Dianne Feinstein

Mrs. FEINSTEIN

Mrs. FEINSTEIN. Mr. President, I rise to speak about charges that the ongoing filibuster against Miguel Estrada is somehow unconstitutional, as some have claimed. I take this job very seriously, and it is not often that I support preventing an up or down vote on any issue. In fact, this is the only time I have ever supported a filibuster against a judicial nominee, and I do so for very specific reasons, as do so many of my Democratic colleagues. Contrary to the charges we have been hearing over the last few days, I believe this filibuster is precisely what the Founders of this Nation had in mind when they created a three-branched system of government with checks, balances, advice and consent. This filibuster is not about preventing a conservative nominee from getting onto the court. Rather, this filibuster is about a failure of this administration to adequately seek the advice and participation of the U.S. Senate in the judicial nominations process, particularly with regard to this nominee. I have spoken several times about Mr. Estrada specifically, and each time I have been clear, as have my colleagues--this is a nominee about whom we know very, very little, and he and this administration have simply not done enough to give us the kind of information we need to properly perform our constitutional duty of advice and consent. Because we are prevented from performing this constitutional duty, we have been forced to resort to a procedure, well within the Senate rules and by no means unprecedented, to enforce those rights. The filibuster is one of the key devices throughout our nation's history that has protected the right of the minority party, or even of one Senator. Without a filibuster right on nominations, there might never be advice and consent at all. And that would turn the Constitution on its head. My colleagues on the other side of the aisle have attempted to make much of the fact that the Constitution does not provide for a ``super- majority'' vote on nominations, unlike constitutional amendments or treaties. This is true--the Constitution is silent on the issue of how many votes a nomination should take. But the Constitution is equally silent about how many votes it would take to proceed to other measures as well--a patient's bill of rights, for example. Or a ban on human cloning. Or the assault weapons ban. Or education bills. Or even major civil rights legislation. Yet nobody argues that it would be unconstitutional for one or more Senators to filibuster these bills. Unwise, perhaps. Subject to public outcry, maybe. A legitimate subject of reasoned debate, absolutely. But unconstitutional? No. Now let me address the issue of whether this filibuster is ``unprecedented,'' as some have charged. If we look at the facts, we soon see that the only really unprecedented aspect of this filibuster may be its success. Many have tried, but few have succeeded. And this may be a good indication of how strongly we feel about enforcing our constitutional role of advice and consent to this and other nominations now before us. The majority now argues that any filibuster of a judicial nominee is unconstitutional because it essentially establishes a new, 60-vote threshold for judicial nominees. But this 60-vote threshold has long been in place for controversial nominees facing objections from one or more Senators. Again, the only real difference between the situation with Miguel Estrada and the situations where cloture votes were required on other nominees is that here, today, there are not enough votes to meet that 60-vote threshold. The procedure is the same--a cloture vote. The debate is the same--over a nomination to the federal judiciary. Only the outcome is different, and I don't see how the outcome can determine the constitutionality of the process. Let me list some other filibusters and cloture votes throughout recent history. In 1968, Abe Fortas was actually prevented from becoming Chief Justice of the Supreme Court by filibuster. The other side may argue that this was a bipartisan filibuster, and they are right--but this is not the point. The point is, a filibuster was used as a tool, and the nomination failed. In 1980, Stephen Breyer had to go through two cloture motions to obtain a seat on the First Circuit--to debate, Miguel Estrada has only had one cloture vote. In 1994, a cloture vote finally stopped a filibuster against Rosemary Barkett, a nominee to the 11th Circuit. In 1994, H. Lee Sarokin's nomination to the Third Circuit required a cloture vote before it could proceed. In 2000, the nominations of both Marsha Berzon and Richard Paez to the Ninth Circuit Court of Appeals--nominations which had been stopped dead in their tracks literally for years by that time--underwent cloture votes. Richard Paez had waited for more than 1,500 days before he was given that cloture vote. To be perfectly frank, hearing these charges from the other side of the aisle is surprising given how many other Clinton nominees were stopped cold by secret holds and other parliamentary tactics, both in committee and on the floor. For instance, Elena Kagan was a Clinton nominee to the D.C. Circuit Court of Appeals--the same circuit to which Miguel Estrada is now nominated. In fact, Ms. Kagan was Miguel Estrada's supervising editor on the Harvard law review, yet Republicans stopped her nomination cold without even getting to the point of a filibuster, or a public accounting of who was for, and who was against, that nominee. Elena Kagan was never filibustered on the floor, but she was effectively ``filibustered'' in committee by one or two Senators who prevented a hearing or a committee vote. Other nominees to the circuit courts who were denied hearings or committee votes include Helene White for the Sixth Circuit, Jorge Rangel for the Fifth Circuit, Bonnie Campbell for the Eighth Circuit, and the list goes on and on. In fact, dozens of Clinton nominees were blocked in committee by anonymous holds or other obstructionist tactics, so there was no need for a filibuster on the floor. It is most surprising to hear these charges of unconstitutionality from the other side of the aisle, given that many of my Republican colleagues actually participated in filibusters against Clinton nominees. Richard Paez, for example, was one of President Clinton's Hispanic nominees to the circuit court, and he could not move on the floor until a cloture petition was filed. When the vote finally came to end the filibuster, the majority of the Senate voted to do so and Richard Paez is now a federal judge. But many of my Republican colleagues voted to continue that filibuster, just three short years ago. Indeed, almost exactly three years ago, on March 8, 2000, fourteen Republican Senators voted to continue the filibuster against Richard Paez, including some of those who now argue that filibusters themselves are unconstitutional. And when the cloture vote came on that same day for Marsha Berzon, another Clinton nominee who waited years for a hearing and up or down vote, thirteen Republican Senators voted to continue that filibuster as well. How can these Senators now argue that this filibuster is unconstitutional? Is it only unconstitutional when Democrats filibuster a nominee, but constitutional for Republicans to do the same? Is it only unconstitutional if the filibuster succeeds? The fact is, this filibuster is very constitutional, and in fact it may even be necessary to enforce the constitution's other provisions, such as the advice and consent power granted to the U.S. Senate. I do not relish where we find ourselves today, nor do any of my colleagues--on either side of the aisle. We stand poised to enter a war against Iraq, and under the constant threat of international terrorism. Our budgets are running at record deficits, the economy is still in trouble, and we recently reorganized our entire homeland security apparatus. All of these issues require the attention in this body. The nominations debate is clearly very important to the future of our judiciary and to the rule of law for decades to come, and there is no question that this issue should not, can not, and will not, be ignored. But we should be concentrating our efforts, and our limited resources in terms of time, staff and attention, on these other important issues as well. It is clear now that Miguel Estrada will not become a federal judge unless our requests are met. Any further debate on this nominee is really a distraction from the many other important issues we should address. I appreciate the attendance of the distinguished Vice President of the United States here today, and I appreciate the gravity of this debate. But I urge the Republican leader and my colleagues to move beyond this debate so we can resolve these other, very important issues.

Mrs. FEINSTEIN

Mrs. FEINSTEIN. Mr. President, in the mid-1960s, during the height of the Vietnam War, the Department of Defense commissioned a study to determine the feasibility and advisability of the use of tactical nuclear weapons in that conflict. A copy of that 1967 study, ``Tactical Nuclear Weapons in Southeast Asia'', has just been declassified, and lays out in terrifying detail what might have happened if the United States had used tactical nuclear weapons during the Vietnam war. The bottom line of the study is that the use of nuclear weapons in Vietnam--to block the Ho Chi Minh trail, kill large numbers of enemy soldiers, or destroy North Vietnamese air bases and seaports--would have offered no decisive military advantages to the United States but would have had grave repercussions for US soldiers in the field and US interests around the world. The study was prepared by four physicists associated with the Jason Division of the Institute of Defense Analyses, a group of scientists who met frequently to provide classified advice to defense officials. The study's conclusions were presented to then-Secretary of Defense Robert McNamara. ``The political effects of US first use of TNW (tactical nuclear weapons) in Vietnam would be uniformly bad and could be catastrophic,'' the scientists wrote. They warned that US first-use of tactical nuclear weapons could lead China or the Soviet Union to provide similar weapons to the Viet Cong and North Vietnam, raising the possibility that US forces in Vietnam ``would be essentially annihilated'' in retaliatory raids by nuclear- armed guerrilla forces. If that happened, they wrote, ``insurgent groups everywhere in the world would take note and would try by all available means to acquire TNW for themselves.'' First-use of nuclear weapons in Southeast Asia, the scientists warned, was ``likely to result in greatly increased long-term risk of nuclear guerrilla operations in other parts of the world,'' including attacks on the Panama Canal, oil pipelines and storage facilities in Venezuela and the Israeli capital of Tel Aviv. ``US security would be gravely endangered if the use of TNW by guerrilla forces should become widespread,'' they concluded. Thirty-six years later some American officials are, according to press reports, once again contemplating the use of nuclear weapons, and seeking to repeal US prohibitions on the developments of smaller nuclear weapons, including so-called ``low-yield'' bombs and deep- penetration ``bunker-busters.'' Writing recently in the Los Angeles Times, military analyst William Arkin disclosed the US Strategic Command in Omaha and the Joint Chiefs of Staff are secretly drawing up nuclear target lists for Iraq. ``Target lists are being scrutinized, options are being pondered and procedures are being tested to give nuclear armaments a role in the new U.S. doctrine of `preemption,' '' Arkin reported. There have also been reports that tactical nuclear weapons, particularly ``bunker busters,'' have been considered by Pentagon planners in the context of the escalating nuclear crisis with North Korea. Moreover, many US analysts believe there is a great danger that North Korea, if its survival was at stake, would be willing to sell its nuclear arsenal to the highest bidder. North Korea itself apparently believes the United States may be planning nuclear strikes of its own, and on March 1 warned that a war on the Korean peninsula would quickly ``escalate into a nuclear war.'' I sincerely believe that any first use of nuclear weapons by the United States cannot and should not be sanctioned. As the Jason scientists argued in the 1960s, U.S. nuclear planning could serve as a pretext for other countries and, worse, terrorist groups such as al- Qaida, to build or acquire their own bombs. If we are not careful, our own nuclear posture could provoke the very nuclear-proliferation activities we are seeking to prevent. This study, ``Tactical Nuclear Weapons in Southeast Asia'', was released this past weekend by the Nautilus Institute of Berkeley, CA, and I would urge those with an interest in reading it in full to contact them directly. The conclusions of the Jason report are as valid, realistic and frightening today as they were in 1967. As we contemplate the future course of our nation's national security policy, I believe that it is important to look at past events, to learn from them, and to benefit from the counsel of history.

