Dianne Feinstein

Mrs. FEINSTEIN

Mrs. FEINSTEIN. Mr. President, in this article, Schrag mentions: Now that ``energy crisis'' and Enron have become household words, Californians had better get familiar with ethanol and Archer Daniels Midland. ADM is already an admitted price-fixing firm. Three of its executives have served prison time for colluding with competitors. In 1996, ADM pled guilty and paid a $100 million fine for conspiring to set the price of an animal feed additive. That is the company that has a 41-percent share of ethanol. The ethanol industry tells us they will be able to produce enough ethanol to meet future demands under this mandate. But what if some of the planned ethanol plants fail to be built? This is a key point. Plants could be delayed, or not coming online at all. We are finding this with the electricity-generation facilities right now in California. Plants that said they were going to come in, because of the economy, or because of their own financial conditions, or one thing or another, have decided no--they are not really going to go ahead with it. What is to preclude that same thing from happening with respect to ethanol? The answer to the question is nothing precludes it. The GAO reports: Projected capacity may be lower if some plants cease production, plants under construction don't come online in time, or some new plants' plans do not materialize. The ethanol industry is asking this Nation to make a blind leap of faith that there will be a sufficient amount of ethanol in the future. In fact, projections of the future domestic ethanol supply are based upon numbers supplied by ethanol producers themselves. We are taking a very big risk here. We should know it. I am also particularly concerned about the long-term effect of nearly tripling the amount of ethanol in our gasoline supply. What effect will this have on our environment? What are the health risks of ethanol? The answers are truthfully largely unknown. That is the rub, too. I believe it is bad public policy to mandate an amount of ethanol that is way above what is required to meet clean air standards before scientific and health experts can fully investigate the impact of ethanol on the air we breathe and the water we drink. There was a 2-percent oxygenate requirement put in some time ago. One of the oxygenates that was chosen was MTBE. Now we find that MTBE has contaminated 10,000 wells in California, the water supply for Santa Monica, the Santa Clara Valley reservoirs, Lake Tahoe, and a number of other places in California. We now find that MTBE may well be a human carcinogen. We learned all of this, the horse is out, and the barn door is shut. Now we are going to do the same thing with respect to ethanol. Just what are the environmental ramifications of more ethanol in our fuel supply? Although the scientific opinion is not unanimous, evidence suggests that, one, reformulated gasoline with ethanol produces more smog pollution than reformulated gas without it. We have reformulated gasoline. That is why we don't need to use it. The finding is that there is more smog pollution with ethanol than if States simply went to reformulated gasoline. Second, ethanol enables the toxic chemicals in gasoline to seep further into ground water and even faster than conventional gasoline. Ethanol is also made out to be an ideal renewable fuel, giving off fewer emissions. Yet on balance, ethanol can be a cause of more air pollution because it produces smog in the summer months. Smog is a powerful respiratory irritant. It affects a large amount of the population. It has an especially pernicious effect on the elderly, on children, and individuals with existing respiratory problems such as asthma. And asthma is going up in America. It is time we begin to ask why. A 1999 report from the National Academy of Sciences found: [T]he use of commonly available oxygenates [like ethanol] in [Reformulated Gasoline] has little impact on improving ozone air quality and has some disadvantages. Moreover, some data suggests that oxygenates can lead to higher Nitrogen Oxide (NOX) emissions. Nitrogen oxides are known to cause smog. The National Academy report also found that ethanol-blended gasoline will ``lead to increased emissions of acetaldehyde''--a toxic pollutant. Thus, ethanol is both good and bad for air quality. And we triple it. That is the unknown. That is the big step into the unknown we are taking. To me, it would make sense to maximize the advantages of ethanol and minimize the disadvantages. This bill, this mandate does not do that. This is exactly why States should have flexibility to decide what goes into their gasoline in order to meet clean air standards. Ethanol should not be mandated, certainly not at this level. Why are some forcing smog pollution into our air during the summer? Evidence also suggests that ethanol accelerates the ability of toxins found in gasoline to seep into our ground water supplies. The EPA Blue Ribbon Panel on Oxygenates found that ethanol ``may retard biodegradation and increase movement of benzene and other hydrocarbons around leaking tanks.'' Now, benzene is a carcinogen. Just know what we are doing. Let me quote the EPA Blue Ribbon Panel on Oxygenates. Ethanol ``may retard biodegradation and increase movement of benzene and other hydrocarbons around leaking tanks.'' According to a report by the State of California entitled, ``Health and Environmental Assessment of the Use of Ethanol as a Fuel Oxygenate,'' there are valid questions about the use of ethanol and its impact on ground and surface water. An analysis in the report found that there will be a 20-percent increase in public drinking water wells contaminated with benzene if a significant amount of ethanol is used--a 20-percent increase in public drinking water wells contaminated with benzene, a known carcinogen. We are tripling the amount of ethanol, and we are tripling it when it isn't needed to meet clean air standards. What kind of public policy is this? It is egregious public policy. It is wrong public policy. If you think I am passionate about it, you are right. So what is the rush to force more ethanol on the American motorists if it will only drive up the price of gasoline and produce mixed environmental results? On top of that, how can the Senate favor protecting the ethanol industry from liability? And this is the clincher in this bill: They are protected from liability. So if you get sick from it, if it pollutes our wells, if benzene increases, you cannot sue. What kind of public policy is this? I urge my colleagues to look at pages 204 and 205 of the energy legislation where a so-called safe harbor provision gives the ethanol industry unprecedented protection against consumers and communities that may seek legal redress against the harm ethanol may cause. I am very pleased to say that my colleague, Senator Boxer from California, will have an amendment which will eliminate this safe harbor provision. More ethanol will force the Government to collect less gasoline tax revenue for the highway trust fund. This is a very big consideration. It is huge. Let me argue this point. Ethanol is exempted from 5.3 cents of the Federal motor fuels tax. The Congressional Research Service has indicated that the ethanol mandate in this bill will divert $7 billion over the 9 years away from the highway trust fund, which States use to pay for essential transportation projects. And that is on top of the cut that is in the Bush budget. So per gallon of gasoline today, 18.4 cents goes into the trust fund. With the tripled amount of ethanol, CRS estimates there will be a $7 billion loss in the highway trust fund over the next 9 years--a $7 billion loss. That is enough in itself to vote against this legislation. California is able to produce special gasoline that is the cleanest burning gasoline in the country today. We meet clean air standards with reformulated gasoline. The State only needs to use ethanol in the winter months to meet clean air requirements. That is why the State has continually asked the Federal Government for a waiver of the 2-percent oxygenate requirement. Yet time and time again, the ethanol industry has flexed its political muscle in the White House, in the Senate, and in the House to force California to use fuel additives the State does not need. This time is no different. And it is clear to me that all of this is merely serving to prop up an industry that would fall apart without overwhelming Government subsidy and action. I am very concerned about the repercussions this mandate may have on the price and supply of gasoline. I cannot vote for this bill with this mandate in it. It is bad public policy. It is egregious public policy. The California Energy Commission again points out: The combination of limited local capacity, restrained imports, limited storage, and a strong demand, has caused the California gasoline market to become increasingly unstable, with wild price swings. The bottom line is that my State's gasoline market is extraordinarily volatile and vulnerable. And this is the fifth largest economic engine in the world. People have to get to work, and gasoline fuels the economy as well as automobiles. And we are going to do this to it? In 1999, fires at Tosco and Chevron refineries during the summer forced the price of gasoline to double in California. This bill will strain California's gasoline supply even further with a Federal ethanol mandate that risks plunging California and other States into the next energy crisis. Every indicator I have seen points to this ethanol requirement as having unanticipated side effects, such as supply problems and resulting in higher gasoline prices for the consumer. So by passing this legislation, the Senate will be making California's and the Nation's gasoline more expensive by mandating a fuel additive with a negative value as an energy source and a mixed value for the environment. On balance, it makes no public policy sense. I want to make clear, once again, my strong opposition to this greedy and misguided renewable fuels requirement. The mandate is a dangerous step that could force gasoline prices to soar, cause shortages of fuel, create more smog, and usher in the next energy crisis. Plain and simple, it is bad policy to charge all consumers more to benefit a collection of very few ethanol producers. I hope this commentary will begin an honest debate in the Senate about the ethanol provisions of the Senate energy bill and what they will really do. I know Senator Schumer is going to follow up on this. However, I take this opportunity to indicate that there will be a number of amendments from those of us on the west coast and those of us on the east coast. We intend to press this debate. We do not intend to let this bill go forward if we can prevent it. I begin with one of my first amendments. Another diabolical thing in this bill is essentially to state that if a waiver is provided, if a State asks to waive--this is on page 195 of the bill--the Administrator, in consultation with the Secretary of Energy, may waive the renewable fuels requirement in whole or in part on petition by one or more States by reducing the national quantity of renewable fuel required under this section based on a determination by EPA, after public notice and opportunity for comment, that implementation of the requirement would severely harm the economy or the environment of a State or a region or the United States; and that based on a determination by the EPA Administrator, after public notice and opportunity, there is an inadequate domestic supply or distribution capacity to meet the requirement. In simple English, this means that if there is an emergency, the ethanol mandate can be temporarily suspended. This is the rub: The bill, as currently drafted, gives EPA 240 days in an emergency to make a decision. That is a good part of a year to decide whether or not to grant a waiver. This is unconscionable. In other words, if you can't obtain enough ethanol and you have an emergency and you petition to waive it, it takes 240 days. What do you do for 240 days? This, in my view, is ridiculous. Can you imagine if in a few years there is an ethanol shortage, there are problems getting enough ethanol to New York or to California and our two Governors ask for a waiver and we have to wait 240 days to get it? Our economy would take a devastating blow if such a situation were to occur. To make this waiver more reasonable, I am offering this amendment to require the EPA to respond in a reasonable time to an emergency request by a State for a waiver. This amendment will give the EPA 30 days to rule on a waiver so consumers will not unduly suffer. By reducing the time period, the Administrator will have not 240 days but 30 days to decide whether or not an emergency waiver should be approved. We can ensure that any price spikes or supply shortage will be as temporary as possible. I believe that 240 days is in there for a reason: Because if your gasoline spikes in price, as we think it is, you can't stop it. It goes on for the 240 days. I will end my remarks. I reserve the right to come back for additional remarks. One of the things I would like to go into is how energy inefficient this ethanol proposal really is because ethanol increases the need for gasoline, it does not reduce it. MTBE reduces the amount of gasoline you need. So if you are short refinery capacity, MTBE works to your advantage. Ethanol does exactly the opposite. If you don't have that refinery capacity, you are stuck. It is a big problem. I would like to do more on that, but at the present time I send an amendment to the desk and yield the floor. I notice the distinguished senior Senator from New York is here and will continue our opposition to this ethanol mandate. I yield the floor, if I might, to the Senator from New York.

