[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6477 Introduced in House (IH)]

112th CONGRESS
  2d Session
                                H. R. 6477

  To strengthen America's financial infrastructure, by requiring pre-
funding for catastrophe losses using private insurance premium dollars 
 to protect taxpayers from massive bailouts, and to provide dedicated 
 funding from insurance premiums to improve catastrophe preparedness, 
  loss prevention and mitigation, and to improve the availability and 
affordability of homeowners insurance coverage for catastrophic events, 
                        and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           September 20, 2012

  Mr. Sires introduced the following bill; which was referred to the 
 Committee on Financial Services, and in addition to the Committee on 
  Transportation and Infrastructure, 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 strengthen America's financial infrastructure, by requiring pre-
funding for catastrophe losses using private insurance premium dollars 
 to protect taxpayers from massive bailouts, and to provide dedicated 
 funding from insurance premiums to improve catastrophe preparedness, 
  loss prevention and mitigation, and to improve the availability and 
affordability of homeowners insurance coverage for catastrophic events, 
                        and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Taxpayer 
Protection Act of 2012''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title and table of contents.
Sec. 2. Findings and purpose.
Sec. 3. Definitions.
  TITLE I--TAXPAYER PROTECTION, PRE-FUNDED CATASTROPHE RECOVERY, AND 
                          MARKET STABILIZATION

Sec. 101. National Commission on Natural Catastrophe Preparation and 
                            Protection.
Sec. 102. Pre-funded and privately financed catastrophe recovery 
                            program.
Sec. 103. Post-catastrophe market stabilization program for liquidity 
                            loans.
Sec. 104. Termination.
 TITLE II--DISASTER READINESS, CITIZEN AND COMMUNITY PREPAREDNESS, AND 
                               MITIGATION

Sec. 201. National Readiness, Preparedness, and Mitigation Committee.

SEC. 2. FINDINGS AND PURPOSE.

    (a) Findings.--The Congress finds the following:
            (1) The economy of the United States, the American 
        taxpayers, and all homeowners need to be better prepared for, 
        and more protected from, major natural catastrophes.
            (2) Taking into consideration the current economic and 
        fiscal challenges facing the United States, it is more 
        important than ever to fortify our Nation's financial 
        infrastructure to be fully prepared for major natural 
        catastrophes and to mitigate the risk of catastrophe as much as 
        possible.
            (3) In the past, when a natural catastrophe eclipsed the 
        ability of the private industry or a State to manage the loss, 
        or individuals were uninsured or underinsured, the Federal 
        Government has stepped in to provide the funding and services 
        needed for recovery.
            (4) The costs of such Federal ``bailouts'' have been borne 
        by all taxpayers, thereby creating a disincentive to fully 
        prepare for catastrophe and unfairly burdening citizens who 
        live in lower risk communities.
            (5) Historically, the budget for Federal Government has 
        assumed there will be no natural disasters, and this lack of 
        pre-funding for catastrophe contributed substantially to annual 
        budget deficits and growing national debt.
            (6) The Budget Control Act of 2011 ends an era of 
        unbudgeted recovery assistance and authorizes a fixed level of 
        annual funding for disaster relief.
            (7) The amount of future disaster relief funding is capped 
        at the average amount spent on natural disasters during the 
        previous 10 years with the high and low years removed.
            (8) By removing the high and low years, the law now caps 
        disaster spending at a level that is less than 60 percent of 
        the amount spent on disaster relief during the previous 10 
        years.
            (9) Natural catastrophes will continue to occur, and the 
        exposure to catastrophe risk is growing. Scientists warn that 
        future catastrophes will inevitably cause losses far in excess 
        of prior events, and these losses could exceed the limited 
        capacity in the private market to cover claims and remain 
        viable to insure properties after massive catastrophic events.
            (10) In 2011, the earthquake centered in Virginia that 
        shook the East Coast and Hurricane Irene provided powerful 
        reminders that natural catastrophes can strike unexpectedly and 
        severely damage areas not thought to be at high risk.
            (11) Losses caused by natural catastrophes in 2011 reached 
        record levels and affected areas throughout the country.
            (12) To successfully transition to a more limited Federal 
        role in post-event disaster funding, communities must be better 
        prepared for future catastrophe, the risk of damage from 
        natural catastrophes must be mitigated and individuals must 
        have greater access to private market protection against 
        catastrophe risk.
            (13) Currently, neither the government, nor communities, 
        nor the private sector are accumulating sufficient resources or 
        procuring sufficient coverage to recover from inevitable future 
        natural catastrophes.
            (14) The private insurance market does not have sufficient 
        capacity to efficiently address the timing risk presented by 
        major natural catastrophes, and there is no guarantee that the 
        level of capacity that does exist will continue to be available 
        from one year to the next or that consumers have the resources 
        to adjust to significant price swings in the cost of the 
        capital for available capacity.
            (15) Disruptions in insurance availability and 
        affordability will continue to harm economic activity in States 
        exposed to major catastrophes and place significant burdens on 
        residents of these States.
            (16) Consumers in many areas around the country cannot find 
        homeowners insurance in the private market, and affordability 
        and availability challenges will grow dramatically when the 
        next major catastrophe strikes.
            (17) Hurricane Katrina and other recent catastrophes 
        confirm that the economic harm from natural catastrophes has a 
        disproportionate impact upon the poor and middle class.
            (18) A new public-private partnership approach to deal more 
        effectively with major natural catastrophes would more 
        efficiently leverage the public sector and establish a limited, 
        less expensive, more focused role for government while also 
        maximizing the capabilities of the private sector.
            (19) A privately funded backstop can provide more 
        protection at lower cost for consumers while also strengthening 
        America's financial infrastructure to deal with natural 
        catastrophes by increasing capacity and providing more market 
        stability after a catastrophe.
            (20) Cost savings can lower premiums for consumers and be 
        used to encourage better prevention and mitigation in lieu of 
        post-event bailouts.
            (21) A financial backstop can be structured to be fully 
        funded to protect taxpayers from bailouts and insurance 
        policyholders from subsidies upon which the current system 
        relies.
            (22) A public-private partnership model, with an 
        appropriately structured backstop, can protect against the 
        timing risk presented by major natural catastrophes, spread 
        risk more broadly, and enable private direct insurers to 
        underwrite and price insurance for large-scale catastrophes 
        more efficiently and with less risk of insolvency or financial 
        distress while making insurance more available and affordable 
        for consumers.
            (23) Private market reinsurers could continue to provide 
        coverage for direct insurers and could participate in providing 
        capacity to the financial backstop.
            (24) For the majority of Americans their home is their 
        single biggest asset and protecting that investment is 
        important to the economic health of millions of Americans, to 
        social stability; and to the health of the banking system and 
        broader economy.
            (25) The financial crisis of 2008 confirms the value of 
        taking action in advance to strengthen America's financial 
        infrastructure through a privately funded backstop rather than 
        waiting for a future crisis or collapse to take emergency 
        action in the form of bailouts.
            (26) It is in the best interests of the Nation to take 
        responsible action now to begin to build a financial backstop 
        that will help protect a recovering American economy and 
        mitigate the economic or financial shock that could result from 
        a major catastrophic event.
    (b) Purposes.--The purposes of this Act are--
            (1) to establish a fully funded program for catastrophe 
        losses to strengthen the financial infrastructure of the United 
        States;
            (2) to protect taxpayers from bailouts and subsidies 
        related to the financing of post-catastrophe disaster relief;
            (3) to develop a public-private partnership that maximizes 
        the private market capacity to directly provide insurance to 
        consumers with a comprehensive and integrated plan to help 
        homeowners better prepare for and recover from the damages 
        caused by natural catastrophes;
            (4) to encourage individuals and communities to adopt 
        mitigation and prevention measures that reduce losses from such 
        catastrophes; and
            (5) to expedite the payment of claims and better assist in 
        the financial recovery from such catastrophes.

