[Congressional Record Volume 155, Number 110 (Tuesday, July 21, 2009)]
[Senate]
[Pages S7784-S7792]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. NELSON, of Florida (for himself and Mr. Martinez):
  S. 1484. A bill to amend the Internal Revenue Code of 1986 to create 
Catastrophe Savings Accounts; to the Committee on Finance.
  Mr. NELSON of Florida. Mr. President, last year we were all 
transfixed by the non-stop news coverage of Hurricanes Gustav and Ike 
as they grew into monster storms, crossing the Caribbean and Gulf of 
Mexico and leaving a trail of misery in their wake. Ike, the third most 
destructive storm in the history of the U.S., made landfall in 
Galveston, Texas, and then tracked through Arkansas, Illinois, Indiana, 
Missouri, Ohio, and Pennsylvania, killing 112 people and causing more 
than $24 billion in damage.
  Since 2003, hurricanes and other tropical cyclones have caused more 
than 2,000 deaths in the U.S. Forty percent of all hurricanes that make 
landfall in the U.S. hit Florida.
  Insured losses from hurricanes average more than $5.2 billion per 
year. A recent study of hurricane-related damages over the last century 
suggests that economic losses will double every 10 years. With more 
than 50 percent of the U.S. population living within 50 miles of the 
coast, and with 180 million people visiting the coast annually, the 
risks to life and property are growing.
  Hurricanes, however, do not just impact the coasts. These extreme 
events also have national consequences, such as increased fuel prices, 
displaced populations, and severe inland flooding.
  The American public is increasingly aware of the potential for high 
recovery costs and financing of natural disaster losses. I cannot 
overstate the importance of prior preparation and insurance coverage 
for large catastrophic risks--including natural disasters such as 
hurricanes and earthquakes--as well as efforts to promote a stable, 
affordable catastrophic insurance market.
  This is why today Senator Martinez and I are introducing four bills: 
the Commission on Catastrophic Disaster Risk and Insurance Act of 2009, 
S. 1487, the Policyholder Disaster Protection Act of 2009, S. 1486, the 
Catastrophe Savings Accounts Act of 2009, S. 1484, and the National 
Hurricane Research Initiative Act of 2009, 1485. These bills take a 
pro-active approach in addressing these natural catastrophe concerns.
  The National Hurricane Research Initiative Act of 2009 will expand 
the scope of fundamental research on hurricanes. The bill is aimed at 
improving hurricane forecasting and tracking and helping us find better 
ways to mitigate their impact. The Act will establish a National 
Science Foundation (NSF) grant program for hurricane and tropical 
cyclone research and bring together a task force, jointly chaired by 
the National Oceanic and Atmospheric Administration, NOAA, the National 
Institute of Standards and Technology, NIST, and NSF.
  The second bill, the Commission on Catastrophic Disaster Risk and 
Insurance Act of 2009, establishes the bipartisan Commission on 
Catastrophic Disaster Risk and Insurance. This commission will assess 
the condition of the property and casualty insurance and reinsurance 
markets in the aftermath of Hurricanes Katrina, Rita, and Wilma in 
2005, as well as the four major hurricanes that struck the U.S. in 
2004. It will also evaluate the country's ongoing exposure to 
earthquakes, volcanic eruptions, tsunamis, and floods. Finally, the 
commission will recommend and report legislative and regulatory changes 
that will improve the domestic and international financial health and 
competitiveness of property and casualty insurance markets, assuring 
the availability of adequate insurance when an insured event occurs, as 
well as the best possible range of insurance products at competitive 
prices.
  The Policyholder Disaster Protection Act of 2009 amends the Internal 
Revenue Code to allow property and casualty insurance companies to 
create tax-exempt disaster protection funds and to make tax deductible 
contributions to those funds for the payment of policyholders' claims 
arising from certain catastrophic events, such as windstorms, 
earthquakes, fires, and floods.
  Finally, the Catastrophe Savings Accounts Act of 2009 amends the 
Internal Revenue Code to create tax-exempt catastrophe savings 
accounts. Individuals could take tax-free distributions from these 
accounts to pay expenses resulting from a presidentially declared major 
disaster. The bill limits catastrophe savings account balances to 
$2,000 for individuals with homeowner insurance deductibles of not more 
than $1,000, and the lesser of $15,000 or twice the homeowner's 
insurance deductible for individuals with deductibles of more than 
$1,000.
  As I mentioned at the beginning of my remarks, the entire country 
experiences financial losses when hurricanes hit. It is time for us to 
take the bull by the horns and pass legislation that plans in advance 
for these and other natural disasters.
  As we are in the hurricane season, it will become painfully apparent 
just

[[Page S7785]]

how precarious a lot of the construction is, how precarious building 
codes are not being fairly and judiciously administered, and it will 
become evident what an economic disaster even a mild hurricane can 
cause when it hits the coast. And Lord knows, if the big one hits an 
urbanized part of the coast--and the big one is a category 4 or a 
category 5 hurricane--it is going to create economic chaos. It is going 
to cause the insurance industry to be on the brink of total collapse. 
And it will ultimately, just like Katrina, end up having the U.S. 
Government pay a major part of the economic bailout consequences of a 
natural disaster, such as a hurricane or an earthquake hitting the 
United States. We ought to get ahead of it and we ought to plan for it, 
and that is what this package of four bills Senator Martinez and I are 
offering will do.
  Mr. President, I ask unanimous consent that the text of the bills be 
printed in the Record.
  There being no objection, the text of the bills was ordered to be 
printed in the Record, as follows:

                                S. 1484

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Catastrophe Savings Accounts 
     Act of 2009''.

     SEC. 2. CATASTROPHE SAVINGS ACCOUNTS.

       (a) In General.--Subchapter F of Chapter 1 of the Internal 
     Revenue Code of 1986 (relating to exempt organizations) is 
     amended by adding at the end the following new part:

                ``PART IX--CATASTROPHE SAVINGS ACCOUNTS

     ``SEC. 530A. CATASTROPHE SAVINGS ACCOUNTS.

