[House Report 106-2]
[From the U.S. Government Publishing Office]
106th Congress Report
1st Session HOUSE OF REPRESENTATIVES 106-2
_______________________________________________________________________
AVIATION WAR RISK INSURANCE PROGRAM EXTENSION
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February 2, 1999.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
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Mr. Shuster, from the Committee on Transportation and Infrastructure,
submitted the following
R E P O R T
[To accompany H.R. 98]
[Including cost estimate of the Congressional Budget Office]
The Committee on Transportation and Infrastructure, to whom
was referred the bill (H.R. 98) to amend chapter 443 and title
49, United States Code, to extend the aviation war risk
insurance program, having considered the same, report favorably
thereon without amendment and recommend that the bill do pass.
Commercial insurance companies will usually not insure
commercial airline flights to high-risk areas such as countries
at war or on the verge of war. In many cases, these flights are
required to further the foreign policy or national security of
the United States. For example, in Operation Desert Shield and
Desert Storm, commercial airlines were needed to ferry troops
and equipment to the Middle East.
To ensure that flights to high-risk areas can operate when
needed, Chapter 443 of Title 49 of the U.S. Code authorizes the
Secretary of Transportation to provide insurance and
reinsurance to commercial airlines against any risk.
The war risk insurance program was first authorized in
1951. Insurance was provided under this program in the early
1970s in the aftermath of attacks by Palestinian terrorists,
during the final days of the Vietnam war, the Gulf War, and
Bosnia. Since 1975, war risk insurance has been activated over
5,000 times.
The program has been reauthorized 12 times and is now
schedule to expire on March 31 of this year. In the past,
reauthorization of the war risk program has been relatively
routine and was often accomplished without any changes or even
the need for holding a hearing.
Last year, the Committee approved legislation (H.R. 4058,
H. Rept. 105-632 and H.R. 4057, H. Rept. 105-639 at page 45)
modifying the program to ensure prompt payment to the airlines
in the event of a claim and reauthorizing the program through
December 31, 2003. These bills passed the House on July 20,
1998 and August 4, 1998 respectively. However, neither was
enacted. Instead, for reasons unrelated to the merits of the
war risk program, the Omnibus Consolidated and Emergency
Supplemental Appropriations Act for Fiscal Year 1999 (P.L. 105-
277, See H. Rept. 105-825, at 608) reauthorized the program
until only March 31, 1999. This Act did include the provision
in the House passed bills ensuring prompt payment.
Expiration of the war risk insurance program at the end of
March could prove harmful to national security. Airlines will
be reluctant to provide their aircraft in the event of war or
other military action without the backing of the war risk
insurance program. Therefore, the reported bill
wouldreauthorize the program until December 31, 2003. This was the
period specified in the original House-passed bills.
Section-by-Section Summary
Section 1. Extension of Insurance Program
This language simply reauthorizes the war risk insurance
program through December 31, 2003.
Hearings and Legislative History
H.R. 98 was introduced on January 6, 1999. The Committee
has not held hearings on the reported legislation.
Committee Consideration
On January 7, 1999, the Committee met in open session,
discharged the Subcommittee on Aviation, and ordered the bill
reported, without an amendment, by voice vote with a quorum
present. There were no recorded votes taken during Committee
consideration of H.R. 98.
Record Votes
Clause 3(b) of Rule XIII of the House of Representatives
requires each committee report to include the total number of
votes cast for and against on each record vote on a motion to
report and on any amendment offered to the measure or matter,
and the names of those members voting for and against. There
were no recorded votes taken in connection with ordering H.R.
98 reported. A motion by Mr. Duncan to order H.R. 98 favorably
reported to the House, without amendment, was agreed to by
voice vote, a quorum being present.
Committee Oversight Findings
With respect to the requirements of clause 3(c)(i) of Rule
XIII of the Rules of the House of Representatives, the
Committee's oversight findings and recommendations are
reflected in this report.
Cost of the Legislation
Clause 3(d)(2) of Rule XIII of the Rules of the House of
Representatives does not apply where a cost estimate and
comparison prepared by the Director of the Congressional Budget
Office under section 402 of the Congressional Budget Act of
1974 has been timely submitted prior to the filing of the
report and is included in the report. Such a cost estimate is
included in this report.
Compliance With House Rule XIII
1. With respect to the requirement of clause 3(c)(2) of
Rule XIII of the Rules of the House of Representatives, and
section 308(a) of the Congressional Budget Act of 1974, the
Committee references the report of the Congressional Budget
Office below.