SEC. 3. DEFINITIONS.

    For purposes of this Act, the following definitions shall apply:
            (1) Actuarially sound.--The term ``actuarially sound'' 
        means, with respect to premiums, that premiums are determined 
        according to principles of actuarial science to be adequate, 
        but not excessive, in the aggregate to pay current and future 
        obligations, including the expected annualized cost of all 
        claims, loss adjustment expenses, and all administrative costs.
            (2) Covered event.--The term ``covered event'' means the 
        occurrence of one or more of the perils specified in section 
        102(c) that causes a loss or series of losses.
            (3) Covered state.--The term ``covered States'' means, with 
        respect to a State plan, a State covered by the plan.
            (4) Eligible state plan.--The term ``eligible State plan'' 
        means a State plan or multi-State plan that meets the 
        requirements of section 102(d).
            (5) Emergency response providers.--The term ``emergency 
        response providers'' has the meaning given such term in section 
        2 of the Homeland Security Act of 2002 (6 U.S.C. 101).
            (6) Fund.--The term ``Fund'' means the Catastrophe 
        Preparedness Fund established under section 102(g).
            (7) Insured loss.--The term ``insured loss'' means any loss 
        and associated loss adjustment expense insured or reinsured by 
        an eligible State plan.
            (8) Liquidity loan.--The term ``liquidity loan'' means a 
        loan to an eligible State plan made under section 103.
            (9) Multi-state plan.--The term ``multi-State plan'' means 
        a State plan described in paragraph (12)(A)(ii) of this 
        section.
            (10) Secretary.--The term ``Secretary'' means the Secretary 
        of the Treasury except as specifically provided otherwise.
            (11) State.--The term ``State'' includes the several States 
        of the United States, the District of Columbia, the 
        Commonwealth of Puerto Rico, Guam, the Commonwealth of the 
        Northern Mariana Islands, the United States Virgin Islands, and 
        American Samoa, and any other territory or possession of the 
        United States.
            (12) State plan.--The term ``State plan'' means a plan 
        that--
                    (A) is created or administered by--
                            (i) a single State; or
                            (ii) two or more States; and
                    (B) provides insurance or reinsurance protection to 
                address natural catastrophe preparedness and 
                protection, and in the case of a plan described in 
                subparagraph (A)(ii), provides such protection as part 
                of a program covering multiple States.

  TITLE I--TAXPAYER PROTECTION, PRE-FUNDED CATASTROPHE RECOVERY, AND 
                          MARKET STABILIZATION

SEC. 101. NATIONAL COMMISSION ON NATURAL CATASTROPHE PREPARATION AND 
              PROTECTION.

