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107th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     107-779

======================================================================



 
                     TERRORISM RISK PROTECTION ACT

                                _______
                                

               November 13, 2002.--Ordered to be printed

                                _______
                                

  Mr. Oxley, from the committee of conference, submitted the following

                           CONFERENCE REPORT

                        [To accompany H.R. 3210]

      The committee of conference on the disagreeing votes of 
the two Houses on the amendment of the Senate to the bill (H.R. 
3210), to ensure the continued financial capacity of insurers 
to provide coverage for risks from terrorism, having met, after 
full and free conference, have agreed to recommend and do 
recommend to their respective Houses as follows:
      That the House recede from its disagreement to the 
amendment of the Senate and agree to the same with an amendment 
as follows:
      In lieu of the matter proposed to be inserted by the 
Senate amendment, insert the following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Terrorism 
Risk Insurance Act of 2002''.
    (b) Table of Contents.--The table of contents for this Act 
is as follows:

Sec. 1. Short title; table of contents.

                  TITLE I--TERRORISM INSURANCE PROGRAM

Sec. 101. Congressional findings and purpose.
Sec. 102. Definitions.
Sec. 103. Terrorism Insurance Program.
Sec. 104. General authority and administration of claims.
Sec. 105. Preemption and nullification of pre-existing terrorism 
          exclusions.
Sec. 106. Preservation provisions.
Sec. 107. Litigation management.
Sec. 108. Termination of Program.

                 TITLE II--TREATMENT OF TERRORIST ASSETS

Sec. 201. Satisfaction of judgments from blocked assets of terrorists, 
          terrorist organizations, and State sponsors of terrorism.

               TITLE III--FEDERAL RESERVE BOARD PROVISIONS

Sec. 301. Certain authority of the Board of Governors of the Federal 
          Reserve System.

                  TITLE I--TERRORISM INSURANCE PROGRAM

SEC. 101. CONGRESSIONAL FINDINGS AND PURPOSE.

    (a) Findings.--The Congress finds that--
            (1) the ability of businesses and individuals to 
        obtain property and casualty insurance at reasonable 
        and predictable prices, in order to spread the risk of 
        both routine and catastrophic loss, is critical to 
        economic growth, urban development, and the 
        construction and maintenance of public and private 
        housing, as well as to the promotion of United States 
        exports and foreign trade in an increasingly 
        interconnected world;
            (2) property and casualty insurance firms are 
        important financial institutions, the products of which 
        allow mutualization of risk and the efficient use of 
        financial resources and enhance the ability of the 
        economy to maintain stability, while responding to a 
        variety of economic, political, environmental, and 
        other risks with a minimum of disruption;
            (3) the ability of the insurance industry to cover 
        the unprecedented financial risks presented by 
        potential acts of terrorism in the United States can be 
        a major factor in the recovery from terrorist attacks, 
        while maintaining the stability of the economy;
            (4) widespread financial market uncertainties have 
        arisen following the terrorist attacks of September 11, 
        2001, including the absence of information from which 
        financial institutions can make statistically valid 
        estimates of the probability and cost of future 
        terrorist events, and therefore the size, funding, and 
        allocation of the risk of loss caused by such acts of 
        terrorism;
            (5) a decision by property and casualty insurers to 
        deal with such uncertainties, either by terminating 
        property and casualty coverage for losses arising from 
        terrorist events, or by radically escalating premium 
        coverage to compensate for risks of loss that are not 
        readily predictable, could seriously hamper ongoing and 
        planned construction, property acquisition, and other 
        business projects, generate a dramatic increase in 
        rents, and otherwise suppress economic activity; and
            (6) the United States Government should provide 
        temporary financial compensation to insured parties, 
        contributing to the stabilization of the United States 
        economy in a time of national crisis, while the 
        financial services industry develops the systems, 
        mechanisms, products, and programs necessary to create 
        a viable financial services market for private 
        terrorism risk insurance.
    (b) Purpose.--The purpose of this title is to establish a 
temporary Federal program that provides for a transparent 
system of shared public and private compensation for insured 
losses resulting from acts of terrorism, in order to--
            (1) protect consumers by addressing market 
        disruptions and ensure the continued widespread 
        availability and affordability of property and casualty 
        insurance for terrorism risk; and
            (2) allow for a transitional period for the private 
        markets to stabilize, resume pricing of such insurance, 
        and build capacity to absorb any future losses, while 
        preserving State insurance regulation and consumer 
        protections.

SEC. 102. DEFINITIONS.

