[Congressional Record Volume 151, Number 85 (Thursday, June 23, 2005)]
[Senate]
[Pages S7267-S7284]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              ELECTRIC TRANSMISSION PROPERTY DEPRECIATION

  Mr. THOMAS. Mr. President, I would like to speak about an amendment I 
filed to the tax title of this bill on electric transmission property 
depreciation and engage Mr. Grassley in a colloquy on this important 
issue if I may.
  I did not push this issue to a vote during the committee markup, and 
I don't intend to do so on the floor either since I understand the 
provision is included in the House version of the bill and enjoys broad 
support in both the House and the Senate.
  That said, I felt it was important to underscore the importance of 
energy infrastructure in the United States. It is completely irrelevant 
how much we have in the area of energy-producing resources if we can't 
transport that energy to where it's needed.
  And electric transmission capacity is a prime example.
  There are a number of barriers to building additional transmission 
capacity, among them being stringent regulations at the federal, state, 
and local levels; NIMBY-ism, in other words, those who want it, but not 
in their backyard; and high capital cost.
  My amendment--which would have incorporated my bill, S. 815, into the 
tax title--addresses the substantial investment required to build 
additional capacity.
  I thank Senators Snowe, Bingaman, Bunning, and Smith for cosponsoring 
both the bill and the amendment.
  The provision would shorten the depreciation life of electric 
transmission property from the current 20 years to 15 years, thereby 
substantially reducing the cost.
  I understand Chairman Grassley's hesitancy to include provisions in 
the Senate package that are already covered in the House bill. However, 
I am asking for the Chairman's commitment to ensure this important 
provision is included in a final energy package.
  Mr. GRASSLEY. I agree that energy infrastructure, particularly 
electric transmission capacity, is a critical component of our domestic 
energy policy, and I am committed to helping you ensure that it is 
included in the final energy bill.


               Sec. 261, Hydroelectric Relicensing Reform

  Ms. CANTWELL. Mr. President, Section 261 of the underlying bill 
contains provisions designed to reform the hydroelectric relicensing 
process. These provisions are the result of a hard-won compromise, and 
I thank the chairman and ranking member, along with Senators Craig, 
Smith and Feinstein for their leadership on this issue. In particular, 
these provisions significantly differ from previous House- and Senate-
passed versions, as they will allow States, tribes and the public to 
propose alternative licensing conditions, and will further allow these 
entities to trigger the trial-type hearing process outlined in this 
section. I believe these public participation provisions are key 
improvements in this legislation. I would also like to more fully 
explore the process by which alternative conditions proposed by these 
stakeholders should be considered.
  Before an alternative condition or prescription to a license may be 
approved, the Secretary must concur with the judgment of the license 
applicant that it will either cost significantly less to implement, or 
result in improved operation of the hydro project for electricity 
production--at the same time it provides for adequate protection of the 
resource--or in the case of fishway prescriptions, will be no less 
protective than the fishway initially proposed by the Secretary. This 
provision does not provide the license applicant a so-called veto power 
over proposed alternatives, because this judgment requires the 
Secretary's concurrence. In addition, it is the Senate's intent that 
these judgments be supported by substantial evidence as required by 
Section 313 of the Federal Power Act. I would like to ask the senior 
Senator from New Mexico the following question: If the Secretary 
determines that a license applicant's judgment has been based on 
inaccurate data and thus fails to meet the test of being supported by 
substantial evidence, can the Secretary withhold his or her 
concurrence?
  Mr. Domenici. The Senator from Washington is correct in expressing 
our intent that the license applicant's judgment be supported by 
substantial evidence. It is not our intent to provide an incentive for 
applicants to provide poor data in order to prompt the rejection of a 
condition by other stakeholders. If the Secretary of a resource agency 
determines that the evidence provided by the license applicant is of 
insufficient quality and therefore does not meet the substantial 
evidence test, the Secretary should not concur with the license 
applicant's judgment in the matter.
  Mr. SALAZAR. Mr. President, I am pleased join with the distinguished 
majority leader in support of H.R. 6.
  I am particularly pleased with the bill's support for integrated coal 
gasification, IGCC, technology development and deployment into 
commercial use. Our Nation needs a comprehensive energy policy which 
promotes new, cleaner, and more advanced generation technologies.
  I have been increasingly concerned with the challenges associated 
with developing IGCC technology for burning Western coal. Western coal 
is a valuable resource and crucial to our economy; however, both cost 
and technological difficulties have prevented development of IGCC in 
the West. That is why I support a provision for a Western IGCC 
Demonstration Project, Section 407. This project would allow for 
development of an IGCC technology designed to use Western coal and in a 
cost-effective manner.
  I have also been increasingly concerned with the need to address 
climate change. The promise of IGCC technology's ability to reduce 
carbon dioxide emissions should be realized as soon as possible. That 
is why the Western IGCC demonstration project shall include a carbon 
technology component.
  I wish to also take this opportunity to clarify an important point. 
There have been media reports expressing concern that the Western IGCC 
demonstration project is special legislation designed to benefit a 
single company building a new project in Wyoming. I can assure you that 
neither this provision, nor any other provision I have sponsored, is 
designed to benefit any specific project or any specific company. My 
sincere objective is simply to provide for the development of an IGCC

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demonstration project in the West, using Western coal, regardless of 
who owns or develops it.
  This provision is designed to provide incentives to an IGCC project 
using Western coal at high altitudes. I have heard from many 
stakeholders, the utility industry, environmental groups and energy 
consumers, regarding the potential environmental and energy benefits of 
this new technoloy. However, I have also heard that IGCC has been 
applied primarily in the East. It is not yet demonstrated to be viable 
and cost-effective in the high altitude West using the low-rank coals 
mined in Western States. This provision would allow the region to prove 
the viability of this important technology, assess carbon capture and 
sequestration opportunities, and, I hope, lead to its successful 
deployment in my region of the country.
  The purpose of the Western coal demonstration project will be to show 
that coal gasification works for the different kinds of coals mined in 
the West. This includes the lower energy coals like those mined in 
Wyoming's Powder River Basin, and it includes higher energy coals like 
those found in Colorado. These coals vary by energy content, and in 
other ways such as moisture and sulfur content. My colleague from 
Wyoming and I want to ensure that the demonstration project will show 
the feasibility of gasification for the entire range of Western coals. 
In that way, hurdles to gasification can be removed and our Nation can 
move forward into a cleaner energy future, and one that recognizes the 
importance of our abundance of coal resources.
  I want to close with a special tribute to Senator Thomas for his 
diligence in this effort. We are both Western Senators and we share a 
concern that the Western United States should benefit from IGCC 
technology as much as the Eastern United States. I want to thank him 
for his initiative and support for this provision.
  Mr. DOMENICI. I thank Senator Salazar for his support for H.R. 6 and 
share his interest in developing a sound and forward-looking energy 
policy for our Nation. I understand his concern that the West enjoy 
clean energy generation. I look forward to working with him to move 
H.R. 6 as quickly as possible.


                        Innovative Technologies

  Mr. CONRAD. Mr. President, I would like to engage the distinguished 
manager of the bill in a brief colloquy. I understand that title XIV of 
the bill before us includes incentives for ``innovative technologies,'' 
including gasification projects that will allow us to use our vast 
domestic coal reserves to produce clean transportation fuels.
  Mr. DOMENICI. The Senator is correct.
  Mr. CONRAD. I thank the distinguished Senator from New Mexico for 
accepting clarifying language that will allow additional coal-to-fuel 
facilities to qualify for the loan guarantees included in title XIV of 
the Energy bill.
  As a result of these changes, the incentives included in section 
1403, which include loan guarantees, would apply to the development of 
projects that will utilize various gasification technologies to produce 
clean transportation fuels from any of our coal types, including 
bituminus, sub-bituminous, and lignite coals.
  Mr. DOMENICI. The Senator is correct.
  Mr. CONRAD. Again, I thank the distinguished chairman of the Energy 
Committee for working with me to ensure that facilities in my State 
will be eligible for these incentives for coal-to-liquids technologies. 
It is my hope that North Dakota's coal resources will play an important 
role in reducing our dependence on foreign oil, allowing us to create 
jobs here at home and clean our environment.


                          Governor's Authority

  Mr. VITTER. Mr. President, I would like to discuss a Governor's 
authority to approve the issuance of a license for an offshore LNG 
facility.
  Mr. DOMENICI. I understand that intend to emphasize the current role 
of a Governor in the licensing of offshore LNG facilities pursuant to 
the Deepwater Port Act.
  Mr. VITTER. The Senator is correct. In Louisiana, there has been a 
tremendous amount of controversy involving the licensing of offshore 
LNG terminals recently related mainly to a technology for reheating the 
gas called open rack vaporization. My amendment is designed to 
emphasize the Governor's current authority under the Deepwater Port 
Act. Under current law the Deepwater Port Act allows the Governor of a 
state to approve--or be presumed to approve--the issuance of a license 
for an offshore LNG facility.
  Mr. DOMENICI. The Senator saying that a Governor currently has a 
clear opportunity to disapprove that a license be issued for any 
offshore LNG terminal?
  Mr. VITTER. That is correct. So, no changes to existing law are 
necessary in order for the Governor to approve or disapprove issuance 
of a license for offshore LNG facilities.
  Mr. DOMENICI. How many times has a Governor used this authority to 
approve or disapprove that a license be issued?
  Mr. VITTER. A Governor has never attempted to use this authority. In 
the case of Louisiana, we have two licensed offshore LNG facilities and 
the Governor of Louisiana approved both of these facilities.
  Louisiana has lost thousands of jobs due to the high costs of energy. 
The underlying bill does much to address this challenge and LNG will 
play an important role in addressing the increasing demand for natural 
gas.
  I thank the Senator from New Mexico for clarifying the Governor's 
authority to approve or disapprove an offshore LNG facility.


        blm policy on oil and gas development in potash reserve

  Mr. CORNYN. Mr. Chairman, I rise to speak to an amendment I have 
filed to address the Bureau of Land Management's policy toward 
development of much needed oil and gas resources in the potash reserve. 
Notwithstanding the strong bipartisan consensus that the U.S. must 
expeditiously develop its readily available domestic oil and gas 
resources, for decades the Bureau of Land Management has restricted 
development of large volumes of oil and gas located in the Known Potash 
Leasing Area near Carlsbad, NM. BLM has authority to permit compatible 
oil and gas development in conjunction with potash mining in the area, 
but the agency has failed to do so due to asserted concerns with 
adverse impact on potash mining reserves and mine safety. For a long 
time the oil and gas industry has had the technical ability to drill in 
the potash region without creating any such threat to these potash 
mining interests. Concerns with BLM's administration of the Interior 
Secretary's October 1986 order have been raised with Congress over many 
years. However, given the Nation's continuing economic stress due to 
the oil and gas price and supply situation, and the policy imperative 
underlying the current energy bill debate to facilitate resource 
development on Federal lands where Federal rules or policies have 
unnecessarily inhibited such activity, the time has come to 
expeditiously resolve the administrative problems that have impeded 
reasonable oil and gas development in the Nation's potash reserve.
  The BLM has denied approximately 190 applications for drilling 
permits and applicants strongly believe that their permits have been 
denied without appropriate consideration of their technical ability to 
develop oil and gas in the potash area while not creating any safety 
risks to potash mining or jeopardizing economically recoverable potash 
reserves.
  My amendment would address this disadvantage for oil and gas drilling 
permits in the potash area, insuring that BLM allows drilling 
compatibly with the interest in maintaining potash reserves and mining 
in the area. Specifically, my amendment would still allow BLM to deny 
permits out of concern for adverse impact on potash mining, but only if 
the agency could specify with particularity the reasons why approval of 
the oil and gas permit would jeopardize potash mining safety or 
threaten recoverable potash reserves the value of which exceeded the 
value of the recoverable oil and gas associated with the relevant 
permit.
  I understand that the chairman is well aware of the protracted 
history of this problem and has directed his staff to investigate the 
situation with BLM. Indeed, this week my staff attended a meeting with 
the BLM State director and the Chairman's staff to discuss this issue.

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  I certainly could offer the amendment for a vote at this time, but 
may I first inquire of the chairman whether he shares my concern with 
the BLM policy regarding the amount of oil and gas drilling being 
permitted in the potash region?
  Mr. DOMENICI. This has been an evolving problem for some time now and 
I share the Senator's concern about whether the proper balance is being 
struck. Particularly in light of available technologies, I believe that 
there should be a way to produce oil and gas in the potash area without 
interfering with the recovery of the potash resource. My desire is to 
see both a vibrant potash industry and a vibrant oil and gas industry 
in the region, with both generating strong economic activity and 
employment.
  Mr. CORNYN. I share the Chairman's views and would furthr inquire 
whether the chairman would be willing to work with me through the 
course of the conference on the energy bill to assure that this problem 
with BLM policy is properly addressed?
  Mr. DOMENICI. I would tell the Senator that I would be pleased to 
give him that commitment.
  Mr. CORNYN. I thank the Chairman.
  Ms. CANTWELL. Mr. President, I wish to clarify for my colleagues the 
intent of section 1270 of the underlying Energy bill, which is a 
provision of extreme importance to my Washington State constituents. 
Ratepayers in my State were harmed by the Western energy crisis and the 
manipulation and fraudulent practices of Enron in wholesale electricity 
markets. A number of proceedings remain underway at the Federal Energy 
Regulatory Commission, which will determine the relief granted to 
consumers harmed by Enron's unlawful trading practices. An important 
issue that remains is whether utilities--such as Washington State's 
Snohomish County Public Utility District--should be forced to make 
termination payments to Enron, for power Enron never delivered in the 
midst of its scandalous collapse into bankruptcy.
  The intent of section 1270 of the underlying bill and the technical 
correction we have adopted today is simply to affirm that the Federal 
Energy Regulatory Commission has exclusive jurisdiction under sections 
205 and 206 of the Federal Power Act to determine whether these 
termination payments should be required. This provision expresses 
Congress's belief that the issues surrounding the potential requirement 
to make termination payments associated with wholesale power contracts 
are inseparable and inextricably linked to the commission's 
jurisdictional responsibilities.
  Mr. CRAIG. I would like to inquire of the Senator from Washington, 
does section 1270 predetermine or in any way prejudice the manner in 
which FERC employs its jurisdiction in matters currently pending before 
the Commission?
  Ms. CANTWELL. This provision in no way prejudices or predetermines 
FERC's decisions in those matters. During the Senate Energy Committee's 
work on this legislation, the supporters of this amendment and I 
initially considered offering an amendment that would have gone further 
to require a certain outcome, had the commission made certain findings. 
We chose not to pursue that amendment in response to concerns that were 
raised by colleagues. Section 1270 of this legislation is completely 
neutral regarding how the commission uses its authority under sections 
205 and 206 of the Federal Power Act. As such, the provision does not 
in any way implicate what is known as the Mobile-Sierra doctrine, 
related to which standard FERC should apply to its review of 
jurisdictional wholesale power contracts.
  Mr. CRAIG. How does the technical amendment adopted today further 
clarify the committee and Congress's intent in regard to section 1270 
of the underlying legislation?
  Ms. CANTWELL. The clarifications to section 1270 effectuated by the 
amendment accepted today are consistent with the committee's intent in 
adopting section 1270. In addition, they are completely consistent with 
Supreme Court precedent.
  The committee sought assurances that section 1270 would not disturb 
underlying legal doctrines such as the Mobile-Sierra doctrine or the 
separation of powers principles. The amendment provides further clarity 
that section 1270 is not intended to otherwise disturb or modify the 
Mobile-Sierra doctrine by adding the phrase ``or contrary to the public 
interest.'' This phrase, when coupled with the standard recital of 
FERC's exclusive authority to determine whether a charge is just and 
reasonable, makes it clear that Congress is making no pronouncements 
regarding the manner in which FERC exercises its authority, but rather 
only that it is the appropriate forum to resolve these issues. Congress 
is giving no guidance to FERC on Mobile-Sierra one way or another 
through this provision.
  The committee's overarching intent with respect to section 1270 was 
to ensure that the Federal Energy Regulatory Commission, and not the 
bankruptcy court involved in the Enron matter, decides all of the 
issues surrounding whether termination payments are lawful. The 
addition of the phrase ``rate schedules and contracts entered 
thereunder'' ensures that result.
  In addition, this clarification is completely consistent with Supreme 
Court decisions permitting Congress to give a Federal agency the 
authority to resolve matters that are also normally addressed by our 
judicial branch of government. As the Supreme Court stated in a case 
entitled Commodity Futures Trading Commission v. Schor, 478 U.S. 833, 
854 (1986),

       ``looking beyond form to the substance of what Congress has 
     done'', we are persuaded that the congressional authorization 
     of limited CFTC jurisdiction over a narrow class of common 
     law claims as an incident to the CFTC's primary, and 
     unchallenged, adjudicative function does not create a 
     substantial threat to the separation of powers. Thomas v. 
     Union Carbide Agricultural Products Co., 473 U.S. 568, 589 
     (1985).