    (a) Establishment.--To effectuate a stronger public-private 
partnership at the local, State, and national levels regarding natural 
catastrophe preparation and protection, the Secretary of the Treasury, 
in consultation with the Secretary of Homeland Security, shall 
establish a commission to be known as the National Commission on 
Natural Catastrophe Preparation and Protection (in this title referred 
to as the ``Commission'').
    (b) Duties.--The Commission shall meet for the purpose of advising 
the Secretary regarding the estimated loss costs associated with the 
contracts for reinsurance protection made available under this title 
and carrying out the functions specified in this Act, including--
            (1) the development and implementation of public education 
        concerning the risks posed by natural catastrophes;
            (2) the establishment of a research priority for the 
        development and implementation of prevention, mitigation, 
        recovery, and rebuilding standards, and prudent land-use 
        policies, that better prepare and protect the United States 
        from natural catastrophes;
            (3) the establishment of a process for members of the 
        Commission to deploy following every major catastrophe to 
        inspect and evaluate the handling of such catastrophes;
            (4) conducting continuous analysis of the effectiveness of 
        this Act and recommending improvements to the Congress so that 
        the costs of providing natural catastrophe protection are 
        decreased and so that the United States is better prepared; and
            (5) ensuring that the programs under this title are 
        operated in a financially prudent manner and on an actuarially 
        sound basis consistent with the provisions of this title and is 
        not dependent on subsidy from taxpayers or consumers in areas 
        that do not reside in areas that have a high-risk to natural 
        catastrophe loss, including by monitoring the expenditure of 
        funds for administrative purposes to promote efficiency and 
        economy in the operation and administration of the program and 
        to minimize the cost for participating States.
    (c) Members.--The Commission shall consist of 11 members, as 
follows:
            (1) Homeland security member.--The Secretary of Homeland 
        Security or the Secretary's designee.
            (2) Appointed members.--Eleven members appointed by the 
        Secretary of the Treasury, who shall consist of--
                    (A) one individual who is an actuary;
                    (B) one individual who is employed in engineering;
                    (C) one individual representing the scientific 
                community;
                    (D) one individual representing property and 
                casualty insurers;
                    (E) one individual representing reinsurers;
                    (F) one individual representing the Federal 
                Insurance Office of the Department of the Treasury;
                    (G) one individual who is a member or former member 
                of the National Association of Insurance Commissioners;
                    (H) two individuals who are consumers, including 
                one consumer who is a homeowner who resides in an area 
                with relatively high exposure to natural catastrophe 
                risk and one consumer who resides in an area with 
                relatively low exposure to natural catastrophe risk;
                    (I) one individual who is an emergency response 
                expert; and
                    (J) one individual with expertise regarding capital 
                markets.
    (d) Treatment of Non-Federal Members.--Each member of the 
Commission who is not otherwise employed by the Federal Government 
shall be considered a special Government employee for purposes of 
sections 202 and 208 of title 18, United States Code.
    (e) Experts and Consultants.--The Commission may procure temporary 
and intermittent services from individuals or groups recognized as 
experts in the fields of actuarial science, meteorology, seismology, 
vulcanology, geology, structural engineering, wind engineering, seismic 
engineering and hydrology, emergency response, and other fields, under 
section 3109(b) of title 5, United States Code, but at rates not in 
excess of the daily equivalent of the annual rate of basic pay payable 
for level V of the Executive Schedule, for each day during which the 
individual procured is performing such services for the Commission. The 
Commission may also procure, and the Congress encourages the Commission 
to procure, experts from universities, research centers, foundations, 
and other appropriate organizations that could study, research, and 
develop methods and mechanisms that could be utilized to strengthen 
structures to better withstand the perils covered by this Act.
    (f) Compensation.--Each member of the Commission who is not an 
officer or employee of the Federal Government shall be compensated at a 
rate of basic pay payable for level V of the Executive Schedule, for 
each day (including travel time) during which such member is engaged in 
the performance of the duties of the Commission. All members of the 
Commission who are officers or employees of the United States shall 
serve without compensation in addition to that received for their 
services as officers or employees of the United States.
    (g) Obtaining Data.--
            (1) Authority.--The Commission and the Secretary may 
        solicit loss and exposure data and such other information that 
        they deem necessary to carry out their responsibilities under 
        this Act from eligible State plans, other governmental 
        agencies, and bodies and organizations that act as statistical 
        agents for the insurance industry. The Commission and the 
        Secretary shall take such actions as are necessary to ensure 
        that confidential or proprietary information is disclosed only 
        to authorized individuals working for the Commission or the 
        Secretary.
            (2) Confidentiality.--
                    (A) In general.--Information obtained by the 
                Commission and the Secretary pursuant to this Act with 
                reference to which a request for confidential treatment 
                is made by the person furnishing such information--
                            (i) shall be exempt from disclosure under 
                        section 552 of title 5, United States Code; and
                            (ii) shall not be published or disclosed.
                    (B) Exception.--Subparagraph (A) shall not apply 
                with respect to the publication or disclosure of any 
                data aggregated in a manner that ensures protection of 
                the identity of the person furnishing such data.
    (h) Authorization of Appropriations.--There is authorized to be 
appropriated--
            (1) $10,000,000 for fiscal year 2013 for the initial 
        expenses in establishing the Commission and the initial 
        activities of the Commission during such fiscal year that 
        cannot timely be covered by amounts that are deposited in the 
        Fund pursuant to section 102(e)(5)(D); and
            (2) for fiscal year 2014 and each fiscal year thereafter, 
        such sums as may be necessary to carry out the activities of 
        the Commission during each such fiscal year that cannot timely 
        be covered by amounts that are deposited in the Fund pursuant 
        to section 102(e)(5)(D).
    (i) Termination.--The Commission shall terminate upon the date 
specified in section 104(c).

SEC. 102. PRE-FUNDED AND PRIVATELY FINANCED CATASTROPHE RECOVERY 
              PROGRAM.

