Congressional Record, Volume 153 Issue 191 (Thursday, December 13, 2007)

[Congressional Record Volume 153, Number 191 (Thursday, December 13, 2007)]
[Senate]
[Pages S15433-S15452]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

FARM, NUTRITION, AND BIOENERGY ACT OF 2007--Continued

Mr. GRASSLEY. Mr. President, I ask for the regular order on amendment
No. 3823.
Mr. REID. Mr. President, was there a request?
Mr. GRASSLEY. I am asking for the regular order on amendment No.
3823.
Mr. REID. Mr. President, I am confident this is the right thing to
do. The two managers of the bill are not here right now. Until they
return, I think we should wait.
Mr. GRASSLEY. I ask for the regular order.
Mr. REID. I suggest the absence of a quorum.
I have no right to suggest the absence of a quorum. The Senator has
the floor. I interrupted him.
Mr. GRASSLEY. The managers of the amendments are trying to get
amendments brought up. I am ready to go, and they asked if I was ready
to go.
Mr. REID. I say to my friend, I had conversations with the two of
them. They are in the back coming up with something in writing to
proceed through these amendments.
Go ahead. Regular order, Mr. President, fine.

Amendment No. 3823

The PRESIDING OFFICER. The amendment is now pending. The Senator from
Iowa is recognized.
Mr. GRASSLEY. Mr. President, amendment No. 3823 deals with
agricultural competition and increased consolidation in the
agricultural industry. The amendment is cosponsored by me, Senator
Grassley, and two Democrats--Senator Kohl and Senator Harkin.
I wish to make it very clear--and I will get into some detail--there
may be some people who feel the amendment I have put before the Senate
is exactly the same as a bill Senator Kohl and I had introduced
previously. It is very slimmed down from that bill. So any staff who is
watching the debate and getting nervous about an amendment coming up
that every big industry in the United States may find fault with, we
are talking about a very slimmed-down version of it. I will explain all
that shortly.
I have been concerned with competition in the agricultural
marketplace and increased competition in the agricultural industry for
quite some time now. You have heard me speak about it on the floor. We
have had hearings on it. I had hearings in the Senate Finance
Committee, as well as hearings I participated in under both Republican
and Democratic chairmanships of the Judiciary Committee.
Agriculture, as you know, is a fairly risky business. I know that
from personal experience because I have lived and worked on a farm all
my life. But for some time, working in agriculture has become even more
difficult for the little guy. The trend has been for companies in the
agricultural sector to consolidate. I am talking about businesses that
serve agriculture with input. I am talking about industry that
processes agriculture. So there has been consolidation in that
industry. I am not talking about the consolidation of farms. There has
been that as well. That has been going on since 1790, when 90 percent
of the people in this country were farmers. Today, 2 percent of the
people in this country are farmers. I am talking about the impact of
agriculture agribusiness consolidation and the impact upon the 2
percent of the people in this country who are farmers.
This consolidation has created new business giants impacting
competition in the marketplace for the family farmers, for producers,
and for consumers. Family farms and independent producers are feeling
the pressure of concentration in agriculture. Small and independent
producers are seeing fewer choices--who the farmer can buy from and to
whom the farmer can sell.
All this consolidation in industry at both the horizontal and
vertical levels leads to the very real possibility of fewer product
choices and higher prices for consumers.
I don't believe all mergers are, per se, bad, and I don't believe all
are wrong and all lead to unfairness. But I think at the same time we
need to make sure--we need to make very sure--open and fair access to
the marketplace is preserved for everyone. We need to make sure large
businesses are not acting in a predatory or anticompetitive manner. We
need to make sure family farmers and independent producers can compete
on a level playing field. We need to make sure consumers have as many
choices as possible.
So I am not talking just about mergers and lack of competition being
harmful just to farmers, I am talking about the impact that might have
on consumers paying more. The antitrust laws are all about protecting
consumers, not about protecting producers. But in the case of family
farmers, they are purchasers of input, and so they are consumers. But
they also have to make sure that the marketplace is protected for the
ultimate end-consumer, the consumer of our agricultural products.

By looking out for these things, you know what we end up doing, Mr.
President? We keep our economy strong because of competition. We keep
our agricultural community vibrant. We keep it competitive. And
hopefully, in the end, we keep our consumers happy, with quality food
at a relatively inexpensive price. American consumers don't know that,
but they already have that environment from our farmers. We take too
much for granted in America, so I am not so sure consumers know that,
and I like to remind them from time to time.

[[Page S15434]]

So we have this amendment before us. It is an amendment cosponsored,
as I said, by Senator Kohl and Senator Harkin. The language of this
amendment draws from a bill that Senator Kohl, Senator Thune, and I
introduced earlier this year--S. 1759. It is called the Agriculture
Competition Enhancement Act, ACE for short. We call it the ACE Act.
However--and this is the point I started out with--I wish to make clear
that this amendment which is being offered to the farm bill is quite
different from the ACE Act as originally introduced earlier this year.
Amendment No. 3823, which I have called up here under regular order,
does not include all the provisions of S. 1759 and either eliminates
provisions in that bill or incorporates many changes to address
concerns raised by members of the agricultural industry, by the
administration, as well as Senators on both sides of the aisle.
I also worked with the chairman and ranking member of the Judiciary
Committee because this bill, S. 1759, was referred to the Judiciary
Committee. Because we are offering it as an amendment to this bill, I
also worked with the ranking member of the Agriculture Committee to
address issues that were in that original S. 1759, which I was hoping
to offer here, to take care of some opposition to this bill coming up
and yet still accomplishing quite a bit about the problems I see with
lack of competition. So the amendment I have called up under regular
order is the product of these discussions we had with business, with
agricultural leaders, with the White House--or I should say with the
administration generally, not necessarily the White House--and, of
course, with the Judiciary Committee members and the ranking member of
the Agriculture Committee.
Now, I want to explain what this bill does after having explained to
you, as I just did, that it is not what we had introduced as a bill.
First, the amendment would create an Agriculture Competition Task
Force to study problems in agricultural competition, establish ways to
coordinate Federal and State activities to address competition problems
in agriculture, and make recommendations to Congress. In particular,
the task force would establish a smaller working group on buyer power
to study the effects of concentration, the effects of monopsony, and
the effects of oligopsony in agriculture, and make recommendations to
the Department of Justice and to the Federal Trade Commission on and
for agricultural guidelines. The task force will help give our
antitrust regulators real insight and expertise specific to the farm
community that I believe is currently lacking when they address
competition issues in agriculture.
Second, the amendment would require the Justice Department and the
Federal Trade Commission to issue agricultural guidelines, taking into
account the special conditions of the agriculture industry, and require
the Department of Justice and the Federal Trade Commission to report to
Congress on the guidelines.
Both the Senate Judiciary Committee and the Agriculture Committee
heard witnesses in several hearings testify that there is a need for
agriculture-specific guidelines when the Department of Justice and the
Federal Trade Commission look at agriculture mergers.
Currently, the Department of Justice and the Federal Trade Commission
have guidelines for specific industries and issues, such as health care
and intellectual property, but not for agriculture. So it makes sense--
not just to me but to these many experts in agriculture and antitrust
law that we heard in these several hearings before our committees--that
our Federal regulators should have agricultural guidelines because of
the special circumstances and special characteristics particular to the
agriculture industry and particularly because there tends to be, in
Washington, DC, outside of the Agriculture Department, little
consideration and understanding of the unique industry of agriculture.
Some people would say that even within the U.S. Department of
Agriculture there is a lack of understanding in Washington, DC, of what
the problems of agriculture are all about.
I don't pretend that even with the adoption of this amendment we are
necessarily going to bring about the total understanding that there
ought to be for the 2 percent of the people in this country who produce
food for the other 98 percent, as well as a lot of surplus that is
exported beyond. But whatever we can do to help, and particularly when
there are policy decisions made dealing with agriculture when it is not
fully understood, if we can just get some attention on agriculture in
those areas, I think we will be taking a giant step forward.

Those characteristics I am talking about include monopsony, which is
a situation where there is a single purchaser of goods, and oligopsony,
which is a situation where there are few buyers who, at the same time,
have a disproportionate amount of market power.
Third, the amendment would formalize the Department of Agriculture's
review of agriculture mergers with the Justice Department and the
Federal Trade Commission, requiring the Department of Agriculture to
provide comments on larger mergers in the industry--mergers that
submitted second requests for information under the Clayton Act. That
is already a process that is in law.
Currently, the Justice Department or the Federal Trade Commission
informally consults with the Department of Agriculture when they
analyze ag mergers. These agencies have what we call a memorandum of
understanding to consult with each other. But I believe, following on
the advice of experts who have testified on this matter before the
Agriculture Committee, that the current process--meaning the current
process of the memorandum of understanding--does not sufficiently
ensure that farm community concerns are adequately considered.
Far more than the Justice Department and far more than the Federal
Trade Commission, the Department of Agriculture has extraordinary
knowledge and expertise in agricultural matters. The Department of
Agriculture formulates agricultural policy for our great Nation and
works closely with the farm community and agricultural industry about
various concerns. They have experts and economists who know and work
with the data on a daily basis. The Department of Agriculture is the
office that can best assess the true impact of ag mergers and other
business transactions for farmers, ranchers, and independent producers,
as well as the trickle-down effect on the consumer. So that is why it
makes sense that the role the Department of Agriculture plays presently
in antitrust review of ag mergers be more than just a memorandum of
understanding; that, in fact, it be permanent and a formal role, not
one that is informal and loosely contained in the memorandums.
Moreover, having such a requirement of formal participation or
consultation is not some new novel idea. I wish I could claim a new
novel idea. Other agencies, such as the Federal Communication
Commission or the Department of Transportation, formally participate in
the review of mergers in their industries. They render formal decisions
that are then shared with the FTC or the Department of Justice. So
along the lines of the precedent set by the FCC and the Department of
Transportation, I am asking that we do the same thing with the
Department of Agriculture and the FTC and the Department of Justice.
I hope I have described to you what is a very modest approach, much
more modest than the ideas Senator Kohl and I had in the bill that I am
saying I am offering a stripped-down version of here. I basically put
in statute what the Department of Justice and the Federal Trade
Commission are allegedly already supposed to be doing with the U.S.
Department of Agriculture. The approach we advocate in this amendment
will ensure that all of agriculture's concerns and needs are fully
discussed when Federal agencies examine proposed ag business mergers.
By guaranteeing inclusion and openness, we will go a long way toward
alleviating understandable anxiety about an increasingly concentrated
industry.
Finally, the amendment would provide for additional resources to the
Department of Justice and the U.S. Department of Agriculture's GIPSA
division to enhance their ability to look at agricultural transactions
and competition issues.
I want my colleagues to know that we worked very closely with several

[[Page S15435]]

agricultural and antitrust experts on the language contained in this
very amendment, as we did in the original bill. The amendment is
supported by a number of farm groups, and I would like to read these to
you: the Organization for Competitive Markets, the Campaign for
Contract Agriculture Reform, the Center for Rural Affairs, Food and
Water Watch, the Institute for Agriculture and Trade Policy, R-CALF
USA--and just in case people don't understand that acronym, those are
people who are cattle producers but who aren't necessarily affiliated
with the National Cattlemen's Association. They could have dual
memberships, but they do have some different points of view. Then
another organization is the Sustainable Agriculture Coalition, and
lastly the Western Organization of Resource Councils.
Mr. President, I ask unanimous consent to have printed in the Record
a December 10, 2007, letter in support of this amendment.
There being no objection, the material was ordered to be printed in
the Record, as follows:

December 10, 2007.
Re Agricultural Competition Enhancement Act.

Hon. Charles Grassley,
Senate Office Building,
Washington, DC.
Hon. Herb Kohl,
Senate Office Building,
Washington, DC.
Dear Senators Grassley and Kohl: We would like to thank you
and express our support for the Agricultural Competition
Enhancement Act, Amendments 3717, 3823 and 3631, proposed for
inclusion in the Farm Bill. Agricultural producers face buyer
power when selling their products--and seller power when
buying. This market power scissors effect has devastated the
economy of rural America. These Amendments can begin to
reverse the process.
Congress created antitrust law in 1890. This body of law
did not exist previously, except through a patchwork of
common law doctrines and state statutes. The courts weakened
the Sherman Act. Congress responded by enacting the Clayton
Act. Then the Federal Trade Commission Act was passed. Some
updating occurred in the 1970's. However, the last 30 years
has seen competition falter in agriculture as antitrust law
has been incrementally neutered. Powerful companies have
opposed antitrust law for decades, with substantial recent
success.

Amendments 3717 and 3823

This Amendment will create the Agriculture Competition Task
Force. The Task Force is necessary to focus on the
agricultural concentration problem and solutions. We can no
longer pretend that unfair and deceptive practices do not
exist in the U.S. food industry, America's biggest industry.
New guidelines are needed at the Department of Justice
specific to agriculture. DOJ admits that antitrust laws apply
unaltered across the economy--thereby conceding the problem
that must be solved. The current economywide guidelines are
of only passing relevance to farmers, ranchers and growers.
Those guidelines may apply to an industry dominated by five
firms dealing vertically with an industry dominated by three
firms. But the guidelines do not tackle the real problems of
disparate farmers with no market power doing business with
sophisticated, multinational firms.
Better methods must be developed to establish geographic
and product markets. Black and white concentration thresholds
must be devised to provide certainty and concentration.
Neither judges nor Department of Justice officials have
sufficiently grasped these issues in the recent past.
Rather they accept pleasing theories of competition that
work in textbooks, but not on the ground.
The failures have been astounding. In this year alone, the
Department of Justice approved a Southeast U.S. hog packing
monopoly by allowing Smithfield Foods to acquire Premium
Standard Farms. And DOJ also allowed Monsanto to acquire a
near monopoly in the cotton seed market when acquiring Delta
& Pine Land Company. Legislation is clearly needed.

Amendment 3631

We also support Amendment 3631. The Post Merger Review
provisions are needed to correct the past mistakes of DOJ
that have harmed the agricultural economy by extracting
wealth from farmers, ranchers and rural communities. We
cannot continue protecting those accumulating market power.
Studying those past mergers will reveal the worst past
mistakes, and enable correction when warranted.
The Special Counsel for Agricultural Competition is also
needed at the USDA. The Grain Inspection, Packers &
Stockyards Administration has not been up to the task.
GIPSA's competition activities should be transferred to more
professional, accountable and well-funded staff.
We strongly support the Amendment's clarifications
regarding the burden of proof in a merger case. Congress can
and should make the policy decision that competition is often
harmed by concentration. It is sensible to exempt mergers
that are not problematic by allowing a defendant to prove the
deal does not substantially lessen competition or create a
monopoly.
This Amendment could be improved if it clarified that the
benefits of any alleged efficiencies created by an
acquisition must be passed on to consumers or producers, not
merely maintained by the merged entities. Efficiencies
benefiting the merged entities are emblematic of market
power, not competition. Those efficiencies should be proved
by clear and convincing evidence to dissuade judges from
lazily accepting mere theories and arguments rather than
factual proof.

Department of Justice Opposition

We note the surprisingly strident opposition of the
Department of Justice in a November 15, 2007 letter to
Chairman Leahy. That opposition is ideological and turf-
based, not substantive. Indeed, the letter is akin to an
industry association press release.
Both DOJ and USDA have repeatedly failed their charge to
enforce the law, protect competition, and eliminate ideology
from decision making. Congress should not enable further
failure.
DOJ makes some fairly large leaps of logic, stating that
the Amendments would actually harm competition in
agriculture. No sound basis exists for such a claim, and
doubt is thus cast on the entire submission. Bureaucratic
distaste for legislation does not beget economic harm.
The Constitutional concerns expressed by the Department are
consistent with its new Unitary Executive theory that
relegates Congress to a minor governmental role. Congress
should be assertive in maintaining its authority, including
the ability to establish Task Forces that assist the
formation of merger review guidelines and enforcement policy.
DOJ also claims a Special Counsel for Competition at USDA
``would harm American agriculture.'' This again is a leap of
logic, sprung from ideology and bureaucratic turf protection
rather than law or fact. DOJ's defense of USDA's Grain
Inspection, Packers & Stockyards Administration fails to
acknowledge the repeated GAO and USDA-OIG investigations
showing incompetence at best, and falsifying reports to
Congress at worst.
Indeed, the protestations prove the point--that change must
be imposed from outside the agencies.
We commend you for taking this modest first step in
antitrust improvement for production agriculture.
Signatory organizations,
Organization for Competitive Markets; Campaign for
Contract Agriculture Reform; Center for Rural Affairs;
Food & Water Watch; Institute for Agriculture and Trade
Policy; R-CALF USA; Sustainable Agriculture Coalition;
Western Organization of Resource Councils.