       ``(a) General Rule.--A Catastrophe Savings Account shall be 
     exempt from taxation under this subtitle. Notwithstanding the 
     preceding sentence, such account shall be subject to the 
     taxes imposed by section 511 (relating to imposition of tax 
     on unrelated business income of charitable organizations).
       ``(b) Catastrophe Savings Account.--For purposes of this 
     section, the term `Catastrophe Savings Account' means a trust 
     created or organized in the United States for the exclusive 
     benefit of an individual or his beneficiaries and which is 
     designated (in such manner as the Secretary shall prescribe) 
     at the time of the establishment of the trust as a 
     Catastrophe Savings Account, but only if the written 
     governing instrument creating the trust meets the following 
     requirements:
       ``(1) Except in the case of a qualified rollover 
     contribution--
       ``(A) no contribution will be accepted unless it is in 
     cash, and
       ``(B) contributions will not be accepted in excess of the 
     account balance limit specified in subsection (c).
       ``(2) The trustee is a bank (as defined in section 408(n)) 
     or another person who demonstrates to the satisfaction of the 
     Secretary that the manner in which that person will 
     administer the trust will be consistent with the requirements 
     of this section.
       ``(3) The interest of an individual in the balance of his 
     account is nonforfeitable.
       ``(4) The assets of the trust shall not be commingled with 
     other property except in a common trust fund or common 
     investment fund.
       ``(c) Account Balance Limit.--The aggregate account balance 
     for all Catastrophe Savings Accounts maintained for the 
     benefit of an individual (including qualified rollover 
     contributions) shall not exceed--
       ``(1) in the case of an individual whose qualified 
     deductible is not more than $1,000, $2,000, and
       ``(2) in the case of an individual whose qualified 
     deductible is more than $1,000, the amount equal to the 
     lesser of--
       ``(A) $15,000, or
       ``(B) twice the amount of the individual's qualified 
     deductible.
       ``(d) Definitions.--For purposes of this section--
       ``(1) Qualified catastrophe expenses.--The term `qualified 
     catastrophe expenses' means expenses paid or incurred by 
     reason of a major disaster that has been declared by the 
     President under section 401 of the Robert T. Stafford 
     Disaster Relief and Emergency Assistance Act.
       ``(2) Qualified deductible.--With respect to an individual, 
     the term `qualified deductible' means the annual deductible 
     for the individual's homeowners' insurance policy.
       ``(3) Qualified rollover contribution.--The term `qualified 
     rollover contribution' means a contribution to a Catastrophe 
     Savings Account--
       ``(A) from another such account of the same beneficiary, 
     but only if such amount is contributed not later than the 
     60th day after the distribution from such other account, and
       ``(B) from a Catastrophe Savings Account of a spouse of the 
     beneficiary of the account to which the contribution is made, 
     but only if such amount is contributed not later than the 
     60th day after the distribution from such other account.
       ``(e) Tax Treatment of Distributions.--
       ``(1) In general.--Any distribution from a Catastrophe 
     Savings Account shall be includible in the gross income of 
     the distributee in the manner as provided in section 72.
       ``(2) Distributions for qualified catastrophe expenses.--
       ``(A) In general.--No amount shall be includible in gross 
     income under paragraph (1) if the qualified catastrophe 
     expenses of the distributee during the taxable year are not 
     less than the aggregate distributions during the taxable 
     year.
       ``(B) Distributions in excess of expenses.--If such 
     aggregate distributions exceed such expenses during the 
     taxable year, the amount otherwise includible in gross income 
     under paragraph (1) shall be reduced by the amount which 
     bears the same ratio to the amount which would be includible 
     in gross income under paragraph (1) (without regard to this 
     subparagraph) as the qualified catastrophe expenses bear to 
     such aggregate distributions.
       ``(3) Additional tax for distributions not used for 
     qualified catastrophe expenses.--The tax imposed by this 
     chapter for any taxable year on any taxpayer who receives a 
     payment or distribution from a Catastrophe Savings Account 
     which is includible in gross income shall be increased by 10 
     percent of the amount which is so includible.
       ``(4) Retirement distributions.--No amount shall be 
     includible in gross income under paragraph (1) (or subject to 
     an additional tax under paragraph (3)) if the payment or 
     distribution is made on or after the date on which the 
     distributee attains age 62.
       ``(f) Tax Treatment of Accounts.--Rules similar to the 
     rules of paragraphs (2) and (4) of section 408(e) shall apply 
     to any Catastrophe Savings Account.''.
       (b) Tax on Excess Contributions.--
       (1) In general.--Subsection (a) of section 4973 of the 
     Internal Revenue Code of 1986 (relating to tax on excess 
     contributions to certain tax-favored accounts and annuities) 
     is amended by striking ``or'' at the end of paragraph (4), by 
     inserting ``or'' at the end of paragraph (5), and by 
     inserting after paragraph (5) the following new paragraph:
       ``(6) a Catastrophe Savings Account (as defined in section 
     530A),''.
       (2) Excess contribution.--Section 4973 of such Code is 
     amended by adding at the end the following new subsection:
       ``(h) Excess Contributions to Catastrophe Savings 
     Accounts.--For purposes of this section, in the case of 
     Catastrophe Savings Accounts (within the meaning of section 
     530A), the term `excess contributions' means the amount by 
     which the aggregate account balance for all Catastrophe 
     Savings Accounts maintained for the benefit of an individual 
     exceeds the account balance limit defined in section 
     530A(c)(1).''.
       (c) Conforming Amendment.--The table of parts for 
     subchapter F of chapter 1 of the Internal Revenue Code of 
     1986 is amended by adding at the end the following new item:

              ``Part IX. Catastrophe Savings Accounts.''.

       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2008.

                                S. 1485

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``National 
     Hurricane Research Initiative Act of 2009''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Sense of Congress.
Sec. 4. Definitions.
Sec. 5. National Hurricane Research Initiative.
Sec. 6. National Hurricane Research Task Force.
Sec. 7. National Hurricane Research.
Sec. 8. Authorization of appropriations.
Sec. 9. Independent review.

     SEC. 2. FINDINGS.

       Congress makes the following findings:
       (1) Hurricanes and other tropical cyclones have directly 
     caused more than 2,000 deaths in the United States since 2003 
     and account for approximately 66 percent of insured losses 
     due to natural hazards.
       (2) While the ability to understand and predict hurricanes 
     and other tropical cyclones has improved since 1999, 
     particularly with respect to storm tracking, much remains 
     unknown concerning--
       (A) storm dynamics, rapid intensity change, and impact on 
     extratropical cyclones;
       (B) the interactions of storms with natural and built 
     environments; and
       (C) the impacts to and response of society to destructive 
     storms.
       (3) Several expert assessments of the state of hurricane 
     science and research needs have been published, including--
       (A) the January 2007 report by the National Science Board 
     titled, ``Hurricane Warning: The Critical Need for a National 
     Hurricane Initiative'';
       (B) the February 2007 report by the Office of the Federal 
     Coordinator for Meteorological Services and Supporting 
     Research entitled, ``Interagency Strategic Research Plan for 
     Tropical Cyclones: The Way Ahead''; and
       (C) reports from the Hurricane Intensity Working Group of 
     the National Science Advisory Board of the National Oceanic 
     and Atmospheric Administration.

[[Page S7786]]

       (4) In the June 2005 publication, ``Grand Challenges for 
     Disaster Reduction'', and in related 2008 implementation 
     plans for hurricane and coastal inundation hazards the 
     Subcommittee on Disaster Reduction of the Committee on 
     Environment and Natural Resources of the National Science and 
     Technology Council prioritized Federal science and technology 
     investments needed to reduce future loss of life and property 
     caused, both directly and indirectly, by hurricanes and other 
     coastal storms.
       (5) A National Hurricane Research Initiative complements 
     the objectives of the National Windstorm Impact Reduction 
     Program.

     SEC. 3. SENSE OF CONGRESS.

       It is the sense of Congress that, consistent with the 
     findings of the expert assessments and strategies described 
     in paragraphs (3) and (4) of section 2, a National Hurricane 
     Research Initiative should be established to address the 
     urgent and compelling need to undertake long-term, 
     coordinated, multi-entity hurricane research focused on--
       (1) conducting high priority scientific, engineering, and 
     related social and behavioral studies; and
       (2) effectively applying the research results of such 
     studies to mitigate the impacts of hurricanes on society.

     SEC. 4. DEFINITIONS.

       In this Act:
       (1) Task force.--The term ``Task Force'' means the National 
     Hurricane Research Task Force established under section 6(a).
       (2) Eligible entities.--The term ``eligible entities'' 
     means State, regional, and local government agencies and 
     departments, tribal governments, universities, research 
     institutes, and nongovernmental organizations.
       (3) Indian tribe.--The term ``Indian tribe'' has the 
     meaning given the term in section 102 of the Federally 
     Recognized Indian Tribe List Act of 1994 (25 U.S.C. 479a).
       (4) Initiative.--The term ``Initiative'' means the National 
     Hurricane Research Initiative established under section 
     5(a)(1).
       (5) National windstorm impact reduction program.--The term 
     ``National Windstorm Impact Reduction Program'' means the 
     program established by section 204 of the National Windstorm 
     Impact Reduction Act of 2004 (42 U.S.C. 15703).
       (6) State.--The term ``State'' means any State of the 
     United States, the District of Columbia, American Samoa, 
     Guam, the Commonwealth of the Northern Mariana Islands, 
     Puerto Rico, and the Virgin Islands.
       (7) Tribal government.--The term ``tribal government'' 
     means the governing body of an Indian tribe.
       (8) Under secretary.--The term ``Under Secretary'' means 
     the Under Secretary for Oceans and Atmosphere.

     SEC. 5. NATIONAL HURRICANE RESEARCH INITIATIVE.

