[Congressional Record Volume 140, Number 24 (Tuesday, March 8, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]
[Congressional Record: March 8, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]
NATIONAL COMPETITIVENESS ACT
The Senate continued with the consideration of the bill.
Mr. DANFORTH. Mr. President, I believe it was a year ago last January
when we had on the floor of the Senate a bill to create a commission to
study the state of the airline industry in the United States, and the
aircraft manufacturing industry.
During that debate I brought to the floor of the Senate boxes of
existing reports on the subject of the airline industry and the
aircraft manufacturing industry. During my speech, I was standing at
this desk, and I took out volume after volume of existing reports, all
since the mid-1980's, from various parts of the Federal Government on
the question of airlines and aircraft. Some of them were DOT studies,
some of them were GAO studies, and some of them were committee reports
from various committees in Congress.
It was a stack of reports that reached from this desk just about to
my nose. So at the end of the speech it was as though Kilroy were
making the speech.
The point that I was trying to make was that we have had report after
report after report after report on the condition of the airline
industry and on the condition of the aircraft manufacturing industry
and that nothing has come of those reports. The problem has not been
lack of analysis; the problem has been lack of action. All we do is
have reports. All we do is have commissions. All we do is make studies.
So I attempted to make the point during that debate that this Airline
Commission will just be yet another study and nothing will come of it,
that it will take more time, and that the time has come for action.
That argument got nowhere, and we proceeded to set up the Commission
that was headed by former Governor Baliles of Virginia. That Commission
dutifully met and had a report, and it issued that report. As I recall,
it was sometime last summer when the report was issued. After that
report was issued, exactly what I predicted came to pass. I predicted
that when the report was issued, the administration would then say that
it had to study the study, and that is precisely what the
administration did.
So the administration began studying the study. And having studied
the study, the administration said with respect to the product
liability issue on general aviation--the question that is now before us
in the form of the Kassebaum amendment--the administration said, well,
this issue should now be referred to the Justice Department for study.
So, in other words, we had a Commission which was established a year
ago January for the purpose of studying these major parts of our
economy--airlines and aircraft--and the Commission recommended that we
move ahead with product liability legislation, statute of repose
legislation, for the manufacture of general aviation aircraft. And then
that Commission's report, or study, was studied, and the administration
has proposed a study.
Some people have commented on deadlock in Government. This is not
just deadlock, because something is happening; there is some motion. At
least papers are flying around. It is more like wheelspinning, I think,
than deadlock. It is just studying for the sake of studies.
Now we have an amendment before us, and I believe that on a couple of
past occasions this same issue has been before the Judiciary Committee.
But now we are told that this matter should be before more than the
Senate Commerce Committee; it should be referred to the Judiciary
Committee. And this morning, the Senator from Alabama informed us that
perhaps it should not only be before the Judiciary Committee, it should
be before the Armed Services Committee, because there was said to be
national defense implications.
So it could be that we have had a matter that has been studied by the
Airline Commission, studied by the administration, and will be studied
by the Justice Department, and has been studied by the Commerce
Committee, and will be studied by the Judiciary Committee, and studied
further by the Armed Services Committee. There could be no end at all
to the studies. So the lawyers that my chairman referred to today,
during the lunches at all the restaurants they try, would have a lot to
meet about. They could meet about who was going to conduct the next
study of the same problem.
Mr. President, it seems to me that it is reasonable to assume that at
some point in time, we in Government actually act, just every now and
then. I am not asking us to do anything that would be viewed as
precipitous, or going off halfcocked; just every now and then, after a
few years of studying a subject, to actually do something.
Senator Kassebaum has offered an amendment to do something. I think
that what she has asked us to do is very reasonable--a 15-year statute
of repose. She has made a good argument for doing that. Shipments of
new light-piston engine aircraft have declined from 17,000 in 1978 to
555 last year. The head of one company--Beechcraft, I believe,
manufactures these planes--says that if we act and if this statute of
repose problem is solved, 25,000 new jobs will be created. Those who
argue for S. 4 say that it makes our economy more competitive. I do
believe that it is germane to this legislation to try to make the
economy more competitive by creating 25,000 additional jobs in the
aircraft manufacturing industry, general aviation aircraft. It was an
industry that has been in decline, and if a Commission appointed by the
President has recommended how to fix the industry, I believe we should
fix it.
So I understand the need to study things. But it really does get down
to a point where the studies reach the state of being ridiculous, not
to mention redundant. We have long passed that point.
I compliment Senator Kassebaum for offering the amendment. I
especially want to pay my respects to Senator McCain, who really made
an excellent speech and had some very good charts explaining the
situation with respect to general aviation aircraft. Here is a sector
of our economy that could be fixed, and I believe we should fix it.
Mr. HOLLINGS addressed the Chair.
The PRESIDING OFFICER. The Senator from South Carolina [Mr. Hollings]
is recognized.
Mr. HOLLINGS. Mr. President, I would like to respond to my
distinguished colleague relative to the Airline Commission report, and
his call to get something done. Right to the point, there was in the
morning news mention of a proposal to create a private entity, a
special commission. Just get rid of the Government in this.
In essence, if you can get that private commission, what you really
can do is spend more money. If you think that politicians can spend,
you ought to go to the private sector. I have worked with them.
I will never forget the role I had as Governor. We did not have those
automatic signature machines back then, so I would spend Saturday
mornings on the State bonds that we issued, whether for highways,
colleges, universities, the public buildings, and so on.
I know the private lawyer group plus the aircraft lobby that made up
this commission. Sure enough, one of the big recommendations, that
incidentally they have accepted, is to create a private group empowered
to issue bonds and spend more money.
That is repugnant to this Senator, who has been trying to pay the
bill with spending freezes, with Gramm-Rudman-Hollings and, now, with a
value-added tax to pay for health care. I have had a bill on file since
January of last year, for a value-added tax to pay for health care, the
deficit, and the debt.
I will never forget when the distinguished leader made such a good
talk. I was voting on the other side. I did not want to disturb him. He
said that none of those voting for the balanced budget amendment had
proposed a way to pay for it. There is at least one exception, I can
assure you, because I have voted and will continue to vote for spending
cuts. I will vote against new initiatives such as the Community Service
Program. And I will also champion new taxes because we are into that
particular financial fix in this country.
You need to cut spending. You need to withhold otherwise well-
considered programs but programs not needed at this time.
I helped start the Peace Corps--and we can go into that record--but a
domestic Peace Corps. I will never forget. I regretted having to vote
against President Clinton's Community Service Program. But the White
House gentleman called me and with persuasion said, ``Well, Senator,
now we've got 2,000 people volunteering in this particular program.''
This was during the terrible Midwest floods, so I said, ``Son, you
got 2 million volunteering not in your program.''
I know from Hurricane Hugo in my own backyard that volunteers came
from 38 different States, all down there to South Carolina to help us
after Hugo.
Americans similarly volunteered when they had the earthquake out
there in Oakland, after Hurricane Andrew, after the Los Angeles
earthquake most recently. After Hurricane Andrew, South Carolinians
were the first on the scene with the police force from my Charleston
area. We did not need a special program to volunteer. The people of
America know all about voluntarism.
We have to withhold programs that are popular but unaffordable. They
never ask that in a poll ``Do you want to pay for it?'' They just ask
whether you are for this or that. You can get a majority vote. Of
course, in a poll you will never find the word ``taxes'' because the
Reagan-Bush crowd made tax a poison word in politics.
That is finding its way down to my local level, which I regret. I
find now that they are trying to cut the revenues, and when you ask how
are they going to compensate for it down in South Carolina, they say
growth, growth, growth--the same disease we had in 1981 and 1982 with
Kemp-Roth. I can go back to where Senator Dole even opposed that
initially, and then came out leading it, calling it Reaganomics, and
growth, growth. What grew, the growth we had and continue to have, is
in the deficit, the debt, and the interest costs on that national debt.
I am ready to vote at any time, because I want to move this bill
forward on those things related in the bill and not adopt every little
nuance and interest that people have. General aviation does not even
belong on this particular technology bill.
A more relevant issue is the abuse of the highway and airport trust
funds. Moneys from these trust funds are allocated to the deficit and
debt and not to the highways and airports of America.
If I bring the figures up to date, I would say that we might get
about $19 billion from the Federal highway tax and we spend about $12
billion on the highways and the other $7 billion we spend on the
deficit and the debt.
Similarly, with the airport and airways improvement fund. We spend
less than $2 billion a year of what we need. I asked the FAA
Administrator, after attesting to that fact. I said, ``Give me your
program and I will be glad to try, and we will get the money and let us
go with it.''
The White House never would let the FAA Administrator do it. But if
you can at the White House now appoint a separate commission, you
cannot only continue to spend the moneys but then you can go--now it
becomes clear--you can issue bonds, you can really spend way more money
than you ever spent before.
I held up out here the National Airport and Dulles that particular
Commission for 4 years running because what we needed at the time was
$250 million. Instead, with the Commission that we got, I had to
finally yield because nothing was going to be done. They are going to
spend anywhere from $750 million to $850 million issuing bonds.
So there is one thing to do, something that they recommended that I
hope I can block because we do have an FAA Administrator. He is going
into the records now and finding out the tremendous waste in the
contracts that have been given out over there over the years during the
past administration. He is cleaning up those contracts, and if we can
take the tax revenues that the air travelers are being charged in air
travel each day and allocate them to the airport airways and
improvement, we do not need a commission and we can get the program. It
is well conceived. But understand, these commissions do not give any
sanctity because the private crowd they say, well, nothing is getting
done. When we get it away from the Congress, we can issue bonds. When
we issue bonds we can spend more money. That is exactly what has
happened.
Another finding that they failed to make was that the problem was
deregulation. Everyone knows deregulation is the culprit. The fetish
and fever in this Congress has been for several years now
competitiveness, competitiveness; competition, competition. You do not
invent competition on the floor of the Senate or the House. You have it
out there where you want to compete. I can tell you that right now.
And that was proved by the deregulation of airlines in America. Once
we deregulated, yes, competition went in for the long hauls, and the
short hauls and the connector routes were totally abandoned or priced
out of the question.
And so it is that when I came here almost 27 years ago, I had three
direct flights from my hometown Charleston to Washington National. It
was $34 at that time, so it was $68, round trip.
I get a Government rate, but my wife, in order to travel coach class
from Washington, DC, to Charleston, SC, and back, pays $698. Usually,
instead, we get one flight coming up, rather than three flights, so
usually we have to go through Charlotte. Maybe I ought to run for mayor
of Charlotte, because I am in Charlotte more than the people down
there, just sitting around waiting making that particular connection.
My point is, the long hauls pay the money and that is where the
competition went. Yes, you can fly from here to Frankfurt, Germany, and
back for $279. We will find you the ticket. We got hold of one of them
and I kept it on my desk to show how you could do it for the long
hauls.
But what really occurred, then, was 85 percent of America--small- and
medium-sized communities--was subsidizing and financing the long hauls.
Along with that long-haul competition went everything that you could
think of, from movies, to chances for a bottle of champagne, to bigger
and better meals, to bigger and newer equipment that they started
ordering, and they all thought they had a wonderful idea. We are going
to put all the new equipment in, and we have the clean plane and all
the different services and the prizes you can win and the contests and
the free flights that you can win, and they all just went overboard. We
looked around, and the airlines are broke.
Do you know what, Mr. President? The regulated have taken over the
deregulated. KLM is financing Northwest. British Air is financing U.S.
Air. Here comes the regulated airlines out of Europe--this is meeting
yourself coming around the corner now, and still you get 50 different
commissions in Washington.
They do not want to speak the truth and have any hearings on really
what is happening. But, they are trying their best to recover with the
financing of the regulated. They went right back to where we were
regulated. It was a wonderful situation. We had the local communities
financing and building the air fields.
I know, I was a lawyer at that particular time. We would make
appearances and help the communities get the service. So once we had
the facilities built by the local community, we then went to an airline
that was willing to provide the service. And on the basis of public
convenience and necessity, on the basis of the public interest--not
competition, competition, competition--on the basis of public
convenience and necessity, we would come to the Civil Aeronautics Board
and prove our case and say, ``Here are the facilities. Here is the
airline. Here are the services they are willing to provide for us.''
That is how air travel developed in America. Generally speaking, the
banks and insurance companies owned the equipment and good operators
operated the thing in a very competitive way. We had hearings. You had
competitive prices. They were all solvent, they were all strong, until
the disease and virus started here up on the floor of the National
Congress that somehow they were not competitive. If we could get
competition into it instead of public convenience and necessity, we
really could let those market forces and venture capitalists come in.
Now no venture capitalist wants to invest in the blooming thing and
they are going to employees, saying, ``Please, if you want to save your
job, why don't you put up some money? Go to your little piggy banks,
employees, and put up your money, because we have done it. We have
cleaned their clock with so-called venture capitalists and market
forces.''
Now why did they not recommend this and why does the White House?
Nothing happened because it should not happen. They did not have at
this particular commission any testimony whatsoever from consumers.
They had no testimony from those who handled or are involved in
aircraft accidents.
They had the aircraft people there who were writing out their ticket.
Of course, they wrote down this thing because, yes, in 1978, what was
it, 17,000 planes. The 17,000 planes are still around. With prosperity
and the way they built them, thank heavens, they are still here and
they are all ready to fly. We just do not have the need.
Air travel has gone down with the recession. It is coming back now.
It is back up from the 1993 figure given by the distinguished Senator
from Missouri over 1992. We have given the facts on how they are all
coming back, Beechcraft and Cessna and all the rest of them.
But that is not to say that we here are trying our best to produce
airplanes. I think our primary responsibility--salus populi suprema
lex--the safety of the people is the supreme law. That is old common
law from Roman days.
Yes, we have made it safe with product liability, and product
liability has worked. We have put in the facts and figures from the
National Transportation Safety Board how they finished in accidents and
got greater safety and greater confidence.
Now we are creating that and we have airlines that are trying to
recover. Some have got the employees to come in. Like I say, some
others have got the regulated Europeans financially to save them.
The one in my back yard is on the front page of the business section
this morning, trying to regroup before British Air puts its money in.
It was going to put in millions and millions more. They are holding up
because my particular airline that serves my backyard did not retrench
with respect to the employees. They made a representation, as I
understand it, not to have any discharge or what they call downsizing,
layoffs.
Downsizing is the polite word for firing the poor folks. But that is
what is going on. Hundreds and hundreds and thousands and thousands of
jobs. They are having to downsize on account of the monkeyshines of the
National Government, namely deregulation.
That is what wrecked the airlines. I have been here. I have seen it.
I have worked with the airlines. I have helped represent them. I have
represented others. I know from hard experience, deregulation--and you
will not find it in these nice pretty magazines or the glossy little
charts that they use at the Airline Commission. They brought the glossy
charts and the glossy pictures, but did not hear from anybody in the
business that was really handling these accidents and saying we ought
to do something about product liability. They sneaked in this
particular endorsement.
Well, I am glad the White House has got better sense on this
particular score. They met with the preordained conclusion. And one of
the conclusions that upsets this particular Senator is a matter of
begging the question when it comes to deregulation.
My distinguished friend, the former Governor who chaired the
commission, Governor Baliles, wrote an op-ed piece for the Washington
Post. When I read that, I said, ``Katie bar the door. He has been taken
over,'' because that is not the case at all.
They need money, and why they need money is that they went
immediately for where the competition was, the long hauls, and they
just had a free for all, like the Katzenjammer kids falling all over
each other. Like you see the Bell companies doing right now, trying to
invest hither and yon. They are saying, ``We got to hurry up. We
understand there are only going to be five of us left, and we want to
be one of the five.''
They keep putting in the money for the new equipment, and ordering
the planes, and putting on the prizes, and putting on the free
champagne and the free trips and everything else that they could think
of. Now they look around and they are all broke. If we had kept the
regulations on we would have a strong airline industry like they have
had in other countries, and like we had in the United States of
America. So as we are waiting for the negotiations, I do not mind
discussing, at any time, the airline industry because I have been on
this committee 20-some years. We have worked with them. We have heard;
we have watched these reports.