Mrs. FEINSTEIN. Mr. President, I rise today to open the debate on the so-called renewable fuels or ethanol mandate in the Senate energy bill. I strongly believe the fuel provisions in this legislation are egregious public policy, that they amount to a wish list for the ethanol industry, and the Senate has to consider the impact of these provisions on the rest of the Nation. Frankly, I believe it is terrible public policy. Frankly, I believe this amounts to a wealth transfer of literally billions of dollars from every State in the Nation to a handful of ethanol producers. Frankly, I believe this mandate amounts to a new gas tax in the Nation. Here are my objections to the renewable fuels requirement in the Senate energy bill: First, despite limited clean air benefits, the mandate will almost triple the amount of ethanol in our Nation's fuel. Second, even if States do not use this ethanol, they are required-- forced--to pay for it anyway. Third, forcing more ethanol into gasoline will only drive prices up at the pump. Fourth, since over 98 percent of the production capacity of ethanol is based in the Midwest, it is extremely difficult to transport large amounts of ethanol to States where it is not produced. Fifth, I am very concerned the limited number of ethanol suppliers in the United States will be able to exercise their market power and drive up price. This is exactly what happened last year in the West when electricity and natural gas prices soared due to supply manipulation by out-of-State energy companies. Sixth, there may not be enough ethanol produced in the United States to meet future demand. Seventh, almost tripling the amount of ethanol we produce raises serious health and environmental questions. Tripling it is a big step into the unknown, environmentally and health-wise. I hope to show this in my remarks. Finally, because ethanol is subsidized, mandating more of it will divert money from the highway trust fund. What I mean by this is there is a 5.4-cent-per-gallon tax credit for ethanol that will continue to divert more and more resources to ethanol instead of the highway trust fund where every State gets its essential resources to reduce traffic congestion and improve the safety of roads and bridges. Let me explain each objection, one at a time. Let me begin by talking about my concerns with mandating more ethanol than is needed. This bill forces California, my State, to use 2.68 billion gallons of ethanol over the 9 years it does not need to meet clean air standards. Look at this chart. The red is the amount of ethanol California will be forced to use from 2004 to 2012 under the mandate in the Senate energy bill. The blue is the amount of ethanol we would use without the mandate, largely in the winter months in the southern California market. Here you see, to meet clean air standards, by 2004, we will be forced to use 126 million gallons. This bill forces us to use 276 million gallons in 2004 and it forces us to use 312 million gallons in 2005 and it ratchets up every year until we are forced to use, by the end of this mandate, 600 million gallons of ethanol in 2012 when we only need to use 143 million gallons to meet clean air standards. What kind of public policy would do that? What kind of public policy would require a State to use a dramatic amount more of ethanol, an untested health and environmental additive to gasoline, that it doesn't really need? Is that good public policy? I do not think it is. What makes it even more egregious--and the reason I use the word ``egregious'' is if we do not use it, if we trade it, we are forced to pay for it anyway. That is the massive transfer of wealth that takes place under this amount. No one knows how much more consumers will be forced to pay, but a recent study by the Department of Energy indicates that prices will increase 4 to 10 cents a gallon across the United States if this ethanol mandate becomes law. A study sponsored by the California Energy Commission indicates that in a State such as California, where ethanol is not produced, gas prices could double and even reach $4 per gallon. This chart shows the real hazard this mandate is on both coasts. In California, where it is estimated the price increase is .096 cents per gallon. Then in other states: Connecticut, it will increase the price of gasoline 9 cents a gallon; Delaware, 9 cents a gallon; New Hampshire, 8 cents a gallon; New Jersey, 9 cents a gallon; New York, 7 cents a gallon; Pennsylvania, 5 cents a gallon; Rhode Island, 9 cents a gallon; Virginia, 7 cents a gallon; Massachusetts, 9 cents a gallon; Missouri, 5 cents a gallon-- and on and on and on. This is bad public policy. California does not have the infrastructure in place to be able to transport large amounts of ethanol into the State, therefore any shortfall of supply--either because of manipulation or raw market forces--will be exacerbated because the State will be reliant on ethanol from another area of the United States. According to a recent report issued by the GAO, over 98 percent of the U.S. ethanol production capacity is located in the Midwest. Here it is: In the West, 10 million gallons--that is all we produce; in the Rocky Mountain region, 12 million gallons; the South, here, 15 million gallons; and the east coast, 4 million gallons. In the Midwest, which is the big beneficiary of this ethanol mandate--nobody should doubt that--they produce 2.27 billion gallons of ethanol. So the ethanol is all produced in the Midwest. There is only one ethanol plant in California today, so it is going to be impossible for California to respond to any ethanol shortage. As the GAO reports: Ethanol imports from other regions are vital. However, any potential price spike could be exacerbated if it takes too long for supplies from out-of-State (primarily the Midwest where virtually all the production capacity is located) to make their way to California. Since there is no quick or effective way to send ethanol to California as of yet, more time is needed to develop the proper ethanol delivery infrastructure. One of the amendments I will be sending to the desk essentially delays the beginning of this by an additional year to give us the time to get the infrastructure. This is why it is important. Because moisture causes ethanol to separate from gasoline, this fuel additive cannot be shipped through traditional gasoline pipelines. So it needs a whole new infrastructure. Ethanol needs to be transported separately by truck, by boat, and by rail, and blended into gasoline after arrival. Unfortunately, this makes the 1- to 3-week delivery time from the Midwest to either coast-- either to California and the west coast, or to the east coast-- dependent upon good weather conditions as well as available ship, truck, and train equipped to handle large amounts of ethanol. Again, this is a tripling of the ethanol use in America over the next 9 years. I believe everyone outside of the Midwest will have to grapple with how to bring ethanol to their States. According to the California Energy Commission: The adequacy of logistics to deliver large volumes of ethanol to California on a consistent basis-- This is the key. Gasoline is sold every day. You can't just import it once and then forget it for 3 weeks. Every single day on a consistent basis is uncertain. A recent report sponsored by the same energy commission predicts that there will be future logistical problems since the gasoline supply is currently constrained with demand exceeding the existing infrastructure capacity. This means that California is already at its refining capacity. It is actually at about 98 percent of refining capacity. If there is insufficient transportation infrastructure to ship large amounts, this just makes the problem worse. I don't see any way for California to avoid experiencing a new energy crisis. This one would be a direct result of an unnecessary Federal requirement that increases our mandatory use of ethanol far beyond what we need to use to meet the clean air standard. The fact that there are limited numbers of suppliers in the ethanol market reminds me of the situation with electricity a year ago when prices soared in the West because of a few out-of-State generating firms dominating the market. What do I mean by that? According to the GAO, the largest ethanol producer is Archer Daniels Midland. That is this company. They have a 41-percent share of the ethanol market. The entire ethanol market really consists of these companies: Minnesota Corn Producers, 6 percent; Williams Bio-Energy, 6 percent; Cargill, 5 percent; High Plains Corporation, 4 percent; New Energy Corporation, 4 percent; Midwest Grain, 3 percent; and, Chief Ethanol, 3 percent. These eight companies corner the market on ethanol. There is a market concentration of ethanol. That is a danger signal for all of us--a concentrated market, and a huge mandate that triples. ADM has a 41-percent market share. The top eight firms have a 71- percent market share. The GAO finds their market share to be ``highly concentrated.'' How can those in the West who suffered last year believe these firms will not abuse their market power to drive prices up? If we learned anything from the energy crisis last year, it is that when there is not an ample supply or adequate competition in the marketplace, prices will soar, and consumers will pay. Mr. President, I ask unanimous consent to have printed in the Record an op-ed by Peter Schrag that appeared in the Sacramento Bee on January 30.

