John Cornyn

Mr. CORNYN

Mr. CORNYN. Mr. President, as the Senator from Vermont said at a recent Judiciary Committee hearing: I have always found that every administration, Republican or Democrat, would love to keep a whole lot of things from the public. They do something they are proud of, they will send out a hundred press releases. Otherwise, they will hold it back. We have the Freedom of Information Act, which is a very good thing. It keeps both Democratic and Republican administrations in line. I agree with that. Essentially, we are talking about human nature. It is only natural that elected officials and Government leaders want recognition for their successes but not their failures. But we, as a healthy democracy, need to know the good, the bad, and the ugly. The news media, of course, is the main way people get information about the Government. The media pushes Government entities and elected officials, bureaucrats, and agencies to release information that the people have the right to know, occasionally exposing waste, fraud, and abuse--and hopefully more often than that letting the American people know what a good job their public officials are doing. But we have also seen in recent years an expansion of other outlets for sharing information outside of the mainstream media to online communities, discussion groups, and blogs. I believe all these outlets can and do contribute to the health of our political democracy. Let me make this clear. This is not just a bill for the media, lest anybody be confused. This is a bill that will benefit every man, woman, and child in the United States of America who cares about the Federal Government, cares about how the Federal Government operates, and ultimately cares about the success of this great democracy. By reforming our information policies in order to guarantee true access by all citizens to Government records, we will revitalize the informed consent that keeps America free. The Open Government Act contains over a dozen substantive provisions, designed to achieve the following four objectives: First, it will strengthen the Freedom of Information Act and close loopholes. Secondly, it will help Freedom of Information Act requesters obtain timely responses to their requests. Third, it will ensure that agencies have strong incentives to comply with the law in a timely fashion. Fourth, it will provide Freedom of Information Act officials; that is, people within Government agencies, with all the tools, including the education, they need in order to ensure that our Government remains open and accessible. This legislation is not just pro-openness, pro-accountability and pro-accessibility; it is also pro-Internet. It contains important congressional findings to reiterate the presumption of openness. It includes a provision for a hotline that enables citizens to track the requests and even allows tracking of those requests via the Internet. As a whole, the Open Government Act reiterates the principle that our Government is based not on the need to know but rather on the right to know. We all recognize that America's security should never take a back seat. But nor should the claim, without justification, of national security be used as a barrier against allowing taxpayers to know how their money is being spent. There is a broad consensus across the aisle, the political spectrum, that we currently overclassify Government documents, and that many documents and much information is placed beyond the public view without any real justification. I believe we need a system of classification that strikes the right balance between the need to classify documents in the interest of our national security and our national values of open government. Our default position of the U.S. Government must be one of openness. If records can be open, they should be open. If there is a good reason to keep something closed, it is the Government that should bear the burden, not the other way around. Open government is fundamentally an American issue. It is literally necessary to preserve our way of life as a self-governing people. Ensuring the accessibility, accountability, and openness of the Federal Government is a cause worthy of preservation, and I call on my colleagues to join the Senator from Vermont and I today in taking a meaningful step toward that goal. Finally, before I yield the floor to the Senator from Vermont, let me again express my appreciation to him and his staff. They have worked very closely with my staff. This is one of those good Government initiatives that knows no party affiliation, no ideological affiliation, but is really one that is essential to the preservation of our way of life as a self-governing democracy. Exhibit 1 Openness Promotes Effectiveness in our National Government Act of 2005 Led by U.S. Senators John Cornyn and Patrick Leahy, the OPEN Government Act of 2005 is a bipartisan effort to achieve meaningful reforms to federal government information laws-- including most notably the Freedom of Information Act of 1966 (``FOIA''). If enacted, the legislation would substantially enhance and expand the accessibility, accountability, and openness of the federal government. It has been nearly a decade since Congress has approved major reforms to FOIA. Moreover, the Senate Judiciary Committee has not convened an oversight hearing to examine FOIA compliance issues since April 30, 1992. (The Senate Homeland Security and Governmental Affairs Committee, which shares jurisdiction over federal government information laws with the Judiciary Committee, has not held a FOIA oversight hearing since 1980.) This legislation is the culmination of months of extensive discussions between the offices of Senators Cornyn and Leahy and various members of the requestor community. The bill is supported by Texas Attorney General Greg Abbott and a broad coalition of organizations across the ideological spectrum, including: American Association of Law Libraries American Civil Liberties Union American Library Association American Society of Newspaper Editors Associated Press Managing Editors Association of Health Care Journalists Center for Democracy & Technology Coalition of Journalists for Open Government Committee of Concerned Journalists Education Writers Association Electronic Privacy Information Center Federation of American Scientists/Project on Government Secrecy Free Congress Foundation/Center for Privacy & Technology Policy Freedom of Information Center, University of Missouri The Freedom of Information Foundation of Texas The Heritage Foundation/Center for Media and Public Policy Information Trust National Conference of Editorial Writers National Freedom of Information Coalition National Newspaper Association National Security Archive/George Washington University Newspaper Association of America People for the American Way Project on Government Oversight Radio-Television News Directors Association The Reporters Committee for Freedom of the Press Society of Environmental Journalists The Act contains important Congressional findings to reiterate and reinforce the view that the Freedom of Information Act establishes a presumption of openness, and that our government is based not on the need to know, but upon the fundamental right to know. The Act also contains over a dozen substantive provisions, designed to achieve the following four objectives: (1) Strengthen FOIA and close loopholes (2) Help FOIA requestors obtain timely responses to their requests (3) Ensure that agencies-have strong incentives to act on FOIA requests in a timely fashion (4) Provide FOIA officials with all of the tools they need to ensure that our government remains open and accessible strengthen foia and close loopholes Ensure that FOIA applies when agency recordkeeping functions are outsourced Establish a new open government impact statement, by requiring that any future Congressional attempt to create a new FOIA exemption be expressly stated within the text of the legislation Impose annual reporting requirement on usage of the DHS disclosure exemption for critical infrastructure information Protect access to FOIA fee waivers for legitimate journalists, regardless of institutional association-- including bloggers and other Internet-based journalists Provide reliable reporting of FOIA performance, by requiring agencies to distinguish between first person requests for personal information and other kinds of requests help foia requestors obtain timely responses Establish FOIA hotline services, either by telephone or on the Internet, to enable requestors to track the status of their requests Create a new FOIA ombudsman, located at the Administrative Conference of the United States, to review agency FOIA compliance and provide alternatives to litigation Authorize reasonable recovery of attorney fees when litigation is inevitable ensure that agencies have strong incentives to act on foia requests in timely fashion Restore meaningful deadlines for agency action by ensuring that the 20-day statutory clock runs immediately upon the receipt of the request Impose real consequences on federal agencies for missing statutory deadlines Enhance authority of the Office of Special Counsel to take disciplinary action against government officials who arbitrarily and capriciously deny disclosure Strengthen reporting requirements on FOIA compliance to identify agencies plagued by excessive delay, and to identify excessive delays in fee status determinations provide foia officials with the tools they need to ensure that our government remains open and accessible Improve personnel policies for FOIA officials to enhance agency FOIA performance Examine the need for FOIA awareness training for federal employees Determine appropriate funding levels needed to ensure agency FOIA compliance Openness Promotes Effectiveness in our National Government Act of 2005 Section-by-Section Analysis Sec. 1. Short Title. The Open Government Act of 2005. Sec. 2. Findings. The findings reiterate the intent of Congress upon enacting the Freedom of Information Act (FOIA), 5 D.S.C. 552 as amended, and restate FOIA's presumption in favor of disclosure. Sec. 3. Protection of Fee Status for News Media. This section amends 5 U.S.C. 552(a)(4)(A)(ii) to make clear that independent journalists are not barred from obtaining fee waivers solely because they lack an institutional affiliation with a recognized news media entity. In determining whether to grant a fee waiver, an agency shall consider the prior publication history of the requestor. If the requestor has no prior publication history and no current affiliation with a news organization, the agency shall review the requestor's plans for disseminating the requested material and whether those plans include distributing the material to a reasonably broad audience. Sec. 4. Recovery of Attorney Fees and Litigation Costs. This section, the so-called Buckhannon fix, amends 5 U.S.C. 552(a)(4)(E) to clarify that a complainant has substantially prevailed in a FOIA lawsuit, and is eligible to recover attorney fees, if the complainant has obtained a substantial part of his requested relief through a judicial or administrative order or if the pursuit of a claim was the catalyst for the voluntary or unilateral change in position by the opposing party. The section responds to the Supreme Court's ruling in Buckhannon Board and Care Home, Inc. v. West Virginia Dep't of Health and Human Resources, 532 U.S. 598 (2001), which eliminated the ``catalyst theory'' of attorney fee recovery under certain Federal civil rights laws. FOIA requestors have raised concerns that the holding in Buckhannon could be extended to FOIA cases. This section preserves the ``catalyst theory'' in FOIA litigation. Sec. 5. Disciplinary Actions for Arbitrary and Capricious Rejections of Requests. FOIA currently requires that when a court finds that agency personnel have acted arbitrarily or capriciously with respect to withholding documents, the Office of Special Counsel shall determine whether disciplinary action against the involved personnel is warranted. See 5 U.S.C. 552(a)(4)(F). This section of the bill amends FOIA to require the Attorney General to notify the Office of Special Counsel of any such court finding and to report the same to Congress. It further requires the Office of Special Counsel to report annually to Congress on any actions taken by the Special Counsel to investigate cases of this type. Sec. 6. Time Limits for Agencies to Act on Requests. The section clarifies that the 20-day time limit on responding to a FOIA request commences on the date on which the request is first received by the agency. Further, the section states that if the agency fails to respond within the 20-day limit, the agency may not then assert any FOIA exemption under 5 U.S.C. 552(b), except under limited circumstances such as endangerment to national security or disclosure of personal private information protected by the Privacy Act of 1974, unless the agency can demonstrate, by clear and convincing evidence, good cause for failure to comply with the time limits. Sec. 7. Individualized Tracking Numbers for Requests and Status Information. Requires agencies to establish tracking systems by assigning a tracking number to each FOIA request: notifying a requestor of the tracking number within ten days of receiving a request; and establishing a telephone or Internet tracking system to allow requestors to easily obtain information on the status of their individual requests, including an estimated date on which the agency will complete action on the request. Sec. 8. Specific Citations in Exemptions. 5 U.S.C. 552(b)(3) states that records specifically exempted from disclosure by statute are exempt from FOIA. This section of the bill provides that Congress may not create new statutory exemptions under this provision of FOIA unless it does so explicitly. Accordingly, for any new statutory exemption to have effect, the statute must cite directly to 5 U.S.C. 552(b)(3), thereby conveying congressional intent to create a new (b)(3) exemption. Sec. 9. Reporting Requirements. This section adds to current reporting requirements by mandating disclosure of data on the 10 oldest active requests pending at each agency, including the amount of time elapsed since each request was originally filed. This section further requires agencies to calculate and report on the average response times and range of response times of FOIA requests. (Current requirements mandate reporting on the median response time.) Finally, this section requires reports on the number of fee status requests that are granted and denied and the average number of days for adjudicating fee status determinations by individual agencies. Sec. 10. Openness of Agency Records Maintained by a Private Entity. This section clarifies that agency records kept by private contractors licensed by the government to undertake recordkeeping functions remain subject to FOIA just as if those records were maintained by the relevant government agency. Sec. 11. Office of Government Services. This section establishes an Office of Government Information Services within the Administrative Conference of the U.S. Within that office will be appointed a FOIA ombudsman to review agency policies and procedures, audit agency performance, recommend policy changes, and mediate disputes between FOIA requestors and agencies. The establishment of an ombudsman will not impact the ability of requestors to litigate FOIA claims, but rather will serve to alleviate the need for litigation whenever possible. Sec. 12. Accessibility of Critical Infrastructure Information. This section requires reports on the implementation of the Critical Infrastructure Information Act of 2002, 6 U.S.C. 133. Reports shall be issued from the Comptroller General to the Congress on the number of private sector, state, and local agency submissions of CII data to the Department of Homeland Security and the number of requests for access to records. The Comptroller General will also be required to report on whether the nondisclosure of CII material has led to increased protection of critical infrastructure. Sec. 13. Report on Personnel Policies Related to FOIA. This section requires the Office of Personnel Management to examine how FOIA can be better implemented at the agency level, including an assessment of whether FOIA performance should be considered as a factor in personnel performance reviews, whether a job classification series specific to FOIA and the Privacy Act should be considered, and whether FOIA awareness training should be provided to federal employees. Exhibit 2 February 15, 2005. Hon. John Cornyn, Chairman, U.S. Senate Judiciary Subcommittee on the Constitution, Civil Rights & Property Rights, Washington