The product liability has achieved at least that. We might not have
all the equipment we want at the airfields; we might have a pilot--and
this Senator fought alongside the distinguished Senator, side by side,
to have random drug and alcohol testing in transportation: Railroad
conductors, bus drivers, truck drivers; and, yes, airline pilots.
Yes, we fought and we fought and we fought, and we finally got random
drug and alcohol testing. We had to pass it 11 times, over there, to
the House side. Finally, we only got results when we put a rider under
the appropriations bill.
But I worked with my colleague here and I admire him greatly. We have
the safety with respect to the pilots. We definitely have safe
equipment as a result of product liability. Now we need to go to work
on the airports, which we are doing in Denver. We are behind the curve
there on that particular billion-dollar development. I welcome it. But
we need that. It is the first one in 20-some, 30 years, almost. We
need, all over this country, new airport facilities of that kind. But
it has not been because we just get something done. That is a pretty
good plea, to get something done. That is what our plea is with respect
to the subject of this bill. This bill has to do with the advanced
technology program. It is peer reviewed; industry initiated; and, in
the major part, industry financed.
We do not pick winners and losers. That industry has to come. It is
not us picking anybody. Once they come with a particular idea, they
have to say they are going to finance at least 50 percent. And the
practice has been over 50 percent, over half of it. And we say, still,
that is fine business, but we have to have the National Academy of
Engineering peer review this thing. There is to be no political
decision of winners and losers. And once that is done, it has been
highly successful.
Similarly, with the regional research outreach of the manufacturing
centers. Now we have seven; we hope to start catching up more with the
Japanese. That is the global competition. They have 170. This
administration talks about, by the end of the century, they hope to get
100. We do not know whether we are going to get the money. But we know,
moneywise, this is less than 2 percent of what the Federal Government
expends on research. Less than 2 percent of the $70 billion the Federal
Government spends--$40-some billion over in Defense; so much over in
Energy; so much in Agriculture, and so on. This is the least amount:
Tested, tried, and true; checked off by the Small Business
Administration; checked off by the National Science Foundation, and
checked off by the National Academy of Engineering. And in a very
deliberate, positive, tested way.
It passed unanimously the year before last. It went to the House. We
had in the committee, Republicans and Democrats, signed off on the
conference report. But it was held up politically here on the floor of
the Senate.
We came back again in May of last year and it passed unanimously:
Every Republican vote, every Democratic vote in the Commerce Committee.
It was put on the floor. And now, when we should have passed this last
night by unanimous consent, they have instead turned it into open
sesame: Let us put everything and anything we can think of on this
particular bill.
That would be most unfortunate. There has been a lot of
reconciliation, giving and taking. There has been a lot of good study,
and predominantly the overwhelming support of the business, science,
and technology competitiveness community. I do not know of any who
oppose it. They have all worked on this hard. Staff worked around the
clock over here. Over the last several years, they have worked
developing this.
Now, when we want to do something, they want to muck it up with any
and every little pet bill they have in their minds. Whatever the
dispute is with the Judiciary Committee--fine. Let them settle it.
Whatever dispute they may have on their particular bill, they have a
vote in our committee and it has been out for quite some time. Whatever
dispute they might have on international trade and GATT--fine. Let them
take that up. But I am getting reports through the staff that they have
all kinds of amendments coming up here. That would be disastrous.
I am given a list. They tell me that they have--I do not know, but
that is what we are talking about: A Danforth amendment on
greenlighting subsidies on GATT; a Grassley amendment on product
liability reform; a Cochran amendment on EPA regulations; a Wallop
amendment on regulatory flexibility analysis; a Nickles amendment on
transportation-related regulatory reform; a Kassebaum amendment on
general aviation liability; and a Simpson substitute that is inclusive,
all wrapped up in one. If you want to know why nothing gets done, here
is where you can bet your boots nothing will happen on this bill, or it
could go anywhere--Brown, Davis-Bacon and service contract repeal;
Coverdell, U.S. Postal Service intrusion bill, Paperwork Reduction Act;
Wallop-Boren, Rural Community Reinvestment Act; Kempthorne, Hero Act;
Nickles-Reid, Economic and Employment Impact Act; Dole, Private
Property Regulation Act; Hatch, Regulatory Accountability Act; Gramm,
to be announced. And on down the list. On down the list.
I plead with the common sense and understanding and fraternity of the
body that we just withhold these. Let them come up in their normal
order, or whatever it is, because it is quite obvious, if that is the
strategy--let us call it that--if that is the strategy, nothing is
going to happen on this bill or any other bill.
If we passed all these measures and put it on the bill, that would
never pass muster on the House side. It would kill the bill. I do not
know if you would have a majority vote for this bill even though you
had a unanimous vote for it on two occasions from this House and out of
the committee and on a bipartisan basis.
Those who talked eloquently--and the reason I comment as I do is
because I have not had any of my Republican colleagues who worked on
this bill come forward and talk in favor of these bills. All we had
was, ``Hush, don't you say anything. We have all these other
amendments, and that is what we will put up.'' That will destroy this
bill; and if that is the argument of why we cannot do something, that
is the best example. It is all political; not germane whatsoever. We
considered everybody when we were within the committee, Republican and
Democrat. They never mentioned GATT; they never mentioned regulatory
reform; they never mentioned general liability on aircraft. They never
mentioned any of these things.
So we know our bill. We know our measure. And we know also how
nothing can get done if that is their wish.
Mrs. KASSEBAUM. Mr. President, I wonder if the Senator from South
Carolina would allow me just a few comments to express----
The PRESIDING OFFICER. The Senator from Kansas [Mrs. Kassebaum], is
recognized.
Mrs. KASSEBAUM. I am not part of any strategy. I have greatly
respected the chairmanship of the Senator from South Carolina of the
Commerce Committee. For a number of years, although I know he has not
been a supporter of general aviation product liability----
Mr. HOLLINGS. Will the distinguished Senator yield?
Mrs. KASSEBAUM. He has tried to be accommodating to at least let me
have a voice. I would be happy to yield.
Mr. HOLLINGS. What the Senator does is give prestige and dignity and
credibility to the statute because she is known as one of the
outstanding bipartisan Senators, ultimately fair. And when the Senator
comes with her particular amendment, they all sort of join in and she
gives credibility and dignity and prestige to the strategy. That is
what is occurring.
Mrs. KASSEBAUM. Mr. President, I very much appreciate those comments.
I would just like to say all I really want is a vote and for some time
have tried to make the case why we do need to have general aviation
product liability.
I would make the case also, Mr. President, it is germane to S. 4. S.
4 is an effort to speak to technology, to speak to the needs of
competitiveness in this country in the future. The general aviation
product liability bill speaks to the same means except it does
something--it really will add production.
This morning there were comments made about how well the general
aviation industry was doing, and it has had a rebound, Mr. President,
that is true, but not in piston-powered planes. It has been the top-of-
the-line jet planes that obviously have done well in recent years.
But that is not where we are losing the industry. Where we are losing
the industry is most Americans really want to be able to buy the
smaller, light planes. So I think it is germane. I think it speaks to
jobs. I think it speaks to technology. I think it speaks to the ability
of workers who may be dislocated for one reason or another, even those
who may need retraining, to be able to find a number of jobs in an
industry that has lost a lot through the years.
I believe the case can be made in fact that it has largely been lost
because of cost, cost that is directly due to having to meet the high
price that comes from settling a case, many times settled when it has
not been the fault of the manufacturer but money having to be spent in
order to address the issue that has been raised.
It has a logical place on this bill, Mr. President. I hope we can
continue the debate. I think it has a great deal of merit. I would be
the first to say, as would everyone else, that if there is defective
manufacturing which has caused an accident, then those victims
certainly should be compensated--if it is due to manufacturing within
the 15 years. Any plane that has withstood for 15 years, solid design
and manufacturing, is not going to face that kind of situation.
But I would also say manufacturers should not pay for pilot errors,
and they should not pay for air traffic control errors. These are
things over which they have no control. But because they have the deep
pockets to pay, they are then sued. This is why I believe it is
important for us to address this now. Manufacturers should not pay when
their planes are improperly maintained or repaired or modified by
others. There are strict standards that have to be met.
For those who are fliers and have not flown but kept a little plane
in the hangar that has not been properly maintained, have not flown for
a couple years and decide to take the plane up and because of their own
errors have had a crash and lives have been lost or serious injury
occurs, it is not the manufacturer's fault in that instance, and that
is the difference. It is a difference which I think needs to be clearly
understood and clearly made.
There should and would be just and fair compensation if it would be
the manufacturer's fault within the framework of the limitations that
would be imposed on a manufacturer. But where there is a faulty part,
any good pilot is going to replace that part, and a whole new 15-year
cycle starts once a part has been replaced.
So there are many just and fair reasons why this should be a part of
this bill, S. 4. We have debated this many times.
I further add, Mr. President, only 1 percent of all general aviation
accidents are caused by design or manufacturing defects, and almost all
of those accidents occur within 8 years from the time the plane is
built.
An analysis by the National Transportation Safety Board shows that
from the years 1983 through 1990, 99.9 percent of all general aviation
accidents were caused by something other than a design or manufacturing
defect in a plane that is over 15 years old. Nevertheless, the
manufacturers are constantly being sued for their older planes.
I feel very strongly, Mr. President, that we end up debating these
points which I believe most of us would feel are very logical points,
but there are those in the legal profession who view this as a camel's
nose under the tent and see this as an opening in tort reform that they
do not wish to address.
It is not that. I think we should take it for what it is. It is a
fair way to address a problem that has existed for the manufacturing of
light airplanes and, if we can pass this legislation, will mean exactly
what the chairman of the Commerce Committee is trying to address with
S. 4, stronger industry, advancing technology, jobs for those in a
field that will again make the United States a leader in general
aviation aircraft. I believe that in a very simple way we have answers
here that will mean a great deal to the very issues the Senator from
South Carolina has been addressing.
I yield the floor.
Mr. DANFORTH. Mr. President, will the Senator yield for a question?
Mrs. KASSEBAUM. I would be happy to do so.
Mr. DANFORTH. I ask the Senator to respond to a point that was made
just before the break for lunch with respect to the effect that this
amendment might have on safety in manufacturing general aviation
aircraft. The point that was made by opponents was that this really is
a safety issue and that somehow manufacturing would be less safe if
this amendment were adopted.
But what I hear the Senator saying is that most accidents in general
aviation are not related to the construction or the design of the
aircraft, and that the overwhelming percentage of those accidents that
are related to manufacturing/design occur in the first 8 years of the
aircraft's operation, and that a tiny percentage have to do with
anything that happens after 15 years.
So my question to the Senator is, In the real world of manufacturing
and the exercise of care in putting a product on the market, is it the
Senator's view that this amendment would have anything at all to do
with the real world of safety?
Mrs. KASSEBAUM. Mr. President, I appreciate the question from the
Senator from Missouri, the ranking member of the Commerce Committee.
It would not jeopardize safety at all. The aviation industry and
general aviation is guided each step of the way from the beginning
design to the completion of the plane by Federal safety guidelines.
There are various steps of certification that have to be met. There are
manuals that lay out exactly what needs to be done to maintain a plane,
approval along each step of the way. In no way will safety be placed in
jeopardy.
The Senator from Missouri is exactly correct when he said that 99.9
percent of all general aviation accidents were caused by something
other than design or manufacturing defects. As you say, those would be
with 8 years or less.
I think this is an industry that has to meet such stiff requirements
for safety all along the manufacturing process that the safety will
never be placed in jeopardy. One of the reasons that we have a higher
safety record today is that we have imposed and continue to impose such
high standards for safety. We have lights on runways now, we have the
ability to project with the highest technology from the air traffic
control system--we are constantly seeking to improve that--plus pilot
training.
Those are things that we can continue to do. Hearings have been held
many times over the years in the Commerce Committee regarding aviation
and the safety of aviation. Those are things that will not be affected
at all by this legislation.
Mr. President, I yield the floor.
Mr. HEFLIN addressed the Chair.
The PRESIDING OFFICER. The Senator from Alabama [Mr. Heflin], is
recognized.
Mr. HEFLIN. Mr. President, I am delighted to agree with Senator
Hollings on his evaluation of Senator Kassebaum. We all have the
highest respect and regard for her.
She, of course, says that she is not a lawyer and does not have legal
training. I think she does a great job of articulating her position.
But she may not, therefore, be in a position to evaluate certain
aspects of this bill.
It was interesting to me to see that she did admit that the general
aviation industry is on the rebound and is doing well, but that the
piston-powered aviation is in trouble. She recited the number of
instances where there has been a reduction in the number of units that
have been manufactured.
It would appear to me that this bill might not have as much
opposition if it was limited to piston-powered aircraft. But included
in it are jets, helicopters, military planes, Medivac. I do not believe
you would have a choice if a Medivac plane came to you, and it had a
big sign on it: ``Enter at your own risk because this plane is 15 years
old,'' and therefore no one can recover if there are manufacturer's or
design defects.
This bill has been changed tremendously. That is one of the reasons
why I think it ought to be referred to the Judiciary Committee for a
sequential referral. Nothing really in previous bills is contained in
this bill. It is entirely new. There was a previous bill with a much
higher statute of repose. There is nothing in this bill to prevent
frivolous lawsuits, as the argument has been made many, many times that
we must stop these frivolous lawsuits.
There is nothing in this bill; only one thing: The statute of repose.
If there is a frivolous lawsuit brought when there is a defect, a
design or manufacturing defect, failure to warn defect, whatever it
might be, if it is 10 years old, if it is a frivolous lawsuit, there is
nothing in this bill that stops it.
We hear a lot about punitive damages; that they have gone out of
control, and we have these punitive damages. I thought Senator Hollings
was very much on point when he pointed out that, not personal injury,
business versus business is where most of the punitive damage lawsuits
arise, and the big verdicts such as he cited in that case in Texas.
There are no caps on damages. We hear a lot about a need for caps on
damages. There is nothing like that in this bill. We hear that there is
a great danger today, and it is an injustice some people say in regard
to joint and several liability--there is no joint and several liability
limitation in this bill. It is still a 15-year statute of limitation.
We hear a lot about, there ought to be caps on noneconomic damages
such as pain and suffering, and that therefore that is where a lot of
the ills and product liability suits have occurred, and the juries have
awarded money that causes noneconomic values. There is no effort made
in this bill relative to that.
We hear a lot in regard to the English rule, that the loser ought to
pay. There is nothing in regards to that.
You start tracing the history of the legislation that has been
proposed, and the reasons that came out about it, and you have seen
drastic changes take place.
Now we are down to just one issue, one issue, and that is the issue
of the statute of repose, which is different from a statute of
limitation. It says under no circumstances can you bring a lawsuit to
recover for manufacturer's defects or manufacturer's design problems.
Any of those things can occur.
Regardless of age, they are talking about the number of years. I am
trying to remember. Maybe I have it somewhere. I think I have, and I
will refer to it later. But it is something like this: That in 1958, a
manufacturer of a small plane, which would have been under the
classification of general aviation, had brought to its attention that
the design of that plane could cause the plane to break apart. They did
not do anything about it. They sat back, and they were willing to
gamble rather than recall the planes that they made and change the
design.
A jury case was brought, and the verdict was against the manufacturer
for its failure to heed the warning of its own people that the
airplane's design could cause it to break apart. They did not do
anything about it. Finally, after a verdict, they did something about
it. But it was, if I remember, something like 29 years after they had
knowledge of it, before they did anything.
I want to get the facts of that case, and bring it up. When they did
not do it, you have a situation where you are asking that, therefore,
if we discover something that is in the design, or the way one part of
it reacts with another, we are in a situation where you should have
known and should have done something to correct it. And they did not do
it. But they say, all right, after 15 years we just sit back and wait
until the 15 years run, and we will not have any problems with it. We
will not do it.
I listened to the colloquy, and I really think they are a little
naive in regard to the fact that they would take out all safety and
there will not be any problems in aviation. But there are many
instances in the manufacture of others. I remember an automobile
manufacturer in a case where it was brought to their attention that the
gas tank was located in a certain locality and it would be very
dangerous, particularly in a rear-end collision. The evidence was that
there was a memorandum that: We can save money by going ahead and
paying the costs of those who get injured or killed and who, therefore,
sue us.