Mr. GRASSLEY. So my colleagues are clear, once again to repeat,
Senator Kohl and I listened very carefully to the concerns expressed by
companies and groups that contacted us about S. 1759, the original
Agriculture Competition Enhancement Act--we call that ACE for short--
and in response to those concerns, we made significant changes and
elimination to the language which has been incorporated in this
amendment. This amendment does not make any substantive changes in
antitrust laws. I am going to address that a little more specifically
because that is one of the things we have heard against this amendment.
Maybe it would be an applicable criticism of the bill but not of this
amendment.

Also, there is no mandatory adoption of the task force
recommendations on the guidelines to which I have referred. The
constitutional issues raised have been taken care of and more
contentious provisions have been eliminated. The bottom line is the
concerns that were raised by certain companies, as well as the Justice
Department and the FTC, about our previous iterations of the ACE bill
have been taken care of in the amendment. The bottom line is, this
amendment is very much an attempt to address everyone's concerns and to
reach a fair compromise because I think we could have gone a lot
further and been even a lot more aggressive in dealing with
agricultural competition issues. I had a hard time convincing Senator
Kohl we ought to make these changes, but he has agreed as well.
There is a real need for this amendment. We need it to beef up our
ability to address competition issues in agriculture and to address
concerns with consolidation in the industry. My amendment is an itty-
bitty step in the right direction; maybe some would say too small of a
step but still a good first step at getting something done.
I urge my colleagues to support the Grassley-Kohl-Harkin amendment.
I do have some other things I want to say, but I do not want to take
all the time right now. I do want to speak about some of the
differences between what was in our bill and what is in our

[[Page S15436]]

amendment. I am willing to yield the floor if other people want to
speak on the amendment that I have before us.
The PRESIDING OFFICER. The Senator from Kansas.
Mr. BROWNBACK. Mr. President, I would like to speak on the Grassley
amendment. I am certainly willing to yield to the Senator from Iowa, if
he wants to have his colleague from Wisconsin speak right with him or
if he wants to go afterwards.
Mr. KOHL. Mr. President, I rise today with Senator Grassley in
support of amendment No. 3823. Our amendment will significantly enhance
the antitrust review given to mergers and acquisitions in the
agricultural sector.
Concentration and consolidation in agriculture is a major concern for
our hard working farmers. Due to the wave of mergers and acquisitions
that have occurred throughout the agricultural sector in recent years,
fewer and fewer food processors have captured a greater and greater
share of the market for purchasing agricultural goods. Farmers have
less choice of where to sell their products, and as a result the prices
they receive continue to decline.
Our Nation's farmers--who comprise less than 2 percent of the
population--produce the most abundant, wholesome, and by far the
cheapest supply of food on the face of the Earth. However, the way in
which that food is produced is rapidly changing, creating significant
new challenges. We have witnessed a massive reorganization in our food
chain due to the increasing numbers of mergers in the dairy, livestock,
grain, rail, and biotechnology industries. In fact, the top four beef
packers control 71 percent of the market, the top four pork processors
control 63 percent of the market and the top four poultry processors
control 50 percent of the market. During this period of enormous
transformation in the agricultural industry, disparity in market power
between family farmers and the large conglomerates all too often leaves
the individual farmer with little choice regarding who will buy their
products and under what terms.
The effects of this increasing consolidation are felt throughout the
agricultural sector. Rather than buying on the open market, processors
of farm commodities are relying more and more on contractual
arrangements with farmers which bind farmers to sell a specified amount
of product, for prices specified by the processors. In many cases,
there is no longer a significant open market to which farmers and
ranchers can turn. These contractual arrangements damage the
independence of family farmers, leaving them little choice regarding
what to grow and the terms on which to sell their products.
Agricultural consolidation has also been pronounced in the dairy
sector. Mergers among milk processors have greatly concentrated the
industry, and resulted in lower prices for dairy farmers. There have
been serious allegations of anticompetitive conduct by one large dairy
processor in Florida and elsewhere resulting from this highly
concentrated market.
Unfortunately, in recent years our antitrust regulators at the
Department of Justice have done little to stem the tide of ever
increasing agricultural consolidation. This is why we are today
offering this amendment to the farm bill.
Our amendment will significantly enhance the scrutiny given to
agricultural mergers under the antitrust laws. It will establish an
Agricultural Competition Task Force--made up of representatives of
antitrust enforcement officials, State and Federal agriculture
regulatory officials, State attorneys generals, industry experts, and
representatives of small family farmers and ranchers--charged to
investigate problems of competition in agriculture and make
recommendations to Congress and enforcement agencies on ways to enhance
competition.
Our amendment will also direct the Justice Department and Federal
Trade Commission to develop, within 2 years, new guidelines for
antitrust enforcement in the agricultural sector. These guidelines are
to be written to prevent anticompetitive mergers in the agricultural
industry. These guidelines will require the antitrust enforcement
agencies to challenge any merger or acquisition in the agricultural
sector, if the effect of that merger or acquisition may be to
substantially lessen competition or to tend to create a monopoly. The
development of such strong guidelines should deter anticompetitive
mergers from even being attempted in the first place.
Our amendment will also provide a procedure for comments by the
Secretary of Agriculture regarding proposed mergers and acquisitions in
the agricultural sector. These comments should provide important
expertise and enhance the merger review process of the antitrust
agencies when reviewing agricultural mergers.
In sum, our amendment is a significant measure to combat the ever
rising tide of consolidation in agriculture which threatens to swamp
our Nation's hard working family farmers. I urge my colleagues to
support amendment No. 3823.
Thank you, Mr. President. I yield the floor.
Mr. BROWNBACK. Mr. President, I want to speak in opposition to the
Grassley amendment. I appreciate the heart of the Senator from Iowa,
and his intent. He has been consistent. He has been longstanding and
heartfelt on this issue. I have been in the meetings he has called with
the head of packing and stockyard compensation about concerns of
concentration in the agricultural industry. I have seen him press on
this issue. I agree with his heart on this amendment and his effort and
his desire.
I absolutely disagree with this amendment. I agree with the
sentiment, what he is trying to get done. This is not the way. I would
like to express to this body what I believe, clearly, will take place
in my State were this amendment to pass.
The cattle industry is a major industry in my State. We are third in
the number of cattle on ranches and feed yards--6.4 million. There are
more than twice as many cattle than people in my State. It is big
business. It is a feed yard business where a lot of cattle from all
over the country come to be fed out and processed. It is a very big
business. It is $6.25 billion in cash receipts a year in my State, my
rural State.
This is a business where there are a lot of contractual engagements
and obligations back and forth. A man may have cattle from Alabama, and
he puts them on a feed yard near Dodge City, KS. The processing plant
is near Dodge City and the feed yard may have a contractual arrangement
with the processor, saying: I am going to deliver you a thousand head
of cattle a day for every working day. That keeps your processing plant
orderly and organized. In exchange for that, I am going to get a higher
value of cattle that he then passes on to that Alabama cattleman who
owns the cattle there.
It is an arrangement that has worked to produce a very highly
effective system. Some people do not like the scale of it. In many
respects I do not. I would rather it be dispersed to a huge number of
family farms across the country the way it used to be, like the farm
where I grew up where we had chickens and pigs and cattle. Instead, we
have much more integrated operating units. But this would go right at
the heart of this industry, as far as changing the burden of proof and
changing it on one specific industry. It will not have the intended
effect of recreating the family farm system. That is not what is going
to be the spill-out of this.
What will end up taking place is the Alabama cattleman is going to
end up getting less money for his cattle, and the consumer is going to
get less of a directed product they want. I want to develop that for
the body, to explain why I like the heart of the people proposing this,
but this will not produce the results they want.
The amendment creates an Agricultural Competition Task Force with the
stated purpose to examine problems in agricultural competition. The
task force has virtually unlimited authority to investigate
transactions and business arrangements in the livestock industry--read
special counsel for agriculture. It puts in several millions of dollars
in that area. The task force is unaccountable to anyone. It is not
required to hold public meetings nor abide by the Administrative
Procedure Act nor acquire evidence from all parties. Under this
amendment, the livestock industry and entire agricultural industry
could be subject to limitless reviews of transactions.
I think the biggest piece I have concern about--and I have concerns
about

[[Page S15437]]

this as a lawyer, and as an agricultural lawyer I have concerns about
this. This is the area that I taught in. This is the area I have
written in. I have written on the Packers and Stockyards Act. It is an
important piece of legislation that this Government passed in the
1920s, when we had a very diffuse agriculture with a very monopolistic
packing industry. We said this is not fair, so we are creating the
Packers and Stockyards Act to oversee this structure. That is what they
have been charged with doing.
In this particular amendment they would shift the burden of proof in
the justice system and say this is a guilty transaction, monopolistic
in nature, and then you prove your way out of it. To support that, I
want to quote from the Department of Justice letter they wrote on the
particular provisions. I understand my colleague from Iowa has changed
some of the provisions but not this piece of it.
This would change the standards of certain mergers, acquisitions, and
actions under the Clayton Act. That is the base bill. In particular, in
all agricultural merger cases brought by the Government, Federal and
State, and all private cases where the merging parties' combined market
share is 20 percent or more--this is the DOJ letter--it puts the burden
of proof on the defendant to show the transaction would not
substantially impact or lessen competition or tend to create problems
in the marketplace.
I am paraphrasing monopoly in the marketplace at the end.
The current setting is, no, we have to prove that against the
individual or the group. To date, the Federal antitrust laws apply
unaltered to mergers across virtually all industries, with the
overriding objective to protect competition to the benefit of consumers
because the Department has not been prevented from challenging
anticompetitive mergers. They can challenge, and do now, in agriculture
under the current legal standards. Shifting the burden of proof is
unnecessary. This is a big deal, to shift the burden of proof on one
particular industry, and then also to put in industry-specific
guidelines.
Let me tell you what is taking place now. I described the situation
of an Alabama cattle producer who puts cattle on feed in Kansas, who
gets more money for his cattle because they are on feed there and
because that feed yard guarantees a certain flow of cattle. If you put
this in place, it has lawyers paid for by the Government to go out and
examine any contract that is taking place. It can go, pick a feed yard,
a Kansas feed yard, and it can go out and say: You have a contractual
arrangement with this packer, and we are going to examine that.
Now, you pay for lawyers to say this is not a noncompetitive
transaction--and they are going to have to hire lawyers to do that.
They are going to end up having a big legal bill on a shifted burden,
where the guilt is assumed, not innocence is assumed. It is going to be
different from any other industry around. You are going to then have
people driving down the price of the commodity. And you have a number
of groups that are in these innovative market mechanisms. I described
one earlier, a group of people at the Knight Feedyard that have
certified hormone-free, antibiotic-free beef. It is a group
of producers. They formed an association. They go to a big packer and
say: Will you process our cattle and deliver it to the shelves in
Connecticut and New York as hormone-free, additive-free, antibiotic-
free beef? The packer agrees to do so. That is a contractual
arrangement that will be subject to investigation, that will be
presumed guilty under this.

My Kansas producers, under this innovative marketing approach that
they initiated, get a substantial benefit by being able to market this
sort of product that the consumer wants, and they have to go to a major
packer to do it because he is the person--that is the group that can
process cattle and get it to the shelf in a good quality state.
But my guys are the ones who get the money out of the system. They
will be presumed guilty. It will be presumed to violate this. It will
be subject to a great deal of legal investigation taking place, and my
belief is it will not happen. Then my producers get less money for
their cattle, and the consumers do not get the product they want. This
is a specialty product that people want. It costs more to produce this
type of beef and the consumer is not going to get that product and my
cattlemen are going to get less money for their product.
I appreciate the heart of the proposal. What it is going to end up
doing is getting less money to cattlemen in particular. I can't speak
for other agricultural or livestock industries as well as I can for
business that is in my State. The National Cattleman's Beef Association
is strongly opposed to this amendment. The Department of Justice is
opposed to this amendment for reasons of shifting standards for one
industry but not for any others; for having different standards for
that industry. The cattlemen believe it is going to hurt them
substantially, subject them to a number of legal costs that they do not
currently have and that they cannot afford to deal with. It is going to
hurt the consumer as well.
While I appreciate the intent, I appreciate the presentation of it--
my family farms. My brother is a farmer. This is not going to take us
in the right direction. I believe the route to go is what we have been
doing in the Packers and Stockyards Administration and having industry
standards that are similar across all industries, and that we should
support the Packers and Stockyards Administration, support the laws
that are there, fund those entities--which I support doing--maintaining
those standards but allowing these innovative approaches to take place
for a major industry in my State and for my producers and cattle
producers across the country.
I know others want to speak on this issue. I may speak on it again in
a while.
I yield the floor.
The PRESIDING OFFICER (Mr. Sanders). The Senator from Iowa is
recognized.
Mr. GRASSLEY. Mr. President, I listened to the Senator from Kansas. I
am a farmer. I am not a lawyer like he is. He is a lawyer and farmer,
so he might have some intuition. But I would just like to have him
come, and I will deliver it to his desk--he needs to read my amendment.
What he has said is an analysis of the bill that Senator Kohl and I
introduced, but that is not the amendment. Maybe he missed my opening
remarks, but I went to great length in those opening remarks to explain
how my amendment differs from the bill. I want to point that out to the
Senator from Kansas because I think I have addressed every concern he
has presented to the Senate in his very good speech.
I have taken care of his concerns, and I am going to mention those
concerns he has brought up, and then I am going to go to some length to
tell you how I have taken care of that. But there is no special counsel
amendment in this bill, as the Senator from Kansas has said. There are
no additional reviews of transactions that have already taken place.
That was in the original bill. It is not in this amendment.
He spoke two or three times about changing the burden of proof. That
was in the original bill. It is not in this slimmed-down amendment.
There is no burden of proof shifting in the amendment.
The task force that we provided for has no review or study provisions
in the amendment, as indicated by the Senator from Kansas.
Now I am going to go into some detail, because obviously people are
not listening to anything I have said. I want to state in a more
elaborate way how this bill differs--this amendment differs from the
bill that I said Senator Kohl and I first introduced, and the length we
went to take care of concerns that the White House, the administration
has raised, concerns that both the ranking member and the chairman of
the Judiciary Committee raised, because this bill was referred to
Judiciary, and then lastly, working with the ranking member of the
Agriculture Committee, to address concerns he had.
There has been a lot of smoke and mirrors--I think you heard some of
that--about the provision of the bill, and most of those charges are
not factual, as I have indicated.
The fact is, this amendment is very different from the bill Senator
Kohl and I introduced earlier this year. This amendment is also
different from another amendment I had already filed to this bill. Let
me list some of the things

[[Page S15438]]

that are not in our amendment that are before us in 3823.
I am hearing that people are concerned about the shifting of the
burden of proof in the amendment. The burden-of-proof shifting
provision that was in the prior iteration has been eliminated. It is
not in this amendment. There are no substantive changes to antitrust
laws at all.
I am hearing concerns about reviews that will be done after mergers
have been approved. The provisions that allow the task force to do a
study of agricultural mergers that were approved within the past 10
years have been eliminated, not in this amendment.
In addition, the provisions requiring the Justice Department and the
Federal Trade Commission to review ag mergers 5 years after they have
been approved have been eliminated as well.
The provision creating an Assistant Attorney General for Agricultural
Antitrust at the Justice Department has been eliminated. In other
words, it is not in the amendment pending before the Senate.
The constitutional concerns raised by the administration, not by
Senator Brownback, about the agricultural competition task force are
gone, the constitutional concerns.
We changed the provisions requiring adoption by the Justice
Department of task force working group recommendations on agricultural
guidelines. The amendment now has the Justice Department and the
Federal Trade Commission consulting with the task force working group
on the guidelines.
Any so-called constitutional concerns have been eliminated. We have
made other changes to the prior writings of this amendment and/or the
bill, all of which were incorporated in amendment 3823. We made these
changes to address concerns that we agreed with, and we made changes in
order to reach a fair compromise.
The fact is, big business and the agricultural giants do not want
anything that might put up any sort of review by people who know
something about agriculture, of their expansion and concentration
efforts. The fact is, our Federal antitrust regulators refuse to
recognize that agriculture is unique and should have industry-specific
guidelines to make sure that special circumstances of the agricultural
landscape are considered.
This brings about consideration, this does not bring about any
change. Any movement to them, no matter how small, to try to address
concentration and competition issues in agriculture is going to be
decried by the powerful interest groups and their lobbyists. So when
something reasonable is suggested, such as the Grassley-Kohl-Harkin
amendment No. 3823, we still are going to get the outrageous claims
that this is a bad amendment. The reality is the sky is not falling.
I advise my colleagues, particularly the Senator from Kansas, to read
the amendment. Forget about the bill he has been referring to. Instead,
listen, and stop listening to those sensational cries being made by
agribusiness and their allies. We need to pass this amendment.
I yield the floor.
Mrs. BOXER. Mr. President, what is the pending business?
The PRESIDING OFFICER. The amendment of the Senator from Iowa.
Mrs. BOXER. I ask my good friend if he would yield 1 minute to me to
talk about an amendment that is coming later this evening.
Mr. GRASSLEY. I will probably do that. Let me make an inquiry. Can I
do that, Mr. President, without setting aside or yielding my right to
continue discussion of this amendment?
The PRESIDING OFFICER. The Senator may address another amendment
without prejudice to the pending amendment.
Mr. GRASSLEY. I yield.

