Jon Kyl

Mr. KYL

Mr. KYL. Mr. President, I will just take 1 minute. The point I want to make is to correct something that was incorrectly noted before. It was stated this will be a brand new weapon. The truth is that this weapon was already developed during the Clinton administration. Using the current B61, which is a nuclear warhead, the B61 mod 11 was developed as an earth penetrator weapon. But it was determined by feasibility studies that it did not have sufficient capability to penetrate and thus provide a deterrent. The B61-11 is not sufficiently hardened to penetrate certain target geologies. So the feasibility study is designed to determine whether a more robust outer casing, which still protects the internal components of the warhead, could be developed for the B83 warhead. That is all it is, is to determine whether an existing warhead could be used with a different casing to penetrate, and thus replace a weapon that is already in our inventory.

Mr. KYL

Mr. KYL. Mr. President, I rise today to speak to the withdrawal of my amendment No. 1050 to H.R. 2361, the pending Interior Appropriations bill. Although the amendment was withdrawn, I remain committed to addressing the funding inequities in the EPA-administered Clean Water Act State Revolving Fund--CWA SRF--the primary Federal mechanism for financing clean water and wastewater infrastructure projects nationwide. I applaud both Senator Burns and Senator Dorgan, the chairman and ranking member respectively, for recognizing the importance of this program and funding it at the fiscal year 2005 level of $1.09 billion in this tight budget year. Our States do depend on CWA SRF to provide much needed financial assistance in the form of low interest loans to towns and cities to help defray the costs of maintaining and upgrading their water treatment systems. It is especially beneficial for small rural water companies that serve so much of the Western and Midwestern States. However, providing level funding for the CWA SRF is not enough. We have a more fundamental problem that needs to be addressed with regard to the CWA SRF. That is, the inequities built into the current CWA SRF formula which will determine how much of the $1.09 billion each State gets. Senator Burns recognizes that too, and has agreed to work with me to correct it. Congress adopted the current allocation formula in the 1987 amendments to the Clean Water Act. The formula was developed behind closed doors during the conference. Nowhere in the legislative history of Congress' final action on the 1987 amendments is there a clear statement about how it came up with the final allocation formula--it is even difficult to guess. The conference report on the final legislation merely states: ``The Conference substitute adopts a new formula for distributing construction grant funds and the state revolving loan fund capitalization grant funds and the state revolving loan fund capitalization grants among the states for fiscal years 1987 through 1990.'' The allocations are fixed, statutory percentages. That is to say, once the Act was signed into law, each would receive the same share of available funds in perpetuity, unless the Act itself is amended. This is not the first time I have come to the floor to persuade my colleagues to act to change this formula, and I doubt it will be the last. Some of you may remember that we had a very good debate on August 2, 2001, during the Senate's consideration of the VA-HUD appropriations bill on this very issue that resulted in the Senate expressing its sense about the need to report authorizing legislation that included an equitable, needs-based formula. As my constituents remind me, we have yet to either amend or reauthorize the portion of the Clean Water Act pertaining to the CWA SRF or the faulty formula. Year after year promises are made but nothing happens. The authorizing committee has had years to change the formula and has not done so. There is a reason nothing happens-- because the States that benefit from the current formula do not want it to change. There is nothing wrong with that. I do not blame them, but there comes a time when one's patience wears thin. I think we have an obligation to say enough is enough. We must change the formula. After all, let's look at the current situation we face in the bill before us. We are appropriating dollars to an unauthorized program--it expired in 1990--using a statutory formula set 19 years ago that bears no relationship to the actual needs reported by the states. That is sad, and it needs to change. It is interesting to note that, when Congress enacted the 1996 Safe Drinking Water Act, we ensured that no such inequity would haunt the newly created Drinking Water State Revolving Fund. From its inception, the Drinking Water Fund was allocated on the basis of a quadrennial infrastructure needs survey conducted by the various States under EPA supervision and guidance. The survey involves the States in determining their own needs for drinking water infrastructure to ensure compliance with EPA regulations. The EPA, in turn, validates the state submissions and compiles them in a report to Congress. The EPA then allocates Drinking Water Fund appropriations on the basis of each State's proportional share of the total need. There is a fundamental fairness associated with allocating the funds on the basis of the survey. The States themselves participate in the survey. The EPA has oversight, but in the end, valid needs are simply compiled into the aggregate, and the resulting State share of the total national need determine Drinking Water Fund allocations among the States. Unfortunately, as we all know, the same is not true for the much larger CWA SRF. A Clean Water Needs Survey is performed by the States every 4 years called the ``Clean Watershed Needs Survey'' and the EPA in fashion similar to the compilation of the Drinking Water Needs Survey validates the State's submissions and compiles them in a report to Congress. The Clean Watershed Needs Survey, however, has no impact on CWA SRF allocations. I believe, as I am sure do most of my fair-minded colleagues, that we must work together to right this wrong. There is no reason for the Drinking Water Fund to be allocated fairly on the basis of actual need, while the CWA SRF is allocated on an arcane set of fixed percentages that were established before most of us were elected to Congress. So what does my amendment do? What my amendment would do is update the funding formula using the Drinking Water Fund formula as precedent. Under my amendment, each State would receive funds based on its share of the total 20 year-clean watershed infrastructure needs, as documented in the most recent Clean Watershed Needs Survey, with no State receiving less than 1 percent of the total appropriated for the CWA SRF. There would be up to 1.5 percent set aside for Indian Tribes and 0.25 percent for all the U.S. territories. What I am saying is, let's even out the playing field and make sure that everybody gets at least a share closer to what the EPA says they deserve to have. That is what we are trying to do, make it fair for everybody. Let me cite some examples that demonstrate the fundamental unfairness of the current formula in contrast to my amendment. There are 12 States that are receiving more funding than the minimum allocation and more than they documented in needs in the survey. These States would lose the windfall they are currently receiving under my amendment. But there are some States, like New Jersey and Florida, that are receiving significantly less than their share. My amendment would correct this inequity. New Jersey, for example, would receive about $45 million under the current formula. It would receive almost $61 million under my amendment--about a $16 million increase. Florida would receive about $37 million under the current formula but would receive almost $48 million under my amendment--about a $10 million increase. The increases these States receive demonstrate the fact that they have been significantly shortchanged in the past. My home State falls into this category. Arizona ranks 10th in need according to the latest EPA Clean Watershed Needs Survey. However, Arizona ranks dead last, behind all the States and Puerto Rico in the percentage of needs met under the current formula. In terms of dollars, Arizona would receive about $7 million under the current formula, but would receive almost $31 million under my amendment. I am sure now it is clear why I am standing here. My amendment also helps small States. Those States would receive the minimum allotment, which is actually a greater percentage than they should based on the needs they documented in the needs survey. There are five other States that will see a reduction in what they receive, but these States have had a larger percentage of their total needs funded under the current formula since it was enacted. The state of New York is an example. New York is No. 1 in need and No. 1 in total dollars received out of the CWA SRF. I should point out that although New York's total allocation would go down under my amendment it would continue to rank No. 1 in terms of dollars allocated. New York would receive approximately $95 million. The formula that I proposed in my amendment assures that each State could meet the clean water needs of its citizens by bringing fundamental fairness to the allocation of the appropriated dollars. It ensures that all States receive a fair share, and recognizes that needs change over time. By changing the formula to comport with the needs survey, it will adjust to changing circumstances and, thus, will protect all states. If my colleagues have a better formula I urge them to come forward with it. This issue is not going away. Senator Burns recognizes that. In return for my withdrawal of this amendment, he has agreed to work with me to persuade the authorizing committee to get this done. I thank him for that.

