[Congressional Record Volume 148, Number 48 (Thursday, April 25, 2002)]
[Senate]
[Pages S3342-S3390]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




   NATIONAL LABORATORIES PARTNERSHIP IMPROVEMENT ACT OF 2001--Resumed

  The PRESIDING OFFICER. The clerk will report the bill.
  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.
       Murkowski/Breaux/Stevens amendment No. 3132 (to amendment 
     No. 2917) to create jobs for Americans, to reduce dependence 
     on foreign sources of crude oil and energy, to strengthen the 
     economic self-determination of the Inupiat Eskimos, and to 
     promote national security.
       Feinstein amendment No. 3225 (to amendment No. 2917) to 
     modify the provision relating to the renewable content of 
     motor vehicle fuel to eliminate the required volume of 
     renewable fuel for calendar year 2004.
       Feinstein amendment No. 3170 (to amendment No. 2917) to 
     reduce the period of time in which the Administrator may act 
     on a petition by one or more States to waive the renewable 
     fuel content requirement.
       Durbin amendment No. 3342 (to amendment No. 2917) to strike 
     the nonbusiness use limitation with respect to the credit for 
     the installation of certain small wind energy systems.
       Harkin amendment No. 3195 (to amendment No. 2917) to direct 
     the Secretary of Energy to revise the seasonal energy 
     efficiency ratio standard for central air-conditioners and 
     central air-conditioning heat pumps within 60 days.
       Carper amendment No. 3198 (to amendment No. 2917) to 
     decrease the U.S. dependence on imported oil by the year 
     2015.
       Reid (for Bingaman) amendment No. 3359 (to amendment No. 
     2917) to modify the credit for new energy-efficient homes by 
     treating a manufactured home which meets the energy star 
     standard as a 30-percent home.
       Reid (for Boxer) amendment No. 3139 (to amendment No. 2917) 
     to provide for equal liability treatment of vehicle fuels and 
     fuel additives.
       Reid (for Boxer) amendment No. 3311 (to amendment No. 3139) 
     to provide for equal liability treatment of vehicle fuels and 
     fuel additives.

  The PRESIDING OFFICER. The Senator from California.


                           amendment no. 3311

  Mrs. BOXER. Mr. President, I understand that under the unanimous 
consent agreement, I am to call up my amendment No. 3311 at this time.
  The PRESIDING OFFICER. That amendment is already pending.
  Mrs. BOXER. Mr. President, I would like the clerk to read the 
amendment, and after that I am going to yield briefly, without the time 
coming off my time, to several colleagues who want to lay down some 
amendments; also, that I would not lose my right to the floor, as they 
will make clear when they speak.
  The PRESIDING OFFICER. Without objection, it is so ordered. The clerk 
will report the amendment.
  The senior assistant bill clerk read as follows:

       In lieu of the matter proposed to be inserted, insert the 
     following:
       ``(1) In general.--Notwithstanding any other provision of 
     federal or state law, a renewable fuel, as defined by this 
     Act, used or intended to be used as a motor vehicle fuel, or 
     any motor vehicle fuel containing such renewable fuel, shall 
     be subject to liability standards no less protective of human 
     health, welfare and the environment than any other motor 
     vehicle fuel or fuel additive.
       ``(2) Effective date.--This subsection shall be effective 
     one day after the enactment of this Act.''

  Mrs. BOXER. Mr. President, I ask for the yeas and nays on my 
amendment.
  The PRESIDING OFFICER. Is there a sufficient second?
  There appears to be a sufficient second.
  The yeas and nays were ordered.
  Mrs. BOXER. Mr. President, now I will be happy to yield, with the 
understanding I will not lose my right to the floor, to several of my 
colleagues.
  The PRESIDING OFFICER. The Senator from Washington.
  Mrs. MURRAY. Mr. President, will the Senator from California yield 
for a unanimous consent request?
  Mrs. BOXER. I will be happy to yield.


                amendment no. 3326 to amendment No. 2917

  Mrs. MURRAY. Mr. President, I ask unanimous consent that the pending 
amendment be set aside and amendment No. 3326 be called up, and that 
immediately after it is reported, it be laid aside and the Senate 
resume consideration of Senator Boxer's amendment No. 3311.
  The PRESIDING OFFICER. Without objection, it is so ordered. The clerk 
will report.
  The assistant legislative clerk read as follows:

       The Senator from Washington [Mrs. Murray], for herself and 
     Ms. Cantwell, proposes an amendment numbered 3326 to 
     amendment No. 2917.

  Mrs. MURRAY. Mr. President, I ask unanimous consent that the reading 
of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

  (Purpose: To modify the specifications for a fuel cell power plant 
          eligible for the extension of the energy tax credit)

       In Division H. beginning on page 103, line 19, strike all 
     through page 104, line 7, and insert the following:
       ``(i) generates at least 0.5 kilowatt of electricity using 
     an electrochemical process, and
       ``(ii) has an electricity-only generation efficiency 
     greater than 30 percent.
       ``(B) Limitation.--In the case of qualified fuel cell 
     property placed in service during the taxable year, the 
     credit determined under paragraph (1) for such year with 
     respect to such property shall not exceed an amount equal to 
     the lesser of--
       ``(i) 30 percent of the basis of such property, or
       ``(ii) $500 for each 0.5 kilowatt of capacity of such 
     property.''

  The PRESIDING OFFICER. The Senator from Florida.
  Mr. GRAHAM. Mr. President, I ask unanimous consent that the pending 
amendment be set aside and amendments Nos. 3370 and 3372 be brought up, 
and that immediately after they are reported, they be laid aside and 
the Senate resume consideration of Senator Boxer's amendment No. 3311.
  The PRESIDING OFFICER. Is there objection?
  The Senator from Alaska.
  Mr. MURKOWSKI. Mr. President, we have a problem. We are not going to 
be able to finish this bill. We have a number of Senators in the queue 
waiting to call up their amendments. I am concerned, and I would like 
to discuss this matter a little further. I suggest the absence of a 
quorum.
  The PRESIDING OFFICER. The Senator does not have the floor. Does the 
Senator object?
  Mr. MURKOWSKI. The Senator does object.
  The PRESIDING OFFICER. Objection is heard.
  The Senator from California.

[[Page S3343]]

  Mrs. BOXER. Mr. President, I tell my friend, under the UC agreement, 
I have agreed to yield--and, of course, Senators have the right to 
object, but I agreed to yield next to Senator Corzine and then Senator 
Dorgan, and then I go back to my amendment and we get this done. I 
wanted to be congenial to my colleagues because they have done that for 
me in the past.
  Mr. KYL. Will the Senator from California yield?
  Mr. MURKOWSKI. Reserving the right to object. I have already 
objected. I had understood Senator Boxer was going to be next, although 
previous conversation indicated Senator Murray was going to be next. We 
have been going back and forth, and we want to continue going back and 
forth. Senator Kyl is prepared to go.
  My concern is we are going to run out of time, and we want to 
accommodate Senators, but as we put new Senators into the queue, we are 
going to run into a situation with the finance aspect of this 
legislation, on which I am sure Senator Baucus wants a reasonable 
amount of time. We are going to have to come up with some solution.
  I want to accommodate my friend from Florida. I wonder if he will 
give us a few moments to try to work this out. If I may propose a 
unanimous consent request that the Senator from California may speak on 
her amendment now while we try to work this out.
  Mrs. BOXER. Mr. President, we already have a unanimous consent 
agreement. I think it would be wise of my colleagues just simply not to 
interrupt and to have a conversation with the Senator from Alaska while 
I begin.
  Mr. MURKOWSKI. I am concerned about the time element involved with 
each Senator. I understand the Senator from California wants to speak 
for about an hour.
  Mrs. BOXER. No, I do not want to speak for about an hour. I want to 
argue this, and I have 50 minutes remaining on my time. Other Senators 
want to speak, if they come. I am not interested in stalling.
  The PRESIDING OFFICER. Does the Senator from California yield to the 
Senator from Florida?
  Mrs. BOXER. I am delighted to yield to my friend, assuming we go 
right back to this amendment as we originally intended in our UC 
agreement; is that correct, that is what will happen under the UC 
agreement?
  The PRESIDING OFFICER. Under the unanimous consent agreement, the 
Senator from California was to yield to several Senators without losing 
her right to the floor.
  Mrs. BOXER. Mr. President, I yield to my friend from Florida or my 
friend from Nevada, whomever.
  Mr. REID. Will the Senator yield to me without losing her right to 
the floor?
  Mrs. BOXER. I will be happy to yield without losing my right to the 
floor.
  The PRESIDING OFFICER. The Senator from Nevada.
  Mr. REID. It seems what we should do is what the Senator from Alaska 
suggested. The Senator from California should speak on her amendment, 
and in the meantime, while she is doing that, we will try to work out 
some process for these amendments to go forward. We are using a lot of 
time on the bill that this afternoon will be vitally needed. There are 
important tax measures, as the Senator from Alaska indicated, that 
should take a bit of discussion. There are other matters that may not 
take much time. But the tax matters, in my brief review of them, are 
fairly complicated.
  That is my suggestion: The Senator from California should go ahead 
and complete her statement and, in the meantime, we will try to work 
out the way the other amendments can come forward.
  Mr. SCHUMER. Will the Senator from California yield?
  Mrs. BOXER. I will be happy to yield for a question.
  Mr. SCHUMER. I wish to speak on the amendment of the Senator from 
California. I do not want anything to get in the way of others who wish 
to speak to that amendment right after her.
  Mr. REID. I respond through the Chair to the Senator from New York, 
that is my suggestion: We get debate done on the Boxer amendment. In 
the meantime, we have a number of people--Senator Corzine and Senator 
Kyl are here--there are a number of people, including Senators Dorgan 
and Graham, who have amendments to offer, and we will try to work our 
way through those. That is my suggestion.
  The PRESIDING OFFICER. The Senator from California has the floor.
  Mr. MURKOWSKI. I wonder if the Senator will yield for a point.
  Mrs. BOXER. Yes.
  Mr. MURKOWSKI. What we are really trying to do is proceed without 
basically having the exposure of Senators yielding to other Senators to 
offer amendments as opposed to other Senators wanting to speak on 
behalf of an amendment offered. I think Senator Bingaman will agree 
that is all we are trying to do.
  The PRESIDING OFFICER. The Senator from California.
  Mrs. BOXER. Mr. President, this has been an interesting beginning to 
my amendment. I am looking forward to getting to it, which I am going 
to do right now. I want to clarify that the time that was used did not 
come off my 51 minutes, which is what I said in my UC request when I 
began: That none of the time would come off the time I have.
  The PRESIDING OFFICER. That was not the Chair's understanding. But 
without objection, it is so ordered.
  Mrs. BOXER. I thank the Chair. I did say it, but it may have been 
lost in the shuffle.


                           Amendment No. 3311

  Mrs. BOXER. Mr. President, there is an extraordinary thing about the 
bill we are debating. For the first time in history, makers of a 
product are being given a waiver of all liability essentially, if 
something in that product goes wrong in the future. For anyone who 
cares about consumers and communities, this is a terrible situation 
because we do not know what is going to happen with ethanol.
  Now, I am not in the least bit hostile to ethanol. I think it is an 
exciting possibility that we can help our farmers and we can have a 
good additive that cleans the air. I know it opens up an opportunity, 
for example, for my rice growers that they can make ethanol from rice. 
So I am not at all hostile. In fact, most of my friends know, in the 
pro-ethanol caucus, as I call them, that I am the one who led the fight 
to ban MTBE because it is so damaging to the water supply.
  What concerns me is giving the makers of this product carte blanche 
to walk away if in the future we find out there is a problem.
  When I brought this issue up to the ethanol folks in the Senate, they 
said: Well, Senator, we are mandating ethanol in this bill and, 
therefore, if the Government is mandating ethanol, then we should give 
them a waiver from being held accountable if something goes wrong.
  That reasoning is faulty and it is not borne out by the way we do 
business in this country. For example, we mandate that there be 
seatbelts in all cars, but we do not exempt car companies from being 
held accountable if they make a defective seatbelt. They are held 
accountable. We mandated seatbelts, but they are held accountable for 
the safety of the product.
  We mandated that there be airbags in all cars, but we do not exempt 
car companies from being held accountable if there is a defective 
airbag.
  We mandated that all mammographer machines meet certain safety 
standards. Even though we had a mandate that they meet certain 
standards in terms of the radiation that can leak from them, we did not 
say they cannot be held accountable.
  In the 1990 Clean Air Act, we mandated that either MTBE or ethanol be 
used in gasoline, but neither was let off the hook for any damage they 
caused.
  So the first argument that the Government is mandating this so there 
should be no liability for the people who make ethanol does not hold 
up.
  The second time I came back and made the argument, I was told: In the 
bill, the Government will pick up all costs if there is a problem.
  So I said, that is interesting. So my wonderful staff went back and 
read every page of the bill. They could not find anyplace in the bill 
where the Government picks up the tab. So they spoke to everyone they 
could and said, well, did we miss something? There is nothing in the 
bill that says the liability will be shifted from the people who make 
the product to the Federal Government.

[[Page S3344]]

  I have scratched my head and said, is there any precedent at all? I 
thought, maybe the Price-Anderson Act, which by the way I have never 
supported--the bottom line is it says if there is an accident in a 
nuclear powerplant, the taxpayers will pick up the tab. But even there 
the nuclear powerplants have to pay an insurance premium over to the 
Federal Government so at least they are paying part of the tab if, God 
forbid, there should be an accident at a nuclear powerplant.
  There is no premium being paid by the people who make ethanol. So 
that is the second place where this myth is exploded. There is nothing 
in the bill that says the Government will pick up the tab.

  There is a third myth. They say we are only providing a safe harbor 
from one type of lawsuit: defective products. So I went to my lawyerly 
staff, and I said: They are saying no problem, they are only exempting 
these companies from a very narrow provision of law.
  Well, the defective product argument is the only one that will hold 
up in court. It is the one that people are using as they seek to get 
damages for MTBE. So very cleverly, the way this bill is crafted, I 
assure everyone, by the attorneys for the oil companies--I can assure 
everyone that--it is crafted in a way so the liability is waived in a 
way so people can never be held accountable.
  Why is this so important? Because if one looks back at what happened 
with MTBE, they see the argument that did carry weight was the 
defective product argument.
  Why is it important to everyone? Because in the beginning everyone 
thought MTBE was safe, and now even though the people who want to 
support this mandate are saying the product is safe, there are studies 
in the bill to find out if it is really safe. We do not know.
  Senator Feinstein, who I see in the Chamber, has gone into this 
matter in great detail. We do not know what can happen. What we do know 
is it cleans the air but it makes smog worse. We know that but we 
really do not know what is going to occur when the components break 
down.
  The city of Santa Monica had to sue because they paid over $200 
million to try to clean up the damage from MTBE. We hope they will be 
able to recover because they sued under this defective product 
provision.
  Myth four: Ethanol is safe; no need to worry about liability. I was 
not born yesterday, as everyone can tell, and if there is no need to 
worry about liability then why have the waiver for liability? It does 
not make sense. Obviously, somebody is worried about it. The oil 
companies are worried about it, I can say that. One does not give a 
special exemption from liability--and one does not work to get it in 
the bill and, by the way, fight for it, because I have tried to get 
some agreement on it and the oil companies do not want to give an inch 
on it--if you are 100-percent convinced that it is safe.
  As the Washington Post points out in its April 16 editorial, the safe 
harbor liability protection is ``hardly a sign of confidence in 
ethanol's environmental merits.'' We cannot have it both ways. One 
cannot stand up and say this is safe and then fight to protect their 
product. Consumers should be outraged, and that is why we have every 
consumer group that I know of supporting this amendment. That is why we 
have every environmental group that I know of supporting this 
amendment.
  Mr. DURBIN. Will the Senator yield for a question?
  Mrs. BOXER. If it comes off the time of the Senator. I have very 
little time.
  Mr. DURBIN. I did not know I had time.
  Mrs. BOXER. Yes, the Senator has an hour under cloture. Every Senator 
does. If the Senator takes it on his time, that is fine.
  Mr. DURBIN. I ask unanimous consent that time for the colloquy in 
which I am about to engage be taken from the appropriate time.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DURBIN. May I say to the Senator from California--and she knows 
this very well--I come from the heart of ethanol country. I have been 
supportive of the ethanol program throughout my congressional career. 
At times I have been chairman of the alcohol fuels caucus in both the 
House and the Senate. I believe ethanol has been proven over and over 
again to be a safe fuel. It is simply alcohol. It does not have the 
carcinogenic and dangerous qualities of MTBE and other chemicals. We 
have used it successfully in the State of Illinois for years. About a 
third of our gasoline supply is blended with ethanol and is used 
safely.
  So I say to the Senator from California, speaking only for myself, I 
accept her challenge. I believe we can establish across the Nation that 
ethanol is a safe fuel, not only safe for those who would handle it and 
those who would use it in their cars but safe for our environment.
  I see no reason for us to put language in this bill creating any kind 
of exemption from liability for ethanol or renewables fuels.
  The Senator from California has suggested our fuels be held to the 
same standards as every other fuel in America in terms of public health 
and safety. I completely endorse that approach. I would like to be 
shown as a cosponsor to the Senator's amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DURBIN. I yield the floor.
  Mrs. BOXER. I thank my friend. Senator Dayton was here yesterday, 
from ethanol country, supporting this amendment. I think it takes guts 
to do it, but the Senator is right.
  The people we have been meeting with from the Corn Belt--the 
producers, the farmers--do not like this. Frankly, they do not like the 
liability waiver. I believe it is the oil companies that came to the 
table that were fighting for this.
  I am pleased the Senator is a cosponsor. I ask unanimous consent that 
John Kerry be added as a cosponsor.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mrs. BOXER. We have been hit with several myths. Another myth is ETBE 
is not included in the safe harbor. We are glad it isn't. ETBE is only 
one form of ethanol and not the most prominent form. Most ethanol will 
be exempted and will have this safe harbor.
  I state for the record who supports this Boxer-Feinstein-Durbin-
Kerry-Schumer amendment: the National Resources Defense Council, the 
Sierra Club, the U.S. Public Interest Research Group, the League of 
Conservation Voters, Consumer Federation of America, Consumers Union, 
the American Lung Association, Earthjustice, Friends of the Earth, 
Physicians for Social Responsibility, the American Water Works 
Association, the Association of Metropolitan Water Agencies, the 
Association of California Water Agencies, and the South Tahoe Public 
Utility District.
  It is true that even the groups that support the ethanol mandate 
agree with our amendment on liability--for example, the American Lung 
Association and the Blue Water Network. Even among the supporters of 
ethanol--such as Senator Durbin and Senator Dayton--supporters have no 
qualms about going forward with this amendment. They realize the double 
standard is wrong.
  When Senator Feinstein began the debate on why California is leery of 
this mandate, she made several points. One dealt with the issue of 
price. Again, we were told over and over again, the Department of 
Energy says, yes, there will be a 9-cent increase per gallon in certain 
places and 7 elsewhere. That was wrong; it would only be a penny.
  Senator Feinstein made the point we have had some bad experiences 
with collusion in the area of our electricity. If there are only four 
or five people who make the product, we could have problems.
  Yesterday there was a San Francisco Chronicle article: ``Memos show 
possible ethanol price-fixing.'' I ask unanimous consent this article 
be printed in the Record.
  There being no objection, the article was ordered to be printed in 
the Record, as follows:

           [From the San Francisco Chronicle, Apr. 24, 2002]

                Memos Show Possible Ethanol Price-Fixing

            (By Zachary Coile, Chronicle Washington Bureau)

       Washington, Apr. 24.--The Senate backed a plan yesterday to 
     triple the amount of ethanol in gasoline, which opponents 
     argued will lead to more expensive prices at the pumps for 
     Californians.

[[Page S3345]]

       As lawmakers on both sides of the Capitol debated the 
     ethanol requirement, a Sacramento congressman who opposes the 
     plan revealed possible price manipulation among ethanol 
     producers.
       Rep. Doug Ose, the Republican chairman of the energy 
     subcommittee of the House Government Reform Committee, 
     released internal memorandums from ethanol suppliers at a 
     hearing about a proposal to ban MTBE as a gasoline additive 
     and require three times as much ethanol, a corn-based 
     additive. The proposal is part of the energy bill scheduled 
     for a Senate vote tomorrow.
       ``These memos show a disturbing trend of potential market 
     manipulation by ethanol producers,'' Ose said.
       William Kovacic, the general counsel for the Federal Trade 
     Commission and a witness at Ose's hearing, said the full 
     commission could initiate an investigation of the ethanol 
     suppliers.
       Kovacic said that he could not tell whether the documents 
     were evidence of possible industry collusion but that the 
     memos were ``not simply provocative, but perhaps alarming as 
     well.''
       ``Direct communications between rivals that suggest such 
     behavior are a matter of keen concern to the enforcement 
     community,'' Kovacic said, adding that he would alert 
     antitrust investigators at the Justice Department.
       A spokesman for the Renewable Fuels Association, the 
     ethanol industry's trade association, said his group had not 
     seen any of the document and could not comment on Ose's 
     allegations.
       ``I am very suspect of the timing and motivation of this 
     charge,'' Bob Dinneen, the group's president, said in a 
     statement. ``Congressman Ose called today's hearing at the 
     request of the MTBE industry, and no one from the ethanol 
     industry was called to testify. It strikes me as more than a 
     coincidence that Mr. Ose raised this issue at the eleventh-
     hour on the day the Senate is debating the renewable fuels 
     standard.''
       The release of the documents came on a day of often bitter 
     debate that split the Senate along regional lines, pitting 
     Midwestern lawmakers who support the ethanol requirement 
     against senators from California and New York, who strongly 
     oppose it.
       The Senate last night defeated, by a 68-to-31 vote, an 
     amendment by Sen. Charles Schumer, D-N.Y., that would have 
     stripped the ethanol requirement from the energy bill.
       Earlier in the day, California Sen. Dianne Feinstein 
     temporarily delayed the bill until senators could debate 
     proposals to alter the ethanol requirement.
       Feinstein, a Democrat, said the requirement could sharply 
     raise gas prices for California consumers because much of the 
     ethanol will have to be transported by rail from the Midwest, 
     where 98 percent of ethanol plants are located.
       In releasing the memos, Ose said the documents appear to 
     show a pattern by ethanol suppliers to discuss what prices 
     they intended to bid for supplies before ethanol auctions 
     took place--with the goal of assuring that suppliers got the 
     prices they wanted.
       In one of the memos, an executive at an Orange County 
     ethanol supplier, Western Ethanol Co., wrote to a competitor 
     in Costa Rica on Sept. 29, 2000: ``I expect that the winning 
     bid for the 25 percent volume will be somewhere in the upper 
     $1.30's to low $1.40's. We are prepared to stop bidding 
     should the price drop below $1.38 per gallon.''
       In another memo, an executive at another Orange County 
     company, Regent International, wrote to an official at Archer 
     Daniels Midland, the nation's largest ethanol producer, on 
     Nov. 20, 1995, to discuss a proposed deal with a London-based 
     ethanol producer, ED & F Man Alcohols, to jointly bid on fuel 
     from France.
       ``Therefore (ED & F) Man will be bidding on the 75,000 hl 
     out of France at a price of 5.02,'' the memo read. ``I would 
     suggest that ADM underbid at a price of 4.85. This will serve 
     as a safety net in the event Man's bid is rejected for any 
     reason.''
       ADM officials could not be reached for comment. Messages 
     left at the offices of the Orange County companies yesterday 
     afternoon were not returned.
       The release of the memos was part of a last-ditch attempt 
     by ethanol opponents to derail the plan to phase out MTBE as 
     a gasoline additive and triple the use of ethanol by 2012.
       California and a dozen other states have moved to ban MTBE, 
     which has been implicated in groundwater contamination. Gov. 
     Gray Davis last month delayed the state's MTBE ban by a year, 
     to Jan. 1, 2004; after a report by the California Energy 
     Commission said replacing MTBE with ethanol could cut the 
     state's gas supply by 5 to 10 percent and drive up prices to 
     $2 to $3 a gallon.

  Mrs. BOXER. Essentially, it shows Congressman Ose from California got 
ahold of memos that show, if you are doubtful, they are already talking 
about how they will get the highest price possible for this product.
  I add that because it is important that when we voted on some of the 
other ethanol issues, everyone said: Don't listen to the people from 
California.
  Now it is time to listen to us. We have been through some troubles in 
our State because there wasn't transparency; there was manipulation of 
supply and electricity. We don't want to see that happen to any other 
State. We don't want to see it happen to gasoline.
  When the people who objected to points made by Senator Feinstein and 
Senator Schumer, saying they were wrong, there would be no problem, 
this article shows possible ethanol price fixing.
  This is just the beginning. I don't want to see, in 2 years, 
communities in trouble because it turned out ethanol was not as safe as 
they said and we had problems in our communities and there is no way to 
recuperate from the manufacturers of ethanol.
  I diverted into the issue of possible price fixing; I hope people 
listen. I am not here because I am hostile to ethanol. I would like to 
see it move a little slower. I want to see the health studies. I am not 
hostile to using ethanol. We are going to use it in a lot of our 
gasoline. It may turn out to be the panacea. We don't know. I am 
saying: Be cautious and do not give anyone a blanket waiver of 
liability from the one area of the law--defective product--that people 
may have at their disposal.
  I ask my colleague, does she want me to yield for questions?
  Mrs. FEINSTEIN. I very much appreciate the Senator from California 
making that offer. I would like to add to what the Senator has said. I 
am firmly in support of the Senator's amendment. I ask this question. 
She made the case about the health and environmental unknowns of 
ethanol. That was somewhat contested. She is absolutely right.
  I ask the Senator if she knew about the EPA blue-ribbon panel on 
oxygenates which found ``ethanol may retard biodegradation and increase 
movement of benzene and other hydrocarbons around leaking tanks''?
  Mrs. BOXER. I say to my colleague and friend and partner in this 
effort, we are aware of it. I am glad the issue has been raised. This 
has been an education for everyone as we looked into the study. The 
underlying bill does a study on the safety of ethanol, which is an 
admission that they don't know. Therefore, to have a study in the bill, 
and yet at the same time, before we have the facts from the study, 
waive this liability is terrible for consumers and States.
  I am happy the Senator asked the question and I continue to yield.
  Mrs. FEINSTEIN. I wonder if the Senator from California heard that a 
report by the State of California entitled ``Health and Environmental 
Assessment of the Use of Ethanol as a Fuel Oxygenate'' points out there 
are valid questions about the impact of ethanol on ground and surface 
water. The report points that there will be a 20-percent increase in 
public drinking water wells contaminated with benzene if a significant 
amount of ethanol is used. Of course, benzene is a known carcinogen.
  What is interesting in the study, it points out that ethanol causes 
the components of gasoline to break apart and therefore more easily 
seep into ground water from leaking tanks. We all know gasoline leaks. 
It is saying it aids in the release of benzene, a component of 
gasoline.
  I wonder if the junior Senator from California heard of that 
California report.
  Mrs. BOXER. I say to my senior Senator, I have. In addition to the 
benzene, I make the point there are other dangerous areas--not only 
benzene but ethyl benzene, toluene, xylene. We believe ethanol may 
inhibit the breakdown of these toxic materials.
  Yes, we have a blue-ribbon panel, the State. That is why I think we 
are disturbed at the liability waiver.
  I say to my friend, it is incredible because everyone said MTBE was 
wonderful, too.
  Now we have more warning about ethanol than we had about MTBE, and 
they put in a liability waiver.
  I am encouraged that Senator Durbin, for example, and Senator 
Dayton--from ethanol country--are with us on this issue. It means a 
great deal.
  Mr. SCHUMER. Will the Senator yield for a question?
  Mrs. BOXER. I am happy to yield for a question.
  Mr. SCHUMER. I am sorry I could not be here at the beginning of the 
debate, but I have a couple of questions. Just let me get this 
straight.
  We are banning MTBEs because we know they are harmful--in this bill.

[[Page S3346]]

Some of our States have done it already. And we are forcing States that 
may not use ethanol to buy ethanol, which will raise gas prices and cut 
the amount that goes into the trust fund. At the same time, we are 
saying: But, if your soil is polluted--and we have a big problem in New 
York because on Long Island we have one aquifer, one place where all 
the drinking water occurs and the MTBEs are sinking in--if your soil is 
polluted and even if it was done knowingly, that you cannot sue the 
polluter? Is that what we are saying here?
  Mrs. BOXER. Yes, this is exactly what the liability safeguard 
provision does. I repeat, the corn people to whom we have spoken really 
do not like this particularly. They are unhappy with it. But the oil 
companies are pushing for it.
  It seems to me, when you hear that Senator Durbin and Senator Dayton, 
from corn-growing places, support us, that is hopeful. But my friend is 
right. We are banning MTBE because it is harmful. We do not really know 
the end result of ethanol. And before we even know the end result, we 
are waiving liability. He is correct.
  Mr. SCHUMER. I know the Senator has been a leader and expert in these 
issues of suits and liability, far more than I have. How often have we 
done this? How often have we taken some substances that we know are 
dangerous already, some substances that might be dangerous, and put in 
a whole safe harbor so you cannot sue no matter what happens? Have we 
done this for other substances?
  Mrs. BOXER. I say to my friend, this is a precedent-setting waiver. 
Even in the case of the Price-Anderson Act where we waived liability 
for the nuclear power industry, they must pay a premium into a fund, so 
they are on the hook for billions of dollars. This has never been done. 
I say further to my friend, when we talk to some of my ethanol-
supporting friends, they say: But the Government is mandating this, so 
therefore they should waive liability. We mandate seatbelts, but if 
there is a defective seatbelt, a person can sue; airbags, mammograms--
you could go through the list. This is precedent setting, and it is 
terrible law.
  Mr. SCHUMER. If I might ask a question or two more?
  So we are saying the Government is mandating it, but we are not 
putting in any Government backstop?
  Mrs. BOXER. We are not.
  Mr. SCHUMER. If you are a small community and you have a couple of 
schools in your community and your ground water is polluted, costing 
you millions of dollars--and that means the property taxes have to go 
way up--and you know some oil company or refiner, or whatever, polluted 
that soil knowingly, and the MTBEs leaked in, you have no recourse 
against the company and there is no Government backstop as in Price-
Anderson, so the local taxpayers would be stuck; is that correct?
  Mrs. BOXER. That is correct. As a matter of fact, the first time I 
raised it, some of my friends from the ethanol areas said there was a 
Government backstop in the bill. So I went back. We searched the bill, 
page after page, and could not find it.

  We called the people who put together the compromise. As you know, 
the Senators from California and New York were not in that group when 
there was a compromise. No one has come up with anything that shows us 
there is anything in the bill.
  The bottom line is that a city such as Santa Monica--and you could 
pick out your cities--that had a horrible problem with MTBE is 
currently suing to recover $200 million from the oil companies. If that 
was not allowed, the consumers, our taxpayers, have to pick up the tab. 
This is the classic case of, in my view, turning away from ``polluter 
pays'' and going to ``taxpayer pays.''
  If ethanol is so safe, then I would say: Why do they have a study on 
safety in the bill? Why are they seeking this waiver? And why are they 
ignoring the two studies my friend from California, Senator Feinstein, 
is going to have printed in the Record, the blue-ribbon committee from 
EPA, and the State study, that show there is really a problem?
  Mr. SCHUMER. Just another question: So when the Senator is saying 
``taxpayers pay,'' in this case it is not even the Federal taxpayer--
which we do in other areas--it would be the local property taxpayer who 
would be left holding the bag?
  Mrs. BOXER. It will be the biggest unfunded mandate. Not only are 
they mandating ethanol, and at a very fast pace--and it is very hard 
for us to be able to accept that much--but they are also saying: Local 
communities, you are on your own.
  Mr. SCHUMER. It seems to me--and I wonder about the Senator's 
comments as to this--this is like piling on. First you mandate ethanol 
and raise the gasoline prices in New York, California, and so many 
other parts of the country. We can dispute how much. We think a modest 
estimate is 4 cents to 10 cents, depending on the State. Then we cut 
money from the trust fund, so you are getting a gas tax but not the 
money to build the roads. And now we are saying pollution--where it is 
caused by ethanol, we don't know it; but things we know are poisonous 
and polluting are exempt from any lawsuit at all. It seems to me that 
is just piling on. I have never seen anything like it.
  I ask my friend from California, has she? She has more experience in 
these areas than do I. Have you seen anything that has such an amalgam? 
It is almost like an evil brew. They put in all these bad ingredients 
and sneak them in the bill.
  I appreciate very much the leadership of the Senator from California, 
standing up to this provision. We tried to knock out the whole thing. I 
was surprised we got as many as 31 votes, given the power of the 
ethanol lobby. But now we are looking at one piece of it, perhaps one 
of the most egregious pieces of it, and asking people just to knock out 
that part.
  Mrs. BOXER. I agree.
  Mr. SCHUMER. Have you seen anything of such an amalgam this way, that 
hits you right, hits you left, hits you center?
  Mrs. BOXER. It is an amazing situation for those of us on the east 
coast or the west coast. We know we are outnumbered here. But as my 
colleague from California has told me many times, we must make the case 
and the record on this, because I can tell you right now, after living 
through the crisis we lived through in electricity, where we saw what 
happens when a supply is manipulated--the story in today's San 
Francisco Chronicle says:

       These memos show a disturbing trend of potential market 
     manipulation by ethanol producers. . . .

  And the ink hasn't dried on this bill as it becomes law.
  Did you say a witch's brew? Is that what you said?
  Mr. SCHUMER. I can't remember. I think I said an evil brew.
  Mrs. BOXER. If you look at the components of ethanol--and we all hope 
and pray the health studies in the bill come out that it is terrific 
and there is no problem--just look at what ethanol does to another 
witch's brew. It may spread blooms of benzene, toluene, ethyl benzene, 
and xylene because ethanol may inhibit the breakdown of these toxic 
materials.
  Mr. SCHUMER. Just to clarify, what is in the bill doesn't just apply 
to ethanol and its potential dangers but to some things that we know 
are dangerous such as MTBEs, such as benzene, and other things. Is that 
fair to say?
  Mrs. BOXER. The safe harbor does not apply to MTBE.
  Mr. SCHUMER. It does not? Just to the ethanol?
  Mrs. BOXER. It is just ethanol minus ETBE, which as I understand it 
is about 2 percent--a very small percentage of the ethanol. Those are 
the only two.
  There is another point I want to make to my friend.
  I ask unanimous consent to have printed in the Record this letter 
from the Association of California Water Agencies, American Water Works 
Association, and the Association of Metropolitan Water Agencies.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:


[[Page S3347]]


         Association of California Water Agencies, American Water 
           Works Association, Association of Metropolitan Water 
           Agencies,
                                                   April 16, 2002.
     Re: Energy Policy Act of 2002: MTBE and Ethanol provisions

     Hon. Tom Daschle,
     U.S. Senate, Senate Hart Office Building, Washington, DC.
       Dear Senator Daschle: The Association of California Water 
     Agencies (ACWA), American Water Works Association (AWWA) and 
     the Association of Metropolitan Water Agencies (AMWA) 
     strongly support language in the current Energy Policy Act of 
     2002 to end the use of methyl tertiary butyl ether (MTBE) and 
     expedite states' requests for waivers from the Clean Air 
     Act's oxygenate requirement. The phase-out will protect 
     increasingly scarce water supplies from additional 
     contamination by MTBE, which was blended into gas without 
     regulators' consideration of its impact on groundwater.
       Unfortunately, however, the energy bill would also require 
     that states use a new fuel additive, ethanol, in even greater 
     quantities than were required for MTBE. Replacing MTBE with 
     ethanol runs the serious risk of repeating costly 
     environmental mistakes, once again without evidence of the 
     benefits for clean air or the risks to human health. A 1999 
     study by the University of California concluded that the 
     state could meet its clean air, goals without oxygenated 
     fuel, a point corroborated by the U.S. EPA's Blue Ribbon 
     Panel in July 1999. Putting ethanol in gasoline, at any 
     levels would almost certainly result in higher prices at the 
     pump and new instances of possible water contamination.
       The problems don't end there. The ethanol provision 
     features language creating a ``renewable fuels safe harbor'' 
     that gives product liability protection to ethanol marketers. 
     This is especially troubling in view of the real possibility 
     that it will have its own environmental problems.
       Members of the above organizations supply safe drinking 
     water to more than 200 million people in North America. We 
     recognize the need for the U.S. to invest in renewable fuel 
     sources, and are cognizant of the benefits they offer. But 
     ethanol doesn't need a federal mandate to help meet U.S. 
     energy needs. Your fellow Senators have spoken at length on 
     this provision creating market volatility and price spikes 
     for the benefit of a few ethanol producing states, and our 
     organizations support efforts by Senators Feinstein and Boxer 
     to amend the bill.
       Senator Daschle, water agencies sincerely appreciate the 
     language phasing-out MTBE in S. 517. But the bill's call for 
     renewable fuels must not be pitted against the safety of 
     drinking water. We oppose the ethanol mandate and safe harbor 
     language in the bill, and we urge instead your support for 
     waivers from the Clean Air's outdated oxygenate requirement.
       Thank you for your consideration, and please contact our 
     offices if we may provide further information.

  Mrs. BOXER. Here is what it says. It is a letter addressed to Senator 
Daschle.

       Senator Daschle, water agencies sincerely appreciate the 
     language phasing-out MTBE that is in the bill. But the bill's 
     call for renewable fuels must not be pitted against the 
     safety of drinking water. We oppose the ethanol mandate and 
     safe harbor language in the bill, and we urge instead your 
     support for waivers from the Clean Air Act's outdated 
     oxygenate requirement.

  That is of course the larger picture.
  But the point is these water agencies have had to deal with the real 
problems of MTBE. Mr. President, 120 million people are served by these 
water agencies.
  Mrs. FEINSTEIN. Will my colleague yield?
  Mrs. BOXER. I am happy to yield.
  Mrs. FEINSTEIN. I thank Senator Boxer for her support and leadership 
on this issue, as Senator Schumer said. One of the things that has 
struck me is the belief that there is no harm from ethanol when in fact 
studies on this issue have not been done to a great extent.
  I would ask the Senator if she has comments about yesterday's hearing 
on the House side. Yesterday, Professor Gordon Rauser of the University 
of California commented on the potential harm of ethanol on ground 
water. This was before a House committee.
  He said that research now strongly suggests that the presence of 
ethanol in gasoline not only delays its degradation of benzene but also 
lengthens the benzene plumes which run out by between 25 and 100 
percent.
  I think it is very important that the Record shows there is 
scientific evidence that benzene plumes can go up as much as 100 
percent and travel 100 percent more in distance because of ethanol.
  That suggests ethanol may not be as safe as its proponents would have 
you believe.
  Mrs. BOXER. Yes. That is exactly the point of the blue-ribbon panel 
of the EPA. That is exactly what MTBE does as well.
  We are dealing with the potential that we could really have problems. 
No one hopes more than I do that in the end it is all going to be safe; 
that would be a winner. But we cannot stand here and say that.
  If we don't learn from history, we are doomed to repeat it. We went 
through the electricity crisis. We know what happens when supply is 
manipulated.
  Unfortunately, what my friend said on the floor may become true. 
Manipulation is already being discussed on what to charge for ethanol.
  We lived through the MTBE tragedy. I was one of the leaders; I had 
the first bill to ban MTBE. In fact, a long time ago we got over 56 
votes to ban MTBE.
  No one can say I have been reluctant to do that. As I said, I am not 
hostile to ethanol; I am very open to it, but at the same time we need 
to know what we are doing here. We need to be careful about the amount 
we are mandating so it isn't overwhelming but also difficult for people 
to charge exorbitant rates. We have to be careful that there are not a 
few suppliers and there is price manipulation. We have to be careful 
with that. We have to be careful that we have the infrastructure we 
need to bring in the ethanol. We must be careful so we are not giving a 
waiver of liability to the oil companies and give them safe harbor so 
they will not be held responsible, if, in fact, it turns out that this 
blue-ribbon panel and the scientist who Senator Feinstein quoted proves 
to be correct.
  We already know that ethanol makes the air cleaner, but it makes smog 
worse. We know these things. What we don't know is the long-range 
impact of what happens when we use it in the types of quantities in 
which we want to use it.
  Mr. President, how much time do we have on our side?
  The PRESIDING OFFICER (Mr. Carper). Seventeen minutes.
  Mr. MURKOWSKI. Mr. President, will the Senator yield for a very short 
question?
  Mrs. BOXER. On your time. I want to reserve my time.
  Mr. MURKOWSKI. My question has to do with the terminology ``Big Oil'' 
and the responsibility for ethanol. The Senator from Alaska understands 
that Big Oil does not make ethanol.
  Mrs. BOXER. We understand that the oil companies are at the table 
with the ethanol people. They manufacture products. So everyone is at 
the table with the oil companies.
  Mr. MURKOWSKI. I will leave the question out there. It is not my 
understanding that Big Oil makes ethanol.
  Mrs. BOXER. They blend it into the oil. We understand that.
  Mr. MURKOWSKI. They blend it because it is mandated.
  Mrs. BOXER. Right now it is not mandated. We will wait and see what 
happens.
  But my argument is, if this bill becomes law, I don't want to see the 
oil companies--the makers of ethanol--get off the hook if there is a 
problem. It would be unprecedented. It would be the first time in 
American history that it would happen. And it would be coming at a time 
when we know that all the environmental and health questions have not 
been answered.
  Before some of my colleagues arrived, I went through all of the myths 
that I have been told relating to my case. To try to say we are just 
mandating it, and we must, therefore, waive liability--we don't do that 
to automobile manufacturers with seatbelts, airbags, or anything else.
  That is why I am very proud to have Senator Durbin's support and 
Senator Dayton's support because these Senators come from ethanol 
States. They understand that if they have this waiver in this bill, it 
clouds this whole issue. If anyone says to you they have the safest 
product in the world and they want a liability waiver, what does that 
mean? It means in their hearts that they are not so sure. Again, anyone 
who wasn't born yesterday knows that is not a good thing to do.
  I reserve the remainder of my time--probably 15 minutes.
  The PRESIDING OFFICER. The assistant majority leader.
  Mr. REID. Thank you, Mr. President. We would like to schedule a vote 
in the next hour or so on the amendments of the Senators from 
California. It is my

[[Page S3348]]

understanding that on the Boxer amendment, Senator Grassley wishes to 
speak for 5 minutes and Senator Hagel for 10 minutes. I will use a 
couple of minutes.
  We have to move this along. How much longer does the Senator from 
California wish to speak?
  Mrs. BOXER. If I could just close in 5 minutes.
  Mr. REID. Mr. President, on this amendment, the Boxer amendment, I 
ask unanimous consent that I be recognized for 5 minutes to speak in 
opposition to the amendment, that Senator Boxer close with 5 minutes, 
that Senator Grassley be recognized for 5 minutes in opposition to the 
amendment, and that Senator Hagel be recognized to speak for 10 minutes 
in opposition to this.
  I also ask unanimous consent that, upon completion of debate on the 
Boxer amendment, sometime prior to 12:30 today, I be recognized to 
offer a motion to table on behalf of the majority leader.
  Mrs. BOXER. Mr. President, reserving the right to object for one 
moment, I didn't realize the Senator from Nevada was speaking against 
my amendment. Therefore, because of his eloquence, I ask that I be able 
to speak for 8 minutes instead of 5 minutes.
  The PRESIDING OFFICER. Does the Senator modify his request?
  Mr. REID. That would be fine.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.
  Mr. REID. Mr. President, how much time does the Senator from 
California need on her very important amendment?
  Mrs. FEINSTEIN. One-half hour.
  Mr. REID. We will arrange a vote, and I assume a few Members will 
wish to speak in opposition to the amendment. I don't have the amount 
of time figured out.
  If the Senator from California would agree to 25 minutes, and 15 
minutes in opposition----
  Mrs. FEINSTEIN. I agree to that.
  Mr. REID. Mr. President, I ask unanimous consent that on the 
Feinstein amendment No. 3225----
  Mrs. FEINSTEIN. The 1 year.
  Mr. REID. Yes. We would have a vote first on the Boxer amendment and 
second on the Feinstein amendment at 12:30, with the times I have 
mentioned. I ask unanimous consent that be the order, and that both 
votes be on or in relation to the amendments.
  The PRESIDING OFFICER. Will the Senator please restate the request 
with respect to the Feinstein amendment.
  Mr. REID. I am sorry, I cannot hear the Chair.
  The PRESIDING OFFICER. Will the Senator please restate the debate 
time with respect to the Feinstein amendment.
  Mr. REID. Yes. Senator Feinstein would have 25 minutes to speak on 
her amendment, and the opposition would have 15 minutes.
  The PRESIDING OFFICER. Is there objection to the unanimous consent 
request?
  Without objection, it is so ordered.
  Mr. REID. And the vote would occur at 12:30, with no second-degree 
amendments prior to that time being in order.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  The deputy majority leader.
  Mr. REID. Mr. President, the majority leader is in the most important 
agricultural conference, which supposedly--I have heard this before--is 
in its waning minutes, and he can't be in the Chamber. He is one of 
four Democratic conferees. So he has asked me to speak on his behalf 
relating to the Boxer amendment.
  First, Mr. President, the chart I have shows the amount of cases that 
the Senator from California is talking about. Of all the cases we have 
in our court system, the defective product liability cases amount to 
.002 percent. On behalf of the majority leader, I indicate that this is 
a very small number of cases, and it relates to this bill. It is my 
understanding that the language in this bill certainly gives the proper 
opportunity for people to go forward in litigation.
  What the amendment of the Senator from California could be construed 
to be is, in effect, giving strict liability, meaning that you do not 
have to prove any negligence. The majority leader has indicated that 
this simply is not fair, that there is no reason to have strict 
liability in this instance when there are so few cases in our judicial 
system where strict liability is allowed. So the majority leader has 
asked me to indicate that this amendment should be opposed by all 
Senators.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. GRASSLEY. Mr. President, I had the good fortune of listening to 
the exchange between the junior Senator from California and the senior 
Senator from New York. The senior Senator from New York is not in the 
Chamber now. But I would like to point out that there is a lack of 
understanding of this legislation, particularly as it relates to that 
exchange they had over whether or not you can sue with regard to MTBE.
  For all the pollution we have had from that product, there is nothing 
in this legislation that is going to restrict any lawsuits in regard to 
MTBE. So when there was an implication that if we did not adopt the 
amendment before us, that people who have been harmed would not be able 
to seek legal redress, that is totally false. It is misleading if 
anybody says that for MTBE, and damage done from it, there cannot be 
legal redress.
  It is very important we make that clear because the water of 
California, the water of New York, and other States--there is even a 
little bit in my State--has been damaged because of this product, MTBE. 
If you drink MTBE, it will kill you. If you drink ethanol, it will not.
  For the future--and this legislation is prospective--if there is any 
violation of the Clean Water Act, the Clean Air Act, if there is any 
violation by any product, the Environmental Protection Agency has the 
power to make that determination. If that determination is made, then 
there is not a safe harbor under this legislation. So I think, as the 
distinguished Democratic whip has stated, there is ample opportunity 
for redress in this legislation.
  I also point out another misstatement from the other side: that 
somehow you are not going to be able to hold big oil companies 
responsible involving anything to do with ethanol. You do not have to 
worry about holding them responsible anyway. The big oil companies are 
not producing ethanol.
  Then, I remind the junior Senator from California, as I have said, I 
think on two other occasions during this debate over the last week, 
that we were proud of her and willing to work with her on a resolution 
in 1999 that she authored, to declare MTBE as something that should be 
outlawed, and that the reason it should be outlawed is the Clean Air 
Act requirements could be met because the oxygenate requirements of 
that act could be fulfilled because of the availability of ethanol.
  Well, it is the same ethanol in the year 2002 as we were mixing with 
gasoline in 1999, or for the last 20 years, as far as that is 
concerned. The Senator from California, at that particular time, was 
giving accolades to ethanol as a substitute for MTBE.
  Then, lastly, since I am a Republican, I might be suspect from the 
other side of the aisle, but about 6, 7 years ago, Senator Harkin, my 
colleague from Iowa, had a hearing on ethanol versus MTBE in relation 
to its safety, its use, et cetera, and Senator Harkin gave a 
demonstration for all of the Senate that was involved in that 
committee.
  He had a small glass of ethanol, and he drank it. You can talk all 
you want about the dangers of ethanol, but Senator Harkin is very much 
alive and well, years after he took that small amount of ethanol. He 
also had some MTBE there with the skull and crossbones on the can that 
said how poisonous it was. So I think we need to get the facts straight 
before this Senate.
  Again, the exchange that went on a few minutes ago from the senior 
Senator from New York to the junior Senator from California was 
misleading in relation to people not having legal redress in this law 
against damage from MTBE.
  I yield the floor.
  The PRESIDING OFFICER. The Senator has used his 5 minutes.
  The Senator from Nebraska.
  Mr. HAGEL. Mr. President, I rise today to speak in opposition to the

[[Page S3349]]

amendment offered by my colleague from California. As the Senators from 
Iowa and Nevada, who have just preceded me, have stated very clearly, 
this latest attempt to undermine the energy bill's renewable fuel 
standard--one of the few provisions of the bill that is truly 
bipartisan--is not in the best interest of this country's energy needs. 
And it deserves, as the senior Senator from Iowa has just said, some 
explanation as to what it does and does not do--this renewable fuel 
standard amendment, reached by a bipartisan group of Senators, that is 
in the present energy bill.
  It is claimed that it will provide a sweeping liability exemption for 
damage to public health or the environment resulting from the use of 
renewable fuels. This is a clear misrepresentation of this section of 
the energy bill.
  A few months ago, Majority Leader Daschle reached out to a number of 
Senators from both sides of the aisle to help craft the renewable fuel 
provision in the current energy bill that we debate today. The result 
is a historic agreement which has been endorsed by a majority of 
Governors, the Bush administration, agricultural organizations, the oil 
industry, and, yes--and yes--environmental and public health groups.
  The talks that produced this bipartisan compromise included 
representatives from the EPA, the American Lung Association, and the 
Northeast States for Coordinated Air Use Management, among many others.
  I know--and I am sure my colleagues from California and other 
Senators in this body know--that the majority leader of the Senate has 
a strong commitment to the environment and to the health of all 
Americans. I suspect he would not agree to a provision he thought might 
ultimately harm the public's health or environment. None of us would.
  The safe harbor provision in this bill is there for one reason: to 
protect the public and the environment while at the same time not 
exposing manufacturers and distributors to frivolous lawsuits for 
simply complying with a Federal requirement, a Federal requirement that 
we imposed aimed at improving our air and water quality.
  This language in this bill is fair. It is reasonable. It is right.
  Yesterday, the Renewable Energy Action Project, REAP, a California-
based coalition of environmental groups, public agencies, and renewable 
energy producers, placed a full-page ad in the Washington Post. The 
headline in the ad read: ``Renewable fuels mean cleaner air, cleaner 
water, and less dependence on foreign oil.'' And the ad went on to talk 
about the health benefits.
  The ad strongly supports the renewable fuels standard provision and 
calls the provision an important environmental victory that will 
protect America's drinking water and improve our air quality. This 
coalition also warned readers to remember the facts and not be 
surprised when they hear inflammatory and misleading information 
attacking the renewable fuel standard.

