Mike Crapo

Mr. CRAPO

Mr. CRAPO. Mr. President, last week I introduced with my colleague from Nevada, Senator Reid, the Support of American Silver Eagle Bullion Program Act. This legislation will preserve our most successful silver coin program, the American Silver Eagle Bullion Program. From the inception of the program, the Silver Eagle coin has been the domestic and global market share leader in commemorative coin programs. It is also the largest of the United States Mint's silver coin programs. From Fiscal Year 1995-2001, the program has generated revenues of more than $264 million. Profits from this program ultimately go into the Treasury General Fund, which reduces the government's debt. Since 1986, the Mint, through interagency agreements with the Defense Logistics Agency, has been using the Strategic and Critical Materials Stockpile as a source of silver from the American Eagle Silver Bullion Program. The use of the Stockpile silver is a result of legislative mandates. This stockpile of silver, which had a beginning balance of 137.5 million ounces, is rapidly being depleted. At the current rate of depletion, the silver will be depleted in approximately two months. With the depletion of silver reserves in the Defense Logistics Agency Stockpile, it has become necessary for the Department of the Treasury to acquire silver from other sources in order to continue the Silver Eagle Program. This bill adds a stockpile depletion contingency provision to the United States Code that allows the Secretary of the Treasury to obtain silver from other available sources, while not paying more than the average world price. I rise today to introduce this legislation because it is vital to the economy in my home State of Idaho. The mines of the Silver Valley in North Idaho produce more than $70 million of silver per year, along with employing over 3,000 Idahoans and contributing more than $900 million to the overall Idaho economy. Moreover, I am proud to recognize that the blanks used by the United States mint in their American Eagle Silver Bullion Program are produced by Sunshine Minting, Inc., in Coeur d'Alene, ID. Approximately 60 people at Sunshine Minting work directly on the U.S. Mint Silver Eagle Program. Idaho's mining sector is a critical component of our national economy, and this bill makes certain that we preserve the Silver Eagle program and keep valuable mining jobs in Idaho and other silver mining states. It is my hope that the Senate will move expeditiously to consider and pass this legislation before the stockpile is deleted.

Mr. CRAPO

Mr. CRAPO. Mr. President, I rise today to introduce the Fremont- Madison Conveyance Act. The purpose of this act is to authorize the Secretary of the Interior to convey title to certain facilities to the Fremont-Madison Irrigation District. The District has long operated and maintained these facilities since they were constructed and the United States will be fully reimbursed for the cost of construction by the time of the transfer. Under this title transfer, there is expected to be no change in the operation of the facilities. The measure would also require any necessary actions to be taken to comply with the National Environmental Policy Act and local environmental needs. This proposal is consistent with Bureau of Reclamation policy to transfer title to facilities to irrigation districts that have long operated and maintained those facilities. As you know, Congress has authorized similar title transfers in the past and it would be appropriate to do so for this district.

Mr. CRAPO

Mr. CRAPO. Mr. President, I rise today to introduce the Fremont- Madison Conveyance Act. The purpose of this act is to authorize the Secretary of the Interior to convey title to certain facilities to the Fremont-Madison Irrigation District. The District has long operated and maintained these facilities since they were constructed and the United States will be fully reimbursed for the cost of construction by the time of the transfer. Under this title transfer, there is expected to be no change in the operation of the facilities. The measure would also require any necessary actions to be taken to comply with the National Environmental Policy Act and local environmental needs. This proposal is consistent with Bureau of Reclamation policy to transfer title to facilities to irrigation districts that have long operated and maintained those facilities. As you know, Congress has authorized similar title transfers in the past and it would be appropriate to do so for this district.

Mr. CRAPO

Mr. CRAPO. Mr. President, I rise today to commend one of the key figures in Idaho's economic development efforts, Aldred Ames. For over two decades Mr. Ames has made a positive impact in virtually every one of Idaho's 201 incorporated communities, 44 counties, and 5 tribal nations. He has brought not only technical expertise and access to financial resources, but perhaps even more important a positive attitude that kept his constituents in economic distress from giving up hope. Government employees are often accused of being process oriented rather than results oriented. Mr. Ames, with his single-minded focus on results, is an excellent example of the kind of Federal employee of whom we should all be proud. As he is about to retire, I congratulate Mr. Ames on his outstanding record of accomplishment and wish him every success in his future endeavors.

Mr. CRAPO

Mr. CRAPO. Mr. President, I rise today to commend the contributions of the Idaho National Guard who are providing support for in Operation Enduring Freedom and other military operations now underway in the war against terrorism. While many of our military troops are serving our country far away, many others are working hard here at home to keep us safe. Idaho National Guard members have played key roles in several events and efforts here at home and I wanted to take this time to thank them and their families for those efforts. Their assignments have been varied. From September until the end of May, Idaho National Guard members have augmented airport security and civilian screening efforts in at least six airports in Idaho. They have provided a trained, armed, and highly visible military presence in airports in Boise, Lewiston, Idaho Falls, Pocatello, Twin Falls, and Hailey. For the most part, these assignments have not required Guard members to be away from home, although some have had to leave their families to rotate through the assignments. During the Olympics, the Boise Airport served as one of four gateway airports to Salt Lake City, and Idaho Guard members assisted in a variety of efforts, including screening of aircrafts and passengers. Guard members also participated in security screening efforts at the venues during the Games in Salt Lake City, working closely with the Secret Service. Additionally, the Idaho Guard provided aircraft and personnel to facilitate moving people and equipment around various locations in the Salt Lake area. And just this week, a couple of dozen of Idaho Guard members returned from assisting at the Paralympics. Members of the Idaho National Guard were on hand for several weeks from October to January to help the state police with increased security at the Idaho State Capitol, providing an extra set of eyes and ears. Right now, there are more than 40 Idaho Guard personnel who have just been deployed to Bosnia for a six-month assignment. While there, they will assist in the peace-making missions outlined in the 1995 Dayton Peace Accord. As we continue to fight this war on terrorism, it is important to remember not only those who are serving in far-off places, but to recognize those who are serving at home to keep us safe. This is a war like no other we have fought, and we are reminded every day of the value of military service. The vigilance of the Idaho Guard members and many others like them throughout the country is most appreciated, and I want to make certain that they know their efforts have not gone unnoticed. I salute the men and women of the Idaho National Guard and the following units: 124th Wing, Idaho Air National Guard; Det 35 OSAR; HQS STARC; 216th Military Intelligence Company; 145th Support Battalion; HHC 116th Cavalry Brigade; 2nd Battalion 116th Calvalry; 1st Battalion 183rd Aviation; B Co 1st 189th Aviation Battalion; 116th Engineer Battalion; 938th Engineer Detachment; 1st Battalion 148th Field Artillery.