They calculated what the recovery would be, as opposed to what it
would have to be to take the automobile off the market and make a
redesign. And on a pure dollars-and-cents basis, they said: We will pay
the damages, suffer the lawsuits, and it will come out a lot cheaper if
we follow that. There was a complete disregard to the deaths, the
injuries, the family suffering, and the consequences which could have
occurred.
There are things that, as we think about this, cause us a lot of
concern. I think that we are going to have to look sort of carefully as
to what may happen in the military. I discussed this briefly before,
but the helicopters, the fixed wings today that are being used--if you
go to a military base and you see the planes that are generally being
used, particularly the training planes, they are practically all over
15 years of age. We do not know what had gone on pertaining to the
design; we do not know whether there is metal stress, which is a matter
that occurs after years; it does not occur during the first 8 years or
10 years. Most of those planes are sold under the idea that they can be
used for 30, 40 years. I wonder how many planes we could look at in the
military today and find they are not at least 30 years old.
We have a situation in which you in effect are saying, all right, if
you go into the service and get into this helicopter, then because of a
defect that occurred in the design, or a manufacturing defect, or metal
stress, or numerous other instances, a person is injured; but they do
not have any right of recovery against the manufacturer who has
designed it or whose manufacturing activities created the problem that
caused the death. Those people usually will end up costing the
Government money.
We are downsizing the military today, and I do not anticipate that we
are going to be buying a great number of new planes. We are going to
have to rely on the older ones. It seems to me that the safety of the
various people in the service ought to be of paramount concern to the
Members of this Congress.
I will have other things to say. There may be others who want to
speak on it.
I yield the floor at this time.
Mrs. KASSEBAUM. Mr. President, to make a couple of points in answer
to the Senator from Alabama when he asks whether or not there would
perhaps be a separation, and does the 15-year statute of repose cover
piston-powered planes, and not jet-powered.
I just suggest, Mr. President, that the 15 years, when you have gone
without manufacturing or design defect, applies the same to piston-
powered or jet-powered. I think that whether it is the military or
civilian, if you have flown a plane for 15 years and there has not been
a defect, then clearly the plane is going to survive. I grant that
there would be an exception, but are we going to close down one aspect
of an important industry that has always been at the cutting edge of
aviation just because of those exceptions? There will be those and they
will have to be answered.
I feel that we are missing the point here when we try to bring in all
these other aspects. I am not quite sure about the military. I think
the military is going to keep their planes in good repair. They are
constantly being flown. During any stress tests, if they show a part
needs to be replaced, it will be replaced, and a new 15-year statute of
repose would go into effect. So it is a rolling sort of limitation.
I think just in answer to the sequential referral and the comments
about the Judiciary Committee--and perhaps I mentioned this this
morning, Mr. President, but I know what would happen in the Judiciary
Committee. It has been there twice before, and both times it was
reported out unfavorably. While the Senator from Alabama mentioned this
is very different, the statute of repose has been addressed before in
the Judiciary Committee. Yes, I think in 1990 it was a 20-year statute
of repose. We have changed that to 15 years because we have given up a
lot of other things that were in that bill at that time, such as joint
and several liability and the ability to have Federal standards. These
were things that we gave up.
We certainly did not address punitive damages because that was
clearly objected to. That is why we decided to make it as narrow and
specific and as reasonable as possible. That is what I think we have
done, Mr. President. I do believe the Judiciary Committee certainly has
addressed itself and has said in the past that statute of repose was
not something that most of the Members of the Judiciary Committee could
support in any form. So I know well what the views of the Judiciary
Committee would be, and I think they have been expressed in the past.
That is why it seems to me the debate really comes down to the fact
that a plane manufacturer, whether jet-powered or piston-powered, after
15 years, should be sued for a design or manufacturing defect. If it
has been flying for 15 years, I think it is proven that there is not a
manufacturing or design defect.
I yield the floor.
Mr. HOLLINGS addressed the Chair.
The PRESIDING OFFICER (Mr. Wellstone). The Senator from South
Carolina is recognized.
Mr. HOLLINGS. Mr. President, I will complete the record with respect
to the cases that were cited by my distinguished colleague from
Alabama, because these things continually occur. It has been my
contention throughout that product liability is working, is necessary,
and should not in anywise be weakened or diminished with respect to
verdicts being had against clients.
I will elaborate on that, because that is not the case, and
manufacturers should not be held responsible, as the distinguished
Senator from Kansas points out, with respect to maintenance. But that
is not the issue. The issue is about the manufacture itself. I read
from an article December 8, 1992, of the Washington Post, and I ask
unanimous consent that this article in its entirety be printed in the
Record.
There being no objection, the article was ordered to be printed in
the Record, as follows:
Investigation of GM Trucks
(By Warren Brown)
The government will open an investigation today into
allegations that General Motors Corp. made pickup trucks with
improperly positioned gas tanks that can rupture and burn in
side-impact collisions, sources said yesterday.
At issue are GM's 1983-87 C/K model pickups, which some
consumer and auto safety advocates say have caused 300 deaths
in fiery crashes. An estimated 8.8 million of those trucks
were made; some 5 million remain in service today.
The trucks in question, such as the GMC Sierra and
Chevrolet C/K 1500 series, are equipped with ``sidesaddle gas
tanks,'' whose location on the trucks contribute to crash
hazards, the safety groups claim. The tanks are positioned
outside of heavy metal, ladder-frame rails, and those rails
support the truck's cab and cargo bed. By locating gas tanks
outside of the rails, GM made them more prone to explode when
the trucks are struck from the side, the consumer groups
contend.
Two of those groups, the Center for Auto Safety and Public
Citizen, both based in Washington, have petitioned the
National Highway Traffic Safety Administration (NHTSA) to
open an investigation into the matter. Today, according to
government and industry sources, NHTSA will announce the
beginning of an engineering analysis, the first phase of a
federal probe into potential auto defects.
GM has denied that its 1983-87 C/K pickups are defective
and has issued detailed rebuttals of the consumer groups'
charges, which have been aired on several network television
news shows.
The opening of an engineering analysis does not mean NHTSA
actually has reason to believe a defect exists. The agency
opens up dozens of such investigations annually, sometimes in
response to intense public pressure, as in this case. NHTSA
has until next Monday to answer the consumer groups' petition
and decide if it will proceed with a study of the C/K truck
charges.
GM in 1988 changed the location of gas tanks on its
pickups, placing them inside the ladder-frame rails. But GM
officials said yesterday that the change had more to do with
an overall redesign of the trucks than it had to do with
safety.
GM's newer pickups have wider spaces between the frame
rails, which allow for easier placement of gas tanks inside
the rails, GM officials said. Also, the wider stance of
the newer trucks helps them to ride and handle more like
cars, a characteristic desired by consumers nowadays, GM
officials said.
GM's older C/K trucks are safe, spokesman Ed Lechtzin said.
``The chances of being involved in a fatal accident in that
truck'' in which a fuel tank explodes ``are about the same as
being in a fatal accident in any truck, which is pretty
small,'' he said. The consumer groups' claims that C/K trucks
caused 300 fire-crash deaths are ``vastly exaggerated,'' he
said.
NHTSA officials say there is no official confirmation of
the cause or the number of deaths cited in the consumer
groups' claims.
However, the consumer groups claim that much of the safety
information regarding the C/K pickups is contained in volumes
of court documents filed in conjunction with a 1990 product
liability suit in Fort Worth, Tex.
The suit by Rose Zelenuk of Arlington, Tex., alleges that
her husband burned to death in a 1989 accident in which his
1987 C/K truck was struck in the side.
NHTSA's safety investigation could lead to a court-ordered
recall of GM's trucks. But such recalls are rare. More often,
the investigations have been dropped for lack of evidence, or
the agency and the automaker have agreed on a voluntary
recall.
Mr. HOLLINGS. I read as follows:
The government will open an investigation today into
allegations that General Motors Corp. made pickup trucks with
improperly positioned gas tanks that can rupture and burn in
side-impact collisions, sources said yesterday.
At issue are GM's 1983-87 C/K model pickups, which some
consumer and auto safety advocates say have caused 300 deaths
in fiery crashes. An estimated 8.8 million of those trucks
were made; some 5 million remain in service today.
Then following that particular article, Mr. President, I ask
unanimous consent that a November 5 article in the New York Times, be
printed in the Record in its entirety.
There being no objection, the article was ordered to be printed in
the Record, as follows:
[From the New York Times, Nov. 5, 1993]
Settlement Backed in Texas on G.M. Pickups
(By Barry Meier)
A Texas state judge approved a settlement on Tuesday under
which the General Motors Corporation will give $1,000 coupons
to 645,000 owners of older pickups that Federal safety
officials say may pose a fire hazard.
The settlement resolves a class-action lawsuit bought in
1992 on behalf of Texas owners of full-sized G.M. pickups
built between 1973 and 1987. The plaintiffs claimed that the
fire risks posed by the vehicles' side-mounted fuel tanks had
reduced their resale value. A similar case involving 5.7
million G.M. pickup owners nationwide is pending on Federal
court in Philadelphia.
In April, the National Highway Traffic Safety
Administration made a preliminary finding that G.M. pickups
with side-mounted tanks were more prone to catch fire when
hit in the side than competitor's pickups made in the same
years. G.M., however, said the trucks were safe and rejected
the agency's request to recall the pickups voluntarily and
repair them.
$500 Certificates
Under the Texas settlement, the coupons can be used by
owners of the pickups toward the purchase of a new G.M.
pickup or light truck. The coupons can also be exchanged for
$500 certifiicates that pickup owners can sell.
In approving the settlement, Judge Bonnie Leggat said she
believe it was fair and reasonable. Pickup owners who accept
the offer do not lose their right to sue G.M. in case of a
product-related accident, nor are they prevented from taking
part in any future recall to repair safety defects, should
the Government eventually order one.
In Philadelphia last month, Judge William Yohn Jr. of
Federal District Court heard arguments in support of the
$1,000-coupon settlement from lawyers representing G.M. and
pickup owners. Dozens of lawsuits from around the country
were consolidated in the Philadelphia case.
Though some consumer groups oppose the coupon settlement,
only 11,653 of the 5.7 million truck owners who were notified
of the proposed settlement in the Philadelphia case have
formally criticized or rejected it.
A formal investigation of G.M. pick-ups by Federal highway
safety officials is continuing.
Mr. HOLLINGS. Mr. President, I cite from that:
A Texas state judge approved a settlement on Tuesday under
which the General Motors Corporation will give $1,000 coupons
to 645,000 owners of older pickups that Federal safety
officials say may pose a fire hazard.
The settlement resolves a class-action lawsuit bought in
1992 on behalf of Texas owners of full-sized G.M. pickups
built between 1973 and 1987. The plaintiffs claimed that the
fire risks posed by the vehicles' side-mounted fuel tanks had
reduced their resale value. A similar case involving 5.7
million G.M. pickup owners nationwide is pending in Federal
court in Philadelphia.
Then, of course, Mr. President, these are cases that come down to the
safety officials having to go into them that act like manufacturers are
being found against and damages awarded.
There is the case, of course, very recently here in October, the fall
of last year, where:
One of the world's largest health care products companies
has pleaded guilty to violating federal statutes governing
the safety of medical devices and agreed to pay a record $61
million fine, federal officials said yesterday.
C.R. Bard Inc. of Murray Hill, N.J., deliberately sold
faulty surgical devices and used unsuspecting heart patients
as ``guinea pigs'' to test new products, federal health and
justice officials said.
I ask unanimous consent that the entire article be printed in the
Record.
There being no objection, the article was ordered to be printed in
the Record as follows:
[From the Washington Post, Oct. 18, 1993]
Firm Fined for Selling Faulty Surgical Devices
(By John Schwartz)
One of the world's largest health care products companies
has pleaded guilty to violating federal statutes governing
the safety of medical devices and agreed to pay a record $61
million fine, federal officials said yesterday.
C.R. Bard Inc. of Murray Hill, N.J., deliberately sold
faulty surgical devices and used unsuspecting heart patients
as ``guinea pigs'' to test new products, federal health and
justice officials said. According to federal grand jury
indictments handed up late Thursday and announced yesterday
in Boston, the products failed in about 50 operations,
causing one heart attack and one death.
In one of the biggest health care fraud investigations in
the history of the Food and Drug Administration and the
Department of Justice, Bard agreed to plead guilty to 391
counts of conspiracy, mail fraud, lying to regulators and
shipping ``adulterated products'' that were not approved by
the FDA. The $61 million in criminal fines and federal civil
claims is several times larger than any in the history of FDA
enforcement cases.
The charges concern angioplasty catheters manufactured by
Bard's Massachusetts-based USCI division. The devices use
tiny balloons that are inflated to push open clogged arteries
and then deflated before removal.
In the plea bargain, the company admitted that from 1987 to
early 1990, it violated the Federal Food, Drug and Cosmetics
Act and other statutes by distributing catheters that had not
been properly tested or approved, and by routinely making
changes in the materials and design without notifying the
FDA, as required by law. The company admitted it did not tell
doctors, their patients or the FDA about problems they
encountered with the products.
The company covered up problems, including arterial damage
and a tendency of the tips of some devices to fall off. The
defects created a risk of heart attack and in 22 cases
required emergency bypass surgery--the very procedure
angioplasty is usually intended to avoid.
William G. Reilly Jr., a spokesman for Bard, said ``The
management of C.R. Bard Inc. sincerely regrets the activities
that led to this plea agreement. . . . Bard and USCI
products, including all angioplasty products, have received
all necessary FDA approvals. All Bard products on the market
today can be used with confidence.'' The company earned $75
million in 1992 on sales of $990 million.
As part of the plea bargain, the company has agreed to a
series of stringent remedial measures, including scrutiny by
an outside consultant who will report to the FDA. The company
said it ``reorganized and restructured its management team''
in 1990, and withdrew all products deemed out of compliance.
U.S. Attorney A. John Pappalardo, who investigated the case
with the FDA, said yesterday in Boston that ``this
extraordinary settlement with Bard is a reflection of both of
the severity of the criminal conduct of [USCI] . . . and
Bard's desire to assure that this unfortunate episode in its
past is never repeated.''
The Boston grand jury also handed up a 393-count indictment
charging George T. Maloney, chief executive officer of Bard,
and five other former officers of the company with violating
federal laws. If convicted, the defendants face sentences
totaling more than 1,000 years in prison and millions of
dollars in fines. Maloney has left Bard ``to help prepare his
defense,'' the company said yesterday.
Balloon angioplasty is one of the medical success stories
of the 1980s, allowing obstructed arteries to be treated
without opening the chest. Making only a small incision in
the groin area, a doctor snakes a catheter through a large
blood vessel in the leg to the blocked artery. The balloon is
then inflated, flattening the obstructing material on the
artery walls and opening the passageway.
Between 1980 and 1990, the number of angioplasties
increased ninefold, according to a report in the Journal of
the American Medical Association. In 1991, doctors performed
nearly 300,000 of the procedures, according to the National
Heart Lung and Blood Institute.
Bard rode the angioplasty wave. From 1980 until 1985, it
was the only U.S. company with FDA permission to market heart
catheters. By the mid-1980s, however, other companies had
jumped in; by 1988, Bard's share of the burgeoning market
dropped to 50 percent.
The federal indictment alleges that from roughly 1987 to
1990, Bard began to ``improve'' its product--but without
following the FDA's complicated procedures that are intended
to ensure safety and effectiveness. The indictment alleges
that by around 1988, the company had received at least 62
complaints that it balloons weren't deflating or were
wrapping themselves around the catheter. The company changed
the design, creating the ``B Probe,'' and distributed about
30 of the new devices to hospitals and clinics around the
country for evaluation, again without notifying the FDA.
Meanwhile, the company had applied for FDA approval for the B
Probe.
By December of 1988, complaints began to come in about the
B Probe's tips breaking off, but the company again did not
tell federal officials, the indictments said. In January
1989, the FDA approved the B Probe for human use. By May
1989, tips had broken off in about 50 procedures. By
September of 1989, Bard had sold approximately 18,000 of the
B Probe and newer devices.
The indictments also state that company officials hid the
existence of an entire plant from the FDA, packaging and
distributing catheters from a Haverhill, Mass., plant that
had not been inspected or approved by the agency. The company
told federal officials the devices were coming from an
approved plant in Billerica, Mass., and labeled them
accordingly, according to the indictment.