  We have heard the misleading information. We have heard it clearly. 
Let's review the facts.
  The facts are, this bill has solid safeguards. It requires, the 
Environmental Protection Agency to conduct studies of the long-term 
health and environmental effects of renewable fuels. Under this bill, 
the EPA Administrator has the authority, the jurisdiction, the control 
to either prohibit or allow the sale of renewable fuels that could 
adversely affect air or water quality or the public health. There is no 
safe harbor if the Administrator rules that the law has been broken or 
laws are violated.
  The safe harbor provision is very limited. It applies only to claims 
that a renewable fuel is ``defective in design or manufacture''--I know 
some in the legal business find that difficult to accept--and that 
meets the requirements of the Clean Air Act. This is very important. 
The Clean Air Act is still the law of the land. All must comply with 
the law of the land. These requirements include compliance with 
requests for information about a fuel's public health and environmental 
effects as well as compliance with any regulations adopted by the EPA. 
If these requirements are not met, the safe harbor protection does not 
apply.
  This provision does not affect claims based on the wrongful release 
of a renewable fuel into the environment. Anyone harmed by a release of 
that kind would retain all the rights to sue, all the rights they now 
have under current law. If we change or strike the safe harbor 
provision in this bill, we will unravel the entire bipartisan 
agreement. We will, in fact, be taking several steps backward because 
the result will be the continued use of MTBE, which we know has health 
and environmental consequences. I do not think that is what my 
colleagues from California or any other colleague wants or intends.
  Just let me recap for a moment what the senior Senator from Iowa said 
about compliance and who is protected, which is very important. There 
is no safe harbor protection under this amendment, if the EPA 
Administrator rules that a manufacturer or any entity is not in 
compliance with the Clean Air Act. The language is very clear. I shall 
read briefly from that language in the bill:

       If it does not violate a control or prohibition imposed by 
     the administrator under section 211 of the Clean Air Act, as 
     amended by this act, and the manufacturer is in compliance 
     with all requests for information under section 211(b) of the 
     Clean Air Act, as amended by this act, in the event that the 
     safe harbor under this section does not apply, the existence 
     of a design defect or manufacturing defect shall be 
     determined under otherwise applicable law.

  This is very clear.
  As I summarize, let me point out an article that appeared today in 
the Washington Post. This article is headlined ``Link Seen Between 
Cooking, Cancer . . . Frying, Baking Starches Creates A Carcinogen.'' 
It goes on to say:

       The process of frying and baking starchy foods such as 
     potatoes and bread causes the formation of potentially 
     harmful amounts of a chemical listed as a probable 
     carcinogen. . . .

  It goes on.
  What much of this is also about is downstream, future technologies. 
No one can predict what is ahead. We now have a story questioning 
starchy foods and how we prepare them. I think there is some historical 
evidence that people have actually been baking bread for centuries and 
eating potatoes cooked many ways and have done quite well actually.
  Let's bring some common sense back to this debate. Let's bring some 
common sense to what we are trying to do here and apply the law based 
on common sense.
  With that, I yield the floor.
  The PRESIDING OFFICER. The Senator from Alaska.
  Mr. MURKOWSKI. Mr. President, how much time remains on the side of 
the opponents?
  The PRESIDING OFFICER. Fifteen minutes in opposition on the Feinstein 
amendment.
  Mrs. BOXER. Mr. President, I have 8 minutes to respond.
  The PRESIDING OFFICER. The question was on the time in opposition.
  The Senator from Alaska.
  Mr. MURKOWSKI. Mr. President, it is fair to reflect on this safe 
harbor Boxer amendment which will be stricken if the amendment 
prevails.
  The bill, we all know, contains this safe harbor provision regarding 
the liability of manufacturers and distributors in renewable fuels that 
are subject to the bill's mandate. The principle is relatively simple: 
No one should be subjected to tort liability simply for manufacturing 
or selling a product that was mandated by this Congress. That is what 
we are talking about, a product mandated by Congress. Maybe Congress 
should bear the liability.
  In any event, it is fair to say the provision is very limited. It 
applies only to claims that a renewable fuel mandated by the act is 
defective in design or manufacture, and it applies only so long as the 
applicable requirements of section 211 of the Clean Air Act have been 
met. These requirements include both compliance with requests for 
information about a fuel's public health and environmental effects and 
compliance with any regulations adopted by the Administrator.
  If these requirements are not met, then the safe harbor protection 
will not be available, and liability will be determined under otherwise 
applicable law.
  This provision does not affect claims based on wrongful release of a 
renewable fuel in the environment. Anyone harmed by a release of that 
kind would

[[Page S3350]]

retain all rights he or she has under current law.
  It also applies only prospectively. So it does not affect any claims 
that have already been filed as of the effective date.
  There is some uncertainty regarding the long-term health and 
environmental risks associated with renewable fuels. Questions have 
been asked about ETBE, an ether derivative from ethanol, even ethanol 
itself. The major strength of the bill is its provisions requiring EPA 
to conduct studies of those effects.
  Those studies show that if additional regulations are necessary, then 
the Administrator simply has authority under the rulemaking provision. 
Liability protection under the bill would depend on full compliance 
with any rules the Administrator may adopt. The balanced approach, 
which I think it is, will protect the public from any adverse health 
and environmental impacts from renewable fuels while not exposing 
manufacturers and distributors to tort lawsuits for complying with the 
renewable fuels mandated in the bill.
  Some have contended that this provision could give polluters sweeping 
liability for damage to public health or the environment resulting from 
renewable fuels or their use, in the sense of conventional gasoline. 
Nothing could be further from the truth.
  In the first place, the safe harbor provision doesn't affect claims 
based on the wrongful release of the renewable fuel into the 
environment. Those responsible for releases to the environment receive 
no protection whatsoever, nor should they. Moreover, the safe harbor 
only applies if the maker or seller of a renewable fuel complies with 
EPA regulations to protect the public health and environment.
  Under this bill, the Administrator has the authority to control, or 
even prohibit, the sale of renewable fuels that may adversely affect 
air or water quality or the public health. There is no safe harbor if 
the Administrator's rules are violated.
  In my opinion, the amendment would simply promote litigation and 
increase our dependence on imported oil, which we have already talked 
about a great deal in this debate on the energy bill.
  Mr. President, I reserve the remainder of my time.
  The PRESIDING OFFICER. Who seeks time?
  Mrs. BOXER. Mr. President, understanding is that all time in 
opposition to my amendment has been used; is that correct?
  The PRESIDING OFFICER. Yes. The time in opposition to the Senator's 
amendment has expired.
  The Senator from California has 8 minutes.
  Mrs. BOXER. I would like to be told when I have used up 7 minutes of 
my 8.
  Mr. President, it is such a simple point. People try to complicate 
simple matters around here. If ethanol is so safe, why have the 
companies involved in its production pressed for the liability 
exemption in the bill? I have to say, with respect to my friends from 
ethanol country, if this chart that my friend from Nevada talked about 
were submitted as an answer to a question in a bar exam, the person 
would fail the bar exam because they have mixed up the causes from the 
remedies. You cannot show all of this and say each one of these is a 
cause. Compensatory damages is a remedy. Punitive damages is a remedy.
  The cause of action they are going after here happens to be a very 
small one, it is true. It is only used in a small number of all civil 
cases, it is true. But defective product liability is the only cause of 
action that will hold up in a court of law when you seek to get damages 
from an additive to gasoline.
  How do I know this? Because we have done this with MTBE, and every 
other cause of action that was recommended was thrown out by the court. 
The only one left standing was defective product.
  So then my friends say: But we are only eliminating defective 
product, and it is just a little narrow sliver. Again, they don't pay 
these oil company attorneys $500 an hour to come up with some 
overarching thing that people will notice. They pay them to come up 
with a very narrow exemption that they hope will slip through. Thank 
goodness, people who have read this bill understand the ramifications 
of this liability waiver, because this could have slipped through.

  The fact of the matter is that they have exempted themselves in this 
so-called ethanol compromise--the compromise where Senator Feinstein 
wasn't at the table, nor was I, nor were the New York Senators. They 
compromised it themselves. The oil companies and the ethanol producers 
came up with this liability waiver.
  So it is a simple point. If it is meaningless, why won't they take it 
out? If it only applies to .002 percent of civil cases, then it is 
meaningless, so why won't they take it out?
  The other question is, I believe, this is precedent setting. We 
mandate many things. The Senator from Alaska says we are mandating 
this. We cannot expect these companies to pick up the tab if it is 
defective. We mandate seatbelts. If there is a defective seatbelt, auto 
companies are held responsible. We mandate regulations on a lot of 
products, such as airbags. We mandate that products be safe and that 
certain rules and regulations be followed in mammography and many other 
products. Yet if there is a defective product, there is no waiver of 
liability.
  One of my friends who is with the ethanol caucus said: Well, we did 
it in Y2K, Mr. President; we waived the liability for the computer 
industry in Y2K. That is a laughable comparison. We gave a waiver of 
liability for 1 year on the Y2K problem because we knew it would be 
complicated. That set a precedent for every thousand years--every 
thousand years. We won't be around for the next one.
  But that is not what this is about. You have heard the expression 
``solidarity forever.'' This is liability forever--liability from a 
product on which there are some problems already proven and there are 
perhaps more problems yet to be known. That is why there is a study in 
the bill.
  I think anyone in this body who cares about consumers, and about 
health, and about the children, and who cares about the environment, 
cares about our States and localities that will have to pick up the tab 
if there is a problem, will vote with us.
  I will be happy to yield to my friend for a question.
  Mrs. FEINSTEIN. Mr. President, I think what the Senator has said is 
very important. I hope Members of the Senate will listen because what 
she pointed out was the central flaw in this safe harbor provision.
  As I understand it, what the Senator is pointing out is that the safe 
harbor provision eliminates the one cause of action anyone has that is 
able to be successful, and that relates to a defective product. So this 
bill eliminates any cause of action which is brought around the product 
being defective.
  Let me give an example, if I understand this. If it is shown--as I 
believe it can be shown--that ethanol breaks down gasoline to allow its 
component parts to plume into the air, spread into the ground, and then 
it enables benzene to move faster and longer and harder, no one can sue 
under a defective product liability cause of action; is that right?
  Mrs. BOXER. My colleague is absolutely correct. If I might tell her 
that, in the Lake Tahoe case against MTBE, the only cause of action the 
court allowed was the very one they are trying to do away with, as she 
pointed out, the defective product liability. It was $45 million to 
clean up the mess at Lake Tahoe, an area of our Nation that my 
colleague and I, Senators Reid, and others have worked so hard to 
protect. The fact is, they had a horrible problem because of the boats 
using the gasoline with MTBE, which is now banned on Lake Tahoe. They 
went to court to try to get the $45 million. We still don't know. The 
jury did come back, and they found for the good guys, the plaintiffs.
  The PRESIDING OFFICER. The Senator has 1 minute.
  Mrs. BOXER. The jury ruled in favor of the plaintiffs. It was made 
under the defective product cause of action. Had they not had that 
available to them--which is exactly what this bill would do, eliminate 
that--they would not have had a case; the people of Lake Tahoe would be 
stuck paying $45 million. This is a small area.
  So, in closing, let me say this: I say to my friends here, please, 
rise above all of this special interest politics and think about what 
is good for your people. We know what is good for your

[[Page S3351]]

people is to make sure they are protected--protected from a product 
that may cause them and their community harm. If we don't vote for this 
amendment, I worry and fear for the future.
  I yield the floor.
  The PRESIDING OFFICER. The Senator's time has expired.
  Who yields time? If no one yields time, time will be charged equally.
  The Senator from New Mexico.
  Mr. BINGAMAN. Mr. President, would you repeat that statement? What is 
the status with regard to time?
  The PRESIDING OFFICER. If no one uses time, time will be charged 
equally to both sides. Senator Feinstein has 25 minutes remaining in 
support of her amendment, and there are 10 minutes in opposition to the 
Feinstein amendment.
  Mr. BINGAMAN. Under the unanimous consent agreement, Senator 
Feinstein's 25 minutes begins to run at this point?
  The PRESIDING OFFICER. That is correct.
  Mr. BINGAMAN. I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. MURKOWSKI. Mr. President, how much time do we have?
  The PRESIDING OFFICER. Ten minutes in opposition. Senator Feinstein 
has 25 minutes, and the time is equally divided in both the support and 
opposition.


                      Amendment No. 3132 Withdrawn

  Mr. MURKOWSKI. Mr. President, I ask unanimous consent to withdraw 
amendment No. 3132.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 3225

  Mrs. FEINSTEIN. Mr. President, I call up amendment No. 3225, and I 
ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  Mrs. FEINSTEIN. Mr. President, the amendment I call up is a very 
modest amendment to the renewable fuels provision in the Senate energy 
bill. It will simply delay the implementation of the ethanol mandate 
for 1 year. That would move it from 2004 to 2005.
  The purpose of the amendment is to give States more time to make 
essential infrastructure refinery and storage improvements. This 
amendment will provide the Senate with the opportunity to make an 
essential modification to the current bill since virtually every State 
outside of the Midwest will have to grapple with how to bring in more 
ethanol over the next several years.
  Although the ethanol industry says they can meet future demand, 
virtually every expert has told me that delivery interruptions and 
shortfalls are likely, if not inevitable, and yet we are tied to bring 
in a specific amount. In 2004, the Nation will be forced to use 2.3 
billion gallons of ethanol. There is insufficient transportation 
infrastructure to ship large amounts of ethanol to the east and west 
coasts, and a temporary reprieve is essential to develop the 
infrastructure, especially when the infrastructure demands for ethanol 
are far more complex for ethanol than for MTBE.
  Here is why infrastructure is so important. Moisture causes ethanol 
to separate from gasoline. So the fuel additive cannot be shipped 
through traditional gasoline pipelines. Ethanol needs to be transported 
separately by truck, boat, barge, rail, and then blended into the 
gasoline at the refinery site after it has arrived.

  Yet it will not be so easy to transport ethanol by truck, boat, or 
rail from the Midwest and blend it once it is transported, unless 
adequate facilities can be built.
  According to the California Energy Commission, the adequacy of 
logistics to deliver large volumes of ethanol is not consistent. A 
recent report sponsored by the California Energy Commission predicts 
there will be future logistical problems since the gasoline supply 
system is currently constrained with demand exceeding the existing 
infrastructure capacity.
  In fact, inadequate infrastructure recently led the Governor of 
California to push back the start date of the State's ban on MTBE to 
2004 from 2003. California does not have the ethanol infrastructure in 
place to meet the oxygenate requirement under current law once MTBE is 
banned. The Governor had little choice because California's predicted 
gas prices at the pump would double if the MTBE ban went into effect as 
planned in 2003.
  This is due in part to the lack of infrastructure. It is also because 
once MTBE is removed, California needs 5 to 10 percent more gasoline 
with ethanol. Here is why.
  MTBE helps reduce the amount of gasoline needed to make a gallon. 
Ethanol, however, does not go as far as MTBE, so it increases the 
amount of gasoline needed to make a gallon. Once we have phased out 
MTBE, the difference is estimated by experts to require 5 to 10 percent 
more gasoline in every gallon of gasoline that is produced with 
ethanol--5 to 10 percent more.
  California's refining capacity is at capacity. It is 98 percent, 
which is capacity. Therefore, we cannot refine 5 to 10 percent more 
gasoline under the present refining conditions. Therefore, not only are 
there going to have to be massive improvements in the ability to bring 
ethanol into the State, but there have to be massive changes made in 
the refineries themselves, and this is going to take time. Somehow we 
are going to have to bring online additional refining capacity to 
handle the tripling of ethanol that is required over the next 10 years 
by this bill.
  This is one of the reasons, from a California perspective, the 
ethanol mandate is worse for California than for any other State, and 
for California it is going to spike the cost of gasoline.
  Let there be no doubt, we have troubles even the way things are with 
gasoline supply. As a matter of fact, gas in California is going up. 
One of the reasons is refinery outages, the shortage of gasoline. That 
is a very real problem.
  This additional year, from 2004 to 2005, will give all States, and 
especially the east coast and west coast States, an additional year to 
solve some of these problems.
  Before forcing three times the amount of ethanol we currently produce 
in our fuel supply, I sincerely urge the Senate to adopt this amendment 
to allow those States that have problems, of which ours is prime, to be 
able to develop the terminals, the trucks, and the barges to bring in 
ethanol and the refinery changes that are going to be necessary to 
produce more gasoline, as well as to absorb ethanol into the situation.
  Let me summarize. In the past days, we have made the following 
points: That the Senate bill requires 5 billion gallons of ethanol by 
2012. The mandate will force California to use 2.68 billion gallons 
more of ethanol than we need to meet clean air standards.

  We have proven, I think, that this is a hidden gas tax of anywhere 
from 4 to 10 percent, and the infrastructure shortfalls in California 
will most likely put the gas tax hike above that. We have shown there 
are transportation and infrastructure problems. We have shown there is 
a dangerously high market concentration.
  We point out Archer Daniels Midland has a 41 percent market share. 
The Wall Street Journal this morning contains a very interesting 
article on this very subject entitled ``ADM Used European Wine For 
Ethanol.'' It shows how recent evidence has been uncovered to suggest 
that ADM engaged in bid rigging, which is a form of price fixing, with 
respect to European ethanol brought into the United States.
  So giving any company a large concentration of market share can also 
produce exactly what we went through with Enron. We have shown that 
ethanol has mixed environmental and health benefits. It does decrease 
carbon monoxide. However, it increases nitrogen oxide emissions, or 
NOx, which will increase smog in my State and in other 
States.
  We have demonstrated there will be less revenue to the highway trust 
fund because gasoline is taxed at 18.4 cents to provide funds for our 
roads and bridges, but fuel blended with ethanol is only taxed at 13.1 
cents. Therefore, this mandate will create an unbelievable $7 billion 
shortfall in the highway trust fund, and it will provide every State in 
the Union less dollars to build roads, bridges, and transportation 
infrastructure.
  We have shown, and Senator Boxer did this eloquently, that the safe 
harbor provision of the bill prevents legal redress if ethanol and 
other fuel additives harm the environment, because it

[[Page S3352]]

removes the unsafe product liability cause of action. That is the one 
cause of action that sustained the cases in California brought on MTBE, 
and this bill removes it for ethanol.
  Why is this in there? Because the oil companies wanted liability 
protection or they would not go along with the deal that was cut. So 
they were given liability protection and no one can bring an unsafe 
product cause of action against ethanol.
  We have shown that ethanol is not a renewable fuel because some 
scientists believe it takes 70 percent more energy to make ethanol than 
it saves using it, and we have shown that the ethanol mandate will 
largely benefit producers, not farmers.
  Producers will get 70 percent of the benefit; farmers, 30 percent 
according to one report. We have shown what this amounts to is a 
massive transfer of wealth.
  The bottom line is the ethanol provisions of this bill are a very bad 
deal and that mandating 5 billion gallons of it, a tripling of it, by 
2012, which never had a hearing in the Energy Committee, never saw the 
light of day before the deal was put together in secret and apparently 
a majority of the Senate is going to support it, we ask one thing, and 
that is that California and other States that need it, on the east 
coast and on the west coast especially, be given one more year to 
increase the refining capacity, to improve the infrastructure, to see 
that the terminals are in place and that we can, in fact, triple 
ethanol and have enough gasoline to supply our need.
  It is my understanding the junior Senator from California would like 
to ask a question.
  Mrs. BOXER. I do want to ask a question, but first I want to thank my 
colleague for this very modest amendment. I am stunned that our friends 
in the ethanol caucus have so far not acceded to it. This is my 
feeling, and I ask my friend if she agrees with me. As she has so 
eloquently pointed out, we need to build an infrastructure to receive 
this ethanol. We have to make sure we know what we are doing and we do 
not rush this. If we rush this and the Senator's amendment is not 
adopted, I think it is possible there could be huge hostility toward 
the use of ethanol, and when the people of our country get upset about 
taxation without representation--and that is how they are going to feel 
because, as my friend has pointed out, this is like a tax on gasoline 
for us--there is no telling what is going to happen in this country in 
places where they are hit.
  If we put that together with this terrible article that ran 
yesterday, ``Memos Show Possible Ethanol Price-fixing,'' with the 
legitimate issues of building an infrastructure, together with the fact 
we do not know the health impacts, if they rush this there could be an 
explosion of resentment in the country.
  There is a 2-year study on the health effects in the bill. Until that 
is done, until that is analyzed, this could take us into 2005. If we 
find out, for example, there is a way to mitigate some of the problems, 
we would have time to fix the infrastructure in a way to contain the 
problem.
  My question to my friend, in addition to thanking her for her 
leadership on this, is, does she not believe if we are all really on 
the level and we are being sincere, that this is a friendly amendment 
to both sides because it would, in fact, give us more time to 
accommodate for the use of the ethanol, would give us more information 
on the impacts of the ethanol, and it would allow us to do this in an 
orderly way without great disruption to the marketplace and at the 
pumps.
  Mrs. FEINSTEIN. I respond to the junior Senator by saying she is 
absolutely right. She has phrased it in a very kind and gentle way. I 
am afraid I feel more adamantly about it, because I am 100 percent 
certain this is a big gas tax increase for our people.
  We have the longest commutes in the Nation now with people commuting 
as much as 2\1/2\ hours to get to work from Stockton to the Bay Area. 
This is going to be a real hardship. Our State is complicated because 
we do not have the refining capacity to refine the additional gasoline 
that ethanol is going to require. We talked about this yesterday. I 
went back and checked the figures, and our state will require 5 to 10 
percent additional gasoline once we ban MTBE, but to force ethanol down 
our throats at the same time is a recipe for disaster.
  Therefore, we will not have the refining ability to refine that 
because our refineries are at capacity.
  So the infrastructure need of our State is much greater because it is 
going to mean additional refining capacity. That is not cheap or easy 
to produce, because you have to go through zoning, you have to go 
through local governments, you have to conduct environmental reports, 
to increase the refining capacity of our refineries.
  Additionally, our refineries are old and they break down. We have had 
two breakdowns of major refineries, as the junior Senator knows, and 
that spikes the price of gasoline. The Senator is right. All this 
amendment says is, give us another year. Instead of 2004, make it 2005. 
Give us and other states a chance to produce our additional refining 
capacity and to meet the additional infrastructure needs.
  The Senator from New York is in the chair. She knows the hardship 
that New York is going to occasion because of this. It gives New York 
an additional year to be able to make substantial infrastructure 
changes.

  Neither California nor New York have much by the way of ethanol 
plants. Everything has to come in from the Midwest. Weather is going to 
impact it. It has to come in by truck or rail or boat. Then it has to 
be transported to a refinery and injected into the gasoline.
  We are saying: Please, you have the votes out there. You know it will 
present considerable hardship to some. At least be generous enough to 
give an extra year to be able to get ready for it.
  I thank the Senator for her question, and I yield the floor.
  The PRESIDING OFFICER (Mrs. Clinton). The Senator from Iowa.
  Mr. GRASSLEY. Madam President, obviously, I am against this 
amendment. The rest of the country is trying to help California get 
through their oxygenate standards and to get over the business of 
polluting water with MTBE which their oil companies wanted to use and 
got a mandate for in the last Clean Air Act.
  Somehow, notwithstanding all this help, the Senators from California 
do not realize how good the agricultural States and even other States 
are trying to be to California to get through this problem. For 
example, a lot of farmer cooperatives have helped invest $1.4 billion 
in small ethanol plants and ethanol expansion in order to provide the 
product needed to help California to meet the requirements of the Clean 
Air Act.
  We already have the Governor of California sticking it to the 
farmers--particularly the farmers who have created the small co-ops to 
produce ethanol--by delaying one year, the MTBE ban that he said 3 
years ago would take effect at the end of this year. So now farmers 
have to wait through 2003 before they get the market created by the 
MTBE ban. It is putting the investment of these small co-ops in danger.
  The Senators from California can talk all they want about helping 
ADM. ADM will survive. The financial investments of the small co-ops 
will be harmed.
  So now, in addition to the damage the Governor of California has been 
done by delaying the MTBE ban by 1 year, now the Senators want to delay 
another year.
  The Senators will help ADM and hurt the farmers who have been trying 
to build the smaller plants so there is more competition in ethanol and 
also more value-added benefits of ethanol go to the individual family 
farmer, instead of ADM.
  So I make it clear, this 1 more year delay, in addition to the year 
delay caused by the Governor of California, is doing damage to the 
people that Senators say they want to help. Senators say they do not 
want dependence upon ADM, but they will make themselves more dependent 
on ADM.

  And now to clear up something about the mixture of ethanol with 
gasoline. The senior Senator from California said you bring ethanol to 
the refinery and it is injected. Let me tell how simple it is to mix 
ethanol and gasoline together. In the tanker, you put the 10-percent 
mix of ethanol in the tanker and add the other 90 percent of gasoline. 
This can be done at the terminal, not at the refinery. You go down the

[[Page S3353]]

road and it is splash blended. It is not a technologically complicated 
process of mixing ethanol with gasoline to create what we call gasohol.
  The other thing I think the Senate should be reminded of regarding 
not having refinery capacity, how long has it been since you built a 
refinery in California? It has been decades. That is not our problem; 
that is your problem that you don't have this refinery capacity because 
of the attitude ``not in my backyard.''
  Now, key points regarding this amendment: The bill before the Senate 
provides for a gradual phase-in of the use of renewable fuels beginning 
with 2.3 billion gallons in the year 2004 and growing to 5 billion 
gallons over an additional 8-year-period of time. So there is plenty of 
time to meet the needs under this legislation.
  The gradual phase-in of the renewable fuels standard provides a very 
orderly transition allowing ethanol capacity and infrastructure 
modifications to expand to meet market demand.
  Nevertheless, we have this delaying tactic before the Senate. It is 
being presented out of fear of disruptions of supply and price. The 
facts show there is no need to delay our fuel standard and there is no 
fear of disruptions. The original agreement implemented the renewable 
fuels provisions beginning 2003 in an effort to assure all parties that 
ethanol capacity expansion and infrastructure modifications needed to 
meet demand would be completed, and we made the renewable portfolio 
standards delayed by 1 year, until the year 2004.
  The U.S. ethanol industry has the capacity to produce 2.3 billion 
gallons of ethanol per year. Right now we produce 1.8 billion gallons 
per year. Plants currently under construction will increase capacity to 
2.7 billion gallons by the end of this year. Clearly, there is more 
than enough ethanol capacity to meet the needs of the first year of the 
program, beginning 2 years from now.
  Ethanol producers have expanded capacity to meet demands. In response 
to State calls for the removal of MTBE from gasoline, America's farmers 
responded, investing in ethanol plants and adding 1 billion gallons of 
new capacity in just these 2 years. Delaying the renewable fuels 
provision will result in significant oversupply in the ethanol market, 
harming new entrants in the ethanol market. Predominantly, these are 
farmer-owns facilities, likely resulting in some plant shutdown.
  A delay will wreak havoc on the fuel supply markets as ethanol plants 
shut down as a result of delay. The petroleum industry will lose 
potential sources of supply necessary to meet renewable fuel 
requirements the following year when the program begins, disrupting 
markets and actually raising the potential for price increases to 
consumers.
  By the way, I want to respond to the so-called tax on consumers. 
There is not any place I have been in my State that you have to pay one 
penny more for gasoline with ethanol in it. Most times you get it for 2 
cents cheaper, sometimes 3 cents cheaper. Most of the time it is priced 
exactly the same. Don't talk to me about a tax on consumers because 
ethanol is in gasoline.
  Today, oil refineries are operating at near full capacity, leaving no 
room in the system for unexpected shutdowns, fires, or pipeline 
disruptions.
  Delaying the renewable fuels provision by a year will further 
constrain domestic supply, leaving consumers vulnerable to price hikes.
  Last, I think we also have to remember there is a certain amount of 
camaraderie around this body that has to be respected. That is that we 
do have some very basic agreements put together in regard to getting a 
bipartisan energy bill through this body.
  The historic bipartisan compromise on fuels issues in this bill 
represents a carefully crafted agreement among oil industry, ethanol 
producers, agricultural groups, environmental and public health 
interest groups, including the American Lung Association, the Union of 
Concerned Scientists, and Northeast States for Coordinated Air Use 
Management, among others.
  So let's keep this carefully crafted agreement together so we can get 
a bill passed and maintain a bipartisan approach to the energy problems 
of this country.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from California.
  Mrs. FEINSTEIN. Madam President, how much time do I have?
  The PRESIDING OFFICER. Six minutes.
  Mrs. FEINSTEIN. Madam President, I would like to respond to the 
Senator. I found his comments really quite amazing. On the one hand, he 
was saying how generous he was being to California; on the other hand, 
he was saying: Tough, if it spikes your cost of gasoline; tough, if you 
don't have enough refinery capability, that is your fault. I am for the 
farmers in the Midwest, and all the rest of you be damned.
  I don't appreciate that very much. I will tell you something: When 
the price of gasoline does spike and people are calling, I will refer 
them to your office, Senator, and be happy to do so. We are being 
forced to use something we do not need. It would be one thing if we 
needed it to meet clean air standards. We are being forced to use 2.68 
billion gallons of ethanol we do not need in California to meet clean 
air standards. I resent that.
  I resent that the policy of the United States Senate mandates that we 
have to use something we do not need that is going to cost us more, 
that is going to prevent us from getting highway money and 
transportation money because it is going to cut the highway trust fund 
by $7 billion.
  I resent the fact that I am on the Energy Committee and this bill was 
not even run by the committee; that there has been no public hearing 
held on any part of it. I resent that fact.
  I resent the fact that you don't care whether my State has the 
refining capacity or not to meet this in time. We have tried to be nice 
all during this debate, but I resent the fact that this is a deal cut 
in secret, when nobody who is affected adversely has a chance to weigh 
in.
  I resent the fact that we have no chance to get experts before a 
committee, to say what we do and do not know about ethanol.
  I resent the fact that everybody says it is just great, when 
scientists have said it may have real problems attributed to it and we 
cannot even have a hearing to listen to those problems. I resent that. 
I do not think it is good public policy. It might be good in a 
political campaign.
  I resent the fact that I had the refiners, the ethanol people and the 
corn farmers, in my office for 8 months trying to negotiate something 
that California could live with, and then both Presidential candidates 
announced their support of ethanol and the corn growers reversed and 
said: Forget you, we are not going to negotiate with you; now we can 
get much more. And the ``much more'' has resulted in a tripling of an 
additive we do not need.
  Senator Boxer and I are standing here like two lone sheep trying to 
make an argument when the deal has already been cut, when we have never 
been consulted. The Senator from New York, what is she going to do when 
her gasoline price spikes--because it is going to--because we did not 
have that opportunity?
  I resent that as public policy. I have every right to. I represent 
34.5 million people, the fifth-largest economic engine on Earth, and we 
are being told: It is good for corn farmers, so, you guys, lay down and 
take it. I am being told: Oh, we have a credit trading system. But the 
fact of the matter is, if you really read the fine print: Use it or pay 
for it.
  I have a problem with that public policy. And I have every right to 
stand on this Senate floor and say I have a problem with it, and say I 
think this is unfair, and say I think it is done in the dark of night, 
and say I do not think anybody who is really affected by it has been 
let into that secret, dark room.

  Yes, you have all cut your deal, and both coasts are going to suffer 
because of it.
  I talk to Senators who I was surprised were in on the deal. What they 
told me was: We had to, or they would not let us stop using MTBE. We 
had to, or they would not let us stop using MTBE. That is the way 
public policy is made.
  It is wrong. I am sorry, it is wrong. We lose today, but guess what, 
we will watch this thing. We will watch this with the eyes of a hawk. 
You can be sure we will have more to say about it

[[Page S3354]]

because it is bad public policy. To mandate States to use something 
they don't need, when they can meet clean air standards with 
reformulated fuel except for a small part of the year, in a certain 
market--it is wrong. It is bad public policy.
  Mrs. BOXER. Will my colleague yield for a question?
  Mrs. FEINSTEIN. I will be happy to yield because my adrenaline will 
then drop and my blood pressure will as well.
  Mrs. BOXER. I say to my colleague, she had every right to exhibit the 
feelings she did, when we are told on the floor: Don't come and tell us 
about price increases.
  Our State has gone through the proverbial nightmare with electricity 
prices because they were manipulated, because the supply was 
manipulated, because there was no transparency, because a few companies 
got together and did it to us. Now we are walking into this situation 
because of our colleagues who have a special interest in this. I 
understand it, but don't stand on the floor and say: Don't tell me 
about price increases.
  Your administration, the administration in charge, the Bush 
administration, has put out a chart. What I want to ask my colleague is 
this: Didn't Spencer Abraham put out a chart that showed us that this 
administration believes the price of gasoline in California will go up 
9 cents? This is not something we are making up. Is that not a fact?
  The PRESIDING OFFICER. The time of the Senator has expired.
  Mrs. BOXER. I ask for 30 more seconds so she can respond.
  Mr. REID. There is no time.
  Mrs. BOXER. May she have 30 seconds to respond to my question, 
please?
  Mr. REID. I object.
  The PRESIDING OFFICER. Is there objection?
  Mr. REID. Yes. The Senator from Nevada has 2\1/2\ minutes. I yield 2 
minutes of that to the Senator from Nebraska, Mr. Nelson.
  The PRESIDING OFFICER. The Senator from Nebraska.
  Mr. NELSON of Nebraska. Madam President, one of the questions raised 
continuously throughout this debate, and it continues to be a question, 
is: Will there be enough volume, will there be enough production 
capacity to handle these requirements? Let me refer to the chart we 
have here that shows there are 61 plants today, plants that are in 
operation; 14 are under construction--and they claim 82 percent of 
capacity is in production. We can do better. Biodiesel is estimated to 
provide another 100 million gallons of ethanol equivalent.
  As you begin to see the capacity and production, you see that we have 
the additional capacity in excess of the production we have at the 
present time. So the whole question about whether or not we will have 
enough production, will there be enough ethanol, I think should be put 
to bed.
  The other point that needs to be made is, will this raise the price 
of gasoline because of the cost of ethanol? Frankly, by reducing the 
amount of gasoline used, because of the additive, it will drive down 
the supply of gasoline, which I think will also, if you will--and the 
use of ethanol as a part of that--not increase the cost of gasoline but 
will in fact decrease the cost of gasoline. The evidence really exists 
that this is what the marketplace has been doing over the last 10 to 20 
years in many States across the country.
  I can understand the concern that has been raised. But I think we 
have to deal with the facts. If we are going to deal with concerns, the 
best way to deal with them is with facts. I think the facts have shown 
capacity, have shown prices, and haven't gone up. I think we can 
conclude that there will be enough capacity and that the prices will 
not go up as has been suggested.
  I yield the floor.
  Mr. REID. Madam President, I yield the final 30 seconds to the 
Senator from California.
  The PRESIDING OFFICER. The Senator from California is yielded the 
final 30 seconds.
  Mrs. FEINSTEIN. Madam President, once again, this is just a very 
modest amendment. It delays the implementation of this mandate by 1 
year, until 2005. It gives both coasts of the United States the 
opportunity to do what they need to do to increase refining capacity, 
to develop the terminals, to develop the truck fleet, and to get ready 
for what is going to be a massive infusion of a product that can't be 
shipped by pipe. It has to be shipped by truck or by rail or by barge.
  I hope the Senate will allow us this additional year to get ready for 
this unfortunate mandate.


  Amendments Nos. 3332, 3333, 3370, 3372, 3239, As Modified, 3146, As 
          Modified and Further Modified, 3082, 3355, and 3335

  Mr. REID. Madam President, prior to the vote taking place, there are 
some housekeeping matters.
  I ask unanimous consent the pending amendments be temporarily set 
aside in order for the following filed amendments to be offered in the 
order in which they are listed below. I further ask unanimous consent 
that following the reporting of these amendments they be set aside in 
the order offered:
  Kyl No. 3332; Kyl No. 3333; Graham No. 3370; Graham No. 3372; 
Brownback No. 3239, as modified; Hagel No. 3146, as modified, with a 
further modification now at the desk; Baucus No. 3082; Conrad-Smith No. 
3355; and Sessions No. 3335.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendments (Nos. 3332, 3333, 3370, 3372, 3239, as modified, 3146, 
as further modified, 3082, 3355, and 3335) are as follows:


                           amendment no. 3332

     (Purpose: To strike the extension of the credit for producing 
                         electricity from wind)

       In Division H, on page 4, line 8, strike ``Subparagraphs 
     (A) and'' and insert ``Subparagraph''.
                                  ____



                           amendment no. 3333

(Purpose: To strike the provisions relating to alternative vehicles and 
                           fuels incentives)

       In Division H, beginning on page 17, line 9, strike all 
     through page 55, line 6.
                                  ____



                           amendment no. 3370

(Purpose: To strike section 2308 of Division H (relating to energy tax 
                              incentives))

       In Division H, (relating to energy tax incentives), strike 
     section 2308.
                                  ____



                           amendment no. 3372

(Purpose: To limit the effective dates of the provisions of Division H 
                  (relating to energy tax incentives))

       In Division H, on page 216, after line 21, add the 
     following:

     SEC.  . LIMITATION ON EFFECTIVE DATES.

       Notwithstanding any other provision of this division, no 
     provision of nor any amendment made by this division shall 
     take effect until the date of the enactment of legislation 
     which raises Federal revenues or reduces Federal spending 
     sufficient to offset the Federal budgetary cost of such 
     provisions and amendments for the 10-fiscal year period 
     beginning on October 1, 2002.
                                  ____



                    AMENDMENT NO. 3239, As Modified

       Strike all after the title heading and insert the 
     following:

     SEC. 1101. PURPOSE.

       The purpose of this title is to establish a greenhouse gas 
     inventory, reductions registry, and information system that--
       (1) are complete, consistent, transparent, and accurate;
       (2) will create reliable and accurate data that can be used 
     by public and private entities to design efficient and 
     effective greenhouse gas emission reduction strategies; and
       (3) will acknowledge and encourage greenhouse gas emission 
     reductions.

     SEC. 1102. DEFINITIONS.

       In this title:
       (1) Administrator.--The term ``Administrator'' means the 
     Administrator of the Environmental Protection Agency.
       (2) Baseline.--The term ``baseline'' means the historic 
     greenhouse gas emission levels of an entity, as adjusted 
     upward by the designated agency to reflect actual reductions 
     that are verified in accordance with--
       (A) regulations promulgated under section 1104(c)(1); and
       (B) relevant standards and methods developed under this 
     title.
       (3) Database.--The term ``database'' means the National 
     Greenhouse Gas Database established under section 1104.
       (4) Designated agency.--The term ``designated agency'' 
     means a department or agency to which responsibility for a 
     function or program is assigned under the memorandum of 
     agreement entered into under section 1103(a).
       (5) Direct emissions.--The term ``direct emissions'' means 
     greenhouse gas emissions by an entity from a facility that is 
     owned or controlled by that entity.
       (6) Entity.--The term ``entity'' means--
       (A) a person located in the United States; or
       (B) a public or private entity, to the extent that the 
     entity operates in the United States.
       (7) Facility.--The term ``facility'' means--
       (A) all buildings, structures, or installations located on 
     any 1 or more contiguous or adjacent properties of an entity 
     in the United States; and
       (B) a fleet of 20 or more motor vehicles under the common 
     control of an entity.
       (8) Greenhouse gas.--The term ``greenhouse gas'' means--

[[Page S3355]]

       (A) carbon dioxide;
       (B) methane;
       (C) nitrous oxide;
       (D) hydrofluorocarbons;
       (E) perfluorocarbons;
       (F) sulfur hexafluoride; and
       (G) any other anthropogenic climate-forcing emissions with 
     significant ascertainable global warming potential, as--
       (i) recommended by the National Academy of Sciences under 
     section 1107(b)(3); and
       (ii) determined in regulations promulgated under section 
     1104(c)(1) (or revisions to the regulations) to be 
     appropriate and practicable for coverage under this title.
       (9) Indirect emissions.--The term ``indirect emissions'' 
     means greenhouse gas emissions that--
       (A) are a result of the activities of an entity; but
       (B)(i) are emitted from a facility owned or controlled by 
     another entity; and
       (ii) are not reported as direct emissions by the entity the 
     activities of which resulted in the emissions.
       (10) Registry.--The term ``registry'' means the registry of 
     greenhouse gas emission reductions established as a component 
     of the database under section 1104(b)(2).
       (11) Sequestration.--
       (A) In general.--The term ``sequestration'' means the 
     capture, long-term separation, isolation, or removal of 
     greenhouse gases from the atmosphere.
       (B) Inclusions.--The term ``sequestration'' includes--
       (i) soil carbon sequestration;
       (ii) agricultural and conservation practices;
       (iii) reforestation;
       (iv) forest preservation;
       (v) maintenance of an underground reservoir; and
       (vi) any other appropriate biological or geological method 
     of capture, isolation, or removal of greenhouse gases from 
     the atmosphere, as determined by the Administrator.

     SEC. 1103. ESTABLISHMENT OF MEMORANDUM OF AGREEMENT.