       (a) Establishment.--
       (1) In general.--The Under Secretary, in collaboration with 
     the Director of the National Science Foundation, shall 
     establish an initiative to be known as the ``National 
     Hurricane Research Initiative'' for the purposes described in 
     paragraph (2). The Initiative shall consist of--
       (A) the activities of the Under Secretary under this 
     section;
       (B) the activities of the Task Force under section 6; and
       (C) the research carried out under section 7.
       (2) Purposes.--The purposes described in this paragraph are 
     as follows:
       (A) To improve understanding and prediction of hurricanes 
     and other tropical storms, including--
       (i) storm tracking and prediction;
       (ii) forecasting of storm formation, intensity, and wind 
     and rain patterns, both within the tropics and as the storms 
     move poleward;
       (iii) storm surge modeling, inland flood modeling, and 
     coastal erosion;
       (iv) the interaction with and impacts of storms with the 
     natural and built environment; and
       (v) the impacts to and response of society to destructive 
     storms, including the socio-economic impacts requiring 
     emergency management, response, and recovery.
       (B) To develop infrastructure that is resilient to the 
     forces associated with hurricanes and other tropical storms.
       (C) To mitigate the impacts of hurricanes on coastal 
     populations, the coastal built environment, and natural 
     resources, including--
       (i) coral reefs;
       (ii) mangroves;
       (iii) wetlands; and
       (iv) other natural systems that can reduce hurricane wind 
     and flood forces.
       (D) To provide training for the next generation of 
     hurricane researchers and forecasters.
       (b) Implementation Plan.--
       (1) In general.--Not later than 18 months after the date of 
     the enactment of this Act, the Under Secretary shall develop 
     a detailed, 5-year implementation plan for the Initiative 
     that--
       (A) incorporates the priorities for Federal science and 
     technology investments set forth in the June 2005 
     publication, ``Grand Challenges for Disaster Reduction'', and 
     in related 2008 implementation plans for hurricane and 
     coastal inundation hazards of the Subcommittee on Disaster 
     Reduction of the Committee on Environment and Natural 
     Resources of the National Science and Technology Council;
       (B) to the extent practicable and as appropriate, 
     establishes benchmarks, milestones, goals, and performance 
     measures to track progress of the research carried out under 
     the Initiative and the application of research results for 
     reducing hurricane losses and related public benefits, as 
     recommended by the Task Force under section 6(f)(2); and
       (C) identifies opportunities to leverage the results of the 
     research carried out under section 7 with other Federal and 
     non-Federal hurricane research, coordination, and loss-
     reduction initiatives, such as--
       (i) the National Windstorm Impact Reduction Program 
     established by section 204(a) of the National Windstorm 
     Impact Reduction Act of 2004 (15 U.S.C. 15703);
       (ii) the National Flood Insurance Program established under 
     chapter 1 of the National Flood Insurance Act of 1968 (42 
     U.S.C. 4011 et seq.);
       (iii) the initiatives of the Robert T. Stafford Disaster 
     Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.);
       (iv) wind hazard mitigation initiatives carried out by a 
     State;
       (v) the Hurricane Forecast Improvement Project fo the 
     National Oceanic and Atmospheric Administration; and
       (vi) the Working Group for Tropical Cyclone Research of the 
     Office of the Federal Coordinator for Meteorological Services 
     and Supporting Research.
       (2) Review.--Not later than 18 months after the date of the 
     enactment of this Act, the Under Secretary shall ensure that 
     the implementation plan required by paragraph (1) is reviewed 
     by--
       (A) the Director of the National Science Foundation;
       (B) the Secretary of Homeland Security;
       (C) the Director of the National Institute for Standards 
     and Technology;
       (D) the Commanding General of the U.S. Army Corps of 
     Engineers;
       (E) the Commander of the Naval Meterorology and 
     Oceanography Command;
       (F) the Associate Administrator for Science Mission 
     Directorate of the National Aeronautics and Space 
     Administration; and
       (G) the Director of the U.S. Geological Survey.
       (3) Revisions.--The Under Secretary shall revise the 
     implementation plan required by paragraph (1) not less 
     frequently than once every 5 years to address and respond to 
     the findings and recommendations of the Task Force.
       (c) Research.--
       (1) Establishment of research objectives.--The Under 
     Secretary shall, in consultation with the Director fo the 
     National Science Foundation, establish objectives for 
     research carried out pursuant to section 7 that are based on 
     the findings of the expert assessments and strategies 
     described in paragraphs (3) and (4) of section 2.
       (2) Coordination.--In carrying out the provisions of this 
     subsection, the Under Secretary shall coordinate with the 
     Task Force to the extent practicable.
       (d) National Workshops and Conferences.--The Under 
     Secretary, in coordination with the Director of the National 
     Science Foundation and the Task Force, shall carry out a 
     series of national workshops and conferences that assemble a 
     broad collection of scientific disciplines--
       (1) to address hurricane-related research questions; and
       (2) to encourage researchers to work collaboratively to 
     carry out the purposes described in subsection (a)(2).
       (e) Public Internet Website.--The Under Secretary, in 
     coordination with the Task Force, shall facilitate the 
     establishment of a public Internet website for the 
     Initiative--
       (1) to foster collaboration and interactive dialogues among 
     the Under Secretary, the Director of the National Science 
     Foundation, the Task Force, and the public; and
       (2) to enhance public access to Initiative documents and 
     products, including--
       (A) information about the members of the Task Force, 
     including their affiliation and contact information;
       (B) meeting agenda and minutes of the Task Force;
       (C) reports and publications of the Initiative;
       (D) the most recent 5-year implementation plan developed 
     under subsection (b); and
       (E) the most recent annual report submitted to Congress 
     under subsection (f).
       (f) Annual Report.--
       (1) Requirement for annual crosscut budget and report.--The 
     Under Secretary, in conjunction with members of the Task 
     Force who represent Federal agencies, the Office of Science 
     and Technology Policy, and the Office of Management and 
     Budget, shall submit to Congress each year, together with 
     documents submitted to Congress in support of the budget of 
     the President for the fiscal year beginning in such year (as 
     submitted pursuant to section 1105 of title 31, United States 
     Code), a coordinated annual report for the Initiative for the 
     fiscal year in which the report is submitted and the last 
     fiscal year ending before such submittal.
       (2) Contents.--The report required by paragraph (1) shall--
       (A) document the funds transferred by the Under Secretary 
     to the heads of other Federal agencies under section 8(b); 
     and
       (B) document the grants and contracts awarded to eligible 
     entities under section 7;
       (C) for each agency that receives funds under section 8(b) 
     and eligible entity that receives a grant or contract under 
     section 7, identify what major activities were undertaken 
     with such funds, grants, and contracts; and

[[Page S7787]]

       (D) for each research activity or group of activities 
     described in section 7(c), as appropriate, identify any 
     accomplishments, which may include full or partial 
     achievement of benchmarks, milestones, goals, performance 
     measure targets established for the implementation plan under 
     subsection (b)(1)(B).

     SEC. 6. NATIONAL HURRICANE RESEARCH TASK FORCE.

