[Congressional Record Volume 148, Number 37 (Tuesday, April 9, 2002)]
[Senate]
[Pages S2389-S2402]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




       NATIONAL LABORATORIES PARTNERSHIP IMPROVEMENT ACT OF 2001

  The PRESIDING OFFICER. Under the previous order, the Senate will now 
resume consideration of S. 517, which the clerk will report.
  The assistant legislative clerk read as follows:

       A bill (S. 517) to authorize funding the Department of 
     Energy to enhance its mission areas through technology 
     transfer and partnerships for fiscal years 2002 through 2006, 
     and for other purposes.

  Pending:

       Daschle/Bingaman further modified amendment No. 2917, in 
     the nature of a substitute.
       Feinstein modified amendment No. 2989 (to amendment No. 
     2917), to provide regulatory oversight over energy trading 
     markets and metals trading markets.
       Kerry/McCain amendment No. 2999 (to amendment No. 2917), to 
     provide for increased average fuel economy standards for 
     passenger automobiles and light trucks.
       Dayton/Grassley amendment No. 3008 (to amendment No. 2917), 
     to require that Federal agencies use ethanol-blended gasoline 
     and biodiesel-blended diesel fuel in areas in which ethanol-
     blended gasoline and biodiesel-blended diesel fuel are 
     available.
       Lott amendment No. 3028 (to amendment No. 2917), to provide 
     for the fair treatment of Presidential judicial nominees.
       Landrieu/Kyl amendment No. 3050 (to amendment No. 2917), to 
     increase the transfer capability of electric energy 
     transmission systems through participant-funded investment.
       Graham amendment No. 3070 (to amendment No. 2917), to 
     clarify the provisions relating to the Renewable Portfolio 
     Standard.
       Reid amendment No. 3081 (to amendment No. 2989), in the 
     nature of a substitute.


                           Amendment No. 3081

  Mr. REID. Mr. President, I understand that under the regular order we 
would be on the Reid and Feinstein amendments.
  The PRESIDING OFFICER. The Senator is correct.
  Mr. REID. Mr. President, I have spoken to the senior Senator from 
California. She is going to move to table my amendment as soon as she 
completes her remarks. I will, therefore, say just a few things.
  I, first of all, commend the Senator from California for her 
amendment and for her work on this extremely difficult issue dealing 
with derivatives regulation.
  To put this in proper perspective, I think we should look at the 
predicament in which Senator Feinstein now finds herself. She 
represents 35 million people, the largest State in the United States. 
This State's gross domestic product is larger than most nations. She 
knows specifically, but I think California has the sixth or seventh 
largest gross national product in the world.
  Last year's energy crisis threatened California's prosperity and 
brought home to all of us that we are in uncharted territory with 
regard to energy deregulation. The State of Nevada actually passed 
deregulation legislation. I spoke to the legislature a year ago. 
Because of my suggestions and others, they rescinded deregulation. But 
even by that time certain things had been put in place. Nevada 
suffered, along with California, with this energy crisis.
  Enron was the supposed leader in energy trading and markets. It makes 
me wonder how can we have a company such as Enron in this country--a 
publicly owned company--that changes in 1 year from a high-flying, 
worldwide, mega company into a bankrupt loser. In the process, 
hundreds, if not thousands, of people's lives were ruined. We have many 
congressional committees now looking at what happened. A prosecutor is 
also looking into criminal activities that probably took place.
  I think we all owe Senator Feinstein a debt of gratitude for her 
interest in this issue and for the work in process to make changes to 
the Commodity Exchange Act that will ensure trading and energy 
derivatives is done in the open with transparency in a way that 
inspires public confidence in the market.
  The amendment I have offered, and which she is going to move to 
table, would restore metal derivatives trading to exempt commodity 
status. Senator Feinstein's amendment inadvertently included metals 
derivatives with the derivatives that are the intended target of her 
amendment. Like other metals, metals derivatives markets help companies 
manage the risk of sudden and large price changes.
  In recent years, derivatives and other so-called ``hedging 
transactions'' have helped the mining industry--especially in the State 
of Nevada--cope with the steadily declining gold price by selling 
mining production forward. The last couple of years illustrate the 
function and the value in the marketplace of such transactions.
  Some companies decided not to hedge, betting that the gold price 
would rise and that hedging contracts would lock them into below-market 
prices. Most of these companies were hurt significantly because the 
gold price stayed relatively low.
  In contrast, other companies hedged some or most of their production. 
These companies have survived, and survived well, and some have even 
thrived. By choosing to manage their risk, they accepted the risk that 
the gold price could rise, but they stabilized company performance, 
continued to provide jobs, and continued to contribute to the 
communities in Nevada where they are so important.

  Unlike energy derivatives, which raise questions because of the 
recent energy crisis, metal derivatives have been traded over the 
counter for many years. The 2,000 amendments to the Commodity Exchange 
Act didn't change this; they only clarified and confirmed the legality 
of these markets. Lumping metal derivatives together with energy 
derivatives would impose regulatory burdens that never existed, even 
before the 2,000 amendments, without any justification.
  The amendment I have offered would not allow metals derivatives 
markets and participants to trade derivatives without accountability 
and transparency.
  I hope, first of all, that my amendment will be accepted. If there is 
a motion to table, which I understand my friend is going to offer, I 
hope it will be defeated.
  The metal derivatives market has been going on for many years. I 
repeat that unlike energy derivatives, which raise questions because of 
the recent energy crisis, metal derivatives have been traded over the 
counter for many years with absolutely no problem. My amendment is 
necessary to restore metal derivatives trading to exempt status, which 
is critical to the health of the mining industry.
  Because of the low price of gold, the mining industry has really 
struggled. We have seen various articles, which I know the Presiding 
Officer is interested in, which have indicated there is agreement that 
there needs to be a change in the 1872 mining law, which has absolutely 
nothing to do with what I am talking about. But the mining industry has 
agreed that we need to go forward with that. At a National Mining 
Association meeting, Jack Gerard

[[Page S2390]]

stated in the papers over the weekend that he agrees there should be 
changes. That is something which we have acknowledged and recommended 
and have worked on for a number of years. The Presiding Officer worked 
with us on this.
  I hope with the many legislative things we have to do that we can 
move forward on this in a way that would bring about some stability to 
the mining industry. I look forward to working with not only the 
Presiding Officer but also with the manager of this bill, Senator 
Bingaman.


                    Amendment No. 3081, As Modified

  Mr. REID. Mr. President, I send a modification to the desk.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Nevada [Mr. Reid] proposes an amendment 
     numbered 3081 to amendment No. 2989, as modified.

  Mr. BINGAMAN. Mr. President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment (No. 3081), As Modified, is as follows:

       At the end of the amendment add the following:

                       DIVISION __--MISCELLANEOUS

                      TITLE I--ENERGY DERIVATIVES

     SEC. __1. JURISDICTION OF THE COMMODITY FUTURES TRADING 
                   COMMISSION OVER ENERGY TRADING MARKETS.

       (a) FERC Liaison.--Section 2(a)(8) of the Commodity 
     Exchange Act (7 U.S.C. 2(a)(8)) is amended by adding at the 
     end the following:
       ``(C) FERC liaison.--The Commission shall, in cooperation 
     with the Federal Energy Regulatory Commission, maintain a 
     liaison between the Commission and the Federal Energy 
     Regulatory Commission.''.
       (b) Exempt Transactions.--Section 2 of the Commodity 
     Exchange Act (7 U.S.C. 2) is amended--
       (1) in subsection (h), by adding at the end the following:
       ``(7) Applicability.--This subsection does not apply to an 
     agreement, contract, or transaction in an exempt energy 
     commodity described in section 2(j)(1).''; and
       (2) by adding at the end the following:
       ``(j) Exempt Transactions.--
       ``(1) Transactions in exempt energy commodities.--An 
     agreement, contract, or transaction (including a transaction 
     described in section 2(g)) in an exempt energy commodity 
     shall be subject to--
       ``(A) sections 4b, 4c(b), 4o, and 5b;
       ``(B) subsections (c) and (d) of section 6 and sections 6c, 
     6d, and 8a, to the extent that those provisions--
       ``(i) provide for the enforcement of the requirements 
     specified in this subsection; and
       ``(ii) prohibit the manipulation of the market price of any 
     commodity in interstate commerce or for future delivery on or 
     subject to the rules of any contract market;
       ``(C) sections 6c, 6d, 8a, and 9(a)(2), to the extent that 
     those provisions prohibit the manipulation of the market 
     price of any commodity in interstate commerce or for future 
     delivery on or subject to the rules of any contract market;
       ``(D) section 12(e)(2); and
       ``(E) section 22(a)(4).
       ``(2) Bilateral dealer markets.--
       ``(A) In general.--Except as provided in paragraph (6), a 
     person or group of persons that constitutes, maintains, 
     administers, or provides a physical or electronic facility or 
     system in which a person or group of persons has the ability 
     to offer, execute, trade, or confirm the execution of an 
     agreement, contract, or transaction (including a transaction 
     described in section 2(g)) (other than an agreement, 
     contract, or transaction in an excluded commodity), by making 
     or accepting the bids and offers of 1 or more participants on 
     the facility or system (including facilities or systems 
     described in clauses (i) and (iii) of section 1a(33)(B)), may 
     offer or may allow participants in the facility or system to 
     enter into, enter into, or confirm the execution of any 
     agreement, contract, or transaction under paragraph (1) 
     (other than an agreement, contract, or transaction in an 
     excluded commodity) only if the person or group of persons 
     meets the requirement of subparagraph (B).
       ``(B) Requirement.--The requirement of this subparagraph is 
     that a person or group of persons described in subparagraph 
     (A) shall--
       ``(i) provide notice to the Commission in such form as the 
     Commission may specify by rule or regulation;
       ``(ii) file with the Commission any reports (including 
     large trader position reports) that the Commission requires 
     by rule or regulation;
       ``(iii) maintain sufficient capital, commensurate with the 
     risk associated with the transaction, as determined by the 
     Commission;
       ``(iv)(I) consistent with section 4i, maintain books and 
     records relating to each transaction in such form as the 
     Commission may specify for a period of 5 years after the date 
     of the transaction; and
       ``(II) make those books and records available to 
     representatives of the Commission and the Department of 
     Justice for inspection for a period of 5 years after the date 
     of each transaction; and
       ``(iv) make available to the public on a daily basis 
     information on volume, settlement price, open interest, 
     opening and closing ranges, and any other information that 
     the Commission determines to be appropriate for public 
     disclosure, except that the Commission may not--

       ``(I) require the real time publication of proprietary 
     information; or
       ``(II) prohibit the commercial sale of real time 
     proprietary information.

