[Congressional Record (Bound Edition), Volume 150 (2004), Part 10]
[House]
[Pages 13264-13266]
[From the U.S. Government Publishing Office, www.gpo.gov]




              CAPE TOWN TREATY IMPLEMENTATION ACT OF 2004

  Mr. MICA. Mr. Speaker, I move to suspend the rules and pass the bill 
(H.R. 4226) to amend title 49, United States Code, to make certain 
conforming changes to provisions governing the registration of aircraft 
and the recordation of instruments in order to implement the Convention 
on International Interests in Mobile Equipment and the Protocol to the 
Convention on International Interests in Mobile Equipment on Matters 
Specific to Aircraft Equipment, known as the ``Cape Town Treaty,'' as 
amended.
  The Clerk read as follows:

                               H.R. 4226

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as ``Cape Town Treaty Implementation 
     Act of 2004''.

     SEC. 2. FINDINGS AND PURPOSE.

       (a) Findings.--Congress finds the following:
       (1) The Cape Town Treaty (as defined in section 44113 of 
     title 49, United States Code) extends modern commercial laws 
     for the sale, finance, and lease of aircraft and aircraft 
     engines to the international arena in a manner consistent 
     with United States law and practice.
       (2) The Cape Town Treaty provides for internationally 
     established and recognized financing and leasing rights that 
     will provide greater security and commercial predictability 
     in connection with the financing and leasing of highly mobile 
     assets, such as aircraft and aircraft engines.
       (3) The legal and financing framework of the Cape Town 
     Treaty will provide substantial economic benefits to the 
     aviation and aerospace sectors, including the promotion of 
     exports, and will facilitate the acquisition of newer, safer 
     aircraft around the world.
       (4) Only technical changes to United States law and 
     regulations are required since the asset-based financing and 
     leasing concepts embodied in the Cape Town Treaty are already 
     reflected in the United States in the Uniform Commercial 
     Code.
       (5) The new electronic registry system established under 
     the Cape Town Treaty will work in tandem with current 
     aircraft document recordation systems of the Federal Aviation 
     Administration, which have served United States industry 
     well.
       (6) The United States Government was a leader in the 
     development of the Cape Town Treaty.
       (b) Purpose.--Accordingly, the purpose of this Act is to 
     provide for the implementation of the Cape Town Treaty in the 
     United States by making certain technical amendments to the 
     provisions of chapter 441 of title 49, United States Code, 
     directing the Federal Aviation Administration to complete the 
     necessary rulemaking processes as expeditiously as possible, 
     and clarifying the applicability of the Treaty during the 
     rulemaking process.

     SEC. 3. RECORDATION OF SECURITY INSTRUMENTS.

       (a) Establishment of System.--Section 44107(a) of title 49, 
     United States Code, is amended--
       (1) in paragraph (2)(A) by striking ``750'' and inserting 
     ``550''; and
       (2) in paragraph (3) by striking ``clause (1) or (2) of 
     this subsection'' and inserting ``paragraph (1) or (2)''.
       (b) International Registry.--Section 44107 of such title is 
     amended by adding at the end the following:
       ``(e) International Registry.--
       ``(1) Designation of united states entry point.--As 
     permitted under the Cape Town Treaty, the Federal Aviation 
     Administration Civil Aviation Registry is designated as the 
     United States Entry Point to the International Registry 
     relating to--
       ``(A) civil aircraft of the United States;
       ``(B) an aircraft for which a United States identification 
     number has been assigned but only with regard to a notice 
     filed under paragraph (2); and
       ``(C) aircraft engines.
       ``(2) System for filing notice of prospective interests.--
       ``(A) Establishment.--The Administrator shall establish a 
     system for filing notices of prospective assignments and 
     prospective international interests in, and prospective sales 
     of, aircraft or aircraft engines described in paragraph (1) 
     under the Cape Town Treaty.
       ``(B) Maintenance of validity.--A filing of a notice of 
     prospective assignment, interest, or sale under this 
     paragraph and the registration with the International 
     Registry relating to such assignment, interest, or sale shall 
     not be valid after the 60th day following the date of the 
     filing unless documents eligible for recording under 
     subsection (a) relating to such notice are filed for 
     recordation on or before such 60th day.
       ``(3) Authorization for registration of aircraft.--A 
     registration with the International Registry relating to an 
     aircraft described in paragraph (1) (other than subparagraph 
     (C)) is valid only if (A) the person seeking the registration 
     first files documents eligible for recording under subsection 
     (a) and relating to the registration with the United States 
     Entry Point, and (B) the United States Entry Point authorizes 
     the registration.''.