Mrs. FEINSTEIN

Mrs. FEINSTEIN. Mr. President, today commemorates the forty-fourth anniversary of the 1959 ``Lhasa Uprising.'' I offer my comments today in the sincere hope that it will promote a constructive dialogue between Chinese and Tibetan leaders, and with the goal of ending the bitter divisiveness now plaguing relations between China and Tibet. When, following the Chinese invasion in 1949-1950, Tibet was established as an autonomous region in the People's Republic of China, the Tibetan people were granted the right of autonomy in determining the shape of their religious, cultural and social institutions. China's leadership is on record as agreeing to this principle. Unfortunately, between 1951 and 1959 the government of the People's Republic of China did not uphold these guarantees of autonomy, leading to the 1959 Lhasa Uprising and the flight of the Dalai Lama from Tibet. During the past 44 years, tens of thousands of Tibetans have been forced to flee their homeland in the face of continued Chinese repression and violation of their right to religious and cultural autonomy. I find this a tragedy. Nonetheless, the Dalai Lama, in seeking to engage with China's leadership to discuss the future of the Tibetan people, has specifically cited that he is not seeking independence for Tibet, that he is willing to confine his discussions to achieving cultural and religious autonomy for his people, and that he is willing to negotiate within the framework enunciated by Deng Xiaoping in 1979. Indeed, in his statement today on the ``44th Anniversary of the Tibetan National Uprising,'' the Dalai Lama stated that ``As far back as the early seventies in consultation with senior Tibetan officials I made a decision to seek a solution to the Tibetan problem through a ``Middle Way Approach.'' This framework does not call for independence and separation of Tibet. At the same time it provides genuine autonomy for the six million men and women who consider themselves Tibetans to preserve their distinctive identity, to promote their religious and cultural heritage that is based on a centuries-old philosophy which is on benefit even in the 21st century, and to protect the delicate environment of the Tibetan plateau. This approach will contribute to the overall stability and unity of the People's Republic of China.'' Over the past 12 years I have made every effort to encourage rapprochement between China and Tibet, including helping to pass messages from His Holiness, the Dalai Lama to China. I believe the Dalai Lama is absolutely sincere in his desire to negotiate a peaceful solution to what has been a great tragedy for the Tibetan people. This past September the Chinese government made it possible for two envoys of the Dalai Lama to visit Beijing to re-establish direct contact with the Chinese leadership, and to visit Tibet to meet with local Tibetan officials. This trip was, in my view, very significant, very encouraging, and very meaningful. Nonetheless, much remains to be done if the people of Tibet are to achieve freedom and autonomy in determining the shape of their society. It is my sincere hope that China's new leadership will extend the hand of cooperation in resolving differences with Tibet.

Mrs. FEINSTEIN

Mrs. FEINSTEIN. Mr. President, no one can deny the contributions women and children have made to this country and the world. In government, business, education, medicine, the arts, and athletics, women have met and exceeded the great challenges placed before them. It is altogether fitting, then, that we set aside one day every year to pay tribute and acknowledge these accomplishments: March 8, 2003 is International Women's Day. On this day, we celebrate the progress women and girls have made over the years, but we also renew our commitment to create a better world and bestow a better future to women and girls in every country. We must not rest on our laurels until all women and girls enjoy basic human rights and have the opportunity to fulfill their life dreams. Rarely does a day go by when we do not hear the news of a woman fighting for those rights and those dreams, whether it be a girl struggling to get an education in Afghanistan, a mother desperately seeking to provide for her children in sub-Saharan Africa, or a woman expressing her views in the streets of Venezuela. We who enjoy the blessings of liberty and democracy have an obligation to raise our voice on behalf of these women and girls to let them know that they are not alone and we are fighting for them. All over the world, women and girls are looking to the United States for leadership and I would like to take this time to address several critical issues that I believe are vital to their lives: international family planning assistance, the Convention on the Elimination of All Forms of Discrimination Against Women, CEDAW, rape as an instrument of war, and the plight of women in Afghanistan. Honest differences of opinion exist on this issue, but I believe that those of us in Congress who support a robust package of U.S. assistance to international family planning organizations must not back down. I was dismayed when on July 22, 2002 Secretary of State Colin Powell decided to withhold the $34 million U.S. contribution to the United Nations Population Fund, UNFPA--an amount allocated to it by law and after months of negotiation and with bipartisan support--because he determined that UNFPA participated in coercive family planning programs in China. The administration's decision to withhold the funds and withhold $25 million for Fiscal Year 2003 runs counter to common sense and counter to the findings of its own investigative team. Just over a month earlier a three member State Department team investigated UNFPA programs in China and concluded quite clearly that there was no evidence that UNFPA supported or participated in coercive family planning programs and recommended that it receive the full U.S. $34 million contribution. Nevertheless, the Administration chose to ignore these findings and, in doing so, struck a terrible blow to U.S. leadership in combating overpopulation. One can not underestimate the importance of family planning assistance, especially for the poor. The United Nations estimates that the world's population will double to 12 billion by the year 2050. Most of this growth will occur in countries least able to sustain it and educational and medical services will suffer greatly as a result. In the age of global terrorism where groups such al-Qaida find new recruits among the poor, the sick, and the uneducated, this is especially troubling. No woman should be prevented from receiving the assistance she deserves to plan and care for healthy families. When we help them, we reduce poverty, improve health, and raise living standards. Each and every dollar the United States spend on international family planning assistance--none of which, I might add, is spent on international abortion--is one less dollar we will have to spend on costlier interventions in the future. So many of my colleagues share my view and together we must work harder to ensure that the United States reclaims its leadership role on international family planning and reproductive issues. On International Women's Day, I urge my colleagues to support full funding for the UNFPA and other international family planning programs. Sadly, another year has gone by and the United States still has not yet ratified the Convention to Eliminate All Forms of Discrimination Against Women. As Americans, we can no longer afford to ignore this important document and put in jeopardy our status as a leader in advancing human rights for women and girls. Given that it has been over 20 years since President Carter signed the Convention, one might think that the delay in ratification is due to the fact we are dealing with a treaty that requires years of study and consideration. Yet the Convention simply requires that participating states take all appropriate steps to eliminate discrimination against women in political and public life, law, education, employment, health care, commercial transactions, and domestic relations. We are alone among the leading democracies in our failure to ratify. In fact, our partners outside the Convention include Iran, North Korea, and Sudan. Are these the countries with whom we share our values of democracy, freedom, and respect for human rights? Are these the countries we can count on in the international arena? Women and girls around the world who turn to the United States for leadership in advancing their rights are mystified that we do not take the simple step of ratifying the Convention. When we do, the sky will not fall, the sun will rise in the morning, and the Constitution will still be the law of the land. By ratifying the Convention, the United States will reclaim its leadership status as a champion of the rights of women and girls and send a strong signal of warning to those states who abuse those rights. On International Women's Day, I call on my colleagues in the Senate to move forward and ratify the Convention. The use of rape as an instrument of war is a gross violation of the basic human rights of women and girls and I have worked hard over the years to raise awareness about this issue. The United States must work closely with our friends and allies in the international community to eliminate this practice once and for all. We have seen far too often in recent years how soldiers have used rape in an organized, systematic, and sustained manner to intimidate, spread fear, and ethnically cleanse entire communities. In Bosnia, Rwanda, and East Timor, women were kidnaped, interned in camps and houses, forced to do labor and subjected to frequent rape and sexual assault. Those who committed these crimes did not believe that anyone was watching. They were wrong. On February 22, 2001, the international tribunal in the Hague sentenced three Bosnian Serbs to prison for rape during the Bosnian war. Judge Florence Mumba of Zambia stated, ``Lawless opportunists should expect no mercy, no matter how low their position in the chain of command.'' Last year, in response to a report co-authored by the Shan Women's Action Network and the Shan Human Rights Foundation, I and 31 other Senators wrote to UN Secretary General Kofi Annan to urge him to investigate rape cases by Burmese soldiers between 1996 and 2001 involving 625 women and girls. The report was based on interviews with refugees on the Thai-Burmese border. It found that the rapes were committed mostly by officers in front of their troops and that 61 percent were gang rapes and 25 percent ended in the murder of the victims. The victims included girls as young as 5 years old. The Burmese junta did not make a serious effort to investigate the cases. It called the report ``totally false and unjust'' and sought to discredit the authors. Those who committed these heinous crimes in Burma must be brought to justice. The United States and the international community must continue to put pressure on the Burmese regime to come clean and take substantive action to punish those responsible. I commend the victims who overcame their fears to report what happened in Burma. I am hopeful more women and girls who have suffered the same crime will come forward and speak up. On International Women's Day, I urge the administration and our friends and allies to join me in continuing the fight to end the practice of rape as an instrument of war. The situation for most women and girls in Afghanistan has improved since the fall of the Taliban. Nevertheless, there is still a great deal of work to be done and I am concerned that the administration is not paying enough attention to the reconstruction of Afghanistan in general and the condition of women and girls in particular. The United States Congress made a strong statement in support of the women and girls of Afghanistan by passing the ``Afghan Women and Children Relief Act of 2001'' and the ``Afghan Freedom Support Act of 2002''. Now we must follow up with sufficient funding. I was proud to co-sponsor an amendment to the Fiscal Year 2003 Omnibus appropriations bill that directed $8 million of the money appropriated for humanitarian aid to Afghanistan towards programs that support women's development: $5 million to the Ministry of Women's Affairs, $1.5 million to the Human Rights Commission, and the rest to USAID. The future for women and girls in Afghanistan is by no means assured. There are credible reports that in Herat, the local governor Ismail Khan has censored women's groups, intimidated women leaders, and removed women from his administration. In all parts of Afghanistan, women still fear abuse from authorities, avoid attending school, and face undue harsh restrictions. I am particularly concerned to learn of reports that police in Herat are detaining women and girls caught with unrelated men and forcing them to undergo medical examinations to determine if they recently had sexual intercourse. I and my colleague from California, Senator Boxer, wrote to Secretary of Defense Donald Rumsfeld and Secretary of State Colin Powell urging them to put pressure on Ismail Khan to stop these practices and do more to protect the rights of women and girls. Our victory in Afghanistan will be lost if women and girls are not afforded basic human rights. On International Women's Day, let us reaffirm our commitment to them for a better future and let us let them know that we will not turn our backs on them again. We must debate and ratify the Convention on the Elimination of All Forms of Discrimination Against Women. We must rededicate ourselves and our resources to international family planning programs. We must not ignore the use of rape as an instrument of war. We must help the women and girls of Afghanistan realize their hopes and dreams. We cannot afford to remain silent. We cannot afford to place women's rights on a second tier of concern of U.S. foreign policy. On International Women's Day, the United States and the international community must take a strong stand and issue a clear warning to those who attempt to rob women of basic rights that the world's governments will no longer ignore these abuses, or allow them to continue without repercussion.