       ``(3) Reporting requirements.--On request of the 
     Commission, an eligible contract participant that trades on a 
     facility or system described in paragraph (2)(A) shall 
     provide to the Commission, within the time period specified 
     in the request and in such form and manner as the Commission 
     may specify, any information relating to the transactions of 
     the eligible contract participant on the facility or system 
     within 5 years after the date of any transaction that the 
     Commission determines to be appropriate.
       ``(4) Transactions exempted by commission action.--Any 
     agreement, contract, or transaction described in paragraph 
     (1) (other than an agreement, contract, or transaction in an 
     excluded commodity) that would otherwise be exempted by the 
     Commission under section 4(c) shall be subject to--
       ``(A) sections 4b, 4c(b), 4o, and 5b; and
       ``(B) subsections (c) and (d) of section 6 and sections 6c, 
     6d, 8a, and 9(a)(2), to the extent that those provisions 
     prohibit the manipulation of the market price of any 
     commodity in interstate commerce or for future delivery on or 
     subject to the rules of any contract market.
       ``(5) No effect on other ferc authority.--This subsection 
     does not affect the authority of the Federal Energy 
     Regulatory Commission to regulate transactions under the 
     Federal Power Act (16 U.S.C. 791a et seq.) or the Natural Gas 
     Act (15 U.S.C 717 et seq.).
       ``(6) Applicability.--This subsection does not apply to--
       ``(A) a designated contract market regulated under section 
     5; or
       ``(B) a registered derivatives transaction execution 
     facility regulated under section 5a.''.
       (c) Contracts Designed to Defraud or Mislead.--Section 4b 
     of the Commodity Exchange Act (7 U.S.C. 6b) is amended by 
     striking subsection (a) and inserting the following:
       ``(a) Prohibition.--It shall be unlawful for any member of 
     a registered entity, or for any correspondent, agent, or 
     employee of any member, in or in connection with any order to 
     make, or the making of, any contract of sale of any commodity 
     in interstate commerce, made, or to be made on or subject to 
     the rules of any registered entity, or for any person, in or 
     in connection with any order to make, or the making of, any 
     agreement, transaction, or contract in a commodity subject to 
     this Act--
       ``(1) to cheat or defraud or attempt to cheat or defraud 
     any person;
       ``(2) willfully to make or cause to be made to any person 
     any false report or statement, or willfully to enter or cause 
     to be entered any false record;
       ``(3) willfully to deceive or attempt to deceive any person 
     by any means; or
       ``(4) to bucket the order, or to fill the order by offset 
     against the order of any person, or willfully, knowingly, and 
     without the prior consent of any person to become the buyer 
     in respect to any selling order of any person, or to become 
     the seller in respect to any buying order of any person.''
       (d) Conforming Amendments.--The Commodity Exchange Act is 
     amended--
       (1) in section 2 (7 U.S.C. 2)--
       (A) in subsection (h)--
       (i) in paragraph (1), by striking ``paragraph (2)'' and 
     inserting ``paragraphs (2) and (7)''; and
       (ii) in paragraph (3), by striking ``paragraph (4)'' and 
     inserting ``paragraphs (4) and (7)''; and
       (B) in subsection (i)(1)(A), by striking ``section 2(h) or 
     4(c)'' and inserting ``subsection (h) or (j) or section 
     4(c)'';
       (2) in section 4i (7 U.S.C. 6i)--
       (A) by striking ``any contract market or'' and inserting 
     ``any contract market,''; and
       (B) by inserting ``, or pursuant to an exemption under 
     section 4(c)'' after ``transaction execution facility'';
       (3) in section 5a(g)(1) (7 U.S.C. 7a(g)(1)), by striking 
     ``section 2(h)'' and inserting ``subsection (h) or (j) of 
     section 2'';
       (4) in section 5b (7 U.S.C. 7a-1)--
       (A) in subsection (a)(1), by striking ``2(h) or'' and 
     inserting ``2(h), 2(j), or''; and
       (B) in subsection (b), by striking ``2(h) or'' and 
     inserting ``2(h), 2(j), or''; and
       (5) in section 12(e)(2)(B) (7 U.S.C. 16(e)(2)(B)), by 
     striking ``section 2(h) or 4(c)'' and inserting ``subsection 
     (h) or (j) of section 2 or section 4(c)''.

     SEC. __2. RECRUITMENT AND RETENTION OF QUALIFIED PERSONNEL AT 
                   THE COMMODITY FUTURES TRADING COMMISSION.

       (a) In General.--Section 2(a)(6) of the Commodity Exchange 
     Act (7 U.S.C. 2(a)(6)) is amended by adding at the end the 
     following:
       ``(G) Personnel matters.--
       ``(i) In general.--The Chairman may appoint and fix the 
     compensation of any officers, attorneys, economists, 
     examiners, and other employees that are necessary in the 
     execution of the duties of the Commission.
       ``(ii) Compensation.--

[[Page S2391]]

       ``(I) In general.--Rates of basic pay for all employees of 
     the Commission may be set and adjusted by the Chairman 
     without regard to the provisions of chapter 51 or subchapter 
     III of chapter 53 of title 5, United States Code.
       ``(II) Additional compensation.--The Chairman may provide 
     additional compensation and benefits to employees of the 
     Chairman if the same type and amount of compensation or 
     benefits are provided, or are authorized to be provided, by 
     any other Federal agency specified in section 1206 of the 
     Financial Institutions Reform, Recovery, and Enforcement Act 
     of 1989 (12 U.S.C. 1833b).
       ``(III) Comparability.--In setting and adjusting the total 
     amount of compensation and benefits for employees under this 
     subparagraph, the Chairman shall consult with, and seek to 
     maintain comparability with, any other Federal agency 
     specified in section 1206 of the Financial Institutions 
     Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 
     1833b).''.

       (b) Conforming Amendments.--
       (1) Section 3132(a)(1) of title 5, United States Code, is 
     amended--
       (A) in subparagraph (C), by striking ``or'';
       (B) in subparagraph (D), by adding ``or'' at the end; and
       (C) by adding at the end the following:
       ``(E) the Commodity Futures Trading Commission.''.
       (2) Section 5316 of title 5, United States Code, is 
     amended--
       (A) by striking ``General Counsel, Commodity Futures 
     Trading Commission.''; and
       (B) by striking ``Executive Director, Commodity Futures 
     Trading Commission.''.
       (3) Section 5373(a) of title 5, United States Code, is 
     amended--
       (A) in paragraph (2), by striking ``or'' at the end;
       (B) by redesignating paragraph (3) as paragraph (4); and
       (C) by inserting after paragraph (2) the following:
       ``(3) section 2(a)(6)(G) of the Commodity Exchange Act.''.
       (4) Section 1206 of the Financial Institutions Reform, 
     Recovery, and Enforcement Act of 1989 (12 U.S.C. 1833b) is 
     amended by inserting ``the Commodity Futures Trading 
     Commission,'' after ``the Farm Credit Administration, ''.

     SEC. __3. JURISDICTION OF THE FEDERAL ENERGY REGULATORY 
                   COMMISSION OVER ENERGY TRADING MARKETS.

       Section 402 of the Department of Energy Organization Act 
     (42 U.S.C. 7172) is amended by adding at the end the 
     following:
       ``(i) Jurisdiction Over Derivatives Transactions.--
       ``(1) In general.--To the extent that the Commission 
     determines that any contract that comes before the Commission 
     is not under the jurisdiction of the Commission, the 
     Commission shall refer the contract to the appropriate 
     Federal agency.
       ``(2) Meetings.--A designee of the Commission shall meet 
     quarterly with a designee of the Commodity Futures Trading 
     Commission, the Securities Exchange Commission, the Federal 
     Trade Commission, and the Federal Reserve Board to discuss--
       ``(A) conditions and events in energy trading markets; and
       ``(B) any changes in Federal law (including regulations) 
     that may be appropriate to regulate energy trading markets.
       ``(3) Liaison.--The Commission shall, in cooperation with 
     the Commodity Futures Trading Commission, maintain a liaison 
     between the Commission and the Commodity Futures Trading 
     Commission.''.

  The PRESIDING OFFICER. The Senator from California.
  Mrs. FEINSTEIN. Mr. President, I very much appreciate what the 
distinguished Senator from Nevada has done, which is essentially to 
eliminate metals from the derivatives amendment that is now pending. It 
is a second-degree amendment. It would continue the exemption for 
metals.
  I want to go into three cases and why I believe metals should be 
included.
  The first is the case called Sumitoma. It goes back to 1996. After 
nearly a year of complaints by market participants and regulated 
markets, Sumitoma copper trading irregularities ended up with the 
company losing a reported $4 billion and their main copper trader 
pleading guilty to the Japanese equivalent of market manipulation. The 
company is paying record fines to the United States and British 
regulatory authorities.
  Sumitoma manipulation efforts occurred in the over-the-counter and 
cash markets. Although observed by market participants and markets, the 
Commodity Futures Trading Commission--the CFTC--was nearly powerless to 
do anything about it without the consent of the British regulator.
  In the 30 days following the May 17, 1996, collapse, the market 
dropped by nearly 60 cents per pound--from $1.30 to 70 cents by the 
middle of June.
  In just the 8 months prior to the collapse, U.S. consumers were 
overcharged by nearly $2.5 billion in copper purchases because of the 
Sumitoma trader's manipulation.
  Once again, had the CFTC had the authority--just modest authority--in 
our amendment, this fraud could have been detected and dealt with much 
earlier and without such a devastating economic impact.
  We are simply including the antifraud and antimanipulation provision 
of the CFTC, and applying it also to metals as well as energy.
  Let me cite a second one having to do with the Metalgeselschaft 
collapse in 1993. This company was known as MG. It was once a 
preeminent metals and energy trader. It collapsed in late 1993, losing 
billions of dollars, costing thousands of employees their jobs, and 
endangering the energy marketplace. After the collapse, analysis showed 
that MG's derivative positions, over the counter, in combination with 
the faulty strategy, contributed to the collapse. If the Commodity 
Futures Trading Commission, the CFTC, had at that time the authority 
contained in our amendment to monitor large trader positions and ensure 
adequate net capital, the debacle could likely have been avoided. It 
certainly would have been detected far before the collapse occurred. 
That is point 2. These are actual cases that have taken place.
  Point 3: The Hunt brothers and the silver bubble. In 1979, the sons 
of patriarch H.L. Hunt, Nelson Bunker and William Herbert, together 
with some wealthy Arabs, formed a silver pool. In a short period of 
time they had amassed more than 200 million ounces of silver, 
equivalent to half of the world's deliverable supply. When the Hunts 
began accumulating silver back in 1973, the price was in the $1.95 an 
ounce range. Early in 1979, the price was about $5. In late 1979, early 
1980, the price was $50, peaking at $54.
  Once the silver market was cornered, outsiders joined the chase. But 
a combination of changed trading rules on the New York Metals Market, 
COMEX, and the intervention of the Federal Reserve put an end to the 
game. The price began to slide. It culminated in a 50-percent 1-day 
decline on March 27, 1980, as the price plummeted from $21.62 to 
$10.80.
  The collapse of the silver market meant countless losses for 
speculators. The Hunt brothers declared bankruptcy. By 1987, their 
liabilities had grown to nearly $2.5 billion against assets of $1.5 
billion. And in August of 1988, the Hunts were convicted of conspiring 
to manipulate the market.
  This is the point. These things have happened. These are three big 
metals cases. What we say is, put them within the Commodity Futures 
Trading Commission antifraud and antimanipulation commission. Why give 
online trading platforms exemptions from transparency? Why allow a 
commodity that isn't being delivered from me to you but traded back and 
forth to have no transparency of any of these trades so that no one can 
find an audit trail, no one can find the records, and no one can ever 
know what really happened?
  At the end of my remarks, I will move to table the Reid amendment.
  I will briefly talk about the energy derivatives amendment 
cosponsored by Senators Fitzgerald, Cantwell, Wyden, Corzine, Leahy, 
and Boxer, and the Presiding Officer. I am very grateful for your 
support.
  Our amendment is currently supported by the National Rural Electric 
Cooperative Association, the Derivatives Study Center, the Sierra Club, 
the American Power Association, the American Public Gas Association, 
the Texas Independent Petroleum Royalty Owners Association, the Mid-
American Energy Holdings Company, the New York Mercantile Exchange, the 
California Municipal Utilities Association, the United States Public 
Interest Research Group, the Consumers Union, the Consumers Federation 
of America, the Apache Corporation, Calpine, Southern California 
Edison, Pacific Gas and Electric, the Silver Users Association--
interestingly enough, they are concerned; they want metals in this 
amendment--the Commodity Futures Trading Commission's Commissioner Tom 
Erickson, and all four Commissioners of the Federal Energy Regulatory 
Commission, including its Chairman, Pat Wood.

  Because of this support, the amendment has been filibustered by 
certain Senators who don't want to see it come to a vote. The amendment 
has now been on the floor for more than a month. The leadership was 
forced to file cloture last night to try to bring this to a conclusion.

