[Congressional Record Volume 143, Number 160 (Thursday, November 13, 1997)]
[House]
[Pages H10945-H10946]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




   CONSIDERING AS ADOPTED S. 1193, AND H.R. 2036, AVIATION INSURANCE 
                      REAUTHORIZATION ACT OF 1997

  Mr. ARMEY. Mr. Speaker, I ask further unanimous consent that the 
Senate bill (S. 1193) to amend chapter 443 of title 49, United States 
Code, to extend the authorization of the aviation insurance program, 
and for other purposes, the counterpart of H.R. 2036, considered by the 
House on Monday, September 29, 1997, be considered as adopted, and the 
motion to reconsider be laid on the table.
  The text of S. 1193 is as follows:

                                S. 1193

       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.

       (a) General Authority for Insurance and Reinsurance.--
     Section 44302(a)(2) of title 49, United States Code, is 
     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.''.
       (b) Limitation on Maximum Insured Amount.--Section 44306(c) 
     of title 49, United States Code, is 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 the following: ``If such an 
     agreement is countersigned by the President or the 
     President's designee, 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.

       (a) In General.--Section 44310 of title 49, United States 
     Code, is amended by striking ``September 30, 2002'' and 
     inserting ``December 31, 1998''.
       (b) Effective Date.--The amendment made by subsection (a) 
     takes effect on October 1, 1997.

     SEC. 6. USE OF AIRCRAFT FOR DEMONSTRATION.

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

  (For text of H.R. 2036, see proceedings of the House of Monday, 
September 29, 1997, at page H8092.)
  Mr. ARMEY. Mr. Speaker, I ask unanimous consent that the bill, H.R. 
2036, be laid on the table.
  The SPEAKER pro tempore. Is there objection to the combined requests 
of the gentleman from Texas?
  There was no objection.
  Mr. SHUSTER. Mr. Speaker, the War Risk Insurance Program has been a 
relatively noncontroversial program. It was first authorized in 1951 
and last reauthorized in 1992.
  Since 1975, it has been used to insure more than 5,000 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 expired on September 30, 
1997. 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: First, 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. Second, state that the President's signature of the 
indemnification agreement between the DOT Secretary and the head of 
another U.S. Government agency will coinstitute the required finding 
that the flight is necessary to carry out the foreign policy of the 
United States. Third, permit 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. And fourth, extend 
the program for 1 year.
  There are three 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. We look forward to working with the FAA, DOD, 
and the airlines on this.

[[Page H10946]]

  The reauthorization period has been shortened to 1 year to ensure 
that FAA addresses this matter in the next year. It is our intent that 
the 1-year reauthorization period in this bill would supersede the 
longer period in section 1088 of the DOD reauthorization bill.
  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. The 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 from the Government 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.
  This bill is essentially the same as H.R. 2036 that the House debated 
on September 29, 1997. I urge support for this legislation.

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