    (a) Program Authority.--
            (1) In general.--The Secretary of the Treasury, in 
        consultation with the Secretary of Homeland Security, shall 
        carry out a program under this section that utilizes premiums 
        from eligible State plans to provide additional capacity and 
        stability in the homeowners insurance market and improve the 
        availability and affordability of homeowners protection 
        coverage to pre-fund future natural catastrophe recovery by 
        making available for purchase, only by eligible State plans, 
        contracts for reinsurance coverage under this section.
            (2) Purpose.--The program shall make available privately 
        funded reinsurance coverage under this section--
                    (A) to protect taxpayers from financing the cost of 
                bailouts after natural catastrophes;
                    (B) to diversify and spread risk more efficiently 
                and leverage the economies of pooling reinsurance 
                arrangements from different geographical areas of the 
                country covering the perils specified in subsection 
                (c);
                    (C) to generate additional capacity and provide 
                stability to the homeowners insurance market by 
                encouraging States to develop or expand plans that 
                address current market challenges and assist homeowners 
                in securing needed protection;
                    (D) to improve the availability and affordability 
                of homeowners insurance for the purpose of privately 
                financing post-catastrophe recovery by facilitating the 
                pooling and spreading the risk of catastrophic 
                financial losses from natural catastrophes;
                    (E) to improve the solvency, capacity, and 
                stability of homeowners insurance markets;
                    (F) to encourage the development and implementation 
                of mitigation, prevention, recovery, and rebuilding 
                standards to reduce future catastrophe losses; and
                    (G) to analyze and recommend methods to 
                continuously improve the way the United States prepares 
                for, reacts to, and responds to catastrophes, including 
                improvements to the Catastrophe Preparedness Fund 
                established under section 102(g).
            (3) Contract principles.--Under the program under this 
        section, the Secretary shall offer reinsurance coverage through 
        contracts with eligible State plans, which contracts shall--
                    (A) be priced on an actuarially sound basis as 
                specified in this section; and
                    (B) provide coverage based solely on insured losses 
                within the State or States participating in the 
                eligible State plan purchasing the contract.
    (b) Qualified Lines of Coverage.--Each contract for reinsurance 
coverage made available under this section shall provide coverage for 
insured property losses covered under primary insurance contracts to 
homeowners, mobile home owners, renters, and condominium owners for 
covered perils. Nothing in this Act shall be interpreted to expand the 
terms, conditions, or scope of coverage or perils covered under 
insurance policies issued by insurers or eligible State plans.
    (c) Covered Perils.--
            (1) In general.--Each contract for reinsurance coverage 
        made available under this section shall cover losses insured or 
        reinsured by the eligible State plan purchasing the contract 
        that are proximately caused by--
                    (A) earthquakes;
                    (B) perils ensuing from earthquakes, including fire 
                and tsunami-related flood;
                    (C) catastrophic wildfires unrelated to 
                earthquakes;
                    (D) tropical cyclones having maximum sustained 
                winds of at least 74 miles per hour, including 
                hurricanes and typhoons;
                    (E) tornadoes;
                    (F) volcanic eruptions;
                    (G) catastrophic winter storms; and
                    (H) any other natural catastrophe insured or 
                reinsured under the eligible State plan purchasing the 
                contract.
            (2) Definitions.--The Secretary shall, by regulation, 
        define the natural catastrophe perils identified under this 
        subsection.
    (d) Eligible State Plans.--A State plan shall be an eligible State 
plan for purposes of this section only if the State plan meets all of 
the following requirements:
            (1) Program design.--The entity for the covered State or 
        States that is authorized to make such determinations certifies 
        to the Secretary that the State plan is a program, established 
        by the covered State or States, that provides--
                    (A) insurance coverage for insured property losses 
                covered under primary insurance contracts for 
                residential property located in any covered State; or
                    (B) reinsurance coverage that is designed to 
                improve availability or affordability, or both, in the 
                private insurance markets that offers coverage for 
                insured property losses covered under primary insurance 
                contracts for residential property located in any 
                covered State.
            (2) Operation.--The entity for the covered State or States 
        that is authorized to make such determinations certifies to the 
        Secretary that the State plan complies with the following 
        requirements:
                    (A) Establishment; governing body.--The State plan 
                shall be established by the covered State or States and 
                a majority of the members of the governing body of the 
                State plan shall be public officials or appointed by 
                public officials.
                    (B) Repayment.--If any covered State has at any 
                time appropriated amounts from the fund of the State 
                plan for any purpose other than payments made in 
                connection with the activities authorized under the 
                State plan, the State shall have repaid such amounts to 
                the State fund, together with interest on such amounts.
                    (C) Nondiscrimination in coverage.--Insurance or 
                reinsurance coverage, as applicable, provided under the 
                eligible State plan shall be made available on a 
                nondiscriminatory basis to all qualifying residents of 
                any covered State.
                    (D) Prohibition of cross-subsidization.--The State 
                plan may not, except for charges or assessments related 
                to post-event financing or bonding, involve cross-
                subsidization between any separate property and 
                casualty lines covered under the plan.
                    (E) Reinsurance premiums.--In the case of State 
                plans providing reinsurance coverage, the plan or the 
                law in effect in each covered State shall require that 
                to the extent that reinsurance coverage made available 
                under the program under this section results in cost 
                savings in providing insurance coverage for risks in 
                such State, such cost savings be reflected in premium 
                rates charged to consumers for such coverage.
                    (F) Termination.--The State plan shall include 
                provisions that authorize the entity for the covered 
                State or States that is authorized to make such a 
                determination to terminate the State plan or, in the 
                case of a multi-State plan, membership in such Plan, if 
                such entity determines that the State plan is no longer 
                necessary to ensure the availability or affordability 
                of residential property insurance for all residents of 
                any covered State.
                    (G) Actuarial soundness.--Insurance or reinsurance 
                coverage, as applicable, made available by the State 
                plan shall be provided at actuarially sound rates.
            (3) Treatment of earnings.--The entity for the covered 
        State or States that is authorized to make such determinations 
        certifies to the Secretary that the State plan does not provide 
        for redistribution of any part of any net profits under the 
        State plan to any insurer that participates in the State plan.
            (4) Support for mitigation and prevention.--
                    (A) Requirements.--Except as provided in 
                subparagraph (B), the Secretary determines that, for 
                any year for which the coverage is in effect, the 
                provision of reinsurance coverage under the program 
                under this section to the State plan supports 
                mitigation and prevention of risk associated with 
                covered events and that the State plan meets all of the 
                following requirements:
                            (i) Building, fire, and safety codes.--Each 
                        covered State has in effect, or appropriate 
                        local governments within each covered State 
                        have in effect, and enforce building, fire, and 
                        safety codes and standards that offer risk 
                        responsive resistance to earthquakes or high 
                        winds.
                            (ii) Mitigation.--Each covered State has 
                        taken actions to mitigate losses caused by 
                        natural disasters.
                            (iii) Prohibition of price gouging.--Each 
                        covered State has in effect laws or regulations 
                        sufficient to prohibit price gouging, during 
                        the term of reinsurance coverage provided under 
                        the program under this section for the State 
                        plan in any disaster area located within the 
                        covered State.
                            (iv) Homeowners insurance rates.--For any 
                        covered State that has in effect laws that 
                        require insurers providing homeowners insurance 
                        to file their rates for review or regulatory 
                        approval, the covered State has certified that 
                        homeowners insurance rates associated with 
                        catastrophe coverage for covered perils are 
                        actuarially sound.
                            (v) Land use and zoning plans.--Each 
                        covered State, to the extent feasible, shall 
                        encourage State and local government units to 
                        develop, implement, and enforce comprehensive 
                        land use and zoning plans that are designed to 