[[Page S2392]]

  Some of the opponents continue to argue that this amendment is too 
complicated for them to understand. I once again explain very simply 
what our amendment does. The amendment provides antifraud and 
antimanipulation authority to the Commodity Futures Trading Commission 
for all energy trades and metals where there is no physical delivery.
  If I buy energy from you, Mr. President, and you deliver that energy 
directly to me, the Federal Energy Regulatory Commission has 
oversight--antifraud, antimanipulation oversight--and you must keep 
records; I must keep records.
  But if there is no delivery--if I buy an energy swap, for instance, 
to lock in a set price and protect myself from risk--the CFTC does not 
have oversight, if I use an electronic trading exchange. That is the 
rub. The electronic trading exchange is exempted. If we go through the 
Chicago Mercantile, we are not exempted. If we go through New York, we 
are not exempted. But an online trading platform has no transparency 
for a derivative not delivered.
  In fact, the CFTC may not even be able to investigate fraud or 
manipulation if the exchange was operated, like Enron Online, where 
Enron was both a buyer and a seller. This is what is known as a 
bilateral dealer market. If Enron Online or another company operating a 
bilateral dealer market wanted to manipulate prices and/or corner the 
market, regulators might very well be helpless to investigate.
  Since more than 90 percent of energy trades do not involve delivery, 
and since other electronic exchanges are now emulating the Enron model, 
there is a huge loophole here. I will predict that some of these go 
down just as Enron did.
  Our amendment closes that Enron loophole and makes sure the CFTC has 
full antifraud, antimanipulation authority over all energy trades where 
there is no delivery.
  The amendment also subjects all dealer markets selling energy and 
metals derivatives online, including Enron Online, Dynegy Direct, 
Aquila, to similar requirements as other nonelectronic exchanges. This 
means these exchanges would have to file with the CFTC, provide some 
price transparency and price disclosure, and maintain capital 
commensurate with risk--all the things that Enron Online did not do and 
did not have to do because of the 2000 Commodity Futures Modernization 
Act which provided Enron this loophole. How convenient.
  Someone buys energy not on an exchange; let's say they pick up the 
phone and buy an energy derivative, but there is no delivery. The 
transaction is subject only to antifraud and antimanipulation 
authority. So if you are trading energy derivatives on an electronic 
trading platform, that exchange is regulated just as other exchanges.
  If you are not using an exchange, the CFTC can investigate 
allegations of fraud and manipulation. I don't think this is confusing 
at all. Either we are going to require energy trades to be transparent 
or we are going to continue to support loopholes, allowing some energy 
trading to be done in the dark of night.
  I want to point out that on this simple proposal, just to close 
loopholes in the energy and metals markets, we have now spent 3\1/2\ 
hours more of debate than this body spent considering the entire 
Commodity Futures Modernization Act of 2000--that's right, 3\1/2\ hours 
more debate than was spent on the entire Commodity Futures 
Modernization Act.
  The Senate did not spend 1 minute debating the Commodity Futures 
Modernization Act--one of the most sweeping regulatory revisions in 
several decades. And the loophole for Enron just went through. Yes, the 
Senate Agriculture Committee held hearings and completed a markup of 
the Senate version of the CFMA on June 29, 2000; but that is where the 
process stopped in the Senate.
  At the last minute, Enron lobbied the House for an exemption for 
energy and metals trading. This is what appeared in the appropriations 
bill for the Department of Labor and Health and Human Services at the 
very end of the 106th Congress. And this was inconsistent with what the 
Senate Agriculture Committee marked up in regard to energy and metal.
  The amendment we are debating is consistent with the bill that 
Senator Lugar and the Agriculture Committee, which he chaired, marked 
up. What the Agriculture Committee passed was consistent with the 
recommendations spelled out in the November 1999 President's working 
group, signed by Fed Chairman Alan Greenspan, Treasury Secretary Larry 
Summers, SEC Chairman Art Leavitt, and CFTC Chairman William Rainer. 
That report asserted that there should be two categories of 
derivatives--financial derivatives and everything else. There was no 
reason that metal or energy or any other tangible, finite commodity 
should be entitled to its own category.
  So what we are doing in our amendment is entirely consistent with 
that report. In regard to the electronic trading platforms, we simply 
return things to the way they were before the President's working group 
affirmed that we were doing it right. By that standard, this amendment 
has been subjected to intense scrutiny and infinitely more debate than 
the comprehensive regulatory legislation adopted in 2000.
  Before the recess, at the end of the last floor debate, my colleague 
from Idaho asked--I think facetiously--why we did not simply try to 
provide antifraud and antimanipulation authority for all transactions, 
not just energy and metals. Let me point out that our bill affects 
about 2 percent of the derivative market that deals with energy and 
metals. We actually don't know if it is 1 percent or 3 percent because 
as a result of the Enron exemption, there is not enough transparency to 
know.
  Our amendment does not affect financial instruments at all. We have 
cleared that up. Financial derivatives already have a statutory 
exclusion under the Commodities Exchange Act. Our amendment only deals 
with derivative transactions that involve energy or metal, the two 
commodities exempted by the 2000 CFMA.
  This lack of transparency had important ramifications for the energy 
crisis experienced in California and the West, which ended only about 
10 months ago. This is what got me interested in this matter. As a 
result, we still don't know why gas prices at the California border 
remained significantly higher than neighboring States for more than 5 
months. Why don't we know? There is no transparency; there is no audit 
trail; there are no records. It is impossible to prove what kind of 
trading back and forth was done, frankly, to increase the price of gas.

  Some have asserted that the CFTC already has antifraud authority for 
over-the-counter trades. If this authority is already there, then our 
amendment reaffirms that the authority is there. But this is not as 
easy to determine as one might think.
  Let me read two short paragraphs that show you what I mean. This is 
from the International Swaps and Derivatives Association:

       Transactions involving exempt commodities, including 
     commodities such as energy products, chemicals, and metals, 
     are similarly excluded from the Commodity Exchange Act and 
     remain subject to the CFTC's antifraud and antimanipulation 
     authority.

  Then they put out another publication, which is the March 11 
opposition letter to our amendment, and they say exactly the opposite. 
They say:

       The amendment extends the application of the CFTC's 
     antifraud and antimanipulation provisions to transactions in 
     exempt commodities. The amendment would revise the Commodity 
     Exchange Act, section 2(g), to provide that otherwise exempt 
     transactions in exempt commodities would be subject to 
     antifraud and antimanipulation provisions of the Commodity 
     Exchange Act.

  So maybe the authority is there and maybe it is not. If our amendment 
passes, we know for sure that it is. We take the vagary out of it, we 
take the game playing out of it, and the same party cannot say 
different things at different times. That is really why this amendment 
is necessary.
  So that means if someone is cornering the market in energy or 
metals--or maybe in natural gas, as many suspect Enron did--the CFTC 
will have the necessary tools to investigate. And 99 times out of 100, 
the CFTC will find that there is nothing improper. But isn't it good to 
know that regulators can provide assurance that markets are functioning 
properly? Isn't that what gives people confidence to invest, that they 
know there is regulation and that these markets are performing 
efficiently and with transparency?

[[Page S2393]]

  I want to make one final point about Enron. As I said before, Enron 
Online operated completely outside of the CFTC's antifraud and 
antimanipulation authority because it was operating an online trading 
forum to conduct trades bilaterally, one to one, where it was both a 
buyer and a seller. In other words, Enron was buying energy and selling 
energy, and only Enron knew the price. Enron could have been buying at 
one price and selling at a much higher price. Because there was no 
transparency and no oversight authority, we may never know.
  Other companies now have stepped up to fill Enron's market void. Some 
of these energy trading platforms are operating the same way Enron 
Online did.
  Do any of my colleagues truly believe that we should be limiting 
transparency and regulatory authority in light of all we have just 
learned about the energy markets and Enron? I think not. So this 
amendment is really on the side of the angels. It gives certainty, it 
provides for antifraud, antimanipulation oversight; it says the CFTC 
must set some capitalization standards based on risk, and it provides 
that all trades are transparent, records are kept, and audit trails are 
available.
  I know why the banks oppose this. Because they want to do the same 
thing Enron has done. The banks have set up their own online trading 
platform which, again, would trade in darkness, which, again, for 
nondelivered derivatives would have no transparency, have no record, 
have no capital requirements, and no antifraud and antimanipulation 
oversight. I believe there are more Enrons coming down. I believe there 
are going to be more just on this very point.
  What I am saying to the Senate is the Senate has to protect the 
people. The Senate has to provide for regulation. Why should there be 
regulation of the Nasdaq? Why should there be regulation on the Chicago 
Mercantile and no regulation online? It is a huge loophole, and we 
ought to plug it.
  Mr. President, I move to table----
  Mr. REID. Will the Senator withhold?
  Mrs. FEINSTEIN. I will.
  Mr. REID. I appreciate the Senator withholding. I ask that the 
Senator listen to the unanimous consent request I am going to propound 
and see if she will agree with it. I think it will be in keeping with 
what she wants.
  Mr. President, I ask unanimous consent that the time until 3:45 p.m. 
today be for debate prior to vote in relation to the Reid second-degree 
amendment No. 3081, with the time equally divided and controlled 
between Senators Reid and Feinstein, or their designees; that no other 
amendment be in order prior to a vote in relation to the Reid 
amendment.
  The Senator could move to table now as she indicated she would, and 
the vote will occur at 3:45 p.m.
  Mrs. FEINSTEIN. I have no problem. I agree.
  The PRESIDING OFFICER (Mr. Carper). Without objection, it is so 
ordered.
  Mrs. FEINSTEIN. Mr. President, I move to table the Reid amendment.
  Mr. REID. I ask for the yeas and nays.
  The PRESIDING OFFICER. The motion to table is not in order until the 
expiration of the controlled time.
  Mr. REID. Mr. President, I ask unanimous consent that the Senator 
from California be allowed to offer her motion to table at this time. 
That way she will not have to stay around if she does not want to. The 
vote will occur on the motion to table at 3:45 p.m.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Illinois.
  Mr. DURBIN. Mr. President, I rise in support of Senator Feinstein's 
motion to table the Reid amendment. Let me say at the outset, when she 
came to me with this concept, it struck me as not only fair but good 
policy. How did we get into this mess with the seventh largest 
corporation in the United States going bankrupt and dragging down with 
it thousands of innocent investors, pensioners at Enron, not to mention 
the employees who lost jobs, or the employees that other companies, 
like Andersen which is based in Chicago, who stand to lose their jobs.
  It all came about because the folks in Houston who worked for Enron 
Corporation tried to take as many business activities as possible off 
the books. They did not want the world to see what was going on behind 
the corporate boardroom doors at Enron. The greatest fear they had was 
daylight, the possibility that people would know what they were doing. 
So they created these elaborate pyramid schemes. They created a 
multitude of corporations. They hid debt. They managed to, in many 
ways, deceive some well-meaning people into believing they were a 
prosperous and profitable corporation. One of the instruments and 
weapons they used in this battle was this whole notion of trading in 
energy futures, energy derivatives without Government oversight.
  I live in the State of Illinois. We are proud of the fact we have 
many markets in the State of Illinois which average people and 
businesses use to trade futures, derivatives, and options that give 
them protection in their business day world. But every step of the way 
in that process the Government keeps an eye on them, just as it does 
the stock exchange in New York and in other places around the United 
States. Why? So the average person who picks up that financial page in 
the paper every morning and looks at it knows it is on the square, the 
trade actually took place, the prices are actually moving in these 
commodities.
  What we saw with Enron is that they raced away from those markets 
where the Government was looking over the shoulders of the traders into 
this netherworld, if you will, of trading without regulation and 
without oversight. That is exactly where they wanted to play. They 
wanted to get out from the public eye. They did not want people to see 
what they were doing. They wanted to manage their own affairs without 
scrutiny, without oversight, without the restrictions of regulations 
and laws.
  The Senator from California has a very simple proposition: If we want 
to restore the integrity of many corporate activities, we should 
establish standards for oversight and regulation. We now know better 
when it comes to Enron. Had there been appropriate oversight and 
regulation at Enron, we might have avoided the disaster that occurred 
in that company.
  As she offers this amendment, there are special interest groups that 
oppose her. There are those trading without Government oversight who do 
not want the Government involved. So they are going to oppose her. The 
smoothies out there, the future Enrons, that want to use the current 
system to avoid regulation are opposed to the amendment of the Senator 
from California as well. They want to have this mechanism available to 
them.
  That, frankly, is the reason why the Senate should take this 
amendment very seriously and why we should join the Senator from 
California in tabling the amendment of the Senator from Nevada. There 
is no reason why we should exempt metals. Why in the world would we say 
when it comes to energy we want honest, open, transparent trading, but 
when it comes to metals and their derivatives, we do not? We heard the 
litany that was read by the Senator from California when companies came 
in and tried to take control of markets. For the average person going 
to work every day, you wonder: What difference does it make? It does 
make a difference. It makes a difference in the commodities they 
purchase. If there is some illegal activity, if there is some inflation 
of price, it is going to be felt by consumers and businesses across 
America and around the world.