Mr. KYL

Mr. KYL. Mr. President, let me explain briefly what the amendment is, and why I filed it, and why we need to deal with that subject matter in the future. I have spoken with Senator Burns about this and have his agreement that he will try to work with us to find a way around the problem that the amendment was designed to resolve. I appreciate his cooperation in that regard. Actually, for several years I have discussed this on the floor. We have had agreements in the past that the authorizing committees would work with us to change the formula for the Clean Water Act. We have not been able to get that done yet. So I am, once again, noting the fact that under the EPA-funded study to determine the needs of the States--a similar study which is used under the Clean Water Act--Arizona ranks 10th in terms of needs in the country, 10th out of all of the States. In terms of the funding provided by the formula under this act, Arizona ranks 51st among the 50 States. Now, you may say: 51st? There are only 50 States. That is right. Actually, Arizona ranks behind Guam and Puerto Rico. So here we have one of the fastest growing States, with some of the greatest needs--according to the EPA, 10th in the country in needs--and the formula puts Arizona worse than any other State in the Union. That has to be fixed. I believe my colleagues will understand if I say that in Arizona we cannot allow this situation to continue any longer. So if my colleagues do not like the formula we have put forward that would resolve this issue, then I invite them to come forward with some other kind of formula that would resolve the issue. But we are not going to very long abide by a situation which has been going on now for years that continues to put Arizona at the very bottom when our needs rank very close to the top. Again, I appreciate the commitments that have been made by the distinguished chairman, the Senator from Montana, to try to work with us to find a way around this. I do appreciate that this is primarily an authorizing problem, so we will be talking to the authorizing chairmen as well. My colleagues will hear more about this in the future. In the meantime I have withdrawn the amendment that would fix this. But I hope my colleagues will work with us in the future.

Mr. KYL. Mr. President, I thank the Senator from Montana. Amendment No. 1050 Withdrawn Mr. President, I first ask unanimous consent to withdraw amendment No. 1050.

