[Congressional Record Volume 143, Number 132 (Monday, September 29, 1997)]
[House]
[Pages H8092-H8094]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                              {time}  1415
             AVIATION INSURANCE REAUTHORIZATION ACT OF 1997

  Mr. KIM. Mr. Speaker, I move to suspend the rules and pass the bill 
(H.R. 2036) to amend chapter 443 of title 49, United States Code, to 
extend the authorization of the aviation insurance program, and for 
other purposes, as amended.
  The Clerk read as follows:

                               H.R. 2036

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Aviation Insurance 
     Reauthorization Act of 1997''.

     SEC. 2. VALUATION OF AIRCRAFT.

       Sections 44302(a)(2) and 44306(c) of title 49, United 
     States Code, are each amended by striking ``as determined by 
     the Secretary'' and inserting ``as determined by the 
     Secretary in accordance with reasonable business practices in 
     the commercial aviation insurance industry''.

     SEC. 3. EFFECT OF INDEMNITY AGREEMENTS.

       Section 44305(b) of title 49, United States Code, is 
     amended by adding at the end of the following: ``If such an 
     agreement is countersigned by the President, the agreement 
     shall constitute, for purposes of section 44302(b), a 
     determination that continuation of the aircraft operations to 
     which the agreement applies is necessary to carry out the 
     foreign policy of the United States.''.

     SEC. 4. ARBITRATION AUTHORITY.

       (a) Authorization of Binding Arbitration.--Section 
     44308(b)(1) of title 49, United States Code, is amended by 
     inserting after the second sentence the following: ``Any such 
     policy may authorize the binding arbitration of claims made 
     thereunder in such manner as may be agreed to by the 
     Secretary and any commercial insurer that may be responsible 
     for any part of a loss to which such policy relates.''.
       (b) Authority To Pay Arbitration Award.--Section 
     44308(b)(2) of such title is amended--
       (1) by striking ``and'' at the end of subparagraph (A);
       (2) by redesignating subparagraph (B) as subparagraph (C); 
     and
       (3) by inserting after subparagraph (A) the following:
       ``(B) pay the amount of a binding arbitration award made 
     under paragraph (1); and''.

     SEC. 5. EXTENSION OF PROGRAM.

       Section 44310 of title 49, United States Code, is amended 
     by striking ``September 30, 1997'' and inserting ``December 
     31, 1998''.

     SEC. 6. PUBLIC AIRCRAFT DEFINED.

       Section 40102(a)(37)(A) of title 49, United States Code, is 
     amended--
       (1) by striking ``or'' at the end of clause (i);
       (2) by redesignating clause (ii) as clause (iii); and
       (3) by inserting after clause (i) the following:
       ``(ii) owned by the Armed Forces of the United States and 
     operated by any person for purposes related to crew training, 
     equipment development, or demonstration; or''.

  The SPEAKER pro tempore (Mr. Upton). Pursuant to the rule, the 
gentleman from California [Mr. Kim] and the gentleman from Minnesota 
[Mr. Oberstar] each will control 20 minutes.
  The Chair recognizes the gentleman from California [Mr. Kim].
  Mr. KIM. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, this bill reauthorizes the War Risk Insurance Program 
for another year. The War Risk Insurance Program was first reauthorized 
in 1951 and has been reauthorized periodically since then. Its current 
authorization expires tomorrow. This program was used extensively 
during operations in Desert Shield and Desert Storm to insure aircraft 
ferrying troops and supplies to the Middle East. Without this program, 
the military would have had to buy more aircraft for this purpose, 
which would have cost taxpayers billions of dollars. Instead, 
commercial aircraft, with the protection of war risk insurance, were 
willing to take on these dangerous missions.
  The bill being considered today reauthorizes this program and makes 
several relatively minor changes that were suggested by the 
administration, the GAO, and the airlines, at the Subcommittee on 
Aviation hearing last May. The bill differs slightly from the bill that 
was approved by the Committee on Transportation and Infrastructure last 
July. The main difference is

[[Page H8093]]