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

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

Mrs. FEINSTEIN. Mr. President, I send to the desk to be printed in the Record an editorial from the Sacramento Bee entitled ``Highway Robbery,'' which essentially characterizes what this does to the highway trust fund, how it hurts the country, how energy experts show that producing ethanol from corn requires more energy than the fuel produces, and that the ethanol mandate would make the country more fossil fuel dependent, not less.

Mrs. FEINSTEIN. I send another amendment to the desk which delays the beginning date from 2004 to 2005. It is sent to the desk on behalf of Senator Boxer and myself.

Mrs. FEINSTEIN

Mrs. FEINSTEIN. I thank the Senator for his remarks and for his leadership on this bill. I am pleased that he shares my strongly-held view that we need to ensure that the voting rights of all American citizens, regardless of where they reside, needs to be safeguarded. path of travel

Mrs. FEINSTEIN. Mr. President, I wish to engage the chairman of the Committee on Rules and Administration, Senator Dodd, in a colloquy concerning the voting rights of thousands of American citizens, many of whom are members of the Good Sam Club, which is based in California. The citizens to whom I am referring own recreation vehicles, RVs, and live in them year round. The number of full-time ``RVers'' grows larger each year. These individuals, most of whom are retirees, have sold their conventional homes and travel around the country year round in their RVs and mobile homes. Ostensibly, they do not have a permanent address. While nobody can question these individuals' right to travel, the fact is that this lifestyle does create a series of logistical problems, particularly as it relates to their ability to establish a domicile. While they may not remain at any one location, full-time RVers must still register their vehicles, maintain a current driver's license, obtain insurance, have some kind of legal address, and pay taxes. They also have, or should have, the right to register to vote if they so choose. Two years ago, the voting rights of over 9,000 full-time RVers who were registered to vote in Polk County, TX, was challenged in court. The plaintiffs in this case argued that since these individuals did not reside in Polk County on a permanent basis, they constituted a significant voting block of ``nonresidents'' that was likely to have an effect on the outcome of the election, and that their votes should be disallowed. Ultimately, the full-time RVers' constitutional right to vote was upheld in court, but future challenges are likely. The legislation that we are considering today would establish an Election Administration Commission, EAC. Among other responsibilities, this Commission is mandated to conduct a number of studies on various election issues, and report its findings to the President and Congress. Does the Senator from Connecticut agree that, at the very least, the issue of full-time RVers voting rights would be a suitable topic for the Commission to study?