2. With respect to the requirement of clause 3(c)(4) of
Rule XIII of the Rules of the House of Representatives, the
Committee has received no report of oversight findings and
recommendations from the Committee on Government Reform and
Oversight on the subject of H.R. 98.
3. With respect to the requirement of clause 3(c)(3) of
Rule XIII of the Rules of the House of Representatives and
section 402 of the Congressional Budget Act of 1974, the
Committee has received the following cost estimate for H.R. 98
from the Director of the Congressional Budget Office.
U.S. Congress,
Congressional Budget Office,
Washington, DC, January 21, 1999.
Hon. Bud Shuster,
Chairman, Committee on Transportation and Infrastructure, House of
Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 98, a bill to
amend chapter 443 of Title 49, United States Code, to extend
the aviation war risk insurance program.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Victoria V.
Heid.
Sincerely,
June E. O'Neill, Director.
Enclosure.
congressional budget office cost estimate
H.R. 98--A bill to amend chapter 443 of Title 49, United States Code,
to extend the aviation war risk insurance program
H.R. 98 would extend the authorization for the Federal
Aviation Administration's (FAA's) aviation insurance program
through December 31, 2003. Under current law, the program will
end on March 31, 1999. Enacting H.R. 98 could increase federal
spending, but because claims under the aviation insurance
program are very rare, CBO estimates that extending the program
would probably have no significant impact on the federal budget
over the next five years. Because the bill could affect direct
spending, pay-as-you-go procedures would apply. H.R. 98
contains no intergovernmental or private-sector mandates as
defined in the Unfunded Mandates Reform Act and would have no
impact on the budgets of state, local, or tribal governments.
The aviation insurance program insures aircraft operations
that are deemed essential to the foreign policy interests of
the United States when commercial insurance is unavailable on
reasonable terms. The program is financed through the Aviation
Insurance Revolving Fund, which is supported by premiums paid
for coverage (for ``premium insurance''), one-time binder fees
paid by the airlines (for ``nonpremium insurance''), and
interest on investments from the revolving fund in U.S.
Treasury securities. According to the FAA, from 1959 through
September 1998, the balance in the fund has grown to $71
million and the fund has paid out a total of only $151,000 in
claims. New receipts from airlines total less than $100,000 a
year.
Nonpremium insurance, which has accounted for about 99
percent of all aviation insurance in the recent past, is for
U.S. airlines that are providing contract services for federal
agencies that have indemnification agreements with the
Department of Transportation (DOT). Currently, only the
Department of Defense (DoD) and the State Department have such
agreements with DOT. In the event of a loss, DoD and the State
Department would reimburse the FAA for the insurance claims it
would have to pay the airlines. Since 1975, approximately 5,400
flights have been covered by the program.
Premium insurance is provided to U.S. or foreign airlines
for regularly scheduled commercial or charter service. Airlines
pay a premium to FAA for the coverage, similar to a commercial
insurance policy. Both types of insurance policies cover hull
loss and liability.
Enacting H.R. 98 could cause an increase in federal
spending if new claims would result. Moreover, such new
spending could be very large, particularly if a claim exceeded
the balance of the trust fund and the FAA had to seek a
supplemental appropriation. But historical experience suggests
that claims under this program are very rare; therefore,
extending the aviation insurance program would probably have no
significant impact on the federal budget over the next five
years.
The CBO staff contact for this estimate is Victoria V.
Heid. The estimate was approved by Robert A. Sunshine, Deputy
Assistant Director for Budget Analysis.
Applicability to the Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act (Public Law
104-1).
Federal Mandates Statement
The Committee adopts as its own the estimate of the Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act (Public Law 104-4).
Constitutional Authority Statement
Pursuant to clause 3(d)(i) of rule XIII of the Rules of the
House of Representatives, committee reports on a bill or joint
resolution of a public character shall include a statement
citing the specific powers granted to the Congress in the
Constitution to enact the measure. The Committee on
Transportation and Infrastructure finds that Congress has the
authority to enact this measure pursuant to its powers granted
under article I, section 8 of the Constitution.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3 of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
SECTION 44130 OF TITLE 49, UNITED STATES CODE
Sec. 44310. Ending effective date
The authority of the Secretary of Transportation to provide
insurance and reinsurance under this chapter is not effective
after [March 31, 1999] December 31, 2003.