 
such 
losses 
that 
exceeds
$100,000,000,000; and
(B) 
participating 
insurance 
companies
shall not be liable for the payment of any por-
tion 
of 
the 
amount 
that 
exceeds
$100,000,000,000.
(3) NOTICE TO CONGRESS.—The Secretary shall
notify the Congress if estimated or actual aggregate
insured losses exceed $100,000,000,000 in any period
described in paragraph (1), and the Congress shall de-
termine the procedures for and the source of any such
excess payments.
(4) FINAL NETTING.—The Secretary shall have
sole discretion to determine the time at which claims
relating to any insured loss or act of terrorism shall
become final.
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(5) DETERMINATIONS
FINAL.—Any determina-
tion of the Secretary under this subsection shall be
final, and shall not be subject to judicial review.
(6) IN-FORCE REINSURANCE AGREEMENTS.—For
policies covered by reinsurance contracts in force on
the date of enactment of this Act, until the in-force re-
insurance contract is renewed, amended, or has
reached its 1-year anniversary date, any Federal
share of compensation due to a participating insur-
ance company for insured losses during the effective
period of the Program shall be shared—
(A) with all reinsurance companies to
which the participating insurance company has
ceded some share of the insured loss pursuant to
an in-force reinsurance contract; and
(B) in a manner that distributes the Fed-
eral share of compensation for insured losses be-
tween the participating insurance company and
the reinsurance company or companies in the
same proportion as the insured losses would have
been distributed if the Program did not exist.
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SEC. 5. GENERAL AUTHORITY AND ADMINISTRATION OF
CLAIMS.
(a) GENERAL AUTHORITY.—The Secretary shall have
the powers and authorities necessary to carry out the Pro-
gram, including authority—
(1) to investigate and audit all claims under the
Program; and
(2) to prescribe regulations and procedures to
implement the Program.
(b) INTERIM RULES
AND PROCEDURES.—The Sec-
retary shall issue interim final rules or procedures speci-
fying the manner in which—
(1) participating insurance companies may file,
verify, and certify claims under the Program;
(2) the Secretary shall publish or otherwise pub-
licly announce the applicable percentage of insured
losses that is the responsibility of participating insur-
ance companies and the percentage that is the respon-
sibility of the Federal Government under the Pro-
gram;
(3) the Federal share of compensation for insured
losses will be paid under the Program, including pay-
ments based on estimates of or actual aggregate in-
sured losses;
(4) the Secretary may, at any time, seek repay-
ment from or reimburse any participating insurance
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company, based on estimates of insured losses under
the Program, to effectuate the insured loss sharing
provisions contained in section 4;
(5) each participating insurance company that
incurs insured losses shall pay its pro rata share of
insured losses, in accordance with section 4; and
(6) the Secretary will determine any final net-
ting of payments for actual insured losses under the
Program, including payments owed to the Federal
Government from any participating insurance com-
pany and any Federal share of compensation for in-
sured losses owed to any participating insurance com-
pany, to effectuate the insured loss sharing provisions
contained in section 4.
(c) SUBROGATION RIGHTS.—The United States shall
have the right of subrogation with respect to any payment
made by the United States under the Program.
(d) CONTRACTS FOR SERVICES.—The Secretary may
employ persons or contract for services as may be necessary
to implement the Program.
(e) CIVIL PENALTIES.—The Secretary may assess civil
money penalties for violations of this Act or any rule, regu-
lation, or order issued by the Secretary under this Act relat-
ing to the submission of false or misleading information
for purposes of the Program, or any failure to repay any
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amount required to be reimbursed under regulations or pro-
cedures described in section 5(b). The authority granted
under this subsection shall continue during any period in
which the Secretary’s authority under section 6(d) is in ef-
fect.
SEC. 6. TERMINATION OF PROGRAM; DISCRETIONARY EX-
TENSION.
(a) TERMINATION OF PROGRAM.—
(1) IN GENERAL.—The Program shall terminate
1 year after the date of enactment of this Act, unless
the Secretary—
(A) determines, after considering the report
and finding required by this section, that the
Program should be extended for one additional
year, beginning on the day after the date of expi-
ration of the initial 1-year period of the Pro-
gram; and
(B) promptly notifies the Congress of such
determination and the reasons therefor.
(2) DETERMINATION FINAL.—The determination
of the Secretary under paragraph (1) shall be final,
and shall not be subject to judicial review.
(3) TERMINATION
AFTER
EXTENSION.—If the
Program is extended under paragraph (1), the Pro-
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gram shall terminate 1 year after the date of com-
mencement of such extension period.
