[Congressional Record Volume 141, Number 5 (Tuesday, January 10, 1995)]
[Senate]
[Pages S731-S740]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
By Mr. AKAKA:
S. 186. A bill to amend the Energy Policy and Conservation Act with
respect to purchases from the Strategic Petroleum Reserve by entities
in the insular areas of the United States, and for other purposes; to
the Committee on Energy and Natural Resources.
the emergency petroleum supply act
Mr. AKAKA. Mr. President, today I am introducing the Emergency
Petroleum Supply Act, a bill to ensure that Hawaii has access to the
strategic petroleum reserve during an oil supply disruption. The
Emergency Petroleum Supply Act would guarantee Hawaii oil--at a fair
price--and give tankers bound for Hawaii priority loading during an
emergency.
[[Page S732]]
This legislation passed the Senate in each of the previous two
Congresses. During the 104th Congress, I will aggressively work to see
this legislation enacted into law.
The objective of my bill can be summed up in one word: access.
Because of its tremendous distance from the gulf coast, Hawaii needs
guaranteed access to the strategic petroleum reserve [SPR], as well as
priority access to the SPR loading docks.
My bill addresses both these concerns. First, it provides a mechanism
to guarantee an award of SPR oil. Hawaii's energy companies would be
able to submit binding offers for a fixed quantity of oil at a price
equal to the average of all successful bids. This concept is modeled
after the Federal Government's method of selling Treasury bills. It
would give Hawaii ready access to emergency oil supplies at a price
that is fair to the Government. Without this bill, Hawaii's energy
companies, and the population they serve, face the risk that their bid
for SPR oil would be rejected and that oil inventories would run dry.
The second component of my bill addresses the problem of delay. The
Emergency Petroleum Supply Act grants ships delivering petroleum to
Hawaii expedited access to SPR loading docks. It would be a terrible
misfortune if deliveries to Hawaii were delayed because the tanker
scheduled to carry emergency supplies was moored in the Gulf of Mexico,
waiting in line for access to the SPR loading docks.
As any grade-school geography student can tell you, Hawaii is a long
way from the Gulf of Mexico, especially when you have to transit the
Panama Canal. The distance between the SPR loading docks and Honolulu,
by way of the canal, is 7,000 miles--more than one-quarter of the
distance around the globe.
But distance alone is not the issue. When you add together the time
between the decision to draw down the reserve and the time for oil from
the reserve to actually reach our shores, the seriousness of the
problem emerges. It takes time to solicit and accept bids for SPR oil,
time to locate and position tankers, time for tankers to wait in line
to gain access to SPR loading docks, and more time to transit the canal
to Hawaii. Obviously, Hawaii is at the end of a very, very long supply
line. People overlook the fact that insular areas have a limited supply
of petroleum products on hand at any one time. While Hawaii waited for
emergency supplies to arrive, oil inventories could run dry and our
economy could grind to a halt.
Last year, the Department of Energy asked Hawaii's East-West Center
to study this problem. The East-West Center report concluded that my
SPR access measure ``is an excellent proposal which would greatly
reassure the islands that their basic needs would be maintained.'' I
ask that a summary of the report be placed in the Record following my
remarks. I will also place a copy of Energy Secretary O'Leary's letter
in support of the Emergency Petroleum Supply Act in the record
following my remarks.
The East-West Center report provides strong justification for
granting Hawaii special access to SPR oil during an energy emergency.
The report found that a major oil supply disruption would have a much
more severe impact on the Pacific islands than on the rest of the
United States. Although all of Asia would experience inflation and
recession, the small economies of the insular areas would be virtually
unprotected from volatile economic forces. While the rest of the United
States does not have to rely on ocean transport from other nations for
essential goods and services, the economies of Hawaii and the Pacific
islands are heavily dependent on ocean-borne trade and foreign
visitors.
The need for this provision is further justified by a December 1993
Department of Energy/State of Hawaii analysis of Hawaii's energy
security which found the following:
Hawaii depends on imported oil for over 92% of its energy.
This makes Hawaii the most vulnerable state in the Nation to
the disruption of its economy and way of life in the event of
a disruption of the world oil market or rapid oil price
increases.
Currently, 40% of Hawaii's oil comes from Alaska and the
remainder from the Asia-Pacific region. The export
capabilities of these domestic and foreign sources of supply
are projected to decline by approximately 50 percent by the
year 2000. This will likely increase Hawaii's dependence on
oil the reserves of the politically unstable Middle East.
Hawaii is also vulnerable to possible supply disruptions in
the event of a crisis. The long distance from the U.S.
Strategic Petroleum Reserve in Louisiana and Texas, combined
with a declining number of U.S.-flag tankers capable of
transiting the Panama Canal, make timely emergency deliveries
problematic.
Other studies have consistently verified Hawaii's energy
vulnerability and its need for special access to the SPR. An analysis
by Mr. Bruce Wilson, an accomplished oil economist, determined that the
delivery of SPR oil to Hawaii from the Gulf of Mexico would take as
long as 53 days. That exceeds the state's average commercial working
inventory by 23 days. As Mr. Wilson's research demonstrates, an oil
supply disruption is Hawaii's greatest nightmare.
Opponents of the Emergency Petroleum Supply Act insist that market
forces will ensure that Hawaii and the territories receive the oil they
need during an energy emergency. Unfortunately, these are the same
market forces that cause Hawaii's consumers to pay 50 percent more for
a gallon of gasoline than consumers pay on the mainland. And when a
crisis hits, our energy prices could easily double or triple.
Hawaii may be the 50th State, but we deserve the same degree of
energy security that the rest of the Nation enjoys. It's simply a
matter of equity. Hawaii's tax dollars help fill and maintain the
reserve; Hawaii should enjoy the energy security the SPR is designed to
provide.
My bill will safeguard Hawaii from the harsh economic consequences of
an oil emergency. The Emergency Petroleum Supply Act is not only good
energy policy, it's good economic policy for Hawaii.
Mr. President, I ask unanimous consent that the text of the bill and
additional material be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
S. 186
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 the ``Emergency Petroleum Supply
Act''.
SEC. 2. PURCHASES FROM THE STRATEGIC PETROLEUM RESERVE BY
ENTITIES IN THE INSULAR AREAS OF THE UNITED
STATES.
(a) General Provisions.--Section 161 of the Energy Policy
and Conservation Act (42 U.S.C. 6241) is amended by adding at
the end the following new subsection:
``(j)(1) With respect to each offering of a quantity of
petroleum product during a drawdown of the Strategic
Petroleum Reserve:
``(A) the State of Hawaii, in addition to having the
opportunity to submit a competitive bid, may--
``(i) submit a binding offer, and shall on submission of
the offer, be entitled to purchase a category of petroleum
product specified in a notice of sale at a price equal to the
volumetrically weighted average of the successful bids made
for the remaining quantity of petroleum product within the
category that is the subject of the offering; and
``(ii) submit one or more alternative offers, for other
categories of petroleum product, that will be binding in the
event that no price competitive contract is awarded for the
category of petroleum product on which a binding offer is
submitted under clause (i); and
``(B) at the request of the Governor of the State of
Hawaii, petroleum product purchased by the State of Hawaii at
a competitive sale or through a binding offer shall have
first preference in scheduling for lifting.
``(2)(A) In administering this subsection, and with respect
to each offering, the Secretary may impose the limitation
described in subparagraph (B) or (C) that results in the
purchase of the lesser quantity of petroleum product.
``(B) The Secretary may limit the quantity of petroleum
product that the State of Hawaii may purchase through binding
offer at any one offering to one-twelfth of the total
quantity of imports of petroleum product brought into the
State during the previous year (or other period determined by
the Secretary to be representative).
