Snow (Photo courtesy of U.S. Dept. of the Treasury)

T

Under TRIA, Treasury covers 90% of terrorism losses over a deductible, which this year is 15% of an insurer’s 2004 premiums. It caps combined federal and insurance industry liability at $100 billion a year. Real estate, construction and insurance groups want TRIA extended two years. But in a June 30 letter to House and Senate committee leaders, Snow said the Bush administration "opposes extension of TRIA in its current form." Continuing the present program "is likely to hinder the further development of the insurance market by crowding out innovation and capacity building," he says. The administration would back an extension only if the size of a terrorist event requiring federal coverage were hiked to $500 million, from $5 million, he says. Treasury also wants insurers’ deductibles and co-payments raised.

Snow’s letter accompanied a long-awaited Treasury report on TRIA. It says the law has been effective overall, providing a transition in which insurers increased resources to write terrorism risk coverage. If the program expires, "it is reasonable to expect that the removal of the subsidy will result in a short-lived adjustment in coverage and pricing," the report concludes.

The study says 54% of policyholders said they had terrorism risk coverage in 2004, up from 27% in 2002. More policyholders now pay separately for terrorism coverage. For those buying separate coverage, the cost fell to 2.7% of premium in 2004, from 4% two years earlier.

Coalition to Insure Against Terrorism spokesman Martin L. DePoy says Treasury’s report is "flawed." DePoy, who also is the National Association of Real Estate Investment Trusts’ vice president for government relations, says the study "fails to acknowledge that the risk of terrorism is unknowable."

But Congress is likely to insist on changes in TRIA. House Financial Services Committee Chairman Michael Oxley (R-Ohio) says that "a simple extension of the program is not in the best interest of American consumers or the economy." Senate Banking Committee Chairman Richard Shelby (R-Ala.) says TRIA as now configured "has created considerable market dysfunction which...has led to additional dependency on the federal government backstop."

Shelby plans a July 14 hearing on Treasury’s report. He says a temporary TRIA extension may be needed, but it "should be narrow, targeted and minimize interference with our markets."

Spending: House Boosts Amtrak, Cuts GSA Renovations The House added $626 million to 2006 funding its Appropriations Committee had allotted to Amtrak. To help pay for that hike, lawmakers slashed the General Services Administration’s renovations program by $568 million. The shift was part of a floor amendment approved June 29 to a Transportation/Treasury spending bill. It leaves GSA’s repairs and alterations account with $393 million, down 58% from 2005. Other key infrastructure programs fared well in the underlying bill, which passed June 30, 405-18. Federal-aid highways gets $37 billion, up 3% from 2005. The Federal Transit Administration receives $7.6 billion, up 11%. The Federal Aviation Administration’s Airport Improvement Program rises 4%, to $3.6 billion. EPA: Candidates For Two Posts Named The White House has nominated a House staffer and a private attorney to fill two long-vacant senior positions at the Environmental Protection Agency. Susan P. Bodine, staff director and senior counsel for the House water resources and environment subcommittee, was nominated June 28 to be assistant administrator in EPA’s Office of Solid Waste and Emergency Response. If confirmed by the Senate, Bodine would succeed Thomas P. Dunne, who has been acting administrator since Marianne L. Horinko resigned in June 2004. President Bush also picked Granta Y. Nakayama to head EPA’s enforcement office. A former naval engineer, Nakayama is a partner specializing in environmental law with Kirkland & Ellis. Thomas V. Skinner has been acting enforcement chief since April 2004. GSA: Chief of Public Buildings Service Is Departing Aug. 1 F. Joseph Moravec, head of the General Services Administration’s Public Buildings Service, said June 28 that he is returning to the private sector. Moravec, PBS commissioner since June 2001, will depart on Aug. 1. He has not announced his specific plans. Before GSA, Moravec worked for major real estate companies and was senior advisor for business development at George Washington University. Compiled by Tom Ichniowski and Sherie Winston

he Treasury Dept. says it won’t support extending the law pro-viding a federal insurance "backstop" for terrorism-related claims unless insurers pick up more of the risk. Key lawmakers praised Treasury Secretary John Snow’s June 30 statement on the 2002 Terrorism Risk Insurance Act, which means changes in the statute are likely. Time is tight: TRIA expires Dec. 31. While Congress decides how to rewrite the law, it may have to pass a temporary, narrowly focused extension.