Mrs. FEINSTEIN

Mrs. FEINSTEIN. Mr. President, I rise today to offer this amendment. I recognize that the leadership is not accepting amendments. I accept that. I am a supporter of the treaty, and I am happy to cast my vote for it. But there is one significant omission from this treaty, and I want to point out that omission. That omission is that we have literally thousands of nuclear missiles on hair trigger alert. The Russian Federation has thousands of nuclear missiles on hair trigger alert. This treaty does not take that into consideration and does not urge or does not certify a reduction of the alert status of these missiles. I believe if we fail to address this issue, we risk the lives of millions of people over what may turn out to be a simple miscalculation. People hearing me might say, how can that possibly happen? I would like to explain how it can happen. On the morning of January 25, 1995, the Russian military initially interpreted the launch of a U.S. weather rocket from Norway as a possible nuclear attack on the Russian Federation. That is just 8 years ago. Thankfully, the true nature of the launch became known and a catastrophic mistake was averted. Nevertheless, then-President Yeltsin and his advisers had only minutes to decide whether the launch of a weather rocket was a surprise attack because Russia, like the United States, maintained and continues to maintain thousands of nuclear weapons on high alert status, ready to be launched at a moment's notice. This was not the only instance in which both countries have come close to the unthinkable. On at least two occasions in the United States and at least one occasion in Russia, false alarms could have led to the accidental launch of nuclear weapons. Today, Russia and the United States are entering into a new era of relations. We do so with the advent of this treaty. A deliberate nuclear strike by either side is unthinkable. In fact, the administration states the brevity of the Moscow Treaty and the lack of verification, timetables, and a list of specific weapons to be destroyed, is due to the fact that Russia and the United States are no longer strategic competitors but today we are strategic allies. So fear and suspicion have been replaced by trust, cooperation, and friendship. It is surprising, then, that the United States and Russia continue to maintain their nuclear arsenals on this high alert status. It is surprising the Moscow Treaty, a symbol of the new relationship, in the words of the administration, does not address this issue. In the past, President Bush has recognized the dangers of high alert status and the need to reevaluate our nuclear weapons. As a candidate, he stated in a speech on May 23, 2000: Keeping so many weapons on high alert may create unacceptable risks of accidental or unauthorized launch. Experts on nuclear weapons issues have expressed similar concerns. In his testimony on the Moscow Treaty before the Senate Foreign Relations Committee, former Senator Sam Nunn stated that the alert status: . . . may well be more important to stability and security than the actual number of nuclear weapons. He likened the issue to two families who have agreed to reduce the number of high-powered automatic weapons aimed at each other in several years' time but in the meantime decide to keep the weapons loaded with a finger on the trigger. Former Secretary of Defense William Perry testified that the Moscow Treaty's failure to address the alert status of the United States and Russia's nuclear weapons represented a significant missed opportunity. He concurred with retired Air Force GEN Eugene Habiger, former commander in chief of the U.S. Strategic Command, who recommended that the United States take a first step by immediately standing down all nuclear weapons systems that will not be operationally deployed under the Moscow Treaty. If you will note, the amendment I have sent to the desk does not say this should be unilateral, on our part only; it says a bilateral reduction of alert status of operational nuclear weapons deployed today. I believe we should take the words of the general, of the very respected Senator Nunn, and former Defense Secretary Bill Perry and take some action. A miscalculation, in Senator Nunn's scenario, would result in the loss of a few lives from these automatic weapons in a family feud situation, but a miscalculation between Russia and the United States could result in the loss of millions of lives. De- alerting will give the leaders of the United States and Russia sufficient time to evaluate fully a situation before making a decision on a nuclear response in a matter of minutes or seconds, and it would greatly reduce the possibility of an accidental nuclear launch due to false alarm and miscalculation. The amendment I sent to the desk encourages the President, within 180 days of exchange of instruments and ratification, to initiate in a safe and verifiable manner a stand-down from alert status of all nuclear and Russian nuclear weapons systems that will not be operationally deployed under the treaty. In other words, the treaty calls for removing the operational deployment. But in the meantime all these missiles remain on high alert status--hair trigger alert status. The amendment would urge the President to call on the Russian Federation to reciprocate in kind, and the amendment asks that a representative of the executive branch of the Government offer regular briefings to the Committee on Armed Services and the Committee on Foreign Relations of the Senate on three specific topics: First, the alert status of the nuclear forces of the United States and Russia; second, any determination of the President to order a standdown of the alert status on the U.S. nuclear forces; third, any progress in establishing cooperative measures with Russia to effect a standdown of Russia's nuclear forces. There is a precedent for de-alerting our nuclear weapons and prompting the Russians to do likewise. In 1991, as the Soviet Union began to crumble, then-President Bush ordered a unilateral standdown of the U.S. strategic bombers and de-alerted some missiles scheduled for deactivation under the START treaty. Soviet President Gorbachev at that time reciprocated with similar measures, and the world breathed a little easier during those turbulent times. So there is precedent for their de-alerting missiles. And I believe that this Moscow Treaty, which is based on friendship, trust, and cooperation, necessitates an increased de-alerting status of the literally thousands of nuclear weapons that remain in their silos on a hair trigger alert. The amendment is simple and straightforward. We can take it very easily. I very much regret that we are in a no-amendment scenario. What I hope to do and my cosponsors hope to do is enter into a colloquy in the Record indicating support for this measure and, second, we will draft a letter and try to get as many signatures from other Senators as we can. I believe this treaty, which should be ratified by this Senate today, has this significant oversight. I believe that to leave these missiles on hair trigger alert status when we enter into this treaty really downgrades the treaty. If we truly trust, if we truly want to be cooperative, and if we truly are friends, friends don't aim loaded guns at each other with the triggers pulled back. I am hopeful that the administration would respond and begin a discussion between President Putin and President Bush to see if we cannot reach a bilateral de-alerting of the literally--probably more than--10,000 missiles that will remain with nuclear warheads on hair trigger alert. Amendment No. 251 Withdrawn I ask unanimous consent that the amendment be withdrawn. I yield the floor.

Mrs. FEINSTEIN. I send an amendment to the desk on behalf of Senators Leahy, Wyden, Harkin, and myself.

Mrs. FEINSTEIN. I ask unanimous consent the reading of the amendment be dispensed with.

Mrs. FEINSTEIN. Mr. President, I suggest the absence of a quorum.

Mrs. FEINSTEIN

Mrs. FEINSTEIN. In addition to recommending an ``immediate standdown'' in the alert status of the nuclear forces reduced under this treaty, it is my understanding that in his testimony, General Habiger also suggested that a system to take weapons off alert status in ways that make sense, are transparent, and do not compromise our security be designed by teams by people who actually build the weapons. Given this commonsense recommendation--and the failure of the treaty to address this question--I would like to ask the Senator what action he would recommend the Senate take to make General Habiger's suggestion a reality? What measures, if any, does he plan to address this issue in an appropriate manner this Congress?

Mrs. FEINSTEIN. Mr. President, I wish to ask the Senator from Delaware and the Senator from Indiana some questions about one of the issues that was raised during the hearings conducted by his committee on this treaty, and one of the questions not addressed by this treaty that I believe to be critical to reducing the danger of accidental or unauthorized nuclear war: the alert status of U.S. and Russian nuclear forces. Like me, I know that they are concerned that the current alert status of U.S. and Russian nuclear forces leaves open the possibility that, by continuing to maintain those nuclear forces that will not be operationally deployed under the Moscow Treaty on so-called hair trigger alert status, we increase the chances of an accidental or mistaken launch of nuclear weapons or, worse still, provide additional vulnerability to terrorist who might seek to hack into our nuclear command and control system and launch weapons. I was pleased to note that the report of the Foreign Relations Committee on this treaty addresses the concerns that the alert status issue creates for crisis stability raised by former Senator Nunn, and the suggestion made by Gen. Eugene Habiger, the former Commander in Chief of U.S. Strategic Command that ``We may have to find a way to move more weapons off alert status''. What are the views of the Senator from Delaware and the Senator from Indiana on this issue, and the desirability of moving nuclear weapons off alert status?

Mrs. FEINSTEIN. I thank the Senator from the Delaware and the Senator from Indiana for their leadership and hard work on this issue, and I look forward to continuing to work with him, on additional legislation, if need be, to pursue this initiative.

Mrs. FEINSTEIN. Mr. President, I rise today to express my support for ratification of the Moscow Treaty which will require the United States and Russia to reduce the number of strategic nuclear warheads to 1,700 and 2,200 each by December 31, 2012. This treaty marks an important step forward in the relationship between the United States and Russia and reduces the dangers posed by strategic nuclear weapons. Nevertheless, I am concerned that the treaty does not go far enough and I believe its flaws must be addressed if we truly want to make the threat of nuclear war a thing of the past. It should be pointed out that at one time the administration did not even want a treaty, preferring to reach a ``gentleman's agreement'' with Russia instead. I am pleased that President Bush changed course and recognized the value in committing the reduction of strategic nuclear warheads to a binding, legal document. That document now before us is welcome but its brevity--all of three pages--indicates that certain issues were left out or swept aside. First, the treaty does not actually require the United States or Russia to destroy any nuclear warhead. Either side may comply with the provisions of the treaty simply by ``deactivating'' the warhead and placing it in storage for possible redeployment. And, each side reserves the right to decide what exactly ``deactivation'' means. This runs counter to the whole point of reducing the dangers of nuclear weapons by eliminating them once and for all. Have we really made a step forward in securing a better world for ourselves and future generations if both sides can re-arm at a moment's notice? And have we really made progress if the actual number of warheads destroyed is rather small? Russia, for one, simply can not afford to maintain its current number of strategic nuclear warheads. But I am concerned that if we do not actively destroy more of our strategic nuclear warheads, Russia may feel compelled to keep more of its own, thus diverting valuable resources away from more pressing needs. And, I think everyone recognizes that Russia's ability to safely and securely store any warheads is far less than our own and the potential that they may fall into the wrong heads much higher. Second, the treaty does not contain a detailed verification regime to judge compliance with its provisions. The treaty only mentions the creation of a Bilateral Implementation Commission that will meet twice a year. No more. The START Treaty, in contrast, contained provisions on detailed notifications, regular data exchanges, onsite inspections, and continuous monitoring of select facilities. President Reagan was found telling his Soviet counterparts that when it came to reducing the number of nuclear weapons, his motto was ``Trust, but verify.'' Though the Soviet Union is no more and Russia and the United States have a new relationship based on friendship and cooperation, I believe President Reagan's words still ring true. Eliminating nuclear warheads is serious business and it is beneficial and, necessary, even for friends, to closely monitor, and verify, the progress of each side. We will enhance and deepen the trust and cooperation between Russia and the United States by doing so. So, I would urge the administration to use the Bilateral Implementation Commission as a forum for negotiating a detailed verification regime. Third, there is no timetable for implementation and no mileposts to judge progress before the Treaty expires. The only date and milepost mentioned is the deadline to reach 1,700 to 2,200 strategic nuclear warheads by December 31, 2012. Thus, over a 10-year period, with no verification regime, we will have no indication on how Russia is achieving the goals of the treaty until the very day it is bound to reach those goals. And then the treaty expires unless both sides agree at some point to extend it. Again, trust and cooperation are built on verification and openness. I urge the administration to press for detailed timetables and mileposts to ensure that both sides are actively complying with the provisions of the treaty and will reach the final marker at the stated time. Fourth, the treaty does not address tactical nuclear weapons. As my colleagues know, there is a great deal of uncertainty about the number, location, and secure storage of Russian tactical nuclear weapons. Smaller and more portable than strategic nuclear weapons, they are vulnerable to theft or sale to terrorist groups. Yet, the treaty does not even mention them. This is a glaring oversight and the dangers posed by tactical nuclear weapons--especially now in the post-September 11 world of global terrorism--warrants the immediate attention and action by both Russia and the United States. I urge the administration to press for an accurate accounting of and adequate safeguards for tactical nuclear warheads and to work towards reducing their number. Finally, the treaty does not address the alert status of our nuclear forces. I offered, and withdrew, an amendment to address this issue earlier. Suffice to say that I am very concerned that in this era of a new relationship between the United States and Russia, we still keep our nuclear weapons on high alert or hair trigger status. This greatly increases the chances of an accidental or unauthorized launch or miscalculation which would result in unthinkable devastation. Clearly there are problems with this treaty but I will vote for ratification because it is a step forward towards the goal of reducing the dangers posed by strategic nuclear weapons. But there is a lot of work to be done to make this Treaty truly worthwhile. As our former colleague Senator Sam Nunn stated in hearing held by the Senate Foreign Relations Committee on the Moscow Treaty: If [the Treaty] is not followed with other substantive actions it will become irrelevant at best and counterproductive at worst. I hope the administration will take these words to heart and get to work on the important issues left out of the treaty so that we will be able to leave a world for future generations safer from the horror of nuclear war.