  Similarly, in this instance, the grant of authority to FERC to decide 
this matter is exceedingly narrow insofar as it relates solely to the 
legality of Enron collecting additional profits in the form of 
termination payments for power not delivered. Clearly, it is directly 
related to the agency's core function to ensure just and reasonable 
rates and guard against market manipulation. Moreover, these are public 
rights that are at stake in this dispute--the rights of electric 
ratepayers across the country to just and reasonable rates, rights that 
have existed under federal statute since 1935--and not mere private 
rights that should be resolved by a non-article III bankruptcy 
tribunal. Accordingly, the clarification provided by the amendment is 
completely consistent with Supreme Court precedent on the separation of 
powers principle.
  Mr CARPER. Mr. President, I would like to take a moment to discuss 
with my friend, the Senator from Montana, a tax incentive which I 
believe is very important to our efforts to reduce fuel consumption in 
America. As you know, Senator Baucus is the ranking Democrat on the 
Senate Finance Committee and has a great understanding of our nation's 
tax policy, as well as a great institutional memory of tax legislation 
through the years. Senator Baucus and Senator Grassley, the chairman of 
the Finance Committee, provide us with advice and counsel concerning 
tax policy and do a superb job in that role.
  The specific incentive I would like to discuss with my friend from 
Montana is a provision included in the House energy bill to encourage 
the use of clean diesel passenger vehicles. It is called the ``diesel 
advanced lean-burn'' tax credit, and it would give consumers a credit 
on their income taxes when they purchase a clean diesel vehicle meeting 
stated fuel efficiency and environmental requirements. I am very 
supportive of this provision and want to encourage my colleagues to 
consider it when the Senate energy bill is conferenced with the House 
bill.
  Why is that? Why do I think this provision is so important to our 
energy policy? For these reasons.
  Diesel fuel contains more energy than gasoline, resulting in fuel 
economy increases of more than 40 percent compared to equivalent gas 
powered autos.
  In fact, the Department of Energy estimates that 30 percent diesel 
penetration in the U.S. passenger vehicle market by 2020 would reduce 
net crude oil imports by 350,000 barrels per day.
  So why aren't diesel vehicles more common on U.S. highways? Because 
until recently, they have been considered significantly dirtier in 
terms of air pollution. But the technology has

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changed. Today, you will have a difficult time telling a new diesel car 
from its gasoline counterpart. New diesels are clean, quiet, and 
powerful. And they will get even cleaner with the introduction of low 
sulfur diesel fuel in the United States late next year as the result of 
new regulations.
  Diesel engines have become increasingly popular in Europe over the 
last 20 years to the extent that market penetration now exceeds 40 
percent. The situation is very different in the U.S. where diesel 
accounts for only 1 percent of light vehicles.
  Clean diesel engines provide the perfect platform for the use of 
BioDiesel which comes from products grown here at home by American 
farmers. The more diesel engines on the road, the greater demand for 
this renewable product, and the less petroleum imports from overseas to 
meet our fuel needs.
  We now have the opportunity to take advantage of the advances in 
clean diesel technology and to do what we can to get more of these fuel 
efficient vehicles on the road.
  In the 2003 Energy Bill there was a tax incentive for ``new advanced 
lean burn motor vehicles,'' and the House recently passed an Energy 
Bill containing essentially the same provision.
  So with that background, I wanted to ask my friend from Montana 
whether it is correct that high efficiency diesel vehicles would be 
considered ``lean burning'' vehicles?
  Mr. BAUCUS. First, let me compliment my friend for his thoughtful 
discussion of this issue. The Senator from Delaware has obviously done 
a fair amount of homework on automotive technology, and I appreciate 
his insights on the benefits of clean diesel technology. Let me also 
congratulate the Senator on his work with Senator Voinovich and others 
on the recently introduced legislation to clean up heavy-duty diesel 
engines through retrofitting. We adopted that measure as an amendment 
to the energy bill earlier this week, and I think it is an important 
addition, so I thank the Senator for his work in that regard.
  Now, to respond to the Senator's question concerning the diesel lean-
burn provision from the House bill. Under the House provision, the tax 
credit would be available for the purchase of diesel vehicles meeting 
certain fuel efficiency and emissions standards. As long as a vehicle 
met those standards, it would be considered a ``lean burning'' vehicle 
and thereby merit the tax credit to the purchaser.
  Mr. CARPER. The 2003 conference legislation contained incentives for 
lean-burn diesel vehicles. Is it fair to say that you are interested in 
this technology and in promoting cleaner diesel cars in the U.S.?
  Mr. BAUCUS. I agree with my colleague that lean-burn diesel is 
promising technology. We did include the diesel lean-burn credit in the 
energy conference measure in 2003. As you know, in the Senate bill, we 
have included similar incentives for the purchase of other energy-
efficient vehicles--hybrids, alternative fuel vehicles and fuel cell 
vehicles. We often start out with different positions than our House 
counterparts, and typically we merge together the best pieces of each 
bill in conference. I think any new technology warrants serious 
consideration if it can help make U.S. vehicles more fuel efficient and 
lessen our dependence on foreign oil.
  Mr. CARPER. And is it your thought that the Senate conferees should 
carefully consider the tax incentives provided in the House version of 
the bill for these types of vehicles?
  Mr. BAUCUS. I believe we should, and I believe we will. I am 
confident that the clean diesel credit will get very careful 
consideration by the Senate conferees.
  Mr. CARPER. I thank my friend for taking a moment to discuss this 
matter with me, and I would encourage my colleagues who will be 
negotiating the tax provisions of the Energy Bill with the House of 
Representatives to do just that--to carefully consider the benefits 
that new clean diesel vehicles have to offer. I think the benefits are 
substantial, that diesel passenger vehicles are already very clean and 
will get even cleaner next year when low sulfur fuel becomes available, 
and that a transition toward this technology will pay big dividends for 
the country over the next few years. This is something we can do which 
will have an almost immediate positive effect, and I encourage my 
colleagues to consider this incentive positively.
  Ms. CANTWELL. Mr. President, I rise to speak to a particular section 
of the comprehensive energy bill (S. 10) that we have been discussing 
for the past 2 weeks. My comments focus specifically on section 1270 of 
this legislation.
  Section 1270 was an amendment I offered in the Energy & Natural 
Resources Committee mark-up of this legislation. It was accepted after 
considerable debate and discussion, on a bipartisan voice vote. Since 
then, I have continued to work with my colleagues on the Energy 
Committee, to further clarify and perfect this language. In fact, I was 
pleased to work with my colleague from Idaho, Senator Craig, on a 
technical amendment to this language, amendment No. 895, to refine it 
even further.
  This provision, entitled ``Relief for Extraordinary Violations,'' is 
extremely important to the consumers of Washington State and ratepayers 
in other parts of the West, who bore tremendous costs as a result of 
Enron's schemes to manipulate our wholesale electricity markets. The 
principle at the heart of this provision is simple. The consumers of 
Washington State must not be forced to become the deep-pockets for 
Enron's bankruptcy. The same ratepayers who have paid so dearly for the 
Western energy crisis and Enron's schemes to manipulate markets should 
not be forced to pay even more--four years later--for power that Enron 
never even delivered.
  I must thank my colleagues on the Energy Committee for their 
thoughtful consideration of this issue, particularly my colleagues from 
the Pacific Northwest and West as a whole who have seen first-hand the 
toll the crisis has taken on our economy and our constituents. I must 
also express my gratitude to the rest of the members of the committee, 
and to the chairman and ranking member for indulging what was a very 
thoughtful debate on this issue.
  At the conclusion of the committee debate, this Senator was extremely 
satisfied; first, because of the very nature of the debate itself, in 
which--for almost an entire hour--a bipartisan group of Senators 
focused their valuable time and attention on a situation that is highly 
complicated, and likely unprecedented in the history and application of 
our Nation's energy laws. And second, because, at the end of the day, 
the committee struck a blow for justice and for Western consumers. It 
was an important statement. This is not the kind of country where we 
should reward Enron for its criminal conspiracy to commit fraud; a 
fraud of historic proportions perpetrated against the consumers of the 
West.
  As my colleagues appreciate by now, my State was particularly ravaged 
by the western energy crisis of 2000-2001. One of my State's public 
utility districts, Public Utility District No. 1 of Snohomish County, 
had a long-term contract with Enron, to purchase power. The contract 
was terminated once Enron began its scandalous collapse into 
bankruptcy. Nonetheless, Enron has asserted before the bankruptcy court 
the right to collect all of the profits it would have made under the 
contract through so-called ``termination payments.'' Enron has made 
this claim even though Enron never delivered the power under the 
contract, even though Enron had obtained its authority to sell power 
fraudulently, and even though Enron was in gross violation of its legal 
authority to sell power at the very time the contract was entered into. 
This has been demonstrated by the criminal guilty pleas of the senior 
managers of Enron's Western power trading operation, in which it has 
been admitted that Enron was engaged in a massive criminal conspiracy 
to rig electric markets and rip off electric ratepayers. But it has 
been further illustrated by the now-infamous Enron tapes, in which 
Enron employees discuss many unsavory topics, including specifically 
how they were ``weaving lies together'' in their negotiations related 
to the contract with Snohomish.

  I will tell my colleagues that there is no way under the sun that I 
believe my constituents owe Enron another penny. Not one single penny 
more. What this amendment does is ensure that, when the Federal Energy 
Regulatory Commission FERC comes to a conclusion

[[Page S7271]]

later this year about how to cleanup the Enron mess, that the 
bankruptcy court cannot overturn FERC's decision about whether these 
``termination payments'' are just, reasonable or in the public 
interest. It says to FERC, ``do your job to protect consumers, and when 
you make a decision, that decision will stand.'' Interpreting our 
nation's energy consumer protection laws is not the job of a bankruptcy 
judge.
  Now, this Senator has a very strong opinion on this matter in 
general. I believe there is no way no stretch of the imagination, or 
interpretation of law in which these termination payments could be 
deemed just, reasonable or in the public interest, knowing everything 
we know today about what Enron did to the consumers of my state. In 
fact, during committee debate on the underlying provision in this bill, 
some of my colleagues suggested that we should just out-right abrogate 
these contracts; simply declare them null and void on their face. But 
what we recognized, relying on the legal expertise of the committee 
staff, is that an act like that--as tempting as it may seem--would pose 
certain constitutional issues. We recognized that this provision 
section 1270--is the best way for Congress to express its will in this 
matter.
  I have, as my colleagues know, had substantial differences with FERC 
over the course of the past few years. But I am glad to say today, 
after 4 long years, it appears that the commission may be on the right 
track on this issue. This March, FERC issued a ruling in which the 
commission definitely found that the termination payments at issue here 
``are based on profits Enron projected to receive under its long-term 
wholesale power contracts executed during the period when Enron was in 
violation of conditions of its market-based rate authority.'' For the 
first time, FERC found that Enron was in violation of its market-based 
rate authority at the time victimized utilities such as Washington's 
Snohomish PUD inked power sales contract with the now-bankrupt energy 
giant. That FERC process is on-track to wrap-up this year; but so long 
as that process is ongoing, utilities like Snohomish have been 
operating under the threat that the bankruptcy court would swoop in and 
demand payments for Enron, regardless of the pattern of market 
manipulation and fraud. In a series of rulings, the bankruptcy court 
has expressed its will to do just that. What this provision does is 
ensure the bankruptcy court cannot force these utilities and their 
consumers to make termination payments that are unjust, unreasonable or 
contrary to the public interest.
  Section 1270 states that notwithstanding any other provision of law, 
and specifically the bankruptcy code, FERC ``shall have exclusive 
jurisdiction'' to make these determinations. Many of my colleagues 
might naturally assume that this provision merely sets forth what is 
already the case. But as I stated earlier, that is not necessarily the 
case. This provision is necessary and critical because the Federal 
bankruptcy court has already concluded that it will not defer to FERC 
with respect to whether our constituents will be required to make 
termination payments. Not only has the bankruptcy court not deferred to 
FERC, it compounded the seriousness of the issue by enjoining FERC from 
proceeding with its own specific inquiry into whether Enron is owed the 
termination payments. It forced FERC to stop on a matter that FERC had 
said required its special expertise.

  Imagine making it through the arduous and frustrating, years-long 
process of proving the case against Enron and proving it to FERC, only 
to find out at the end of the day that the bankruptcy court would 
intervene and force these termination payments anyway. It is this 
situation--a collision between FERC and the bankruputcy court that this 
legislation addresses. And what the Congress is saying with this 
amendment, as counsel for the Energy Committee stated during our 
extended discussion, is that ``the Commission, not the bankruptcy 
[court], is the proper forum in which these question be resolved.'' 
That is certainly my view, and the view of many of us who represent 
ratepayers harmed by Enron.
  I do not assume this position in denigration of the responsibility of 
the bankruptcy court. The bankruptcy court has an important role to 
play in our law and our economic community. However, I do think it is 
fair to say that it is a forum in which it naturally looks first to 
maximizing the assets of the estate. In contrast, the Federal Energy 
Regulatory Commission's first obligation is to protect our nation's 
ratepayers. In this very unique context, in which a seller of 
electricity that has fraudulently and criminally manipulated the market 
in violation of the tariffs on file with the commission--and where the 
seller is now seeking to reap the profits from that activity in the 
form of termination payments for power never delivered--what we are 
saying here, unequivocally, is that FERC is the forum in which this 
should be resolved. FERC is the entity that is supposed to look after 
our nation's ratepayers, and should have make the decision about 
whether termination payments are permissible under the Federal Power 
Act..
  Given the nuanced, legal nature of this provision, I can assure my 
colleagues that this ``rifle shot,'' as the ranking minority member of 
the committee called it, is narrowly drawn in order to minimize any 
unanticipated impacts. It is only applicable to contracts entered into 
during the electricity crisis with sellers of electricity that 
manipulated the market to such an extent that they brought about unjust 
and unreasonable rates. There is only one such seller, and that is 
Enron, and there are only a handful of terminated contracts with Enron 
that haven't been resolved as of this date.
  As a result, the amendment does not tamper with or otherwise disturb 
long-standing legal precedents. It does not tamper with the Mobile-
Sierra doctrine, nor does it disturb other recent federal court 
decisions regarding the relationship of the bankruptcy courts and FERC 
in the context of the rejection in bankruptcy of FERC approved power 
sales contracts. It is, as the ranking minority member of the committee 
observed, a ``clean shot'' that ``affirms that FERC is the entity with 
the authority to review whether termination payments associated with 
cancelled Enron power contracts are lawful under the Federal Power 
Act.''
  The ultimate disposition of this issue is of paramount concern to my 
constituents. It will decide whether they will be on the hook for more 
than $120 million, an amount that means more than $400 in the pocket of 
each ratepayer in Snohomish County, WA. It is critical that this issue 
be decided by the forum with the specialized expertise in matters 
relating to the sale of electricity with a stated mission of protecting 
ratepayers, and that is the Federal Energy Regulatory Commission.
  Let me conclude by saying that I am very pleased that this provision 
has broad bipartisan support as well as the support of the Edison 
Electric Institute, the National Rural Electric Co-operative 
Association and the American Public Power Association. I believe my 
colleague from Oregon, Senator Smith, said it exactly right when this 
amendment was debated in committee, and I am extremely grateful for his 
support. He essentially said that no Senator Republican or Democrat 
should feel any limitation in ``lending their shoulder to this wheel,'' 
to get this situation fixed. Senator Smith, Senator Allen, and Senator 
Craig all played important roles during the mark-up in allowing this 
measure to move forward.
  And I would be remiss if I did not mention the invaluable assistance 
from the Senators from Nevada on this issue the minority leader, 
Senator Reid, but also Senator Ensign. While Senator Ensign does not 
serve on the Energy Committee, he played a crucial role in ensuring 
that colleagues on both sides of the aisle understood the importance 
and reasonableness of this measure, and the importance of this 
provision to him and to the people of Nevada.
  I thank my colleagues, look forward to the passage of this provision 
out of the Senate and to working together to ensure this critical 
measure is included in legislation that emerges from the Energy bill 
conference with the House of Representatives.
  Mrs. MURRAY. Mr. President, I would like to express my support for a 
provision in this energy legislation that provides relief for 
Washington State ratepayers who suffered from Enron's market 
manipulation schemes.

