[Congressional Record Volume 148, Number 147 (Thursday, November 14, 2002)]
[House]
[Pages H8738-H8741]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




    WAIVING POINTS OF ORDER AGAINST CONFERENCE REPORT ON H.R. 3210, 
                     TERRORISM RISK PROTECTION ACT

  Mr. SESSION. Mr. Speaker, by direction of the Committee on Rules, I 
call up House Resolution 607 and ask for its immediate consideration.
  The Clerk read the resolution, as follows:

                              H. Res. 607

       Resolved, That upon adoption of this resolution it shall be 
     in order to consider the conference report to accompany the 
     bill (H.R. 3210) to ensure the continued financial capacity 
     of insurers to provide coverage for risks from terrorism. All 
     points of order against the conference report and against its 
     consideration are waived. The conference report shall be 
     considered as read.

  The SPEAKER pro tempore (Mr. Dan Miller of Florida). The gentleman 
from Texas (Mr. Sessions) is recognized for 1 hour.
  Mr. SESSIONS. Mr. Speaker, for the purpose of debate only, I yield 
the customary 30 minutes to the gentleman from Massachusetts (Mr. 
McGovern), pending which I yield myself such time as I may consume. 
During consideration of this resolution, all time yielded is for the 
purpose of debate only.
  Mr. Speaker, the resolution is the standard rule for consideration of 
conference reports and waives all points of order against consideration 
of the conference report.
  Mr. Speaker, on September 11, 2001, the collective memories of 
Americans were altered forever. The terrorist attacks resulted in an 
incalculable loss, both in loss of life and the destruction of 
buildings and businesses.
  While America has begun its recovery and is healing from last 
September, we must be mindful of the threat that continues to exist. 
Just yesterday, our intelligence officials indicated that terrorist 
groups may be planning a new wave of attacks against our homeland. 
Exposure to terrorism is not only a threat to our national security but 
is also a threat to the U.S. and the global economy.
  There is no doubt that these terrorist attacks have resulted in the 
most costly, catastrophic loss in the history of property and casualty 
insurance. However, the ripple effects of the attacks continues to last 
and will linger on.
  The shortage of terrorism insurance has left any number of our 
hospitals, stadiums, shopping malls, apartments, and office buildings 
either with astronomical rates for insurance or none at all.
  It goes without saying that the attacks have been a real threat not 
only to our homeland but also to our economic security. The United 
States Chamber of Commerce estimates that the economy has suffered a 
loss of

[[Page H8739]]

more than $15 billion and 300,000 jobs in the construction industry 
alone.
  Mr. Speaker, insurance has been described as the glue which holds our 
economy together. Without reinsurance for the risk of terrorism, some 
insurance companies have been forced to specifically exclude it from 
their future policies. Without this terrorism coverage, lenders are 
unlikely to underwrite loans for major projects. This sequence of 
events could result in dangerous disruptions to the marketplace and 
further hurt our economy.
  In April of this year, a Washington Post article cited two real-life 
examples. One, J.W. ``Bill'' Marriott, chairman and chief executive 
officer of Marriott International, said that although the hotel company 
remained insured for terrorism, he was expecting a 300 percent increase 
in premiums when it had to renew its new policies.
  Another example was from Baylor University, which is located in Waco, 
Texas. According to David Brooks, vice president for finance and 
administration at Baylor University, the University had to go to 23 
insurance companies searching for terrorism coverage.
  These snapshots from around the country form a composite picture of a 
dire situation that requires action from this body, the United States 
Congress.
  Heeding President Bush's call for Congress to act, the House passed 
H.R. 3210, the Terrorism Risk Protection Act, shortly after the 
September 11, 2001, attacks. The Terrorism Risk Protection Act provides 
a Federal backstop for financial losses in the event of future 
terrorism attacks.