       (a) Establishment.--Not later than 90 days after the date 
     of the enactment of this Act, the Under Secretary shall 
     establish a task force to be known as the ``National 
     Hurricane Research Task Force'' to facilitate and coordinate 
     the efforts of Federal agencies and eligible entities in 
     support of the Initiative.
       (b) Membership.--The Task Force shall be composed of the 
     following:
       (1) The Under Secretary, or the Under Secretary's designee.
       (2) The Director of the National Science Foundation, or the 
     Director's designee.
       (3) The Director of the National Institute of Standards and 
     Technology, or the Director's designee.
       (4) The Secretary of Homeland Security, or the Secretary's 
     designee.
       (5) The Commanding General of the U.S. Army Corps of 
     Engineers, or the Commanding General's designee.
       (6) The Director of the United States Geological Survey, or 
     the Director's designee.
       (7) The Administrator of the National Aeronautics and Space 
     Administration, or the Administrator's designee.
       (8) One member shall be appointed by the Secretary of 
     Defense, who shall be a representative of the Office of Naval 
     Research or the Chief of Naval Operations.
       (9) The Federal Coordinator for Meteorological Services and 
     Supporting Research.
       (10) The Director of the Office of Science and Technology 
     Policy, or the Director's designee.
       (11) The Director of the Office of Management and Budget, 
     or the Director's designee.
       (12) The Chair of the Executive Committee of the Federal 
     Geographic Data Committee, or the Chair's designee.
       (13) Such other members from Federal agencies as the 
     chairpersons of the Task Force jointly consider appropriate.
       (14) Members who are not employees of the Federal 
     Government, selected jointly by the chairpersons of the Task 
     Force in consultation with the National Academy of Sciences 
     and the National Academy of Engineering, as follows:
       (A) At least 3 members who are prominent in the fields of 
     hurricane science, engineering, social science, or related 
     fields.
       (B) At least 1 member who represents a State government 
     agency responsible for emergency management and response.
       (C) At least 3 members who represent the views of local 
     governments, tribal governments, and nongovernmental 
     organizations.
       (D) At least 2 members who represent private sector 
     interests engaged in hurricane research, preparedness, 
     response, or recovery.
       (E) At least 1 member who represents a State floodplain or 
     coastal zone manager.
       (F) Such other members as may be appropriate.
       (c) Chairpersons.--The concurrent chairpersons of the Task 
     Force shall be the following:
       (1) The Under Secretary, or the Under Secretary's designee 
     under subsection (b)(1).
       (2) The Director of the National Science Foundation, or the 
     Director's designee under subsection (b)(2).
       (3) The Director of the National Institute of Standards and 
     Technology, or the Director's designee under subsection 
     (b)(3).
       (d) Initial Meeting.--Not later than 120 days after the 
     date of the enactment of this Act, the Task Force shall hold 
     its first meeting.
       (e) Meetings.--The Task Force shall meet at the call of the 
     chairpersons of the Task Force, but not less frequently than 
     twice each year.
       (f) Duties.--The duties of the Task Force are as follows:
       (1) To provide assistance to the Under Secretary with the 
     development of the 5-year implementation plan required by 
     section 5(b).
       (2) Not later than 270 days after the date of the enactment 
     of this Act and in consideration of the expert findings 
     referred to in section 2(3)--
       (A) to develop and furnish to the Under Secretary findings 
     and recommendations, as appropriate, for monitoring research 
     progress and for a set of benchmarks, milestones, goals, and 
     performance measures to track the transition and application 
     of research results for reducing hurricane losses and related 
     public benefits under the Initiative;
       (B) to identify interim and long-term goals of the research 
     program under section 7; and
       (C) to prioritize the activities of the Initiative over a 
     10-year period.
       (3) To improve communication and coordination among Federal 
     agencies with respect to hurricane-related research, 
     developments in hurricane forecasting and operations, and 
     best practices for applying results of Initiative research to 
     reduce loss of life and property damage resulting from 
     hurricanes.
       (4) To identify opportunities to leverage the activities 
     and products of the Initiative with the National Windstorm 
     Impact Reduction Program and other Federal and non-Federal 
     hurricane research, coordination, and loss reduction 
     programs.
       (5) To recommend a model described in section 7(c)(1)(A) 
     and monitor progress on development of such model.
       (6) To make recommendations to the Under Secretary and the 
     Director of the National Science Foundation on research 
     priorities and content and structure of the program 
     established under section 7(a)(1).
       (7) To make recommendations on national hurricane research 
     observation and data requirements.
       (8) To assess opportunities to leverage the capabilities of 
     the following stakeholders:
       (A) Federal, State, and local governments.
       (B) Tribal governments.
       (C) Academic and research institutions.
       (D) Entities from the private sector.
       (E) Nongovernmental organizations.
       (9) To evaluate the extent to which the stakeholders 
     described in paragraph (8) have been engaged as partners and 
     collaborators in the Initiative.
       (10) To assist the Under Secretary in facilitating the 
     development of the annual report required by section 5(f).
       (11) To review such report and provide comments to the 
     Under Secretary.
       (12) To submit to the National Science and Technology 
     Council and to Congress, together with documents submitted to 
     Congress in support of the budget of the President for the 
     2012 fiscal year (as submitted pursuant to section 1105 of 
     title 31, United States Code), a report containing a 
     comprehensive review of the progress of the Initiative in 
     meeting the needs of the United States to understand 
     hurricanes, their impacts on natural and built environment, 
     and methods to mitigate such impacts.
       (g) Advisory Bodies.--
       (1) Authority to establish.--The Task Force may establish 
     such advisory bodies as the Task Force considers necessary to 
     assist the Task Force in its duties under subsection (f).
       (2) Criteria.--An advisory body established under paragraph 
     (1) shall represent a broad variety of private and public 
     interests.
       (h) Advisors to the Task Force.--The Task Force may seek 
     advice and input from any interested, knowledgeable, or 
     affected party as the Task Force considers necessary to carry 
     out the duties under subsection (f).
       (i) Compensation.--
       (1) In general.--All members of the Task Force 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.
       (2) Travel expenses.--The members of the Task Force shall 
     be allowed travel expenses, including per diem in lieu of 
     subsistence, at rates authorized for employees of agencies 
     under subchapter I of chapter 57 of title 5, United States 
     Code, while away from their homes or regular places of 
     business in the performance of services for the Task Force.
       (j) Procurement of Temporary and Intermittent Services.--
     The Chairpersons may procure temporary and intermittent 
     services under section 3109(b) of title 5, United States 
     Code, at rates for individuals which do not exceed the daily 
     equivalent of the annual rate of basic pay prescribed for 
     level V of the Executive Schedule under section 5316 of such 
     title.
       (k) Volunteer Services.--Notwithstanding section 1342 of 
     title 31, United States Code, the Commission may accept and 
     use voluntary and uncompensated services as the Commission 
     determines necessary.
       (l) Exemption From FACA Notice Requirement for Task Force 
     Advisory Bodies.--An advisory body established by the Task 
     Force under subsection (g) shall not be subject to section 
     10(a)(2) of the Federal Advisory Committee Act (5 U.S.C. App. 
     10(a)(2)).
       (m) Termination of Task Force.--The Task Force shall 
     terminate on September 30, 2018.

     SEC. 7. NATIONAL HURRICANE RESEARCH.

       (a) National Science Foundation Competitive Grant Research 
     Program.--
       (1) In general.--The Director of the National Science 
     Foundation, in coordination with the Under Secretary, shall 
     establish a program to award grants to eligible entities to 
     carry out--
       (A) research described in subsection (c); or
       (B) other research that is consistent with the research 
     objectives established under section 5(c)(1).
       (2) Selection.--The National Science Foundation shall 
     select grant recipients under this section through its merit 
     review process.
       (b) National Oceanic and Atmospheric Administration 
     Research Program.--
       (1) In general.--The Under Secretary shall carry out a 
     program of research described in subsection (c) or other 
     research that is consistent with the research objectives 
     established under section 5(c)(1).
       (2) Research activities.--Research carried out under 
     paragraph (1) may be carried out through--
       (A) intramural research;
       (B) awarding grants to eligible entities to carry out 
     research;
       (C) contracting with eligible entities to carry out 
     research; or
       (D) entering into cooperative agreements to carry out 
     research.
       (c) Research.--The research described in this subsection is 
     research that is consistent with the purposes described in 
     section 5(a)(2) and is described by one or more of the 
     following:

[[Page S7788]]

       (1) Fundamental hurricane research.--Fundamental hurricane 
     research, which may consist of the following:
       (A) Community research models.--Research to support 
     continued development and maintenance of community weather 
     research and forecast models recommended by the Task Force 
     under section 6(f)(5), including advanced methods of 
     observing storm structure and assimilating observations into 
     the models, in which the agency or institution hosting the 
     models ensures broad access and use of the model by members 
     of the Task Force and the civilian research community.
       (B) Predicting hurricane intensity and structure.--Research 
     to improve understanding and prediction of--
       (i) storm formation and tracking with extended time scale 
     to weeks in advance;
       (ii) rapid changes in storm size, motion, structure, and 
     intensity;
       (iii) the internal dynamics of storms;
       (iv) the transition to extratropical characteristics as 
     storms move poleward; and
       (v) the interactions of storms with environmental 
     conditions, including the atmosphere, ocean, and land 
     surface.
       (C) Understanding air and sea interactions.--Research 
     regarding observations, theory, and modeling to improve 
     understanding of air and sea interaction in hurricanes and 
     other high wind speed environments.
       (D) Predicting storm surge, waves, rainfall, inland 
     flooding, and strong winds produced by hurricanes.--Research 
     to understand, model, and predict rainfall, coastal and 
     riverline flooding, high winds, and the potential occurrence 
     of tornadoes, including probabilistic modeling, mapping, and 
     visualization of risk.
       (E) Relationships between hurricanes and climate 
     variability and change.--Research to improve the 
     understanding of the complex relationships between hurricanes 
     and climate on seasonal to decadal time scales, such as 
     research to determine the most effective methods to use 
     observational information and numerical-model simulations to 
     examine short-term and long-term impacts of climate on 
     changes in storm intensity, geographic distribution, and 
     frequency.
       (F) Relationships between hurricanes and ecosystems.--
     Research to improve the understanding of how hurricanes 
     affect ecosystems, landscapes, and natural resources and to 
     develop assessments for hurricane vulnerability and risk, 
     including--
       (i) how ecosystems have been influenced by past hurricanes 
     and the ability and capacity of ecosystems to recover from 
     the effects of hurricanes;
       (ii) how ecosystem management practices can minimize 
     disruptions to ecosystem functions and dependent economic 
     uses as a result of hurricanes; and
       (iii) the role of natural features, such as barrier 
     islands, wetlands, and mangroves, in--

       (I) acting as natural buffers to wind and flood forces; and
       (II) improving coastal resiliency.