  When Senator Feinstein comes to us and says, Table the amendment of 
the Senator from Nevada, Mr. Reid, I think she is moving in the right 
direction. We need more transparency and more oversight.
  If you buy the premise of Senator Reid that metals should be exempt 
or you buy the premise of those who oppose Senator Feinstein's 
amendment, which I am cosponsoring, who say we should not have this 
Government oversight, how do you rationalize the millions of dollars we 
spend every year as taxpayers for watchdogs and policemen to keep an 
eye on so many other industries where there is trading? Listen, one is 
right and one is wrong.
  If we believe there should not be Government oversight, let the Wild 
West prevail--there may be some who take that point of view. I am not 
one of them. It is tough for me as an individual; it is tough for many 
small businesses to judge whether there is an

[[Page S2394]]

honest transaction taking place and that is why the Government steps 
in. They want to make sure that when there is a transaction reported, 
it actually took place, that there was not self-dealing, there was not 
the kind of chicanery as we saw in Houston with Enron. That is why we 
have these regulatory agencies.
  The Senator from California is correct; we should apply that to 
energy and metal derivatives. There is no reason to make exceptions. I 
can tell you what is going on--and I know the Senator is aware of this. 
What she is fighting is growing in size and volume across the world. 
These unregulated online markets are starting to appear everywhere, and 
woe be to the consumer or those involved who go into them believing the 
Government is watching what is going on. In many instances, there is no 
oversight; there is no review; there is no accountability.
  I stand not only as a cosponsor of the amendment of the Senator from 
California but in strong support of the Senator from California.
  I close by saying I sincerely hope we adopt this amendment. This 
started off as a debate on an energy bill. It certainly is a timely 
debate, but as I have listened to this debate transpire, as I have 
watched special interest groups come in and destroy every meaningful 
and credible part of this bill, I am beginning to believe this is the 
most anemic energy bill ever considered by Congress.
  Consider for a minute that we are about to embark on a debate as to 
whether or not to drill for oil in the Arctic National Wildlife Refuge. 
This wildlife refuge was not created by any liberal President; it was 
created by President Dwight Eisenhower in 1960. He said: There is a 
piece of Alaska we ought to protect. It is a frontier we ought to 
preserve because we may never get that chance again, and when it comes 
to the wildlife, when it comes to the resources there, we ought to make 
certain that America takes a stand and says we are going to leave this 
for future generations in perpetuity. This is our legacy to our 
children.
  President Eisenhower was right. What President Eisenhower did not 
anticipate was that the oil companies would come into this region, 
discover what they consider to be substantial reserves, put their money 
interests behind those reserves, and then come to Congress and start 
twisting arms in every direction in order to try to beg us to allow 
them to come and drill for oil in a wildlife refuge.
  How much oil is involved? First, even the rosiest scenario suggests 
we will not see the first barrel of oil from ANWR for 5 years. The one 
more realistic scenario says 10 years. As we consider all the problems 
in the Middle East facing us today, ANWR is certainly not the answer. 
Not for 5 years at least, or 10, will we see the first barrel of oil 
coming out of this wildlife refuge.
  How much oil is involved? They talk in terms of millions and 
billions. But put it in this perspective: Over a 10-year period of 
time, if we draw from ANWR, the oil that the U.S. Geological Survey 
says is there will account for a 6-month supply of oil for the United 
States in that 10-year period. Put it in this perspective as well: By 
the year 2020, if ANWR were in full production, ANWR would reduce our 
importation of foreign oil from 62 percent of our national need to 60 
percent, a 2-percent reduction.
  Some have said it takes a great deal of political courage to stand up 
for drilling in the Arctic National Wildlife Refuge on behalf of the 
oil companies that own those rights for minerals to be derived. I am 
not sure it takes a great deal of courage. Does it take a great deal of 
courage for us to spoil the frontier of a wildlife refuge, to endanger 
species that currently live there and may never be replicated? That 
does not take a great deal of courage.
  The courage is in standing up and protecting them. The courage is in 
saying if you want to do something about energy security and 
independence, if you want to try to break the chains between the 
Mideast and the United States so we can make our own decisions and not 
have to wait for a nod of approval from Saudi Arabia and the gulf 
states, the courage is in saying to the American people we have to 
change the way we do business and live in America.
  We had a chance to do that several weeks ago. What we were going to 
do--here is a radical suggestion--we were going to say to the big three 
automakers, they have to make their cars and trucks more fuel 
efficient. Oh, no, the Senate said, by almost a margin of two-to-one, 
we could not do anything that radical. We could not do anything that 
demands that kind of sacrifice, no way.
  We are going to show courage by drilling in a wildlife refuge. The 
Porcupine caribou do not vote in the Senate. They do not elect anybody. 
Run them off. We have lost 30 percent of them in the last 10 years, so 
if they disappear, we will show our kids pictures and videos. But to 
ask the Big Three to come up with more fuel-efficient cars and trucks, 
oh, no, no way.

  The special interests swamped those of us who believe fuel efficiency 
should be part of our debate on our energy security. We did not have a 
chance in the Senate. The special interests won, and won big. We did 
not have the courage to say to the Big Three or to consumers across 
America, we have to do business differently. We have not improved the 
fuel efficiency of vehicles in America since 1985--17 years of neglect.
  So they talk about the Middle East and the challenge we face and how 
we have to show courage and determination as Americans. Let us start it 
by showing some honesty in our energy policy. We need more fuel 
efficiency, and we need more renewable fuels. For goodness' sake, I 
think 3 or 4 percent of all the electricity generated in America comes 
from renewable fuels. When Senator Jeffords of Vermont wanted to raise 
this to 20 percent over a 20-year period of time, I was ready to 
support him and was a cosponsor, but he did not have a chance. We lost.
  But we will show courage by drilling in the Arctic National Wildlife 
Refuge and we will show courage in standing behind the special interest 
groups that want to stop Senator Feinstein from bringing transparency 
and regulation to the trading in energy derivatives.
  I am afraid this energy bill is going in the wrong direction if we do 
not include in it fuel efficiency, fuel economy, conservation, 
renewable fuels, and a sensible pricing of energy. Look at what 
happened in the State of California. I cannot imagine what life is like 
for the Senator, going home every weekend to see families and 
businesses trying to cope with something totally beyond their control. 
They responded heroically showing that they could, if challenged, 
dramatically conserve energy in the State of California. The Senator 
must have felt like the most helpless victim in America because these 
energy companies were running circles around her.
  When the Senator says they ought to be held accountable, these energy 
companies and energy derivative markets ought to have government 
regulation, they are the first ones to scream bloody murder. They 
cannot stand that notion. The Senator is right. She ought to proceed on 
that, and I am happy to support her in that effort.
  Mrs. FEINSTEIN. Will the Senator yield?
  Mr. DURBIN. I am happy to yield.
  Mrs. FEINSTEIN. I mentioned in my remarks what really kind of clued 
me on to this was the price of natural gas. Right after CFMA passed, we 
noticed the price of gas at the southern California border was $50 a 
decatherm--a decatherm is about enough for 900 homes--whereas in San 
Juan, NM, it was $8, and the transportation cost was $1. Nobody knew 
why it had spiked that way.
  So I picked up the phone. I called what is called ISO, the 
independent system operator, and said: Why is gas spiking this way? 
They did not know.
  Now I do not know whether Enron was doing this or not, but as soon as 
Enron went belly up, the next day the price of gas dropped 
dramatically. So it has to have been the trading that was being done 
that did not have a delivery directly related to it.
  Now people say the SEC will step in and look at this. The fact is 
there are no records for the SEC to look at now because there is no 
audit trail. There are no records kept of these trades. Somehow it is 
very difficult to get that across to our Members. It would get across 
if they were trading on the Chicago Mercantile.

  Mr. DURBIN. That is right, it would be transparent.

[[Page S2395]]

  I am holding in my hand the energy bill we are debating. On at least 
four separate occasions now, we have had the chance to do something 
sensible for energy security and energy independence--to lessen our 
dependence on Mideastern oil. We had a chance to do it with the fuel 
efficiency of the trucks and cars that we want to drive in America for 
years to come, and we failed. The special interests won. We could have 
done it by improving and increasing the renewable fuels used across 
America that are environmentally friendly, which give us a chance 
toward independence. The special interests opposed us. We lost.
  Now we see the battle that is being joined: Whether or not we are 
going to have full disclosure of these energy trades, whether we are 
going to have the kind of openness that Americans want. And the special 
interests oppose it.
  I stand in complete support of the efforts of the Senator from 
California, and I thank her for her leadership.
  I yield the floor.
  The PRESIDING OFFICER. The assistant majority leader.
  Mr. REID. Mr. President, my friend from Illinois and my friend from 
California are right in most everything they have said about the need 
for a good energy policy. I agree with the Senator from Illinois. I 
think it is too bad we did not pass fuel efficiency standards. The 
Presiding Officer, I hope, is going to try to rectify that and offer 
something in the near future to set some fuel efficiency standards.
  The Senator from Illinois is right when he speaks about the need to 
not drill in ANWR, but my friend from Illinois and my friend from 
California are wrong about transactions involving metal derivatives 
because they lack necessary information. The Commodity Exchange Act 
already requires record keeping for transactions in metal derivatives 
markets.
  The Feinstein amendment includes metal derivatives, citing fraud in 
the metals market in the past decade. In fact, my friend from 
California uses two specific examples of high-profile cases. She talked 
about the Hunt brothers in silver and Sumitomo in copper. Neither of 
these fraud cases would be addressed with the Feinstein amendment. It 
has nothing to do with the Feinstein amendment. The Feinstein amendment 
could already be in effect, and the Hunt problem would still be there, 
and that related to copper would still be there. Why do I say that?
  The attempt by the Hunt brothers in 1979 to corner the silver market 
involved manipulation of the physical silver market. They bought all 
the silver they could, which reminds me of a Nevada resident by the 
name of Forest Mars, of the Mars empire. He owned it. He was a great 
man. He died in the last couple of years. He was a wonderful man. He 
lived above his candy store in Las Vegas. This billionaire had a little 
apartment above his candy store.
  When the Hunt brothers tried to corner the silver market, he said 
they should have talked to him first. You cannot have a monopoly. He 
tried on two separate occasions. You cannot do it. Keep in mind, Mars 
was one of the richest men in the world. His family is still rich, with 
Uncle Ben's Rice and most of the candy in the world. He was very rich. 
He thought in his younger days they would buy all the pepper. He wanted 
to control pepper. He spent some time going out and buying all the 
black pepper he could find. He controlled black pepper in the world. 
But he said: In the end, I could not control the black pepper market, 
because people who had white pepper dyed their pepper black, and I no 
longer had control of the market.
  The Hunt brothers tried to corner the silver market and went out and 
bought all the silver. Her amendment would have nothing to do with 
that. The Hunt silver trading scandal involved trading on regulated 
exchanges, not in the over-the-counter derivatives market. The trading 
abuses involved the physical accumulation of more than 200 million 
ounces of silver. It did not involve over-the-counter derivatives in 
any way.
  The Sumitomo situation involved the manipulation of the copper market 
by a Japanese company operating through a rogue trader acting in London 
and Tokyo.
  The abuses occurred on a fully regulated exchange, not in the over-
the-counter derivatives market. It involved manipulation of the price 
of copper on the London Metal Exchange, which is fully regulated by the 
United Kingdom's Financial Services Authority. Further, the 
manipulation took place overseas, not in the U.S. markets.
  I urge my colleagues to not support the motion to table that strikes 
metal derivatives from the Feinstein amendment. Derivatives are 
essential to the health of the metals market, and today they are 
regulated, controlled. Recordkeeping is now in place. Fraud in the 
metals market did not involve over-the-counter derivatives.
  With all due respect to my friend from California, using the Hunt 
brothers example and the Sumitomo example, they simply do not apply. I 
believe wherever that information came from, it was misguided and 
simply wrong. I suggest we would be better off going forward with her 
legislation, which I have indicated on a number of occasions I support. 
But I am saying that having the metals industry involved in this does 
not do anything except make the mining industry in America weaker than 
it is.
  Mining as an industry exports gold. It is one of the few places we 
have a favorable balance of trade. We should be happy about that.
  The motion to table is ill advised, based on wrong facts. It is not 
in keeping with what I think is the direction of the underlying 
Feinstein amendment. I ask for the yeas and nays on the motion of the 
Senate to table.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  Mrs. FEINSTEIN. Mr. President, I take a moment to respond to the 
statement of the Senator from Nevada.
  The point I was trying to make, to the Senator from Nevada, is that 
manipulation does occur in metals. Clearly, it did. Obviously, there 
was no online trading at that time. Everybody knows that. The fact is, 
these remain three major cases of market manipulation. It doesn't only 
happen in energy; it can happen in metals as well.
  The key point is, if the Reid amendment is successful, metals will be 
the only exemption. Why should metals be the only exemption? I don't 
think they should. We know you are covered if you deliver the commodity 
directly to another individual. We know FERC covers that. We know you 
are not covered if you are swapping or trading against risk. We also 
know there is great uncertainty as to whether, with energy, there is 
coverage.
  I purposely read the letters from the Swaps and Derivatives 
Association because they say two different things. In one statement 
they say these areas do remain within the CFTC jurisdiction; they turn 
around in a March 11 opposition letter and say exactly the opposite.
  The time has come to have certainty, to see that energy and metals 
are covered. Let me say once again, who can object to there being 
antifraud and antimanipulation oversight? No one. Who can object to 
saying you have to keep records of trades, online trades, even if you 
are not directly delivering the product, if you are swapping to hedge 
against risk, for example? Why shouldn't you keep a record and have an 
audit trail on what you are doing so that people know? Why shouldn't 
there be some provision for capitalization of these trades based on 
risk, and the CFTC would decide a level of risk and the level of 
capitalization?
  This past week, I was just reading another article of a company that 
would go down because it was swapping. There was no capitalization, 
Peter came home to pay Paul, and there was nothing there. So the 
company is going to go bankrupt. It was another major company.
  It seems to me, rather than create uncertainty, our amendment creates 
certainty. It says to the world, to everybody, energy and metals are 
not the only two that enjoy an exemption. Energy and metals, for 
derivative online trading, are covered by the CFTC. It is a small 
amendment. I have been so surprised at the amount of opposition. It 
convinces me more that something must be going on. There has to be a 
reason that people want to do this trading in the darkness. There has 
to be a reason that they do not want to keep records. There has to be a 
reason they do not want to subject themselves to any kind of 
capitalization requirement.