                              {time}  1330

  This bill establishes a system of shared public/private compensation 
for insured losses resulting from acts of terrorism to protect 
consumers and create a transitional period for the private insurance 
markets to stabilize.
  The Federal backstop is triggered when the Secretary of the Treasury 
determines that an act of terrorism has occurred with losses in excess 
of $5 million. The Federal Government would pay 90 percent of the 
insured losses that exceeded the insured deductibility, which increases 
each year of the program, up to $100 billion each year.
  The conference report provides for full payback protection for the 
American taxpayer by guaranteeing that the first 10- to $15 billion in 
losses would be paid by the insurance marketplace. The Secretary would 
retain the authority to fully recoup any additional costs as necessary.
  Mr. Speaker, as my colleagues are fully aware, much of the recent 
attention has been focused on the tort provisions in this bill. The 
Joint Economic Committee released a study this May that estimated that 
lawsuits stemming from the September 11 attacks were already estimated 
to cost as much as $20 billion. These lawsuits typically pay 33 to 40 
percent of the award to the plaintiff's lawyers.
  The 1993 World Trade Center bombing, which killed six people, 
resulted in 500 lawsuits by 700 individuals, businesses and insurance 
companies. Mr. Speaker, it has now been 8 years and the cases are only 
now just getting to the trial stage, where hundreds of plaintiffs have 
yet to even receive one cent of compensation. Mr. Speaker, this is not 
a circumstance or a situation that we want to repeat.
  Though this bill does not solve the woes of our legal system, it does 
take the first solid steps towards reform. By providing reasonable 
reforms, victims of terrorism will more quickly and equitably receive 
compensation while also reducing the substantial uncertainty facing the 
insurance industry when pricing terrorism risk.
  Mr. Speaker, I would like to take a moment to commend the conferees 
who have labored to produce this fine work. I would also like to 
recognize the leadership of the gentleman from Ohio (Mr. Oxley), who 
has been so instrumental in the success of this critically important 
bill. Mr. Speaker, I urge my colleagues to support me in not only 
supporting this rule but also the underlying legislation.
  Mr. Speaker, I reserve the balance of my time.
  Mr. McGOVERN. Mr. Speaker, I want to thank my colleague from Texas 
for yielding me the customary 30 minutes and I yield myself such time 
as I may consume.
  Mr. Speaker, the tragic events of September 11, 2001, will remain 
fresh in our minds for years to come. The shroud of terrorism continues 
to surround us and terrorists around the world continue to regroup, 
plan and carry out attacks on innocent civilians. The economic 
consequences of another terrorist attack on the United States are real 
and, without proper preparation, could be economically devastating.
  After September 11, there was no question whether the insurance 
industry needed financial backing in case of another terrorist attack 
on the United States. We all agreed that another attack could 
potentially cripple the American economy. In response, the Committee on 
Financial Services produced a truly bipartisan bill that was approved 
unanimously by the full committee. It was not perfect, there were real 
disagreements over specific provisions in the original risk insurance 
bill, but it was a good start.
  Unfortunately, Mr. Speaker, the majority leadership decided it had to 
meddle in the process and inserted language drastically changing the 
tort system in this country. The original bill was made worse and in 
the process bipartisanship was thrown aside.
  Mr. Speaker, this conference gets us back to the land of 
bipartisanship. All the Democratic conferees signed the conference 
report and, after initially threatening to veto it, the White House is 
now indicating that the President will sign the bill into law.
  My concern is with the unnecessary delay here. This bill should have 
been completed last year. Without the tort language in the original 
House-passed bill, a conference report could have been easily agreed to 
and, with hard work, this bill might have been signed into law before 
the first of the year. By making this a political process rather than 
the truly bipartisan process it should have been and it started out to 
be, the majority showed us that they will bend over backward for 
special interests, especially before an election. Thankfully the other 
body was able to stand up to these special interests and, a year later, 
the result is a good bipartisan bill.
  Mr. Speaker, I support this rule and I support this conference report 
which, as I said in the beginning, represents a bipartisan compromise. 
I would urge my colleagues to support the rule and support the 
conference report.
  Mr. Speaker, I reserve the balance of my time.
  Mr. SESSIONS. Mr. Speaker, I yield such time as he may consume to the 
gentleman from Ohio (Mr. Oxley), the chairman of the Committee on 
Financial Services.
  (Mr. OXLEY asked and was given permission to revise and extend his 
remarks.)
  Mr. OXLEY. Mr. Speaker, let me begin by thanking the gentleman from 
Texas for his usual excellent work as a member of the Committee on 
Rules that handles legislation coming from the Committee on Financial 
Services. I do rise in support of the rule. The efforts that the 
committee and the entire Congress made in antiterrorism legislation 
clearly is one of the most important bills that will pass the Congress 
this year.
  It is no secret that after 9/11, the reinsurance industry, which is 
mostly offshore, indicated they would no longer write terrorism 
insurance. Since they are the insurers of the insurers, it meant that 
the domestic-based insurance companies were unable to spread their risk 
and as a result we have a crisis in insurance coverage for terrorism. 
That crisis has evidenced itself in many ways, not the least of which 
is a recent study that indicated over $15 billion in valuable projects 
are on hold, not going forward, because of the lack of terrorism 
insurance; and because they cannot get terrorism insurance, they cannot 
get lending for those projects.
  We are not just talking, Mr. Speaker, about New York City. I was 
recently in Chicago. There is a major project going on in Chicago that 
is simply now just a hole in the ground that will employ several 
hundred people. The President has indicated that their studies indicate 
some 300,000 jobs are at stake in the construction industry, the 
realtors, lenders and the like. So in many, many ways this is an 
economic issue and a jobs issue. That is why the President