Mrs. FEINSTEIN

Mrs. FEINSTEIN. Mr. President, I rise today to submit a resolution to prohibit employment discrimination in the Senate based on sexual orientation. I would like to thank the Senator from Oregon, Mr. Smith, as well as my other colleagues who join me in introducing this resolution. The resolution would amend the Standing Rules of the Senate by adding ``sexual orientation'' to ``race, color, religion, sex, national origin, age, or state of physical handicap'' in the antidiscrimination provision of rule 42, which governs the Senate's employment practices. By amending the current rule, it would forbid any Senate Member, officer, or employee from terminating, refusing to hire, or otherwise discriminating against an individual with respect to promotion, compensation, or any other privilege of employment, on the basis of that individual's sexual orientation. Senate employees currently have no recourse available to them should they become a victim of this type of employment discrimination. If the rules are amended, any Senate employee that encountered discrimination based on their sexual orientation would have the option of reporting it to the Senate Ethics Committee. The Ethics Committee could then investigate the claim and recommend discipline for any Senate Member, officer, or employee found to have violated the rule. Unfortunately, the Senate is already well behind other establishments of the U.S. Government in this area of antidiscrimination. By 1996, at least 13 Cabinet level agencies, including the Departments of Justice, Agriculture, Transportation, Health and Human Services, Interior, Housing and Urban Development, Labor, and Energy, in addition to the General Accounting Office, General Services Administration, Internal Revenue Service, the Federal Reserve System, Office of Personnel Management, and the White House had already issued policy statements forbidding sexual orientation discrimination. In 1998, Executive Order 13087 was issued to prohibit sexual orientation discrimination in the Federal executive branch, including civilian employees of the military departments and sundry other governmental entities. That Executive order now covers approximately 2 million Federal civilian workers. Yet more than 4 years later, there are still employees of the Senate that are unprotected. In taking this step toward addressing discrimination, the Senate would join not only the executive branch, but also 308 Fortune 500 companies, 23 State governments and 262 local governments that have already prohibited workplace discrimination based on sexual orientation. Currently, 65 Senators have already adopted written policies for their congressional offices indicating that sexual orientation is not a factor in their employment decisions. Now, I urge my colleagues to join me by making this policy universal for the Senate, rather than relying on a patchwork of protection that only covers some of the Senate's employees.

Mrs. FEINSTEIN

Mrs. FEINSTEIN. Mr. President, here is an explanation of what this bill does: It applies anti-fraud and anti-manipulation authority to all exempt commodity transactions--an exempt commodity is a commodity which is not financial and not agricultural and mainly includes energy and metals. The bill sets up two classes of swaps. For those made between ``sophisticated persons,'' basically institutions and wealthy individuals, that are not entered into on a ``trading facility''--for example, an exchange--anti-fraud and anti-manipulation provisions apply and wash trades are prohibited. The following regulations would apply to all swaps made on an ``electronic trading facility'' and a ``dealer market'', which includes dealers who buy and sell swaps in exempt commodities, and the entity on which the swap takes place: anti-fraud and anti-manipulation provisions and the prohibition of wash trades apply; if the entity on which the swap takes place serves a pricing or price discovery function, increased notice, reporting, bookkeeping, and other transparency requirements; and the requirement to maintain sufficient capital commensurate with the risk associated with the swap; Except for the anti-fraud and anti-manipulation provisions, the CFTC has the discretion to tailor the above requirements to fit the character and financial risk involved with the swap or entity. While the CFTC could require daily public disclosure of trading data like open and closing prices, similar to the requirements of futures exchanges, it could not require real-time publication of proprietary trading information or prohibit an entity from selling their data. The CFTC may allow entities to meet certain self-regulatory responsibilities- as provided in a list of ``core principles.'' If an entity chose to become a self-regulator, these core principles would obligate the entity to monitor trading to prevent fraud and manipulation as well as assure that its other regulatory obligations are met. The penalties for manipulation are greatly increased. The civil monetary penalty for manipulation is increased from $100,000 to $1 million. Wash trades are subject to the monetary civil penalty for each violation, and imprisonment up to 10 years. The FERC is required to improve communications with other Federal regulatory agencies. A shortcoming in the main anti-fraud provision of the CEA is also corrected by allowing CFTC enforcement of fraud to apply to instances of either defrauding a person for oneself or on behalf of others. It requires the FERC and the CFTC to meet quarterly and discuss how energy derivative markets are functioning and affecting energy deliveries. It grants the FERC the authority to use monetary penalties on companies that don't comply with requests for information. It is essentially the same authority that the SEC has. It makes it easier for FERC to hire the necessary outside help they need including accountants, lawyers, and investigators for investigative purposes. It eliminates the requirement that FERC receive approval from the Office of Management and Budget before launching an investigation or price discovery of electricity or natural gas markets involving more than 10 companies. It increases the penalty amounts to $1 million instead of the current $5,000 for violations of the Federal Power Act and the Natural Gas Act; five years instead of the current two for violations of the statute; and, $50,000 per violation per day instead of the current $500 for violations of rules or orders under the Federal Power Act and Natural Gas Act. The Commission's authority to impose civil penalties is broadened to all sections of Part II of the Federal Power Act and the penalty amount is increased from $10,000 to $50,000 per violation per day. It modifies Section 206 of the Federal Power Act to allow for an earlier refund effective date to increase the opportunity for refunds as a deterrent to fraudulent and manipulative behavior in the energy markets. This legislation is not going to do anything to change what happened in California and the West. But it does provide the necessary authority for the CFTC and FERC which will help protect against another energy crisis. When regulatory agencies have the will but not the authority to regulate, Congress must step in and ensure that our regulators have the necessary tools. Unfortunately, sometimes an agency has neither. In this case I am glad to have the support of FERC and I hope that the CFTC will reconsider and support this legislation.