[[Page S7272]]

  All of us from the West Coast remember the energy crisis of 2001, 
when consumers and businesses were hit with massive increases in the 
cost of energy. Many in California faced shortages and brownouts. In 
Washington State, we felt the impact as well.
  Washington State ratepayers have been continually penalized for 
failures in the energy market and failures by Federal energy 
regulators. While there were many causes for the energy crisis, the 
most disturbing is the fact that energy companies, such as Enron, 
manipulated the marketplace to take advantage of consumers.
  As we saw throughout the crisis, the Federal Energy Regulatory 
Commission did not take aggressive action to protect consumers from 
market manipulation. In fact, over the last several years, as we in the 
West have sought to clean up the mess that these companies left in 
their wake, FERC has continued to drag its regulatory feet.
  For more than 3 years, many of us in the Northwest delegation have 
been urging FERC to better protect consumers, and provide relief to 
ratepayers affected by market manipulation. At the height of the 2001 
energy crisis, FERC was urging companies to enter into long-term 
contracts at highly-inflated rates, advice which many Northwest 
companies followed.
  In 2003, FERC found that market manipulation occurred during the 2001 
energy crisis, but indicated it would be unlikely that Washington State 
ratepayers would be reimbursed for the harm caused by the manipulation. 
When Western utilities--including Snohomish PUD, which was hit 
particularly hard--terminated their contracts with Enron, Enron turned 
around and sued them for ``termination payments.''
  It was very disturbing for all of us to see FERC agree that there was 
manipulation, but leave Washington ratepayers holding the bag--with no 
relief--for the harm they experienced in 2001 and continue to 
experience today.
  I am pleased that this energy legislation addresses this important 
issue by giving FERC exclusive jurisdiction to determine whether 
termination payments are required under certain power contracts are 
unjust and unreasonable.
  This is wonderful news for Washington State ratepayers because of a 
March 2005 order, in which FERC found Enron in violation of its market-
based authority at the time Snohomish PUD signed its power contract. 
This provision ensures Snohomish PUD's ratepayers will not be required 
to pay the now-bankrupt Enron for power the region did not receive.
  Mr. President, I support this provision as it will protect Northwest 
ratepayers and give FERC more tools to better police the energy market.
  Mr. ENSIGN. Mr. President, I rise to thank my colleagues for 
including a provision in this bill which give the people of Nevada a 
fair chance to keep their hard earned money away from the clutches of 
Enron.
  Enron is still seeking to extract an additional $326 million in 
profits from my State's utilities for power that was never delivered. 
Enron, after all of its market manipulation and financial fraud, is 
still trying to profit from its wrong-doing at the expense of each and 
every Nevadan.
  Section 1270 of the Energy Policy Act ensures that the proper 
government agency will determine whether Enron is entitled to more 
money from Nevada. That agency is the Federal Energy Regulatory 
Commission. When FERC was established by Congress, its fundamental 
mission was, and remains, to protect ratepayers. FERC has specialized 
expertise required to resolve the issues surrounding some of the 
contracts that Enron entered into and eventually terminated.
  Many of my colleagues know that Enron has filed for bankruptcy 
protection. There is an issue in the bankruptcy case as to whether 
Enron can enforce contracts that it terminated. The enforceability of 
these contracts should not be decided by a bankruptcy court. A 
bankruptcy judge does not have the specialized expertise required for 
this job. A bankruptcy court is responsible for considering different 
equities than an oversight agency, like FERC, would. The bankruptcy 
court is responsible for enhancing the bankruptcy estate for the 
benefit of creditors. FERC, on the other hand, sees a more complete 
picture which includes protecting the interests of the general public.
  This is why section 1270 is so important. It is a provision that is 
limited in scope. It does not seek to resolve the issue in the favor of 
one party. Though many Senators from affected States may have been 
tempted to legislate the outcome, we have refrained from doing so. Let 
me set the stage for why this provision is so critical. It is a 
complicated story. It is one that should be told in order to understand 
why I so strongly support this provision and why I believe the 
provision should be enacted into law.
  There are two major utilities that serve Nevada: Nevada Power and 
Sierra Pacific Power. Both need to buy power in the wholesale power 
market to meet the growing energy needs of Nevada. Las Vegas is the 
fastest growing city in the country. It takes a lot of power to keep 
the lights on in Las Vegas, Reno, and other parts of our growing State. 
At the height of the western electricity crisis, when spot market 
prices for electricity were going not just through the roof but through 
the stratosphere, FERC urged utilities like the Nevada utilities to 
reduce their purchases of spot supplies and enter into long-term 
contracts for electricity.
  That is precisely what the Nevada utilities did. Enron was one of the 
biggest suppliers of wholesale electricity at the time. Starting in 
December 2000, the Nevada utilities entered into long-term contracts 
with Enron to meet a significant portion of their long-term needs. At 
the time, no one was aware of Enron's on-going criminal conspiracy to 
manipulate the market. No one knew that Enron had engaged in fraud to 
hide its true financial picture.

  The prices that the Nevada utilities agreed to pay Enron for long-
term power were truly outrageous. The prices fully reflected Enron's 
success in manipulating the market. Prices were three times as high as 
the threshold that FERC had established as a ceiling price that would 
trigger close scrutiny under the just and reasonable standard. As a 
result, in November 2001, the Nevada utilities asked FERC to review the 
rates to determine whether those contract prices were just and 
reasonable.
  Two days after the Nevada companies filed their complaints against 
Enron, Enron filed for bankruptcy. Its financial house of cards had 
finally collapsed. As one definitive study of Enron concluded, Enron 
had been insolvent at the time the company entered into each and every 
contract with the Nevada utilities.
  The contracts between Enron and the Nevada utilities incorporated the 
Western Systems Power Pool Agreement, a master agreement on file and 
approved by FERC. This master agreement governs transactions of more 
than 200 parties throughout the west.
  Under the terms of that agreement, if one of the parties files for 
bankruptcy, the other party may rescind the agreement. So in this case, 
Enron's bankruptcy would have given the Nevada utilities cause to 
terminate the contracts. Under the unique terms of this agreement, 
however, the commercial party that is ``in the money'' will still be 
able to benefit if the contract is rescinded. So while the Nevada 
companies could terminate the contract, they still would have had to 
pay Enron the difference between the contract price and the market 
price at the time of terminating, to say nothing of the need to buy 
replacement power.
  When Enron entered bankruptcy, the price for electricity had fallen 
to the level power had sold for prior to Enron's market manipulation. 
This demonstrates that there was a huge difference between the 
artificially and unlawfully manipulated price that Enron commanded at 
the time of the contract and the market price at the time Enron filed 
for bankruptcy. Given the huge financial hit that the Nevada companies 
would have had to pay to terminate the Enron contracts, the Nevada 
companies continued to honor their commitment to purchase power under 
these contracts.
  In March 2002, the Public Utilities Commission of Nevada refused to 
allow the Nevada utilities to pass more than $400 million in purchased 
power costs on to ratepayers. As a result, the credit ratings of the 
Nevada utilities fell below investment grade. Under the terms of the 
WSPPA, this downgrade gave Enron the right to request assurances 
regarding the Nevada companies'

[[Page S7273]]

intentions with respect to their contracts. In meetings and in 
telephone calls, the Nevada Companies assured Enron that they would be 
able to pay Enron everything that would be owed under the contracts.
  The WSPPA required Enron to use ``reasonable'' discretion with 
respect to the contracts. Despite this requirement, Enron terminated 
the contracts with the Nevada companies and demanded that the Nevada 
companies pay Enron termination payments totaling approximately $326 
million. These termination payments represent pure profit to Enron on 
power than Enron never delivered. By pure profit, I mean just that. The 
termination payments are calculated, as I previously noted, by the 
difference between the cost of power today and the outrageous, 
manipulation-based prices Enron was able to extract during the energy 
crisis that Enron had unlawfully created.

  The Nevada companies refused to make payment. At this time, it was 
known that Enron had manipulated the entire western market. As part of 
Enron's bankruptcy, an ``adversary proceeding'' was initiated to 
determine the enforceability of these contracts and whether Enron would 
be allowed to continue to profit under fraudulent contracts at the 
expense of Nevada's ratepayers.
  At this point, the legal proceedings become very complex but the 
proceedings should be summarized so my colleagues will understand 
exactly what has happened.
  On June 24, 2003, FERC determined that the ``just and reasonable'' 
standard of review is not available to the Nevada companies with 
respect to their long-term contracts with Enron. This decision was made 
because FERC argued that it had previously ``pre-determined'' that the 
contracts would be just and reasonable when they granted Enron its 
authority to sell electricity at market-based rates years earlier.
  On the very next day, FERC withdrew Enron's authority to sell 
electricity at market-based rates because of its ``market manipulation 
schemes that had profound adverse impacts on market outcomes'' which 
violated its ``market-based rate authorizations.''
  The bankruptcy court judge, on August 23, 2003, ruled on a summary 
judgment motion that the Nevada utilities were required to pay Enron 
$326 million in termination payments. The court held that, because FERC 
had not found that Enron's contracts should be modified by virtue of 
its market manipulation, the filed-rate doctrine applied. It further 
ruled that it did not need to defer to FERC on whether Enron had 
complied with the tariff since it could interpret the tariff as well as 
FERC.
  On October 6, 2003, the Nevada Companies filed a complaint with FERC. 
The complaint sought to have FERC determine: Enron's termination was 
unreasonable under the tariff; Enron was not entitled to termination 
payments on equitable grounds; and, assuming Enron was otherwise 
entitled to termination payments, the contract provision should be set 
aside as contrary to the public interest.
  Then, on July 22, 2004, FERC set for hearing the narrow question of 
whether Enron's termination was reasonable. FERC deferred ruling on the 
issue of whether the contract should be set aside under the public 
interest standard until that issue became ``necessary.'' At the 
hearing, FERC did not address the issue of equitable claims. On that 
same day, FERC ruled in a separate case that Enron could be required to 
disgorge all of its profits.
  On September 30, 2004, FERC's administrative law judge denied Enron's 
motion to dismiss the case, finding, among other things, that FERC's 
specialized expertise is required.
  U.S. District Court Judge Barbara Jones reversed a ruling of the 
bankruptcy court on October 15, 2004. The district court considered the 
issue of whether the Nevada companies owed Enron the termination 
payments. The district court found that the Nevada companies had 
offered timely assurances and that the issue of whether Enron rejected 
those assurances and terminated reasonably were issues of fact which 
required a trial.
  On December 3, 2004, the bankruptcy court enjoined FERC from further 
proceedings after finding that FERC had violated the ``automatic stay'' 
provisions of the Bankruptcy Code. A hearing on termination payments 
was tentatively scheduled for this coming July. Currently, motions for 
interlocutory appeal are pending before a U.S. District Court Judge.
  Despite the ruling of a FERC administrative law judge that FERC's 
expertise was necessary to interpret the master tariff's requirement 
that a terminating party act ``reasonably,'' the bankruptcy court has 
enjoined FERC from further considering this issue. Section 1270 of this 
legislation confirms the decision of the FERC administrative law judge. 
This section says the judge is correct and the bankruptcy court is 
wrong. It makes clear that, in this limited matter, FERC has the 
exclusive jurisdiction to determine the merits of the claims at issue.
  This provision is very reasonable. It is a targeted response to a 
clash among competing jurisdictions over which tribunal, FERC or the 
bankruptcy court, should decide this issue. If Congress doesn't address 
the issue of jurisdiction now, the Supreme Court will have to do so 
years from now. That need not happen. Congress can decide this 
jurisdictional issue. The decision of the Senate, as reflected in 
Section 1270, is the right decision.
  The language of the amendment tracks Supreme Court precedent that 
recognizes that Congress can choose to give jurisdiction over issues to 
administrative agencies when the jurisdiction is consistent with the 
core functions of the agency. In this instance, the recognition of 
authority to FERC to decide this matter is narrow. It relates solely to 
the legality of Enron collecting additional profits in the form of 
termination payments for power not delivered. It is also directly 
related to the agency's core function to ensure just and reasonable 
rates and guard against market manipulation.
  I want to assure my colleagues that this provision does not encroach 
upon the sanctity of contracts. It merely picks the proper forum for 
determining whether Enron complied with its tariff obligations. 
Likewise, it also does not alter the standard of review for challenging 
the contract. Congress is not picking a standard; it is only picking a 
forum.
  Mr. President, this reasonable provision has the support of key 
industry leaders such as the National Rural Electric Cooperative 
Association, the American Public Power Association, and the Edison 
Electric Institute. It has bipartisan support. Anyone who has been as 
harmed by Enron as ratepayers in my state have understands the need to 
ensure that only the most qualified tribunal should rule on whether 
Enron can collect an additional $326 million in windfall profits.
  Mr. SALAZAR. Mr. President, as I have said time and again during this 
debate over the last several weeks, America is being held hostage to 
its over-dependence on foreign oil. This Energy bill is our first step 
in setting America free.
  From the National Renewable Energy Laboratory in Golden to the 
balanced development of oil and gas, Colorado is already playing a big 
part in setting America free.
  With a huge, untapped resource called oil shale, Colorado can play an 
even bigger role in this effort. If properly developed, oil shale that 
exists in my great State of Colorado has the potential to be part of a 
strategy to address America's dependence on foreign oil.
  Colorado is home to tremendous deposits of oil shale, a type of 
hydrocarbon bearing rock that is abundant in Western Colorado, as well 
as Utah and Wyoming. Estimates place the potential recoverable amount 
of this type of oil as high as 1 trillion barrels. Let me say that 
again--1 trillion barrels.
  Let me put that in perspective:
  Saudi Arabia's proven conventional reserves are said to be around 261 
billion barrels.
  Several of our colleagues argued earlier this spring that ANWR is a 
resource so remarkable that we must open that pristine land to 
drilling. According to the U.S. Geological Survey--USGS--the mean 
estimate of technically recoverable oil is 7.7 billion barrels--billion 
bbl--but there is a small chance that, taken together, the fields on 
this Federal land could hold 10.5 billion bbl of economically 
recoverable oil. That's one percent of the potential oil shale.
  Assuming we use 15 million barrels of oil a day just for 
transportation, oil