Mrs. FEINSTEIN. Mr. President, stand on the threshold of passing perhaps the most important bill of the 107th Congress. S. 565 makes a long-overdue Federal investment in the most vital infrastructure our nation has: the infrastructure of democracy. We have neglected this infrastructure for too long, and at our peril. Problems in Florida and elsewhere during the November 2000 Presidential election underscored the effects of our years of neglect. I was pleased to see that President Bush's fiscal year 2003 budget request included $400 million for a revolving fund for States for election improvements, and additional funds projected through fiscal year 2005, for a total of $1.2 billion over 3 years. This is commendable, but I think it falls short of what we need. S. 565 authorizes $3.5 billion through fiscal year 2006 to help States and localities: Meet new Federal standards for voting systems; Replace or upgrade voting technology; Educate and train voters, election officials, and poll workers; and Make polling places and equipment physically accessible to the disabled. As Senator Bond and others have said, the new standards contained in S. 565 are meant to ``make it easier to vote, and harder to vote fraudulently.'' What a laudable goal. Under the bill, voting systems must notify voters if they ``over vote''--that is, if they vote for too many candidates for a particular office or position. Voters must be given the opportunity to change their ballot, and verify that it comports with their wishes before casting it. Voting systems must provide nonvisual accessibility for the blind and visually impaired. They must provide ballots in other languages for voters with limited proficiency in English. The bill requires that voters be informed of their right--and be allowed--to cast provisional ballots if their eligibility is challenged at the polling place, and to find out if their votes are counted. The bill also requires the States to develop statewide computerized and interactive voter registration lists both to make it easier to vote and to deter fraud. To meet these requirements, S. 565 provides a 100 percent Federal match. There is no unfunded mandate here foisted on State and local governments. We give them the money they need to do what we ask them to do. The bill comes at an absolutely crucial time for California. Last September, California Secretary of State Bill Jones ``de-certified'' the punch-card voting systems in nine counties, which collectively have 8.6 million registered voters. That's more people than the total populations of 39 States. The counties include: Los Angeles (4 million registered voters); San Diego (1 million registered voters); San Bernardino (700,000 registered voters); Alameda (700,000 registered voters); and Sacramento (600,000 registered voters). The other affected counties are Mendocino, Santa Clara, Shasta, and Solano. Secretary of State Jones gave these jurisdictions until the November 2006 elections to upgrade their systems, presumably to ``touch screen'' machines, also known as ``Direct Record Electronic''--DRE--devices. You can imagine what a challenge it will be to get new systems in place for so many voters. In Los Angeles alone, the cost is expected to be between $90 million and $100 million. In Sacramento, it will cost $20 million to $30 million. But there is more: civil rights groups and other plaintiffs sued to move the date up from 2006 to 2004. Just 2 months ago, U.S. District Judge Stephen V. Wilson ruled in favor of the plaintiffs. So these counties have about 2 years--less really--to get new systems. It is absolutely imperative that we pass this bill, work out a compromise with the House, and get Federal funds to these--and other-- jurisdictions as soon as possible. Last month, California voters approved Proposition 41, a $200 million bond measure that will provide 3-to-1 matching grants to county governments for the purchase of new election equipment. So the State is doing what it can to fix this problem. But it can-not do it by itself. With regard to the bill before us, I want to commend Senators Dodd and McConnell for their hard work in negotiating the compromise we will be voting on shortly. Fixing our election systems--fixing the infrastructure of our democracy--is not a partisan issue. The chairman and ranking member of the Rules Committee have done an admirable job. I am confident that the Senate will approve the compromise amendment overwhelmingly. I am also grateful that the Senate saw fit to approve 2 of my amendments. I offered these amendments to address concerns my staff and I heard from California election officials, notably Bradley J. Clark, the Alameda County Registrar who serves as President of the California Association of Clerks and Election Officials, and Connie B. McCormack and Mischelle Townsend, the Los Angeles County and Riverside County Registrars, respectively. My first amendment would task the Election Administration Commission--EAC--created under the bill with studying the technical feasibility of providing ballots and other election materials in eight or more languages. Section 101(a)(4) of S. 565 as amended significantly expands the Voting Rights Act--VRA--of 1965 requirement regarding the availability of voter registration and election materials in foreign languages. The VRA currently requires the availability of voter registration and election materials in native languages for specified ``language minority groups'' if a certain threshold is reached: No. 1, more than 5 percent of the voting-age citizens within the jurisdiction are members of a ``single language minority'' and have limited English-proficiency; or No. 2, there are at least 10,000 such voters. The VRA restricts the term ``language minority groups/single language minority'' to people who are American Indian, Asian American, Alaskan Natives, or of Spanish heritage. S. 565, as amended, goes beyond the four categories above, and the registrars are concerned that it could require a larger jurisdiction like Los Angeles, San Francisco, or San Diego to prepare ballots and other election materials in languages not covered by the VRA without first assessing the need for such ballots. We have school districts in these cities where 48 different languages are spoken. In the November 2000 elections, Los Angeles County spent $2.2 million out of a total budget of $21 million to prepare registration materials and ballots in six languages: Spanish, Chinese, Japanese, Korean, Vietnamese, and Tagalog--the native language of Filipinos. According to the Los Angeles County Registrar, Ms. McCormack, each language costs about $250,000 per election, and she anticipates adding Cambodian for the November 2002 election. She certainly does not want to disenfranchise any voter, nor would I countenance such an effort. But I think it is important for the EAC to study the technical challenges the multi-lingual ballot provision places on a jurisdiction like Los Angeles. For instance, Ms. McCormack told my staff that while the technology is improving, it is still very difficult to devise ballots in ``character'' languages such as Chinese, even on the newer machines. Prior to the November 2000 elections, she invited companies to bid on a contract to provide a limited number of machines with multi-lingual ballot capabilities. She drew just two bids. Another chief concern I heard about is the requirement in Section 102(a) of the substitute amendment that appropriate election officials must notify a provisional voter in writing within 30 days if his or her provisional ballot is rejected, and the reason for it being rejected. The goal--getting voters properly registered--is certainly worthwhile, but the requirement is administratively cumbersome for some jurisdictions. Los Angeles County, for instance, received over 100,000 provisional ballots in the November 2000 elections, and rejected close to 40,000. In addition to notifying, in writing, those voters whose provisional ballots have not been counted, the amended bill reburies election officials in each jurisdiction to establish a ``free access system'' such as a toll-free number or an official Website that voters can contact to determine if their provisional ballots have been counted. It strikes me that establishing the free access system, informing voters about it, and allowing them to find this information out for themselves is more manageable than requiring the written notification. In either instance, I am concerned about protecting the privacy of the data that such a free access system would contain. S. 565, as amended--Section 102(a)(6)(BN)--is silent on that point. Identify theft is one of the Nation's fastest growing crimes. I felt compelled to offer an amendment to the bill--which has been adopted--to direct the appropriate State or local election officials to protect the security of the personal information contained in the free access systems that will be created. I am pleased that the Senate also adopted the amendment senators Chafee and Reed of Rhode Island offered to ensure that State and local governments making multi-year payments for new voting equipment purchased prior to January 1, 2001 are eligible to apply for grants under this bill. This amendment, as I understand it, ``grandfathers'' Riverside and Marin Counties so that they can tap into Section 203 grant monies to help them defray the cost of equipment they purchased prior to the November 2000 elections. According to Ms. Townsend, the Riverside County Registrar, prior to the 2000 elections, Riverside County using Pitney Bowes for financing-- purchased 4,250 touch screen machines from Sequoia, an Oakland manufacturer, at a cost of $14 million amortized over 15 years (for a total cost, including interest, of roughly $20 million). The new DRE system was so successful that Riverside had one of the ten lowest voter error rates of all counties nationwide--less than one percent. Ms. Townsend told my staff that much of the error rate was attributable to paper absentee ballots. ``Over-voting'' is impossible on touch screens, and ``under-voting'' is the prerogative of individual voters and, consequently, may not represent an error. Riverside was the first county nationwide to rely exclusively on touch screens and is serving as a model for other jurisdictions. The county was commended in the report issued by the Election Reform Commission former Presidents Ford and Carter co-chaired. Clearly, we do not want to punish Riverside County--or Marin County, which purchased DRE touch screen machines and precinct-based optical scanners in time for the November 2000 elections--for acting responsibly. As I said a moment ago, I want to thank Senators Dodd and McConnell for accommodating my concerns. I think the amendments I offered and the Chafee-Reed amendment make an already outstanding bill even better. While much of our discussion concerning specific provisions in the bill may sound arcane or parochial, there is also something much larger at stake here. One hundred years ago, democracy was still very much a tenuous experiment around the world. Even in the United States, African- American men were largely disenfranchised and women still had to wait for 2 more decades before they could vote. According to a 1999 report issued by Freedom House, in 1900, only 5 percent of the world's population had the right to elect their leader(s). Now, 58 percent of the world has this right. In 1900, no nation elected its leader by universal adult suffrage; now, 119 nations do. That is 62 percent of all of the countries in the world. According to the report, entitled Democracy's Century: Like economic progress, political progress has been uneven. But the general trends are hard to ignore. They reinforce the conclusion that humankind, in fits and starts, is rejecting oppression and opting for greater openness and freedom. This report was published before the terrorist attacks on September 11. We have been reminded in a visceral way that enemies of freedom still exist. We have met those enemies on the battlefields of Afghanistan. The battle we now wage is every bit as serious as the cold war. I fervently believe that freedom will win out. Democracy will continue its march. Respect for human rights will grow. The newly established or emerging democracies of the world look to us for inspiration and for guidance. That is why it is so crucial that we pass S. 565 and set about mending our democracy. I traveled abroad after the 2000 elections, and I heard an earful from foreigners. ``Don't lecture us,'' they said, and rightfully so. While we were able to settle on the results peacefully, in our courts, the events surrounding that election shame us, diminish us in the eyes of those who aspire to be like us, and embolden our enemies, freedom's enemies. On April 27, 1994, 43 million black South Africans--86 percent of the eligible voters--cast their first ballots. Can any of us forget the poignant images we saw on television back then of people waiting 8 hours or more to vote, of lines of voters seemingly stretching to the horizon? Yes, democracy is on the march. But it is fragile. We have to protect and nourish it. Even here in America--especially here in America. We are a beacon to the rest of the world, especially to oppressed people everywhere. We Americans have been complacent and neglectful with regard to our democracy. We have allowed the infrastructure that sustains it to fray around the edges. Our democracy has lost some of its marvelous luster. It is time to restore that luster.