Mr. CRAPO

Mr. CRAPO. Madam President, I appreciate the opportunity to rise in opposition to this amendment. We have heard a lot of debate today about a very complicated topic that has been discussed, that understanding derivatives is very difficult to do. Since this debate started and I began working on this issue, even in years previous as we tried to address the issue, I still have to go back again and again to the experts who help us to understand the issue. The first point I want to make is: We spent the better part of a year, a couple of years ago, working on this entire issue of how transactions called derivatives are regulated as they deal with commodities. We had a Presidential Working Group with which then- President Clinton worked, and we relied on the advice of that working group in setting up the model we put forward to help us address how we in the United States should regulate and manage transactions in commodities known as derivatives. I am going to try in a few minutes to give a little bit of structure to how we did that, but the first point is we spent a tremendous amount of time with congressional committees working on it over a long period of time, and with a Presidential panel working on it, and an advisory group, and we came together with an approach that we then brought forth as legislation which became law and which President Clinton signed into law, and which we have now been working under for a few short years. This amendment will change that approach. Before I get into what we are talking about and try to put a little order to what the whole debate is about in terms of the structure of the law, let me state the conclusion that Alan Greenspan gave in answer to me in a Banking Committee hearing a few weeks ago when I said to the Chairman: Chairman Greenspan, is this amendment going to be good for America? His answer to me--and I will read his words in a few minutes if I need to, but his answer, in essence, was he believed the way we had set it up was working, that it provided a resiliency to our markets in the United States and that resiliency was, in his opinion, probably one of the big factors in our ability to have the strength in our economy to rebound as fast as we did when the recessionary trends hit us. In other words, the recessionary trends we are hopefully now starting to see ourselves grow out of were lessened, and the time we had to spend in that financial trough was reduced because we had the resiliency in our derivatives transactions that we put into place as a result of this very thorough study we went through just a few years ago. This amendment seeks to change that. The arguments are in that act we passed a few years ago. There was a rifleshot created, a specific exemption for a few commodities that was not fair, and all commodities should be treated equally. The reality is the reverse. We created basic categories in the law we passed. This amendment is a rifleshot amendment to pick out just a couple commodity groups and say these commodity groups should have been treated differently. How did the law we passed last time work? The question, again, is how are we going to regulate derivatives and commodities that are going to be marketed through derivatives transactions. First, there was an entire category we said we were going to exclude, we would not regulate. Those are called financial derivatives. This includes Treasury bonds, foreign exchange, interest rates, things that happen in the financial industry. The Senator from Illinois discussed how banks and others deal in these transactions. They are totally excluded. Another category of commodities included, because historically they have been included and traded on exchanges and derivatives transactions, was the agricultural commodities. They were included with full regulation, full coverage. They are now traded on these boards. All other commodities were exempted. I use the word ``exempt'' as opposed to ``exclude'' because it is different than how we treat financial transactions. Financial derivatives were excluded; no regulation. Agricultural commodities were included; complete regulation. All other commodities were exempted, meaning they were not going to be regulated and forced on to the exchanges and forced to be traded in the ways that the agricultural commodities were, but they were still subject to very important regulatory controls. The Senator from Texas has already gone over those. Those were protections against fraud. They would be subject to the antifraud protections, the anti- price manipulation protections, and the recordkeeping protections. All other commodities, other than agricultural and financial transactions, are still subject to those types of fraud, price manipulation, and recordkeeping requirements under the act. What has happened with this amendment? From that category called ``all other commodities,'' the amendment seeks to pick out just two commodity groups: Energy and minerals. That is the rifleshot, saying we do not like the categorization we did a few years ago; we need to take energy and minerals and move them to another category. The arguments given in favor of it are because we need more recordkeeping control and protection. That is included under the act. The other argument is that we should not treat one group different from any other group. Frankly, as I indicated, we already have exemptions and exclusions and coverage in different categories. I ask this question: If the argument is that regulation is good and therefore we should not have any commodity derivatives transaction that is not regulated, why not, instead of having a rifleshot amendment that regulates only energy and mineral transactions, bring all the financial transactions in as well? If people are at risk in America today because we are not regulating derivatives transactions, why shouldn't we have regulated derivatives transactions and Treasury bonds? People's retirement depends on their investment in Treasury bonds. Financial transactions, like foreign exchange and interest rates, are every bit as important to the investor in America as are energy or mineral transactions--and, in fact, probably more so if you look at the financial transactions and all of the other types of commodities not included when we did the act before. If we do that, we take the resiliency out of the markets and make it harder for this Nation's financial system to work effectively. If you accept the argument that everybody should be under the same rules and nobody should be rifleshot out, we should cover everybody and have no exclusion for financial transactions and no exclusion for any commodities. Instead, that is not what the working group recommended. I make another point. It has been argued somewhat subtly, but I think the point has been clearly argued, investors are at risk because they do not have information about these derivatives transactions. These transactions are not investor transactions. This is not a situation where an investor is looking at a transaction and saying: I think I will invest in that derivative or I will see if I can buy into this derivative transaction. What is going on is the transfer of risk from those who hold a higher risk situation but do not want to maintain that risk or are not in a financial position to maintain that risk to someone in a better position to maintain risk. We talk about what derivatives transactions do. They transfer risk from one who cannot manage it as well to one who can manage it better. It helps our economy be resilient. These are transactions between extremely sophisticated managers-- whether they be people who are transacting in energy commodities or in minerals commodities. There is not a situation where an investor is being shown a document and being asked to invest in a particular instrument. This is not like a stock market sale or transaction. This is a negotiated contract between sophisticated buyers and sellers who are working in the marketplace to try to reduce risk, which brings strength and stability to the economy and, as Greenspan said, helped in this last recession to bring us back more rapidly. What we are being asked to do is to shackle it and make it so that these transactions cannot occur except over the board. These transactions have to be regulated like the agricultural transactions. There has been a lot of talk about who supports and who opposes this amendment. There is already in the Record a letter from our Secretary of the Department of Treasury and from the Chairman of the Board of Governors of the Federal Reserve System, Paul H. O'Neill and Alan Greenspan, who strongly say we should maintain the current system. I read from the very last part of their letter: [Such legislation] could jeopardize the contribution that off exchange derivatives have made to the dispersion of risk in the economy. These instruments may well have contributed significantly to the economy's impressive resilience to financial and economic shocks and imbalances. So you have the Secretary of the Treasury and the Chairman of the Federal Reserve saying: Do not shackle our economy this way. We also have the Commodity Futures Trading Commission itself, the Chairman, representing the majority point of view, stating that there is no shown reason for us to change the structure we achieved after such careful debate previously. We also have the Securities and Exchange Commission saying there is no need for this change and we should walk carefully. We are talking about the Government regulators--the Department of Treasury, the Federal Reserve, the SEC, the CFTC--saying there is no need for this. What is the private sector saying? Those opposed to this amendment are those who deal in these transactions: The International Swaps and Derivatives Association, the American Bankers Association, the ABA Securities Association, the Bond Market Association, the Financial Services Roundtable, the Futures Industry Association, the Securities Industry Association, and the U.S. Chamber of Commerce, the point being that those in our economy who deal with derivatives are saying to us: We don't want to have a rifleshot amendment that takes energy and mining transactions and moves them over. Again, I want to go back and summarize a little bit. We have a situation here in which we