    In this title, the following definitions shall apply:
            (1) Act of terrorism.--
                    (A) Certification.--The term ``act of 
                terrorism'' means any act that is certified by 
                the Secretary, in concurrence with the 
                Secretary of State, and the Attorney General of 
                the United States--
                            (i) to be an act of terrorism;
                            (ii) to be a violent act or an act 
                        that is dangerous to--
                                    (I) human life;
                                    (II) property; or
                                    (III) infrastructure;
                            (iii) to have resulted in damage 
                        within the United States, or outside of 
                        the United States in the case of--
                                    (I) an air carrier or 
                                vessel described in paragraph 
                                (5)(B); or
                                    (II) the premises of a 
                                United States mission; and
                            (iv) to have been committed by an 
                        individual or individuals acting on 
                        behalf of any foreign person or foreign 
                        interest, as part of an effort to 
                        coerce the civilian population of the 
                        United States or to influence the 
                        policy or affect the conduct of the 
                        United States Government by coercion.
                    (B) Limitation.--No act shall be certified 
                by the Secretary as an act of terrorism if--
                            (i) the act is committed as part of 
                        the course of a war declared by the 
                        Congress, except that this clause shall 
                        not apply with respect to any coverage 
                        for workers' compensation; or
                            (ii) property and casualty 
                        insurance losses resulting from the 
                        act, in the aggregate, do not exceed 
                        $5,000,000.
                    (C) Determinations final.--Any 
                certification of, or determination not to 
                certify, an act as an act of terrorism under 
                this paragraph shall be final, and shall not be 
                subject to judicial review.
                    (D) Nondelegation.--The Secretary may not 
                delegate or designate to any other officer, 
                employee, or person, any determination under 
                this paragraph of whether, during the effective 
                period of the Program, an act of terrorism has 
                occurred.
            (2) Affiliate.--The term ``affiliate'' means, with 
        respect to an insurer, any entity that controls, is 
        controlled by, or is under common control with the 
        insurer.
            (3) Control.--An entity has ``control'' over 
        another entity, if--
                    (A) the entity directly or indirectly or 
                acting through 1 or more other persons owns, 
                controls, or has power to vote 25 percent or 
                more of any class of voting securities of the 
                other entity;
                    (B) the entity controls in any manner the 
                election of a majority of the directors or 
                trustees of the other entity; or
                    (C) the Secretary determines, after notice 
                and opportunity for hearing, that the entity 
                directly or indirectly exercises a controlling 
                influence over the management or policies of 
                the other entity.
            (4) Direct earned premium.--The term ``direct 
        earned premium'' means a direct earned premium for 
        property and casualty insurance issued by any insurer 
        for insurance against losses occurring at the locations 
        described in subparagraphs (A) and (B) of paragraph 
        (5).
            (5) Insured loss.--The term ``insured loss'' means 
        any loss resulting from an act of terrorism (including 
        an act of war, in the case of workers' compensation) 
        that is covered by primary or excess property and 
        casualty insurance issued by an insurer if such loss--
                    (A) occurs within the United States; or
                    (B) occurs to an air carrier (as defined in 
                section 40102 of title 49, United States Code), 
                to a United States flag vessel (or a vessel 
                based principally in the United States, on 
                which United States income tax is paid and 
                whose insurance coverage is subject to 
                regulation in the United States), regardless of 
                where the loss occurs, or at the premises of 
                any United States mission.
            (6) Insurer.--The term ``insurer'' means any 
        entity, including any affiliate thereof--
                    (A) that is--
                            (i) licensed or admitted to engage 
                        in the business of providing primary or 
                        excess insurance in any State;
                            (ii) not licensed or admitted as 
                        described in clause (i), if it is an 
                        eligible surplus line carrier listed on 
                        the Quarterly Listing of Alien Insurers 
                        of the NAIC, or any successor thereto;
                            (iii) approved for the purpose of 
                        offering property and casualty 
                        insurance by a Federal agency in 
                        connection with maritime, energy, or 
                        aviation activity;
                            (iv) a State residual market 
                        insurance entity or State workers' 
                        compensation fund; or
                            (v) any other entity described in 
                        section 103(f), to the extent provided 
                        in the rules of the Secretary issued 
                        under section 103(f);
                    (B) that receives direct earned premiums 
                for any type of commercial property and 
                casualty insurance coverage, other than in the 
                case of entities described in sections 103(d) 
                and 103(f); and
                    (C) that meets any other criteria that the 
                Secretary may reasonably prescribe.
            (7) Insurer deductible.--The term ``insurer 
        deductible'' means--
                    (A) for the Transition Period, the value of 
                an insurer's direct earned premiums over the 
                calendar year immediately preceding the date of 
                enactment of this Act, multiplied by 1 percent;
                    (B) for Program Year 1, the value of an 
                insurer's direct earned premiums over the 
                calendar year immediately preceding Program 
                Year 1, multiplied by 7 percent;
                    (C) for Program Year 2, the value of an 
                insurer's direct earned premiums over the 
                calendar year immediately preceding Program 
                Year 2, multiplied by 10 percent;
                    (D) for Program Year 3, the value of an 
                insurer's direct earned premiums over the 
                calendar year immediately preceding Program 
                Year 3, multiplied by 15 percent; and
                    (E) notwithstanding subparagraphs (A) 
                through (D), for the Transition Period, Program 
                Year 1, Program Year 2, or Program Year 3, if 
                an insurer has not had a full year of 
                operations during the calendar year immediately 
                preceding such Period or Program Year, such 
                portion of the direct earned premiums of the 
                insurer as the Secretary determines 
                appropriate, subject to appropriate 
                methodologies established by the Secretary for 
                measuring such direct earned premiums.
            (8) NAIC.--The term ``NAIC'' means the National 
        Association of Insurance Commissioners.
            (9) Person.--The term ``person'' means any 
        individual, business or nonprofit entity (including 
        those organized in the form of a partnership, limited 
        liability company, corporation, or association), trust 
        or estate, or a State or political subdivision of a 
        State or other governmental unit.
            (10) Program.--The term ``Program'' means the 
        Terrorism Insurance Program established by this title.
            (11) Program years.--
                    (A) Transition period.--The term 
                ``Transition Period'' means the period 
                beginning on the date of enactment of this Act 
                and ending on December 31, 2002.
                    (B) Program year 1.--The term ``Program 
                Year 1'' means the period beginning on January 
                1, 2003 and ending on December 31, 2003.
                    (C) Program year 2.--The term ``Program 
                Year 2'' means the period beginning on January 
                1, 2004 and ending on December 31, 2004.
                    (D) Program year 3.--The term ``Program 
                Year 3'' means the period beginning on January 
                1, 2005 and ending on December 31, 2005.
            (12) Property and casualty insurance.--The term 
        ``property and casualty insurance''--
                    (A) means commercial lines of property and 
                casualty insurance, including excess insurance, 
                workers' compensation insurance, and surety 
                insurance; and
                    (B) does not include--
                            (i) Federal crop insurance issued 
                        or reinsured under the Federal Crop 
                        Insurance Act (7 U.S.C. 1501 et seq.), 
                        or any other type of crop or livestock 
                        insurance that is privately issued or 
                        reinsured;
                            (ii) private mortgage insurance (as 
                        that term is defined in section 2 of 
                        theHomeowners Protection Act of 1998 
(12 U.S.C. 4901)) or title insurance;
                            (iii) financial guaranty insurance 
                        issued by monoline financial guaranty 
                        insurance corporations;
                            (iv) insurance for medical 
                        malpractice;
                            (v) health or life insurance, 
                        including group life insurance;
                            (vi) flood insurance provided under 
                        the National Flood Insurance Act of 
                        1968 (42 U.S.C. 4001 et seq.); or
                            (vii) reinsurance or retrocessional 
                        reinsurance.
            (13) Secretary.--The term ``Secretary'' means the 
        Secretary of the Treasury.
            (14) State.--The term ``State'' means any State of 
        the United States, the District of Columbia, the 
        Commonwealth of Puerto Rico, the Commonwealth of the 
        Northern Mariana Islands, American Samoa, Guam, each of 
        the United States Virgin Islands, and any territory or 
        possession of the United States.
            (15) United states.--The term ``United States'' 
        means the several States, and includes the territorial 
        sea and the continental shelf of the United States, as 
        those terms are defined in the Violent Crime Control 
        and Law Enforcement Act of 1994 (18 U.S.C. 2280, 2281).
            (16) Rule of construction for dates.--With respect 
        to any reference to a date in this title, such day 
        shall be construed--
                    (A) to begin at 12:01 a.m. on that date; 
                and
                    (B) to end at midnight on that date.

SEC. 103. TERRORISM INSURANCE PROGRAM.