Mrs. FEINSTEIN. Madam President, yesterday the State of California submitted a filing to the Federal Energy Regulatory Commission which provides a wholesale indictment of energy companies and shows how a number of energy firms engaged in deceptive trading practices to drive up prices in the Western Energy Market. I have called on FERC to make this evidence public and I want to reiterate my request again. I am also introducing a bill with Senators Fitzgerald, Harkin, Lugar, Cantwell, Wyden, and Leahy to close a loophole which allows energy trades to take place electronically, in private, with no transparency, record, audit trail or any oversight to guard against fraud and manipulation. But before I reintroduce this bill, I want to reiterate the important revelations that have been uncovered in the past year and detail what we know about yesterday's filing at FERC. Last week I came to the floor to update the Senate on recent evidence of fraud and manipulation in the energy sector. Today I want to pick up where I left off and introduce the Energy Market Oversight Act. Mr. President, I draw my colleagues' attention to a filing made at FERC. This ``Public Version'' is a 27-page summary of the filing with confidential information removed, but it provides a detailed overview of the fraud and manipulation carried out by energy companies during the Western energy crisis. In addition to testimony by expert witnesses, 348 exhibits, transcripts of depositions, tapes of trader telephone conversations, emails, and other data, the California parties submitted a 161-page brief to FERC. The document I have inserted into the Record includes the Table of Contents, the Introduction and Overview, and the Conclusion of this 161-page document. To be clear, it is part, but not all of the brief filed by the State of California. Mr. President, the filing submitted by the State of California yesterday shows that there was an extensive and coordinated attempt by energy companies to engage in the following schemes to drive up prices in the Western Energy Market: 1. Withholding of Power--driving up prices by creating false shortages; 2. Bidding to Exercise Market Power--suppliers bid higher after the California ISO declared emergencies, knowing the State would need power and be willing to pay any price to get it; 3. Scheduling of Bogus Load, aka ``Fat Boy'' or ``Inc- ing''--suppliers submitted false load schedules to increase prices; 4. Export-Import Games, aka ``Ricochet or ``Megawatt Laundering''--suppliers exported power out of California and imported it back into the State in an attempt to sell power at inflated prices; 5. Congestion Games, aka ``Death Star''--suppliers created false congestion and were then paid for relieving congestion without moving any power; 6. Double-Selling--suppliers sold reserves, but then failed to keep those reserves available for the ISO; 7. Selling of Non-Existent Ancillary Services, aka ``Get Shorty''--suppliers sold resources that were either already committed to other sales or incapable of being provided; 8. Sharing of Non-Public Generation Outage Information--the largest suppliers in California shared information from a company called Industrial Information Resources that provided sellers detailed, non-public information on daily plant outages; 9. Collusion Among Sellers--sellers were jointly implementing or facilitating Enron-type trading strategies; 10. Manipulation of the Nitrous Oxide (NOX) Emission Market--sellers manipulated the market for NOX emissions in the South Coast Air Quality Management District through a series of wash trades that created the appearance of a dramatic price increase that may have been fabricated. For example, Dynegy, together with AES and others, entered into a series of trades of NOx credits in July and August of 2000 by which Dynegy would sell a large quality of credits and then simultaneously buy back a smaller quantity of credits at a higher per credit price. We can assume that the thousands of pages filed by the California parties at FERC detail these examples of market abuse. At this point we cannot know all of the instances because the specifics remain confidential, but we have plenty to go on. Yesterday I wrote another letter to FERC Chairman Pat Wood asking the Commission to lift its ``Protective Order'' to make this information public so that families and businesses harmed during the Western Energy Crisis can know the extent of fraud and manipulation that occurred. I believe the filing yesterday presents a key decision for FERC. Clearly the Commission cannot ignore this mountain of new evidence submitted--especially since it comes at a time when other disclosures have been made to show pervasive fraud and manipulation in the Western Energy Market. Last month Jeffrey Richter, the former head of Enron's Short-Term California energy trading desk, pled guilty to conspiracy to commit fraud as part of Enron's well known schemes to manipulate Western energy markets. Richter's plea follows that of head Enron trader Tim Belden in the fall of 2002. Belden admitted that he schemed to defraud California during the Western energy crisis and also plead guilty to conspiracy to commit wire fraud. The Enron plea came on the heels of FERC's release of transcripts from Reliant Energy that reveal how their traders intentionally withheld power from the California market in an attempt to increase prices. This is one of the most egregious examples of manipulation and it is clear and convincing evidence of coordinated schemes to defraud consumers. Let me read just one part of the transcript to demonstrate the greed behind the market abuse by Reliant and its traders. On June 20, 2000 two Reliant employees had the following conversation that reveals the company withheld power from the California market to drive prices up: Reliant Operations Manager 1: ``I don't necessarily foresee those units being run the remainder of this week. In fact you will probably see, in fact I know, tomorrow we have all the units at Coolwater off.'' (The Coolwater plant is a 526 Megawatt plant.) Reliant Plant Operator 2: ``Really?'' Reliant Operations Manager 1: ``Potentially. Even number four. More due to some market manipulation attempts on our part. And so, on number four it probably wouldn't last long. It would probably be back on the next day, if not the day after that. Trying to uh . . .'' Reliant Plant Operator 2: ``Trying to shorten supply, uh? That way the price on demand goes up.'' Reliant Operations Manager 1: ``Well, we'll see.'' Reliant Plant Operator 2: ``I can understand. That's cool.'' Reliant Operations Manager 1: ``We've got some term positions that, you know, that would benefit.'' Six months after this incident, as the Senate Energy Committee was attempting to get to the bottom of why energy prices were soaring in the West, the President and CEO of Reliant testified before Congress that the State of California ``has focused on an inaccurate perception of market manipulation.'' Reliant's President and CEO went on to say, ``We are proud of our contributions to keep generation running to try to meet the demand for power in California. Reliant Energy's plant and technical staffs have worked hard to maximize the performance of our generation.'' These transcripts prove otherwise and reveal the truth about market manipulation in the energy sector. Despite this clear and convincing evidence of fraud, on January 31 of this year, the Federal Energy Regulatory Commission chose to only give Reliant a slap on the wrist for this behavior. The company paid only $13.8 million to sweep this criminal behavior under the rug and settle with FERC. Let me turn to some other recent examples that demonstrate how other energy companies manipulated the Western Energy Market as Reliant did. On December 11th, FERC finally released audio tapes that show how traders at Williams conspired with AES Energy plant operators to keep power offline and drive prices up. The tapes depict how on April 27, 2000, Williams outage coordinator Rhonda Morgan encouraged an AES operator at the company's Alamitos plant to extend a plant outage because the California grid operator was paying ``a premium'' for power at the time. The Williams employee stated, ``that's one reason it wouldn't hurt Williams' feelings if the outage ran long.'' Later that day, Eric Pendergraft, a high-ranking AES employee called to confirm with Ms. Morgan that Williams wanted the plant to stay offline by saying, ``you guys were saying that it might not be such a bad thing if it took us a little while longer to do our work?'' ``I don't want to do something underhanded,'' Ms. Morgan responded, ``but if there is work you can continue to do . . .'' At this point Mr. Pendergraft interrupted to cut off their suspicious conversation, saying, ``I understand. You don't have to talk anymore.'' Clearly, this is evidence of a calculated intent to withhold power to raise prices. I find it unconscionable. Let's turn to some other examples. On January 27, 2003, Michelle Marie Valencia, a 32-year-old former senior energy trader for Dynegy was arrested on charges that she reported fictitious natural gas transactions to an industry publication. On December 5, 2002, Todd Geiger, a former vice president on the Canadian natural gas trading desk for El Paso Merchant Energy, was charged with wire fraud and filing a false report after allegedly telling a trade publication about the prices for 48 natural gas trades that he never made in an effort to boost prices and company profit. These indictments are just the latest examples of how energy firms reported inaccurate prices to trade publications to drive energy prices higher. Industry publications claimed they could not be fooled by false prices because deviant prices are rejected, but this claim was predicated on the fact that everyone was reporting honestly--which we now know they weren't doing. CMS Energy, Williams, American Electric Power Company, and Dynegy have each acknowledged that its employees gave inaccurate price data to industry participants. On December 19th Dynegy agreed to pay a $5 million fine for its actions. In September an Administrative Law Judge at FERC issued a landmark ruling concluding that El Paso Corporation withheld natural gas from California and recommended penalty proceedings against the company. Since the El Paso Pipeline carries most of the natural gas to Southern California, this ruling has tremendous implications. The FERC Commissioners are expected to take up this case for a final judgement soon. These have been the latest revelations in a series of energy disclosure bombshells that began on Monday, May 6th when the Federal Energy Regulatory Commission posted a series of documents on their website that revealed Enron manipulated the Western Energy Market by engaging in a number of suspect trading strategies. These memos revealed for the first time how Enron used schemes called ``Death Star,'' ``Get Shorty,'' ``Fat Boy,'' and ``Ricochet'' to fleece families and businesses in the West. The filing made yesterday to FERC shows how other companies did engage in these Enron-type trading strategies. The brief submitted by the State of California and others states that suppliers ``were jointly implementing or facilitating Enron-type trading strategies.'' Let us turn to other types of fraudulent trades that many energy firms have admitted to. Dynegy, Duke Energy, El Paso, Reliant Resources Inc., CMS Energy Corp., and Williams Cos. all admitted engaging in false ``round-trip `` or ``wash trades.'' What is a ``round-trip'' trade, one might ask? ``Round-trip'' trades occur when one firm sells energy to another and then the second firm simultaneously sells the same amount of energy back to the first company at exactly the same price. No commodity ever actually changes hands, but when done on an exchange, these transactions send a price signal to the market and they artificially boost revenue for the company. How widespread are ``round-trip'' trades? Well, the Congressional Research Service looked at trading patterns in the energy sector over the last few years and reported, ``this pattern of trading suggests a market environment in which a significant volume of fictitious trading could have taken place.'' Yet, since most of the energy trading market is unregulated by the government, we have only a slim idea of the illusions being perpetrated in the energy sector. Consider the following recent confessions from energy firms about ``round-trip'' trades: Reliant admitted 10 percent of its trading revenues came from ``round-trip'' trades. The announcement forced the company's President and head of wholesale trading to both step down. CMS Energy announced 80 percent of its trades in 2001 were ``round-trip'' trades. Remember, these trades are sham deals where nothing was exchanged, yet the company booked revenues from the trades. Duke Energy disclosed that 1.1 billion dollars-worth of trades were ``round-trip'' since 1999--roughly two-thirds of these were done on InterContinental Exchange, which means that thousands of subscribes would have seen these false price signals. A lawyer for J.P. Morgan Chase admitted the bank engineered a series of ``round-trip'' trades with Enron. Dynegy and Williams have also admitted to this round-trip trading. And although these trades mostly occurred with electricity, there is evidence to suggest that ``round-trip'' trades were made in natural gas and even broadband. By exchanging the same amount of a commodity at the same price, I believe these companies have not engaged in meaningful transactions, but deceptive practices to fool investors and possibly drive energy prices up for consumers. It is therefore imperative that the Department of Justice, FERC, the SEC, the Commodities Futures Trading Commission and every other oversight agency conduct an aggressive and vigorous investigation into all of the energy companies who participated in Western Energy Market. Beyond that I believe Congress must re-examine what tools the government needs to keep a better watch over these volatile markets that are little understood. In the absence of vigilant government oversight of the energy sector, firms have the incentive to create the appearance of a mature, liquid, and well-functioning market, but it is unclear whether such a market exists. The ``round-trip'' trades, the Enron memos, and the filing at FERC raise questions about illusions in the energy market. To this end, I believe it is critical for the Senate to act soon on the legislation I offered last April to regulate online energy trading. I am re-introducing this legislation to subject electronic exchanges like Enron On-Line to the same oversight, reporting and capital requirements as other commodity exchanges like the Chicago Mercantile Exchange, the New York Mercantile Exchange and the Chicago Board of Trade. I am pleased Senator Fitzgerald, Senator Harkin, Senator Lugar, Senator Cantwell, Senator Wyden, and Senator Leahy have again signed on to this legislation. I am proud of the work we did in the 107th Congress and I hope we can complete action on this bill soon. Without this type of legislation, there is insufficient authority to investigate and prevent fraud and price manipulation since parties making the trade are not required to keep a record. Right now, energy transactions are regulated by the Federal Energy Regulatory Commission (FERC) when there is actual delivery. For example, if I buy natural gas from you, and you deliver that natural gas to me, FERC has the authority to ensure that this transaction is transparent and reasonably priced. However, many energy transactions no longer result in delivery. A giant loophole has opened where there is no government oversight when these transactions are done on internet exchanges. In 2000, Congress passed the Commodity Futures Modernization Act in 2000 which exempted energy and metals trading from regulatory oversight and excluded it completely if the trade was done electronically. So today, as long as there is no delivery, there is no price transparency. Again, this lack of transparency and oversight only applies to energy. It does not apply if you are selling wheat or pork bellies or any other tangible commodity. And it did not take long for Enron Online, and others in the energy sector, to take advantage of this new freedom by trading energy derivatives absent any regulatory oversight. Thus, after the 2000 legislation was enacted, Enron OnLine began to trade energy derivatives bilaterally without being subject to proper regulatory oversight. It should not surprise anyone that without the transparency, prices soared. Just yesterday Warren Buffett published a warning in Fortune Magazine saying that ``Derivatives are financial weapons of mass destruction.'' In his annual warning letter to shareholders about what worries him about the financial markets, Warren Buffett called derivatives and the trading activities that go with them ``time bombs.'' In the letter, Warren Buffett states, ``In recent years some huge- scale frauds and near-frauds have been facilitated by derivatives trades. In the energy and electric utility sectors, for example, companies used derivatives and trading activities to report great `earnings'--until the roof fell in when they actually tried to convert the derivatives-related receivables on their balance sheets into cash.'' We clearly saw this with Enron. Was Enron and its energy derivative trading arm, Enron-On-Line the sole reason California and the West had an energy crisis? No. Was it a contributing factor to the crisis? I certainly believe that it was. Unfortunately, because of the energy exemptions in the 2000 CFMA, which took away the CFTC's authority to investigate, we may never know for sure. In the 107th Congress, this legislation was debated during consideration of the Senate Energy Bill and it was the subject of a hearing in the Agriculture Committee, but time ran out before the legislation could be marked up and passed. Since that time, Senators Lugar and Harkin have made significant improvements to the legislation and we have added stronger penalties for market abuse and wrongdoing. Today I am pleased to note that the following companies and organizations are supporting this legislation: The National Rural Electric Cooperative Association, The Derivatives Study Center, The American Public Gas Association, The American Public Power Association, The California Municipal Utilities Association, The Southern California Public Power Authority, The Transmission Access Policy Study Group, The U.S. Public Interest Research Group, The Consumers Union, The Consumers Federation of America, Calpine, Southern California Edison, Pacific Gas and Electric, and FERC Chairman Pat Wood. I ask unanimous consent that the letters of support from these organizations and companies be printed in the Record.