Amendment No. 3771

Mrs. BOXER. I thank my friend very much. I thank the chairman very
much as well.
Senator Bond has filed an amendment to the farm bill that I hope the
President sitting in the chair will listen to me about, because it
would undercut crucial food safety, health, environment, consumer
protection, and other laws, most of which come out of the Environment
and Public Works Committee.
I am not going to go into it now, because it will be gone into later.
But it would stop agencies such as the EPA from adopting or retaining
safeguards for the American public.
It is opposed by the following: AFL-CIO, the American Lung
Association, the Natural Resources Defense Council, the Consumer
Federation, the Sierra Club, the Alliance for Justice, the National
Audubon Society, the United Food and Commercial Workers, Humane
Society, and many others.
It would require a complex, burdensome, and unnecessary regulatory
analysis by Federal agencies. It would impose a maze of ``regulatory
flexibility,'' and all kinds of analyses so that it would stop us from
moving forward to ensure our laws such as Clean Air, Safe Drinking
Water, Clean Water, and Wholesome Meat and the Wholesome Poultry
Products Act.
I simply flag this for colleagues who care about food safety, who
care about clean water and safe drinking water, and hope we will have a
resounding ``no'' vote or perhaps Senator Bond might rethink his
amendment.
It gives special treatment to virtually any industry with even
tenuous connections to agriculture in rulemakings. It gives special
treatment to all ``agricultural entities,'' defined so broadly as to
include virtually any industry with any arguable connection to
agriculture or forestry, such as the food processing corporations,
pesticide companies, railroads, paper mills, shipping companies, and
truck and tractor manufacturers.
It gives agribusiness corporations a special private right to
privately comment on and seek to weaken Federal protections.
The amendment creates a special process, only applicable to EPA and
the Department of the Interior rules in which only agricultural
industry representatives get inside information and a private chance to
lobby against potential new agency rules before the proposal becomes
public. This could allow large corporations to delay or kill vital
environmental and health protections against toxic pesticides, water or
air pollution, and other important threats.
It creates a new lobbying/litigation shop at USDA to advocate for
agribusiness. This new ``Chief Council for Advocacy'' would lobby
agencies and even file amicus briefs in litigation challenging agency
rules.
It provides special new special judicial review provisions that only
``agricultural entities'' can use, which would delay or undercut
Federal safeguards. It gives special standing to ``agricultural
entities'' to sue agencies for failing to comply with most of these
requirements.
It requires Federal agencies to consider weakening all of its current
rules. Every agency must review any rule it has on the books which has,
or will have, a ``significant economic impact upon a substantial number
of agricultural entities'' to see if ``such rules should be continued
without change, or should be amended or rescinded.''
The Bond amendment would keep EPA and other agencies from doing their
job to protect the American public. I urge all of my colleagues to vote
``no'' on the Bond amendment, SA 3771. It is bad for America's health
and bad for our environment.
Mr. BROWNBACK. Mr. President, I wish to respond to the good Senator
from Iowa and a couple of his comments about the amendment. But first I
ask unanimous consent to insert in the Record after my statement a
letter from the Department of Justice opposing the bill.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See Exhibit 1.)
Mr. BROWNBACK. Mr. President, we just received this from the
Department of Justice. They state in the first paragraph:

The Department of Justice strongly opposes the amendment.

To read their summation sentence, which I do not think is fair, given
the detail and the work the Senator from Iowa has gone into on this,
and substantial changes that he has made--we have been reviewing his
amendment. I have the amendment.
But in the DOJ summary sentence, they state this:

However, DOJ believes certain provisions included in the
amendment would not accomplish its stated goal of protecting
rural communities and family farms and ranches, but instead
would unnecessarily duplicate

[[Page S15439]]

existing collaboration efforts, increase costs and
uncertainty and may hinder effective antitrust enforcement
and harm competition in agriculture and other industries.
Therefore DOJ strongly opposes the amendment.

Then they go on further to develop the points they have here. As I
said, I appreciate the modifications the Senator from Iowa has made. I
can tell you in my State, and in the cattle industry, they view this as
hurting the price that they are going to be able to get for cattle is
the bottom line issue. They view this as driving up substantially their
legal costs, and most farmers do not like to have any legal costs, let
alone having a number of legal costs.
They believe this is going to do it, and that is not--that is coming
from the National Cattlemen's Beef Association, it is coming from the
Kansas Livestock Association, where I was a couple of weeks ago at
their annual meeting. This was one of their lead concerns, and the
reason it was one of their lead concerns is they are looking at that
and saying: Look, we are going into a number of different marketing
transactions now, and we feed cattle for a lot of people around the
country.
My guess is a fair number of Iowa's cattle are on feed in my State in
Kansas, and that that is taking place is a good thing. We invite more
farms to come there because of the efficiency, of our feeding
operations, because of the weather conditions for those, because of the
packers that are located there, and the efficiency of being able to do
that, and then of these innovative marketing arrangements so that they
can get a premium price for Angus cattle that come out of Iowa or
Alabama or California or somewhere else. They are able to get a premium
price for those because they do special things. They say we are going
to keep these Angus fed separately here, and we are going to track them
through the whole system. Then we are going to make sure they are
hormone free, if that is what the group wants, or we are going to do
something else to have premium beef that is going to be marketed only
in certain high-end restaurants.
All of that segments the marketplace, but those segmented
marketplaces are through contractual arrangements, and they get a
premium to the producer that will be under investigation with this.
That is why DOJ opposes it. That is why the Kansas Livestock
Association, when I was meeting with them, was very fearful of this.
I appreciate some of the changes that were made and were noted here.
The base concerns remain what was stated here by the Department of
Justice and by the Kansas livestock producers.
Now, different people look at this different ways. A lot of us are
deeply concerned, and have been for some time, about the concentration
that has taken place in the agriculture business. How do you go at it
differently? I spent 6 years as agriculture secretary in Kansas, and
many times was trying to come up with innovative, different market
segments, whether we could do it on a small scale, farmers' markets,
and getting products closer to consumers, whether we can do different
products which are coming out now.
We are a big cotton producer in Kansas, looking at canola oil--some
of it got going; some of it did not--or confection of sunflower seeds
which are under contract, I might point out as well.
So we went through a period we are not making enough money off of the
commodity-based business, and we have got to segment this. But when you
segment it, that generally requires some sort of identity being
preserved and some sort of contractual relationship. And, yes, you get
a benefit for that, you get paid more than someone who just has a
commodity product.
Well, now, if you say: You cannot do that, or if you do that, we are
going to presume you are guilty and you are going to have to pay a
lawyer to fight your way out of it. With all due respect to the people
whose intent is pure on this, this is going to hurt producers in my
State.
That is why many of them--not all, some--support this approach, but
many would be strongly opposed to this, as the Department of Justice
is.
I urge my colleagues to vote against it.

Exhibit 1

U.S. Department of Justice,

Office of Legislative Affairs,

Washington. DC, December 13, 2007.
Hon. Patrick Leahy,
Chairman, Committee on the Judiciary, U.S. Senate,
Washington, DC.
Dear Mr. Chairman: The Department of Justice (DOJ) has
reviewed Senate Amendment 3823 to H.R. 2419. DOJ works
vigorously to ensure that the benefits of competition are
maintained in all markets, including agricultural markets, to
the benefit of American consumers. However, DOJ believes that
certain provisions included in the amendment would not
accomplish its stated goal of protecting rural communities
and family farms and ranches, but instead would unnecessarily
duplicate existing collaboration efforts, increase costs and
uncertainty, and may hinder effective antitrust enforcement
and harm competition in agriculture and other industries.
Therefore, DOJ strongly opposes the Amendment.
Senate Amendment 3823 to H.R. 2419 calls on DOJ and the
Federal Trade Commission (FTC) to issue agriculture merger
guidelines. To date, the Federal antitrust laws apply
unaltered to mergers across virtually all industries, with
the overriding objective to protect competition to the
benefit of consumers. As such, there is no need for any
industry-specific merger guidelines. The Horizontal Merger
Guidelines (Guidelines) issued by the DOJ and FTC apply
consistently to mergers across the entire economy, and no
need has been demonstrated to depart from that generally
applicable approach. DOJ has not been prevented from
challenging anti competitive mergers in agriculture under the
current legal standards. To the extent that there is a
suggestion that monopsony is a problem particularly
significant to agriculture, the guidelines address monopsony
and thus no industry specific guideline is warranted for that
concern.
DOJ believes that current merger policy is sufficiently
flexible to address market conditions that may be unique to
agricultural markets. For example, DOJ and FTC recently
issued a Commentary to the Horizontal Merger Guidelines
(2006), which provides several examples of how agricultural
matters are reviewed. This commentary, DOJ's merger
challenges in matters such as General Mills/Pillsbury (2001),
Archer-Daniels-Midland/Minnesota Corn Processors (2002),
Syngenta/Advanta (2004). and Monsanto/DPt (2007), competitive
impact statements issued as part of those challenges, and the
closing statements DOJ has issued for certain agricultural
matters, demonstrate that merger policy under the Guidelines
is effective at protecting consumers and maintaining
competition in agriculture industries. Changing the well-
established policy is not necessary and could deter
efficiency enhancing transactions that would benefit
consumers by resulting in lower prices.
Subsection (c) of Senate Amendment 3823 creates an
Agriculture Competition Task Force (Task Force), made up of
representatives from DOJ, FTC, United States Department of
Agriculture (USDA), State governments and attorneys general,
small and independent farming interests, and academics or
other experts. The Task Force is charged with devoting
additional resources focused solely on agriculture industries
to study competition issues, coordinate Federal and State
activities to address ``unfair and deceptive practices'' and
concentration, and work with representatives from rural
communities to ``identify abusive practices.'' In addition,
the Task Force shall report on the state of family farmers
and ranchers. DOJ believes such a task force would at best
duplicate existing enforcement activities, and at worst could
impede existing coordination between DOJ, USDA, and state
governments by creating a bureaucratic structure that would
increase the cost to the American taxpayer without any
benefit to competition or independent farmers. Furthermore,
to the extent the amendment requires consideration of the
effects on ``rural communities'' there is no clear
explanation regarding how this factor should be considered,
and such consideration could be inconsistent with overall
antitrust objectives.
Subsection (e) of this amendment requires notification to
the USDA of Hart Scott Rodino (HSR) filings with the FTC and
DOJ as well as the sharing with the Secretary of Agriculture
of any second request materials obtained under such merger
reviews. Under this section, USDA may submit and publish
comments on whether mergers ``present significant competition
and buyer power concerns,'' such that further review by DOJ
or the FTC is warranted. Congress provided essential
confidentiality for HSR filings and for productions of
documents under that process, and no need has been shown to
change that important protection. Through the existing
Memorandum of Understanding between DOJ, the FTC and USDA,
the antitrust agencies seek expertise and information from
USDA on agriculture matters, and as part of that cooperative
relationship, USDA expresses its views regarding antitrust
merger enforcement matters, and thus no need for radical
change has been shown. In addition, concurrent jurisdiction
likely would increase costs and time delays inherent in
duplicative review and has the potential for inconsistent
standards and outcomes.
DOJ shares the concern of the amendment's sponsors that
agriculture, as a key part of our economy, should maintain
its competitive nature so that producers and consumers alike
benefit from adequate supply and choice of agricultural
products at competitive prices. Moreover, we take seriously
concerns expressed in the agriculture community about
competitiveness in the agriculture sector. However, because
Senate

[[Page S15440]]

Amendment 3823 has several provisions that raise concerns for
DOJ, both about unintended consequences as well as about
competition and public policy, DOJ strongly opposes these
provisions.
Thank you for the opportunity to provide our views on this
proposed legislation. The Office of Management and Budget has
advised us that there is no objection to this letter from the
perspective of the Administration's program.
Sincerely,
Brian A. Benczkowski,
Principal Deputy Assistant Attorney General.