that the provision on borrowing authority was dropped and the 
reauthorization period was shortened.
  The borrowing authority provision was designed to ensure that 
insurance claims could be paid in a timely manner without having to 
wait for an appropriation. Unfortunately, the administration opposed 
this. They did agree, however, to develop an alternative. This bill 
gives them 1 year to develop that alternative.
  Also, this bill includes a small change to the definition of ``public 
aircraft.'' That change will allow military aircraft manufacturers to 
lease back their planes from the military for air shows or other 
demonstration purposes. This is a good bill, and I urge my colleagues 
to support this.
  Mr. Speaker, I reserve the balance of my time.
  Mr. OBERSTAR. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I, of course, support H.R. 2036, the War Risk Insurance 
Reauthorization Act of 1997. This is one of several times we have come 
to the floor to reauthorize this legislation, and this particular 
reauthorization extends the program until December 31, 1998.
  This is very important legislation. It may not seem large in the 
great scheme of things that we do in the House or even on our Committee 
on Transportation, but this particular legislation is vitally important 
to our national security effort. This bill includes provisions to 
ensure that the program will run more smoothly the next time we have to 
call upon the airlines to engage in national security support 
initiatives.
  The War Risk Insurance Program was most recently put into operation 
during Desert Shield and Desert Storm. U.S. air carriers flew thousands 
of U.S. troops and tons of equipment from the United States and from 
Europe into the Middle East theater of operations. During that period 
of time, the FAA issued nonpremium war risk insurance for some 5,000 
commercial flights that operated air lift services as part of the Civil 
Reserve Air Fleet.
  In fact, in an assessment after Desert Storm, President Bush 
complimented the Civil Reserve Air Fleet, the domestic airline carriers 
and both the scheduled carriers and the charter operators and our cargo 
fleet on the superb job they did, saying that without those 5,000 
fleets, we could not have met the challenge with the readiness that the 
U.S. forces demonstrated at the outset of both Desert Shield and Desert 
Storm.
  Not only is insurance vital to airline operations, it is essential in 
operations such as this type in high-risk combat zones. The FAA and the 
DOT requires insurance for airline operations under any circumstance. 
But in these circumstances, there is a higher risk and a higher need. 
And that is why this is a matter of national policy to provide war risk 
insurance.
  The very simple fact is that such operations are carrying out foreign 
policy objectives of the United States in a highly contested arena. The 
program is divided into two parts, both premium and nonpremium 
insurance. Under the premium policy, insurance is provided to U.S. or 
foreign carriers for commercial scheduled and charter service. It can 
be used only for international flights. It is a very important 
distinction. Premium insurance was provided during the Vietnam war and 
on 37 occasions after Iraq invaded Kuwait.
  Nonpremium insurance is used to ensure that airlines operating under 
contract to the U.S. Government, either State or Defense Department, 
and it can cover domestic or international flights. In the course of 
the Subcommittee on Aviation hearings conducted by the gentleman from 
Tennessee [Mr. Duncan], our very distinguished chairman, GAO raised two 
issues that should be addressed legislatively.
  First, air carriers that are purchasing premium insurance, in GAO's 
opinion, needed to have a better guarantee that if they suffered a 
claim in excess of the amount in the revolving fund, they would be 
assured of complete and immediate reimbursement.
  Second, there was a need to clarify whether flights conducted on 
behalf of Defense and State covered by nonpremium insurance had to be 
determined by the President to be in the best foreign policy interests 
of the United States. Both of those concerns are addressed in this 
legislation.
  Since then, the administration has expressed again its concerns about 
a provision in the bill that provided borrowing authority to the FAA in 
the event a claim would be made in excess of the amount in the 
revolving fund. The administration wanted time to work out an agreement 
between the FAA and DOT to meet the concerns expressed by GAO. We have 
agreed to drop that provision but have shortened the length of time for 
this authorization from 5 years to 15 months.
  Normally, we would have a much longer authorization period. I felt 
that this shorter timeframe needed to be explained, because it is not 
the committee's intention to proceed without some understanding on this 
very important matter of extending the borrowing authority for those 
cases in which claims are made in excess of the revolving fund.
  I know that is the concern of the gentleman from Tennessee [Mr. 
Duncan]. I know that is a concern of the gentleman from Illinois [Mr. 
Lipinski], our remarking member on the Subcommittee on Aviation, and I 
know that the gentleman from Pennsylvania [Mr. Shuster] shares that 
concern.
  We do want to ensure that there will be continuity for this program. 
We want to ensure that it will not be subject to stop and start by 
fits. We prefer a much longer period of authorization. But until this 
issue is revolved, I do not think it is responsible for the Congress to 
proceed until this matter is resolved.
  I take this opportunity to urge the DOT, as the lead agency here, and 
State and Defense and all the other entities in the administration that 
have a say in this issue, to get together, resolve the issue so that we 
can provide the longer term authorization that is our customary 
practice in the war risk insurance issue.
  I want to congratulate the gentleman from Tennessee [Mr. Duncan], our 
subcommittee chair, and the gentleman from Illinois [Mr. Lipinski], our 
ranking minority member, for the splendid work they have done, and our 
staff on both sides of the aisle for paying such careful and detailed 
attention to this very important issue that might otherwise not be so 
fully appreciated.
  Mr. Speaker, I yield such time as she may consume to the gentlewoman 
from Florida (Ms. Brown].
  Ms. BROWN of Florida. Mr. Speaker, I rise in support of H.R. 2036, 
the Aviation Insurance Reauthorization Act of 1997.
  First of all, I wish to congratulate the gentleman from Tennessee 
[Mr. Duncan], subcommittee chairperson; and the gentleman from Illinois 
[Mr. Lipinski], the ranking member; as well as the gentleman from 
Pennsylvania [Mr. Shuster], the chairman; and the gentleman from 
Minnesota [Mr. Oberstar], the ranking member, for their work on this 
legislation. It is a good bill and deserves the support of all.
  Mr. Speaker, H.R. 2036 reauthorizes the important War Risk Insurance 
Program until December 31, 1998. It also contains provisions intended 
to ensure that the program runs more smoothly the next time it is 
utilized. It is important that carrier concerns are addressed to the 
greatest extent possible in order to encourage continued carrier 
participation in the Civil Reserve Air Fleet. The need for a vibrant 
CRAF Program was evidenced in 1990, during the Desert Shield and Desert 
Storm operations.
  Since the program was last authorized, the Department of Defense, 
working with the Federal Aviation Administration and the carriers, 
entered into an agreement whereby losses incurred by a carrier 
operating on behalf of the Departments of State or Defense, covered by 
nonpremium insurance, could be reimbursed in a more timely manner.
  When our committee held a hearing on these programs earlier this 
year, GAO testified that there were only two outstanding issues that 
should be addressed legislatively.
  Mr. Speaker, this is a noncontroversial bill developed on a 
bipartisan basis, and I urge my colleagues to support its passage.
  Mr. OBERSTAR. Mr. Speaker, I yield 1 minute to the gentleman from 
Ohio [Mr. Traficant].
  Mr. TRAFICANT. Mr. Speaker, I thank the ranking member, Mr. Oberstar, 
for yielding me the time, and I support the amendment.
  But I took to the floor to note that the gentleman from Minnesota 
[Mr.