[[Page H8740]]

has been so outspoken in virtually every opportunity that he has had 
asking the Congress for this important legislation. I suspect that the 
President has mentioned this issue perhaps more than any other issue in 
my memory and about the only time that he did not make a public 
statement about terrorism insurance was at the United Nations. But 
overall this issue, this crisis in insurance coverage, has been a major 
factor, I suggest, in the slowdown of the economy.
  The Secretary of the Treasury was quoted as saying that it could very 
well knock 1 percent off our gross domestic product. That is a 
significant amount. We are fortunate today because we stand on the 
threshold of passing this important legislation that the President will 
willingly and gladly sign.
  Let me just talk about the key elements briefly of this bill. The 
conference report provides full payback protection for American 
taxpayers, guaranteeing that the first 10- to $15 billion in losses 
will be paid by the insurance marketplace with the Secretary fully able 
to recoup any additional amounts necessary. This was a critical 
component in the House bill that Chairman Baker and I and others 
insisted upon, that if the taxpayers were going to be involved in this 
backup, it is important that those tax dollars be repaid. Even though 
it was not in the Senate version, we prevailed in the conference. It is 
important to point that out to my colleagues in the House.
  Secondly, we have incorporated a transition period that provides 
immediate full commercial terrorism coverage for all American business 
consumers while long-term contracts under the bill are being 
negotiated; in other words, an immediate start at getting these 
projects up and running and 300,000 people back to work.
  Three, the Federal backstop has been simplified and requires that 
insurers have to pay a sizable deductible before they are eligible for 
the Federal backstop. This deductible is increased from 7 to 15 percent 
of their premiums over the program to phase out the taxpayer exposure 
and foster the reemergence of a private insurance market for terrorism. 
It insures that only truly catastrophic events trigger any Federal 
involvement while continuing to provide equal protection for small and 
rural insurers.
  Fourth, we have provided more disclosures and information to 
consumers, with more options to insure that terrorism coverage is 
available in all commercial policies.
  In addition, we continue to provide strong penalties to punish 
insurers who defraud the government. State insurance and reinsurance 
programs can be fully covered by the Treasury Secretary to provide 
equivalent protections for Americans who are unable to obtain insurance 
in the private markets. And we continue to give victims of terrorist 
attacks the ability to enforce court judgments against terrorists' 
assets.
  Finally, while I would note that the legal protections may not be as 
strong as I or others would desire, they are all improvements over 
existing law and are very similar to those strongly approved in the 
Committee on Financial Services over 1 year ago.
  Mr. Speaker, this conference report is timely and critical for 
America. We need it to protect jobs, protect our economy and protect 
the American people against future terrorist attacks. I urge all of our 
colleagues and friends to support the rule.
  Mr. SESSIONS. Mr. Speaker, I yield 7 minutes to the gentleman from 
Alabama (Mr. Bachus), the chairman of the Subcommittee on Financial 
Institutions and Consumer Credit.
  (Mr. BACHUS asked and was given permission to revise and extend his 
remarks.)
  Mr. BACHUS. Mr. Speaker, what we are doing today is simply a part of 
both responding to the terrorist attacks of September 11 and defending 
our country from continuing damage from those terrorist attacks. It is 
a very prudent thing that we do today. It is a part of the defense of 
our homeland and of our economy, for if our economy continues to be 
weakened by the terrorist attack, then the terrorists win. The 
President has called on us repeatedly to respond with legislation.
  I commend this House. This House has passed, and passed last 
