[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.

____________________