[Congressional Record Volume 148, Number 150 (Tuesday, November 19, 2002)]
[Senate]
[Pages S11524-S11530]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




        TERRORISM RISK INSURANCE ACT OF 2002--CONFERENCE REPORT

  The PRESIDING OFFICER. Under the previous order, the Chair lays 
before the Senate the conference report to accompany H.R. 3210.
  The legislative clerk read as follows:


[[Page S11525]]


       The committee of conference on the disagreeing votes of the 
     two Houses on the amendment of the Senate to the bill (H.R. 
     3210) to ensure the continued financial capacity of insurers 
     to provide coverage for risks from terrorism, having met, 
     have agreed that the House recede from its disagreement to 
     the amendment of the Senate, and agree to the same with an 
     amendment, signed by a majority of the conferees on the part 
     of both Houses.

  The PRESIDING OFFICER. The Senate will proceed to the consideration 
of the conference report.
  (The report is printed in the House proceedings of the Record of 
November 13, 2002.)


                             Cloture Motion

  The PRESIDING OFFICER. Under the previous order, pursuant to rule 
XXII the Chair lays before the Senate the pending cloture motion, which 
the clerk will report.
  The legislative clerk read as follows:

                             Cloture Motion

       We, the undersigned Senators, in accordance with the 
     provisions of Rule XXII of the Standing Rules of the Senate, 
     hereby move to bring to a close the debate on the conference 
     report to accompany H.R. 3210, the Terrorism Risk Protection 
     Act.
         Christopher Dodd, Zell Miller, Joseph Lieberman, Harry 
           Reid, Jack Reed, Jon Corzine, Debbie Stabenow, Hillary 
           Rodham Clinton, Charles Schumer, Maria Cantwell, Paul 
           Sarbanes, Byron L. Dorgan, Tom Carper, Jeff Bingaman, 
           Tom Daschle, Barbara Boxer.

  The PRESIDING OFFICER. There are 2 minutes of debate evenly divided 
before the vote. Who yields time?
  Mr. SARBANES. Mr. President, I urge Members to vote in favor of 
invoking cloture. I am not quite sure why we are doing the cloture 
vote, but in any event, so we can get to the legislation and pass it--
this is worthy legislation--I hope the Senate will first impose 
cloture, and then, under the unanimous consent agreement, we would go 
to a final vote on the legislation.
  The PRESIDING OFFICER. The Senator from Texas is recognized.
  Mr. GRAMM. Mr. President, much good work has gone into this bill. I 
am going to vote against cloture. I don't think the industry retention 
figures are high enough. I think the taxpayer is too exposed. I am 
afraid the secondary market will not develop under these circumstances, 
and, despite all our efforts, the bill still retains the provision that 
will produce punitive damage judgments against victims of terrorism. In 
my mind, that is licensing piracy on hospital ships and should not be 
allowed.
  The PRESIDING OFFICER. Is all time yielded back?
  All time is yielded back.
  By unanimous consent, the mandatory quorum call under the rule is 
waived.
  The question is, Is it the sense of the Senate that debate on the 
conference report accompanying H.R. 3210, the Terrorism Risk Protection 
Act, shall be brought to a close?
  The yeas and nays are required under the rule.
  The clerk will call the roll.
  The assistant legislative clerk called the roll.
  Mr. NICKLES. I announce that the Senator from North Carolina (Mr. 
Helms), the Senator from Alaska (Mr. Murkowski), and the Senator from 
Arkansas (Mr. Hutchinson) are necessarily absent.
  The yeas and nays resulted--yeas 85, nays 12, as follows:

                      [Rollcall Vote No. 251 Leg.]

                                YEAS--85

     Akaka
     Allard
     Allen
     Barkley
     Baucus
     Bayh
     Bennett
     Biden
     Bingaman
     Bond
     Boxer
     Breaux
     Brownback
     Bunning
     Burns
     Byrd
     Campbell
     Cantwell
     Carnahan
     Carper
     Chafee
     Cleland
     Clinton
     Cochran
     Collins
     Conrad
     Corzine
     Crapo
     Daschle
     Dayton
     DeWine
     Dodd
     Domenici
     Dorgan
     Durbin
     Edwards
     Feingold
     Feinstein
     Fitzgerald
     Frist
     Graham
     Gregg
     Hagel
     Harkin
     Hatch
     Hollings
     Inhofe
     Inouye
     Jeffords
     Johnson
     Kennedy
     Kerry
     Kohl
     Landrieu
     Leahy
     Levin
     Lieberman
     Lincoln
     Lott
     Lugar
     McCain
     McConnell
     Mikulski
     Miller
     Murray
     Nelson (FL)
     Nelson (NE)
     Reed
     Reid
     Roberts
     Rockefeller
     Sarbanes
     Schumer
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Stabenow
     Stevens
     Thompson
     Thurmond
     Torricelli
     Voinovich
     Warner
     Wyden

                                NAYS--12

     Craig
     Ensign
     Enzi
     Gramm
     Grassley
     Hutchison
     Kyl
     Nickles
     Santorum
     Sessions
     Shelby
     Thomas