Mr. CORNYN. Mr. President, I rise today to introduce a bill, along with the Senator from Vermont who we will hear from shortly, that will help enhance the openness of the Federal Government. This bill is called the Open Government Act of 2005. It is a bipartisan effort to improve and update our public information laws--particularly the Freedom of Information Act. The purpose of the bill is to arm the American people with the information they need to make certain that ours remains a government whose legitimacy is derived from the consent of the governed. This legislation will significantly expand the accessibility, accountability, and openness of the Federal Government. Open government, of course, is one of the most basic requirements of a healthy democracy. It allows taxpayers to see where their money is going. It permits the honest exchange of information that ensures government accountability, and it upholds the ideal that government never rules without the consent of the governed. As is so often the case, Abraham Lincoln said it best: No man is good enough to govern another without that person's consent. But achieving the true consent of the governed requires something more than just holding elections every couple of years. What we need is informed consent. Informed consent is impossible without open and accessible government. It has been nearly a decade since Congress has approved major reforms to the Freedom of Information Act. The Senate Judiciary Committee has not convened an oversight hearing to examine the Freedom of Information Act compliance issue since 1992. And at that time, I believe it is clear that the growth of technology and the Internet has created a real desire among the American people to achieve direct, efficient, and open access to government information. I thank my colleague from Vermont, the ranking member of the Judiciary Committee, who has long been a champion of these issues, for his hard work on this bill. Together our offices have spent a good deal of time meeting with open government advocates. I am proud to say this bill is supported by a broad coalition across the ideological spectrum, because I believe this legislation should not be a partisan or special interest bill. Indeed, it is not. I ask unanimous consent that these endorsement letters from dozens of watchdog groups across the political spectrum be printed in the Record at the close of my remarks.

Mr. CORNYN

Mr. CORNYN. Mr. President, I will spend a few minutes correcting the record in response to a question of press availability on Tuesday about whether Democrats were opposing as a caucus all of the renominated judges that previously were denied an opportunity for an up-or-down vote when a bipartisan majority stood ready to confirm them last year. The Senate minority leader said, ``Renomination is not the key. I think the question is, those judges that have already been turned down in the Senate''--in other words, he said these judges, even though they commanded the support of a bipartisan majority of the Senate during the last 2 years and were not permitted to have an up-or-down vote, he characterized those judges who have now been renominated by the President as judges who have, in fact, been turned down by the Senate. So my question is, to whom is the distinguished Democratic leader referring? None of President Bush's nominees have been turned down by the none, zero. The nominees he referred to were denied a vote altogether. In fact, all of these nominees would have been confirmed last Congress had majorities been allowed to govern as they have during the entire history of this country and the entire history of the Senate--save and except for the time when Democrats chose to deny a majority the opportunity for an up-or-down vote. So I would say, correcting the record, it is a little difficult to turn down a nominee, as the minority leader has said, if the nominee never gets an up-or-down vote on the Senate floor. Now, the second part I would like to correct is that when the Democratic leader was asked whether obstruction would create a 60-vote threshold for all future judicial nominees, he said: It's always been a 60-vote for judges. There is--nothing change[d]. He said: Go back many, many, many years. Go back decades and it's always been that way. Well, we took his advice, and we did go back over the years. It turns out it has not always been that way. Indeed, there has never, ever, ever been a refusal to permit an up-or-down vote with a bipartisan majority standing ready to confirm judges in the history of the Senate until these last 2 years. Many nominees have, in fact, been confirmed by a vote of less than 60 Senators. In fact, the Senate has consistently confirmed judges who enjoyed a majority but not 60-vote support, including Clinton appointees Richard Paez, William Fletcher, and Susan Oki Mollway; and Carter appointees Abner Mikva and L.T. Senter. Specifically, the distinguished Democratic leader, yesterday, when he said this had been used by Republicans against Democratic nominees, mentioned Judge Paez. Well, obviously, that is not correct because Judge Paez, indeed, was confirmed by the Senate and sits on the Federal bench today. So it reminds me of, perhaps, an old adage I learned when I was younger, when computers were not as common as they are now, and people marveled at this new technology, and those who wanted to chasten us a little bit would say, well, they are not the answer to all of our concerns, and they said: Garbage in, garbage out. In other words, if you do not have your facts right, it is very difficult to reach a proper conclusion. So I thought it was very interesting--and I thought it was important--that the Democratic leader would make this claim, first of all, as I said, that these judges had been somehow turned down by the Senate when, in fact, they had been denied an opportunity for an up-or- down vote; and, secondly, that somehow there is a 60-vote requirement, and it has always been that way, because the facts demonstrate that both of those conclusions are clearly incorrect. Finally, he said something I do more or less agree with, although I would differ a little bit on the contentious tone. He said: We're hopeful they'll bring them to the floor so there will be a fair fight. Well, I think I knew what he meant. I hope he meant a fair debate. Frankly, the American people are tired of obstruction and what they see as partisan wrangling and fighting over judicial nominees. In the end, that is what happened during the Clinton administration when, perhaps, judges who were not necessarily favored by our side of the aisle did receive an up-or-down vote and did get confirmed. And that is, of course, what happened during the Carter administration. In fact, that is what has happened throughout American history--until our worthy adversaries on the other side of the aisle decided to obstruct the President's judicial nominees and they were denied the courtesy of that fair process, that fair debate, and an up-or-down vote. Let me just conclude by saying this really should not be a partisan fight. Indeed, what we want is a fair process. We want a process that applies the same when a Democrat is in the White House and Democrats are in the majority in the Senate as we do when a Republican is in the White House and Republicans are in the majority in the Senate. We want good judges. The American people deserve to have judges who will strictly interpret the law and will rule without regard to some of the political passions of the day. A judge understands that they are not supposed to take sides in a controversy. That is what Congress, the so-called political branch, is for. That is why debate is so important in this what has been called the greatest deliberative body on Earth. But we do not want judges who make political decisions. Rather, we want judges who will enforce those decisions because they are sworn to uphold the law and enforce the law as written. Members of Congress write the laws, the President signs or vetoes the laws, and judges are supposed to enforce them but not participate in the rough and tumble of politics. So it is important that the process I have described produces a truly independent judiciary because we want judges who are going to be umpires, who are going to call balls and strikes regardless of who is up at bat. So I think the process we have seen over the last couple years, which, unfortunately, it sounds like, if what I am hearing out of the Democratic leader is any indication, is a process that has not only been unfair because it has denied bipartisan majorities an opportunity to confirm judges who have been nominated by the President, but it is one which, frankly, creates too much of a political process, one where it appears that judges who are sworn to uphold the law, and who will be that impartial umpire--it has made them part of an inherently political process. Now, I want to be clear. It is the Senate's obligation to ask questions and to seriously undertake our obligation to perform our duty under the Constitution to provide advice and consent. But, ultimately, it is our obligation to vote, not to obstruct, particularly when we have distinguished nominees being put forward for our consideration, when they are unnecessarily besmirched and, really, tainted by a process that is beneath the dignity of the United States. Certainly none of these individuals who are offering themselves for service to our Nation's courts in the judiciary deserve to be treated this way. So, basically, Mr. President, what we are talking about is a process that works exactly the same way when Democrats are in power as it does when Republicans are in power. That, indeed, is the only principled way we can approach this deadlock and this obstructionism. I hope the Democratic leader--who I know has a very difficult job because he, no doubt, has to deal with and reflect the views of his caucus on this issue--I hope he will encourage his caucus, the Democrats in the caucus, and we will all, as a body, look at the opportunity to perhaps view this as a chance for a fresh start, a chance for a fair process, one that is more likely to produce an independent judiciary that is going to call balls and strikes regardless of who is at bat. Mr. President, I thank you for the opportunity. I yield the floor and suggest the absence of a quorum.