[[Page S7274]]

shale could keep our transportation going for another 200 years.
  Colorado has some experience in trying to access this potential 
asset. We have had two boom and bust periods, one in the 1800s and the 
other in the 1980s.
  The most recent story is about the ``Boom & Bust'' Colorado 
experienced during the last oil shale development cycle that began in 
the 1970's and ended in May of 1982 on ``Black Sunday.''
  I will never forget the powerful lessons of Black Sunday.
  Colorado invested millions in new towns, only to see thousands of 
residents flee when oil prices fell, leaving behind them a devastated 
real estate market.
  Communities that invested heavily in schools and roads and housing 
could no longer meet the burden of paying for this critical 
infrastructure.
  Buildings on the Western Slope--and even in Denver--were built and 
left empty, if the construction was completed at all.
  Towns that thought they were seeing a bright future, struggled to 
deal with crippling unemployment.
  The technical challenges of oil shale and the searing memories of 
Black Sunday have taught all of Colorado some important lessons.
  We now recognize that oil shale's potential can only be realized if 
it is approached in the right way.
  Oil shale development must be considered a marathon and not a sprint.
  I believe, as many in Colorado do, that oil shale research and 
development must be conducted in an open, cautious and thoughtful 
manner that includes our local communities.
  As Congress instructs Federal agencies to consider oil shale research 
and development leasing and commercial leasing, it must give careful 
consideration to environmental and socioeconomic impacts and 
mitigations as well as the sustainability of an oil shale industry.
  Colorado is a team player. The people of my State are ready to share 
the abundant natural resources with which we have been blessed. In 
exchange, Colorado expects to have a seat at the table.
  That is why I introduced the Oil Shale Development Act of 2005. I am 
very pleased that it has been incorporated into the Energy bill we are 
now considering.
  I believe the oil shale provision in this Energy bill is a thoughtful 
approach to future oil shale development. It is full of commonsense 
provisions that build on the lessons we learned in that painful 
experience 30 years ago.
  It directs leasing for research and development;
  It requires a programmatic Environmental Impact Study to ensure that 
we take a comprehensive environmental look at potential commercial 
leasing;
  It directs the Secretary of Interior to work with the States, local 
communities, and industry to identify and report on issues of primary 
concern to local communities and populations with commercial leasing 
and development;
  and it insists that States--not the Federal Government--retain 
authority over water rights.
  I know we are going to hear more and more about oil shale development 
in the Rocky Mountain west. That is as it should be, and we will embark 
on a thoughtful, balanced approach to oil shale development with this 
bill.
  Mr. ALLEN. Mr. President, as we move forward on Energy legislation 
crucial for our country's national security, jobs, and competitiveness, 
I wish to raise an issue which is threatening global energy security. 
The surging demand for energy in developing countries coupled with the 
dynamic rise in power and influence of government operated energy 
companies is changing the global energy market. Specifically, I am 
concerned about the role of the People's Republic of China with its 
national oil companies, and the potential adverse effects on U.S. 
energy supplies. I am also concerned about our ability to compete for 
energy assets.
  China's surging demand for energy is impacting the world. China has 
now emerged as the second largest consumer of energy, and demand could 
double by 2020. According to the U.S. Energy Information 
Administration, China is consuming 7.2 million barrels of oil per day 
and this is expected to rise to 7.8 million barrels of oil per day by 
next year. China alone has accounted for 40 percent of growth in oil 
demand over the last 4 years. According to recent studies, China's 
growing demand for oil is one of the significant factors driving oil 
prices to record high levels. With such growth in the Chinese economy, 
it is understandable why there is greater demand for energy in the form 
of coal, oil, and nuclear power as well as materials ranging from 
cement to steel.
  With limited domestic resources, China has embarked on an aggressive 
program through its national energy companies to secure energy and in 
doing so has proposed acquisition of energy assets around the world, 
including assets of U.S. based companies. It has become increasingly 
difficult for private companies in the U.S. to compete against these 
government-owned energy companies, such as the Chinese state-owned 
company known as CNOOC. The inherent advantage that these state-owned 
companies have is that they can operate under non-market terms and 
conditions for the purchase of energy supplies and assets, including 
accepting very low rates of return. Thus, private entities in free 
countries are disadvantaged in competing for energy assets.
  China in the past year has signed deals for oil reserved in Africa, 
Iran, South America, and now Canada. Today, one of China's largest 
state-controlled oil companies made a $18.5 billion unsolicited bid for 
Unocal, signaling the first big takeover battle by a Chinese company 
for a U.S. corporation.
  Energy is a global issue and we need to understand the implications 
for American interests on how these energy shifts may impact us as well 
as the rest of the world.
  It is important that we have a comprehensive review which would 
include a full assessment of the types of investments China is making 
in international and U.S. based companies, a better understanding of 
the relationship between the Chinese energy sector and the Chinese 
government, and what we can do to ensure a level playing field and 
flexibility in the global market. Perhaps most importantly, we need to 
understand how we can better work cooperatively to pursue energy 
interests as well as work together on conservation, energy efficiency, 
and technology.
  It is nice to talk about working cooperatively with China, but I am 
concerned that we may be headed on a collision course. Energy is the 
lifeblood of economic growth and we are beginning to see an imbalance 
occur. I look forward to hearing from the administration to gain a 
better understanding of the issues and how the U.S. can best proceed to 
secure our future energy needs.
  Mr. FEINGOLD. Mr. President, while I voted for a similar amendment 
offered by the Senators from Arizona, Mr. McCain, and Connecticut, Mr. 
Lieberman, in 2003, unfortunately, the current version of the amendment 
includes over $600 million in taxpayer subsidies for the creation of 
new nuclear powerplants. The nuclear industry is a mature industry that 
does not need to be propped up by the taxpayers. Over 300 national 
environmental and consumer organizations, including the League of 
Conservation Voters, Public Interest Research Group, and the Sierra 
Club, oppose this amendment. Our Nation faces an ever-growing budget 
deficit and we must be fiscally and environmentally responsible. I 
strongly believe that global warming is an important national issue, 
which is why I supported the Bingaman-Specter sense-of-the-Senate 
amendment to push for a national policy on global warming. I will 
continue to work with my colleagues on both sides of the aisle to 
create a meaningful global warming program.
  Mr. JEFFORDS. Mr. President, I rise today to congratulate my 
colleagues on our efforts to pass an energy bill through the Senate 
that does not include exemptions for the oil and gas industry from 
drinking water and clean water protections. Section 327 of H.R. 6 as 
reported contains an exemption to the Safe Drinking Water Act for the 
practice of hydraulic fracturing. Section 328 of H.R. 6 contains an 
exemption for the oil and gas industry from obtaining stormwater 
discharge permits under the Clean Water Act, rolling back fifteen years 
of environmental

[[Page S7275]]

protection. These efforts to weaken the protections applied to our 
Nation's waters should be stricken from the bill as the conferees on 
H.R. 6 work to resolve the differences between the two bills.
  Over half of our Nation's fresh drinking water comes from underground 
sources. Hydraulic fracturing occurs when fluids are injected at high 
rates of speed into rock beds to fracture them and allow easier 
harvesting of natural oils and gases. It is these injection fluids, and 
their potential to contaminate underground sources of drinking water, 
that are of high concern. In a recent report, the EPA acknowledged that 
these fluids, many of them toxic and harmful to people, are pumped 
directly into or near underground sources of drinking water. This same 
report cited earlier studies that indicated that only 61 percent of 
these fluids are recovered after the process is complete. This leaves 
39 percent of these fluids in the ground, risking contamination of our 
drinking water.
  In June of 2004, an EPA study on hydraulic fracturing identified 
diesel as a ``constituent of potential concern.'' Prior to this, EPA 
had entered into a Memorandum of Agreement with three of the major 
hydraulic fracturing corporations, whom all voluntarily agreed to ban 
the use of diesel, and if necessary select replacements that will not 
cause hydraulic fracturing fluids to endanger underground sources of 
drinking water. However, all parties acknowledged that only technically 
feasible and cost-effective actions to provide alternatives would be 
sought.
  Litigation over the last several years has resulted in findings that 
hydraulic fracturing should be regulated as part of the underground 
injection control program in the Safe Drinking Water Act. Yet, EPA 
indicated in a letter in December of 2004 that they have no intention 
of publishing regulations to that effect or ensuring that state 
programs adequately regulate hydraulic fracturing.
  I will include our letter to EPA dated October 14, 2004, and their 
response dated December 7, 2004, in the Record.
  We need to be moving in the right direction--taking steps to ensure 
that hydraulic fracturing is appropriately regulated under the Safe 
Drinking Water Act. I have introduced S. 1080, the Hydraulic Fracturing 
Safety Act of 2005 to ensure that the practice of hydraulic fracturing 
is regulated under the Safe Drinking Water Act through the Underground 
Injection Control, UIC, Program. I would like to thank Senators 
Lautenberg, Boxer, and Lieberman for co-sponsoring that bill. The House 
energy bill takes steps in the wrong direction--exempting hydraulic 
fracturing from the Safe Drinking Water Act.
  I urge the conferees of this energy bill to strike section 327 of the 
House-passed energy bill. By striking this language, the conferees will 
help to ensure that the drinking water enjoyed by all Americans is not 
damaged through the process of hydraulic fracturing.
  This exemption for hydraulic fracturing is not the only step 
backwards that the House energy bill takes. Section 328 of the bill 
exempts the oil and gas industry from stormwater protections in the 
Clean Water Act.
  Stormwater runoff is a leading cause of impairment to the nearly 40 
percent of surveyed U.S. water bodies that do not meet water quality 
standards.
  Currently, the oil and gas industry is regulated under Phase I of 
EPA's stormwater regulations which requires National Pollution 
Discharge Elimination System, NPDES, permits for medium and large 
municipal storm sewer systems and eleven, 11, categories of industrial 
activity, including construction sites disturbing more than 5 acres of 
land. In 1999, EPA adopted the Phase II permitting requirements, 
effective March 10, 2003, covering small municipal separate stormwater 
systems and construction sites affecting one to five acres of land. 
However, EPA extended the Phase II permitting deadline to June 12, 2006 
for only the oil and gas industry.
  Now, section 328 of the House energy bill completely exempts the oil 
and gas industry from compliance with both Phase I and Phase II of the 
NPDES stormwater program.
  This action will adversely impact water quality. Oil and gas 
construction activities require companies to undertake a number of 
earth disturbing activities, including: clearing, grading, and 
excavating. Oil and gas site development may also include road 
construction to transport equipment and other materials, as well as 
pipeline construction. The stormwater pollution created from these 
activities can be devastating to the environment.
  According to the EPA, over a short period of time, stormwater runoff 
from construction site activity can contribute more harmful pollutants, 
including sediment, into rivers, lakes, and streams than had been 
deposited over several decades. Sediment clouds water, decreases 
photosynthetic activity, reduces the viability of aquatic plants and 
animals; and ultimately destroys animals and their habitat. Sediment 
rates from cleared and graded construction sites are typically 10 to 20 
times greater than those from agricultural lands and one-thousand to 
two-thousand times greater than those from forest lands. Other harmful 
pollutants in stormwater runoff from construction sites include 
phosphorous and nitrogen, pesticides, petroleum derivatives, 
construction chemicals, and solid wastes that may be mobilized when 
land surfaces are disturbed.

  More than 5,000 cities, towns, and counties and eleven, 11, 
industrial sectors are required to obtain NPDES stormwater permits. 
Large oil and gas construction sites covered under the Phase I 
stormwater program have been taking action to reduce the impact of 
sediments and pollutants on water quality since 1990. In 2005, GAO 
reported that over a one-year period, 4,330 oil and gas construction 
sites obtained Phase I stormwater permits in three of the six largest 
oil and gas producing states. In 20 the Warren County Conservation 
District submitted information to EPA indicating that 70 percent of the 
oil and gas projects they inspected between 1997 and 2002 were in 
violation of Phase I permit conditions. If this amendment is adopted, 
these actions will no longer be required. In FY 2002/2003, the Alaska 
Department of Environmental Conservation estimated that they would 
review 400 engineering plans as part of the stormwater permitting 
process. The House provision would exempt these sites from 15-year-old 
requirements to reduce the pollution they send into surrounding waters 
through stormwater discharges.
  The environmental impact from this amendment is even more severe when 
you factor in the approximately 30,000 oil and gas ``starts'' per year 
that EPA anticipates could be covered by the Phase II stormwater 
regulation. EPA is currently reviewing the impact of the regulation on 
these sites. Adopting this amendment would circumvent this review 
process and exempt thousands of sites from taking action to protect 
water quality.
  Section 402(l) of the Clean Water Act contains a limited exemption 
for specific types of uncontaminated discharges from specific types of 
oil and gas sites from stormwater permit requirements. The language of 
the Act and the legislative history of this section indicate that when 
adopted, section 402(l) was intended to give a narrow exemption for 
specific circumstances in the oil and gas industry that did not include 
construction activities at every oil and gas--related site.
  I urge the conference committee on H.R. 6 to reject the Clean Water 
and Safe Drinking Water Act exemptions included in the House energy 
bill. These provisions represent a major step backward in efforts to 
protect water quality and could pose a direct threat to the safety of 
drinking water supplies. Should these exemptions be included in the 
final conference report, we will see our Nation's water quality 
standards go down the drain.

  I ask unanimous consent to print the above-referenced letters in the 
Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                         U.S. Senate, Committee on


                                 Environment and Public Works,

                                 Washington, DC, October 14, 2004.
     Administrator Michael O. Leavitt,
     Environmental Protection Agency, Ariel Rios Building, 
         Washington, DC
       Dear Administrator Leavitt: We are writing to you regarding 
     the Environmental Protection Agency's (EPA's). administration 
     of the Safe Drinking Water Act (SDWA) as it pertains to 
     hydraulic fracturing. In recent months, the Agency has taken 
     several key actions on this issue:
       On December 12, 2003, the EPA signed a Memorandum of 
     Understanding with three of the largest service companies 
     representing 95 percent of all hydraulic fracturing performed

[[Page S7276]]