Mrs. FEINSTEIN

Mrs. FEINSTEIN. Mr. President, I rise to urge my colleagues to support the cloture motion on the amendment that is now pending. This amendment essentially would close what I call the Enron loophole, which allows certain areas of trading to go without any oversight or regulation. The amendment has been out there for 5 weeks now. Hopefully, that was more than enough time for Senators to give it due consideration. There has been lobbying for the amendment on both sides. This is what the amendment does. It essentially provides antifraud and antimanipulation authority to the Commodity Futures Trading Commission for all energy trades online, when there is no physical delivery. The amendment subjects all energy platforms--trading platforms--to the same levels of oversight they had before the 2000 Commodity Futures Modernization Act, which was changed at the final hour by Enron to include an exemption for energy trading. This means these trades exchanges would, once again, have to file with the CFTC. They would have to provide price transparency, maintain capital commensurate with risk, as decided by the CFTC. All the things that Enron did online essentially provided this giant loophole. Mr. President, if I trade natural gas to you and deliver it to you, we are covered by the Federal Energy Regulatory Commission. But if I don't deliver the gas to you but a number of trades take place in the interim, none of these trades are covered by anybody. There is no antifraud; there is no antimanipulation oversight; I don't have to keep any record; there is no audit trail; and I don't have to have sufficient capital based on the risk I am taking. All of these things are covered by this amendment. This amendment essentially closes a loophole, and that loophole is that if you trade online, there is no oversight, or there is no antifraud or antimanipulation authority. So it is my hope that the Senate will provide cloture. It is my hope that we will be able to close this loophole. The amendment is supported by a number of groups. It is fair to say there is intense lobbying on both sides. I view this amendment as being on the side of the angels. It is very hard for me to understand why because you trade derivatives on an electronic platform--meaning online--that you are able to escape any form of oversight. I think this kind of situation does not breed security in the marketplace, does not give confidence to investors. So I hope there are 60 votes present for this amendment. I reserve the remainder of my time and I yield the floor.

Mrs. FEINSTEIN. Mr. President, how much time is remaining?

Mrs. FEINSTEIN. Mr. President, I rise to withdraw the amendment on which we just voted, amendment No. 2989.

Mrs. FEINSTEIN. Thank you, Mr. President.

Mrs. FEINSTEIN. I yield the remainder of my time to the Senator from New Jersey.

Mrs. FEINSTEIN. Absolutely.

Mrs. FEINSTEIN

Mrs. FEINSTEIN. Mr. President, students have fallen silent in schools all across the country today to bring attention to the discrimination and harassment of our gay, lesbian, bisexual and transgender, GLBT, youth. The voices that won't be heard today belong to the participants of a national project called the Day of Silence. The Day of Silence was conceived more than 6 years ago by Maria Pulzetti, then a student at the University of Virginia, after she wrote a paper on nonviolent protest and grassroots organizing. It encourages students to take a nine-hour pledge of silence to represent the silence that GLBT students face because of harassment, discrimination and prejudice at their schools. Since the first-ever Day of Silence at the University of Virginia in 1996, the event has grown in size each year. This year, thousands of students will be participating from more than 1,776 middle schools, high schools, colleges and universities in 49 States, Puerto Rico and the District of Columbia, including at least 136 schools in my State of California. This year's effort will easily be the largest in its history. Instead of speaking, participants of the Day of Silence will hand out cards that explain why they have chosen not to talk. The cards read: Please understand my reasons for not speaking today. I am participating in the Day of Silence, a national youth movement protesting the silence faced by lesbian, gay, bisexual and transgender people and their allies. My deliberate silence echoes that silence, which is caused by harassment, prejudice, and discrimination. I believe that ending the silence is the first step toward fighting these injustices. Think about the voices you are not hearing today. What are you going to do to end the silence? Some participants will also be wearing t-shirts that spell out why they have chosen not to speak today. Others will wear buttons or stickers. And still others will offer ribbons to those who are not ready to take a vow of complete silence but who want to show their support. In some cases, teachers will even join the effort by taping their lessons for the day, screening movies, or writing on the blackboard instead of speaking to their classes. In fact, students who have organized the event in the past say that the broad participation of their friends and teachers has elevated the Day of Silence from ``a bunch of gay kids complaining about discrimination'' to a formidable student-led movement for civil rights. But, regardless of which participant you ask, they all agree that they can speak loudest by not saying a word. And, even though they will be silent, their message will get across loud and clear. I would also like to give special recognition to two California students that have helped organize this year's Day of Silence: Sumiko Braun, 17, of Carson, CA, is the California State Organizer. She is currently a senior at the California Academy of Mathematics and Science, and is also the founder and president of her school's Gay- Straight Alliance. Although the Gay-Straight Alliance has faced much adversity, the group has remained one of the most active on the school's campus. Nikira Hernandez, 15, of Santa Cruz, CA, is one of the National Team Co-Advisors. She currently attends Santa Cruz High School, and is a member of her school's Rainbow Alliance. Before organizing Santa Cruz High School's first Day of Silence last spring, Nikira said her school's Rainbow Alliance counted about half a dozen students as members--and they weren't very motivated. Then, when more than 200 people fell silent on their behalf last year, she couldn't believe how much her life changed. She said, ``Seeing how many allies we had made me feel much more accepted at my school.'' I am encouraged that these two talented and dedicated young ladies have taken the initiative to help end the silence of GLBT students that, unfortunately, has become the norm in our Nation's schools. These outstanding Californians are not only giving support to other young people who are participating in the Day of Silence effort, they are helping to make their schools and their communities more accepting in the process. The effects of today's silence will last much longer than just one day. This experience will offer students an opportunity to think about how powerful silencing can be and to focus on how they can make their own voices stronger. Long after this day has ended, I hope students will continue to speak out against discrimination and harassment so that everyone can feel accepted at their schools, and we can overcome the forces that impose silence on our youth.