                        limit additional natural hazard exposure and 
                        promote natural hazard mitigation.
                            (vi) Emergency preparedness actions.--Each 
                        covered State, in consultation and cooperation 
                        with localities in the State, the Administrator 
                        of the Federal Emergency Management Agency, and 
                        other appropriate agencies and organizations, 
                        shall have taken actions to continuously 
                        improve emergency preparedness.
                    (B) Transition period.--To provide sufficient time 
                for adoption of the provisions of this subsection and 
                to support implementation of prevention and mitigation 
                measures set forth in subparagraph (A) of this 
                paragraph, during the 5-year period that begins on the 
                date of the enactment of this Act, a State plan shall 
                not be precluded from qualifying as an eligible State 
                plan because the Secretary is unable to make any of the 
                determinations required under subparagraph (A).
    (e) Terms of Reinsurance Contracts.--Each contract for reinsurance 
coverage under this section shall be subject to the following terms and 
conditions:
            (1) Maturity.--The contract shall have a minimum term of 1 
        year or such longer duration as the Secretary may determine.
            (2) Payment condition.--The contract shall authorize claims 
        payments only for eligible losses to the eligible State plan 
        purchasing the coverage.
            (3) Retained losses requirement.--For each covered event, 
        the contract shall not reimburse any losses until the total 
        incurred covered losses exceeds the applicable attachment point 
        established pursuant to subsection (f)(2).
            (4) Multiple events.--The contract shall cover any eligible 
        losses from one or more covered events that may occur during 
        the term of the contract and shall provide that if multiple 
        events occur, the retained losses requirement under paragraph 
        (f) shall apply in the aggregate and not separately to each 
        individual event.
            (5) Pricing.--The price of reinsurance coverage under the 
        contract shall be an amount established by the Secretary as 
        follows:
                    (A) Recommendations.--The Secretary shall take into 
                consideration the recommendations of the Commission in 
                establishing the price, but the price may not be less 
                than the amount recommended by the Commission.
                    (B) Fairness to taxpayers.--The price shall be 
                established at an actuarially sound level that protects 
                taxpayers from liability and takes into consideration 
                models that estimate losses from covered events.
                    (C) Self-sufficiency.--The rates for reinsurance 
                coverage for an eligible State plan shall be 
                established at an actuarially sound level that produces 
                expected premiums sufficient to pay--
                            (i) the expected annualized cost of all 
                        claims;
                            (ii) loss adjustment expenses;
                            (iii) the cost of funding emergency 
                        preparedness and mitigation efforts; and
                            (iv) the costs of operating the Commission 
                        and all administrative costs of reinsurance 
                        coverage offered under this subsection.
                The expected annualized cost of all claims shall be 
                comparable to amounts being included in the price for 
                similar layers of coverage in the private sector, 
                taking into account the savings associated with the 
                funding mechanisms and the non-profit and tax-exempt 
                status of the Fund.
                    (D) Offset.--The Secretary shall ensure, to the 
                maximum extent practicable, that in each fiscal year an 
                amount equal to any amount appropriated pursuant to 
                section 101(h) for such fiscal year is obtained from 
                purchasers of reinsurance coverage under this section 
                by incorporating the costs described in subparagraph 
                (C)(iv) of this paragraph into the pricing of the 
                contracts for such coverage.
            (6) Taxpayer protection, rapid cash build-up, and post-
        event pricing adjustments.--
                    (A) First 5 years.--Notwithstanding any other 
                provision of this section, during the first five years 
                of the program under this section, the Secretary shall 
                increase the price that is charged for reinsurance 
                coverage provided under the program under this section 
                by at least five percent, or such higher amount as the 
                Secretary deems, above the actuarially sound price 
                calculated under paragraph (5), to facilitate and 
                accelerate the accumulation of reserves and to support 
                the creation of the readiness, preparedness, and 
                mitigation grant program under section 201.
                    (B) Post-event.--Notwithstanding any other 
                provision of this section, after any covered event 
                triggering any payment under a contract for reinsurance 
                coverage that requires the Fund to issue obligations 
                under subsection (g)(4) to make such payment and to 
                provide additional taxpayer protection and ensure that 
                the program under this section is fully funded on an 
                ongoing basis, the Secretary shall require the 
                inclusion of an additional amount in the price that is 
                charged for reinsurance coverage provided under the 
                program equal to at least five percent of the 
                actuarially sound price calculated under paragraph (5) 
                to ensure that the program collects all revenue 
                necessary--
                            (i) to provide the reinsurance coverage 
                        authorized under this section;
                            (ii) to administer the program under this 
                        section, and
                            (iii) to account for any losses paid with 
                        funds acquired from obligations issued under 
                        subsection (g)(4) during a period having a 
                        duration not longer than five years, if 
                        feasible.
                Any such obligations issued under subsection (g)(4) 
                shall be repaid in full from the surcharges assessed 
                under this paragraph.
            (7) Economic fairness.--The Secretary may establish 
        criteria and include provisions in the contract that limit the 
        pricing benefits under the program under this section for 
        properties that exceed a value determined by the Secretary to 
        represent affluent property owners who do not need the benefit 
        of the program.
            (8) Information.--The contract shall contain a condition 
        providing that the Commission may require the eligible State 
        plan that is covered under the contract to submit to the 
        Commission all information regarding the eligible State plan 
        relevant to the duties of the Commission, as determined by the 
        Secretary.
            (9) Additional contract option.--The contract shall provide 
        that the purchaser of the contract may, during the term of such 
        original contract, purchase additional contracts from among 
        those offered by the Secretary at the beginning of the term, 
        subject to the limitations under subsection (f), at the prices 
        at which such contracts were offered at the beginning of the 
        term, prorated based upon the remaining term as determined by 
        the Secretary. Such additional contracts shall provide coverage 
        beginning on a date 15 days after the date of purchase, but 
        shall not provide coverage for losses for an event that has 
        already occurred. Eligible State plans may arrange for 
        prospective contracts for planning purposes and to enhance 
        stability and predictability in managing risk and accounting 
        for costs associated with risk transfer.
            (10) Other terms.--The contract shall contain such other 
        terms as the Secretary considers necessary to carry out this 
        Act and to ensure the long-term financial integrity of the 
        program under this section. The contract shall also specify how 
        payouts shall be administered if multiple events occur that 
        affect more than one eligible State plan.
            (11) Private sector right to participate.--
                    (A) Establishment of competitive procedure.--The 
                Secretary shall establish, by regulation, a competitive 
                procedure under this paragraph that provides qualified 
                entities an opportunity, on a basis consistent with the 
                contract cycle established under this section by the 
                Secretary, to offer to provide, in lieu of reinsurance 
                coverage under this section, reinsurance coverage that 
                is substantially similar to coverage otherwise made 
                available under this section.
                    (B) Competitive procedure.--Under the procedure 
                established under this paragraph--
                            (i) the Secretary shall establish criteria 
                        for private insurers, reinsurers, and capital 
                        market companies, and consortia of such 
                        entities to be treated as qualified entities 
                        for purposes of this paragraph, which criteria 
                        shall require such an entity to have at all 
                        times capital sufficient to satisfy the terms 
                        of the reinsurance contracts and shall include 
                        such other industry and credit rating standards 
                        as the Secretary considers appropriate;
                            (ii) not less than 30 days before the 
                        beginning of each contract cycle during which 
                        any reinsurance coverage under this section is 
                        to be made available, the Secretary may request 
                        proposals and shall publish in the Federal 
                        Register the rates and terms for contracts for 
                        coverage under this section that are to be made 
                        available during such contract cycle;
                            (iii) the Secretary shall provide qualified 
                        entities a period of not less than 10 days 
                        (which shall terminate not less than 20 days 