Mr. CORNYN

Mr. CORNYN. Mr. President, I understand we are in morning business.

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

Mr. CORNYN

Mr. CORNYN. Mr. President, I want to take a second to convey my appreciation to the Senator from Vermont for his eloquent and I know heartfelt remarks. Today is a good day for open Government in the Senate. I wish to recognize the leadership of Senator DeWine for legislation he will be pursuing later today that enhances disclosure of records regarding Nazi war criminals. Senator DeWine, Senator Feinstein, and I are proud to be cosponsors of the legislation, as is the Senator from Vermont. We are all proud of that effort under the leadership of Senator DeWine. I yield the floor and suggest the absence of a quorum.

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

Mr. CORNYN. Mr. President, I ask unanimous consent that I be allotted 15 minutes of the 30 minutes of the time allotted to myself and the Senator from Vermont.

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

Mr. CORNYN. I suggest the absence of a quorum.

Mr. CORNYN

Mr. CORNYN. Mr. President, I thank Judge Michael Chertoff for having the courage to take on the challenging tasks of leading the Department of Homeland Security. He is an ideal nominee for this position, and I look forward to working with him and other department officials to ensure that we have the best possible border and port security, cyber security, and efficient distribution of DHS resources and personnel. There are several issues that we need to address in the short term, particularly in the areas of state homeland security grants and cyber security. For the last 4 years, the Department of Homeland Security has provided billions of dollars throughout the country to prevent, prepare for, and respond to acts of terrorism. There are several effective first responder grant programs that have raised our nation's overall level of preparedness and ability to react to all manner of disasters. However, many of the funds distributed to states and local Governments have been allocated by formulas that fail to take into consideration actual needs or are not based on real risks of terrorism. It is time that Congress re-examine the methods of distributing these critical preparedness funds. In order to adequately secure the nation against terrorist attacks, the Federal Government must strategically distribute grants to states and local governments in an efficient manner and to the places where they will be most effective. Congress must take the lead in reforming the system for distributing these funds based on actual threats and vulnerabilities and enable Federal agencies to target critical gaps in state and local terrorism prevention and preparedness capabilities. We know that terrorists seek to strike the U.S. where it will do the most damage, either in terms of American lives or our country's economy and vital assets. Of course, we should make sure that our population centers are protected, but that does not mean that funds should only go to urban areas. When it comes to protecting our economy and vulnerable critical infrastructure, we need to be mindful of protecting all the vital components of these systems. Taking the U.S. food supply as an example, this would mean securing both up and down stream components, from agriculture and food production systems to the ports that ship products in and out of the country. By targeting terrorism preparedness funds to the communities and components of the economy that are most at risk, the whole country benefits. And looking beyond traditional terrorism preparedness, in this age of the Internet and globally interconnected computer systems, securing the Nation's borders no longer includes just land, air and sea, but also cyberspace. As a result, it is critical that the federal government provide strong leadership in cyber security by securing its computer systems and adequately safeguarding key components in our national infrastructure--including the systems the country relies upon that link water, utility, communications, transportation and financial networks. I am encouraged that Judge Chertoff, has committed to closely examining the agency's role in cyber security to ensure it is doing everything possible in this critical mission. Toward that goal, we should elevate the issue of cyber security within the agency and create the position of Assistant Secretary of Cyber Security. We made important strides toward making America safer with the recently enacted Intelligence Reform Bill, but we cannot claim to have finished the job of improving our intelligence capability and homeland security until we deal comprehensively with the need for enhanced cyber security. An organized cyber attack would disrupt national security, halt the production and distribution of needed goods and services, and threaten the very fabric of our Nation's economy. Unfortunately, cyber security is an area that tends to be overlooked in the discussion of homeland security. First responders to a cyber security attack on America have far different needs and functions than traditional first responders. They require a clear and visible leadership within DHS to organize and maintain our security. Given the dynamic and ever-expanding threats in the area of cyber security, an Assistant Secretary of Cyber Security will provide DHS with an enhanced ability to interact, influence, and coordinate targeted cyber security missions across all areas of our infrastructure. The effort to secure our nation will not be complete until all aspects of vulnerability to terrorists are recognized. This is true for all our national borders; on land, air, sea, and cyber space. Recognizing that threat is an important step, but we must now make every effort to prevent the threat from becoming a crippling reality. I am proud to vote for Judge Chertoff. He has well-deserved bipartisan support, and I am confident he will be able to do the job. As Assistant Attorney General for the Criminal Division of the U.S. Department of Justice, he worked tirelessly following the September 11th attacks, prosecuting those whose specific goal was to kill innocent citizens in New York, Virginia and elsewhere in this country. I look forward to working alongside him on these critical issues, and I am sure he will bring courage and commitment to the serious tasks at hand.

Mr CORNYN

Mr CORNYN. Mr. President, I have spoken previously on this floor about my concerns that this legislation does not go far enough to address the scandal of litigation abuse that plagues our civil justice system. I stand by those concerns today. We can and should do more to reduce the burden of frivolous, expensive litigation. Our Nation's economic competitiveness in the 21st century depends on it. We should consider additional measures that better level the playing field, that produce a good flow of information and transparency, and that provide a clear relationship between plaintiffs and their attorneys. But while this modest legislation could do more, I believe that S. 5 is an important first step to reform--a step in the right direction. By providing for removal of a greater number of class action lawsuits from State court to Federal court and by requiring that judges carefully review all coupon settlements and limit attorneys' fees paid to these settlements to the value actually received by class members, it sets the groundwork for a much needed reform. In the spirit of bipartisan cooperation that drove this bill forward, I set aside my concerns for now and am proud to co-sponsor. I thank my friend from Iowa, Senator Grassley, for his leadership and persistence on this issue. For five consecutive Congresses, dating back to 1997, Senator Grassley has taken up the mantel of class action reform and he deserves a great deal of credit for it. Finally, I want to thank Chairman Specter and Senator Hatch for their continued stewardship. Without them, this bill would not be where it is today.