       (2) Technology assessment and development.--Technology 
     assessment and development, which may consist of the 
     following:
       (A) Improved observation of hurricanes and tropical 
     storms.--Research to improve hurricane and tropical storm 
     observations and to improve the understanding of the complex 
     nature of storms and their interaction with the natural and 
     built environment through development and application of new 
     technologies, such as--
       (i) mobile radars and advanced airborne observing 
     technologies;
       (ii) global positioning system technology;
       (iii) unmanned vehicles;
       (iv) satellite-based sensors;
       (v) ground-based and aerial wireless sensors; and
       (vi) other geospatial technologies and geospatial data, 
     including bathymetry and elevation.
       (B) Computational capability.--Research and development of 
     robust computational capabilities and facilities required to 
     conduct numerical and other types of modeling that support 
     the scientific studies and research carried out under the 
     Initiative as well as data acquisition and modeling during 
     hurricane events, including research to improve understanding 
     of the efficient utility of multiple models that--
       (i) require sharing and interoperability of databases, 
     computing environments, networks, visualization tools, and 
     analytic systems that improve on such technologies that are 
     available on the date of the enactment of this Act; and
       (ii) are used for transitioning hurricane research assets 
     into operational practice.
       (C) Technologies for disaster response and recovery.--
     Research to improve damage assessments after a hurricane and 
     emergency communications during hurricane response and 
     recovery, including improvements to--
       (i) communications networks for government agencies and 
     nongovernmental entities;
       (ii) network interoperability;
       (iii) cyber-security during hurricane or storm related 
     emergencies; and
       (iv) use of models, remote sensing, and statistically based 
     ground sampling to support effective and rapid damage 
     assessment to scale disaster response and recovery needs.
       (3) Research integration, transition, and application.--
     Research on integration, transition, and application of 
     research results, which may consist of the following:
       (A) Transition of research to operations.--Research to 
     develop mechanisms to accelerate the application of improved 
     models, observations, communication, and risk assessment 
     systems, and related research products to forecasting and 
     other operational settings, including use of 1 or more 
     developmental test beds.
       (B) Assessing vulnerable infrastructure.--Developing a 
     national engineering assessment and clearinghouse of coastal 
     infrastructure by leveraging and building upon existing 
     Federal activities, resources, and research, including 
     infrastructure related to levees, sea walls, and similar 
     coastal flood-protection structures, drainage systems, 
     bridges, water and sewage utilities, power, and 
     communications, to determine the level of vulnerability of 
     such infrastructure to damage from hurricanes.
       (C) Interaction of hurricanes with engineered structures.--
     Research to improve understanding of the impacts of 
     hurricanes and tropical storms on buildings, structures, and 
     housing combined with modeling that is essential for guiding 
     the creation of improved building designs and construction 
     codes in locations particularly vulnerable to hurricanes.
       (D) Evacuation planning.--Research to improve the manner in 
     which hurricane-related information is provided to, and 
     utilized by, the public and government officials, including 
     research to assist officials of State, tribal, regional, or 
     local governments in--
       (i) determining the circumstances in which evacuations are 
     required; and
       (ii) carrying out such evacuations.
       (E) Decision support.--Research to--
       (i) assess the social, behavioral, and economic factors 
     that influence decision making by the public, government 
     officials, nongovernmental entities, the private sector, and 
     other impacted populations before, during, and in the 
     aftermath of hurricanes;
       (ii) improve the translation of natural science and 
     engineering research carried out under the Initiative into 
     informed decision making that enables communities, economies, 
     and the man-made and natural environments to become resilient 
     to hurricane impacts, including development of effective risk 
     and vulnerability assessment and risk communication tools; 
     and
       (iii) develop methods of assessing disaster recovery costs, 
     both government and nongovernment, and of comparing the 
     relative benefits of disaster mitigation methods with 
     disaster recovery costs.

     SEC. 8. AUTHORIZATION OF APPROPRIATIONS.

       (a) In General.--There are authorized to be appropriated 
     for fiscal years 2010 through 2015 amounts as follows:
       (1) To the Under Secretary, $18,750,000 to carry out 
     sections 5, 6, and 7(b), of which not less than $13,750,000 
     shall be used to carry such section 7(b).
       (2) To the Director of the National Science Foundation, 
     $56,250,000 to carry out sections 5 and 7(a).
       (b) Interagency Transfer of Funds.--
       (1) Transfers by under secretary for oceans and 
     atmosphere.--Of amounts appropriated pursuant to the 
     authorization of appropriations under subsection (a)(1), the 
     Under Secretary may transfer to the heads of other Federal 
     agencies such amounts as the Under Secretary considers 
     appropriate to carry out sections 5, 6, and 7(b).
       (2) Transfers by director of the national science 
     foundation.--Of amounts appropriated pursuant to the 
     authorization of appropriations under subsection (a)(2), the 
     Director of the National Science Foundation may transfer to 
     the heads of other Federal agencies such amounts as the 
     Director considers appropriate to carry out sections 5 and 
     7(a).

     SEC. 9. INDEPENDENT REVIEW.

       (a) Agreement.--
       (1) In general.--The Under Secretary shall seek to enter 
     into an agreement with the National Research Council of the 
     National Academies for the National Research Council to 
     perform the services covered by this section.
       (2) Timing.--The Under Secretary shall seek to enter into 
     the agreement described in paragraph (1) not later than 180 
     days after the date of the enactment of this Act.
       (b) Independent Review of National Hurricane Research 
     Initiative.--Under an agreement between the Under Secretary 
     and the National Research Council under this section, the 
     National Research Council shall carry out an independent 
     review of the Initiative. In carrying out the review, the 
     National Research Council shall review the following:
       (1) Whether the Initiative has well-defined, prioritized, 
     and appropriate research objectives.
       (2) Whether the Initiative is properly coordinated among 
     relevant Federal agencies and stakeholders.
       (3) Whether the Initiative has allocated appropriate 
     resources to each of the research objectives.
       (4) Whether suitable mechanisms exist for transitioning the 
     research results from the Initiative into operational 
     technologies and procedures and activities in a timely 
     manner.
       (c) Report.--Not later than 4 years after the date of the 
     enactment of this Act, the Under Secretary shall submit to 
     the Committee on Commerce, Science, and Transportation of the 
     Senate and the Committee on Science and Technology of the 
     House of Representatives a report on the results of the 
     review carried out under this section.

[[Page S7789]]

       (d) Authorization of Appropriations.--There is authorized 
     to be appropriated to the Under Secretary, $750,000 to carry 
     out this section.

                                S. 1486

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Policyholder Disaster 
     Protection Act of 2009''.

     SEC. 2. FINDINGS.

       The Congress makes the following findings:
       (1) Rising costs resulting from natural disasters are 
     placing an increasing strain on the ability of property and 
     casualty insurance companies to assure payment of homeowners' 
     claims and other insurance claims arising from major natural 
     disasters now and in the future.
       (2) Present tax laws do not provide adequate incentives to 
     assure that natural disaster insurance is provided or, where 
     such insurance is provided, that funds are available for 
     payment of insurance claims in the event of future 
     catastrophic losses from major natural disasters, as present 
     law requires an insurer wishing to accumulate surplus assets 
     for this purpose to do so entirely from its after-tax 
     retained earnings.
       (3) Revising the tax laws applicable to the property and 
     casualty insurance industry to permit carefully controlled 
     accumulation of pretax dollars in separate reserve funds 
     devoted solely to the payment of claims arising from future 
     major natural disasters will provide incentives for property 
     and casualty insurers to make natural disaster insurance 
     available, will give greater protection to the Nation's 
     homeowners, small businesses, and other insurance consumers, 
     and will help assure the future financial health of the 
     Nation's insurance system as a whole.
       (4) Implementing these changes will reduce the possibility 
     that a significant portion of the private insurance system 
     would fail in the wake of a major natural disaster and that 
     governmental entities would be required to step in to provide 
     relief at taxpayer expense.

     SEC. 3. CREATION OF POLICYHOLDER DISASTER PROTECTION FUNDS; 
                   CONTRIBUTIONS TO AND DISTRIBUTIONS FROM FUNDS; 
                   OTHER RULES.