       (a) In General.--Not later than 1 year after the date of 
     enactment of this Act, the President, acting through the 
     Director of the Office of National Climate Change Policy, 
     shall direct the Secretary of Energy, the Secretary of 
     Commerce, the Secretary of Agriculture, the Secretary of 
     Transportation, and the Administrator to enter into a 
     memorandum of agreement under which those heads of Federal 
     agencies will--
       (1) recognize and maintain statutory and regulatory 
     authorities, functions, and programs that--
       (A) are established as of the date of enactment of this Act 
     under other law;
       (B) provide for the collection of data relating to 
     greenhouse gas emissions and effects; and
       (C) are necessary for the operation of the database;
       (2)(A) distribute additional responsibilities and 
     activities identified under this title to Federal departments 
     or agencies in accordance with the missions and expertise of 
     those departments and agencies; and
       (B) maximize the use of available resources of those 
     departments and agencies; and
       (3) provide for the comprehensive collection and analysis 
     of data on greenhouse gas emissions relating to product use 
     (including the use of fossil fuels and energy-consuming 
     appliances and vehicles).
       (b) Minimum Requirements.--The memorandum of agreement 
     entered into under subsection (a) shall, at a minimum, retain 
     the following functions for the designated agencies:
       (1) Department of energy.--The Secretary of Energy shall be 
     primarily responsible for developing, maintaining, and 
     verifying the registry and the emission reductions reported 
     under section 1605(b) of the Energy Policy Act of 1992 (42 
     U.S.C. 13385(b)).
       (2) Department of commerce.--The Secretary of Commerce 
     shall be primarily responsible for the development of--
       (A) measurement standards for the monitoring of emissions; 
     and
       (B) verification technologies and methods to ensure the 
     maintenance of a consistent and technically accurate record 
     of emissions, emission reductions, and atmospheric 
     concentrations of greenhouse gases for the database.
       (3) Environmental protection agency.--The Administrator 
     shall be primarily responsible for--
       (A) emissions monitoring, measurement, verification, and 
     data collection under this title and title IV (relating to 
     acid deposition control) and title VIII of the Clean Air Act 
     (42 U.S.C. 7651 et seq.), including mobile source emissions 
     information from implementation of the corporate average fuel 
     economy program under chapter 329 of title 49, United States 
     Code; and
       (B) responsibilities of the Environmental Protection Agency 
     relating to completion of the national inventory for 
     compliance with the United Nations Framework Convention on 
     Climate Change, done at New York on May 9, 1992.
       (4) Department of agriculture.--The Secretary of 
     Agriculture shall be primarily responsible for--
       (A) developing measurement techniques for--
       (i) soil carbon sequestration; and
       (ii) forest preservation and reforestation activities; and
       (B) providing technical advice relating to biological 
     carbon sequestration measurement and verification standards 
     for measuring greenhouse gas emission reductions or offsets.
       (c) Draft Memorandum of Agreement.--Not later than 15 
     months after the date of enactment of this Act, the 
     President, acting through the Director of the Office of 
     National Climate Change Policy, shall publish in the Federal 
     Register, and solicit comments on, a draft version of the 
     memorandum of agreement described in subsection (a).
       (d) No Judicial Review.--The final version of the 
     memorandum of agreement shall not be subject to judicial 
     review.

     SEC. 1104. NATIONAL GREENHOUSE GAS DATABASE.

       (a) Establishment.--As soon as practicable after the date 
     of enactment of this Act, the designated agencies, in 
     consultation with the private sector and nongovernmental 
     organizations, shall jointly establish, operate, and maintain 
     a database, to be known as the ``National Greenhouse Gas 
     Database'', to collect, verify, and analyze information on 
     greenhouse gas emissions by entities.
       (b) National Greenhouse Gas Database Components.--The 
     database shall consist of--
       (1) an inventory of greenhouse gas emissions; and
       (2) a registry of greenhouse gas emission reductions.
       (c) Comprehensive System.--
       (1) In general.--Not later than 2 years after the date of 
     enactment of this Act, the designated agencies shall jointly 
     promulgate regulations to implement a comprehensive system 
     for greenhouse gas emissions reporting, inventorying, and 
     reductions registration.
       (2) Requirements.--The designated agencies shall ensure, to 
     the maximum extent practicable, that--
       (A) the comprehensive system described in paragraph (1) is 
     designed to--
       (i) maximize completeness, transparency, and accuracy of 
     information reported; and
       (ii) minimize costs incurred by entities in measuring and 
     reporting greenhouse gas emissions; and
       (B) the regulations promulgated under paragraph (1) 
     establish procedures and protocols necessary--
       (i) to prevent the reporting of some or all of the same 
     greenhouse gas emissions or emission reductions by more than 
     1 reporting entity;
       (ii) to provide for corrections to errors in data submitted 
     to the database;
       (iii) to provide for adjustment to data by reporting 
     entities that have had a significant organizational change 
     (including mergers, acquisitions, and divestiture), in order 
     to maintain comparability among data in the database over 
     time;
       (iv) to provide for adjustments to reflect new technologies 
     or methods for measuring or calculating greenhouse gas 
     emissions; and
       (v) to account for changes in registration of ownership of 
     emission reductions resulting from a voluntary private 
     transaction between reporting entities.
       (3) Baseline identification and protection.--Through 
     regulations promulgated under paragraph (1), the designated 
     agencies shall develop and implement a system that provides--
       (A) for the provision of unique serial numbers to identify 
     the verified emission reductions made by an entity relative 
     to the baseline of the entity;
       (B) for the tracking of the reductions associated with the 
     serial numbers; and
       (C) that the reductions may be applied, as [determined to 
     be appropriate by any Act of] Congress enacted after the date 
     of enactment of this Act, toward a Federal requirement under 
     such an Act that is imposed on the entity for the purpose of 
     reducing greenhouse gas emissions.

     SEC. 1105. GREENHOUSE GAS REDUCTION REPORTING.

       (a) In General.--An entity that participates in the 
     registry shall meet the requirements described in subsection 
     (b).
       (b) Requirements.--
       (1) In general.--The requirements referred to in subsection 
     (a) are that an entity (other than an entity described in 
     paragraph (2)) shall--
       (A) establish a baseline (including all of the entity's 
     greenhouse gas emissions on an entity-wide basis); and
       (B) submit the report described in subsection (c)(1).
       (2) Requirements applicable to entities entering into 
     certain agreements.--An entity that enters into an agreement 
     with a participant in the registry for the purpose of a 
     carbon sequestration project shall not be required to comply 
     with the requirements specified in paragraph (1) unless that 
     entity is required to comply with the requirements by reason 
     of an activity other than the agreement.
       (c) Reports.--
       (1) Required report.--Not later than April 1 of the third 
     calendar year that begins after the date of enactment of this 
     Act, and not later than April 1 of each calendar year 
     thereafter, subject to paragraph (3), an entity described in 
     subsection (a) shall submit to each appropriate designated 
     agency a report that describes, for the preceding calendar 
     year, the entity-wide greenhouse gas emissions (as reported 
     at the facility level), including--
       (A) the total quantity of each greenhouse gas emitted, 
     expressed in terms of mass and in terms of the quantity of 
     carbon dioxide equivalent;
       (B) an estimate of the greenhouse gas emissions from fossil 
     fuel combusted by

[[Page S3356]]

     products manufactured and sold by the entity in the previous 
     calendar year, determined over the average lifetime of those 
     products; and
       (C) such other categories of emissions as the designated 
     agency determines in the regulations promulgated under 
     section 1104(c)(1) may be practicable and useful for the 
     purposes of this title, such as--
       (i) direct emissions from stationary sources;
       (ii) indirect emissions from imported electricity, heat, 
     and steam;
       (iii) process and fugitive emissions; and
       (iv) production or importation of greenhouse gases.
       (2) Voluntary reporting.--An entity described in subsection 
     (a) may (along with establishing a baseline and reporting 
     reductions under this section)--
       (A) submit a report described in paragraph (1) before the 
     date specified in that paragraph for the purposes of 
     achieving and commoditizing greenhouse gas reductions through 
     use of the registry; and
       (B) submit to any designated agency, for inclusion in the 
     registry, information that has been verified in accordance 
     with regulations promulgated under section 1104(c)(1) and 
     that relates to--
       (i) with respect to the calendar year preceding the 
     calendar year in which the information is submitted, and with 
     respect to any greenhouse gas emitted by the entity--

       (I) project reductions from facilities owned or controlled 
     by the reporting entity in the United States;
       (II) transfers of project reductions to and from any other 
     entity;
       (III) project reductions and transfers of project 
     reductions outside the United States;
       (IV) other indirect emissions that are not required to be 
     reported under paragraph (1); and
       (V) product use phase emissions;

       (ii) with respect to greenhouse gas emission reductions 
     activities of the entity that have been carried out during or 
     after 1990, verified in accordance with regulations 
     promulgated under section 1104(c)(1), and submitted to 1 or 
     more designated agencies before the date that is 4 years 
     after the date of enactment of this Act, any greenhouse gas 
     emission reductions that have been reported or submitted by 
     an entity under--

       (I) section 1605(b) of the Energy Policy Act of 1992 (42 
     U.S.C. 13385(b)); or
       (II) any other Federal or State voluntary greenhouse gas 
     reduction program; and

       (iii) any project or activity for the reduction of 
     greenhouse gas emissions or sequestration of a greenhouse gas 
     that is carried out by the entity, including a project or 
     activity relating to--

       (I) fuel switching;
       (II) energy efficiency improvements;
       (III) use of renewable energy;
       (IV) use of combined heat and power systems;
       (V) management of cropland, grassland, or grazing land;
       (VI) a forestry activity that increases forest carbon 
     stocks or reduces forest carbon emissions;
       (VII) carbon capture and storage;
       (VIII) methane recovery;
       (IX) greenhouse gas offset investment; and
       (X) any other practice for achieving greenhouse gas 
     reductions as recognized by 1 or more designated agencies.

       (3) Exemptions from reporting.--
       (A) In general.--If the Director of the Office of National 
     Climate Change Policy determines under section 1108(b) that 
     the reporting requirements under paragraph (1) shall apply to 
     all entities (other than entities exempted by this 
     paragraph), regardless of participation or nonparticipation 
     in the registry, an entity shall be required to submit 
     reports under paragraph (1) only if, in any calendar year 
     after the date of enactment of this Act--
       (i) the total greenhouse gas emissions of at least 1 
     facility owned by the entity exceeds 10,000 metric tons of 
     carbon dioxide equivalent (or such greater quantity as may be 
     established by a designated agency by regulation); or
       (ii)(I) the total quantity of greenhouse gases produced, 
     distributed, or imported by the entity exceeds 10,000 metric 
     tons of carbon dioxide equivalent (or such greater quantity 
     as may be established by a designated agency by regulation); 
     and
       (II) the entity is not a feedlot or other farming operation 
     (as defined in section 101 of title 11, United States Code).
       (B) Entities already reporting.--
       (i) In general.--An entity that, as of the date of 
     enactment of this Act, is required to report carbon dioxide 
     emissions data to a Federal agency shall not be required to 
     re-report that data for the purposes of this title.
       (ii) Review of participation.--For the purpose of section 
     1108, emissions reported under clause (i) shall be considered 
     to be reported by the entity to the registry.
       (4) Provision of verification information by reporting 
     entities.--Each entity that submits a report under this 
     subsection shall provide information sufficient for each 
     designated agency to which the report is submitted to verify, 
     in accordance with measurement and verification methods and 
     standards developed under section 1106, that the greenhouse 
     gas report of the reporting entity--
       (A) has been accurately reported; and
       (B) in the case of each voluntary report under paragraph 
     (2), represents--
       (i) actual reductions in direct greenhouse gas emissions--

       (I) relative to historic emission levels of the entity; and
       (II) net of any increases in--

       (aa) direct emissions; and
       (bb) indirect emissions described in paragraph (1)(C)(ii); 
     or
       (ii) actual increases in net sequestration.
       (5) Failure to submit report.--An entity that participates 
     or has participated in the registry and that fails to submit 
     a report required under this subsection shall be prohibited 
     from including emission reductions reported to the registry 
     in the calculation of the baseline of the entity in future 
     years.
       (6) Independent third-party verification.--To meet the 
     requirements of this section and section 1106, a entity that 
     is required to submit a report under this section may--
       (A) obtain independent third-party verification; and
       (B) present the results of the third-party verification to 
     each appropriate designated agency.
       (7) Availability of data.--
       (A) In general.--The designated agencies shall ensure, to 
     the maximum extent practicable, that information in the 
     database is--
       (i) published;
       (ii) accessible to the public; and
       (iii) made available in electronic format on the Internet.
       (B) Exception.--Subparagraph (A) shall not apply in any 
     case in which the designated agencies determine that 
     publishing or otherwise making available information 
     described in that subparagraph poses a risk to national 
     security.
       (8) Data infrastructure.--The designated agencies shall 
     ensure, to the maximum extent practicable, that the database 
     uses, and is integrated with, Federal, State, and regional 
     greenhouse gas data collection and reporting systems in 
     effect as of the date of enactment of this Act.
       (9) Additional issues to be considered.--In promulgating 
     the regulations under section 1104(c)(1) and implementing the 
     database, the designated agencies shall take into 
     consideration a broad range of issues involved in 
     establishing an effective database, including--
       (A) the appropriate units for reporting each greenhouse 
     gas;
       (B) the data and information systems and measures necessary 
     to identify, track, and verify greenhouse gas emission 
     reductions in a manner that will encourage the development of 
     private sector trading and exchanges;
       (C) the greenhouse gas reduction and sequestration methods 
     and standards applied in other countries, as applicable or 
     relevant;
       (D) the extent to which available fossil fuels, greenhouse 
     gas emissions, and greenhouse gas production and importation 
     data are adequate to implement the database;
       (E) the differences in, and potential uniqueness of, the 
     facilities, operations, and business and other relevant 
     practices of persons and entities in the private and public 
     sectors that may be expected to participate in the registry; 
     and
       (F) the need of the registry to maintain valid and reliable 
     information on baselines of entities so that, in the event of 
     any future action by Congress to require entities, 
     individually or collectively, to reduce greenhouse gas 
     emissions, Congress will be able--
       (i) to take into account that information; and
       (ii) to avoid enacting legislation that penalizes entities 
     for achieving and reporting reductions.
       (d) Annual Report.--The designated agencies shall jointly 
     publish an annual report that--
       (1) describes the total greenhouse gas emissions and 
     emission reductions reported to the database during the year 
     covered by the report;
       (2) provides entity-by-entity and sector-by-sector analyses 
     of the emissions and emission reductions reported;
       (3) describes the atmospheric concentrations of greenhouse 
     gases; and
       (4) provides a comparison of current and past atmospheric 
     concentrations of greenhouse gases.

     SEC. 1106. MEASUREMENT AND VERIFICATION.

       (a) Standards.--
       (1) In general.--Not later than 1 year after the date of 
     enactment of this Act, the designated agencies shall jointly 
     develop comprehensive measurement and verification methods 
     and standards to ensure a consistent and technically accurate 
     record of greenhouse gas emissions, emission reductions, 
     sequestration, and atmospheric concentrations for use in the 
     registry.
       (2) Requirements.--The methods and standards developed 
     under paragraph (1) shall address the need for--
       (A) standardized measurement and verification practices for 
     reports made by all entities participating in the registry, 
     taking into account--
       (i) protocols and standards in use by entities desiring to 
     participate in the registry as of the date of development of 
     the methods and standards under paragraph (1);
       (ii) boundary issues, such as leakage and shifted use;
       (iii) avoidance of double counting of greenhouse gas 
     emissions and emission reductions; and
       (iv) such other factors as the designated agencies 
     determine to be appropriate;
       (B) measurement and verification of actions taken to 
     reduce, avoid, or sequester greenhouse gas emissions;

[[Page S3357]]

       (C) in coordination with the Secretary of Agriculture, 
     measurement of the results of the use of carbon sequestration 
     and carbon recapture technologies, including--
       (i) organic soil carbon sequestration practices; and
       (ii) forest preservation and reforestation activities that 
     adequately address the issues of permanence, leakage, and 
     verification;
       (D) such other measurement and verification standards as 
     the Secretary of Commerce, the Secretary of Agriculture, the 
     Administrator, and the Secretary of Energy determine to be 
     appropriate; and
       (E) other factors that, as determined by the designated 
     agencies, will allow entities to adequately establish a fair 
     and reliable measurement and reporting system.
       (b) Review and Revision.--The designated agencies shall 
     periodically review, and revise as necessary, the methods and 
     standards developed under subsection (a).
       (c) Public Participation.--The Secretary of Commerce 
     shall--
       (1) make available to the public for comment, in draft form 
     and for a period of at least 90 days, the methods and 
     standards developed under subsection (a); and
       (2) after the 90-day period referred to in paragraph (1), 
     in coordination with the Secretary of Energy, the Secretary 
     of Agriculture, and the Administrator, adopt the methods and 
     standards developed under subsection (a) for use in 
     implementing the database.
       (d) Experts and Consultants.--
       (1) In general.--The designated agencies may obtain the 
     services of experts and consultants in the private and 
     nonprofit sectors in accordance with section 3109 of title 5, 
     United States Code, in the areas of greenhouse gas 
     measurement, certification, and emission trading.
       (2) Available arrangements.--In obtaining any service 
     described in paragraph (1), the designated agencies may use 
     any available grant, contract, cooperative agreement, or 
     other arrangement authorized by law.

     SEC. 1107. INDEPENDENT REVIEWS.

       (a) In General.--Not later than 5 years after the date of 
     enactment of this Act, and every 3 years thereafter, the 
     Comptroller General of the United States shall submit to 
     Congress a report that--
       (1) describes the efficacy of the implementation and 
     operation of the database; and
       (2) includes any recommendations for improvements to this 
     title and programs carried out under this title--
       (A) to achieve a consistent and technically accurate record 
     of greenhouse gas emissions, emission reductions, and 
     atmospheric concentrations; and
       (B) to achieve the purposes of this title.
       (b) Review of Scientific Methods.--The designated agencies 
     shall enter into an agreement with the National Academy of 
     Sciences under which the National Academy of Sciences shall--
       (1) review the scientific methods, assumptions, and 
     standards used by the designated agencies in implementing 
     this title;
       (2) not later than 4 years after the date of enactment of 
     this Act, submit to Congress a report that describes any 
     recommendations for improving--
       (A) those methods and standards; and
       (B) related elements of the programs, and structure of the 
     database, established by this title; and
       (3) regularly review and update as appropriate the list of 
     anthropogenic climate-forcing emissions with significant 
     global warming potential described in section 1102(8)(G).

     SEC. 1108. REVIEW OF PARTICIPATION.

       (a) In General.--Not later than 5 years after the date of 
     enactment of this Act, the Director of the Office of National 
     Climate Change Policy shall determine whether the reports 
     submitted to the registry under section 1105(c)(1) represent 
     less than 60 percent of the national aggregate anthropogenic 
     greenhouse gas emissions.
       (b) Increased Applicability of Requirements.--If the 
     Director of the Office of National Climate Change Policy 
     determines under subsection (a) that less than 60 percent of 
     the aggregate national anthropogenic greenhouse gas emissions 
     are being reported to the registry--
       (1) the reporting requirements under section 1105(c)(1) 
     shall apply to all entities (except entities exempted under 
     section 1105(c)(3)), regardless of any participation or 
     nonparticipation by the entities in the registry; and
       (2) each entity shall submit a report described in section 
     1105(c)(1)--
       (A) not later than the earlier of--
       (i) April 30 of the calendar year immediately following the 
     year in which the Director of the Office of National Climate 
     Change Policy makes the determination under subsection (a); 
     or
       (ii) the date that is 1 year after the date on which the 
     Director of the Office of National Climate Change Policy 
     makes the determination under subsection (a); and
       (B) annually thereafter.
       (c) Resolution of Disapproval.--For the purposes of this 
     section, the determination of the Director of the Office of 
     National Climate Change Policy under subsection (a) shall be 
     considered to be a major rule (as defined in section 804(2) 
     of title 5, United States Code) subject to the congressional 
     disapproval procedure under section 802 of title 5, United 
     States Code.

     SEC. 1109. ENFORCEMENT.

       If an entity that is required to report greenhouse gas 
     emissions under section 1105(c)(1) or 1108 fails to comply 
     with that requirement, the Attorney General may, at the 
     request of the designated agencies, bring a civil action in 
     United States district court against the entity to impose on 
     the entity a civil penalty of not more than $25,000 for each 
     day for which the entity fails to comply with that 
     requirement.

     SEC. 1110. REPORT ON STATUTORY CHANGES AND HARMONIZATION.

       Not later than 3 years after the date of enactment of this 
     Act, the President shall submit to Congress a report that 
     describes any modifications to this title or any other 
     provision of law that are necessary to improve the accuracy 
     or operation of the database and related programs under this 
     title.

     SEC. 1111. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated such sums as are 
     necessary to carry out this title.
                                  ____



                Amendment No. 3146, As Further Modified

 (Purpose: To establish a national registry for accurate and reliable 
reports of greenhouse gas emissions, and to further encourage voluntary 
                     reductions in such emissions)

       Strike Title XI and insert the following:

               TITLE XI--NATIONAL GREENHOUSE GAS REGISTRY

     SEC. 1101. SHORT TITLE.

       This title may be cited as the ``National Climate Registry 
     Initiative of 2002''.

     SEC. 1102. PURPOSE.

       The purpose of this title is to establish a new national 
     greenhouse gas registry--
       (1) to further encourage voluntary efforts, by persons and 
     entities conducting business and other operations in the 
     United States, to implement actions, projects and measures 
     that reduce greenhouse gas emissions;
       (2) to encourage such persons and entities to monitor and 
     voluntarily report greenhouse gas emissions, direct or 
     indirect, from their facilities, and to the extent 
     practicable, from other types of sources;
       (3) to adopt a procedure and uniform format for such 
     persons and entities to establish and report voluntarily 
     greenhouse gas emission baselines in connection with, and 
     furtherance of, such reductions;
       (4) to provide verification mechanisms to ensure for 
     participants and the public a high level of confidence in 
     accuracy and verifiability of reports made to the national 
     registry;
       (5) to encourage persons and entities, through voluntary 
     agreement with the Secretary, to report annually greenhouse 
     gas emissions from their facilities;
       (6) to provide to persons or entities that engage in such 
     voluntary agreements and reduce their emissions transferable 
     credits which, inter alia, shall be available for use by such 
     persons or entities for any incentive, market-based, or 
     regulatory programs determined by the Congress in a future 
     enactment to be necessary and feasible to reduce the risk of 
     climate change and its impacts; and
       (7) to provide for the registration, transfer and tracking 
     of the ownership or holding of such credits for purposes of 
     facilitating voluntary trading among persons and entities.

     SEC. 1103. DEFINITIONS.

       In this title--
       (1) ``person'' means an individual, corporation, 
     association, joint venture, cooperative, or partnership;
       (2) ``entity'' means a public person, a Federal, 
     interstate, State, or local governmental agency, department, 
     corporation, or other publicly owned organization;
       (3) ``facility'' means those buildings, structures, 
     installations, or plants (including units thereof) that are 
     on contiguous or adjacent land, are under common control of 
     the same person or entity and are a source of emissions of 
     greenhouse gases in excess for emission purposes of a 
     threshold as recognized by the guidelines issued under this 
     title;
       (4) ``reductions'' means actions, projects or measures 
     taken, whether in the United States or internationally, by a 
     person or entity to reduce, avoid or sequester, directly or 
     indirectly, emissions of one or more greenhouse gases;
       (5) ``greenhouse gas'' means--
       (A) an anthropogenic gaseous constituent of the atmosphere 
     (including carbon dioxide, methane, nitrous oxide, 
     chlorofluorocarbons, hydrofluorocarbons, perfluorocarbons, 
     sulfur hexafluoride, and tropospheric ozone) that absorbs and 
     re-emits infrared radiation and influences climate; and
       (B) an anthropogenic aerosol (such a black soot) that 
     absorbs solar radiation and influences climate;
       (6) ``Secretary'' means the Secretary of Energy;
       (7) ``Administrator'' means the Administrator of the Energy 
     Information Administration; and
       (8) ``Interagency Task Force'' means the Interagency Task 
     Force established under title X of this Act.

     SEC. 1104. ESTABLISHMENT.

       (a) In General.--Not later than 1 year after the enactment 
     of this title, the President shall, in consultation with the 
     Interagency Task Force, establish a National Greenhouse Gas 
     Registry to be administered by the Secretary through the 
     Administrator in accordance with the applicable provisions of 
     this title, section 205 of the Department of Energy Act (42 
     U.S.C. 7135) and other applicable provisions of that Act (42 
     U.S.C. 7101, et seq.).
       (b) Designation.--Upon establishment of the registry and 
     issuance of the guidelines

[[Page S3358]]

     pursuant to this title, such registry shall thereafter be the 
     depository for the United States of data on greenhouse gas 
     emissions and emissions reductions collected from and 
     reported by persons or entities with facilities or operations 
     in the United States, pursuant to the guidelines issued under 
     this title.
       (c) Participation.--Any person or entity conducting 
     business or activities in the United States may, in 
     accordance with the guidelines established pursuant to this 
     title, voluntarily report its total emissions levels and 
     register its certified emissions reductions with such 
     registry, provided that such reports--
       (1) represent a complete and accurate inventory of 
     emissions from facilities and operations within the United 
     States and any domestic or international reduction 
     activities; and
       (2) have been verified as accurate by an independent person 
     certified pursuant to guidelines developed pursuant to this 
     title, or other means.

     SEC. 1105. IMPLEMENTATION.

       (a) Guidelines.--Not later than 1 year after the date of 
     establishment of the registry pursuant to this title, the 
     Secretary shall, in consultation with the Interagency Task 
     Force, issue guidelines establishing procedures for the 
     administration of the national registry. Such guidelines 
     shall include--
       (1) means and methods for persons or entities to determine, 
     quantify, and report by appropriate and credible means their 
     baseline emissions levels on an annual basis, taking into 
     consideration any reports made by such participants under 
     past Federal programs;
       (2) procedures for the use of an independent third-party or 
     other effective verification process for reports on emissions 
     levels and emissions reductions, using the authorities 
     available to the Secretary under this and other provisions of 
     law and taking into account, to the extent possible, costs, 
     risks, the voluntary nature of the registry, and other 
     relevant factors;
       (3) a range of reference cases for reporting of project-
     based reductions in various sectors, and the inclusion of 
     benchmark and default methodologies and practices for use as 
     reference cases for eligible projects;
       (4) safeguards to prevent and address reporting, 
     inadvertently or otherwise, of some or all of the same 
     greenhouse gas emissions or reductions by more than one 
     reporting person or entity and to make corrections and 
     adjustments in data where necessary;
       (5) procedures and criteria for the review and registration 
     of ownership or holding of all or part of any reported and 
     independently verified emission reduction projects, actions 
     and measures relative to such reported baseline emissions 
     level;
       (6) measures or a process for providing to such persons or 
     entities transferable credits with unique serial numbers for 
     such verified emission reductions; and
       (7) accounting provisions needed to allow for changes in 
     registration and transfer of ownership of such credits 
     resulting from a voluntary private transaction between 
     persons or entities, provided that the Secretary is notified 
     of any such transfer within 30 days of the transfer having 
     been effected either by private contract or market mechanism.
       (b) Consideration.--In developing such guidelines, the 
     Secretary shall take into consideration--
       (1) the existing guidelines for voluntary emissions 
     reporting issued under section 1605(b) of the Energy Policy 
     Act of 1992 (42 U.S.C. 13385(b)), experience in applying such 
     guidelines, and any revisions thereof initiated by the 
     Secretary pursuant to direction of the President issued prior 
     to the enactment of this title;
       (2) protocols and guidelines developed under any Federal, 
     State, local, or private voluntary greenhouse gas emissions 
     reporting or reduction programs;
       (3) the various differences and potential uniqueness of the 
     facilities, operations and business and other relevant 
     practices of persons and entities in the private and public 
     sectors that may be expected to participate in the registry;
       (4) issues, such as comparability, that are associated with 
     the reporting of both emissions baselines and reductions from 
     activities and projects; and
       (5) the appropriate level or threshold emissions applicable 
     to a facility or activity of a person or entity that may be 
     reasonably and cost effectively identified, measured and 
     reported voluntarily, taking into consideration different 
     types of facilities and activities and the de minimis nature 
     of some emissions and their sources; and
       (6) any other consideration the Secretary may deem 
     appropriate.
       (c) Experts and Consultants.--The Secretary, and any member 
     of the Interagency Task Force, may secure the services of 
     experts and consultants in the private and non-profit sectors 
     in accordance with the provisions of section 3109 of title 5, 
     United States Code, in the areas of greenhouse gas 
     measurement, certification, and emissions trading. In 
     securing such services, any grant, contract, cooperative 
     agreement, or other arrangement authorized by law and already 
     available to the Secretary or the member of the Interagency 
     Task Force securing such services may be used.
       (d) Transferability of Prior Reports.--Emission reports and 
     reductions that have been made by a person or entity pursuant 
     to section 1605(b) of the Energy Policy Act of 1992 (42 
     U.S.C. 13385(b)) or under other Federal or State voluntary 
     greenhouse gas reduction programs may be independently 
     verified and registered with the registry using the same 
     guidelines developed by the Secretary pursuant to this 
     section.
       (e) Public Comment.--The Secretary shall make such 
     guidelines available in draft form for public notice and 
     opportunity for comments for a period of at least 90 days, 
     and thereafter shall adopt them for use in implementation of 
     the registry established pursuant to this title.
       (f) Review and Revision.--The Secretary, through the 
     Interagency Task Force, shall periodically thereafter review 
     the guidelines and, as needed, revise them in the same manner 
     as provided for in this section.

     SEC. 1106. VOLUNTARY AGREEMENTS.

       (a) In General.--In furtherance of the purposes of this 
     title, any person or entity, and the Secretary, may 
     voluntarily enter into an agreement to provide that--
       (1) such person or entity (and successors thereto) shall 
     report annually to the registry on emissions and sources of 
     greenhouse gases from applicable facilities and operations 
     which generate net emissions above any de minimis thresholds 
     specified in the guidelines issued by the Secretary pursuant 
     to this title;
       (2) such person or entity (and successors thereto) shall 
     commit to report and participate in the registry for a period 
     of at least 5 calendar years, provided that such agreements 
     may be renewed by mutual consent;
       (3) for purposes of measuring performance under the 
     agreement, such person or entity (and successors thereto) 
     shall determine, by mutual agreement with the Secretary--
       (A) pursuant to the guidelines issued under this title, a 
     baseline emissions level for a representative period 
     preceding the effective date of the agreement; and
       (B) emissions reduction goals, taking into consideration 
     the baseline emissions level determined under subparagraph 
     (A) and any relevant economic and operational factors that 
     may affect such baseline emissions level over the duration of 
     the agreement; and
       (4) for certified emissions reductions made relative to the 
     baseline emissions level, the Secretary shall provide, at the 
     request of the person or entity, transferable credits (with 
     unique assigned serial numbers) to the person or entity (and 
     successors thereto) which, inter alia,--
       (A) can be used by such person or entity towards meeting 
     emissions reductions goals set forth under the agreement;
       (B) can be transferred to other persons or entities through 
     a voluntary private transaction between persons or entities; 
     or
       (C) may be applicable towards any incentive, market-based, 
     or regulatory programs determined by the Congress in a future 
     enactment to be necessary and feasible to reduce the risk of 
     climate change and its impacts.
       (b) Public Notice and Comment.--At least 30 days before any 
     agreement is final, the Secretary shall give notice thereof 
     in the Federal Register and provide an opportunity for public 
     written comment. After reviewing such comments, the Secretary 
     may withdraw the agreement or the parties thereto may 
     mutually agree to revise it or finalize it without 
     substantive change. Such agreement shall be retained in the 
     national registry and be available to the public.
       (c) Emissions in Excess.--In the event that a person or 
     entity fails to certify that emissions from applicable 
     facilities and operations are less than the emissions 
     reduction goals contained in the agreement, such person or 
     entity shall take actions as necessary to reduce such excess 
     emissions, including--
       (1) redemption of transferable credits acquired in previous 
     years if owned by the person or entity;
       (2) acquisition of transferable credits from other persons 
     or entities participating in the registry through their own 
     agreements; or
       (3) the undertaking of additional emissions reductions 
     activities in subsequent years as may be determined by 
     agreement with the Secretary.
       (d) No New Authority.--This section shall not be construed 
     as providing any regulatory or mandate authority regarding 
     reporting of such emissions or reductions.

     SEC. 1107. MEASUREMENT AND VERIFICATION.

       (a) In General.--The Secretary of Commerce, through the 
     National Institute of Standards and Technology and in 
     consultation with the Secretary of Energy, shall develop and 
     propose standards and practices for accurate measurement and 
     verification of greenhouse gas emissions reductions. Such 
     standards and best practices shall address the need for--
       (1) standardized measurement and verification practices for 
     reports made by all persons or entities participating in the 
     registry, taking into account--
       (A) existing protocols and standards already in use by 
     persons or entities desiring to participate in the registry;
       (B) boundary issues such as leakage and shifted 
     utilization;
       (C) avoidance of double-counting of greenhouse gas 
     emissions and emissions reductions; and
       (D) such other factors as the panel determines to be 
     appropriate;
       (2) measurement and verification of actions taken to 
     reduce, avoid or sequester greenhouse gas emissions;
       (3) in coordination with the Secretary of Agriculture, 
     measurement of the results of

[[Page S3359]]

     the use of carbon sequestration and carbon recapture 
     technologies, including--
       (A) organic soil carbon sequestration practices;
       (B) forest preservation and re-forestation activities which 
     adequately address the issues of permanence, leadage, and 
     verification; and
       (4) such other measurement and verification standards as 
     the Secretary of Commerce, the Secretary of Agriculture and 
     the Secretary of Energy shall determine to be appropriate.
       (b) Public Comment.--The Secretary of Commerce shall make 
     such standards and practices available in draft form for 
     public notice and opportunity for comment for a period of at 
     least 90 days, and thereafter shall adopt them, in 
     coordination with the Secretary of Energy, for use in the 
     guidelines for implementation of the registry as issued 
     pursuant to this title.

     SEC. 1108. CERTIFIED INDEPENDENT THIRD PARTIES.

       (a) Certification.--The Secretary of Commerce shall, 
     through the Director of the National Institute of Standards 
     and Technology and the Administer, develop standards for 
     certification of independent persons to act as certified 
     parties to be employed in verifying the accuracy and 
     reliability of reports made under this title, including 
     standards that--
       (1) prohibit a certified party from themselves 
     participating in the registry through the ownership or 
     transition of transferable credits recorded in the registry;
       (2) prohibit the receipt by a certified party of 
     compensation in the form of a commission where such party 
     receives payment based on the amount of emissions reductions; 
     verified; and
       (3) authorize such certified parties to enter into 
     agreements with persons engaged in trading of transferable 
     credits recorded in the registry.
       (b) List of Certified Parties.--The Secretary shall 
     maintain and make available to persons or entities making 
     reports under this title and to the public upon request a 
     list of such certified parties and their clients making 
     reports under this title.

     SEC. 1109. REPORT TO CONGRESS.

       Not later than 1 year after guidelines are issued for the 
     registry pursuant to this title, and biennially thereafter, 
     the President, through the Interagency Task Force, shall 
     report to the Congress on the status of the registry 
     established by this title. The report shall include--
       (a) an assessment of the level of participation in the 
     registry (both by sector and in terms of total national 
     emissions represented);
       (b) effectiveness of voluntary reporting agreements in 
     enhancing participation the registry;
       (c) use of the registry for emissions trading and other 
     purposes;
       (d) assessment of progress towards individual and national 
     emissions reduction goals; and
       (e) an inventory of administrative actions taken or planned 
     to improve the national registry or the guidelines, or both, 
     and such recommendations for legislative changes to this 
     title or section 1604 of the Energy Policy Act of 1992 (42 
     U.S.C. 13385) as the President believes necessary to better 
     carry out the purposes of this title.

     SEC. 1110. REVIEW OF PARTICIPATION.

       (a) In General.--Not later than 5 years after the date of 
     enactment of this title, the Director of the Office of 
     National Climate Change Policy shall determine whether the 
     reports submitted to the registry represents less than 60 
     percent of the national aggregate greenhouse gas emissions as 
     inventoried in the official U.S. Inventory of Greenhouse Gas 
     Emissions and Sinks published by the Environmental Protection 
     Agency for the previous calendar year.
       (b) Mandatory Reporting.--If the Director of the Office of 
     National Climate Change Policy determines under subsection 
     (a) that less than 60 percent of such aggregate greenhouse 
     gas emissions are being reported to the registry--
       (1) all persons or entities, regardless of their 
     participation in the registry, shall submit to the Secretary 
     a report that describes, for the preceding calendar year, a 
     complete inventory of greenhouse gas emissions (as reported 
     at the facility level), including--
       (A) the total quantity of each greenhouse gas emitted by 
     such person or entity, expressed in terms of mass and in 
     terms of the quantity of carbon dioxide equivalent;
       (B) an estimate of the emissions from products manufactured 
     and sold by such person or entity in the previous calendar 
     year, determined over the average lifetime of those products; 
     and
       (C) such other categories of emissions as the Secretary 
     determines by regulation to be practicable and useful for the 
     purposes of this title, such as--
       (i) direct emissions from statutory sources;
       (ii) indirect emissions from imported electricity, heat, 
     and stream;
       (iii) process and fugitive emissions; and
       (iv) production or importation of greenhouse gases; and
       (2) each person or entity shall submit a report described 
     in this section--
       (A) not later than the earlier of--
       (i) April 30 of the calendar year immediately following the 
     year in which the Director of the Office of National Climate 
     Change Policy makes the determination under subsection (a); 
     or
       (ii) the date that is 1 year after the date on which the 
     Director of the Office of National Climate Change Policy 
     makes determination under subsection (a); and
       (B) annually thereafter.
       (c) Exemptions From Reporting.--
       (1) In general.--A person or entity shall be required to 
     submit reports under subsection (b) only if, in calendar year 
     after the date of enactment of this title--
       (A) the total greenhouse gas emissions of at least 1 
     facility owned by the person or entity exceeds 10,000 metric 
     tons of carbon dioxide equivalent greenhouse gas (or such 
     greater quantity as may be established by a designated agency 
     by regulation);
       (B) the total quantity of greenhouse gas produced, 
     distributed, or imported by the person or entity exceeds 
     10,000 metric tons of carbon dioxide equivalent greenhouse 
     gas (or such greater quantity as may be established by a 
     designated agency by regulation); or
       (C) the person or entity is not a feedlot or other farming 
     operation (as defined in section 101 of title 11, United 
     States Code).
       (2) Entities already reporting.--A person or entity that, 
     as of the date of enactment of this title, is required to 
     report carbon dioxide emissions data to a Federal agency 
     shall not be required to report that data again for the 
     purposes of this title. Such emissions data shall be 
     considered to be reported by the entity to the registry for 
     the purpose of this title and included in the determination 
     of the Director of the Office of National Climate Change 
     Policy made under subsection (a).
       (d) Enforcement.--If a person or entity that is required to 
     report greenhouse gas emissions under this section fails to 
     comply with that requirement, the Attorney General may, at 
     the request of the Secretary, bring a civil action in the 
     United States district court against the person or entity to 
     impose on the person or entity a civil penalty of not more 
     than $25,000 for each day for which the entity fails to 
     comply with that requirement.
       (e) Resolution of Disapproval.--If made, the determination 
     of the Director of the Office of National Climate Change 
     Policy made under subsection (a) shall be considered to be a 
     major rule (as defined in section 804(2) of title 5, United 
     States Code) subject to the congressional disapproval 
     procedure under section 802 of title 5, United States Code.

     SEC. 1111. NATIONAL ACADEMY REVIEW.

       Not later than 1 year after guidelines are issued for the 
     registry pursuant to this title, the Secretary, in 
     consultation with the Interagency Task Force, shall enter 
     into an agreement with the National Academy of Sciences to 
     review the scientific and technological methods, assumptions, 
     and standards used by the Secretary and the Secretary of 
     Commerce for such guidelines and report to the President and 
     the Congress on the results of that review, together with 
     such recommendations as may be appropriate within 6 months 
     after the effective date of that agreement.
                                  ____



                           amendment no. 3082

 (Purpose: To provide that certain gasoline and diesel fuel be treated 
      as entered into the customs territory of the United States)

       At the appropriate place, insert the following:

     SEC. ____. SALE OF GASOLINE AND DIESEL FUEL AT DUTY-FREE 
                   SALES ENTERPRISES.

       (a) Prohibition.--Section 555(b) of the Tariff Act of 1930 
     (19 U.S.C. 1555(b)) is amended--
       (1) by redesignating paragraphs (6) through (8) as 
     paragraphs (7) through (9), respectively; and
       (2) by inserting after paragraph (5) the following:
       ``(6) Any gasoline or diesel fuel sold at a duty-free sales 
     enterprise shall be considered to be entered for consumption 
     into the customs territory of the United States.''.
       (b) Construction.--The amendments made by this section 
     shall not be construed to create any inference with respect 
     to the interpretation of any provision of law as such 
     provision was in effect on the day before the date of 
     enactment of this Act.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of enactment of this Act.
                                  ____



                           amendment no. 3355

  (Purpose: To amend the Internal Revenue Code of 1986 to extend the 
         energy credit to stationary microturbine power plants)

       In Division H, beginning on page 103, line 1, strike all 
     through page 105, line 12, and insert the following:

     SEC. 2104. CREDIT FOR BUSINESS INSTALLATION OF QUALIFIED FUEL 
                   CELLS AND STATIONARY MICROTURBINE POWER PLANTS.

       (a) In General.--Subparagraph (A) of section 48(a)(3) 
     (defining energy property) is amended by striking ``or'' at 
     the end of clause (i), by adding ``or'' at the end of clause 
     (ii), and by inserting after clause (ii) the following new 
     clause:
       ``(iii) qualified fuel cell property or qualified 
     microturbine property,''.
       (b) Qualified Fuel Cell Property; Qualified Microturbine 
     Property.--Subsection (a) of section 48 is amended by 
     redesignating paragraphs (4) and (5) as paragraphs (5) and 
     (6), respectively, and by inserting after paragraph (3) the 
     following new paragraph:
       ``(4) Qualified fuel cell property; qualified microturbine 
     property.--For purposes of this subsection--
       ``(A) Qualified fuel cell property.--
       ``(i) In general.--The term `qualified fuel cell property' 
     means a fuel cell power plant that--

[[Page S3360]]

       ``(I) generates at least 1 kilowatt of electricity using an 
     electrochemical process, and
       ``(II) has an electricity-only generation efficiency 
     greater than 30 percent.

       ``(ii) Limitation.--In the case of qualified fuel cell 
     property placed in service during the taxable year, the 
     credit determined under paragraph (1) for such year with 
     respect to such property shall not exceed an amount equal to 
     the lesser of--

       ``(I) 30 percent of the basis of such property, or
       ``(II) $1,000 for each kilowatt of capacity of such 
     property.

       ``(iii) Fuel cell power plant.--The term `fuel cell power 
     plant' means an integrated system comprised of a fuel cell 
     stack assembly and associated balance of plant components 
     that converts a fuel into electricity using electrochemical 
     means.
       ``(iv) Termination.--Such term shall not include any 
     property placed in service after December 31, 2007.
       ``(B) Qualified microturbine property.--
       ``(i) In general.--The term ``qualified microturbine 
     property' means a stationary microturbine power plant which 
     has an electricity-only generation efficiency not less than 
     26 percent at International Standard Organization conditions.
       ``(ii) Limitation.--In the case of qualified microturbine 
     property placed in service during the taxable year, the 
     credit determined under paragraph (1) for such year with 
     respect to such property shall not exceed an amount equal to 
     the lesser of--

       ``(I) 10 percent of the basis of such property, or
       ``(II) $200 for each kilowatt of capacity of such property.

       ``(iii) Stationary microturbine power plant.--The term 
     `stationary microturbine power plant means a system 
     comprising of a rotary engine which is actuated by the 
     aerodynamic reaction or impulse or both on radial or axial 
     curved full-circumferential-admission airfoils on a central 
     axial rotating spindle. Such system--

       ``(I) commonly includes an air compressor, combustor, gas 
     pathways which lead compressed air to the combustor and which 
     lead hot combusted gases from the combustor to 1 or more 
     rotating turbine spools, which in turn drive the compressor 
     and power output shaft,
       ``(II) includes a fuel compressor, recuperator/regenerator, 
     generator or alternator, integrated combined cycle equipment, 
     cooling-heating-and-power equipment, sound attenuation 
     apparatus, and power conditioning equipment, and
       ``(III) includes all secondary components located between 
     the existing infrastructure for fuel delivery and the 
     existing infrastructure for power distribution, including 
     equipment and controls for meeting relevant power standards, 
     such as voltage, frequency, and power factors.

       ``(iv) Termination.--Such term shall not include any 
     property placed in service after December 31, 2006.''.
       (c) Limitation.--Section 48(a)(2)(A) (relating to energy 
     percentage) is amended to read as follows:
       ``(A) In general.--The energy percentage is--
       ``(i) in the case of qualified fuel cell property, 30 
     percent, and
       ``(ii) in the case of any other energy property, 10 
     percent.''.
       (d) Conforming Amendments.--
       (A) Section 29(b)(3)(A)(i)(III) is amended by striking 
     ``section 48(a)(4)(C)'' and inserting ``section 
     48(a)(5)(C)''.
       (B) Section 48(a)(1) is amended by inserting ``except as 
     provided in subparagraph (A)(ii) or (B)(ii) of paragraph 
     (4),'' before ``the energy''.
       (e) Effective Date.--The amendments made by this subsection 
     shall apply to property placed in service after December 31, 
     2002, under rules similar to the rules of section 48(m) of 
     the Internal Revenue Code of 1986 (as in effect on the day 
     before the date of the enactment of the Revenue 
     Reconciliation Act of 1990).
                                  ____



                           amendment no. 3335

  (Purpose: To amend the Internal Revenue Code of 1986 to extend the 
 credit for the production of fuel from non-conventional sources with 
                respect to certain existing facilities)

       In Division H, on page 202, between lines 22 and 23, insert 
     the following:
       (b) Extension for Certain Fuel Produced at Existing 
     Facilities.--Paragraph (2) of section 29(f) (relating to 
     application of section) is amended by inserting ``(January 1, 
     2005, in the case of any coke or coke gas produced in a 
     facility described in paragraph (1)(B))'' after ``January 1, 
     2003''.


                     Amendments Nos. 3258 And 3170

  Mr. BINGAMAN. Madam President, I ask unanimous consent that, 
notwithstanding rule XXII, it now be in order for the Senate to 
consider, en bloc, amendment No. 3258 and amendment No. 3170; that the 
latter be modified with the changes that are at the desk; that the 
foregoing amendments be agreed to en bloc, and that the motions to 
reconsider be laid upon the table.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendments (Nos. 3258 and 3170, as modified), en bloc, were 
agreed to, as follows:


                           AMENDMENT NO. 3258

 (Purpose: To strike the provision authorizing loan guarantees for an 
               Alaska natural gas transportation project)

       Strike section 708.
                                  ____



                           amendment no. 317

       Beginning on page 195, strike line 19 and all that follows 
     through page 196, line 4, and insert the following:
       ``(B) Petitions for waivers.--The Administrator in 
     consultation with the Secretary of Agriculture and the 
     Secretary of Energy, shall approve or disapprove a State 
     petition for a waiver of the requirement of paragraph (2) 
     within 90 days after the date on which the petition is 
     received by the Administrator.


 Amendments Nos. 3082, 3130, 3331, 3336, 3338, 3349, 3350, 3351, 3352, 
                          3353, 3356, And 3359

  Mr. BINGAMAN. Madam President, I ask unanimous consent that, 
notwithstanding rule XXII, it now be in order for the Senate to 
consider, en bloc, amendments No. 3082, No. 3130, No. 3331, No. 3336, 
No. 3338, No. 3349, No. 3350, No. 3351, No. 3352, No. 3353, No. 3356, 
and No. 3359; that the foregoing amendments be agreed to en bloc, and 
that the motions to reconsider be laid on the table.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendments (Nos. 3082, 3130, 3331, 3336, 3338, 3349, 3350, 3351, 
3352, 3353, 3356 and 3359) were agreed to, as follows:


                           amendment no. 3082

 (Purpose: To provide that certain gasoline and diesel fuel be treated 
      as entered into the customs territory of the United States)

       At the appropriate place, insert the following:

     SEC. ____. SALE OF GASOLINE AND DIESEL FUEL AT DUTY-FREE 
                   SALES ENTERPRISES.