The PRESIDING OFFICER. The Senator from Iowa.
Mr. GRASSLEY. I do not have a whole lot more to say about this bill
if you want to move on. But I do want to continue to correct a couple
of things the Senator from Kansas has spoken about.
First, I was listening as he was quoting from the Department of
Justice letter. And he may have a later letter, but those exact words
that he was reading from appear in a November 15 letter that Senator
Leahy received as chairman of the Judiciary Committee with objections
from the Department of Justice.
But those objections are about the bill S. 1759, the bill that I said
we have modified considerably as an amendment here, so that it does not
do all of the things that have been attributed to it.
Mr. BROWNBACK. If my colleague will yield, my letter is dated today,
December 13. It is a subsequent letter to the letter the Senator is
quoting from.
Mr. GRASSLEY. OK.
Mr. BROWNBACK. It is on the amendment.
Mr. GRASSLEY. But in the paragraph you were quoting, it says exactly
the same thing in the letter I got of November 15 in which they were
commenting on 1759, and they surely can't find the same fault with the
amendment that they found with the bill because we met with them and
made changes according to what they asked us to do.
My staff corrects me that we didn't actually meet with the Department
of Justice, but we were well aware of the changes they were demanding,
and those changes are taken into consideration in this legislation.
Then we keep hearing from the Senator from Kansas about
investigations and reviews. Get that out of your system. I have spoken
twice on that issue--no reviews, no investigation.
Then when you hear all of these faults the bill is going to bring
about--you are going to increase the cost of food to the consumer or
maybe decrease profitability to the farmer--I don't see that anything
like that is a result of a task force that is going to help the Justice
Department and the FTC in determining whether mergers are
anticompetitive. These are guidelines. They are not making decisions.
The Department of Justice and the FTC will be making those decisions.
But is there anything wrong with having a little bit of input into
agricultural issues before those two agencies from experts in this town
in the Department of Agriculture who may have some understanding of
agriculture? I don't think the sky is going to fall if you have that
sort of input.
I hope we can vote on my amendment and move on. I will only speak to
the extent I have to to continue to defend misunderstandings of what
the amendment does as opposed to what the original bill did.
Mr. HATCH. Mr. President, today I rise in reluctant opposition to the
amendment offered by my friend, the gentleman from Iowa.
Our Nation has been blessed with a judicial system dedicated to the
principle of the rule of law. Each one of us no matter how: rich or
poor; strong or weak; big or small; receive equal justice under the
law.
In part, that is one of the reasons why our national competition
policy is framed in general, universal terms. Specifically, the Sherman
Act prohibits every ``contract, combination or conspiracy, in restraint
of trade;'' and the Clayton Act prohibits all acquisitions whose effect
``may be substantially to lessen competition.''
There are many instances, where we have diverged from these
principles, even for good cause. However, in many of these instances we
have encountered numerous difficulties and our economy harmed by
unexpected consequences.
One need only look at correcting legislation that the chairman of the
Antitrust Subcommittee, Senator Kohl, recently offered eliminating
railroad antitrust exemptions.
Senator Kohl believes, with a great deal of merit, that many shippers
are being charged exorbitant prices to transport their goods by the
railroads. In fact, the Antitrust Subcommittee, of which I am ranking
Republican member, received a letter, as part of the subcommittee's
hearing into railroad antitrust exemptions, from several States'
attorneys general that discussed how foreign corporations are very
reluctant to invest in new American manufacturing facilities if the
proposed location of these facilities is serviced by only one railroad.
Senator Kohl's solution to this problem is to eliminate the special
antitrust exemptions granted to railroad mergers.
Indeed, many Senators have argued for the repeal of the McCarran-
Ferguson Act. As my colleagues know the McCarran-Ferguson Act exempts
the business of insurance from Federal antitrust laws when and to the
extent that business is regulated by State law.
These Senators believe that certain insurers took advantage of the
McCarran-Ferguson exemption to implement a collective agreement to
raise insurance prices on gulf coast residents still recovering from
Hurricane Katrina.
Clearly, there is evidence of unattended consequences when special
provisions are permitted in antitrust law.
That being said, there is a substantial difference between railroad
antitrust exemptions, McCarran-Ferguson exemptions and creating new
agriculture antitrust guidelines as called for by the Grassley
amendment. I thoroughly recognize that the market relationship between
the producer and the food packer desires special attention. However,
the underlining concern is well founded: special antitrust rules for
specific industries can have profound undesirable consequences and
violate one of our national competition policies fundamental tenants:
that antitrust law should be framed in general, universal terms. So the
question I believe that we should be asking is if the remedy to this
situation is additional, special legislation, or greater enforcement?
Currently, the Department of Justice has devoted considerable effort to
investigate agricultural mergers but the time might be coming where we
need to increase those resources for the Department. Perhaps the
creation of a new Deputy Assistant Attorney General, whose
responsibilities are solely to investigate agriculture mergers, is the
correct path.
My trepidations of industry-specific rules, such as those called for
by the Grassley amendment, are that they are likely to create legal
difficulties. First, industry-specific rules add to the danger of
inconsistent enforcement across industries. Second, industry-specific
rules introduce additional uncertainty, since it will not always be
clear in which industry a particular product should be classified, and
thus not clear which legal standard will apply. Finally, has shown that
once you enact industry-specific rules other industries and
constituency groups will request there own special antitrust rules.
So what should we do? Do we maintain our national competition policy
which is framed in general, universal terms, or should we embrace
through industry-specific enactments.
Well let's look at the record. During a period of ever increasing
complex laws and regulations having general and simple rules makes
antitrust law more understandable to both the legal and business
community. The general language of current statutes provides courts and
enforcement agencies valuable flexibility to incorporate the latest
developments in business and economic learning. It should also be noted
that, where industry-specific factors are important to reaching a
correct decision in a particular case, the agencies and the courts are
already fully authorized to consider those factors under current law.
In particular, current antitrust principles can address issues of buyer
power that have concerned some observers of agricultural mergers.
One should also remember that congressionally created Antitrust
Modernization Commission concluded that ``the basic framework for
analyzing mergers followed by the U.S. enforcement agencies and courts
is sound.''

[[Page S15441]]

Therefore, I oppose Senator Grassley's amendment. Senator Grassley
has a well-deserved reputation for standing up for and defending the
American farmer. I agree that we must be vigilant in ensuring that the
Department of Justice and Federal Trade Commission are diligent in
enforcing antitrust laws--but those laws should be for all American
economic endeavors, not fragmented as all too many of our laws have
become.
The PRESIDING OFFICER. The Senator from Iowa.
Mr. HARKIN. Mr. President, I thank the Senator from Iowa for offering
this amendment. I am a cosponsor and a proud supporter.
I have been listening to the debate taking place, and quite frankly I
do not understand the opposition by the Senator from Kansas. After all,
as Senator Grassley pointed out, this is not the original bill. It was
modified quite a bit.
All this amendment really does is create an Agriculture Competition
Task Force to study problems in agricultural competition, establish
ways to coordinate Federal and State activities, address unfair and
deceptive practices in concentration, create a working group on buyer
power to study effects of concentration in agriculture, and make
recommendations to assist the Department of Justice and the Federal
Trade Commission in drafting agricultural guidelines. I don't know that
anything could be more advisory than that. All we are doing is saying,
use the expertise they have at the Department of Agriculture to look at
these issues and advise and inform DOJ. It doesn't say that DOJ has to
do what they say. It doesn't say they have to follow everything they
say. It is advisory. I don't see why there would be such an objection
to this kind of advice which would be given to DOJ and the Federal
Trade Commission. There are some other things in there, but that is
sort of basically the essence.
Again, as many times as we have seen decisions come down from the
Department of Justice and the Federal Trade Commission, you wonder if
they have anybody over there who understands anything at all about
rural America. You wonder how many of these lawyers over there at the
Department of Justice--I don't want to pick on any schools; we always
say Harvard-trained lawyers and Yale-trained lawyers--have had any dirt
under their fingernails from a farm or how many of them know anything
about livestock issues.
This is a good amendment. Quite frankly, I am surprised there is this
kind of opposition.
Having said that, I wonder if the Senator from Iowa--if we could ask
to set the amendment aside temporarily so we can move on to a couple
other amendments.
Mr. GRASSLEY. Before I consent to that, and I probably will, as the
manager of the amendment, is there any determination you can give me
when we can vote on this or are we going to stack votes and vote all at
once?
Mr. HARKIN. We are working out a unanimous consent agreement now. It
is bouncing back and forth. Hopefully within a few minutes or so, we
will have that. I have a feeling these votes might be stacked. I can't
say right now. I have a feeling they will probably be stacked.
Mr. GRASSLEY. I will not object.
Mr. BROWNBACK. Mr. President, may I inquire of the Senator from Iowa,
if this is voted on, will this require a 60-vote threshold?
Mr. HARKIN. I asked my ranking member about that. He would insist on
60 votes. I am not insisting on 60 votes. He informed me that it would
require 60 votes.

Amendment No. 3851 to Amendment No. 3500

(Purpose: To promote legal certainty, enhance competition, and reduce
systemic risk in markets for futures and over-the-counter derivatives,
and for other purposes)

Mr. HARKIN. I ask unanimous consent that the pending amendment be set
aside. I send an amendment to the desk and ask for its immediate
consideration.
The PRESIDING OFFICER. Without objection, it is so ordered.
The clerk will report.
The assistant legislative clerk read as follows:

The Senator from Iowa [Mr. Harkin], for himself, Mr.
Chambliss, Mrs. Feinstein, Mr. Levin, Ms. Snowe, Mr. Crapo,
Mr. Conrad, and Ms. Cantwell, proposes an amendment numbered
3851 to amendment No. 3500.

Mr. HARKIN. I ask unanimous consent that reading of the amendment be
dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
(The amendment is printed in today's Record under ``Text of
Amendments.'')
The PRESIDING OFFICER. The majority leader.
Mr. REID. Mr. President, I apologize for interrupting. We have been
waiting for a lull in the debate. I will send a cloture motion to the
desk.
I ask for the regular order with respect to amendment No. 3830.
While the staff is looking for the amendment, let me just say this is
a motion I will file for cloture in regard to the firefighters
amendment. We have tried almost all day to work out something. I
thought we could work out something--side by sides, a couple of second-
degree amendments. We have been unable to do so. We had a suggestion
from the Republicans that we would have a voice vote. That didn't work
out. We had a suggestion that maybe what we should do is try to do a
freestanding bill at some later time. We were unable to get agreement
to do that.
What we are going to have to do now, which is really too bad, is we
are going to send this cloture motion to the desk. That will ripen 1
hour after we come in on Saturday. If Senators are willing to advance
the vote, we can do it tomorrow, of course. That not being the case, we
have no choice but to do it on Saturday. We have so many important
things to do. We can't be stepping on ourselves with 30 hours
postcloture.
I have told everyone, as soon as we finish this vote on this
firefighting thing, we will have cloture on the bill. It doesn't matter
what is pending, what is going on; we are going to have cloture on the
bill. Then, when that is over, we have to have a vote on the motion to
invoke cloture on the FISA legislation that has been reported by the
Intelligence Committee and the Judiciary Committee. We have to finish
that. The law expires on February 4 or 5. Senator Feingold and Senator
Dodd have indicated to me on more than one occasion that they will not
let us go to the bill without a 60-vote margin. So that is where we
are. We need to get to that sometime early Monday to get through all
the other things we have to do.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. HARKIN. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. HARKIN. Mr. President, would the Chair please state what the
amendment is before the Senate right now?
The PRESIDING OFFICER. Amendment No. 3851.
Mr. HARKIN. Mr. President, that is the amendment I had sent to the
desk prior to the quorum call being established?
The PRESIDING OFFICER. The Senator from Iowa is correct.
Mr. HARKIN. I thank the Chair.
This is basically an extension of the Commodity Exchange Act of 2013.
I wish to state for the record we would not ordinarily include the
Commodity Exchange Act in the farm bill, but for various reasons we
were unable to reauthorize the CEA in the last Congress.
This amendment further regulates energy transactions that perform a
significant price discovery function. This is an issue Senators
Feinstein and Levin have been working hard on.
The amendment also addresses fraud and retail transactions in foreign
exchange markets. It gives the CFTC broader authority to prosecute
fraud in other commodities such as heating oil. I am very pleased we
are able to work through the reauthorization issues with the ranking
member, Senator Crapo, and numerous cosponsors of this amendment.
I yield the floor.
Mr. CHAMBLISS. Mr. President, I wish to thank the chairman for this
and thank Senator Feinstein, Senator Crapo, and Senator Levin. All of
us have been working on this issue for literally 3 years now. This is
the culmination of an awful lot of sweat on the part of not only those
individuals but the industry as a whole. This is a huge day for the
futures industry. I thank the chairman.

[[Page S15442]]

Mr. HARKIN. I thank Senator Chambliss. It is a great effort, a great
product.
I see one of the main architects of the provisions of this bill, and
I yield the floor.
The PRESIDING OFFICER. The Senator from California is recognized.
Mrs. FEINSTEIN. Mr. President, I would like to indicate my full
support for this. This effort actually began 6 years ago. Some of us
were here then, including Senator Cantwell who is here tonight, Senator
Harkin, Senator Levin, Senator Snowe, Senator Conrad, when we began
this effort. It looks like opportunity and timing are once again coming
together.
We have a bill that today has the general support of the Commodities
Futures Trading Commission, the electronic exchange known as ICE, the
New York Mercantile Exchange known as NYMEX, the Chicago Mercantile,
and the President's Working Group. This legislation, supported by
myself, Senator Levin, Senator Snowe, as well as Senator Cantwell--I
have a list here--Senator Conrad, obviously Senator Chambliss, and
Senator Crapo would accomplish that. I would like to point out that
under Senator Levin's leadership and his Permanent Subcommittee on
Investigations, which did an investigation into the absence of
oversight and transparency on some of these markets, became a guide for
this push and effort.
I would like to very briefly say what this legislation does. It
increases transparency in energy markets to deter traders from
manipulating the price of oil and natural gas futures traded on
electronic markets. Here is what it would do. First, it requires energy
traders to keep records for a minimum of 5 years so there is
transparency and an audit trail. Second, it requires electronic energy
traders to report trading in significant price discovery contracts to
the Commodities Futures Trading Commission so they would have the
information to effectively oversee the energy futures market.
Manipulators could then be identified and punished by the CFTC, and in
the past there have been plenty of those. It cost the State of
Washington--wounded them deeply--and it cost my State $40 billion in
fraud and manipulation.
Third, the amendment gives the Commodities Futures Trading Commission
new authority to punish manipulation, fraud, and price distortion.
Fourth, it requires electronic trading platforms to actively monitor
their markets to prevent manipulation and price distortion of contracts
that are significant in determining the price of the market.
These are the factors CFTC will consider in making that
determination. The trading volume, whether significant volumes of a
commodity are traded on a daily basis. Price referencing, if the
contract is used by traders to help determine the price of subsequent
contracts. Price linkage, if the contract is equivalent to a NYMEX
contract and used the same way by traders.
For example, when Amaranth was directed to reduce their positions in
regulated natural gas contracts, they simply moved their positions to
the unregulated electronic natural gas contracts. The bottom line: This
requirement would essentially say similar contracts on ICE and NYMEX
will be regulated the same way.
In October, the four CFTC Commissioners released a report
underscoring the critical need for increased oversight in U.S. energy
markets. This bill includes what they asked for. We are very pleased. I
am delighted the CFTC reauthorization is included in this package. Once
again, this is a bipartisan bill. I wish to thank my main cosponsors:
Senator Levin, Senator Snowe, Senator Cantwell, Senator Conrad, and
others who have been very helpful in this area. I believe we can pass
this legislation, hopefully unanimously, tonight.
I yield the floor.
The PRESIDING OFFICER. The majority leader is recognized.
Mr. REID. Mr. President, the distinguished Senator from Maine wishes
to speak for 3 minutes on this matter, and then I ask unanimous consent
that I be recognized following her statement.
The PRESIDING OFFICER. Without objection, it is so ordered.
The Senator from Maine is recognized.
Ms. SNOWE. Mr. President, I wish to express my appreciation to the
Senator from California for spearheading this initiative that is so
essential and so critical, particularly at this time as we have seen
exorbitant increases and historical in energy prices. I also wish to
thank Chairman Harkin for his support and his leadership, as well as
Senator Chambliss and Senator Crapo for their work on this essential
issue and for their cooperation in working to help adopt this component
as part of the pending farm bill.
Americans have lost confidence in our energy markets--particularly in
the futures market. I have heard from numerous constituents who have
long been skeptical about the price of gasoline and heating oil prices.
Particularly in recent months, we have seen historical increases. Our
trucking industry has held numerous meetings across the State because
of the rising price of diesel fuel to $3.73 a gallon. These savvy
consumers strongly suspect these prices are being manipulated. Frankly,
their analysis is supported by a Senate subcommittee report, leading
economists, the GAO and most recently the CFTC.
How can a market fundamentally change to such a degree that prices
are skyrocketing by 43 percent in less than a year? That question is
omnipresent in American society today. It is being asked by Mainers who
are struggling with heating bills, the industrial sector struggling
with electricity prices, and the transportation industry, which is
concerned about how long they can sustain these prices.
The answer is certainly complex, but it is becoming patently clear
that speculation in the unregulated exempt commodities market is
exacerbating energy prices. Providing transparency to these dark
markets is, bluntly, long overdue, and I ask my colleagues to support
this legislation which, as Senator Feinstein indicated, will provide
transparency and accountability to these exempt security markets.
On October 25, a coalition of more than 80 national, regional, and
State organizations came together to form the Energy Market Oversight
Coalition and wrote each Member of the Senate asking them to finally
close the Enron loophole. As the coalition stated in their letter to
the Senate: To restore public confidence, all energy markets must be
fair, orderly, and transparent so the prices paid by consumers reflect
the true supply and demand.
In 2005, I requested a report from the Government Accountability
Office on the issue of futures market manipulation. That report
released on October 24 outlined three fundamental components to a
functional futures market. One is access to current information;
secondly, a large number of participants in the market; and third,
transparency. It is this last piece that is sorely lacking in our
markets today.
The current system with respect to exempt commercial markets lacks
transparency and fails to provide an essential tenet to any futures
market. Traders are able to avoid revelations of their identity within
these exempt commercial markets. In fact, based on one of the
investigations that took place by a Senate subcommittee, they
discovered the Amaranth hedge fund had excessively traded natural gas
contracts to such a degree that in 2006, it controlled 40 percent of
all natural gas contracts in the New York Mercantile. One hedge fund
controlled 40 percent of all the natural gas deliveries in the United
States. The positions were so substantial the company could
unilaterally alter the prices for natural gas. The New York Mercantile,
which is subject to the CFTC regulation, required Amaranth in August of
2006 to reduce their holdings of natural gas contracts. Their response,
the hedge fund's response, was simply to move its dealings to the
exempt commodity market, thereby defeating the entire purpose of the
CFTC regulation and cloaking its potentially manipulative market power
for further regulation.
This is an unacceptable gap in the law, and that is why the
legislation we are presenting tonight will address that, because it is
long overdue. Even the CFTC reversed their decision and unanimously
supported including this oversight as part of their jurisdiction and
responsibility.
So I yield the floor.
Mr. BINGAMAN. Mr. President, I want to congratulate the primary
sponsors of this amendment on achieving a hard-won compromise on an
issue

[[Page S15443]]

that has been intensely debated by Members of this body for a number of
years. As I understand the purpose of the amendment, it would
essentially close what is come to be known as the ``Enron Loophole'' in
the Commodity Exchange Act, CEA.
This loophole in the law, included in the Commodity Futures
Modernization Act, CFMA, of 2000, has allowed large volumes of energy
derivatives contracts to be traded over-the-counter, OTC, and on
electronic platforms, without the federal oversight necessary to
protect both the integrity of the market and our nation's energy
consumers.
Mr. President, my Committee--the Senate Committee on Energy and
Natural Resources--first heard testimony on this issue on January 29,
2002. At that hearing, Mr. James Newsome, then the chairman of the
Commodity Futures Trading Commission, described the impacts of the CFMA
thusly:

With respect to the energy markets, the CFMA exempts two
types of markets from much of the CFTC's oversight. Such
markets are described in Section 2(h) of the CEA, as amended
by the CFMA. The Act defines exempt commodities as, roughly
speaking, all commodities except agricultural and financial
products. This category, which for the most part represents
futures contracts based on metals and energy products may be
traded on the two types of markets covered by Section 2(h).
The first is bilateral, principal-to-principal trading
between two eligible contract participants . . . The second
is electronic multilateral trading among eligible commercial
entities, which include, among others, eligible contract
participants that can also demonstrate an ability to either
make or take delivery of the underlying commodity and dealers
that regularly provide hedging services to those with such
ability.