       (a) Contributions to Policyholder Disaster Protection 
     Funds.--Subsection (c) of section 832 of the Internal Revenue 
     Code of 1986 (relating to the taxable income of insurance 
     companies other than life insurance companies) is amended by 
     striking ``and'' at the end of paragraph (12), by striking 
     the period at the end of paragraph (13) and inserting ``; 
     and'', and by adding at the end the following new paragraph:
       ``(14) the qualified contributions to a policyholder 
     disaster protection fund during the taxable year.''.
       (b) Distributions From Policyholder Disaster Protection 
     Funds.--Paragraph (1) of section 832(b) of the Internal 
     Revenue Code of 1986 is amended by striking ``and'' at the 
     end of subparagraph (D), by striking the period at the end of 
     subparagraph (E) and inserting ``, and'', and by adding at 
     the end the following new subparagraph:
       ``(F) the amount of any distributions from a policyholder 
     disaster protection fund during the taxable year, except that 
     a distribution made to return to the qualified insurance 
     company any contribution which is not a qualified 
     contribution (as defined in subsection (h)) for a taxable 
     year shall not be included in gross income if such 
     distribution is made prior to the filing of the tax return 
     for such taxable year.''.
       (c) Definitions and Other Rules Relating to Policyholder 
     Disaster Protection Funds.--Section 832 of the Internal 
     Revenue Code of 1986 (relating to insurance company taxable 
     income) is amended by adding at the end the following new 
     subsection:
       ``(h) Definitions and Other Rules Relating to Policyholder 
     Disaster Protection Funds.--For purposes of this section--
       ``(1) Policyholder disaster protection fund.--The term 
     `policyholder disaster protection fund' (hereafter in this 
     subsection referred to as the `fund') means any custodial 
     account, trust, or any other arrangement or account--
       ``(A) which is established to hold assets that are set 
     aside solely for the payment of qualified losses, and
       ``(B) under the terms of which--
       ``(i) the assets in the fund are required to be invested in 
     a manner consistent with the investment requirements 
     applicable to the qualified insurance company under the laws 
     of its jurisdiction of domicile,
       ``(ii) the net income for the taxable year derived from the 
     assets in the fund is required to be distributed no less 
     frequently than annually,
       ``(iii) an excess balance drawdown amount is required to be 
     distributed to the qualified insurance company no later than 
     the close of the taxable year following the taxable year for 
     which such amount is determined,
       ``(iv) a catastrophe drawdown amount may be distributed to 
     the qualified insurance company if distributed prior to the 
     close of the taxable year following the year for which such 
     amount is determined,
       ``(v) a State required drawdown amount may be distributed, 
     and
       ``(vi) no distributions from the fund are required or 
     permitted other than the distributions described in clauses 
     (ii) through (v) and the return to the qualified insurance 
     company of contributions that are not qualified 
     contributions.
       ``(2) Qualified insurance company.--The term `qualified 
     insurance company' means any insurance company subject to tax 
     under section 831(a).
       ``(3) Qualified contribution.--The term `qualified 
     contribution' means a contribution to a fund for a taxable 
     year to the extent that the amount of such contribution, when 
     added to the previous contributions to the fund for such 
     taxable year, does not exceed the excess of--
       ``(A) the fund cap for the taxable year, over
       ``(B) the fund balance determined as of the close of the 
     preceding taxable year.
       ``(4) Excess balance drawdown amounts.--The term `excess 
     balance drawdown amount' means the excess (if any) of--
       ``(A) the fund balance as of the close of the taxable year, 
     over
       ``(B) the fund cap for the following taxable year.
       ``(5) Catastrophe drawdown amount.--
       ``(A) In general.--The term `catastrophe drawdown amount' 
     means an amount that does not exceed the lesser of the amount 
     determined under subparagraph (B) or (C).
       ``(B) Net losses from qualifying events.--The amount 
     determined under this subparagraph shall be equal to the 
     qualified losses for the taxable year determined without 
     regard to clause (ii) of paragraph (8)(A).
       ``(C) Gross losses in excess of threshold.--The amount 
     determined under this subparagraph shall be equal to the 
     excess (if any) of--
       ``(i) the qualified losses for the taxable year, over
       ``(ii) the lesser of--

       ``(I) the fund cap for the taxable year (determined without 
     regard to paragraph (9)(E)), or
       ``(II) 30 percent of the qualified insurance company's 
     surplus as regards policyholders as shown on the company's 
     annual statement for the calendar year preceding the taxable 
     year.

       ``(D) Special drawdown amount following a recent 
     catastrophe loss year.--If for any taxable year included in 
     the reference period the qualified losses exceed the amount 
     determined under subparagraph (C)(ii), the `catastrophe 
     drawdown amount' shall be an amount that does not exceed the 
     lesser of the amount determined under subparagraph (B) or the 
     amount determined under this subparagraph. The amount 
     determined under this subparagraph shall be an amount equal 
     to the excess (if any) of--
       ``(i) the qualified losses for the taxable year, over
       ``(ii) the lesser of--

       ``(I) \1/3\ of the fund cap for the taxable year 
     (determined without regard to paragraph (9)(E)), or
       ``(II) 10 percent of the qualified insurance company's 
     surplus as regards policyholders as shown on the company's 
     annual statement for the calendar year preceding the taxable 
     year.

       ``(E) Reference period.--For purposes of subparagraph (D), 
     the reference period shall be determined under the following 
     table:


 
 ``For a taxable year beginning in--    The reference period shall be--
 
2012 and later......................  The 3 preceding taxable years.
2011................................  The 2 preceding taxable years.
2010................................  The preceding taxable year.
2008 or before......................  No reference period applies.
 

       ``(6) State required drawdown amount.--The term `State 
     required drawdown amount' means any amount that the 
     department of insurance for the qualified insurance company's 
     jurisdiction of domicile requires to be distributed from the 
     fund, to the extent such amount is not otherwise described in 
     paragraph (4) or (5).
       ``(7) Fund balance.--The term `fund balance' means--
       ``(A) the sum of all qualified contributions to the fund,
       ``(B) less any net investment loss of the fund for any 
     taxable year or years, and
       ``(C) less the sum of all distributions under clauses (iii) 
     through (v) of paragraph (1)(B).
       ``(8) Qualified losses.--
       ``(A) In general.--The term `qualified losses' means, with 
     respect to a taxable year--
       ``(i) the amount of losses and loss adjustment expenses 
     incurred in the qualified lines of business specified in 
     paragraph (9), net of reinsurance, as reported in the 
     qualified insurance company's annual statement for the 
     taxable year, that are attributable to one or more qualifying 
     events (regardless of when such qualifying events occurred),
       ``(ii) the amount by which such losses and loss adjustment 
     expenses attributable to such qualifying events have been 
     reduced for reinsurance received and recoverable, plus
       ``(iii) any nonrecoverable assessments, surcharges, or 
     other liabilities that are borne by the qualified insurance 
     company and are attributable to such qualifying events.
       ``(B) Qualifying event.--For purposes of subparagraph (A), 
     the term `qualifying event' means any event that satisfies 
     clauses (i) and (ii).
       ``(i) Event.--An event satisfies this clause if the event 
     is 1 or more of the following:

       ``(I) Windstorm (hurricane, cyclone, or tornado).
       ``(II) Earthquake (including any fire following).
       ``(III) Winter catastrophe (snow, ice, or freezing).
       ``(IV) Fire.
       ``(V) Tsunami.
       ``(VI) Flood.
       ``(VII) Volcanic eruption.
       ``(VIII) Hail.

[[Page S7790]]

       ``(ii) Catastrophe designation.--An event satisfies this 
     clause if the event--

       ``(I) is designated a catastrophe by Property Claim 
     Services or its successor organization,
       ``(II) is declared by the President to be an emergency or 
     disaster, or
       ``(III) is declared to be an emergency or disaster in a 
     similar declaration by the chief executive official of a 
     State, possession, or territory of the United States, or the 
     District of Columbia.

       ``(9) Fund cap.--
       ``(A) In general.--The term `fund cap' for a taxable year 
     is the sum of the separate lines of business caps for each of 
     the qualified lines of business specified in the table 
     contained in subparagraph (C) (as modified under 
     subparagraphs (D) and (E)).
       ``(B) Separate lines of business cap.--For purposes of 
     subparagraph (A), the separate lines of business cap, with 
     respect to a qualified line of business specified in the 
     table contained in subparagraph (C), is the product of--
       ``(i) net written premiums reported in the annual statement 
     for the calendar year preceding the taxable year in such line 
     of business, multiplied by
       ``(ii) the fund cap multiplier applicable to such qualified 
     line of business.
       ``(C) Qualified lines of business and their respective fund 
     cap multipliers.--For purposes of this paragraph, the 
     qualified lines of business and fund cap multipliers 
     specified in this subparagraph are those specified in the 
     following table:

``Line of Business on Annual                                   Fund Cap
                                                            Multiplier:
  Statement Blank:                                                     
Fire..............................................................0.25 
Allied............................................................1.25 
Farmowners Multiple Peril.........................................0.25 
Homeowners Multiple Peril.........................................0.75 
Commercial Multi Peril (non-liability portion)....................0.50 
Earthquake.......................................................13.00 
Inland Marine.....................................................0.25.