                        before the beginning of the contract cycle) to 
                        submit to the Secretary a written expression of 
                        interest in providing reinsurance coverage in 
                        lieu of the coverage otherwise to be made 
                        available under this section;
                            (iv) the Secretary shall provide any 
                        qualified entity submitting an expression of 
                        interest during the period referred to in 
                        clause (iii) a period of not less than 20 days 
                        (which shall terminate before the beginning of 
                        the contract cycle) to submit to the Secretary 
                        an offer to provide, in lieu of the reinsurance 
                        coverage otherwise to be made available under 
                        this section, coverage that is substantially 
                        similar to such coverage;
                            (v) if the Secretary determines that an 
                        offer submitted during the period referred to 
                        in clause (iii) is a bona fide offer to provide 
                        reinsurance coverage during the contract cycle 
                        at rates and terms that are substantially 
                        similar to the rates and terms for reinsurance 
                        coverage otherwise to be provided under this 
                        section by the Secretary, the Secretary shall 
                        accept the offer (if still outstanding) and, 
                        notwithstanding any other provision of this 
                        Act, provide for such entity to make 
                        reinsurance coverage available in accordance 
                        with the offer; and
                            (vi) if the Secretary accepts an offer 
                        pursuant to clause (v) to make reinsurance 
                        coverage available, notwithstanding any other 
                        provision of this Act, the Secretary shall 
                        reduce, to an equivalent extent, the amount of 
                        reinsurance coverage available under this 
                        section during the contract cycle to which the 
                        offer relates, unless and until the Secretary 
                        determines that the entity is not complying 
                        with the terms of the accepted offer.
            (12) Participation by multi-state plans.--The Congress 
        hereby explicitly encourages States to create and maintain 
        catastrophe funds for their States or with other States, and 
        nothing in this Act may be interpreted to prohibit or 
        discourage the creation of multi-State plans, or the 
        participation by such plans in the program established pursuant 
        to subsection (a). The Secretary shall, by regulation, provide 
        for the application of the provisions of this Act to multi-
        State catastrophe insurance and reinsurance plans. The 
        Commission shall develop a process to evaluate and encourage 
        the creation of regional programs and approaches to advance the 
        purposes of this Act through the establishment of multi-State 
        plans.
    (f) Treatment of Insured Losses and Maximum Federal Liability.--
            (1) Available levels of retained losses.--In making 
        reinsurance coverage available under this section, the 
        Secretary shall make available for purchase contracts for such 
        coverage that require the sustainment of retained losses from 
        covered events (as required under subsection (e)(3) for payment 
        of eligible losses) in various amounts, as the Secretary, in 
        consultation with the Commission, determines appropriate and 
        subject to the requirements under paragraph (2).
            (2) Standard attachment point.--
                    (A) Establishment.--The Secretary, in consultation 
                with the Commission, shall establish a standard 
                attachment point at which coverage is provided to 
                eligible State plans for all contracts.
                    (B) Considerations.--In setting a standard 
                attachment point, the Secretary and the Commission 
                shall take into consideration--
                            (i) how many and which eligible State plans 
                        are seeking contracts for reinsurance coverage 
                        under this section;
                            (ii) the capital and surplus positions of 
                        the eligible State plans;
                            (iii) the coverage preferences of eligible 
                        State plans;
                            (iv) the availability and price of 
                        reinsurance in the private market;
                            (v) that pooling reinsurance from different 
                        geographic locations and covering different 
                        perils is more efficient than stand-alone 
                        programs;
                            (vi) affordability of homeowners insurance; 
                        and
                            (vii) other factors deemed appropriate to 
                        operating a long-term national reinsurance 
                        backstop program.
                    (C) Use.--The standard attachment point established 
                pursuant to this paragraph shall be used in 
                establishing reinsurance contracts for each eligible 
                State plan, unless the Secretary, in consultation with 
                the Commission, determines that market conditions or 
                the financial position of an eligible State plan 
                warrants a lower attachment point in a contract for 
                such eligible State plan in a given year.
                    (D) Lower attachment points.--If a reinsurance 
                contract is contemplated for an eligible State plan 
                having an attachment point lower than the standard 
                attachment point, the cost of such contract shall 
                include or otherwise take into account the additional 
                costs associated with such additional layer of 
                protection.
            (3) Ceiling coverage level.--Notwithstanding any other 
        provision of law and subject to any limitations in future 
        appropriations Acts, the aggregate potential liability for 
        payment of claims under all contracts for reinsurance coverage 
        sold under this title to any single eligible State plan during 
        a 12-month period shall not exceed the difference between--
                    (A) the amount equal to the covered loss projected 
                to be incurred once every 600 years from a single event 
                by the eligible State plan; and
                    (B) the amount equal to the cash available in the 
                eligible State plan to pay covered losses.
    (g) Catastrophe Preparedness Fund for Pre-Funding Preparedness and 
Recovery.--
            (1) Establishment.--There is established within the 
        Treasury of the United States a fund to be known as the 
        ``Catastrophe Preparedness Fund''.
            (2) Credits.--The Fund shall be credited with--
                    (A) amounts received from the sale of contracts for 
                reinsurance coverage under this section;
                    (B) any amounts borrowed under paragraph (4);
                    (C) any amounts earned on investments of the Fund 
                pursuant to paragraph (5); and
                    (D) such other amounts as may be credited to the 
                Fund.
            (3) Uses.--Amounts in the Fund shall be available to the 
        Secretary only for the following purposes:
                    (A) Contract payments.--For payments to covered 
                purchasers under contracts for reinsurance coverage 
                under this section for eligible losses under such 
                contracts.
                    (B) Commission costs.--For the operating costs of 
                the Commission.
                    (C) Administrative expenses.--For the 
                administrative expenses incurred by the Secretary in 
                carrying out the reinsurance program under this Act.
                    (D) Cost of national readiness, preparedness, and 
                mitigation committee.--For the operating costs of the 
                National Readiness, Preparedness, and Mitigation 
                Committee established under section 201 and for 
                disbursements under section 201(f)(2) for disaster 
                readiness, preparedness, prevention, and mitigation.
                    (E) Termination.--Upon termination under section 
                104, as provided in such section.
            (4) Liquidity.--
                    (A) Authority.--To the extent that the amounts in 
                the Fund are insufficient to pay claims and expenses 
                under paragraph (3), the Secretary may issue such 
                obligations of the Fund as may be necessary to cover 
                the insufficiency and shall purchase any such 
                obligations issued.
                    (B) Public debt transaction.--For the purpose of 
                purchasing any such obligations, the Secretary may use 
                as a public debt transaction the proceeds from the sale 
                of any securities issued under chapter 31 of title 31, 
                United States Code, and the purposes for which 
                securities are issued under such chapter are hereby 
                extended to include any purchase by the Secretary of 
                such obligations under this paragraph.
                    (C) Characteristics of obligations.--Obligations 
                issued under this paragraph shall be in such forms and 
                denominations, bear such maturities, bear interest at 
                such rate and be subject to such other terms and 
                conditions as the Secretary shall determine.
                    (D) Treatment.--All redemptions, purchases, and 
                sales by the Secretary of obligations under this 
                paragraph shall be treated as public debt transactions 
                of the United States.
                    (E) Repayment.--Any obligations issued under this 
                paragraph shall be repaid, including interest, from the 
                Fund and shall be recouped from surcharges under 
                subsection (e)(6)(B) on premiums for reinsurance 
                coverage provided under this section.
            (5) Investment.--The Secretary shall invest accumulated 
        amounts in the Fund as the Secretary considers advisable in 
        obligations issued or guaranteed by the United States.
            (6) Prohibition on federal appropriations.--Except for 
        amounts made available pursuant to paragraph (4)(A) of this 
        subsection and section 101(h), no Federal funds shall be 
        authorized or appropriated for the Fund or for carrying out the 
        reinsurance liquidity protection program under this section.