It is my understanding that the amendment before us would address the
current lack of regulatory authority governing the second category of
trading that Mr. Newsome described back in 2002. It would grant the
CFTC new authority to impose important requirements on electronic, OTC
transactions that rely on the current exemption contained in Section
2(h)(3) of the CEA, but serve a significant price discovery function.
These requirements include the implementation of market monitoring, the
establishment of position limitations or accountability levels, the
daily publication of trading information, and a number of other
standards key to restoring transparency to this important corner of our
energy markets.
Ensuring that proper oversight exists in these markets is of critical
importance to our nation's energy consumers, and to the efficient
operation of the physical, or cash, energy markets that fall under the
purview of the Federal Energy Regulatory Commission--FERC--and my
committee's jurisdiction. To illustrate why, I would like to once again
go back to the testimony we heard at our January 2002 hearing. As
described by Mr. Vincent Viola, the then-chairman of the NYMEX:

[In] the energy marketplace, there is a very substantial
interaction between NYMEX and the unregulated, physical and
over-the-counter energy markets. The interaction was clearly
apparent in the case of Enron.

Indeed, subsequent to that hearing, FERC, CFTC and the Department of
Justice conducted investigations of the various aspects of what became
perhaps one of the largest scandals in American corporate history. In
its March 2003 ``Final Report on Price Manipulation in Western
Markets,'' the FERC staff reported the following:

FERC Staff obtained information indicating that Enron
traders potentially manipulated the price of natural gas at
the Henry Hub in Louisiana to profit from positions taken in
the over-the-counter--OTC--financial derivatives markets--OTC
markets. It is staff's opinion that Enron traders, through
transactions falling within the commission's jurisdiction and
authorized through a blanket certificate, successfully
manipulated the physical natural gas markets. The
manipulation yielded profits in the financial OTC markets.

It was findings like these that motivated a number of Members of my
Committee to work together to ensure FERC had the proper tools at its
disposal, to stamp out the kind of manipulation that occurred during
the Western energy crisis of 2000-2001. During consideration of the
Energy Policy Act of 2005, EPACT 2005, Public Law 109-58, I was pleased
to work with Senators Cantwell, Feinstein and Wyden on these
provisions, along with Senator Domenici, who then chaired the Energy
Committee, and Senators Craig and Smith.
Indeed, sections 315 and 1283 of EPACT 2005 added anti-manipulation
provisions to both the Natural Gas Act and the Federal Power Act,
respectively. Both make it unlawful for anyone to use ``any
manipulative or deceptive device or contrivance . . . in contravention
of'' the rules of the Federal Energy Regulatory Commission. Both
closely track the language used in section 10(b) of the Securities and
Exchange Act and define ``any manipulative or deceptive device or
contrivance'' by reference to section 10(b). The Federal Energy
Regulatory Commission issued a final rule implementing the two anti-
manipulation provisions in January 2006.
The Energy Policy Act of 2005 provided FERC these much-needed, new
authorities in response to the Western energy crisis. However, it is
also clear that further regulatory authority is needed, to ensure the
CFTC has the tools at its disposal to ensure the integrity of financial
energy markets. The present circumstance is one in which the CFTC has
essentially been blind to a large portion of these markets for a number
of years. This is of critical concern to me, and to my committee,
because--as Mr. Viola observed in 2002, and as Enron demonstrated--all
of these markets are linked.
In fact, there is also significant reason to believe that these
markets have become more fully intertwined since that hearing 5 years
ago. In its 2006 State of the Markets Report, FERC devoted an entire
section, section 7, to the ``Growing Influence of Futures and Financial
Energy Markets'' on physical energy prices. The report notes that this
impact is particularly acute as it relates to natural gas prices--but
effects electricity prices as well, to the extent that a growing
percentage of our nation's electric generating capacity is gas-fired.
The FERC report details the link between prices set in the financial
derivatives market, and the physical natural gas contracts that
ultimately dictate the prices paid by American consumers.
Overall, I believe the current situation was most recently and
accurately described by FERC Chairman Joseph Kelliher in December 12,
2007, testimony before the Subcommittee on Oversight and Investigations
of the House Committee on Energy and Commerce:

[It] is important to understand that price formation in
sophisticated energy markets has become increasingly complex.
Regulators must understand and consider the interplay between
financial and futures energy markets, on the one hand, and
physical energy markets, on the other hand. While FERC has
jurisdiction over physical wholesale gas sales, and the
Commodity Futures Trading Commission (CFTC) has jurisdiction
over futures, the link between futures and physical markets
cannot be overstated. In a sense, these markets have
effectively converged. Manipulation does not recognize
jurisdictional boundaries and we must be vigilant in
monitoring the interplay of these markets if we are to
adequately protect consumers.

For these reasons, I support the amendment being offered today. It
would enhance the CFTC's authority to protect the integrity of
financial energy markets, which in turn play an increasingly important
price discovery role in physical energy markets. And it would do so in
a manner that also preserves FERC's important role in guarding against
market manipulation and protecting American natural gas and electricity
consumers. For that, I congratulate the sponsors. In addition, I will
enter into a colloquy with the distinguished Chairman of the Senate
Agriculture Committee, Senator Harkin, along with Senators Feinstein
and Levin, regarding the intent of this amendment with respect to its
jurisdictional implications for FERC and the CFTC.
Mr. LEVIN. Mr. President, for the past five years, I have been
working with my colleagues to close the Enron loophole that, since
2000, has exempted electronic energy markets for large traders from
government oversight. This loophole opened the door to price
manipulation and excessive speculation, and American consumers have
been paying the price ever since with sky-high prices for crude oil,
natural gas, gasoline, diesel fuel, home heating oil, propane, and
other energy commodities vital to a functioning U.S.

[[Page S15444]]

economy. That is why I am pleased to stand before the Senate today in
support of bipartisan legislation, sponsored by Senator Feinstein,
myself, Senator Snowe and others, that will close the Enron loophole
and put the cop back on the beat in all U.S. energy markets in an
effort to stop price manipulation and excessive speculation.
I would like to thank a number of my colleagues for not only making
this bipartisan legislation possible, but also agreeing to include it
in the farm bill today. Senator Harkin, chairman of the Committee on
Agriculture, played a key role in getting us together and encouraging
us to resolve our differences. Senator Chambliss, the committee's
ranking republican, agreed to address the problems we identified and
helped work through our differences. Senator Feinstein of California
provided unending determination needed to get this problem solved.
There are many more who played a critical role in this legislation as
well, including Senator Bingaman, Senator Snowe, Senator Dorgan who
cosponsored our original bill, S. 2058, the Close the Enron Loophole
Act, and Senator Crapo who helped us produce a bipartisan product.
I thank not only the Senators, but also their staffs who put in many
hours on this legislation, provided invaluable expertise, and
repeatedly came up with creative solutions to tough problems. I would
like to thank in particular Dan Berkovitz of my subcommittee staff who
has lived with this issue for the last 5 years and devoted so much
time, work, and expertise to it.
A stable and affordable supply of energy is, of course, vital to the
national and economic security of the United States. We need energy to
heat and cool our homes and offices, to generate electricity for
lighting, manufacturing, and vital services, and to power our
transportation sector--automobiles, trucks, boats, and airplanes.
Over 80 percent of our energy comes from fossil fuels--oil, natural
gas, and coal. About 50 percent is from oil and natural gas. The U.S.
consumes around 20 million barrels of crude oil each day, over half of
which is imported. About 90 percent of this oil is refined into
products such as gasoline, home heating oil, jet fuel, and diesel fuel.
The crude oil market is the largest commodity market in the world,
and hundreds of millions of barrels are traded daily in the various
crude oil futures, over-the-counter, and spot markets. The world's
leading exchanges for crude oil futures contracts are the New York
Mercantile Exchange--NYMEX--and the Intercontinental Exchange, known as
ICE Futures in London.
Natural gas heats the majority of American homes, is used to harvest
crops, powers 20 percent of our electrical plants, and plays a critical
role in many industries, including manufacturers of fertilizers,
paints, medicines, and chemicals. It is one of the cleanest fuels we
have, and we produce most of it ourselves with only 15 percent being
imported, primarily from Canada. In 2005 alone, U.S. consumers and
businesses spent about $200 billion on natural gas.
Today, only part of the natural gas futures market is regulated.
Natural gas produced in the United States is traded on NYMEX and on an
unregulated ICE electronic trading platform headquartered in Atlanta,
GA. The price of natural gas in both the futures market and in the spot
or physical market depends on the prices on both of these U.S.
exchanges.
The ``Enron loophole'' is a provision that was inserted at the last
minute, without opportunity for debate, into commodity legislation that
was attached to an omnibus appropriations bill and passed by Congress
in late December 2000, in the waning hours of the 106th Congress. This
loophole exempted from U.S. government oversight the electronic trading
of energy commodities by large traders. The loophole has helped foster
the explosive growth of trading on unregulated electronic energy
exchanges. It has also rendered U.S. energy markets more vulnerable to
price manipulation and excessive speculation, with resulting price
distortions.
Since 2001, the Permanent Subcommittee on Investigations, which I
chair, has been examining the vulnerability of U.S. energy commodity
markets to price manipulation and excessive speculation. Beginning in
2002, we have held 6 days of hearings and issued 4 reports on issues
related to inflated energy prices.
The subcommittee first documented some of the weaknesses in U.S.
crude oil markets in a 2003 staff report I released which found that
crude oil prices were

Affected by trading not only on regulated exchanges like the
NYMEX, but also on unregulated ``over-the-counter'' (OTC)
markets which have become major trading centers for energy
contracts and derivatives. The lack of information on prices
and large positions in these OTC markets makes it difficult
in many instances, if not impossible in practice, to
determine whether traders have manipulated crude oil prices.

In June 2006, the subcommittee issued a staff report entitled, ``The
Role of Market Speculation in Rising Oil and Gas Prices: A Need to Put
the Cop Back on the Beat.'' This bipartisan staff report analyzed the
extent to which the increasing amount of financial speculation in
energy markets had contributed to the steep rise in energy prices over
the past few years. The report concluded that: ``[s]peculation has
contributed to rising U.S. energy prices,'' and endorsed the estimate
of various analysts that the influx of speculative investments into
crude oil futures accounted for approximately $20 of the then-
prevailing crude oil price of approximately $70 per barrel.
The 2006 report recommended that the CFTC be provided with the same
authority to regulate and monitor electronic energy exchanges, such as
ICE, as it has with respect to the fully regulated futures markets,
such as NYMEX, to ensure that excessive speculation in the energy
markets did not adversely effect the availability and affordability of
vital energy commodities through unwarranted price increases.
In June 2007, the subcommittee released another bipartisan report--
``Excessive Speculation in the Natural Gas Market.'' Our report found
that a single hedge fund named Amaranth had dominated the U.S. natural
gas market during the spring and summer of 2006, and Amaranth's large-
scale trading significantly distorted natural gas prices from their
fundamental values based on supply and demand.
The report concluded that the current regulatory system was unable to
prevent these distortions because much of Amaranth's trading took place
on an unregulated electronic market and recommended that Congress close
the ``Enron loophole'' that exempted such markets from regulation.
The report describes in detail how Amaranth used the major
unregulated electronic market, ICE, to amass huge positions in natural
gas contracts, outside regulatory scrutiny, and beyond any regulatory
authority. During the spring and summer of 2006, Amaranth held by far
the largest positions of any trader in the natural gas market.
According to traders interviewed by the subcommittee, during this
period natural gas prices for the following winter were ``clearly out
of whack,'' at ``ridiculous levels,'' and unrelated to supply and
demand. At the subcommittee's hearing in June of this year, natural gas
purchasers, such as the American Public Gas Association and the
Industrial Energy Consumers of America, explained how these price
distortions increased the cost of hedging for natural gas consumers,
which ultimately led to increased costs for American industries and
households. The Municipal Gas Authority of Georgia calculated that
Amaranth's excesses increased the cost of their winter gas purchases by
$18 million. Also at the hearing the New England Fuel Institute and the
Petroleum Marketers Association of America made clear how rampant
speculation in energy trading harms the smaller businesses that trade
in energy commodities.
Finally, when Amaranth's positions on the regulated futures market,
NYMEX, became so large that NYMEX directed Amaranth to reduce the size
of its positions on NYMEX, Amaranth simply switched those positions to
ICE, an unregulated market that is beyond the reach of the CFTC. In
other words, in response to NYMEX's order, Amaranth did not reduce its
size; it merely moved it from a regulated market to an unregulated
market.
This regulatory system makes no sense. It is as if a cop on the beat
tells a liquor store owner that he must obey the law and stop selling
liquor to minors, yet the store owner is allowed to move his store
across the street and