     SEC. 4. REGULATIONS.

       (a) In General.--The Administrator of the Federal Aviation 
     Administration shall issue regulations necessary to carry out 
     this Act, including any amendments made by this Act.
       (b) Contents of Regulations.--Regulations to be issued 
     under this Act shall specify, at a minimum, the requirements 
     for--
       (1) the registration of aircraft previously registered in a 
     country in which the Cape Town Treaty is in effect; and
       (2) the cancellation of registration of a civil aircraft of 
     the United States based on a request made in accordance with 
     the Cape Town Treaty.
       (c) Expedited Rulemaking Process.--
       (1) Final rule.--The Administrator shall issue regulations 
     under this section by publishing a final rule by December 31, 
     2004.
       (2) Effective date.--The final rule shall not be effective 
     before the date the Cape Town Treaty enters into force with 
     respect to the United States.
       (3) Economic analysis.--The Administrator shall not be 
     required to prepare an economic analysis of the cost and 
     benefits of the final rule.
       (d) Applicability of Treaty.--Notwithstanding parts 
     47.37(a)(3)(ii) and 47.47(a)(2) of title 14, of the Code of 
     Federal Regulations, Articles IX(5) and XIII of the Cape Town 
     Treaty shall apply to the matters described in subsection (b) 
     until the earlier of the effective date of the final rule 
     under this section or December 31, 2004.

     SEC. 5. LIMITATION ON VALIDITY OF CONVEYANCES, LEASES, AND 
                   SECURITY INSTRUMENTS.

       Section 44108(c)(2) of title 49, United States Code, is 
     amended by striking the period at the end and inserting ``or 
     the Cape Town Treaty, as applicable.''.

     SEC. 6. DEFINITIONS.

       (a) In General.--Chapter 441 of title 49, United States 
     Code, is amended by adding at the end the following:

     ``Sec. 44113. Definitions

       ``In this chapter, the following definitions apply:
       ``(1) Cape town treaty.--The term `Cape Town Treaty' means 
     the Convention on International Interests in Mobile 
     Equipment, as modified by the Protocol to the Convention on 
     International Interests in Mobile Equipment on Matters 
     Specific to Aircraft Equipment, signed at Rome on May 9, 
     2003.
       ``(2) United states entry point.--The term `United States 
     Entry Point' means the Federal Aviation Administration Civil 
     Aviation Registry.
       ``(3) International registry.--The term `International 
     Registry' means the registry established under the Cape Town 
     Treaty.''.
       (b) Conforming Amendment.--The analysis for such chapter is 
     amended by adding at the end the following:

``44113. Definitions.''.

     SEC. 7. EFFECTIVE DATE AND PRESERVATION OF PRIOR RIGHTS.

       This Act, including any amendments made by this Act, shall 
     take effect on the date the Cape Town Treaty (as defined in 
     section 44113 of title 49, United States Code) enters into 
     force with respect to the United States and shall not apply 
     to any registration or recordation that was made before such 
     effective date under chapter 441 of such title or any legal 
     rights relating to such registration or recordation.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Florida (Mr. Mica) and the gentlewoman from California (Ms. Millender-
McDonald) each will control 20 minutes.
  The Chair recognizes the gentleman from Florida (Mr. Mica).
  Mr. MICA. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, the Cape Town Treaty was signed by the United States on 
May 9, 2003, and referred to the United States Senate for ratification 
at the end of that year. The Senate will most likely consider 
ratification of the treaty in the next month or so.
  Now, this action by the House today of course will not approve the 
Cape Town Treaty. That responsibility does lie with the other body. 
However, this bill takes an action to conform United States law for 
proper implementation of that treaty, and that is why this action today 
is important.
  The Cape Town Treaty is vital to international commerce. It will 
bring the uniformity of modern commercial finance laws, already in 
place in the United States, to international transactions involving 
aircraft and also aircraft engines.
  This uniformity will both greatly reduce the risks associated with 
aircraft