SEC. 103. POST-CATASTROPHE MARKET STABILIZATION PROGRAM FOR LIQUIDITY 
              LOANS.

    (a) Purposes.--The purposes of this section are to establish a 
program--
            (1) to expedite the payment of claims under State 
        catastrophe insurance programs and better assist the financial 
        recovery from significant natural catastrophes by authorizing 
        the Secretary to issue loans for such purposes; and
            (2) to promote the availability of private capital to 
        provide liquidity and capacity to State catastrophe insurance 
        programs and to augment the efforts of such programs.
    (b) Liquidity Loans.--The Secretary may make liquidity loans under 
this section to State plans for the purposes of this section, and shall 
have the powers and authorities necessary to make such loans, subject 
to the requirements of this section.
    (c) Conditions for Loan Eligibility.--A loan under this section may 
be made to a State plan only if--
            (1) the plan has a capital liquidity shortage, in 
        accordance with regulations that the Secretary shall establish, 
        such that the obligations of the plan resulting from a covered 
        event exceed the amount of cash available to the plan to pay 
        covered losses;
            (2) the plan cannot access capital in the private market at 
        a cost lower and for similar duration than that provided under 
        a loan under this section, as determined by the Secretary; and
            (3)(A) the plan is an eligible State plan; or
            (B) the loan complies with the requirements under 
        subsection (e).
The Secretary may not require an eligible State plan to purchase 
reinsurance coverage made available under the program under section 102 
to be eligible for a liquidity loan under this section.
    (d) States With Eligible State Plans.--
            (1) Contracts.--The Secretary may enter into contracts with 
        eligible State plans to carry out the purposes of this section 
        by providing for liquidity loans for such plans, as the 
        Secretary may deem appropriate.
            (2) Eligible state plan pre-certification.--The Secretary 
        shall establish procedures and standards for State plans to 
        apply to the Secretary at any time for pre-certification (and 
        recertification) as eligible State plans, which procedures and 
        standards shall provide as follows:
                    (A) The Secretary shall administer the pre-
                certification (and recertification) of State plans as 
                eligible State plans.
                    (B) State plans that are pre-certified as eligible 
                State plans may enter into contracts described in 
                paragraph (1).
            (3) Interest rate.--Subject to subsection (h), a liquidity 
        loan made under this section to an eligible State plan shall 
        bear interest at an annual rate to be established by the 
        Secretary, in consultation with the Commission, which shall be 
        equal to the rate of interest on State and local government 
        series securities have the same duration as the liquidity loan 
        outstanding as of the date the loan is made.
            (4) Mandatory assistance for eligible state plans.--The 
        Secretary shall, upon the request of an eligible State plan and 
        subject to paragraphs (1) and (2) of subsection (c), make a 
        loan for such plan in the amount requested by such plan 
        (subject to the limitations under subsection (f)).
    (e) States Without Eligible State Plans.--
            (1) Authority.--Subject to subsection (c), the Secretary 
        may make a liquidity loan under this section to a State plan 
        that is not an eligible State plan, but only if the Secretary 
        determines that--
                    (A) the loan is necessary to avoid a capital 
                shortfall; and
                    (B) the provisions providing for repayment of the 
                loan are comparable in providing protection to 
                taxpayers as provisions providing for repayment of 
                liquidity loans under this section by eligible State 
                plans.
            (2) Interest rate.--Subject to subsection (h), a liquidity 
        loan made under this section to a State plan that is not an 
        eligible State plan shall bear interest at an annual rate that 
        exceeds the rate required under subsection (d)(3) for a loan 
        made to an eligible State plan. Such rate shall be determined 
        in accordance with a schedule of interest rates, which shall be 
        established by the Secretary and shall provide lower rates for 
        loans to State plans that comply with more of the requirements 
        for eligible State plans under section 102(d) and higher rates 
        for loans to State plans that comply with fewer of such 
        requirements.
    (f) Amount.--The principal amount of a liquidity loan under this 
subsection may not exceed the difference between the applicable 
attachment point as determined by the Secretary in section 102(f)(2) 
and the amount of funds the eligible State plan had to pay losses at 
the time of the covered event for which the loan is made.
    (g) Use.--Amounts from a liquidity loan under this section may be 
used only to pay losses covered by the State plan to which the loan is 
made.
    (h) Exception to Interest Rate Limitation.--In the case of 
liquidity loan under this section made pursuant to a large covered 
event that occurs early in the existence of a State plan, the Secretary 
may charge an interest rate for the loan that allows the State plan to 
repay the loan and interest without causing significant increases in 
the cost of insurance for covered perils in the covered State or 
States.
    (i) Premiums Under State Plan.--
            (1) Determination of actuarially sound premiums.--In making 
        a request for a liquidity loan under this section, a State plan 
        shall determine, and the Secretary, in consultation with the 
        Commission, shall approve, a premium amount for the coverage 
        layer under the State plan for which the liquidity loan is 
        sought that is actuarially sound.
            (2) Chargeable premiums.--Unless otherwise provided by the 
        Secretary, a State plan shall charge, for the coverage layer 
        under the State plan for which the liquidity loan is made an 
        annual premium, for coverage during the period that begins upon 
        the making of the liquidity loan and ends upon full repayment 
        of the loan, in an amount that is not less than 150 percent of 
        the actuarially sound premium determined pursuant to paragraph 
        (1).
    (j) Repayment of Loans.--
            (1) In general.--Any liquidity loan made under this section 
        to a State plan shall be repaid solely through premiums charged 
        by such plan in accordance with subsection (i)(2), unless 
        alternative arrangements have been made pursuant to paragraph 
        (3). The Secretary, in consultation with the Commission, shall 
        determine the expected duration of each loan and monitor 
        repayment of such loans.
            (2) Amount of payment.--To repay a liquidity loan under 
        this section, the State plan shall pay to the Fund, from all 
        amounts collected for the coverage layer referred to in 
        subsection (i)(2) during the period referred to in such 
        subsection, an amount equal to a minimum of 100 percent of the 
        actuarially sound premium determined under subsection (j)(1) 
        for such coverage layer, and shall retain the remainder of such 
        amount collected to build reserves for future events, or such 
        other amount or percentage of such amounts as the Secretary, in 
        consultation with the Commission and State plans, determines is 
        appropriate.
            (3) Other options.--A State plan may petition the Secretary 
        for other repayment terms, including repayment from sources 
        such as dedicated State sales taxes or other means, and the 
        Secretary may, in consultation with the Commission, agree to 
        such other terms.
    (k) Regulations.--The Secretary shall issue any regulations 
necessary to carry out the program under this section.