Mr. CORNYN

Mr. CORNYN. Mr. President, I first want to say how much I respect and admire the author of this amendment, Senator Pryor. He and I served together as State attorneys general, he in Arkansas and I in Texas, for 4 years. Our careers overlapped. I agree with him about the important role that attorneys general play when it comes to protecting a State's citizens and a State's consumers. But I think where I part company with my friend Senator Pryor is, No. 1, this amendment is not necessary to preserve the authority of the State attorney general to protect the State's consumers, and, second, this amendment as worded--and I know this is not his intention--would create a potential loophole big enough to drive a truck through, that could cause substantial mischief that is intended to be prevented by this very bill. Finally, as Senator Carper has said, this is a negotiated bill. There are amendments I would like to offer that I think would make it a better bill. But I think we all realize that after many Senators have labored long and hard to try to get us to the point today where we literally have bipartisan support for this compromise, to offer any amendments, and particularly one like this and others that have been filed but not yet called up, would threaten our chance of success. I think that would be a shame because we all agree that the class action abuses we see are very real and are something that do not benefit the American people or consumers in general. We have seen that some of these egregious abuses of the class action procedure have been used to make certain entrepreneurial lawyers very wealthy when the consumers literally get a coupon worth pennies on the dollar. I am not opposed to lawyers. Let me say up front I happen to be a lawyer. But I do think that all lawyers, all people, anybody with common sense--some may say that excludes lawyers--but I like to think anybody with common sense recognizes the very real abuses that have occurred in the class action system. We have heard a lot about that. I will not repeat all of that now. I think we all take that as a given. First, let me allude to the letter signed by--the Senator from Arkansas said 46 State attorneys general from the National Association of Attorneys General, an organization of which I used to be a member and for which I have a lot of respect, both for the people who help run that organization as well as the attorneys general who make up its membership. I point my colleagues to paragraph 2 in this letter, which I believe makes my initial point which is that this amendment is not necessary to preserve the authority of State attorneys general. Indeed, in the last sentence in the second paragraph these 46 attorneys general say: It is our concern that certain provisions of S. 5 might be misinterpreted to hamper the ability of attorneys general to bring such actions, thereby impeding one means of protecting our citizens from unlawful activity and its resulting harm. In other words, these 46 lawyers, the chief law enforcement officers of these States, make no claim that in fact this bill would impede their authority but, rather, that it might be misinterpreted. I think it is fair to say that any law that has ever been written is capable of being misinterpreted. That is why we have the court system. But we certainly do not need an amendment like this to protect the States or the attorneys general against a potential misinterpretation of S. 5, the Class Action Reform bill. That is the function, that is the role of the courts. I think it is very plain that no power of the State attorney general is impeded by virtue of S. 5, or will be once it is signed into law. Indeed, the Senator from Arkansas alluded to statutes that are typical of every State--deceptive trade practice acts and consumer protection statutes--which in my State and I believe in virtually every other State specifically authorize the attorney general to seek remedies on behalf of aggrieved consumers. This bill certainly would not encroach on that authority. Indeed, he also alluded to common law claims that are asserted by the attorneys general in pursuit of justice for their State's citizens. We heard the Senator from Delaware talk about the parens patriae doctrine, which is generally recognized as providing the authority to the attorney general to sue on behalf of his State's citizens. I acknowledge, as he said, there are some variations in terms of the court's interpretation in each State about the scope of that doctrine and how much or what kinds of actions might be authorized. But clearly, when State law and the State Constitution specifically provide for the right of an attorney general, a State attorney general, to sue on behalf of his State's citizens, then this bill, when made a law, will not in any way impede that endeavor. Finally, in terms of the lack of necessity of this bill, the Senator from Delaware pointed out that where a substantial number of a State's citizens are party to a class action and are located in one State, they are carved out by the very terms of this bill so that the case will remain in State court if that is where it was originally filed. But the real danger in this amendment--and here again I am not suggesting that anyone intended this, but I think it does show the potential for mischief with amendments that have not been the subject of long debate and negotiation--is the language that says: . . . does not include any civil action brought by or on behalf of the Attorney General of any State. I am very sensitive to that particular phrase in the amendment because of a, frankly, very tragic experience I had as attorney general of my State. It is a fact that my predecessor as attorney general in the State of Texas is currently in the Federal penitentiary. He is in the Federal penitentiary because he was convicted, based on his own confession, of mail fraud and other violations of law primarily related to his attempt, almost successful, to backdate outside counsel contracts with an old buddy of his, that would potentially entitle his friend to $520 million out of the taxpayers' recovery in the Texas tobacco litigation. I take no pleasure in bringing this up but merely make mention of it to point out the potential for mischief--not when cases are brought by an attorney general, somebody who is elected by the people, whose future, frankly, is dependent on their dutiful discharge of their obligations and faithful discharge of their duties--but when you carve out suits brought on behalf of the attorney general, which could include any lawyer who any attorney general might choose to hire as outside counsel and, of course, who is unelected and unaccountable to the people. Here, we see the potential for grave abuses. As I have pointed out, this example was part of the Texas tobacco litigation that was part of a nationwide set of litigation, one which ultimately involved settlements on behalf of several individual States. I want to say, if my memory serves me, that Florida, Mississippi, and Texas filed their individual lawsuits and had individual judgments rendered. But the remainder of the States, including, I believe, the States of the Senator from Arkansas and the Senator from Colorado--they will correct me if I am wrong--they had a collective judgment rendered against the tobacco industry of almost $250 billion, a sum we would recognize, even here in Washington, as being significant. The problems presented by outside counsel performing the duties of an attorney general under an exception like this just go on and on. My own experience is, again, where outside counsel of the State of Texas claimed the right to $3.3 billion out of the Texas tobacco lawsuit recovery, which by any reasonable measure was an extraordinary fee, one that, when calculated by the hours of work actually put into the lawsuit, has been described as scandalous and unconscionable. The ultimate concern must be the public interest. By accepting an amendment that would place outside the scope of this bill someone bringing a lawsuit on behalf of the attorney general, somebody unelected by the people, not accountable at the polls, we would be creating an environment ripe for fraud. Let me tell you this: I recall that many of the States' attorneys general believed in good faith that the tobacco industry was responsible for contributing to the death and the illness of hundreds of thousands of Americans each year. Indeed, that is a fact. We lose 400,000 people each year in this country as a result of consuming tobacco products. But the lawsuits brought, which were ultimately settled by the tobacco industry, were brought under the guise of protecting children and protecting the American consumer. We now see that almost $300 billion was paid out but not a single tobacco company is out of business today. Indeed, they continue to make their product, not only in this country but worldwide. There has been no decrease in the number of people who get sick or die as a result of consuming tobacco products in this country each year. I just have to ask whether it is wise--I suggest it is not--to create an exception, to place outside the protections of the bill not the attorneys general per se but those who seek to bring suits on the attorney general's behalf. I suggest to you the evidence in my State-- and perhaps nationwide--indicates that the lack of accountability to the voters, the lack of concern for ultimate welfare of the consumer, and the potential presence of an immediate personal self-serving motive to maximize a huge attorney fee, creates enough opportunity for mischief under this well-intended amendment that it should be voted down on that basis, if no other. Finally, let me say in conclusion that I know the Senator from Arkansas has filed this amendment in good faith and certainly does not intend any of the results I have suggested here today. But I reiterate what the Senator from Delaware has said, and what I have been told both privately and publicly. If I were to offer amendments which I believe would make this bill better, it would be a poison pill for this litigation. Indeed, I believe that no matter how well intended the amendment offered by the Senator from Arkansas is, it would have that same effect. I don't believe that is in anyone's interest. I thank the Chair. I thank my colleagues. I yield the floor.

Mr. CORNYN. It is my understanding Senator Carper would like to speak for about 5 minutes. I ask unanimous consent that I be recognized immediately after Senator Carper, and then Senator Salazar be recognized in that sequence.

Mr. CORNYN

Mr. CORNYN. Mr. President, I ask unanimous consent that a member of my staff, Magan Dredla, be given floor privileges for the duration of the debate.