* * * * *
``(3) Notwithstanding any limitation imposed under
paragraph (2), in administering this subsection, and with
respect to each offering, the Secretary shall, at the request
of the Governor of the State of Hawaii, or an eligible entity
certified under paragraph (6), adjust the quantity to be sold
to the State of Hawaii as follows:
[[Page S733]]
``(A) The Secretary shall adjust upward to the next whole
number increment of a full tanker load if the quantity to be
sold is--
``(i) less than one full tanker load; or
``(ii) greater than or equal to 50 percent of a full tanker
load more than a whole number increment of a full tanker
load.
``(B) The Secretary shall adjust downward to the next whole
number increment of a full tanker load if the quantity to be
sold is less than 50 percent of a full tanker load more than
a whole number increment of a full tanker load.
``(4) The State of Hawaii may enter into an exchange or a
processing agreement that requires delivery to other
locations, so long as petroleum product of similar value or
quantity is delivered to the State of Hawaii.
* * * * *
``(6)(A) Notwithstanding the foregoing, and subject to
subparagraphs (B) and (C), if the Governor of the State of
Hawaii certifies the Secretary that the State has entered
into an agreement with an eligible entity to effectuate the
purposes of this Act, such eligible entity may act on behalf
of the State of Hawaii for purposes of this subsection.
``(B) The Governor of the State of Hawaii shall not certify
more than one eligible entity under this paragraph for each
notice of sale.
``(C) If the secretary has notified the Governor of the
State of Hawaii that a company has been barred from bidding
(either prior to, or at the time that a notice of sale is
issued), the Governor shall not certify such company under
the paragraph.
``(7) As used in this subsection--
``(A) the term `binding offer' means a bid submitted by the
State of Hawaii for an assured award of a specific quantity
of petroleum product, with a price to be calculated pursuant
to this Act, that obligates the offeror to take title to the
petroleum product;
``(B) the term `category of petroleum product' means a
master line item within a notice of sale;
``(C) the term `eligible entity' means an entity that owns
or controls a refinery that is located within the State of
Hawaii;
``(D) the term `full tanker load' means a tanker of
approximately 700,000 barrels of capacity, or such lesser
tanker capacity as may be designated by the State of Hawaii;
``(E) the term `offering' means a solicitation for bids for
a quantity or quantities of petroleum product from the
Strategic Petroleum Reserve as specified in the notice of
sale; and
``(F) the term `notice of sale' means the document that
announces--
``(i) the sale of Strategic Petroleum Reserve products;
``(ii) the quantity, characteristics, and location of the
petroleum product being sold;
``(iii) the delivery period for the sale; and
``(iv) the procedures for submitting offers.''.
(b) Effective Date.--The amendment made by that final
regulations are promulgated pursuant to section 3, whichever
is sooner.
SEC. 3. REGULATIONS.
(a) In General.--The Secretary shall promulgate such
regulations as are necessary to carry out the amendment made
by section 2.
(b) Administrative Procedure.--Regulations issued to carry
out this section, and the amendment made by section 2, shall
not be subject to--
(1) section 523 of the Energy Policy and Conservation Act
(42 U.S.C. 6393); or
(2) section 501 of the Department of Energy Organization
Act (42 U.S.C. 7191).
____
The Secretary of Energy,
Washington, DC, July 27, 1994.
Hon. J. Bennett Johnston,
Chairman, Committee on Energy and Natural Resources, U.S.
Senate, Washington, DC.
Dear Mr. Chairman: This is to provide you with Department
of Energy views on S. , the ``Emergency Petroleum Supply
Act,'' introduced by Senator Akaka.
S. , would amend the Energy Policy and Conservation Act
to give certain preferences to the State of Hawaii and
several other insular territories and possessions of the
United States in the event of a drawdown and sale from the
Strategic Petroleum Reserve.
The Department has worked closely with Senator Akaka's
staff to understand the concerns of the State and the intent
of the legislation, and to help make the bill technically
sound. Based upon these discussions, a number of changes to
the bill have been made. As redrafted, the legislation would
apply solely to Hawaii. It would allow the State, or a
company with a refinery on Hawaii with which Hawaii has a
contract, to submit a bid for Strategic Petroleum Reserve
petroleum product that is assured of receiving an award at
the average price paid for the same product by other
successful bidders. The bill also would provide that Hawaii
be given first priority for scheduling deliveries of oil that
is purchased from the Strategic Petroleum Reserve.
The State of Hawaii always has believed that it is more
vulnerable to oil supply disruptions than the mainland due to
its high level of dependence on oil in general and its
distance from sources of supply and from the Strategic
Petroleum Reserve. The provisions of this bill that would
assure Hawaii of supply and allow for timely delivery will
satisfy the State that it is receiving protection for Hawaii
commensurate with that offered to the U.S. mainland by the
Strategic Petroleum Reserve. At the same time, the Department
is satisfied that it will receive full market value for the
oil that it sells to Hawaii, that the quantity directed to
Hawaii will not materially reduce the volume available to
other locations, and that the process of making the award and
delivering the oil will not be an unreasonable administrative
burden.
For these reasons, the Department of Energy supports the
amendment offered by Senator Akaka during the Committee's
consideration of S. 2251, to amend and extend the Energy
Policy and Conservation Act.
The Office of Management and Budget advises that from the
standpoint of the Administration's program, there is no
objection to the submission of this report for the
consideration of the Committee.
Sincerely,
Hazel R. O'Leary.
____
Energy Vulnerability Assessment for the U.S. Pacific Islands, the East/
West Center, April 1994
oil supply disruption scenarios for the pacific islands
The following sections describe the potential oil supply
disruptions scenarios provided by the USDOE for this report,
the likely impacts of these supply disruptions on the island
economies, and selected response issues. The discussions
parallel those in chapters 4 to 7, which also discuss
vulnerability response options for the individual island
entities. The response issues which are discussed below
reflect the larger economies of scale which can be gained by
linking Guam, the CNMI, Palau, and American Samoa. Hawaii and
the Federated States of Micronesia and the Republic of the
Marshall Islands should also be included in any regional
groupings because they are also part of the same oil supply
system. Unfortunately, the terms of reference for this report
did not allow for assessment of these island entities.
Three oil supply disruption scenarios for the Pacific
islands are discussed below and evaluated with respect to
their potential impacts. Figures 2.16, 2.17, and 2.18 provide
the basis for the assessment. The three scenarios are all
estimated to last six months and include:
Scenario I: Major disruption caused by major political
turmoil affecting Middle Eastern and Asian producers with a
net loss of 4.5 MMBD (9.0 MMBD production loss minus 4.5 MMBD
drawdown of global strategic petroleum reserve).
Scenario II: Medium-scale disruption caused by simultaneous
upheaval in West African and Latin American producers with a
net loss 4.5 MMBD (production loss of 6.0 MMBD minus SPR
drawdown of 1.5 MMBD).
Scenario III: Minor disruption based on limited upheaval in
the Middle East with a loss of 2.0 MMBD (production loss of
4.3 MMBD minus production increase by other countries of 2.3
MMBD).
Before discussing the specific scenarios, several
historical reference points should be noted. First, the Asian
market is a net importer of oil sourced largely from the
Middle East. Second, during previous oil crises, Asian
producers such as Indonesia and Malaysia have not diverted
supplies. Instead, Asian producers have generally given
preference to traditional markets, including Singapore, for
their products. Third, most Asian refineries such as those in
Singapore are configured to process Middle Eastern crudes and
are not as well adapted to refining the lighter, sweeter West
African crudes and the heavier, more sour Latin American
crudes. In other words, Asia's refining capacity is geared
towards supplies from the Middle East, and substitutes are
not readily available or easily incorporated. The scenarios
are discussed below beginning in reverse order.