                             NOT VOTING--3

     Helms
     Hutchinson
     Murkowski
  The PRESIDING OFFICER. On this vote, the ayes are 85, the nays are 
12. Three-fifths of the Senators duly chosen and sworn having voted in 
the affirmative, the motion is agreed to.
  Mr. HATCH. Mr. President, today I rise to speak on final passage of 
H.R. 3210, the conference report to the Terrorism Risk Insurance Act of 
2002. Most of us agree that something needs to be done in this area. 
This legislation is important to our economy and the many jobs and 
construction projects that have been in limbo due to the uncertainty 
following the tragic events of September 11th. My constituents have 
come to me on multiple occasions, imploring that the Senate act on this 
issue. They are genuinely concerned about the negative impact lack of 
coverage has had on their businesses and their employees. Without 
insurance, our economic growth is in jeopardy, businesses will fail and 
jobs will be lost. For that reason, I will support final passage.
  However, I am concerned that we have not addressed the issue in a 
prudent and responsible manner that provides the appropriate stability 
to our economy without exposing our taxpayers to an unreasonable 
financial burden. In this legislation, we have failed to provide 
elements that are necessary to the businesses that are themselves the 
victims of the terrorist attacks, those very same businesses that 
provide the thousands of jobs in this country that we are seeking to 
preserve. Moreover, I have concerns about implementing a program such 
as this without ensuring that the hardworking taxpayers in this county 
are not forced to pick up the tab for the overzealous and unrestrained 
trial bar. With the type of litigation that would likely result from 
massive losses, even just from one attack, it defies common sense that 
some would oppose implementing principles of litigation management to 
ensure that all victims get treated fairly and jury awards, based more 
on emotion rather than actual legal culpability, do not dry up the 
resources of defendant businesses, which in turn hurts victims, 
employees and taxpayers.
  In a letter dated June 10, 2000, from the Treasury Department and 
signed by not only the Secretary of the Treasury, but the Director of 
the Office of Management and Budget, the Director of the National 
Economic Council and the Director of Economic Advisers really 
underscores the serious ramifications to our economy that have resulted 
from a lack of coverage for terrorist acts and supports Congressional 
action in this area. But it also emphasizes that we must do so in a 
responsible manner.

       One important issue for the availability of terrorism 
     insurance is the risk of unfair or excessive litigation 
     against American companies following an attack. Many for-
     profit and charitable companies have been unable to obtain 
     affordable and adequate insurance, in part because of the 
     risk that they will be unfairly sued for the acts of 
     international terrorists . . . It makes little economic sense 
     to pass a terrorism insurance bill that leaves our economy 
     exposed to such inappropriate and needless legal uncertainty. 
     [emphasis added]

  In seeking to provide stability to our economy we must not act 
irresponsibly. The conference report on H.R. 3210, while providing a 
necessary backstop to our economy, includes some weaknesses that 
concern me. While I believe this measure is necessary and should be 
enacted as soon as possible, I sincerely hope this body will address my 
concerns in the next Congress.
  Mr. GRASSLEY. Mr. President, I rise to express my concern about the 
conference report to H.R. 3210, the Terrorism Risk Insurance Act. When 
the Senate first considered this bill in June, I expressed the hope 
that Congress would send the President a bill that was fair and 
balanced with respect to basic liability protections for all victims of 
terrorism. However, I believe that the conference report before us 
fails to provide reasonable restrictions on lawsuit liability, and 
instead exposes the American taxpayer to potentially excessive costs of 
unmitigated litigation as a result of terrorist attacks beyond anyone's 
control. Consequently, I am reluctant to vote for final passage of this 
conference report.

[[Page S11526]]

  I am glad that the final version of the terrorism reinsurance 
legislation is only a temporary fix. As a general matter, the 
Government should not be in the business of writing claims.
  Some have implied that we wrongly predicted an insurance crisis 
following the events of September 11, 2001, which was the reason for 
this temporary backstop. The insurance companies have survived without 
government support thus far, and banks are still lending where there is 
uncovered risks. According to the Wall Street Journal, ``the economy 
has continued to grow, albeit slowly, and some companies have started 
offering insurance again, albeit at very high premiums.'' The article 
states that a short-term solution would be nice, but the bill is ``a 
bonanza for the trial lawyers, an entitlement for insurers.''
  Again, I do not believe that this legislation contains adequate 
liability protections. While some restrictions were negotiated in 
conference, I don't believe that they go far enough. Basically, 
American companies that are themselves victims of terrorists acts 
should not be subject to predatory lawsuits or unfair and excessive 
punitive damages. If that happens, not only will Americans be the 
victims of another attack, but the taxpayers will be the victims of 
trial lawyers who will seek the deepest pocket and rush to the 
courthouse to sue anyone regardless of fault. There needs to be careful 
restrictions on lawsuit liability to protect taxpayer funds from being 
exposed to opportunistic, predatory assaults on the United States 
Treasury.
  In fact, I agree with an editorial in the Washington Post: the other 
side of the aisle should be ``embarrassed by their efforts to defend 
trial lawyers at the expense of the American economy.'' Rather, we 
should be working to enforce the long-standing Federal policies behind 
the Federal Tort Claims Act: namely, that lawyers should not be making 
handsome profits when they are paid from the U.S. Treasury. I agree 
with a statement made by House Judiciary Chairman Sensenbrenner, that 
``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.''
  Many say we can come back and revisit these provisions later. I say 
we get it right the first time we sign it into law.
  I ask unanimous consent to print the Wall Street Journal article to 
which I referred in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