Mrs. FEINSTEIN. Madam President, I rise in support of the Efficient Energy through Certified Technologies Act which I have cosponsored along with Senator Olympia Snowe of Maine. The EFFECT Act will provide tax incentives to encourage homeowners and businesses to improve the energy efficiency of their buildings and equipment. This legislation will stimulate the economy, cut energy bills, reduce energy usage, and reduce pollution. This bill was originally introduced in the 107th Congress to address the Western energy crisis which, as we all know, created exorbitantly high prices for power and rolling blackouts. This legislation incorporates improvements based on last year's Senate energy tax bill. While conditions in the West have improved because there are more plants coming online and families and businesses have reduced their energy usage, it is important to take steps to continue to increase our energy efficiency and reduce energy consumption. Simply put, there are only two things one can do when there is not enough power to go around: increase supply or decrease demand. Without a doubt, the quickest way to address future demand and supply imbalances is to provide incentives to increase energy efficiency to reduce demand. This bill creates economic incentives for Americans to increase energy efficiency by establishing the following tax deductions and tax credits for commercial and residential properties using specific energy efficient technologies: A tax deduction of $2.25 per square foot for newly constructed or remodeled commercial buildings, including schools and other public buildings as well as rental housing, that achieve a 50-percent reduction in total annual energy costs, compared to existing national standards. A $2,000 tax credit to builders of new homes that use 50 percent less energy than a national model standard. A performance-based tax credit of as much as $6,000 for installing solar technology. A tax credit of as much as $300 if businesses install a super- efficient, new electric heat pump, a new central air-conditioner, or a new gas or electric water heater. A tax credit of as much as $500 if homeowners, tenants, or landlords retrofit their homes to achieve a 30 percent or 50 percent reduction in annual energy costs. The benefits of increasing energy efficiency are immense. First, increasing energy efficiency will cut heating, cooling, and electricity costs. Homeowners and businesses spend over $250 billion each year on heat, air-conditioning, and related energy costs for their businesses and homes. If we can reduce energy costs by increasing energy efficiency, money will be freed to fuel the economy in other areas and create new jobs. Furthermore, increasing energy efficiency will reduce the impact of future energy price spikes that harm families and businesses. And the incentives will cause businesses to invest in producing more efficient equipment and services beginning immediately after the bill is enacted. Second, increasing energy efficiency will reduce air pollution. Energy generation to heat, cool, and light our homes and offices produces 35 percent of the air pollution emitted nationwide. If we increase efficiency, then less energy will be needed to power our buildings, and consequently, we will be able to reduce emissions from powerplants. Third, increasing energy efficiency will help maintain the reliability of our Nation's electricity supply. Since most of our peak electricity demand comes from heating, cooling, or lighting needs, increasing energy efficiency will lower the probability of blackouts or brownouts. In fact, with this legislation in place, peak electricity demand in the summer would be reduced by tens of thousands of negawatts nationwide after a decade--or the equivalent output produced by hundreds of large powerplants. This could result in over 10,000 MW of savings over the summer just in our State and much more on the Western grid that California shares with neighboring States. Meanwhile, this legislation will also create a market for firms to develop more energy-efficient products, such as air-conditioners, heat pumps, lighting equipment, windows, insulation, water heaters, and solar panels. Just think how conditions could have improved in California during the Western energy crisis if we had been able to reduce our energy consumption instead of purchasing power at exorbitant rates from out- of-State suppliers. According to the Department of Energy, California is already one of the most energy-efficient States in the Nation--ranking fourth in overall energy efficiency and second in electricity efficiency. Nevertheless, Californians responded to the crisis and further increased their energy efficiency. This legislation will take energy efficiency to the next level and create the opportunity for all families and businesses nationwide to make energy efficient improvements. Instead of waiting for the next energy emergency to occur, we should take steps now to reduce energy consumption across the board. The bill introduced in the 107th Congress had the support of California Governor Gray Davis, the California Energy Commission, the Sacramento Municipal Utility District, the Natural Resources Defense Council, Union of Concerned Scientists, the California Building Industry Association, most California utilities and many other organizations and businesses. We expect similar widespread support for the bill we are reintroducing today. This bill is an important step to help reduce demand. It provides financial incentives to offset some of the costs of building new energy-efficient buildings and homes, and improving existing structures to make them more energy efficient. I urge my colleagues to support this important legislation.

Mrs. FEINSTEIN

Mrs. FEINSTEIN. Madam President, I rise in support of the Efficient Energy through Certified Technologies Act which I have cosponsored along with Senator Olympia Snowe of Maine. The EFFECT Act will provide tax incentives to encourage homeowners and businesses to improve the energy efficiency of their buildings and equipment. This legislation will stimulate the economy, cut energy bills, reduce energy usage, and reduce pollution. This bill was originally introduced in the 107th Congress to address the Western energy crisis which, as we all know, created exorbitantly high prices for power and rolling blackouts. This legislation incorporates improvements based on last year's Senate energy tax bill. While conditions in the West have improved because there are more plants coming online and families and businesses have reduced their energy usage, it is important to take steps to continue to increase our energy efficiency and reduce energy consumption. Simply put, there are only two things one can do when there is not enough power to go around: increase supply or decrease demand. Without a doubt, the quickest way to address future demand and supply imbalances is to provide incentives to increase energy efficiency to reduce demand. This bill creates economic incentives for Americans to increase energy efficiency by establishing the following tax deductions and tax credits for commercial and residential properties using specific energy efficient technologies: A tax deduction of $2.25 per square foot for newly constructed or remodeled commercial buildings, including schools and other public buildings as well as rental housing, that achieve a 50-percent reduction in total annual energy costs, compared to existing national standards. A $2,000 tax credit to builders of new homes that use 50 percent less energy than a national model standard. A performance-based tax credit of as much as $6,000 for installing solar technology. A tax credit of as much as $300 if businesses install a super- efficient, new electric heat pump, a new central air-conditioner, or a new gas or electric water heater. A tax credit of as much as $500 if homeowners, tenants, or landlords retrofit their homes to achieve a 30 percent or 50 percent reduction in annual energy costs. The benefits of increasing energy efficiency are immense. First, increasing energy efficiency will cut heating, cooling, and electricity costs. Homeowners and businesses spend over $250 billion each year on heat, air-conditioning, and related energy costs for their businesses and homes. If we can reduce energy costs by increasing energy efficiency, money will be freed to fuel the economy in other areas and create new jobs. Furthermore, increasing energy efficiency will reduce the impact of future energy price spikes that harm families and businesses. And the incentives will cause businesses to invest in producing more efficient equipment and services beginning immediately after the bill is enacted. Second, increasing energy efficiency will reduce air pollution. Energy generation to heat, cool, and light our homes and offices produces 35 percent of the air pollution emitted nationwide. If we increase efficiency, then less energy will be needed to power our buildings, and consequently, we will be able to reduce emissions from powerplants. Third, increasing energy efficiency will help maintain the reliability of our Nation's electricity supply. Since most of our peak electricity demand comes from heating, cooling, or lighting needs, increasing energy efficiency will lower the probability of blackouts or brownouts. In fact, with this legislation in place, peak electricity demand in the summer would be reduced by tens of thousands of negawatts nationwide after a decade--or the equivalent output produced by hundreds of large powerplants. This could result in over 10,000 MW of savings over the summer just in our State and much more on the Western grid that California shares with neighboring States. Meanwhile, this legislation will also create a market for firms to develop more energy-efficient products, such as air-conditioners, heat pumps, lighting equipment, windows, insulation, water heaters, and solar panels. Just think how conditions could have improved in California during the Western energy crisis if we had been able to reduce our energy consumption instead of purchasing power at exorbitant rates from out- of-State suppliers. According to the Department of Energy, California is already one of the most energy-efficient States in the Nation--ranking fourth in overall energy efficiency and second in electricity efficiency. Nevertheless, Californians responded to the crisis and further increased their energy efficiency. This legislation will take energy efficiency to the next level and create the opportunity for all families and businesses nationwide to make energy efficient improvements. Instead of waiting for the next energy emergency to occur, we should take steps now to reduce energy consumption across the board. The bill introduced in the 107th Congress had the support of California Governor Gray Davis, the California Energy Commission, the Sacramento Municipal Utility District, the Natural Resources Defense Council, Union of Concerned Scientists, the California Building Industry Association, most California utilities and many other organizations and businesses. We expect similar widespread support for the bill we are reintroducing today. This bill is an important step to help reduce demand. It provides financial incentives to offset some of the costs of building new energy-efficient buildings and homes, and improving existing structures to make them more energy efficient. I urge my colleagues to support this important legislation.

