The Pre-Disaster Mitigation Grant Program is administered by the Federal Emergency Management Agency (FEMA) and authorized by Section 203 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 USC, as amended by section 102 of the Disaster Mitigation Act of 2000 to provide funds to States and local governments for implementing long-term pre-disaster mitigation countermeasures that would prevent or minimize loss and damages that result from anticipated major disasters. The main purpose of the program is to reduce the loss of life and property due to natural disasters and to enable mitigation measures to be implemented ahead of time before it is too late to make a difference.
However, FEMA strongly urges States and communities to use the required hazard mitigation planning processes to successfully set short and long range mitigation goals and objectives. Hazard mitigation planning is a collaborative process that could assess vulnerabilities and identify hazards affecting the communities. And therefore minimize or eliminate the effects of these hazards. 
Funding for the program is provided through the National Pre-Disaster Mitigation Fund but in order for States and local governments to receive funding, they must comply with FEMA’s regulations. To be eligible for PDM funding there are certain criteria to be met. These criteria are designed to ensure that the most cost-effective and appropriate projects are selected for funding. FEMA regulations require that the projects are part of an overall mitigation strategy for the anticipated disaster areas. The amount of funding that can be given to states is depending on how well they meet the required criteria, the higher criteria they meet the more money they get. One of the most important criteria is that applicants must participate in the National Flood Insurance Program and be in good standing, not on probation or suspended. States that meet higher mitigation planning criteria may qualify for 20 percent under the Disaster Mitigation Act of 2000.
There are five types of eligible activities under the PDM Program: management costs (up to $50,000 for grantees); information dissemination (up to 10%), mitigation planning, technical assistance (for sub-grantees), and mitigation "brick and mortar" projects. A mitigation "brick and mortar" project is any action that results in elimination or long-term reduction of damages to public or private property from natural hazards.
An approved mitigation plan is required for mitigation "brick and mortar" project grants. Therefore, PDM applicants are strongly encouraged to focus on the development of multi-hazard mitigation plans. FEMA's new planning regulation, 44 CFR Part 201, Hazard Mitigation Planning, establishes criteria for State and local hazard mitigation planning, which will take effect beginning on November 1, 2003.
To make pre-disaster mitigation planning more effective, The President's fiscal year 2003 budget proposal included a competitive grant program for pre-disaster mitigation. FEMA is preparing to implement the program competitively if enacted by Congress.  

For More Information, see the following:
http://www.fema.gov/fima/pdm.shtm
http://www.fema.gov/fima/plan01_04n.shtm
http://www.fema.gov/regions/v/newsletter/volume_4/news_n01.htm