Scenario III: Minor Disruption
Under Scenario III, there would be no redirection of Asian
oil supplies. Impact on U.S. West Coast supplies would be
negligible. However, there would be a drop of 10 percent in
supplies for Singapore (approximately 100 to 150 MBD), and a
similar reduction in Australia and New Zealand crude imports.
The result is an anticipated shortfall of approximately 10
percent for the Pacific islands region.
The effects of this 10 percent shortfall are considered
minimal. Oil price rises would be very modest and there
should be no appreciable negative secondary effects for the
islands region such as a major decline in tourism.
No official response measures would need to be instituted.
However, it is recommended that monitoring of supplies and
prices should be carried out. It is also recommended that
utilities, the oil industry, and governments promote energy
conservation programs, including voluntary measures by the
population to reduce consumption of electricity and gasoline.
Scenario II: Medium Disruption
Although the volume of oil lost to the market is
considerable (4.5 MMBD), because the West African and Latin
American producers are linked to other markets, the Asia-
Pacific region would be only slightly affected. There would
be some redirection of Middle Eastern supplies, but it is
anticipated that the net effect would lead to only a 10
percent decrease in supplies for Singapore, Australia and New
Zealand. Similarly, the effect on the U.S. West Coast would
be minimal.
The results and response measures for Scenario II are
identical to those described above for Scenario III.
[[Page S734]]
Scenario I: Major Disruption
A global net loss of 4.5 MMBD based on major political
upheaval in the Middle East and Asia and includes a total
loss of 2.5 MMBD from Asia oil producers would affect various
Pacific Rim markets very differently. The direct impact on
U.S. West Coast supplies would be fairly limited (e.g., 5
percent or less) because imports have only a small role in
that market. The direct and indirect effects on supplies to
Australia and New Zealand should be relatively modest,
approximating a 10 percent decline. The Singapore refiners,
however, would be severely affected.
In this scenario, Singapore would experience a 30 percent
loss in Asian supplies. The cutback in Middle Eastern
production would result in additional 20 percent decrease.
The combined loss of 50 percent would greatly affect the
islands region both directly and indirectly.
Directly, the islands region would lose at least 50 percent
of its supplies from Singapore. Australia would be able to
provide some additional supplies, but it would also have to
compensate for its own loss of supplies. The net loss to the
islands region could well be in the range of 25 to 50
percent.
A secondary impact would be significant price hikes. Under
Scenario I, spot prices on the Singapore market would soar.
Price doubling and even tripling would be likely outcomes. In
the 1979/80 period, the crisis centered on Iran led to an
additional 20 percent increase in prices. The short-term
consequences of the 1979 oil price rise lead to inflation
rates of 7.5 percent in Japan, 11 percent in Australia, 15
percent in Fiji and nearly 30 percent in Tonga and Vanuatu.
In other words, inflation rates in some of the islands nearly
doubled. If the 1979 experience is applied, it would be
reasonable to anticipate a near doubling of inflation rates
for Guam, the CNMI and Palau.
Compounding the direct supply and price effects of Scenario
I, the political complications of the oil supply disruption
have to be considered. Following the onset of the recent
Persian Gulf War, the Iraqi President threatened to attack
U.S. territory and economic interests throughout the world,
and there had been several reports of terrorist activity by
Iraqis in Asia which heightened concern. As a result, Guam,
the CNMI, and Hawaii experienced a downturn in tourism
immediately following the outbreak of the 1991 Gulf War
because tourists were frightened to fly to U.S. territory.
Whether fact or only perception, people reduce their
international travel even to relatively ``safe'' destinations
during crisis periods: if there is political upheaval in a
major Middle Eastern or Asian nation, international business
and tourist travel will be restricted in order to reduce the
vulnerability to terrorist attacks.
Interestingly, the number of tourists to Guam and the CNMI
began to revive soon after the Gulf War and by early 1992
tourist arrivals were at record levels. However, in September
1992, Typhoon Omar struck Guam and the CNMI and was followed
by several other typhoons. The result was a drop of nearly 45
percent in the level of Guam's tourist arrivals, a loss of
1,500 jobs, and a substantial decline in tax revenues, all of
which have been greatly compounded by the continuing slump in
the Japanese economy.
These effects would probably be similar to the effects of
an oil supply disruption under Scenario I. Although difficult
to predict with any level of certainty, tourist arrivals
could fall sharply (by as much as 50 percent) if a political
upheaval in Asia elevated fears of international terrorist
activity and/or resulted in higher travel costs. The near-
term effects would be a loss of jobs by roughly 5 percent and
a fall in tax revenues by a similar level. However, if a
recession were to follow, and this would be a likely outcome,
then the downturn would be much more severe and could easily
double the effects of the crisis.
With Scenario I, it is very likely that in addition to oil
supply shortfalls, oil price increases, inflation, and
reduced levels of international tourism resulting from the
political upheaval causing the oil supply disruption, a
recessionary period in the major economies would ensue. The
effects of a major recession would again greatly affect the
island economies through reduced levels of tourism and
reduced demand for their exports, mainly fresh and canned
seafoods. As an example, the 1973/74 oil price rise led to
global recession, including a severe downturn in Australia
which greatly reduced the levels of Australian tourists to
Fiji. In other words, a severe oil supply disruption creates
downstream effects which are not felt for several months yet
may continue for several years.
Two key questions emerge under Scenario I. The first is
whether the islands would experience more severe impacts than
the rest of the United States. Although all of Asia would
experience inflation and recession, the islands' small open
economies would be virtually unprotected from the global
market: nearly all food and all medicine are imported. The
economies are nearly totally dependent on off-island trade
and international tourism; with the exception of Hawaii, the
rest of the United States does not have to rely on ocean
transport and other nations for essential goods and services.
In sum, there would be no territory of the United States more
severely affected by a major Asian oil supply disruption than
the Pacific islands.
The second question is how to respond with short-term
measures to meet basic demands for petroleum. Oil price and
supply monitoring and voluntary conservation programs would
be insufficient responses to a disruption of this magnitude.
With respect to the oil supply, the U.S. West Coast could
divert some of its supplies to the islands. The Australian
arrangement for the South Pacific islands may provide a
useful guide. In the event of an oil supply disruption which
results in a net market loss of crude oil or petroleum
products of 7 percent of the total International Energy
Agency (IEA) market, the IEA member may elect to activate the
Emergency Oil Sharing System, the objective of which is to
ensure fair sharing of available supplies among the IEA group
of countries (the OECD minus France). As a member of the IEA,
Australia is committed to take certain demand restraint
measures should the IEA Emergency Oil Sharing Scheme go into
effect. The demand restraint is measured as a percentage
decrease in total consumption, including traditional exports.
This means that if a 10 percent demand restraint measure is
instituted, then Australia has to cut its combined own
consumption and traditional exports by 10 percent.
The Australian arrangement covers the independent island
nations sourced from Australia. It does not cover American
Samoa or any of the North Pacific nations and territories
sourced via Guam, including the Federated States of
Micronesia and the Republic of the Marshall Islands. These
nations and territories either have to secure emergency
supplies via Singapore or from a nontraditional supplier, the
United States.
The United States via its military infrastructure has
considerable levels of stocks in the Asia-Pacific region as
well as the shipping capacity to deliver supplies. However,
as Figure 3.2 shows, the military is cutting back on its
commercially leased storage capacity and is also shutting
down some of its own storage facilities in certain locations.