[[Page S15445]]

sell to whomever he wants because the cop has no jurisdiction on the
other side of the street and none of the same laws apply. The Amaranth
case history shows it is clearly time to put the cop on the beat in all
of our energy exchanges.
At the subcommittee's 2007 hearings, both of the major energy
exchanges, NYMEX and ICE, testified that they would support a change in
the law to eliminate the current exemption from regulation for
electronic energy markets, in order to reduce the potential for
manipulation and excessive speculation. Consumers and users of natural
gas and other energy commodities--the American Public Gas Association,
the New England Fuel Institute, the Petroleum Marketers Association of
America, and the Industrial Energy Consumers of America--also testified
in favor of closing the Enron loophole. That testimony helped galvanize
the current effort to produce legislation in this area.
Just last week, my subcommittee teamed up with Senator Dorgan's
Subcommittee on Energy to hold still another hearing examining how
excessive speculation is continuing to add to crude oil prices, harming
consumers and the American economy as a whole. During that hearing,
Senators from both sides of the aisle expressed the need to develop new
tools to address this problem.
The legislation being added to the farm bill today will do just that.
It will help fix a number of the problems identified in the
subcommittee's hearings and reports. Most importantly, it will put an
end to the Enron-inspired exemption from government oversight now
provided to electronic energy trading markets set up for large traders.
By ending that exemption, this legislation will restore the ability of
the Commodity Futures Trading Commission--CFTC--to police all U.S.
energy exchanges to prevent price manipulation and excessive
speculation.
The legislation would do more than require CFTC oversight; it would
also require electronic exchanges, for the first time, to begin
policing their own trading operations and become self-regulatory
organizations in the same manner as futures exchanges like NYMEX.
Specifically, the legislation would establish 5 ``core principles'' to
which electronic exchanges must adhere, each of which parallels core
principles already applicable to other CFTC-regulated exchanges and
clearing facilities. Implementing these core principles would require
an electronic exchange to monitor the trading of contracts which the
CFTC has determined affect energy prices, ensure these contracts are
not susceptible to manipulation, require traders to supply information
about these contracts when necessary, supply large trader reports to
the CFTC related to these contracts, and publish daily trading data on
the price, trading volume, opening and closing ranges, and open
interest for these contracts.
In addition, the electronic exchanges would have to establish
position limits and accountability levels for individual traders buying
or selling these contracts in order to prevent price manipulation and
excessive speculation. Electronic exchanges are intended to implement
these position limits and accountability levels in the same way as
futures exchanges like NYMEX. Moreover, it is intended that the CFTC
will take steps to ensure that the position limits and accountability
levels on all exchanges are comparable to prevent traders from playing
one exchange off another.
In implementing these core principles, electronic exchanges are given
the same flexibility accorded to other CFTC regulated entities, subject
to CFTC approval. In addition, the legislation states explicitly that,
when implementing the requirements for position limits, accountability
levels, and emergency authority to require reductions of positions, the
electronic exchanges are allowed to take into account differences
between trades which are cleared and not cleared, and the CFTC would
police implementation of those core principles in an appropriate manner
recognizing those differences.
Although the legislation provides an electronic trading facility with
flexibility to implement the core principles, in the same manner as
futures exchanges have with respect to the core principles applicable
to them, and the flexibility to take into account the differences
between cleared and uncleared trades in certain circumstances, in all
instances the CFTC has the ultimate responsibility and authority to
interpret the core principles, establish rules or guidance as to how
they should be applied, and determine whether a facility or exchange is
complying with the core principles.
The legislation would also require electronic exchanges to establish
procedures to prevent conflicts of interest and anti-trust violations
in their operations. These provisions parallel core principles already
applicable to other CFTC-regulated exchanges and clearing facilities
and are intended to function in a similar manner. These provisions are
not restricted to trades involving contracts that affect energy prices,
but apply to the entire exchange to ensure it operates in a fair
manner.
In addition to requiring electronic exchanges to become self-
regulatory organizations, the legislation would require the CFTC to
oversee these exchanges in the same general way that it currently
oversees futures exchanges like NYMEX. The legislation also, however,
assigns the CFTC a unique responsibility not present in its oversight
of other types of exchanges and clearing facilities. The legislation
would require the CFTC to review the contracts on each electronic
exchange to identify those which ``perform a significant price
discovery function'' or, in other words, have a significant effect on
energy prices. The CFTC would make this determination by looking at
such factors as whether the electronic exchange's contract is
explicitly linked to a contract used on a futures exchange; whether the
electronic exchange's contract price is used by traders to set prices
in other contracts; whether traders take positions in the contract and
use those positions to arbitrage prices in other energy markets; and
whether the contract is traded in sufficient volume to affect market
prices. The CFTC can also look at other factors to determine if a
contract is affecting energy prices. Contracts designated by the CFTC
as performing a significant price discovery function are those that
would be policed by both the exchange and the CFTC.
The legislation directs the CFTC to conduct a rulemaking to implement
this requirement. The legislation also states clearly that a CFTC
determination that a contract performs a significant price discovery
function is a determination that is within the Commission's discretion;
this determination is not intended to be subject to formal challenge
through administrative proceedings. The legislation would also require
the CFTC to review the contracts at an electronic exchange on at least
an annual basis to determine which perform significant price discovery
functions. This review is not intended to require the CFTC to conduct
an exhaustive examination of every contract traded on an electronic
exchange, but instead to concentrate on those contracts that are most
likely to meet the criteria for performing a significant price
discovery function. The legislation also directs the electronic
exchange to bring to the CFTC's attention any contract which it
believes is affecting energy prices.
To enable the CFTC to conduct oversight of its operations, in
particular to prevent price manipulation and excessive speculation,
electronic exchanges are required to file large trader reports with the
CFTC for trades involving contracts that perform a significant price
discovery function. These are the same large trader reports already
filed by other CFTC-regulated exchanges and clearing facilities. In
addition, electronic exchanges found to be trading contracts that
perform a significant price discovery function are treated as a
``registered entity'' under the Commodity Exchange Act. This
designation ensures that the CFTC has the same enforcement authority
over electronic exchanges as it has with respect to other exchanges and
clearing facilities to ensure compliance with its regulatory and
statutory requirements.
One last issue. Another provision in the legislation states that its
provisions are not intended to limit or affect the jurisdiction of the
CFTC or any other agency involved with protecting our markets from
price manipulation and excessive speculation. A legal battle is going
on in the courts right now over enforcement actions by the CFTC

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and the Federal Energy Regulatory Commission accusing Amaranth of
manipulating or attempting to manipulate natural gas prices. This
legislation is not intended to affect that court battle in any way. We
are all waiting to see how it plays out and how the courts will
interpret the law. This legislation is intended to play an absolutely
neutral role in those enforcement actions, and should not be
interpreted as changing the status quo in any way.
The provisions I have just discussed are the product of lengthy
negotiations and compromises over the best way to close the Enron
loophole. They seek to provide stronger government oversight of U.S.
energy markets, while preserving the legitimate trading operations of
electronic exchanges like ICE. Senator Feinstein and I have introduced
a number of bills over the years to tackle this problem, each of which
took a somewhat different approach to strike the right balance. My
latest effort, introduced a few months ago with Senator Dorgan and
others, was S. 2058, the Close the Enron Loophole Act. While that bill
is more comprehensive than the legislation being added to the farm bill
today, the combined legislation before us now preserves our bill's
intent and ensures that both the exchanges and the CFTC can enforce
prohibitions against price manipulation and excessive speculation.
That, to me, is the most important aspect of the legislation and why I
support it today.
The legislation reflects input from the CFTC, industry, consumer
groups, and a wide range of Senators. Some compromises were made, but
again, those compromises did not weaken the ability of the CFTC to
police out energy markets--in fact, if this legislation is enacted into
law, the CFTC will be in a stronger position since 2000 to protect our
markets from trading abuses.
The House is working on similar legislation, so I am hopeful that we
can get something enacted into law as part of the farm bill early next
year. I will be working to ensure that the enforcement provisions we
have worked so hard to include in this legislation are preserved.
In addition to these provisions closing the Enron loophole, the farm
bill will include a host of other provisions to reauthorize and
strengthen the Commodity Exchange Act. Those provisions include
stronger civil and criminal penalties for manipulation, better
enforcement authority for currency exchange trading abuses, among
others, all of which I support. I thank my colleagues for including
them in the farm bill as well.
Preventing price manipulation and excessive speculation in U.S.
energy markets is not an easy undertaking. I thank my colleagues,
industry, consumers and others for their good-faith suggestions to
improve the legislation that is now before the Senate. Recent cases
have shown that market abuses and failures did not stop with the fall
of Enron. They are still with us. We cannot afford to let the current
situation continue, allowing energy traders to use unregulated markets
to avoid regulated markets. It is time to put the cop back on the beat
in all U.S. energy markets. The stakes for our energy security and for
competition in the market place are too high to do otherwise.

Intent of the Commodity Exchange Act

Mr. BINGAMAN. Mr. President, I believe the primary sponsors of this
amendment, as well as the distinguished chairman of the Senate
Agriculture Committee, Senator Harkin, share my desire for the Federal
Energy Regulatory Commission, FERC, and Commodity Futures Trading
Commission, CFTC, to coordinate seamlessly in their efforts to oversee
the increasingly interdependent energy markets under their respective
jurisdictions. Moreover, it is important to clarify that nothing
included in this amendment would interfere or prejudice the respective
Commissions' ongoing, enforcement-related proceedings and litigation.
I would like to inquire of the chairman of the Agriculture Committee,
Senator Harkin, do you concur in my assessment that nothing in this
amendment would prejudice or interfere with ongoing, energy market
enforcement-related litigation or administrative proceedings currently
involving FERC and the CFTC?
Mr. HARKIN. Yes, I agree with the assessment of the chairman of the
Energy and Natural Resources Committee.
Mr. BINGAMAN. Likewise, I believe we have taken pains in this
amendment to ensure that the current jurisdictional boundaries between
the two Commissions are maintained, with respect to the authorities of
FERC under the Federal Power and Natural Gas Acts, and the CFTC under
the Commodity Exchange Act. How do you view this matter?
Mr. HARKIN. Again, I concur with the Senator from New Mexico. Nothing
in this amendment would erode either Commission's authorities under the
statutes that you have cited.
Mr. BINGAMAN. Finally, I ask if, in your view, anything contained in
this amendment would limit FERC's existing ability to gain information
from market participants?
Mr. HARKIN. No, this amendment would not infringe on FERC's current
ability to gain information from market participants.
Mr. BINGMAN. Thank you. I would like to now ask a few questions of
the senior senator from California, Senator Feinstein, one of the
primary authors of this amendment, as well as one of the coauthors of
sections 315 and 1283 in the Energy Policy Act of 2005 (P.L. 109-58),
which gave FERC additional antimanipulation authorities under the
Federal Power and Natural Gas Acts. In your view, does anything
contained in this amendment undermine or alter those authorities?
Mrs. FEINSTEIN. No. In my view, nothing contained in this amendment
would or is intended to undermine or alter those important, new
authorities. We have sought to make this clear, with the inclusion in
section 13203 of paragraph (c)(2), which preserves FERC's existing
authorities.
Mr. BINGAMAN. I would also like to make an inquiry of the senior
Senator from Michigan, Senator Levin, another primary author of the
amendment now before the Senate. As I understand this amendment, it
expands the CFTC's authorities with respect to the requirements it may
impose on transactions it deems ``significant price discovery
contracts.'' This ``significant price discovery contract''
determination may be applied to contracts, agreements, and transactions
that are conducted in reliance on the exemption included in section
2(h)(3) of the Commodity Exchange Act. As a conforming matter,
paragraph (c)(1) of section 13203 extends the CFTC's exclusive
jurisdiction over these ``significant price discovery contracts.''
As the Senator from Michigan knows, the meaning and expanse of CFTC's
exclusive jurisdiction over the regulation of futures markets is
currently the subject of litigation. As we have heard from the chairman
of the Agriculture Committee and Senator Feinstein, another one of the
amendment's authors, this amendment was written to ensure it would not
interfere with any such ongoing litigation; and further, to maintain
the current jurisdictional division between FERC and the CFTC. I am
satisfied with those assurances.
But in addition, as a forward-looking matter, it is important to
clarify the intent of the amendment with respect to this new class of
``significant price discovery contracts.'' I am aware of the fact that
certain electronic trading facilities that currently operate under the
exemption included in section 2(h)(3) of the Commodity Exchange Act for
purposes of trading energy swaps also trade physical--or cash--
contracts in electricity and natural gas. For oversight and enforcement
purposes, it is crucial that FERC retain its jurisdiction over these
physical energy transactions. In your view, how would the amendment
impact FERC's jurisdiction over these transactions?
Mr. LEVIN. The Senator from New Mexico raises an interesting and
important question, on which I have conferred with the CFTC. In
addition to the savings clause in section 13203(c)(2) that preserves
FERC's jurisdiction under its statutes as a threshold matter, I believe
that FERC's jurisdiction over these transactions would, in any event,
be preserved. It is my view that the kinds of cash transactions that
you cite would not be captured within the amendment's ``significant
price discovery contract'' test. The test is reserved for those
transactions conducted ``in reliance'' on the exemption

[[Page S15447]]

in paragraph 2(h)(3) of the Commodity Exchange Act. Because the CEA
does not apply to cash transactions for purposes of regulation, these
transactions cannot, by definition, be conducted ``in reliance'' on
this exemption. As such, FERC's authority in this area is preserved on
all accounts.
Mr. BINGAMAN. I have a similar question as it relates to the status
and functions of regional transmission organizations, RTOs, under this
language. RTOs often deal in the auction of financial transmission
rights and ancillary services associated with the orderly operation of
electricity markets. Do you believe this ``significant price discovery
contract'' provision would impact FERC's authority in this area?
Mr. LEVIN. For many of the same reasons I have cited in relation to
natural gas markets, I believe--and it is certainly my intention, as
one of the amendment's authors--that FERC's authority over RTOs would
be unaffected. To my knowledge, no RTO operates pursuant to the
exemption in paragraph 2(h)(3) of the Commodity Exchange Act. Moreover,
the savings clause in section 13203(c)(2) makes abundantly clear that
FERC's existing authorities are preserved.
Mr. BINGAMAN. I thank the Senators for their assurances in this
regard, and congratulate them on their amendment.

rolling spot contracts

Mr. HARKIN. This bill includes reauthorization of the Commodity
Exchange Act. One of the issues addressed in the reauthorization is the
problem of so-called ``rolling spot'' contracts, a type of contract
that unscrupulous criminals use to defraud retail customers while
avoiding the jurisdiction of the Commission. Because of several adverse
court decisions addressing rolling spot contracts used in retail
foreign exchange fraud, the Commission has been severely hampered in
its efforts to protect consumers.
This reauthorization clarifies the jurisdiction of the Commission
over these ``rolling spot'' contracts. In addition, because these
``rolling spot'' contracts have begun to be used in other commodities
such as metals, this reauthorization clarifies the Commission's
authority to address ``rolling spot'' contracts should they spread to
other agricultural or exempt commodities.
Mr. CHAMBLISS. Will the gentleman yield for a question?
Mr. HARKIN. Yes.
Mr. CHAMBLISS. Is it the intent of the provision to imply or provide
that agricultural or exempt futures contracts that are not currently
legal futures contracts, are somehow legal because of these new
provisions?
Mr. HARKIN. No. The provisions explicitly say that they have no
effect on whether contracts are considered legal futures contracts or
not.
Mr. CHAMBLISS. I thank the Senator.
The PRESIDING OFFICER. The majority leader is recognized.
Mr. REID. Mr. President, it is with some consternation that I rise
this evening. We have an amendment that is very important to working
men and women in this country. Basically, what it allows is
firefighters and police to organize collectively. It is very important
that they have that opportunity. That is the legislation before this
body, the amendment dealing with firefighters.
The pleasant thing about this amendment is that it is bipartisan. We
have 64 Senators who would have voted for this amendment. We have tried
very hard. Everybody knows that I have four Democratic Senators running
for President. They are all wonderful, good legislators, and wonderful
human beings. One of them is going to be President of the United
States, more than likely, next year. But we have tried all day to get a
vote. As I indicated a little while ago, we will take a 60-vote margin,
a side-by-side or a second-degree amendment, a freestanding bill or
whatever other variation I can think of.
My friends are very good--the opponents of this legislation. There
are not a lot of them, but there are a few. They know the rules, and
they know how difficult it is when we are less than 3 weeks before the
first primary, the caucus in Iowa, to get these four Senators here.
They were here this morning. There were two important bills, one on
energy and one on a farm issue. They were scheduled to come back here.
One of them is on a plane coming back here for a morning vote. The word
got out that we needed them here. So there has been this stalling. We
have no alternative but to come back and fight another day. I say to
all Senators that this is a bipartisan bill.
I see my friend on the floor, Judd Gregg. We would not be where we
are tonight but for him. It is true. I mean, it is not often that on a
labor issue you have someone of his stature on the other side of the
aisle supporting this legislation. But I respect those few Senators who
object to this. They have the legal rights and procedural rights that
they do, and getting my Presidentials back here on Saturday would be
hard. We know it is a difficult time for everybody on a Saturday.