[[Page H8094]]

Oberstar], our ranking member, had been in Minnesota a couple weeks ago 
because his 86-year-old mother, Mariette, had a heart attack. I am glad 
to see that he is back energetically handling our committee's business. 
He was made to do so.
  I am proud to announce that his mom is doing fine. And everybody here 
would like to just state, for the Record, that we support this bill and 
we are glad to see our ranking member back and his mom doing fine up 
there in Minnesota.
  Mr. KIM. Mr. Speaker, I yield back the balance of my time.
  Mr. OBERSTAR. Mr. Speaker, I thank the gentleman from Ohio [Mr. 
Traficant] for his very heartfelt comments, and if my mother were 
watching, she would be very happy to have heard those kind words, as 
well. It is very reassuring that she has been able to rebound from a 
very serious illness and assume her normal course of activities, 
cooking, baking, the things that she loves best.
  The woman, who in her lifetime has cooked probably three tons of 
bread, is not going to be stopped by a heart attack. I thank the 
gentleman from Ohio [Mr. Traficant] for his kind words and all those 
who have been so supportive.
  Mr. DUNCAN. Mr. Speaker, Chairman Shuster, myself, the ranking member 
of the full committee, Mr. Oberstar, and the ranking member of the 
Aviation Subcommittee, Mr. Lipinski, introduced H.R. 2036, the Aviation 
Insurance Reauthorization Act of 1997 on June 25th.
  This war risk insurance program was first authorized in 1951, and, 
over the years, has been improved upon during the reauthorization 
process.
  On May 1, 1997, the Aviation Subcommittee held a hearing to review 
the War Risk Insurance Program, which expires tomorrow.
  Of course, we rarely hear about this program until a conflict arises, 
like Vietnam, the gulf war, or Bosnia. This insurance program was an 
integral part of our Nation's military response in those cases.
  The reauthorization of this program is also very essential for a 
viable Civil Reserve Air Fleet Program which meets the Nation's 
security needs.
  The Department of Defense depends on the CRAF Program for over 90 
percent of its passengers, 40 percent of its cargo, and nearly 100 
percent of its air medical evacuation capability in wartime. These 
flights could not be operated without the insurance provided by this 
bill.
  So it is very important that we reauthorize this program in a timely 
manner.
  This bill was approved unanimously by the Aviation Subcommittee on 
July 10 and by the full Transportation & Infrastructure Committee on 
July 23. The bill incorporated many of the suggestions we heard from 
expert witnesses at our May hearing.
  Mr. Speaker, this legislation authorizes the Secretary of 
Transportation to be guided by reasonable business practices of the 
commercial aviation insurance industry when determining the amount for 
which an aircraft should be insured.
  This change is intended to recognize that there may be instances in 
which an aircraft's market value is not the appropriate basis for 
determining the amount of insurance.
  The bill also states that the President's signature of the 
indemnification agreement between the DOT Secretary and the head of 
another U.S. Government agency will constitute the required finding 
under current law that the flight is necessary to carry out the foreign 
policy of the United States.
  Section 4 of the bill permits a war risk insurance policy to provide 
for binding arbitration of a dispute between the FAA and the commercial 
insurer over what part of a loss each is responsible.
  The provision on borrowing authority that was in the reported bill 
has been dropped because the administration objected to it.
  However, they did agree to develop in the coming months an 
alternative to the borrowing authority that would ensure that air 
carrier insurance claims could be paid in a timely manner. We look 
forward to working with them on that.
  And finally, the bill also now includes a very simple provision 
designed to fix a problem experienced by defense contractors who lease 
back their planes from the military in order to fly them in air shows 
or other similar demonstrations.
  Although this practice has been going on for many years, some in the 
FAA have interpreted the law in a way that would prevent this from 
occurring. This bill would allow these flight demonstrations, which are 
important to product development and company sales, to take place.