(b) REPORT TO CONGRESS.—Not later than 9 months
after the date of enactment of this Act, the Secretary shall
submit a report to Congress—
(1) regarding—
(A) the availability of insurance coverage
for acts of terrorism;
(B) the affordability of such coverage, in-
cluding the effect of such coverage on premiums;
and
(C) the capacity of the insurance industry
to absorb future losses resulting from acts of ter-
rorism, taking into account the profitability of
the insurance industry; and
(2) that considers—
(A) the impact of the Program on each of
the factors described in paragraph (1); and
(B) the probable impact on such factors and
on the United States economy if the Program
terminates 1 year after the date of enactment of
this Act.
(c) FINDING REQUIRED.—A determination under sub-
section (a) to extend the Program shall be based on a find-
ing by the Secretary that—
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(1) widespread market uncertainties con-
tinue to disrupt the ability of insurance compa-
nies to price insurance coverage for losses result-
ing from acts of terrorism, thereby resulting in
the continuing unavailability of affordable in-
surance for consumers; and
(2) extending the Program for an addi-
tional year would likely encourage economic sta-
bilization and facilitate a transition to a viable
market for private terrorism risk insurance.
(d) CONTINUING AUTHORITY TO PAY OR ADJUST COM-
PENSATION.—Following the termination of the Program
under subsection (a), the Secretary may take such actions
as may be necessary to ensure payment, reimbursement, or
adjustment of compensation for insured losses arising out
of any act of terrorism occurring during the period in
which the Program was in effect under this Act, in accord-
ance with the provisions of section 4 and regulations pro-
mulgated thereunder.
(e) REPEAL; SAVINGS CLAUSE.—This Act is repealed
at midnight on the final termination date of the Program
under subsection (a), except that such repeal shall not be
construed—
(1) to prevent the Secretary from taking, or
causing to be taken, such actions under subsection (d)
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of this section and sections 4(e)(4), 4(e)(5), 5(a)(1),
5(c), 5(d), and 5(e) (as in effect on the day before the
date of such repeal), and applicable regulations pro-
mulgated thereunder, during any period in which the
authority of the Secretary under subsection (d) of this
section is in effect; or
(2) to prevent the availability of funding under
section 9(b) during any period in which the authority
of the Secretary under subsection (d) of this section
is in effect.
(f) SENSE OF THE CONGRESS.—It is the sense of the
Congress that the Secretary should make any determination
under subsection (a) in sufficient time to enable partici-
pating insurance companies to include coverage for acts of
terrorism in their policies for the second year of the Pro-
gram, if the Program is extended in accordance with this
section.
(g) STUDY AND REPORT ON SCOPE OF THE PRO-
GRAM.—
(1) STUDY.—The Secretary, after consultation
with the NAIC, representatives of the insurance in-
dustry, and other experts in the insurance field, shall
conduct a study of the potential effects of acts of ter-
rorism on the availability of life insurance and other
lines of insurance coverage.
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(2) REPORT.—Not later than 9 months after the
date of enactment of this Act, the Secretary shall sub-
mit a report to the Congress on the results of the
study conducted under paragraph (1).
(h) REPORTS REGARDING TERRORISM RISK INSUR-
ANCE PREMIUMS.—
(1) REPORT TO THE NAIC.—Beginning 6 months
after the date of enactment of this Act, and every 6
months thereafter, each participating insurance com-
pany shall submit a report to the NAIC that states
the premium rates charged by that participating in-
surance company during the preceding 6-month pe-
riod for insured losses covered by the Program, and
includes an explanation of and justification for those
rates.
(2) REPORTS
FORWARDED.—The NAIC shall
promptly forward copies of each report submitted
under paragraph (1) to the Secretary, the Secretary
of Commerce, the Chairman of the Federal Trade
Commission, and the Comptroller General of the
United States.
(3) AGENCY REPORTS TO CONGRESS.—
(A) IN GENERAL.—The Secretary, the Sec-
retary of Commerce, and the Chairman of the
Federal Trade Commission shall submit joint re-
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ports to Congress and the Comptroller General of
the United States summarizing and evaluating
the reports forwarded under paragraph (2).
(B) TIMING.—The reports required under
subparagraph (A) shall be submitted—
(i) 9 months after the date of enact-
ment of this Act; and
(ii) 12 months after the date of submis-
sion of the first report under clause (i).
(4) GAO EVALUATION AND REPORT.—
(A) EVALUATION.—The Comptroller Gen-
eral of the United States shall evaluate each re-
port submitted under paragraph (3), and upon
request, the Secretary, the Secretary of Com-
merce, the Chairman of the Federal Trade Com-
mission, and the NAIC shall provide to the
Comptroller all documents, records, and any
other information that the Comptroller deems
necessary to carry out such evaluation.
(B) REPORT TO CONGRESS.—Not later than
90 days after receipt of each report submitted
under paragraph (3), the Comptroller General of
the United States shall submit to Congress a re-
port of the evaluation required by subparagraph
(A).