Mr. KYL. Mr. President, I am pleased to join with Senator Hutchison, Senator Craig, and others to offer this amendment responding to new information about shortfalls in the fiscal 2005 budget for the Department of Veterans Affairs. Naturally, every Member of this body is distressed to learn that the Department is in these fiscal straits and that the Department has made the extent of the problem clear at this date late in the fiscal year. I am pleased that the Appropriations and Veterans Affairs Committees have moved so quickly to pursue the oversight we now urgently need to determine: 1. How this could have occurred, and 2. what Congress and the VA will need to do differently to ensure that we do not confront shortfalls of this nature next year and thereafter. But today, we will accomplish the even more urgent work of ensuring that the necessary funds--$1.5 billion--are available on an emergency basis for the current fiscal year so that there is absolutely no deterioration in the quality of services and facilities for our veterans. I suppose it is inevitable that everything sooner or later becomes the subject of partisan dispute in Washington, DC, but it is disappointing that some have seen fit to make support for our veterans a partisan weapon. I hope the action we take today will go some distance toward demonstrating that the irresistible temptation some feel to try to take partisan advantage notwithstanding and that Congress stands united in support of those who have served and sacrificed.

Mr. KYL

Mr. KYL. Mr. President, I thank the Senator from Texas. The President's remarks last night on the 1-year anniversary of handing power over to the Iraqi Government was a good opportunity to remind Americans why it is so critical that we stay the course in Iraq. Interestingly, just a year ago, there was one Iraqi battalion. Today there are 100 Iraqi battalions. That is a good metaphor for what we are doing there and how we are going to succeed. And it is a good answer to those who say we need a plan. We need an exit strategy. People who talk about that have not been listening to the President. His plan, as he outlined last night, is simple, and it is a plan that we have been following since over a year ago, when the transfer of power occurred. The plan is to enable the Iraqis to take over the security of their own country, and then we can leave. We are not going to leave before that job is done. No one knows exactly how long it will take, but the fact that we have increased a hundredfold the number of Iraqi units in the year since we turned over power is a good indication of what we intend to do and what we have been able to do. The President noted last night that not all of these units are trained to the same level that the U.S. units are. That is obvious. But as we are able to do so, those Iraqi units will be able to take over more and more of the operation. Eventually, as the President noted last night, the United States might be able to do more by simply embedding some of our officers in those units, thus reducing, again, the amount of American manpower actually on the ground. There is a way that the United States is approaching this that will result in the United States withdrawing and the Iraqis being able to take care of their own security. That is the plan, and it is a wise one. What is at stake if we were to either announce an early withdrawal or pull out early? The President made it clear last night that you don't announce to the enemy when you are going to leave. The enemy simply takes note of that and says, fine, waits until you leave, and then does all the bad stuff that it wants to do without any fear of retribution by the United States. That is not workable. Nor would it be workable for the United States to pull out too soon. Think about what would happen. If the terrorists were to take back over in Iraq, even Saddam Hussein could be returned to power. That would become a hot bed of terrorism in the Middle East. The progress that has been made in surrounding countries such as Pakistan, the efforts that are being made toward democracy in places such as Lebanon and Egypt and Saudi Arabia, all of those would go up in smoke. The problems that a country such as Pakistan would have would be horrendous. Countries such as Syria and Iran would decide that to be on the winning side, they want to continue their support of the terrorists. Our credibility would be absolutely destroyed. An opportunity to create a democracy in that part of the Middle East would have evaporated. I can't think of anything worse than losing in Iraq. And since victory is within our grasp, we need to pursue that course. The President was on the right track last night. There will be some who will never respond favorably toward his message because they are simply in such disagreement with him politically that they can't force themselves to acknowledge anything that he does is correct or good. Those people are not going to be persuaded. But the vast majority of Americans who were listening will appreciate the fact that we do have a good strategy, that the President is not trying to engage in happy talk. He repeatedly said this was going to be difficult. But it is also important for him to point out the successes because the news media is not likely to do that as fully as it should. The President combined both a sober assessment of the realities, a pragmatic assessment, along with a good report of the progress that has been made, and we believe will continue to be made. In all of these things, I believe President Bush should be complimented and that we, as a nation, should join behind him, just as the soldiers and the families of the soldiers at Fort Bragg did last night. It was evident to me that they support the President. It is important that the American people and we support the President as well.