Mr. CORNYN

Mr. CORNYN. I will speak generally about the issue of class action reform contained in S. 5, because I believe the American civil justice system is, in many ways, at a crossroads. We have an opportunity to choose between taking a path toward greater freedom and responsibility, or heading down a path that encourages lawsuit abuse and cripples our ability to compete in a global economy. Now is the time, I believe-- actually it is past time--to enact the reforms necessary to ensure America's competitiveness in the 21st century. I am struck, as I listen to the critics of this bill, many of whom are the same people who complain about the fact that American jobs are being sent offshore to places like India, China, and elsewhere, when one of the very causes of the damage to America's global competitiveness is our civil justice system. I think people of good faith and good will agree that the goal of our civil justice system ought to be getting people who are truly injured as a result of the fault of another fair compensation. But I think also, being objective about this issue and some of the examples of abuses that we have seen, we know too often that this goal is not being met in the current environment. We see lawsuit abuse particularly in the class action area and also in the asbestos area. This abuse is having a damaging impact on our economy. In the asbestos area, we see people who are sick are getting pennies on the dollar in compensation because people who are not sick are getting ahead of them in line, resulting in bankruptcies which have destroyed jobs and pensions for American workers. So it is unthinkable to me that anyone could stand here on the Senate floor and claim there is nothing wrong. That seems to be a common theme these days, whether we are talking about Social Security or lawsuit reform, or a variety of subjects. But the truth is that the facts clearly indicate otherwise. As the continued spread of democracy and capitalism take root in countries throughout the world, and as modern travel and information technology bring our world closer together, there is no question that the health of America's economy is influenced by the free flow of goods and services in international markets. It is a simple fact of life: We live in a global marketplace, where we do not just compete with businesses across the street, but with ones on the other side of the world. Our economic strength and ability to compete now depends on our willingness to confront the burdens that prevent growth, discourage innovation, and ultimately cost Americans their jobs. It is unthinkable to me that anyone can claim a system that compensates people who truly are injured as a result of the fault of another so poorly, but makes a handful of lawyers rich, doesn't need to be fixed. But the system--particularly in the class action area--is fraught with abuse. I will not detail all of those abuses, since they have been addressed earlier. But one of the most classic cases is the coupon settlement. It reminds me of an old country and western song, where the lawyers get the goldmine and the consumers get the shaft. We have all seen the numbers relating to the cost of our broken civil justice system. According to one estimate, the cost of the tort system in 2003 totaled more than $245 billion, or 2.2 percent of the gross domestic product. That amounts to a tort tax on every American citizen of approximately $845 a year. The percentage of our economy that is devoted to tort law and resolution of claims through our tort system is far greater than any other industrialized country. In Britain, for example, the entire tort system--attorneys' fees, settlement costs, jury awards, and administrative costs--costs less as a percentage of GDP than America's plaintiffs' lawyers gross for themselves alone. This level of stress on the economy and on our civil justice system itself is unacceptable. But it hasn't always been that way. Class actions, prior to significant rule changes in the 1960s and 1970s were not, as they are today, largely a sport for a handful of aggressive personal injury lawyers to pursue abusive litigation and junk lawsuits. Take, for example, the change in 1966, from a system where class members were required to ``opt in'' to a system, where now they are required to ``opt out.'' By 1971, four times as many class actions were being filed than had been in 1966. In other words, from 1966 to 1971, we saw four times the number of class actions brought. Since that time, recoveries have skyrocketed. This chart behind me reflects the growth I mentioned a moment ago. You can see that from 1973 to 1975 there were relatively few class action lawsuits and relatively modest recoveries. But they have obviously ballooned and appear to be getting bigger year by year. The problems we increasingly experience with abusive class action lawsuits call for a significant overhaul of our civil justice system and particularly our rules providing for the resolution of mass tort litigation. I must tell you that the bill we have before us today is clearly a modest reform. It amounts to an improvement over the status quo, but it doesn't begin to approach the comprehensive solution America needs. As it stands, S. 5 provides two primary improvements: It allows removal of a greater number of class action lawsuits from State court to Federal court, and it requires judges to carefully review all coupon settlements and limit attorneys' fees paid in those settlements to the value actually received by class members. These two reforms--as modest as they are--are important and will certainly offer fair but desperately needed relief for State courts which are experiencing firsthand the explosion of class action litigation. It will also provide for greater fairness for defendants who are currently being dragged into ``magnet jurisdictions,'' and it will provide greater fairness for class members who are oftentimes receiving pennies on the dollar, while class counsel get rich. Yet, as much of an improvement as this bill is, it falls short of the ideal. To be effective and fair, I believe class actions and other mass tort litigation require three things: A level playing field; transparency, so consumers can have complete, fair, and accurate information; and a clear relationship between class members and their lawyers. First, a level playing field depends on a fair class certification process. As the current occupant of the chair knows, almost all class actions settle if certified. The main event in class action lawsuits is the certification process because ultimately, once certified, most defendants feel as if they have no choice but to settle because even a small risk of an adverse judgment, given the large number of class members, can lead to a ruinous result. They are forced to try to settle the case on the best terms they can. Where there is no right to an immediate interlocutory appeal of class certification and stay on discovery, class certification can cause settlements that far exceed the case's value on the merits because of the extortionate effect of the certification process and the threat it brings to the very livelihood, not to mention the financial life, of the defendant involved. States, such as my home State of Texas, have also embraced limits on appeal bonds. Too often in large class action lawsuits, the judgment can be so large that the defendant cannot, in effect, buy an appeal bond with which to appeal the case and correct an erroneous ruling below. So the defendant is forced to settle because they cannot afford to appeal--again, not based on the merits, but based on the way class action lawsuits are structured, without a right to interlocutory appeal. The second step toward an effective system, I believe, is information flow. Class actions require that adequate information be available both for the sake of the process itself and for policymakers, like us, to analyze. It is hard for us to do our job when it comes to class action reform or civil justice reform when some of the information--much of the information--is simply hidden from public view. Class members should be fully advised of all aspects of their case, and we should require that certain relevant information about all class action settlements be collected and published centrally for examination and review by analysts and policymakers. Just as in Government, when it comes to class actions, people deserve to know what is going on, particularly if it is their case. The final step, and the most important one to me, is maintaining the proper relationship between the class members and their attorney. As the occupant of the chair, the Presiding Officer, knows, this is a particularly tough issue when it comes to class counsel who may have one real client, the class representative, with whom they deal but, in reality, class counsel calls the shots and runs the case. Class members may not even know they are involved in a lawsuit until they receive a notice of settlement and perhaps, as we heard, a coupon worth pennies on the dollar. The opportunity for abuse of that important fiduciary relationship between the lawyer and the client is very important to address. I believe one solution would be to allow members of the class to opt in instead of opting out because, indeed, in a country that says we do not promote litigation, although we certainly give fair access to courts, it just does not make much sense to me to say to the consumers: You can be a plaintiff in a lawsuit, you can actually be a party to a lawsuit and not even know about it until the lawsuit is over, which is what happens today. Consumers should not have to learn that they are members of a class action lawsuit by receiving a check for $2.38 in the mail and then find out in the morning paper that the lawyers who purported to represent them just collected $5 million. The cases and examples go on and on. It should also go without saying that the attorneys should be paid at a level commensurate with the work before them, not based on strictly a contingency fee which may, indeed, allow huge financial rewards for relatively modest work actually being done. I hope those listening, if there are any listening to my comments, understand my concerns that this modest legislation does not go far enough to remove the scandal of litigation abuse that too often plagues our civil justice system and the American economy. I hope they understand my reservations do not indicate I am not for this bill because, indeed, I am. I believe S. 5 is an important first step in reform and an important step in the right direction. In conclusion, because I know there are others who want to speak, there will be attempts to offer amendments to this bill. I know Senator Durbin, but for the loss of his voice, would have been the first to offer his amendment. I am told Senator Kennedy will be here shortly to do the same, but as everyone knows who has followed this bill-- certainly Senator Carper who has been an advocate for class action reform for some time, knows--the compromise reflected by S. 5 is a very fragile one, and it essentially depends on no amendments being made to the bill or agreed to the bill. If that happens, it is likely the bill will go promptly to the House where they will pass it, and it will go to the President's desk, and we will have an early victory for the American people in this important area. But there are a number of amendments that will be offered which, in essence, are poison pills, that if agreed to will completely destroy any opportunity we have for this modest reform. I have my own amendments that I filed, if others are offered and agreed to, which I believe are important to move the bill in the direction where I think it ought to go. But the truth is, I am refraining from urging those amendments at this time because I think this fragile compromise, as modest as it is, does represent real reform in moving the bill in the right direction. Here again, as the Washington Post editorial on August 27, 2001, points out: No portion of the American civil justice system is more of a mess than the world of class action. None is in more desperate need of policymakers' attention. That was in 2001, and certainly the situation has not changed today. I am baffled by those who want to whistle past the graveyard and act as if there is nothing wrong and that everything is just hunky-dory when it comes to class action reform. I believe the American people expect that the civil justice system will operate in their best interest, not in the best interest of a handful of lawyers. I am confident the damage that is being done to American competitiveness is killing jobs that would be created in the United States but for the fact that people do not want to subject themselves to an out-of-control class action system. So, instead, jobs are being created in other countries across the world where they do not have those same concerns. This is clearly an area that cries out for reform. It is one that is long past due. I congratulate Senator Carper and others on that side of the aisle who have worked so carefully to try to craft this fragile compromise. But I want my colleagues to understand--and I think they all do; I think we all do--that any amendments to this bill will doom it. So I urge all of my colleagues to vote against any and all amendments; indeed, even ones that I may like but which I know will have the ultimate effect of killing the bill. I think it is better to save those for another day and another time rather than have the prospect of this bill going down in flames. Mr. President, I appreciate the time and yield the floor.