had a Presidential working group that said we should set it up the way we did. We set it up the way we did. It worked. Those who deal with our financial markets in America have said it brings us and brought us the resilience we needed this last time when our economy had the shocks and turmoil we have faced in the last few years. It has been working. There was also testimony in the hearings we held before the Banking Committee and elsewhere, where those who have tried to tie the failure to regulate derivatives transactions to some kind of problem in the energy markets in California, or to the Enron collapse, have been able to show no real evidence of that. If there were evidence of that, then I think that is something that would be a valid debate for us to have in the Senate. Instead, I have sat here now for hours this morning, listening to the debate, and it has come down to basically two points, as I understand the reasons that have been put forth for this amendment. They are that we need to have more information available for investors and those in the industry who might want to look at these transactions to see if there was fraud or whatever. And the response to that argument again is that they are already subject to the Act's anti- fraud provisions, their anti-price discrimination provisions, and their recordkeeping provisions, and that these are not investor transactions. Then there are those who say it is just a good thing for us to have everybody under the same rules and nobody should get any exemptions. If that is the case, we should amend the amendment to bring in all commodities, including those that are excluded, such as the financial transactions, and those that are exempted, such as the commodities that are not agricultural. Again, I am not recommending that. I am simply saying the argument that everybody should be under the same rules does not carry with regard to these kinds of transactions. If it did, then the amendment should be much broader than it is. The bottom line here is this: If there is some basis for us to consider changing the law, which we worked so hard to put together a few years ago, then that process of determining the change that needs to be made and evaluating the facts and the arguments behind why such a change should be made should first go through the regular process of legislating here in this Congress; namely, the committees with jurisdiction should take jurisdiction over these issues and establish the analysis. We should hold hearings. If there is an argument that somehow the Enron situation is connected to how we regulate derivatives transactions, then we should hold hearings. Those hearings should probably be in the Agriculture Committee, which is where the jurisdiction of this amendment lies. But somewhere we should have hearings to find out whether such a connection is real and, if so, what the connection is and why it occurred. That will guide us, then, in terms of figuring out how we might create a better regulatory mechanism. The same is true if there are those who contend that somehow the California energy collapse and the circumstances that occurred there were caused by failure to properly regulate energy derivatives. Again, no connection has been made in the minds of those who work in the marketplace. But if there is an argument that such a connection is there and that it justifies a change in the law, then shouldn't we have a study of it? Shouldn't we evaluate it? Shouldn't we have a hearing-- at least one? Shouldn't we let the committees of jurisdiction dig into this and go through the process we did before? Maybe we need another Presidential advisory board. If the results of the last system are not adequate, we could add to them and supplement them. But we should study the issue and try to find out what facts justify such an argument and, if there is any validity to it, what caused it, so we can then understand how to regulate it better. The bottom line is that we have had none of this. We have had no hearings. We have had no committee evaluation. We have had nothing, other than a several-hour debate in this Chamber. We had a couple hours of debate a week or so ago and now a couple of hours more today. But we have not had the opportunity to get to the bottom of all of these arguments, whether they be factual allegations or arguments about the proper mode of regulation. I suggest what we need to do is to refer this amendment to the appropriate committees of jurisdiction and let them conduct the studies, conduct the evaluations. In fact, what might even be a better solution is to refer this issue to the appropriate regulators. At some point in time I may submit an amendment to do just that, to let the CFTC and the other appropriate regulators have a period of time--the Senator from Texas suggested maybe a short period such as 45 days--to dig into this matter and give a report to Congress about what they have found out about all the alleged contacts between wrongs in our society that might be related to something here dealing with derivatives. Again, if they find anything in that context, then the appropriate committees of jurisdiction can have hearings and review these issues, determine if there is any merit whatsoever in proceeding forward with changing our regulatory scheme, and then in a very effectively fine- tuned way figure out how we should change the law. To me it seems very clear; if we do not have the kind of threat that some suggest we have, and if we do have the potential strength in our economy that is provided by having this flexible system of commodities transactions regulations, it would be very dangerous for us to move into a new regulatory system without understanding where we are heading. This is one of those circumstances in which it is far too important for our economy for us to take a risk of unintended consequences. One of the most significant things we will face with regard to this amendment, in my opinion, is the list of unintended consequences that could occur. The Senator from Texas indicated earlier it is really hard to debate unintended consequences because we really don't know what they are, because they are unintended, uninformed--something of which we are unaware. It is something about which, if we held hearings and went through the regular legislative process on this issue, we would identify. Then whatever consequences flowed from what we were doing would be understood and supposedly intended by those who supported it. Instead, we are being asked here on very short notice, without the kind of debate we need, to regulate in a way that is not necessary one section of our economy--the energy and the minerals transactions related to derivatives. Again, if the argument is going to be made that we need to protect investors in America, it is hard to see that because these are not investor transactions; they are transactions between highly sophisticated individuals. If it is true that derivatives are somehow a threat to the investor community and the safety of the investments of the American public is at risk because of something wrong with the way we manage derivatives, then why don't we cover all commodities? As I said earlier, it seems to me the question of how we regulate Treasury bonds or foreign exchange or interest rates or other financial transactions is every bit as important to the American investor as is the question of how we regulate minerals or how we regulate energy transactions. I know in today's climate, with the Enron collapse and with the energy troubles we faced a few years ago in California, there are those who want to look at every aspect of financial and other transactions relating to energy and see if there is some way we can improve it. But I suggest it does not necessarily mean that more regulation and more government bureaucracy is the best way to solve these problems, particularly when you have the Secretary of the Treasury and the Chairman of the Federal Reserve telling us we have to have the kind of resiliency in our economy that derivatives provide to us. In conclusion, I believe the bottom line is that each side can point to those who support their positions and those who oppose them. Each side can come up with arguments about why what we are doing now is or is not working. But no side can say we have the background information necessary to make this decision, because we have not had the kind of hearings and congressional evaluation of this issue we should have had. Because of that, I stand firmly opposed to the amendment. I believe ultimately the American people will be much better served if we do our jobs in the Senate the way our procedures are set up to do them. The procedures and the policies of the Senate have been established to make very clear that we can have the time to evaluate issues such as this and do the study necessary to have good, solid support. I also believe, as has been indicated by those who debate here, if we went through that process I have suggested--having a study and then further congressional evaluation and then maybe propose legislation--we would probably have much more support for whatever came forth, if anything. We would build the collaboration, we would build the consensus, and we would come forward, because the one thing that there has been agreement on today is that nobody wants to have the problems we saw occur in California. Nobody wants to see any kind of fraud or abuse from financial transactions or derivatives transactions. Everybody is willing to make sure that antifraud provisions and price protection provisions and the recordkeeping provisions are adequately available for derivatives transactions as necessary, so that we do not cause or increase any risk of problems in the economy. If we will follow the procedures and the processes of the Senate, let this matter be handled by the committee of jurisdiction, which I believe is probably the Agriculture Committee, and then let other related committees handle their parts of it, with studies in support from the private sector and from our regulating agencies, I believe we can get the information necessary for us to do a good job, build consensus, and come forward with a solution that can be broadly supported on both sides of the aisle. I thank the Chair very much for this time.