       ``(D) Subsequent modifications of the annual statement 
     blank.--If, with respect to any taxable year beginning after 
     the effective date of this subsection, the annual statement 
     blank required to be filed is amended to replace, combine, or 
     otherwise modify any of the qualified lines of business 
     specified in subparagraph (C), then for such taxable year 
     subparagraph (C) shall be applied in a manner such that the 
     fund cap shall be the same amount as if such reporting 
     modification had not been made.
       ``(E) 20-year phase-in.--Notwithstanding subparagraph (C), 
     the fund cap for a taxable year shall be the amount 
     determined under subparagraph (C), as adjusted pursuant to 
     subparagraph (D) (if applicable), multiplied by the phase-in 
     percentage indicated in the following table:


------------------------------------------------------------------------
                                                 Phase-in percentage  to
                                                 be applied  to fund cap
          ``Taxable year beginning in:                computed  under
                                                  subparagraphs  (A) and
                                                           (B)
------------------------------------------------------------------------
2009...........................................                5 percent
2010...........................................               10 percent
2011...........................................               15 percent
2012...........................................               20 percent
2013...........................................               25 percent
2014...........................................               30 percent
2015...........................................               35 percent
2016...........................................               40 percent
2017...........................................               45 percent
2018...........................................               50 percent
2019...........................................               55 percent
2020...........................................               60 percent
2021...........................................               65 percent
2022...........................................               70 percent
2023...........................................               75 percent
2024...........................................               80 percent
2025...........................................               85 percent
2026...........................................               90 percent
2027...........................................               95 percent
2028 and later.................................             100 percent.
------------------------------------------------------------------------

       ``(10) Treatment of investment income and gain or loss.--
       ``(A) Contributions in kind.--A transfer of property other 
     than money to a fund shall be treated as a sale or exchange 
     of such property for an amount equal to its fair market value 
     as of the date of transfer, and appropriate adjustment shall 
     be made to the basis of such property. Section 267 shall 
     apply to any loss realized upon such a transfer.
       ``(B) Distributions in kind.--A transfer of property other 
     than money by a fund to the qualified insurance company shall 
     not be treated as a sale or exchange or other disposition of 
     such property. The basis of such property immediately after 
     such transfer shall be the greater of the basis of such 
     property immediately before such transfer or the fair market 
     value of such property on the date of such transfer.
       ``(C) Income with respect to fund assets.--Items of income 
     of the type described in paragraphs (1)(B), (1)(C), and (2) 
     of subsection (b) that are derived from the assets held in a 
     fund, as well as losses from the sale or other disposition of 
     such assets, shall be considered items of income, gain, or 
     loss of the qualified insurance company. Notwithstanding 
     paragraph (1)(F) of subsection (b), distributions of net 
     income to the qualified insurance company pursuant to 
     paragraph (1)(B)(ii) of this subsection shall not cause such 
     income to be taken into account a second time.
       ``(11) Net income; net investment loss.--For purposes of 
     paragraph (1)(B)(ii), the net income derived from the assets 
     in the fund for the taxable year shall be the items of income 
     and gain for the taxable year, less the items of loss for the 
     taxable year, derived from such assets, as described in 
     paragraph (10)(C). For purposes of paragraph (7), there is a 
     net investment loss for the taxable year to the extent that 
     the items of loss described in the preceding sentence exceed 
     the items of income and gain described in the preceding 
     sentence.
       ``(12) Annual statement.--For purposes of this subsection, 
     the term `annual statement' shall have the meaning set forth 
     in section 846(f)(3).
       ``(13) Exclusion of premiums and losses on certain puerto 
     rican risks.--Notwithstanding any other provision of this 
     subsection, premiums and losses with respect to risks covered 
     by a catastrophe reserve established under the laws or 
     regulations of the Commonwealth of Puerto Rico shall not be 
     taken into account under this subsection in determining the 
     amount of the fund cap or the amount of qualified losses.
       ``(14) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this subsection, including regulations--
       ``(A) which govern the application of this subsection to a 
     qualified insurance company having a taxable year other than 
     the calendar year or a taxable year less than 12 months,
       ``(B) which govern a fund maintained by a qualified 
     insurance company that ceases to be subject to this part, and
       ``(C) which govern the application of paragraph (9)(D).''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2008.

                                S. 1487

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Commission on Catastrophic 
     Disaster Risk and Insurance Act of 2009''.

     SEC. 2. FINDINGS.

       Congress finds the following:
       (1) Hurricanes Katrina, Rita, and Wilma, which struck the 
     United States in 2005, caused over $200 billion in total 
     economic losses, including insured and uninsured losses.
       (2) Although private sector insurance is currently 
     available to spread some catastrophe-related losses 
     throughout the Nation and internationally, most experts 
     believe there will be significant insurance and reinsurance 
     shortages, resulting in dramatic rate increases for consumers 
     and businesses, and the unavailability of catastrophe 
     insurance.

[[Page S7791]]

       (3) The Federal Government has provided and will continue 
     to provide billions of dollars and resources to pay for 
     losses from catastrophes, including hurricanes, volcanic 
     eruptions, tsunamis, tornados, and other disasters, at huge 
     costs to American taxpayers.
       (4) The Federal Government has a critical interest in 
     ensuring appropriate and fiscally responsible risk management 
     of catastrophes. Mortgages require reliable property 
     insurance, and the unavailability of reliable property 
     insurance would make most real estate transactions 
     impossible. In addition, the public health, safety, and 
     welfare demand that structures damaged or destroyed in a 
     catastrophe be reconstructed as soon as possible. Therefore, 
     the inability of the private sector insurance and reinsurance 
     markets to maintain sufficient capacity to enable Americans 
     to obtain property insurance coverage in the private sector 
     endangers the national economy and the public health, safety, 
     and welfare.
       (5) Multiple proposals have been introduced in the United 
     States Congress over the past decade to address catastrophic 
     risk insurance, including the creation of a national 
     catastrophic reinsurance fund and the revision of the Federal 
     tax code to allow insurers to use tax-deferred catastrophe 
     funds, yet Congress has failed to act on any of these 
     proposals.
       (6) To the extent the United States faces high risks from 
     catastrophe exposure, essential technical information on 
     financial structures and innovations in the catastrophe 
     insurance market is needed.
       (7) The most efficient and effective approach to assessing 
     the catastrophe insurance problem in the public policy 
     context is to establish a bipartisan commission of experts to 
     study the management of catastrophic disaster risk, and to 
     require such commission to timely report its recommendations 
     to Congress so that Congress can quickly craft a solution to 
     protect the American people.

     SEC. 3. ESTABLISHMENT.

       There is established a bipartisan Commission on 
     Catastrophic Disaster Risk and Insurance (in this Act 
     referred to as the ``Commission'').

     SEC. 4. MEMBERSHIP.

       (a) Members.--The Commission shall be composed of the 
     following:
       (1) The Administrator of the Federal Emergency Management 
     Agency or a designee of the Administrator.
       (2) The Administrator of the National Oceanic and 
     Atmospheric Administration or a designee of the 
     Administrator.
       (3) 12 additional members or their designees of whom one 
     shall be--
       (A) a representative of a consumer group;
       (B) a representative of a primary insurance company;
       (C) a representative of a reinsurance company;
       (D) an independent insurance agent with experience in 
     writing property and casualty insurance policies;
       (E) a State insurance regulator;
       (F) a State emergency operations official;
       (G) a scientist;
       (H) a faculty member of an accredited university with 
     experience in risk management;
       (I) a member of nationally recognized think tank with 
     experience in risk management;
       (J) a homebuilder with experience in structural 
     engineering;
       (K) a mortgage lender; and
       (L) a nationally recognized expert in antitrust law.
       (b) Manner of Appointment.--
       (1) In general.--Any member of the Commission described 
     under subsection (a)(3) shall be appointed only upon 
     unanimous agreement of--
       (A) the majority leader of the Senate;
       (B) the minority leader of the Senate;
       (C) the Speaker of the House of Representatives; and
       (D) the minority leader of the House of Representatives.
       (2) Consultation.--In making any appointment under 
     paragraph (1), each individual described in paragraph (1) 
     shall consult with the President.
       (c) Eligibility Limitation.--Except as provided in 
     subsection (a), no member or officer of the Congress, or 
     other member or officer of the Executive Branch of the United 
     States Government or any State government may be appointed to 
     be a member of the Commission.
       (d) Period of Appointment.--
       (1) In general.--Each member of the Commission shall be 
     appointed for the life of the Commission.
       (2) Vacancies.--A vacancy on the Commission shall not 
     affect its powers, but shall be filled in the same manner as 
     the original appointment was made.
       (e) Quorum.--
       (1) Majority.--A majority of the members of the Commission 
     shall constitute a quorum, but a lesser number may hold 
     hearings.
       (2) Approval actions.--All recommendations and reports of 
     the Commission required by this Act shall be approved only by 
     a majority vote of a quorum of the Commission.
       (f) Chairperson.--The majority leader of the Senate, the 
     minority leader of the Senate, the Speaker of the House of 
     Representatives, and the minority leader of the House of 
     Representatives shall jointly select 1 member appointed 
     pursuant to subsection (a) to serve as the Chairperson of the 
     Commission.
       (g) Meetings.--The Council shall meet at the call of its 
     Chairperson or a majority of its members at any time.

     SEC. 5. DUTIES OF THE COMMISSION.