Another potential source of crude petroleum is Papua New
Guinea whose oil production is now at 135,000 b/d. Currently
refined throughout the Asia Pacific region, this crude
resource could provide a substantial margin of safety for the
Pacific islands. A 30,000 b/d refinery has been approved by
the government and could be operating in 1996.
Through the supply capacities of the oil companies
operating in the region, other regional suppliers, and the
U.S. government (Strategic Petroleum Reserve and the
military), the Pacific islands should be able to receive
emergency supplies. It is possible that some type of formal
assurance to the island governments is required. Currently
being considered for legislation in the U.S. Congress is a
proposal which would guarantee the U.S. Pacific islands
including Hawaii a percentage drawdown of the national SPR if
emergency measures were placed in effect. This guarantee
would ensure access to oil supplies for the islands. Market
prices would have to be paid, but basic services could be
maintained. Not guaranteed is transport for the oil supplies.
However, preliminary indications are that tankers could be
acquired, albeit at market rates which would be high during
crisis periods. This is an excellent proposal which would
greatly reassure the islands that their basic needs would be
maintained.
the economic effects of oil supply disruptions
In addition to the issue of continued access to oil
supplies, the economic impacts of a major oil market
disruption can be devastating. The most harmful economic
repercussions of Scenario I are: inflation, recessions in
major markets, and a simple reluctance of potential tourists
to travel because of a perceived vulnerability to terrorist
acts stemming from the political upheaval which caused the
oil supply disruption. The initial loss of jobs and economic
activity could be further worsened by the likely occurrence
of a subsequent regional or global recession. The longer the
recession, the greater the negative impacts, including
increased loss of jobs and tax revenues. Small open economies
such as the U.S. Pacific islands are especially vulnerable.
Would the United States provide any type of assistance to the
Pacific islands to compensate for the downstream effects of
an oil supply disruption? Are they eligible for emergency
aid? This is a complicated issue and cannot be resolved in
this discussion. Suffice it to say that it would probably be
more useful and more important for the island economies to
have a buffer against recessions than an SPR established on
Guam or in American Samoa.
Discussed below are some of the likely identifiable impacts
of an oil supply disruption on the island economies. Data
have been drawn from a range of sources. Published data from
government and private sector sources have been referenced,
and estimates generated as part of the energy vulnerability
assessment are appropriately noted. Assessing impacts on the
islands in the year 2000 based on current economic growth
projections is an order of magnitude exercise. However, the
best available data have been utilized and the estimates can
and should be revised when more data become available. The
section discusses the effects of an oil supply disruption on
the value of petroleum imports, GDP, inflation, employment,
and government revenues.
Oil Shocks and the Value of Petroleum Imports
Table 3.10 shows the impact of petroleum price increases
and growth in the volume of petroleum imports. The first
column shows projected rates of price increases for petroleum
products under low price, base price and high price
scenarios. The second column
[[Page S735]]
shows the most recent value figure for imported petroleum
products. The value figure shown in the second column
corresponds to a volume figure which is then multiplied by
the demand growth scenarios in the third column (e.g., low,
medium and high growth in demand for petroleum products) and
the three price scenarios to indicate the estimated value of
petroleum imports in the years 1995 and 2000. High, medium
and low demand growth scenarios were available only for Guam
and the CNMI. In addition, among the different scenarios for
both 1995 and 2000, there is a scenario which doubles prices
for the medium demand growth case. This doubling of prices is
a result of a petroleum price increase associated with Oil
Supply Disruption Scenario I, a loss of 4.5 MMBD caused by
political turmoil in the Middle East and Asia. The price
doubling is an estimated price increase which reflects short-
term market responses, similar to those following the Iraqi
invasion of Kuwait and the 1979/80 oil price increase.
The demand growth (1.2 percent per year) and a base case
petroleum price increase (3.9 percent per year) result in a
doubling in the value of petroleum imports for American Samoa
between 1990 and 2000. The values of Guam's, the CNMI's, and
Palau's petroleum imports more than double by the year 2000.
The effect of a high oil price and high demand growth is a
seven-fold increase in the value of the CNMI's petroleum
imports. Although this may seem unlikely, demand increased by
21 percent between 1991 and 1992, and the planned expansion
to the power sector indicates that growth will remain high.
Table 3.10 only assumes the indicated growth rates, which
is to say that other variables such as the impact of demand-
side management programs and other efficiency and
conservation activities have not been factored into the
analysis because data are not available. The estimates also
do not reflect the impact of higher petroleum prices on
consumption. For example, when gasoline prices rise, theory
suggests that people will drive less. However, the experience
during the recent Persian Gulf War indicates that island
consumers did not curtail their driving or use of electricity
when prices increased. Thus, it has been assumed that
consumption rates will not be significantly affected by price
increases, a very tenuous assumption.
The result of an oil price shock following political
upheaval in the Middle East and Asia is a doubling of the
values for petroleum imports. For comparative purposes, in
1990, American Samoa imported goods valued at $360 million
and exported items worth $306 million. Under a high oil price
scenario generated by an oil shock in the year 2000, the
value of petroleum imports increases to $175 million. Guam,
which had imports valued at $385 million in 1988 and exports
valued at $85 million in 1991, would have petroleum imports
valued at $742 million under a high oil price and high demand
growth scenario. Similarly, the CNMI, with imports at $392
million and exports at $255 million in 1991, would have
petroleum imports valued at $503 million under the high oil
price/high demand growth scenario. Palau, with imports valued
at $25 million and exports at $600 thousand in 1989, would
have petroleum imports valued at $37 million under a high oil
price and demand growth scenario in the year 2000.
Given the above projected effects of an oil price shock, it
is doubtful that any of the economies would be able to
sustain the projected rates of growth. The cost of petroleum
imports would require the use of public and private sector
surpluses simply to maintain existing standards of living.
Even if the oil price shock were short-lived, it is likely
that the effects would have substantial repercussions on
economic activity for an extended period of time. These will
be discussed in subsequent sections.
______
By Mr. McCAIN (for himself and Mr. Bryan):
S. 187. A bill to provide for the safety of journeymen boxers, and
for other purposes; to the Committee on Commerce, Science, and
Transportation.
the professional boxer safety act
Mr. McCAIN. Mr. President, I am pleased today to introduce the
Professional Boxing Safety Act, a bill to make the professional boxing
industry safer for boxers across America. This bill is identical to the
version of this bill that was favorably reported out of the Senate's
Commerce Committee as S. 1991 on September 23, 1994. I am also very
pleased that Senator Richard Bryan is the prime cosponsor of this
legislation, as he was last year. The professional boxing industry is
obviously of tremendous importance to the residents of Nevada, and he
has been a strong force behind this bills success.
I have been an avid boxing fan for over 40 years. Boxing can be one
of the most exciting and impressive tests of coverage and athletic
skill that exist in the world of sport. To this very day, boxing is
viewed by many disadvantaged, yet determined young men as their best
and only chance to rise above bleak circumstances that most of their
fellow citizens could not even comprehend.
It is these men--some still teenagers, others who are in their
forties and are at the end of a long career marked by much punishment
and little reward--who are the object of this proposal. As a Senator,
my legislative objective regarding professional boxing revolves around
my desire to see that the exploitation of this group of brave but
highly vulnerable athletes in our society is brought to an end. The
Professional Boxing Safety Act will help accomplish this goal.