Mr. CRAPO

Mr. CRAPO. Mr. President, this amendment seeks to strike section 215 from the bill. I encourage all Senators not to support the motion to table. The issue is very simple. We have very important and strong conservation programs that have been historic parts of the farm bill. They are critical to our environment and to the conservation in our country. This amendment seeks to attach to that an effort to manage water under the Endangered Species Act in a way which would give further Federal control over what has traditionally been a State prerogative: The management, allocation, and use of water. It is critical we not start mixing our domestic farm policy with issues of Endangered Species Act management and with issues of States water rights management, allocation and use. I encourage all Senators to oppose the motion to table.

Mr. CRAPO. Madam President, I will take a moment and then yield the remainder of my time to Senator Thomas from Wyoming. This amendment is simple. It strikes section 215 from the farm bill. Section 215 contains provisions that would require a landowner who seeks to participate in a portion of the acreage of the CRP to give up his or her water rights either temporarily or permanently. Those kinds of efforts to increase Federal intrusion and Federal control over water management are simply unnecessary and inappropriate. Under the law as we now have it, this very successful conservation program would be hooked not only to the Endangered Species Act, which is something that has never been done before under the farm bill, but also to a requirement that landowners must yield their water rights to the Federal Government in return for the right to participate in this very popular and successful conservation program. This is an unnecessary intrusion of Federal law into the arena of inserting the Endangered Species Act into the farm bill and is an unnecessary intrusion of Federal law into management of State water rights. For that reason, I encourage the support for this amendment. I yield the remainder of our time to Senator Thomas from Wyoming.

Mr. CRAPO

Mr. CRAPO. Mr. President, I call up amendment No. 2533.

Mr. CRAPO. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. CRAPO. Mr. President, I ask unanimous consent that reading of the amendment be dispensed with.

Mr. CRAPO. Mr. President, this amendment strikes section 215 of the Water Conservation Program from this bill. I have introduced this amendment on behalf of not only myself but Senator Craig, Senator Domenici, Senator Thomas, Senator Ensign, Senator Allard, Senator Campbell, Senator Hagel, Senator Enzi, Senator Burns, and Senators Hatch and Bennett of Utah. This amendment is essentially a debate over whether the Federal Government should make an unprecedented move into the management, allocation, and use of water nationwide through the farm bill. Historically we have had some very successful programs in the farm bill dealing with conservation. In fact, I have often stated, as I talk around the country about the farm bill, that in addition to creating our domestic farm policy, the farm bill has many other incredibly important provisions, not the least of which is its conservation title. It is probably the most important environmental piece of legislation this Congress considers on a regular basis. One of those important environmental programs is the Conservation Reserve Program. This is a program that is time honored and has worked for many years in a way that has assisted farmers while at the same time assisted those who seek to improve the habitat for fish and wildlife around our country and to protect and preserve and strengthen our environment. The Conservation Reserve Program is one which, in essence, allows a farmer to put his or her land into the program and idle it, allowing for more and better growth and development of habitat for wild species while at the same time allowing the farmer to receive some compensation for the agreement to do the effort of working to develop a habitat and protect it. It is a program, as I say, that has been very successful and very well received, and in this farm bill there are proposals to improve and increase the availability of the CRP to those in the agricultural arena. I have worked for months now on developing a very strong conservation title that can be a part of whatever we move forward on in the arena of our agricultural policy. In the proposals I have made, we have, indeed, added and improved the scope and reach of the CRP. The water provisions we are debating today are an effort to link, if you will, administration of the Endangered Species Act with this very successful CRP, and to do so in a way that will intrude on State sovereignty over water and will create inappropriate pressures on our farmers, our agricultural producers, to give up their water rights and will not result in more effective benefits for the wildlife. In essence, the language we are debating says, as to some of that increased CRP land we are proposing to be put into the new farm bill, about 1.1 million acres of it, that in order to participate in that new CRP land, a farmer would have to agree to give up either temporarily or permanently his or her water rights to the Federal Government. First, this is creating a condition on our farmers for their participation in a portion of a very successful conservation program, a condition that is unnecessary and is harmful. Second, it is walking all over States rights. Today States have sovereignty over the allocation, management, and use of water and water rights, and this is an unprecedented move of the Federal Government into the management, allocation, and use of water rights and, frankly, a move that will put the Federal Government in control of water rights in return for giving farmers the permission to participate in the CRP. Third, the States already have programs and operations in place that enable them to address the questions of the need for water for species management. In fact, in my State of Idaho, we already are working very aggressively in salmon and steelhead recovery efforts to work with private property owners and water rights holders to make certain we are able to get water to the species that need it without harming the agricultural community and the other interests of water users, and we are doing so very successfully. In fact, with permission, I would like to read briefly from a letter to me from former Senator Kempthorne, now Governor Kempthorne of the State of Idaho. I ask unanimous consent to read from this letter.