November, good legislation to address the problem. And what is the 
problem? Mr. Speaker, before the terrorist attack, normally, as a 
matter of course, protection against terrorist attacks was included in 
commercial property and casualty insurance policies. After the losses 
on September 11, which amounted to 40- or $50 billion, it was 
impossible for insurance companies to predict when and if and the 
extent of these terrorist attacks in the future. It is impossible for 
us as a government to predict when and where and to what extent these 
attacks will occur. So there is no way for the insurance companies to 
assess that damage and to make reserves and charge premiums in an 
adequate amount.
  So what have the insurance companies done? They have done two things. 
They have either in most cases not extended coverage or, two, they have 
simply picked a very high number for a premium and extended coverage at 
a very substantial amount for what, in all probability, will not occur 
at a specific location because of the actions that this government and 
this administration has taken since September 11. However, because 
terrorist insurance coverage has not been extended, billions of dollars 
of projects have been put on hold or canceled. In fact, a recent, and 
this is very recent, real estate group estimated that the lack of 
affordable terrorist insurance has resulted in the delaying or the 
cancellation of more than $15.5 billion worth of new commercial 
building projects just in the past few months. The Federal Reserve, in 
fact, Chairman Greenspan recently said that as a result of terrorist 
insurance coverage not being provided, not being available, it is 
producing as much as a 1 percent drag on our gross domestic product.

                              {time}  1345

  We talk about percentages of 1 percent. We talk about figures of $20 
or $15 billion. What we are really talking about here is layoffs. We 
are talking about construction workers not working. We are talking 
about buildings not being built. We are talking about employees who 
work for companies that supply the office furniture for those 
buildings, who supply the goods that were to be sold in those 
buildings, the equipment in those buildings not being sold. As the 
President said, we have to respond comprehensively to what happened 
September 11. Thus, this bill.
  Let us talk about the liability provisions of this bill, because 
there was in fact an unwillingness on the part of some to endorse this 
legislation simply because of what was proposed.
  What is proposed here today is that, in the event of a large-scale 
terrorist attack upon this country in any location, one Federal court, 
one jurisdiction will take control and be charged with the 
administration of handling all the claims as a result of that attack, 
instead of having State and Federal courts all over the United States 
handling thousands of claims. Instead of that situation, which I think 
we all agree would be unmanageable, one Federal court picked for the 
convenience of those who had been hurt by this terrorist attack and 
picked for the efficient handling of the claims would be picked within 
90 days of the terrorist attack, a Federal cause of action.
  The lawsuits under this legislation would be tried in Federal court, 
Federal rules of procedure. However, the substantive law of the State 
or where the attack occurred would be the applicable law.
  Finally, there has been a lot said about punitive damages. I for one 
have contended, and this bill makes it very clear, that punitive 
damages are not insured losses. Let me repeat that. Punitive damages 
are not insured losses. The taxpayers will not have to pay punitive 
damages under this legislation, and that is very important because the 
people that will be responsible for these attacks that ought to be 
punished will be the terrorists, not the American people.
  All the legal reforms, as the gentleman from Ohio (Mr. Oxley) said, 
are an improvement over the current law. The Federal Government of the 
American taxpayers will not be forced to reinsure any punitive damage 
claims. Private rights of action for punitive damages are unchanged.
  In conclusion, let me simply commend the gentleman from Ohio (Mr.