    (a) Establishment of Program.--
            (1) In general.--There is established in the 
        Department of the Treasury the Terrorism Insurance 
        Program.
            (2) Authority of the secretary.--Notwithstanding 
        any other provision of State or Federal law, the 
        Secretary shall administer the Program, and shall pay 
        the Federal share of compensation for insured losses in 
        accordance with subsection (e).
            (3) Mandatory participation.--Each entity that 
        meets the definition of an insurer under this title 
        shall participate in the Program.
    (b) Conditions for Federal Payments.--No payment may be 
made by the Secretary under this section with respect to an 
insured loss that is covered by an insurer, unless--
            (1) the person that suffers the insured loss, or a 
        person acting on behalf of that person, files a claim 
        with the insurer;
            (2) the insurer provides clear and conspicuous 
        disclosure to the policyholder of the premium charged 
        for insured losses covered by the Program and the 
        Federal share of compensation for insured losses under 
        the Program--
                    (A) in the case of any policy that is 
                issued before the date of enactment of this 
                Act, not later than 90 days after that date of 
                enactment;
                    (B) in the case of any policy that is 
                issued within 90 days of the date of enactment 
                of this Act, at the time of offer, purchase, 
                and renewal of the policy; and
                    (C) in the case of any policy that is 
                issued more than 90 days after the date of 
                enactment of this Act, on a separate line item 
                in the policy, at the time of offer, purchase, 
                and renewal of the policy;
            (3) the insurer processes the claim for the insured 
        loss in accordance with appropriate business practices, 
        and any reasonable procedures that the Secretary may 
        prescribe; and
            (4) the insurer submits to the Secretary, in 
        accordance with such reasonable procedures as the 
        Secretary may establish--
                    (A) a claim for payment of the Federal 
                share of compensation for insured losses under 
                the Program;
                    (B) written certification--
                            (i) of the underlying claim; and
                            (ii) of all payments made for 
                        insured losses; and
                    (C) certification of its compliance with 
                the provisions of this subsection.
    (c) Mandatory Availability.--
            (1) Initial program periods.--During the period 
        beginning on the first day of the Transition Period and 
        ending on the last day of Program Year 2, each entity 
        that meets the definition of an insurer under section 
        102--
                    (A) shall make available, in all of its 
                property and casualty insurance policies, 
                coverage for insured losses; and
                    (B) shall make available property and 
                casualty insurance coverage for insured losses 
                that does not differ materially from the terms, 
                amounts, and other coverage limitations 
                applicable to losses arising from events other 
                than acts of terrorism.
            (2) Program year 3.--Not later than September 1, 
        2004, the Secretary shall, based on the factors 
        referred to in section 108(d)(1), determine whether the 
        provisions of subparagraphs (A) and (B) of paragraph 
        (1) should be extended through Program Year 3.
    (d) State Residual Market Insurance Entities.--
            (1) In general.--The Secretary shall issue 
        regulations, as soon as practicable after the date of 
        enactment of this Act, that apply the provisions of 
        this title to State residual market insurance entities 
        and State workers' compensation funds.
            (2) Treatment of certain entities.--For purposes of 
        the regulations issued pursuant to paragraph (1)--
                    (A) a State residual market insurance 
                entity that does not share its profits and 
                losses with private sector insurers shall be 
                treated as a separate insurer; and
                    (B) a State residual market insurance 
                entity that shares its profits and losses with 
                private sector insurers shall not be treated as 
                a separate insurer, and shall report to each 
                private sector insurance participant its share 
                of the insured losses of the entity, which 
                shall be included in each private sector 
                insurer's insured losses.
            (3) Treatment of participation in certain 
        entities.--Any insurer that participates in sharing 
        profits and losses of a State residual market insurance 
        entity shall include in its calculations of premiums 
        any premiums distributed to the insurer by the State 
        residual market insurance entity.
    (e) Insured Loss Shared Compensation.--
            (1) Federal share.--
                    (A) In general.--The Federal share of 
                compensation under the Program to be paid by 
                the Secretary for insured losses of an insurer 
                during the Transition Period and each Program 
                Year shall be equal to 90 percent of that 
                portion of the amount of such insured losses 
                that exceeds the applicable insurer deductible 
                required to be paid during such Transition 
                Period or such Program Year.
                    (B) Prohibition on duplicative 
                compensation.--The Federal share of 
                compensation for insured losses under the 
                Program shall be reduced by the amount of 
                compensation provided by the Federal Government 
                to any person under any other Federal program 
                for those insured losses.
            (2) Cap on annual liability.--
                    (A) In general.--Notwithstanding paragraph 
                (1) or any other provision of Federal or State 
                law, if the aggregate insured losses exceed 
                $100,000,000,000, during the period beginning 
                on the first day of the Transition Period and 
                ending on the last day of Program Year 1, or 
                during Program Year 2 or Program Year 3 (until 
                such time as the Congress may act otherwise 
                with respect to such losses)--
                            (i) the Secretary shall not make 
                        any payment under this title for any 
                        portion of the amount of such losses 
                        that exceeds $100,000,000,000; and
                            (ii) no insurer that has met its 
                        insurer deductible shall be liable for 
                        the payment of any portion of that 
                        amount that exceeds $100,000,000,000.
                    (B) Insurer share.--For purposes of 
                subparagraph (A), the Secretary shall determine 
                the pro rata share of insured losses to be paid 
                by each insurer that incurs insured losses 
                under the Program.
            (3) Notice to congress.--The Secretary shall notify 
        the Congress if estimated or actual aggregate insured 
        losses exceed $100,000,000,000 during the period 
        beginning on the first day of the Transition Period and 
        ending on the last day of Program Year 1, or during 
        Program Year 2 or Program Year 3, and the Congress 
        shall determine the procedures for and the source of 
        any payments for such excess insured losses.
            (4) Final netting.--The Secretary shall have sole 
        discretion to determine the time at which claims 
        relating to any insured loss or act of terrorism shall 
        become final.
            (5) Determinations final.--Any determination of the 
        Secretary under this subsection shall be final, unless 
        expressly provided, and shall not be subject to 
        judicial review.
            (6) Insurance marketplace aggregate retention 
        amount.--For purposes of paragraph (7), the insurance 
        marketplace aggregate retention amount shall be--
                    (A) for the period beginning on the first 
                day of the Transition Period and ending on the 
                last day of Program Year 1, the lesser of--
                            (i) $10,000,000,000; and
                            (ii) the aggregate amount, for all 
                        insurers, of insured losses during such 
                        period;
                    (B) for Program Year 2, the lesser of--
                            (i) $12,500,000,000; and
                            (ii) the aggregate amount, for all 
                        insurers, of insured losses during such 
                        Program Year; and
                    (C) for Program Year 3, the lesser of--
                            (i) $15,000,000,000; and
                            (ii) the aggregate amount, for all 
                        insurers, of insured losses during such 
                        Program Year.
            (7) Recoupment of federal share.--
                    (A) Mandatory recoupment amount.--For 
                purposes of this paragraph, the mandatory 
                recoupment amount for each of the periods 
                referred to in subparagraphs (A), (B), and (C) 
                of paragraph (6) shall be the difference 
                between--
                            (i) the insurance marketplace 
                        aggregate retention amount under 
                        paragraph (6) for such period; and
                            (ii) the aggregate amount, for all 
                        insurers, of insured losses during such 
                        period that are not compensated by the 
                        Federal Government because such 
                        losses--
                                    (I) are within the insurer 
                                deductible for the insurer 
                                subject to the losses; or
                                    (II) are within the portion 
                                of losses of the insurer that 
                                exceed the insurer deductible, 
                                but are not compensated 
                                pursuant to paragraph (1).
                    (B) No mandatory recoupment if 
                uncompensated losses exceed insurance 
                marketplace retention.--Notwithstanding 
                subparagraph (A), if the aggregate amount of 
                uncompensated insured losses referred to in 
                clause (ii) of such subparagraph for any period 
                referred to in subparagraph (A), (B), or (C) of 
                paragraph (6) is greater than the insurance 
                marketplace aggregate retention amount under 
                paragraph (6) for such period, the mandatory 
                recoupment amount shall be $0.
                    (C) Mandatory establishment of surcharges 
                to recoup mandatory recoupment amount.--The 
                Secretary shall collect, for repayment of the 
                Federal financial assistance provided in 
                connection with all acts of terrorism (or acts 
                of war, in the case of workers compensation) 
                occurring during any of the periods referred to 
                in subparagraph (A), (B), or (C) of paragraph 
                (6), terrorism loss risk-spreading premiums in 
                an amount equal to any mandatory recoupment 
                amount for such period.
                    (D) Discretionary recoupment of remainder 
                of financial assistance.--To the extent that 
                the amount of Federal financial assistance 
                provided exceeds any mandatory recoupment 
                amount, the Secretary may recoup, through 
                terrorism loss risk-spreading premiums, such 
                additional amounts that the Secretary believes 
                can be recouped, based on--
                            (i) the ultimate costs to taxpayers 
                        of no additional recoupment;
                            (ii) the economic conditions in the 
                        commercial marketplace, including the 
                        capitalization, profitability, and 
                        investment returns of the insurance 
                        industry and the current cycle of the 
                        insurance markets;
                            (iii) the affordability of 
                        commercial insurance for small- and 
                        medium-sized businesses; and
                            (iv) such other factors as the 
                        Secretary considers appropriate.
            (8) Policy surcharge for terrorism loss risk-
        spreading premiums.--
                    (A) Policyholder premium.--Any amount 
                established by the Secretary as a terrorism 
                loss risk-spreading premium shall--
                            (i) be imposed as a policyholder 
                        premium surcharge on property and 
                        casualty insurance policies in force 
                        after the date of such establishment;
                            (ii) begin with such period of 
                        coverage during the year as the 
                        Secretary determines appropriate; and
                            (iii) be based on a percentage of 
                        the premium amount charged for property 
                        and casualty insurance coverage under 
                        the policy.
                    (B) Collection.--The Secretary shall 
                provide for insurers to collect terrorism loss 
                risk-spreading premiums and remit such amounts 
                collected to the Secretary.
                    (C) Percentage limitation.--A terrorism 
                loss risk-spreading premium (including any 
                additional amount included in such premium on a 
                discretionary basis pursuant to paragraph 
                (7)(D)) may not exceed, on an annual basis, the 
                amount equal to 3 percent of the premium 
                charged for property and casualty insurance 
                coverage under the policy.
                    (D) Adjustment for urban and smaller 
                commercial and rural areas and different lines 
                of insurance.--
                            (i) Adjustments.--In determining 
                        the method and manner of imposing 
                        terrorism loss risk-spreading premiums, 
                        including the amount of such premiums, 
                        the Secretary shall take into 
                        consideration--
                                    (I) the economic impact on 
                                commercial centers of urban 
                                areas, including the effect on 
                                commercial rents and commercial 
                                insurance premiums, 
                                particularly rents and premiums 
                                charged to small businesses, 
                                and the availability of lease 
                                space and commercial insurance 
                                within urban areas;
                                    (II) the risk factors 
                                related to rural areas and 
                                smaller commercial centers, 
                                including the potential 
                                exposure to loss and the likely 
                                magnitude of such loss, as well 
                                as any resulting cross-
                                subsidization that might 
                                result; and
                                    (III) the various exposures 
                                to terrorism risk for different 
                                lines of insurance.
                            (ii) Recoupment of adjustments.--
                        Any mandatory recoupment amounts not 
                        collected by the Secretary because of 
                        adjustments under this subparagraph 
                        shall be recouped through additional 
                        terrorism loss risk-spreading premiums.
                    (E) Timing of premiums.--The Secretary may 
                adjust the timing of terrorism loss risk-
                spreading premiums to provide for equivalent 
                application of the provisions of this title to 
                policies that are not based on a calendar year, 
                or to apply such provisions on a daily, 
                monthly, or quarterly basis, as appropriate.
    (f) Captive Insurers and Other Self-Insurance 
Arrangements.--The Secretary may, in consultation with the NAIC 
or the appropriate State regulatory authority, apply the 
provisions of this title, as appropriate, to other classes or 
types of captive insurers and other self-insurance arrangements 
by municipalities and other entities (such as workers' 
compensation self-insurance programs and State workers' 
compensation reinsurance pools), but only if such application 
is determined before the occurrence of an act of terrorism in 
which such an entity incurs an insured loss and all of the 
provisions of this title are applied comparably to such 
entities.
    (g) Reinsurance to Cover Exposure.--
            (1) Obtaining coverage.--This title may not be 
        construed to limit or prevent insurers from obtaining 
        reinsurance coverage for insurer deductibles or insured 
        losses retained by insurers pursuant to this section, 
        nor shall the obtaining of such coverage affect the 
        calculation of such deductibles or retentions.
            (2) Limitation on financial assistance.--The amount 
        of financial assistance provided pursuant to this 
        section shall not be reduced by reinsurance paid or 
        payable to an insurer from other sources, except that 
        recoveries from such other sources, taken together with 
        financial assistance for the Transition Period or a 
        Program Year provided pursuant to this section, may not 
        exceed the aggregate amount of the insurer's insured 
        losses for such period. If such recoveries and 
        financial assistance for the Transition Period or a 
        Program Year exceed such aggregate amount of insured 
        losses for that period and there is no agreement 
        between the insurer and any reinsurer to the contrary, 
        an amount in excess of such aggregate insured losses 
        shall be returned to the Secretary.
    (h) Group Life Insurance Study.--
            (1) Study.--The Secretary shall study, on an 
        expedited basis, whether adequate and affordable 
        catastrophe reinsurance for acts of terrorism is 
        available to life insurers in the United States that 
        issue group life insurance, and the extent to which the 
        threat of terrorism is reducing the availability of 
        group life insurance coverage for consumers in the 
        United States.
            (2) Conditional Coverage.--To the extent that the 
        Secretary determines that such coverage is not or will 
        not be reasonably available to both such insurers and 
        consumers, the Secretary shall, in consultation with 
        the NAIC--
                    (A) apply the provisions of this title, as 
                appropriate, to providers of group life 
                insurance; and
                    (B) provide such restrictions, limitations, 
                or conditions with respect to any financial 
                assistance provided that the Secretary deems 
                appropriate, based on the study under paragraph 
                (1).
    (i) Study and Report.--
            (1) Study.--The Secretary, after consultation with 
        the NAIC, representatives of the insurance industry, 
        and other experts in the insurance field, shall conduct 
        a study of the potential effects of acts of terrorism 
        on the availability of life insurance and other lines 
        of insurance coverage, including personal lines.
            (2) Report.--Not later than 9 months after the date 
        of enactment of this Act, the Secretary shall submit a 
        report to the Congress on the results of the study 
        conducted under paragraph (1).