Mr. CRAPO. Mr. President, this letter, sent by Governor Kempthorne on December 11, says: The water conservation program-- The water proposals I am talking about right now in this bill-- are not consistent with the laws of the 18 Western States, including those of the State of Idaho. In addition, the goal of implementing water quantity and water quality improvement demonstrated to be required for species listed under the Endangered Species Act can largely be achieved under existing State laws. My point is that the objective of this language we are talking about is certainly worthwhile: getting water, quantity and quality, to the species that need them. But the States already have programs in place to achieve these objectives, and it is achieved very successfully in Idaho. Governor Kempthorne goes on to point out: In Idaho, the U.S. Bureau of Reclamation has been able to rent water from the State water supply bank from willing sellers pursuant to State law for almost a decade. More recently, the Bureau has rented water while in the Lemhi River, a tributary of the Salmon River, for the benefit of fish species. Again, this was done under the auspices of State law in cooperation with willing sellers. My point again is that State law already provides mechanisms for the objectives of this water language to be achieved. We do not need to insert the Federal Government into the control of water rights, and we do not need to condition participation in a very successful conservation program and pressure being brought to bear to force farmers to give up their water rights either temporarily or permanently. I will make another point and then yield the floor because I know there are other Senators concerned about this matter and who want to speak about it. The point is this: We have all had a lot of experience under the Endangered Species Act with its implementation and management. A very critical question has been raised about this language with regard to what happens if it is adopted and a farmer, in order to participate in this program, agrees to temporarily give up his or her water rights, thinking: I can get those water rights back at some point when I determine I would like to say it is time to return them to me. What if a species has become dependent on that water? Under the Endangered Species Act, section 9, the question arises: Does that become a taking? Does there need to be a NEPA analysis before the Federal Government can return the water rights to this farmer? Does it have to go through an analysis of section 9 of the Endangered Species Act and under NEPA and other provisions of Federal law to determine whether other Federal law would be violated by the return which is contemplated by this very language? Those are the kinds of questions that must be answered, but they are the kinds of questions that also raise clearly the problem that is addressed in terms of the Federal Government beginning to assert itself into this process. Mr. President, I know we have a limited time right now, so I am going to conclude my remarks. I know there are a number of other Senators who will seek time. I have been told to remind them all we only have about 15 minutes of debate remaining. I yield the floor.

Mr. CRAPO

Mr. CRAPO. Mr. President, I appreciate the opportunity to speak on the bill. I came down to express my strong support for this legislation, not only because of the important reforms in education that it proposes but because of the significant new resources that the Federal Government will be providing to public education, and also to discuss the fact we are going to be moving forward from this legislation to reform and strengthen the IDEA legislation next year. I look forward to being a part of that process and working with our chairman and ranking member on addressing these critical needs of our children. I have worked for the last 3 or 4 years myself with the committee and with others to see if we could somehow reach that goal of 40-percent funding for IDEA, which is our objective. We have had a lot of difficult battles over that issue, and we have had a number of votes to try to get us moving down that path. We are on the path toward achieving that objective. I certainly agree with my good friend, Senator Gregg, about the fact because we have not yet achieved success does not mean we should vote against this legislation. I also have concerns about the testing language in the legislation. I have concerns about where we should address a number of the critical issues in education. Not everything in this legislation is as I would have had it. However, I consider this bill to be an important step forward, and I look forward to working with the committee next year on achieving both substantive reforms and the financial commitment we need to make to IDEA. I yield back the remainder of my time. Several Senators addressed the Chair.

Mr. CRAPO

Mr. CRAPO. Madam President, I would like to make a couple comments on the amendment before we vote, if I might.