  I strongly use the House to support this legislation so that we can 
reauthorize this very essential program.
  Mr. SHUSTER. Mr. Speaker, the war risk insurance program has been a 
relatively non-controversial program.
  It was first authorized in 1951 and last reauthorized in 1992.
  Since 1975, it has been used to insure more than 5000 flights to 
trouble spots such as the Middle East, Haiti, and Bosnia. It was used 
to insure airlines ferrying troops and supplies to the Middle East 
during Operation Desert Storm.
  The program is scheduled to expire at the end of this fiscal year.
  The reauthorization of this program is relatively straightforward.
  Several technical changes suggested by GAO, the administration, or 
the affected airlines have been included in the bill. These changes 
would do the following--
  Authorize the Secretary to be guided by the reasonable business 
practices of the commercial aviation insurance industry when 
determining the amount for which an aircraft should be insured.
  This change is intended to recognize that there may be instances in 
which an aircraft's market value is not the appropriate basis for 
determining the amount of insurance. For example, this occurs in the 
case of leased or mortgaged aircraft when the lessor or mortgagor 
require a specified amount of insurance in the lease or mortgage 
agreement. As the market values of aircraft fluctuate, the specified 
amount may sometimes be different than the market value of the 
aircraft.
  States that the President's signature of the indemnification 
agreement between the DOT Secretary and the head of another U.S. 
Government agency will constitute the required finding that the flight 
is necessary to carry out the foreign policy of the United States.
  Permits a war risk insurance policy to provide for binding 
arbitration of a dispute between FAA and the commercial insurer over 
what part of a loss each is responsible for.
  Extends the program for 1 year.
  There are 3 changes from the bill that was reported by our Committee 
(Report 105-244) they are--
  Elimination of the provision on borrowing authority;
  Shortening of the authorization period; and
  A very limited provision on public aircraft.
  The elimination of the borrowing authority and the shortening of the 
reauthorization period are closely related.
  We have dropped the borrowing authority at the request of the 
administration. However, FAA officials have committed to us that in 
return for eliminating this provision, they would work with us to 
develop an alternative to ensure that airline insurance claims can be 
paid in a timely fashion.
  The reauthorization period has been shortened to ensure that FAA 
addresses this matter in the next year. We look forward to working with 
the FAA, DoD and the airlines on this.
  The new provision on public aircraft is a response to a problem 
recently experienced by Boeing, McDonnell-Douglas and other defense 
contractors. The problem arises because these companies will sometimes 
lease back from the military aircraft that they had previously sold 
them. They do this in order to fly them in air shows, flight 
demonstrations, research, development, test, evaluation, or aircrew 
qualification. When they do this, FAA now believes that they lose their 
status as public aircraft and become subject to FAA regulations. 
However, as military aircraft, they cannot comply with civil 
regulations.
  In order to allow aircraft manufacturers to once again fly their 
aircraft in air shows and demonstrate them for customers, this bill 
will make clear that these aircraft retain their status as public 
aircraft when leased back to the manufacturer for these limited 
purposes. This provision will certainly not allow anyone to lease a 
plane from the military and use it to carry passengers or for similar 
commercial purposes.
  I urge support for this legislation.
  MR. OBERSTAR. Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from California [Mr. Kim] that the House suspend the rules 
and pass the bill, H.R. 2036, as amended.
  The question was taken.
  Mr. CONDIT. Mr. Speaker, I object to the vote on the ground that a 
quorum is not present and make the point of order that a quorum is not 
present.
  The SPEAKER pro tempore. Pursuant to clause 5, rule I, and the 
Chair's prior announcement, further proceedings on this motion will be 
postponed.
  The point of no quorum is considered withdrawn.

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