Mr. CORNYN

Mr. CORNYN. Mr. President, I rise today to introduce the Fairness in Bankruptcy Litigation Act of 2005. This legislation will provide much-needed protection--for consumers, creditors, workers, pensioners, shareholders, and small businesses--by reforming the rules governing venue in bankruptcy cases to combat forum shopping. Quite simply, my bill will prevent corporate debtors from moving their bankruptcy cases thousands of miles away from the communities and their workers who have the most at stake. And it will prevent bankrupt corporations from effectively selecting the judge in their own cases-- because picking the judge isn't far off from picking the verdict. This Act is a positive step for fairness, responsibility, and justice. It implements a major recommendation from the October 1997 National Bankruptcy Review Commission report, and earned the support of prominent bankruptcy law professors and practitioners nationwide. The bill is also supported by Texas Attorney General Greg Abbott (R) and former Massachusetts Attorney General Scott Harshbarger (D); Brady C. Williamson, who served as chairman of the National Bankruptcy Review Commission; and major national bankruptcy organizations like the National Association of Credit Management and the Commercial Law League of America. With the introduction of this Act, this body will now have an opportunity to consider this growing crisis, which effects so many consumers and workers, just as we are about to examine the issue of comprehensive bankruptcy reform. Sadly, our current bankruptcy venue law has become a target for enormous abuse. It's a problem that is well documented by academics, most recently in a comprehensive book published just last week by UCLA Law Professor Lynn M. LoPucki, as well as by Harvard Law Professor Elizabeth Warren, who served as the reporter for the National Bankruptcy Review Commission, and Professor Jay L. Westbrook of the University of Texas Law School. I have personal experience with the worst kind of forum shopping. During my service to the State of Texas as Attorney General, I argued that the Enron Federal bankruptcy court proceedings should be litigated in Houston. That seemed like the common sense argument, of course-- after all, Houston was where the majority of employees and others who were victimized by that corporate scandal called home. Yet that's not where the case ended up. Instead, Enron was able to exploit a key loophole in bankruptcy law to maneuver their proceedings as far away from Houston as possible. They ended up in their desired forum in New York. See In re Enron Corp., 274 B.R. 327 (S.D.N.Y. Bankr. 2002). Enron used the place of incorporation of one of its small subsidiaries in order to file a bankruptcy claim in New York, and then used that smaller claim as the basis for shifting all of its much larger bankruptcy proceedings into that same court. The company had 7,500 employees in the Houston headquarters, but they filed for bankruptcy in New York, where Enron had only 57 employees. This kind of blatant forum shopping makes a mockery of our laws. The common-sense legislation that I've introduced today will combat such egregious forum shopping by requiring that corporate debtors file where their principal place of business or principal assets are located, rather than their state of incorporation, and forbidding parent companies from manipulating the venue by filing first through a subsidiary. Bankruptcy venue abuse is not just bad for our legal system; it hurts America's consumers, creditors, workers, pensioners, shareholders, and small businesses. Under current law, corporate debtors effectively get to pick the court in which they will file for bankruptcy. As a result, creditors can be forced to litigate far away from the real-world location, where costs and inconveniences associated with travel are prohibitive. This troubling loophole also serves to unfairly enable corporate debtors to evade their financial commitments. It badly disables consumers, creditors, workers, pensioners, shareholders, and small businesses from pursuing and receiving reasonable compensation from bankruptcy proceedings. Current law allows debtors to forum shop and thereby to pick jurisdictions likely to rule in their favor. If debtors get to pick the jurisdiction, then bankruptcy judges have a disturbing incentive to compete with other bankruptcy courts for major bankruptcy cases, by tilting their rulings in favor of corporate debtors and their attorneys. The examples are numerous. Here are three of the most prominent incidents: Polaroid. In October 2001, Boston-based Polaroid filed for bankruptcy in Delaware, listing assets at $1.9 billion. Polaroid's top executives claimed that the company was a ``melting ice cube,'' and arranged a hasty sale for $465 million to a single bidder. The court refused to hear testimony as to the true value of the company and closed the sale in only 70 days. The top executives went to work for the new buyer and received millions of dollars in stock. Meanwhile, disabled employees had their health-care coverage canceled. The so- called ``melting ice cube'' became profitable the day after the sale became final. K-Mart. In January 2002, failed top executives delivered Michigan- based K-Mart to the bankruptcy court in Chicago, which reportedly had been actively soliciting large corporate debtors to file there. With a workforce of 225,000, K-Mart had more employees than any company that had ever filed bankrupt nationwide. The Chicago judge let the failed executives take tens of millions of dollars in bonuses, perks, and loan forgiveness. Bankruptcy lawyers also profited, pocketing nearly $140 million in legal fees. But some 43,000 creditors received only about ten cents on the dollar. Worldcom. Worldcom perpetrated one of the biggest accounting frauds in history, inflating its income by $9 billion. Although based in Mississippi, Worldcom followed Enron into the New York bankruptcy court, where its managers received the same lenient treatment. No trustee was appointed; indeed, five months after the case was filed, the directors in office when the fraud occurred still constituted a majority of the board. They chose their own successors. A Top Worldcom executive used money taken from the company to build an exempt Texas homestead, and Worldcom took no action. That executive then used the homestead to buy his way out of his problems with the SEC. Meanwhile, creditors--mostly bondholders--lost $20 billion. This is not the first time we have addressed this important issue. The House Judiciary Subcommittee on Commercial and Administrative Law held a hearing on July 21, 2004, entitled ``Administration of Large Business Bankruptcy Reorganizations: Has Competition for Big Cases Corrupted the Bankruptcy System?,'' and Congressman Brad Sherman (D-CA) has previously led efforts to champion bankruptcy venue reform in the House. During the 107th Congress, Senator Durbin introduced S. 2798, the Employee Abuse Prevention Act of 2002, joined by Senators Kennedy, Kerry, Leahy, and Rockefeller, while Congressman William D. Delahunt (D-MA) introduced the same bill in the House; section 205 of that legislation would have reformed bankruptcy venue law. I believe we must take steps to respond to this important problem. The American people deserve better from our legal system. All bankruptcy cases deserve to be handled fairly and justly, and no corporate debtor should be allowed to escape responsibility by fleeing to another venue. It is high time that we take up this much-needed reform. I ask unanimous consent that letters of support be printed in the Record.

Mr. CORNYN

Mr. CORNYN. Mr. President, I rise today to introduce the Fairness in Bankruptcy Litigation Act of 2005. This legislation will provide much-needed protection--for consumers, creditors, workers, pensioners, shareholders, and small businesses--by reforming the rules governing venue in bankruptcy cases to combat forum shopping. Quite simply, my bill will prevent corporate debtors from moving their bankruptcy cases thousands of miles away from the communities and their workers who have the most at stake. And it will prevent bankrupt corporations from effectively selecting the judge in their own cases-- because picking the judge isn't far off from picking the verdict. This Act is a positive step for fairness, responsibility, and justice. It implements a major recommendation from the October 1997 National Bankruptcy Review Commission report, and earned the support of prominent bankruptcy law professors and practitioners nationwide. The bill is also supported by Texas Attorney General Greg Abbott (R) and former Massachusetts Attorney General Scott Harshbarger (D); Brady C. Williamson, who served as chairman of the National Bankruptcy Review Commission; and major national bankruptcy organizations like the National Association of Credit Management and the Commercial Law League of America. With the introduction of this Act, this body will now have an opportunity to consider this growing crisis, which effects so many consumers and workers, just as we are about to examine the issue of comprehensive bankruptcy reform. Sadly, our current bankruptcy venue law has become a target for enormous abuse. It's a problem that is well documented by academics, most recently in a comprehensive book published just last week by UCLA Law Professor Lynn M. LoPucki, as well as by Harvard Law Professor Elizabeth Warren, who served as the reporter for the National Bankruptcy Review Commission, and Professor Jay L. Westbrook of the University of Texas Law School. I have personal experience with the worst kind of forum shopping. During my service to the State of Texas as Attorney General, I argued that the Enron Federal bankruptcy court proceedings should be litigated in Houston. That seemed like the common sense argument, of course-- after all, Houston was where the majority of employees and others who were victimized by that corporate scandal called home. Yet that's not where the case ended up. Instead, Enron was able to exploit a key loophole in bankruptcy law to maneuver their proceedings as far away from Houston as possible. They ended up in their desired forum in New York. See In re Enron Corp., 274 B.R. 327 (S.D.N.Y. Bankr. 2002). Enron used the place of incorporation of one of its small subsidiaries in order to file a bankruptcy claim in New York, and then used that smaller claim as the basis for shifting all of its much larger bankruptcy proceedings into that same court. The company had 7,500 employees in the Houston headquarters, but they filed for bankruptcy in New York, where Enron had only 57 employees. This kind of blatant forum shopping makes a mockery of our laws. The common-sense legislation that I've introduced today will combat such egregious forum shopping by requiring that corporate debtors file where their principal place of business or principal assets are located, rather than their state of incorporation, and forbidding parent companies from manipulating the venue by filing first through a subsidiary. Bankruptcy venue abuse is not just bad for our legal system; it hurts America's consumers, creditors, workers, pensioners, shareholders, and small businesses. Under current law, corporate debtors effectively get to pick the court in which they will file for bankruptcy. As a result, creditors can be forced to litigate far away from the real-world location, where costs and inconveniences associated with travel are prohibitive. This troubling loophole also serves to unfairly enable corporate debtors to evade their financial commitments. It badly disables consumers, creditors, workers, pensioners, shareholders, and small businesses from pursuing and receiving reasonable compensation from bankruptcy proceedings. Current law allows debtors to forum shop and thereby to pick jurisdictions likely to rule in their favor. If debtors get to pick the jurisdiction, then bankruptcy judges have a disturbing incentive to compete with other bankruptcy courts for major bankruptcy cases, by tilting their rulings in favor of corporate debtors and their attorneys. The examples are numerous. Here are three of the most prominent incidents: Polaroid. In October 2001, Boston-based Polaroid filed for bankruptcy in Delaware, listing assets at $1.9 billion. Polaroid's top executives claimed that the company was a ``melting ice cube,'' and arranged a hasty sale for $465 million to a single bidder. The court refused to hear testimony as to the true value of the company and closed the sale in only 70 days. The top executives went to work for the new buyer and received millions of dollars in stock. Meanwhile, disabled employees had their health-care coverage canceled. The so- called ``melting ice cube'' became profitable the day after the sale became final. K-Mart. In January 2002, failed top executives delivered Michigan- based K-Mart to the bankruptcy court in Chicago, which reportedly had been actively soliciting large corporate debtors to file there. With a workforce of 225,000, K-Mart had more employees than any company that had ever filed bankrupt nationwide. The Chicago judge let the failed executives take tens of millions of dollars in bonuses, perks, and loan forgiveness. Bankruptcy lawyers also profited, pocketing nearly $140 million in legal fees. But some 43,000 creditors received only about ten cents on the dollar. Worldcom. Worldcom perpetrated one of the biggest accounting frauds in history, inflating its income by $9 billion. Although based in Mississippi, Worldcom followed Enron into the New York bankruptcy court, where its managers received the same lenient treatment. No trustee was appointed; indeed, five months after the case was filed, the directors in office when the fraud occurred still constituted a majority of the board. They chose their own successors. A Top Worldcom executive used money taken from the company to build an exempt Texas homestead, and Worldcom took no action. That executive then used the homestead to buy his way out of his problems with the SEC. Meanwhile, creditors--mostly bondholders--lost $20 billion. This is not the first time we have addressed this important issue. The House Judiciary Subcommittee on Commercial and Administrative Law held a hearing on July 21, 2004, entitled ``Administration of Large Business Bankruptcy Reorganizations: Has Competition for Big Cases Corrupted the Bankruptcy System?,'' and Congressman Brad Sherman (D-CA) has previously led efforts to champion bankruptcy venue reform in the House. During the 107th Congress, Senator Durbin introduced S. 2798, the Employee Abuse Prevention Act of 2002, joined by Senators Kennedy, Kerry, Leahy, and Rockefeller, while Congressman William D. Delahunt (D-MA) introduced the same bill in the House; section 205 of that legislation would have reformed bankruptcy venue law. I believe we must take steps to respond to this important problem. The American people deserve better from our legal system. All bankruptcy cases deserve to be handled fairly and justly, and no corporate debtor should be allowed to escape responsibility by fleeing to another venue. It is high time that we take up this much-needed reform. I ask unanimous consent that letters of support be printed in the Record.