The physical and economic exploitation I speak of is very familiar to
people involved in the professional boxing industry, though it does not
often come to mind of the general public. Many Americans may think of
boxing only if a local hometown hero emerges, or perhaps when they read
about the huge, multimillion dollar purses that are being battled for
by today's greatest champions.
Big pay days and widespread public acclaim, however, are never
attained by the overwhelming majority of boxers. A large segment of
professional boxers in America never make more than a $100 a night.
Unfortunately, in State after State in our country, in gyms and arenas
both large and small, there are many boxers who are being led into the
ring to absorb more punishment shortly after they have been knocked
out, battered, or when they are in need of medical attention. These
unknown boxers often continue to fight long after their skills have
eroded to the point where they cannot safely compete. The symptoms of
the debilitating illnesses they are at risk for may not surface for
years, so these men answer the bell, endure another defeat, and trudge
on to the next town. As one journeyman boxer said, they exist in the
sport solely as ``A body for better men to beat on.''
The problems in professional boxing that the Professional Boxing
Safety Act will address are as follows: First, we need to immediately
shut down the dangerous and disturbing boxing shows that occur in the
States that have no regulatory authority to oversee them These bootleg
shows feature boxers who have no business being in the ring due to
injury, advancing age, or lack of skills. Journeymen boxers routinely
find themselves overmatched against a promising young prospect in need
of an easy victory to boost his ranking, and their health and welfare
is of small concern to unscrupulous promoters. This bill would require
that all professional boxing shoes in the United States be held under
the oversight of State boxing officials.
Second, we need to ensure that no boxer fights in one State while
they are under suspension in another. Unfortunately, it is commonplace
for boxers in the United States to travel to another State when they
are supposed to be serving a mandatory injury recuperation period, or
to avoid a requirement for medical treatment. Some resort to using
aliases or distorting their career records when presenting themselves
to State officials. To put an end to these practices, the Professional
Boxing Safety Act would require all State boxing commissions to issue
an identification card to professional boxers in their State, and to
honor all medically related suspensions of other State commissions.
Finally, this legislation will strengthen the system by which State
boxing officials share information on professional boxers and other
industry personnel in order to prevent fraudulent and unsafe bouts, and
to ensure that illegal and unethical practices in the sport are
properly punished. The Professional Boxing Safety Act would require
that State boxing officials promptly report the results of all shows
held in their jurisdiction to the boxing registries that serve the
industry. This will provide accurate and reliable information on boxers
from around the world to State boxing officials, and make it easier for
them to evaluate the career records and conduct of the boxers,
managers, and promoters who come to their State.
I would also like to emphasize what this legislation does not do. The
Professional Boxing Safety Act creates no new Federal boxing authority
to regulate the sport; it mandates no burdensome regulations upon our
already under budgeted State commissions; it fosters no unnecessary
Federal intrusion into legitimate business practices, and it requires
no Federal funds and imposes no new tax on boxing events across the
country.
[[Page S736]]
The Professional Boxing Safety would be an effective and practical
step for the Congress to take in addressing legitimate health and
safety issues in the sport, and virtually everyone in the industry that
I've discussed this proposal with seems to agree. I'm very pleased that
last year the Association of Boxing Commissions, the national boxing
organization which represents 35 State commissions across America,
endorsed this bill, as did over 20 individual State boxing commissions
and several major sanctioning bodies who wrote to me in support of it.
This bill was developed with the advice and counsel of the most
experienced and knowledgeable people in the industry, and I'm confident
Senator Bryan and I have put forward an innovative and realistic
measure to make professional boxing a safer, better, and more honorable
sport. I look forward to its prompt passage by the Senate's Commerce
Committee, and to its consideration by the full Senate sometime this
year.
______
By Mr. LAUTENBERG (for himself and Mr. Bradley):
S. 188. A bill to establish the Great Falls Historic District in the
State of New Jersey, and for other purposes; to the Committee on Energy
and Natural Resources.
the Great Falls preservation and redevelopment act
Mr. LAUTENBERG. Mr. President, I am pleased to introduce the
Great Falls Preservation and Redevelopment Act, legislation that
recognizes the historic significance of the Great Falls area of
Paterson, NJ. I am delighted that, once again, my senior colleague from
New Jersey, Senator Bradley, joins me as a cosponsor.
Mr. President, this bill was broadly supported in the last Congress.
The House of Representatives passed the bill by a vote of 280 to 130.
After years of opposition, the administration lent its support. The
Senate Energy and Natural Resources Committee approved the bill in
September, but time ran out before the Senate could act. Today I
reintroduce the draft that achieved this support, and I ask my
colleagues to join once again in supporting the bill.
I'm proud to say I was born in Paterson. My father worked in the
mills, and I experienced firsthand the historic importance of industry
in the city.
Paterson is known as America's first industrialized city. Alexander
Hamilton played a role here when, in 1791 he chose the area around the
Great Falls for his laboratory and to establish the Society for the
Establishment of Useful Manufactures. Textiles held special
significance; Paterson was once called Silk City as the center of the
textile industry.
While rich in history, the area is also blessed by great natural
beauty and splendor. It is an oasis of beauty in an urban environment.
Its resources offer not just educational and cultural opportunities,
but economic and recreational ones as well.
The Federal Government acknowledged all this by designating the area
a national historic landmark, a formal recognition by the National Park
Service.
Mr. President, the roots and contributions of this area run deep. New
industries were responsible for thriving businesses, tight knit
families and for many of the residents, the first homes of immigrants,
who arrived in the United States through nearby Ellis Island.
Many of the industries from Great Falls have moved elsewhere. But we
are left with an area whose significance is great for people like me.
I find a source of inspiration in remembering my father in those
thriving mills of Paterson, so I look at Paterson, and the Great Falls
area, as a reminder of who I am. We must value our personal and
collective histories, because they connect us to our families and to
each other.
Paterson is not alone in this story. New Jersey is rich in
industrial, urban history. New Jersey played a major role in the
industrial revolution.
I sought to highlight this role when I secured funds in the fiscal
year 1992 Interior appropriations bill to establish the urban history
initiative in three cities in New Jersey. Paterson is one of those
cities.
Paterson's urban history program is in its early stages. The
cooperative agreement was recently signed and things are moving. This
infusion of funds has succeeded in initiating Paterson's historic
revitalization.
But this bill formalizes the current partnership among the city, its
residents and the Federal Government. It establishes the Great Falls
Historic District and provides a long-term Federal presence in the
area. The resources of Great Falls are just beginning to be tapped; we
need this bill to give the resources the focus they deserve. Such
historical recognition provides important educational, economic, and
cultural benefits. Its value is immeasurable.
The Secretary of the Interior will enter into cooperative agreements
with nonprofits, property owners, State and local governments to assist
in interpreting and preserving the historical significance and
contributions of the Great Falls to the city, to industry, and to our
heritage.
Mr. President, this bill does not impose Federal Government's heavy
hand on the residents and businesses. The city doesn't want that, and
neither does the Park Service.
Instead, the bill initiates and facilitates cooperative agreements
among interested parties. The Secretary will determine properties of
historical or cultural significance, and provide technical assistance,
interpret, restore, or improve these properties. This historic and
cultural recognition leads to economic revitalization in the area.
Mr. President, this bill is the culmination of years of effort to
determine the correct Federal role in highlighting this important area.
The bill does not designate a new unit of the National Park Service--it
already is designated a unit--and it will not require additional Park
Service personnel. The bill reflects the current budgetary climate by
limiting Federal investment in capital projects, planning, and
technical assistance. It also requires non-Federal matching funds and
the authority to spend funds expires after 5 years.