Mr. CRAPO. Mr. President, I rise in opposition to the amendment. We have heard a lot of discussion over the years about the sugar amendment and the sugar program in the United States. In fact, as the distinguished Senator from Louisiana indicated, we seem to have this debate on at least a biennial basis. We have had this debate since I have been in Congress, and long before that. It would seem people in the country, and particularly here in Congress, would ultimately come to recognize what the true facts about this program are. But, nevertheless, we continue to debate it. I would like to talk a little bit about what really is at stake. There is a lot of discussion about the fact that the United States supposedly subsidizes its sugar and that that is a great cost to the taxpayer, a great cost to the consumer, and an inequity in international trade. The reality is, although there is a lot of talk about the world sugar price--and I am going to discuss that in more detail in a minute--it is a trumped-up argument. The United States, as a matter of fact, has the sugar program because other nations are subsidizing their sugar. The world sugar price, as is so often debated in these halls, is a world-dumped sugar price. What happens is, most nations that produce sugar produce enough sugar for what is consumed in their nation, and then they have some amount of sugar left over. That sugar that is left over is then able to be dumped on the world market through very anticompetitive and even predatory practices by these nations, where they are subsidizing the sugar production and dumping it into the world market in an effort to basically help their producers gain an unfair advantage against the producers in other nations. What the United States did long ago was to recognize that if we were to allow this subsidized sugar to be dumped unjustifiably in the U.S. markets, it would drive the price of sugar in the United States unreasonably low and drive our producers out of business, thereby resulting in a capture of the market by these other nations and their producers. What we always see in the economic cycle when that happens is that then the price can go up, as those who have driven out their competitors and the competition can, then more easily control the price. I show on this first chart what we are talking about in terms of the world sugar dump market price. The world average production cost to produce sugar is $16.26, and the world market price that we often hear about is $9.52, which is why we have deemed it the world dump price. What happens is that a price far below the cost of production of sugar is generated by those nations that subsidize and provide other anticompetitive barriers to the proper movement of sugar in a real market. It is this subsidized sugar that would flow into U.S. markets, significantly jeopardizing our producers in a way that would cause many of them to go out of business, that the U.S. sugar program is designed to stop. That is really what is at issue. The question we must ask ourselves is, Is the United States going to step up to the plate and protect its sugar producers in an anticompetitive world market environment where clearly the competition is out there trying to drive our producers out of business? Some respond by saying the U.S. sugar producers ought to be able to produce their sugar more efficiently or it really isn't a world dump price, and the fact is that U.S. sugar producers want to keep their sugar at unreasonably high prices. Again, the reality is, when we study the nations that have retail sugar prices--I distinguish here between a retail sugar price, the price the consumer pays at the marketplace to buy their sugar--the United States is clear down at the bottom of the developed countries in terms of the retail price paid for sugar in our markets. Our sugar producers are producing sugar efficiently. The price of sugar at our retail level in our markets is very competitive worldwide. In fact, as you can see here, we are clear down toward the bottom. The United States is third from the bottom among developed countries in terms of the low price of sugar. The argument that our consumers are being hurt somehow by the sugar program is simply false. What is really at stake is that there are those who would like to push production of dumped sugar, of subsidized sugar, and dump that sugar into the U.S. markets to gain advantage. If you want to look at whether that will cause the price of goods that utilize sugar to go down, you have to look at the marketplace in the United States. Every year we debate this, the argument is made that the sugar prices are unreasonably high because of the sugar program, and if we could get those sugar prices down, we would save the consumers in the United States a lot of money. If you look at what has happened to the price of sugar for the last 4 years, it has come down. It has come down about 25 percent. We haven't seen the price of products that utilize sugar come down at all. The price of those products has generally gone up over the last 4 years. The savings there have not been passed on to consumers. Those savings, if any, in the reduction of the sugar price in the United States over the last 4 years, have gone directly into the pockets of the producers, those who utilize the lower cost sugar in their products but then continue to sell their products for either the same or an increased price. The real issue is whether the United States will continue to protect its sugar beet farmers. Right now, talking about sugar beets, the sugar farmers throughout the United States are running at 20-year lows. For the past 2 years, the farmers in the United States are getting 20-year low prices, whereas the prices for the goods that utilize sugar have not come down at all. We need to debunk some of these false theories or false rumors that have been placed out in the American public about what is happening in the sugar debate. Another argument that is often made is that the sugar program involves the U.S. Government subsidizing heavily its own sugar to protect against this anticompetitive conduct. There are those who say even though we do recognize that there are predatory practices worldwide, the U.S. taxpayers should not be expected to be the ones who step up to the plate and protect. Again, let's talk about the real facts. The way the sugar program works, the sugar producers themselves pay an assessment on their crops to help to fund the nonrecourse loan program that is established to protect the sugar industry. The sugar program basically consists of two very easy pieces: One, a nonrecourse loan; and, two, quotas on imports to protect us from dumped sugar being forced into U.S. markets. If you look at what the cost to the U.S. Treasury has been as a result of this nonrecourse loan program, you find something very interesting. If you look at the last 12 years, this chart basically covers 9 or 10 years. The U.S. Treasury has gained money because of the sugar program because in each of the years 1991 through 1999, I believe in almost every year prior to that, the assessment paid by the sugar growers was more than was necessary to pay for the cost of the loan program, and the excess went right into the U.S. Treasury. The Federal Government was making money off of the sugar program to the taxpayers, not costing the taxpayers money. It is true that in the year 2000 that reversed, and the loan assessments were not enough to cover it. And in that year there were costs to the taxpayer as a result of the nonrecourse loan program. We can't say that in every single year there is going to be a benefit to the U.S. Treasury. But we can look at history and historically, in the vast majority of the years, the U.S. sugar program operates at no cost to the U.S. taxpayer. In fact, it puts dollars in the Treasury which we then allocate to other important priorities in the United States. Whether we are talking about the consumer, whether we are talking about the taxpayer, or whether we are talking about the sugar growers in the United States, the sugar program is a program that is designed for well-intentioned purposes and is working well. There is no reason we should have to go through this debate endlessly, as those who would like to drive the price of sugar down even further in the United States continue to attack the sugar program. I encourage my colleagues to oppose the amendment to strike the sugar provisions from this bill.

Mr. CRAPO. Will the Senator yield?

Mr. CRAPO. Will the Senator yield for one additional question?

Mr. CRAPO. With regard to the issue of whether State law still applies or whether State law must be complied with in the transfer, let me ask the question. The additional question I wanted to raise is whether State law applies. The Senator from Nevada indicated State law would still be required to be complied with in any transfer of water rights. In Idaho, as I am sure in many States, when a water right is transferred the State authority evaluates it and takes into account a number of considerations before they authorize the transfer. Will it injure any other water user rights? Are the priorities established in State law for the use of the water being met? Is the Senator telling us that if a landowner wanted to participate and yield his water rights in this new acreage that the State water law would still be applicable and the State authorities could say this does not fit the requirements of State law and prohibit that transfer?

Mr. CRAPO. I appreciate that response from the Senator. I guess we have a disagreement on the level of voluntarism and whether it is appropriate in the CRP. I appreciate the Senator clarifying that point.