              [From the Wall Street Journal, Nov. 6, 2002]

                      A Terrifying Insurance Deal


      A bonanza for the trial lawyers, an entitlement for insurers

       After the elections the 107th Congress is threatening to 
     return to pass some unfinished business, including a 
     compromise on terrorism insurance. Having looked at the 
     details of the insurance deal, we can only hope they'll all 
     stay home.
       The two parties have been battling for a year over this 
     bill, especially the extent to which trial lawyers could 
     profit from acts of terror. Republicans and some Democrats 
     want to ban punitive damages against property owners. But Tom 
     Daschle, carrying his usual two oceans of water for the 
     plaintiff's bar, resisted any erosion in the right to sue the 
     owner should a plane crash into his or her building.
       And it looks like Mr. Daschle has prevailed. The compromise 
     permits such suits, albeit before a single federal court as 
     opposed to the more accommodating state courts. In other 
     words, the White House appears to have caved, and after 
     months of arguing the opposite now says terror insurance is 
     about ``jobs, not tort reform.''
       Well, we're not sure it's still about jobs either. The bill 
     makes insurance companies liable for claims amounting to a 
     certain percentage of their premiums, puts the government on 
     the hook for 90% of losses over that deductible, and allows 
     the government to recover some portion of its payment by 
     levying a surcharge on all policy owners. The best news is 
     that government help sunsets in 2005, or at least that's the 
     promise.
       Unfortunately, the bill ignores the crucial problem of 
     risk. Risk-based premiums--which reward the careful and 
     punish the careless--are a superb tool for reducing risk. 
     Consider: There are lots of things property owners can do to 
     reduce the damage from terrorism--retrofitting air-filtration 
     systems to guard against biological agents, redesigning 
     underground parking garages to prevent bomb attacks, 
     fireproofing steel girders to minimize fire damage. And 
     insurance companies can discipline them to take these 
     measures by charging risk-based premiums.
       If insurers were required to pay premiums to the government 
     based on the premiums they receive, market incentives to 
     reduce risk would improve markedly. If, on the other hand, 
     terror insurance is essentially free, as it would be under 
     the current bill, insurers have less incentive to charge the 
     full cost of risk; instead they have every incentive to 
     underprice it.
       An alternative has been suggested by David Moss, an 
     economist at Harvard Business School: Let the federal 
     government pay 80% of losses from a terrorist attack, as long 
     as insurers also pass along 80% of the premiums they collect. 
     This way, says Mr. Moss, insurers would price risk near or at 
     its full cost, exerting discipline against the careless, and 
     prices would be set in the private market.
       We mention Mr. Moss's idea because, despite heavy breathing 
     by the insurance industry, it isn't at all clear that there's 
     an immediate economic need for this legislation. It's true 
     that right after 9/11 the property insurance market seized 
     up. Insurers didn't know how to price for the risk of another 
     attack, and so rent their garments that the economy would 
     collapse without government reinsurance. We were also open to 
     the idea, but it turns out they were wrong. The economy has 
     continued to grow, albeit slowly, and some companies have 
     started offering insurance again, albeit at very high 
     premiums.
       We aren't arguing that a federal backstop might not perk up 
     business in the short term, or that some sort of insurance 
     wouldn't be nice to have in place before another attack. But 
     the assertion that billions of dollars of projects have been 
     shelved and 300,000 jobs lost is bogus. Despite efforts to 
     quantify a slowdown, including a survey by the Fed, evidence 
     of suffering is scattered and anecdotal--and mostly confined 
     to trophy properties.
       The bigger point here is that any legislation is likely to 
     be permanent, since no entitlement of this size has ever been 
     allowed to ride quietly into the sunset. That argues for 
     doing it right, and waiting until the next Congress if need 
     be. Many Republicans are privately unhappy with the deal the 
     White House has cut with Mr. Daschle. We hope they'll urge 
     President Bush to insist on something better.
  Mr. HARKIN. Mr. President, I am very pleased that this conference 
report includes bipartisan legislation that I authored with my 
colleague, Senator Allen of Virginia, which will make state sponsors of 
terrorism and their agents literally pay for the dastardly attacks they 
perpetrate on innocent Americans.
  Last June, the Senate approved our amendment to the terrorism 
insurance bill on an 81 to 3 vote to mandate that at least $3.7 billion 
in blocked assets of foreign state sponsors of terrorism and their 
agents, at the current disposal of the U.S. Treasury Department, be 
used--first and foremost--to compensate American victims of their 
terrorist attacks. That lop-sided vote made it very clear that most 
Americans and their elected representatives understand the importance 
of making the rogue governments who sponsor international terrorism pay 
literally, instead of blithely dunning the American taxpayer to 
compensate the victims of their outrageous attacks or doing nothing.
  Our global struggle against terrorism must be fought and won on 
multiple fronts. In so doing, we cannot forget that terrorist attacks 
are ultimately stories of human tragedy. The young woman from Waverly, 
IA--Kathryn Koob--seeking to build cross-cultural ties between the 
Iranian people and the American people only to be held captive for 444 
days in the U.S. Embassy in Tehran. The teenage boy from LeClaire, 
Iowa--Taleb Subh--who was visiting family in Kuwait in 1990, and who 
was terrorized by Saddam Hussein and Iraqi troops in the early stages 
of the invasion of Kuwait. The U.S. aid worker from Virginia--Charles 
Hegna--who was tortured and killed in 1984 by Iranian-backed hijackers 
in order ``to punish'' the United States. These are only a few of the 
American families victimized by terrorist attacks abroad I have come to 
know. There is not a Senator in this body who cannot count additional 
American victims of state-sponsored terrorism among his or her 
constituents.
  What do we say to these families, the wives, mothers and fathers, 
sons and daughters? More importantly, what can we do, as legislators 
and policymakers, to mitigate their suffering and to answer their cries 
for justice?
  Those who sponsor as well as those who commit these inhumane acts 
must pay a price. That is why I sponsored the Terrorism Victim's Access 
to Compensation Act, whose key provisions are included in this 
conference agreement.