Mr. CORNYN

Mr. CORNYN. Mr. President, would the chairman yield for a question?

Mr. CORNYN. Mr. President, in the fall of 2003, I introduced S. 1932, the Artists' Rights and Theft Prevention Act of 2003, along with my friend from California, Senator Feinstein. As introduced, the ART Act was a modest but necessary first step to combat the rampant piracy plaguing the motion picture, recording and general content industries. The Bill focuses on the most egregious form of copyright piracy plaguing the entertainment industry today--the piracy of film, movies, and other copyrighted materials before copyright owners have had the opportunity to market fully their products. Now, as part of a comprehensive package, ``the Family Entertainment and Copyright Act of 2005,'' it is even more significant. This package contains a number of targeted, important reforms that help strengthen our intellectual property laws. I rise to express my strong support for the bill and ask my colleagues to move it expeditiously. Intellectual property laws and the American businesses that rely on them deserve our strongest support. Our Nation was founded on a number of important ideas. One central one was that the value created by the work and sweat of a person should be recognized as that person's property and should be protected. Protecting the creativity and capital that American innovators invest to make our lives richer is the right thing to do. Failure to do so not only would diminish the quality of our individual lives, but our country would suffer too. Intellectual property-related industries are a central driver of our Nation's economy and a staple of our international trade. The copyright-based industries alone accounted for more than 5 percent of the U.S. GDP or $535,100,000,000 in 2001 and almost 6 percent of U.S. employment, and led all major industry sectors in foreign sales and exports in 2001, the last year for which we have figures. As the Justice Department recently has pointed out: Ideas and the people who generate them serve as critical resources both in our daily lives and in the stability and growth of America's economy. The creation of intellectual property--from designs for new products to artistic creations--unleashes our Nation's potential, brings ideas from concept to commerce, and drives future economic and productivity gains. In the increasingly knowledge-driven, information age economy, intellectual property is the new coin of the realm. . . . [Report of the DOJ Task Force on Intellectual Property, p. 7.] As the DOJ IP Task Force Report notes, America's economy relies more and more on ideas we create, not things we make. We need to protect our Nation's innovative and creative works with strong laws and enforcement of those laws because doing so is vital to our national economic security. Having noted and quoted the DOJ Report, I want to pause to thank the Justice Department and outgoing Attorney General John Ashcroft for taking these issues seriously and for taking significant steps to address them. The formation of the Intellectual Property Task Force spotlighted these issues at the Justice Department and the work of the Task Force, headed by David Israelite did a superb job in developing comprehensive and serious steps better protecting our intellectual property interests. The DOJ engaged in serious domestic and international investigations and prosecutions against digital thieves who have misused promising digital technology like the Internet to further their attacks on American businesses. General Ashcroft and the Justice Department, who deserve our gratitude for so many reasons, certainly deserve it for their efforts on this area. Having provided that foundation, let me discuss briefly some of the important provisions contained in this legislative package. We have purposefully compiled a package of legislation that strikes a balance between innovation and copyright protection. One needn't be sacrificed to encourage the other--rather they go hand-in-hand. First, I would mention the Cornyn-Feinstein ``Artist's Rights and Theft Prevention Act'' or the ART Act. Notably, it contains a provision making it a felony to record a movie in a theater. One of the principal ways that movie piracy happens is by thieves sitting in a movie theater, or bribing a projectionist to help them, and recording movies with small camcorders. These camcorded copies can then make their way around the world on the internet and usually land on the streets of cities around the world in pirated copies sold on the street, often the day the movie opens in the U.S. or even before the movie opens in many countries. All it takes is a single or a small handful of camcorded copies distributed worldwide to have a devastating effect on a movie's profitability. Movies are generally an investment of tens or hundreds of millions of dollars that rely on box office and home video and other subsequent sales to recoup this investment. A camcorded copy released early in any of these cycles can undermine the economics of this business, and especially if they hit the streets or the internet while the movie is still in theaters. This is theft, and it is theft that supports organized crime groups, and perhaps, even terrorism. It deserves to be stopped by the specter of a federal felony. Its second key provision focuses on so-called ``pre-released'' works. Because serious harm can be done to both the reputation of and market for creative products if they are pirated before they actually come to market, we have included reforms in the ART Act and this package that make it easier for the Justice Department to prosecute those who steal and distribute copies of copyrighted works on the internet before they are released to the public by their owners or authorized distributors. We make the prosecutor's job easier by allowing certain presumptions with regard to the harm caused, including the dollar amount and number of copies, necessary to allow the prosecutor to bring a felony action where the works in question are being prepared for commercial release but have not been released to the public legitimately. This is fair because no one can legitimately believe that they are within their rights copying and distributing works that are not yet available in the marketplace. Again this is a common sense concept, which deserves the support of the Congress. Also, I would mention the Family Movie Act--another important component of this package. This provision allows the use of certain, specified technology to skip or mute content that may be objectionable to certain viewers when watching a movie at home, so long as no fixed copy of the edited work is made. Very few would argue that many of the movies produced today contain significant amounts of gratuitous sex, violence, foul language or other potentially objectionable content. A number of innovative companies have stepped forward to solve this problem by providing filters that tag such scenes and allows consumers to tailor their viewing experience. This legislation is designed to solve an on-going controversy surrounding the use of such technology. Specifically, there is litigation pending over the issue of whether providing edited versions of movies to consumers creates a ``derivative work'' that violates the rights of those who created or own the copyrights and trademarks for the original movies. The existence of this controversy arguably is hampering the development of the technology that families may find helpful in protecting children from potentially objectionable content. Let me make clear that this bill is not designed to deal with ad- skipping by consumers in the home. I know that there has been some misinformation about this by groups who apparently oppose copyright protections generally, but this bill has nothing to do with anything other than using a certain kind of technology to modify the viewing experience of a movie to skip over objectionable content. Finally, the two remaining provisions--though relatively small--are not insignificant. The Film Preservation Act, legislation that I recognize is particularly important to Senator Leahy, and I thank him for his efforts in promoting it, will reauthorize a Library of Congress Program dedicated to saving rare and significant films. Additionally, we make a small but necessary change to the Sonny Bono Copyright Term Extension Act. Correction of this error will allow libraries to create copies of certain copyrighted works, such as films and musical compositions that are in the last 20 years of their copyright term, are no longer commercially exploited, and are not available at a reasonable price. Before I relinquish my time, I do want to thank a number of people who have worked tirelessly on behalf of this bill. Allow me to thank David Jones and Tom Sydnor of the staff of Chairman Orrin Hatch, who is not only our previous Judiciary Committee Chairman, but a leader on copyright and intellectual property issues; Susan Davies and Dan Fine of Senator Leahy's staff, who also has long been a leader on intellectual property issues; and finally, David Hantman of Senator Feinstein's staff, a Senator with whom I am happy to have teamed to introduce the ART Act in the last Congress. Having begun with the staff, who rarely get mentioned as much as they deserve for the great work they do, let me also thank the Senators they work for: Senators Hatch, Leahy, and Feinstein for their co- sponsorship, as well as the Majority Leader, who has taken a personal interest in this legislation and worked to make it happen.