[[Page H8741]]

Oxley), chairman, and the gentleman from Louisiana (Mr. Baker), 
chairman of the subcommittee, who have worked long and hard on this. I 
urge all Members of this conference, let us get on with strengthening 
our country, recovering from the attack of September 11 and doing 
everything we can do to prepare for other attacks, hoping they will not 
occur, but we have to act in self-defense.
  Mr. SESSIONS. Mr. Speaker, I inquire about the time remaining.
  The SPEAKER pro tempore (Mr. Dan Miller of Florida). The gentleman 
from Texas (Mr. Sessions) has 10\1/2\ minutes remaining. The gentleman 
from Massachusetts (Mr. McGovern) has 27\1/2\ minutes.
  Mr. SESSIONS. Mr. Speaker, I yield such time as he may consume to my 
friend, the gentleman from Wisconsin (Mr. Sensenbrenner), the chairman 
of Committee on the Judiciary.
  Mr. SENSENBRENNER. Mr. Speaker, I rise in support of this rule, it is 
the standard rule for conference reports, but also in opposition to the 
conference report itself because it fails to include critical liability 
protections for victims of terrorism, which are particularly important 
because the conference report creates a Federal indemnification program 
that puts the American taxpayer on the hook for damages caused by 
terrorists.
  It is important to note what the trial lawyers did first to mark the 
first anniversary of the terrorist attacks on September 11. They are 
suing American companies that were victims of terrorist attacks 
themselves. According to the Washington Post: ``Things really are 
returning to normal a year after the terrorist attacks. Trial lawyers--
surprise!--are headed back to the courthouse, [and] there is a rush by 
lawyers to sue airport operators, airlines, security companies, the 
builders of the World Trade Center and others.''
  Let us face the facts. Terrorist-inspired litigation is not a garden 
variety tort case. A banana peel is an accident waiting to happen, but 
a terrorist is a suicidal fanatic bent upon killing individuals, 
innocent people, and causing mass destruction of property. Even the 
most diligent property owners cannot always guard against such attacks.
  To protect innocent Americans, the provisions in the terrorism 
insurance legislation the House passed a year ago provided that, in a 
lawsuit for damages arising out of a terrorist attack, no punitive 
damages would be allowed against victims of terrorism. The bill before 
us today fails to include that basic protection; and, in doing so, it 
fails to ensure that Americans do not become the victims of terrorists 
twice: first during the initial wave of death and destruction caused by 
the terrorists and second by the legal aftershocks caused by the 
unquantifiable and unpredictable damage claims brought by the 
plaintiffs' bar.
  While the bill before us today excludes punitive damages awarded in 
court from insured losses paid by the United States taxpayer, the mere 
allegation of punitive damages always boosts the settlement value of 
the cases, and this bill leaves U.S. taxpayers paying the inflated 
costs of those cases settled out of court. So what the gentleman from 
Alabama (Mr. Bachus), my friend, said, he is right, we taxpayers do not 
pay punitive damages, but knowing that there is a punitive damage award 
hovering over there means that the settlement value which is paid by 
the taxpayers ends up costing the taxpayers' money. So it requires the 
American taxpayers to engage in an egregious form of national self-
flagellation. American taxpayers are punished for the evil acts of 
foreign enemies.
  Even the Washington Post's editorial page has stated: ``On insurance, 
the Democrats are objecting to Republican proposals to ban punitive 
damages in the event of terrorist attacks, which seems a reasonable 
proposal. The Democratic position on terrorism insurance smacks of the 
trial bar, which never saw a disaster that didn't justify a lawsuit.''
  And just a few weeks ago, the Washington Post stated that ``the 