[[Page S11527]]

  In 1996, the Congress passed an important law--the Anti-Terrorism and 
Effective Death Penalty Act--with bipartisan support and with the 
support of the U.S. State Department. That statute allows American 
victims of state-sponsored terrorism to seek redress and pursue justice 
in our Federal courts. A central purpose of that law is to make the 
international terrorists and their sponsors pay an immediate price for 
their attacks on innocent Americans abroad. For the first time starting 
in 1996, the money of foreign sponsors of terrorism and their agents 
that is frozen bank accounts in the United States and under the direct 
control of the U.S. Treasury was to have become available to compensate 
American victims of state-sponsored terrorism who bring lawsuits in 
federal court and win judgments on the merits against the perpetrators 
of such attacks.
  The law enacted in 1996 only applies to seven foreign governments 
officially designated by the U.S. State Department as state sponsors of 
international terrorism. They are the governments of Iran, Iraq, Libya, 
Syria, Sudan, North Korea, and Cuba. It is these state sponsors of 
international terrorism, not the American taxpayer, who must be 
compelled first and foremost to compensate the American victims of 
their inhumane attacks.

  The U.S. Treasury Department currently and lawfully controls at least 
$3.7 billion in blocked or frozen assets of these seven state sponsors 
of terrorism. But some officials of the U.S. Treasury and State 
Departments who think they know better, until now, have been flaunting 
the law, ignoring the clear intent of the Congress, and opposing the 
use of these blocked assets of Saddam Hussein, the ruling mullahs in 
Iran, and other state sponsors of terrorism to compensate American 
victims of terrorist attacks. In fact, in the on-going case involving 
the 53 Americans taken hostage in the U.S. Embassy in Iran in 1979 and 
held in captivity for 444 days and their families, U.S. Justice 
Department and State Department attorneys have intervened in federal 
court to have their lawsuit dismissed in its entirety, thus de facto 
siding with the Government of Iran.
  Incredibly, since 1996 American victims of state-sponsored terrorism 
have been actively encouraged to seek redress and compensation in our 
federal courts. These long-suffering American families have complied 
with all requirements of existing U.S. law and many have actually won 
court-ordered judgments, only to be denied any compensation and what 
little justice they seek in a court of law. The opponents of this 
legislation apparently want American taxpayers to foot the bill for 
what could amount to hundreds of millions of dollars instead of making 
the terrorists and their sponsors pay.
  With the passage of this new legislation, the Congress is requiring 
that this misguided policy be abandoned. Holding the blocked assets of 
state sponsors of terrorism in perpetuity might make sense in the 
pristine world of high diplomacy, but not in the real world after the 
September 11 terrorist attacks on America.
  First, paying American victims of terrorism from the blocked and 
frozen assets of these rogue governments and their agents will really 
punish and impose a heavy cost on those aiding and abetting the 
terrorists. This tougher U.S. policy will provide a new, powerful 
disincentive for any foreign government to continue sponsoring 
terrorist attacks on Americans, while also discouraging any regimes 
tempted to get into the ugly business of sponsoring future terrorist 
attacks.
  Second, making the state sponsors actually lose billions of dollars 
will more effectively deter future acts of terrorism than keeping their 
assets blocked or frozen in perpetuity in pursuit of the delusion that 
long-standing, undemocratic, brutish governments like those in Iran and 
Iraq can be moderated.
  Third, American victims of state-sponsored terrorism and their 
families will finally be able to secure some measure of justice and 
compensation. Public condemnation by the U.S. Government of state-
sponsored terrorism only goes so far. This new legislation enables 
American victims to fight back, to hold the terrorists who are 
responsible accountable to the rule of law, and to make the 
perpetrators and their sponsors pay a heavy price.
  In his last days in office, former President Clinton signed a law 
endorsing a policy of paying American victims of terrorism from blocked 
assets, while simultaneously signing a waiver of the means to make this 
policy work. The Bush administration has not changed this mistaken 
policy as yet. That is why Senator Allen joined me in pushing this 
bipartisan legislation to establish two new policy cornerstones for our 
Nation's struggle against international terrorism. First, the U.S. will 
first require that compensation be paid from the blocked and frozen 
assets of the state sponsors of terrorism in cases where American 
victims of terrorism secure a final judgment in our Federal courts and 
are awarded compensation. Second, the U.S. Government will provide a 
level playing field for all American victims of state-sponsored 
terrorism who are pursuing redress by providing equal access to our 
federal courts.
  American victims of state-sponsored terrorism deserve and want to be 
compensated for their losses from those who perpetrated the attacks 
upon them, including our former hostages in Iran and their families. 
The Congress should clear the way for them to get some satisfaction of 
court-ordered judgments and, in so doing, help deter future acts of 
state-sponsored terrorism against innocent Americans.
  Mr. KYL. Mr. President, I rise today to express my opposition to the 
conference report on H.R. 3210, the terrorism insurance bill.
  I had hoped that Congress would approve legislation that encouraged 
building construction, gave business owners limited liability 
protection in the event of a terrorist attack, and protected taxpayers 
from exorbitant costs. These goals were all enunciated by President 
Bush when he pressed Congress to act on this issue after months of 
delay.
  Unfortunately, the legislation in its current form fails to meet any 
of those objectives.
  First, the conference report subjects victims of terrorism to 
potentially unlimited liability by placing no restrictions on court 
awards of punitive damages or non-economic damages. This has the 
potential of encouraging a slew of frivolous lawsuits against business 
owners whose business may be destroyed in terrorist attacks. Certainly 
no business that was located in the World Trade Center, for example, 
should be held at fault for the unforeseeable tragedy that took place 
on September 11.
  As several of the President's economic advisors noted in a June 10, 
2002 letter to Senate Minority Leader Lott, ``the victims of terrorism 
should not have to pay punitive damages. Punitive damages are designed 
to punish criminal or near-criminal wrongdoing.'' The letter goes on to 
say ``the availability of punitive damages in terrorism cases would 
result in inequitable relief for injured parties, threaten bankruptcies 
for American companies and a loss of jobs for American workers.''
  I strongly agree with that position and am troubled that the 
conferees did not take these concerns into account before bringing this 
legislation to the Senate floor.
  Additionally, I am concerned that this legislation leaves taxpayers 
open to liability for terrorist attacks. One of the original goals of 
this bill was to allow the Secretary of the Treasury to sign off on 
out-of-court settlements to protect the taxpayers from exorbitant 
costs. Without such a provision, taxpayers, who are liable for as much 
as 90 percent of property and casualty costs after a terrorist attack, 
could be gouged by trial attorneys. That is primarily because insurers, 
with only a ten percent stake in the outcome of litigation, will favor 
faster, rather than fairer, settlements--at the taxpayers' expense.
  Of additional concern, the low per-company deductibles will impede 
the development of a private reinsurance market and will increase the 
likelihood that this temporary federal program becomes permanent. Since 
the Federal Government limits each company's liability, rather than 
that of the entire industry, insurance companies have less incentive to 
spread their risk.
  I am also troubled by certain provisions in Title II of this 
legislation covering victim compensation through