Mr. CRAPO. Mr. President, I rise in opposition to this section of the bill and in support of the amendment to strike it as well. I think it is important as we debate this amendment we recognize that the Senate Agriculture Committee never considered this provision. It was never raised in any of the hearings we held on the conservation title of the farm bill earlier this year, nor was it included in any version of the conservation title on which this committee has worked. It has simply been introduced on the floor now while debating the bill. It hasn't been vetted nationwide. We are in the process of debating it now, as water users, water lawyers, and those who are involved in this issue around the Nation are hurriedly trying to evaluate it and get their information to us to determine what impact and what consequences it will have. I believe the law of unintended consequences, which was discussed by several other Senators here, is going to be played out if this becomes law and we will then see what happens without having had the kind of thorough evaluation that it deserves in this body. What the proposal does is to adjust the CRP, which is a very useful and time-tested program in the conservation title of the farm bill that has been extremely successful over the years in helping us to improve the habitat for wildlife, and for fish, and for species around the Nation by addressing those concerns without doing it in the context of the Endangered Species Act but doing it in the context of the conservation effort that we seek to achieve in our farm policies in this Nation. In fact, I have worked very hard this year and in the last couple of years to put together a conservation title for the farm bill, and a part of that conservation title is to try to expand the CRP to make it even more useful in protecting habitat and improving circumstances nationwide for our wildlife. Yet we have not seen this effort to try to hook Federal acquisition of water rights into the administration of the CRP until today. I have worked very closely with many of the Senators in the Chamber in other efforts to protect and strengthen our salmon and steelhead in Idaho under the Endangered Species Act, another endangered species as well. I worked hard to improve the Endangered Species Act to authorize our landowners to have habitat conservation plans and options where they can commit to use their land in certain ways that will help achieve the objectives of the Endangered Species Act and protect them from some of the onerous implications of the impacts the act may have on them in the administration and use of their land. Never until today have we debated a proposal to merge the CRP with the Endangered Species Act and to do so in a way that facilitates and, in fact, initiates the Federal acquisition of water rights. That is what is causing such a significant concern around the country. In my discussion with the Senator from Nevada earlier, he acknowledged that, although there is a lot of talk about the use of the voluntariness in this package, it is only voluntary in the sense that a farmer does not have to participate in the CRP if he does not want to give up his water rights. But with regard to this 1.1 million acres that is outlined in this proposal, any farmer in America has only one choice: Either do not participate in this part of the expansion of the CRP or give up your water rights, either on a temporary or permanent basis. Such a choice, in my opinion, is not very voluntary. In fact, it will cause a lot of farmers who otherwise would have taken advantage of this expansion of the CRP to do really good things on their land and improve habitat to say: I am not going to give up my water rights. So I am not going to participate in this program and they will make that so-called ``voluntary'' decision, but what it really means is they have been deprived of this ability to participate in the expansion of the CRP because the condition of giving up their water rights has been placed on it. That is what the debate comes down to. Why is it necessary for us to expand into the CRP the Federal effort to gain control over water by acquisition of water rights and to fund it so the Federal Government can then come in with the deepest pocket in the market and buy water rights with the pressure or the tool of access to the CRP used as the hammer? The real debate here is: Why are we seeing this? I think the reason is one that has been suggested by several of the others who have spoken. Historically, we have seen an increasing effort by the Federal Government to gain access to and control over the water in this Nation. That is a continuous issue we fight often in the West, and I know in other parts of the country it is fought as well. So there is an automatic alertness by those who own water rights or who deal with water rights or who seek to manage the water issues in the States, when they see a new program with Federal dollars being pumped in and Federal conditions being brought in to a program that otherwise was working wonderfully with the purpose of saying we are going to utilize this good program and restrict access for it to the new people who want to get in and do so on the basis that the only way they can use it is if they give up their Federal water rights. In a sense that is voluntary because they do not have to do it, but it is making it so anyone who wants to participate in the expansion of the program cannot do so unless they fall within this provision. The proposal I have made, and I hope still will be the one that prevails in the Senate with regard to the CRP lands, is indeed we focus our expansion of the CRP on those buffer strips and those areas where we can have the most impact on habitat for wildlife, but not do it in a way that excludes every landowner in America who does not want to give up their water rights. Let's not create just a limited application of this new expansion of the CRP in a way that would essentially disqualify everyone who is not willing to give up their right to water. That is my biggest concern with regard to the so-called voluntariness issue and the purpose behind this legislation. Another point I think is critical to make is that those who advocate this provision say it is important we protect these threatened species and species that could be benefited if the Federal Government could take control of this water and utilize it for their benefit. It is a good point. Utilization of the water resources of this Nation for the benefit of species is critical, and yet under existing Federal laws, such as the Endangered Species Act, the Clean Water Act, and so forth, and under existing State laws, almost everything that has been discussed as a very positive thing that should be done under the Endangered Species Act can already be done. If you stop to think about it, as the Senator from Montana already said, the Federal Government can already buy water rights in a willing buyer/willing seller arrangement. What is being added here is that lever or that hammer that says you cannot any longer participate in the expansion of the CRP unless you sell your water rights. Just a little bit of a hammer--maybe not such a little hammer--on the water users of this Nation. Yet already we are achieving some of those objectives under the existing law. For example, in my State of Idaho, the need for water for salmon and steelhead has long been established, has been debated actually, but has long been something that has been sought to be addressed under the Endangered Species Act. For years, hundreds of thousands of acre-feet of water in Idaho on an annual basis have been made available on this true willing buyer/willing seller basis where the Federal Government has come in and obtained on fair evenhanded negotiations the ability to get water out of the waterbank or out of some projects or out of water users who do not need it for that year and to utilize it for the salmon and the steelhead. That can be done, but it does not have to be done with the added hammer of prohibiting access to the CRP. In the State of Idaho, for example, the U.S. Bureau of Reclamation, as I indicated, has been able to rent water from the State waterbank from willing sellers for almost a decade. Recently, in another context, the Bureau has rented water in the Lemhi River area, a tributary of the Salmon River for the benefit of species. All of this was done under State law and Federal with the current system. I have a letter from the Governor of the State of Idaho who asked us to oppose this legislation because it is in conflict with Idaho's water law and because, as he says: In addition, the goal of implementing water quantity and water quality improvement demonstrated to be required for species listed under the Endangered Species Act can largely be achieved under existing State laws. The Governor goes on to give examples that explain we have those abilities and the desires in the States right now to achieve these objectives. What this comes down to, frankly, is: Are we going to modify and take a step into the arena of our conservation title of the farm bill now and modify the CRP in a way that creates a hammer to force those who would like to participate in it, would like to improve the habitat under this program, would like to take the incentive that it provides and say: You cannot do it unless you give up your water rights? Or are we going to use the existing voluntary basis of addressing these issues under the Endangered Species Act, in terms of obtaining and utilizing water rights, and let the CRP work as it has been intended to work and as it has so effectively worked over the last years to let farmers, without having to jeopardize their water rights, do those things they know are going to benefit the species that reside on their property? I think that it would be better, actually. If you want to look at what is going to actually result in the best results for species and for wildlife in general in the United States, I think it is going to be best if we allow those who own land and who operate land in agricultural endeavors to continue to utilize this expansion of the CRP program without the threats of giving up their water rights because you will have many more people willing to participate then, many more lands that will be available and be competitive for this expansion, and the Secretary will be able to have a broader array of choices in terms of the allocations of the new CRP land. A last question that perhaps the Senator from Nevada can answer, a question raised by some of the water users as they struggle to evaluate what will happen: What happens if a water user who enters into a contract with the Secretary agrees on a temporary basis to give up his water rights and then chooses, for whatever reasons--economic reasons or whatever--to break out of the contract and go back into production? I understand there are financial penalties for that. That is understood. By then taking that water back from the Federal Government's utilization to the utilization of the farmer, which I assume would be possible, would that then result in a section 9 violation of the Endangered Species Act by taking water away from a species? A lot of questions come up under this law as to what will happen if this new regime for utilization of water is implemented. I know the Senator from Nevada says State law is not being superseded. The fact is, under the State laws in the West, many different evaluations have to be made before a water right can be transferred. In many cases, the water right is actually owned by a canal company or irrigation district, not by the land owner. So permission there would have to be obtained. Then approval from the State water authorities would have to be obtained. I assume from the answers we have gotten that would be left in place and no farmer would be able to participate unless he got approval from the entities that were the actual owners of the water and from the State that manages the water. Again, that will limit dramatically the number of people who can take advantage of this expansion of the CRP. But assuming that is in place, what happens if the Endangered Species Act becomes applicable to the new utilization of the water regime and the farmer wants to take it back? We have a lot of questions that need to be answered. In summary, we have not had a chance to thoroughly vet this issue. It has not been reviewed in committee or hearings. There is a tremendous amount of unrest building and developing around the country over what this will do. The bottom line is, there is no established reason for trying to connect the Endangered Species Act and the desire for expansive Federal control over water to a very effective CRP that is doing its job under the conservation title of the farm bill. I encourage those Senators who will make their decision on this issue soon as we come to vote on it to recognize we should reject this section of the farm bill and support the amendment to strike this provision and work in a collaborative fashion to develop the approaches to the farm bill that will expand and strengthen our conservation title, but not do so in a way so divisive. I conclude with this. I have maintained for many years probably the most significant piece of environmentally positive legislation we have worked on in Congress is the farm bill. It has tremendous incentives in the conservation title to make sure the private land users in this country and the way we utilize our agricultural land and its production are incentivised for good, positive, conservation practices that benefit species, our air quality, our water quality, and the like. That is what this conservation title does. That is what the CRP is designed to do. Do not saddle the CRP with this unnecessary effort to extend Federal control over water and Federal acquisition over water. Let the CRP work as it was intended.