     in the U.S. These three companies, Halliburton Energy 
     Services, Inc., Schlumberger Technology Corporation, and BJ 
     Services Company, voluntarily agreed not to use diesel fuel 
     in their hydraulic fracturing fluids while injecting into 
     underground sources of water for coalbed methane production.
       In June of 2004, EPA completed its study on hydraulic 
     fracturing impacts and released its findings in a report 
     entitled, ``Evaluation of Impacts to Underground Sources of 
     Drinking Water by Hydraulic Fracturing of Coalbed Methane 
     Reservoirs. The report concluded that hydraulic fracturing 
     poses little chance of contaminating underground sources of 
     drinking water and that no further study was needed.
       On July 15, 2004, the EPA published in the Federal Register 
     its final response to the court remand (Legal Environmental 
     Assistance Foundation (LEAF), Inc., v: United States 
     Environmental Protection Agency, 276 F. 3d 1253). The Agency 
     determined that the Alabama underground injection control 
     (UIC) program for hydraulic fracturing, approved by EPA under 
     section 1425 of the SDWA, complies with Class II well 
     requirements.
       We are concerned that the Agency's execution of the SDWA, 
     as it applies to hydraulic fracturing, may not be providing 
     adequate public health protection, consistent with the goals 
     of the statute.
       First, we have questions regarding the information 
     presented in the June 2004 EPA Study and the conclusion to 
     forego national regulations on hydraulic fracturing in favor 
     of an MOD limited to diesel fuel. In the June 2004 EPA Study, 
     EPA identifies the characteristics of the chemicals found in 
     hydraulic fracturing fluids, according to their Material 
     Safety Data Sheets (MSDSs), identifies harmful effects 
     ranging from eye, skin, and respiratory irritation to 
     carcinogenic effects. EPA determines that the presence of 
     these chemicals does not warrant EPA regulation for several 
     reasons. First, EPA states that none of these chemicals, 
     other than BTEX compounds, are already regulated under the 
     SDWA or are on the Agency's draft Contaminant Candidate List 
     (CCL). Second, the Agency states that it does not believe 
     that these chemicals ate present in hydraulic fracturing 
     fluids used for coalbed methane, and third, that if they are 
     used, they are not introduced in sufficient concentrations to 
     cause harm. These conclusions raise several questions:
       1. The data presented in the June 2004 EPA study identifies 
     potential harmful effects from the chemicals listed by the 
     Agency in this report. Has the Agency or does the Agency plan 
     to incorporate the results of this study and the fact that 
     these chemicals are present in hydraulic fracturing agents 
     into the CCL development process, and if not, why not?
       2. In the June 2004 EPA study, the Agency concludes that 
     hydraulic fracturing fluids do not contain most of the 
     chemicals identified. This conclusion is based on two items--
     ``conversations with field engineers'' and ``witnessing three 
     separate fracturing events'' (June 2004 EPA Study, p. 4-17.)
       a. How did the Agency select particular field engineers 
     with whom to converse on this subject?
       b. Please provide a transcript of the conversations with 
     field engineers, including the companies or consulting firms 
     with which they were affiliated.
       c. How did the Agency select the three separate fracturing 
     events to witness?
       d. Were those events representative of the different site-
     specific characteristics referenced in the June 2004 study 
     (June 2004 EPA Study, p. 4-19) as determining factors in the 
     types of hydraulic fracturing fluids that will be used?
       e. Which companies were observed?
       f. Was prior notice given of the planned witnessing of 
     these events?
       g. What percentage of the annual number of hydraulic 
     fracturing events that occur in the United States does ``3'' 
     represent?
       h. Finally, please explain why the Material Safety Data 
     Sheets for the fluids identified as potentially being used in 
     hydraulic fracturing list component chemicals that the EPA 
     does not believe are present.
       The Agency concludes in the June 2004 study that even if 
     these chemicals are present, they are not present in 
     sufficient concentrations to cause harm. The Agency bases 
     this conclusion on assumed flowback, dilution and 
     dispersion, adsorption and entrapment, and biodegradation. 
     The June 2004 study repeatedly cites the 1991 Palmer 
     study, ``Comparison between gel-fracture and water-
     fracture stimulations in the Black Warrior basin; 
     Proceedings 1991 Coalbed Methane Symposium,'' which found 
     that only 61 percent of the fluid injected during 
     hydraulic fracturing is recovered. Please explain what 
     data EPA collected and what observations the Agency made 
     in the field that would support the conclusion that the 39 
     percent of fluids remaining in the ground are not present 
     in sufficient concentrations to adversely affect 
     underground sources of drinking water.
       After identifying BTEX compounds as the major constituent 
     of concern (June 2004 EPA study, page 4-15), the Agency 
     entered into the MOU described above as its mechanism to 
     eliminate diesel fuel from hydraulic fracturing fluids.
       3. a. How does the Agency plan to enforce the provisions in 
     the MOD and ensure that its terms are met?
       b. For example, will the Agency conduct independent 
     monitoring of hydraulic fracturing processes in the field to 
     ensure that diesel fuel is not used?
       c. Will the Agency require states to monitor for diesel use 
     as part of their Class II UIC Programs?
       4. a. Should the Agency become aware of an unreported 
     return to the use of diesel fuel in hydraulic fracturing by 
     one of the parties to the MOU, what recourse is available to 
     EPA under the terms of the MOU?
       b. What action does the Agency plan to take should such a 
     situation occur?
       c. Why did EPA choose to use an MOU as opposed to a 
     regulatory approach to achieve the goal of eliminating diesel 
     fuel in hydraulic fracturing?
       d. What revisions were made to the June 2004 EPA study 
     between the December 2003 adoption of the MOU and the 2004 
     release of the study? Which of those changes dealt 
     specifically with the use and effects of diesel fuel 
     hydraulic fracturing?
       e. The Agency also states that it expects that even if 
     diesel were used, a number of factors would decrease the 
     concentration and availability of BTEX. Please elaborate on 
     the data EPA collected and the observations the Agency made 
     in the field that would support the conclusion that the 39 
     percent of fluids remaining in the ground (1991 Palmer), 
     should they contain BTEX compounds, would not be present in 
     sufficient concentrations to adversely affect underground 
     sources of drinking water.
       We are also concerned that the EPA response to the court 
     remand leaves several unanswered questions. The Court 
     decision found that hydraulic fracturing wells ``fit squarely 
     within the definition of Class II wells,'' (LEAF II, 276 F.3d 
     at 1263), and remanded back to EPA to determine if the 
     Alabama underground injection control program under section 
     1425 complies with Class II well requirements. On July 15, 
     2004, EPA published its finding in the Federal Register that 
     the Alabama program complies with the requirements of the 
     1425 Class IT well requirements. (69 FR No. 135, pp 42341.) 
     According to EPA, Alabama is the only state that has a 
     program specifically for hydraulic fracturing approved under 
     section 1425. Based on this analysis, it seems that in order 
     to comply with the Court's finding that hydraulic fracturing 
     is a part of the Class II well definition, the remaining 
     states should be using their existing Class IT, EPA--approved 
     programs, under 1422 or 1425, to regulate hydraulic 
     fracturing.
       To date, EPA has approved Underground Injection Control 
     programs in 34 states. Approval dates range from 1981-1996.
       5. Do you plan to conduct a national survey or review to 
     determine whether state Class IT programs adequately regulate 
     hydraulic fracturing?
       At the time that these programs were approved, the 
     standards against which state Class IT programs were 
     evaluated did not include any minimum. requirements for 
     hydraulic fracturing. In its January 19, 2000 notice of EPA's 
     approval of Alabama's 1425 program, the Agency stated, ``When 
     the regulations in 40 CFR parts 144 and 146, including the 
     well classifications, were promulgated, it was not EPA's 
     intent to regulate hydraulic fracturing of coal beds. 
     Accordingly, the well classification systems found in 40 CFR 
     144.6 and 146.5 do not expressly include hydraulic fracturing 
     injection activities. Also, the various permitting; 
     construction and other requirements found in Parts 144 and 
     146 do not specifically address hydraulic fracturing.'' (65 
     FR No. 12, p. 2892.)
       Further, EPA acknowledges that there can be significant 
     differences between hydraulic fracturing and standard 
     activities addressed by state Class IT programs. In the 
     January 19, 2000 Federal Register notice, the Agency states:

     ``. . . since the injection of fracture fluids through these 
     wells is often a one-time exercise of extremely limited 
     duration (fracture injections generally last no more than two 
     hours) ancillary to the well's principal junction of 
     producing methane, it did not seem entirely appropriate to 
     ascribe Class II status to such wells, for all regulatory 
     purposes, merely due to the fact that, prior to commencing 
     production, they had been fractured.'' (65 FR No. 12, p. 
     2892.)
       Although hydraulic fracturing falls under the Class II 
     definition, the Agency has acknowledged that hydraulic 
     fracturing is different than most of the activities that 
     occur under Class II and that there are no national 
     regulations or standards on how to regulate hydraulic 
     fracturing.
       6. In light of the Court decision and the Agency's July 
     2004 response to the Court remand, did the Agency consider 
     establishing national regulations or standards for hydraulic 
     fracturing or minimum requirements for hydraulic fracturing 
     regulations under state Class II programs?
       7. a. If so, please provide a detailed description of your 
     consideration of establishing these regulations or standards 
     and the rationale for not pursuing them.
       b. Do you plan to establish such regulations or standards 
     in the future?
       c. If not, what standards will be used as the standard of 
     measurement for compliance for hydraulic fracturing under 
     state Class IT programs?
       We appreciate your timely response to these questions in 
     reaction to the three recent actions taken by the EPA in 
     relation to hydraulic fracturing--the adoption of the MOU, 
     the release of the final study, and the response to the Court 
     remand. Clean and safe drinking water is one of our nation's 
     greatest assets, and we believe we must do all we

[[Page S7277]]

     can to continue to protect public health. Thank you again for 
     your response.
           Sincerely,
     Jim Jeffords.
     Barbara Boxer.
                                  ____

                                     U.S. Environmental Protection


                                                       Agency,

                                 Washington, DC, December 7, 2004.
     Hon. Jim Jeffords,
     U.S. Senate,
     Washington, DC.
       Dear Senator Jeffords: Thank you for your letter to 
     Administrator Michael Leavitt dated October 14, 2004, 
     concerning the recent actions that the Environmental 
     Protection Agency (EPA) has taken in implementing the 
     Underground Injection Control (UIC) program with respect to 
     hydraulic fracturing associated with coalbed methane wells.
       The Office of Ground Water and Drinking Water (OGWDW) has 
     prepared specific responses to your technical and policy 
     questions regarding how we conducted the hydraulic fracturing 
     study, the reasons behind our decisions pertaining to the 
     recommendations contained in the study, and any plans or 
     thoughts we may have on the likelihood for future 
     investigation, regulation, or guidance concerning such 
     hydraulic fracturing.
       Since the inception of the UIC program, EPA has implemented 
     the program to ensure that public health is protected by 
     preventing endangerment of underground sources of drinking 
     water (USDWs). The Agency has placed a priority on 
     understanding the risks posed by different types of UIC 
     wells, and worked to ensure that appropriate regulatory 
     actions are taken where specific types of wells may pose a 
     significant risk to drinking water sources. In 1999, in 
     response to concerns raised by Congress and other 
     stakeholders about issues associated with the practice of 
     hydraulic fracturing of coalbed methane wells in the State of 
     Alabama, EPA initiated a study to better understand the 
     impacts of the practice.
       EPA worked to ensure that its study, which was focused on 
     evaluating the potential threat posed to USDWs by fluids used 
     to hydraulica11y fracture coalbed methane wells was carried 
     out in a transparent fashion. The Agency provided many 
     opportunities to all stakeholders and the general public to 
     review and comment on the Agency study design and the draft 
     study. The study design was made available for public comment 
     in July 2000, a public meeting was held in August 2000, a 
     public notice of the final study design was provided in the 
     Federal Register in September 2000, and the draft study was 
     noticed in the Federal Register in August 2002. The draft 
     report was also distributed to all interested parties and 
     posted on the internet. The Agency received more than 100 
     comments from individuals and other entities.
       EPA's final June 2004 study, Evaluation of Impacts to 
     Underground Sources of Drinking Water by Hydraulic Fracturing 
     of Coalbed Methane Reservoirs, is the most comprehensive 
     review of the subject matter to date. The Agency did not 
     recommend additional study at this time due to the study's 
     conclusion that the potential threat to USDWs posed by 
     hydraulic fracturing of coalbed methane wells is low. 
     However, the Administrator retains the authority under the 
     Safe Drinking Water Act (SDWA) section 1431 to take 
     appropriate action to address any imminent and substantial 
     endangerment to public health caused by hydraulic fracturing.
       During the course of the study, EPA could not identify any 
     confirmed cases where drinking water was contaminated by 
     hydraulic fracturing fluids associated with coalbed methane 
     production. We did uncover a potential threat to USDWs 
     through the use of diesel fuel as a constituent of fracturing 
     fluids where coalbeds are co-located with a USDW. We reduced 
     that risk by signing and implementing the December 2003 
     Memorandum of Agreement (MOA) with three major service 
     companies that carry out the bulk of coalbed methane 
     hydraulic fracturing activities throughout the country. This 
     past summer we confirmed that the companies are carrying out 
     the MOA and view the completion of this agreement as a 
     success story in protecting USDWs.
       In your letter, you asked about the Agency's actions with 
     respect to hydraulic fracturing in light of LEAF v. EPA. In 
     this case, the Eleventh Circuit held that the hydraulic 
     fracturing of coalbed seams in Alabama to produce methane gas 
     was ``underground injection'' for purposes of the SDWA and 
     EPA's UIC program. Following that decision, Alabama 
     developed--and EPA approved--a revised UTC program to protect 
     USDWs during the hydraulic fracturing of coalbeds. The 
     Eleventh Circuit ultimately affirmed EPA's approval of 
     Alabama's revised UIC program.
       In administering the UIC program, the Agency believes it is 
     sound policy to focus its attention on addressing those wells 
     that pose the greatest risk to USDWs. Since 1999, our focus 
     has been on reducing risk from shallow Class V injection 
     wells. EPA estimates that there are more than 500,000 of 
     these wells throughout the country. The wastes injected into 
     them include, in part, storm water runoff, agricultural 
     effluent, and untreated sanitary wastes. The Agency and 
     States are increasing actions to address these wells in order 
     to make the best use of existing resources.
       EPA remains committed to ensuring that drinking water is 
     protected. I look forward to working with Congress to respond 
     to any additional questions, or the concerns that Members of 
     Congress or their constituents may have. If you have further 
     comments or questions, please contact me, or your staff may 
     contact Steven Kinberg of the Office of Congressional and 
     Intergovernmental Relations at (202) 564-5037.
           Sincerely,
                                             Benjamin H. Grumbles,
                                   Acting Assistant Administrator.
       Attachment.

   EPA Response to Specific Questions Regarding Hydraulic Fracturing

       The data presented in the June 2004 EPA study identifies 
     potential harmful effects from the chemicals listed by the 
     Agency in this report. Has the Agency or does the Agency plan 
     to incorporate the results of this study and the fact that 
     these chemicals are present in hydraulic fracturing agents 
     into the Contaminant Candidate List (CCL) development 
     process, and if not, why not?''
       Although the EPA CBM study found that certain chemical 
     constituents could be found in some hydraulic fracturing 
     fluids, EPA cannot state categorically that they are 
     contained in all such fluids. Each fracturing procedure may 
     be site specific or basin specific and fluids used may depend 
     on the site geology, the stratigraphy (i.e. type of coal 
     formation), depth of the formation, and the number of coal 
     beds for each fracture operation. The Agency's study did not 
     develop new information related to potential health effects 
     from these chemicals; it merely reported those potential 
     health effects indicated on the Material Safety Data Sheet 
     (MSDS) or other information we obtained from the service 
     companies.
       As noted in the final report, ``Contaminants on the CCL are 
     known or anticipated to occur in public water systems. . .'' 
     The extent to which the contaminants identified in fracturing 
     fluids are part of the next CCL process will depend upon 
     whether they meet this test.
       2. In the June 2004 EPA study, the Agency concludes that 
     hydraulic fracturing fluids do not contain most of the 
     chemicals identified. This conclusion is based on two items--
     ``conversations with field engineers'' and ``witnessing three 
     separate fracturing events''.
       a. How did the agency select particular field engineers 
     with whom to converse on this subject?
       The Agency did not ``select'' any of the engineers; we 
     talked with the engineers who happened to be present at the 
     field operations. In general those were engineers from the 
     coalbed methane companies and the service companies who 
     conducted the actual hydraulic fracturing. When we scheduled 
     to witness the events, we usually conversed with the 
     production company engineer to arrange the logistics and only 
     spoke with the field engineers from the service companies at 
     the well site.
       b. Please provide a transcript of the conversations with 
     field engineers, including the companies or consulting firms 
     with which they were affiliated.
       EPA did not prepare a word-for-word transcript of 
     conversations with engineers.
       c. How did the Agency select the three separate fracturing 
     events to witness?
       The events selected were dependent on the location of the 
     fracturing events, the schedules of both EPA OGWDW staff and 
     EPA Regional staff to witness the event, and the preparation 
     time to procure funding and authorization for travel. EPA 
     witnessed the 3 events because the planning and scheduling of 
     these happened to work for all parties. In one event, only 
     EPA HQ staff witnessed the procedure, in another event only 
     EPA Regional staff witnessed it, and in one event both EPA HQ 
     and Regional staff attended with DOE staff.
       d. Were those events representative of the different site-
     specific characteristics referenced in the June 2004 study 
     (p. 4-19) as determining factors in the types of hydraulic 
     fracturing fluids that will be used?
       Budget limitations precluded visits to each of the 11 
     different major coal basins in the U.S. It would have proven 
     to be an expensive and time-consuming process to witness 
     operations in each of these regions. Additionally, even 
     within the same coal basin there are potentially many 
     different types of well configurations, each of which could 
     affect the fracturing plan. EPA believed that witnessing 
     events in 3 very different coal basin settings--Colorado, 
     Kansas, and south western Virginia--would give us an 
     understanding of the practice as conducted in different 
     regions of the country.
       e. Which companies were observed?
       EPA observed a Schlumberger hydraulic fracturing operation 
     in the San Juan basin of Colorado, and Halliburton hydraulic 
     fracturing operations in southwest Virginia and Kansas.
       f. Was prior notice given of the planned witnessing of 
     these events?
       Yes, because it would have been very difficult to witness 
     the events had they not been planned. To plan the visit, EPA 
     needed to have prior knowledge of the drilling operation, the 
     schedule of the drilling, and the scheduling of the services 
     provided by the hydraulic fracturing service company. Wells, 
     in general, take days to drill (in some cases weeks and 
     months depending on depth of the well) and the fracturing may 
     take place at a later date depending on the availability of 
     the service company and other factors beyond anyone's 
     control.
       g. What percentage of the annual number of hydraulic 
     fracturing events that occur in the United States does ``3'' 
     represent?
       Because of a limited project budget, EPA did not attempt to 
     attend a representative