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SEC. 7. PRESERVATION OF STATE LAW.
Nothing in this Act shall affect the jurisdiction or regu-
latory authority of the insurance commissioner (or any
agency or office performing like functions) of any State over
any participating insurance company or other person—
(1) except as specifically provided in this Act;
and
(2) except that—
(A) the definition of the term ‘‘act of ter-
rorism’’ in section 3 shall be the exclusive defini-
tion of that term for purposes of compensation
for insured losses under this Act, and shall pre-
empt any provision of State law that is incon-
sistent with that definition, to the extent that
such provision of law would otherwise apply to
any type of insurance covered by this Act;
(B) during the period beginning on the date
of enactment of this Act and ending at midnight
on December 31, 2002, rates for terrorism risk
insurance covered by this Act and filed with any
State shall not be subject to prior approval or a
waiting period, under any law of a State that
would otherwise be applicable, except that noth-
ing in this Act affects the ability of any State
to invalidate a rate as excessive, inadequate, or
unfairly discriminatory; and
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(C) during the period beginning on the date
of enactment of this Act and for so long as the
Program is in effect, as provided in section 6
(including any period during which the author-
ity of the Secretary under section 6(d) is in ef-
fect), books and records of any participating in-
surance company that are relevant to the Pro-
gram shall be provided, or caused to be provided,
to the Secretary or the designee of the Secretary,
upon request by the Secretary or such designee,
notwithstanding any provision of the laws of
any State prohibiting or limiting such access.
SEC. 8. SENSE OF THE CONGRESS REGARDING CAPACITY
BUILDING.
It is the sense of the Congress that the insurance indus-
try should build capacity and aggregate risk to provide af-
fordable property and casualty insurance coverage for ter-
rorism risk.
SEC. 9. AUTHORIZATION OF APPROPRIATIONS; PAYMENT
AUTHORITY.
(a) ADMINISTRATIVE EXPENSES.—There are author-
ized to be appropriated to the Secretary, out of funds in
the Treasury not otherwise appropriated, such sums as may
be necessary for administrative expenses of the Program,
to remain available until expended.
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(b) PAYMENT AUTHORITY.—This Act constitutes pay-
ment authority in advance of appropriation Acts, and rep-
resents the obligation of the Federal Government to provide
for the Federal share of compensation for insured losses
under the Program.
SEC. 10. PROCEDURES FOR CIVIL ACTIONS.
(a) FEDERAL CAUSE OF ACTION.—
(1) IN GENERAL.—There shall exist a Federal
cause of action for property damage, personal injury,
or death arising out of or resulting from an act of ter-
rorism, which shall be the exclusive cause of action
and remedy for claims for such property damage, per-
sonal injury, or death, except as provided in sub-
section (d).
(2) PREEMPTION OF STATE ACTIONS.—All State
causes of action of any kind for property damage,
personal injury, or death arising out of or resulting
from an act of terrorism that are otherwise available
under State law, are hereby preempted, except as pro-
vided in subsection (d).
(b) GOVERNING LAW.—The substantive law for deci-
sion in an action described in subsection (a)(1) shall be de-
rived from the law, including applicable choice of law prin-
ciples, of the State in which the act of terrorism giving rise
to the action occurred, except to the extent that—
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(1) the law, including choice of law principles,
of another State is determined to be applicable to the
action by the district court hearing the action; or
(2) otherwise applicable State law (including
that determined pursuant to paragraph (1), is incon-
sistent with or otherwise preempted by Federal law.
(c) PUNITIVE DAMAGES.—Any amounts awarded in a
civil action described in subsection (a)(1) that are attrib-
utable to punitive damages shall not count as insured losses
for purposes of this Act.
(d) CLAIMS AGAINST TERRORISTS.—Nothing in this
section shall in any way be construed to limit the ability
of any plaintiff to seek any form of recovery from any per-
son, government, or other entity that was a participant in,
or aider and abettor of, any act of terrorism.
(e) EFFECTIVE PERIOD.—This section shall apply only
to actions described in subsection (a)(1) arising out of or
resulting from acts of terrorism that occur during the effec-
tive period of the Program, including, if applicable, any
extension period provided for under section 6.
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SEC. 11. SATISFACTION OF JUDGMENTS FROM FROZEN AS-
SETS OF TERRORISTS, TERRORIST ORGANIZA-
TIONS, 
AND 
STATE 
SPONSORS 
OF 
TER-
RORISM.