       (a) Prohibition.--Section 555(b) of the Tariff Act of 1930 
     (19 U.S.C. 1555(b)) is amended--
       (1) by redesignating paragraphs (6) through (8) as 
     paragraphs (7) through (9), respectively; and
       (2) by inserting after paragraph (5) the following:
       ``(6) Any gasoline or diesel fuel sold at a duty-free sales 
     enterprise shall be considered to be entered for consumption 
     into the customs territory of the United States.''.
       (b) Construction.--The amendments made by this section 
     shall not be construed to create any inference with respect 
     to the interpretation of any provision of law as such 
     provision was in effect on the day before the date of 
     enactment of this Act.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of enactment of this Act.
                                  ____



                           amendment no. 3130

(Purpose: To amend the Internal Revenue Code of 1986 to allow a credit 
   against income tax for taxpayers owning certain commercial power 
                           takeoff vehicles)

       On page 73, between lines 2 and 3, insert the following:

     SEC. ____. CREDIT FOR TAXPAYERS OWNING COMMERCIAL POWER 
                   TAKEOFF VEHICLES.

       (a) In General.--Subpart D of part IV of subchapter A of 
     chapter 1 (relating to business-related credits), as amended 
     by this Act, is amended by adding at the end the following 
     new section:

     ``SEC. 45K. COMMERCIAL POWER TAKEOFF VEHICLES CREDIT.

       ``(a) General Rule.--For purposes of section 38, the amount 
     of the commercial power takeoff vehicles credit determined 
     under this section for the taxable year is $250 for each 
     qualified commercial power takeoff vehicle owned by the 
     taxpayer as of the close of the calendar year in which or 
     with which the taxable year of the taxpayer ends.
       ``(b) Definitions.--For purposes of this section--
       ``(1) Qualified commercial power takeoff vehicle.--The term 
     `qualified commercial power takeoff vehicle' means any 
     highway vehicle described in paragraph (2) which is propelled 
     by any fuel subject to tax under section 4041 or 4081 if such 
     vehicle is used in a trade or business or for the production 
     of income (and is licensed and insured for such use).
       ``(2) Highway vehicle described.--A highway vehicle is 
     described in this paragraph if such vehicle is--
       ``(A) designed to engage in the daily collection of refuse 
     or recyclables from homes or businesses and is equipped with 
     a mechanism under which the vehicle's propulsion engine 
     provides the power to operate a load compactor, or
       ``(B) designed to deliver ready mixed concrete on a daily 
     basis and is equipped with a mechanism under which the 
     vehicle's propulsion engine provides the power to operate a 
     mixer drum to agitate and mix the product en route to the 
     delivery site.
       ``(c) Exception for Vehicles Used by Governments, Etc.--No 
     credit shall be allowed under this section for any vehicle 
     owned by any person at the close of a calendar year if such 
     vehicle is used at any time during such year by--
       ``(1) the United States or an agency or instrumentality 
     thereof, a State, a political subdivision of a State, or an 
     agency or instrumentality of one or more States or political 
     subdivisions, or
       ``(2) an organization exempt from tax under section 501(a).

[[Page S3361]]

       ``(d) Denial of Double Benefit.--The amount of any 
     deduction under this subtitle for any tax imposed by 
     subchapter B of chapter 31 or part III of subchapter A of 
     chapter 32 for any taxable year shall be reduced (but not 
     below zero) by the amount of the credit determined under this 
     subsection for such taxable year.
       ``(e) Termination.--This section shall not apply with 
     respect to any calendar year after 2004.''.
       (b) Credit Made Part of General Business Credit.--
     Subsection (b) of section 38 (relating to general business 
     credit), as amended by this Act, is amended by striking 
     ``plus'' at the end of paragraph (22), by striking the period 
     at the end of paragraph (23) and inserting ``, plus'', and by 
     adding at the end the following new paragraph:
       ``(24) the commercial power takeoff vehicles credit under 
     section 45K(a).''.
       (c) Clerical Amendment.--The table of sections for subpart 
     D of part IV of subchapter A of chapter 1, as amended by this 
     Act, is amended by adding at the end the following new item:

``Sec. 45K. Commercial power takeoff vehicles credit.''.

       (d) Regulations.--Not later than January 1, 2005, the 
     Secretary of the Treasury, in consultation with the Secretary 
     of Energy, shall by regulation provide for the method of 
     determining the exemption from any excise tax imposed under 
     section 4041 or 4081 of the Internal Revenue Code of 1986 on 
     fuel used through a mechanism to power equipment attached to 
     a highway vehicle as described in section 45K(b)(2) of such 
     Code, as added by subsection (a).
       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.
                                  ____



                           amendment no. 3331

   (Purpose: To further encourage development of hydrogen refueling 
                            infrastructure)

       In Division H, on page 50, strike lines 23 and 24, and 
     insert the following:
       ``(l) Termination.--This section shall not apply to any 
     property placed in service--
       ``(1) in the case of property relating to hydrogen, after 
     December 31, 2011, and
       ``(2) in the case of any other property, after December 31, 
     2006.''.
       (b) Incentive for Production of Hydrogen at Qualified 
     Clean-Fuel Vehicle Refueling Property.--Section 179A(d) 
     (defining qualified clean-fuel vehicle refueling property) is 
     amended by adding at the end the following new flush 
     sentence:

     ``In the case of clean-burning fuel which is hydrogen 
     produced from another clean-burning fuel, paragraph (3)(A) 
     shall be applied by substituting `production, storage, or 
     dispensing' for `storage or dispensing' both places it 
     appears.''.
                                  ____



                           amendment no. 3336

  (Purpose: To amend the Internal Revenue Code of 1986 to provide for 
  nonrecognition of grain on dispositions of dairy property which is 
certified by the Secretary of Agriculture as having been the subject of 
an agreement under the bovine tuberculosis eradication program, and for 
                            other purposes)

       In Division H, on page 216, after line 21, add the 
     following:

     SEC. ____. TREATMENT OF DAIRY PROPERTY.

       (a) Qualified Disposition of Dairy Property Treated as 
     Involuntary Conversion.--
       (1) In general.--Section 1033 (relating to involuntary 
     conversions) is amended by designating subsection (k) as 
     subsection (l) and inserting after subsection (j) the 
     following new subsection:
       ``(k) Qualified Disposition To Implement Bovine 
     Tuberculosis Eradication Program.--
       ``(1) In general.--For purposes of this subtitle, if a 
     taxpayer elects the application of this subsection to a 
     qualified disposition:
       ``(A) Treatment as involuntary conversion.--Such 
     disposition shall be treated as an involuntary conversion to 
     which this section applies.
       ``(B) Modification of similar property requirement.--
     Property to be held by the taxpayer either for productive use 
     in a trade or business or for investment shall be treated as 
     property similar or related in service or use to the property 
     disposed of.
       ``(C) Extension of period for replacing property.--
     Subsection (a)(2)(B)(i) shall be applied by substituting `4 
     years' for `2 years'.
       ``(D) Waiver of unrelated person requirement.--Subsection 
     (i) (relating to replacement property must be acquired from 
     unrelated person in certain cases) shall not apply.
       ``(E) Expanded capital gain for cattle and horses.--Section 
     1231(b)(3)(A) shall be applied by substituting `1 month' for 
     `24 months'.
       ``(2) Qualified disposition.--
       ``(A) In general.--For purposes of this subsection, the 
     term `qualified disposition' means the disposition of dairy 
     property which is certified by the Secretary of Agriculture 
     as having been the subject of an agreement under the bovine 
     tuberculosis eradication program, as implemented pursuant to 
     the Declaration of Emergency Because of Bovine Tuberculosis 
     (65 Federal Register 63,227 (2000)).
       ``(B) Payments received in connection with the bovine 
     tuberculosis eradication program.--For purposes of this 
     subsection, any amount received by a taxpayer in connection 
     with an agreement under such bovine tuberculosis eradication 
     program shall be treated as received in a qualified 
     disposition.
       ``(C) Transmittal of certifications.--The Secretary of 
     Agriculture shall transmit copies of certifications under 
     this paragraph to the Secretary.
       ``(3) Allowance of the adjusted basis of certified dairy 
     property as a depreciation deduction.--The adjusted basis of 
     any property certified under paragraph (2)(A) shall be 
     allowed as a depreciation deduction under section 167 for the 
     taxable year which includes the date of the certification 
     described in paragraph (2)(A).
       ``(4) Dairy property.--For purposes of this subsection, the 
     term `dairy property' means all tangible or intangible 
     property used in connection with a dairy business or a dairy 
     processing plant.
       ``(5) Special rules for certain business organizations.--
       ``(A) S corporations.--In the case of an S corporation, 
     gain on a qualified disposition shall not be treated as 
     recognized for the purposes of section 1374 (relating to tax 
     imposed on certain built-in gains).
       ``(B) Partnerships.--In the case of a partnership which 
     dissolves in anticipation of a qualified disposition 
     (including in anticipation of receiving the amount described 
     in paragraph (2)(B)), the dairy property owned by the 
     partners of such partnership at the time of such disposition 
     shall be treated, for the purposes of this section and 
     notwithstanding any regulation or rule of law, as owned by 
     such partners at the time of such disposition.
       ``(6) Termination.--This subsection shall not apply to 
     dispositions made after December 31, 2006.''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply to dispositions made and amounts received in 
     taxable years ending after May 22, 2001.
       (b) Deduction of Qualified Reclamation Expenditures.--
       (1) In general.--Part VI of subchapter B of chapter 1 
     (relating to itemized deductions for individuals and 
     corporations), as amended by this Act, is amended by adding 
     at the end the following new section:

     ``SEC. 199B. EXPENSING OF DAIRY PROPERTY RECLAMATION COSTS.

       ``(a) In General.--Notwithstanding section 280B (relating 
     to demolition of structures), a taxpayer may elect to treat 
     any qualified reclamation expenditure which is paid or 
     incurred by the taxpayer as an expense which is not 
     chargeable to capital account. Any expenditure which is so 
     treated shall be allowed as a deduction for the taxable year 
     in which it is paid or incurred.
       ``(b) Qualified Reclamation Expenditure.--
       ``(1) In general.--For purposes of this subparagraph, the 
     term `qualified reclamation expenditure' means amounts 
     otherwise chargeable to capital account and paid or incurred 
     to convert any real property certified under section 
     1033(k)(2) (relating to qualified disposition) into 
     unimproved land.
       ``(2) Special rule for expenditures for depreciable 
     property.--A rule similar to the rule of section 198(b)(2) 
     (relating to special rule for expenditures for depreciable 
     property) shall apply for purposes of paragraph (1).
       ``(c) Deduction Recaptured as Ordinary Income.--Rules 
     similar to the rules of section 198(e) (relating to deduction 
     recaptured as ordinary income on sale, etc.) shall apply with 
     respect to any qualified reclamation expenditure.
       ``(d) Termination.--This section shall not apply to 
     expenditures paid or incurred after December 31, 2006.''.
       (2) Clerical amendment.--The table of sections for part VI 
     of subchapter B of chapter 1, as amended by this Act, is 
     amended by adding at the end the following new item:

``Sec. 199B. Expensing of dairy property reclamation costs.''.

       (3) Effective date.--The amendments made by this subsection 
     shall apply to expenditures paid or incurred in taxable years 
     ending after May 22, 2001.
                                  ____



                           AMENDMENT NO. 3338

 (Purpose: To amend the Internal Revenue Code of 1986 to modify energy 
          credit for combined heat and power system property)

       In Division H, on page 123, after line 25, add the 
     following:
       ``(v) Nonapplication of certain rules.--For purposes of 
     determining if the term `combined heat and power system 
     property' includes technologies which generate electricity or 
     mechanical power using back-pressure steam turbines in place 
     of existing pressure-reducing valves or which make the use of 
     waste heat from industrial processes such as by using organic 
     rankin, stirling, or kalina heat engine systems, subparagraph 
     (A) shall be applied without regard to clauses (iii) and (iv) 
     thereof.
                                  ____



                           AMENDMENT NO. 3349

    (Purpose: To modify the credit for the production of fuel from 
            nonconventional sources regarding refined coal)

       In Division H, on page 199, lines 5 through 7, strike ``at 
     least 20 percent of the emissions of sulfur dioxide and 
     nitrogen oxide'' and insert ``at least 20 percent of the 
     emissions of nitrogen oxide and either sulfur dioxide or 
     mercury.''

[[Page S3362]]

                           amendment no. 3350

  (Purpose: To modify the credit for the production of electricity to 
                    include small irrigation power)

       In Division H, on page 17, between lines 8 and 9, insert 
     the following:

     SEC. 1905. CREDIT FOR ELECTRICITY PRODUCED FROM SMALL 
                   IRRIGATION POWER.

       (a) In General.--Section 45(c)(1) (defining qualified 
     energy resources), as amended by this Act, is amended by 
     striking ``and'' at the end of subparagraph (F), by striking 
     the period at the end of subparagraph (G) and inserting ``, 
     and'', and by adding at the end the following new 
     subparagraph:
       ``(H) small irrigation power.''.
       (b) Qualified Facility.--Section 45(c)(3) (relating to 
     qualified facility), as amended by this Act, is amended by 
     adding at the end the following new subparagraph:
       ``(G) Small irrigation power facility.--In the case of a 
     facility using small irrigation power to produce electricity, 
     the term `qualified facility' means any facility owned by the 
     taxpayer which is originally placed in service after date of 
     the enactment of this subparagraph and before January 1, 
     2007.''.
       (c) Definition.--Section 45(c), as amended by this Act, is 
     amended by redesignating paragraph (8) as paragraph (9) and 
     by inserting after paragraph (7) the following new paragraph:
       ``(8) Small irrigation power.--The term `small irrigation 
     power' means power--
       ``(A) generated without any dam or impoundment of water 
     through an irrigation system canal or ditch, and
       ``(B) the installed capacity of which is less than 5 
     megawatts.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to electricity sold after the date of the 
     enactment of this Act, in taxable years ending after such 
     date.
                                  ____



                           amendment no. 3351

    (Purpose: To modify the credit for residential energy efficient 
  property by substituting natural gas furnances for naturla gas heat 
                                 pumps)

       In Division H, beginning on page 91, line 15, strike all 
     through page 95, line 17, and insert the following:
       ``(iii) $250 for each advanced natural gas furnace,
       ``(iv) $250 for each central air conditioner,
       ``(v) $75 for each natural gas water heater, and
       ``(vi) $250 for each geothermal heat pump.
       ``(2) Safety certifications.--No credit shall be allowed 
     under this section for an item of property unless--
       ``(A) in the case of solar water heating property, such 
     property is certified for performance and safety by the non-
     profit Solar Rating Certification Corporation or a comparable 
     entity endorsed by the government of the State in which such 
     property is installed,
       ``(B) in the case of a photovoltaic property, a fuel cell 
     property, or a wind energy property, such property meets 
     appropriate fire and electric code requirements, and
       ``(C) in the case of property described in subsection 
     (d)(6), such property meets the performance and quality 
     standards, and the certification requirements (if any), 
     which--
       ``(i) have been prescribed by the Secretary by regulations 
     (after consultation with the Secretary of Energy or the 
     Administrator of the Environmental Protection Agency, as 
     appropriate),
       ``(ii) in the case of the energy efficiency ratio (EER)--

       ``(I) require measurements to be based on published data 
     which is tested by manufacturers at 95 degrees Fahrenheit, 
     and
       ``(II) do not require ratings to be based on certified data 
     of the Air Conditioning and Refrigeration Institute, and

       ``(iii) are in effect at the time of the acquisition of the 
     property.
       ``(c) Carryforward of Unused Credit.--If the credit 
     allowable under subsection (a) exceeds the limitation imposed 
     by section 26(a) for such taxable year reduced by the sum of 
     the credits allowable under this subpart (other than this 
     section and section 25D), such excess shall be carried to the 
     succeeding taxable year and added to the credit allowable 
     under subsection (a) for such succeeding taxable year.
       ``(d) Definitions.--For purposes of this section--
       ``(1) Qualified solar water heating property expenditure.--
     The term `qualified solar water heating property expenditure' 
     means an expenditure for property to heat water for use in a 
     dwelling unit located in the United States and used as a 
     residence by the taxpayer if at least half of the energy used 
     by such property for such purpose is derived from the sun.
       ``(2) Qualified photovoltaic property expenditure.--The 
     term `qualified photovoltaic property expenditure' means an 
     expenditure for property that uses solar energy to generate 
     electricity for use in such a dwelling unit.
       ``(3) Solar panels.--No expenditure relating to a solar 
     panel or other property installed as a roof (or portion 
     thereof) shall fail to be treated as property described in 
     paragraph (1) or (2) solely because it constitutes a 
     structural component of the structure on which it is 
     installed.
       ``(4) Qualified fuel cell property expenditure.--The term 
     `qualified fuel cell property expenditure' means an 
     expenditure for qualified fuel cell property (as defined in 
     section 48(a)(4)) installed on or in connection with such a 
     dwelling unit.
       ``(5) Qualified wind energy property expenditure.--The term 
     `qualified wind energy property expenditure' means an 
     expenditure for property which uses wind energy to generate 
     electricity for use in such a dwelling unit.
       ``(6) Qualified tier 2 energy efficient building property 
     expenditure.--
       ``(A) In general.--The term `qualified Tier 2 energy 
     efficient building property expenditure' means an expenditure 
     for any Tier 2 energy efficient building property.
       ``(B) Tier 2 energy efficient building property.--The term 
     `Tier 2 energy efficient building property' means--
       ``(i) an electric heat pump water heater which yields an 
     energy factor of at least 1.7 in the standard Department of 
     Energy test procedure,
       ``(ii) an electric heat pump which has a heating seasonal 
     performance factor (HSPF) of at least 9, a seasonal energy 
     efficiency ratio (SEER) of at least 15, and an energy 
     efficiency ratio (EER) of at least 12.5,
       ``(iii) an advanced natural gas furnace which achieves at 
     least 95 percent annual fuel utilization efficiency 
     (AFUE),''.
                                  ____



                           amendment no. 3352

           (Purpose: To modify the incentives for biodiesel)

       In Division H, beginning on page 64, line 1, strike all 
     through page 73, line 2, and insert the following:

     SEC. 2008. INCENTIVES FOR BIODIESEL.

       (a) Credit for Biodiesel Used as a Fuel.--
       (1) In general.--Subpart D of part IV of subchapter A of 
     chapter 1 (relating to business related credits), as amended 
     by this Act, is amended by inserting after section 40A the 
     following new section:

     ``SEC. 40B. BIODIESEL USED AS FUEL.

       ``(a) General Rule.--For purposes of section 38, the 
     biodiesel fuels credit determined under this section for the 
     taxable year is an amount equal to the biodiesel mixture 
     credit.
       ``(b) Definition of Biodiesel Mixture Credit.--For purposes 
     of this section--
       ``(1) Biodiesel mixture credit.--
       ``(A) In general.--The biodiesel mixture credit of any 
     taxpayer for any taxable year is the sum of the products of 
     the biodiesel mixture rate for each qualified biodiesel 
     mixture and the number of gallons of such mixture of the 
     taxpayer for the taxable year.
       ``(B) Biodiesel mixture rate.--For purposes of subparagraph 
     (A), the biodiesel mixture rate for each qualified biodiesel 
     mixture shall be--
       ``(i) in the case of a mixture with only biodiesel V, 1 
     cent for each whole percentage point (not exceeding 20 
     percentage points) of biodiesel V in such mixture, and
       ``(ii) in the case of a mixture with biodiesel NV, or a 
     combination of biodiesel V and biodiesel NV, 0.5 cent for 
     each whole percentage point (not exceeding 20 percentage 
     points) of such biodiesel in such mixture.
       ``(2) Qualified biodiesel mixture.--
       ``(A) In general.--The term `qualified biodiesel mixture' 
     means a mixture of diesel and biodiesel V or biodiesel NV 
     which--
       ``(i) is sold by the taxpayer producing such mixture to any 
     person for use as a fuel, or
       ``(ii) is used as a fuel by the taxpayer producing such 
     mixture.
       ``(B) Sale or use must be in trade or business, etc.--
       ``(i) In general.--Biodiesel V or biodiesel NV used in the 
     production of a qualified biodiesel mixture shall be taken 
     into account--

       ``(I) only if the sale or use described in subparagraph (A) 
     is in a trade or business of the taxpayer, and
       ``(II) for the taxable year in which such sale or use 
     occurs.

       ``(ii) Certification for biodiesel v.--Biodiesel V used in 
     the production of a qualified biodiesel mixture shall be 
     taken into account only if the taxpayer described in 
     subparagraph (A) obtains a certification from the producer of 
     the biodiesel V which identifies the product produced.
       ``(C) Casual off-farm production not eligible.--No credit 
     shall be allowed under this section with respect to any 
     casual off-farm production of a qualified biodiesel mixture.
       ``(c) Coordination With Exemption From Excise Tax.--The 
     amount of the credit determined under this section with 
     respect to any biodiesel V shall, under regulations 
     prescribed by the Secretary, be properly reduced to take into 
     account any benefit provided with respect to such biodiesel V 
     solely by reason of the application of section 4041(n) or 
     section 4081(f).
       ``(d) Definitions and Special Rules.--For purposes of this 
     section--
       ``(1) Biodiesel v defined.--The term `biodiesel V' means 
     the monoalkyl esters of long chain fatty acids derived solely 
     from virgin vegetable oils for use in compressional-ignition 
     (diesel) engines. Such term shall include esters derived from 
     vegetable oils from corn, soybeans, sunflower seeds, 
     cottonseeds, canola, crambe, rapeseeds, safflowers, 
     flaxseeds, rice bran, and mustard seeds.
       ``(2) Biodiesel nv defined.--The term `biodiesel nv' means 
     the monoalkyl esters of long chain fatty acids derived from 
     nonvirgin vegetable oils or animal fats for use in 
     compressional-ignition (diesel) engines.
       ``(3) Registration requirements.--The terms `biodiesel V' 
     and `biodiesel NV' shall only include a biodiesel which 
     meets--

[[Page S3363]]

       ``(i) the registration requirements for fuels and fuel 
     additives established by the Environmental Protection Agency 
     under section 211 of the Clean Air Act (42 U.S.C. 7545), and
       ``(ii) the requirements of the American Society of Testing 
     and Materials D6751.
       ``(2) Biodiesel mixture not used as a fuel, etc.--
       ``(A) Imposition of tax.--If--
       ``(i) any credit was determined under this section with 
     respect to biodiesel V or biodiesel NV used in the production 
     of any qualified biodiesel mixture, and
       ``(ii) any person--

       ``(I) separates such biodiesel from the mixture, or
       ``(II) without separation, uses the mixture other than as a 
     fuel,

     then there is hereby imposed on such person a tax equal to 
     the product of the biodiesel mixture rate applicable under 
     subsection (b)(1)(B) and the number of gallons of the 
     mixture.
       ``(B) Applicable laws.--All provisions of law, including 
     penalties, shall, insofar as applicable and not inconsistent 
     with this section, apply in respect of any tax imposed under 
     subparagraph (A) as if such tax were imposed by section 4081 
     and not by this chapter.
       ``(3) Pass-thru in the case of estates and trusts.--Under 
     regulations prescribed by the Secretary, rules similar to the 
     rules of subsection (d) of section 52 shall apply.
       ``(e) Election To Have Biodiesel Fuels Credit Not Apply.--
       ``(1) In general.--A taxpayer may elect to have this 
     section not apply for any taxable year.
       ``(2) Time for making election.--An election under 
     paragraph (1) for any taxable year may be made (or revoked) 
     at any time before the expiration of the 3-year period 
     beginning on the last date prescribed by law for filing the 
     return for such taxable year (determined without regard to 
     extensions).
       ``(3) Manner of making election.--An election under 
     paragraph (1) (or revocation thereof) shall be made in such 
     manner as the Secretary may by regulations prescribe.''.
       ``(f) Termination.--This section shall not apply to any 
     fuel sold after December 31, 2005.''.
       (2) Credit treated as part of general business credit.--
     Section 38(b), as amended by this Act, is amended by striking 
     ``plus'' at the end of paragraph (15), by striking the period 
     at the end of paragraph (16) and inserting ``, plus'', and by 
     adding at the end the following new paragraph:
       ``(17) the biodiesel fuels credit determined under section 
     40B(a).''.
       (3) Conforming amendments.--
       (A) Section 39(d), as amended by this Act, is amended by 
     adding at the end the following new paragraph:
       ``(12) No carryback of biodiesel fuels credit before 
     january 1, 2003.--No portion of the unused business credit 
     for any taxable year which is attributable to the biodiesel 
     fuels credit determined under section 40B may be carried back 
     to a taxable year beginning before January 1, 2003.''.
       (B) Section 196(c) is amended by striking ``and'' at the 
     end of paragraph (9), by striking the period at the end of 
     paragraph (10), and by adding at the end the following new 
     paragraph:
       ``(11) the biodiesel fuels credit determined under section 
     40B(a).''.
       (C) Section 6501(m), as amended by this Act, is amended by 
     inserting ``40B(e),'' after ``40(f),''.
       (D) The table of sections for subpart D of part IV of 
     subchapter A of chapter 1, as amended by this Act, is amended 
     by adding after the item relating to section 40A the 
     following new item:

``Sec. 40B. Biodiesel used as fuel.''.

       (4) Effective date.--The amendments made by this subsection 
     shall apply to taxable years beginning after December 31, 
     2002.
       (b) Reduction of Motor Fuel Excise Taxes on Biodiesel V 
     Mixtures.--
       (1) In general.--Section 4081 (relating to manufacturers 
     tax on petroleum products) is amended by adding at the end 
     the following new subsection:
       ``(f) Biodiesel V Mixtures.--Under regulations prescribed 
     by the Secretary--
       ``(1) In general.--In the case of the removal or entry of a 
     qualified biodiesel mixture with biodiesel V, the rate of tax 
     under subsection (a) shall be the otherwise applicable rate 
     reduced by the biodiesel mixture rate (if any) applicable to 
     the mixture.
       ``(2) Tax prior to mixing.--
       ``(A) In general.--In the case of the removal or entry of 
     diesel fuel for use in producing at the time of such removal 
     or entry a qualified biodiesel mixture with biodiesel V, the 
     rate of tax under subsection (a) shall be the rate determined 
     under subparagraph (B).
       ``(B) Determination of rate.--For purposes of subparagraph 
     (A), the rate determined under this subparagraph is the rate 
     determined under paragraph (1), divided by a percentage equal 
     to 100 percent minus the percentage of biodiesel V which will 
     be in the mixture.
       ``(3) Definitions.--For purposes of this subsection, any 
     term used in this subsection which is also used in section 
     40B shall have the meaning given such term by section 40B.
       ``(4) Certain rules to apply.--Rules similar to the rules 
     of paragraphs (6) and (7) of subsection (c) shall apply for 
     purposes of this subsection.''.
       (2) Conforming amendments.--
       (A) Section 4041 is amended by adding at the end the 
     following new subsection:
       ``(n) Biodiesel V Mixtures.--Under regulations prescribed 
     by the Secretary, in the case of the sale or use of a 
     qualified biodiesel mixture (as defined in section 40B(b)(2)) 
     with biodiesel V, the rates under paragraphs (1) and (2) of 
     subsection (a) shall be the otherwise applicable rates, 
     reduced by any applicable biodiesel mixture rate (as defined 
     in section 40B(b)(1)(B)).''.
       (B) Section 6427 is amended by redesignating subsection (p) 
     as subsection (q) and by inserting after subsection (o) the 
     following new subsection:
       ``(p) Biodiesel V Mixtures.--Except as provided in 
     subsection (k), if any diesel fuel on which tax was imposed 
     by section 4081 at a rate not determined under section 
     4081(f) is used by any person in producing a qualified 
     biodiesel mixture (as defined in section 40B(b)(2)) with 
     biodiesel V which is sold or used in such person's trade or 
     business, the Secretary shall pay (without interest) to such 
     person an amount equal to the per gallon applicable biodiesel 
     mixture rate (as defined in section 40B(b)(1)(B)) with 
     respect to such fuel.''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to any fuel sold after December 31, 2002, and 
     before January 1, 2006.
       (c) Highway Trust Fund Held Harmless.--There are hereby 
     transferred (from time to time) from the funds of the 
     Commodity Credit Corporation amounts determined by the 
     Secretary of the Treasury to be equivalent to the reductions 
     that would occur (but for this subsection) in the receipts of 
     the Highway Trust Fund by reason of the amendments made by 
     this section.
                                  ____



                           amendment no. 3353

(Purpose: To amend the Internal Revenue Code of 1986 to provide for the 
    treatment of sales or dispositions to implement Federal Energy 
     Regulatory Commission or State electric restructuring policy)

       In Division H, on page 215, between lines 10 and 11, insert 
     the following:

     SEC. 2404. SALES OR DISPOSITIONS TO IMPLEMENT FEDERAL ENERGY 
                   REGULATORY COMMISSION OR STATE ELECTRIC 
                   RESTRUCTURING POLICY.

       (a) In General.--Section 451 (relating to general rule for 
     taxable year of inclusion) is amended by adding at the end 
     the following new subsection:
       ``(i) Special Rule for Sales or Dispositions To Implement 
     Federal Energy Regulatory Commission or State Electric 
     Restructuring Policy.--
       ``(1) In general.--For purposes of this subtitle, if a 
     taxpayer elects the application of this subsection to a 
     qualifying electric transmission transaction in any taxable 
     year--
       ``(A) any ordinary income derived from such transaction 
     which would be required to be recognized under section 1245 
     or 1250 for such taxable year (determined without regard to 
     this subsection), and
       ``(B) any income derived from such transaction in excess of 
     such ordinary income which is required to be included in 
     gross income for such taxable year,

     shall be so recognized and included ratably over the 8-
     taxable year period beginning with such taxable year.
       ``(2) Qualifying electric transmission transaction.--For 
     purposes of this subsection, the term `qualifying electric 
     transmission transaction' means any sale or other disposition 
     before January 1, 2007, of--
       ``(A) property used by the taxpayer in the trade or 
     business of providing electric transmission services, or
       ``(B) any stock or partnership interest in a corporation or 
     partnership, as the case may be, whose principal trade or 
     business consists of providing electric transmission 
     services,

     but only if such sale or disposition is to an independent 
     transmission company.
       ``(3) Independent transmission company.--For purposes of 
     this subsection, the term `independent transmission company' 
     means--
       ``(A) a regional transmission organization approved by the 
     Federal Energy Regulatory Commission,
       ``(B) a person--
       ``(i) who the Federal Energy Regulatory Commission 
     determines in its authorization of the transaction under 
     section 203 of the Federal Power Act (16 U.S.C. 824b) is not 
     a market participant within the meaning of such Commission's 
     rules applicable to regional transmission organizations, and
       ``(ii) whose transmission facilities to which the election 
     under this subsection applies are under the operational 
     control of a Federal Energy Regulatory Commission-approved 
     regional transmission organization before the close of the 
     period specified in such authorization, but not later than 
     the close of the period applicable under paragraph (1), or
       ``(C) in the case of facilities subject to the exclusive 
     jurisdiction of the Public Utility Commission of Texas, a 
     person which is approved by that Commission as consistent 
     with Texas State law regarding an independent transmission 
     organization.
       ``(4) Election.--An election under paragraph (1), once 
     made, shall be irrevocable.
       ``(5) Nonapplication of installment sales treatment.--
     Section 453 shall not apply to any qualifying electric 
     transmission transaction with respect to which an election to 
     apply this subsection is made.''.

[[Page S3364]]

       (b) Effective Date.--The amendment made by this section 
     shall apply to transactions occurring after the date of the 
     enactment of this Act.
                                  ____



                           amendment no. 3356

 (Purpose: To apply temporary regulations to certain output contracts)

       In Division H, on page 215, between lines 10 and 11, insert 
     the following:

     SEC. 2405. APPLICATION OF TEMPORARY REGULATIONS TO CERTAIN 
                   OUTPUT CONTRACTS.

       In the application of section 1-141-7(c)(4) of the Treasury 
     Temporary Regulations to output contracts entered into after 
     February 22, 1998, with respect to an issuer participating in 
     open access with respect to the issuer's transmission 
     facilities, an output contract in existence on or before such 
     date that is amended after such date shall be treated as a 
     contract entered into after such date only if the amendment 
     increases the amount of output sold under such contract by 
     extending the term of the contract or increasing the amount 
     of output sold, but such treatment as a contract entered into 
     after such date shall begin on the effective date of the 
     amendment and shall apply only with respect to the increased 
     output to be provided under such contract.
                                  ____



                           Amendment No. 3359

   (Purpose: To modify the credit for new energy efficient homes by 
treating a manufactured home which meets the energy star standard as a 
                            30 percent home)

       In Division H, on page 74, line 16, strike ``Code'' and 
     insert ``Code, or a qualifying new home which is a 
     manufactured home which meets the applicable standards of the 
     Energy Star program managed jointly by the Environmental 
     Protection Agency and the Department of Energy''.

  Mr. REID. Madam President, pursuant to the previous order, I now move 
to table the Boxer amendment No. 3139, and I ask for the yeas and nays 
on behalf of the majority leader.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The question is on agreeing to the motion. The clerk will call the 
roll.
  The assistant legislative clerk called the roll.
  Mr. NICKLES. I announce that the Senator from North Carolina (Mr. 
Helms) is necessarily absent.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 59, nays 40, as follows:

                      [Rollcall Vote No. 87 Leg.]

                                YEAS--57

     Allard
     Allen
     Baucus
     Bayh
     Bennett
     Bond
     Breaux
     Brownback
     Bunning
     Burns
     Byrd
     Campbell
     Carnahan
     Chafee
     Cleland
     Cochran
     Conrad
     Craig
     Crapo
     Daschle
     DeWine
     Domenici
     Dorgan
     Edwards
     Enzi
     Frist
     Grassley
     Gregg
     Hagel
     Harkin
     Hatch
     Hutchinson
     Hutchison
     Inhofe
     Jeffords
     Johnson
     Kohl
     Landrieu
     Lincoln
     Lott
     Lugar
     McConnell
     Miller
     Murkowski
     Nelson (NE)
     Nickles
     Roberts
     Santorum
     Sessions
     Shelby
     Smith (NH)
     Stabenow
     Stevens
     Thomas
     Thompson
     Thurmond
     Voinovich

                                NAYS--42

     Akaka
     Biden
     Bingaman
     Boxer
     Cantwell
     Carper
     Clinton
     Collins
     Corzine
     Dayton
     Dodd
     Durbin
     Ensign
     Feingold
     Feinstein
     Fitzgerald
     Graham
     Gramm
     Hollings
     Inouye
     Kennedy
     Kerry
     Kyl
     Leahy
     Levin
     Lieberman
     McCain
     Mikulski
     Murray
     Nelson (FL)
     Reed
     Reid
     Rockefeller
     Sarbanes
     Schumer
     Smith (OR)
     Snowe
     Specter
     Torricelli
     Warner
     Wellstone
     Wyden

                             NOT VOTING--1

       
     Helms
       
  The motion was agreed to.
  Mr. BINGAMAN. Madam President, I move to reconsider the vote, and I 
move to lay that motion on the table.
  The motion to lay on the table was agreed to.


                       Vote on Amendment No. 3225

  The PRESIDING OFFICER. Under the previous order, the question is on 
agreeing to the Feinstein amendment No. 3225.
  The Senator from Nevada.
  Mr. REID. Madam President, I move to table the amendment, and I ask 
for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There appears to be a sufficient second.
  The question is on agreeing to the motion to table amendment No. 
3225. The clerk will call the roll.
  The legislative clerk called the roll.
  Mr. NICKLES. I announce that the Senator from North Carolina (Mr. 
Helms) is necessarily absent.
  The PRESIDING OFFICER (Mr. Edwards). Are there any other Senators in 
the Chamber desiring to vote?
  The result was announced--yeas 60, nays 39, as follows:

                      [Rollcall Vote No. 88 Leg.]

                                YEAS--60

     Baucus
     Bayh
     Bond
     Breaux
     Brownback
     Bunning
     Burns
     Campbell
     Carnahan
     Carper
     Chafee
     Cochran
     Conrad
     Craig
     Crapo
     Daschle
     Dayton
     DeWine
     Dodd
     Domenici
     Dorgan
     Durbin
     Edwards
     Feingold
     Fitzgerald
     Frist
     Graham
     Grassley
     Gregg
     Hagel
     Harkin
     Hollings
     Hutchinson
     Inhofe
     Inouye
     Jeffords
     Johnson
     Kerry
     Kohl
     Landrieu
     Levin
     Lincoln
     Lott
     Lugar
     McConnell
     Mikulski
     Miller
     Murkowski
     Nelson (FL)
     Nelson (NE)
     Roberts
     Sarbanes
     Sessions
     Smith (NH)
     Stabenow
     Stevens
     Thurmond
     Torricelli
     Voinovich
     Wellstone

                                NAYS--39

     Akaka
     Allard
     Allen
     Bennett
     Biden
     Bingaman
     Boxer
     Byrd
     Cantwell
     Cleland
     Clinton
     Collins
     Corzine
     Ensign
     Enzi
     Feinstein
     Gramm
     Hatch
     Hutchison
     Kennedy
     Kyl
     Leahy
     Lieberman
     McCain
     Murray
     Nickles
     Reed
     Reid
     Rockefeller
     Santorum
     Schumer
     Shelby
     Smith (OR)
     Snowe
     Specter
     Thomas
     Thompson
     Warner
     Wyden

                             NOT VOTING--1

       
     Helms
       
  The motion to table was agreed to.
  The PRESIDING OFFICER. The Senator from Kentucky.


                             Change of Vote

  Mr. McCONNELL. Mr. President, on rollcall vote No. 88, I voted no. It 
was my intention to vote aye. Therefore, I ask unanimous consent that I 
be permitted to change my vote since it would not affect the outcome.
  (The foregoing tally has been changed to reflect the above order.)
  The PRESIDING OFFICER. The Senator from Nevada.
  Mr. REID. Mr. President, we have approximately 2 hours until all time 
runs out on this legislation as a result of the postcloture rules. The 
following amendments are about all we are going to have time to work on 
before 3:30. I ask unanimous consent that Senator Durbin be allowed to 
offer amendment No. 3342, with 10 minutes equally divided; Senator 
Harkin, amendment No. 3195, 20 minutes equally divided, and that 
Senator Dorgan be granted 10 minutes of that 20 in opposition; Carper 
amendment No. 3198, with 40 minutes equally divided; amendment No. 
3326, the Murray amendment, 10 minutes equally divided; Kyl amendments 
Nos. 3332 and 3333, 20 minutes total for the two amendments equally 
divided.
  I ask unanimous consent that following the completion of the debate 
on these amendments there be a series of votes in stacked sequence with 
no intervening second-degree amendments.
  The votes would be on or in relation to the amendments.
  The PRESIDING OFFICER. Is there objection?
  Mr. LEVIN. Mr. President, reserving the right to object.
  The PRESIDING OFFICER. The Senator from Michigan.
  Mr. LEVIN. This does not waive points of order on the amendments?
  Mr. REID. It waives no points of order.
  Mr. LEVIN. One other issue. There are other amendments at the desk, 
including one in which I am interested.
  Mr. REID. Yes. I will work on that.
  The PRESIDING OFFICER. The Senator from Kansas.
  Mr. BROWNBACK. Reserving the right to object, and I will probably not 
object, but we have an amendment on climate change issues that I did 
not hear made mention of. I inquire of the assistant majority leader 
with regard to that amendment.
  Mr. REID. I say to my friend from Kansas, we have taken these 
amendments in the sequence they are now listed. Sadly, is the best way 
I can say it, there are eight amendments to which we are simply not 
going to have time to get. The reason I have asked these people to take 
less time than they are entitled is so we can get to as many of them as 
possible.

[[Page S3365]]

  I say to my friend, if we are able to complete this unanimous consent 
agreement, what we are going to do is ask unanimous consent as to all 
amendments that are in order, that are on this list, Senators would 
have 2 minutes for and 2 minutes against each amendment. Other than 
that, that is the best we can do because that is 4 minutes more than 
the amendments are entitled to under the rule.
  Mr. BROWNBACK. If I could inquire, does that include, then, the 
amendment we have put forward?
  Mr. REID. It will include that.
  The PRESIDING OFFICER. Is there objection?
  Mr. CRAIG. Mr. President, reserving the right to object.
  The PRESIDING OFFICER. The Senator from Idaho.
  Mr. CRAIG. It is my understanding we do not need a vote on the Durbin 
amendment, that a voice vote would be adequate, if that is all right 
with the author of the amendment.
  Mr. REID. We hope that is the case. That is my understanding.
  Mr. CRAIG. Fine. That is what we believe can be done over on this 
side.
  Mr. REID. I say to my friend from Idaho, if we get lucky, there may 
be one or two others that may not require a vote. If that is the case, 
I say to my friend from Kansas, we will try to move down the list a 
little more. But 3:30 is the drop dead time under the rule.

  Mr. CRAIG. That is correct. I thank the Senator.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  The Senator from Nevada.


                Amendment No. 3336 To Amendment No. 2917

  Mr. REID. Mr. President, I ask unanimous consent that the pending 
amendments be set aside temporarily in order to call up amendment No. 
3336 for Senator Levin. This has been cleared on the other side.
  Mr. LEVIN. Mr. President, I do not know that it has been cleared on 
the other side.
  Mr. REID. Yes, it has been. It has not been cleared for acceptance. 
This unanimous consent agreement has been cleared.
  Mr. CRAIG. The unanimous consent agreement?
  Mr. REID. To allow the amendment to be listed.
  Mr. CRAIG. To have it listed, is that the unanimous consent request?
  The PRESIDING OFFICER. Is there objection?
  Mr. CRAIG. Reserving the right to object.
  The PRESIDING OFFICER. The Senator from Idaho.
  Mr. CRAIG. I withdraw.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will report.
  The legislative clerk read as follows:

       The Senator from Nevada [Mr. Reid], for Mr. Levin, proposes 
     an amendment numbered 3366 to amendment No. 2917.

  Mr. REID. Mr. President, I ask unanimous consent that the reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

(Purpose: To modify the incentives for alternative fuel motor vehicles 
                       and refueling properties)

       In Division H, on page 73, between lines 2 and 3, insert 
     the following:

     SEC. ____. MODIFICATIONS TO THE INCENTIVES FOR ALTERNATIVE 
                   VEHICLES AND FUELS.

       (a) Modification to New Qualified Hybrid Motor Vehicle 
     Credit.--The table in section 30B(c)(2)(A) of the Internal 
     Revenue Code of 1986, as added by this Act, is amended by 
     striking ``5 percent'' and inserting ``4 percent''.
       (b) Modifications to Extension of Deduction for Certain 
     Refueling Property.--
       (1) In general.--Subsection (f) of section 179A of the 
     Internal Revenue Code of 1986 is amended to read as follows:
       ``(f) Termination.--This section shall not apply to any 
     property placed in service--
       ``(1) in the case of property relating to hydrogen, after 
     December 31, 2011, and
       ``(2) in the case of any other property, after December 31, 
     2007.''.
       (2) Extension of phaseout.--Section 179A(b)(1)(B) of such 
     Code, as amended by section 606(a) of the Job Creation and 
     Worker Assistance Act of 2002, is amended--
       (A) by striking ``calendar year 2004'' in clause (i) and 
     inserting ``calendar years 2004 and 2005 (calendar years 2004 
     through 2009 in the case of property relating to hydrogen) 
     '',
       (B) by striking ``2005'' in clause (ii) and inserting 
     ``2006 (calendar year 2010 in the case of property relating 
     to hydrogen)'', and
       (C) by striking ``2006'' in clause (iii) and inserting 
     ``2007 (calendar year 2011 in the case of property relating 
     to hydrogen)''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to property placed in service after December 31, 
     2003, in taxable years ending after such date.
       (c) Modification to Credit for Installation of Alternative 
     Fueling Stations.--Subsection (l) of section 30C of the 
     Internal Revenue Code of 1986, as added by this Act, is 
     amended to read as follows:
       ``(l) Termination.--This section shall not apply to any 
     property placed in service--
       ``(1) in the case of property relating to hydrogen, after 
     December 31, 2011, and
       ``(2) in the case of any other property, after December 31, 
     2007.''.
       (d) Effective Date.--Except as provided in subsection 
     (b)(3), the amendments made by this section shall apply to 
     property placed in service after September 30, 2002, in 
     taxable years ending after such date.

  Mr. REID. I call for regular order.
  The PRESIDING OFFICER. The Senator from Illinois.


                           Amendment No. 3342

  Mr. DURBIN. Mr. President, yesterday I had reported by the clerk 
amendment No. 3342 and it was laid aside. I do not know if it is 
necessary for the clerk to report it again. I will speak briefly to the 
amendment. Is it necessary for the clerk to report?
  The PRESIDING OFFICER. The amendment is pending.
  Mr. DURBIN. Mr. President, I will be brief because I believe this 
amendment is going to be agreed to by a voice vote. I thank all those 
who are involved in that: Senator Bingaman, Senator Murkowski, as well 
as Senator Nickles, Senator Grassley, Senator Baucus, and others who 
have followed this matter.
  We clearly need to reduce our dependence on fossil fuels, 
particularly on imported oil. We should focus on sources of energy that 
are clean, free, and literally limitless. One of those sources is wind. 
Wind power is now creating opportunity for the generation of 
electricity across the United States. I introduced legislation last 
year to create a tax credit to help defray the cost of installing a 
small wind energy system to generate electricity for homes, farms, and 
businesses. I hope this legislation will ultimately become the law of 
the land.
  Today, with this amendment, we take an important step forward in 
providing for equal treatment of wind energy used in business and 
nonbusiness applications. It certainly would apply to our quest to 
reduce our dependence on foreign oil. This is extremely important.
  A recent USA Today poll showed 91 percent of the public favors 
incentives for wind, solar, and fuel cells. We think this amendment is 
one that will give us an opportunity to use wind power across America, 
to generate electricity, particularly in applications for farms and 
ranches and businesses.
  This map I have illustrates the areas of the United States where 
there are wind resources that could generate electricity. I am 
surprised, in looking at the map, that there is no indication that 
Washington, DC, is a source of wind, but those who visit Capitol Hill 
might argue otherwise.
  I think if we take a look at this map, though, we can see we have 
ample opportunities across the United States for a clean, literally 
limitless, source of electricity.
  I urge adoption of my amendment.
  The PRESIDING OFFICER. The question is on agreeing to the amendment 
of the Senator from Illinois.
  The amendment (No. 3342) was agreed to.
  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.
  The PRESIDING OFFICER. The Senator from Nevada.
  Mr. REID. 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. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 3195

  Mr. REID. Mr. President, I ask unanimous consent that the time on the 
Harkin amendment, the next in order as I understand it, start running 
against that amendment.