FDA Commissioner David A. Kessler said yesterday ``for a
company to engage in a pattern of using unsuspecting patients
as guinea pigs and operating rooms as laboratories for
unapproved products shows a blatant disregard for the health
and safety of the patients who literally entrusted their
lives to the company's products.''
Mr. HOLLINGS. Mr. President, one other little one--I am just getting
up to a recent one. We have a whole glossary of these. But here again
in the midyear of last year a Wall Street Journal article entitled
``Jury Awards $11.3 Million In Fatal GM Truck Fire,'' and I read the
little article in its entirety.
A federal court jury took less than three hours to return
an $11.3 million judgment against General Motors Corp. for a
truck fire that killed a woman.
Jurors decided Friday that gasoline spilling from a
defective fuel pump caused a 1985 Chevrolet S-10 Blazer to
explode on Feb. 23, 1990. They also ruled that the explosion,
not a preceding head-on collision, killed Beverly Sue Garner
of Bevier.
The lawsuit filed against GM on behalf of Ms. Garner's two
teenage sons claimed GM knew the fuel pump was defective.
For the first time in a case against GM, jurors were shown
a 1973 company report that estimated that ``for GM it would
be worth approximately $2.20 per new model auto to prevent a
fuel-led fire in all accidents.''
GM attorneys declined to comment after the verdict. They
had argued that the fire was caused by fluids from the other
car involved in the crash.
You see these show the jurors are looking at those facts and studying
them very carefully.
I ask unanimous consent that a November 1993 article of Business Week
be printed at this point in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
[From Business Week, November 1993]
Should Business Be Afraid of Juries? The Stereotype of Out-of-Control
Robin Hoods May Be Outdated
(By Linda Himelstein)
What do an investment bank, an auto maker, and a law firm
have in common? The answer: They all suffer from some strain
of juryphobia.
Salomon Brothers Inc. asks business partners to waive a
jury trial should a disagreement arise--preferring instead to
face only a judge. General Motors Corp. settles disputes with
its Saturn dealers before an arbitration panel made up of
Saturn employees and retailers. Its decisions are binding.
And the New York law firm of Paul, Weiss, Rifkind, Wharton &
Garrison paid $45 million in September to settle a civil case
with the government--even though the firm's lawyer contends
his client would have fought the charges had the government
agreed to drop its demand for a jury trial. These companies
and many others are working hard to sidestep juries--a legal
vehicle considered by many to be too costly, too time-
consuming, and just too risky. ``It's like playing with
loaded dice, and you're on the wrong side.'' says Jonathan A.
Marshall, a New York patent attorney.
Much of the uneasiness has been fueled by megaverdicts and
the publicity that follows. Remember the $1.2 billion award
Litton Industries Inc. won in September from Honeywell Inc.
in a patent case? Or when GM was hit in February with a $105
million verdict awarded to the parents of a teenager killed
in one of its pickup trucks--of which $101 million was in
punitive damages? Or the granddaddy of them all, the $10.5
billion awarded to Pennzoil Co. in 1985 in its fight with
Texaco Inc.? ``The jury is probably the No. 1 factor that
swings all of the parties to look at alternative means of
settling disputes,'' says Julie A. Welborn, litigation
management director at Liberty Mutual Insurance Co.
Overblown? Corporate fears are explained by one viewpoint
perennial in the business world: Juries are sympathetic to
plaintiffs, and they distrust defendants. They maintain that
jury trials too often are used to force monied defendants to
redistribute the wealth. ``A lot of people feel that if you
can't win the lottery, maybe you can win a good lawsuit,''
observes Donald Vinson, chairman of Decision Quest, a
consulting firm that helps lawyers analyze jury pools.
But Corporate America's fear of juries may be overblown.
Three independent studies of jury verdicts and jurors'
attitudes completed within the last year suggest that the
litigation explosion is on the wane. In fact, the studies
show that plaintiffs are actually losing a greater proportion
of cases today than they have in many years. Plaintiffs won
63% of all personal injury claims against businesses in 1988;
in 1992, they won only 54% of them, according to a study to
be released in November by Jury Verdict Publications. In
every category of personal injury litigation over the past
five years, except those involving automobile accidents, the
percentage of plaintiffs' victories have decreased.
Jury Verdict's study, which looks at everything from
product liability to sexual harassment in the workplace, also
refutes the popularly held notion that juries' monetary
awards are increasingly out of control. On the contrary,
awards have remained relatively constant in the past five
years. The notion that juries are wild, unpredictable, and
capricious is just not true,'' says Marc S. Galanter, a
professor at the University of Wisconsin Law School. ``People
have very distorted views about what juries do.''
In the area of product liability, the most controversial
and high-profile legal arena, the data are even more
startling. Defendants last year won 57% of those cases
brought by individuals, compared with only 46% in 1989, the
study shows. The number of product-liability suits filed is
also down. Excluding asbestos matters, cases filed in federal
court dropped to their 1985 level in 1991 with 12,413
filings, down from a high of 18,679, another study reveals.
For many plaintiffs' lawyers, the news on juries merely
supports what they have known all along. ``Juries don't give
away the kitchen sink,'' says Lee S. Kreindler, a New York
plaintiffs lawyer. ``Plaintiff bias has been overstated.''
The apparent trend away from skyhigh verdicts and
escalating litigation is so palpable that even tort
reformers, whose arguments are undercut by evidence of sane
juries, are acknowledging it. In fact, they are taking credit
for it, pointing to their campaigns to educate the public
about the economic consequences of excessive verdicts. But
William D. Fay, executive director of the Product Liability
Coordinating Committee, cautions his allies from getting too
excited. ``The trend we see can always reverse the other
way,'' he says.
For now, it appears that jurors are indeed focusing more on
the financial implications of their decisions. Valerie P.
Hans, a professor of psychology at the University of
Delaware, interviewed hundreds of jurors and concluded that
they are generally probusiness. Hans says jurors are very
concerned about what role plaintiffs may have had in
contributing to their injuries as well as the economic impact
of verdicts on the marketplace and their own wallets.
``Jurors are not Robin Hoods,'' she says. ``Americans
generally believe that what's good for business is good for
the country.''
A third study dispels yet another widely held view--that
judges are more prodefendant than juries. A Cornell Law
Review study of verdicts in federal courts reveals that
plaintiffs in product-liability cases win 48% of the time
before judges, compared to only 28% with juries. The evidence
is much the same in medical malpractice suits, with judges
ruling half the time for plaintiffs, while juries find
liability in only 29% of the cases. The study finds little
difference between the outcomes of other types of cases tried
before judges and juries. ``I attribute the results to the
fact that plaintiffs' lawyers have too much faith in juries
and defendants' lawyers have too much fear,'' says Theodore
Eisenberg, a Cornell Law School professor who cowrote the
study.
Still, no academic endeavor can provide the definitive word
on how fair--or unfair--juries are. They don't take into
account suits that may be frivolous but are settled anyway by
defendants to avoid costly and protracted litigation. They
don't reflect the diverse attitudes of jurors from different
geographical areas. And, as with any disputed theory, studies
can be found to show that business is in as much legal
trouble as ever. Vinson, the jury consultant, says his
research indicates that more than half of all jurors hearing
product-liability cases come into court believing
manufacturers are guilty of wrongdoing. In employment
litigation, the presumption of guilt is about 70%. ``Having
been in the line of fire, working with real litigants on real
cases. I can tell you that Corporate America has a lot to be
worried about ``Vinson says.
Maybe so. But if these studies are any indication
businesses are becoming more adept at overcoming many of the
innate biases of juries. That's one sign that the system,
flawed though it may be, is working--welcome news for anyone
heading to court, no matter which side they're on.
Mr. HOLLINGS. Now, Mr. President, just not the entire article, but it
is in the Record here:
Corporate fears are explained by one viewpoint perennial in
the business world: Juries are sympathetic to plaintiffs, and
they distrust defendants. They maintain that jury trials too
often are used to force monied defendants to redistribute the
wealth. ``A lot of people feel that if you can't win the
lottery, maybe you can win a good lawsuit,'' observes Donald
Vinson, chairman of DecisionQuest, a consulting firm that
helps lawyers analyze jury pools.
But Corporate America's fear of juries may be overblown.
Three independent studies of jury verdicts and jurors'
attitudes completed within the last year suggest that the
litigation explosion is on the wane. In fact, the studies
show that plaintiffs are actually losing a greater proportion
of cases today than they have in many years. Plaintiffs won
63% of all personal injury claims against businesses in 1988;
in 1992, they won only 54% of them, according to a study to
be released in November by Jury Verdict Publications. In
every category of personal injury litigation over the past
five years, except those involving automobile accidents, the
percentage of plaintiffs' victories have decreased.
Jury Verdict's study, which looks at everything from
product liability to sexual harassment in the workplace, also
refutes the popularly held notion that juries' monetary
awards are increasingly out of control. On the contrary,
awards have remained relatively constant in the past five
years. ``The notion that juries are wild, unpredictable, and
capricious is just not true,'' says Marc S. Galanter, a
professor at the University of Wisconsin Law School. ``People
have very distorted views about what juries do.''
In the area of product liability, the most controversial
and high-profile legal arena, the data are even more
startling. Defendants last year won 57% of those cases
brought by individuals, compared with only 46% in 1989, the
study shows. The number of product-liability suits filed is
also down.
Then going on, and we could use other quotes here:
The apparent trend away from sky-high verdicts and
escalating litigation is so palpable that even tort
reformers, whose arguments are undercut by evidence of sane
juries, are acknowledging it.
Going down further:
Americans generally believe that what's good for business
is good for the country.
A third study dispels yet another widely held view--that
judges are more prodefendant than juries. A Cornell Law
Review study of verdicts in federal courts reveals that
plaintiffs in product-liability cases win 48% of the time
before judges, compared to only 28% with juries. The evidence
is much the same in medical malpractice suits, with judges
ruling half the time for plaintiffs, while juries find
liability in only 29% of the cases.
The reason I include those in the Record is I am in agreement with
the statement made by the distinguished Senator from Kansas that
manufacturers should not be held responsible-- she is exactly right--
for faulty maintenance or other cases that are not proved by the
preponderance of the weight of the evidence to the satisfaction of all
12 jurors. They must allocate to the defense counsel in America the
role of stupidity or morbidity, or whatever, because when you get a
case the burden is on you with respect to it because you can bet your
boots any lawyer worth his salt, and heaven's above, the manufacturers
of aircraft are certainly astute as shown by the record of the life
span now of these particular planes, which averages 27 years. They
necessarily would have the best of the best attorneys. But the
assumption is that all you have to do is bring the case and show the
jury and walk away with the money.
I know with respect to one particular medical malpractice case in my
own backyard they tried that for 3 weeks. It was a famous helmet injury
case. The distinguished Senator from Missouri had an earlier debate
relative to helmets, and they are still made. In fact, I once brought
one here to the floor. But I remember that particular case where they
tried to make a product liability case of a defective helmet and after
3 weeks the jury said, ``No way, Jose.'' They found for the defendant.
So, I know how jurors work. You have to come in and prove by the
greater weight of the preponderance of the evidence.
This is not a tie-tie case, where you put in enough proof to give
them money for the injury, but you have got to prove it by the greater
weight of the preponderance of the evidence to every one of those 12
jurors; not just to 9, or not just to 10, but to all 12 of the jurors'
satisfaction.
So that is why I read these cases in there, because you can see they
are egregious kinds of cases that could easily have been avoided by
corporate America. Thank heavens, the general aviation industry is
avoiding them. They are producing a sound, safe product.
Which brings me, Mr. President, to the statement made by our
distinguished colleague from Kansas that this bill does exactly what
the chairman of the Commerce Committee wants done; namely, this
particular Senator. Not at all.
I know what we have now. I know what we have is the highest degree of
care on a manufactured product technologically lasting 27 years. And
the amendment of the Senator from Kansas says, go in the other
direction and reduce the technological safety of that particular
device; namely, here, an aircraft, to 15 years. It goes in the wrong
direction.
What we are trying to do is get advanced technological programs--that
is the name of it, ATP, advanced technological programs--to have
greater safety, to have greater, higher quality. That is the global
competition.
When we are talking about those products that we are in competition
with in the global economy, in the global competition, we are always
being told quality, quality, higher quality products. So the advanced
technological program is to take regularly produced products and make
them advanced technologically, not retrenched technologically from 27
years down to 15 years. That is not what this Senator or the chairman
of the Commerce Committee wants at all.
No, this amendment is not germane, and if it were germane it puts us
really in the wrong direction. Here we have come through with the
National Science Foundation, we have come through with the best of the
best of American industry, we have come through with all of the
entities looking at the manufacturing processes and trying our best for
improvement in quality, improvement in safety, and here comes an
amendment that says, ``Let's not improve. Let's retrench. Let's cut
from 27 years to 15 years. Whoopee, after the 15 years, you can put in
any kind of part. Don't worry about it lasting. You are home free.''
That is what this particular amendment says.
So it is not in consonance with the subject matter of the bill. This
never was brought up in 1992 when we unanimously passed it out; never
even considered; even though we considered separately general aviation
liability, never a suggestion that it be on this bill.
Again, in 1993, when we discussed and went over everything in this
particular bill, all Republicans, all Democrats, never a suggestion
about general aviation liability, even though that very same committee,
all Republicans and all Democrats, reported out the general aviation
liability bill. But it was not on this one.
Now they come and say it is germane. And now they come and say it is
in the direction of S. 4. Not so, Mr. President. Not at all. This is
not germane. It is political strategy when you put it together with the
rest.
They have to send the distinguished Senator from Kansas downfield
blocking with her prestige. Yes, she has the prestige, but she does not
have the bill. She does not have the amendment. It is not germane. This
is not in the direction of advanced technology, whatever. It is a
retrenchment, at best, and certainly a subject matter that ought to be
treated separately, because it goes into fundamental tort law; namely,
the statute of repose.
You can read this voluminous bill here and you cannot find anything
that says ``repose'' or ``statute'' in this particular bill--121 pages.
There is nothing that alludes to any kind of statute of repose or
bringing tort action and so forth.
To come now and say this is germane is begging the question. They
really ought to be ashamed to put these amendments up because they know
that, but they just try to make the connection by using the word
``jobs.'' As I stated earlier today, you might as well put in welfare
reform, because we are going to give those on welfare jobs.
So, yes, we hope that this will have quality production and that we
can begin to commercialize America's technology and thereby create
jobs. Over here, we hope we get them off of welfare and get them onto a
job. So let us bring up welfare reform.
I yield the floor.
Mr. DANFORTH addressed the Chair.
The PRESIDING OFFICER. The Senator from Missouri is recognized.
Mr. DANFORTH. Mr. President, I would like to compliment Senator
Kassebaum for her persistence in attempting to get this general
aviation product liability legislation enacted by the Congress of the
United States, or even past the Senate.
It really has been a tremendous act. Like Sisyphus pushing the rock
up the hill, she has pushed and pushed and pushed and she has never
gotten it up the hill.
This is not a new idea which Senator Kassebaum has sprung on the U.S.
Senate. This has not been a question of Senator Kassebaum stealthily
lying in wait to pounce on the Commerce Committee when it least
expected it.
Rather, this is legislation that goes back to the 99th Congress. This
has been before us now five consecutive Congresses. This is not a
matter that has not been studied. As I pointed out earlier, it was
studied by the Presidential Commission on Airlines and on the aircraft
manufacturing industry, and it was recommended by that Commission.
But leave aside the Presidential commission that recommended this,
and leave aside the various supporters of it, various parts of the
aircraft manufacturing industry, the Owners and Pilots Association, the
General Aviation Manufacturers Association, the International
Association of Machinists--all of which support this legislation. Leave
aside all of the groups that have studied it, and the commission that
studied it. The U.S. Senate has studied this, now, ever since the 99th
Congress.
In previous iterations, this statute of repose was incorporated in
broader legislation dealing with various aspects of general aviation
product liability. Senator Kassebaum has tried mightily to get the
broader version of this legislation enacted into law. She has not
succeeded.