Mr. KYL

Mr. KYL. Mr. President, H.R. 6, the Energy bill, is an effort to improve our Nation's energy supply and reliability, and for that it should be praised. Like any bill of its magnitude, the Energy bill includes a variety of good and bad provisions, and it has to be weighed for the relative good and bad it will do. I've come to the conclusion after careful study that the bad outweighs the good, particularly for the State of Arizona. And it is for that reason that I must vote no. This bill will likely raise the price of gasoline in Arizona, hurt our air quality, and raise the price of our electricity, all while increasing the Federal deficit with enormous subsidies, special projects, and tax breaks for everything from fish oil to luxury hybrid cars. I support the President in his efforts to reduce our dependence on foreign oil, and I wish this bill did more to accomplish that goal. As I have said, some important provisions of this bill have much to recommend them. Unfortunately, the ethanol ``Renewable Energy'' title is not one of them. The ethanol provisions of the Energy bill are truly remarkable. They mandate that Americans use 8 billion gallons of ethanol annually by 2012. We use 3.4 billion gallons now. For what purpose, I ask, does Congress so egregiously manipulate the national market for vehicle fuel? No proof exists that the ethanol mandate will make our air cleaner. In fact, in Arizona, the State Department of Environmental Quality has found that ethanol use in the summer will degrade air quality, which will probably force areas in Arizona out of attainment with the Clean Air Act. Arizonans will suffer. California also expects that the summertime use of ethanol would harm air quality, but in the Senate bill, California is exempted from the summer mandate. If Arizona had the same exemption, then the ethanol mandate would still be expensive and unwarranted, but at least it would not actually cause physical harm. An ethanol mandate is not needed to keep the ethanol industry alive. That industry already receives a hefty amount of Federal largesse. CRS estimates that the ethanol and corn industries have received more than $40 billion in subsidies and tax incentives since 1996. I repeat, $40 billion Yet, this bill not only mandates that we more than double our ethanol use, but provides even more subsidies for the industry. In the next 5 years, CBO estimates that the loan guarantee program by itself will cost $110 million, while CRS estimates that the tax incentives for ethanol will cost taxpayers $37.7 billion. Furthermore, according to the Energy Information Administration, a mandate of five billion gallons would cost between $6.7 and $8 billion a year--forcing Americans to pay more for gasoline. Not surprisingly, the 8 billion gallon mandate will cost even more. Professor David Pimentel, of the College of Agriculture and Life Sciences at Cornell, has studied ethanol. He is a true expert on the ``corn-to-car'' fuel process. His verdict, in a recent study: ``Abusing our precious croplands to grow corn for an energy-inefficient process that yields low-grade automobile fuel amounts to unsustainable, subsidized food burning.'' It isn't efficient, and will impede the natural innovation in clean fuels that would occur with a competitive market, free of the government's manipulation. Ethanol is not the only mandate in the bill. This Energy bill also ignores state law and mandates a national one-size-fits-all renewable portfolio standard (RPS) for electricity. Currently, 19 States, including Arizona, and the District of Columbia have their own renewable standards. In Arizona, a State that gets its electricity mainly from coal, natural gas, and hydro facilities, our Corporation Commission has tailored the State's renewable standard to our unique circumstance as a desert State that receives a lot of sunshine, little wind, and has few other renewable resources. The current Arizona standard is 1.1 percent, of which 60 percent must come from solar energy. While solar energy is abundant in Arizona, it costs 3-5 times more than conventional energy and 2-4 times more than other more cost effective renewable energy such as wind and geothermal--a fact that is reflected in the Arizona standard. The Arizona Corporation Commission has recently proposed raising the State's renewable standard and changing the mix of alternative sources that would be acceptable. This proposal, however, is part of an open, collaborative process. All stakeholders have had the chance to submit comments both supporting, opposing, and refining the change. The Corporation Commission will weigh the costs to Arizona ratepayers, and is more likely than the Congress to find a renewable standard that works for Arizona. Unfortunately, the Senate RPS requirement does not have Arizona ratepayers in mind. Utilities in Arizona will be forced, under this bill, to comply with both the State mandate and the Senate's RPS mandate that has different requirements. To meet the Senate's mandate, the bill punishes States that lack reasonably priced renewable resources such as wind and geothermal, hydroelectricity cannot be used under the Senate bill, by forcing them to go buy credits from wind-rich parts of the country or to buy those credits from the Federal Government for $ .015/kwh, adjusted for inflation. That means that if a State cannot find a renewable source that costs less than the conventional price of energy plus $.015/kwh, then it is cheaper to buy the government credit. Arizona simply does not have renewable resources that can compete with the Senate bill's $0.015/kwh RPS penalty. Paying the penalty will be more cost effective than producing solar energy or acquiring other renewable resources. The effective result will be a transfer of wealth from Arizonans to renewable-rich states or to the Federal Government. For my home State of Arizona, electricity rates will rise. A nationwide renewable portfolio standard is, therefore, not only duplicative in Arizona, it would raise consumers' electricity