[[Page S7278]]

     number of hydraulic fracturing events; that would have been 
     beyond the scope of this Phase I investigation. The primary 
     purpose of the site visits was to provide EPA personnel 
     familiarity with the hydraulic fracturing process as applied 
     to coalbed methane wells. The visits served to give EPA staff 
     a working-level, field experience on exactly how well-site 
     operations are conducted, how the process takes place, the 
     logistics in setting up the operation, and the monitoring 
     and verification conducted by the service companies to 
     assure that the fracturing job was accomplished 
     effectively and safely. EPA understands that thousands of 
     fracturing events take place annua1ly, for both 
     conventional oil and gas operations and for coalbed 
     methane production, and that three events represent an 
     extremely small fraction of that total.
       h. Finally, please explain why the Material Safety Data 
     Sheets for the fluids identified as potentialIy being used in 
     hydraulic fracturing list component chemicals that the EPA 
     does not believe are present.
       In Table 4-1 of the final study, EPA identified the range 
     of fluids and fluid additives commonly used in hydraulic 
     fracturing. Some of the fluids and fluid additives may 
     contain constituents of potential concern, however, it is 
     important to note that the information presented in the MSDS 
     is for the pure product. Each of the products listed in Table 
     4-1 is significantly diluted prior to injection. The MSDS 
     information we obtained is not site specific. We reviewed a 
     number of data sheets and we noted that many of them are 
     different, contain different lists of fluids and additives, 
     and thus we concluded in the final report that we cannot say 
     whether one specific chemical, or chemicals, is/are present 
     at every hydraulic fracturing operation.
       3. a. How does the Agency plan to enforce the provisions in 
     the MOU and ensure that its terms are met?
       There is no mechanism to ``enforce'' a voluntary agreement 
     such as the MOA signed by EPA and the three major service 
     companies. The MOA was signed in good faith by senior 
     managers from the three service companies and the Assistant 
     Administrator for Water, and EPA expects it will be carried 
     out. EPA has written all signers of the MOA and asked if they 
     have implemented the agreement and how will they ensure that 
     diesel fuel is not being used in USDWs. All three have 
     written back to EPA, stating that they have removed diesel 
     from their CBM fracturing fluids when a USDW is involved and 
     intend to implement a plan to ensure that such procedures are 
     met. EPA intends to follow up with the service companies on 
     progress in implementing such plans.
       b. For example, will the Agency conduct independent 
     monitoring of hydraulic fracturing processes in the field to 
     ensure that diesel fuel is not used?
       It is unlikely that EPA will conduct such field monitoring. 
     First, in most oil and gas producing states, and coalbed 
     methane producing states, the State Oil and Gas Agency 
     generally has UIC primary enforcement responsibility, and the 
     state inspectors are the primary field presence of such 
     operations. Second, EPA has a very limited field staff and in 
     most cases they are engaged in carrying out responsibilities 
     related to Class I, III and V wells in states in which they 
     directly implement the UIC program. EPA plans to work with 
     several organizations, including the Ground Water Protection 
     Council and the Independent Petroleum Association of America 
     to determine if there are other smaller companies conducting 
     CBM hydraulic fracturing with diesel fuel as a constituent 
     and will explore the possibility of including them in the 
     MOA.
       c. Will the Agency require states to monitor for diesel use 
     as part of their Class II programs?
       Given limited funds for basic national and state UIC 
     program requirements, EPA does not have plans to include the 
     states as parties to the MOA or require them to monitor for 
     diesel fuel in hydraulic fracturiug fluids. The State of 
     Alabama's EPA-approved UIC program prohibits the hydraulic 
     fracturing of coalbeds in a manner that allows the movement 
     of contaminants into USDWs at levels exceeding the drinking 
     water MCLs or that may adversely affect the health of 
     persons. Current federal UIC regulations do not expressly 
     address or prohibit the use of diesel fuel in fracturing 
     fluids, but the SDWA and UIC regulations allow States to be 
     more stringent than the federal UIC program.
       4. a. Should the Agency become aware of an unreported 
     return to the use of diesel fuel in hydraulic fracturing by 
     one of the parties to the MOU, what recourse is available to 
     EPA under the terms of the MOU?
       There are no terms in the MOA that would provide EPA a 
     mechanism to take any enforcement action should the Agency 
     become aware of an unreported return to the use of diesel 
     fuel in hydraulic fracturing by one of the parties to the 
     MOA. However, EPA would work c1osely with the companies to 
     determine why such action occurred and discuss possible 
     termination procedures. The agreement defines how either 
     party can terminate the agreement. EPA would make every 
     effort to work with such a company to maintain their 
     participation in the agreement. EPA entered the agreement 
     with an assumption that the companies would honor the 
     commitments they have made about diesel use in hydraulic 
     fracturing fluids.
       b. What action does the Agency plan to take should such 
     action occur?
       If such a situation does happen, and EPA learns that diesel 
     fuel used in hydraulic fracturing fluid may enter a USDW and 
     may present an imminent and substantial threat to public 
     health, EPA may issue orders or initiate litigation as 
     necessary pursuant to SDWA section 1431 to protect public 
     health. Otherwise, EPA would take the actions described under 
     the previous question.
       c. Why did EPA choose to use an MOU as opposed to a 
     regulatory approach to achieve the goal of eliminating diesel 
     fuel in hydraulic fracturing?
       While the report's findings did not point to a significant 
     threat from diesel fuel in hydraulic fracturing fluids, the 
     Agency believed that a precautionary approach was 
     appropriate. EPA chose to work collaborative1y with the oil 
     service companies because we thought that such an approach 
     would work quicker and be more effective than other 
     approaches the Agency might employ (i.e. rulemaking, 
     enforcement orders, etc.). We believed that once the service 
     companies became familiar with the issue, they wouid 
     willingly address EPA's concerns. After several months of 
     meetings and negotiations between representatives of the 
     service companies and high level management in EPA's 
     Office of Water, a Memorandum of Agreement (MOA) was 
     drafted and signed by all parties effective December 24, 
     2003.
       We believe that the MOA mechanism accomplished the intended 
     goal of removing diesel from hydraulic fracturing fluids in a 
     matter of months, whereas proposing a rule to require removal 
     would have taken at least a year or more.
       d. What revisions were made to the June 2004 EPA study 
     between the December 2003 adoption of the MOU and the 2004 
     release of the study? Which of those changes dealt 
     specifically with the use and effects of diesel fuel in 
     hydraulic fracturing?
       During the specified time-frame, EPA focused on making 
     editorial changes to the report and clarifying information 
     relative to its qualitative discussion of the mitigating 
     effects of dilution, dispersion. adsorption, and 
     biodegradation of residual fluids. With respect to tbe use 
     and effects of diesel fuel. changes in the study primarily 
     focused on including language in the text of the report which 
     acknowledged that we had successfully negotiated an MOA with 
     the service companies. Specifically, EPA referenced this 
     agreement in the text of the report in the Executive Summary 
     at page ES-2 and on page ES-17, and further discussed the MOA 
     in Chapter 7 in the Conclusions Section of the study.
       e. The Agency also states that it expects that even if 
     diesel were used, a number of factors would decrease the 
     concentration and availability of BTEX. Please elaborate on 
     the data EPA collected and the observations the Agency made 
     in the field that would support the conclusion that 39 
     percent of fluids remaining in the ground (1991 Palmer), 
     should they contain BTEX compounds, would not be present in 
     sufficient concentrations to adversely affect underground 
     sources of drinking water.
       EPA reiterates that the 39 percent figure from the 1991 
     Palmer paper is only one instance where it has been 
     documented what quantity of the hydraulic fracturing fluids 
     injected into wells will remain behind. Dr. Palmer, who 
     conducted the original research, estimated that coalbed 
     methane production wells flow back a greater percentage of 
     fracturing fluids injected during the process. Where 
     formations are dewatered or produced for a substantial period 
     of time, greater quantities of formation and fracturing 
     fluids would presumably be removed. We used 39 percent 
     remaining fluids as a ``worst case'' scenario while doing our 
     qualitative assessment, since it was the only figure we had 
     from research conducted on coalbed methane wells.
       With respect to the BTEX compounds, we no longer believe 
     that they are a concern owing to the MOA negotiated between 
     EPA and the three major service companies.
       5. Do you plan to conduct a national survey or review to 
     determine whether state Class II programs adequately regulate 
     hydraulic fracturing?
       At this time, EPA has no plans to conduct such a survey or 
     review regarding the adequacy of Class II programs in 
     regularing hydraulic fracturing. In its final study design, 
     EPA indicated that it would not begin to evaluate existing 
     state regulations concerning hydraulic fracturing until it 
     decided to do a Phase III investigation. The Agency, however, 
     reserves the right to change its position on this if new 
     information warrants such a change.
       6. In light of the Court decision and the Agency's July 
     2004 response to the Court remand, did the Agency consider 
     establishing national regulations or standards for hydraulic 
     fracturing or minimum requirements for hydraulic fracturing 
     regulations under Class II programs?
       When State UIC programs were approved by the Agency--
     primarily during the early 1980s--there was no Eleventh 
     Circuit Court decision indicating that hydraulic fracturing 
     was within the definition of ``underground injection.'' Prior 
     to LEAF v. EPA. EPA had never interpreted the SDWA to cover 
     production practices, such as hydraulic fracturing. After the 
     Court decision in 1997, the Agency began discussions with the 
     State of Alabama on revising their UIC program to include 
     hydraulic fracturing. The net result of that process was the 
     EPA approval of Alabama's revised section 1425 SDWA UIC 
     program to include specific regulations addressing CBM

[[Page S7279]]

     hydraulic fracturing. This approval was signed by the 
     Administrator in December 1999. and published in the Federal 
     Register in January 2000.
       In light or the Phase I HF study and our conclusion that 
     hydraulic fracturing did not present a significant public 
     health risk, we see no reason at this time to pursue a 
     national hydraulic fracturing regulation to protect USDWs or 
     the public health. It is also relevant at the three major 
     service companies have entered into an agreement with EPA to 
     voluntarily remove diesel fuel from their fracturing fluids.
       7. a. If so, please provide a detailed description of your 
     consideration of establishing these regulations or standards 
     and the rationale for not pursuing them.
       b. Do you plan to establish such regulations or standards 
     in the future?
       c. If not, what standards will be used as the standard of 
     measurement for compliance for hydraulic fracturing under 
     state Class II programs?
       EPA has not explored in any detailed fashion minimum 
     national or state requirements for hydraulic fracturing of 
     CBM wells, except when it evaluated the revised UIC program 
     in Alabama.
       Considering and developing national regulations for 
     hydraulic fracturing would involve discussions with numerous 
     stakeholders. the states, and the public and it would require 
     an intensive effort to arrive at regulatory language that 
     could be applied nation-wide. As EPA's study indicates, 
     coalbeds are located in very distinct geologic settings and 
     the manner in which they are produced for methane gas may be 
     very different in each locale. The proximity of USDW to the 
     coal formations. and the regional geology and hydrology all 
     play roles in how hydraulic fracturing operations are 
     conducted.
       If EPA receives information of drinking water contamination 
     incidents and follow-up investigations point to a problem, 
     EPA would then re-evaluate its decision to not continue with 
     additional stndy relating to CBM hydraulic fracturing.
       Should additional states submit revised UIC programs for 
     EPA's review and approval which include hydraulic fracturing 
     regulations, we would evaluate these programs under the 
     ``'effectiveness.'' standards of the SDWA section 1425 as we 
     did or the State of Alabama.
                                  ____



                            Oil and Gas Accountability Project

                                       Durango, CO, June 14, 2005.
     Hon. James M. Jeffords,
     U.S. Senate,
     Washington, DC.
       Dear Senator Jeffords: Please accept this letter of 
     endorsement for S. 1080, the Hydraulic Fracturing Safey Act 
     of 2005.
       Hydraulic fracturing is the industry practice of injecting 
     fluids and other substances underground in order to increase 
     production of oil and gas. While the industry refuses to 
     fully list the chemicals it injects underground, the EPA has 
     found that many of these chemicals are known to be toxic to 
     humans and some are actually considered hazardous under 
     federal law. Yet, the EPA and all states except Alabama have 
     refused to regulate the toxics that are used during hydraulic 
     fracturing operations. What this, means, in practice, is that 
     is it legal for hydraulic fracturing companies to inject 
     toxic chemicals into or close to drinking water aquifers. The 
     EPA has even admitted that a number of toxic hydraulic 
     fracturing chemicals can be injected into drinking water 
     sources at concentrations that pose a threat to human health.
       With thousands of new oil and gas wells being drilled each 
     year, the impacts of hydraulic fracturing are beginning to 
     show up. In western Colorado, hydraulic fracturing literally 
     blew up one homeowner's water well and contaminated it with 
     methane. In Alabama, hydraulic fracturing turned water wells 
     black, and citizens have experienced health problems 
     following contact with the affected water. The true scope of 
     the problem, is not known, however, because state agencies do 
     not monitor groundwater for chemicals used in hydraulic 
     fracturing operations.
       Despite the fact that unregulated hydraulic fracturing may 
     be poisoning our drinking water. Senator Inhofe has 
     introduced a bill, S.837, on behalf of the oil and gas 
     industry, that would completely exempt hydraulic fracturing 
     from EPA regulation under the Safe Drinking Water Act.
       Thank you and Senators Lautenberg, Boxer and Lieberman for 
     introducing the Hydraulic Fracturing Safety Act of 2005 (S. 
     1080). requiring the use of nontoxic products in hydraulic 
     fracturing operations during oil and gas production. This 
     important bill will help to protect our precious underground 
     drinking water sources.
           Sincerely,
                                                     Gwen Lachelt,
     Director.
                                  ____



                                 National Wildlife Federation,

                                     Washington, DC, May 25, 2005.
     Hon. James M. Jeffords,
     Ranking Member, Senate Environment and Public Works 
         Committee, U.S. Senate, Washington, DC.
       Dear Ranking Member Jeffords: On behalf of the National 
     Wildlife Federation, and the millions of hunters, anglers and 
     outdoor enthusiasts we represent, I am writing to thank you 
     for introducing the Hydraulic Fracturing Safety Act of 2005.
       I am pleased that your legislation would ban the use of 
     diesel or other priority pollutants listed under the Federal 
     Water Pollution Control Act in hydraulic fracturing for oil 
     or natural gas exploration and production and also require 
     the EPA to regulate hydraulic fracturing.
       EPA does not currently regulate hydraulic fracturing, a 
     common technique used to stimulate oil and gas production 
     that can potentially compromise groundwater resources and 
     reserves. An EPA whistle-blower and other experts agree that 
     hydraulic fracturing is a serious threat to drinking water. 
     Hydraulic fracturing has already impacted residential 
     drinking water supplies in at least three states (Colorado, 
     Virginia and Alabama) and incidents have been recorded in 
     other states (New Mexico, West Virginia and Wyoming) where 
     residents have recorded changes in water quality or quantity 
     following hydraulic fracturing operations near their homes.
       I am disappointed that the U.S. House of Representatives 
     passed an energy bill that exempts the oil and gas industry 
     from being regulated under the Safe Drinking Water Act for 
     hydraulic fracturing. The House passed bill would also exempt 
     all oil and gas construction activities from the Clean Water 
     Act; cut the heart out of environmental reviews by allowing 
     for numerous National Environmental Policy Act exemptions; 
     and require the BLM to rush to judgment on complex energy 
     permitting decisions. These provisions would harm America's 
     wildlife and Americans' water resources and recreational 
     opportunities. I urge you to remain steadfast and oppose any 
     amendments on the Senate floor that would provide egregious 
     exemptions to the laws that protect water resources, wildlife 
     and their habitat.
       NWF and the millions of hunters, anglers and outdoor 
     enthusiasts we represent commend you for your leadership on 
     safeguarding our water resources and wildlife habitat. If you 
     have further questions, please do not hesitate to contact me.
           Sincerely,
                                                         Jim Lyon,
                              Senior Vice President, Conservation.