[[Page S3366]]

  Mr. COCHRAN. Reserving the right to object, I didn't understand the 
request.
  Mr. REID. The Harkin amendment has 20 minutes evenly divided, and I 
think the time should start running against that.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. COCHRAN. Mr. President, I am a cosponsor of the Harkin amendment, 
along with Senator Grassley and Senator Lincoln. This amendment was 
offered last night. We had a discussion of the amendment at that time. 
The issue presented by this amendment is whether the bill, as taken up 
on the floor of the Senate as it relates to energy-efficient ratios of 
air-conditioning units, should be adopted by the Senate or another 
ratio that would provide virtually the same amount of efficiency but at 
a lower ratio and leave in place production plants that are producing 
coils for air-conditioning units on the market today and the entire 
air-conditioning units to continue to function.
  Let me give a parochial example of the implications of this issue for 
my State of Mississippi. There are over 7,000 workers employed in 
facilities that produce either components for or total air-conditioning 
units. One plant employs 2,500 people in Grenada, MS. Our amendment 
allows the use, sale, manufacture, and use by citizens of air-
conditioning units with an energy efficiency ratio of 12. These are 
numeric. The bill before the Senate requires a ratio of 13. If the 
committee bill is adopted, or the bill before the Senate--the committee 
didn't have a whole lot to do with writing this bill, incidentally--if 
the bill before the Senate is adopted without amendment to this 
section, that plant at Grenada, MS, will shut down and those 2,500 
workers will be out of work. This will be replicated not only 
throughout my State and other manufacturing facilities but throughout 
the country.
  So you need to check to see what the results will be in your State 
before you vote on this amendment.
  The other side of the story is, the cost of air-conditioning units is 
going to skyrocket. I mean that seriously. An additional $700 per air-
conditioning unit is going to be added to the cost to those who want to 
buy an air-conditioning unit. Think about that. If you have a State 
where people work for the minimum wage or low salaries, they can forget 
about buying an air-conditioning unit. They are not going to be able to 
afford air-conditioning.
  One of the main purposes of this legislation is to improve energy 
efficiency. We are for that. The current energy efficiency ratio for 
air-conditioning units is at the level of 10. This amendment raises 
that by 20 percent to 12. We are suggesting--the Senators from Iowa, 
the Senator from Arkansas and I--with this amendment, that the ratio of 
12 is the correct level.
  We are not a regulatory body. Think about this. This bill is 
requiring the Senate to choose a regulatory standard. A rulemaking was 
in process at the Department of Energy. This legislation preempts that 
process and arbitrarily sets a limit that is going to unreasonably 
raise costs of air-conditioning units and put a lot of people out of 
work for no really good, justifiable reason.
  I urge the Senate to think carefully about the implications of this 
amendment and its consequences. We urge Members to vote for the level 
that is more appropriate, that we think the Department of Energy would 
move toward and establish by its rulemaking power--which it should have 
been allowed to do. This bill preempts that process, stops the 
rulemaking in its tracks, and imposes a new energy efficiency standard. 
It is too high. It is too high for the reasons I stated.
  I urge the Senate to adopt the Harkin-Cochran-Grassley-Lincoln 
amendment.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. DORGAN. How much time is available?
  The PRESIDING OFFICER. The Senator has 10 minutes.
  Mr. DORGAN. Mr. President, I was not available when Senator Harkin 
introduced the amendment last evening, but I want to come to the floor 
to support the standard that exists in the energy bill we are now 
considering.
  This issue is in many ways complicated, but it is also the issue that 
deals with energy efficiency. We are talking about increased 
production, conservation, efficiency, as well as the promotion of 
limitless, renewable sources of energy. This issue is called the 
Seasonal Energy Efficiency Ratio. Almost no one knows what it is. It is 
called the SEER standard. The standard in the bill is established at 13 
SEER, which is a standard that was published in the Federal Register 
almost a year and a half ago, January 2001. It would increase 
residential air-conditioner efficiency by 30 percent over the prior 10 
SEER standard.
  The Goodman Manufacturing Company, for example, said in testimony 
they have given at hearings: There have been claims that the 13 SEER 
standard would cost consumers substantially more money than the 
proposed rollback to a 12 SEER standard. According to the Department of 
Energy, the average difference in cost between a 13 SEER unit and a 12 
SEER unit is approximately $122. That is what I am told the Department 
of Energy says is the difference.
  The Department of Energy also indicates that cost will be recovered 
in a very short period of time, because of the added efficiency in a 13 
SEER standard. According to the Goodman Company, which is the second-
largest manufacture of air-conditioners in the country, and who 
supports the 13 SEER standard in the bill, the incremental cost to the 
manufacturer to produce a 13 SEER unit is about $100. They say: We 
believe the most efficient technology should be available to people of 
all income levels at an affordable price. Not all manufacturers may 
have this same marketing philosophy. Some may seek a protection of 
higher profit margins on their more efficient equipment. A 13 SEER 
standard would force all manufacturers to be truly competitive and 
provide all consumers with the most affordable energy-efficient 
technology for air-conditioners that is available today.
  This issue deals with a mix of things we have to do in a successful 
energy policy. We are talking about production, conservation, 
efficiency, and limitless, renewable sources of energy. This is the 
efficiency piece that deals with air-conditioners.
  Most of us understand that at peak loads at certain times of the 
year, the use of air-conditioners consumes a substantial amount of the 
energy in our country. Much has been said about it. Let me show a 
couple of charts that describe a couple of other alternatives.
  Pat Wood, former chairman of the Texas Public Utility Commission 
said:

       Such a significantly strengthened standard to SEER 13 would 
     have the triple benefits of improving electric system 
     reliability, reducing air pollution, and cutting cooling 
     costs for our customers.

  The National Association of Regulatory Utility Commissioners--of the 
various States--say:

       Keeping the SEER 13 standard for residential air-
     conditioners is a crucial component for curbing future demand 
     growth while retaining consumer needs for affordable cooling.

  And the EPA says:

       A 13 SEER standard will do more to stimulate energy savings 
     that benefit the consumer, reduce fossil fuel consumption and 
     limit emissions of air pollutants.

  All of those represent the benefits of the 13 SEER standard as 
opposed to the 12 SEER standard.
  History has shown us, on virtually all of these areas of technology, 
that once a standard is implemented, the markets drive prices down and 
make the more efficient equipment even more affordable for all 
consumers. The incremental cost to the manufacturer to produce the 13 
SEER standard, according to the Goodman Manufacturing Company, the 
second largest air-conditioning manufacturing company in the country--
and, incidentally, a supporter of the 13 SEER standard--is about $100. 
The Goodman Manufacturing company, the EPA, and others say that will be 
recouped in lower electricity costs by a more efficient air-conditioner 
in a very short period of time.
  I mentioned Pat Wood from Texas in a chart. The Texas electric rates 
were 27th in the Nation compared to other States. One of the primary 
uses of electricity in Texas is air-conditioning. Approximately 90 
percent of the homes in Texas have air-conditioning, and Texans spend 
more on air-conditioning than on space heating.
  If the 13 SEER standard is implemented, for example, Texas electric

[[Page S3367]]

companies will save $241 million by the year 2010. It is estimated in 
2020 they will have saved $785 million in electric costs.
  Consumer organizations and low-income advocacy organizations support 
the 13 SEER standard.
  It seems to me, at a time when we want to ensure energy security, 
increasing the efficiency of our appliances makes good sense. We have 
testimony not only from one of the large air-conditioning 
manufacturers, but also from smaller air-conditioning manufacturers, 
that they support this. This can be done and can be done in a manner 
that is helpful to all Americans.
  Goodman Manufacturing, the second largest manufacturer, a couple of 
small manufacturers--Goettl of Arizona and Aaon, Inc. of Tulsa, 
Oklahoma--also support the 30-percent increase in efficiency.
  I know there is not the time to adequately discuss a number of these 
issues in the energy bill. As I indicated when I began, these are 
complicated issues. I know there are disagreements about them within 
the manufacturing sector on air-conditioning units. But with respect to 
legislation that deals with a range of issues in a comprehensive energy 
policy, on the efficiency side, the 13 SEER standard makes sense.
  The 13 SEER standard will save energy. It will promote a substantial 
movement by the manufacturing base to produce these at an affordable 
cost. It will save money and also be friendly to our environment. All 
of this make sense as part of an energy policy.
  Mr. President, how much time is remaining?
  The PRESIDING OFFICER. The Senator has 2 minutes 20 seconds.
  Mr. DORGAN. I reserve the remainder of my time.
  Mr. MURKOWSKI. Mr. President, how much time remains on our side?
  The PRESIDING OFFICER. There remains 4 minutes 18 seconds.
  Mr. MURKOWSKI. Mr. President, I was going to speak on behalf of the 
amendment, but I will defer to Senator Harkin. He controls the time.
  Mr. HARKIN. I am sorry, how much time remains?
  The PRESIDING OFFICER. The Chair corrects the time. There remain 5 
minutes 32 seconds.
  Mr. MURKOWSKI. Will my colleague proceed now. I am going to take 2 
minutes.
  Mr. HARKIN. Whatever the Senator wants.
  Mr. MURKOWSKI. I will yield to the Senator the remaining time.
  Mr. HARKIN. I thank my colleague.
  Mr. MURKOWSKI. Mr. President, this amendment strikes the mandate for 
a 13 SEER standard for residential air-conditioners and heat pumps. As 
we know, the DOE would be required to issue a new 12 SEER efficiency 
standard within 90 days. This would result in the same standard as 
recommended by the DOE staff during the previous administration, and 
constitute a 20-percent increase in efficiency, which is not a rollback 
by any means, as some would indicate.
  Here we are again in the situation, just as in the CAFE debate, where 
certain Senators want you to believe they know better. Instead of 
letting the agency, in this case the DOE, act on a reasonable 
efficiency and cost standard, the number 13 was picked out of the air 
even though it meant higher costs and fewer choices for consumers.
  To give some idea, the nonpartisan Energy Administration estimates 
the 12 SEER standard saves consumers money. The 13 SEER standard is a 
net cost, that is, about $600 million over 10 years. To give some idea, 
the 12 SEER saves $2.3 billion over the 10-year period.
  During the last rulemaking in 2000, DOE staff considered a wide range 
of possible efficiency standards. Based on a review of all factors, DOE 
staff proposed a new 12 SEER standard--a 20 percent increase in energy 
efficiency. However, Secretary Richardson arbitrarily decided--without 
any further study--to issue a new 13 SEER rule in the final days of the 
Clinton Administration. This rule was placed under further review.
  This higher level was not supported by the rulemaking--and it 
certainly is not economically justifiable. To justify the last minute 
13 SEER standard, DOE in the prior Administration disregarded the 
industry data that it had used throughout the entire rulemaking. The 
cost of an air conditioner will increase by $712--nearly 30 percent--if 
a 13 SEER standard is imposed. For most consumers in the Midwest and 
northern regions of the country the ``payback'' time for recovery of 
the additional costs is well over 10 years. For these consumers--the 
extra cost of the more efficient unit just simply isn't worth it over 
the life of the equipment.
  This dramatic increase in the cost of a new air conditioner under a 
13 SEER standard will make air conditioning unaffordable for many 
seniors, working families, and low-income consumers, many of whom own 
single family homes and many of whom rely on air conditioning for their 
health and well being.
  For small and manufactured homes, the expense is even greater. The 
size of an air conditioner under a 13 SEER standard is substantially 
larger than under a 10 or 12 SEER standard. This creates enormous 
retrofitting problems and much higher cost, particularly in 
manufactured housing. The larger cooling coils simply cannot fit in the 
space made for the smaller unit.
  Because of the substantial increase in cost, many consumers will 
choose to fix older units that are less energy efficient instead of 
make a new purchase. This would defeat the purpose of higher 
standards--to save energy and reduce heating and cooling expenses.
  A 13 SEER standard would have tremendously negative impacts on 
industry competition and small businesses: 84 percent of all central 
air conditioning models would be suddenly obsolete; as would 86 percent 
of all heat pump models; redesign and retooling of manufacturing 
facilities would cost the industry $350 million--reducing profits and 
jobs.
  Nearly half of the original equipment manufacturers selling air 
conditioners in the U.S. today do not offer 13 SEER products. The 
Department of Justice and the Small Business Administration have both 
expressed concerns over the loss of competition and the closure of many 
small manufacturers.
  But most of all--the 13 SEER standard is not economically justifiable 
as is required under existing law. Industry figures show that both the 
12 and the 13 SEER standards will cost consumers billions after 
electricity savings are factored in, and the non-partisan Energy 
Information Administration estimates that the 12 SEER standard saves 
consumers money; while the 13 SEER standard is a net cost.
  These are the reasons DOE staff initially recommended the 12 SEER 
standard as the ``economically justifiable'' level of efficiency, and 
this is why the DOE has proposed a 12 SEER standard as a final rule 
after its further review of the record. We should respect the expertise 
of the DOE--and let them carry out their duties under existing law.
  A 13 SEER standard would have a devastating effect on the industry, 
eliminate competition, and cost thousands of jobs. By contrast, a 12 
SEER standard will benefit consumers, preserve jobs and competition, 
and truly save energy. I support the amendment to strike the 13 SEER 
standard, and I encourage my colleagues to do the same.
  I yield the remaining time to the Senator from Iowa.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. HARKIN. Mr. President, I thank the distinguished Senator from 
Alaska for his comments. I support him in favor of a 12 SEER standard 
instead of a 13. I join with my friend from Mississippi. I thank him 
for his strong support of this amendment.
  It always sounds nice. You do a 13, you are going to save a lot of 
energy and can quote from EPA and that stuff. But the fact remains, No. 
1, the Department of Justice in the last Administration had real 
concerns about a 13 standard and this administration said this would be 
harmful to small businesses, this would not be competitive.
  No. 2, the professionals in the Department of Energy in both the past 
administration and in this one have said a 12 standard is the best 
standard.
  What happens if you go to a 13? The cost of these air-conditioners 
will be higher. The elderly, modest-income people, people who live in 
manufactured homes, will be less able to afford them.

[[Page S3368]]

  What they will do is they will keep their old air-conditioners, and 
those are less energy efficient. They will not move to the new ones.
  The cost of going from 10 to 13 will be more than $700 per air-
conditioner. To go to a 12, it is about $407.
  Keep in mind, under the rules the Department of Energy has to abide 
by, they have to look not just at the energy use, they have to look at 
the impact it has on certain subgroups, such as those of modest means. 
Under the 13 that is in this bill, it will mean a lot of low-income 
people in this country are going to be harmed. It will mean the elderly 
who need air-conditioning, when it really gets hot, their health and 
their well-being, will be unable to have the air-conditioning they 
need. Is this what we want to do around here?
  When Senators come to vote on this issue, I hope this is not some 
kind of a knee-jerk reaction: 13 is higher than 12 and we want to have 
a higher energy efficiency standard, so we will vote for 13, without 
thinking about what the implications will mean, what it will mean to 
consumers, the elderly, the low-income people all over this country.
  Last, what is it going to mean to jobs? We have thousands of jobs in 
my State of Iowa that are in jeopardy, dire jeopardy if the standard of 
13 stays in this bill. These are companies that produce good quality 
equipment. You have all heard of Lennox. It is a great company. But I 
can tell you right now, if it goes to 13, Lennox will be squeezed and 
jobs will be lost in my state of Iowa.
  Any way you cut it, the 13 standard that is in the substitute 
amendment now before this body is not going to achieve the goals of 
lower electric energy use people hope for. Instead, it is going to hurt 
our elderly, our low income, and especially the jobs of the people who 
work in these industries today.
  I reserve the remainder of my time, however much it might be.
  The PRESIDING OFFICER. The time of the Senator has expired.
  Ms. CANTWELL. Mr. President, I rise today in opposition to this 
amendment, which would leave it to the Secretary of Energy to decide 
what efficiency standard should be applied to residential air 
conditioners and heat pumps. This is an attempt to reduce by at least 
10 percent the energy efficiency requirement proposed in this bill, 
which reflects the standard promulgated by the Department of Energy in 
January 2001--the result of a comprehensive rulemaking effort and 
multiple years of hearings and analysis.
  The new standard, called SEER 13, seasonal energy efficiency ratio, 
was supposed to take effect last February, but it was delayed by the 
Bush administration's suspension of a long list of Clinton era 
environmental rules in what's come to be known as the ``Card Memo''--
the legality of which is still subject to litigation.
  My colleagues may be aware of a number of other rules that came under 
the Bush administration's scrutiny as a result of this freeze on 
environmental protections. The list is long and includes: the attempt 
to roll back the arsenic standard for drinking water; suspension of the 
roadless rule, designed to protect more than 60 million acres of 
untouched national forests from road building and logging; and even the 
Clinton administration's New Source Review policy, restricting harmful 
emissions from power plants.
  Given this laundry list of environmental reversals, it should 
probably not surprise us that the Bush administration also took steps 
to undermine the air conditioning efficiency standard. After merely 2 
months of review--compared to the 8-year rulemaking process of the 
Clinton administration--the Department of Energy last April proposed 
lowering the air conditioning efficiency standard to SEER 12, or by at 
least 10 percent relative to the Clinton rule. What is more, the Bush 
standard wouldn't even go into effect until 2006.
  And so, the fix is in. If we leave this important standard to the 
discretion of this administration's Department of Energy, we will 
needlessly lower the bar for the efficiency of appliances that use as 
much as 28 percent of all the electricity consumed in this nation on 
hot summer days. Thus, this amendment would adversely impact our 
environment, the reliability of our transmission grid and our Nation's 
consumers.
  I also think it's interesting to note that the Bush administration's 
proposed standard has been vigorously challenged--not just by consumer 
groups, environmental and energy efficiency organizations, but also by 
utilities themselves, State utility regulators, some of the same large 
and small appliance manufacturers that this amendment purports to help, 
and even the Bush administration's own Environmental Protection Agency.
  Indeed, in comments on the Department of Energy's rulemaking, the 
Deputy Administrator of the EPA wrote that ``the EPA believes there is 
a strong rationale to support a 13 SEER standard,'' put in place by the 
Clinton rule, and further alleged that several DOE's arguments in 
justifying its proposed rollback contained ``overestimates,'' 
``underestimates,'' and ``misinformation.''

  Now, why this fight over a seemingly obscure requirement? What is the 
difference between a 12 SEER and 13 SEER standard?
  By 2020, the Bush administration's proposal--which this amendment 
would render a foregone conclusion--would increase by nearly 14,500 
Megawatts the peak electricity demand across this country. That is 
roughly the same as the output from 48 new power plants.
  It would, every year, add 2.5 million metric tons of carbon emissions 
into our air;
  It would cost American consumers $1 billion dollars on their 
electricity bills.
  And it would degrade the reliability of our already strained 
transmission grid.
  I believe these alone are compelling facts. But I also want to talk 
about a benefit of the 13 SEER standard--the standard that is now in 
this bill--that became obvious to us in Washington State during the 
height of the Western energy crisis.
  Now, in my State, we don't have a lot of air-conditioning load during 
the summer because our major population centers are located in a 
temperate climate where temperatures eclipse 80 for only a few days a 
year. In fact, our peak energy usage occurs during the winter--for 
heating purposes. But this is an important issue for ratepayers in my 
State nonetheless, because we are upstream from--and interconnected, 
through Oregon, to--California. And in California, air conditioners 
account for as much as 30 percent of peak energy demand on hot summer 
days. That is, during the business hours when our economy requires the 
most energy to function--during the day, when temperatures are also at 
their height--air conditioning alone uses almost a third of all the 
energy consumed in that State.
  Now, a very painful lesson was driven home up and down the west coast 
last year. That is, when supply is tightest--during periods of peak 
demand--the grid is also the most constrained and wholesale power 
prices are the most volatile. When supply is tight, utilities switch on 
their so-called ``peaker'' plants--plants that are usually the most 
obsolete, least efficient, environmentally damaging and run for only a 
few hours a year. And as my colleagues are aware--because of the unique 
nature of electricity as a commodity that cannot be stored--that very 
last megawatt of electricity needed to meet demand is by far the most 
expensive. It can have an almost exponential effect on power supply 
costs across a market. And it's a primary driver in price spikes and 
volatility.
  So by increasing the efficiency of air conditioners--by 30 percent 
under the Clinton administration standard that this bill contains--we 
would essentially be helping to drive down peak demand in a way that 
will also lessen volatility in electricity markets, enhance the 
reliability of the grid and spare our environment emissions from these 
peaker plants.
  I believe the efficiency standard contained in this bill is right for 
consumers and it is right for the environment. Contrary to what some of 
my colleagues may assert, it is also imminently achievable for 
industry. All manufacturers already make air conditioning models that 
comply with the 30 percent savings standard contained in this bill--so 
clearly, the technology already exists. And the Department of

[[Page S3369]]

Energy concluded in its 8-year rulemaking that the standard would 
actually increase--not reduce--manufacturing jobs in this sector.
  So I think the choice is clear. The evidence supports the standard 
contained in this bill. This is an opportunity for this body to resist 
yet another Bush administration environmental rollback. So I ask my 
colleagues to oppose this amendment.
  Mr. BINGAMAN. How much time remains for the opponents?
  The PRESIDING OFFICER. There remain 2 minutes 17 seconds.
  The Senator from New Mexico.
  Mr. BINGAMAN. Mr. President, to just put this in perspective, this is 
another one of these amendments that we have seen a few of during this 
debate over the last several weeks--the sky is falling, don't try 
requiring anything that is onerous.
  The truth is the provision in the bill says that by the year 2006 we 
believe the air-conditioners sold in the country ought to meet this 
SEER standard. Lennox, the manufacturer which is the one the Senator 
from Iowa referred to today, has over 19 models of air-conditioners, 
and 130 of those models already meet the standard in 2002. We are 
saying that 4 years from now we would like for the others to meet the 
standards as well.
  Carrier lists 1,000 models that they make available. Of those, fewer 
than 100 have a SEER standard of less than 13. They don't have any air-
conditioners on the market with a SEER standard of less than 12.25. So 
we are saying, 4 years from now let's move to the higher standard.
  The EPA--not just the EPA of the prior administration but the EPA of 
this administration--agrees with our position.
  I ask unanimous consent that following my remarks, we have printed in 
the Record a letter dated October 19 from Linda Fisher, Deputy 
Administrator of EPA, saying that EPA believes there is a strong 
rationale for the 13 SEER standard we have in this bill.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See Exhibit 1.)
  Mr. BINGAMAN. Mr. President, it is clear to me there are a great many 
benefits to be achieved for our country, for consumers, and for the 
environment, in lower electricity bills, by going ahead and maintaining 
the provision we have in the bill, the 13 SEER standard. My colleague 
from Iowa says it is going to cost a tremendous number of jobs. The 
Department of Energy itself--this Department of Energy--says this will 
create jobs and it will not lose jobs. It requires a few more workers 
to produce these air-conditioners with this higher standard. Instead of 
losing jobs in 2006 when this new mandate will be effective, we will be 
creating jobs.
  If this is an effort to protect jobs for manufacturers in this 
industry, it is a misguided effort. I believe strongly that the 
provision we have in the bill is the right provision.
  I urge my colleagues not to support the amendment that is offered by 
the Senator from Iowa.

                               Exhibit 1

                                       United States Environmental


                                            Protection Agency,

                                 Washington, DC, October 19, 2001.
     Ms. Brenda Edwards-Jones,
     U.S. Department of Energy, Office of Energy Efficiency and 
         Renewable Energy, Energy Conservation Program for 
         Consumer Products: Central Air Conditioners and Heat 
         Pumps, Docket No. EE-RM/STD-98-440, Washington, DC.
       Dear Ms. Edwards-Jones: On behalf of the U.S. Environmental 
     Protection Agency, I am pleased to submit the attached 
     comments to Docket No: EE-RM-98-440, the Department of 
     Energy's Proposed Rule: Energy Conservation Program for 
     Consumer Products; Central Air Conditioners and Heat Pumps 
     Energy Conservation Standards.
       DOE has proposed a change to its previously issued standard 
     that decreases energy efficiency requirements for residential 
     air conditioners and heat pumps. DOE proposes to withdraw its 
     previously issued 13 SEER standard and replace it with a 12 
     SEER standard. These comments affirm EPA's support for DOE's 
     original 13 SEER standard.
       EPA believes there is a strong rationale to support a 13 
     SEER standard. A 13 SEER standard represents a 30% increase 
     in the minimum efficiency requirements for central air 
     conditioners and air source heat pumps. In contrast, a 12 
     SEER standard represents only a 20% increase. The 
     Administration's National Energy Policy stresses the 
     important role that energy efficiency plays in our energy 
     future. A 13 SEER DOE standard will do more to stimulate 
     energy savings that benefit the consumer. DOE has quantified 
     these savings at approximately 4.2 quads of energy over the 
     2006-2030 period, equivalent to the annual energy use of 26 
     million households and resulting in net benefits to the 
     consumer of approximately $1 billion by 2020. In comparison, 
     DOE projects that only 3 quads of energy would be saved over 
     that same period with a 12 SEER standard.
       A 13 SEER standard will also do more to reduce fossil fuel 
     consumption and more to limit emissions of air pollutants. 
     For example, by avoiding the construction of 39 400 megawatt 
     power plants, a 13 SEER standard will reduce nitrous oxides 
     (NOx) emissions by up to 85 thousand metric tons 
     versus up to 73 thousand metric tons that would be reduced 
     with a 12 SEER standard. A 13 SEER standard will also result 
     in cumulative greenhouse gas emission reductions of up to 33 
     million metric tons (Mt) of carbon. This is in contrast to a 
     12 SEER rule which will reduce up to 24 Mt of carbon 
     equivalent by avoiding the construction of 27 400 megawatt 
     power plants. At a time when many areas across the nation are 
     struggling to improve their air quality, the additional 
     emissions reductions achieved by a 13 SEER standard are 
     especially important.
       Thank you for the opportunity to provide these written 
     comments. Should you have any questions, please contact Dave 
     Godwin in EPA's Office of Air and Radiation at 202-564-3517 
     or via e-mail at [email protected].
           Sincerely,
                                                  Linda J. Fisher,
     Deputy Administrator.
                                  ____


 Comments of the U.S. Environmental Protection Agency on the Proposed 
 Rule, Energy Conservation Program for Consumer Products, Central Air 
 Conditioners and Heat Pumps Energy Conservation Standards, Docket No. 
                     EE-RM-98-440, October 10, 2001


                        Overview of EPA Comments

       The Environmental Protection Agency welcomes the 
     opportunity to comment on the Department of Energy's Proposed 
     Rule setting forth energy conservation standards for 
     residential central air conditioners and central air 
     conditioning heat pumps. EPA recognizes that the new proposed 
     DOE rule represents a 20% increase in minimum efficiency 
     standards for central air conditioning and heat pumps. 
     However, we instead support the previous final rule of a 30% 
     increase.
       EPA has issue with several of the arguments DOE used to 
     justify the withdrawal of the previous final rule as outlined 
     within the Federal Register Notice of July 25, 2001 and the 
     Technical Support Document. In summary, EPA believes that the 
     information in the Federal Register Notice of July 25, 2001:
       overstates the regulatory burden on manufacturers due to 
     HCFC phase-out and concludes that the industry is under 
     greater financial pressure from a 13 SEER standard than it 
     is,
       understates the savings benefits of the 13 SEER standard,
       over and underestimates certain distributional 
     inequalities,
       mischaracterizes the number of manufacturers that already 
     produce at the 13 SEER level or could produce at the 13 SEER 
     level through modest changes to the products, and thereby 
     mischaracterizes the availability of 13 SEER product.
       EPA believes there is a strong rationale to support a 13 
     SEER standard. EPA also believes that the more stringent 
     standard will be more representative of the long term goals 
     of the administration's energy policy and will do more to 
     reduce both the number of new power plants that need to be 
     constructed, as well as the emissions resulting from these 
     plants. EPA's more detailed comments are provided below.


           overstated regulatory burden due to hcfc phaseout

       EPA analysis indicates that the Department of Energy's 
     (DOE) projected cost for manufacturers to transition from 
     HCFT-22 to a substitute for residential central air 
     conditioners and heat pumps is likely to be a significant 
     overestimate. Both EPA's own analyses, and estimates from at 
     least one large manufacturer indicate that the DOE estimates 
     in their Technical Support Document (TSD) are at least twice 
     as high as warranted based on prior industry transitions and 
     more recent trends.
       The attached analysis from EPA's contractor, ICF 
     Consulting, suggests a more reasonable estimate of the cost 
     to be around $20 to $30 million per company, rather than the 
     $50 million estimated by DOE, for the following reasons (see 
     Exhibit 1):
       The costs to retool a facility to accept new compressors is 
     estimated at only $2 million.
       The capital cost for converting from CFC-12 to HFC-134a for 
     the entire U.S. refrigerator industry was estimated to range 
     from $7 million to $23 million.
       Projects approved under the Multilateral Fund of the 
     Montreal Protocol for conversion of refrigerator 
     manufacturing plants from use of CFCs to both HFC-134a 
     refrigerant, and HCFC or hydrocarbon foam processes, show 
     incremental cost estimates of $200,000 to $1 million.
       These estimates are based on the expectation that the 
     industry will transition to one or both of the two 
     refrigerant HFC blends

[[Page S3370]]

     that have emerged as likely replacements for HCFC-22 (as 
     cited in the TSD), R-407C and R-410A, and appear to provide 
     roughly equivalent or better energy efficiency.
       Furthermore, many manufacturers can produce 13 SEER units 
     with only minor modifications to their facilities. DOE 
     already acknowledges in the TSD that using ``407C lowers the 
     efficiency of unmodified R-22 systems by 5-10 percent under 
     the SEER test conditions.'' (TSD, page 4-49). Thus, an 
     unmodified R-22 system of 13.7 to 14.4 SEER, charged with R-
     407C, would achieve a 13 SEER. Of the seven manufacturers 
     listed in the TSD, six (Carrier, Goodman, Rheem, Lennox, 
     Trane and York) currently offer certified products with a 
     SEER of 14.4 or greater, Nordyne makes units up to 14 SEER. 
     Furthermore, it can only be assumed that minor design changes 
     accounting for the use of R-407C would lower or eliminate the 
     5-10% efficiency loss.
       With respect to R-410A, the TSD states that ``manufacturers 
     can preserve system capacity by reducing tube diameter (and 
     tube costs). Furthermore, 410A can provide a slight 
     efficiency boost at the SEER testing points.'' (TSD, page 4-
     49). Thus, the use of R-410A, while likely requiring more 
     redesign of equipment, may actually increase efficiencies. 
     This increase would eliminate the need to take some of the 
     steps outlined in the TSD necessary to comply with a 13 
     SEER rule while using HCFC-22 refrigerant. The TSD 
     necessary to comply with a 13 SEER rule while using HCFC-
     22 refrigerant. The TSD notes that ``Carrier introduced a 
     line of products based on 410A in 1998 and most other 
     major manufacturers have since followed suit.'' (TSD page 
     4-50).
       Carrier, the manufacturer with the largest (31%) share of 
     the residential central air conditioner market (TSD, page 8-
     60), already offers efficient R-410A units. ARI lists over 
     1000 models manufactured by Carrier that use R-410A, ranging 
     in cooling capacity from 23,200 Btuh (less than 2 tons) to 
     60,000 Btuh (5 tons). Of these, only a few dozen have a SEER 
     of less than 13, and all have a SEER of at least 12.25. The 
     maximum SEER listed is 18. While these models do not 
     represent all of Carrier's products, it is apparent that 
     switching to R-410A and achieving SEER ratings of 13 is very 
     much possible. Carrier may now be in a position to increase 
     its manufacturing capacity of these R-410A lines by the 2006 
     DOE deadline, thus meeting a 13 SEER standard with little or 
     no additional regulatory burden. To the extent that Carrier 
     cannot increase its production of R-410A by 2006 to meet 
     demand, it can supplement production with high-efficiency 
     HCFC-22 units until 2010.
       Goodman, the manufacturer with the second largest share 
     (19%) of the market, had already expressed support for the 13 
     SEER. Goodman has analyzed the costs associated with 
     switching refrigerants and meeting a 13 SEER standard and 
     expects the combined cost for both will be on the order of 
     half of DOE's $50 million estimate for just the refrigerant 
     transition. They feel that this $25 million per company is 
     representative of the vast majority of the industry.
       Many other companies offer or are well into the development 
     of equipment using alternatives to HCFC-22. For instance, 
     Lennox offers products with R-410A, ranging from 11.35 to 15. 
     15 SEER. Of 199 models listed, with capacities ranging from 
     23,600 to 61,000 Btuh, 130 models meet or exceed 13 SEER.
       As we look forward over the next decade, there are a number 
     of paths that companies can take to keep these costs low as 
     they work to comply with the EPA regulations banning the 
     shipping of new equipment charged with HCFC-22 starting 
     January 1, 2010 and work to comply with the DOE efficiency 
     rule (whether 12 SEER or 13 SEER) by 2006. One example would 
     be:
       Step up current production of high efficiency HCFC-22 
     equipment;
       Meanwhile, phase out production of lower efficiency HCFC-22 
     units by 2006;
       By 2010, switch these high-efficiency production lines to a 
     new refrigerant while ensuring the efficiency standards are 
     still met.
       Another example would be:
       Move directly to producing R-407C and/or R-410A units that 
     meet the new DOE efficiency regulations;
       Increase the production of these units to meet customer 
     demand by 2006;
       Meanwhile, phase out all HCFC-22 units by 2006.
       Of course, some combination of these strategies is more 
     likely to be taken and seems to offer the most opportunity 
     for manufacturers to reduce regulatory burden.
       The TSD states ``To the extent that manufacturers can 
     introduce new products utilizing the new refrigerant and 
     meeting the new efficiency standard, the cumulative burden 
     will be reduced.'' (TSD page 8-62). EPA believes that there 
     is ample opportunity to meet both a 13 SEER efficiency 
     standard and a ban on HCFC-22 in new equipment with limited 
     regulatory burden.


         underestimates of savings in the cost benefit analysis

       DOE's analysis of the benefits of the withdrawn 13 SEER 
     rule are significantly underestimated. DOE's analysis is 
     based on summer 1996 electricity prices, adjusted downward 
     based on EIA projections of future annual electricity prices. 
     Changes in the electricity market due to utility deregulation 
     has resulted in increased electricity prices overall. DOE did 
     not consider this trend in its analysis.
       According to Synapse Energy Economics' wholesale 
     electricity price data, DOE analysis underestimates the cost 
     of electricity for residential air conditioning by an average 
     of approximately $0.02/kWh. In addition, the California 
     Public Utilities Commission raised some residential rates by 
     as much as 37%, affecting more than 10% of the U.S. 
     electricity market and thereby, raising the national average 
     electricity prices above DOE's projections. Adjusting DOE's 
     analysis to include more recent electricity prices will 
     definitely and drastically alter the results indicating that 
     a DOE minimum standard of 13 SEER represents the better 
     decision for the nation.


         over and under estimates of distributional inequities

       EPA sees distributional inequalities that DOE has not 
     adequately considered. One results from the fact that the 
     residential price of electricity does not capture the 
     complete cost for running systems that largely run at peak 
     times. That is, except in select circumstances, residential 
     customers purchase electricity based upon averages rates, not 
     ``time-of-use'' rates. The actual costs of electricity at 
     peak times are dramatically more and therefore, higher peak 
     rates drive up the average costs. Less efficient equipment 
     operating at peak times drives up the cost of electricity 
     for all customers, including those of low income, who are 
     less likely to have central air conditioning. According to 
     1997 Residential Energy Consumption Survey (RECS) 
     microdata (the same data set used by DOE in their 
     analysis), of the total 101 million households 
     represented, approximately 46% have central air 
     conditioning, but among poor households, only 25% have 
     central air conditioning; just half the rate of presence 
     among non-poor households (See Exhibit 2).
       Also related to distributional equities and according to 
     the RECS data, among households below the poverty level, 
     about 60% rent their housing units. This is in contrast to 
     27% of above poverty level households that rent (See Exhibit 
     2). Therefore, low-income consumers, or those defined as 
     ``poor'' in TSD Table 10.1, are not the ones to buy a central 
     A/C or heat pump product, but they would be the one to pay 
     the utility bill (or likely face increased rents if utilities 
     were included in their rent) for the use of that product. 
     Instituting a higher minimum efficiency standard will 
     actually ensure that low-income consumers have lower utility 
     bills, providing a benefit to this population.


                 misinformation on product availability

       DOE justifies a lower SEER rule because the higher 
     efficiency levels would put manufacturers out of business. 
     However, according to the Air Conditioning and Refrigeration 
     Institute (ARI) database of model combinations, many 
     manufacturers already produce models that meet the 13 SEER 
     requirements. This technology has been available for many 
     years to large and small manufacturers alike. Although 
     confidential ARI shipment information may not reflect large 
     sales of high efficiency equipment, the publicly accessible 
     ARI database of models shows extensive product availability. 
     Over 7,000 air source heat pump model combinations and over 
     14,000 central air conditioner model combinations currently 
     meet or exceed the 13 SEER level as listed by ARI.
       The TSD (TSD page 8-2) describes a group of manufacturers 
     that ``offer more substantial customer and dealer support and 
     more advance products. To cover these higher operating 
     expenses, this group attempts to ``sell-up'' to more 
     efficient products or products with features that consumers 
     and dealers value.'' With a higher standard, these 
     manufacturers would not go out of business, but would rather 
     continue to sell-up, to even higher efficiency levels or 
     additional valued features.
       Furthermore, results and upcoming plans for utility 
     programs around the country also document the availability of 
     13 SEER and above products, as well as the demand for such 
     products. Austin Energy's Residential Efficiency Program 
     2000-2001 gave rebates to single family existing homes for 
     installation of split systems and heat pumps with 
     efficiencies of 12 SEER and above. Rebates were staged: $150 
     for 12.0-12.9 SEER; $250 for 13.0-13.9 SEER; $400 for 14.0-
     14.9 SEER; and $500 for 15.0 and above. In total, 4,000 
     rebates averaging $312 were given to consumers. These numbers 
     illustrate that a significant portion of the rebates given 
     were for 13 SEER and above units.
       In New Jersey, a 3-year rebate structure began in 2000 with 
     a $370 rebate given for the installation of 13.0 SEER 
     equipment and a $550 rebate given for 14.0 SEER equipment. A 
     total of 14,000 rebates were given in the year 2000. As of 
     August 2001, 8000 rebates were given out with approximately 
     6,000 of these units at the 14.0 SEER level. Overall results 
     in New Jersey show that 27% of the market (1998-2000) are 13 
     SEER or higher with 60% of those being at the 14 SEER or 
     higher levels.
       The Long Island Power Authority (LIPA) instituted a program 
     similar to the one in New Jersey offering rebates for 
     installation of 13.0 and 14.0 SEER equipment. Results to date 
     show that LIPA is on target to reach their goal of 
     approximately 3,500 rebates for 13 SEER equipment. 
     Approximately 80% of these rebates are for SEER 14 equipment. 
     LIPA is expecting to ramp up to 5000 rebates in 2002. 
     Overall, 17% of LIPA's market in 2000 is at 13 SEER or 
     higher, with the market share for existing homes even higher 
     at 22%.
       Program plans for 2002 in Texas and California are geared 
     toward equipment at 13 SEER and above. Reliant Energy in 
     Southeast Texas is planning an incentive program

[[Page S3371]]

     to target 13 SEER and above matched systems. California's two 
     large municipal utilities (Sacramento Municipal Utility 
     District and Los Angeles Department of Water and Power) and 
     four investor owned utilities (San Diego Gas and Electric, 
     Southern California Gas, Southern California Edison, and 
     Pacific Gas and Electric), serving over 30,000,000 consumers, 
     are planning rebate programs to assure California residents 
     receive energy efficient equipment, measures, and practices 
     that provide maximum benefit for the cost. These programs all 
     revolve around 13 SEER equipment or higher. Actual incentive 
     amounts are not yet available.
                                  ____


 Oral Statement for Doug Marty, Executive Vice President, on behalf of 
 Goodman Global Holdings Company, U.S. Department of Energy, Office of 
                 Energy Efficiency and Renewable Energy


 public hearing regarding energy efficiency standards for central air 
            conditioners and heat pumps--september 13, 2001

       Assistant Secretary David Garman, and other members of the 
     Department of Energy Staff . . . thank you for the 
     opportunity to speak here today.
       My name is Doug Marty and I am the Executive Vice President 
     of Goodman Global Holdings out of Houston, Texas. Let me 
     start by giving you a brief background of our company: 
     Goodman is the second largest residential air conditioning 
     and heating manufacturer in the United States. Founded in 
     1975 by the late Harold Goodman, Goodman remains entirely 
     family-owned. We produce a complete line of residential and 
     light commercial air conditioning and heating equipment with 
     facilities in Houston, Texas as well as Dayton and 
     Fayetteville, Tennessee. Name brands sold by Goodman include 
     Amana, Goodman, GmC, and 
     Janitrol.
       As the nation's second largest manufacturer, my goal here 
     today is to provide you with accurate information regarding 
     the continuing debate to rollback the energy efficiency 
     standard for air conditioners and heat pumps from a level of 
     13 SEER to 12 SEER. This debate has been fueled by 
     inaccuracies and in some cases outright wrong information. 
     Stronger energy efficiency standards do not place a major 
     burden on manufacturers or limit consumer choice. They do not 
     cause enormous increases in the size of the equipment. 
     Finally, they do not impose unreasonable costs on consumers 
     or hurt the elderly and low-income families. Let me explain.
       Given recent events and for purposes of national security, 
     we now face a time when it is imperative to explore 
     alternatives that help to improve the efficiency of our 
     energy use and build our domestic energy infrastructure. As 
     we seek alternatives, it is important to consider options 
     that strike a balance between both environmental and energy 
     needs. One simple option is energy efficiency and 
     conservation; specifically, energy efficiency standards for 
     air conditioners should be strengthened to a level that 
     provides consumers the most efficient technology available 
     today at an affordable price and helps to strengthen our 
     domestic resources. That level is 13 SEER.
       Many opponents of the 13 SEER standard have argued that 
     moving to the higher level would be a hardship on small 
     manufacturers and that not all manufacturers have the 
     capability to produce the more efficient equipment, thus 
     limiting consumer choice. In fact, the 13 SEER technology has 
     been available to both large and small manufacturers for 
     approximately 15 years. The Air Conditioning and 
     Refrigeration Institutes' own data shows that virtually all 
     manufacturers produce 13 SEER equipment today. In reality, 
     the only difference between a 10 SEER unit, a 12 SEER unit 
     and a 13 SEER unit is a little more copper and aluminum used 
     in manufacturing different sized coils. Given the fact that 
     the units have equivalent technologies, at Goodman we run 
     all of our equipment through the same facilities and 
     assembly lines. Since Goodman and most other manufacturers 
     currently produce the 13 SEER air conditioner, moving to 
     the higher SEER will simply mean producing a higher 
     volume. This will also mean more jobs at the industry 
     level, thus improving the economy.
       There has also been some confusion about the size of the 13 
     SEER equipment versus the 12 SEER equipment. It has been said 
     that there is an enormous difference in the size of the units 
     and with that a tremendously higher related cost for 
     installation. It is clear that an increased efficiency 
     standard will be established at least at a level of 12 over 
     the current 10 SEER standard. If the decision is made to 
     adopt the 12 SEER standard, the unit size will be slightly 
     bigger and will require some structural modifications to 
     install the indoor portion of the system including ductwork 
     during installation of the unit. Once we acknowledge that 
     there will be a standard that will likely require some 
     structural modification, one must compare the 12 SEER unit to 
     the 13 SEER unit. The difference between our 13 SEER and 12 
     SEER external equipment is only 3-5 inches in height. The 
     internal equipment size for the 12 and 13 are similar, and 
     there is almost no difference in the installation costs 
     associated with a 13 SEER unit and a 12 SEER unit.
       There have also been claims that the 13 SEER standard would 
     cost consumers substantially more money than the proposed 
     rollback to a 12 SEER standard. According to the DOE, the 
     average difference in cost between a 13 SEER unit and a 12 
     SEER unit today is approximately $122. The difference in 
     costs for Goodman units is comparable to this estimate. Since 
     a 13 SEER unit is 8 percent more efficient that a 12 SEER 
     unit, consumers will save more on their electric bills each 
     and every month for the life of the unit. Thus, over an 
     average life of a home cooling unit, the savings will easily 
     cover the increase in cost, between a 12 SEER and a 13 SEER 
     unit.
       Moreover, history has shown us time and time again that 
     once a standard is implemented, the market will drive prices 
     down and make the more efficient equipment even more 
     affordable for all consumers. How do we know this? From 
     experience. In 1992, when the government implemented the 
     efficiency standard at 10 SEER, the cost of the 10 SEER air 
     conditioning unit dropped dramatically across the nation. The 
     reason for the change in price is simple. Once the standard 
     is set, more sales of that type of unit will occur and more 
     volume is manufactured, thereby allowing the manufacturers to 
     run their plant more efficiently and pass the savings on to 
     the consumer. Since most consumers purchase units that 
     perform at the minimum standard, it makes it that much more 
     important to establish the standard at the correct level, 13 
     SEER.
       Finally, in our opinion, Goodman has a marketing philosophy 
     of selling in volume. The incremental cost to the 
     manufacturer to produce a 13 SEER unit is only about $100 and 
     we feel that the most efficient technology should be 
     available to people of all income levels at an affordable 
     price. Unfortunately, all manufacturers may not have this 
     same marketing philosophy. Instead some manufacturers may be 
     seeking protection of higher profit margins on their more 
     efficient equipment. A 13 SEER standard would force all 
     energy manufacturers to be truly competitive and provide all 
     consumers with the most affordable energy efficient 
     technology for air conditioners that is available today.
       Just as the Administration has been supportive of energy 
     efficiency and conservation measures, Goodman too supports 
     the use of more energy-efficient appliances, specifically air 
     conditioners and heat pumps. However, rather than rolling the 
     energy efficiency standard back to 12 SEER, a 20 percent 
     increase in efficiency, we support a 13 SEER standard, a 30 
     percent increase in efficiency.
       A 13 SEER standard is achievable today and will certainly 
     be achievable in 2006. A 13 SEER standard will significantly 
     reduce energy consumption, cut utility costs for consumers 
     and improve air quality by reducing the amount of air 
     pollutants and greenhouse gases emitted from fossil-fueled 
     electric power generating facilities.
       In closing, Goodman strongly urges you to consider 
     establishing a 13 SEER standard for residential air 
     conditioners and heap pumps beginning in 2006. Again, it is 
     the right thing to do for both the consumer and the 
     environment.

  The PRESIDING OFFICER. All time on the amendment has expired.