Mrs. FEINSTEIN

Mrs. FEINSTEIN. Madam President, yesterday the State of California submitted a filing to the Federal Energy Regulatory Commission which provides a wholesale indictment of energy companies and shows how a number of energy firms engaged in deceptive trading practices to drive up prices in the Western Energy Market. I have called on FERC to make this evidence public and I want to reiterate my request again. I am also introducing a bill with Senators Fitzgerald, Harkin, Lugar, Cantwell, Wyden, and Leahy to close a loophole which allows energy trades to take place electronically, in private, with no transparency, record, audit trail or any oversight to guard against fraud and manipulation. But before I reintroduce this bill, I want to reiterate the important revelations that have been uncovered in the past year and detail what we know about yesterday's filing at FERC. Last week I came to the floor to update the Senate on recent evidence of fraud and manipulation in the energy sector. Today I want to pick up where I left off and introduce the Energy Market Oversight Act. Mr. President, I draw my colleagues' attention to a filing made at FERC. This ``Public Version'' is a 27-page summary of the filing with confidential information removed, but it provides a detailed overview of the fraud and manipulation carried out by energy companies during the Western energy crisis. In addition to testimony by expert witnesses, 348 exhibits, transcripts of depositions, tapes of trader telephone conversations, emails, and other data, the California parties submitted a 161-page brief to FERC. The document I have inserted into the Record includes the Table of Contents, the Introduction and Overview, and the Conclusion of this 161-page document. To be clear, it is part, but not all of the brief filed by the State of California. Mr. President, the filing submitted by the State of California yesterday shows that there was an extensive and coordinated attempt by energy companies to engage in the following schemes to drive up prices in the Western Energy Market: 1. Withholding of Power--driving up prices by creating false shortages; 2. Bidding to Exercise Market Power--suppliers bid higher after the California ISO declared emergencies, knowing the State would need power and be willing to pay any price to get it; 3. Scheduling of Bogus Load, aka ``Fat Boy'' or ``Inc- ing''--suppliers submitted false load schedules to increase prices; 4. Export-Import Games, aka ``Ricochet or ``Megawatt Laundering''--suppliers exported power out of California and imported it back into the State in an attempt to sell power at inflated prices; 5. Congestion Games, aka ``Death Star''--suppliers created false congestion and were then paid for relieving congestion without moving any power; 6. Double-Selling--suppliers sold reserves, but then failed to keep those reserves available for the ISO; 7. Selling of Non-Existent Ancillary Services, aka ``Get Shorty''--suppliers sold resources that were either already committed to other sales or incapable of being provided; 8. Sharing of Non-Public Generation Outage Information--the largest suppliers in California shared information from a company called Industrial Information Resources that provided sellers detailed, non-public information on daily plant outages; 9. Collusion Among Sellers--sellers were jointly implementing or facilitating Enron-type trading strategies; 10. Manipulation of the Nitrous Oxide (NOX) Emission Market--sellers manipulated the market for NOX emissions in the South Coast Air Quality Management District through a series of wash trades that created the appearance of a dramatic price increase that may have been fabricated. For example, Dynegy, together with AES and others, entered into a series of trades of NOx credits in July and August of 2000 by which Dynegy would sell a large quality of credits and then simultaneously buy back a smaller quantity of credits at a higher per credit price. We can assume that the thousands of pages filed by the California parties at FERC detail these examples of market abuse. At this point we cannot know all of the instances because the specifics remain confidential, but we have plenty to go on. Yesterday I wrote another letter to FERC Chairman Pat Wood asking the Commission to lift its ``Protective Order'' to make this information public so that families and businesses harmed during the Western Energy Crisis can know the extent of fraud and manipulation that occurred. I believe the filing yesterday presents a key decision for FERC. Clearly the Commission cannot ignore this mountain of new evidence submitted--especially since it comes at a time when other disclosures have been made to show pervasive fraud and manipulation in the Western Energy Market. Last month Jeffrey Richter, the former head of Enron's Short-Term California energy trading desk, pled guilty to conspiracy to commit fraud as part of Enron's well known schemes to manipulate Western energy markets. Richter's plea follows that of head Enron trader Tim Belden in the fall of 2002. Belden admitted that he schemed to defraud California during the Western energy crisis and also plead guilty to conspiracy to commit wire fraud. The Enron plea came on the heels of FERC's release of transcripts from Reliant Energy that reveal how their traders intentionally withheld power from the California market in an attempt to increase prices. This is one of the most egregious examples of manipulation and it is clear and convincing evidence of coordinated schemes to defraud consumers. Let me read just one part of the transcript to demonstrate the greed behind the market abuse by Reliant and its traders. On June 20, 2000 two Reliant employees had the following conversation that reveals the company withheld power from the California market to drive prices up: Reliant Operations Manager 1: ``I don't necessarily foresee those units being run the remainder of this week. In fact you will probably see, in fact I know, tomorrow we have all the units at Coolwater off.'' (The Coolwater plant is a 526 Megawatt plant.) Reliant Plant Operator 2: ``Really?'' Reliant Operations Manager 1: ``Potentially. Even number four. More due to some market manipulation attempts on our part. And so, on number four it probably wouldn't last long. It would probably be back on the next day, if not the day after that. Trying to uh . . .'' Reliant Plant Operator 2: ``Trying to shorten supply, uh? That way the price on demand goes up.'' Reliant Operations Manager 1: ``Well, we'll see.'' Reliant Plant Operator 2: ``I can understand. That's cool.'' Reliant Operations Manager 1: ``We've got some term positions that, you know, that would benefit.'' Six months after this incident, as the Senate Energy Committee was attempting to get to the bottom of why energy prices were soaring in the West, the President and CEO of Reliant testified before Congress that the State of California ``has focused on an inaccurate perception of market manipulation.'' Reliant's President and CEO went on to say, ``We are proud of our contributions to keep generation running to try to meet the demand for power in California. Reliant Energy's plant and technical staffs have worked hard to maximize the performance of our generation.'' These transcripts prove otherwise and reveal the truth about market manipulation in the energy sector. Despite this clear and convincing evidence of fraud, on January 31 of this year, the Federal Energy Regulatory Commission chose to only give Reliant a slap on the wrist for this behavior. The company paid only $13.8 million to sweep this criminal behavior under the rug and settle with FERC. Let me turn to some other recent examples that demonstrate how other energy companies manipulated the Western Energy Market as Reliant did. On December 11th, FERC finally released audio tapes that show how traders at Williams conspired with AES Energy plant operators to keep power offline and drive prices up. The tapes depict how on April 27, 2000, Williams outage coordinator Rhonda Morgan encouraged an AES operator at the company's Alamitos plant to extend a plant outage because the California grid operator was paying ``a premium'' for power at the time. The Williams employee stated, ``that's one reason it wouldn't hurt Williams' feelings if the outage ran long.'' Later that day, Eric Pendergraft, a high-ranking AES employee called to confirm with Ms. Morgan that Williams wanted the plant to stay offline by saying, ``you guys were saying that it might not be such a bad thing if it took us a little while longer to do our work?'' ``I don't want to do something underhanded,'' Ms. Morgan responded, ``but if there is work you can continue to do . . .'' At this point Mr. Pendergraft interrupted to cut off their suspicious conversation, saying, ``I understand. You don't have to talk anymore.'' Clearly, this is evidence of a calculated intent to withhold power to raise prices. I find it unconscionable. Let's turn to some other examples. On January 27, 2003, Michelle Marie Valencia, a 32-year-old former senior energy trader for Dynegy was arrested on charges that she reported fictitious natural gas transactions to an industry publication. On December 5, 2002, Todd Geiger, a former vice president on the Canadian natural gas trading desk for El Paso Merchant Energy, was charged with wire fraud and filing a false report after allegedly telling a trade publication about the prices for 48 natural gas trades that he never made in an effort to boost prices and company profit. These indictments are just the latest examples of how energy firms reported inaccurate prices to trade publications to drive energy prices higher. Industry publications claimed they could not be fooled by false prices because deviant prices are rejected, but this claim was predicated on the fact that everyone was reporting honestly--which we now know they weren't doing. CMS Energy, Williams, American Electric Power Company, and Dynegy have each acknowledged that its employees gave inaccurate price data to industry participants. On December 19th Dynegy agreed to pay a $5 million fine for its actions. In September an Administrative Law Judge at FERC issued a landmark ruling concluding that El Paso Corporation withheld natural gas from California and recommended penalty proceedings against the company. Since the El Paso Pipeline carries most of the natural gas to Southern California, this ruling has tremendous implications. The FERC Commissioners are expected to take up this case for a final judgement soon. These have been the latest revelations in a series of energy disclosure bombshells that began on Monday, May 6th when the Federal Energy Regulatory Commission posted a series of documents on their website that revealed Enron manipulated the Western Energy Market by engaging in a number of suspect trading strategies. These memos revealed for the first time how Enron used schemes called ``Death Star,'' ``Get Shorty,'' ``Fat Boy,'' and ``Ricochet'' to fleece families and businesses in the West. The filing made yesterday to FERC shows how other companies did engage in these Enron-type trading strategies. The brief submitted by the State of California and others states that suppliers ``were jointly implementing or facilitating Enron-type trading strategies.'' Let us turn to other types of fraudulent trades that many energy firms have admitted to. Dynegy, Duke Energy, El Paso, Reliant Resources Inc., CMS Energy Corp., and Williams Cos. all admitted engaging in false ``round-trip `` or ``wash trades.'' What is a ``round-trip'' trade, one might ask? ``Round-trip'' trades occur when one firm sells energy to another and then the second firm simultaneously sells the same amount of energy back to the first company at exactly the same price. No commodity ever actually changes hands, but when done on an exchange, these transactions send a price signal to the market and they artificially boost revenue for the company. How widespread are ``round-trip'' trades? Well, the Congressional Research Service looked at trading patterns in the energy sector over the last few years and reported, ``this pattern of trading suggests a market environment in which a significant volume of fictitious trading could have taken place.'' Yet, since most of the energy trading market is unregulated by the government, we have only a slim idea of the illusions being perpetrated in the energy sector. Consider the following recent confessions from energy firms about ``round-trip'' trades: Reliant admitted 10 percent of its trading revenues came from ``round-trip'' trades. The announcement forced the company's President and head of wholesale trading to both step down. CMS Energy announced 80 percent of its trades in 2001 were ``round-trip'' trades. Remember, these trades are sham deals where nothing was exchanged, yet the company booked revenues from the trades. Duke Energy disclosed that 1.1 billion dollars-worth of trades were ``round-trip'' since 1999--roughly two-thirds of these were done on InterContinental Exchange, which means that thousands of subscribes would have seen these false price signals. A lawyer for J.P. Morgan Chase admitted the bank engineered a series of ``round-trip'' trades with Enron. Dynegy and Williams have also admitted to this round-trip trading. And although these trades mostly occurred with electricity, there is evidence to suggest that ``round-trip'' trades were made in natural gas and even broadband. By exchanging the same amount of a commodity at the same price, I believe these companies have not engaged in meaningful transactions, but deceptive practices to fool investors and possibly drive energy prices up for consumers. It is therefore imperative that the Department of Justice, FERC, the SEC, the Commodities Futures Trading Commission and every other oversight agency conduct an aggressive and vigorous investigation into all of the energy companies who participated in Western Energy Market. Beyond that I believe Congress must re-examine what tools the government needs to keep a better watch over these volatile markets that are little understood. In the absence of vigilant government oversight of the energy sector, firms have the incentive to create the appearance of a mature, liquid, and well-functioning market, but it is unclear whether such a market exists. The ``round-trip'' trades, the Enron memos, and the filing at FERC raise questions about illusions in the energy market. To this end, I believe it is critical for the Senate to act soon on the legislation I offered last April to regulate online energy trading. I am re-introducing this legislation to subject electronic exchanges like Enron On-Line to the same oversight, reporting and capital requirements as other commodity exchanges like the Chicago Mercantile Exchange, the New York Mercantile Exchange and the Chicago Board of Trade. I am pleased Senator Fitzgerald, Senator Harkin, Senator Lugar, Senator Cantwell, Senator Wyden, and Senator Leahy have again signed on to this legislation. I am proud of the work we did in the 107th Congress and I hope we can complete action on this bill soon. Without this type of legislation, there is insufficient authority to investigate and prevent fraud and price manipulation since parties making the trade are not required to keep a record. Right now, energy transactions are regulated by the Federal Energy Regulatory Commission (FERC) when there is actual delivery. For example, if I buy natural gas from you, and you deliver that natural gas to me, FERC has the authority to ensure that this transaction is transparent and reasonably priced. However, many energy transactions no longer result in delivery. A giant loophole has opened where there is no government oversight when these transactions are done on internet exchanges. In 2000, Congress passed the Commodity Futures Modernization Act in 2000 which exempted energy and metals trading from regulatory oversight and excluded it completely if the trade was done electronically. So today, as long as there is no delivery, there is no price transparency. Again, this lack of transparency and oversight only applies to energy. It does not apply if you are selling wheat or pork bellies or any other tangible commodity. And it did not take long for Enron Online, and others in the energy sector, to take advantage of this new freedom by trading energy derivatives absent any regulatory oversight. Thus, after the 2000 legislation was enacted, Enron OnLine began to trade energy derivatives bilaterally without being subject to proper regulatory oversight. It should not surprise anyone that without the transparency, prices soared. Just yesterday Warren Buffett published a warning in Fortune Magazine saying that ``Derivatives are financial weapons of mass destruction.'' In his annual warning letter to shareholders about what worries him about the financial markets, Warren Buffett called derivatives and the trading activities that go with them ``time bombs.'' In the letter, Warren Buffett states, ``In recent years some huge- scale frauds and near-frauds have been facilitated by derivatives trades. In the energy and electric utility sectors, for example, companies used derivatives and trading activities to report great `earnings'--until the roof fell in when they actually tried to convert the derivatives-related receivables on their balance sheets into cash.'' We clearly saw this with Enron. Was Enron and its energy derivative trading arm, Enron-On-Line the sole reason California and the West had an energy crisis? No. Was it a contributing factor to the crisis? I certainly believe that it was. Unfortunately, because of the energy exemptions in the 2000 CFMA, which took away the CFTC's authority to investigate, we may never know for sure. In the 107th Congress, this legislation was debated during consideration of the Senate Energy Bill and it was the subject of a hearing in the Agriculture Committee, but time ran out before the legislation could be marked up and passed. Since that time, Senators Lugar and Harkin have made significant improvements to the legislation and we have added stronger penalties for market abuse and wrongdoing. Today I am pleased to note that the following companies and organizations are supporting this legislation: The National Rural Electric Cooperative Association, The Derivatives Study Center, The American Public Gas Association, The American Public Power Association, The California Municipal Utilities Association, The Southern California Public Power Authority, The Transmission Access Policy Study Group, The U.S. Public Interest Research Group, The Consumers Union, The Consumers Federation of America, Calpine, Southern California Edison, Pacific Gas and Electric, and FERC Chairman Pat Wood. I ask unanimous consent that the letters of support from these organizations and companies be printed in the Record.