       The Commission shall--
       (1) assess--
       (A) the condition of the property and casualty insurance 
     and reinsurance markets in the aftermath of Hurricanes 
     Katrina, Rita, and Wilma in 2005, and the 4 major hurricanes 
     that struck the United States in 2004; and
       (B) the ongoing exposure of the United States to 
     earthquakes, volcanic eruptions, tsunamis, and floods; and
       (2) recommend and report, as required under section 6, any 
     necessary legislative and regulatory changes that will--
       (A) improve the domestic and international financial health 
     and competitiveness of such markets; and
       (B) assure consumers of the--
       (i) availability of adequate insurance coverage when an 
     insured event occurs; and
       (ii) best possible range of insurance products at 
     competitive prices.

     SEC. 6. REPORT.

       (a) In General.--Not later than 90 days after the 
     appointment of Commission members under section 4, the 
     Commission shall submit to the President and the Congress a 
     final report containing a detailed statement of its findings, 
     together with any recommendations for legislation or 
     administrative action that the Commission considers 
     appropriate, in accordance with the requirements of section 
     5.
       (b) Considerations.--In developing any recommendations 
     under subsection (a), the Commission shall consider--
       (1) the catastrophic insurance and reinsurance market 
     structures and the relevant commercial practices in such 
     insurance industries in providing insurance protection to 
     different sectors of the American population;
       (2) the constraints and opportunities in implementing a 
     catastrophic insurance system that can resolve key obstacles 
     currently impeding broader implementation of catastrophe risk 
     management and financing with insurance;
       (3) methods to improve risk underwriting practices, 
     including--
       (A) analysis of modalities of risk transfer for potential 
     financial losses;
       (B) assessment of private securitization of insurances 
     risks;
       (C) private-public partnerships to increase insurance 
     capacity in constrained markets; and
       (D) the financial feasibility and sustainability of a 
     national catastrophe pool or regional catastrophe pools 
     designed to provide adequate insurance coverage and increased 
     underwriting capacity to insurers and reinsurers;
       (4) approaches for implementing a public insurance scheme 
     for low-income communities, in order to promote risk 
     reduction and explicit insurance coverage in such 
     communities;
       (5) methods to strengthen insurance regulatory requirements 
     and supervision of such requirements, including solvency for 
     catastrophic risk reserves;
       (6) methods to promote public insurance policies linked to 
     programs for loss reduction in the uninsured sectors of the 
     American population;
       (7) methods to strengthen the risk assessment and 
     enforcement of structural mitigation and vulnerability 
     reduction measures, such as zoning and building code 
     compliance;
       (8) the appropriate role for the Federal Government in 
     stabilizing the property and casualty insurance and 
     reinsurance markets, with an analysis--
       (A) of options such as--
       (i) a reinsurance mechanism;
       (ii) the modernization of Federal taxation policies; and
       (iii) an ``insurance of last resort'' mechanism; and
       (B) how to fund such options; and
       (9) the merits of 3 principle legislative proposals 
     introduced in the 109th Congress, namely:
       (A) The creation of a Federal catastrophe fund to act as a 
     backup to State catastrophe funds (S. 3117);
       (B) Tax-deferred catastrophe accounts for insurers (S. 
     3115); and
       (C) Tax-free catastrophe accounts for policyholders (S. 
     3116).

     SEC. 7. POWERS OF THE COMMISSION.

       (a) Hearings.--The Commission or, at the direction of the 
     Commission, any subcommittee or member of the Commission, 
     may, for the purpose of carrying out this Act--
       (1) hold such public hearings in such cities and countries, 
     sit and act at such times and places, take such testimony, 
     receive such evidence, and administer such oaths or 
     affirmations as the Commission or such subcommittee or member 
     considers advisable; and
       (2) require, by subpoena or otherwise, the attendance and 
     testimony of such witnesses and the production of such books, 
     records, correspondence, memoranda, papers, documents, tapes, 
     and materials as the Commission or such subcommittee or 
     member considers advisable.
       (b) Issuance and Enforcement of Subpoenas.--
       (1) Issuance.--Subpoenas issued under subsection (a) shall 
     bear the signature of the Chairperson of the Commission and 
     shall be served by any person or class of persons designated 
     by the Chairperson for that purpose.

[[Page S7792]]

       (2) Enforcement.--In the case of contumacy or failure to 
     obey a subpoena issued under subsection (a), the United 
     States district court for the judicial district in which the 
     subpoenaed person resides, is served, or may be found may 
     issue an order requiring such person to appear at any 
     designated place to testify or to produce documentary or 
     other evidence. Any failure to obey the order of the court 
     may be punished by the court as a contempt of that court.
       (3) Confidentiality.--
       (A) In general.--Information obtained under a subpoena 
     issued under subsection (a) which is deemed confidential, or 
     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 unless the 
     Commission determines that the withholding of such 
     information is contrary to the interest of the United States.
       (B) Exception.--The requirements of subparagraph (A) shall 
     not apply to the publication or disclosure of any data 
     aggregated in a manner that ensures protection of the 
     identity of the person furnishing such data.
       (c) Authority of Members or Agents of the Commission.--Any 
     member or agent of the Commission may, if authorized by the 
     Commission, take any action which the Commission is 
     authorized to take by this Act.
       (d) Obtaining Official Data.--
       (1) Authority.--Notwithstanding any provision of section 
     552a of title 5, United States Code, the Commission may 
     secure directly from any department or agency of the United 
     States any information necessary to enable the Commission to 
     carry out the purposes of this Act.
       (2) Procedure.--Upon request of the Chairperson of the 
     Commission, the head of that department or agency shall 
     furnish the information requested to the Commission.
       (e) Postal Services.--The Commission may use the United 
     States mails in the same manner and under the same conditions 
     as other departments and agencies of the Federal Government.
       (f) Administrative Support Services.--Upon the request of 
     the Commission, the Administrator of General Services shall 
     provide to the Commission, on a reimbursable basis, any 
     administrative support services necessary for the Commission 
     to carry out its responsibilities under this Act.
       (g) Gifts.--
       (1) In general.--The Commission may accept, use, and 
     dispose of gifts or donations of services or property.
       (2) Regulations.--The Commission shall adopt internal 
     regulations governing the receipt of gifts or donations of 
     services or property similar to those described in part 2601 
     of title 5, Code of Federal Regulations.

     SEC. 8. COMMISSION PERSONNEL MATTERS.

       (a) Compensation of Members.--Each member of the Commission 
     who is not an officer or employee of the Federal Government 
     shall be compensated at a rate equal to the daily equivalent 
     of the annual rate of basic pay prescribed for GS-18 of the 
     General Schedule under section 5332 of title 5, United States 
     Code, 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.
       (b) Travel Expenses.--The members of the Commission shall 
     be allowed travel expenses, including per diem in lieu of 
     subsistence, at rates authorized for employees of agencies 
     under subchapter I of chapter 57 of title 5, United States 
     Code, while away from their homes or regular places of 
     business in the performance of services for the Commission.
       (c) Subcommittees.--The Commission may establish 
     subcommittees and appoint persons to such subcommittees as 
     the Commission considers appropriate.
       (d) Staff.--Subject to such policies as the Commission may 
     prescribe, the Chairperson of the Commission may appoint and 
     fix the pay of such additional personnel as the Chairperson 
     considers appropriate to carry out the duties of the 
     Commission.
       (e) Applicability of Certain Civil Service Laws.--
     Subcommittee members and staff of the Commission may be--
       (1) appointed without regard to the provisions of title 5, 
     United States Code, governing appointments in the competitive 
     service; and
       (2) paid without regard to the provisions of chapter 51 and 
     subchapter III of chapter 53 of that title relating to 
     classification and General Schedule pay rates, except that an 
     individual so appointed may not receive pay in excess of the 
     annual rate of basic pay prescribed for GS-18 of the General 
     Schedule under section 5332 of that title.
       (f) Experts and Consultants.--In carrying out its 
     objectives, the Commission may procure temporary and 
     intermittent services of consultants and experts under 
     section 3109(b) of title 5, United States Code, at rates for 
     individuals which do not exceed the daily equivalent of the 
     annual rate of basic pay prescribed for GS-18 of the General 
     Schedule under section 5332 of that title.
       (g) Detail of Government Employees.--Upon request of the 
     Chairperson of the Commission, any Federal Government 
     employee may be detailed to the Commission to assist in 
     carrying out the duties of the Commission--
       (1) on a reimbursable basis; and
       (2) such detail shall be without interruption or loss of 
     civil service status or privilege.

     SEC. 9. TERMINATION.

       The Commission shall terminate 60 days after the date on 
     which the Commission submits its report under section 6.

     SEC. 10. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated $5,000,000 to carry 
     out the purposes of this Act.
                                 ______