This bill, when enacted, will play an important part in advancing the
historic revival of Paterson and of the Great Falls. In turn, it will
boost the economic vitality of the region while restoring the
importance of our industrial heritage for our children. I look forward
to watching this bill become reality.
I ask unanimous consent that the full text of the bill be included in
the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 188
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 the ``Great Falls Preservation and
Redevelopment Act''.
SEC. 2. FINDINGS.
Congress finds that--
(1) the Great Falls Historic District in the State of New
Jersey is an area of historical significance as an early site
of planned industrial development, and has remained largely
intact, including architecturally significant structures;
(2) the Great Falls Historic District is listed on the
National Register of Historic Places and has been designated
a National Historic Landmark;
(3) the Great Falls Historic District is situated within a
one-half hour's drive from New York City and a 2 hour's drive
from Philadelphia, Hartford, New Haven, and Wilmington;
(4) the District was developed by the Society of Useful
Manufactures, an organization whose leaders included a number
of historically renowned individuals, including Alexander
Hamilton; and
(5) the Great Falls Historic District has been the subject
of a number of studies that have shown that the District
possesses a combination of historic significance and natural
beauty worthy of and uniquely situated for preservation and
redevelopment.
SEC. 3. PURPOSES.
The purposes of this Act are--
(1) to preserve and interpret, for the educational and
inspirational benefit of the public, the contribution to our
national heritage of certain historic and cultural lands and
edifices of the Great Falls Historic District, with emphasis
on harnessing this unique urban environment for its
educational and recreational value; and
(2) to enhance economic and cultural redevelopment within
the District.
SEC. 4. DEFINITIONS.
In this Act:
(1) District.--The term ``District'' means the Great Falls
Historic District established by section 5.
(2) Secretary.--The term ``Secretary'' means the Secretary
of the Interior.
[[Page S737]]
SEC. 5. GREAT FALLS HISTORIC DISTRICT.
(a) Establishment.--There is established the Great Falls
Historic District in the city of Paterson, in Passaic County,
New Jersey.
(b) Boundaries.--The boundaries of the District shall be
the boundaries specified for the Great Falls Historic
District listed on the National Register of Historic Places.
SEC. 6. DEVELOPMENT PLAN.
(a) Grants and Cooperative Agreements.--The Secretary may
make grants and enter into cooperative agreements with the
State of New Jersey, local governments, and private nonprofit
entities under which the Secretary agrees to pay not more
than 50 percent of the costs of--
(1) preparation of a plan for the development of historic,
architectural, natural, cultural, and interpretive resources
within the District; and
(2) implementation of projects approved by the Secretary
under the development plan.
(b) Contents of Plan.--The development plan shall include--
(1) an evaluation of--
(A) the physical condition of historic and architectural
resources; and
(B) the environmental and flood hazard conditions within
the District; and
(2) recommendations for--
(A) rehabilitating, reconstructing, and adaptively reusing
the historic and architectural resources;
(B) preserving viewsheds, focal points, and streetscapes;
(C) establishing gateways to the District;
(D) establishing and maintaining parks and public spaces;
(E) developing public parking areas;
(F) improving pedestrian and vehicular circulation within
the District;
(G) improving security within the District, with an
emphasis on preserving historically significant structures
from arson; and
(H) establishing a visitors' center.
SEC. 7. RESTORATION, PRESERVATION, AND INTERPRETATION OF
PROPERTIES.
(a) Cooperative Agreements.--The Secretary may enter into
cooperative agreements with the owners of properties within
the District that the Secretary determines to be of
historical or cultural significance, under which the
Secretary may--
(1) pay not more than 50 percent of the cost of restoring
and improving the properties;
(2) provide technical assistance with respect to the
preservation and interpretation of the properties; and
(3) mark and provide interpretation of the properties.
(b) Provisions.--A cooperative agreement under subsection
(a) shall provide that--
(1) the Secretary shall have the right of access at
reasonable times to public portions of the property for
interpretive and other purposes;
(2) no change or alteration may be made in the property
except with the agreement of the property owner, the
Secretary, and any Federal agency that may have regulatory
jurisdiction over the property; and
(3) if at any time the property is converted, used, or
disposed of in a manner that is contrary to the purposes of
this Act, as determined by the Secretary, the property owner
shall be liable to the Secretary for the greater of--
(A) the amount of assistance provided by the Secretary for
the property; or
(B) the portion of the increased value of the property that
is attributable to that assistance, determined as of the date
of the conversion, use, or disposal.
(c) Applications.--
(1) In general.--A property owner that desires to enter
into a cooperative agreement under subsection (a) shall
submit to the Secretary an application describing how the
project proposed to be funded will further the purposes of
the District.
(2) Consideration.--In making such funds available under
this section, the Secretary shall give consideration to
projects that provide a greater leverage of Federal funds.
SEC. 8. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated to the Secretary to
carry out this Act--
(1) $250,000 for grants and cooperative agreements for the
development plan under section 6; and
(2) $50,000 for the provision of technical assistance and
$3,000,000 for the provision of other assistance under
cooperative agreements under section 7.
______
By Mr. EXON:
S. 189. A bill to amend the Congressional Budget Act of 1974 to
provide that any concurrent resolution on the budget that contains
reconciliation directives shall include a directive with respect to the
statutory limit on the public debt, and for other purposes; to the
Committee on the Budget and the Committee on Governmental Affairs,
jointly, pursuant to the order of August 4, 1977, with instructions
that if one committee reports, the other committee have 30 days to
report or be discharged.
THE DEBT CEILING REFORM ACT
Mr. EXON. Mr. President, I rise today to introduce the final two
pieces of legislation that I believe are the building blocks for a
sound and responsible Federal budget.
For too long, Congress has been building castles in the sky. We owe
our children and grandchildren a secure financial future. But that
future is flimsily constructed on deficit spending and deficit in the
form of mounting debt.
It's High Noon on fiscal responsibility and the American people have
asked us to rise to the occasion. And these are the weapons we will
take to the showdown.
The first piece of legislation I offer today is a Balanced Budget
Amendment to the Constitution.
When I was Governor of Nebraska, I had the benefit of such
a mechanism. It forced budgetary discipline and kept my State fiscally
sound.
We should be able to deal with the deficit without a balanced budget
amendment. But all evidence runs to the contrary.
The statutory remedies have failed. They are riddled with back doors
and loopholes. We have also proven ourselves incapable of controlling
wasteful spending. The deficit numbers speak for themselves.
We need this amendment to force responsibility upon the Federal
Government. We need a bold approach--a new approach--to end the
dangerous habit of deficit spending. This amendment is our best chance,
perhaps our only chance, to turn back the tide of red ink that
threatens to engulf us.
A balanced budget amendment does not spare us from the difficult,
hard choices. And that is why I cosponsored last week S. 14, the
Legislative Line-Item Veto Act.
Pork has become Congress' scarlet letter. Once again, Congress should
demonstrate the type of self-restraint and sacrifice that would put
this wasteful practice to an end. But I am a realist. While some
Members would voluntarily refrain from pork barrel spending, others
would continue with business as usual. Business as usual does not pass
muster with the American people.
Ideally, I would have offered a bill granting The President a
constitutional line-item veto. As Governor of Nebraska, I also had a
similar line-item veto and it was an invaluable tool to curb spending
by my State legislature. However, those of us who have championed the
line-item veto have always come away empty-handed.
The obvious solution--the bipartisan solution--is to grant the
President the authority to force Congress to vote on specific funding
included in the appropriations bills.
Congressional Members are less likely to pile on the pork if they
know that they might have to defend each item on its own merits.
Some might ask: ``what's the urgency? And that brings me to the
second bill I am introducing today.