prices and create inequities among States. In simplest terms, an RPS mandate would require electric utilities to forego inexpensive conventional energy for more expensive renewable technologies or purchase renewable energy credits from the Federal Government. Either way, an RPS mandate will result in an expensive, hidden tax on electricity consumers. Now for the tax title. My overarching concern is that Congress continues to try to use special interest tax subsidies to set an industrial policy--failed strategy of ``Government knows best''--on the strongest and most dynamic economy in the developed world. I share the concerns of many of my colleagues that the budget deficit demonstrates a lack of wise stewardship of taxpayer dollars. The only way we will get the budget back into balance is to enact policies that support economic growth and spend taxpayer dollars with care. Almost exactly 2 years ago, Congress, working with President Bush, approved one of the most important and best-designed tax cuts in recent memory: the jobs and growth tax bill. Quite simply, it cut tax rates on income and on dividends and capital gains. We know from widely accepted economic studies--most recently from our 2004 Nobel-Prize winning economist, Dr. Prescott from Arizona State University--that high tax rates discourage work, savings and investment and that to encourage these favorable economic activities, the best thing we can do is keep tax rates low and get out of the way. When our economy is growing and businesses and individuals are making money they pay more in taxes, meaning the Government collects more revenue, even at lower rates--indeed, because of the lower rates. So far this year, Federal tax revenues are up significantly. From October 1 through April 30, revenues climbed by $146 billion to a total of $1.216 trillion; an increase of 13.6 percent over a year earlier and four or five times the inflation rate. Income tax receipts are up $66 billion, or 16 percent, to $547 billion. Corporate income tax receipts are rising even faster, up 48 percent to $134 billion. Capital gains tax revenue is set to exceed the Government forecasts by $14 billion this fiscal year and by $16 billion in fiscal year 06. Roughly $5 billion of the dividend tax cut has been recouped through higher than expected dividend payments. These are the kind of tax policies Congress ought to be pursuing. Instead, we are spending over $18 billion on tax subsidies for the energy industry--subsidies that will not generate economic growth and that will not make a dent in our dependence on foreign oil. The tax subsidies in this bill are exactly the wrong approach. Government should not try to force taxpayers into one favored type of investment by providing tax subsidies for that investment. If an investment is not economically viable without a Government subsidy, then perhaps it is not an activity that ought to be encouraged with taxpayer dollars. And if a technology is already viable without a taxpayer-financed subsidy, then we should not devote scarce resources to encourage what is already happening in the free market. My primary complaint has to do with the use of tax credits by the Government. The Federal Government uses tax credits to induce individuals or businesses to engage in favored activities. This can distort the market and cause individuals or businesses to undertake unproductive economic activity that they might not have done absent the inducement. Tax credits are really appropriations that are run through the Internal Revenue Code and are a way to give Federal subsidies, disguised as tax cuts, to favored constituencies. It is something we should do sparingly--very sparingly. While tax credits can be effective in encouraging activities we consider laudable for one reason or another, I believe that, as stewards of the taxpayers' money, we must only support those credits that provide broad benefit to all taxpayers and that are worth the revenue they will cost the Federal Treasury. I do not believe that any of the tax credits in the bill meet these tests. The bill extends and expands the credit provided in section 45 of the Code. This credit is available on a per-kilowatt-hour basis for energy produced from wind, solar, closed-loop biomass, open-loop biomass, geothermal, small irrigation, and municipal solid waste. I believe that the credit for wind energy should have sunset several years ago. Wind energy has been provided this credit since 1992, and if it is not competitive after a decade of taxpayer subsidies, it will never be competitive. In 2001, the wind industry was in fact touting its great success and competitiveness with other forms of energy, but here we are extending the wind credit for 3 more years. I wager that we will still be paying for the ``temporary'' advantage being given to these new energy forms a decade from now. At best, we don't know whether the existing tax subsidies that this legislation extends work at all because we have never subjected them to a comprehensive review. At worst, we are simply funneling taxpayer dollars that could be better used by private individuals in the free market to favored constituencies. During the markup of the tax title in the Finance Committee, many of my colleagues on the Committee expressed sympathy with my concern that Congress passes a myriad of credits and incentives to encourage favored activities, but we never go back to see if the subsidies are working as intended. I am hoping that I can work with my colleagues who expressed these concerns to ask for a Government Accountability Office study of the many subsidies and incentives included in this legislation to track their cost and effectiveness. One subsidy we ought to watch closely is the alternative fuel vehicle subsidy. As much as we all support the goal of cleaner air, we must be careful not to create more problems than we solve. In my own State of Arizona, an alternative fuels subsidy program had to be repealed when its many scandalous deficiencies were