So now she is making an effort to enact a stripped-down version of
her previous legislation dealing only with one subject and that is the
subject of the statute of repose. But this issue, the issue of the
statute of repose, was also included in the legislation that was
introduced in the 99th Congress, in the 100th Congress, in the 101st
Congress and the 102d Congress, in addition to this 103d Congress, the
only change being that the statute of repose was 20 years in the
earlier versions. It is 15 years in this version. But the subject is
the same. The issue has been before us repeatedly.
Now it is said we should not rush into this just on the basis of the
Commerce Committee legislation. This should be a matter that has been
before the Judiciary Committee. Let me describe the history of this
legislation. In the 99th Congress, a hearing was held in the Commerce
Committee and the bill was reported out of the Commerce Committee.
In the 100th Congress a hearing was held in the Commerce Committee
and the bill was reported out of the Commerce Committee and the bill
was referred to the Judiciary Committee. The 100th Congress, the
Judiciary Committee got this issue, including the issue of the statute
of repose. It was referred to the Judiciary Committee. What did the
Judiciary Committee do with this in the 100th Congress? The answer to
the question is it did not do anything. It did not report out anything,
to the best of my knowledge. It did not vote on the subject.
Then came the 101st Congress. Again, it was a bill that was
introduced. It was referred to the Commerce Committee, a hearing was
held yet again in the Commerce Committee. The bill was reported out of
the Commerce Committee and again it was sequentially referred to the
Judiciary Committee. On this occasion, the Judiciary Committee was
moved to action. It was not a positive action. Two votes were held in
the Judiciary Committee in the 101st Congress. The first vote was on a
motion to report the bill without recommendation. That lost 6 to 7.
Then there was a vote to report the bill with a negative
recommendation. That was agreed to by 10 to 2.
So it is not that the Judiciary Committee has not had opportunities
to deal with this. The Judiciary Committee just does not agree with it.
Fine.
Then in the 102d Congress the bill was introduced. It was referred to
the Commerce Committee. A hearing was held and the bill was not
reported.
And then in the 103d Congress, the bill was reported.
So I compliment Senator Kassebaum for her patience and for her
persistence in repeatedly bringing this before the Congress, ever since
the 99th Congress. What would that be, 10 years ago or so? She has been
at this for a decade. And now it is said, oh, my gosh, what is this
irrelevant matter doing on this bill? I think it is relevant to the
whole question of how we do create jobs in this country. But beyond
that, I think Senator Kassebaum is now in a position, having tried for
over a decade to get her legislation passed, of attempting to put it on
some bill that might have some prospect of going somewhere. That is
precisely what she has done.
The Judiciary Committee has had its chance. It has had its chance,
not in one Congress but in two Congresses. It has had its opportunity
to deal with this issue. It does not like this issue. Fine. But that
does not mean we keep on this endless process of wheel-spinning toward
nowhere.
I know Senator Hollings is attempting to pass his legislation and the
chairman feels this is excess baggage as far as his bill is concerned.
I have spoken with Senator Kassebaum about this issue. She would be
willing, at least she has expressed it to me, and I certainly would be
willing, to work out a time certain to vote on this amendment. Let us
just vote on it at a time certain. Then we can get on with other
amendments that other Senators might wish to offer.
So I simply make that suggestion to my chairman, that perhaps we can
figure out some definite time to bring this up.
There are now 51 cosponsors of the bill that gave rise to the
Kassebaum amendment--51 cosponsors of this legislation. So I think
there is a pretty good chance it will be adopted. I hope it will be
adopted. But as a matter of attempting to work this out with the
chairman, maybe we can set a time certain and just vote on it.
Mr. HEFLIN addressed the Chair.
The PRESIDING OFFICER. The Senator from Alabama is recognized.
Mr. HEFLIN. Mr. President, I listened to the logic of arguments
against the referral to the Judiciary Committee. It has long been a
practice in the Senate when there are overlapping jurisdictions that
you have sequential referrals to another committee. For some reason or
another that tradition, that custom, that part of the Senate procedure
just does not appeal to some of the proponents of this legislation. But
it has been done historically. It is done because of the fact that a
committee that has jurisdiction may not have all of the staff expertise
to look into certain specialized areas. And the Commerce Committee,
while it may have some lawyers, it is not like the Judiciary that looks
into the legal aspects, the legal ramifications in regard to it.
This is a completely new bill. There never has been a 15-year statute
of limitation, statute of repose, that has been in a bill that has been
before the Judiciary Committee.
There have been statutes of repose but they have been different. This
is much shorter. This would deprive a great number of people of the
right to recover if they are injured negligently, or injured willfully
or wantonly, or injured under any concept of recovery. It is entirely
different and it is limited to that.
Other times when you had referrals, you had referrals that were over
the overall bill. Most of the time it was spent on other issues, like
punitive damages, caps, joint and several, and other things other than
just the statute of repose.
I think a matter of referral does not have to take long on this. It
is a narrow issue. You would have to have it considered by that. It
seems to me that would be the proper situation to take place relative
to the sequential referral of this bill to the Judiciary Committee.
Mr. HOLLINGS addressed the Chair.
The PRESIDING OFFICER. The Senator from South Carolina is recognized.
Mr. HOLLINGS. Mr. President, inadvertently, I believe, my
distinguished counterpart, the Senator from Missouri, has complimented
me because he has complimented Sisyphus. Let one Sisyphus meet another
Sisyphus.
I have been on this from the 99th Congress, the 100th Congress, the
101st Congress, the 102d Congress and now the 103d Congress. I got it
by way of an amendment on the trade bill.
Right to the point, I have been trying to get the updated
authorization that everyone could agree with. When the Senator says
excess baggage on his bill, it is excess baggage on our bill
Oh, the Senator would smile because this was his bill, my bill. I
worked very closely with him. There is no mystery to this. But what you
see is the political maneuver here. That does not have anything to do
with this bill, because he said let us get a time.
I would like to hear them say that they are not going to come up with
all of these amendments. The Senator from Kansas knows with all of
these amendments that there will be no bill, that this bill is not
going to go anywhere. If they can say let us get together with the
Judiciary Committee on some agreement and then go ahead, pass general
aviation product liability in due time, just like we have done it
before--twice before, this particular bill, without any GATT amendment,
without any general aviation amendment--but pass the Technological
Competitiveness Act of 1994, if we could go ahead and do that, that
would be something.
But we come in, like I say, with the downfield blocking of the
prestigious Senator from Kansas. Of course, the general aviation
amendment is not going anywhere. No amendment is going anywhere because
the bill is not going anywhere. They must know that.
I see a distinguished colleague on the floor who has a very serious
amendment that is germane. I have talked with those with respect to
defense and the National Science Foundation and national education to
hold off on that amendment, even though it is germane, because we know
what can pass and not be controversial.
There has been one heck of a lot of work by staff and Senators
conferencing, getting together with the Energy Committee, getting
together with the Small Business Committee, getting together with the
Labor, Health and Human Resources Committee and Education and all the
other work we have done. There have been a lot of amendments held off
on this side. But now comes the political shenanigans apparently of any
and every amendment coming forward and trying to say, now, this has
really been pushing and pushing and pushing. That is what happens to
us.
Meet another Sisyphus. I have been working and have gotten unanimous
consent on this side two Congresses in a row, and over there on the
other side, the last Congress, with respect to even marking up the bill
and have it reported and all signed in conference and ready to go. And
then politics, unfortunately, added in, partisan politics. And now we
hear about the Sisyphuses, which I compliment the distinguished Senator
from Kansas on being one.
I know a Sisyphus when I see one because I am one. I have been doing
the same thing. But then to come forward and say that we want to get
something done and make that argument in light of the maneuvering to
frustrate and thwart anything being done about competitiveness, about
technology, about the advance technology or about the manufacturing,
about the training, about helping small business, about the information
superhighway, and those kinds of things.
Here we have a wonderful opportunity, and there is no objection, and
there are no amendments to the real substance. But then they come on a
well-considered, well-worked, well-heard bill, hearings and everything
else in an orderly fashion as best that the body politic and the
Congress itself can do, and then they start mucking it up with all of
these amendments, just to come here and have an exercise in politics
and show our strength of how we can really show that nothing can be
done.
I yield the floor.
Mr. DANFORTH addressed the Chair.
The PRESIDING OFFICER. The Senator from Missouri is recognized.
Mr. DANFORTH. Mr. President, I really do not think that it is fair to
the Senator from Kansas to represent that this is some kind of politics
on her part or that it is some kind of plot or scheme on her part to
affect the bill that has been brought to the floor by Chairman
Hollings.
I do not agree with S. 4 because I think that it is industrial
policy. I believe that industrial policy is an issue which should be
debated before our country, as well as before the Senate. I do not
believe that the Department of Commerce should be operating what
amounts to a slush fund of grants to specific businesses. I do not
believe that the Federal Government should be in the business of
picking winners and losers in the private sector. I think that the
marketplace should function for that purpose, not the Federal
Government. That to me is the big issue that is before us and should be
before us and should be debated.
I have not asked Senator Kassebaum to bring her amendment before the
Senate. This is her decision, not mine. It is not part of some scheme
on the part of Republican Senators. It is not politics. I do not know
of any Senator in the U.S. Senate who is better able to work with
Members on both sides of the aisle than Senator Kassebaum. She is a
person who is an established centrist in this body, a person who is
respected on both sides of the aisle, a person who has worked very well
and very effectively and very constructively with Senators on both
sides of the aisle.
This was her decision. But I respect that decision because she has
been working very, very hard on general aviation product liability. She
believes this is real jobs. This is real jobs for her constituents. It
is real jobs for people who work in her State. It is 25,000 additional
jobs for our economy. These are not jobs created by Secretary Ron
Brown, by grants doled out by the Commerce Department, and I have high
regard for Secretary Brown. This is not the Government maintaining a
fund to confer that fund on favored businesses. This is not industrial
policy being advocated by Senator Kassebaum. This is real jobs by
Government doing something that is constructive; not industrial policy,
but simply shortening the statute of repose because Senator Kassebaum
believes that the litigation explosion in this country has crippled an
industry which was once one of the great industries in America.
I compliment her for it. But I do not think we should see in this
some sort of political scheme. It is not politics.
I do believe that on the question of industrial policy there are
political differences. I believe that they are bona fide political
differences about the role of government. It is a matter of basic
political philosophy as to the degree to which the Government should
grant money to specific industries to weigh in on behalf of those
industries. That is a bona fide political issue. It should be debated.
It should be addressed in this deliberative body.
But I do not believe that the issue of general aviation is a
political issue in that sense. I do not think that it is a matter of
basic philosophy. I think that there are those who believe that the
trial lawyers are correct. I think that there are those who believe
that litigation is just hunky-dory. Let us file a lot of lawsuits.
Maybe they make the world safer; maybe the lawyers really have the key
to a safe and prosperous America.
There are people who believe that. But I do not think that is a
matter of basic political philosophy, the kind of thing that defines
people philosophically. The political question has to do with the role
and the scope and the power of the Federal Government, whether we
really have $2.8 billion of excess money to spend on favored
industries. That is a political question. That is a philosophical
question, not the one raised by Senator Kassebaum.
Senator Kassebaum simply wants to pass her bill. She sees a bill here
which has already passed the House of Representatives. She respects the
skills and the ability of the chairman of the Commerce Committee in
getting legislation through, and she wants to put her bill on this
bill. There is nothing novel about that. There is nothing novel or
sinister about offering amendments in this Chamber. That is all Senator
Kassebaum has done, and I respect her for it.
Mr. HOLLINGS addressed the Chair.
The PRESIDING OFFICER. The Senator from South Carolina.
Mr. HOLLINGS. Right to the point, Mr. President. We have not said it
was sinister. We said it was not germane. And the old saying is let the
record speak.
Now, the record speaks with respect to general aviation liability.
This measure was before the Committee of Commerce, and the record would
show that it was reported out by an overwhelming vote as a separate
bill. That is the fact; nothing sinister.
The record would also show with respect to the particular measure
that the Senator from Missouri and I discussed all this before. We were
absolutely admonishing, he to his group and me to my side of the aisle,
that we were not going to have a slush fund, which he talks about now,
the Secretary of Commerce slush fund. And it was at our insistence, the
distinguished Senator and this particular Senator, that we included the
peer review process of the National Academy of Engineering; that it was
not picking winners or losers; that it had to be industry picked. And
we included it, and that is in the particular bill.
That is what the record says. And the record would show that the
Senator from Missouri did not object when the bill passed unanimously.
All of a sudden he is talking about a new particular argument now with
GATT and something that happened in December of just this past year,
1993, with an international trade agreement. That is something separate
and apart. This has nothing to do with this particular bill. All of a
sudden S.4 becomes industrial policy, but the record would show it was
not industrial policy in 1992 when it passed. It was not industrial
policy when it passed out of the committee without the objection of the
Senator from Missouri.
That is why we are talking now of what is politically going on. I am
talking now not about my distinguished colleague from Kansas being
sinister. I do not know where he gets all that. I just said it is not
germane. It does not belong on this bill.
I have the highest respect for the Senator from Kansas. But in
essence, what really happens is the Senator from Missouri now argues
for industrial policy and against industrial policy all in the same
breath because if there is industrial policy in this land of ours set
by the National Government, it is one for the aircraft industry. We
take all of the research from the Department of Defense, all of the
research publicly financed by politicians--winners and losers, yes, we
pick that--the aircraft industry in NASA, the aircraft industry with
respect to the Department of Defense and finance it, and say you take
all of that particular research and put it into your private
production. And, by the way, general aviation, if you want to sell, as
you do, overseas, the Export-Import Bank is there as a matter of
industrial policy to finance you.
And the very amendment says for general aviation we are going to give
you a special statute of repose. The amendment by the distinguished
Senator from Kansas is industrial policy, yet the Senator from Missouri
is against industrial policy, all in the same breath.
Let me yield to my distinguished colleague who seeks the floor.
Mr. DORGAN addressed the Chair.
The PRESIDING OFFICER. The Senator from North Dakota is recognized.
Mr. DORGAN. Mr. President, I was just reading about Sisyphus as the
Senator was speaking. I heard references to it to several times. As I
was standing here, I was thinking about how I missed serving in the
House of Representatives. In the other body, when a bill was considered
on the floor, the rule provided 9 or 10 amendments and a time limit for
general debate and on the amendments. There was some certainty about
when the bill would be voted upon. I do not imagine that many people in
the Senate miss the House, but there are certain aspects of service in
the other body that I miss. Limited debate time is one of them.
I do not intend to discuss Sisyphus. Rather, I was thinking of C.
Northcote Parkinson, who is a more contemporary reference who talked
about time. Parkinson's law said that the time it takes to do things is
generally equal to or exceeds the time available to do things. Since in
the Senate we generally do not have time limits on anything, it is
pretty hard to get things done.
It is interesting that for the very reason the Senator from Missouri
said he is opposing this legislation, I am supporting it. I support
this legislation precisely because I believe it does represent some
kind of industrial policy. Is it massive new Government intervention in
picking winners and losers? No, nothing of the kind. It does not even
resemble that. But it does represent, finally, an understanding in our
country that we ought to find out what is important to us and try to
help it.
One of the things that has been so discouraging, I suspect, to
everybody serving in the Senate is the adversarial relationship between
the private and public sector. We seem to have all of these feuds back
and forth between Government and business. The fact is that we are
involved now in a much more intense international competition.
It did not used to be that way. When I was going to school in a small
town in North Dakota, I walked to school in the morning know that we
were the winners. We were not confronting a tough economic giant in
Asia. We were not confronting a difficult challenge in Europe. We were
No. 1. We were the biggest, the best, and the strongest. We outproduced
everybody.
That is not true any longer. We have certain strengths but we now
face shrewd, tough international economic competition. In most cases
when we face that competition, our business try to sell their products
produced in America by American labor.
The competition we face is often a combination of deliberate strategy
by another government and their private sector working together hand in
hand, cooperating to advance their economic interests.
Why should we not finally understand that we should work together as
well? Why should not our Government and our private sector, instead of
being adversaries, cooperate together because we are on the same team?
We are in this together.
Does it mean that we develop some grand plan from Washington that
represents what the private sector ought to do? No. I do not think so.