                           Amendment No. 3198

  Mr. REID. Mr. President, it is my understanding we are now going to 
move to the debate on the Carper amendment. Is that a valid statement?
  The PRESIDING OFFICER. The Senator is correct.
  Mr. REID. Mr. President, I ask my two colleagues--the Senator from 
Delaware and the Senator from Michigan--if there is any way to pare 
that time down. We are very close to being able to include another 
amendment in the order prior to the votes. We are now scheduling 40 
minutes. Is there any way we can do that in 30, 35, or 25?
  Mr. LEVIN. Mr. President, I would be willing to accept whatever 
Senator Carper is willing to make.
  Mr. CARPER. Mr. President, if the Senator will yield, I am willing to 
go with 20 or 15.
  Mr. REID. Mr. President, I ask unanimous consent that the time for 
the Carper amendment be taken from 40 minutes to 30 minutes evenly 
divided.
  Mr. SPECTER. Mr. President, reserving the right to object, this is a 
very brief period of time, 40 minutes.
  Mr. REID. Mr. President, I withdraw my request.
  The PRESIDING OFFICER. The request is withdrawn.
  The Senator from Delaware.
  Mr. CARPER. Mr. President, amendment No. 3198, which is at the desk, 
I believe is now in order under the previous order.
  The PRESIDING OFFICER. The Senator is correct.
  Mr. CARPER. Mr. President, I yield myself 5 minutes.
  Today, the United States of America will consume some 7.8 million 
barrels of oil to power our cars, trucks, and vans. Between now and the 
year 2015, we are told by the Secretary of Energy that 7.8 million 
barrels of oil per day consumption for our cars, trucks, and vans will 
rise by some 36 percent to

[[Page S3372]]

over 10\1/2\ million barrels of oil per day. My own view is that it 
would be better for our country if we had no increase.
  The amendment Senator Specter and I offer today is one that seeks to 
reduce by one-third--1 million barrels of oil per day--the amount of 
oil we are going to consume in 2015 to power our cars, trucks, and 
vans.
  There are a variety of ways to achieve those savings. Earlier in this 
debate on the energy bill, Senator Levin and Senator Bond offered an 
amendment that sought to conserve oil with respect to our cars, trucks, 
and vans. I voted for it, as did Senator Specter. I voted for that 
amendment because I like a number of aspects of it. I will mention a 
few of those aspects.
  No. 1, it has been said that we should use the Government's 
purchasing power to commercialize new technologies and provide tax 
credits to consumers to buy more fuel-efficient vehicles, and that the 
auto industry be given a reasonable lead time. There were a number of 
very positive aspects to the Levin-Bond amendment.
  One thing that was missing in the Levin-Bond amendment was a 
measurable objective. During the time I served as Governor of Delaware 
for 8 years, we worked often with measurable objectives--job creation, 
improving credit rating, getting people off welfare, and reducing the 
rate of teen pregnancies. In setting the objectives, we tried not to 
micromanage the process. We set a measurable objective and tried to 
hold ourselves accountable to that measurable objective.

  Today, in offering this amendment, we set a measurable objective. We 
don't change the Levin-Bond amendment. It is all there in place. We 
don't change the amendment offered earlier by the Senator from Georgia, 
Mr. Miller, with respect to pickup trucks; that remains where it is.
  But we say that in 2015 we want the consumption of oil for our cars, 
trucks, and vans consuming at that time 1 million barrels less than 
what it otherwise would be without this amendment.
  Senator Specter, in joining me in this amendment, I thought offered a 
very constructive change. He suggested that in order to meet these 
savings, rather than just having the Secretary of Transportation issue 
a regulation to change the CAFE standard, why don't we ask the 
Secretary of Transportation to take into consideration a number of 
other factors, including the use of alternative forms of fuel.
  The amendment, as amended by Senator Specter, does just that. The 
Secretary of Transportation, in issuing his regulations in the future, 
can require so much savings from CAFE changes, so much savings from 
alternative fuels, including biodiesel, soydiesel, ethanol, even diesel 
fuel derived from coal waste.
  I think our obligation here is to set the objective. The 
responsibility of the Congress and the President is to say--and we now 
rely for almost 60 percent of our oil from abroad. We have a $400 
billion trade deficit, and it is growing, and one-third of that is 
attributable to oil, which is troublesome, and the notion that we have 
global warming, and one-quarter of the carbon dioxide that goes up into 
the air which comes from cars, trucks, and vans--we have an obligation 
to set measurable objectives in terms of slowing growth and reserving 
oil.
  This amendment does so in a flexible way. It says to the Secretary of 
Transportation very clearly: We expect you to rely on working with the 
auto industry on issuing a regulation that may involve CAFE changes. We 
also want to make sure we rely on alternative fuels.
  For a State such as Delaware, we have a heavy reliance on the raising 
of soybeans. We like the idea of encouraging soydiesel.
  For those who come from States where there is a lot of corn, there is 
the notion that the Secretary of Transportation can issue regulations 
to encourage the consumption of ethanol to help power our cars, trucks, 
and vans in the future.
  For those who come from States with a fair amount of coal and coal 
waste, there is the notion that you can use that waste product to 
actually create a cleaner diesel fuel that can be used for reducing our 
reliance on oil, and particularly foreign oil.
  I reserve the remainder of my time.
  Mr. President, how much time have I consumed?
  The PRESIDING OFFICER. The Senator has consumed 4 minutes 45 seconds.
  Mr. CARPER. Thank you.
  Mr. President, I yield 5 minutes to the Senator from Pennsylvania.
  The PRESIDING OFFICER. The Senator from Pennsylvania.
  Mr. SPECTER. I thank my colleague from Delaware.
  Mr. President, I support the Carper amendment because I think it is 
vitally important that the United States take affirmative steps to free 
ourselves from dependence upon OPEC oil. This amendment is a modest 
step in that direction.
  While we are using 7.8 million barrels of oil a day to drive our 
vehicles--the estimate by the Department of Energy is that it will grow 
to 10.6 million barrels by the year 2015--the Carper-Specter amendment 
proposes to limit that growth to 9.6 million barrels. We are still 
going to use about 2 million barrels more. But this amendment makes the 
modest step of slowing the rate of increase by 1 million barrels of 
oil.
  It is an intolerable situation, for us to be dependent upon OPEC oil. 
Today's New York Times carries a report about Crown Prince Abdullah of 
Saudi Arabia's proposed statement to the President concerning using 
Saudi oil as an ``oil weapon'' against the United States to demand that 
the United States change our policy in the Mideast. That is blackmail, 
pure and simple. And the United States ought not to put up with it and 
ought not to be in the position to have to put up with it.
  Then the New York Times article goes on to point out that the Saudi 
position is that they are prepared to ``move to the right of bin 
Laden'' if necessary to make the United States capitulate on our 
policy.
  Now, how much more arrogant and inflammatory can a comment be? Saudi 
Arabia produced bin Laden. Fifteen of the nineteen terrorists who 
attacked the United States on 9-11 were from Saudi Arabia. Now the 
Saudis are telling us they are not only embracing bin Laden but are 
prepared to move to the right of him if the United States does not 
yield to their demands on changing our policy in the Mideast.
  In 1973, we faced lines at the gas station, and I think it would have 
been a blessing--perhaps a blessing in disguise--if we had not had 
relief from the oil embargo at that time, so that the United States, in 
1973, would have been compelled to find alternative sources of energy. 
But we went back to our old ways, and the old ways were the easy ways 
and the ways of consuming vast quantities of OPEC oil.
  I have opposed the CAFE standards; that is, for Congress to set a 
mandatory limit of so many miles per gallon, and earlier in this debate 
I voted against those CAFE standards.
  I recall, about a decade ago, being asked to oppose CAFE standards 
for 1 year. Well, that year turned into another year, and yet another 
year. And, finally, it has been a decade or more, and we are still 
avoiding the imposition of CAFE standards, which is right because 
Congress ought not to micro-manage how much gasoline is used.
  But where you have a broad policy consideration, as the Carper-
Specter amendment proposes, modestly, to reduce the rate of increase--
and bear in mind, again, the statistics are that we use a little over 7 
million barrels a day, and we will go to more than 10 million barrels a 
day by 2015--this amendment simply requires the Department of Energy 
and the Department of Transportation to find a formula to limit it to 
9.6 million barrels a day.
  American ingenuity can find the solution to the alternative fuel 
issue if we are put to the test we always have. After all, we put a man 
on the Moon. We invented and placed predators--robots--on the 
battlefield in defense of our troops. We have plans for a strategic 
defense initiative. The opportunities for scientific advances that will 
reduce our dependence on foreign oil are virtually limitless in our 
inventive society.
  Back in 1973, when we had the long gas lines, there was blame 
attached to Israel and there was the undercurrent of anti-Semitism in 
the United States. Today, we see the outburst of anti-Semitism in 
Europe and in many parts of the world as a result of the Israeli policy 
and as a result of the United States backing Israeli policy.

[[Page S3373]]

  The PRESIDING OFFICER (Mrs. Carnahan). The Senator has used 5 
minutes.
  Mr. SPECTER. Madam President, I ask for 1 more minute.
  Mr. CARPER. Madam President, I yield another minute to the Senator.
  Mr. SPECTER. And this issue I raise with some reluctance. But there 
is no doubt that if we face an embargo and if we face the Saudis 
joining Iraq in using oil as a weapon, Israel will be blamed and anti-
Semitism, which now bubbles just a little below the surface in many 
parts of the world, will rise to the surface and exceed it.

  I think it is vital that the Congress establish a policy to be 
independent of OPEC oil. Today, in Pottsville, Pennsylvania, there is a 
plant which converts sludge into diesel fuel. If we set our minds to 
it, we can use the billions of tons of coal to find an alternative 
source of oil and not put up with the arrogance and the chutzpah of the 
Saudis telling us to change our policy in response to their blackmail. 
A strong statement to follow, Madam President.
  The PRESIDING OFFICER. Who yields time?
  The Senator from Michigan.
  Mr. LEVIN. Madam President, I yield myself 5 minutes.
  Madam President, in March, the Levin-Bond amendment regarding 
increased fuel standards for cars and trucks was adopted by the Senate 
with a strong bipartisan vote of 62 to 38. The purpose of the Levin-
Bond amendment was explicit. No. 1, we said we want to increase fuel 
economy. It was specified that way. As a matter of fact, we directed 
the Department of Transportation, in its rulemaking, to increase fuel 
economy. It is very explicit.
  The other provisions of the bill that we adopted were aimed at 
protecting the environment, reducing our dependence on foreign oil, but 
to do this in a way which would not harm the domestic manufacturing 
industry.
  We believe, those 62 of us who voted for it, you could accomplish all 
of these goals: You could reduce our dependence on foreign oil, you 
could reduce the amount of oil we use, you could increase fuel economy, 
you could protect the environment, and you could do that without 
undermining our economy. That was the purpose of the amendment, and 
that is the way we explicitly stated it.
  The way we accomplish those goals becomes vitally important. That is 
what gets to the heart of the debate this afternoon. The amendment we 
adopted did it in two essential ways: First, we included some positive 
incentives. We provided that there would be joint research and 
development to a greater extent among Government, industry, and 
academia than there had been previously or than was proposed by the 
administration. And we provided for Government purchases of hybrids, 
requiring those purchases. Just the way we had previously done for the 
Defense Department in the Defense authorization bill, we did for the 
general Government in the Levin-Bond amendment.

  We also indicated an interest in trying to provide greater tax 
incentives. And there will be an effort later on this afternoon to do 
exactly that: To increase the tax incentives that would be available to 
lead us to the advanced technologies, the advanced hybrids, and the 
fuel cells.
  But then we also did it in a second way. We said there also should be 
increased CAFE requirements but--and this was central to the Levin-Bond 
amendment--those requirements should be set after an analysis by the 
Department of Transportation of all of the factors which should go into 
that decision--not just what is theoretically, technologically capable 
regardless of cost, but what are the technological capabilities, what 
are the costs, what are the impacts on safety, because we had the 
National Academy of Sciences say there is an impact on safety, that you 
lose lives when you reduce the weight of the vehicle.
  We had additional factors. If I could just read through some of these 
factors: Economic practicability, the need of the United States to 
conserve energy, the desirability to reduce U.S. dependence on imported 
oil, the effects of average fuel economy on other standards, such as 
relative to passenger safety and air quality. These are all 
interrelated criteria. And then: What are the adverse effects on the 
competitiveness of domestic manufacturers? What are the effects on the 
level of employment in the United States, the costs and lead time? What 
is the potential of advanced technologies, such as hybrids and fuel 
cells, to contribute to the achievement of significant reductions in 
fuel consumption? And a very important one, No. 12: The extent to which 
the necessity for vehicle manufacturers to incur near-term costs to 
comply with average fuel economy standards adversely affects the 
availability of resources for the development of advanced technology in 
the future, for leap-ahead technologies.
  We listed 12 factors that we said should be considered by the 
Department of Transportation prior to concluding what the new standard 
should be. We said: You have to increase it, but we want you to look at 
12 factors.
  What the Carper amendment does is it wipes out, it eliminates all of 
those factors. It sets a mandatory amount. You must reduce by 1 million 
barrels per day above what is the predicted use of gasoline for those 
years--by another agency, by the way--and that is what it does. It cuts 
the heart out of the Levin-Bond amendment.
  The PRESIDING OFFICER. The Senator has used 5 minutes.
  Mr. LEVIN. I yield myself 2 additional minutes.
  The PRESIDING OFFICER. The Senator has that right.
  Mr. LEVIN. When the Senator from Delaware says it doesn't change 
Levin-Bond, I am afraid he is mistaken. He fundamentally changes the 
Levin-Bond amendment, which we adopted a month ago. The change he makes 
is that he says, forget the consideration of all those other factors. 
You have to reduce it by 1 million barrels a day regardless of the 
impact on safety, regardless of the effect on long-term investments by 
these short-term investments for near-term advances, forget economic 
practical ability, forget cost, forget all the other factors that we 
directed the National Highway Transportation Safety Administration to 
consider. Even though he leaves them--he does not strike them 
technically; he doesn't go out and cancel them; the words still 
remain--the heart of the matter is gone because the heart of the 
regulatory matter in Levin-Bond is that we say to the Department of 
Transportation, you have 15 months. You adopt standards increasing fuel 
economy. If you don't do it in 15 months, we are going to have an 
expedited procedure in the Senate and in the House to consider 
different proposals. If you do adopt standards, they, of course, would 
be subject to legislative review under a generic statute. Either way, 
we will have an expedited process to look at the recommended number of 
the Department of Transportation after they go through a regulatory 
process, not before.
  This amendment prejudges the outcome of the very regulatory process 
which Levin-Bond put into law, if this law is ever signed.
  I hope we will defeat this amendment for all those reasons.
  I yield the floor.
  Mr. BIDEN. Mr. President, I rise to comment on the vote in relation 
to amendment number 3198, which was offered by my friend and colleague 
from the State of Delaware, Senator Carper. The vote by the Senate is 
on a motion to table the amendment. I believe that Senator Carper 
should be given a straight up-or-down vote on his amendment, and for 
that reason, I shall vote against the motion to table.
  Mr. FEINGOLD. Mr. President, I rise to oppose the amendment offered 
by the Senator from Delaware, Mr. Carper. This amendment would add a 
new section to the conclusion of the fuel economy provisions previously 
adopted by the Senate, which I supported, and which were offered by my 
colleague from Michigan, Mr. Levin. The new section would require the 
Secretary of Transportation to issue, within 15 months, regulations to 
reduce the amount of oil consumed in passenger cars and light trucks in 
2015 by 1,000,000 barrels per day compared to consumption without such 
regulations in place.
  I understand and support the desire to reduce the use of oil in the 
transportation sector. Proponents of this amendment have argued that 
this amendment is flexible and would allow the Department of 
Transportation to take other actions, not necessarily through 
adjustments in the fuel economy program, to achieve oil savings. In

[[Page S3374]]

floor debate on this amendment, however, proponents have failed to 
clearly identify any other means of achieving oil savings other than 
fuel economy standards. I think there is broad consensus that new fuel 
economy standards would be the principle tool to achieve oil savings.
  I have supported a new rulemaking on fuel economy with my vote in 
support of the Levin amendment. But the Senate has also passed an 
amendment on this bill, sponsored by the Senator from Georgia, Mr. 
Miller, which I opposed. The Miller amendment weakens current law and 
exempt pickup trucks from any future increases in fuel economy 
standards. I feel that a new rulemaking on fuel economy should examine 
the possibility of fuel economy improvements in all motor vehicles, 
rather than exempt certain types of vehicles.
  I considered the Carper amendment in light of the amendments we have 
already passes. Had the Carper amendment been included as part of the 
original Levin amendment, I might have felt differently on this matter. 
But now that the Senate has already passed the Levin amendment and the 
Miller amendment, supporting the Carper amendment is no longer a sound 
policy decision. To include an oil savings requirement, while excluding 
a whole category of vehicles from making fuel economy improvements, 
would be a poor policy decision and inconsistent. Certain vehicles 
should not have to achieve greater fuel efficiency because we chose to 
exempt a particular category of vehicles.
  Fuel efficiency is a critically important issue for our country, and 
for Wisconsin. I am committed to achieving significant improvements in 
automobile and light truck fuel efficiency. I look forward to having 
many of those efficient vehicles built in Wisconsin. I will look 
forward to a bill in conference that strongly encourages the Department 
of Transportation to make those improvements.
  The PRESIDING OFFICER. Who yields time on the amendment?
  Mr. LEVIN. How much time remains on our side?
  The PRESIDING OFFICER. Twelve and a half minutes.
  Mr. LEVIN. Madam President, I yield 4 minutes to the Senator from 
Alaska.
  The PRESIDING OFFICER. The Senator from Alaska.
  Mr. MURKOWSKI. What we have here is an amendment that would reverse 
the decision on CAFE. Make no mistake about it. While I am sympathetic 
with the appeal, particularly from my friend from Pennsylvania, 
relative to how history is repeating itself as far as our increased 
dependence on imported oil, I can't help but look back at what we did 
in 1973. In 1973, we had the Yom Kippur War. We had a situation where 
our supply from the Mideast was interrupted. We had gas lines around 
the block. We were blaming each other. We set up the Strategic 
Petroleum Reserve to ensure that we would never, ever have a situation 
where we would became so vulnerable.
  We thought at the time that, good heavens, if we ever increased 50 
percent imports, that would be beyond the consideration of this country 
from the standpoint of national defense.
  The problem with the Carper amendment specifically is it has no teeth 
in it. We are looking at a situation in the Mideast today where clearly 
oil is a weapon. We have seen statements suggesting they are going to 
stand behind bin Laden's theory. They are going to stand behind brother 
Saddam Hussein.
  We had an opportunity a few days ago to debate this issue about 
reducing our dependence on foreign oil. It was called ANWR. It was 
substantial. It was defeated. Now we are talking about a smoke-and-
mirrors issue where we have no enforcement mechanism.
  As a consequence, the Carper amendment would have the same negative 
impacts on consumer safety, on vehicle costs, auto jobs, as the Kerry-
McCain amendment. It would increase the cost of cars. Consumers choice 
is gone, thousands of jobs, reductions in the rate of growth and 
several thousand additional deaths and tens of thousands of injuries.
  Make no mistake about one thing: We made a decision on CAFE. It was 
based on consideration of lives being saved by heavier automobiles. You 
can increase CAFE dramatically by smaller automobiles, but you pay the 
price. The decision that was made in this body on that issue was very 
clear. It was an overwhelming vote to reject Kerry-McCain based on 
consideration for the loss of human lives and injuries.
  We are in the same position today. Make no mistake about it. Our 
vulnerability continues. It has been over a month since we voted 62 to 
38 to adopt the Levin-Bond amendment on fuel economy standards. We 
chose at that time to leave the decisions on fuel economy to the 
experts.
  This group is not an expert group. We choose to let the experts 
balance the need for increased fuel economy with safety and the needs 
of the American driving public. The Senate was right once not to pick a 
fuel economy number out of thin air. Let's not make that mistake now.
  I urge my colleagues to reject the Carper amendment. Let's preserve 
American jobs and save lives on the Nations's highways. That was the 
basis for our last decision when we visited this issue.
  I yield back my time.
  The PRESIDING OFFICER. Who yields time?
  Mr. LEVIN. Madam President, how much time on both sides remains?
  The PRESIDING OFFICER. Eight and a half to the sponsors and 9 to the 
opponents.
  Mr. LEVIN. I yield 4 minutes to the Senator from Michigan.
  The PRESIDING OFFICER. The Senator from Michigan.
  Ms. STABENOW. Madam President, I rise today to oppose the Carper-
Specter amendment. I join with my colleagues in opposition. I note this 
issue is of great importance to my colleague from Delaware. We have had 
a lot of conversations about the best approach to increasing fuel 
efficiency and decreasing our dependence on foreign oil. While I 
appreciate his effort and the amendment he is bringing forward, I 
believe the Carper-Specter approach has the same major flaws as the 
Kerry-Hollings amendment and sets, in fact, an arbitrary CAFE number. 
It just does it in a different way. It is not called CAFE, but it has 
the same effect.
  The Carper-Specter amendment sets, in fact, an arbitrary number which 
is exactly what we were debating before. We wanted a process; we wanted 
NHTSA to have the opportunity to have a number of months to take into 
consideration all of the factors and not set an arbitrary number.
  Our opponents, the makers of the amendment, say this is, in fact, not 
a CAFE number and that the amendment creates a modest and measurable 
objective for reducing vehicle gasoline consumption. Unfortunately, it 
is a mandate. It is a fuel economy mandate in the form of millions of 
barrels saved that is no less arbitrary than the Kerry-Hollings 
provision that was replaced in this bill.
  Currently, the only regulatory authority that is available to the 
Department of Transportation to pursue such regulations through 
passenger and light truck fleets is the CAFE program. No matter what we 
call it, it is still CAFE. In essence, the amendment would impose this 
arbitrary oil reduction number as an additional requirement to the 
Department of Transportation as it sets the CAFE levels, thereby 
undermining and distorting the rulemaking considerations and the 
process that we put together through the Levin-Bond proposal.
  I am particularly concerned because now that we have essentially 
eliminated pickup trucks from the equation, it puts even more pressure 
on the other light trucks and SUVs that are made in the United States, 
which involve the employment of literally hundreds of thousands of 
American workers. So it is even more distorted, given the amendment 
that passed in the prior discussion.
  Unfortunately, this amendment undermines the Levin-Bond proposal, and 
I urge us to maintain our position of supporting the process set up in 
the Levin-Bond amendment, which passed by such a wide margin, because 
this sets up a positive, new set of rules and guidance from Congress 
and requires us to address CAFE's impact on a wide variety of issues in 
order to increase our fuel efficiency standards.
  We have to look at safety, jobs, the environment, which is very 
important to all of us--particularly those of us in Michigan. It makes 
sure we don't have a discriminatory impact on the U.S.

[[Page S3375]]

automakers--I know that is of concern to all of us--so that we set the 
standard given all of these criteria.
  By requiring an overriding oil reduction number, the amendment sets a 
hard target, on top of the other considerations, that the rulemaking 
would otherwise try to balance.
  So I believe this amendment puts the cart before the horse. We have 
an excellent approach in front of us--I believe the best approach. We 
are not arguing that we should continue the freeze on CAFE. In fact, we 
are saying let's put in process the way to get to the new technologies. 
We have a combination of market incentives and investments in new 
technologies and tax incentives. We have in place the package of 
incentives, a requirement by NHTSA of deadlines in terms of numbered 
months and the criteria to look at. We direct them in a very specific 
way.
  I urge my colleagues to oppose this amendment and leave in place our 
commitment to the process for raising fuel efficiency standards that 
have already been established in this bill through the Levin-Bond 
amendment.
  The PRESIDING OFFICER. Who yields time?
  Mr. CARPER. Madam President, I yield to the Senator from Connecticut 
3 minutes.
  Mr. LIEBERMAN. Madam President, I rise to support the Carper-Specter 
amendment.
  We come today to offer America a clear path away from foreign oil 
dependency and toward a newly energized economic future, and that is a 
new goal for fuel efficiency of cars and trucks.
  America can start engineering itself out of its oil dependency if we 
make it a priority. This amendment would do just that by setting a bold 
but realistic goal of reducing our projected dependence on oil by one 
million barrels a day by 2015, thereby reducing our reliance on 
imported oil.
  There's no debate that we must change the status quo. According to 
the Energy Information Administration, in 2001, the U.S. consumed 18 
million barrels of oil per day. Automobiles and light trucks used 68 
percent of the total, or 12.25 million barrels per day. The EIA 
estimates total U.S. consumption of between 25 and 28 million barrels 
per day by 2020.
  The majority of that oil comes from other nations. In 2001, the U.S. 
imported 9.1 million barrels of oil per day. Approximately 1.65 million 
barrels per day came from Saudi Arabia and 0.82 million barrels per day 
came from Iraq.
  The question before us today is, Do we keep our blinders on and 
barrel along doing business as usual, knowing full well that we're 
headed in the wrong direction, or do we have the foresight to change 
course?
  President Bush and my colleagues on the other side of the aisle know 
we have no choice but to change course. On February 25 of this year, 
the President said, ``It's important for Americans to remember . . . 
that America imports more than 50 percent of its oil--more than 10 
million barrels a day. And the figure is rising . . . This dependence 
is a challenge to our economic security, because dependence can lead to 
price shocks and fuel shortages. And this dependence on foreign oil is 
a matter of national security. To put it bluntly, sometimes we rely 
upon energy sources from countries that don't particularly like us.''
  We consume a quarter of the world's oil and have about three percent 
of its reserves--so even if we allowed drilling in the Arctic Refuge, 
the Rockies, and right here beneath the Capitol dome, the nations from 
which we import oil would still have us over a barrel. Please indulge 
my oil-dependent puns; in the spirit of this amendment, I am trying to 
get as much mileage out of them as possible.
  In contrast, Mr. President, the fuel efficiency gains we're proposing 
today cannot be exhausted, they cannot run dry, and they will begin to 
shift our economy away from its usage of oil. These steps are the best 
way to substantially reduce our reliance on foreign oil.
  To quote again from the President, ``It's also important to realize 
that the transportation sector consumes more than two-thirds of all the 
petroleum used in the United States, so that any effort to reduce 
consumption must include ways to safely make cars and trucks more fuel 
efficient.''
  I couldn't agree more. Compared to proposals to open precious places 
to oil exploration, this measure would achieve more at a monumentally 
smaller price to America. In fact, the entrepreneurship, creativity and 
ingenuity that would be unleashed when companies strive to hit this 
target would create jobs. They would spur economic growth. And, of 
course, they would help repair the environment in the process--rather 
than continue to contribute to air pollution, global warming, and the 
degradation that often goes along with drilling for oil in natural 
places.
  These proposals, Mr. President, are also more than feasible. Earlier 
this year, the National Academies of Science concluded that current 
technology was available to achieve efficiency gains that far exceed 
those required in this amendment, and that was even excluding 
consideration of the hybrid technology that is on the market right now. 
We must put our faith in the innovative genius of American industry to 
meet the challenge that this amendment poses.
  Mr. President, this amendment also provides the lead-time and 
flexibility our industry needs to achieve these goals. It does not 
micromanage where or how these savings should occur, but rather would 
provide maximum flexibility to the appropriate agencies in achieving 
the objective of using, and therefore importing, less oil. It leaves 
intact all of the provisions that are now included in the underlying 
bill.
  In short, this proposal has been carefully crafted to address the 
concerns raised by Senators in both parties regarding the previous CAFE 
amendment. I hope that the Senate finds this to be a much-improved 
amendment that can be broadly embraced.
  Mr. President, the importance of reducing our reliance on foreign oil 
has been echoed throughout this chamber again and again over the last 
few weeks. I could quote from scores of my colleagues on both sides of 
the aisle who have decried the problem and put the highest priority on 
finding a solution.
  But when it comes down to it, we have failed to prove that we're 
willing to lead America to a better way. This must end. We must re-
energize our commitment to reach bi-partisan consensus on weaning our 
economy off of fossil fuels. The process will by definition be a 
gradual one--so we must start now.
  Mr. President, there are 99 barrels of oil on the wall, 99 barrels of 
oil. Most of them, no matter how much we explore, come from overseas. 
If just one of those barrels should happen to fall, we'll still need 
all 99 barrels of oil on the wall, and they'll still mostly come from 
overseas. But if we as a nation can change our craving for that oil--
get on the efficiency wagon, so to speak--so that we only need 90 or 80 
or 70 and shrinking barrels of oil, we can alter that repetitive 
refrain.
  The question is: Do we have the drive to get there? Do we have the 
will? If we have the will, American ingenuity can and will find the 
way. No one should have any doubt about that. But it takes leadership 
from Washington, and that is what I hope we in the Congress are willing 
to provide, beginning with this amendment.
  Madam President, again, I think we all agree on the problem. The 
problem is that America is dangerously dependent on foreign oil. No 
matter how great our military might is, how strong our economy is, that 
dependence upon foreign oil makes us vulnerable.
  The only way to break our dependence on foreign oil is to diminish 
our dependence on oil. We just don't have enough of it in reserve. One 
of the most tried and true American ways to deal with problems of this 
kind is through thrift, efficiency, conservation, and a better use of 
resources.
  I grew up with a slogan, as I bet a lot of Members did, which is 
``waste not, want not.'' We are using fuel in a wasteful way.
  This amendment is, in my opinion, not in contradiction to the Levin-
Bond amendment. Nothing in the Levin-Bond amendment would be undermined 
or distorted by the rulemaking considerations that are effected by this 
Carper-Specter amendment. The language is respectful of Levin-Bond and 
simply adds the oil-saving target of reducing America's use of oil by 1 
million barrels a day by 2015. You remember the movie ``Field of 
Dreams,'' where it was

[[Page S3376]]

said, ``if you build it, they will come.'' We are saying affirmatively, 
if we set a standard America will meet that standard, and probably go 
beyond it.
  If we do not, we will continue to make ourselves vulnerable by being 
dependent on a source of fuel that we do not control. We consume a 
quarter of the world's oil. We have about 3 percent of its reserves. So 
even if we allowed drilling in the Arctic Refuge, the Rockies, and 
perhaps right here beneath the Capitol dome, the nations from which we 
import oil would still have us--if you will allow an oil-dependent 
pun--over a barrel.
  In contrast, the fuel efficiency gains proposed in this amendment 
cannot be exhausted, cannot run dry, and will begin to shift our 
economy away from its dependency on oil. We have the technological 
capacity to do it if law drives that technology.
  Earlier this year, the National Academy of Sciences concluded that 
current technology was available to achieve the efficiency gains that 
far exceed those required in this amendment. That even excluded 
consideration of the hybrid technology on the market right now, which 
the automakers cannot produce fast enough for the consumers who want to 
buy them.
  We have to put our faith in the innovative genius of American 
industry to meet the challenge that this amendment poses, and I am sure 
they will not only meet it, they will surpass it.
  I yield the floor.
  The PRESIDING OFFICER. Five minutes remain on each side.
  Who yields time? If neither side yields time, time will be charged 
equally.
  Mr. CARPER. Madam President, I yield 2 minutes to the Senator from 
Pennsylvania, Mr. Specter.
  The PRESIDING OFFICER. The Senator from Pennsylvania is recognized.
  Mr. SPECTER. Madam President, I voted for the Levin-Bond amendment on 
that 68-to-32 vote. But the Carper-Specter amendment is not 
inconsistent with that at all. We simply establish a consistent 
standard. We are not establishing a CAFE standard. We are just asking 
that there be a national policy to limit U.S. dependence on foreign 
oil.
  Today, this week, this month is not the first time that I have 
expressed my concern about our undue dependence on foreign oil. I ask 
unanimous consent that my letter to President Clinton, dated April 11, 
2000, and my letter to President Bush, dated April 25, 2001, be printed 
in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                                  U.S. Senate,

                                   Washington, DC, April 11, 2000.
     President William Jefferson Clinton,
     The White House,
     Washington, DC.
       Dear Mr. President: In light of the very serious problems 
     caused by the recent increase in oil prices, we know you will 
     share our view that we should explore every possible 
     alternative to stop OPEC and other oil-producing states from 
     entering into agreements to restrict oil production in order 
     to drive up the price of oil.
       This conduct is nothing more than an old-fashioned 
     conspiracy in restraint of trade which has long been 
     condemned under U.S. law, and which should be condemned under 
     international law.
       After some considerable research, we suggest that serious 
     consideration be given to two potential lawsuits against OPEC 
     and the nations conspiring with it:
       (1) A suit in Federal district court under U.S. antitrust 
     law.
       (2) A suit in the International Court of Justice at the 
     Hague based, perhaps, upon an advisory opinion under ``the 
     general principles of law recognized by civilized nations,'' 
     which includes prohibiting oil cartels from conspiring to 
     limit production and raise prices.
       (1) A suit in Federal district court under U.S. antitrust 
     law. A case can be made that your Administration can sue OPEC 
     in Federal district court under U.S. antitrust law. OPEC is 
     clearly engaging in a ``conspiracy in restraint of trade'' in 
     violation of the Sherman Act (15 U.S.C. Sec. 1). The 
     Administration has the power to sue under 15 U.S.C. Sec. 4 
     for injunctive relief to prevent such collusion.
       In addition, the Administration should consider suing OPEC 
     for treble damages under the Clayton Act (15 U.S.C. Sec. 
     15a), since OPEC's behavior has caused an ``injury'' to U.S. 
     ``property.'' After all, the U.S. government is a major 
     consumer of petroleum products and must now pay higher prices 
     for these products. In Reiter v. Sonotone Corp., 442 U.S. 330 
     (1979), the Supreme Court held that he consumers who were 
     direct purchasers of certain hearing aides who alleged that 
     collusion among manufacturers had led to an increase in 
     prices had standing to sue those manufacturers under the 
     Clayton Act since ``a consumer deprived of money by reason of 
     allegedly anticompetitive conduct is injured in `property' 
     within the meaning of [the Clayton Act].'' Indirect 
     purchasers would appear to be precluded from suit, even in a 
     class action, under Illinois Brick v. Illinois, 431 U.S. 720 
     (1977), but this would not bar the United Sates Government, 
     as a direct purchaser, from having the requisite standing.
       One potential obstacle to such a suit is whether the 
     Foreign Sovereign Immunities Act (``FSIA'') provides OPEC, a 
     group of sovereign foreign nations, with immunity from suit 
     in U.S. courts. To date, there has been a ruling on this 
     issue in only one case. In International Association of 
     Machinists v. OPEC, 477 F. Supp. 553 (1979), the District 
     Court for the Central District of California held that the 
     nations which comprise OPEC were immune from suit in the 
     United States under the FSIA. We believe that this opinion 
     was wrongly decided and that other district courts, including 
     the D.C. District, can and should revisit the issue.
       This decision in Int. Assoc. of Machinists turned on the 
     technical issue of whether or not the nations which comprise 
     OPEC are engaging in ``commercial activity'' or 
     ``governmental activity'' when they cooperate to sell their 
     oil. If they are engaging in ``governmental activity,'' then 
     the FSIA shields them from suit in U.S. courts. If, however, 
     these nations are engaging in ``commercial activity,'' then 
     they are subject to suit in the U.S. The California District 
     Court held that OPEC activity is ``governmental activity.'' 
     We disagree. It is certainly a governmental activity for a 
     nation to regulate the extraction of petroleum from its 
     territory by ensuring compliance with zoning, environmental 
     and other regulatory regimes. It is clearly a commercial 
     activity, however, for these nations to sit together and 
     collude to limit their oil production for the sole purpose of 
     increasing prices.
       The 9th Circuit affirmed the District Court's ruling in 
     Int. Assoc. of Machinists in 1981 (649 F.2d 1354), but on the 
     basis of an entirely different legal principle. The 9th 
     Circuit held that the Court could not hear this case because 
     of the ``act of state'' doctrine, which holds that a U.S. 
     court will not adjudicate a politically sensitive dispute 
     which would require the court to judge the legality of the 
     sovereign act of a foreign state.
       The 9th Circuit itself acknowledged in its Int. Assoc. of 
     Machinists opinion that ``The [act of state] doctrine does 
     not suggest a rigid rule of application,'' but rather 
     application of the rule will depend on the circumstances for 
     each case. The Court also noted that, ``A further 
     consideration is the availability of internationally-accepted 
     legal principles which would render the issues appropriate 
     for judicial disposition.'' The Court then quotes from the 
     Supreme Court's opinion in Banco Nacional de Cuba v. 
     Sabbatino, 376 U.S. 398 (1964).
       ``It should be apparent that the greater of codification or 
     consensus concerning a particular area of international law, 
     the more appropriate it is for the judiciary to render 
     decisions regarding it, since the courts can then focus on 
     the application of an agreed principle to circumstances of 
     fact rather than on the sensitive task of establishing a 
     principle not inconsistent with the national interest or with 
     international justice.''
       Since the 9th Circuit issued its opinion in 1981, there 
     have been major developments in international law that impact 
     directly on the subject matter at issue. As we discuss in 
     greater detail below, the 1990's have witnessed a significant 
     increase in efforts to seek compliance with basic 
     international norms of behavior through international 
     courts and tribunals. In addition, there is strong 
     evidence of an emerging consensus in international law 
     that price fixing by cartels violates such international 
     norms. Accordingly, a court choosing to apply the act of 
     state doctrine to a dispute with OPEC today may very well 
     reach a different conclusion than the 9th Circuit reached 
     almost twenty years ago.
       You should also examine whether the anticompetitive conduct 
     of the international oil cartel is being effectuated by 
     private companies who are subject to the enforcement of U.S. 
     antitrust laws (for example, former state oil companies that 
     have now been privatized) rather than sovereign foreign 
     states. If such private oil companies are determined to in 
     fact be participating in the anticompetitive conduct of the 
     oil cartel, then we would urge that these companies be named 
     as defendants in an antitrust lawsuit in addition to the OPEC 
     members.
       (2) A suit in the International Court of Justice at the 
     Hague based upon ``the general principles of law recognized 
     by civilized nations,'' which includes prohibiting oil 
     cartels from conspiring to limit production and raise prices. 
     In addition to such domestic antitrust actions, we believe 
     you should give serious consideration to bringing a case 
     against OPEC before the International Court of Justice (the 
     ``ICJ'') at the Hague. You should consider both a direct suit 
     against the conspiring nations as well as a request for an 
     advisory opinion from the Court through the auspices of the 
     U.N. Security Council. The actions of OPEC in restraint of 
     trade violate ``the general principles of law recognized by 
     civilized nations.'' Under Article 38 of the Statute of the 
     ICJ, the Court is required to apply these ``general 
     principles'' when deciding cases before it.
       This would clearly be a cutting-edge lawsuit, making new 
     law at the international

[[Page S3377]]

     level. But there have been exciting developments in recent 
     years which suggest that the ICJ would be willing to move in 
     this direction. In a number of contexts, we have seen a 
     greater respect for and adherence to fundamental 
     international principles and norms by the world community. 
     For example, we have seen the establishment of the 
     International Criminal Court in 1998, the International 
     Criminal Tribunal for Rwanda in 1994, and the International 
     Criminal Tribunal for the former Yugoslavia in 1993. Each of 
     these bodies has been active, handing down numerous 
     indictments and convictions against individuals who have 
     violated fundamental principles of human rights. For example, 
     as of December 1, 1999 the Yugoslavia tribunal alone had 
     handed down 91 public indictments.
       Today, adherence to international principles has spread 
     from the tribunals in the Hague to individual nations around 
     the world. Recently, the exiled former dictator of Chad, 
     Hissene Habre, was indicted in Senegal on charges or torture 
     and barbarity stemming from his reign, where he allegedly 
     killed and tortured thousands. This case is similar to the 
     case brought against former Chilean dictator Augusto Pinochet 
     by Spain on the basis of his alleged atrocities in Chile. At 
     the request of the Spanish government, Pinochet was detained 
     in London for months until an English court determined that 
     he was too ill to stand trial.
       The emerging scope of international law was demonstrated in 
     an advisory opinion sought by the U.N. General Assembly in 
     1996 to declare illegal the use or threat to use nuclear 
     weapons. Such an issue would ordinarily be thought beyond the 
     scope of a judicial determination given the doctrines of 
     national sovereignty and the importance of nuclear weapons to 
     the defense of many nations. The ICJ ultimately ruled eight 
     to seven, however, that the use or threat to use nuclear 
     weapons ``would generally be contrary to the rules of 
     international law applicable in armed conflict, and in 
     particular the principles and rules of humanitarian law.'' 
     The fact that this issue was subject to a decision by the 
     ICJ, shows the rapidly expanding horizons of international 
     law.
       While these emerging norms of international behavior have 
     tended to focus more on human rights than on economic 
     principles, there is one economic issue on which an 
     international consensus has emerged in recent years--the 
     illegitimacy of price fixing by cartels. For example, on 
     April 27, 1998, the Organization for Economic Cooperation and 
     Development issued an official ``Recommendation'' that all 
     twenty-nine members nations ``ensure that their competition 
     laws effectively halt and deter hard core cartels.'' The 
     recommendation defines ``hard core cartels'' as those which, 
     among other things, fix prices or establish output 
     restriction quotas. The Recommendation further instructs 
     member countries ``to cooperate with each other in enforcing 
     their laws against such cartels.''
       On October 9, 1998, eleven Western Hemisphere countries 
     held the first ``Antitrust Summit of the Americas'' in Panama 
     City, Panama. At the close of the summit, all eleven 
     participants issued a joint communique in which they 
     expressed their intention ``to affirm their commitment to 
     effective enforcement of sound competition laws, particularly 
     in combating illegal price-fixing, bid-rigging, and market 
     allocations.'' The communique further expresses the intention 
     of these countries to ``cooperate with one another . . . to 
     maximize the efficacy and efficiency of the enforcement of 
     each country's competition laws.'' One of the countries 
     participating in this communique, Venezuela, is a member of 
     OPEC.
       The behavior of OPEC and other oil-producing nations in 
     restraint of trade violates U.S. antitrust law and basic 
     international norms, and it is injuring the United States and 
     its citizens in a very real way. Consideration of such legal 
     action could provide an inducement to OPEC and other oil-
     producing countries to raise production to head off such 
     litigation.
       We hope that you will seriously consider judicial action to 
     put an end to such behavior.
     Arlen Specter,
     Herb Kohl
     Charles Schumer,
     Mike DeWine,
     Strom Thurmond,
     Joe Biden
                                  ____



                                                  U.S. Senate,

                                   Washington, DC, April 25, 2001.
     President George Walker Bush,
     The White House,
     Washington, DC.
       Dear Mr. President: In light of the energy crisis and the 
     high prices of OPEC oil, we know you will share our view that 
     we must explore every possible alternative to stop OPEC and 
     other oil-producing states from entering into agreements to 
     restrict oil production in order to drive up the price of 
     oil.
       This conduct is nothing more than an old-fashioned 
     conspiracy in restraint of trade which has long been 
     condemned under U.S. law, and which should be condemned under 
     international law.
       After some research, we suggest that serious consideration 
     be given to two potential lawsuits against OPEC and the 
     nations conspiring with it:
       (1) A suit in Federal district court under U.S. antitrust 
     law.
       (2) A suit in the International Court of Justice at the 
     Hague based upon ``the general principles of law recognized 
     by civilized nations.''
       (1) A suit in Federal district court under U.S. antitrust 
     law. A strong case can be made that your Administration can 
     sue OPEC in Federal district court under U.S. antitrust law. 
     OPEC is clearly engaging in a ``conspiracy in restraint of 
     trade'' in violation of the Sherman Act (15 U.S.C. Sec. 1). 
     The Administration has the power to sue under 15 U.S.C. Sec. 
     4 for injunctive relief to prevent such collusion.
       In addition, the Administration has the power to sue OPEC 
     for treble damages under the Clayton Act (15 U.S.C. Sec. 
     15a), since OPEC's behavior has caused an ``injury'' to U.S. 
     ``property.'' After all, the U.S. government is a consumer of 
     petroleum products and must now pay higher prices for these 
     products. In Reiter v. Sonotone Corp, 442 U.S. 330 (1979), 
     the Supreme Court held that the consumers of certain hearing 
     aids who alleged that collusion among manufacturers had led 
     to an increase in prices had standing to sue those 
     manufacturers under the Clayton Act since ``a consumer 
     deprived of money by reason of allegedly anticompetitive 
     conduct is injured in `property' within the meaning of [the 
     Clayton Act].''
       One issue that would be raised by such a suit is whether 
     the foreign Sovereign Immunities Act (``FSIA'') provides 
     OPEC, a group of sovereign foreign nations, with immunity 
     from suit in U.S. courts. To date, only one Federal court, 
     the District Court for the Central District of California, 
     has reviewed this issue. In International Association of 
     Machinists v. OPEC, 477 F. Supp. 553 (1979), the Court held 
     that the nations which comprise OPEC were immune from suit in 
     the United Stats under the FSIA. We believe that this opinion 
     was wrongly decided and that other District courts, including 
     the D.C. District, can and should revisit the issue.
       This decision in Int. Assoc. of Machinists turned on the 
     technical issue of whether or not the nations which comprise 
     OPEC are engaging in ``commercial activity'' or 
     ``governmental activity'' when they cooperate to sell their 
     oil. If they are engaging in ``governmental activity,'' then 
     the FSIA shields them from suit in U.S. courts. If, however, 
     these nations are engaging in ``commercial activity,'' then 
     they are subject to suit in the U.S. The California District 
     court held that OPEC activity is ``governmental activity.'' 
     We disagree. It is certainly a governmental activity for a 
     nation to regulate the extraction of petroleum from its 
     territory by ensuring compliance with zoning, environmental 
     and other regulatory regimes. It is clearly a commercial 
     activity, however, for these nations to sit together and 
     collude to limit their oil production for the sole purpose of 
     increasing prices.
       The 9th Circuit affirmed the District Court's ruling in 
     Int. Assoc. of Machinists in 1981 (649 F.2d 1354), but on the 
     basis of an entirely different legal principle. The 9th 
     Circuit held that the Court could not hear this case because 
     of the ``act of state'' doctrine, which holds that a U.S. 
     court will not adjudicate a politically sensitive dispute 
     which would require the court to judge the legality of the 
     sovereign act of a foreign state.
       The 9th Circuit itself acknowledged in its Int. Assoc. of 
     Machinists opinion that ``The [act of state] doctrine does 
     not suggest a rigid rule of application,'' but rather 
     application of the rule will depend on the circumstances of 
     each case. The Court also noted that, ``A further 
     consideration is the availability of internationally-accepted 
     legal principles which would render the issues appropriate 
     for judicial disposition.'' The court then quotes from the 
     Supreme Court's opinion in Banco Nacional de Cuba v. 
     Sabbatino, 376 U.S. 398 (1964):
       ``It should be apparent that the greater the degree of 
     codification or consensus concerning a particular area of 
     international law, the more appropriate it is for the 
     judiciary to render decision regarding it, since the courts 
     can then focus on the application of an agreed principle to 
     circumstances of fact rather than on the sensitive take of 
     establishing a principle not inconsistent with the national 
     interest or with international justice.''
       Since the 9th circuit issued its opinion in 1981, there 
     have been major developments in international law that impact 
     directly on the subject matter at issue. As we discuss in 
     greater detail below, the 1990's have witnessed a significant 
     increase in efforts to seek compliance with basic 
     international norms of behavior through international courts 
     and tribunals. In addition, there is strong evidence of an 
     emerging consensus in international law that price fixing by 
     cartels violates such international norms. Accordingly, a 
     court choosing to apply the act of state doctrine to a 
     dispute with OPEC today may very well reach a different 
     conclusion than the 9th Circuit reached almost twenty 
     years ago.
       (2) A suit in the International Court of Justice at The 
     Hague based upon ``the general principles of law recognized 
     by civilized nations.'' In addition to such domestic 
     antitrust actions, we believe you should give serious 
     consideration to bringing a case against OPEC before the 
     International Court of Justice (the ``ICJ'') at The Hague. 
     You should consider both a direct suit against the conspiring 
     nations as well as a request for an advisory opinion from the 
     Court through the auspices of the U.N. Security Council. The 
     actions of OPEC in restraint of trade violate ``the general 
     principles of law recognized by civilized nations.'' Under 
     Article 38 of the Statute of the ICJ, the Court is

[[Page S3378]]

     required to apply these ``general principles'' when deciding 
     cases before it.
       This would clearly be a cutting-edge lawsuit, making new 
     law at the international level. But there have been exciting 
     developments in recent years which suggest that the ICJ would 
     be willing to move in this direction. In a number of 
     contexts, we have seen a greater respect for and adherence to 
     fundamental international principles and norms by the world 
     community. For example, we have seen the establishment of the 
     International Criminal Court in 1998, the International 
     Criminal Tribunal for Rwanda in 1994, and the International 
     Criminal Tribunal for the former Yugoslavia in 1993. Each of 
     these bodies has been active, handing down numerous 
     indictments and convictions against individuals who have 
     violated fundamental principles of human rights.
       Today, adherence to international principles has spread 
     from the tribunals in The Hague to individual nations around 
     the world. The exiled former dictator of Chad, Hissene Habre, 
     was indicted in Senegal on charges of torture and barbarity 
     stemming from his reign, where he allegedly killed and 
     tortured thousands. This case is similar to the case brought 
     against former Chilean dictator Augusto Pinochet by Spain on 
     the basis of his alleged atrocities in Chili. At the request 
     of the Spanish government, Pinochet was detained in London 
     for months until an English court determined that he was too 
     ill to stand trial.
       While these emerging norms of international behavior have 
     tended to focus more on human rights than on economic 
     principles, there is one economic issue on which an 
     international consensus has emerged in recent years--the 
     illegitimacy of price fixing by cartels. For example, on 
     April 27, 1998, the Organization for Economic Cooperation and 
     Development issued an official ``Recommendation'' that all 
     twenty-nine member nations ``ensure that their competition 
     laws effectively halt and deter hard core cartels.'' The 
     Recommendation defines ``hard core cartels'' as those which, 
     among other things, fix prices or establish output 
     restriction quotas. The Recommendation further instructs 
     member countries ``to cooperate with each other in enforcing 
     their laws against such cartels.''
       On October 9, 1998, eleven Western Hemisphere countries 
     held the first ``Antitrust Summit of the Americas'' in Panama 
     City, Panama. At the close of the summit, all eleven 
     participants issued a joint communique in which they express 
     their intention ``to affirm their commitment to effective 
     enforcement of sound competition laws, particularly in 
     combating illegal price-fixing, bid-rigging, and market 
     allocation.'' The communique further expresses the intention 
     of these countries to ``cooperate with one another . . . to 
     maximize the efficacy and efficiency of the enforcement of 
     each country's competition laws.''
       The behavior of OPEC and other oil-producing nations in 
     restraint of trade violates U.S. antitrust law and basic 
     international norms, and it is injuring the United States and 
     its citizens in a very real way.
       We hope that you will seriously consider judicial action to 
     put an end to such behavior.
     Arlen Specter,
     Charles Schumer,
     Herb Kohl,
     Strom Thurmond,
     Mike DeWine
                                  ____

  Mr. SPECTER. The Federal lawsuit, Prewitt v. OPEC, establishes an 
antitrust violation by OPEC, and my letters to Presidents Clinton and 
Bush set forth legal mechanisms for dealing with OPEC where they engage 
in a conspiracy in restraint of trade and conspiracy to limit 
production and raise prices.
  I ask unanimous consent that an article from the Harrisburg Patriot 
be printed in the Record. It sets out in some detail a way that the 
sludge can be turned into fuel to reduce our dependence on foreign oil.
  There being no objection, the article was ordered to be printed in 
the Record, as follows:

                 [From the Patriot-News, Jan. 4, 2002]

                     Coal-to-Diesel Idea Promising

       Whatever else it has meant for America, the Sept. 11 
     terrorism underscored the folly of U.S. dependence on Middle 
     Eastern oil.
       And while some people believe it mandates drilling for 
     petroleum in the Arctic National Wildlife Refuge and other 
     environmentally sensitive areas, others see the logic in 
     developing legitimate alternative fuels, utilizing the kind 
     of ingenuity and entrepreneurial skills on which America was 
     built.
       Unfortunately, expanded oil drilling and alternative fuel 
     development are tied together in the energy package that 
     remains bottled up in the U.S. Senate, where drilling in ANWR 
     is a key item of debate. Majority Leader Tom Daschle, D-S.D., 
     who sets the agenda, opposes ANWR drilling, which is 
     supported by the president and included in the energy bill 
     approved by the House last summer.
       What that means for Pennsylvania in particular is that 
     construction of a $450 million plant in Schuylkill County to 
     convert coal waste into diesel fuel is on hold.
       John W. Rich, Jr., scion of a family that made its fortune 
     in mining coal, wants to apply proven South African 
     technology to produce 5,000 barrels a day of sulfur-free 
     diesel fuel and eliminate 1 million tons a year of 
     environmentally damaging coal waste from Pennsylvania's coal 
     regions.
       Rich's proposal has won political support and tax credits 
     from the state and a $7.8 million startup grant from the 
     federal government. He hopes that the energy bill, if it ever 
     passes, will provide up to $100 million more, completing a 
     financial package that includes investments from Chevron-
     Texaco and a Bechtel affiliate.
       America's oil resources are so limited and difficult to tap 
     that some foreign oil will always be required here. On the 
     other hand, coal-waste conversion to diesel, a proven 
     technology, would make use of a ready supply of coal and coal 
     waste in Pennsylvania that, in oil equivalent, exceeds the 
     known petroleum reserves of Iraq.
       Not only would this technology cut into the need for 
     foreign oil, but its cost, in comparison to the expense of 
     drilling in ANWR and piping the crude oil south to the Lower 
     48, quite likely would underscore the folly of that proposal.
       The Senate needs to settle on a compromise and pass an 
     energy bill to make practical alternatives to Middle Eastern 
     oil a reality.