[[Page S2396]]

  That was the situation with Enron. Enron went bankrupt. Enron lobbied 
for this amendment. Enron lobbied the House to be excluded, to have 
metals and energy excluded from the bill passed in 2000. Immediately 
after the bill passed in 2000, gas began to spike in California. That 
says volumes to me.
  Once again, I think we are on the side of the angels, to let 
consumers see what is going on. If the consumers buy through the 
Chicago Mercantile, there is a record. If the consumers buy through the 
New York Mercantile, there is a record. With any other kind of 
transaction, there is a record. Why should this huge, burgeoning new 
area of online trading have an exception and not keep these records?
  Again, let me be specific. If the product is delivered, if I buy gas 
from you, and you deliver that natural gas to me, we are covered by the 
Federal Energy Regulatory Commission. If we are trading or swapping and 
there is no delivery, there is no record kept.
  Why does FERC support this amendment? Why do all of the FERC 
Commissioners support this amendment, including the Chairman? They know 
this is a loophole. They know it should see the light of day.
  I control time until 3:45, if I understood correctly.
  The PRESIDING OFFICER. The time is equally divided.
  Mr. REID. I am happy to yield.
  The PRESIDING OFFICER. The Senator from Nevada controls 14\1/2\ 
minutes.
  Mr. REID. The Senator is welcome to take some of my time.
  Mrs. FEINSTEIN. I yield the floor.
  The PRESIDING OFFICER. The Senator from Nevada has yielded?
  Mr. REID. Mr. President, it is my understanding the Senator from 
Louisiana wishes to speak on another amendment she hopes to offer 
subsequently. I think that would be appropriate. I see no one here 
wishing to speak. How much time does the Senator need?
  Ms. LANDRIEU. I need about 15 minutes, if I could?
  Mr. REID. We are going to vote at quarter till, but how about 10 
minutes?
  Ms. LANDRIEU. Ten minutes is fine.
  The PRESIDING OFFICER. The Senator is recognized for 10 minutes.
  Ms. LANDRIEU. I thank the Senator from Nevada, and I thank the 
Senator from California for allowing me to interject a few thoughts on 
a related subject but not the same as the pending amendment.
  The subject is about energy independence. Let me put up my first 
chart to talk about this issue.
  Before I begin with that, let me say this: There are a lot of issues 
such as the issue Senator Feinstein has raised, and other issues, that 
I suggest are maybe not the exact heart of our problem when it comes to 
energy security or energy dependence. The heart of our problem is 
simply that we consume much more than we produce. When you consume more 
than you produce, and when you do not have an electric grid in this 
system that can move power from the places where it is produced to the 
places, such as California and Florida, that consume a lot--and also 
California does produce a great deal--you have blackouts.
  You have power shortages. You have price hikes. It is the natural end 
result of demand outstripping supply. It works that way every time. 
There is no surprise about it. It works that way today. It worked that 
way yesterday. It will work that way tomorrow.
  The core of this debate is energy security. We cannot have energy 
security in this Nation unless we have energy independence. I know 
people hear this and they say: Senator, it is not possible. We could 
never be energy independent.
  I want to say: Yes, we can. Maybe not tomorrow. Maybe not in 5 years. 
But if we set our mind to it and make some very wise strategic 
decisions in this body this week and in this Congress this year, this 
country most certainly could be energy independent in the next decade 
or so. Not in my grandchild's lifetime but in my children's lifetime, 
and in my lifetime, we could be energy independent. But it is going to 
take a lot of work.
  One of the things we are going to have to do is produce more oil and 
gas and fuel domestically. It is not just oil and gas. It is oil, gas, 
clean coal, hydro--and particularly new and exciting fuels such as 
solar and wind. We are not doing nearly enough with that. And we are 
not doing enough on the production side.
  When we think oil, we think automobiles. We think oil, we think 
gasoline. While oil in the transportation sector consumes most of our 
oil, let me name a few other things that we need oil for to produce 
household items: toothpaste, footballs, ink, lifejackets, tents, 
sunglasses, house paints, shampoos, lipsticks--maybe we could find 
alternative sources, some other ways to produce these items. I am sure 
there are scientists and researchers doing that at this time, but we 
need oil in this Nation to run our automobiles the way we have the 
engines structured right now, as well as to produce all these products 
which Americans use every single day.

  Can we reduce our consumption? Can we conserve? Absolutely. But 
should we continue to import 67 percent of our oil from other places in 
this world? I don't think so.
  Let me share with you where we are, the outstripping of production by 
demand. Oil consumption will continue to exceed production. This red 
area of this chart is our problem. It is our problem. You can see it 
very clearly. It is the shortfall. This is basically what we produce. 
This is what we consume. And this is what causes, in many instances, 
blackouts or shortages or high prices--this shortfall. We have to 
correct that. We can correct it by conserving. There are very good 
suggestions, mostly by Senator Bingaman, about how to do that. And we 
must increase our production.
  Let me show you where our production is, currently, in the United 
States. Our production is currently in the Gulf of Mexico and in Texas 
and in Alaska. Should we drill in Alaska, and more? Absolutely. Should 
we drill in the Gulf of Mexico? Absolutely. Should we drill in Texas 
more? Absolutely. Should we drill more in California and places in 
other States? Absolutely.
  The reason is these States consume. They need to produce. Our whole 
Nation consumes and we need to produce more. But we want, in America, 
to have a policy where we basically do not have oil wells anywhere 
except off the coast of Louisiana, Mississippi, and Texas. We expect 
this area then to supply all the needs of our Nation.
  We need to have a stronger policy about drilling domestically, and to 
acknowledge the States that do drill and can drill in a more 
environmentally sensitive way, minimizing the risk to the environment, 
should be compensated for the impacts that are associated. It is not 
always negative environmental impacts; it is infrastructure impacts.
  On each oil rig off the State of Louisiana, we have about 6,000 
people. It is almost like a city out in the gulf.
  I know a lot of people have never been to an oil rig, but I have, 
many times. Senator Breaux and others have visited many times. These 
men and women consume water, they consume food, there are 
transportation requirements, and there are roads and bridges that need 
to help this offshore development.
  One of the things we can do--and I hope we will do, Democrats and 
Republicans, regardless of how we may vote on many of these 
amendments--is to cast favorable votes when it comes to more domestic 
drilling. It is important for us to close the gap of conservation and 
drilling in places where we can. We have rich reserves in Alaska, in 
the Gulf, and in the central part of this Nation. It is misleading to 
say otherwise.
  Let me also give you another reason why domestic production is so 
important. This is from the Sierra Club's executive director, Doug 
Wheeler, who said:

       The exploration and development of energy resources in the 
     United States is governed by the world's most stringent 
     environmental constraints, and to force development elsewhere 
     is to accept the inevitability of less rigorous oversight.

  Let me repeat this, because this is the Sierra Club.

       The exploration and development of energy resources in the 
     United States is governed by the world's most stringent 
     environmental constraints, and to force development elsewhere 
     is to accept the inevitability of less rigorous oversight.

  What we do by not allowing more drilling in the United States is 
exactly this: We force development elsewhere,

[[Page S2397]]

and we wreak environmental havoc. Why? Because in many parts of the 
world there are no democracies, and there are big oil importers, which 
is very problematic. In other countries, they do not have rigorous 
rules. There is no transparent rule of law. There are no court systems. 
There are no investigators to find the polluters. There are no systems 
of fines. They have no consequences for pollution. It happens day after 
day. In our country, if a company violates a local or Federal rule, 
they are prosecuted. They are fined. They can be put out of business 
for destroying the environment. Do you think that happens in some 
places in Africa, South America, or the Mideast? I don't think so.
  Let me make a statement. People will say Senator Landrieu just gets 
on the floor and talks about big oil issues. She is a supporter of big 
oil.
  Let me say for the record that big oil is maybe not that interested, 
frankly, primarily in more domestic production. Leaders of some of the 
environmental organizations want to push production off of our shores 
because they do not want production anywhere. They are absolutely 
totally against fossil fuels and think we can run the country and the 
world can run on something other than fossil fuels. I hope that happens 
in the future, but it is not going to happen today or tomorrow. It is 
in their interest to push production off the shores of the United 
States and use their self-interest to basically push development in 
places where regulations are less; where, if you do something wrong, 
you can't get caught, and where it is cheaper to produce.
  There is sort of an unholy alliance, if you will--I say this with 
great respect--between the industry and the environmental movement. I 
understand this is an unholy alliance that sometimes pushes us to a 
place we don't want to go. I will tell you why we don't want to go 
there. Because it is dangerous.
  If the headlines in the newspapers don't convince people that we are 
on a collision course, I don't know what is. In the paper this morning, 
we read about the escalation of war in the Mideast. We see our foreign 
policy compromised. Why? Because we can't really fight terrorism in a 
way that we know we should. We know that we could be effective. We have 
beaten every foe that has stood before us. We can certainly beat the 
foe of terrorism.
  It would be hard. It would be expensive. But the American people are 
willing to give their time and their treasure to do it. But we can't 
because we are compromised by the fact that the countries we are trying 
to negotiate with are large exporters of oil.
  We sent Colin Powell, our Secretary of State, over to the Mideast 
with one hand tied behind his back. He cannot negotiate as strongly as 
he might because of our dependency on oil from other places in the 
world.
  I know my time has expired. I am going to stay on the floor after the 
vote and ask for some additional time.
  I thank the Senator for yielding. If the clerk is ready to call the 
roll, I will yield the floor.
  The PRESIDING OFFICER (Mr. Miller). The question is on agreeing to 
the motion. The yeas and nays have been ordered, and the clerk will 
call the roll.
  The legislative clerk called the roll.
  Mr. REID. I announce that the Senator from Montana (Mr. Baucus) is 
necessarily absent.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 40, nays 59, as follows:

                      [Rollcall Vote No. 60 Leg.]