Mr. CRAPO. I was not on the floor when Senator Domenici made his request. What is the status of the procedure at this point?

Mr. CRAPO. Madam President, I will support the amendment Senator Domenici from New Mexico has proposed. I appreciate the opportunity to work with him, and I believe he has done a tremendous job in identifying a serious problem and getting, as he indicated, a significant part of it solved. There is still an additional problem with which I have a concern. That is, even though we now have reached an agreement which will basically provide an opt-in situation in which the Governor of each State has the authority to determine whether his State or her State will opt into these provisions, the problem we face is that the States that choose to opt out or to stay out are then deprived of their ability to participate in this 1.1 million acres of CRP land that is being added to the CRP. There is a hammer there on the States now to either opt in or not have access to this expansion of the CRP. I have discussed this issue with the good Senator from Nevada, and I appreciate his willingness to work with me on trying to resolve the issue. He has agreed that we will try to work out the differences and, hopefully, be able to come forward with a unanimous consent request or some type of approach that is agreed to. But if not, we will be able to propose additional amendments to try to address this issue, including striking the provision, if we are not able to work it out. I appreciate all of those here who have worked on this matter. Senator Craig has worked diligently, and Senator Domenici has worked so strongly in bringing this forward. I appreciate the willingness of Senator from Nevada, Mr. Reid, to try to iron out the concerns we have on western water law. I believe several other Senators from the West have strong concerns. They may want to make brief comments. I will support Senator Domenici's amendment.

Mr. CRAPO. Madam President, the Senator talked about the fact this is based on a willing relationship. But if I understand the amendment correctly, it is willing only in the sense that any landowner who wanted to participate in the new CRP acreage that is authorized under the farm bill would be required to either temporarily or permanently yield his or her water rights or could simply choose not to participate in the new acreage. The question is, Is there any way for a landowner to participate in the acreage program for the CRP that is being expanded here without being required by contract to yield up their water rights?

Mr. CRAPO. The response to that is the CRP works very well. It is doing a lot of good for wildlife in the United States. It is not specifically focused on the acquisition of water rights. The expansion of the CRP, which we are trying to accomplish in this farm bill, will expand the successful operations of the CRP. The concern I have and that many others have is the Senator is providing in his amendment that no landowner in America can participate in the expansion of the CRP without being required to yield their water rights. Although I realize that is voluntary in the sense they do not have to participate, it is not voluntary in the sense that a landowner who wants to participate cannot do so without having to yield water rights.