(a) IN GENERAL.—Notwithstanding any other provi-
sion of law, and except as provided in subsection (b), in
every case in which a person has obtained a judgment
against a terrorist party on a claim based upon an act
of terrorism or for which a terrorist party is not immune
under section 1605(a)(7) of title 28, United States Code,
the blocked assets of that terrorist party (including the
blocked assets of any agency or instrumentality of that ter-
rorist party) shall be subject to execution or attachment in
aid of execution in order to satisfy such judgment to the
extent of any compensatory damages for which such ter-
rorist party has been adjudged liable.
(b) PRESIDENTIAL WAIVER.—
(1) IN
GENERAL.—Subject to paragraph (2),
upon determining on an asset-by-asset basis that a
waiver is necessary in the national security interest,
the President may waive the requirements of sub-
section (a) in connection with (and prior to the en-
forcement of) any judicial order directing attachment
in aid of execution or execution against any property
subject to the Vienna Convention on Diplomatic Rela-
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tions or the Vienna Convention on Consular Rela-
tions.
(2) EXCEPTION.—A waiver under this subsection
shall not apply to—
(A) property subject to the Vienna Conven-
tion on Diplomatic Relations or the Vienna Con-
vention on Consular Relations that has been used
by the United States for any nondiplomatic pur-
pose (including use as rental property), or the
proceeds of such use; or
(B) the proceeds of any sale or transfer for
value to a third party of any asset subject to the
Vienna Convention on Diplomatic Relations or
the Vienna Convention on Consular Relations.
(c) SPECIAL RULE FOR CASES AGAINST IRAN.—Sec-
tion 2002 of the Victims of Trafficking and Violence Protec-
tion Act of 2000 (Public Law 106–386; 114 Stat. 1542) is
amended—
(1) in subsection (a)(2)(A)(ii), by inserting after
‘‘July 27, 2000’’ the following: ‘‘or before October 28,
2000,’’;
(2) in subsection (b)(2)(B), by inserting after
‘‘the date of enactment of this Act’’ the following:
‘‘(less amounts therein as to which the United States
has an interest in subrogation pursuant to subsection
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(c) arising prior to the date of entry of the judgment
or judgments to be satisfied in whole or in part here-
under).’’;
(3) by redesignating subsections (d), (e), and (f)
as subsections (e), (f), and (g), respectively; and
(4) by inserting after subsection (c) the following
new subsection (d):
‘‘(d) DISTRIBUTION
OF FOREIGN MILITARY SALES
FUNDS INADEQUATE TO SATISFY FULL AMOUNT OF COM-
PENSATORY AWARDS AGAINST IRAN.—
‘‘(1)(A) In the event that the Secretary deter-
mines that the amounts available to be paid under
subsection (b)(2) are inadequate to pay the entire
amount of compensatory damages awarded in judg-
ments issued as of the date of the enactment of this
subsection in cases identified in subsection (a)(2)(A),
the Secretary shall, not later than 60 days after such
date, make payment from the account specified in
subsection (b)(2) to each party to which such judg-
ment has been issued a share of the amounts in that
account which are not subject to subrogation to the
United States under this Act.
‘‘(B) The amount so paid to each such person
shall be calculated by the proportion that the amount
of compensatory damages awarded in a judgment
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issued to that particular person bears to the total
amount of all compensatory damages awarded to all
persons to whom judgments have been issued in cases
identified in subsection (a)(2)(A) as of the date re-
ferred to in subparagraph (A).
‘‘(2) Nothing herein shall bar, or require delay
in, enforcement of any judgment to which this sub-
section applies under any procedure or against assets
otherwise available under this section or under any
other provision of law.
‘‘(3) Any person receiving less than the full
amount of compensatory damages awarded to that
party in judgments to which this subsection applies
shall not be required to make the election set forth in
subsection (a)(2)(C) in order to qualify for payment
hereunder.’’.
(d) DEFINITIONS.—In this section:
(1) The term ‘‘terrorist party’’ means a terrorist,
a terrorist organization, or a foreign state designated
as a state sponsor of terrorism under section 6(j) of
the Export Administration Act of 1979 (50 U.S.C.
App. 2405(j)) or section 620A of the Foreign Assist-
ance Act of 1961 (22 U.S.C. 2371).
(2) The term ‘‘blocked asset’’ means any asset
seized or frozen by the United States in accordance
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with law, or otherwise held by the United States with-
out claim of ownership by the United States.
(3) The term ‘‘property subject to the Vienna
Convention on Diplomatic Relations or the Vienna
Convention on Consular Relations’’ and the term
‘‘asset subject to the Vienna Convention on Diplo-
matic Relations or the Vienna Convention on Con-
sular Relations’’ mean any property or asset, respec-
tively, the attachment in aid of execution or execution
of which would result in a violation of an obligation
of the United States under the Vienna Convention on
Diplomatic Relations or the Vienna Convention on
Consular Relations, as the case may be.
Attest:
Secretary.