Our Federal debt now tops a whopping $4.7 trillion and we are on
schedule to reach the current debt ceiling of $4.9 trillion in
September or October of this year. Too many Americans still confuse the
annual deficit with our national debt. Even if we accomplish our goal
of a balanced budget by 2002, we will still have a $5.5 trillion
albatross hanging around our necks.
Obviously, we are living beyond our means. When we raise our debt
ceiling for more than we need in the coming year, we perpetuate that
practice and risk plunging our Nation into financial ruin.
My bill attempts to bring some sanity and control to this practice.
it requires our budget resolution to state how much we intend to raise
the debt ceiling each year. And any bill that would raise the debt
ceiling to exceed the amount stated in the budget resolution would be
subject to a budget point of order and a rollcall vote to waive that
point of order.
I have long believed that our Federal Government should balance its
budget each year. The facts are, however, that we have not done so
since 1969. During the 1980's and now the 1990's, we have become so
accustomed to operating in the red that we look upon a $200 billion
deficit as great progress. I, for one, take cold comfort in a $200
billion deficit.
Our Federal debt now tops $4.7 trillion and we are on schedule to
reach the current debt ceiling of about $4.9 trillion in September or
October of this year.
We have now reached a point where we barely lift a finger to balance
our budget. The much heralded Kerrey-Danforth Commission on Entitlement
Reform attempted to forge an agreement upon lowering the deficit to a
[[Page S738]]
proportion of our total economy. It failed to even reach even that
modest goal.
What is even more discouraging and disenchanting is that Congress
often fails to limit its deficit spending to the levels that are
projected in our annual budgets. We no longer decide upon how much we
are going to borrow and to limit ourselves to that amount over the
coming year.
Mr. President, if Congress cannot balance its budget, we should at
least not give ourselves a blank check to borrow beyond our means. Yet
that is exactly what we do when we raise our debt ceiling more than we
need to for the coming year.
My bill attempts to bring some sanity and controls to this practice.
It requires our budget resolution to state how much we intend to raise
the debt ceiling each year. To enforce that goal, any bill that would
cause the debt ceiling to exceed the amount stated in the budget
resolution would be subject to a budget point of order and a rollcall
vote to waive that point of order.
In previous years, I have proposed that the point of order be waived
with 60 votes in the U.S. Senate. This bill will require only a
majority vote. Yet, I believe it will do the job of highlighting this
issue and alerting the American people to Congress' failure to live
within its budget.
I can well understand the reluctance of my colleagues to make raising
the debt ceiling any more difficult than it is now. I am convinced,
however, that we simply must change our process to insure some honesty
and credibility in our Federal budget process.
Doing so will be of paramount importance over the coming year as
leaders from both political parties are promising tax break after tax
break. This is an all too familiar scenario, an all too deplorable
scenario. Tax breaks and spending cuts are promised yet only the tax
breaks are delivered. The result was that our deficits climbed out of
sight and had no resemblance to what we said they were going to be.
Keeping some limits on our debt ceiling will go a long way in keeping
everyone on both sides of the aisle honest. Let us force ourselves to
do what we say we are going to do, and not, with a wink and a nod,
simply hide our failure to do so.
I have always believed that fiscal responsibility is a partnership
between the Federal Governmental and the States. However, we are not
living up to our side of the bargain.
Washington passes mandates and regulations, and then drops them like
a foundling on the doorstep of the States, forcing them to dig deep
into their own pockets to pay for compliance. This cost shifting is
killing the States.
This game of budget tag has to end. And under the bipartisan
legislation I cosponsored last week, it will. This fourth bill--the
last building block--requires the Federal Government to provide direct
spending for these mandates. If it cannot, the mandate requirements are
scaled back to the amount of money appropriated.
Others have proposed a more radical approach; names, ``no money, no
mandates backstop.'' But I would caution my friends not to be
headstrong. Their treatment would not only swell the ranks of the
Federal bureaucracy, it could ignite a firestorm of law suits that
would rage throughout the Nation.
Ours is the right approach. Ours is the fair and reasonable approach
that will get the job done.
The $4.7 trillion debt was not built up overnight, and it will not be
resolved overnight. However, we can no longer afford to sit back. As
Gen. Dwight David Eisenhower said when ordering the D-day invasion,
``OK, let's go!''
______
By Mr. PRESSLER (for himself and Mrs. Kassebaum):
S. 190. A bill to amend the Fair Labor Standards Act of 1938 to
exempt employees who perform certain court reporting duties from the
compensatory time requirements applicable to certain public agencies,
and for other purposes; to the Committee on Labor and Human Resources.
court reporter fair labor amendments
Mr. PRESSLER. Mr. President, today I am introducing the Court
Reporter Fair Labor Amendments of 1995. I originally introduced this
bill last November, during the special GATT session. As I said then,
the American people sent a strong, clear signal on November 8: they
want less Government and they want it now. My bill would keep the
Federal Government from intruding into an area it has no business being
in, and where its protections are unwanted by everyone concerned.
Specifically, my bill would exempt State and local courts reporters
from the compensatory time requirements of the Fair Labor Standards Act
[FLSA] when they perform private transcription work outside of normal
working hours or regular working days. A recent interpretation of the
U.S. Labor Department threatens to radically change the way court
reporters have been paid for many years. This bill would keep
undisturbed current pay arrangements between State and local reporters
and their court employers.
I am pleased my friend from Kansas, Senator Kassebaum, the new
chairman of the Labor and Human Resources Committee, is cosponsoring
this legislation. She has always been a strong proponent of limited
government. We both realize the public demand for less government has
never been greater.
Mr. President, let me explain the situation which brought about the
need for this legislation. For years, official State and local court
reporters have enjoyed a unique status among government workers. In
most States, they are treated as both government employees and
independent contractors, depending on the nature of the work. While
performing their primary duties of recording and reading back court
proceedings, reporters are considered employees of the court. As such,
they are typically compensated with an annual salary and benefits.
However, in addition to these in-court duties, most jurisdictions
also require official court reporters to prepare and certify
transcripts of their stenographic records for private attorneys,
litigants, and others. The reporter and his or her assistants prepare
and deliver transcripts using their own equipment, without any
supervision by the court. The reporter then bills the attorney or other
client directly and collects a per page fee set by law or court rule.
The transcription fees earned are usually twice the amount, or more,
than those earned during an hour of salaried work for the court.
Indeed, it is possible for a court reporter to earn more from private
transcription work than from his or her annual court salary.
When preparing transcripts for a private fee, the court reporter is
clearly acting as an independent operator, as has been specifically
determined by the Internal Revenue Service. For taxation purposes,
transcription fee income is treated as separate and apart from
reporters' annual court salaries. In fact, in my home State of South
Dakota, court reporters are required to collect and pay sales tax on
this income. They also file self-employment income forms with the
Internal Revenue Service.
The transcription services provided by court reporters are invaluable
to private parties. Attorneys are able to obtain a highly accurate
recording of court proceedings quickly and reliably. Court reporters
are small businessmen and businesswomen performing a cost effective and
timely service. There may be many flaws in our system of justice, but
our system of court reporting is not among them.
As I stated earlier, everyone is happy with the current situation. It
has developed over many years. All interested parties--court reporters,
judges, and private attorneys--are very satisfied with the present
arrangement.
Everyone was happy, that is, until the U.S. Department of Labor
inserted itself into this situation. Last fall, the Wage and Hour
Division of the Labor Division took the position that official court
reporters in Oregon are still acting as employees of the court, for
purposes of FLSA, when they prepare transcripts for attorneys,
litigants, and other parties. Similar letters have been received
regarding official court reporters in Indiana and North Carolina.