Mrs. FEINSTEIN

Mrs. FEINSTEIN. Madam President, it has become very clear to me and to others that the linchpin of stabilizing the Middle East and also to developing an allied coalition of Arab nations in the war on terrorism is the resolution of the Israeli-Palestinian conflict. Unfortunately, in the past 2 weeks, while Congress has been on recess, we have seen an escalation of violence. I strongly believe that Yasser Arafat must shut down the suicide bombers or there will be no opportunity for peace in the Middle East. The Crown Prince of Saudi Arabia expressed a vision for a peace plan. Secretary Powell is in the area to see if he can capitalize on this vision and restore peace and stability, at least to get a cease-fire. His job is, indeed, a difficult one. The suicide bombings are a potent weapon and they have been precisely calculated to destroy any chance for peace. Again, why? If these suicide bombers cannot be stopped, the situation can only deteriorate and the result will only be full scale military conflagration. Israel cannot be expected to place a limit on her own self-defense or end her effort to capture terrorists so long as fanatics on the Palestinian side continue to plot and carry out these attacks. Indeed, some 30 years ago, I recall hearing former Israeli Prime Minister Golda Meir say: We are not going to die so the world will think well of us. An overwhelming majority of the Israeli people still feel the same and believe as I do that Israel has a legitimate right to self-defense. Forces under the control of Yasser Arafat have been directly involved in perpetrating the recent wave of deadly terrorist attacks against Israeli civilians. Many of these attacks have been carried out by Arafat-affiliated groups such as the Al Aqsa Brigade, recently designated by the State Department as a foreign terrorist organization, and the Tanzim. These are parts of his own military apparatus. During the week of Passover, 46 Israelis were killed and more than 120 wounded. In March alone, 125 Israelis were killed in the attacks which culminated in the bombing of the Passover ceremony in Netanya. According to documents recently seized by the Israeli military from Palestinian Authority headquarters, one of Arafat's top advisers who works out of his office is directly involved in financing the illegal weapons purchases and the terror activities of the Al Aqsa Brigade. This same Palestinian Authority was directly involved in efforts to illegally smuggle in more than 50 tons of arms from Iran a few months ago. Arafat resumed using terror as a tactic after he walked away from Israel's historic peace concessions at Camp David in 2000. The offer placed on the table at Camp David may not have been perfect, although I happen to believe it was excellent, giving the Palestinians 96 percent of what they wanted. They have not put an offer on the table. Rather, they have opted for violence. Since the fall of 2000, Arafat and his forces have engaged in hundreds of acts of terror against Israel, principally targeted at civilians. Arafat and other Palestinian officials have been directly involved in inciting violence against Israel. Arafat and other Palestinian officials have been directly involved in failing to thwart terrorist operations because they know how powerful those operations are. Arafat and other Palestinian Authority officials have been directly involved in releasing terrorist suspects rather than arresting them. Arafat and other Palestinian Authority officials have been directly involved in failing to confiscate the weapons of terrorist suspects. All of these actions are required under the terms of peace agreements he signed and to which he claims to be still committed. So why is all of this happening? I believe there is a hidden agenda, and that hidden agenda is to drive out the Jewish people and create a Palestinian state, which includes Israel. This has been the Palestinians' historic quest. Many of us hoped that through the Oslo process this quest could have been changed. But I am increasingly beginning to believe it has not been changed. It may be unreasonable to expect that Arafat will be 100 percent successful in bringing Hamas and the Islamic Jihad totally under his control. But he can control Fatah and the Al Aqsa brigades and the Tanzim. So far, it is impossible to make the argument that he has even tried. We must remember that Yasser Arafat has rejected all Israeli peace plans, and he rejected General Zinni's recent cease-fire plan, which Israel accepted. General Zinni went to the Palestinians and said: What do you need? He then went to the Israelis and said: What do you need? He then put them together and presented each with a cease-fire plan. The Israelis accepted it; the Palestinians did not. So one must believe the Palestinians could stop this violence if they wanted. Israeli soldiers are now going door to door. If they retreat, I believe it will be back to the suicide bombing as usual. In the past 2 weeks, there have been no suicide bombings, since the last bombing on March 31 at the Haifa restaurant which killed 14 people. The Israeli Defense Forces, IDF, have arrested roughly 1,500 people and placed 500 on the wanted list. The Israeli Defense Forces have captured more than 2,000 weapons of various types, including thousands of guns and ammunition, 44 combat vests and suicide belts, more than 60 pounds of high explosives, and nearly 50 rocket-propelled grenades and launchers. They have captured night vision equipment and sniper rifles. The IDF has also discovered 11 weapons and explosives laboratories. In the final analysis, if there is to be a peaceful resolution of the crisis, and if there is to be a Palestinian state alongside Israel, Mr. Arafat must make every effort to take the measures necessary to bring the suicide bombing and this kind of violence to an end. That is the responsibility he bears as a leader if he wants to see his people truly live in peace and freedom. If Secretary Powell is unable to make concrete progress in ending the violence and moving the peace process forward, I intend to move forward shortly on an updated version of the Middle East peace compliance legislation that I introduced with Senator McConnell last fall. The stakes are enormous. As an editorial last Thursday in the Washington Post--and I find myself strongly agreeing--stated: It should not be hard to agree that a person who detonates himself in a pizza parlor or a discotheque filled with children, spraying scrap metal and nails in an effort to kill and maim as many of them as possible, has done something evil that can only discredit and damage whatever cause he hopes to advance. That Muslim governments cannot agree on this is shameful evidence of their own moral and political corruption. And, The Palestinian national cause will never recover--nor should it--until its leadership is willing to break definitively with the bombers. And Muslim states that support such sickening carnage will risk not just stigma, but their own eventual self destruction. So either terror ends or full-scale war begins. This is the way I see it. Hopefully, the world will respond. Despite all that has happened, the United States can and should encourage Israel to sit down at the negotiating table for one final try. We should be responsible to get the Israelis to that table. But if the United States is to do so, the Arab world must also rise to the occasion and exercise this same control over Arafat and the Palestinian terrorists. That should be the responsibility of the Arab world. I must say I was struck by the unhelpful nature of Ambassador Bandar bin Sultan's recent op-ed piece in the Washington Post. It seems to me if there is ever a time for responsible Arab governments to shut down suicide bombing as an acceptable tactic for anything and push Yasser Arafat into a cease-fire, real negotiations, and a peace plan, that time is now. Both the Saudis and the Egyptians are well known for seeking and destroying terrorists or others who threaten them. But they fail to allow Israel the right to do the same or to destroy the infrastructure that organizes and arms the suicide bomber and recompenses the bomber's family. Suddenly, those who kill and maim Israeli citizens are heroes, as long as it is only Israelis they kill. Some believe that the Saudis want to have it both ways--support Americans in our war against terror, and support Yasser Arafat as he wages terror. Ambassador Bandar bin Sultan gives credibility to this argument. Any premature withdrawal of Israeli troops before they are able to seek out and destroy the members of the terrorist network must be replaced by a serious commitment of the United States and all moderate Arab States to stop the terrorist bombing. If it is not, then this country's war against terror will be mortally wounded by hypocrisy. I suggest that Secretary Colin Powell pick up the Saudi peace plan and place it squarely on the table of world opinion, with the following caveats: 1. Withdrawal of Israel to the 1967 borders and agreement to the creation of a Palestinian State, to be conditioned by: A, defensible borders; and, B, a division of Jerusalem along the lines of that proposed by President Clinton at Camp David. 2. A 5-year phaseout of Israeli settlements in the West Bank and the Gaza Strip. This is a difficult pill to swallow, but it is also one that has to be done if there is going to be true peace and the ability of an Israeli State to stand side by side with the Palestinian State. 3. No physical Palestinian right of return but just compensation as provided for in United Nations Resolution 194. 4. All suicide bombings stop or the agreement is invalidated. 5. A peacekeeping and monitoring of the agreement by the United Nations and/or the United States over the next 5-year period. If it is true that all Palestinians want is their own state and government, then they shall have it. If it is also true that what they really want is the destruction of the State of Israel, then this will become crystal clear to the world. Israel has a right to live in peace and security, within internationally recognized borders, and only Arab States committed to peace can bring this to a peaceful end. The ongoing wave of terror threatens the survival of Israel as a free democratic and civilized society, and it risks engulfing the entire Middle East in chaos and war. Israel must fight against this terror, just as we do, just as surely as the United States must fight and destroy al-Qaida and the other terrorist groups with global reach. And I firmly believe the United States should stand by Israel's side in the quest for peace and security. Madam President, I yield the floor.

Mrs. FEINSTEIN

Mrs. FEINSTEIN. I mentioned in my remarks what really kind of clued me on to this was the price of natural gas. Right after CFMA passed, we noticed the price of gas at the southern California border was $50 a decatherm--a decatherm is about enough for 900 homes--whereas in San Juan, NM, it was $8, and the transportation cost was $1. Nobody knew why it had spiked that way. So I picked up the phone. I called what is called ISO, the independent system operator, and said: Why is gas spiking this way? They did not know. Now I do not know whether Enron was doing this or not, but as soon as Enron went belly up, the next day the price of gas dropped dramatically. So it has to have been the trading that was being done that did not have a delivery directly related to it. Now people say the SEC will step in and look at this. The fact is there are no records for the SEC to look at now because there is no audit trail. There are no records kept of these trades. Somehow it is very difficult to get that across to our Members. It would get across if they were trading on the Chicago Mercantile.