                                YEAS--40

     Akaka
     Biden
     Boxer
     Breaux
     Byrd
     Cantwell
     Carnahan
     Chafee
     Clinton
     Conrad
     Corzine
     Daschle
     Dayton
     Dodd
     Dorgan
     Durbin
     Edwards
     Feingold
     Feinstein
     Fitzgerald
     Graham
     Harkin
     Hollings
     Inouye
     Kennedy
     Kerry
     Kohl
     Leahy
     Levin
     Lieberman
     Lugar
     Miller
     Murray
     Nelson (FL)
     Reed
     Sarbanes
     Schumer
     Stabenow
     Wellstone
     Wyden

                                NAYS--59

     Allard
     Allen
     Bayh
     Bennett
     Bingaman
     Bond
     Brownback
     Bunning
     Burns
     Campbell
     Carper
     Cleland
     Cochran
     Collins
     Craig
     Crapo
     DeWine
     Domenici
     Ensign
     Enzi
     Frist
     Gramm
     Grassley
     Gregg
     Hagel
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inhofe
     Jeffords
     Johnson
     Kyl
     Landrieu
     Lincoln
     Lott
     McCain
     McConnell
     Mikulski
     Murkowski
     Nelson (NE)
     Nickles
     Reid
     Roberts
     Rockefeller
     Santorum
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Stevens
     Thomas
     Thompson
     Thurmond
     Torricelli
     Voinovich
     Warner

                             NOT VOTING--1

       
     Baucus
       
  The motion was rejected.
  Mr. REID. I move to reconsider the vote.
  Mr. MURKOWSKI. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. REID. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The senior assistant bill clerk proceeded to call the roll.
  Ms. LANDRIEU. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered. The 
Senator from Louisiana.
  Ms. LANDRIEU. I thank the Chair. Mr. President, I thought I would 
take this time, as we are still debating and proceeding with 
consideration of amendments to the energy bill, to finish the comments 
I started before the vote.
  I hope Members on both sides can understand the importance of this 
debate. It always has been important. But I think there has to be some 
renewed urgency given what has happened over the last 2 weeks--the 
unfortunate escalation of violence in the Mideast, the pressure that 
has now come to bear on our Nation in terms of the diplomacy underway 
to try to find a peaceful and certain way out of the situation in the 
Mideast. All of this has a direct bearing on the discussion we are 
having in the Senate about energy and the underlying policy and our 
dependency on this oil that comes in large measure--not solely--from 
Middle Eastern countries or from foreign sources. It has a direct 
impact, I believe, on whether we are ultimately going to be successful 
in the short and long run in our negotiations for peace and in 
combating terrorism.
  I wish to finish my remarks along those lines and to start with a 
chart. I know people in Louisiana understand this.
  I am hoping to share this chart with the other Members in the Senate. 
As Americans everywhere went to the gas stations over this weekend and 
the last few weeks, they really began to feel this. They not only 
understand it but they actually feel it, and it is hurting right in 
their pocketbooks.
  This chart shows us clearly what happens when the price of oil, which 
is demonstrated by this blue line, goes up and what happens to our 
gross domestic product, which is represented by the red line, when that 
price goes up. It is very easy to read this chart. It reminds me of one 
of the charts my colleague, Senator Conrad, brings to explain 
complicated budget issues, and it really helps to clarify it. This 
clarifies the situation to me, and I hope to people who are seeing this 
chart.
  When oil prices are low, then the U.S. gross domestic product is 
high. When the price of oil begins to rise, as it has precipitously in 
the last 2 weeks, the growth of the U.S. economy dives. When the 
economy takes a dive like this, what this means is there are more 
people who are out of work.
  When this red line goes down, it means children do not go to college. 
This red line means somebody has to walk into their house and look in 
their kids' eyes and tell them they lost their job. This means a guy 
who worked his whole life--when he was 45 years old and started a 
business and took his life's savings and his wife's savings and said: 
Honey, I am going to go out and start a business--has to come back and 
tell her he could not make it. Not because they did not have a good 
product, not because he was not a hard worker, not because his spouse 
did not do everything she should and could do, but because we cannot 
get a handle on the price of gasoline and it drove him out of business. 
That is what this line means when the gross domestic product in our 
country goes down. It means pain. It means suffering.

[[Page S2398]]

  We could stop the pain and stop the suffering if we could get an 
energy policy that would stabilize this price and reduce our dependency 
on oil that comes from outside of this Nation.
  One way to do it, not the only way to do it, is to drill more in the 
United States of America. We have oil reserves in many of our States, 
if not most of our States. We have reserves onshore and offshore, and 
we have technologies unlike 50 years ago, 40 years ago, or 25 years 
ago, that we can produce and find those reserves at less financial risk 
and less environmental risk.
  I am in the Senate because I promised the people of my State I would 
try to keep this red line up as high as possible, because I have a 
promise to send as many kids to college as I can possibly help get 
there and give them the skills they need to function. I have made a lot 
of promises to them about giving them an atmosphere where they can take 
their dream of starting a business and actually make it work. I have 
made promises to my school boards and my public officials back home to 
try to help improve the highway system, which is not very good in our 
State. I have hospitals that cannot keep their doors open, and there is 
a Senate that has the resources and the opportunity to pass an energy 
bill that could produce more but for some reason will not.
  Let me show what the Sierra Club says about domestic production 
because I have sometimes been accused of having an anti-environmental 
position. I actually think this position is a pro-environmental 
position, it is the right environmental position, and I will say why. 
The director of the Sierra Club evidently agrees with that line of 
thinking, although I do not want to indicate he agrees with the 
exploration in ANWR or my amendment, but he agrees with the principle. 
He says exactly what I would say:

       The exploration and development of energy resources in the 
     United States is governed by the world's most stringent 
     environmental constraints, and to force development elsewhere 
     is to accept the inevitability of less rigorous oversight.

  I could even go further to say: To develop elsewhere is to accept the 
inevitability of wholesale environmental destruction, because that is 
what happens when you do not have good laws. That is what happens when 
you do not have good regulations. That is what happens when you do not 
have good court systems where polluters are determined not to follow 
the rules if they had them, or to go ahead even without the rules and 
proceed to extract those resources. That is what happens when you drive 
production off the shores of the United States of America. The 
environment is harmed more than if you could drill in a country that 
had the strongest rules, the best courts, the highest fines, and the 
ability to vigorously prosecute polluters.
  We do not want to do that. We want to get oil from countries--and we 
use 18 million barrels of oil every day from places such as Saudi 
Arabia, Iraq; and from such stable governments in a lot of trouble now 
such as Colombia, Angola, Kuwait, and Yemen, just to name a few.
  If we drilled more in Alaska, in Louisiana, off the coast, on the 
gulf coast, in other interior States, and we did it in the right ways, 
we could make the lines in that chart I showed earlier move in a 
different direction, in a direction of hope for the American people.
  Let me also say we need to do it for the purposes of our economy. We 
also need to drill more in the United States for the purposes of our 
security and for the purposes of long-term domestic and international 
security for our Nation.
  We call the underlying bill we are debating, and on which Senator 
Bingaman and Senator Murkowski have worked exceedingly hard, the Energy 
Policy Act. It could be the energy security act, but I would really 
like it to be named the energy independence act because only by energy 
independence will America ever be secure.
  Let me say that again: Only with energy independence will we ever 
really be secure. If we and our democratic allies--not countries that 
do not believe in democratic principles, not countries that do not 
allow women to vote, not countries that do not have high standards when 
it comes to child protection and the rights of children and families. I 
am talking about democratically elected governments. When we and our 
allies, such as in Europe and in other places of the world, can 
diversify our portfolio of energy, then we can relieve ourselves of 
being dependent on countries that do not share our values, that are not 
democratic nations, and that do not compromise.
  When I see statements that are in the press--and I have been reading 
a lot of things about the Mideast--it is very concerning to me when I 
hear anyone say the people who have strapped dynamite and other 
explosives to themselves, who have gone into places such as hotels 
where people are eating a meal or into daycare centers, or in pubs 
where mothers might take their daughters or sons out for an afternoon 
cup of tea or a rest, and people refer to these individuals as freedom 
fighters. These are not freedom fighters. These are terrorists. That is 
what terrorism is. That is what the definition and embodiment of 
terrorism is.

  It is not fighting army to army or armed person to armed person. It 
is an individual, desperate, strapping explosives to their body, giving 
up their life and harming innocent men and women and children for the 
purposes of terrorizing a nation and either bringing it to its knees, 
or bringing it to a negotiating table, or forcing it to do something 
that is against its will or its long-term best interests.
  We are fighting terrorism here with all the strength and breath we 
can in our Nation. We had two of our mightiest buildings collapse. We 
don't call the people who got in the airplanes freedom fighters. We 
call them terrorists. But we can't call some of these other people 
exactly what we need to be calling them. Why? Because we are too 
dependent on oil from that region. We are debating an energy bill and 
we will not make the decision to produce more oil in the United States 
because we would rather compromise our foreign policy.
  I will be for more drilling in the United States, when and wherever 
possible. And I don't believe we can drill everywhere. But where there 
are reserves, where our technology shows we can drill, the more oil we 
can drill here the better.
  In addition, what we can do, and Senator Bingaman has led this fight 
so ably and so well, is to diversify our portfolio so we are not held 
hostage by oil, period. I am from an oil-producing State. But do you 
know what my own producers tell me? They don't want our Nation to be 
held hostage by fossil fuels, even though we produce a lot of oil and 
produce a lot of gas. Louisiana believes, as an oil- and gas-producing 
State, that we need to develop alternative sources. As an investor with 
your life savings, you don't invest it in just one company, in the 
event that company goes belly up and you lose everything you worked 
for. With investments, investors want a diverse portfolio. Why? To 
spread the risk. Any good investor knows that spreading risk is very 
important for long-term security.
  Why, then, do we have an energy policy, or the lack of an energy 
policy, that allows all of our eggs to be in one basket. It is too much 
in oil, and in some ways too much in gas, and not enough in other 
developing technologies such as wind, solar, hydropower, and other ways 
of generating energy.
  The most promising technology we have discussed on the floor is in 
the transportation sector, in hydrocells, for our automobiles. It is 
the transportation sector that uses most of the oil. Our industrial 
sector and our electric generators use a lot of gas, a lot of coal, and 
a lot of nuclear. The bottom line is, while we have to reduce our 
dependency on foreign oil, particularly from nondemocratic nations, 
particularly from nations that do not have stable governments, 
particularly from nations that do not believe in the rule of law, that 
do not allow women the right to vote, that do not allow children, girls 
in particular, to go to school, why do we compromise our foreign policy 
because we need that resource when we could drill more domestically? In 
addition, not only do we have to drill more in the United States, but 
we have to wean ourselves off of fossil fuels over time and try to come 
up with renewable resources because all of these resources are finite.
  To broaden our pool, to diversify our portfolio of sources is good 
for the consumer and good for business because it

[[Page S2399]]

will keep prices very competitive. If gas is too high, people could 
switch to nuclear. If nuclear is too high, producers of energy could 
switch to hydro. If hydro is too high, they could move to coal. If coal 
is too high, we can move to biomass.