SEC. 104. GENERAL AUTHORITY AND ADMINISTRATION OF CLAIMS.

    (a) General Authority.--The Secretary shall have the powers 
and authorities necessary to carry out the Program, including 
authority--
            (1) to investigate and audit all claims under the 
        Program; and
            (2) to prescribe regulations and procedures to 
        effectively administer and implement the Program, and 
        to ensure that all insurers and self-insured entities 
        that participate in the Program are treated comparably 
        under the Program.
    (b) Interim Rules and Procedures.--The Secretary may issue 
interim final rules or procedures specifying the manner in 
which--
            (1) insurers may file and certify claims under the 
        Program;
            (2) the Federal share of compensation for insured 
        losses will be paid under the Program, including 
        payments based on estimates of or actual insured 
        losses;
            (3) the Secretary may, at any time, seek repayment 
        from or reimburse any insurer, based on estimates of 
        insured losses under the Program, to effectuate the 
        insured loss sharing provisions in section 103; and
            (4) the Secretary will determine any final netting 
        of payments under the Program, including payments owed 
        to the Federal Government from any insurer and any 
        Federal share of compensation for insured losses owed 
        to any insurer, to effectuate the insured loss sharing 
        provisions in section 103.
    (c) Consultation.--The Secretary shall consult with the 
NAIC, as the Secretary determines appropriate, concerning the 
Program.
    (d) Contracts for Services.--The Secretary may employ 
persons or contract for services as may be necessary to 
implement the Program.
    (e) Civil Penalties.--
            (1) In general.--The Secretary may assess a civil 
        monetary penalty in an amount not exceeding the amount 
        under paragraph (2) against any insurer that the 
        Secretary determines, on the record after opportunity 
        for a hearing--
                    (A) has failed to charge, collect, or remit 
                terrorism loss risk-spreading premiums under 
                section 103(e) in accordance with the 
                requirements of, or regulations issued under, 
                this title;
                    (B) has intentionally provided to the 
                Secretary erroneous information regarding 
                premium or loss amounts;
                    (C) submits to the Secretary fraudulent 
                claims under the Program for insured losses;
                    (D) has failed to provide the disclosures 
                required under subsection (f); or
                    (E) has otherwise failed to comply with the 
                provisions of, or the regulations issued under, 
                this title.
            (2) Amount.--The amount under this paragraph is the 
        greater of $1,000,000 and, in the case of any failure 
        to pay, charge, collect, or remit amounts in accordance 
        with this title or the regulations issued under this 
        title, such amount in dispute.
            (3) Recovery of amount in dispute.--A penalty under 
        this subsection for any failure to pay, charge, 
        collect, or remit amounts in accordance with this title 
        or the regulations under this title shall be in 
        addition to any such amounts recovered by the 
        Secretary.
    (f) Submission of Premium Information.--
            (1) In general.--The Secretary shall annually 
        compile information on the terrorism risk insurance 
        premium rates of insurers for the preceding year.
            (2) Access to information.--To the extent that such 
        information is not otherwise available to the 
        Secretary, the Secretary may require each insurer to 
        submit to the NAIC terrorism risk insurance premium 
        rates, as necessary to carry out paragraph (1), and the 
        NAIC shall make such information available to the 
        Secretary.
            (3) Availability to congress.--The Secretary shall 
        make information compiled under this subsection 
        available to the Congress, upon request.
    (g) Funding.--
            (1) Federal payments.--There are hereby 
        appropriated, out of funds in the Treasury not 
        otherwise appropriated, such sums as may be necessary 
        to pay the Federal share of compensation for insured 
        losses under the Program.
            (2) Administrative expenses.--There are hereby 
        appropriated, out of funds in the Treasury not 
        otherwise appropriated, such sums as may be necessary 
        to pay reasonable costs of administering the Program.

SEC. 105. PREEMPTION AND NULLIFICATION OF PRE-EXISTING TERRORISM 
                    EXCLUSIONS.

    (a) General Nullification.--Any terrorism exclusion in a 
contract for property and casualty insurance that is in force 
on the date of enactment of this Act shall be void to the 
extent that it excludes losses that would otherwise be insured 
losses.
    (b) General Preemption.--Any State approval of any 
terrorism exclusion from a contract for property and casualty 
insurance that is in force on the date of enactment of this 
Act, shall be void to the extent that it excludes losses that 
would otherwise be insured losses.
    (c) Reinstatement of Terrorism Exclusions.--Notwithstanding 
subsections (a) and (b) or any provision of State law, an 
insurer may reinstate a preexisting provision in a contract for 
property and casualty insurance that is in force on the date of 
enactment of this Act and that excludes coverage for an act of 
terrorism only--
            (1) if the insurer has received a written statement 
        from the insured that affirmatively authorizes such 
        reinstatement; or
            (2) if--
                    (A) the insured fails to pay any increased 
                premium charged by the insurer for providing 
                such terrorism coverage; and
                    (B) the insurer provided notice, at least 
                30 days before any such reinstatement, of--
                            (i) the increased premium for such 
                        terrorism coverage; and
                            (ii) the rights of the insured with 
                        respect to such coverage, including any 
                        date upon which the exclusion would be 
                        reinstated if no payment is received.