I asked former Trade Ambassador Carla Hills one day: ``Is there
anything in this economy the loss of which you would want to care about
that you would move to try to stop? Are there any concentric economic
activities in this country that are essential to the future of this
country? If you saw certain sectors of our economy for various reasons
being weakened, crushed and failing and falling, would you decide that
there is some public policy reason to step in and help it because you
cannot have a strong economy without that certain of a pillar? Is there
anything that you feel that way about?''
``No. Not really. Let the private sector be the allocator of funds.
Let the market system work.'' That was her reply.
I was asking Ambassador Hills about that because it seemed to me at
the time that the market system was working. At the time we had old
Milliken out there in Beverly Hills coordinating with New York City. he
was pumping junk bonds out through every opening he could find in the
financial scheme, loading up our financial institutions and investors
with junk bonds. The fact is that this was not advancing this country's
interest. It was weakening this country's interest.
My point is that we often get a lot of perverted results in the
market system. What we ought to do is understand that market system is
a good system but not a perfect system, and that we can help that
system. That is what this legislation does.
It is why I support this legislation. This legislation says that the
private sector is going to have to confront international competition.
The question of who wins that competition provides the answer to who
gets the jobs in the future of this world. Will we win or will we lose?
This legislation says let us help American industry win. Is it just
big business, just the large manufacturing concerns that move out and
confront competition? Not at all. Many of us serving in this Senate
serve smaller, rural States. In my State of North Dakota we have over
200 manufacturers, many of which are small, employing, on average,
about 50 employees each. They must meet international competition as
much as any other manufacturer in the United States.
What this legislation does, and the reason I support it so strongly,
is it says to small manufacturers, we want to provide a marketplace for
new technologies. We want to develop manufacturing extension centers,
based on the model of something that has been extraordinarily
successful. Something the Senator from Kansas would understand and
agree coming from a rural State. The model is the extension centers
that 50 years ago moved knowledge and information to the rural areas of
the country. The result was a virtual explosion of capability in rural
America.
The Senator from South Carolina brings to the floor of this Senate a
bill that says let us provide the same opportunity in manufacturing
technology to assist small manufacturers in this country, to be better,
to be better able to produce, better able to compete, more efficient,
and more effective. That, in my judgment, is a good investment. That is
sound policy. That is not saying let us interfere, or let us interrupt.
That is saying let us offer a helping hand.
If we have technology that works, that can make a small manufacturer
better able to compete in selling in the international marketplace, why
on Earth would we not want to share that? Why would we not want to
strengthen those economic interests in the private sector?
If you ask manufacturing firms--and I have in my State--what they
think of this, do you think they think that this is interference? They
will tell you this is good news. This makes a whole lot of sense. At a
time when they are talking about all the burdens we impose, all the
troubles the Federal Government provides for them, they say this is a
ray of hope. This is a Government that wants to help, not hurt.
I have great respect for the Senator from Missouri. I have always
thought he is one of the legislators that sets an example in this
Chamber. But I must say for the very reason he opposes it I support it.
It is at least in some semblance, some notion of a plan. I have never
felt that for the last 14 years that I have served here in Washington
that it ought to be a source of pride for some one to stand up and say
``we have no plan.''
``Let me brag about that. We have no plan. We do not want an
industrial policy.''
I have not heard some one say with pride: ``That would be central
planning. So let us be the first to proclaim we have none.''
It is pretty self-evident by what has been happening to us in
international trade that we can do a lot better in this country if we
decide that we are going to confront competition, competition from the
Pacific rim, from the European countries, and elsewhere where it has
become sharper, tougher, and more aggressive.
We need to say that we are going to finally decide that we are part
of the same team in this country--the private sector and the public
sector. We want the same things and we want to be able to succeed.
Instead of working against each other, we need to start working
together.
That is what, in my judgment, this piece of legislation does, and why
I am so pleased to be here on the floor of the Senate saying that I
would like to, in any way that I can, advance its interests.
I have not spoken to the amendment offered by the Senator from
Kansas, and shall not. But there are, I understand, many other
amendments waiting in the wings, many of which probably have nothing at
all to do with this legislation.
I guess everybody has a right to do that. I am not suggesting that is
the case with the amendment of the Senator from Kansas.
But I would say this: Notwithstanding the amendments that might or
might not be offered, I would very much hope that in the coming hours
and coming days we will advance the interests that are central to this
bill. Those interests, in my judgment, are interests that will advance
the interests of our country, provide economic growth and hope and
opportunity again.
I want to credit the Chairman of the Senate Commerce Committee, who I
think has done a wonderful job on this bill. I hope that as we move
forward in the coming hours or days that we can finally see this passed
and help create a semblance of policy that I think will strengthen this
country.
I yield the floor.
Mr. HOLLINGS. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The bill clerk proceeded to call the roll.
Mr. DANFORTH. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DANFORTH. Mr. President, Senator Kassebaum has introduced Senate
bill 1458. In addition to Senator Kassebaum, there are 50 cosponsors to
that legislation. That bill is the substance of the amendment that has
now been offered by Senator Kassebaum, and I ask unanimous consent that
a list of the cosponsors of S. 1458 be printed in the Record.
There being no objection, the list was ordered to be printed in the
Record, as follows:
Cosponsors List, S. 1458
Senators Bennett, Bond, Brown, Burns, Coats, Danforth,
Dole, Exon, Glenn, and Gorton.
Senators Grassley, Gregg, Hatch, Hutchinson, Jeffords,
Kerrey, Kerry, Lott, Lugar, and Mack.
Senators McCain, Murkowski, Pressler, Rockefeller, Simpson,
Smith, Thurmond, Warner, Boren, and Pell.
Senators Chaffee, Mathews, Inouye, Nickles, Wallop,
Faircloth, D'Amato, Lieberman, Durenberger, and Craig.
Senators Kempthorne, Gramm, Dodd, Cochran, Domenici, Helms,
Hatfield, Coverdell, McConnell, and Stevens.
Total cosponsors: 50.
Mr. DANFORTH. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER (Mr. Feingold). The clerk will call the roll.
The bill clerk proceeded to call the roll.
Mr. SIMPSON. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. SIMPSON. Mr. President, I support the Kassebaum amendment. Yet I
am also a member, or was a member, of the Wyoming Trial Lawyers'
Association. In fact, I was one of the founding members of the Wyoming
Trial Lawyers' Association. I am very proud of that. I do not think
that group should be suspect in any way, when they enter the debate on
issues.
I have a great respect for the Senator from South Carolina. Senator
Hollings and I have often joined--I joined with him--to oppose various
efforts of broad-brush tort reform. I strongly believe the area of tort
law should remain the exclusive jurisdiction of the State courts.
However, there are always exceptions to a general rule and this is just
such a case. I hope I can make that distinction.
I have listened to the debate. It has been a very good debate. I
admire the two participants in the debate so personally, Senator
Hollings, and Senator Kassebaum--who came here when I did to the
Senate. But certainly the United States has always been the leader in
aircraft technology. In the field of general aviation, that of course
being the aircraft manufactured for use by the citizen pilot, the
United States has been the world leader.
It is important to emphasize I said the United States has been the
world leader. We are in danger of losing that important industry.
Foreign manufacturers of small aircraft enjoy a phenomenal
competitive advantage over American manufacturers. They are reaping
large profits. Rather than compete with American technology, they are
simply buying it up in some instances.
American general aviation companies are disappearing. They are losing
their profitability not because they have an inferior product,
obviously, but because they face excessively burdensome liability laws
and other factors, too. But make no mistake about it, the continued
threat of liability is resulting in some phenomenal costs that are
passed right on to the consumers. It is the threat of liability, not
actually liability resulting from negligence or any wrongful acts by
the manufacturers.
I listened with great interest to my friend, Senator Hollings,
comment that in the area of product liability few Members of the Senate
really do know what we are talking about. After being through the
efforts with him, I believe it. We have been, sometimes, on the short
end of a vote where people just did not care to educate themselves on
the issue. But I understood him to mean in this context that we should
pay very close attention to those who do work in this area of the law
and heed their expert counsel on what we should do--if anything.
I agree with the Senator from South Carolina. I agree with him and I
would also suggest we should heed the counsel of those in this body
with special knowledge of specific matters. I remember so well our
distinguished former colleague from Utah, Senator Jake Garn, who was a
pilot, who spoke so clearly on the issue last session when he was a
Member of our body. I recommend to my colleagues they have their staffs
obtain a copy of Senator Garn's statement in the Congressional Record
of last session before he left. He gave us a very real example of the
costs--at least he attributed this to the costs of the current
liability law.
He cited one which I thought was rather graphic. Most of us know what
an oil dipstick is: A metal rod that dips into the oil reservoir of a
piston engine. We pull it out and we check to see the oil level. It is
a rather simple thing. It is just a stick, and it does not take a
rocket scientist to use such a stick. A replacement dipstick in a high
performance race car might cost you $10 or $15. I remember Senator Garn
told us that in his small aircraft that same dipstick cost over $70.
If the dipstick can cost that much, how much for the oil filter or
the spark plug? And we can also assume the costs have increased in the
time since our colleague spoke to us on that issue.
So, clearly, if a company can be under the threat, just the threat of
product liability to the point they have to pass along costs as absurd
as that, something is wrong.
Senator Kassebaum has been working on this issue for many years. I
have joined her each and every time. Each year this Congress has
delayed in passing this legislation the United States has lost more of
its competitive edge.
We are losing our competitive ability, not because American workers
are producing an inferior product, but because some Americans see a
very deep pocket out there to reach into when something goes wrong.
That, too, is perfectly proper if there are reasonable protections
against frivolous or stale claims. There are no such protections for
this important American industry.
This legislation would provide a few sorely needed rules to even the
playing field for general aviation manufacturers. It is not
unreasonable to reduce the period to file a lawsuit. It is not
unreasonable to say that there is some point in time, whether 10, 15,
or 20 years, that a person must enforce their rights by litigating
their own claim or that their claim is lost or expired.
In fact, I suggest that it is clearly very reasonable and I think
quite correct to do that in light of the many hands that these products
have passed through, over and through time. That, too, is what we are
talking about, products that pass through many hands. Each time a
modification is made or something is added that changes the very nature
of the original product, if something goes wrong under the current
system it is not the person who made the change who suffers the
greatest threat of liability but the manufacturer of the original
product, a product that has been modified and is totally outside the
control of the manufacturer when these modifications are added.
I think that is unfair and it is wrong. It is not just. It is not
what our system of justice was designed to do. You are dealing with a
product that passes through various persons, people with various
degrees of experience, expertise, mechanical ability. And of course all
of that has been covered very thoroughly in the debate.
But as proof, I think, that the manufacturers of general aviation
aircraft are doing a pretty good job, I refer to some of the comments
that have been made by critics of the amendment. Each of our colleagues
has pointed out the average age of a general aviation aircraft is
nearly 20 years. That says something. That says that they make a pretty
good product, and a pretty safe product. How many Members of the Senate
or their staffs own a car that is over 20 years old? Many people do not
even live in houses that are that old. Would we have an indefinite
period to sue a homebuilder for something that happened to a home 20
years after it was built? I think clearly not.
Nor would we support a system that allowed a lawsuit over an alleged
defect in a car that was over 20 years old, yet more people die in car
wrecks with each passing year. In fact, thousands and thousands.
So, as I stated, I think if you stay in the legislative game long
enough, you will come up with an exception to something you have held
dear to in the past. I do not favor Federal legislation--that has been
a consistency in my review--in the area of tort law, and product
liability is part of that body of tort law. I think this is a unique
situation. After thoughtful consideration when I originally supported
Senator Kassebaum and, again, the same considerations now because of
the unique nature, I again agreed to cosponsor the original bill
offered by my friend from Kansas over, I think, 4 years ago.
I continue to support this legislation for the same reasons. It is
fair, it is equitable, and it is crucial, I think, to protect the
future of one of the remaining areas where the United States remains
the world leader in technology and in safety, and we should not, in my
mind, allow an unfair system of product liability laws to destroy this
important and, again, as I say, uniquely American industry.
For those reasons I wanted to share with my colleagues and hope that
there will be support for Senator Kassebaum's amendment. I thank the
Chair.
Mr. HOLLINGS addressed the Chair.
The PRESIDING OFFICER. The Senator from South Carolina.
Mr. HOLLINGS. Mr. President, the distinguished Senator from Wyoming
knows the tremendous professional respect and the personal affection
that the Senator from South Carolina has for him. He is doing us a
favor next week in coming down to speak to our friendly Sons of St.
Patrick, the second oldest Hibernian in the United States after Boston.
I was past president of that organization, and he really graces us by
being willing to come down to our annual banquet and respond to the
toast to the United States of America.
He and I have worked together on product liability. And listening to
his delivery here, I want to try to update what is really occurring,
because what the distinguished Senator is saying could perhaps have
been pertinent or at least sustainable 5 or 6 years ago when we were
arguing these things. But the recession is over and the industry is
coming back.
We have citation after citation of the matter of the billings up over
$2.1 billion now, an increase of 16 percent. We have Cessna that was
taken over by Textron. They are making a great profit. The same with
Raytheon. They bought out Beechcraft. They have $106 million in profits
on $1.1 billion in sales. R Tech has come to South Carolina trying to
locate the manufacture of small general aircraft. Mooney Aircraft is
boosting its production. The American General Aircraft Corp. I caught
the statement that the domestic manufacturers are drying up. I believe
the record would show to the contrary.
With respect to the matter of the safety and the time period, I only
suggest to my distinguished friend that that is not only necessary but
wonderful. It is working. I look over here and I read the headlines
every week now, one of these automobile manufacturers is having a
recall, is recalling thousands of cars on account of a brake, or
thousands of cars on account of the gear shift jumps into another gear
and goes in the other direction, or thousands of cars more recalled for
another reason. The reason for those recalls is product liability, and
that is where, in general terms, the distinguished Senator from Wyoming
and I agree. That is why they have been having those recalls, because
they know they are going to, by gosh, get socked financially if they
allow the defect to remain. And these recalls are saving many, many
lives.
We are not afforded that luxury in general aircraft manufacturing.
Yes, there should be a much, much higher degree of care and, yes, there
is, fortunately. You do not hear them recalling planes. They
manufacture those planes now so the average life is 27 years. That
manufacture is strong. We are not talking about the maintenance, we are
not talking about the engine parts and some of the verdicts that we can
talk about here. We are talking about basic general aviation
manufacturing. It has worked, and worked extremely well. That is why we
are in opposition to going in the other direction.
The general aviation safety chart, as enunciated by our National
Transportation Safety Board, shows a steady decline, I say to the
Senator from Wyoming, coming right on down. This is one of the few
charts where you see improvement. Smoking is up, drinking is up, crime
is up. The one thing that is working is product liability and the
safety caution used in the manufacture of aircraft. We put that in at
the very incidence of this particular debate on the Kassebaum
amendment.
I know the Senator is a distinguished member of the Judiciary
Committee. I yield to him on that particular score because we have
heard it and we have reported it from the Commerce Committee. It is our
Judiciary Committee friends who have a very valid interest in this
regard. I am sure we will hear from them.
But I am really a little concerned about the basis upon which now the
distinguished Senator addresses the subject, because product liability
is working and safety is out there and, yes, the dip stick is going to
cost more. I remember that wonderful talk that our friend from Utah
made, the former Senator Jake Garn. He knew aircraft. He was an
astronaut as well as a pilot. But when it comes to manufacturing, let
us not start with a 15-year statute of repose.
The Senator was concluding and saying we do not have it in the
automobile industry, so we should not have it in aircraft
manufacturing. I think the contrary is true. We do not have the luxury
of recalling an unsafe plane. Somebody has gone to the far beyond when
that occurs. That is the real concern the Senator from South Carolina
has with the Kassebaum amendment.
Mrs. KASSEBAUM addressed the Chair.
The PRESIDING OFFICER. The Senator from Kansas [Mrs. Kassebaum] is
recognized.
Mrs. KASSEBAUM. Mr. President, if I may just respond a moment to the
figures again on what has happened as far as the numbers in the general
aviation industry. In 1979, there were 13,000 piston airplanes
manufactured per year. Today, there are 500. That is where the decline
has taken place.