[[Page S11528]]

seized assets from terrorists and terrorist-sponsoring states. As the 
conference report stands now, this provision would create a race to the 
courthouse benefiting a small group of Americans over a far larger 
group of victims just as deserving of compensation.
  Economic sanctions against terrorist states have kept the economic 
activity of those states to a minimum. Yet this limited pool of frozen 
assets and diplomatic property would be exhausted quickly as large, and 
often uncontested, compensatory and punitive damage awards are 
satisfied, leaving most victims with nothing. For example, the special 
provisions for terrorism victims of Iran expands the number of judgment 
holders eligible for payment under the 2000 Act (to approximately 
eight), but metes out all of the approximately $30 million remaining in 
the fund to satisfy judgments in only two cases. And there are a number 
of ongoing lawsuits by terrorism victims and their families against 
Iran that will be foreclosed under this agreement.
  This section would also disproportionately benefit trial lawyers, 
since plaintiff's lawyers whose fees are contingent upon satisfying 
their clients' judgments stand to gain the lion's share of the 
compensation, not the victims.
  Overall, this legislation is far from what President Bush wanted. It 
is a major disappointment that literally benefits trial lawyers at the 
expense of the taxpayers.
  I realize that many of my colleagues want to support this bill, 
despite its flaws. And I understand that. It is regrettable that 
special-interest groups exerted so much influence in the drafting of 
this legislation, leaving the President with a bill that amounts to 
little more than the best he could get from this Congress.
  But as it stands today, I cannot ask Arizona taxpayers to absorb the 
potential losses they might incur because of the self-serving and 
unjustified lawsuits that are the all but inevitable outcome of this 
legislation.
  Mr. HARKIN. Mr. President, I rise to address a portion of this 
conference agreement relating to enforcement of judgments obtained by 
victims of terrorism against state sponsors of terrorism. These 
provisions strike an important blow in our global struggle against 
terrorism.
  The purpose of title II is to deal comprehensively with the problem 
of enforcement of judgments issued to victims of terrorism in any U.S. 
court by enabling them to satisfy such judgments from the frozen assets 
of terrorist parties. As the conference committee stated, this title 
establishes, once and for all, that such judgments are to be enforced 
against any assets available in the U.S., and that the executive branch 
has no statutory authority to defeat such enforcement under standard 
judicial processes, except as expressly provided in this act.
  Title II expressly addresses three particular issues which have vexed 
victims of terrorism in this context. First, there has been a dispute 
over the availability of ``agency and instrumentality'' assets to 
satisfy judgments against a terrorist state itself. Let there be no 
doubt on this point. Title II operates to strip a terrorist state of 
its immunity from execution or attachment in aid of execution by making 
the blocked assets of that terrorist state, including the blocked 
assets of any of its agencies or instrumentalities, available for 
attachment and/or execution of a judgment issued against that terrorist 
state. Thus, for purposes of enforcing a judgment against a terrorist 
state, title II does not recognize any juridical distinction between a 
terrorist state and its agencies or instrumentalities.
  Second, title II amends Section 2002 of the Justice for Victims of 
Terrorism Act of 2000 to address a miscarriage of justice in the 
drafting and implementation of that act. In that provision, Congress 
had directed that specified claimants against Iran receive payment in 
satisfaction of judgments from two specified accounts, namely Iran's 
Foreign Military Sales, ``FMS'', Trust Account and the proceeds of 
rental of certain Iranian government properties. Contrary to 
Congressional intent, the legislative language has been construed by 
the Departments of State and Treasury to exclude unspecified claimants 
and to allow the executive branch to bar enforcement of their awards 
against other blocked assets. As one United States District Court has 
noted, the result is a gross injustice that demands immediate 
correction.
  To address this injustice, we are adding to the list of those to be 
compensated, all persons who meet two criteria--either, 1, they had a 
claim filed when Section 2002 was enacted and have already received a 
final judgment on that claim as of the date of enactment, or 2 were 
added to the list by the State Department Reauthorization Bill enacted 
last month. In accordance with amended Section 2002(b)(2)(B), each of 
these claimants are to be treated as if they were originally included 
in Section 2002, and are to be paid an amount determined by the 
Secretary of the Treasury to have been available for payment of their 
judgment on the date their judgment was issued. Once these amounts are 
paid, any remaining amounts in these accounts are to be paid to 
remaining claimants under the formula specified in amended Section 
2002(d).