[[Page 13265]]

and engine sales abroad, and it will also help to bring improved and 
newer aircraft, it will help bring them to many areas of the world that 
desperately need them.
  The job of the Subcommittee on Aviation since I have become chairman 
and, even more importantly, since September 11, 2001, is to aid this 
industry that has been ailing. If we look at what happened since 
September 11, many folks refer to some 3 million jobs lost in this 
industry, and I can almost stand here with certainty and guarantee that 
half of those 3 million jobs, 1.5 million were directly related to the 
aviation industry. This bill is one more step in helping to revitalize 
that shaky industry that we have seen since September 11.
  The Cape Town Treaty seeks to establish an international registry 
where parties having an interest in aircraft or in aircraft engine can 
register that interest at an international level to ensure that they 
remain protected.
  The treaty enjoys strong bipartisan support and is also supported by 
the U.S. aviation industry, as well as our key government Departments, 
including our State Department, Department of Transportation, and 
Department of Commerce.
  In order to fully implement the treaty and its accompanying protocol, 
the administration has proposed to allow the Federal Aviation 
Administration's Civil Aviation Registry to be the United States' so-
called ``entry point'' to the international registry for relevant 
actions. This is a minor, but important, change in United States law, 
because it will ensure that upon ratification, the Cape Town Treaty and 
its aircraft protocol can be fully implemented. That is exactly what 
H.R. 4226, the Cape Town Treaty Implementation Act, proposes to do.
  This is important legislation, again, that will help an industry that 
is still recovering from the tragic events of September 11.
  In closing, I would like to thank Ambassador Ed Stimpson. Ed Stimpson 
is the ambassador to ICAO, which is the International Civil Aviation 
Organization. That international headquarters is located in Montreal, 
and Ed Stimpson does a great job in representing United States aviation 
interests on that international body. So I wish to thank him for 
bringing the need to implement this needed legislation before the House 
of Representatives and also his leadership in trying to help revitalize 
our industry, both that produces large aircraft and also that produces 
aircraft engines. So again, I say thank you to Ed Stimpson, our 
ambassador, for his leadership on this issue.
  I also join with the full committee chairman, the gentleman from 
Alaska (Mr. Young); the ranking member, the gentleman from Minnesota 
(Mr. Oberstar); and the Subcommittee on Aviation ranking member, the 
gentleman from Oregon (Mr. DeFazio), in urging immediate passage of 
this bipartisan bill.
  Mr. Speaker, I reserve the balance of my time.
  Ms. MILLENDER-McDONALD. Mr. Speaker, I yield myself such time as I 
may consume.
  Mr. Speaker, I rise in support of H.R. 4226, the Cape Town Treaty 
Implementation Act of 2004.
  The Cape Town Convention and related protocol on aircraft equipment 
known collectively as the Cape Town Treaty will extend modern 
commercial finance laws already used in the United States to 
international transactions involving aircraft and aircraft engines.
  Lenders have been reluctant or are charging more to extend financing 
for the sale of aircraft or aircraft engines to foreign entities, 
particularly in developing countries, because certain countries do not 
recognize the right of a lender with a priority interest in an asset to 
repossess or otherwise dispose of it if the owner defaults on a loan. 
The Cape Town Treaty, when ratified, is expected to lower their 
financial risks and therefore the costs of such financing and bring 
certainty to the marketplace, thereby increasing sales in aircraft 
frames and engines abroad.
  Importantly, the Cape Town Treaty creates an international registry 
in which persons with secured credit or leasing interest in highly 
mobile assets such as aircraft and engines will be able to put other 
potential lenders on notice of their interest in a particular asset.