  Mr. JEFFORDS. Mr. President. I thank Senator Grassley, Senator Baucus 
and the other members of the Senate Finance Committee for agreeing to 
my recycling amendment, which I call the Recycling Investment Saves 
Energy, RISE, provisions. These provisions were added to the tax title 
of the energy bill last week and have now been incorporated into the 
Energy bill as section 1545 of H.R. 6.
  The current Senate Energy bill contains important provisions to 
promote the use of energy savings in vehicles, appliances, new homes, 
and commercial buildings. As we move forward with fostering energy 
efficiency, we must not neglect recycling. Recycling should be an 
integral component of our nation's energy efficiency strategy.
  The RISE provisions will create jobs, increase productivity, and 
conserve energy by establishing a tax credit to preserve and expand 
America's recycling infrastructure. Specifically, the provisions 
establish a 15 percent tax credit for the purchase of qualified 
recycling equipment used to sort or process packaging and printed 
materials, such as beverage containers, cardboard boxes, glass jars, 
steel cans and newspapers.
  The tax credit could be claimed by material recovery facilities, 
manufacturers or other persons that purchase recycling equipment that 
sorts or processes residential or commercial recyclable materials, even 
if such equipment also is used to handle material from industrial 
facilities.
  This national investment in our recycling infrastructure is necessary 
to reverse the declining recycling rate of many consumer commodities, 
including aluminum, glass and plastic, which are near historic lows. 
For example, 55 billion aluminum cans were wasted by not being recycled 
in 2004, which represents approximately $1 billion of aluminum lost to 
industry. The recycling rate of paper is estimated to be roughly 50 
percent, glass containers 35 percent, and PET plastic bottles less than 
20 percent.
  The energy savings from greater recycling are significant. Increasing 
the recycling of containers, packaging and paper could save the 
equivalent energy output of 15 medium-sized power plants on an annual 
basis. Recycling aluminum cans, for example, saves 95 percent of the 
energy required to make the same amount of aluminum for its virgin 
source. Increasing the U.S. recycling rate to 35 percent would result 
in annual energy savings of 903 trillion BTUs, enough to meet the 
annual energy needs of 8.9 million homes.
  Due to the diminishing quantity and quality of available recyclable 
materials, many companies are not able to obtain the volume of quality 
recycled feedstock needed to meet demand. This

[[Page S7280]]

new economic challenge makes it even harder for recycled products to 
compete in the marketplace. For example, two Michigan plastic recycling 
facilities recently closed, affecting 100 jobs, as a result of 
inconsistent supply of recycled plastic. Similarly 17 percent of the 
recycling capacity at U.S. paper mills has been shut down, in part due 
to insufficient quality recyclable materials. One leading glass 
manufacturer also reports that they are able to obtain only a small 
fraction of the volume of recycled glass that their facilities can use.
  In some cases, recyclers have been forced to shut down their 
operations in the United States and relocate to other countries due in 
part to insufficient or poor quality recycled feedstocks. This is 
particularly unfortunate as, on a per-ton basis, sorting and processing 
recyclables are estimated to sustain 10 times more jobs than 
landfilling or incineration.
  The RISE provisions aim to reverse the declining recycling rate and 
resulting energy loss by incentivizing greater collection of quality 
recyclable materials. The bill would expand collection efforts by 
making innovative technology more affordable, such as reversible 
vending machines that collect and process empty containers. It could 
also be used to finance equipment at recycling collection centers.
  This targeted tax credit would address quality concerns by reducing 
the barriers hindering investment in optical sorting and other state of 
the art equipment needed at material recovery facilities. By reducing 
material loss and improving quality, RISE will increase both the 
quantity and quality of recycled feedstock available to manufacturers.
  Reducing the barriers to recycling also serves a number of 
environmental goals, including lessening the need for new landfills, 
preventing emissions of many air and water pollutants, reducing 
greenhouse gas emissions, and stimulating the development of green 
technology. But most importantly, recycling helps preserve resources of 
our children's future. For these reasons, I urge my colleagues to 
support these provisions.
  Mr. President, last night the Senate narrowly defeated the Kerry 
amendment No. 844, sense-of- the-Senate resolution on climate change. I 
was unable to be present for the vote, but I strongly supported this 
sense of the Senate. The United States has consistently failed to 
constructively engage in international discussions in a manner 
consistent with our obligations under the United Nations Framework 
Convention on Climate Change or even under a basic good neighbor 
policy. The Bush administration policy on global warming is 
ineffective, unproductive, and irresponsible.
  The administration's voluntary approach and efforts to address global 
warming have been underfunded and will not produce real emissions 
reductions in the timeframe necessary. Fortunately, many of the States 
have taken up the mantle of leadership, since there is a tremendous 
vacuum in the White House. By reversing his pledge to control carbon 
dioxide from powerplants, walking away from the Kyoto Protocol, and now 
snubbing British Prime Minister Tony Blair's request for assistance 
from the United States on this critical climate change problem, the 
President is reneging on this Nation's responsibility and opportunity 
to be a world leader.
  Carbon dioxide levels have never been higher and the United States 
disproportionately contributes to the global warming problem. We need 
to reengage with the world in producing a binding global plan that 
reduces greenhouse gases below levels that would cause dangerous 
interference with the Earth's climate.
  The administration and the world should pay close attention to the 
passage of the Bingaman-Specter resolution that committed the Senate to 
adopting legislation containing mandatory controls on carbon dioxide. 
This is an important resolution and it should serve as a wakeup call to 
the administration and those among the carbon-intensive industries. We 
must shoulder our moral responsibility to reduce the risks of global 
warming.
  Mr. President, I thank the bill managers, Senator Domenici and 
Senator Bingaman, for agreeing to accept my amendment in the managers' 
package that was agreed to last night by unanimous consent. My 
amendment directs the Architect of the Capitol to study the feasibility 
of installing energy and water conservation measures on the rooftop of 
the Dirksen building, specifically the roof area above the cafeteria in 
the center of the building.
  Today, all that exists is open space in the center of the building. 
My amendment will assist the Architect in obtaining information that 
will allow this space to be used in a more efficient manner and save 
taxpayer dollars.
  During debate on the energy bill, the Senate has heard numerous 
arguments on the importance of conserving energy. In August of 2003, 
nearly 50 million people in the Northeast and Midwest were affected by 
a massive power outage. This event emphasized the vulnerability of the 
U.S. electricity grid to human error, mechanical failure, and weather-
related outages. Failure to maintain a reliable grid had a huge impact 
on our Nation's economy, businesses, and individuals' everyday lives.
  It is vital, then, that we here in the Senate do our part and put 
measures in place to make the Nation's Capitol a more secure and 
sustainable user of electricity. The Capitol Complex is largely 
dependent upon the electrical grid for power. Our daily operations 
should not be compromised by grid failure.
  My amendment moves us forward in the right direction. Technology 
already exists to ensure that our operating systems can continue to 
operate despite loss of a main power supply. By creating onsite 
generating capacity through the installation of cogeneration equipment 
at the power plant and using solar powered equipment, like photovoltaic 
panels, we could produce energy to operate essential systems during a 
blackout or significant loss of power. We can start slowly by powering 
emergency lighting and notification systems in hallways so the 
occupants know how to exit the building safely or upgrade the 
electrical generating capacity of the complex. Technology is only 
getting better. My amendment asks the Architect of the Capitol to 
explore the use of this new technology to ensure that the Nation's 
Capitol always has reliable power.
  In addition, this new technology also has the potential to provide 
significant savings in the Capitol's operating budget. We are all 
looking for ways to save the taxpayers money and reduce the Nation's 
deficit. We have the opportunity today to set an example and practice 
what we preach. As Members of Congress, we can educate ourselves and 
our staff on the benefits of energy efficiency, and see first hand the 
savings it can generate. The Nation's Capitol can join those already 
utilizing this technology and help encourage others to adopt it as 
well.
  My amendment requires a feasibility study be conducted to look at the 
Dirksen building rooftop, including the open space in the center of the 
building directly above the cafeteria. The study will focus on more 
efficient use of the space while providing energy and water savings to 
the Capitol Complex.
  I envision a wonderful park and garden area that Members and staff 
can actually use. These gardens would not only provide a beautiful 
environment by utilizing native plants, but they would also reduce 
energy use, and provide insulation for the building to reduce heat and 
energy loss.
  These gardens would also provide a collection system for rainwater to 
limit the amount of stormwater runoff in the area. This collected water 
could be utilized for basic plumbing, watering the vegetation, or even 
the fire sprinkler systems; thereby reducing the use of water in the 
Capitol Complex.
  Installation of technology, like photovoltaic panels, could collect 
the rays of the sun and provide energy to the building. These can be 
installed on the rooftops of our buildings in many different areas. 
These panels are now made to blend into any environment
  There is even technology that exists to funnel natural daylight into 
the cafeteria in the basement. Imagine enjoying natural daylight as you 
consume your lunch or hold that quick meeting. Preliminary studies show 
that exposure to daylight improves worker productivity and results in 
less absenteeism due to illness.
  The Architect of the Capitol is currently updating the master plan 
for the

[[Page S7281]]

Capitol Complex. This small project fits into that plan. The Architect 
is making great strides to update our operating systems with newer and 
efficient technology with sustainable features. I appreciate his 
efforts and encourage him to continue doing so.
  Before I conclude, I would like to thank a former staffer who helped 
me develop this great idea, Mary Katherine Ishee. Mary Katherine was 
creative enough to look beyond the barren view from the committee 
offices on the fourth floor of the Dirksen building and realize the 
opportunity it presented.
  It is about time we bring our home, the Capitol Complex, up to date 
with the rest of the world. This language is a step in that direction. 
We have the potential to use the latest technology to save energy, 
address security concerns, conserve our resources, and make more 
efficient use of this space.
  We will all benefit from a wonderful, efficient, and useful park in 
the middle of the Dirksen building, and the taxpayers will benefit from 
our reduced energy and water use in the form of lower utility bills. I 
am very pleased that this measure has been added and I hope it will be 
retained by the conferees.
  Mr. President, I want to thank Senators Domenici and Bingaman for 
adopting my amendment No. 774, as part of the Senate Energy bill. The 
amendment authorizes up to $20 million a year for 7 years for the 
establishment of a new Department of Energy grant program to aid local 
governments, municipal utilities, rural electric cooperatives, and not-
for-profit agencies. The cost of repairing transmission lines is 
proving particularly difficult for small communities in Vermont and 
across America.
  I became interested in creating such a program due to the challenges 
that communities in my State are facing with respect to the upgrading 
and siting of transmission and distribution lines. For example, 
residents in Lamoille County, VT, have been struggling to find ways to 
expand the transmission system to accommodate the demands of a growing 
tourism industry without overly burdening local residents with the cost 
of such an upgrade. Currently, the transmission system that delivers 
electricity to this area of my State is at peak capacity, leaving the 
local community in jeopardy should a single event like a fallen power 
line or damage to a key piece of equipment occur.
  Not only must communities afford the costs of the infrastructure 
itself, but also the costs of integrating these new technologies into 
the rural landscape in a way that does not destroy their scenic quality 
and protects their lifestyle.
  These grants will help rural communities meet these needs. They can 
be used for increasing energy efficiency, siting or upgrading 
transmission lines, or providing modernizing electric generating 
facilities to serve rural areas. Under the generation grants portion of 
the program, preference will be given to renewable facilities such as 
wind, ocean waves, biomass, landfill gas, incremental hydropower, 
livestock methane, or geothermal energy.
  By adopting my legislation as part of this Energy bill, small 
electric cooperatives and local governments in Lamoille County, VT, 
will be eligible to apply for Federal grants to construct new 
facilities and transmission upgrades. This is a good amendment and it 
should be retained by the conferees.
  Mr. President, last night the Senate defeated amendment No. 961 that 
would have banned the siting of windmills in many areas in the lower 48 
States and made them ineligible to receive Federal tax subsidies. Had I 
been present to vote, I would have opposed this amendment. In my 30 
years in Congress, I have been a strong proponent of renewable energy 
sources including wind power. I am very optimistic about the role wind 
energy can play in satisfying a growing proportion of this Nation's 
energy needs.
  If the objective of this amendment was to protect scenic qualities of 
America's lands and shorelines, it did not achieve that goal. The 
amendment only targeted the siting of windmills within 20 miles of 
Federal public lands, but did not address the siting of coal-fired 
powerplants and other energy sources that have far greater impacts to 
our public lands. Just look at the impacts that air pollution blowing 
in from coal-fired Midwest powerplants is currently having on the Great 
Smoky Mountain National Park, Shenandoah National Park, and the 
protected areas in the beautiful green mountains of Vermont.
  This amendment also failed to treat all public lands and wildlife 
refuges equally. As ranking member of the Environment and Public Works 
Committee, the committee with jurisdiction over our Nation's wildlife 
refuges, I was concerned that, had this amendment been approved, no 
wind turbine situated anywhere near Federal lands in the lower 48 
States would have been eligible to receive Federal tax subsidies, 
thereby severely limiting the expansion of wind power in the United 
States. Oddly, this amendment specifically exempted some other 
federally protected areas such as coastal wildlife refuges in Louisiana 
and Alaska. By defeating this amendment by a wide margin, the Senate 
sends a strong message that wind power has a role to play in satisfying 
this Nation's energy needs.
  Mr. PRYOR. Mr. President, families in Arkansas want and deserve a 
national energy policy that truly moves us towards energy independence. 
We must look beyond oil, gas, and coal and develop cleaner alternatives 
and new sources of energy, especially renewable fuels.
  This bill offers a good starting point in achieving this goal, and I 
am pleased the Senate has agreed to adopt my amendment that embraces 
the potential of biodiesel and hythane as part of this effort.
  My amendment requires that the Department of Energy, in conjunction 
with universities throughout the country, prepare two reports. These 
reports would evaluate the potential markets, infrastructure 
development needs and possible impediments to commercialization for two 
alternative fuels: biodiesel and hythane.
  Biodiesel can substitute directly for petroleum-based diesel fuel, 
usually with no engine modifications, and offers a number of health and 
environmental benefits. It produces less carbon monoxide, less sulfur 
oxides emissions, and less particulate or soot emissions from some 
engines. It allows for safer handling. It is an agricultural-based 
feedstock may be produced anew every year, unlike fossil fuels which 
have declining reserves. And in Arkansas and other agricultural states, 
the robust commercializing of biodiesel would mean an economic boon to 
our farmers.
  The promise of biodiesel as a fuel source is just beginning to show. 
Biodiesel only currently accounts for less than 0.1 percent of diesel 
fuel consumption in the U.S. But total U.S. diesel fuel use was 
estimated at 39.5 billion gallons in 2001, including 33.2 billion of 
on-road highway use.
  The enhanced commercialization of biodiesel can help reverse this 
trend, but only if we enable this industry to get off the ground on a 
solid footing. We have seen an enormous amount of federal assistance 
help support and catapult the ethanol industry. Our soybean farmers and 
our Nation could benefit from similar treatment.
  My amendment also requires a study on the feasibility of hythane 
deployment, which is a blend of hydrogen and methane. Hythane is 
considered a stepping stone or bridge to the hydrogen economy because 
it represents an initial commercial application of hydrogen as a 
legitimate fuel option. It reduces nitrogen oxide, NOx, 
emissions by 95 percent relative to diesel, and makes significant 
reductions in carbon dioxide.
  China is now leading the way in developing hythane-powered vehicles. 
In preparation for the 2008 Olympics, Beijing, is in the process of 
replacing 10,000 diesel buses with hythane buses.
  Additionally, hythane offers a solution to improve waste management 
in our communities. According to the Environmental Protection Agency, 
municipal solid waste landfills are the largest source of human-related 
methane emissions in the United States, accounting for about 34 percent 
of these emissions. Landfill gas is created as solid waste decomposes 
in a landfill and consists of about 50 percent methane.
  Instead of allowing this gas to escape into the air, it can be 
captured, converted, and used to make hythane. As