Mrs. FEINSTEIN. I will.

Mrs. FEINSTEIN. I have no problem. I agree.

Mrs. FEINSTEIN. I yield the floor.

Mrs. FEINSTEIN. Mr. President, I very much appreciate what the distinguished Senator from Nevada has done, which is essentially to eliminate metals from the derivatives amendment that is now pending. It is a second-degree amendment. It would continue the exemption for metals. I want to go into three cases and why I believe metals should be included. The first is the case called Sumitoma. It goes back to 1996. After nearly a year of complaints by market participants and regulated markets, Sumitoma copper trading irregularities ended up with the company losing a reported $4 billion and their main copper trader pleading guilty to the Japanese equivalent of market manipulation. The company is paying record fines to the United States and British regulatory authorities. Sumitoma manipulation efforts occurred in the over-the-counter and cash markets. Although observed by market participants and markets, the Commodity Futures Trading Commission--the CFTC--was nearly powerless to do anything about it without the consent of the British regulator. In the 30 days following the May 17, 1996, collapse, the market dropped by nearly 60 cents per pound--from $1.30 to 70 cents by the middle of June. In just the 8 months prior to the collapse, U.S. consumers were overcharged by nearly $2.5 billion in copper purchases because of the Sumitoma trader's manipulation. Once again, had the CFTC had the authority--just modest authority--in our amendment, this fraud could have been detected and dealt with much earlier and without such a devastating economic impact. We are simply including the antifraud and antimanipulation provision of the CFTC, and applying it also to metals as well as energy. Let me cite a second one having to do with the Metalgeselschaft collapse in 1993. This company was known as MG. It was once a preeminent metals and energy trader. It collapsed in late 1993, losing billions of dollars, costing thousands of employees their jobs, and endangering the energy marketplace. After the collapse, analysis showed that MG's derivative positions, over the counter, in combination with the faulty strategy, contributed to the collapse. If the Commodity Futures Trading Commission, the CFTC, had at that time the authority contained in our amendment to monitor large trader positions and ensure adequate net capital, the debacle could likely have been avoided. It certainly would have been detected far before the collapse occurred. That is point 2. These are actual cases that have taken place. Point 3: The Hunt brothers and the silver bubble. In 1979, the sons of patriarch H.L. Hunt, Nelson Bunker and William Herbert, together with some wealthy Arabs, formed a silver pool. In a short period of time they had amassed more than 200 million ounces of silver, equivalent to half of the world's deliverable supply. When the Hunts began accumulating silver back in 1973, the price was in the $1.95 an ounce range. Early in 1979, the price was about $5. In late 1979, early 1980, the price was $50, peaking at $54. Once the silver market was cornered, outsiders joined the chase. But a combination of changed trading rules on the New York Metals Market, COMEX, and the intervention of the Federal Reserve put an end to the game. The price began to slide. It culminated in a 50-percent 1-day decline on March 27, 1980, as the price plummeted from $21.62 to $10.80. The collapse of the silver market meant countless losses for speculators. The Hunt brothers declared bankruptcy. By 1987, their liabilities had grown to nearly $2.5 billion against assets of $1.5 billion. And in August of 1988, the Hunts were convicted of conspiring to manipulate the market. This is the point. These things have happened. These are three big metals cases. What we say is, put them within the Commodity Futures Trading Commission antifraud and antimanipulation commission. Why give online trading platforms exemptions from transparency? Why allow a commodity that isn't being delivered from me to you but traded back and forth to have no transparency of any of these trades so that no one can find an audit trail, no one can find the records, and no one can ever know what really happened? At the end of my remarks, I will move to table the Reid amendment. I will briefly talk about the energy derivatives amendment cosponsored by Senators Fitzgerald, Cantwell, Wyden, Corzine, Leahy, and Boxer, and the Presiding Officer. I am very grateful for your support. Our amendment is currently supported by the National Rural Electric Cooperative Association, the Derivatives Study Center, the Sierra Club, the American Power Association, the American Public Gas Association, the Texas Independent Petroleum Royalty Owners Association, the Mid- American Energy Holdings Company, the New York Mercantile Exchange, the California Municipal Utilities Association, the United States Public Interest Research Group, the Consumers Union, the Consumers Federation of America, the Apache Corporation, Calpine, Southern California Edison, Pacific Gas and Electric, the Silver Users Association-- interestingly enough, they are concerned; they want metals in this amendment--the Commodity Futures Trading Commission's Commissioner Tom Erickson, and all four Commissioners of the Federal Energy Regulatory Commission, including its Chairman, Pat Wood. Because of this support, the amendment has been filibustered by certain Senators who don't want to see it come to a vote. The amendment has now been on the floor for more than a month. The leadership was forced to file cloture last night to try to bring this to a conclusion. Some of the opponents continue to argue that this amendment is too complicated for them to understand. I once again explain very simply what our amendment does. The amendment provides antifraud and antimanipulation authority to the Commodity Futures Trading Commission for all energy trades and metals where there is no physical delivery. If I buy energy from you, Mr. President, and you deliver that energy directly to me, the Federal Energy Regulatory Commission has oversight--antifraud, antimanipulation oversight--and you must keep records; I must keep records. But if there is no delivery--if I buy an energy swap, for instance, to lock in a set price and protect myself from risk--the CFTC does not have oversight, if I use an electronic trading exchange. That is the rub. The electronic trading exchange is exempted. If we go through the Chicago Mercantile, we are not exempted. If we go through New York, we are not exempted. But an online trading platform has no transparency for a derivative not delivered. In fact, the CFTC may not even be able to investigate fraud or manipulation if the exchange was operated, like Enron Online, where Enron was both a buyer and a seller. This is what is known as a bilateral dealer market. If Enron Online or another company operating a bilateral dealer market wanted to manipulate prices and/or corner the market, regulators might very well be helpless to investigate. Since more than 90 percent of energy trades do not involve delivery, and since other electronic exchanges are now emulating the Enron model, there is a huge loophole here. I will predict that some of these go down just as Enron did. Our amendment closes that Enron loophole and makes sure the CFTC has full antifraud, antimanipulation authority over all energy trades where there is no delivery. The amendment also subjects all dealer markets selling energy and metals derivatives online, including Enron Online, Dynegy Direct, Aquila, to similar requirements as other nonelectronic exchanges. This means these exchanges would have to file with the CFTC, provide some price transparency and price disclosure, and maintain capital commensurate with risk--all the things that Enron Online did not do and did not have to do because of the 2000 Commodity Futures Modernization Act which provided Enron this loophole. How convenient. Someone buys energy not on an exchange; let's say they pick up the phone and buy an energy derivative, but there is no delivery. The transaction is subject only to antifraud and antimanipulation authority. So if you are trading energy derivatives on an electronic trading platform, that exchange is regulated just as other exchanges. If you are not using an exchange, the CFTC can investigate allegations of fraud and manipulation. I don't think this is confusing at all. Either we are going to require energy trades to be transparent or we are going to continue to support loopholes, allowing some energy trading to be done in the dark of night. I want to point out that on this simple proposal, just to close loopholes in the energy and metals markets, we have now spent 3\1/2\ hours more of debate than this body spent considering the entire Commodity Futures Modernization Act of 2000--that's right, 3\1/2\ hours more debate than was spent on the entire Commodity Futures Modernization Act. The Senate did not spend 1 minute debating the Commodity Futures Modernization Act--one of the most sweeping regulatory revisions in several decades. And the loophole for Enron just went through. Yes, the Senate Agriculture Committee held hearings and completed a markup of the Senate version of the CFMA on June 29, 2000; but that is where the process stopped in the Senate. At the last minute, Enron lobbied the House for an exemption for energy and metals trading. This is what appeared in the appropriations bill for the Department of Labor and Health and Human Services at the very end of the 106th Congress. And this was inconsistent with what the Senate Agriculture Committee marked up in regard to energy and metal. The amendment we are debating is consistent with the bill that Senator Lugar and the Agriculture Committee, which he chaired, marked up. What the Agriculture Committee passed was consistent with the recommendations spelled out in the November 1999 President's working group, signed by Fed Chairman Alan Greenspan, Treasury Secretary Larry Summers, SEC Chairman Art Leavitt, and CFTC Chairman William Rainer. That report asserted that there should be two categories of derivatives--financial derivatives and everything else. There was no reason that metal or energy or any other tangible, finite commodity should be entitled to its own category. So what we are doing in our amendment is entirely consistent with that report. In regard to the electronic trading platforms, we simply return things to the way they were before the President's working group affirmed that we were doing it right. By that standard, this amendment has been subjected to intense scrutiny and infinitely more debate than the comprehensive regulatory legislation adopted in 2000. Before the recess, at the end of the last floor debate, my colleague from Idaho asked--I think facetiously--why we did not simply try to provide antifraud and antimanipulation authority for all transactions, not just energy and metals. Let me point out that our bill affects about 2 percent of the derivative market that deals with energy and metals. We actually don't know if it is 1 percent or 3 percent because as a result of the Enron exemption, there is not enough transparency to know. Our amendment does not affect financial instruments at all. We have cleared that up. Financial derivatives already have a statutory exclusion under the Commodities Exchange Act. Our amendment only deals with derivative transactions that involve energy or metal, the two commodities exempted by the 2000 CFMA. This lack of transparency had important ramifications for the energy crisis experienced in California and the West, which ended only about 10 months ago. This is what got me interested in this matter. As a result, we still don't know why gas prices at the California border remained significantly higher than neighboring States for more than 5 months. Why don't we know? There is no transparency; there is no audit trail; there are no records. It is impossible to prove what kind of trading back and forth was done, frankly, to increase the price of gas. Some have asserted that the CFTC already has antifraud authority for over-the-counter trades. If this authority is already there, then our amendment reaffirms that the authority is there. But this is not as easy to determine as one might think. Let me read two short paragraphs that show you what I mean. This is from the International Swaps and Derivatives Association: Transactions involving exempt commodities, including commodities such as energy products, chemicals, and metals, are similarly excluded from the Commodity Exchange Act and remain subject to the CFTC's antifraud and antimanipulation authority. Then they put out another publication, which is the March 11 opposition letter to our amendment, and they say exactly the opposite. They say: The amendment extends the application of the CFTC's antifraud and antimanipulation provisions to transactions in exempt commodities. The amendment would revise the Commodity Exchange Act, section 2(g), to provide that otherwise exempt transactions in exempt commodities would be subject to antifraud and antimanipulation provisions of the Commodity Exchange Act. So maybe the authority is there and maybe it is not. If our amendment passes, we know for sure that it is. We take the vagary out of it, we take the game playing out of it, and the same party cannot say different things at different times. That is really why this amendment is necessary. So that means if someone is cornering the market in energy or metals--or maybe in natural gas, as many suspect Enron did--the CFTC will have the necessary tools to investigate. And 99 times out of 100, the CFTC will find that there is nothing improper. But isn't it good to know that regulators can provide assurance that markets are functioning properly? Isn't that what gives people confidence to invest, that they know there is regulation and that these markets are performing efficiently and with transparency? I want to make one final point about Enron. As I said before, Enron Online operated completely outside of the CFTC's antifraud and antimanipulation authority because it was operating an online trading forum to conduct trades bilaterally, one to one, where it was both a buyer and a seller. In other words, Enron was buying energy and selling energy, and only Enron knew the price. Enron could have been buying at one price and selling at a much higher price. Because there was no transparency and no oversight authority, we may never know. Other companies now have stepped up to fill Enron's market void. Some of these energy trading platforms are operating the same way Enron Online did. Do any of my colleagues truly believe that we should be limiting transparency and regulatory authority in light of all we have just learned about the energy markets and Enron? I think not. So this amendment is really on the side of the angels. It gives certainty, it provides for antifraud, antimanipulation oversight; it says the CFTC must set some capitalization standards based on risk, and it provides that all trades are transparent, records are kept, and audit trails are available. I know why the banks oppose this. Because they want to do the same thing Enron has done. The banks have set up their own online trading platform which, again, would trade in darkness, which, again, for nondelivered derivatives would have no transparency, have no record, have no capital requirements, and no antifraud and antimanipulation oversight. I believe there are more Enrons coming down. I believe there are going to be more just on this very point. What I am saying to the Senate is the Senate has to protect the people. The Senate has to provide for regulation. Why should there be regulation of the Nasdaq? Why should there be regulation on the Chicago Mercantile and no regulation online? It is a huge loophole, and we ought to plug it. Mr. President, I move to table----