SEC. 104. TERMINATION.

    (a) In General.--Except as provided in subsection (b), the 
Secretary may not--
            (1) provide any new reinsurance coverage under section 102 
        that covers any period after the expiration of the 20-year 
        period beginning on the date of the enactment of this Act; or
            (2) make any new liquidity loan under section 103 having a 
        term to maturity that concludes after the expiration of such 
        20-year period.
    (b) Extension.--If upon the expiration of the period under 
subsection (a) the Secretary, in consultation with the Commission, 
determines that continuation of the program for reinsurance coverage 
under section 102 or for liquidity loans under section 103 is necessary 
or appropriate to carry out the purposes this Act because of 
insufficient growth of capacity in the private homeowners insurance 
market, the Secretary shall continue to make such coverage and loans 
available and subsection (a) shall be applied by substituting ``25-year 
period'' for ``20-year period'' each place such term appears.
    (c) Repeal.--Effective upon the first date that reinsurance 
coverage under section 102 is no longer available or in force and that 
liquidity loans under section 103 are no longer available or 
outstanding, pursuant to subsection (a) or (b), this Act (except for 
this section) is repealed.
    (d) Deficit Reduction.--The Secretary shall pay into the General 
Fund of the Treasury any amounts remaining in the Fund upon the repeal 
of this Act under subsection (c).

 TITLE II--DISASTER READINESS, CITIZEN AND COMMUNITY PREPAREDNESS, AND 
                               MITIGATION

SEC. 201. NATIONAL READINESS, PREPAREDNESS, AND MITIGATION COMMITTEE.

    (a) Establishment.--There is established a National Readiness, 
Preparedness and Mitigation Committee (in this section referred to as 
the ``Committee'').
    (b) Members.--The Committee shall consist of 9 members appointed by 
the Secretary of Housing and Urban Development or the Secretary's 
designee, as follows:
            (1) Three individuals from nationally recognized 
        organizations representing State or local disaster response 
        providers or disaster management professionals.
            (2) Three individuals representing nationally recognized 
        non-profits active in disaster preparedness and response.
            (3) Three individuals representing nationally recognized 
        organizations with expertise in contingency planning, 
        residential construction, building code development and 
        implementation, and land use policy.
    (c) Terms.--
            (1) In general.--Except as provided in paragraphs (2) and 
        (3), each member of the Committee shall be appointed for a term 
        of 3 years.
            (2) Initial members.--Of the members initially appointed to 
        the Committee--
                    (A) one member appointed under each of paragraphs 
                (1), (2), and (3) of subsection (b) shall be appointed 
                for a term of 1 year;
                    (B) one member appointed under each of paragraphs 
                (1), (2), and (3) of subsection (b) shall be appointed 
                for a term of 2 years; and
                    (C) one member appointed under each of paragraphs 
                (1), (2), and (3) of subsection (b) shall be appointed 
                for a term of 3 years.
            (3) Vacancies.--A member appointed to fill an unexpired 
        term shall serve the remainder of that term.
            (4) Termination.--In the event that the Committee 
        terminates, all appointments shall terminate.
    (d) Prohibition of Compensation; Reimbursement.--Members of the 
Committee shall receive no compensation by reason of their service on 
the Committee, but shall be reimbursed as provided by rules and by-laws 
established by the National Commission on Natural Catastrophe 
Preparation and Protection established under section 101.
    (e) Duties.--The members of the Committee shall administer the 
program under subsection (f) and conduct oversight of the program and 
activities under such program.
    (f) Readiness, Preparedness, and Mitigation Grant Program.--
            (1) Allocation of amount.--Beginning upon the expiration of 
        the 12-month period that begins on the date of the enactment of 
        this Act, the Secretary shall ensure that, to the extent 
        provided in appropriation Acts, approximately 35 percent of the 
        annual net investment income of the Fund under sec. 102(g), but 
        not less than $15,000,000, and not more than 20 percent of the 
        premium charged for reinsurance coverage under section 102 in 
        any given year, shall be used for grants to States, units of 
        local government, nonprofit organizations, and other 
        appropriate public and private entities to develop, enhance, or 
        maintain programs and initiatives to improve and maintain 
        disaster response, citizen preparedness and protection, and 
        prevention and mitigation of losses from natural catastrophes.
            (2) Program elements.--The amounts made available under 
        paragraph (1) shall be allocated for each of the following 
        purposes in equal amounts:
                    (A) Disaster response readiness.--For disaster 
                response readiness programs, which shall include 
                national initiatives that develop, enhance, or maintain 
                the capacity of a public safety agency or other 
                organization to be better prepared, equipped, and 
                trained to respond to natural catastrophes.
                    (B) Citizen and community preparedness.--For 
                citizen and community preparedness, which shall include 
                programs and initiatives, such as those offered by the 
                American Red Cross, to improve education and training 
                to ensure that citizens and organizations in their 
                community are better prepared for natural catastrophes.
                    (C) Prevention and mitigation.--For prevention and 
                mitigation of loss from natural catastrophes, which 
                shall include methods to reduce loss of life and 
                property, including appropriate measures to--
                            (i) encourage awareness of the risk factors 
                        and what steps can be taken to eliminate or 
                        reduce them;
                            (ii) identify location of risks, by giving 
                        careful consideration to the natural risks for 
                        the location of the property before allowing 
                        construction and considerations if structures 
                        are allowed; and
                            (iii) provide for construction relative to 
                        the risk and hazards, including--
                                    (I) establishment and adoption of 
                                State mandated building codes 
                                appropriate for the risk;
                                    (II) adequate enforcement of the 
                                risk-appropriate building codes, 
                                including inspections of homes to 
                                identify areas to strengthen such homes 
                                and reduce exposure to natural 
                                catastrophes;
                                    (III) use of building materials 
                                that prevent or significantly lessen 
                                potential damage from the natural 
                                catastrophes;
                                    (IV) use of building methods that 
                                prevent or significantly lessen 
                                potential damage from the natural 
                                catastrophes; and
                                    (V) focusing on prevention and 
                                mitigation for any substantially 
                                damaged structure, with an emphasis on 
                                how structures can be retrofitted to 
                                make them compliant with building 
                                codes.
    (g) Continuous Improvement, Coordination and Integration.--The 
National Commission on Natural Catastrophe Preparation and Protection 
established under section 101 shall work with eligible State plans and 
the Committee to continuously improve, coordinate, and integrate 
disaster readiness, citizen and community preparedness, and loss 
prevention and mitigation at the local, State, regional, and national 
levels.
                                 <all>