  We need more diverse sources of fuel, homegrown, and limit our 
imports of fuel from nations that are not democratic nations. I am not 
speaking about Canada. Canada is a great ally of the United States. We 
import a lot of gas from Canada. Let's continue to do it. Canada is a 
democracy. It is our ally. We can rely on it. That is smart politics.
  Relying on other countries that do not share those values, that do 
not have democratic values, gets us dealing with places where people 
tie dynamite to themselves and blow up themselves and innocent people. 
It confuses us whether it is a terrorist or freedom fighter. We have 
freedom fighters in America. Martin Luther King, Jr., was a freedom 
fighter. That is the kind of freedom fighter who we believe in in this 
Nation. Gandhi was a freedom fighter. That is the kind of freedom 
fighter who ultimately wins peace and security and justice and changes 
when things are unjust. Not suicide bombers and not terrorists. It must 
be rejected every day, every month, every year, every time--in the 
United States, in Israel, and in the Middle East.
  Our energy policy puts us in a position where that gets foggy; it 
does not get clear. It is dangerous. It is not going to serve us well, 
not this week, not next week, and not in the near future. Our 
dependency on oil imports from places that are not democratic nations, 
our refusal to broaden our portfolio of sources of energy, and our 
inability to separate this from our negotiations is not good for 
America.
  Let us begin by supporting Senator Murkowski's amendment on ANWR. Let 
us go further and support drilling. Let us fight very hard with Senator 
Bingaman to try to put dollars into research and technologies for new 
alternatives. Let's be careful with the tax credits we give so we build 
a domestic industry, creating new jobs and keeping our environment 
clean and investing in the States and the localities so when they are 
impacted, we can fix them. When we lose wetlands, we can restore them. 
When some places are disrupted, we can do our very best to fix them and 
have the kind of infrastructure necessary so we can have a good, solid, 
and clean industry.
  That is why, in conclusion, this is getting a lot of momentum. This 
is why the President is receiving a tremendous amount of support in 
some areas of his policy, and why, today, there was a great meeting and 
press conference of some of the major Jewish organizations throughout 
this Nation. B'nai B'rith, the oldest and largest Jewish organization, 
has finally and eloquently stated why it is so important to join this 
fight, along with veterans, along with our military, particularly the 
veterans who have been there. They have been to Europe; they have been 
to Korea; they have been to Vietnam. They know the price that is paid 
when American foreign policy is based on anything outside of our core 
values of freedom and democracy.
  When we start fighting over oil and sacrificing the lives of our 
young men and women, it is just not worth the fight. Let me say again, 
it is not worth the fight. Other issues are worth the fight: democracy, 
freedom, and justice. Oil is not worth the fight, especially when we 
could have energy security by drilling in our own country. It is too 
high of a price to pay. I don't think we should pay it.
  We should continue the effort to get a good, strong bill out of the 
Senate and get it into conference so we can have a bill that produces, 
that encourages more domestic drilling, expands our portfolio of energy 
to include other things, that invests in research and development. This 
country leads the world in technology. When we make up our minds to 
create anything, we can do it. And we hardly ever fail. I can't think 
of a time we failed. We most certainly would be successful in new 
technologies and getting us off, eventually, fossil fuels, a finite 
resource, and getting us to renewables, so we are truly independent and 
our people can have hope.
  In addition, I hope we can then balance this bill in conference. I 
urge the President to take as balanced an approach as possible in 
helping shape a bill that works for our economy, that works for our 
foreign policy, and, most importantly, a bill that is true to values 
that America has stood for now for 225 years. It does not cause us to 
have to be hypocritical or to turn our eye or to be foggy in our 
outlook. We want to see clearly, to be honest with ourselves, about 
this issue.
  It is very serious. It is a very serious issue. Now it is affecting 
our national security. People at home would like to see strong steps 
taken in that regard.
  I am going to be offering an amendment for energy independence in the 
morning. I have a series of amendments that I will be offering over the 
course of this debate. I will lay that out to my colleagues for their 
consideration and I hope we will be strong enough to take the actions 
necessary to set our Nation on the course for independence.
  I yield the remainder of my time.
  The PRESIDING OFFICER. The Chair recognizes the Senator from 
Missouri.
  Mrs. CARNAHAN. I ask unanimous consent to proceed as in morning 
business for 10 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The remarks of Mrs. Carnahan are printed in today's Record under 
``Morning Business.'')
  Mrs. CARNAHAN. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. MURKOWSKI. Madam President, I ask unanimous consent that the 
order for the quorum call be rescinded.
  The PRESIDING OFFICER (Mrs. Carnahan). Without objection, it is so 
ordered.
  Mr. MURKOWSKI. Madam President, for the last several days--since we 
have been following the Mideast crisis--clearly I think we are all 
aware that what was a tinderbox has now ignited into a firestorm.
  This chart gives us an update of what happened while we were out for 
our Easter recess. It is a memorandum to the American people.
  Let me identify the urgency because over the last few days Saddam 
Hussein of Iraq has imposed a 30-day oil embargo on the United States. 
We have seen the price of oil jump about $3 a barrel. We have seen 
Saddam Hussein offer to pay the families of the Palestinian suicide 
bombers up to $25,000. If that isn't an incentive to stimulate those 
who are inclined to give up their life for the cause of Saddam Hussein, 
I don't know what is.
  Further, Iraq and Iran call on countries to use oil as a weapon 
against the United States and Israel. And Libya agrees.
  Think of that--using oil as a weapon.
  When was the last time we talked about a weapon around here? It was 
on September 11th when we were confronted with the first reality that 
an airplane would be used as a weapon. Obviously, we saw that at the 
Pentagon and the two towers of the World Trade Center. This goes beyond 
our previous comprehension of what weapons are. But Iraq and Iran are 
calling on countries to use oil as a weapon.
  What do they mean? They mean, obviously, that with the money and the 
cashflow of oil, they can motivate people to give up their lives as 
suicide bombers if their families can generate $25,000, or thereabouts. 
Where does their money come from? It comes from the cashflow of oil. 
Make no mistake about it.
  Further, a Christian Science Monitor article indicates that there is 
information relative to Iraq carrying out a plot to blow up a U.S. 
warship. That was exposed by the article. The theory was a little more 
significant because what they proposed to do was target a tanker, 
probably in the Straits of Hormuz, and then go after a U.S. warship.
  We are also seeing here at home a skyrocketing increase in gasoline.
  Who is responsible for that? It is our good friend, Saddam Hussein.
  Iraq is the fast-growing source of U.S. oil imports--1.1 million 
barrels; the Persian Gulf, almost 3 million barrels; and, OPEC 
countries, 5.5 million barrels.
  When Saddam Hussein indicates he was going to terminate production 
for 30 days, that means somebody else is

[[Page S2400]]

going to have to pick up their oil. Maybe OPEC will do it. They have 
indicated that Saudi Arabia has the capacity. But will they? Clearly, 
when 1 million barrels are taken off the world market, prices are going 
to increase, and shortages are going to increase. That is reality.
  Make no mistake about it. Saddam Hussein is not doing any favors for 
the United States.
  In announcing an oil embargo, he has effectively caused the spiraling 
in prices and an indicated shortage in production.
  We have some other charts that I think show you the vulnerability of 
the United States. This is, again, while we were away on our Easter 
recess.
  As the Mideast crisis worsens, the price of oil rises. This is the 
statement by Iraq's ruling party.

       If the oil weapon is not used in the battle to 
     defend American and Zionist [Israel] aggression, it is 
     meaningless.

  That is a statement by Iraq's ruling party.
  This is the timeframe from March 25 until our return.

       If the oil weapon is not used in the battle to defend our 
     nations and safeguard our lives and dignity against American 
     and Zionist aggression, it is meaningless.

  That is a pretty strong message. They are saying: We are going to use 
oil as a weapon.
  Make no mistake about it. What does that translate to? Our economy, 
and perhaps increased prices.
  I do not know how many times we have to go to the well around here 
before we understand that some of these folks mean business. We are 
already well aware of bin Laden. We are well aware of the aftermath of 
al-Qaida.
  We wish we would have taken steps to avoid those actions. But where 
are we today as we look at Saddam Hussein? We have every reason to 
believe that he is developing weapons of mass destruction. We haven't 
had the U.N. inspections in several years.
  Are we putting off the inevitable? What is the inevitable? Is it some 
kind of an action that is perpetrated as a consequence of Saddam 
Hussein's weapons that he has developed over a period of time? What are 
those weapons? We don't know because we haven't had inspectors in there 
in over 2 years.
  What we know is that we have been taking his oil. We know that we 
have been enforcing a no-fly zone over Iraq since 1992. We do know that 
we have bombed him three times this year. We do know that we put our 
young men and women's lives at risk as we enforce the no-fly zone. We 
also know as he takes our money, he develops weapons capability and 
weapons of mass destruction--biological weapons--aimed at our ally, 
Israel. We know those things.
  Where is the logic? How do we close the loop? What is the message? 
How are we going to respond?
  I do not know how many times we have to reflect on weapons. We saw an 
aircraft used as a weapon three times on September 11. It could have 
been much worse but for that heroic event in Pennsylvania.
  Here is an article from Reuters of April 1.

       Iraq urges use of oil as a weapon against Israel and U.S.

  It states:

       Use oil as a weapon in the battle with the enemy, Israel.

  Iraq's ruling Baath Party said in a statement published by the 
Baghdad media:

       If the oil weapon is not used in the battle to defend our 
     nations and safeguard our lives and dignity against American 
     and Zionist aggression, it is meaningless.

  That is the ruling party of Iraq.

       ``If Arabs want to put an end to Zionism, they are able to 
     do so in 24 hours,'' Saddam told a group of Iraq's religious 
     dignitaries Sunday night.

  Another quote:

       The world understands the language of economy, so why do 
     not Arabs use this language? He asked.
       Saddam said if only two Arab states threatened to use 
     economic measures against western countries if Israel did not 
     withdraw from the Palestinian-ruled territory, ``you will see 
     they (Israelis) will pull out the next day.''

  Madam President, do we believe that? Saddam Hussein is one of two 
Arab States that has already used its economic measure against the 
Western countries by terminating its oil production for 30 days.
  What else happened today that deserves consideration? In our own 
hemisphere, South America certainly, Venezuela, PDVSA, one of the 
largest conglomerates in the world, went on strike. What does that mean 
to the United States? It means that roughly 30 percent of our imports 
are no longer available. Saddam Hussein stopped his production, and 
Venezuela, PDVSA, is on strike. We don't know the ramifications of 
that.
  The threat is clearly here. I have been coming to the Chamber for a 
long time talking about the blatant inconsistency of our foreign energy 
policy. We have other charts here. I will stay on this subject a little 
more because I think many Members assume this is oil that is coming in 
from overseas. So it is Iraqi oil. So what? We probably don't get it.
  Here is a chart that shows where it goes. What we did was, we went to 
the importers and asked where this oil went. And we got some idea of 
where it is refined: Washington State, California, Texas, Oklahoma, 
Arkansas, Mississippi, Louisiana, Missouri, Illinois, Indiana, Ohio, 
Kentucky, Minnesota, New Jersey. This constitutes roughly Iraqi oil 
imports from January to December of the year 2001, a total of 287.3 
million barrels consumed in these States. It is pretty well spread 
around the geography of the United States.
  We have another chart that shows very vividly crude oil imports from 
Iraq to the United States in the year 2001--283 million barrels. This 
is by month. June was an all-time high. Then down in July. In September 
it bounced up again, in October, November, December. So here we are, 
clearly identifying where the oil comes from and where it goes.
  We could show another chart that shows you what is happening in the 
United States today. That is the increase in retail gasoline prices per 
gallon. This is $1, $1.05, $1.15, up to $1.40. Here we are, April 1: 
$1.34. Make no mistake about it. These are factual realities associated 
with what is happening. The American public is modestly inconvenienced, 
but there is no consensus on what kind of relief.
  I suggest there is an energy plan out there that has been proposed by 
some. This is kind of it. Unless the crisis is too bad, we just stick 
our head in the sand. Is this an energy plan? I don't think so. We have 
an energy bill before us. It is absolutely necessary that we proceed 
with this bill. As a consequence of the extended discussion about how 
we are going to reduce our dependence, one of the issues that comes up 
is obviously to produce more oil in the United States. How can we do 
that?
  One of the more contentious amendments that will be debated on the 
floor is the ANWR amendment. What is so significant about ANWR? The 
significance is that it is the most likely area in North America for a 
major oil discovery. We had ANWR passed in the omnibus bill back in 
1995. In December, it passed out of the Senate. It was vetoed by 
President Clinton. We would know today and have production from the 
area and we wouldn't be beholden to Saddam Hussein, who suddenly 
decides he is going to cut 1 million barrels of production, his 
production, away from the market. We anticipate that ANWR would exceed 
1 million barrels a day.

  We have been paying Saddam Hussein roughly $25 million a day for 
Iraqi oil for the last year. That is a lot of money, $25 million a day. 
This is the same dictator who actively fired on our pilots, who is 
developing weapons of mass destruction, funding terrorism against 
Israel, yet is our fastest growing source of imported oil.
  Saddam Hussein is paying bounties of $25,000 to each suicide bomber 
who murders Israeli citizens. The suicide bombers terrorizing Israel 
are the proxy soldiers of Saddam Hussein. Think about that. They are 
proxy soldiers. Yet we rely on Saddam Hussein for our energy needs each 
day.
  Every time we go to the gas pump, a portion of what we pay funds 
Saddam Hussein in his war on the United States and Israel; on his war, 
if you will, to encourage individuals to sacrifice their lives as 
suicide bombers and commit funds to the relatives of some $25,000.
  Enough is enough. We need to end this inconsistency once and for all.