Even more importantly, and this has been said several times, but in
1980, the United States had 29 percent of the world market for piston-
powered airplanes, and foreign manufacturers had 15 percent. In 1992,
the United States had 9 percent of that market and the rest had shifted
to foreign manufacturers. That is the concern.
The distinguished Senator from South Carolina was talking about
recall. The automobile industry does not have the FAA as their watchdog
at the gate, and the FAA has been a powerful guardian of safety in the
aviation industry.
So I just wanted to reiterate those figures because I think that
shows what has happened to piston-powered manufacturing. It is that
which we focused on in this debate.
I yield the floor, Mr. President.
Mr. WARNER. Mr. President, I rise today to strongly support the
amendment introduced by Senator Kassebaum.
Mr. President, we cannot ignore the fact that product liability
remains an extremely serious problem for many industries. I recently
did some research with respect to the impact of product liability in
general aviation. The information available reveals without a doubt
that product liability has been the greatest single obstacle to the
success and survival of the American light aircraft industry.
General aviation has been seriously impacted. Production of new
aircraft has plummeted from 18,000 just a few years ago to around 1,021
last year. Industry employment has been cut in half. Cessna Aircraft,
which used to produce nearly 9,000 aircraft a year, has not produced a
single- or twin-engine piston powered airplane since 1986. Piper
Aircraft is in bankruptcy, largely due to product liability costs.
The dire state of this previously healthy industry has serious
consequences. If we do not provide new training aircraft for our future
pilots, what will happen to our air transportation system? The average
age of the single-engine aircraft is now 26 years. Increased foreign
competition is targeting the U.S. marketplace with a number of general
aviation airplanes.
Mr. President, the general aviation industry is intensely regulated
by the Federal Government. Every stage of design, production, and
testing is scrutinized by the Federal Aviation Administration. The
general aviation industry is in dire need of a uniform Federal standard
of liability to dovetail with the existing system of Federal
regulation. Senator Kassebaum has been a longtime leader in supporting
legislation to create a national product liability law for general
aviation. Senator Kassebaum has introduced S. 1458, the General
Aviation Revitalization Act, as an amendment to the pending
legislation. The chairman of Cessna has publicly stated that the
company would resume production of piston-powered aircraft if the
legislation introduced by Senator Kassebaum was approved by the
Congress.
Mr. President, I urge that action be taken by the Congress to help
this important industry to resume production.
Mr. President, I ask unanimous consent that a few articles from
various publications be printed in the Record for all Senators to
review this important issue.
There being no objection, the articles were ordered to be printed in
the Record as follows:
[From Barron's, Feb. 21, 1994]
Falling From the Sky--Unlimited Liability Claims Destroy an American
Industry
(By Thomas G. Donlan)
Over the past two decades, we have endured warning after
dire warning that some American industry or another was about
to be slaughtered by foreign competition.
To save them, the United States has strong-armed other
countries into adopting ``voluntary'' export quotas on steel
and cars. Trade bureaucrats imposed ``market opening''
obligations on reluctant foreign purchasers of computer chips
and cellular telephones. Trade managers even now are swinging
into action against Japan and the yen, hoping to reduce the
Japanese trade surplus.
What we have not seen is the collapse of any of the
industries that pleaded for special treatment. We have,
however, in these two decades seen one major American
industry, the unquestioned leader in the home market and in
every export market, driven almost to extinction. Unit sales
by American firms in this industry are down 95% since 1978.
Dollar volume is down by nearly half, not counting the effect
of inflation, and in the higher-volume, lower-cost segment of
the market, the dollar volume is down 90%. An estimated
100,000 jobs have been lost.
Yet this industry, the general-aviation industry, was not
destroyed by foreign competition. Americans did this to
Americans, using the power of the judicial system.
lawyers in a tail spin
Filing lawsuits against Cessna, Piper, Beech and the other
small-plane manufacturers has become a lucrative vocation for
a small coterie of lawyers. About 40% of all plaintiffs in
general-aviation liability cases are represented by one of 16
law firms, who in turn employ fewer than a dozen expert
witnesses.
Their theory is quite simple: Something bad happened, so
the manufacturer of the plane was at fault. Thus, Cessna was
recently sued over an accident involving a plane that was
built in 1946 and has been out of production for 40 years.
Among other things, the suit alleged that the gas tank was
defective--the plane ran out of fuel.
Most pilots are grateful that planes are so well built that
they last so long, but their next-of-kin are more interested
in creating an inheritance. So claims against manufacturers
are not uncommon, even when a plane was obviously misused.
The Supreme Court recently refused to review a case in
which a pilot making a movie seated himself backwards into
the back seat of his old plane and tried to film and fly at
the same time. Attempting to take off, he ran into a van
parked on the runway, and he was severely injured in the
crash. His lawyer successfully argued that Piper made an
unsafe aircraft because there was poor forward visibility
from the back seat.
Liability suits helped drive Piper into bankruptcy in 1990,
and potential buyers have shied away from reviving it unless
they can jettison the old company's old liabilities. Cessna
ceased production of piston-engine planes in 1986.
``Even though we have not produced a single-engine aircraft
for more than seven years, we continue to be sued in almost
every accident involving one of our aircraft, regardless of
cause,'' says Russell W. Meyer Jr., chairman of Cessna and of
the General Aviation Manufacturers Association, a trade
group.
How much would cars cost if every fatal accident resulted
in a suit against the manufacturer, the dealer and every
mechanic who ever worked on the vehicle? How much would
computers cost if every sap who typed ``del C:*.*'' sued IBM
and Microsoft?
A small Beechcraft aimed at the private recreational market
listed for $26,550 in 1974. today, Beech's smallest plane is
a little bigger than the `74 model, but it lists for
$255,800. Consumer prices about tripled in that period; car
prices about quadrupled; the price of computers has fallen by
about 99%.
The big difference between a plane and a car is that juries
and judges drive cars, and take a lot more convincing before
they will believe that an alleged defect caused an accident.
And computer accidents don't scatter wreckage or leave dead
bodies and grieving heirs.
the cost of claims
From 1978 to 1992, American general-aviation manufacturers
spent as much to defend product liability suits as they had
spent from 1945 to 1978 to develop new aircraft. The result
has been the same as any other allocation of resources--
aircraft manufacturers have become highly skilled at
designing legal defense and lobbying, while they have ceased
designing new aircraft.
The General Aviation Manufacturers Association and the
Aircraft Owners and Pilots Association have rounded up a
majority of the House of Representatives and a near majority
of the Senate to co-sponsor a bill they label the General
Aviation Revitalization Act. It would enact a statute of
repose, to bar suits against manufacturers after their
products are more than 15 years old. Most planes by that time
have had several owners, at least three major overhauls and
on average accumulated 6,000 hours of flying time. The theory
of the statute of repose is that such use ought to
demonstrate the safety of the basic design.
But any adjustment to the idea that victims have an
unlimited right to sue anybody anytime for anything must go
through the judiciary committees. In particular, the House
Judiciary Committee has proven itself willing to sit on
aviation reform forever. Fortunately, Rep. Jim Inhofe, an
Oklahoma Republican, successfully campaigned last year to
lift the secrecy of the discharge petition so that a majority
of the House can be shamed into bringing a bill to the floor.
We wish the general-aviation lobby happy landings in their
quest for a 15-year statute of repose, but the rest of us
should dream bigger dreams. Even a Congress whose every other
member is a lawyer should recognize that a court contest is
not the best way to pay off the heirs of people who chose to
have fun in a risky way.
There should be no unwritten warranty that guarantees
planes, ski slopes, cars or sidewalks forever free of all
danger, and it ought to be possible for people to accept
risks and sign away their right to blame someone else. Pilots
and skiers--and automobile drivers and pedestrians--are aware
of the risks they run in the activities they choose, and they
must accept the responsibility to insure themselves if their
heirs are to be protected from unfortunate outcomes.
Let there be no more suing the aircraft manufacturer after
crashing, or the ski area after running off the trail, or the
car maker after hitting the accelerator instead of the brake,
or the city streets department after slipping on ice. Only a
lawyer can love a tort; the rest of us need tort reform.
____
[From Forbes, Mar. 14, 1994]
Ending Airborne Ambulance Chasing
Congress can create 25,000 good-paying, high-skill jobs by
passing the General Aviation Revitalization Act. The bill
would prohibit product liability lawsuits against airplanes
that are 15 years old or older.
That companies can be sued for almost any accident
involving a product regardless of cause or age is an example
of how warped our justice system has become. A few weeks ago
Cessna Aircraft was sued for an accident involving a 47-year-
old plane, even though the model has been out of production
for more than 40 years. The average age of airplanes in these
suits is 22 years.
The light-aircraft industry has nearly been destroyed by
unlimited exposure to product liability litigation. Over
100,000 industry and related jobs have been lost in the last
decade. These suits forced Cessna to shut down its single-
engine production lines.
Our balance of trade has been harmed: Almost a third of
these aircraft had been sold outside the U.S. Our leadership
in this field has been lost and taken up by foreign
manufacturers. And the decimation of the light-aircraft
industry is hurting our future supply of pilots. Many young
people start out flying in these airplanes.
What is truly absurd is that almost half the cases against
makers of small planes are brought by just 16 law firms that
routinely use the same nine--yes, nine--``expert'' witnesses.
These firms rake in the money. Out of every dollar awarded
only 17 cents goes to the accident victims or their families.
The bill is eminently reasonable. An aircraft that survives
without a manufacturer-caused accident for 15 years has more
than demonstrated its airworthiness. This country must once
again value and encourage individual responsibility; we must
stop blaming everything and everyone else for the woes that
befall us. A nice start would be this legislation, which
would revitalize a wonderful American industry and enormously
benefit the economy as well.
____
[From the Christian Science Monitor, Jan. 25, 1994]
Injury Lawsuits Said To Cause Financial Crisis for Many U.S.
Companies--Tort Tax Burdens Small-Plane Builders, but Litigation
Advocates Claim Safety Gains
(By James H. Andrews)
As he lifts a document from his desk, T. W. Wakefield's
voice has a ``here we go again'' tone.
``This case just came in,'' says the vice president and
general counsel of Cessna Aircraft Company, an airplane
builder in Wichita, Kan. ``Farley v. Cessna, in Pennsylvania.
The pilot and a passenger were killed last April when one of
our single-engine Model 140s crashed. The plane was built in
1946--47 years old. Forty-seven years, and the next-of-kin
say Cessna is still liable.''
``In other words,'' Mr. Wakefield says, ``Cessna has the
deep pockets.''
It needs those deep pockets. Since 1986, the company ``has
spent $20 million to $25 million each year to defend hundreds
of product-liability cases,'' Russell Meyer Jr., Cessna
chairman and chief executive officer, told a United States
Senate subcommittee last fall.
``Crash cases are very expensive to defend,'' says Peter
Puciloski, an aviation lawyer in Boston. ``There are no
fender-benders in this field. . . . A manufacturer can spend
$1 million to defend a case, even if it wins. That's why the
companies often settle, even when their liability is slim.''
The general aviation industry (builders of all planes
except commercial airliners and military aircraft) has a
unique liability profile, since the longevity of airplanes
gives the industry an unusually long ``liability tail.''
Still, executives and lawyers for companies all over
America--manufacturers of everything from cars, heavy
machinery, and power tools to ladders, sports equipment, and
prescription drugs, as well as their suppliers and
distributers--sympathize with Wakefield's frustration over a
legal system that he contends is ``unfair.''
For many business-people, actual or potential exposure to
personal-injury lawsuits imposes a heavy cost. Some companies
have been driven out of business or into bankruptcy by
litigation costs.
Piper Aircraft Corporation, a Cessna competitor, has been
in Chapter 11 since 1991, owing to liability suits, it says.
Last month, Keene Corporation became the 18th company to file
for bankruptcy as a result of asbestos claims: Keene has paid
out $450 million in litigation and settlement costs for an
insulation subsidiary it purchased for $8 million in 1968--
more than 20 years after most of the plaintiffs were exposed
to asbestos in US shipyards during World War II.
Moreover, some executives and economists contend, the
``tort tax''--the amount added to a product's price to cover
liability costs and insurance--inhibits the competitiveness
of American products international markets. And critics of
the legal system argue that fear of lawsuits causes companies
to discontinue products or deters product innovation.
The Product Liability Coordinating Committee, an industry
group, cites recent effects of ``the litigation climate
existing in the United States'';
Monsanto Company abandoned development of a safe substitute
for asbestos.
Of the 20 makers of football helmets in 1975, only two
companies still manufacture the product; one of them, Riddell
Inc., says 50 percent of the price of a helmet is
attributable to liability-related costs.
Liability concerns have had negative effects on research
for an AIDS vaccine, Science magazine reported in 1992.
From such reports and the writings of researchers like
Peter Huber and Walter Olson of the Manhattan Institute (a
conservative think tank in New York), who popularized the
notion of a ``litigation explosion,'' one could infer that
personal-injury lawsuits and other litigation have reached
crisis proportions.
The issue is slippery, however. While tort-reform
literature is rife with horror stories about ``bet your
company'' lawsuits and entire industries awash in
``frivolous'' claims, hard numbers on the economic effects of
litigation are elusive.
In a 1991 speech to the American Bar Association advocating
tort reform, then-Vice President Dan Quayle--drawing on the
research of Mr. Huber and others--put the total tort bill at
$300 billion a year, including direct and indirect costs.
Some critics have deemed that number wildly inflated,
however.
A 1992 study by Tillinghast, an insurance actuarial firm,
estimated direct tort-insurance costs to be $130 billion a
year, of which about $90 billion goes for motor-vehicle
coverage. Citing these figures in an article last year, law
professors Kenneth Abraham, Robert Rabin, and Paul Weiler
wrote, ``Only a minor share of the [accident-insurance] money
is expended for the product and medical litigation that
attracts most of the popular and political attention.''
Also, amid the sound and fury over tort reform and all the
lawyers jokes, one should not lose sight of the fact that
thousands of people each year are killed, maimed, or injured
by products that are, in legal terms, ``defective,'' say
consumer activists and plaintiffs' lawyers.
Moreover, many product-related deaths and injuries are not
compensated through the legal system. According to Professors
Abraham, Rabin, and Weiler, ``the parties seeking cutbacks in
tort litigation do not highlight the scholarly evidence that,
relative to the number of potential `high stakes' tort
claims, only a minority of suits are actually filed.''
``The only `litigation explosion' is in lawsuits by
businesses against other businesses,'' says Barry Nace,
president of the Association of Trial Lawyers of America.
``The number of product-liability and medical-malpractice
suits has actually declined in recent years. The so-called
litigation explosion is a figment either of poor research or
of intentionally misleading reports by groups like the
Manhattan Institute, which is funded and controlled by big
business.''
Whether or not the ``litigation explosion'' has been the
subject of some hype and scare-mongering by business groups,
academics, and politicians, a consensus is growing among
legal scholars that the tort system needs an overhaul to make
it more efficient, predictable in its outcomes, and equitable
in its allotment of risks and compensation. A number of
reform proposals are under consideration in Congress and
state legislatures.
But such bills do not redress firms' main liability
problems, says James Seifert, senior attorney for Toro
Company, a Minneapolis maker of lawn mowers, snow blowers,
and other equipment.
First, he says, a manufacturer ``can't be certain it's
complying with the law at the design stage. You can hire the
best engineers, have a very disciplined design process, try
to foresee every possible use and misuse of the product, and
you still don't know if a future jury may conclude that the
product was defective.''
To minimize the problem, Mr. Seifert says, he has ``tried
to create a liability prevention culture in the company. We
map out how a product could be misused, then design around it
or determine what warnings we must give to users.''
The second major problem Seifert identifies is that ``you
never have issue finality. Even if a court in one state says
a product is defect-free, another plaintiff in exactly the
same circumstances can sue you in a different state and win a
big judgment.''
``Issue finality'' is the legal reform the general aviation
industry values most. It is lobbying for a bill in Congress
that would create a ``statute of repose,'' barring product-
liability suits against the manufacturer of an airplane that
has been in service more than 15 years.