[[Page S7282]]

of December 2004, there are approximately 380 operational Landfill Gas 
energy projects in the United States and more than 600 landfills that 
are good candidates for projects. Companies ranging from Ford to 
Honeywell to Nestle are converting landfill gas into energy.
  There is similar potential for chemical plants who also release 
methane into the atmosphere, contributing to local smog and global 
climate change. If they sequestered methane to sell to a hythane 
manufacturer, I believe they would take advantage of the profits it 
would yield.
  My State of Arkansas, for example, has significant methane seams, 
including the Fayetteville shale bed methane seam, which Southwest 
Energy and CDX Gas are already using to their advantage. These 
resources could contribute to hythane fuel production as well.
  Our Nation's energy problems cannot be solved overnight; however, we 
would be remiss if we did not at least further explore innovative and 
practical solutions, such as biodiesel and hythane. This amendment is a 
win-win situation for our energy dependence, health, economy and 
environment. I thank my colleagues for their support.
  Mr. FEINGOLD. Mr. President, I regret that I was unable to take part 
in yesterday's cloture vote because I was testifying before the BRAC 
Commission in St. Louis, MO, along with the senior Senator from 
Wisconsin, in an effort to save the Milwaukee-based 440th Airlift Wing 
from closing. The fate of the 440th is very important to me and my 
constituents, and, while I have only missed a handful of votes in my 12 
years in the Senate, it is clear to me that testifying in St. Louis was 
the right decision.
  If I had been present I would have again voted against the cloture 
motion on the nomination of John Bolton. Since the motion required 60 
votes to pass, my absence did not affect, and could not have affected, 
the outcome of the vote.
  Mr. BYRD. Mr. President, for too long, we as a body, and we as a 
Nation, have fallen short in our efforts to address some of the most 
profound and far reaching challenges of our time--global climate change 
and energy security. For too long, we have skirted the issues and have 
shirked our responsibilities. We have convinced ourselves that we are 
doing something but, in reality, we continue to take no real action. 
Rather than lead, we have stood by, paralyzed, undermining any efforts 
to forge an effective response.
  It is time to pull ourselves out of that quicksand and confront the 
tasks at hand. First, we must establish practical and comprehensive 
steps to reduce U.S. emissions of greenhouse gases and to reduce our 
dependence on foreign energy sources. Second, we must work in a 
partnership with developing nations to deploy clean energy technologies 
that can meet their urgent development needs while reducing their own 
contribution to global climate change and their growing energy 
dependency. Third, we must commit ourselves to the fundamental task of 
forging an effective and sound international agreement to guide a truly 
global effort to confront this most daunting problem, global climate 
change.
  In 1997, during the 105th Congress, the Senate passed S. Res. 98, by 
a vote of 95 to 0. As the primary author, along with Senator Hagel, of 
S. Res. 98, I sought at that time to express the sense of the Senate 
regarding the provisions of any future binding, international agreement 
that would be acceptable to the Senate.
  However, almost from the day of that vote, those on both sides of the 
issue have misrepresented and misconstrued its intent. What was meant 
as a guide for action has instead been invoked, time and again, as an 
excuse for inaction. Yet no one has misrepresented and misconstrued S. 
Res. 98 more so than this present administration. Rather than employing 
it as a tool to positively influence the international negotiations, 
the administration used it as cover to simply walk away from the 
negotiating table.
  For the U.S., the issue should no longer be about the Kyoto Protocol. 
Certainly, everyone in this Chamber knows that the United States will 
not join the Kyoto Protocol. The rest of the world has come to accept 
that fact as well. So let us exorcize the specter of the Kyoto Protocol 
from this debate. The real question is what comes next. How do we 
arrive at a credible, workable strategy, one compatible with the best 
interests of the United States and of the other major emitting 
industrial and developing countries? That must be the question now 
before us.
  We must send a clear signal that we recognize our responsibilities, 
and we must be prepared to work toward a fair and effective framework 
for action. We must be bold leaders. We owe this to ourselves; we owe 
it to the other nations of the world; and we owe it most of all to our 
children and to future generations.
  Technology is a critical component to resolving the climate change 
challenges in the U.S. and around the world. But let me be clear. Even 
as the administration has touted technology as the solution, it 
continues to woefully underfund these very programs. Technology 
policies by themselves cannot be the silver bullet. Technology policies 
must be paired with commonsense, market-based solutions to create 
incentives for innovation and adoption of new and improved technologies 
that will provide a signal to reduce emissions.
  There must be a broader approach. I want to commend Senators McCain 
and Lieberman for their diligence and hard work to find a middle 
ground. I want to commend Senator Bingaman on his efforts as well. Like 
them, I believe that we face a problem, and it requires that we craft 
an economically and environmentally sound solution.
  The McCain-Lieberman amendment did not pass in its current form. 
While I did not vote for their amendment, I want to make it very clear 
to the administration and to others who just want to say ``no'' that I 
will work with Senator McCain, Senator Lieberman, and Senator Bingaman, 
and other Republican and Democratic Senators who want to craft a 
constructive solution.
  I have long said that global warming and our energy security are 
major challenges in the U.S. and around the world. Troubling things are 
happening in our atmosphere, and we should wake up. I am not alone in 
this belief. The U.S. cannot bury its head in the sand and hope that 
these problems will simply go away.
  I have insisted on a rational and cost-effective approach for dealing 
with climate change, both domestically and internationally. I have no 
doubt that the far right and the far left will oppose any moderate 
approach on this issue, but it is time to get the right architecture 
and solid funding in place to make a first step a reality. I am 
concerned that the McCain-Lieberman approach, in its present form, will 
negatively impact my State, but that does not mean that we will not be 
able to find some common ground in the future. I hope that my friends 
in the energy industry will decide to work with them as well.
  Mr. President, we cannot just stand still. I know Senator McCain. He 
is tenacious, and Senators Lieberman and Bingaman are equally 
tenacious. If 14 Senators in the middle can come together to diffuse 
the Nuclear Option, then I am certain that a solid center of Senators 
can find a new path forward to address global climate change and our 
Nation's energy security needs. I would certainly not support actions 
that would harm the economy or the people of my State of West Virginia 
or the United States in general. Yet, I repeat, I believe that there is 
a middle path forward, and I stand ready to work with those who share 
that view.
  Mr. REID. Mr. President, I rise to speak to a particular section of 
H.R. 6, the Energy bill that would lead to Nevada and Washington 
ratepayers being relieved of $480 million in fees under fraudulent 
contracts entered into with Enron, the defunct energy company.
  The largest utility in my State, Nevada Power, had a $326 million 
contract with Enron for power. The contract was terminated once it 
became impossible for Enron to hide its financial frauds any longer and 
instead was forced to declare bankruptcy. Nonetheless, Enron has 
asserted before the bankruptcy court the right to collect all of the 
profits it would have made under the contract through so-called 
``termination payments.'' Enron has made this claim even though Enron 
never delivered the power under the

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contract, even though Enron had obtained its authority to sell power 
fraudulently, and even thought Enron was in gross violation of its 
legal authority to sell power at the very time the contract was entered 
into.
  The energy bill ensures that the proper government agency will 
determine whether Enron is entitle to more money from Nevada. That 
agency is the Federal Energy Regulatory Commission, FERC. When FERC was 
established by Congress, its fundamental mission was, and remains, to 
protect ratepayers. FERC has specialized expertise required to resolve 
the issues surrounding some of the contracts that Enron entered into 
and eventually terminated. The provision is an outgrowth of the Enron 
criminal conspiracy to rip off ratepayers throughout the West.
  Enron is still seeking to extract an additional $326 million in 
profits from my State's utilities for power that was never delivered. 
Enron, after all of its market manipulation and financial fraud, is 
still trying to profit from its wrong-doing at the expense of every 
Nevadan.
  Starting in December 2000, Nevada utilities entered into long-term 
contracts with Enron to meet a significant portion of their long-term 
needs. No one was aware of Enron's fraudulent activities to manipulate 
electricity markets. The prices that Nevada Power agreed to pay were 
three times as high as the threshold that FERC had established as a 
ceiling price. In November 2001, Nevada Power asked FERC to review the 
rate to determine whether those contracts were just and reasonable. Two 
days after the complaint was filed against Enron, Enron filed for 
bankruptcy. There is an issue in the bankruptcy case as to whether 
Enron can enforce contracts that it terminated. The bankruptcy court is 
responsible for enhancing the bankruptcy estate for the benefit of 
creditors. FERC, on the other hand, sees a more complete picture which 
includes protecting the interests of the general public.
  This issue is of paramount concern to my constituents. It will decide 
whether they will be on the hook for more than a hundred million 
dollars, an amount that when spread out over a relatively small number 
of ratepayers, would translate into rate increases. It is critical that 
this issue be decided by the forum with the specialized expertise in 
matters relating to the sale of electricity with a stated mission of 
protecting ratepayers, and that is the Federal Energy Regulatory 
Commission.
  I would like to especially thank Senators Bingaman, Cantwell, 
Domenici, and Ensign for their assistance on this provision. I thank my 
colleagues on both sides of the aisle for their support up until this 
point, and for their continuing support in making sure that this 
critical measure is included in the legislation that emerges from the 
conference committee.
  I yield the floor.
  Mr. CRAIG. Mr. President, I am not aware of any further amendments. 
Therefore, I ask for a third reading of the bill.
  The PRESIDING OFFICER. The question is on the engrossment of the 
amendments and third reading of the bill.
  The amendments were ordered to be engrossed and the bill to be read a 
third time.
  The bill was read the third time.
  Mr. CRAIG. I ask unanimous consent that the vote on passage of the 
bill occur at 9:45 a.m, on Tuesday, June 28, with paragraph 4 of rule 
XII waived.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. CRAIG. Mr. President, before I yield the floor, let me extend a 
very special thanks to all who have participated in the crafting and 
the final work product that we now have before us, a national energy 
policy for our country. A good many have contributed and most assuredly 
the chairman of the committee, Pete Domenici, and the ranking member, 
Senator Bingaman, have done an excellent job, in a very bipartisan way, 
to bring us to where we are at this moment.
  Let me also extend a special thanks to the staff of the committee who 
have expended extraordinary time and hours to get us to this point. I 
thank my personal staff for a near 5-year effort, as we have worked 
over a long period of time to winnow out, shape, and bring before us 
what I think I can say is a very fine work product.
  I am anxious to see its final passage, which will occur on Tuesday, 
and a conference with the House. I hope we can have this bill on the 
President's desk sooner, rather than later. The American people deserve 
a national energy policy that allows this country to get back into the 
production of energy of all of the types that have been addressed in 
this legislation.
  I thank all of my colleagues for their work effort, and I yield the 
floor.
  The PRESIDING OFFICER. The Senator from Rhode Island.
  Mr. REED. Mr. President, I ask unanimous consent to speak as in 
morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                               KARL ROVE

  Mr. REED. Mr. President, I rise to join many of my colleagues to 
express my dismay concerning the deplorable comments by Karl Rove that 
suggest that--indeed states that Democrats did not respond to the 
attack on this country on 9/11, that they did not join in with other 
Americans who not only recognized the consequences but came together to 
work together to attack those who attacked us and to bring to justice 
those who had callously attacked and killed thousands of Americans. 
Such a statement is beyond the pale.
  Mr. President, 9/11 is a moment in which the Nation was attacked, and 
we all came together, not as Democrats or Republicans, liberals or 
conservatives, but as Americans. We all came together.
  The record itself clearly undercuts this contention of Mr. Rove. 
Within days of the attack of 9/11, we passed in this Senate an 
authorization for the use of military force. The vote was 98 to 
nothing. Every Republican and every Democratic Senator voting cast his 
or her vote to give the President of the United States the authority 
and the power to go forward, seek our enemies, and destroy them.
  I can recall going up to Providence, RI, my State capital, that 
afternoon, and standing with every one of the elected officials in the 
State, Republican and Democrat, before a crowd of 25,000 people. My 
message was very simple. The Senate unanimously has authorized the 
President to seek out and destroy those who attacked us. That is what 
happened on 9/11. It was not as Mr. Rove tries to distort, to spin some 
situation in which we did not recognize the consequences or respond to 
the responsibilities of that dreadful moment.

  Mr. Rove suggests that our response was simply to suggest therapy, to 
understand our attackers. That is a misstatement of the fact. In fact, 
following that authorization of the use of force, we succeeded in this 
Senate, acting with virtual unanimity on measure after measure, to give 
the President and this Nation what we all needed to defend ourselves 
and to inflict upon our adversaries the justice which they so richly 
deserved.
  We passed the Aviation Transportation Security Act. We passed the 
fiscal year Intelligence Authorization Act--unanimously, the fiscal 
year Defense Authorization Act, the fiscal year Defense Appropriations 
Act, on and on and on, with virtual unanimity.
  We did this because we recognized that we are Americans. Today, Mr. 
Rove seeks to distort this historic record, to suggest we did not come 
together as Americans, but that there were those who knew the way and 
took it and those who tried to ignore the reality. That is a gross 
misstatement of history, of the facts, and he should apologize for it. 
It is inappropriate that an individual who works in the White House 
should make such callous and clearly erroneous statements for political 
effect.
  Mr. Rove suggests, in the article I have seen in the newspaper 
describing his speech, that our response was one of moderation and 
restraint. Nothing could be further from the truth. Our response was 
one voice authorizing the President to attack, giving him the tools to 
carry out the attack. Mr. Rove suggested that conservatives saw 9/11 
and said we will defeat our enemies. That is exactly what all Americans 
said or did. He goes on to suggest that what liberals saw prompted 
liberals to say: We must understand our enemies.

  Again, that is not the reality. I hope Mr. Rove is not suggesting 
unwittingly that we should go about without respecting and 
understanding our enemies. He should look back at Sun Tzu,

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the Chinese philosopher whose ``Art of War'' speaks to us today as it 
did centuries ago. As Sun Tzu said:

       If you know the enemy and know yourself, you need not fear 
     the results of 100 battles.

  In fact, some might suggest we are learning about our enemy too late 
in Iraq today.
  The point I make is this type of attack has no place, it does not 
conform to history, it undercuts the spirit of that moment, a moment in 
which every American came together as one people, indeed, as the world 
responded to us. That unanimity may have lessened over the last several 
months, but it was there. To view September 11 any other way is a gross 
distortion. Mr. Rove should apologize for it.
  He went on to attack my colleague, the Senator from Illinois, Mr. 
Durbin. Senator Durbin has apologized for his comments, and that 
apology is appropriate. But to continue to attack this individual does 
nothing to advance any of the ideals or aspirations or policies that we 
must be engaged with. What it does is distort a person, someone I have 
come to know, respect, and admire. Someone who is caring and concerned 
for people, whose thoughtfulness, whose intense commitment to doing 
what is appropriate for all Americans, and who is particularly 
sensitive to the needs of our military forces has impressed me.
  Like anyone who has had the privilege of serving and understanding in 
the U.S. Army or any uniformed service, I had the privilege of 
commanding paratroopers of the 82nd Airborne Division. We understand 
the extraordinary courage and bravery and valor of those individuals.
  I have been impressed many times with Senator Durbin's commitment to 
help those individuals in meaningful ways by providing the equipment 
they need, by ensuring that our veterans who have served with 
distinction are not ignored. The attacks on him are without correlation 
to the person and to the service of this individual.
  I hope Mr. Rove would apologize for these remarks and would refrain 
in the future from distorting the historial record. I don't think that 
is too much to ask of someone who is in such a position of power in the 
White House.
  At this point, it is sufficient to conclude by saying I hope, indeed, 
that we can avoid this kind of personalized attack, this gross 
distortion, which is untrue, misleading, and divides a nation and does 
not unite it. I hope we move on to substantive policy as we face real 
problems that face this Nation.
  I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. FRIST. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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