Bill summaries are authored by CRS.

Shown Here:
Reported to House amended, Part I (10/07/1994)

Natural Disaster Protection Partnership Act of 1994 - Amends the Robert T. Stafford Disaster Relief and Emergency Assistance Act (the Act) to add a new title VII concerning disaster mitigation. Requires the Director of the Federal Emergency Management Agency to establish and carry out natural disaster hazard mitigation (mitigation) programs that support natural disaster research, technology, and education.

Gives the effect of law to a specified executive order relating to earthquake design and construction standards for federally leased, assisted, or regulated buildings.

Requires the Director to report to the Congress on any additional sanctions or other measures deemed necessary to assure that policyholders purchase Federal flood insurance pursuant to the National Flood Insurance Act. Requires the Director to enter into an arrangement with the National Academy of Sciences (NAS) to conduct a feasibility study of establishing national minimum building construction standards for residential and commercial building construction. Requires the study to be transmitted to the Congress. Requires another NAS study (as well as transmission to the Congress) for establishing standards for the training and licensing of home inspectors and for using such inspections as a means of promoting mitigation for residential property. Requires the Director and other relevant Federal agencies to conduct a study of the feasibility of expanding the catastrophic insurance coverage of the Act to include commercial losses.

Requires the Director to define which States should be classified as earthquake-prone for purposes of the Act.

Requires each State to either: (1) adopt multihazard building and safety codes for all new and substantially modified building construction in that State; or (2) certify that the State's local communities have adopted and are enforcing building codes which meet or exceed the appropriate minimum mitigation requirements of that State. Requires each State designated as flood-prone to either adopt relevant flood protection standards or certify that its flood-prone local communities are in compliance with appropriate State flood protection standards. Requires each State to either develop a multihazard mitigation plan or designate an existing plan which includes specified compliance and response requirements. Outlines provisions concerning State compliance with the establishment, adoption, and implementation of appropriate mitigation plans. Provides penalties for noncompliance.

Requires funds from a Mitigation Account (established under this Act) to be allocated by the Director to States which comply with all mitigation requirements under this Act. Provides an allocation formula. Requires such funds to be used to support mitigation activities, especially those necessary to bring a State into compliance with building and safety code requirements enumerated under this Act. Requires audits of fund uses.

Encourages each private insurer that participates in the Natural Disaster Protection Fund (established under this Act) to take mitigation measures into account in setting rates and deductibles for its property insurance.

Prohibits any federally related mortgage loan secured by residential property located in an earthquake-prone State from being made, increased, extended, or renewed unless the property securing the loan is covered by an insurance policy covering earthquake and volcanic eruption perils. Provides an escrow requirement with respect to insurance premiums for such coverage.

Requires all private insurers electing to participate in the Natural Disaster Protection Corporation (established under this Act) to provide earthquake and volcanic eruption coverage to all of their residential property policyholders in conjunction with their standard residential property insurance contracts. Requires private insurers electing not to participate in the Corporation to notify their policyholders of such nonparticipation and of the absence of such coverage. Requires private insurers which exclude coverage for physical damage caused by flooding to include in the contract a specified warning statement to that effect (or an appropriate alternative warning statement).

Establishes the Natural Disaster Protection Corporation as a private corporation to provide catastrophic insurance coverage for natural disasters. Allows private insurers as well as State insurance pools to participate in the Corporation. Outlines provisions concerning Corporation: (1) structure and operations; (2) scope of coverage and included hazards; (3) establishment of appropriate rates (with appropriate consideration of adopted mitigation measures) and receipt and deposit of premium payments into an appropriate reserve account; (4) insurance terms and conditions; and (5) use of funds from other accounts and funds to pay for losses in excess of reserve account funds (requiring repayment of funds borrowed from such accounts or funds).

Establishes an independent Natural Disaster Insurance Rate-Making Commission to certify whether rates established by the Corporation are actuarially sound. Prohibits the authorization or appropriation of Federal funds for Corporation activities.

Requires the Comptroller General to audit Corporation and Commission activities and to report to the Congress on audit results.

Establishes in the Treasury the Natural Disaster Protection Fund. Establishes within the Fund a separate Private Loss Account, Public Loss Account, and Mitigation Account. Provides for appropriate transfers and credits to such Accounts. Authorizes appropriations to the Accounts. Requires the Private Loss Account to make up any shortfalls in the reserve account of the Corporation. Requires the Public Loss Account to provide grants to States for the repair or restoration of critical facilities and lifelines and public facilities damaged or destroyed by natural disasters and for pre-natural disaster mitigation. Requires the Mitigation Account to provide funds to States for appropriate mitigation activities.