Amendment No. 3830, withdrawn

Without belaboring the issue, I ask unanimous consent to now withdraw
amendment No. 3830.
Mr. KENNEDY. Mr. President, reserving the right to object, I will not
object, but I want to, first of all, thank our majority leader for his
comments. Just before the request is agreed to, I want to remind the
Members of the Senate that private workers have the opportunity under
the labor laws to get the kinds of protections and rights we are
talking about; public workers do not. The public workers, who have been
on the front lines of so many of the challenges we are facing in our
society, deserve these rights.
Public safety workers put their lives on the line every day they go
to work. They are on the frontlines of our effort to keep America safe.
We ask much from them. When the California wildfires threatened lives
and property, we asked that they battle those blazes. When natural
disasters strike, we expect them to be the first on the scene. And on
September 11th, they were the heroes that restored our hope.
These heroic men and women have earned our thanks and respect. All
they asked of this body was the right to enjoy the same basic rights
that private sector workers enjoy. The right to have a voice at the
table when decisions are made that are critical to their safety and
their livelihood.
The bipartisan amendment that we offered would have guaranteed every
first responder the right to collective bargaining. Many of our first
responders already have this fundamental right. This amendment would
have provided these basic rights for those who don't and it would have
done so in a reasonable manner. For States that currently accord public
safety officers these rights, the amendment would have no affect. For
States that don't currently provide these rights, the amendment would
not trample on their rights. They would have ample opportunity to
establish their own collective bargaining systems, or ask the Federal
Labor Relations Authority for help. The choice would belong to the
state.
The public safety officers came to us with a modest request. Tonight,
a minority of the Senate said no to their request. Despite the broad
bipartisan support we had for this amendment, we could not get past the
obstructions of those who were determined to deny our Nation's first
responders their basic rights.
This fight is not over. I pledge to our Nation's brave firefighters,
police officers, and emergency medical technicians, that we will bring
this legislation back to the Senate again and again until the Senate
says ``yes'' to them. Each day they face hazards that put their lives
at risk, and as we enjoy the security that their sacrifice provides,
they should know that they have allies in the Senate that will keep
fighting for them.
While we may not have succeeded today, we will bring this legislation
back to the floor of the U.S. Senate soon and we will pass it.
Our public safety officers deserve no less.
I thank the leader for all of his strong support for this
legislation, and I indicate that I, for one--and there are many
others--will come back and revisit this issue at an early time. So I
don't object to the request, but I do want to state that this issue is
going to

[[Page S15448]]

be front and center before the Senate in the near future.
The PRESIDING OFFICER (Mr. Casey). Without objection, the amendment
is withdrawn.

Amendment No. 3851

Mr. REID. Mr. President, it is my understanding that the Feinstein
amendment is ready to be adopted.
The PRESIDING OFFICER. If there is no further debate, the question is
on agreeing to the Feinstein amendment.
The amendment (No. 3851) was agreed to.
Mr. HARKIN. Mr. President, I ask unanimous consent to add onto that
amendment Senators Dorgan, Durbin, and Conrad as cosponsors.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. REID. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. REID. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. REID. I ask the Chair, under the order now before the Senate--
Mr. SANDERS. I object.
Mr. REID. I haven't said anything yet. Mr. President, I ask that the
Chair inform the Senator from Nevada if I am right, that under a
previously entered order I have a right, after consultation with the
Republican leader, to ask that there be cloture right now or whatever
time I choose?
The PRESIDING OFFICER. Under the substitute amendment to the bill,
that is correct.
Mr. REID. So, Mr. President, under the order that is before the
Senate, we are going to have a cloture vote on the farm bill after
weeks and weeks. Now, I understand there are people who are
disappointed. We still have a significant number of amendments. After
adding up those that have been objected to, there are 15 by one
Senator. So we have 15 plus 11--a lot of amendments.
The time has come that we stop this. We need the farm bill. We need
to get a conference. I believe, after conversations I have had with the
Republican leader, that this is a bill we can go to conference on. So
the time is here. We don't have time for 26 more amendments.
We had a briefing in S-407 today. I don't know how people are going
to vote on domestic surveillance and other types of surveillance, but
it is an important issue that we have an obligation as Senators to
resolve. We had the head of the national intelligence agency there,
Judge Mukasey. We have to do that. I am going to move to that bill
tomorrow.
As I have stated on the floor, Senator Feingold and Senator Dodd are
not going to let us move to that. I have filed cloture on that bill. I
know people are disappointed, but we have no alternative. I guess there
is an alternative, but I don't think people want to be around here in
the middle of next week to finish the farm bill. We will have cloture
on it tonight and, as far as I am concerned, we can have final passage
as soon as we finish the cloture vote.
For all Senators, the cloture vote will take place at 9 o'clock
tonight on the farm bill.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. SALAZAR. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER (Mr. Sanders). Without objection, it is so
ordered.
Mr. SALAZAR. Mr. President, I ask unanimous consent that I be
recognized to speak as in morning business for up to 5 minutes.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. SALAZAR. Mr. President, I wish to say a few words about an event
that happened earlier this evening, and that is the passage of the
Energy bill with a great bipartisan vote in the Senate.
In my view, this is the signature agenda of the 21st century. I am
very proud of the work that went into fashioning that bill by the
Energy Committee, the Commerce Committee, as well as a package we
attempted to get in there by the Finance Committee.
At the end of the day, this package which moves on to the House and
then to the President for his signature will do some historic things
for the clean energy economy for America.
The first thing it will do is make sure CAFE standards are up to
where they should have been a long time ago, with much more highly
efficient vehicles in our country as our national fleet will be in a
position to have the kind of oil savings that will lead us to energy
independence and help get rid of the addiction on foreign oil that
currently compromises the foreign policy of the United States.
Second, we will start addressing the issue of global warming by
making sure we look at a national carbon assessment, the sequestration
program that will help us capture and store carbon as part of the
remedy to deal with the problem of global warming.
Finally, moving forward with renewable fuels, many of us recognize it
is rural America that is going to help us grow our way to energy
independence, and the 25-25 resolution that is included in the energy
legislation sets out a national vision for us to get to 25 percent of
our energy coming from renewable energy resources.
I know there were many people who worked on this legislation. I thank
and commend all of those who were involved in putting it together. On
my staff, in particular: Steve Black, who had been very involved in the
crafting of the 2005 Energy Policy Act; Suzanne Wells, who has been a
fellow in my office and worked on this issue for almost as long as
Steve Black; Ben Brown, a new fellow in my office; Tracy Ross, a young
employee in my office who was part of this energy team, along with
Brendan McGuire, Grant Leslie--a whole host of others--Jeff Lane in my
office also was involved.
I also thank the staff of the committees because I know the staff
members of both the Energy and Commerce Committees worked day and night
to get us a good energy package.
I would be remiss if I did not say something about Russ Sullivan and
the great staff of the Finance Committee, headed by our chair, Max
Baucus. The Finance Committee functions completely on every cylinder
and is a stellar committee, a group of staff members that makes us very
proud and serves as a role model for the rest of the committees in the
Senate.
It is a historic night for us with the passage of the energy
legislation.
As we move closer toward the passage of the 2007 farm bill, I also
commend all of my colleagues who have worked so hard in trying to get
us to a procedural way forward to get us to the completion of this
bill.
I yield the floor.
The PRESIDING OFFICER. The Senator from Vermont.
Mr. GREGG. Mr. President, I wish to speak briefly on the practical
implications of what we are about to do. I appreciate the positions the
leaders of the bill are in. They worked hard to get this bill through.
Obviously, I don't support the bill, but I feel they have every right
to finish it. They have the votes to pass it, and there is no reason
there should be dilatory delays. But there are three major events that
are going to be impacted by this exercise.
The first is an amendment which I had pending which would have given
people relief when their homes are foreclosed on so they would not get
hit with a tax bill. It appears that amendment, on which there was
general consensus, will not be brought up and voted on. That is
unfortunate. I hope we can come to this from another angle.
I spoke with the chairman of the Finance Committee. He and the
Finance Committee members are trying to find some way to accomplish
that. I think it is wrong, when people have their home foreclosed, that
they have the IRS follow them to wherever they are going, the apartment
they have to move to, to hit them with a tax bill for that foreclosure.
The second issue is a proposal I had--the Senator in the chair also
had a proposal on this issue--which was to get some funds in LIHEAP.
All of us who live in the colder regions of this country have seen our
oil bills go up dramatically. There is a lot of pressure on low-income
people, and the LIHEAP

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funds, which help low-income people deal with that pressure, are simply
not going to be adequate. They are just not going to be adequate.
The Senator from Vermont had an amendment in this area. I had an
amendment in this area. Unfortunately, they both will fall.
The third issue is the firefighters, fully explained by Senator Reid,
the majority leader. I appreciate his kind words relative to my efforts
in this area. I am sorry we will not be able to accomplish this effort
at this time. This is an important issue. I do hope we will come back
to it. I know it is high on the list of the majority leader and also
high on my list.
I regret the procedure that has to take place. Obviously, it is the
prerogative of the leadership to do this. I can understand why they are
doing it. They have been on the bill a number of weeks. The first
couple of weeks we could not offer amendments. That was not our fault.
As a practical matter, this session is coming to a close, and they want
to wrap up the bill. And as a practical matter, the bill should be
wrapped up.
I regret some of these amendments that I think are very important to
Americans, especially those in cold climates having to deal with
heating bills and those who have had homes foreclosed, and Americans
who protect us through fighting fires, those amendments will not be
considered.
The PRESIDING OFFICER. The Senator from North Dakota.
Mr. CONRAD. Mr. President, I rise to thank the leadership for taking
this bull by the horns and dealing with a circumstance that changed
rather dramatically in the last several hours.
I know there are colleagues who are disappointed that they are not
going to be able to offer amendments that are unrelated to the farm
bill to this legislation. But if you put yourself in the position of
the leadership, they were faced with an impossible situation, a
situation that was made more difficult by the way events unfolded.
We had 20 amendments on a side that were in order, 40 amendments in
total. That could include amendments that were related to the farm bill
as well as those unrelated. Amendments were filed. Not all 40 had been
filed. There were still, I believe, at least eight slots. So when the
leadership looked at the time--and the fact is, here we are, almost 9
o'clock on Thursday night--and they looked at the other business that
has to be done, it didn't fit together.
We could be in a circumstance in which things that must be done for
us to conclude business for the year could not be concluded because it
would take unanimous consent to go off the farm bill now that we are on
it. Anybody could object. So they had to find a way to reach
conclusion. The rules of the Senate required this circumstance. I know
there is disappointment, but our leaders face a very difficult set of
choices, and if they wanted to get the business of the Congress done
this year by next Friday, they had no alternative but to do what the
leaders collectively decided to do tonight.
I know there is disappointment, but there was no choice, if the
business of the Senate was to get concluded.
I salute the leadership. I thank Senator Reid for his strong
leadership. I thank Senator McConnell. I especially thank the bill
managers, Senator Harkin and Senator Chambliss, who have worked
tirelessly to get this bill done and under extremely difficult
circumstances where they have had the bill interrupted every few hours
to handle other legislation, and we have Presidential candidates on
both sides who are not here. So these managers are told: You can't vote
now, you can't vote then, you have an event here, you have an event
there. They were put in an absolutely unbelievably difficult situation,
and they have handled it with grace. We should thank them for how well
they have done to clear amendments. But they had no choice if this work
was to get done.
So thanks to the leaders. I know there are people who are upset, but
I say thanks to the leaders.
Mr. HARKIN. Mr. President, will the Senator yield?
Mr. CONRAD. I will be happy to yield.
Mr. HARKIN. Mr. President, I thank the Senator for his comments, and
I thank him for all his help throughout a long year in the Agriculture
Committee, helping us with our budget problems and getting us to this
point.
I appreciated the fact that the Senator said the managers had handled
this bill with grace. The Senator doesn't see what I do when I go home.
I act out my frustrations later.
I say to the Senator, it has been frustrating, but that is the
process of the Senate. The Senator is absolutely right, our leader is
correct in calling for cloture. I am not disappointed. I am managing
the bill under the rules we had, which was to try to accommodate as
many amendments as possible, to move them as rapidly as possible, to
get votes on them. Let's face it, we have had enough, and we have had
enough amendments and we debated them.
This is a good bill. Some of the amendments that were not adopted
maybe I wish were, and some that were adopted maybe I wish were not.
That is the process. It is a good bill with which to go to conference.
It is a bill that does a lot, as the Senator knows, in energy, it does
a lot in conservation, and it provides a great safety net for our
farmers, and what we do for specialty crops that we have never done
before in any farm bill, and what we do for nutrition. We answer the
call of church groups and people around the country who said we had to
do more to take care of low-income people in the Nation and to meet our
obligations to the poorest among our society. We have done that in this
bill. We have done great work in the food stamp and nutrition programs.
It is a good bill. All of us worked very hard on it. We will go to
cloture this evening. Quite frankly, I am not disappointed. I am happy
we are bringing this to a close so we can get to conference. I hope we
can get the conference concluded by the time we get back in January so
we can have a conference report sometime toward the end of January.
I thank the Senator from North Dakota for his many kindnesses, for
all of the hard work he has done, and his staff through this long
process in getting us here. I thank him very much.
Mr. CONRAD. Mr. President, I thank the chairman for his vision and
his leadership. This is a bill of which we can all be proud. This is a
bill that strengthens the safety net. This is a bill that increases
resources for conservation by $4 billion. This increases the resources
over the so-called base line for nutrition by $5 billion. This
increases the resources for speciality crops by $2.5 billion, an
unprecedented commitment of resources for that purpose. This is a bill
that has permanent disaster assistance. This is a bill that is paid for
and paid for honestly. This is a bill that does not add a dime to the
deficit or the debt. It deserves our vote for cloture tonight.
All of those who are concerned about farm and ranch families, this is
their opportunity to demonstrate that support and that concern by
supporting cloture on this bill.
I especially thank the chairman of the committee, Senator Harkin, the
ranking member, Senator Chambliss, and again the strong leadership of
the majority leader, Senator Reid, for bringing cloture before the body
tonight. This bill needed to end for the Senate to conclude its
business for the year.
I yield the floor.
The PRESIDING OFFICER. The majority leader.
Mr. REID. Mr. President, it is time for the vote to take place in a
minute or two. I inform all Members that we will have this cloture vote
tonight, and then we are under the rules that there will be 30 hours
following completion of that vote. It is my intention, and I think
everyone's intention here, to finish this bill and not have it spill
into Saturday. We are going to deal with germane amendments pursuant to
the rules of the Senate. The managers will work on those during the
evening and hopefully early tomorrow we can finish this bill.
Remember, tomorrow we have to finish FHA modernization, and we have
to finish the Defense authorization bill. We have a limited time
agreement on both of those, an hour each at this time. There may be
other issues we are going to try to do. At least that is what we need
to do.
Also, as I indicated, before we close business tomorrow, we are going
to file cloture on the FISA legislation.

[[Page S15450]]

The PRESIDING OFFICER. The Senator from South Dakota.
Mr. THUNE. Mr. President, I, too, wish to urge my colleagues to vote
for cloture this evening on the farm bill. This is bringing a long
debate to its finality and to a close that is good for American
agriculture.
Actually, the American people today are going to get an energy bill
to promote renewable energy, and they are going to get a farm bill that
strengthens the safety net and makes a strong commitment to
conservation. Many of the programs funded in this bill do an awful lot
to support conservation across this country. In many respects, the
conservation title of the farm bill, I would argue, is probably one of
the best environmental stewardship policies we have put in place in the
Congress.
It also adds an energy policy that will complement what was done
today in the Energy bill--the renewable fuels standard--which will
increase the amount of renewable energy that will be used in this
country. In order to reach that standard, we are going to have to use
more and more cellulosic ethanol, which is the next generation of
biofuels in this country, and the farm bill has in its energy title
some incentives for energy-dedicated crops that can be used in the
production of cellulosic ethanol.
I think this energy policy and the energy title, the conservation
title, the commodity title of this bill, and many of the other
provisions are good for American agriculture. It has been a long
battle, and we still have a long ways ahead of us. We have to go to
conference with the House and get a bill the President will sign, but
this will help move this process forward, and it is high time we got an
opportunity to push to a final vote and final passage.
So I urge my colleagues to vote for cloture this evening.

Cloture Motion

The PRESIDING OFFICER. Under the previous order, pursuant to rule
XXII, the Chair lays before the Senate the pending cloture motion,
which the clerk will report.
The assistant legislative clerk read as follows:

cloture motion

We, the undersigned Senators, in accordance with the
provisions of rule XXII of the Standing Rules of the Senate,
do hereby move to bring to a close debate on the Harkin
substitute amendment No. 3500 to H.R. 2419, the farm bill.
Tom Harkin, Russell D. Feingold, Jon Tester, Dick Durbin,
Benjamin L. Cardin, Frank R. Lautenberg, John Kerry,
Ted Kennedy, Byron L. Dorgan, Barack Obama, Ben Nelson,
Amy Klobuchar, Sherrod Brown, S. Whitehouse, Tim
Johnson, Jim Webb, Hillary Rodham Clinton.