SEC. 106. PRESERVATION PROVISIONS.

    (a) State Law.--Nothing in this title shall affect the 
jurisdiction or regulatory authority of the insurance 
commissioner (or any agency or office performing like 
functions) of any State over any insurer or other person--
            (1) except as specifically provided in this title; 
        and
            (2) except that--
                    (A) the definition of the term ``act of 
                terrorism'' in section 102 shall be the 
                exclusive definition of that term for purposes 
                of compensation for insured losses under this 
                title, and shall preempt any provision of State 
                law that is inconsistent with that definition, 
                to the extent that such provision of law would 
                otherwise apply to any type of insurance 
                covered by this title;
                    (B) during the period beginning on the date 
                of enactment of this Act and ending on December 
                31, 2003, rates and forms for terrorism risk 
                insurance covered by this title and filed with 
                any State shall not be subject to prior 
                approval or a waiting period under any law of a 
                State that would otherwise be applicable, 
                except that nothing in this title affects the 
                ability of any State to invalidate a rate as 
                excessive, inadequate, or unfairly 
                discriminatory, and, with respect to forms, 
                where a State has prior approval authority, it 
                shall apply to allow subsequent review of such 
                forms; and
                    (C) during the period beginning on the date 
                of enactment of this Act and for so long as the 
                Program is in effect, as provided in section 
                108, including authority in subsection 108(b), 
                books and records of any insurer that are 
                relevant to the Program shall be provided, or 
                caused to be provided, to the Secretary, upon 
                request by the Secretary, notwithstanding any 
                provision of the laws of any State prohibiting 
                or limiting such access.
    (b) Existing Reinsurance Agreements.--Nothing in this title 
shall be construed to alter, amend, or expand the terms of 
coverage under any reinsurance agreement in effect on the date 
of enactment of this Act. The terms and conditions of such an 
agreement shall be determined by the language of that 
agreement.

SEC. 107. LITIGATION MANAGEMENT.

    (a) Procedures and Damages.--
            (1) In general.--If the Secretary makes a 
        determination pursuant to section 102 that an act of 
        terrorism has occurred, there shall exist a 
Federalcause of action for property damage, personal injury, or death 
arising out of or resulting from such act of terrorism, which shall be 
the exclusive cause of action and remedy for claims for property 
damage, personal injury, or death arising out of or relating to such 
act of terrorism, except as provided in subsection (b).
            (2) Preemption of state actions.--All State causes 
        of action of any kind for property damage, personal 
        injury, or death arising out of or resulting from an 
        act of terrorism that are otherwise available under 
        State law are hereby preempted, except as provided in 
        subsection (b).
            (3) Substantive law.--The substantive law for 
        decision in any such action described in paragraph (1) 
        shall be derived from the law, including choice of law 
        principles, of the State in which such act of terrorism 
        occurred, unless such law is otherwise inconsistent 
        with or preempted by Federal law.
            (4) Jurisdiction.--For each determination described 
        in paragraph (1), not later than 90 days after the 
        occurrence of an act of terrorism, the Judicial Panel 
        on Multidistrict Litigation shall designate 1 district 
        court or, if necessary, multiple district courts of the 
        United States that shall have original and exclusive 
        jurisdiction over all actions for any claim (including 
        any claim for loss of property, personal injury, or 
        death) relating to or arising out of an act of 
        terrorism subject to this section. The Judicial Panel 
        on Multidistrict Litigation shall select and assign the 
        district court or courts based on the convenience of 
        the parties and the just and efficient conduct of the 
        proceedings. For purposes of personal jurisdiction, the 
        district court or courts designated by the Judicial 
        Panel on Multidistrict Litigation shall be deemed to 
        sit in all judicial districts in the United States.
            (5) Punitive damages.--Any amounts awarded in an 
        action under paragraph (1) that are attributable to 
        punitive damages shall not count as insured losses for 
        purposes of this title.
    (b) Exclusion.--Nothing in this section shall in any way 
limit the liability of any government, an organization, or 
person who knowingly participates in, conspires to commit, aids 
and abets, or commits any act of terrorism with respect to 
which a determination described in subsection (a)(1) was made.
    (c) Right of Subrogation.--The United States shall have the 
right of subrogation with respect to any payment or claim paid 
by the United States under this title.
    (d) Relationship to Other Law.--Nothing in this section 
shall be construed to affect--
            (1) any party's contractual right to arbitrate a 
        dispute; or
            (2) any provision of the Air Transportation Safety 
        and System Stabilization Act (Public Law 107-42; 49 
        U.S.C. 40101 note.).
    (e) Effective Period.--This section shall apply only to 
actions described in subsection (a)(1) that arise out of or 
result from acts of terrorism that occur or occurred during the 
effective period of the Program.

SEC. 108. TERMINATION OF PROGRAM.

    (a) Termination of Program.--The Program shall terminate on 
December 31, 2005.
    (b) Continuing Authority To Pay or Adjust Compensation.--
Following the termination of the Program, the Secretary may 
take such actions as may be necessary to ensure payment, 
recoupment, reimbursement, or adjustment of compensation for 
insured losses arising out of any act of terrorism occurring 
during the period in which the Program was in effect under this 
title, in accordance with the provisions of section 103 and 
regulations promulgated thereunder.
    (c) Repeal; Savings Clause.--This title is repealed on the 
final termination date of the Program under subsection (a), 
except that such repeal shall not be construed--
            (1) to prevent the Secretary from taking, or 
        causing to be taken, such actions under subsection (b) 
        of this section, paragraph (4), (5), (6), (7), or (8) 
        of section 103(e), or subsection (a)(1), (c), (d), or 
        (e) of section 104, as in effect on the day before the 
        date of such repeal, or applicable regulations 
        promulgated thereunder, during any period in which the 
        authority of the Secretary under subsection (b) of this 
        section is in effect; or
            (2) to prevent the availability of funding under 
        section 104(g) during any period in which the authority 
        of the Secretary under subsection (b) of this section 
        is in effect.
    (d) Study and Report on the Program.--
            (1) Study.--The Secretary, in consultation with the 
        NAIC, representatives of the insurance industry and of 
        policy holders, other experts in the insurance field, 
        and other experts as needed, shall assess the 
        effectiveness of the Program and the likely capacity of 
        the property and casualty insurance industry to offer 
        insurance for terrorism risk after termination of the 
        Program, and the availability and affordability of such 
        insurance for various policyholders, including 
        railroads, trucking, and public transit.
            (2) Report.--The Secretary shall submit a report to 
        the Congress on the results of the study conducted 
        under paragraph (1) not later than June 30, 2005.

                TITLE II--TREATMENT OF TERRORIST ASSETS

SEC. 201. SATISFACTION OF JUDGMENTS FROM BLOCKED ASSETS OF TERRORISTS, 
                    TERRORIST ORGANIZATIONS, AND STATE SPONSORS OF 
                    TERRORISM.