  Moreover, to address this injustice, this amendment will treat all of 
these victims--those originally included in Section 2002 and those now 
being added--equally to the maximum extent possible. No priority is 
given to one group or the other. Those in each group which have filed 
timely lawsuits and received a final judgment by the enactment of this 
Act are to be paid within the strict deadlines set in the Act, i.e., 
within 60 days, without delay. Those not included within this time 
frame may pursue satisfaction from blocked assets. This will 
necessarily include some who, for whatever reason, have failed to 
obtain a judgment in their lawsuit by the date of enactment of this 
act.
  Third, the term ``blocked asset'' has been broadly defined to include 
any asset of a terrorist party that has been seized or frozen by the 
United States in accordance with law. This definition includes any 
asset with respect to which financial transactions are prohibited or 
regulated by the U.S. Treasury under any blocking order under the 
Trading With the Enemy Act, the International Emergency Economic Powers 
Act, or any proclamation, order, regulation, or license. Moreover, by 
including the phrase ``seized by the United States'' in this section, 
it is our intent to include within the definition of ``blocked asset'' 
any asset of a terrorist party that is held by the United States. This 
is intended as an explicit waiver of any principle of law under which 
the United States might not be subject to service and enforcement of 
any judicial order or process relating to execution of judgments, or 
attachments in aid of such execution, in connection with terrorist 
party assets that happen to be held by the United States. In this 
respect, the United States is to be treated the same as any private 
party or bank which holds assets of a terrorist party, and such 
terrorist party assets held by the United States are not immunized from 
court procedures to execute against such assets. However, any assets as 
to which the United States claims ownership are not included in the 
definition of ``blocked assets'' and are not subject to execution or 
attachment under this provision.
  Mr. ENZI. Mr. President, first of all, I want to thank all of the 
conferees for the long hours and late nights they here worked to 
complete this bill. I know this has been a difficult process and a long 
year.
  Unfortunately, now I kind myself in a very difficult position. I find 
myself forced to oppose this legislation even though it is a 
Presidential priority and even though I support the underlying goals.
  It was a little over a year ago that Senators Sarbanes, Gramm, Dodd, 
and I announced an agreement for terrorism risk insurance legislation. 
That agreement outlined the parameters that we thought were a 
reasonable response to disruptions occurring in the marketplace as a 
result of the lack of reinsurance. This agreement outlined very limited 
and specific liability protections that would protect both the 
taxpayer's pocketbook and businesses which may themselves be victim's 
of terrorism from frivolous lawsuits after future terrorist attack.
  These limited protections were: First, suits filed as a result of a 
terrorist attack would be consolidated