                              {time}  1130

  Priority in an asset will be based on a first in time filing with the 
international registry. The filing of a notice of a security interest 
in the international registry will also facilitate a secured creditor's 
ability to repossess, sell, or lease a piece of equipment in the event 
of a default under the remedies provided by the treaty.
  H.R. 4226 makes technical changes to section 44107 of title 49 
governing the recordation of security interests with the Federal 
Aviation Administration, including designating the FAA's civil aircraft 
registry to be the U.S. entry point to the International Registry. This 
will enable the FAA to authorize filings with the International 
Registry related to U.S. registered aircrafts, aircraft engines, and 
aircraft that have received a U.S. identification number or to 
prospective interests in such aircraft or engines.
  Filings to the International Registry would be valid only if the 
creditor first files with the FAA full documentation of the security 
interest as currently required by U.S. law and the FAA authorizes the 
transmittal of the filing of the notice of the secured interest to the 
International Registry. Also directing the FAA to immediately proscribe 
regulations for the registration and deregistration of aircraft and to 
complete the rulemaking process by December 31, 2004.
  H.R. 4226 also provides that, if necessary, the provisions of the 
Cape Town Treaty shall apply to the registration and deregistration of 
aircraft until the FAA regulations are effective or by December 31, 
2004, whichever occurs earlier.
  In addition, H.R. 4226 states that the amendments to Title 49 made by 
this bill and any related regulations are effective upon the Cape Town 
Treaty's coming into force and do not apply to any prior registration 
or recordation.
  To put this in a local perspective, Mr. Speaker, in my district we 
manufacture aircrafts and this bill opens up markets that have 
historically been problematic. This treaty brings uniformity to 
bankruptcy and commercial finance laws by extending current U.S. 
finance laws to international transactions involving aircrafts and 
aircraft engines. It lowers the risk to financial lenders and 
manufacturers alike to engage in new markets. To put it simply, passage 
of the Cape Town Treaty will help American companies compete in foreign 
markets. It puts manufacturers in the situation to compete for foreign 
contracts.
  For example, the Boeing 717 built in my district of Long Beach, 
California, would benefit from the leasing requirements negotiated in 
this treaty. This translates into jobs and economic activity locally. 
The Boeing 717 plant in Long Beach employs 3,000 men and women and the 
plant also contracts with 320 suppliers. Currently, the 717 plant 
produces one plane a month. I have been told, however, that this plant 
is capable of producing 60 planes a year. If the 717 plant were to 
double their production to 24 planes a year, that would translate to 
upwards of 400 jobs created in Long Beach.
  I thank the gentleman from Alaska (Mr. Young) and the ranking member, 
the gentleman from Minnesota, Mr. Oberstar for their strong leadership 
on this issue, the chairman of the subcommittee, the gentleman from 
Florida (Mr. Mica), and the ranking member the gentleman from Oregon 
(Mr. DeFazio) for their leadership.
  I urge all of my colleagues to support this resolution.
  Mr. Speaker, I do not have other speakers, and I yield back the 
balance of my time.
  Mr. MICA. Mr. Speaker, I yield myself the balance of my time to 
close.
  Mr. Speaker and my colleagues, again I ask your support in the 
passage today of H.R. 4226 as amended. As you heard, this is an 
implementation technical bill that will implement provisions of the 
Cape Town Treaty. As you heard in my previous comment and the

[[Page 13266]]

comments of the gentlewoman from California, this legislation will, in 
fact, aid our aviation industry which has been, again, so hard hit 
during the past 2\1/2\ years.
  This will not only create jobs in Long Beach, California, but 
Washington and dozens of other States that produce major aircraft in 
the United States and also assist us to sell engines which are produced 
in the United States, I believe in Ohio, but not only from Ohio will 
there be a good results from the implementation of this treaty, but 
across the United States where additional parts are produced. So it 
aids manufacturing, it aids the job creation.
  And we urge also the other body to act expeditiously in the passage 
of this legislation so that the full benefits in effect of the Cape 
Town Treaty when fully implemented can be realized.
  So, again, I urge adoption of H.R. 4226.
  Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Graves). The question is on the motion 
offered by the gentleman from Florida (Mr. Mica) that the House suspend 
the rules and pass the bill, H.R. 4226, as amended.
  The question was taken; and (two-thirds having voted in favor 
thereof) the rules were suspended and the bill, as amended, was passed.
  A motion to reconsider was laid on the table.

                          ____________________