    (a) In General.--Notwithstanding any other provision of 
law, and except as provided in subsection (b), in every case in 
which a person has obtained a judgment against a terrorist 
party on a claim based upon an act of terrorism, or for which a 
terrorist party is not immune under section 1605(a)(7) of title 
28, United States Code, the blocked assets of that terrorist 
party (including the blocked assets of any agency or 
instrumentality of that terrorist party) shall be subject to 
execution or attachment in aid of execution in order to satisfy 
such judgment tothe extent of any compensatory damages for 
which such terrorist party has been adjudged liable.
    (b) Presidential Waiver.--
            (1) In general.--Subject to paragraph (2), upon 
        determining on an asset-by-asset basis that a waiver is 
        necessary in the national security interest, the 
        President may waive the requirements of subsection (a) 
        in connection with (and prior to the enforcement of) 
        any judicial order directing attachment in aid of 
        execution or execution against any property subject to 
        the Vienna Convention on Diplomatic Relations or the 
        Vienna Convention on Consular Relations.
            (2) Exception.--A waiver under this subsection 
        shall not apply to--
                    (A) property subject to the Vienna 
                Convention on Diplomatic Relations or the 
                Vienna Convention on Consular Relations that 
                has been used by the United States for any 
                nondiplomatic purpose (including use as rental 
                property), or the proceeds of such use; or
                    (B) the proceeds of any sale or transfer 
                for value to a third party of any asset subject 
                to the Vienna Convention on Diplomatic 
                Relations or the Vienna Convention on Consular 
                Relations.
    (c) Special Rule for Cases Against Iran.--Section 2002 of 
the Victims of Trafficking and Violence Protection Act of 2000 
(Public Law 106-386; 114 Stat. 1542), as amended by section 686 
of Public Law 107-228, is further amended--
            (1) in subsection (a)(2)(A)(ii), by striking ``July 
        27, 2000, or January 16, 2002'' and inserting ``July 
        27, 2000, any other date before October 28, 2000, or 
        January 16, 2002'';
            (2) in subsection (b)(2)(B), by inserting after 
        ``the date of enactment of this Act'' the following: 
        ``(less amounts therein as to which the United States 
        has an interest in subrogation pursuant to subsection 
        (c) arising prior to the date of entry of the judgment 
        or judgments to be satisfied in whole or in part 
        hereunder)'';
            (3) by redesignating subsections (d), (e), and (f) 
        as subsections (e), (f), and (g), respectively; and
            (4) by inserting after subsection (c) the following 
        new subsection (d):
    ``(d) Distribution of Account Balances and Proceeds 
Inadequate To Satisfy Full Amount of Compensatory Awards 
Against Iran.--
            ``(1)  Prior judgments.--
                    ``(A) In general.--In the event that the 
                Secretary determines that 90 percent of the 
                amounts available to be paid under subsection 
                (b)(2) are inadequate to pay the total amount 
                of compensatory damages awarded in judgments 
                issued as of the date of the enactment of this 
                subsection in cases identified in subsection 
                (a)(2)(A) with respect to Iran, the Secretary 
                shall, not later than 60 days after such date, 
                make payment from such amounts available to be 
                paid under subsection (b)(2) to each party to 
                which such a judgment has been issued in an 
                amount equal to a share, calculated under 
                subparagraph (B), of 90 percent of the amounts 
                available to be paid under subsection (b)(2) 
                that have not been subrogated to the United 
                States under this Act as of the date of 
                enactment of this subsection.
                    ``(B) Calculation of payments.--The share 
                that is payable to a person under subparagraph 
                (A), including any person issued a final 
                judgment as of the date of enactment of this 
                subsection in a suit filed on a date added by 
                the amendment made by section 686 of Public Law 
                107-228, shall be equal to the proportion that 
                the amount of unpaid compensatory damages 
                awarded in a final judgment issued to that 
                person bears to the total amount of all unpaid 
                compensatory damages awarded to all persons to 
                whom such judgments have been issued as of the 
                date of enactment of this subsection in cases 
                identified in subsection (a)(2)(A) with respect 
                to Iran.
            ``(2) Subsequent judgment.--
                    ``(A) In general.--The Secretary shall pay 
                to any person awarded a final judgment after 
                the date of enactment of this subsection, in 
                the case filed on January 16, 2002, and 
                identified in subsection (a)(2)(A) with respect 
                to Iran, an amount equal to a share, calculated 
                under subparagraph (B), of the balance of the 
                amounts available to be paid under subsection 
                (b)(2) that remain following the disbursement 
                of all payments as provided by paragraph (1). 
                The Secretary shall make such payment not later 
                than 30 days after such judgment is awarded.
                    ``(B) Calculation of payments.--To the 
                extent that funds are available, the amount 
                paid under subparagraph (A) to such person 
                shall be the amount the person would have been 
                paid under paragraph (1) if the person had been 
                awarded the judgment prior to the date of 
                enactment of this subsection.
            ``(3) Additional payments.--
                    ``(A) In general.--Not later than 30 days 
                after the disbursement of all payments under 
                paragraphs (1) and (2), the Secretary shall 
                make an additional payment to each person who 
                received a payment under paragraph (1) or (2) 
                in an amount equal to a share, calculated under 
                subparagraph (B), of the balance of the amounts 
                available to be paid under subsection (b)(2) 
                that remain following the disbursement of all 
                payments as provided by paragraphs (1) and (2).
                    ``(B) Calculation of payments.--The share 
                payable under subparagraph (A) to each such 
                person shall be equal to the proportion that 
                the amount of compensatory damages awarded that 
                person bears to the total amount of all 
                compensatory damages awarded to all persons who 
                received a payment under paragraph (1) or (2).
            ``(4) Statutory construction.--Nothing in this 
        subsection shall bar, or require delay in, enforcement 
        of any judgment to which this subsection applies under 
        any procedure or against assets otherwise available 
        under this section or under any other provision of law.
            ``(5) Certain rights and claims not relinquished.--
        Any person receiving less than the full amount of 
        compensatory damages awarded to that party in a 
        judgment to which this subsection applies shall not be 
        required to make the election set forth in subsection 
        (a)(2)(B) or, with respect to subsection (a)(2)(D), the 
        election relating to relinquishment of any right to 
        execute or attach property that is subject to section 
        1610(f)(1)(A) of title 28, United States Code, except 
        that such person shall be required to relinquish rights 
        set forth--
                    ``(A) in subsection (a)(2)(C); and
                    ``(B) in subsection (a)(2)(D) with respect 
                to enforcement against property that is at 
                issue in claims against the United States 
                before an international tribunal or that is the 
                subject of awards by such tribunal.
            ``(6) Guidelines for establishing claims of a right 
        to payment.--The Secretary may promulgate reasonable 
        guidelines through which any person claiming a right to 
        payment under this section may inform the Secretary of 
        the basis for such claim, including by submitting a 
        certified copy of the final judgment under which such 
        right is claimed and by providing commercially 
        reasonable payment instructions. The Secretary shall 
        take all reasonable steps necessary to ensure, to the 
        maximum extent practicable, that such guidelines shall 
        not operate to delay or interfere with payment under 
        this section.''.
    (d) Definitions.--In this section, the following 
definitions shall apply:
            (1) Act of terrorism.--The term ``act of 
        terrorism'' means--
                    (A) any act or event certified under 
                section 102(1); or
                    (B) to the extent not covered by 
                subparagraph (A), any terrorist activity (as 
                defined in section 212(a)(3)(B)(iii) of the 
                Immigration and Nationality Act (8 U.S.C. 
                1182(a)(3)(B)(iii))).
            (2) Blocked asset.--The term ``blocked asset'' 
        means--
                    (A) any asset seized or frozen by the 
                United States under section 5(b) of the Trading 
                With the Enemy Act (50 U.S.C. App. 5(b)) or 
                under sections 202 and 203 of the International 
                Emergency Economic Powers Act (50 U.S.C. 1701; 
                1702); and
                    (B) does not include property that--
                            (i) is subject to a license issued 
                        by the United States Government for 
                        final payment, transfer, or disposition 
                        by or to a person subject to the 
                        jurisdiction of the United States in 
                        connection with a transaction for which 
                        the issuance of such license has been 
                        specifically required by statute other 
                        than the International Emergency 
                        Economic Powers Act (50 U.S.C. 1701 et 
                        seq.) or the United Nations 
                        Participation Act of 1945 (22 U.S.C. 
                        287 et seq.); or
                            (ii) in the case of property 
                        subject to the Vienna Convention on 
                        Diplomatic Relations or the Vienna 
                        Convention on Consular Relations, or 
                        that enjoys equivalent privileges and 
                        immunities under the law of the United 
                        States, is being used exclusively for 
                        diplomatic or consular purposes.
            (3) Certain property.--The term ``property subject 
        to the Vienna Convention on Diplomatic Relations or the 
        Vienna Convention on Consular Relations'' and the term 
        ``asset subject to the Vienna Convention on Diplomatic 
        Relations or the Vienna Convention on Consular 
        Relations'' mean any property or asset, respectively, 
        the attachment in aid of execution or execution of 
        which would result in a violation of an obligation of 
        the United States under the Vienna Convention on 
        Diplomatic Relations or the Vienna Convention on 
        Consular Relations, as the case may be.
            (4) Terrorist party.--The term ``terrorist party'' 
        means a terrorist, a terrorist organization (as defined 
        in section 212(a)(3)(B)(vi) of the Immigration and 
        Nationality Act (8 U.S.C. 1182(a)(3)(B)(vi))), or a 
        foreign state designated as a state sponsor of 
        terrorism under section 6(j) of the Export 
        Administration Act of 1979 (50 U.S.C. App. 2405(j)) or 
        section 620A of the Foreign Assistance Act of 1961 (22 
        U.S.C. 2371).