[[Page S11529]]

into a Federal district court; second, punitive damages would not be 
allowed; and third, the Secretary of the Treasury was given the ability 
to agree to out-of-court settlements.
  Now, in this new conference report, two out of these three 
protections have been eliminated. The new program in this conference 
report will allow frivolous lawsuits to be filed against businesses 
that may be victims of the terrorist act themselves. Think about a 
business located in the World Trade Center on 9/11. This business was 
destroyed and likely lost a number of its employees. The next thing 
that happens is while attempting to rebuild, the business gets slapped 
with a frivolous lawsuit by a greedy trial lawyer. It is ridiculous to 
believe that a business could have prevented an attack of this kind. 
Yet this legislation will subject them to the will of the trial bar.
  This conference report keeps America's businesses and the taxpayer 
subject to punitive damages. I have a Statement of Administration 
Policy from the executive Office of the President's Office of 
Management and Budget. In the second paragraph of the letter dated June 
13, 2002, it states ``the Administration cannot support enactment of 
any terrorism insurance bill that leaves the Nation's economy and 
victims of terrorist acts subject to predatory lawsuits and punitive 
damages.'''
  Also from the administration, I have a letter signed by Treasury 
Secretary O'Neill, OMB Director Daniels, Director of the National 
Economic Council Lindsey, and Director of the Council of Economic 
Advisors Glenn Hubbard dated June 10, 2002. This letter states ``the 
victims of terrorism should not have to pay punitive damages. Punitive 
damages are designed to punish criminal or near-criminal worngdoing.'' 
It goes on the say ``the availability of punitive damages in terrorism 
cases would in inequitable relief for injured parties, threaten 
bankruptcies for American companies and a loss of jobs for American 
workers.'' I could not agree more with the administration's position 
from just a few months ago that this legislation could lead to the 
bankruptcies of American companies who were victims of terrorist acts 
themselves.
  In addition, this conference report does not include a provision 
which allows the Secretary of the treasury to agree to out-of-court 
settlements. This legislation has the American taxpayer pay potentially 
90 percent of property and casualty costs after a terrorist attack. I 
can think of no other instance where the group liable for paying 90 
percent of a lawsuit is unable to agree to an out-of-court settlement. 
If another catastrophic terrorist attack occurs, every trial lawyer in 
America will file a lawsuit because they know that the insurance 
company, which only pays 10 percent of the settlement, will agree 
immediately. The mansions of the trial lawyers will be built with the 
dollars of the American taxpayer.
  I do not consider the inclusion of these protections to be extreme 
measures and I do not think that most of the members of this chamber 
believe them to be unreasonable. They are very simple and reasonable 
protections that basically say the trial bar should not take advantage 
of tragedies caused by terrorists.
  The President invited Senate Republican conferees to the White House 
a few weeks ago where concerns were raised regarding the lack of these 
specific taxpayer protections. Unfortunately, these protections were 
not reintroduced into the legislation and now this conference report 
comes to the floor of the Senate without a single Senate Republican 
conferee's signature.
  For these reasons, I am unable to support passage of this 
legislation. I support the program and understand the possible economic 
problems by not passing the legislation. I cannot in good faith subject 
the hard-working taxpayers of Wyoming to the potential losses they 
might incur because of the self-serving and unjustified lawsuits which 
may result.
  However, even though I cannot support this bill because of the lack 
of taxpayer protections, I would like to commend those who have worked 
so diligently on the legislation for over a year now. Senator Dodd, in 
particular, has given more time and effort to this project than 
probably anyone. He and his staff, Alex Sternhell, have remained 
committed to seeing the passage of this legislation and have done 
remarkable work to bring the issues that relate to the structure of the 
program to a compromise. I have to say that I agree with Senator Dodd's 
position on the structure of the program and always felt confident in 
the manner which he negotiated these provisions.
  Mr. President, my position on this legislation has not changed since 
the very beginning. I believe we need a Federal backstop and I believe 
at one point we had a bill that did just that. I am sorry the trial bar 
was able to derail the bill for over a year now. I can only hope that 
the trial lawyers of America will stop to realize that subjecting 
Americans to lawsuits to line their pockets after the devastation of a 
terrorist attack is simply the wrong thing to do .
  Mr. President, I yield the floor.
  Mr. LEAHY. Mr. President, I am pleased to support this conference 
report to provide a federal backstop for terrorism insurance. I believe 
this bipartisan bill will boost our economy by providing extra 
protection against terrorist attacks for buildings and construction 
projects with resulting new jobs in Vermont and across the nation. I 
agree with President Bush that this legislation is essential for our 
future economic growth.
  I worked with the distinguished Majority Leader, Senator Dodd, 
Senator Sarbanes, Senator Schumer and others to craft a balanced 
compromise in the conference report on legal procedures for civil 
actions involving acts of terrorism covered by the legislation. The 
conference report protects the rights of future terrorism victims and 
their families while providing federal court jurisdiction of civil 
actions related to acts of terrorism, consolidating of such cases on a 
pre-trial and trial basis, and excluding punitive damages from 
government-backed insurance coverage under the bill. These provisions 
do not limit the accountability of a private party for its actions in 
any way.
  Further, the conference report, identical to the Senate-passed bill, 
fully protects federal taxpayers from paying for punitive damage 
awards. Under the conference report only corporate wrongdoers pay 
punitive damages, not U.S. taxpayers as some incorrectly claimed on the 
Senate floor during consideration of the Senate-passed bill.
  The U.S. Chamber of Commerce has declared that the conference report 
``will improve the legal rights of plaintiffs and defendants and, 
importantly, will help American workers and the economy.'' I agree.
  I thank the conferees for rejecting the special legal protections in 
the House-passed bill. The liability limits for future terrorist 
attacks in the House-passed bill were irresponsible because they 
restricted the legal rights of victims and their families and 
discouraged private industry from taking appropriate precautions to 
promote public safety. Restricting damages against a wrongdoer in 
terrorism-related civil actions involving personal injury or death, for 
example, could discourage corporations from taking the necessary 
precautions to prevent loss of life or limb in a future terrorist 
attack. There is no need to enact these special legal protections and 
take away the legal rights of victims of terrorism and their families.
  For example, the House-passed bill would have permitted a security 
firm to be protected from punitive damages if the private firm hired 
incompetent employees or deliberately failed to check for weapons and a 
terrorist act resulted.
  The threat of punitive damages is a major deterrent to wrongdoing. 
Eliminating punitive damages under the House-passed bill would have 
severely undercut this deterrent and permitted reckless or malicious 
defendants to find it more cost effective to continue their wanton 
conduct without the risk of paying punitive damages. Without the threat 
of punitive damages, callous corporations could have decided it is more 
cost-effective to cut corners that put American lives at risk. This 
approach failed to protect public safety, and the conferees rightly 
rejected it.
  In addition, I thank the managers for including language in the 
conference report to help captive insurance companies participate in 
the federal backstop program. Many captives deal in