exposed. Nor has there been any evidence that the vehicles to which the subsidy applies aren't simply priced higher by the amount of the subsidy. I have serious questions about whether the incentives are necessary and whether it is appropriate to use the tax code to persuade taxpayers to purchase one type of vehicle over another. I know hybrid cars and alternative fuel cars are very popular, so Senators may hesitate to stand in the way of tax incentives for people to buy them. But I believe their very popularity argues that there is no need for the tax incentives. People are buying them today without being coaxed by the Federal Government. I hope we can agree to have the GAO study this new credit to determine how much the provision is really costing, how effective it is at encouraging the purchase of alternative fuel vehicles, and how long the credit will be needed. I have spoken of the ``bad'' in the bill, now I want to discuss what is ``good''. I have been particularly interested in the provisions in the electricity title that are designed to restructure our electricity markets. Some of my colleagues have been tempted to move immediately to completely unregulated electricity markets; others favored imposing a more stringent regulatory regime as a result of problems in California. Representing Arizona, I was well aware of the problems stemming from the California energy crisis but cannot agree with those who say the solution is to return to a command-and-control regulatory structure. I continue to believe that the most efficient way to allocate resources is through competitive markets. The bill encourages competitive markets while ensuring that safety and reliability are maintained. The reliability provisions of the electricity title will convert the current voluntary system of reliability procedures to a mandatory system that all utilities must follow, but that is sensitive to regional differences in the electricity grid. The electricity title also repeals the Public Utility Holding Company Act of 1935. As we all know, our energy markets have evolved significantly since the era of the Great Depression. State regulators are smarter, more well equipped, and able to protect consumers from the ills that gave rise to the Public Utility Holding Company Act of 1935 nearly 70 years ago. On the downside, the electricity title also contains unfortunate provisions that would grant the Federal Energy Regulatory Commission (FERC) additional authority to regulate generation, natural gas utilities, and holding companies. Giving FERC new merger authority is going in the wrong direction. Utility mergers and acquisitions are already subject to multiple and overlapping reviews by FERC, SEC, DOJ, FTC, and the States. FERC uses exactly the same merger review guidelines as the antitrust agencies, DOJ and FTC--thus FERC performs essentially the same review those agencies already perform. There is no need to add new layers of review. I have often expressed my concern with what some industry officials have termed a jurisdictional reach by FERC into the delivery of power to retail customers. The service obligation amendment that I worked on with the chairman has been included in this package, and I believe it provides a commonsense way to promote competitive markets while preserving the reliability that retail electric consumers expect and deserve. In its actions governing access to transmission systems, FERC has not adequately ensured that the native load customers, for whom the system was constructed, can rely on the system to keep the lights on. The bill adds a new section 218 to the Federal Power Act to ensure that native load customers' rights to the system, including load growth, are protected. It is also worth noting that the Energy bill expands jurisdiction over those stakeholders in electric markets that were previously unregulated by the FERC. The ``FERC-lite'' provision that addresses the Federal Energy Regulatory Commission's efforts to provide open access over all transmission facilities in the United States again, in my mind, strikes the right balance. It requires FERC to ensure that transmission owners--whether they are municipal utilities, power marketing administrations, or electric cooperatives--deliver power at terms that are not discriminatory or preferential. However, this provision is limited and does not give FERC the ability to begin regulating the rate-setting activities of these organizations. FERC- lite does not confer further authority to FERC over public power systems. FERC cannot order structural or organizational changes in an unregulated transmitting utility to comply with this section. For example, if an integrated utility providing a bundled retail service operates transmission distribution and retail sales out of a single operational office, the Commission cannot require functional separation of transmission operations from retail sales operations. Gratifying, as well, is that the Senate bill has not pursued a command-and-control approach with respect to regional transmission organizations, or RTOs. I believe the best approach, which is captured in this bill, is for FERC to provide incentives to encourage membership in RTOs and independent system operators. As lawmakers, we need to be sensitive to the policy changes we propose and how the laws we draft will affect Wall Street and the markets, and we must make sure we promote the investments that are needed. This is a prime example of how the Energy bill has sought to advance policies to which the investment community can respond favorably. So, in conclusion, while this bill includes several meritorious provisions, especially the electricity title, I must vote against it because of the $ 18.4 billion in tax subsidies and the bill's irresponsible manipulation of the energy markets through an ethanol mandate and a national renewable portfolio standard. I hope that the conference of the House and the Senate is able to address these issues so that I can support this bill in the future.