              TITLE III--FEDERAL RESERVE BOARD PROVISIONS

SEC. 301. CERTAIN AUTHORITY OF THE BOARD OF GOVERNORS OF THE FEDERAL 
                    RESERVE SYSTEM.

    Section 11 of the Federal Reserve Act (12 U.S.C. 248) is 
amended by adding at the end the following new subsection:
    ``(r)(1) Any action that this Act provides may be taken 
only upon the affirmative vote of 5 members of the Board may be 
taken upon the unanimous vote of all members then in office if 
there are fewer than 5 members in office at the time of the 
action.
    ``(2)(A) Any action that the Board is otherwise authorized 
to take under section 13(3) may be taken upon the unanimous 
vote of all available members then in office, if--
            ``(i) at least 2 members are available and all 
        available members participate in the action;
            ``(ii) the available members unanimously determine 
        that--
                    ``(I) unusual and exigent circumstances 
                exist and the borrower is unable to secure 
                adequate credit accommodations from other 
                sources;
                    ``(II) action on the matter is necessary to 
                prevent, correct, or mitigate serious harm to 
                the economy or the stability of the financial 
                system of the United States;
                    ``(III) despite the use of all means 
                available (including all available telephonic, 
                telegraphic, and other electronic means), the 
                other members of the Board have not been able 
                to be contacted on the matter; and
                    ``(IV) action on the matter is required 
                before the number of Board members otherwise 
                required to vote on the matter can be contacted 
                through any available means (including all 
                available telephonic, telegraphic, and other 
                electronic means); and
            ``(iii) any credit extended by a Federal reserve 
        bank pursuant to such action is payable upon demand of 
        the Board.
    ``(B) The available members of the Board shall document in 
writing the determinations required by subparagraph (A)(ii), 
and such written findings shall be included in the record of 
the action and in the official minutes of the Board, and copies 
of such record shall be provided as soon as practicable to the 
members of the Board who were not available to participate in 
the action and to the Chairman of the Committee on Banking, 
Housing, and Urban Affairs of the Senate and to the Chairman of 
the Committee on Financial Services of the House of 
Representatives.''.
      And the Senate agree to the same.

                From the Committee on Financial Services, for 
                consideration of the House bill and the Senate 
                amendment thereto, and modifications committed 
                to conference:
                                   Michael G. Oxley,
                                   Richard H. Baker,
                                   Robert W. Ney,
                                   Sue W. Kelly,
                                   Christopher Shays,
                                   Vito Fossella,
                                   Michael Ferguson,
                                   John J. LaFalce,
                                   Paul E. Kanjorski,
                                   Ken Bentsen,
                                   James H. Maloney,
                                   Darlene Hooley,
                From the Committee on the Judiciary, for 
                consideration of sec. 15 the House bill and 
                secs. 10 and 11 of the Senate amendment 
                thereto, and modifications committed to 
                conference:
                                   John Conyers, Jr.,
                                 Managers on the Part of the House.

                                   Paul Sarbanes,
                                   Christopher J. Dodd,
                                   Jack Reed,
                                   Charles Schumer,
                                Managers on the Part of the Senate.
       JOINT EXPLANATORY STATEMENT OF THE COMMITTEE OF CONFERENCE

      The managers on the part of the House and the Senate at 
the conference on the disagreeing votes of the two Houses on 
the amendment of the Senate to the bill (H.R. 3210) to ensure 
the continued financial capacity of insurers to provide 
coverage for risks from terrorism, submit the following joint 
statement to the House and the Senate in explanation of the 
effect of the action agreed upon by the managers and 
recommended in the accompanying conference report.
      The Senate amendment struck all of the House bill after 
the enacting clause and inserted a substitute text.
      The House recedes from its disagreement to the amendment 
of the Senate with an amendment that is a substitute for the 
House bill and the Senate amendment.
      The Conference Report includes the following provisions:
Section 1. Short title; table of contents
      The short title of this legislation is ``Terrorism Risk 
Insurance Act of 2002.''

                  TITLE I--TERRORISM INSURANCE PROGRAM

Section 101. Congressional findings and purpose
      Following the widespread financial market uncertainties 
due to the terrorist attacks of September 11, 2001, Congress 
determined that there was a need for a temporary Federal 
program to establish a system of shared public/private 
compensation for insured losses resulting from acts of 
terrorism to protect consumers and create a transitional period 
for the private insurance markets to stabilize.
Section 102. Definitions
      Section 102 defines terms necessary for implementation of 
this legislation. The Federal backstop is triggered when the 
Secretary of the Treasury, in concurrence with the Secretary of 
State and the Attorney General, certifies that an event meets 
the definition of an act of terrorism. The legislation only 
applies to U.S. risks, including domestic air carriers and flag 
vessels, U.S. territorial seas and continental shelf, and U.S. 
missions. The legislation applies only to acts that are 
committed by an individual or individuals acting on behalf of a 
foreign person or foreign interest.
      The terms ``affiliate'' and ``control'' are meant to 
ensure that affiliated insurers are treated as a consolidated 
entity for calculating direct earned premiums. The term 
``insured loss'' includes losses resulting from an act of 
terrorism (and from an act of war in the case of workers 
compensation). Each insurer will be responsible for paying out 
a prescribed amount of insured losses, the ``insurer 
deductible,'' before Federal assistance becomes available. This 
deductible is based on a percentage of direct earned premiums 
from the previous calendar year. Insurers' deductibles are 1% 
during a transition period for the remainder of 2002, 7% in 
2003, 10% in 2004, and 15% in 2005. Except as otherwise 
specifically provided, the Conferees intend the legislation to 
apply only to primary and excess commercial property and 
casualty insurance (including cyber-terrorism and business 
interruption coverage).
Section 103. Terrorism Insurance Program
      The Terrorism Insurance Program is established in the 
Department of the Treasury under which the Federal government 
will share the risk of loss from future terrorist attacks with 
the commercial property and causality insurance marketplace, 
for a temporary period of time. The Secretary of the Treasury 
(hereafter ``Secretary'') shall administer theProgram and pay 
the Federal share of compensation for insured losses. The Federal 
government pays 90% of insured losses in excess of an insurer's 
deductible while the insurer pays 10%. Insurers may reinsure their 
insurer deductibles and 10% co-shares. Losses covered by the Program 
will be capped at $100 billion per year; above this amount, Congress is 
to determine the procedures for and the source of any payments.
      Before receiving Federal assistance under this Act, an 
insurer must certify its claim for payment of insured losses, 
that a policyholder (or person acting on the policyholder's 
behalf) has filed a claim for such loss, and the insurer's 
compliance with the Act. The Secretary may not reimburse an 
insurer for such losses unless the insurer has provided clear 
and conspicuous disclosure to the policyholder of the premium 
charged for terrorism coverage and the Federal share of 
compensation. This disclosure to the policyholder must occur at 
the time of offer, purchase, and renewal of the policy for 
policies issued after the date of enactment, and must be made 
on a separate line item in the policy with respect to policies 
issued more than 90 days after enactment. For policies issued 
before the date of enactment, the disclosure must be made 
within 90 days of such date. The Conferees intend this 
disclosure to enhance the competitiveness of the marketplace by 
better enabling consumers to comparison shop for terrorism 
insurance coverage, and to make policyholders better aware that 
the Federal government will be sharing the costs of such 
coverage with the insurers, thereby reducing the insurers's 
exposure. Insurers must submit premium and claims information 
to the Secretary who may investigate and audit all claims under 
the Program.
      Each entity meeting the definition of insurer under this 
legislation is required to participate in the Program. During 
the first two years of the Program each such insurer must make 
available in all of its property and casualty insurance polices 
coverage for insured losses, and shall make such coverage 
available on terms that do not differ materially from the 
terms, amounts, and other coverage limitations applicable to 
losses arising from events other than acts of terrorism. The 
Secretary has discretion to extend this requirement to the 
third year of the Program, to preserve this important option 
for policyholders.
      Section 103 provides for insurance marketplace retentions 
of $10 billion in Program year 1 (including any remainder of 
2002), $12.5 billion in Program year 2, and $15 billion in 
Program year 3. Federal assistance within the retention above 
in insurer deductibles and 10% co-shares must be recouped while 
additional amounts of Federal assistance may be recouped based 
on economic factors in the judgment of the Secretary. Mandatory 
recoupment within the insurance marketplace retention is 
through terrorism loss risk-spreading premiums (surcharges) 
paid by all commercial property and casualty policyholders 
based on premium rates with any year's surcharge (mandatory and 
discretionary combined) capped at 3% of the premium charged for 
property and casualty insurance coverage under the policy in 
each such year. The Secretary has discretion over the timing of 
recoupment, and to adjust amounts for urban, smaller 
commercial, and rural areas, as well as for different lines of 
insurance, so long as themandatory amounts are ultimately 
recouped. The Secretary may assess civil penalties on insurers for 
submission of false or misleading information or failure to repay the 
Secretary for any amount required to be repaid, or for other failure to 
comply with the provisions of this title.
      This section directs the Secretary to apply the 
provisions of the legislation to State residual market 
insurance entities and State workers compensation funds. The 
Secretary is directed to either treat State residual market 
insurance entities as separate insurers, or to calculate the 
premiums, losses, and Federal backstop based on each insurer's 
share of the entity, imputing such amounts as part of their 
total business. This calculation would apply to all insurers 
that participate in such entities, regardless of whether they 
otherwise provide commercial property and casualty insurance as 
set forth in the legislation. This section further gives the 
Secretary discretion to apply the legislation to various 
classes of captives and self-insurance programs (such as 
workers' compensation self-insurance programs and State 
workers' compensation reinsurance pools).
      The Secretary is also directed to conduct an expedited 
study to determine whether adequate and affordable catastrophe 
reinsurance for acts of terrorism is available to group life 
insurers and whether the threat of terrorism is reducing the 
availability of group life insurance for consumers. Should the 
Secretary determine that terrorism coverage is not or will not 
be reasonably available to insurers and consumers, the 
Secretary would be required to include group life insurance in 
the Terrorism Insurance Program. In so doing, the Secretary 
would have discretion to determine the most appropriate way to 
include group life insurance in the Program.
      The Secretary, after consultation with the NAIC, is to 
conduct a study of the potential effects of acts of terrorism 
on the availability of life insurance generally and other lines 
of insurance coverage, including personal lines, to be 
submitted to Congress not later than 9 months from the date of 
enactment.