Mr. CORNYN. Mr. President, would the Senator yield for a quick question?

Mr. CORNYN. As the chairman knows, he and I and our other cosponsors have worked throughout last Congress on the provisions of the Family Entertainment and Copyright Act of 2005 that we have introduced today. With respect to the Family Movie Act portion of the bill, I just wanted to raise the point that there had been some concern over the potential effect of the FMA on future cases involving ``ad skipping'' technologies and ask if you would have any objection to including in the record the relevant portion of the floor discussion on that issue from last Congress?

Mr. CORNYN

Mr. CORNYN. As the chairman knows, he and I and our other cosponsors have worked throughout last Congress on the provisions of the Family Entertainment and Copyright Act of 2005 that we have introduced today. With respect to the Family Movie Act portion of the bill, I just wanted to raise the point that there had been some concern over the potential effect of the FMA on future cases involving ``ad skipping'' technologies and ask if you would have any objection to including in the record the relevant portion of the floor discussion on that issue from last Congress?

Mr. CORNYN. Mr. President, would the Senator yield for a quick question?

Mr. CORNYN. Mr. President, in the fall of 2003, I introduced S. 1932, the Artists' Rights and Theft Prevention Act of 2003, along with my friend from California, Senator Feinstein. As introduced, the ART Act was a modest but necessary first step to combat the rampant piracy plaguing the motion picture, recording and general content industries. The Bill focuses on the most egregious form of copyright piracy plaguing the entertainment industry today--the piracy of film, movies, and other copyrighted materials before copyright owners have had the opportunity to market fully their products. Now, as part of a comprehensive package, ``the Family Entertainment and Copyright Act of 2005,'' it is even more significant. This package contains a number of targeted, important reforms that help strengthen our intellectual property laws. I rise to express my strong support for the bill and ask my colleagues to move it expeditiously. Intellectual property laws and the American businesses that rely on them deserve our strongest support. Our Nation was founded on a number of important ideas. One central one was that the value created by the work and sweat of a person should be recognized as that person's property and should be protected. Protecting the creativity and capital that American innovators invest to make our lives richer is the right thing to do. Failure to do so not only would diminish the quality of our individual lives, but our country would suffer too. Intellectual property-related industries are a central driver of our Nation's economy and a staple of our international trade. The copyright-based industries alone accounted for more than 5 percent of the U.S. GDP or $535,100,000,000 in 2001 and almost 6 percent of U.S. employment, and led all major industry sectors in foreign sales and exports in 2001, the last year for which we have figures. As the Justice Department recently has pointed out: Ideas and the people who generate them serve as critical resources both in our daily lives and in the stability and growth of America's economy. The creation of intellectual property--from designs for new products to artistic creations--unleashes our Nation's potential, brings ideas from concept to commerce, and drives future economic and productivity gains. In the increasingly knowledge-driven, information age economy, intellectual property is the new coin of the realm. . . . [Report of the DOJ Task Force on Intellectual Property, p. 7.] As the DOJ IP Task Force Report notes, America's economy relies more and more on ideas we create, not things we make. We need to protect our Nation's innovative and creative works with strong laws and enforcement of those laws because doing so is vital to our national economic security. Having noted and quoted the DOJ Report, I want to pause to thank the Justice Department and outgoing Attorney General John Ashcroft for taking these issues seriously and for taking significant steps to address them. The formation of the Intellectual Property Task Force spotlighted these issues at the Justice Department and the work of the Task Force, headed by David Israelite did a superb job in developing comprehensive and serious steps better protecting our intellectual property interests. The DOJ engaged in serious domestic and international investigations and prosecutions against digital thieves who have misused promising digital technology like the Internet to further their attacks on American businesses. General Ashcroft and the Justice Department, who deserve our gratitude for so many reasons, certainly deserve it for their efforts on this area. Having provided that foundation, let me discuss briefly some of the important provisions contained in this legislative package. We have purposefully compiled a package of legislation that strikes a balance between innovation and copyright protection. One needn't be sacrificed to encourage the other--rather they go hand-in-hand. First, I would mention the Cornyn-Feinstein ``Artist's Rights and Theft Prevention Act'' or the ART Act. Notably, it contains a provision making it a felony to record a movie in a theater. One of the principal ways that movie piracy happens is by thieves sitting in a movie theater, or bribing a projectionist to help them, and recording movies with small camcorders. These camcorded copies can then make their way around the world on the internet and usually land on the streets of cities around the world in pirated copies sold on the street, often the day the movie opens in the U.S. or even before the movie opens in many countries. All it takes is a single or a small handful of camcorded copies distributed worldwide to have a devastating effect on a movie's profitability. Movies are generally an investment of tens or hundreds of millions of dollars that rely on box office and home video and other subsequent sales to recoup this investment. A camcorded copy released early in any of these cycles can undermine the economics of this business, and especially if they hit the streets or the internet while the movie is still in theaters. This is theft, and it is theft that supports organized crime groups, and perhaps, even terrorism. It deserves to be stopped by the specter of a federal felony. Its second key provision focuses on so-called ``pre-released'' works. Because serious harm can be done to both the reputation of and market for creative products if they are pirated before they actually come to market, we have included reforms in the ART Act and this package that make it easier for the Justice Department to prosecute those who steal and distribute copies of copyrighted works on the internet before they are released to the public by their owners or authorized distributors. We make the prosecutor's job easier by allowing certain presumptions with regard to the harm caused, including the dollar amount and number of copies, necessary to allow the prosecutor to bring a felony action where the works in question are being prepared for commercial release but have not been released to the public legitimately. This is fair because no one can legitimately believe that they are within their rights copying and distributing works that are not yet available in the marketplace. Again this is a common sense concept, which deserves the support of the Congress. Also, I would mention the Family Movie Act--another important component of this package. This provision allows the use of certain, specified technology to skip or mute content that may be objectionable to certain viewers when watching a movie at home, so long as no fixed copy of the edited work is made. Very few would argue that many of the movies produced today contain significant amounts of gratuitous sex, violence, foul language or other potentially objectionable content. A number of innovative companies have stepped forward to solve this problem by providing filters that tag such scenes and allows consumers to tailor their viewing experience. This legislation is designed to solve an on-going controversy surrounding the use of such technology. Specifically, there is litigation pending over the issue of whether providing edited versions of movies to consumers creates a ``derivative work'' that violates the rights of those who created or own the copyrights and trademarks for the original movies. The existence of this controversy arguably is hampering the development of the technology that families may find helpful in protecting children from potentially objectionable content. Let me make clear that this bill is not designed to deal with ad- skipping by consumers in the home. I know that there has been some misinformation about this by groups who apparently oppose copyright protections generally, but this bill has nothing to do with anything other than using a certain kind of technology to modify the viewing experience of a movie to skip over objectionable content. Finally, the two remaining provisions--though relatively small--are not insignificant. The Film Preservation Act, legislation that I recognize is particularly important to Senator Leahy, and I thank him for his efforts in promoting it, will reauthorize a Library of Congress Program dedicated to saving rare and significant films. Additionally, we make a small but necessary change to the Sonny Bono Copyright Term Extension Act. Correction of this error will allow libraries to create copies of certain copyrighted works, such as films and musical compositions that are in the last 20 years of their copyright term, are no longer commercially exploited, and are not available at a reasonable price. Before I relinquish my time, I do want to thank a number of people who have worked tirelessly on behalf of this bill. Allow me to thank David Jones and Tom Sydnor of the staff of Chairman Orrin Hatch, who is not only our previous Judiciary Committee Chairman, but a leader on copyright and intellectual property issues; Susan Davies and Dan Fine of Senator Leahy's staff, who also has long been a leader on intellectual property issues; and finally, David Hantman of Senator Feinstein's staff, a Senator with whom I am happy to have teamed to introduce the ART Act in the last Congress. Having begun with the staff, who rarely get mentioned as much as they deserve for the great work they do, let me also thank the Senators they work for: Senators Hatch, Leahy, and Feinstein for their co- sponsorship, as well as the Majority Leader, who has taken a personal interest in this legislation and worked to make it happen.