  Mr. SPECTER. Madam President, I think if every one of our colleagues 
read the story on the front page of the New York Times today, there 
would be no doubt about the insistence of this body to reduce our 
dependence on OPEC oil. To have Crown Prince Abdullah of Saudi Arabia 
release through a spokesman what he intends to say to the President of 
the United States--that Saudi Arabia will use oil as an oil weapon, as 
Saddam Hussein has done is outrageous. The spokesman is quoted as 
saying that Saudi Arabia is prepared to go to the right of bin Laden, 
and that Saudi Arabia is prepared to fly to Baghdad and embrace Saddam 
Hussein like a brother.
  I ask unanimous consent that the New York Times article ``Saudi To 
Warn Bush of Rupture Over Israel Policy'' be printed in the Record.
  There being no objection the article was ordered to be printed in the 
Record, as follows:

                [From The New York Times, Apr. 25, 2002]

            Saudi To Warn Bush of Rupture Over Israel Policy

                         (By Patrick E. Tyler)

       Houston, Apr. 24.--Crown Prince Abdullah of Saudi Arabia is 
     expected to tell President Bush in stark terms at their 
     meeting on Thursday that the strategic relationship between 
     their two countries will be threatened if Mr. Bush does not 
     moderate his support for Israel's military policies, a person 
     familiar with the Saudi's thinking said today.
       In a bleak assessment, he said there was talk within the 
     Saudi royal family and in Arab capitals of using the ``oil 
     weapon'' against the United States, and demanding that the 
     United States leave strategic military bases in the region.
       Such measures, he said, would be a ``strategic debacle for 
     the United States.''
       He also warned of a general drift by Arab leaders toward 
     the radical politics that have been building in the Arab 
     street.
       The Saudi message contained undeniable brinkmanship 
     intended to put pressure on Mr. Bush to take a much larger 
     political gamble by imposing a peace settlement on Israeli 
     and Palestinians.
       But the Saudi delegation also brought a strong sense of the 
     alarm and crisis that have been heard in Arab capitals.
       ``It is a mistake to think that our people will not do what 
     is necessary to survive,'' the person close to the crown 
     prince said, ``and if that means we move to the right of bin 
     Laden, so be it; to the left of Qaddafi, so be it; or fly to 
     Baghdad and embrace Saddam like a brother, so be it. It's 
     damned lonely in our part of the world, and we can no longer 
     defend our relationship to our people.''
       Whatever the possibility of bluster, it is also clear that 
     Abdullah represents not just Saudi Arabia but also the 
     broader voice of the Arab world, symbolized by the peace plan 
     he submitted and that was endorsed at an Arab summit meeting 
     in March.
       Those familiar with the prince's ``talking points'' said he 
     would deliver a blunt message that Mr. Bush is perceived to 
     have endorsed--despite his protests to the contrary--Prime 
     Minister Ariel Sharon's military incursion into the West 
     Bank.
       Abdullah believes Mr. Bush has lost credibility by failing 
     to follow through on his demand two weeks ago that Mr. Sharon 
     withdraw Israeli troops from the West Bank and end the sieges 
     of Yasir's compound in Ramallah and of the Church of the 
     Nativity in Bethlehem.
       If those events occur and Mr. Bush makes a commitment ``to 
     go for peace'' by convening an international conference, as 
     his father did after the Persian Gulf war, to press for a 
     final settlement and a Palestinian state, the Saudi view 
     would change dramatically.
       But those close to the Saudi delegation said there was no 
     expectation that Mr. Bush is prepared to apply the pressure 
     necessary to force such an outcome.
       ``The perception in the Middle East, from the far left to 
     the far right, is that America

[[Page S3379]]

     is totally sponsoring Sharon--not Israel's policies but 
     Sharon's policies--and anyone who tells you less is insulting 
     your intelligence,'' the person familiar with Abdullah's 
     thinking said.
       Western analysts see the prince as a blunt Bedouin leader 
     whose initiative is regarded by many Arabs as a gesture 
     worthy of the late Egyptian leader Anwar el-Sadat, who flew 
     to Jerusalem in 1973 to sue for peace with Menachem Begin. 
     Abdullah's offer, now the Arab world's offer, calls for 
     recognition of Israel and ``normal relations'' in return for 
     a Palestinian state on lands Israel occupied in 1967.
       The Saudi assessment was apparently being conveyed through 
     several private channels.
       On Tuesday President Bush's father had lunch with the Saudi 
     foreign minister, Saud al-Faisal, and the kingdom's longtime 
     ambassador to Washington, Prince Bandar bin Sultan. Their 
     specific message could not be learned, but in the familial 
     setting, where Barbara Bush was also the hostess for Princess 
     Haifa, Prince Bandar's wife, the strong strategic and 
     personal ties of the Persian Gulf war that characterized 
     Saudi-American relations a decade ago was a message in 
     itself.
       Abdullah, in a luncheon today with Vice President Dick 
     Cheney, was to convey the seriousness with which he regards 
     the Thursday meeting with President Bush as a ``last chance'' 
     for constructive relations with the Arab world.
       Secretary of Defense Donald H. Rumsfeld and Gen. Richard B. 
     Myers, chairman of the joint chiefs of staff, also flew to 
     Houston to join in last-minute discussions before the summit 
     meeting. A senior official in Washington said Mr. Rumsfeld 
     and General Myers were dispatched to brief the prince 
     personally on the American accomplishments in Afghanistan and 
     in the broader war on terrorism.
       ``The idea was, if he thought we were strong in Desert 
     Storm, we're 10 times as strong today,'' one official said. 
     ``This was to give him some idea what Afghanistan 
     demonstrated about our capabilities.''
       United States military commanders in the Persian Gulf 
     region have been building up command centers and equipment 
     depots in Qatar and Kuwait in recent months in anticipation 
     of a possible breach with Riyadh.
       Saudi officials assert that American presidents since 
     Richard M. Nixon have been willing to speak more forcefully 
     to Israeli leaders than the current president when American 
     interests were at stake.
       ``If Bush freed Arafat and cleared Bethlehem, it would be a 
     big victory, show a stiffening of spine,'' the person close 
     to Abdullah said. ``But incremental steps are no longer valid 
     in these circumstances,'' meaning that Mr. Bush would have to 
     follow up with a major push to fulfill the longstanding 
     expectation of the Palestinians for statehood.
       The mood in the Saudi camp was that of gloom and anxiety in 
     private even as Saudi and American officials went ahead with 
     preparations for a warm public encounter with the Bush 
     family.
       On Friday, after his meeting with President Bush at his 
     home in Crawford, Abdullah is to take a long train ride to 
     College Station, the central Texas town where the former 
     President Bush will be host at his presidential library. On 
     Saturday, Saudi's Arabia's state oil company is gathering the 
     luminaries of the international energy industry to dine with 
     Abdullah and his party.
       But the person close to the prince said that if the summit 
     talks went badly, Abdullah might not complete his stay in 
     Texas. Instead, he might return directly to Riyadh and call 
     for a summit meeting of the Organization of the Islamic 
     Conference, to report to its 44 leaders, who represent 1.2 
     billion Muslims.
       ``He wants to say, `I looked the president of the U.S. in 
     the eye and have to report that I failed,'' this person said. 
     His message to the Arabs will be, ``Take the responsibility 
     in your own hands, my conscience is clear, before history, 
     God, religion, country and friends.''
       The person close to Abdullah pointed out that Saudi 
     Arabia's recent assurances that it would use its surplus oil-
     producing capacity to blunt the effects of Saddam Hussein's 
     30-day suspension of Iraqi oil exports could quickly change.
       That Saudi pledge ``was based on a certain set of 
     assumptions, but if you change the assumptions, all bets are 
     off,'' he said. ``We would no longer say what Saddam said was 
     an empty threat, because there come desperate times when you 
     give the unthinkable a chance.''
       Abdullah is reported to be bitter over the White House's 
     assertion that the president is taking a balanced approach to 
     the Israeli-Palestinian conflict, and he wants to evaluate in 
     person whether Mr. Bush understands how his actions are being 
     perceived in the Arab world.
       ``This is not a mistake or a policy gaffe,'' the person 
     close to Abdullah said, referring to Mr. Bush's approach. 
     ``He made a strategic, conscious decision to go with Sharon, 
     so your national interest is no longer our national interest; 
     now we don't have joint national interests. What it means is 
     that you go your way and we will go ours, economically, 
     militarily and politically--and the antiterror coalition 
     would collapse in the process.''

  Mr. SPECTER. We are heading for a cataclysm. We are headed for a 
cataclysmic, destructive process. When the oil industry in Iran was 
nationalized in the early 1950s and the Anglo-Iranian Oil Company was 
evicted by an act of the Iranian parliament, Great Britain decided 
against the use of force and submitted the dispute to the International 
Court, which decided it had no jurisdiction. But if we are starved from 
oil, we should attempt to figure out some way to denationalize what the 
OPEC countries have done, in taking the property of the seven sisters, 
the oil companies--BP and others--without compensation, or without 
adequate compensation.
  But the demands and the blackmail and the extortion that is contained 
on the front page of the New York Times today concerning what OPEC has 
in mind for us should drive the U.S. toward independence from OPEC oil, 
not only as a matter of self-respect, but as a matter of national 
defense and continuing economic development in this country.
  I thank the Chair and yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. LEVIN. How much time remains, Madam President?
  The PRESIDING OFFICER. Four minutes 54 seconds.
  Mr. LEVIN. I yield 4 minutes to Senator Bond.
  Mr. BOND. Madam President, I rise in opposition to the amendment by 
my colleague from Delaware, Mr. Carper. This amendment to the energy 
bill would substantially raise Corporate Average Fuel Economy, CAFE, 
standards with negative impacts on jobs, safety and the health of our 
domestic economy.
  On March 13, the Senate overwhelmingly passed a bipartisan amendment 
I wrote with my colleague from Michigan, Senator Levin. The Levin-Bond 
amendment mandates that the National Highway Traffic Safety 
Administration, NHTSA, increase CAFE standards for cars and light 
trucks to the maximum feasible levels. The Bond-Levin amendment 
replaced a provision in the original energy bill which called for 
significant increases in CAFE based only on a political number, not 
science. The Senate wisely rejected that underlying provision as being 
bad for American jobs, bad for highway safety and bad for consumer 
choice.
  Unfortunately, the Carper-Specter amendment on oil consumption would 
result in CAFE increases similar to the Kerry provision. It must be 
defeated. While Senator Carper's goal may be to reduce American 
dependence on foreign oil, the effect of his amendment would be lost 
factory jobs, more highway fatalities and reduced vehicle choice. Don't 
be fooled by arguments that Senator Carper's proposal is not a CAFE 
increase. The only way to meet the target under the amendment is for 
NHTSA to increase fuel economy standards beyond the maximum feasible 
level. And why would NHTSA only look at the CAFE program? Because it is 
the only regulatory authority currently available to pursue the 
mandated oil reductions under the Carper amendment!
  The debate on the Levin-Bond amendment was only a few short weeks ago 
but let me refresh your memories as to the details of this proposal 
which passed on a 62-38 vote. Specifically, the Levin-Bond amendment 
directs the Department of Transportation to increase fuel economy 
standards for cars and light trucks based on consideration of a number 
of factors including the desirability of reducing U.S. dependence on 
foreign oil. I agree with the sponsor of the amendment that a goal of 
our national energy policy should be a reduction in the amount of 
imported oil. That is why I included language in my amendment last 
month requiring NHTSA to include it in the regulatory process to set 
new CAFE standards.
  Other factors that NHTSA must consider include: technological 
feasibility; economic practicability; the effect of other government 
motor vehicle standards on fuel economy; the need to conserve energy; 
the effect on motor vehicle safety; the effects of increased fuel 
economy on air quality; the adverse effects of increased fuel economy 
standards on the relative competitiveness of manufacturers; the effect 
on U.S. employment; the cost and lead-time required for introduction of 
new technologies; the potential for advanced

[[Page S3380]]

technology vehicles--such as hybrid and fuel cell vehicles--to 
contribute to significant fuel usage savings; and the effect of near-
term expenditures required to meet increased fuel economy standards on 
the resources available to develop advanced technology.

  The Department of Transportation shall complete the rulemaking for 
light trucks within 15 months of enactment and shall give automobile 
manufacturers sufficient lead-time to comply with the new standards. 
The rulemaking for passenger cars shall be initiated within 6 months of 
enactment and shall be completed within 24 months. Each rulemaking 
shall be multiyear for a period not to exceed 15 model years. If DOT 
fails to act within the required time frame, it will be in order for 
Congress to consider, under expedited procedures, legislation mandating 
an increase in fuel economy standards, consistent with the 
considerations set forth above.
  These are the details of what the Senate adopted last month on a 
bipartisan vote. It is a carefully balanced proposal with firm 
deadlines and clear criteria. Unfortunately, the Carper amendment 
before us today would undermine and distort the rulemaking 
considerations by NHTSA. The Carper amendment returns to the notion of 
setting an arbitrary target--in this case, to reduce the amount of oil 
that can be consumed in our passenger car and light trucks in 2015. Not 
only would this lead to CAFE increases similar to those proposed in the 
original bill, but it would also force the Department of Transportation 
to disregard the careful balancing of criteria in its rulemakings. 
Indeed, DOT would have to impose a overriding element (saving a 
specific amount of oil) on top of the considerations that the 
rulemaking would otherwise try to balance.
  If you get nothing else out of my statement today, please simply 
remember that this proposed amendment will absolutely hurt consumers 
who choose to drive minivans and SUVs. Because the Senate adopted a 
measure excluding pick-up trucks from the CAFE increases, the burden on 
the rest of that light truck category is increased dramatically. This 
effect would be magnified with the adoption of the Carper-Specter 
amendment today.
  Oh, and has anyone besides me taken the time to ask NHTSA or the 
Department of Transportation if this amendment is even feasible? I 
talked to Secretary Mineta yesterday, and 2 days ago I spoke with Dr. 
Runge, the NHTSA Administrator. Both indicated to me that it is not 
feasible to guarantee specific fuel savings through CAFE standards. 
There are simply too many variables and assumptions preventing any 
guarantee of this sort.
  Many of the Senators who supported the Bond-Levin amendment agreed 
that the CAFE program is complex with many tradeoffs. That's why the 
experts at NTHSA are best qualified to determine future CAFE levels 
based on sound science and dependable data. Rather that CAFE increases 
based on nothing more than a political number which would have negative 
consequences for American jobs, highway safety and economic growth, 
NHTSA can determine the appropriate standard after extensive review and 
study.
  Given the complexities of the issues, there are great advantages to 
allowing a rulemaking process to resolve these issues rather than pre-
selecting an arbitrary outcome as the Carper oil consumption amendment 
would do.
  One of the most useful reports in the entire fuel economy debate is 
the National Academy of Sciences study on the Effectiveness of CAFE. As 
I did last month, let me share with you a key finding about the safety 
and higher standards:

       In summary, the majority of the committee finds that the 
     downsizing and weight reduction that occurred in the late 
     1980s most likely produced between 1,300 and 2,600 crash 
     fatalities and 13,000 and 26,000 serious injuries in 1993.
       If an increase in fuel economy is effected by a system that 
     encourages either downweighting or the production and sale of 
     more small cars, some additional traffic fatalities would be 
     expected.

  I believe that NAS report offers all of us in the Senate clear 
guidance and expert, scientific analysis as we debate fuel economy 
levels. I also point out that the NAS panel was extremely careful to 
caution its readers that its fuel economy targets were not recommended 
CAFE goals, because they did not weigh other considerations such as 
employment, affordability, and safety.
  I urge you to join me, along with numerous business and labor groups, 
in opposing the Carper amendment which only complicates NHTSA's effort 
to set appropriate CAFE standards under the mandates of the Bond-Levin 
amendment.
  If you want appropriate CAFE standards for cars and light trucks that 
won't harm jobs, highway safety and vehicle choice, vote ``no'' on the 
Carper amendment.
  Madam President, we have been here before. We have had this debate. 
We have done the bill. We got the T-shirt. Unfortunately, we are back 
on the floor with this again.
  Let me be clear: This amendment totally negates the careful direction 
that we put in law in the Levin-Bond amendment that the National 
Highway Transportation Safety Administration must use the best science 
and technology available to increase standards to get more fuel-
efficient cars, vans, and trucks on the road.
  Setting an arbitrary standard which comes out of somebody's hip 
pocket does nothing for sound science. I have talked to NHTSA. They say 
there is no way we can guarantee it. There would have to be a wild 
estimate that would come out somewhere around where the original 
proposal in the underlying bill was.
  Do my colleagues know what we found out when we took a look at that? 
We have the National Academy of Sciences saying the mandated fuel 
efficiency previously done has resulted when we could not meet those 
goals through technology in cars that weighed roughly 1,000 pounds 
less. What happens? Thousands and thousands of people have been killed 
in unsafe cars.
  Despite what some of my friends on the other side of this issue say, 
you cannot mandate by law that technology will come out of thin air. We 
have asked the experts at NHTSA to use the National Academy of Sciences 
and find out what technology is available. If we can make diesel out of 
sludge in Pennsylvania, great, we will do it. That will be available to 
the National Academy of Sciences.
  We are changing in Missouri and Arkansas. We are using poultry waste 
and turning it into power. Good. Let's use all those things we can, but 
let us not go back on the carefully agreed upon construct that was 
developed in the Levin-Bond amendment and overwhelmingly supported 
which says: Yes, we need more fuel-efficient minivans and cars, and it 
is going to be based on how much science can move forward, not how much 
an arbitrary limitation--in terms of saving gallons which cannot be 
controlled solely by fuel efficiency standards--would do.
  There is technology. There will be increases, but it should not be 
arbitrary. We do not want to deprive people of the opportunity to buy 
the cars and minivans they need. We have talked in the past about 
forcing people into purple-people eaters and golf carts. Frankly, that 
is where you go when you have an unrealistically high CAFE standard.
  We need to give people the choices of vehicles that fit their needs 
that incorporate the new technology which is designed to save as much 
fuel as possible. We need to keep the jobs in the United States. We 
need to keep our economy going. We need not compromise safety, as would 
be done by this amendment.
  This amendment is not merely a refinement. This amendment is simply a 
bad shot at setting a standard that is not based on science but is 
based on an arbitrary figure that is infeasible, unworkable, destroys 
consumer choice, costs us jobs in the United States, and risks more 
lives on highways. I urge my colleagues not to support the Carper-
Specter amendment.
  I reserve the remainder of my time and yield the floor.
  Mr. CARPER. Madam President, how much time remains on either side?
  The PRESIDING OFFICER. The sponsors have 1 minute 41 seconds 
remaining.
  Mr. CARPER. And the other side?
  The PRESIDING OFFICER. The opposition has 48 seconds.
  Mr. CARPER. I would like to have the opportunity to close, if I can. 
Will the Senator be willing to accommodate me?

[[Page S3381]]

  Mr. LEVIN. Madam President, I will be happy to accommodate my friend 
from Delaware.
  Madam President, let us be real clear. The Levin-Bond amendment had 
positive incentives. We need tax incentives, joint research and 
development money, Government purchasing, to a much larger extent than 
the administration proposed. They are in the Levin-Bond amendment.
  Also in the Levin-Bond amendment, which this would totally, in 
effect, abrogate, is a regulatory process: 15 months for the Department 
of Transportation to look at 12 different criteria in upping the CAFE 
standard. This does not wait. This prejudges the outcome of that 
process and says 1 million barrels a day. That is the mandate. This is 
not some objective, this is a mandatory amount specifically in this 
amendment, and it is not the way we should be legislating.
  The PRESIDING OFFICER. The Senator from Delaware.
  Mr. CARPER. Madam President, in listening to the comments against the 
Carper-Specter amendment, I am not sure they have fully read the Levin-
Bond amendment. I know they have not read the amendment we offer today. 
Senator Specter and I both voted for the Levin-Bond amendment. It is a 
good amendment. It has a number of positive features that make common 
sense for our country.
  In a moment or two, a budget point of order will be brought against 
our amendment. None was brought against the Levin-Bond amendment. The 
reason is because in the Carper-Specter amendment, we are looking for a 
real reduction in oil consumption. We do not vitiate the Levin-Bond 
amendment. The whole language stays in the bill.
  The Levin-Bond amendment directs the Secretary of Transportation to 
promulgate regulations, essentially CAFE regulations, in order to meet 
high fuel efficiencies. We do not change that, but we do say in order 
to reduce the consumption of oil for our cars, trucks, and vans by 
2015, not only should the Secretary of Transportation have the 
opportunity to consider changes in CAFE, but they should also consider 
how it can reduce oil consumption through alternative fuels.
  Alternative fuels could be biodiesel or soy diesel. It could include 
ethanol, diesel created from coal waste in Pennsylvania, West Virginia, 
Ohio, or other States.
  Four things are different than when we voted a month ago on the 
Levin-Bond amendment. The Middle East today is in turmoil. Venezuela is 
in turmoil. We voted last week not to drill in ANWR, and we voted last 
week to cut off oil imports entirely from Iraq. That is 1 million 
barrels a day. Those things are different.

  We need to put into this legislation meaningful objectives, 
measurable objectives. This amendment would do that.
  The PRESIDING OFFICER. All time has expired on this amendment. The 
Senator from Michigan.
  Mr. LEVIN. Madam President, is it in order at this time to move to 
table the Carper amendment?
  The PRESIDING OFFICER. The motion is in order, but the vote will 
occur later.
  Mr. LEVIN. I move to table the Carper amendment and ask for the yeas 
and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There appears to be a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. The Senator from Washington.


                           Amendment No. 3326

  Mrs. MURRAY. Madam President, I call up amendment No. 3326.
  The PRESIDING OFFICER. The amendment is pending pursuant to the 
order.
  Mrs. MURRAY. Madam President, the amendment that is now before us is 
a minor tax amendment that has been cosponsored by my colleague from 
Washington, Senator Cantwell. I know debate on this bill is limited, so 
I will be very brief.
  The tax provisions in this bill provide important tax credits to 
encourage the use of energy-efficient fuel cells that are 1 kilowatt or 
greater. I note that the tax credit applies only to fuel cells of 1 
kilowatt or greater because there are a number of important fuel cell 
applications that are less than 1 kilowatt. It is important that we 
support the development of fuel cells that are less than 1 kilowatt.
  This amendment would expand the tax credit to include fuel cells that 
are greater than a half a kilowatt, but would keep the per kilowatt 
amount of the tax credit the same. Fuel cells that are between a half 
and 1 kilowatt are used as emission-free power supplies for a number of 
noteworthy applications, including cellular phone tower repeaters, home 
dialysis machines, railroad signaling and switching equipment, and 
recreational vehicle and camping powering equipment.
  Fuel cells are an emerging technology that hold the promise of 
helping to dramatically reduce world pollution. This promising 
technology could eventually shift our dependence from fuels like 
gasoline and diesel fuel to hydrogen. This important tax credit is 
intended to provide an incentive for research, develop, design, and use 
fuel cell technologies.
  We need to encourage the use of all types of fuel cells because as we 
gain more experience in the design and construction of fuel cells, it 
will allow the technology to advance to the point where it is 
competitive with other power sources.
  Some may say this amendment is too costly, but the current market for 
fuel cells is very small. We have estimated the cost of this amendment, 
over the period of the tax credit, is less than $3 million. That is a 
small price to pay for encouraging the development of this promising 
new technology.
  I urge my colleagues to support the development of a broader scope of 
fuel cell technology by supporting this amendment.
  I know Senator Cantwell from my State wanted to be present as well, 
but she is unavailable at this time. I understand this amendment has 
been accepted on both sides and would be willing to move quickly to a 
vote.
  The PRESIDING OFFICER. Who yields time?
  Mr. BAUCUS. Madam President, I ask that the Senator from Washington 
yield.
  Mrs. MURRAY. I yield to the Senator from Montana.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. The Finance Committee has examined this amendment, and we 
approve it. I think it is a good idea to encourage greater research 
into fuel cell development. It is clearly a technology of the future. 
The sooner we begin, the better. This is a very modest amendment, but 
it is an important amendment, and I urge the Senate to adopt it.
  I yield the floor.
  Ms. CANTWELL. Madam President, I rise today as a cosponsor of this 
amendment, and ask my colleagues to vote in its favor. I also want to 
thank my friend, Senator Murray, for her work on this amendment.
  I think there is broad bipartisan support for further development of 
the fuel cell as one of the solutions to our Nation's 21st century 
energy needs. The number of potential applications for the fuel cell is 
almost limitless. In this regard, I was pleased to join with Senator 
Dorgan in sponsoring an amendment to this energy bill that will require 
the Secretary of Energy to develop a program to ensure 100,000 hydrogen 
fuel-cell vehicles will be available for sale by 2010, and 2.5 million 
vehicles will be available by 2020. Fuel cell vehicles are three times 
more efficient than internal combustion engines, and they produce none 
of the harmful emissions associated with fossil fuels.
  The fuel cell vehicle is a concept that has recently been embraced by 
the President, and I believe the broad bipartisan support for this 
technology is already reflected in the tax credit included in this bill 
for other, stationary fuel cell applications. Currently, this credit is 
available for fuel cells of one kilowatt or more. What this amendment 
would do is simply lower the floor to half a kilowatt, or 500 watts.
  I believe this is an important change, because we should also extend 
this credit to fuel cells that can be used in numerous business 
applications. Fuel cells smaller than one kilowatt are already 
providing power for remote cell phone towers, backup power for certain 
medical technologies, and even used to light some types of railroad and 
traffic

[[Page S3382]]

signals. Expanding the tax credit already in this bill will help 
further demonstrate the commercial applicability of this technology.
  This is an important component of any 21st century energy policy, and 
I ask my colleagues to support this amendment.
  The PRESIDING OFFICER. All time is yielded?
  Mrs. MURRAY. All time is yielded back.
  The PRESIDING OFFICER. The question is on agreeing to amendment No. 
3326.
  The amendment (No. 3326) was agreed to.
  Mr. REID. Madam President, 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.
  The PRESIDING OFFICER. The Senator from Nevada.
  Mr. REID. Madam President, we have been able to save a little bit of 
time. I ask unanimous consent that we move down the amendment list and, 
prior to the votathon starting, we allow Senator Graham of Florida to 
bring up amendment No. 3370. He has agreed there would be 15 minutes 
equally divided on this amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. REID. This would be under the same rules as the prior unanimous 
consent agreement: No seconds, and the vote would take place at the end 
of the votes on other amendments.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Arizona.
  Mr. KYL. As I understand it, it is now in order for me to bring up 
amendment No. 3333. Is that correct?
  The PRESIDING OFFICER. The Senator may consider amendments Nos. 3333 
and 3332 concurrently.


                           Amendment No. 3333

  Mr. KYL. Madam President, I will first discuss amendment No. 3333.
  As a member of the Senate Finance and Energy Committees, I have had 
the opportunity to witness first-hand the contradictions in Federal 
energy and tax policy, specifically policy for the electricity 
industry. One glaring example is the Energy Policy Act of 1992 and the 
private use rules of the Internal Revenue Code, which pre-date the 
Energy Policy Act and are applicable, as you know, to public power 
utilities.
  While our Federal energy policy since 1992 has been to open electric 
markets to wholesale and even retail competition, our Tax Code contains 
restrictions dating back to the Tax Reform Act of 1986 that make it 
difficult, and in some cases impossible, for publicly-owned utilities 
to comply with that deregulation policy.
  In an attempt to remove the tax-code impediments to participation in 
the newly restructured electric industry, the publicly-owned and 
investor-owned utilities labored for several years to develop a package 
of tax-law changes that would provide the necessary flexibility to 
comply with the new energy policies being implemented by the Federal 
and State governments while, at the same time, not fundamentally 
changing the competitive balance between the private and public sectors 
of the energy industry.
  The fruit of those efforts was S. 972, introduced last year by 
Senators Murkowski, Thompson, Breaux, and Jeffords. I joined as a 
cosponsor of this bipartisan bill. In the House, H.R. 1459 was 
introduced by Congressman J.D. Hayworth and was cosponsored by 16 other 
members of the Ways and Means Committee. These bills were successful in 
accommodating widely divergent views of public-power and investor-owned 
utilities on a whole score of Federal tax issues. They represent years 
of negotiations between the private and public sectors of the industry, 
and as such, reflect a delicate, equitable balancing of interests.
  There are four provisions in these companion bills that are designed 
to help modernize our Tax Code for investor-owned utilities. I want to 
address these provisions in light of the subsequent House-passed bill, 
H.R. 4, and the bill marked out of the Senate Finance Committee that we 
are now considering. Both of these latest incarnations represent a 
significant departure from the original texts of H.R. 1459 and S. 972.
  The first provision addresses the transmission tax problem that has 
occurred as the result of FERC Order 2000. This order strongly 
encourages, some would say ``directs,'' all transmission-owning 
electric companies, subject to FERC jurisdiction, to join a regional 
transmission organization, RTO. However, many proposals to form RTOs 
would force these utilities to sell or spin off their transmission 
assets to form independent transmission companies, Transcos, resulting 
in a substantial Federal income-tax liability.
  The solution to this problem, as stated in S. 972 and H.R. 1459, is 
to amend section 1033 of the Tax Code to permit sales of transmission 
assets on a tax-deferred basis if these sales occur in conformity with 
Order 2000, and the proceeds of the sale are reinvested in certain 
utility assets. Section 355(e) would also be amended to permit a non-
taxable spin-off of transmission assets even if they are combined with 
neighboring transmission assets in conformity with Order 2000. Amending 
the Federal Tax Code to allow formation of Transcos will further 
diminish tax barriers to wholesale and retail competition by creating 
truly independent transmission organizations.
  H.R. 4 includes this provision, but unfortunately, the bill reported 
out of the Senate Finance Committee does not. Before this bill is 
signed by the President, I hope that the transmission-relief provision 
will be included in the legislation.
  The second provision concerns the equitable tax treatment of nuclear 
decommissioning funds, and it is the only provision of the four that is 
addressed in all of the aforementioned bills. Under current law, owners 
of nuclear power plants must make mandatory contributions to external 
trust funds to ensure that monies are available to decommission plants 
when they are retired. Congress added section 468A to the tax code in 
1984 to permit owners of nuclear plants to deduct a portion of the 
contributions made to these external funds. Section 468A, when enacted, 
was designed to operate within the existing structure of regulated 
rates. The ability to deduct the contributions as permitted in section 
468A is currently dependent on the local public service commission's 
formal approval of the decommissioning expenses that an electric 
utility can charge its customers. Both the House and the Finance 
Committee have adopted changes to section 468A to adapt to the 
structure of competitive markets while preserving the Section's 
original intent. These changes will facilitate the transfer of nuclear 
facilities to new owners in compliance with State and Federal 
directives.
  A third provision, included in S. 972, H.R., 1459, and H.R. 4, but 
not in the Finance Committee bill, has to do with the reimbursement of 
utilities for construction costs. Under current law, the costs of 
building new transmission and distribution lines for new generating 
plants, homes, commercial properties, and industrial sites, indeed, any 
kind of property where construction costs are paid by a developer or 
interconnecting party to a utility, are treated as contributions in aid 
of construction--CIACs--and are considered as taxable income to the 
utility. The result is that developers or interconnecting third parties 
must reimburse a utility for construction costs plus a Federal tax of 
over 30 percent. The proposed solution is to treat the reimbursement of 
these costs as non-taxable, therefore facilitating new generation, 
transmission, and distribution facilities by making it less costly to 
provide these services. This would certainly help increase the supply 
of power and improve electric reliability, and I am hopeful that 
Congress will resolve this issue in conference.
  The fourth provision concerns the public power utilities only. This 
provision effectively relaxes the private use restrictions on existing 
bonds if the issuing municipal or State utility elected to terminate 
permanently its ability to issue tax-exempt debt to build new 
generation facilities. Publicly-owned utilities, as entities of State 
and local governments, have used tax-exempt debt to finance their 
utility infrastructure in much the same way as cities finance schools, 
roads, and bridges. Without this provision, public power systems cannot 
issue stock to raise capital and have no alternative source of 
financing for these large capital projects other than municipal bonds.

[[Page S3383]]

  In exchange for the use of tax-exempt debt, public power systems are 
required to adhere to a strict set of Federal tax rules and regulations 
designed to limit the amount of power they can sell to private 
entities. These rules limit a public power entity's ability to 
negotiate contracts with exiting customers, to resell excess power 
resulting from competition, ``lost load'', and to discourage the 
opening of transmission lines that were financed with tax-exempt debt.
  The truth is, the current private use laws and regulations are no 
longer suitable for today's energy market. S. 972 and H.R. 1459 
successfully incorporated what both the investor-owned and the 
publicly-owned utilities agree would constitute an effective 
modernization of the current Tax Code. The Finance Committee bill did 
not meet that test, and H.R. 4, although it attempted to do so, failed 
that test as well.
  What happened was that H.R. 1459 sustained damage during the process 
of House passage. The bill, as approved by the Committee on Ways and 
Means--H.R. 2511, ``The Energy Policy Act of 2001''--and as 
subsequently passed by the House--H.R. 4, ``Securing America's Future 
Energy Act of 2001''--contains substantial, material modifications to 
the original legislation that make it impossible to vote for. In fact, 
certain modifications are even more restrictive than existing law and 
IRS regulations. As a result, H.R. 4, overall, works absolutely counter 
to national energy policy and the efficient operation of our country's 
electric infrastructure. The various conditions set forth in the bill 
will unfortunately discourage utilities from taking the necessary steps 
to advance open access. Examples of the most problematic provisions:
  Provisions that eliminate public power's ability to elect to forego 
issuance of future tax-exempt bonds for generation from refunding 
outstanding tax-exempt generation bonds, even though this can result in 
savings to the utilities' customers and the U.S. Treasury. The bill 
also prohibits these electing utilities from utilizing tax-exempt 
financing to fund limited repairs and environmental improvements, 
including those which may be government-mandated.
  In the context of sales of energy, there are provisions that restrict 
or eliminate public power's ability to use long-standing statutory and 
regulatory exceptions to the private use rules, and provisions that 
constrain new rules designed to enable public power to participate in a 
deregulated environment. As an example, language in the bill 
effectively precludes sales to rural electric cooperatives that were 
one of the exceptions to the private use rules. The bill seems to 
provide that the expansion of an existing generation facility can 
result in loss of eligibility of the entire facility for permitted 
exception treatment for long-term take or pay requirement contracts, 
even if the cost of the expansion was financed with taxable debt or 
equity. Furthermore, a public power company that owns no transmission 
will qualify for the bill's clarifications to the private use rules 
only if all transmission providers who provide transmission to that 
municipal utility's customers provide open access to all of their 
transmission facilities. These types of restrictions reduce or 
eliminate many of the benefits intended in the bill.
  There are new restrictions on tax exempt bonds for transmission 
facilities that will prevent municipal utilities from using tax-exempt 
bonds to finance new transmission facilities to connect new power 
plants to their service areas. In addition, new restrictions in the 
bill require that, to qualify for private use relief, public power 
transmission facilities must be owned, directly connected to customers, 
and necessary to serve those customers. Thus, the bill ignores the need 
for investment in new transmission for maintenance of grid reliability, 
the multiple legal forms of ownership and use of transmission 
(including the different forms of RTOs and related organizations, 
leasehold and operational arrangements), and the fundamental physics 
involved in transmission network operation.
  The new exception to the private use rules for sales of certain lost 
load is revised so as to require proof that the load loss was 
``attributable to open access'' in order to take advantage of this 
exception, which was designed to ensure that our nation's energy 
capacity is fully utilized.
  I had hoped that these problems could have been resolved in the 
Finance Committee by my colleagues and myself, but the revenue 
constraints imposed on us have prevented us from rectifying these 
problems. So the Finance Committee, rather than correcting the errors 
as reported in the final version of H.R. 4, chose not to provide any 
private use relief at all. Instead, we directed the Treasury to conduct 
a study to examine the problem and propose a solution.
  That said, I think more immediate assistance can and should be 
provided by the Treasury Department.
  During the Finance Committee's mark-up of the tax title of the 
pending energy bill, I asked the Treasury Department to look into an 
allocation proposal related to the private use restrictions of the 
Internal Revenue Code. The proposal would provide a limited safe harbor 
under which issuers of tax-exempt bonds could allocate private use 
first and foremost to the portion of an output facility that is not 
financed with outstanding tax-exempt bonds. For certain bonds, the 
proposal would permit issuers to use reasonable methods to allocate 
various funding sources among their assets.
  The Treasury Department has examined this proposal and believes that 
many of the issues raised therein could be addressed under current law. 
Treasury officials say we could, under a different time frame than the 
pending energy bill, issue regulations to that effect. In the meantime, 
however, I would strongly support a provision in the tax title of the 
bill incorporating this proposal.
  In addition, various members of the Finance Committee, including the 
chairman of the Energy and Natural Resources Committee, have asked that 
the Treasury Department finalize various temporary output regulations 
that relate to the use of tax-exempt financing by public power as 
quickly as possible. I expect that the Treasury Department will make 
finalizing these regulations a top priority and will endeavor to be 
responsive to the many public comments that it has received. I look 
forward to their findings.
  I ask unanimous consent to have printed in the Record letters dated 
March 8, 2002 and March 20, 2002.
  There being no objection, the letters were ordered to be printed in 
the Record, as follows:

                                                  U.S. Senate,

                                    Washington, DC, March 8, 2002.
     Hon. Mark A. Weinberger,
     Assistant Secretary, Tax Policy, Department of the Treasury, 
         Washington, DC.
       Dear Mr. Secretary: I am following up with you directly on 
     certain items that were raised during the Senate Finance 
     Committee's consideration of the tax title to the pending 
     Senate energy bill. Although I continue to believe that a 
     broader, more expansive solution is necessary to more fully 
     address the tax issues presented by the restructuring of the 
     electric utility industry, I raised question at the mark-up 
     with respect to two narrower items.
       The first item concerns our discussion during the mark-up 
     about an allocation proposal related to the private use 
     restrictions of the Internal Revenue Code. You will recall 
     that I asked if you would examine this proposal. The proposal 
     generally would provide a limited safe harbor under which 
     issuers of tax-exempt bonds could allocate private business 
     use first to the portion of an output facility that is not 
     financed with outstanding tax-exempt bonds. For certain 
     bonds, the proposal would permit issuers to use reasonable 
     methods to allocate various funding sources among their 
     assets.
       The second item is the temporary output regulations. As you 
     know, the Finance Committee, as part of its report, asked 
     that the Treasury Department finalize the temporary and 
     proposed output regulation as quickly as possible, providing 
     flexibility in those regulations, to foster participation of 
     public power in a rapidly changing electric industry, without 
     adversely affecting public power investors and customers.
       I look forward to a letter from the Treasury Department on 
     both of these issues. I am hopeful that you will find that 
     many of the issues raised by the allocation proposal could be 
     addressed under present law, and that, under a different 
     timeframe than the pending energy bill, you would issue 
     administrative guidance to that effect. It would be helpful, 
     in the meantime, however, if you would also indicate your 
     support for a provision in the tax title of the Senate bill 
     incorporating this proposal.
       With respect to the temporary and proposed regulations, I 
     hope that you will be able to state in that letter that you 
     will make the finalization of these regulations a

[[Page S3384]]

     top priority and will endeavor to use your regulatory 
     authority to the greatest extent possible to be responsive to 
     the numerous public comments you have received and to further 
     public power's participation in the restructuring of the 
     industry.
       Naturally, I do not expect you to take any action that 
     would be inappropriate or contravene normal agency rules and 
     regulations. Thank you for your attention to this matter.
           Sincerely,
                                                          Jon Kyl,
     U.S. Senator.
                                  ____



                                   Department of the Treasury,

                                   Washington, DC, March 20, 2002.
     Hon. Jon Kyl,
     U.S. Senate,
     Washington, DC.
       Dear Senator Kyl: Thank you for your letter dated March 8, 
     2002 concerning certain items that were raised during the 
     Senate Finance Committee's consideration of the tax title to 
     the pending Senate energy bill. In particular, your letter 
     refers to two matters relating to electric facilities 
     financed with tax-exempt bonds: (1) temporary and proposed 
     Treasury regulations that define private use of output 
     facilities, including generation, transmission and 
     distribution facilities (temporary regulations; and (2) a 
     proposal that, in general, would allow issuers to allocate 
     private use first to the portion of an output facility that 
     is not financed with tax-exempt bonds.
       Your letter requests that the Treasury Department finalize 
     the temporary regulations expeditiously, in a manner that 
     fosters participation by public power systems in electric 
     industry restructuring. We understand that providing 
     certainty in this area is necessary for the industry to 
     evolve. Thus, we are making the finalization of these 
     regulations a top priority. We intend to craft regulations 
     that take into account the current dynamic environment in the 
     electricity industry and the policy objective of facilitating 
     public power's participation in the restructuring of the 
     industry. In finalizing the regulations, we will, of course, 
     carefully consider all of the public comments we have 
     received.
       Treasury is examining your proposal regarding the proper 
     allocation of private use of an output facility. We believe 
     that the issues raised by your proposal can be addressed 
     under present law. The proposal raises policy and 
     administrative questions that require careful consideration. 
     As we work to finalize the temporary regulations, we intend 
     to address the issues raised by your proposal. In doing so, 
     we must craft an administrable set of rules that are 
     consistent with the policy objective of a competitive 
     electricity market.
       We hope this information is helpful to you. Please contact 
     me if you have any additional questions.
           Sincerely,

                                           Mark A. Weinberger,

                                               Assistant Secretary
                                                     (Tax Policy).