[[Page S2401]]

  Among the considerations that come to mind to end this would be the 
President's certification that Iraq is complying with U.N. Security 
Council Resolution 687 which demands that the Iraqi weapons program be 
destroyed, destroyed and certified by inspectors, that we have the 
satisfaction of knowing that Saddam Hussein is no longer smuggling oil 
in circumvention of the Oil for Food Program. We have already lost 
lives. We lost the lives of two American Navy men when they intercepted 
one of Saddam Hussein's smuggling ships. In the process of boarding the 
ship, the ship sank and these two American sailors lost their lives. 
Little was said about it, but Saddam Hussein is still taking American 
lives.
  Further, one could consider a stipulation that Saddam Hussein would 
not subsidize the action of the suicide bombers.
  As I indicated earlier, some people don't have a second thought about 
where we get our oil. Some think that drilling in Alaska is too risky. 
That is poppycock. We have drilled in Alaska for 30 years in the Arctic 
and developed the largest field in North America, Prudhoe Bay. You 
might not like oilfields. That is your own business. But Prudhoe Bay is 
the best oilfield not only in the United States but in the world. It 
has more environmental oversight by Federal and State officials, laws, 
and regulations.
  So it is interesting to reflect, if you don't get the oil from here, 
where are you going to get it? Do you want to go to Colombia where they 
are blowing up Colombian pipelines and kidnapping American oil workers? 
Some of the oilfields of Russia are an absolute disgrace from the 
standpoint of environmental oversight.
  Nobody seems to care where it comes from. Why can't it come from an 
area where we have the oversight, where we have the safety, and we can 
do it right?
  We have a situation today where Israeli and Palestinian citizens are 
dying in the streets. They are certainly at risk. Yet they say it is 
too risky to open up the Arctic. I wonder if channeling funds to Saddam 
Hussein to allow him to carry out his vicious campaigns is not risky. 
Our men and women in uniform are in harm's way today. Yet many Members 
in this body live in some fantasyland, a world of ivory towers, an 
image of pristine wilderness.
  Well, I have been there, Madam President. It is a harsh reality. The 
aboriginal residents of the area of Kaktovic support the development. I 
have felt like a voice in the wilderness on this issue for some time. 
We have a lot of wilderness--about 56 million acres, which is the size 
of the State of California.
  It is time for some of us to face the facts. It is time to stop 
contributing to Saddam Hussein's campaign of terror. How bad do things 
have to get before we have the fortitude to recognize that we can 
reduce our dependence and send Saddam Hussein a very strong signal--and 
the rest of the Mideast, such as Iran, Libya, and the other countries, 
including Saudi Arabia--a message that we mean business?
  Remember what Saddam Hussein says at the end of every speech. His 
last words are--think about this--``death to Israel. Death to 
America.'' From what I have seen in Israel in the last 2 months, with 
all the suicide bombers, we ought to know what he means. How long does 
this have to go on before we come to grips with reality and make a 
commitment that we can open up this area safely, that it will 
significantly recuse our dependence on imported oil? I think that time 
has come, and I urge my colleagues to make commitments to America's 
environmental community to recognize that you are going to have to be 
counted here and do what is right for America, not necessarily what is 
right to placate some of the extreme environmental groups that have 
used this as a cash cow; they have milked it for all it is worth.
  It is kind of interesting to hear the mischaracterizations of a 
recent study by the Department of the Interior, the USGS. They 
indicated in the first study the supposition that the entire area was 
at risk. What is the entire area? It is 1.5 million acres that was 
somehow at risk. It was the assumption that the entire area would be 
put up for lease. Of course, the House bill, and what is in the 
amendment that we intend to offer, is that the footprint will be 
limited to 2,000 acres. There will not be international airports, or 
airports of any significance. There will not be any activity during the 
caribou calving season when the Porcupine herd is in the area. Drilling 
and exploration will be limited to wintertime activities. There will be 
no roads built. There will just be ice roads.
  This is the technology we have now. Make no mistake about it, from 
the standpoint of conservation, we have learned how to take care of the 
caribou. There are two major actions we have done to protect them. We 
allow no hunting. You can't run them down in a snow machine. The herd, 
known as the western Arctic herd, in the Prudhoe Bay area was about 
3,000 in the early 1970s. It is over 26,000 today. You can't hunt in 
the area; you can't take those animals.
  The Porcupine herd is something else. The aboriginal people depend 
upon them, and the herd is quite healthy. Remember where that herd 
goes. It crosses the Dempster Highway in Canada. That is probably where 
it receives the most intense pressure from human predators, who take 
the caribou for subsistence and sport purposes. That doesn't happen in 
Alaska; it happens in Canada.
  So I hope my colleagues will be ready to recognize the significance 
of their votes. Not only is this a major issue for the veterans of this 
country who have said time and time again that we want to reduce our 
dependence on foreign oil. We don't want to send our men and women 
overseas to fight another war on foreign soil.
  I am reminded of Mark Hatfield's statement; he is a former Senator 
from the State of Oregon. He said:

       I will vote for ANWR any day rather than send our young men 
     or women overseas to fight a war over oil on foreign soil.

  Well, we did it in 1992 and we lost 147 lives. Let's get on with the 
issue at hand and let's reflect on the issues. American labor is on 
board because they see it as a jobs issue--somewhere in the area of 
250,000 new jobs. People talk about stimulus. That is the largest 
single stimulus that anybody has been able to identify in this entire 
year of debate on the floor of the Senate. What does it mean? It means 
250,000 jobs. But these are private sector, well-paying jobs, union 
jobs that will not cost the taxpayer one red cent. This is win-win-win-
win. It is win for America, win for jobs, win for reducing our 
dependence on imported oil, and win for our scientific community and 
our environmental community--to ensure that we have the technology to 
do this right.
  I look forward to the debate in the coming days, but I think it is 
appropriate to highlight what has happened in just the last 2 days. 
Saddam Hussein has determined he is going to stop oil production for 30 
days. Venezuela is on strike. We have, overnight, lost nearly 30 
percent of our imports, and each day you are going to hear more bad 
news: higher prices at the gas station and higher prices to fill your 
heating oil tanks. You are going to see it represented in the economy--
on the stock market as it affects our growth and, God knows what we can 
expect from the Mideast crisis that is underway in that area today, as 
our vulnerability becomes more intense.
  I will have more to say about this topic each day. I wanted to bring 
to my colleagues' attention the highlights of the pending crisis. When 
we left here on our recess, we had a threat. Today we have a crisis. 
Here it is: a 30-day oil embargo, $3-a-barrel increase, and Saddam pays 
suicide bombers $25,000. Iraq and Iran call on countries to use oil as 
a weapon. If that isn't a threat against the United States and Israel, 
I don't know what is. Iraq plots to blow up U.S. warships, and the 
price of gasoline is skyrocketing.
  Madam President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. DASCHLE. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DASCHLE. Madam President, it is 5:45 in the afternoon. We had one 
vote today. Obviously, there will be no

[[Page S2402]]

more rollcall votes today. I say ``obviously''; I should probably say 
``unfortunately.'' This is the fourth week now we have been on this 
bill. This is the 15th day we have been on this bill. We have scores, 
if not hundreds, of amendments that ought to be offered and ought to be 
debated. We listened to countless speeches all last year from many of 
our Republican colleagues about how critical it was we bring up this 
bill. I think Senator Murkowski on several occasions said: Let's let 
the chips fall where they may; let's offer amendments; let's take up 
ANWR; let's get this legislation done.
  The Senator from Alaska talked today about this being another crisis, 
given the Iraqi situation. Here it is, 5:45 this afternoon, and we are 
facing a Republican filibuster on the Feinstein amendment, the so-
called derivatives amendment. We are hopeful we can at long last reach 
a cloture vote tomorrow. They have been filibustering the derivative 
amendment now for some time. I don't understand why we have yet to take 
up the ANWR amendment. As I said, after 15 long days of debate, we have 
yet to debate one of the central issues involving energy policy from 
the Republicans' perspective, and that is the debate on ANWR.
  It is critical we have that debate sooner rather than later. And if 
need be, I know some of my colleagues have actually suggested maybe 
they will raise the issue, that they take it up, that they offer the 
amendment. We would probably offer the House language.
  We want to accomplish as much as possible during this work period. I 
have laid out, on several occasions now, our hope and expectation with 
regard to the legislative agenda for this work period. It is ambitious. 
But our Republican friends in the administration, and Republican 
friends in the Senate, talk about how they are unable to take up other 
very important pieces of legislation, including trade promotion 
authority and terrorist insurance.
  But we find ourselves here with a Republican filibuster on the energy 
bill, a Republican reluctance to take up the ANWR amendment, and, at 
5:45 in the afternoon, no one to offer amendments in spite of the fact 
that we have been on this bill now for 15 days and over 200 amendments 
are still pending.
  So, I must say, it is a situation that has to be rectified sooner or 
later. There is no way we can take up all of the other important bills 
during this very critical work period if we do not have more 
cooperation and ability to address the remaining issues in this bill 
than what has been demonstrated so far.
  It is unfortunate. It is frustrating to be at a point, after this 
long on the energy bill, that in my view is so far from closure on a 
bill that both sides have acknowledged must be completed.
  I want to complete it. I know Senator Reid has been working very hard 
to try to work on both sides to see if we can come up with a list of 
amendments. But, as I say, a Republican filibuster on the derivative 
amendment has to end. The ANWR amendment has to be debated. We have to 
find some way to resolve whatever other outstanding questions there are 
and bring this bill to a close so we can move on to other important 
pieces of legislation, including border security, which, as I 
understand it, is supported by the administration; Republicans and 
Democrats support it.
  We also have the election reform bill. We have nominations we would 
like to take up--judicial nominations. We have heard a lot about that 
in recent days. So there is no lack of work required of this body. Yet 
there are such limits on our ability to deal with all of those and 
other priorities, simply because we have been unable to move this bill 
any further along than we are this afternoon.
  Mr. REID. Will the Senator yield for a question?
  Mr. DASCHLE. I will be happy to yield to the Senator from Nevada.
  Mr. REID. I ask my friend from South Dakota, the majority leader, if 
he is aware that we have had speeches here in the past several weeks--
we had one earlier this afternoon--of Senators saying, Why don't we 
vote on ANWR? Why don't we have an up-or-down vote on ANWR?
  Is the Senator aware these speeches are being made by the other side 
often but no amendment is offered? Have you ever seen a procedure such 
as that where they complain about not having a vote but they have not 
offered the amendment?
  Mr. DASCHLE. It is mystifying to me. We have been told for months, if 
not years, how critical ANWR is to some of our colleagues on the other 
side. Yet after 15 days we are told we still have to wait for an ANWR 
amendment on this energy bill.
  So something doesn't connect here. Either ANWR is not important or 
there is a slow-walking of the bill--inexplicably. There is an 
emergency, as some of our colleagues have indicated today, but there is 
an inability here to connect the dots. It seems to me we have to 
rectify that situation.
  The Senator is right. You cannot give speeches and say it is 
important for us to finish the bill and take up ANWR and we need a vote 
but then fail to offer the amendment to get the vote.
  I ask my colleagues to recognize how precious our time is. This is 
Tuesday. I have already had two or three requests for early evenings 
and early departure this weekend. I suspect we will get more of those 
throughout the week. We have to make the most of the days we are here. 
Let's make the most of Wednesday, the most of Thursday. Let's resolve 
these outstanding issues, let's end the filibuster, and let's get this 
job done.
  I yield the floor and I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. REID. Madam President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. REID. Madam President, I ask unanimous consent that at 9:15 on 
Wednesday, April 10, the Senate resume consideration of S. 517; that 
the time until 9:45 a.m. be for debate prior to the cloture vote with 
respect to the Feinstein amendment numbered 2989, with the time equally 
divided and controlled in the usual form; that at 9:45 tomorrow morning 
the Senate proceed to vote on the motion to invoke cloture; and that 
Senators have until 9:30 a.m. for filing second-degree amendments to 
the Feinstein amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________