Section 104. General authority and administration of claims

      The Secretary shall have the powers and authorities 
necessary to carry out the Program. The Secretary shall 
annually compile information on the terrorism risk insurance 
premium rates of insurers for the preceding year. To the extent 
that such information is not otherwise available, the Secretary 
may require insurers to submit their terrorism risk insurance 
premium rates to the NAIC, which shall make such information 
available to the Secretary.

Section 105. Preemption and nullification of pre-existing terrorism 
        exclusions

      This section voids any commercial property and casualty 
terrorism insurance exclusion that is in force on the date of 
the enactment of this Act to the extent that it excludes that 
in force on the date of the enactment of this Act to the extent 
that it excludes losses that would otherwise be insured losses. 
Any Sate approval of any commercial property and casualty 
terrorism insurance exclusion in force on the date of enactment 
is also void to the extent that it excludes losses that would 
otherwise be insured losses.
      This provision is intended to create immediate terrorism 
coverage for commercial property and casualty policyholders 
upon enactment for a short window of time, while allowing 
insurers to immediately send notices of the increased premium 
for such coverage and giving policyholders the option within 30 
days of such notice to pay such increased premium or allow 
reinstatement of any preexisting terrorism exclusion.

Section 106. Preservation provisions

      This section preserves State regulatory authority except 
as specifically provided in this legislation. A uniform 
definition of a terrorist act is established in this 
legislation. Until the end of 2003, States would be required to 
allow rate and form changes to take effect immediately but 
would retain authority to disapprove any rates as excessive, 
inadequate, or unfairly discriminatory and where a State has 
prior approval authority for forms, subsequent review of such 
forms is permitted. During the period in which the Secretary's 
authority to carry out the Program is in effect, the Secretary 
would have access to any books and records of insurers that are 
relevant to the Program.

Section 107. Litigation management

      The Conferees agreed to a provision on litigation 
management.

Section 108. Termination of program

      This section provides a three-year program (with a 
transition period for the balance of 2002) that terminates on 
December 31, 2005. The Secretary shall conduct a study and 
report to Congress no later than June 30, 2005 on the 
effectiveness of the Program and the likely capacity of the 
property and casualty insurance industry to offer insurance for 
terrorism risk after termination of the Program, and the 
availability and affordability of such insurance for various 
policyholders, including railroads, trucking, and public 
transit.

                TITLE II--TREATMENT OF TERRORIST ASSETS

Section 201. Satisfaction of judgments from blocked assets of 
        terrorists, terrorist organizations, and state sponsors of 
        terrorism

      The purpose of Section 201 is to deal comprehensively 
with the problem of enforcement of judgments rendered on behalf 
of victims of terrorism in any court of competent jurisdiction 
by enabling them to satisfy such judgments through the 
attachment of blocked assets of terrorist parties. It is the 
intent of the Conferees that Section 201 establish that such 
judgments are to be enforced. Section 201 builds upon and 
extends the principles in section 1610(f)(1) of the Foreign 
Sovereign Immunities Act (28 U.S.C. Sec. 1610(f)(1)), 
authorizes the enforcement of judgments against terrorist 
organizations and eliminates the effect of any Presidential 
waiver issued prior to the date of enactment purporting to bar 
or restrict enforcement of such judgments, thereby making clear 
that all such judgments are enforceable against any assets or 
property under any authorities referenced in Section 
1610(f)(1).
      Section 201(c) establishes a special rule for cases 
against Iran. In Section 2002 of the Victims of Trafficking and 
Violence Protection Act of 2000 (2000 Act), Congress directed 
that specified claimants against Iran under Section 1605(a)(7) 
of the Foreign Sovereign Immunities Act receive payment in 
satisfaction of judgments. Unfortunately, several victims and 
families of victims who brought suit against Iran, were left 
out of the 2000 Act. The Conferees have sought to correct this 
injustice.
      In order to accommodate additional dates within the 
equitable formula for payment of remaining amounts in the 
accounts and rental proceeds, the Conferees added to Section 
(c) an adjustment to the proportional formula for payment to 
qualifying claimants.
      In Section 201(d), the Conferees broadened the definition 
of ``act of terrorism'' for purposes of that section; defined 
the term ``blocked assets''; and clarified the term ``terrorist 
organization'' to mean any entity included in the definition 
provided in Section 212(a)(3)(B)(vi) of the Immigration and 
Nationality Act, (8 U.S.C. Sec. 1182(a)(3)(B)(vi)). This 
provision is intended to reach terrorist organizations.

              TITLE III--FEDERAL RESERVE BOARD PROVISIONS

Section 301. Certain authority of the Board of Governors of the Federal 
        Reserve System

      The Conferees agreed to certain changes to Section 11 of 
the Federal Reserve Act.

                From the Committee on Financial Services, for 
                consideration of the House bill and the Senate 
                amendment thereto, and modifications committed 
                to conference:
                                   Michael G. Oxley,
                                   Richard H. Baker,
                                   Robert W. Ney,
                                   Sue W. Kelly,
                                   Christopher Shays,
                                   Vito Fossella,
                                   Michael Ferguson,
                                   John J. LaFalce,
                                   Paul E. Kanjorski,
                                   Ken Bentsen,
                                   James H. Maloney,
                                   Darlene Hooley,
                From the Committee on the Judiciary, for 
                consideration of sec. 15 the House bill and 
                secs. 10 and 11 of the Senate amendment 
                thereto, and modifications committed to 
                conference:
                                   John Conyers, Jr.,
                                 Managers on the Part of the House.

                                   Paul Sarbanes,
                                   Christopher J. Dodd,
                                   Jack Reed,
                                   Charles Schumer,
                                Managers on the Part of the Senate.