[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.
____________________