The PRESIDING OFFICER. By unanimous consent, the mandatory quorum
call is waived.
The question is, Is it the sense of the Senate that debate on
amendment No. 3500, offered by the Senator from Iowa, Mr. Harkin, to
H.R. 2419, farm bill, shall be brought to a close?
The yeas and nays are mandatory under the rule.
The clerk will call the roll.
The legislative clerk called the roll.
Mr. DURBIN. I announce that the Senator from Delaware (Mr. Biden),
the Senator from California (Mrs. Boxer), the Senator from New York
(Mrs. Clinton), the Senator from Connecticut (Mr. Dodd), and the
Senator from Illinois (Mr. Obama) are necessarily absent.
Mr. McCONNELL. The following Senators are necessarily absent: the
Senator from North Carolina (Mr. Burr), the Senator from Nebraska (Mr.
Hagel), the Senator from Mississippi (Mr. Lott), the Senator from
Arizona (Mr. McCain), and the Senator from Alaska (Mr. Stevens).
The PRESIDING OFFICER (Mr. Casey). Are there any other Senators in
the Chamber desiring to vote?
The yeas and nays resulted--yeas 78, nays 12, as follows:

[Rollcall Vote No. 431 Leg.]

YEAS--78

Akaka
Alexander
Allard
Barrasso
Baucus
Bayh
Bennett
Bingaman
Brown
Brownback
Bunning
Byrd
Cantwell
Cardin
Carper
Casey
Chambliss
Coburn
Cochran
Coleman
Conrad
Corker
Cornyn
Craig
Crapo
Dole
Domenici
Dorgan
Durbin
Enzi
Feingold
Feinstein
Graham
Harkin
Hatch
Hutchison
Inhofe
Inouye
Isakson
Johnson
Kennedy
Kerry
Klobuchar
Kohl
Landrieu
Leahy
Levin
Lieberman
Lincoln
Lugar
Martinez
McCaskill
McConnell
Mikulski
Murkowski
Murray
Nelson (FL)
Nelson (NE)
Pryor
Reed
Reid
Roberts
Rockefeller
Salazar
Schumer
Sessions
Shelby
Smith
Snowe
Stabenow
Tester
Thune
Vitter
Voinovich
Warner
Webb
Whitehouse
Wyden

NAYS--12

Bond
Collins
DeMint
Ensign
Grassley
Gregg
Kyl
Lautenberg
Menendez
Sanders
Specter
Sununu

NOT VOTING--10

Biden
Boxer
Burr
Clinton
Dodd
Hagel
Lott
McCain
Obama
Stevens
The PRESIDING OFFICER. On this vote, the yeas are 78, the nays are
12. Three-fifths of the Senators duly chosen and sworn having voted in
the affirmative, the motion is agreed to.
Mr. HARKIN. Mr. President, we are now operating postcloture on the
farm bill. As we know, there are 30 hours. And germane amendments are
obviously acceptable postcloture.
Right now I am working with Senator Chambliss to try to come up with
a roadmap on how we proceed on this yet this evening and tomorrow. We
had basically a kind of a finite list. Since there were only 20
amendments allowed on either side, we kind of know what that universe
is.
Prior to the cloture vote, we were down to about 11--if the Chair
will indulge me, 11 votes that could be held. Now some of those, it is
just my own observation, without being the Parliamentarian, are
nongermane.
For example, one of my own amendments I can truthfully say is not
germane. The others I do not know, and those will have to be decided by
the Parliamentarian. I would say, however, if there is anyone here who
has a germane amendment--and I do believe perhaps the Feingold-Menendez
amendment appears to be fully germane.
Now, again, there may be an objection raised to that, and the
Parliamentarian will have to decide it, but that seems to me--that
seems to be one in front of us now that is germane. I would say if the
authors of that amendment, either Mr. Feingold or Mr. Menendez, were
willing to debate that amendment this evening, under some reasonable
time limit, we would like to do that.
So I hope that is at least one we might get to tonight that looks to
be thoroughly germane to the bill. There is the Grassley-Kohl
amendment. I am not certain about that one. That one is maybe a little
bit more uncertain. But, again, that is up to the Parliamentarian to
decide. But at least that decision could be made, and we might be able
to move ahead.
So with the concurrence of my ranking member----
Mr. CHAMBLISS. I believe the Coburn amendment is also germane.
Mr. HARKIN. Right. The Coburn amendment is probably germane.
Mr. CHAMBLISS. If the Chair would agree, I think we probably ought to
maybe go into a quorum call and let the Parliamentarian decide what is
germane and what is not. If we find one that is germane, let's go ahead
with that one while they are making a decision on the rest of them.
Mr. HARKIN. I agree. The only reason I was saying this is, keep in
mind there is a limited amount of time. So I am saying, anyone who
believes they have a germane amendment in this list, they ought to
probably want to debate it tonight.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. HARKIN. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.

Amendment No. 3736 Withdrawn

Mr. HARKIN. I ask unanimous consent that the Wyden amendment No. 3736
be withdrawn.
The PRESIDING OFFICER. Without objection, it is so ordered.

CALIFORNIA'S SUGAR ALLOCATION

Mrs. BOXER. Mr. President, I thank Senator Harkin for joining me to
discuss the important issue of California's sugar allocation. I
appreciate his leadership in bringing a farm bill forward for the
Senate's consideration.

[[Page S15451]]

Mr. HARKIN. I thank the Senator. It is my understanding that she
would like to speak about an issue facing the sugar beet industry in
California.
Mrs. BOXER. That is correct. The sugar marketing allocation formula
in the 2002 farm bill took 2.5 percent of the total national allocation
away from California because of the closure of sugar refineries in
Woodland, CA, and Tracy, CA, between 1998 and 2000.
Since that time, there have been numerous other closures, including
Bayrd, NE; Greeley, CO; Moses Lake, WA; Carrollton, MI; Nyssa, OR; and
Hereford, TX. However, under the current farm bill structure, only
California was penalized by downward allocation adjustments due to
refinery closures. Refinery closures in California fell within an
arbitrary base period in the 2002 farm bill that penalized States that
had refinery closures by reducing their allocation. The six other
States that have seen refineries close since the arbitrary period ended
have not had any allocation taken away.
Mr. HARKIN. I ask the Senator, how has this decrease in California's
portion of the national allocation impacted growers and other sugar
beet refineries in your State?
Mrs. BOXER. Sugar beets are an important crop for many growers
throughout California's San Joaquin and Imperial Valleys. Growers in
California want to keep producing sugar beets, but processing
refineries in California are in danger of closing if they do not
recover the marketing allocation they lost in the last farm bill.
If the allocation formula is not corrected to provide California with
its fair share, the entire sugar beet industry in my State, with the
hundreds of jobs it supports, will be in serious jeopardy.
California's sugar beet industry is an important contributor to the
economies of the rural communities where they are located. The city of
Mendota, located in western Fresno County, has one of the highest
unemployment rates in the State, a problem that will certainly be
exacerbated by the possible closure of the refinery. The Mendota
facility employs 300 full-time workers and as many as 500 to 600
workers when running at full capacity.
The importance of the refinery to the local economy becomes clearer
when you consider that according to the city's estimate there are 1,767
jobs available in Mendota. At full capacity the refinery accounts for
more than one-third of the city's employment base.
The farm gate value of sugar beets in California is approximately
$66.7 million, and when sugar and the value of its byproducts are
included, sugar beets in California contribute $130.8 million annually
to the California economy.
Mr. HARKIN. How much more in allocation would California need to keep
the facility in Mendota open?
Mrs. BOXER. My growers have assured me that if the allocation is
there, they will be able to grow the sugar beets necessary to meet the
need. They have told me that under the 2002 farm bill, they lost
133,750 tons raw value in allocation and would need near that amount to
keep the Mendota refinery open.
Senator Harkin, as much as 74,900 tons raw value in allocation is
being reassigned this year from sugar cane growers, and another 6,800
tons raw value in allocation is being reassigned from growers in Puerto
Rico.
Mr. HARKIN. I appreciate the Senator providing that information. Can
she suggest a possible solution that would allow the Mendota refinery
to remain open?
Mrs. BOXER. My growers tell me that they would be willing to purchase
the plant from the Southern Minnesota Company. Southern Minnesota would
include 64,200 tons raw value of sugar allotment in selling the plant
to California sugar beet growers. With a guarantee that Congress would
provide 53,500 tons raw value in additional sugar allotment for
California equaling a total allocation of approximately 117,000 tons
raw value, the purchase of the Mendota refinery by California's sugar
beet growers would be economically viable.
Since it will take approximately 53,500 tons raw value in additional
sugar allotment in California to keep the Mendota refinery in
operation, and 81,700 tons raw value is being reassigned from sugarcane
growers this year, perhaps it would be possible to assign the necessary
amount of excess sugarcane allocation to California in order to keep
the Mendota refinery operating.
Mr. HARKIN. I will raise this issue when the Senate and House meet to
finalize a farm bill conference report.
Mrs. BOXER. I thank the Senator.
Mr. WYDEN. Mr. President, I rise to discuss the amendment that
Senator Harkin and I offered to make some modifications to the
bioenergy crop transition program in the committee bill. First,
however, I want to thank the Republican manager of the bill, Senator
Chambliss, and his staff for working with me and my staff, and with
Senator Harkin and his staff to address this issue.
As I said the other evening, we are importing $1 billion worth of oil
a day from other countries. Bioenergy crops provide a real opportunity
to spend that money here at home and help our farmers and rural
communities in the process.
The bill that was reported by the Agriculture Committee proposed a
program to help make this a reality by making payments to farmers to
transition to these new energy crops. This was a good idea, but Senator
Harkin and I were concerned that the program would lead to unintended
consequences. We have now reached agreement on a managers' amendment
that goes a very long way toward addressing our concerns.
The agreement that we have reached improves the program in ways that
will protect the environment and make it a more cost-effective program.
The program will now include eligibility criteria for bioenergy crops
to ensure that crops that are invasive species or could become invasive
species are not eligible for the program.
The program will now ensure that only lands that have already been
farmed are eligible and that we are not promoting the conversion of
native grasslands or forests to production of bioenergy crops.
The program will now have a formal application and selection process
so that we can be sure that the limited amount of funds available is
spent in the most productive way.
In deciding how these transition assistance payments are made, the
Secretary of Agriculture will now have to consider the likelihood that
the proposed establishment of the crop will, in fact, be viable in the
proposed location.
The Secretary will also need to consider the impact that the proposed
bioenergy crop, and the process of turning it into fuel or energy, will
have on wildlife, air, soil, and water quality and availability.
And the Secretary will have to consider the potential for economic
benefits to farmers and ranchers and impacts on their communities.
We have also added planning grants to help farmers and ranchers make
the decision to grow these new bioenergy crops and to assemble enough
acreage that can support the development of bioenergy facilities to use
them.
Finally, we have added an additional requirement that participants in
the program agree to implement a plan to protect land, water, soil and
wildlife.
I think these are real improvements in the bill. I again want to
thank Senator Chambliss and his staff for working with us to make this
program that truly will help move us toward a new energy future that
will benefit our farmers, our rural communities, and the environment.
Mr. SPECTER. Mr. President, I have sought recognition to comment on
an amendment to the farm bill that I have cosponsored which will
provide needed tax relief to homeowners facing foreclosure as a result
of the sub-prime mortgage crisis.
The Gregg amendment No. 3674, will allow foreclosed homeowners to
avoid the additional hardship of being taxed on cancelled debt income.
Under current law, if a homeowner has an obligation to a bank of
$150,000 and the home is foreclosed on and sold for $100,000, the
$50,000 difference is treated as personal income and the IRS sends that
individual a tax bill. With the rate of foreclosures and mortgage
defaults rising to new levels, now is not the time for the Federal
Government to be kicking homeowners when they are down. In addition, as
some lenders are renegotiating loans with borrowers to keep them in
their home, the exclusion

[[Page S15452]]

of cancelled mortgage debt income is a necessary step to ensure that
homeowner retention efforts are not thwarted by tax policy.
This amendment provides a targeted exclusion from taxation for
canceled mortgage debt for those individuals most in need of
assistance. It covers discharges of indebtedness between January 1,
2007, and January 1, 2010. In addition, the amendment would only apply
if the home facing foreclosure is the taxpayer's principal residence
and the exclusion is only available on mortgage indebtedness of up to
$1 million.
On a related note, I have introduced S. 2133, the Home Owners
``Mortgage and Equity Savings Act,'' to help distressed homeowners who
file for bankruptcy. The amount of a debt forgiven or discharged in
bankruptcy is not deemed income. This amendment is important companion
legislation in that it would help those who are able to renegotiate
their mortgages, or who face foreclosure, but do not go into
bankruptcy.
I urge my colleagues to support the Gregg amendment.
Mr. CRAPO. Mr. President, over the past years Congress has wrestled
with the question of what was the appropriate level of regulation of
futures exchanges and derivative markets. I have been very concerned
about the potential efforts to change the manner in which we regulate
derivatives or to impact the manner in which derivatives operate in the
economy. It is critical that we strike the appropriate balance between
protecting consumers and markets from trading abuse while ensuring
continued growth and innovation in the U.S. markets.
The President's Working Group on Financial Markets, PWG, has played
an important role in this debate by explaining why proposals that we
have faced in the last few years for additional regulation of energy
derivatives were not warranted, and has urged Congress to be aware of
the potential for unintended consequences that would harm America's
financial markets.
I have been repeatedly warned by our federal financial regulators
that the importance of derivative markets in the U.S. economy should
not be taken lightly, as businesses, financial institutions, and
investors throughout the economy rely on these risk management tools.
Derivatives markets have contributed significantly to our economy's
ability to withstand and respond to various market stresses and
imbalances.
In September of 2007, the Commodity Futures Trading Commission, CFTC,
held a hearing to examine the oversight of trading on regulated futures
exchanges or exempt commercial markets. Based on this hearing, the CFTC
reported that the current risk-based, tiered regulatory structure has
successfully encouraged financial innovation, competition, and
modernization. However, the CFTC also found that additional oversight
was warranted for certain contracts traded on an ECM that serve a
significant price discovery function in order to detect and prevent
manipulation. The CFTC proposed four legislative recommendations that
were endorsed by the PWG.
In September of 2007, the Commodity Futures Trading Commission held a
hearing to examine the oversight of trading on regulated futures
exchanges and exempt commercial markets. Based on this hearing, the
CFTC reported that the current risk-based, tiered regulatory structure
has successfully encouraged financial innovation, competition, and
modernization. However, the CFTC also found that additional oversight
was warranted for certain contracts traded on an ECM that serves a
significant price discovery function in order to detect and prevent
manipulation. The CFTC proposed four legislative recommendations that
were endorsed by the PWG.
It is for this reason that I decided to work with a bipartisan group
of Senators who also wanted to address the appropriate level of
regulation of futures exchanges and over-the-counter derivative
transactions. I want to thank Senate Agriculture Committee Chairman
Harkin, Senate Agriculture Committee Ranking Member Chambliss, Senator
Feinstein, Senator Snowe, Senator Levin, and Senator Coleman for all
their work.
I appreciate their willingness to work off the framework that was
endorsed by the PWG and believe this allowed all of us to reach a deal.
This was a significant concession to some Senators who have supported
an alternative approach, and I would like to thank them for doing so.
In addition, this amendment extends the reauthorization of the CFTC,
clarifies the CFTC authority over off-exchange retail foreign currency
transactions, clarifies the antifraud authority over principal-to-
principal transactions, increases civil and criminal penalties, and
makes technical and conforming amendments. These provisions were also
largely based off the framework that was endorsed by the PWG letter of
November of 2007.
Earlier this week the House Agriculture Committee approved by voice
vote a similar measure to reauthorize the Commodity Futures Trading
Commission. It is my hope that in a conference the House and Senate
will reconcile their differences over the reauthorization period and
Zelener related issues.
I strongly believe that Congress needs to reauthorize the CFTC and
frankly, so that we can give this agency all the tools it needs to
protect investors and promote the futures industry and preserve the
integrity of our markets. Moreover, the Senate must act to confirm Walt
Lukken as Chairman of the CFTC. He has demonstrated throughout this
reauthorization process the strong leadership that is essential to
managing an agency. I want to commend him, his fellow commissioners,
and staff for all their tremendous work.

____________________