Democrats should indeed be embarrassed'' by their efforts to defend 
lawyers at the expense of the American economy.
  It is no surprise to me that all Democratic conferees signed this 
conference report.
  The terrorism insurance bill the House passed last year also provided 
the defendants could only be liable for the amount of damages for pain 
and suffering in direct proportion to the defendant's percentage of 
responsibility for harm. That provision allows Americans who are 
victims of terrorists to rely, at the very least, on their own 
innocence to protect them from liability. My colleagues may remember 
that in the No Child Left Behind Act, which overwhelmingly passed both 
the House and the Senate, the very same rule was applied to protect 
teachers. If that provision is good enough for teachers, it should be 
good enough for victims of terrorism.
  The bill that the House passed last year also provided that fees for 
attorneys suing victims of terrorism could not be greater than 20 
percent of the damages awarded or any amount of the settlement 
received. That provision is simply a continuation of the long-standing 
Federal policy behind the Federal Tort Claims Act, namely that lawyers 
should not profit excessively when they are paid from the United States 
Treasury.
  Especially today, in a time of war, excessive lawyer fees drawn from 
the U.S. Treasury should not be allowed to result in egregious war 
profiteering at the expense of victims, jobs, and businesses; and this 
bill, unfortunately, will allow this one segment of our society to 
legally, with the blessing of the United States Congress, engage in war 
profiteering.
  This conference report does not include these protections for the 
victims of terrorism that were in the bill the House passed a year ago. 
It gives the plaintiffs' bar the keys to the United States Treasury, 
and it gives lawyers a license to further prey on the victims of 
terrorism.
  We passed a compensation program the week after 9/11 for the 
survivors of the victims of those attacks, and some of the proceedings 
that have gone on under that law have resulted in embarrassment to the 
public and to the authors of that act and grist for investigative 
reporters. Should, God forbid, there be another terrorist attack and 
the provisions of this bill come into play, that same embarrassment 
will apply. There is an old adage ``Fool me once, shame on you; fool me 
twice, shame on me.'' Let us not shame us by passing this bill. It 
should be voted down.
  Mr. McGOVERN. Mr. Speaker, I yield myself such time as I may consume.
  I want to take this opportunity to commend the gentleman from Ohio 
(Mr. Oxley), the chairman; and the gentleman from New York (Mr. 
LaFalce), ranking member; and all the members of the Committee on 
Financial Services for all of their work on this issue. As I said in my 
opening remarks, they initially came up with an okay bill that, 
unfortunately, as a result of some meddling from the majority 
leadership, turned into a very bad bill in my opinion.
  What we have before us today in this conference report is a bill that 
represents bipartisan concerns and deserves bipartisan support, and I 
would urge my colleagues to support this rule, and I would urge my 
colleagues to support final passage of the conference report.
  Mr. Speaker, I yield back the balance of my time.
  Mr. SESSIONS. Mr. Speaker, I yield myself such time as I may consume.
  I urge my colleagues to join with me in supporting this rule and of 
course the underlying legislation which is so critically important not 
only to this country but to the economy of this country for consumers 
and for men and women who own businesses and have money invested in 
this country.
  Mr. Speaker, I yield back the balance of my time, and I move the 
previous question on the resolution.
  The previous question was ordered.
  The resolution was agreed to.
  A motion to reconsider was laid on the table.

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