DEPARTMENT OF TRANSPORTATION DRAFT BILL -- "TO EXTEND THE AVIATION INSURANCE PROGRAM FOR 5 YEARS."

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90M00004R001000010003-3
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 6
• Document Creation Date: December 27, 2016
• Document Release Date: December 8, 2011
• Sequence Number: 3
• Publication Date: June 30, 1987
• Content Type: MEMO

Declassified in Part - Sanitized Copy Approved for Release 2011/12/08: CIA-RDP90M00004RO01000010003-3
Action
OCA 87-2854
OFFICE OF CONGRESSIONAL AFFAIRS
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7. Admin Officer
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 Declassified in Part - Sanitized Copy Approved for Release 2011/12/08: CIA-RDP90M00004RO01000010003-3
Action
OCA 87-2854
OFFICE OF CONGRESSIONAL AFFAIRS
Routing Slip
ACTION
INFO
1. D/OCA
X
2. DD/Legislation
3. DD/Senate Affairs
X
4. Ch/Senate Affairs
5. DD/House Affairs
X
6. Ch/House Affairs
7. Admin Officer
8. Executive Officer
9. FOIA Officer
10 Constituent Inquiries
Officer
11.
12.
STAT
STAT
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 Declassified in Part - Sanitized Copy Approved for Release 2011/12/08: CIA-RDP90M00004RO01000010003-3
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
June 30, 1987
LEGISLATIVE REFERRAL MEMORANDUM
Legislative Liaison Officer
Depa ment of Defense - Sam Brick (697-1305)
Dep tment of State - Lee Ann Howdershell (647-4463)
C tral Intelligence Agency-
SPECIAL
SUBJECT: Department of Transportation draft bill -- "To extend
the Aviation Insurance Program for 5 years."
The Office of Management and Budget requests the views of your
agency on the above subject before advising on its relationship to
the program of the President, in accordance with OMB Circular A-19.
Please provide us with your views no later than COB -- July 17, 1987.
Direct your questions to Jim Brown (395-3457), the
James C. Murr for
Assistant Director for
Legislative Reference
Enclosures
cc: Nancy Potok
Sam Fairchild
Jim Fish
Russ Neely
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THE SECRETARY OF TRANSPORTATION
WASHINGTON, D.C. 20590
The Honorable George Bush
President of the Senate
Washington, D.C. 20510
IDENTICAL LE rr j. T0:
The Honorable Jim Wright
Speaker of the House of Representatives
Washington, D.C. 20515
Enclosed for introduction and referral to the appropriate
Committee is a legislative proposal which would provide for
a 5-year extension of the Aviation Insurance Program
administered by the Department of Transportation's Federal
Aviation Administration. Pursuant to section 1312 of the
Federal Aviation Act of 1958, as amended, the current
program will expire on September 30, 1987. Our proposed
legislation will extend the program through September 30,
1992.
The Aviation Insurance Program plays an important role in
ensuring that emergency air transportation needs are met.
Commercial aviation insurance is unavailable in a limited
number of extraordinarily high risk environments which
cannot be fully anticipated or specified. Commercial
insurance underwriters consider these high risk environments
either outside the scope of coverage they offer or incapable
of actuarial analysis.
When these high risk environments can be anticipated or
specified, they are excluded from commercial insurance
coverage. For example, commercial insurance underwriters
treat aircraft operations performed pursuant to activation
of the Civil Reserve Air Fleet (CRAF) as military operations
because the participating aircraft are under the operational
control of the United States Air Force. Therefore, they
specifically exclude CRAF operations from their war risk
insurance coverage.
In order to limit their financial liability in high risk
environments which cannot be fully anticipated or specified,
commercial insurance underwriters retain the option, with
due notice, to raise premiums, limit coverage to less than
full value or even cancel coverage in circumstances where
risks increase significantly.
Since aircraft operators cannot or will not operate without
insurance coverage, these potential gaps in commercial
insurance coverage during high risk situations could
preclude performance of air services required to further
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United States foreign policy or national security
interests. Title XIII of the Federal Aviation Act
authorizes--the Secretary of Transportation to provide
aviation insurance coverage in these limited circumstances.
The scope of Title XIII insurance is limited by the
statutory requirement that provision of this insurance for
specified international air services be preceded by both a
Secretarial determination that commercial insurance coverage
for those services is not available on reasonable terms and
conditions, and a Presidential determination that the
performance of these air services is in the foreign policy
interest of the United States.
The current balance of the Aviation Insurance Revolving
Fund, established under Title XIII, is such that a
significant loss covered by the Program could exhaust the
Fund. Accordingly, we are exploring various methods, within
the scope of Title XIII, to improve the solvency of the Fund
in keeping with the Congressional intent that this Program
be operated, to the extent feasible, on a businesslike basis.
Pursuant to Title XIII authority, insurance is currently
being provided by the Secretary for operations performed in
the event of CRAF activation and would be available in
emergency evacuation situations. The Department of
Transportation believes there is a continuing need for this
limited authority to provide aviation insurance and
recommends a 5-year extension of Title XIII of the Federal
Aviation Act. We urge the Congress to give favorable
attention to this legislative proposal.
The Office of Management and Budget advises that there is no
objection, from the standpoint of the Administration's
program, to the enactment of this legislation.
Sincerely,
Elizabeth Hanford Dole
Enclosure
Draft Bill
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Aviation Insurance Program
A BILL
To extend the Aviation Insurance Program for 5 years.
Be it en-acted by the Senate and House of Representatives of the
United States of America in Congress assembled, That section 1312
of the Federal Aviation Act o 1958, as amended (49 U.S.C. App.
1542) is amended by striking "1987" and inserting "1992" in lieu
thereof.
._ Declassified in Part - Sanitized Copy Approved for Release 2011/12/08: CIA-RDP90M00004ROO1000010003-3