[Congressional Record (Bound Edition), Volume 153 (2007), Part 25]
[Senate]
[Pages 34226-34246]
[From the U.S. 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

[[Page 34227]]

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.
  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

[[Page 34228]]

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 
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

[[Page 34229]]

     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 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.

[[Page 34230]]

  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 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-

[[Page 34231]]

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 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.

[[Page 34232]]


  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 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

[[Page 34233]]

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 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

[[Page 34234]]

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.''
  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

[[Page 34235]]

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.
  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

[[Page 34236]]

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 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

[[Page 34237]]

     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. 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

[[Page 34238]]

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 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

[[Page 34239]]

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 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

[[Page 34240]]

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

[[Page 34241]]

amendment's ``significant price discovery contract'' test. The test is 
reserved for those transactions conducted ``in reliance'' on the 
exemption 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

[[Page 34242]]

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 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

[[Page 34243]]

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 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

[[Page 34244]]

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.
  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

[[Page 34245]]

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.
  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.

[[Page 34246]]

  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 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.

                          ____________________