Mr. KYL

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

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

Mr. KYL. Mr. President, I ask that the pending amendment be laid aside, and I call up amendment No. 1050.

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

Mr. KYL. Mr. President, I call up, on my behalf, amendment No. 1049.

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

Mr. KYL. Mr. President, I appreciate the Senator from Arkansas allowing me to either call up or offer three specific amendments. Amendment No. 1048

Mr. KYL. Mr. President, I call up, on behalf of Senator Smith, amendment No. 1048.

Mr. KYL. Mr. President, on behalf of Senator Inhofe, I send an amendment to the desk.

Mr. KYL. Mr. President, I yield the floor.

Mr. KYL

Mr. KYL. Further reserving the right to object, would the manager of the bill at this time have an estimate--we will temporarily lay this aside for the presentation of another amendment and then back to this amendment and, with the 30 minutes, presumably, we would be voting at about 6 o'clock, or thereabouts; is that correct?

Mr. KYL. Mr. President, reserving the right to object, so long as the unanimous consent agreement did not say that the last word was Senator Bond. The last word is ordinarily reserved for the proponent of the amendment.

Mr. KYL. Mr. President, let me take a moment to say that I totally agree with Senator Schumer that we need to restore existing law in this area. The reason is because highly enriched uranium is used to build bombs. We want to be very careful how we export that. In the case of the production of medical isotopes, we do need to export it because that is all that is available right now to produce medical isotopes in relatively large quantities. Low enriched uranium for a target for these isotopes is a process that scientifically works. We are trying to work out whether or not it can happen on a large-scale production basis. Current law says we will continue to export highly enriched uranium as long as the recipient of that highly enriched uranium is working with the United States cooperatively to try to get to the production of these isotopes with low enriched uranium. That is a goal that I think everybody agrees with. We need to have that incentive so that when we export this, we are exporting it to somebody that is cooperating with us. What the Energy bill did was to eliminate that requirement of cooperation. It is stricken from the language. That is wrong. If we want an incentive for people to continue to work with us, we have to retain the existing law's language. That is why the Schumer amendment is critical, to ensure that we can both continue to produce these medical isotopes, but also to do so in a way that does not proliferate highly enriched uranium around the world. The manufacturer of this product in Canada has enough of this material right now to build a couple of bombs. In Canada that is probably OK, as long as they continue to cooperate with us. But you eliminate that requirement of cooperation, all of us will have a real problem on our hands. Were something bad to happen, each one of us would be responsible for that. That is the reason the Schumer amendment is so important. My second-degree amendment, if it is agreed to, simply requires a study and report to us about the status of the development of this technology, whether it is cost beneficial and whether it is scientifically achievable. With that, let me yield the floor to an opponent of the amendment.

Mr. KYL. I leave it to the manager at this point to determine what to do.

Mr. KYL. Mr. President, I will quote a couple lines from this letter. I appreciate the comments of my colleague from North Carolina. I am tempted--I do not know if he is a poker player--to use that old phrase, ``I will see you one and call you here,'' talking about the number of people who are supportive. We have a letter from 30,000 physicians. That letter is in the Record and I will quote from it briefly. The Physicians for Social Responsibility, representing 30,000 physicians and health professionals nationwide, is writing to urge support for the Schumer amendment and opposition to the language supported by the Senator from North Carolina. As noted, the letter says: As physicians and health care professionals, we support the use of medical isotopes, but this legislation-- Meaning the legislation in the Energy bill-- is not necessary to ensure the supply of medical isotopes to U.S. hospitals and clinics. Under existing law, medical isotope production capacity has grown to 250 percent of demand. In addition, no medical isotope producer has ever been denied a shipment of HEU as a result of the successful incentivization of efforts to convert to LEU. The Schumer-Kyl amendment would guarantee continued use of HEU to produce medical isotopes until LEU substitutes are available, so long as foreign producers cooperate on efforts to eventually convert to LEU when possible. It makes the point that under existing law, we have all the medical isotopes we need, but we also have something else. We have assurances from these producers that they are working with the United States to eventually try to move away from using highly enriched uranium, which makes nuclear bombs, and move instead to low-enriched uranium, when that is possible. The essence of the Schumer amendment is to retain that law because the language that is in the bill right now eliminates that requirement of assurances. Why on Earth would we want to do that? I urge my colleagues to support the Schumer amendment. I simply note that if there is any confusion, after the Schumer amendment is dispensed with, the Kyl second-degree amendment will be automatically voted on or adopted, and that provides for a study and a report to the Congress on the status of this situation so that instead of having competing claims by all of us, we will have a report upon which I think we can all rely to help guide us in the future. In the meantime, it seems to me only to make sense to keep current law in effect. Mr. President, might I inquire if there is more than 7 minutes remaining on the Schumer side?