Official court reporters in the vast majority of States operate in
circumstances similar to these three States.
The DOL's interpretation would require State and local courts to pay
court reporters one and one-half times their regular rate of pay for
all transcription work performed during overtime hours in a given week.
The Labor
[[Page S739]]
Department's position also exposes State and local courts to
potentially enormous liability costs from court reporters suing for
overtime back-pay. If a suit is successful, the court would owe the
reporter at least 2 years worth of overtime back-pay. The amount would
be doubled if the court could not demonstrate that it was acting in
good faith and could go back 3 years if the violation were deemed
willful.
If allowed to stand, the impact of the Labor Department's position of
the court reporting system would be dramatic. State and local courts
would face increased salary budgets and liability exposure. Court
reporters facing budgetary cutbacks could lose a significant part of
their income and, in some cases, their jobs. Private parties would lose
the productivity and efficiency of the current method of transcription.
The decision would have adversely affected all interested parties. As
you might imagine, no one involved in the court reporting system is
happy with DOL`s position.
Faced with exposure to millions of dollars of liability nationwide,
some courts have already implemented changes. Beginning this month, the
South Dakota Court System imposed a new system of pay for transcription
on their court reporters. Court salary budgets have also been
tightened. State court judges must avoid using their reporters too
much, to keep overtime down. Court administrators have been burdened
with additional administrative duties and headaches. Private attorneys
are concerned they can no longer rely on speedy transcriptions at a
reasonable price. No one is happy with the changes.
So why are these changes being considered? Because the U.S.
Department of Labor says so. After all these years, the Department has
suddenly decided that the Fair Labor Standards Act applies in a
situation never contemplated by Congress. What fantastic benefits will
result from this governmental meddling? None.
I have a solution, however: Don't fix what is not broken. Keep the
Federal Government out of the situation.
The bill I am introducing today would allow official court reporters
an exemption from the Fair Labor Standards Act while they are
performing transcription duties for a private party, provided there is
an understanding between the court reporters and their State or local
court employer. The bill also would bar lawsuits by court reporters for
overtime back pay.
Note that only State and local court reporters would be affected.
That is because Federal court reporters already enjoy a complete
exemption from FLSA. State and local court reporters deserve similar
treatment. Passage of my bill would allow all official court
reporters--Federal State, and local court reporters--to perform their
work in the same way.
The Fair Labor Standard Act is designed to protect workers from
abusive employers. In this situation, however, the very workers who
would receive the so-called protections of the Federal Government,
don't want them. Official court reporters would be greatly harmed if
the helping hand of the Federal Government takes them under its wing.
They don't want, or need, to be taken care of, especially by
Washington. That is why the National Court Reporter Association
strongly supports this bill.
Mr. President, here is a rare instance where labor and management are
in agreement on the best solution regarding a labor issue. Everyone
agrees that the current system serves everyone's best interests. When
performing transcription services for a private party, court reporters
are acting as independent contractors. That is what the IRS considers
them. Federal court reporters are treated that way. I can't think of a
reason in the world why State and local reporters should be treated any
differently. I urge my colleagues to support this bill.
Mr. President, I ask unanimous consent that the bill be printed in
the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 190
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 the ``The Court Reporter Fair
Labor Amendments of 1995''.
SEC. 2. LIMITATION ON COMPENSATORY TIME FOR COURT REPORTERS.
Section 7(o) of the Fair Labor Standards Act of 1938 (29
U.S.C. 207(o)) is amended--
(1) by redesignating paragraph (6) as paragraph (7); and
(2) by inserting after paragraph (5) the following new
paragraph:
(6) A public agency may not be considered to be in
violation of subsection (a) with respect to an employee who
performs court reporting transcript preparation duties if
such public agency and such employee have an understanding
that the time spent performing such duties outside of normal
working hours or regular working days is not considered as
hours or regular working days is not considered as hours
worked for the purposes of subsection (a).''.
SEC. 3. EFFECTIVE DATE OF AMENDMENTS.
The amendments made by section 2 shall take effect as if
included in the provisions of the Fair Labor Standards Act of
1938 to which such amendments relate, except that such
amendments shall not apply to an action--
(1) that was brought in a court involving the application
of section 7(a) of such Act to an employee who performed
court reporting transcript preparation duties; and
(2) in which a final judgment has been entered on or before
the date of enactment of this Act.
______
By Mr. EXON:
S.J. Res. 14. A joint resolution proposing an amendment to the
Constitution relating to Federal Budget Procedures; to the Committee on
the Judiciary.
BALANCED BUDGET CONSTITUTIONAL AMENDMENT JOINT RESOLUTION
Mr. EXON. Mr. President, I rise today to introduce legislation
proposing a constitutional amendment requiring the President to submit,
and the Congress to enact, a balanced Federal budget.
This is not the first time I have introduced such legislation. For
years, I have taken a leadership role promoting passage of a balanced
budget amendment.
I can think of no greater priority than dealing responsibly with the
Federal deficit. A balanced budget amendment underscores my bedrock
beliefs in a lean and agile government and living within one's means.
Thirty-seven States have balanced budget provisions. When I was
Governor of Nebraska, I had no choice but to balance our State's budget
for 8 straight years. I'm not complaining. It forced budgetary
discipline and kept my State fiscally sound. It was the right thing to
do.
During last year's debate on the balanced budget amendment, I
listened with great care and interest to the arguments that we didn't
need it.
The critics claimed that self-restraint and legislation could solve
the spiralling deficits that have bedeviled us--deficits that trifle
with the future and standard of living of our children and
grandchildren--deficits that shackle them to a mountain of debt.
The opponents further contended that a balanced budget amendment is
no substitute for tough, honest, and effective leadership.
Mr. President, one does not preclude the other. And I might point out
that the type of leadership and courage so often extolled on the Senate
floor is often in very short supply. There is a lot of breast beating
about the deficit, but little will to make the difficult and hard
decisions to bring it under control.
Yes, we should be able to deal with deficit without a balanced budget
amendment, but the evidence runs to the contrary. All of the statutory
remedies have failed. They are riddled with loopholes and back doors
which have been exploited to the fullest.
Mr. President, we have also proven ourselves incapable of controlling
wasteful spending. The deficit figures speak for themselves. There is
still too much business-as-usual around here, and business-as-usual no
longer works and will put future generations of Americans in terrible
straits.
True, we have made some remarkable headway in reducing the deficit.
We turned an important corner by passing the 1993 deficit reduction
package and it is performing beyond expectations.
However, the deficits projections for the out-years are not
reassuring. Right now, we are enjoying a brief respite from the storm,
but is promises to whip back on us in 5 or 6 years. We cannot afford to
hide our heads in the sand and hope the problem will go way. It won't.
Let there be no mistake, a balanced budget amendment is no panacea
and we will still have to make a lot of hard
[[Page S740]]
choices. But I see no alternative to this amendment. We are out of
options. We need the balanced budget amendment to force responsibility
upon the Federal Government. We need a bold approach--a new approach--
to end the dangerous habit of deficit spending.
This amendment presents our best chance, perhaps our only chance, to
turn back the sea of red ink that threatens to engulf us. It's the
first step to the establishment of a sound fiscal policy and
accountability in the U.S. Congress.
Mr. President, it's time we stopped all the hand wringing over the
Federal deficit. It's time we stopped dodging the issue. It's time we
showed the courage and leadership demanded of us by the American
people. It's time we passed a balanced budget amendment and sent it to
the States for ratification. This is the legacy I want to leave our
children.
____________________