[[Page S11530]]

property and casualty lines, but some do not. Senator Jeffords and I 
strongly support language in the conference report to allow those 
captives in property and casualty the option of participating in the 
program while not requiring other captives to start offering terrorism 
risk insurance.
  The state of Vermont is the premier U.S. domicile for captive 
insurance companies. Vermont's captive owners represent a wide range of 
industries including multinational corporations, associations, banks, 
municipalities, transportation and airline companies, power producers, 
public housing authorities, higher education institutions, 
telecommunications suppliers, shipping companies, insurance companies 
and manufacturers, among others. Since 1981, Vermont has averaged 
approximately 25 captives licensed annually, and those numbers are on 
the rise. Vermont closed 2001 with 38 new captives, 37 pure and I 
sponsored, for a total of 527 at year-end. The first half of 2002 saw 
26 new captives licensed in Vermont setting a record pace, according to 
the Vermont Department of Banking, Insurance and Health Care 
Administration.
  At a time when the American people are looking for Congress to take 
measured actions to protect them from acts of terror and jump-start our 
economy, this conference report is a shining example of bipartisan 
progress. I applaud Senator Daschle, Senator Dodd, Senator Sarbanes, 
Senator Schumer and the other Senate and House conferees on their good 
work on this bipartisan conference report.
  The PRESIDING OFFICER. The majority leader is recognized.
  Mr. DASCHLE. Mr. President, I have consulted with the chairman and 
the ranking member of the Appropriations Committee. As I think our 
colleagues know, the next order of business is a debate and then a vote 
on the continuing resolution. I am told they will need no more than 40 
minutes. So Senators should be prepared to vote on final passage on the 
continuing resolution at about 9:10 to 9:15 p.m. Please return to the 
Chamber if you are not going to stay. That will be the final vote of 
the evening. We will vote at approximately 9:10 to 9:15 p.m., following 
this vote.
  The PRESIDING OFFICER. Under the previous order, cloture having been 
invoked, the question is on agreeing to the conference report to 
accompany H.R. 3210.
  Mr. DODD. Mr. President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The clerk will call the roll.
  The legislative clerk called the roll.
  Mr. NICKLES. I announce that the Senator from North Carolina (Mr. 
Helms), the Senator from Arkansas (Mr. Hutchinson), and the Senator 
from Alaska (Mr. Murkowski) are necessarily absent.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 86, nays 11, as follows:

                      [Rollcall Vote No. 252 Leg.]

                                YEAS--86

     Akaka
     Allard
     Allen
     Barkley
     Baucus
     Bayh
     Bennett
     Biden
     Bingaman
     Bond
     Boxer
     Breaux
     Brownback
     Bunning
     Burns
     Byrd
     Campbell
     Cantwell
     Carnahan
     Carper
     Chafee
     Cleland
     Clinton
     Cochran
     Collins
     Conrad
     Corzine
     Crapo
     Daschle
     Dayton
     DeWine
     Dodd
     Domenici
     Dorgan
     Durbin
     Edwards
     Ensign
     Feingold
     Feinstein
     Fitzgerald
     Frist
     Graham
     Gregg
     Hagel
     Harkin
     Hatch
     Hollings
     Inhofe
     Inouye
     Jeffords
     Johnson
     Kennedy
     Kerry
     Kohl
     Landrieu
     Leahy
     Levin
     Lieberman
     Lincoln
     Lott
     Lugar
     McCain
     Mikulski
     Miller
     Murray
     Nelson (FL)
     Nelson (NE)
     Reed
     Reid
     Roberts
     Rockefeller
     Santorum
     Sarbanes
     Schumer
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Stabenow
     Stevens
     Thompson
     Thurmond
     Torricelli
     Voinovich
     Warner
     Wyden

                                NAYS--11

     Craig
     Enzi
     Gramm
     Grassley
     Hutchison
     Kyl
     McConnell
     Nickles
     Sessions
     Shelby
     Thomas

                             NOT VOTING--3

     Helms
     Hutchinson
     Murkowski
  The conference report was agreed to.
  Mr. REID. Mr. President, I ask unanimous consent that the Senator 
from Georgia, Mr. Cleland, be recognized for up to 10 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________