  Mr. KYL. Madam President, this first amendment is a very simple 
amendment that would save a little over a billion dollars, according to 
the calculations of the committee, but probably would save closer to $3 
billion by striking that section of the Finance Committee portion of 
the bill that is called the clear act provisions; more specifically, 
those provisions that provide tax credits for Americans who purchase 
four specific kinds of motor vehicles; specifically, a new qualified 
alternative fuel motor vehicle, a new qualified fuel cell motor 
vehicle, a new hybrid motor vehicle, and then it extends the present 
law which provides a credit for electric vehicles.
  I know this provision was inserted in the Finance Committee with the 
best of intentions, but for the reason I will point out, I think this 
has not been as carefully thought out and prepared as it should be. 
Based on the experience of my home State of Arizona trying to do the 
same thing, it would be premature for us to move forward with this 
particular program at this time. I will illustrate specifically what is 
involved and then get to the Arizona experience.
  Under the bill pending before us, there would be provided a maximum 
income tax credit of $40,000 per taxpayer for the purchase of these 
kinds of motor vehicles, the fuel cells, the alternative fuel, and the 
electric vehicles. The fact is that is for a very large vehicle; the 
average for the usual passenger car type of vehicle would be in the 
neighborhood of from $3,500 to $6,000.
  The part I am particularly interested in is the alternative fuel 
vehicle. According to the committee staff, the average tax credit in 
this case would be about $5,000. It is determined by a very complicated 
formula based upon the weight of the vehicle and some other factors, 
but it is about a $5,000 subsidy per taxpayer buying this particular 
kind of vehicle.
  I am concerned about this because Arizona decided to try to do this 
same thing, provide a taxpayer subsidy for the purchase of these 
alternative fuel vehicles as a way of trying to clean up our 
environment and to reduce reliance upon pure oil or gasoline. It 
provided a subsidy, calculated a little bit differently, for the 
purchase of these vehicles; in fact, for the retrofitting of the 
alternative fuel system for a vehicle that had already been 
manufactured.
  I will read some headlines, or excerpts, from some of the Arizona 
newspapers after this program was put into effect. I might begin by 
saying this has been a fiasco in Arizona. The program has since been 
terminated. Politicians' careers have been destroyed because of it. 
They did not think it through carefully enough before they implemented 
it. It was about to bankrupt the State, so the State decided to 
terminate the program prematurely before it ended up costing them as 
much as it was going to cost.
  These are a few quotations:

       The rebate program was originally projected to cost the 
     State about $3 million but has since spiraled to a dizzying 
     $483 million.

  That is from the Arizona Daily Star.

       Bad legislation, bad policy and no benefit to air quality.

  That is a quotation from the Arizona Republic. That is October 30, 
2000.
  From that same editorial:

       There has been no environmental study of the alternative-
     fuel program by any State agency, just as no one ever 
     completed an incisive cost analysis of the legislation.

  Another quotation from the Arizona Republic:

       The law allowed thousands of people to buy expensive sport-
     utility vehicles with the State picking up nearly half the 
     costs of the trucks and their bifuel conversions to either 
     propane or compressed natural gas.

  One final quotation from the Arizona Daily Star says:

       The Arizona Republic shows that 13 percent of the 
     applications for cleaner-running vehicles came from rural 
     areas without a pollution problem.

  I ask unanimous consent that the remainder of these statements be 
printed in the Record at this point.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

      Arizona's Experience With Alternative Fuels and Tax Credits.

       ``The law in question . . . provided tax incentives and 
     rebates for up to 50 percent of the cost of a car equipped to 
     burn alternative fuels. One of the startling loopholes in 
     this poorly written law was a failure to require any 
     accountability from consumers. Vehicles equipped to run on an 
     alternative fuel are also equipped with regular gas tanks. A 
     person could buy a new vehicle, have half of it paid for by 
     the state, and never use an ounce of the cleaner burning fuel 
     system.'' (AZ Daily Star, Editorial, Oct. 31, 2000)
       ``The rebate program was originally projects to cost the 
     state of about $3 million but has since spiraled to a 
     dizzying $483 million. (AZ Daily Star, Editorial, Oct. 30, 
     2000)
       ``Bad legislation, bad policy and no benefit to air 
     quality.'' (AZ Republic, Oct. 30, 2000)
       ``There has been no environmental study of the alternative-
     fuel program by an state agency, just as no one ever 
     completed an incisive cost analysis of the legislation'' (AZ 
     Repub, Oct. 30)
       ``House Speaker Jeff Groscost boasted in Washington three 
     weeks after a new tax credit law took effect here that 
     Arizona auto dealers had at least 1,800 orders for 
     alternative fuel vehicles. . . . The state budget had been 
     built on the assumption that only about 300 people would buy 
     these cars and trucks and apply for the generous tax 
     credits.'' (AZ Daily Star, Oct. 30, 2000)
       ``The law allowed thousands of people to buy expensive 
     sport-utility vehicles with the state picking up nearly half 
     of the costs of the trucks and their bifuel conversions to 
     either propane or compressed natural gas.''(AZ Republic, Oct. 
     30
       ``Just 12 days after it was implemented, the state's 
     alternative-fuels rebate program has already blown its worst 
     cost estimate by 13 percent.''(AZ Repub, Nov. 2, 2000)
       ``The Arizona Republic shows that 13 percent of the 
     applications for cleaner-running vehicles came from rural 
     areas without a pollution problems.''(AZ Daily Star, Oct. 30, 
     2000)
       ``The Republic's analysis of the state's rebate program to 
     convert gasoline-powered cars and trucks to alternative fuel, 
     mainly propane and natural gas, is based on preliminary data 
     obtained from the Commerce Department, the administrator of 
     the program.
       ``The analysis included only the 5,512 applications in 
     which a rebate amount was contained in the computer database 
     obtained this week from the Commerce Department. The database 
     contained more than 12,000 applications for rebates and is 
     anticipated to grow to 22,000 when all the applications are 
     processed. Few rebates have been paid to the buyers of new 
     vehicles being converted to an alternative fuel.

[[Page S3385]]

       ``The alternative-fuel vehicle rebate legislation passed on 
     April 18 didn't contain funding limits. The estimated cost of 
     $3 million to $10 million for the program was unofficial.
       Under the alternative-fuels program, the entire cost of 
     converting a vehicle to propane or compressed natural gas 
     would be paid by the state, along with 30 percent of the 
     purchase price of a new vehicle. For example, if a sport-
     utility vehicle originally cost $25,000 plus $7,000 to 
     convert it to also run on compressed natural gas, its owner 
     would be reimbursed the entire conversion cost plus $9,600--
     30 percent of the total vehicle cost of $32,000.'' (AZ Repub, 
     Nov 2, 2000).
       ``It sounded irresistible: buy a car that burns something 
     other than gasoline and the state pays up to 50 percent of 
     the cost; convert an existing gas-burner to alternative fuels 
     and the state pays 100 percent of the cost of the conversion. 
     No alternative fuel depot at home? Not to worry. The state 
     will cover that $7,000 as well, or up to $400,000 for a 
     commercial alternative-fuels depot. It is all courtesy of a 
     measure proposed and adopted in Arizona at the last minute of 
     a legislative session in April. Sound too good to be true? 
     More than 22,000 Arizonans did not think so, and since July 
     they have filed applications for an average of $21,966 each, 
     which would cost the state nearly $500 million from a program 
     that was supposed to cost less than $5 million a year. State 
     officials now say the eventual costs could reach $800 million 
     once applications being processed are counted.
       ``The premise of the program was simple. According to a 
     state-issued summary, the law allows the users of 
     alternative-fuel vehicles bought or converted after Jan. 1, 
     2000, to qualify for cash rebates or tax credits worth 30 
     percent of the vehicle's cost. Eligible vehicles can use an 
     alternative fuel solely or, as with `bifuel' vehicles, run on 
     either gasoline or some other fuel, such as natural gas. If a 
     $25,000 vehicle cost $7,000 to convert to propane, for 
     example, a program participant would be reimbursed the 
     conversion cost plus $9,600, 30 percent of the total $32,000 
     cost.
       ``Some found the legislation laughable from the beginning. 
     `The legislation had so many loopholes you could drive a Ford 
     Excursion through it,' said Sandy Bahr, outreach director for 
     the Phoenix-based Grand Canyon chapter of the Sierra Club. 
     Ms. Bahr said that, because the bill does not require owners 
     to actually use alternative fuels, many are using the bifuel-
     vehicle incentives to take advantage of the program. `You've 
     got people putting little four-gallon propane tanks in sports 
     utility vehicles and getting 50 percent back on a $40,000 
     car.'' Ms. Bahr said. `Four gallons of propane goes less far 
     than four gallons of gasoline, so all they do is use their 
     regular engines because propane is hard to find. That 
     actually creates more emissions because they're driving a 
     bigger car than they would ordinarily buy.'
       ``Moreover, there are only six refueling stations for 
     alternative fuels in the Phoenix area, and none in the rest 
     of the state.'' (NY Times, Nov. 2, 2000)

  Mr. KYL. What we can see is, like the system that is being proposed 
by the Senate, there was no cost-benefit analysis. There was not a very 
clear idea of what the ultimate costs were going to be, and the 
experience with the program not only showed fraud or potential fraud 
but runaway expenses.
  Under the program that has come out of the committee, one of the 
concerns is that nonprofits will be able to utilize credits by selling 
them, which, of course, opens up the possibility that there could be a 
secondary market or abuses could occur in selling these large tax 
credits.
  There has been very little evaluation of whether or not the vehicles 
could be altered after their purchase, after the tax credit has been 
received, so that they could run in fact on gasoline or diesel. There 
is no data whatsoever to show that we would have a better environment 
as a result. In fact, there has been no cost-benefit analysis.
  Pursuant to an amendment I offered in the committee, there will be a 
study after the fact that will tell us how successful the program has 
been, but there has been no study in advance of that. In fact, the 
committee report language does not cite a single study or report 
justifying the credits under the reason for change.
  The report says, and I am quoting:

       The committee believes further investments in alternative 
     fuel and advanced technology vehicles are necessary to 
     transform automotive transportation in the United States to 
     be cleaner, more efficient and less reliant on petroleum 
     fuels.

  The committee language also prognosticates, and I am quoting again:

       That it expects hybrid motor vehicles and dedicated 
     alternative fuel vehicles are the near-term technological 
     advancement that will replace gasoline- and diesel-burning 
     engines with alternative powered engines.

  The revenue estimates are $1.1 billion, but since many of the credits 
expire after 2006, I think it vastly understates the true cost. I 
suspect this will be extended before they expire, so that the cost is 
more likely going to be maybe $3 billion or so over a 10-year period. 
Obviously, the automobile industry is the primary beneficiary of these 
credits since they can simply increase the cost of the vehicles, and 
then the credits obviously go to the taxpayer to offset that increase 
in cost.
  I make this point--and I don't expect members of the committee are 
going to agree with this proposition--I wish we could go a little 
slower. I advised the committee of the experience in Arizona. To the 
credit of the committee and the chairman of the committee, his staff 
was very careful to talk to people in Arizona and do their best to 
remove the kinds of problems we experienced in Arizona. I commend the 
chairman of the Finance Committee for that effort. It was a useful 
effort.
  I am concerned we are going to find a lot of problems in this program 
after it begins. It will be too late then. We will find it will cost a 
whole lot more than we predicted and the benefits will not pan out in 
terms of cost-benefit analysis.
  I reserve the remainder of my time on this amendment. If anyone 
wishes to respond, I will briefly discuss the other amendment.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Madam President, on the face of it, everyone would agree, 
this is to give a stimulus, a boost, to alternative fuels, alternative 
fuel vehicles, and alternative fuel vehicle infrastructure. About two-
thirds of the petroleum we consume today in America is consumed in the 
transportation sector--cars, trucks, railroads, and so forth.
  Clearly, we are trying as Americans to wean ourselves a bit from our 
overreliance on OPEC. That is the whole point of this energy bill. We 
will not make ourselves completely self-reliant. No one claims that. At 
least on the margin, we are making a step or two difference to become 
more energy self-sufficient. Clearly, helping alternative fuel 
development and alternative fuel vehicle development, alternative fuel 
vehicle infrastructure development--pumps and so forth--will help.
  It is also important we not act precipitously, that we act 
measurably, thoughtfully. Through the very able assistance of my good 
friend from Arizona, we have worked closely with the Arizona Department 
of Transportation. Unfortunately, in the State of Arizona, which 
attempted something similar a year or two ago, there were people who 
took advantage of the situation to such a degree that it became a bit 
of an outrage. We don't want to repeat those mistakes. I don't think 
anyone in this body wants to repeat those mistakes.
  As the Senator said, our staff spent quite a bit of time talking with 
the Arizona Department over what problems and recommendations they have 
so the problems do not recur in the provisions enacted here. As a 
consequence of those discussions, we have dramatically tightened up 
this bill regarding credits. They cannot be used in the aftermarket by 
people who alter vehicles. They cannot be used for vehicles that use 
conventional fuels. This credit is only available to vehicles dedicated 
to alternative fuels. We made that clear.

  I add the primary sponsors of this amendment are Senators who worked 
hard: Senators Hatch, Rockefeller, Kerry, and Snowe. They are the 
primary sponsors of this provision. It has the support of both the auto 
manufacturing industry and the conservation community, the 
Environmental Defense Fund, the Union of Concerned Scientists support 
this amendment, NRDC, Ford Motor Company, Lance Auto Manufacturing, and 
others too numerous to name.
  The main point is, we are trying to wean ourselves from OPEC. This 
provision is a step, a start. It helps. We have tailored the amendment 
based upon the experience in Arizona to help assure this works. It will 
probably not work as well as many think, and it may work better than 
some Members think, but we are undertaking a good effort to make this 
right. I appreciate the concerns of my friend from Arizona. They are 
legitimate concerns and concerns we all have. We have attempted to 
address these concerns. I thank the good State of Arizona for helping 
address these matters.
  I urge not adopting the amendment that strikes, but to work together 
to

[[Page S3386]]

see what works and what doesn't work and change or modify or delete as 
the case in Arizona. I thank my good friend for helping draw out what 
is going on in this debate.
  Mr. HATCH. Madam President, I rise today in opposition to the 
amendment of the Senator from Arizona. As I understand it, this 
amendment would strike the portions of the energy tax provisions that 
would provide tax incentives for the purchase of alternative fuels and 
advanced technology vehicles such as hybrid electric and fuel cell 
automobiles.
  The provisions that this amendment would strike are almost identical 
to the provisions in the bipartisan CLEAR ACT, which stands for Clean 
Efficient Automobiles Resulting from Advanced Car Technology, which I 
introduced last year along with Senators Jeffords, Rockefeller, Chafee, 
Kerry, Collins, Gordon Smith, Crapo, and Lieberman.
  The CLEAR ACT is the product of a carefully crafted, delicately 
balanced, and politically unusual alliance between auto manufacturers, 
truck engine manufacturers, environmental groups, fuel suppliers, and 
other stakeholders. I might add that these provisions, which provide 
strong incentives for energy conservation, are an integral part of the 
President's energy plan. The CLEAR ACT provisions create a fair and 
balanced playing field for all the advanced technologies and 
alternative fuel vehicles that offer the promise of both clean air and 
less dependency on foreign fuel.
  Transportation accounts for about two-thirds of the oil consumption 
in the United States, and we are 97 percent dependent on oil for our 
transportation needs. When we consider the role transportation plays in 
our economy and our way of life, it is hard to believe that we rely on 
foreign sources for more than one-half of our oil supply. If our nation 
is going to have a strategy for energy security, that strategy must 
begin with transportation fuels. The Kyl amendment would take away our 
best opportunity to provide a balanced approach to achieve this 
strategy.
  Advances in alternative fuels and new vehicle technologies have been 
significant in recent years. However, three basic obstacles stand in 
the way of a broad shift toward their adoption. These are the higher 
cost of the vehicles, the higher cost of alternative fuels, and the 
lack of an infrastructure of alternative fueling stations.
  The CLEAR ACT provisions that this amendment would strike would lower 
the barriers that stand in the way of widespread consumer acceptance of 
these advanced technology and alternative fuel vehicles by providing 
tax credits to consumers who purchase hybrid electric, fuel cell, 
battery electric, and dedicated alternative fuel vehicles. They would 
also provide incentives for the purchase of alternative fuels and the 
development of an alternative fuel infrastructure.
  Without imposing any new mandates, the CLEAR ACT provisions in this 
energy bill focus on the very best emerging technologies to help our 
citizens to enjoy the health benefits of cleaner air sooner, to help 
our communities to enjoy the economic benefits of attaining clean air 
standards sooner, and to help us reduce our consumption of foreign oil 
sooner than would otherwise be possible.
  With the clear benefits of these provisions to less dependency on 
foreign oil and to cleaner air, which I might add come at a very 
reasonable cost in terms of revenue loss to the Treasury, it is hard to 
see why anyone in this body would want to strike them. Moreover, the 
tax credits the CLEAR ACT offers are performance based, which is to say 
that they are based on the principle that every dollar of tax 
expenditure should produce substantive air quality and energy security 
benefits. The greater the benefits a particular vehicle achieves, the 
larger the tax incentive for purchasing it.
  While I do not want to assume I know the motivations of the Senator 
from Arizona for offering this amendment, part of it might be based on 
an unfortunate experience in his home state. Not long ago, a well-
intentioned program to promote alternative fuel vehicles by the Arizona 
legislature experienced extreme cost overruns and failed to provide the 
promised energy and environmental benefits. I want to assure the 
members of this body that we have studied the Arizona experience, we 
have identified the inherent weaknesses of that model, and we have been 
careful to avoid each one of them in this legislation.
  With the CLEAR ACT provisions, until a new advanced vehicle is 
purchased, until new infrastructure has been installed, or until 
alternative fuel is placed in the tank of a dedicated alternative fuel 
vehicle, there will be no cost to the Treasury. And when a cost is 
incurred, it will be a small cost relative to the resulting 
environmental benefits and energy savings.
  To me it is inconceivable that this Senate would pass an energy 
policy bill without addressing the issue of how to increase the 
public's adoption of alternative fuel and advanced technology vehicles. 
Although gasoline vehicles are 90 percent cleaner today than thirty 
years ago, the significant increase in the total number of vehicles on 
the road and the miles traveled per year by each vehicle means that 
little progress has been made in reducing the contribution of motor 
vehicle emissions to air pollution.
  Similarly, despite improvements in fuel economy compared to thirty 
years ago, more petroleum than ever is used in motor vehicles and U.S. 
dependence on imported oil is at a record high and increasing. 
Alternative fuel vehicles and advanced technology vehicles, such as 
hybrids and fuel cells, significantly reduce the use of gasoline and 
diesel and have dramatically reduced emissions. Each dedicated natural 
gas vehicle displaces 100 percent of the gasoline or diesel that 
otherwise would be used in that vehicle.
  Conventional gasoline and diesel motor vehicle technology has come 
about as far as it can in terms of fuel economy and emissions. The 
further gains that are needed to allow the U.S. to achieve energy 
security and clean air require nonpetroleum vehicles and hybrid and 
fuel cell vehicles. The nation simply cannot achieve its goals in these 
areas with these conventional vehicles. Striking these provisions would 
be a big mistake, and I urge my colleagues to vote against the Kyl 
amendment.
  Mr. GRASSLEY. Madam President, I oppose Senator Kyl's amendment to 
strike the wind energy tax credit extension provisions in this bill. It 
is unwise from an energy policy standpoint and would be harmful to 
American agriculture. Therefore, I oppose it vigorously.
  Mr. FEINGOLD. Madam President, I supported the amendment offered by 
the junior Senator from Arizona, Mr. Kyl. I did so even though I 
support the underlying policy that amendment sought to strike from the 
bill, namely the alternative fuels vehicle tax credit. I regret, 
though, that this provision, along with many other tax provisions in 
the bill, were included without adequate offsetting savings. The result 
is a measure that will make our budget deficits even larger.
  We must return to the fiscally responsible budgeting that was so 
beneficial to the economy, and which brought our budget, however 
briefly, to balance, and even a slight surplus. If Congress does not 
pay for additional tax cuts, we will only make matters worse.
  Mr. KYL. How much time remains for me?
  The PRESIDING OFFICER. The Senator has 2 minutes.


                           Amendment No. 3332

  Mr. KYL. It is my intention to use the remainder of the time on the 
second amendment, numbered 3332, after which I presume a Member on the 
other side will move to table amendment No. 3333, to get the yeas and 
nays, and I would be happy to accept a voice vote on 3332, which I will 
describe at this point.
  This is an amendment that eliminates the credits for wind energy. 
According to the industry itself, they are now competitive and they no 
longer need the subsidy we provide to them. As a matter of fact, 
quoting from their own material from the American Wind Energy 
Association: The state-of-the-art wind power plants are generating 
electricity at costs as low as 4 cents per kilowatt hour, a price 
competitive with many conventional energy technologies. This is without 
the production tax credit that would be extended under this 
legislation.
  The AWEA further projects by the year 2005 the costs will be in the 
area

[[Page S3387]]

of 2.5 to 3.5 cents per kilowatt hour, just about exactly the range of 
the cost of production by coal or nuclear or other generation, or 
natural gas. This is a tax credit that is simply no longer needed.
  Since the Department of Energy Information Administration has 
analyzed that the RPS mandate in this legislation will only be 
fulfilled through additional wind energy capacity, we are just 
basically giving a huge gift to the producers of wind energy that would 
have essentially a monopoly on this new renewable power we are 
mandating.
  I will not name the particular companies, but the companies that are 
going to benefit from this are some of the largest production companies 
in the country, all good companies, but certainly companies that are 
multibillion-dollar companies and hardly need this particular kind of a 
credit.
  I ask unanimous consent to have printed in the Record brochures from 
the industry itself.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

  What Are the Factors in the Cost of Electricity From Wind Turbines?

       The cost of electricity from utility-scale wind systems has 
     dropped by more than 80% over the last 20 years.
       In the early 1980's, when the first utility-scale wind 
     turbines were installed, wind-generated electricity cost as 
     much as 30 cents per kilowatt-hour. Now, state-of-the-art 
     wind power plants are generating electricity at costs as low 
     as 4 cents/kWh, a price that is competitive with many 
     conventional energy technologies. Costs are continuing to 
     decline as more and larger plants are built and advanced 
     technology is introduced.
       Aside from actual cost, wind energy offers other economic 
     benefits which make it even more competitive in the long 
     term:
       Greater fuel diversity and less dependence on fossil fuels, 
     which are often subject to rapid price fluctuations and 
     supply problems. This is a significant issue around the world 
     today, with many countries rushing to install gas-fired 
     electric generating capacity because of its low capital cost. 
     As world gas demand increases, the prospect of supply 
     interruptions and fluctuations will grow, making further 
     reliance on it unwise and increasing the value of diversity.
       Greatly reduced environmental impacts per unit of energy 
     produced, compared with conventional power plants. 
     Environmental costs are becoming an increasingly important 
     factor in utility resource planning decisions.
       More jobs per unit of energy produced than other forms of 
     energy.
                                  ____


    New Corporate Players Could Power Stronger Growth in Wind Energy

       As the U.S. Senate continues consideration of national 
     energy legislation, the American wind energy industry is 
     poised to continue building on 2001--its most successful year 
     in history--and is the focus of growing interest by major 
     players in the energy field, according to the American Wind 
     Energy Association (AWEA).
       The industry is receiving a boost not only from the recent 
     two-year extension of the federal wind energy production tax 
     credit (PTC), which was signed into law March 9, but from a 
     series of announcements by utilities, oil companies, and 
     other firms that they see wind energy in their future. Wind 
     energy supporters are hopeful that with a further three-year 
     extension of the PTC included in the Senate energy bill, the 
     industry will at last have a stable financial environment and 
     the serious corporate participation needed to put it on the 
     road to steady long-term growth.
       Among recent industry developments, AWEA said, are the 
     following:
       American Electric Power (AEP), one of the nation's largest 
     utilities, spent $175 million in late December to buy the 
     160-megawatt (MW) Indian Mesa wind plant in West Texas. 
     Previously, AEP had invested $160 million to build its own 
     150-MW wind farm at Trent Mesa, also in West Texas. Dwayne L. 
     Hart, senior vice president of business development for AEP 
     subsidiary AEP Energy Services, commented, ``The addition of 
     Indian Mesa furthers our goal of enhancing the renewable 
     portion of our overall generation portfolio.'' Ward Marshall 
     of AEP Energy Services is President-Elect of AWEA.
       BP and ChevronTexaco announced in mid-January that they 
     will build and operate a 22.5-MW wind plant at their jointly-
     owned Nerefco oil refinery near Rotterdam in The Netherlands. 
     Bob Dudley, BP's group vice president, Gas and Power and 
     Renewables, said, ``This project is an excellent opportunity 
     in line with BP's strategy to add value to our business, 
     lower emissions, and demonstrate our commitment to clean 
     energy,'' while James Houck, ChrevronTexaco President Power 
     and Gasification, said, ``Wind power is an increasingly 
     viable source of power generation and this project fits with 
     our objectives to manage carbon emissions and invest in new 
     technologies that minimize environmental impact.''
       Entergy, a major utility based in New Orleans, La., 
     purchased a majority interest in the 80-MW Top of Iowa wind 
     farm from Houston, Tex.-based Zilkha Renewable Energy and its 
     partner, Midwest Renewable Energy Corp. Geoff Roberts, 
     president and CEO of Entergy's independent power development 
     business unit, commented on the transaction, ``This project 
     provides Entergy with an attractive entry vehicle into 
     the wind energy business.''
       FPL Energy, a subsidiary of FPL Corp., which also owns the 
     large utility Florida Power & Light, announced January 7 that 
     it had added 844 MW of wind power to its power generation 
     portfolio during 2001. The company, America's largest wind 
     plant operator, now operates 1,830 MW of wind, of which it 
     owns 1,439 MW. Dean Gosselin, FPL Energy vice president of 
     wind development, said, ``We know there are many more 
     opportunities for wind energy throughout the country and 
     great support in many regions for new wind power 
     facilities.''
       GE Power Systems said in late February that it has signed 
     an agreement to purchase the manufacturing capability of 
     Enron Wind Corp., the largest U.S.-based utility-scale wind 
     turbine manufacturer. ``The acquisition of Enron Wind 
     represents GE Power Systems'' initial investment into 
     renewable wind power, one of the fastest growing energy 
     sectors,'' said John Rice, president and CEO of GE Power 
     Systems. GE Power Systems said it expects the wind industry 
     to grow at an annual rate of about 20%, with principal 
     markets in Europe, the U.S., and Latin America.
       Pacificorp Power Marketing (PPM), affiliated with 
     Pacificorp, a large utility based in Portland, Ore., is 
     playing a major role in building the market for wind in the 
     Northwest. The company is purchasing and marketing power from 
     three wind plants in the West, including the 261-MW Stateline 
     Project, and has said it plans to add substantial wind 
     capacity to its portfolio over the next few years. ``This is 
     wind power on a grand scale,'' said PPM president Terry 
     Hudgens of Stateline, adding, ``Stateline is a watershed 
     event for our company and for the region. With Stateline, 
     wind is no longer just a small niche in our supply, but has 
     taken a position as a very real and significant part of the 
     new electric resources the region badly needs.''
       Shell Subsidiary Shell WindEnergy, Inc., announced in late 
     January that it had purchased an 80-MW wind plant near 
     Amarillo, Tex. ``We are delighted to have moved so quickly in 
     making a second major investment in the U.S. wind power 
     market,'' said David Jones, Director of Shell WindEnergy, 
     Inc. ``Wind energy is not only the fastest-growing area of 
     power generation worldwide but it is also one of the cleanest 
     sources of energy.'' Shell WindEnergy also owns a 50-MW wind 
     project in Wyoming, and Shell is developing or operating more 
     than 1,000 MW of wind in the U.S. and Europe.
       TXU, a large utility based in Dallas, Tex., announced in 
     early January that it plans to purchase a 40% equity stake in 
     two wind farms under construction in central Spain. TXU is 
     already one of the largest U.S. purchasers of wind-generated 
     electricity, buying the output of several Texas wind plants.
       Utilicorp United, based in Kansas City, Mo., commissioned a 
     110-MW wind plant near Montezuma, Kans., in December. 
     Commented Keith Stamm, president and chief operating officer 
     of UtiliCorp's Global Networks Group, ``This wind farm 
     demonstrates UtiliCorp's commitment to providing its 
     customers with renewable and reliable energy supplies . . . 
     While this is the first major wind power project in Kansas, 
     the state has the potential to be a U.S. leader in wind 
     energy.''
       ``This string of announcements by major energy corporations 
     is rapidly changing the face of the wind energy business,'' 
     said Randall Swisher, AWEA executive director. ``Coming on 
     the heels of the industry's most successful year, in the U.S. 
     and worldwide, it signals that wind energy is moving into the 
     big leagues. AWEA estimates that with continued government 
     encouragement and broad utility support, wind energy will 
     provide at least six percent of the nation's electricity by 
     2020.
                                  ____


 FPL Energy Places Order for 175 Vestas Wind Turbines, With Option for 
                          650 Additional Units

       FPL Energy, LLC, the independent power production 
     subsidiary of FPL Group Inc. (NYSE: FPL), today announced an 
     agreement with Vestas Wind Systems A/S of Denmark for 
     delivery of approximately 175 wind turbines and an option for 
     an additional 650 turbines.
       Delivery of the 660-kilowatt turbines will begin in 2002 
     and will support the planned expansion of wind-driven 
     electricity generation projects underway at FPL Energy.
       ``Wind projects will be a major element of our expansion 
     activity in 2002 and 2003,'' said Ron Green, president of FPL 
     Energy. ``We expect to add 1,000 to 2,000 megawatts of wind 
     power to our portfolio by the end of next year.''
       FPL Energy is the largest generator of electricity form 
     wind turbines in the United States. It currently owns and 
     operates wind farms in eight states with more than 1,400 
     megawatts of capacity.
       ``As the leading U.S. developer of wind power, it is 
     important for FPL Energy to secure a reliable source of wind 
     turbines for use in projects we are developing today and into 
     the future,'' said Mr. Green.
       Approximately 80 percent of FPL Energy's electric 
     generation is fueled by renewable

[[Page S3388]]

     sources or clean-burning natural gas. Wind power represents 
     nearly 28 percent of the company's 5,063-megawatt portfolio.
       Last month, Congress extended the production tax credit for 
     operating wind projects. Projects that become operational by 
     the end of 2003 will receive a 1.7-cent per kilowatt-hour tax 
     credit, adjusted for inflation, for a ten-year period.
       ``We continued our wind project development activities 
     during the first part of this year, and the extension of the 
     production tax credit in March gave us the green light to 
     quickly advance these important projects to construction.
       ``Wind power is an important component of our nation's move 
     toward energy independence as we harness our natural 
     resources for production of electricity. It is a clean, 
     renewable source of energy that can be sited, built and in 
     operation much more rapidly than conventional fossil fuel 
     facilities,'' Mr. Green said.
       ``Typically, wind farms can be constructed in six to nine 
     months, and they are profitable from the first day of 
     operation,'' said Mr. Green. Last year, FPL Energy built 
     nearly 850 megawatts of wind-powered generating facilities, 
     approximately half of what was built in the United States.
       ``A large percentage of our current wind facilities are 
     equipped with Vestas turbines,'' said Mr. Green. ``We are 
     pleased to move forward with such a reliable supplier for our 
     future expansion.''
       FPL Energy is the nation's leader in wind energy 
     generation, with 24 wind farms in Iowa, Kansas, Texas, 
     Minnesota, Wisconsin, Washington, Oregon and California. The 
     company is a leading independent producer of clean energy 
     from natural gas, wind, solar and hydroelectric. Its 
     portfolio includes 73 facilities in operation, under 
     construction, or in advanced stages of development in 17 
     states.
       FPL Group, with annual revenues of more than $8 billion, is 
     nationally known as a high quality, efficient, and customer-
     driven organization focused on energy-related products and 
     services. With a growing presence in more than 17 states, it 
     is widely recognized as one of the country's premier power 
     companies. Its principal subsidiary, Florida Power & Light 
     Company, serves approximately 4 million customer accounts in 
     Florida. FPL Energy, LLC, an FPL Group energy-generating 
     subsidiary, is a leader in producing electricity from clean 
     and renewable fuels. FPL FiberNet, LLC is a leading provider 
     of fiber-optic networks in Florida. Additional information is 
     available on the Internet at www.fplgroup.com, www.fpl.com, 
     www.fplenergy.com and www.fplfibernet.com.

 Mr. KYL. I close by advising my colleagues I would be pleased to have 
a vote by voice.
  The PRESIDING OFFICER. The Senator from New Mexico.
  Mr. BINGAMAN. I think we are ready to vote on amendment No. 3332.
  The PRESIDING OFFICER. The question is on agreeing to the amendment 
of the Senator from Arizona.
  The amendment (No. 3332) was rejected.
  Mr. REID. I move to reconsider the vote.
  Mr. BINGAMAN. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. BINGAMAN. I move to table the other Kyl amendment, numbered 3333, 
and I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second? There is a 
sufficient second.
  The yeas and nays were ordered.


                           Amendment No. 3370

  Mr. REID. Madam President, it is my understanding the next amendment 
in order by virtue of the unanimous consent agreement is Graham 
amendment No. 3370.
  The PRESIDING OFFICER. The Senator is correct.
  Mr. REID. I ask unanimous consent the 15 minutes granted on this 
amendment start running.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. REID. I suggest the absence of a quorum with the time counting 
against the Graham amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. REID. Madam President, I ask unanimous consent the order for the 
quorum call be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. REID. The Senator from Florida is on the floor. I ask unanimous 
consent the amendment now pending be temporarily laid aside for 
purposes of calling up this amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 3346

  Mr. REID. I call up amendment No. 3346.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Nevada [Mr. Reid], for Mr. Kohl, proposes 
     an amendment numbered 3346.

  Mr. REID. I ask unanimous consent the reading of the amendment be 
dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

  (Purpose: To modify the credit for the production of electricity to 
            include municipal biosolids and recycled sludge)

       In Division H, on page 17, between lines 8 and 9, insert 
     the following:

     SEC. ____. CREDIT FOR ELECTRICITY PRODUCED FROM MUNICIPAL 
                   BIOSOLIDS AND RECYCLED SLUDGE.

       (a) In General.--Section 45(c)(1) (defining qualified 
     energy resources), as amended by this Act, is amended by 
     striking ``and'' at the end of subparagraph (G), by striking 
     the period at the end of subparagraph (H), and by adding at 
     the end the following new subparagraphs:
       ``(I) municipal biosolids, and
       ``(J) recycled sludge.''.
       (b) Qualified Facilities.--Section 45(c)(3) (relating to 
     qualified facility), as amended by this Act, is amended by 
     adding at the end the following new subparagraphs:
       ``(H) Municipal biosolids facility.--In the case of a 
     facility using municipal biosolids to produce electricity, 
     the term `qualified facility' means any facility owned by the 
     taxpayer which is originally placed in service after December 
     31, 2001, and before January 1, 2007.
       ``(I) Recycled sludge facility.--
       ``(i) In general.--In the case of a facility using recycled 
     sludge to produce electricity, the term `qualified facility' 
     means any facility owned by the taxpayer which is originally 
     placed in service before January 1, 2007.
       ``(ii) Special rule.--In the case of a qualified facility 
     described in clause (i), the 10-year period referred to in 
     subsection (a) shall be treated as beginning no earlier than 
     the date of the enactment of this subparagraph.''.
       (c) Definitions.--Section 45(c), as amended by this Act, is 
     amended by redesignating paragraph (9) as paragraph (11) and 
     by inserting after paragraph (8) the following new 
     paragraphs:
       ``(9) Municipal biosolids.--The term `municipal biosolids' 
     means the residue or solids removed by a municipal wastewater 
     treatment facility.
       ``(10) Recycled sludge.--
       ``(A) In general.--The term `recycled sludge' means the 
     recycled residue byproduct created in the treatment of 
     commercial, industrial, municipal, or navigational 
     wastewater.
       ``(B) Recycled.--The term `recycled' means the processing 
     of residue into a marketable product, but does not include 
     incineration for the purpose of volume reduction.''.
       (d) Exemption From Credit Reduction.--The last sentence of 
     section 45(b)(3), as added by this Act, is amended by 
     inserting ``, (c)(3)(H), or (c)(3)(I)'' after 
     ``(c)(3)(B)(i)(II)''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to electricity sold after the date of the 
     enactment of this Act, in taxable years ending after such 
     date.


                           Amendment No. 3370

  The PRESIDING OFFICER. Who yields time?
  The Senator from Florida.
  Mr. GRAHAM. Madam President, what is the parliamentary situation at 
this time?
  The PRESIDING OFFICER. Amendment No. 3370 is the business before the 
Senate. The Senator's amendment is before the Senate.
  Mr. GRAHAM. Madam President, I would like to take up first amendment 
No. 3372.
  Mr. REID. Madam President, if I could reserve my right to object, the 
Senator has two amendments. We do not care which one he brings up, but 
he cannot bring up both.
  Mr. GRAHAM. I would like to bring up No. 3372.
  Mr. REID. I ask the unanimous consent agreement that is now standing 
be modified.
  The PRESIDING OFFICER. Is there objection?
  Mr. NICKLES. Madam President, parliamentary inquiry: Is that 
amendment germane postcloture?
  The PRESIDING OFFICER. No, it is not.
  Mr. NICKLES. Is the amendment out of order?
  The PRESIDING OFFICER. A point of order would lie at the appropriate 
time.
  Mr. NICKLES. Madam President, for the information of my colleague, I 
am happy for him to discuss it, but I will make a point of order at the 
appropriate time.

[[Page S3389]]

  Mr. GRAHAM. Madam President, I will object to the unanimous consent 
request by the Senator from Nevada, and we will proceed on the 
amendment that was the original subject of the unanimous consent.
  The PRESIDING OFFICER. Objection has been heard.
  The Senator from Florida.
  Mr. GRAHAM. Madam President, in February the Finance Committee 
reported out legislation which has become the tax provisions for the 
energy bill. This set of provisions includes a number of incentives 
provided to traditional energy production, conservation, and the use of 
alternative fuels.
  In reporting this set of proposals, the Finance Committee made the 
decision to defer the inclusion of an appropriate offset for the cost 
of these tax incentives until the bill was considered on the floor. We 
of course are now at that point.
  The committee did not make the decision that such an offset was 
unnecessary. In fact, the budget which was adopted by the Congress last 
year for the 1st session of the 107th Congress, as well as the one 
which is currently under consideration by the Senate Budget Committee, 
requires that this legislation be budget neutral.
  The amendment I had hoped to offer, and to which our friend and 
colleague from Oklahoma has just indicated his intent to offer a point 
of order that it was not germane, and therefore was not available, 
would have met that obligation. It would have said, simply, that before 
these tax provisions went into effect either through spending or 
through revenue from other sources, it would be our obligation to make 
this a budget-neutral program.
  I am personally very disappointed that we are proceeding with these 
tax provisions, which as of now have a 10-year cost estimate of 
approximately $13 billion, without any effort to offset.
  I strike the word ``any.'' We did, in fact, adopt a package of 
proposals earlier today which were stated to be a partial offset. But 
when you look at the cumulative number of those provisions, the total 
amount of additional revenue over 10 years would be $37 million, as 
against $13 billion of revenue loss in this program.

  The President of the United States outlined very clearly in his State 
of the Union Message that there were three priorities for this Nation, 
all of which have strong bipartisan support. These three priorities 
were what he said could be considered without the fiscal discipline 
requiring that there be a method of paying for these. Those three were: 
Winning the war on terrorism, defending our homeland, and reviving our 
economy.
  Congress has in fact followed the President's direction. In March we 
passed the Job Creation Worker Assistance Act, which included several 
tax incentives designed to stimulate the economy. That legislation was 
enacted without an offset. In a few weeks, Congress is likely to 
consider a supplemental appropriation to provide $37 billion for the 
war in Afghanistan, and that will be without an offset.
  But wherever we go outside these three areas of the war, homeland 
security, or stimulating the economy, the effect of not providing an 
offset is to ask our children and grandchildren, by the reduction in 
the Social Security trust fund, upon which their security in retirement 
depends, that trust fund now becomes the means by which we pay for our 
current appetite.
  Therefore, the amendment that is before us is an amendment which will 
strike one of the provisions in the tax measure. It is division H, 
relating to energy tax incentives, striking section 2308.
  Frankly, that is an arbitrary selection and a strike. In a world in 
which we were prepared to pay for these various energy tax measures, I 
might well be prepared to support them. But in a world in which we are 
saying it is not important enough for us to pay for these measures, we 
are going to ask the next generations to pay by reducing the security 
upon which their retirement depends. I think that is an immoral act. I 
believe it is another step on the slippery slope down the mountain from 
fiscal discipline which this Congress worked so hard over the last 
decade to achieve.
  We already have converted an almost $6 trillion projected 10-year 
surplus into a series of deficits. We have acted at a level of fiscal 
irresponsibility almost unknown in the history of this country. I wish 
we had been able to adopt the amendment that I wanted to offer, which 
would have said let's put aside all of these tax measures until we have 
developed--as a Finance Committee indicated it was the intention--a 
means of paying for them before they go into effect. That is not 
available.
  Therefore, I am taking a second option to propose that we strike this 
and other of the provisions that have gone into the bill so we will not 
be in the position of having to find an offset because we have made the 
decision that we are going to be fiscally responsible.
  I urge my colleagues to take this opportunity to say enough is 
enough. We are already committed to paying without offsets for the war, 
for homeland security, and for economic stimulation. But beyond those 
priorities, I think on a broad, bipartisan consensus we should ask is 
this issue important enough for us to do and important enough for our 
generation of Americans to pay for it.
  Mr. BINGAMAN. Mr. President, let me first say that the general 
sentiment that the Senator from Florida has expressed is one I agree 
with--which is that I am disappointed that we have not come up with a 
proposal to offset the cost of the various tax provisions in this bill. 
I hoped we could do that in the Finance Committee.
  I think that clearly would be the better course to follow, and 
perhaps, if we could get the support from the administration, we could 
move in that direction. But that has not been possible.
  I am constrained to oppose the amendment of the Senator from Florida.
  This amendment would simply pick out the tax provisions in the bill, 
and the particular provision that he finds objectionable, which is 
intended to maintain domestic production when world oil prices are 
lower. We have several provisions in the bill which are so-called 
countercyclical provisions, which basically say that when the oil price 
goes down below certain levels, there is a tax incentive for companies 
to stay in the business and not to shut down production in this 
country.
  This is one of several provisions intended to maintain reasonable 
cashflows to keep the service sector in the oil economy working. The 
provision would stimulate the economy and producing areas in our 
country.
  For that reason, I urge my colleagues to oppose the Graham amendment 
that has been presented to the Senate at this time.
  I yield the floor.
  Mr. NICKLES. Mr. President, I want to inform my friend from Florida 
that I will make a couple of comments and then move to table. But if he 
wishes to speak before the tabling motion, I would be happy to let him 
do so.
  Mr. GRAHAM. Mr. President, I was going to close on the amendment 
before we take up the tabling motion.
  The PRESIDING OFFICER. The Senator from Florida.
  Mr. GRAHAM. Mr. President, it had not been my intention to dwell on 
specifics of a particular tax measure because, as I indicated, if we 
had provided the offset for this, I would have voted for it.
  The issue for our colleagues and for the American people is that this 
provision would further deplete the Social Security trust fund. That is 
where it is coming from. This is not revenue eligible.
  As desirable as this may be, I do not believe it meets that test. It 
does not meet the President's test. It does not justify going into the 
Social Security trust fund.
  I share his position and urge that our colleagues use this as a line 
in the sand for fiscal discipline.
  Mr. NICKLES. Mr. President, my colleague and good friend is on the 
Finance Committee, as am I. We had an opportunity to offset it if we 
wanted to in committee. We didn't do it.
  I don't know why this particular amendment is picked out. But I think 
it is a mistake to try to strike this language. This language says you 
can't expense over 2 years' payments that are made to keep a lease 
ongoing. Sometimes a person or a company may have a lease to drill or 
to explore. For whatever reason, they can't initiate exploration. It 
may be because of political problems. Maybe they can't get a particular 
permit. Maybe the price has

[[Page S3390]]

dropped so low that it is not feasible. But they want to keep the lease 
open. So they make payments.
  Under the provision in the bill, we say those payments are expensed 
over 2 years. Frankly, they should be expensed in the year made.
  I might note we passed countless amendments that said let us give a 
tax credit for this. We will reduce taxes substantially; in other 
words, have the taxpayers subsidize it. In this case, we are not 
looking for subsidies. If somebody writes a check, we are asking that 
they be able to expense that check.
  Frankly, the provision in the Senate bill is over 2 years. It should 
be 1 year. When you write the check ``for lease payment,'' you could 
have an example where somebody has a lease to drill someplace, and a 
political obstruction has arisen--maybe State, maybe Federal, maybe 
whatever--and they are not able to commence exploration. But if they 
don't make payments, they would lose the lease. They should be able to 
expense those payments in the year made.
  The bill before us says they should be able to expense it in 2 years. 
That is more than defensible.
  I urge my colleagues to vote in favor of the motion to table the 
Graham amendment.
  I move to table the Graham amendment, and I ask for the yeas and 
nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.

                          ____________________