Mrs. FEINSTEIN. Mr. President, I take a moment to respond to the statement of the Senator from Nevada. The point I was trying to make, to the Senator from Nevada, is that manipulation does occur in metals. Clearly, it did. Obviously, there was no online trading at that time. Everybody knows that. The fact is, these remain three major cases of market manipulation. It doesn't only happen in energy; it can happen in metals as well. The key point is, if the Reid amendment is successful, metals will be the only exemption. Why should metals be the only exemption? I don't think they should. We know you are covered if you deliver the commodity directly to another individual. We know FERC covers that. We know you are not covered if you are swapping or trading against risk. We also know there is great uncertainty as to whether, with energy, there is coverage. I purposely read the letters from the Swaps and Derivatives Association because they say two different things. In one statement they say these areas do remain within the CFTC jurisdiction; they turn around in a March 11 opposition letter and say exactly the opposite. The time has come to have certainty, to see that energy and metals are covered. Let me say once again, who can object to there being antifraud and antimanipulation oversight? No one. Who can object to saying you have to keep records of trades, online trades, even if you are not directly delivering the product, if you are swapping to hedge against risk, for example? Why shouldn't you keep a record and have an audit trail on what you are doing so that people know? Why shouldn't there be some provision for capitalization of these trades based on risk, and the CFTC would decide a level of risk and the level of capitalization? This past week, I was just reading another article of a company that would go down because it was swapping. There was no capitalization, Peter came home to pay Paul, and there was nothing there. So the company is going to go bankrupt. It was another major company. It seems to me, rather than create uncertainty, our amendment creates certainty. It says to the world, to everybody, energy and metals are not the only two that enjoy an exemption. Energy and metals, for derivative online trading, are covered by the CFTC. It is a small amendment. I have been so surprised at the amount of opposition. It convinces me more that something must be going on. There has to be a reason that people want to do this trading in the darkness. There has to be a reason that they do not want to keep records. There has to be a reason they do not want to subject themselves to any kind of capitalization requirement. That was the situation with Enron. Enron went bankrupt. Enron lobbied for this amendment. Enron lobbied the House to be excluded, to have metals and energy excluded from the bill passed in 2000. Immediately after the bill passed in 2000, gas began to spike in California. That says volumes to me. Once again, I think we are on the side of the angels, to let consumers see what is going on. If the consumers buy through the Chicago Mercantile, there is a record. If the consumers buy through the New York Mercantile, there is a record. With any other kind of transaction, there is a record. Why should this huge, burgeoning new area of online trading have an exception and not keep these records? Again, let me be specific. If the product is delivered, if I buy gas from you, and you deliver that natural gas to me, we are covered by the Federal Energy Regulatory Commission. If we are trading or swapping and there is no delivery, there is no record kept. Why does FERC support this amendment? Why do all of the FERC Commissioners support this amendment, including the Chairman? They know this is a loophole. They know it should see the light of day. I control time until 3:45, if I understood correctly.

Mrs. FEINSTEIN. Will the Senator yield?

Mrs. FEINSTEIN

Mrs. FEINSTEIN. Madam President, I ask unanimous consent to speak in morning business for the next half hour.