Mrs. FEINSTEIN. Mr. President, here is an explanation of what this bill does: It applies anti-fraud and anti-manipulation authority to all exempt commodity transactions--an exempt commodity is a commodity which is not financial and not agricultural and mainly includes energy and metals. The bill sets up two classes of swaps. For those made between ``sophisticated persons,'' basically institutions and wealthy individuals, that are not entered into on a ``trading facility''--for example, an exchange--anti-fraud and anti-manipulation provisions apply and wash trades are prohibited. The following regulations would apply to all swaps made on an ``electronic trading facility'' and a ``dealer market'', which includes dealers who buy and sell swaps in exempt commodities, and the entity on which the swap takes place: anti-fraud and anti-manipulation provisions and the prohibition of wash trades apply; if the entity on which the swap takes place serves a pricing or price discovery function, increased notice, reporting, bookkeeping, and other transparency requirements; and the requirement to maintain sufficient capital commensurate with the risk associated with the swap; Except for the anti-fraud and anti-manipulation provisions, the CFTC has the discretion to tailor the above requirements to fit the character and financial risk involved with the swap or entity. While the CFTC could require daily public disclosure of trading data like open and closing prices, similar to the requirements of futures exchanges, it could not require real-time publication of proprietary trading information or prohibit an entity from selling their data. The CFTC may allow entities to meet certain self-regulatory responsibilities- as provided in a list of ``core principles.'' If an entity chose to become a self-regulator, these core principles would obligate the entity to monitor trading to prevent fraud and manipulation as well as assure that its other regulatory obligations are met. The penalties for manipulation are greatly increased. The civil monetary penalty for manipulation is increased from $100,000 to $1 million. Wash trades are subject to the monetary civil penalty for each violation, and imprisonment up to 10 years. The FERC is required to improve communications with other Federal regulatory agencies. A shortcoming in the main anti-fraud provision of the CEA is also corrected by allowing CFTC enforcement of fraud to apply to instances of either defrauding a person for oneself or on behalf of others. It requires the FERC and the CFTC to meet quarterly and discuss how energy derivative markets are functioning and affecting energy deliveries. It grants the FERC the authority to use monetary penalties on companies that don't comply with requests for information. It is essentially the same authority that the SEC has. It makes it easier for FERC to hire the necessary outside help they need including accountants, lawyers, and investigators for investigative purposes. It eliminates the requirement that FERC receive approval from the Office of Management and Budget before launching an investigation or price discovery of electricity or natural gas markets involving more than 10 companies. It increases the penalty amounts to $1 million instead of the current $5,000 for violations of the Federal Power Act and the Natural Gas Act; five years instead of the current two for violations of the statute; and, $50,000 per violation per day instead of the current $500 for violations of rules or orders under the Federal Power Act and Natural Gas Act. The Commission's authority to impose civil penalties is broadened to all sections of Part II of the Federal Power Act and the penalty amount is increased from $10,000 to $50,000 per violation per day. It modifies Section 206 of the Federal Power Act to allow for an earlier refund effective date to increase the opportunity for refunds as a deterrent to fraudulent and manipulative behavior in the energy markets. This legislation is not going to do anything to change what happened in California and the West. But it does provide the necessary authority for the CFTC and FERC which will help protect against another energy crisis. When regulatory agencies have the will but not the authority to regulate, Congress must step in and ensure that our regulators have the necessary tools. Unfortunately, sometimes an agency has neither. In this case I am glad to have the support of FERC and I hope that the CFTC will reconsider and support this legislation.

Mrs. FEINSTEIN

Mrs. FEINSTEIN. Mr. President, I thank the distinguished Senator from Texas for her remarks. I think, indeed, they were very interesting. I had no idea about her family lineage and her interest in the particular day. I salute her for her comments on the floor.

Mrs. FEINSTEIN

Mrs. FEINSTEIN. I wanted to make one point, so I will defer.

Mrs. FEINSTEIN. Through the Chair, to answer the distinguished Senator from Alabama, I asked my counsels when did they first know, and they said, well, informally there was discussion, but the notice--and I said, well, get me a copy of the notice then. I want to see the notice. And it was 4:58 the day before. That is the problem. I do not know exactly how all the counsels work, but I can tell the Senator that on our side time is important. Giving a little bit of time, I think, could go a very long way to solving the problem we are in, officially. so there are no excuses then. The official notice goes out. Who is on the calendar occurs a substantial period before the hearing so we have time to do what we need to do, particularly when I think there were seven judges on this particular calendar, three of them appellate judges, meaning it is a very big and heavy calendar on which to do your work.

Mrs. FEINSTEIN. May I respond to that?

Mrs. FEINSTEIN. I do not take any pleasure in this. When I became a Member of this body, I ran as an independent voice, and I want to be that way. I want to work with both sides, and I have tried to do that. I think we are at a point, though, where some action has to be taken to restore the consideration that has usually been offered to members of this committee, that when they have a problem, a little more time is provided. I believe very strongly--I have never used my blue slip. I have said I would never use my blue slip prior to a hearing; that I believe everybody is entitled to a hearing, and then we should vote the individual up or down, and that is my view. I do not push my view on anybody else, but that is how I decided I was going to handle my spot on this committee. But if the minority gets rolled, we go into a defensive posture and everybody is compelled then to unify and hold together. I think my colleagues see a lot of this in this filibuster. I am hopeful in the future there can be a precise time when an official notice is sent out prior to the hearing being scheduled, so that every member of this committee has an opportunity to do their due diligence. It is interesting to note that the votes in the committee--and I have them. On Mrs. Cook, there were 12 yeas, two nays and five present. The present, or pass, votes submitted by the ranking member, myself, Senators Feingold, Durbin and Schumer, were really, I think, on this point, that we did not have an ample opportunity to do our due diligence and to ask the questions we needed to ask. On Mr. Roberts, there were 13 yeas, two nays and two present, Senator Leahy and Senator Feingold, which probably came from the same venue. In other words, they did not feel they had sufficient information to vote. So I am hopeful that in the future we would be able to settle some of these issues in the committee and just bend over backwards. I remember the day when if a Member had a problem with a judge who had been recommended to the President by a specific Senator, that Member picked up the phone and called that Senator and said: I just want you to know, I have these concerns, and there was this kind of convivial relationship. That is all but gone now. So the process is extraordinarily formal now, and the formality is carried out, for the most part, in the public hearing. So having notice to that public hearing becomes really all important. I have pretty much summed up my position and my hope on this. I see the distinguished Senator from Alabama on his feet so I yield the floor.

Mrs. FEINSTEIN. Through the Chair to the ranking member, that is correct.