Even though the industry's safety record has improved
steadily for four decades (see chart for accident rates since
1972), and even though aircraft must meet the certification
standards of the Federal Aviation Administration, product-
liability costs for airplane builders have soared in recent
years. They jumped from $24 million in 1977 to $210 million
in 1985; per fatality, the cost rose from $17,000 to
$223,600.
Litigation costs and the companies' related inability to
obtain adequate insurance coverage are the main reasons that
Piper is in bankruptcy and that Cessna stopped making single-
engine piston aircraft in 1986, industry executives say.
Moreover, they say, the price increases necessary to cover
litigation costs caused a 95 percent drop in factory
shipments of general aviation aircraft between 1978 and 1992
(see chart). The tort tax represents 30 to 40 percent of the
price of many US small planes today, according to the General
Aviation Manufacturers Association.
But Lee Kreindler, a New York lawyer who represents
plaintiffs in crash cases, says: ``If litigation is the major
cause of general aviation's problems--and I'm not sure that's
true--that just shows the tort system is working. The system
is weeding out marginal products. There are a lot of unsafe
planes and components out there, and they're failing.''
The proposed federal statute of repose strikes a fair
balance between airplane users and the manufacturers, says E.
Glenn Parr, Piper Aircraft's general counsel. ``Most genuine
design defects become evident within 15 years,'' he says.
``And cutting off the liability tail for planes that have
been in service longer than that will restore litigation
predictability--so we can be an insurable risk again.''
Wakefield, the Cessna lawyer, says the statute of repose
also would reduce juries' ability to second-guess aviation
designers. ``Jurors listen to the plaintiffs' safety experts,
and they retrospectively apply today's state of the art to
design decisions made 30 to 40 years ago,'' he says.
But Mr. Kreindler says the statue strikes the wrong balance
between manufacturers and the ``innocent victems--especially
surviving family members--of defective aircraft, whenever
they are built.''
With or without a statute of repose, aviation defense
lawyers know they will always face uphill battles in courts
of law. ``Even when our planes aren't the cause of
accidents,'' Wakefield says, ``juries look at burn victims or
grieving families, and a big sympathy factor comes into
play.''
____
[From the Wall Street Journal, Oct. 19, 1993]
Small-Plane Makers May Get a Big Lift From Congress
(By William M. Bulkeley)
Lawsuits helped send the small-plane business into a death
spiral. Now Congress may pass a law that averts a crash.
Airplane makers have high hopes for a bill that would
eliminate their crash liability for planes more than 15 years
old. Under the bill, manufacturers of planes over 15 years
old couldn't be sued if the planes crashed. ``When an
airplane is 15 years old, then you know it was designed
properly and built properly. If it crashes, it's not the
fault of the airplane at that point,'' says Robert Crowley,
chief executive of American General Aircraft Corp. of
Greenville, Miss., which builds about 80 planes a year.
Although there have been other legislative attempts to
revive the small-plane business, this one has some
heavyweight support. More than half the members of the House
of Representatives have already signed on as co-sponsors.
Labor, pilot groups and the industry all back it. However,
trial lawyers could be major opponents, with hearings before
the House Public Works Committee's Subcommittee on Aviation
due to start Oct. 27.
``I'm more optimistic than I've been in the past,'' says
U.S. Rep. Dan Glickman, one of the main sponsors of the bill.
The Kansas Democrat comes from Wichita where market leaders
Cessna and Beech make their planes.
The general-aviation industry has long been Exhibit A when
people complain about the litigation explosion. A Brookings
Institution study of litigation effects concluded that
general aviation was the most severely affected of any
industry studied. U.S. production of general-aviation
aircraft fell to 880 planes last year from a peak of 17,811
in 1978, and some companies left the business complaining
bitterly about litigation costs.
Arthur Alan Wolk, a lawyer from Philadelphia who has won
several big judgments for crash victims, says the decline of
the small-plane business reflects management errors, inflated
costs, disappearing tax credits and the luxury tax that was
repealed this year--not product-liability lawsuits. He says
the bill would be ``a ridiculous windfall for the industry.''
Plane makers say the bill would allow the rebirth of a
moribund industry. Cessna Aircraft, a Textron Inc. unit that
stopped building piston-engine planes in 1986, says it would
start production planning the day the bill passes and could
hire 1,500 workers and build up to 2,000 small planes in
1996. Cessna once built as many as 9,000 piston-engine planes
a year in Wichita. Now it makes just 130 business jets a
year.
Piper Aircraft Corp., which once made as many as 5,200
planes a year, now is struggling to emerge from bankruptcy
proceedings after making 113 small planes last year. Chuck
Suma, president of Piper, which is in Vero Beach, Fla.,
believes that the bill's passage will cause insurance
companies to eventually feel comfortable about insuring
fleets under 15 years old. And when that happens, he says,
``rates will come down, and we'll be able to spend the money
on research and development.''
The companies complain that they are automatically sued in
every crash because they have deep pockets and build long-
lived products. For example, Raytheon Corp.'s Beech Aircraft
unit was sued in 1989 when a 19-year-old Beechcraft crashed
into a tree. The pilot was flying into a small airport in
Kentucky at dusk and ducked under clouds to view the field,
despite warnings from the ground. Government investigators
blamed pilot error. But Beech says it spent more than
$100,000 in legal fees before the case was dismissed.
Privately held American General is one of the few remaining
makers of planes that cost under $150,000. Mr. Crowley says
liability insurance, at about $10,000 a plane, is ``the
second-most expensive component, after the engine.''
Larger manufacturers are even more eager to have the law
changed. Russ Meyer, president of Cessna, says, ``A high
percentage of the 120,000 planes we built in the last 60
years are still flying.'' As lawsuits are filed concerning
old planes, the rising costs are tacked onto the liability
insurance rates for new planes.
Beech's lawyers once analyzed lawsuits covering 203 crashes
that occurred in the mid-1980s. Federal investigators blamed
weather, faulty maintenance and air-control errors, but never
Beech's design or manufacturing as the cause of the crash.
But ``plaintiffs' attorneys claimed 100% of those crashes
were the fault of the manufacturer,'' says Robert Martin, a
Wichita lawyer who frequently defends Beech. Each case cost
Beech an average of $530,000. Even those that were dismissed
cost $100,000 to $200,000 apiece to prepare, Mr. Martin says.
Mr. Wolk, the plaintiffs' attorney, who has won plane-crash
judgments as high as $107.3 million, says the bill's passage
may help manufacturers but will hurt pilots, flight schools,
maintenance shops and airfields. ``Pilots and ground
operators should get significantly higher insurance limits
because passengers and customers will be suing them for
larger amounts of money,'' he says.
Nobody expects the small-plane business to bounce back to
the level of 15 years ago when generous tax credits and a
growing number of student pilots created a seemingly ever-
expanding market. Most of the planes sold then were under
$50,000 apiece. Today, the lowest priced plane from a major
manufacturer is the Piper Cub, a cloth-covered two-seater
that goes for $85,000. Mr. Suma of Piper says the change to
15-year liability ``will allow us to stabilize pricing, but I
don't see an industrywide reduction.'' Cessna indicates it
hopes to have a base price under $100,000.
In fact, the days when Americans dreamed of learning to fly
and buying a plane may be gone for good. Over the past four
years, the number of new student pilots has steadily
declined. Instructional hours flown have dropped. Getting a
pilot's license now costs about $4,500, up from $1,500 15
years ago.
Among the few remaining manufacturers, demand already
trails production capacity. Mooney Aircraft Corp., Kerrville,
Texas, which makes high-performance 200-mile-per-hour planes
costing $160,000 to $400,000, has seen declines in business
for the past three years, says Jeffrey Dunbar, vice
president, sales.
Pilots, plane owners and small manufacturers say that
Cessna's return with spiffy new planes and a big promotional
campaign should rekindle customer interest. ``As we resume
production, we'd be stimulating demand,'' says Philip M.
Michel, Cessna's vice president, marketing. ``I don't believe
interest in flying can't be stimulated. It's as basic as a
child watching a bird.''
____
[From Forbes magazine, Nov. 8, 1993]
Crash--The Odd Case of the Man Who Tried to Fly a Plane from the Back
Seat Shows Why American Companies Don't Sell Many Private Airplanes
Anymore
(By David Frum)
Here's a distressing statistic: In 1979 American companies
made and sold 17,000 private planes. In 1989 they made and
sold only 1,535. This is one instance where you can't blame
foreign competition. We can blame only ourselves for
destruction of this once vibrant industry. The bizarre case
of Piper Aircraft v. Cleveland shows why this wound is self-
inflicted.
On July 7, 1983, just before dawn, a pilot named Edward
Cleveland crashed his 13-year-old Piper Super Cub into a
parked van at an airfield about 20 miles outside of
Albuquerque, N.M. The van belonged to the owner of the
airfield, who had placed it on the runway in order to block
Cleveland from taking off.
Why? Cleveland and the company he worked for had a history
of unsafe flying practices, and the owner didn't want him
using the airfield. But a local savings and loan had hired
Cleveland's company to film an ad with a sailplane gliding at
dawn over the nearby Sandia Mountains, and Cleveland didn't
want to lose the job.
Rather than take up two planes--one to launch the sailplane
and one to film--Cleveland knocked out the front seat of his
two-seater aircraft, and had his crew install a rear-facing
camera. The cameraman squeezed in behind the camera with his
back covering the instrument panel and front window.
Cleveland would pilot from the rear seat.
To block the plane, the airfield owner parked his van a
thousand feet down the runway. Day was breaking, and the
van's lights were on.
Cleveland started down the runway anyway. Either he didn't
see the van, or he just decided to push his luck. In any
case, he didn't make it. He hit the van, smashing his face
into the steel camera mount in front of him. Cleveland
suffered severe brain damage.
His family sued the airfield owner, and won $300,000. Then
their lawyer--Daniel Cathcart, whose expertise in suing
aircraft manufacturers has bought him a Beverly Hills house
adjacent to that formerly owned by Jean Harlow--decided to go
for broke. He would sue Piper.
According to Cathcart, the Super Cub's design was
defective: On the ground, it is impossible to see out the
front from the rear seat. He also contends the plane should
have been equipped with a rear shoulder harness. Never mind
that the passenger sat in a way that blocked the pilot's
view. A jury was convinced, and awarded $1,042,000 in
damages.
That award gave liability lawyers a real chance to strut
their stuff. In 1979 manufacturers of Federal Aviation
Administration-approved aircraft paid out $24 million in
damages and litigation costs. By 1989 they paid a total of
$210 million.
Piper became a special target. Operators of corporate jets
usually carry insurance. Lawyers can sue them when an
accident occurs. But the operators of Piper's cheap planes
don't usually buy much insurance. So the lawyers go after the
manufacturer.
According to Piper's general counsel, Glenn Parr, the
company paid $10 million a year from 1987 to 1991 to settle
lawsuits on its FAA-approved aircraft. Piper stopped buying
insurance in 1987. By then, insurance had become pointless
anyway: The last policy the company owned had carried a $100
million deductible. In July 1991 Piper entered Chapter 11.
Now, if you aren't seething already, this will really make
you grind your teeth: The design of the Super Cub, the most
popular aircraft in history, had long been approved by the
FAA. This included a 1977 ruling that only a front-seat
shoulder harness was required. Thus, according to the
relevant federal regulators, the Super Cub was a safe plane.
The New Mexico legislature would not try to substitute its
own safety standards for those of the federal government.
Should a New Mexico jury be allowed to do so?
Despite this legal question and the economic carnage, the
federal courts have so far refused to consider the argument
that federal regulation should preempt juries from applying
state law. Early last month the Supreme Court refused to hear
the Cleveland case.
The Supreme Court's decision raises one especially
troubling issue. For more than a decade the top court has
avoided doing anything much about the tort explosion. But if
the top court won't take action in a case as extreme as Piper
Aircraft v. Cleveland, it's hard to imagine that it ever
will. So a part of the legal profession flashes heavy gold
watches, while a whole industry that once had great potential
goes down the toilet.
Mr. DORGAN. Mr. President, I rise today to support S. 4, the National
Competitiveness Act. This important legislation is an essential element
of the Clinton administration's agenda to make American business more
competitive and to reinvigorate our Nation's manufacturing base. In
both sign and in substance, this legislation embodies a cooperative
approach between business and Government that will achieve positive
results, including more American jobs. Federal support for civilian
technology and manufacturing is a positive industrial policy, necessary
in a competitive global environment. I urge my colleagues to support
this important bill.
The National Competitiveness Act embraces the best of the concept of
a public-private partnership. This legislation expands Government
support for industry-led projects to develop technology and cooperative
efforts with States to help small- and medium-sized manufacturers. I
believe that the approach we are taking with this legislation will lead
us down the road to a more productive and highly competitive
manufacturing base in the United States. American businesses want an
activist Government, especially in the area of making our Nation's
manufacturing base more competitive. U.S. investment in manufacturing
is falling behind our competitors. Currently, United States investment
in plant and equipment is half of Japan's and less than half of any
other G-7 country.
In the past, business and Government have seemed at odds with each
other. Businesses have felt overtaxed and burdened with endless
Government mandates. Indeed, Government too often is in the position of
laying heavier burdens on businesses as opposed to looking for ways to
make them more competitive. This legislation signifies and demonstrates
that Government and business can have a more positive, cooperative
relationship. Under the many programs authorized in the National
Competitiveness Act, the Government is providing assistance to help
business become more competitive. The focus of this legislation is
appropriately on manufacturing and technology development--an area
where the United States is, unfortunately, falling behind. We, as a
nation, need to be concerned. That is why this legislation is so
important--it recognizes that our manufacturing base is critical to our
economy and unless the Government and business work together to
transform our manufacturing base into a globally competitive force,
then our standing as an economic power will suffer.
Not only will this legislation benefit American manufacturers as a
whole, but it will help stimulate economic development in rural areas
by channeling badly needed assistance to small- and medium-sized
manufacturers in rural areas. One of the most important provisions in
the bill to rural areas is the Manufacturing Extension Partnership
[MEP] Program. Under this program, the National Institute of Standards
and Technology [NIST] would establish extension centers, designed to
help small- and medium-sized manufacturers become more competitive
through the implementation of advance technology and state-of-the-art
manufacturing practices. President Clinton has set a goal of
establishing a network of over 100 manufacturing extension centers. As
a clear sign of the administration's support for the MEP Program, the
fiscal year 1995 budget request would double funding for MEP: $61
million, up from $30 million in the current fiscal year. I support the
President's goal and I further believe that this national network of
manufacturing extension centers needs to include rural areas.
While it is clear that MEP programs will benefit many manufacturing
sectors throughout the country, smaller manufacturers stand a great
deal to gain under this program. S. 4 contains language that requires
the Secretary of Commerce, when making awards under the MEP, to
``strive for geographical balance and for balance between urban and
rural recipients.'' The fact is that there is a tremendous amount of
innovation and development occurring in rural areas by small
manufacturers. These small manufacturers often are overlooked as a
source of efficient, highly productive performance. The inclusion of
rural areas within a national network of manufacturing extension
centers will not only help hundreds--if not thousands--of small
manufacturers, but it will lead to a national manufacturing base that
employs the best our country has to offer.
In North Dakota, for example, there are over 200 small manufacturers,
employing an average of about 50 workers. Almost 80 percent of these
manufacturers in North Dakota export their products to other States and
about one-fourth of the exporting manufacturing companies sell products
outside the United States. There are several examples of large national
cooperations looking to rural manufacturers and business as efficient,
productive locations. Many rural States, like North Dakota, have seen
modest growth in their manufacturing businesses. However, their future
growth faces many challenges--from financing to technical assistance.
MEP programs can provide some of the critical help that small
manufacturers need to grow and become more competitive nationally and
internationally.
Rural States like North Dakota stand to benefit from the programs
authorized under this legislation. Throughout rural America are
hundreds of small businesses that, with a little assistance, will shine
as some of our Nation's finest and most competitive manufacturers. As
we continue to shift our emphasis from defense-orientated technology
research and development toward civilian technology, small- and medium-
sized rural manufacturers need to be considered an essential element to
our Nation's success.
Mr. President, I strongly urge my colleagues to support this
legislation. The administration and the bill sponsors deserve
commendation for their vision and leadership on this issue. America
needs the kind of proactive and cooperative commitment at the Federal
level that this legislation provides.
____________________