Mr. KYL. Mr. President, my colleagues first should be astonished that Senator Schumer and I are in total agreement on something, and I cannot wait to tell them why and hope that will persuade them that if the Senator from New York and I are in agreement on something, there must be something to it. Indeed, both Senator Schumer and I have been very strong advocates against proliferation of nuclear material. The chairman of the Senate Foreign Relations Committee, Senator Lugar, is strongly in agreement with the position that Senator Schumer and I are taking. He will be listed as one of the people in support of the Schumer-Kyl approach. No one has fought this harder than Senator Lugar. We are all familiar with the Nunn-Lugar work. The reason Senator Lugar is so strongly supportive, the reason members of the Democratic Party are so strongly supportive, the reason people who have been involved in national defense and proliferation on nuclear issues from day one, like myself, are so concerned about this is that we are in danger, unless this amendment passes, of changing a law that has helped us to control proliferation of nuclear material. Why would we want to change the law? Since 1992, our law has enabled us to export highly enriched uranium, from which you can make bombs, as long as there is an assurance that the recipient is cooperating with us in trying to control proliferation; in this case, trying to eventually move to low-enriched uranium. We would all love to be able to move to low-enriched uranium to produce, for example medical isotopes. That is why we are so concerned. The language in the bill, unfortunately, removes the requirement for that cooperation. Why would we want to do that? Because one Canadian company is concerned about the cost. That shouldn't even be a concern because today the Nuclear Regulatory Commission issues these export licenses and one of their considerations is cost. They have already made the decision that this is not an issue for the issuance of a license. Has one license ever been denied? Never. None. It is a false choice to suggest somebody is going to be denied medical treatment, a little boy or a little girl or anybody else, if this amendment is adopted. Since 1992, nobody has been denied treatment with medical isotopes. The law has permitted the development of this kind of treatment, and there is nothing to suggest that it will not continue. The law does something else, too. It requires assurances that the people who are producing this are working with us to eventually try to convert to low-enriched uranium. What does the Department of Energy say about that? The Department of Energy, on its Web site dealing with this subject with regard to current law, says this law has been very helpful in persuading a number of research reactors to convert to low-enriched uranium. Why, if we have a law that has never denied any license and has permitted the production of these isotopes for medical production and moves us toward a nonproliferation, toward low-enriched uranium, why we would want to scrap that and say we will do away with the requirement that the companies work with the United States to work toward low- enriched uranium? It makes no sense at all. That is why the group of physicians I cited earlier is in support of the current law. It is why the Department of Energy Web site notes the fact that the current law is working well. I ask my colleagues, in summary, this question: If ever a terrorist group gets a hold of this high-enriched uranium and builds a bomb because we eliminated this requirement for no particular purpose, what are we going to say about that? Let's retain the existing law the Department of Energy believes has been working. Nobody is denied medical treatment as a result of this law. I urge my colleagues to support the Schumer amendment. Please support the Schumer amendment at this time.

Mr. KYL. Mr. President, let me use part of that 3 minutes right now to ask unanimous consent to print in the Record a statement and a letter from the Physicians for Social Responsibility, dated June 20, 2005. I ask unanimous consent that this material be printed in the Record.

Mr. KYL. Mr. President, I will speak for a moment. I am responding both to the senior Senator from Idaho and also the Senator from Arkansas. The Senator from Idaho is correct. Under existing law, we have had numerous shipments since 1992, and we have been producing these medical isotopes, and everything has been fine. That is what the Schumer amendment seeks to do--to ensure that the existing law is in place. So that condition the Senator from Idaho spoke to is precisely the good condition that would prevail if the Schumer amendment is adopted and we return to existing law. The problem is that an amendment was inserted in the Energy bill in committee which strikes existing law and eliminates the requirement that the recipient of this highly enriched uranium provide assurances to the United States that it is cooperating with us to move to a low- enriched uranium target. That is everybody's goal. Nobody disagrees with that goal. But because of that amendment, we would no longer have the assurance that we could eventually get off of highly enriched uranium--which is used to build nuclear bombs--and get to low-enriched uranium. This is a proliferation issue, not a medical issue. That is what I say to the Senator from Arkansas. There is no suggestion that there is going to be any lack of medical treatment as a result of the existing law. Since 1992, we have had medical isotopes available for treatment, and we are going to have them available in the future. There is nothing in existing law that takes away from that. There is an attempt by somebody to scare people into believing that somehow or another the existing law--in effect since 1992--is somehow going to result in a lack of medical isotopes. That is false, and it is pernicious. Whoever is trying to spread this notion should not do that because it will scare people into thinking there are not going to be medical isotopes available for treatment. Nothing could be further from the truth. Existing law has worked. Not once has an export license been denied. So let's forget this scare tactic. We are going to have the medical isotopes that we need. The real question here is proliferation. We have had a law that has worked very well since 1992. We are trying to move toward low-enriched uranium. Listen to what the Secretary of Energy has had to say about this. In a speech delivered on April 5, Secretary Samuel Bodman said: We should set a goal of working to end the commercial use of highly enriched uranium in research reactors. The availability today of advanced, high-density low enriched uranium fuels allows great progress toward this goal. The Department of Energy's Reduced Enrichment for Research and Test Reactors program Web site states: This law has been very helpful in persuading a number of research reactors to convert to LEU. That is existing law, which we want to retain. Why would we want to strike the one provision in existing law that helps us to achieve this goal? The provision that says that the recipient of this highly enriched uranium has to provide assurances to the United States that it is cooperating with us toward this goal--something is going on here, Mr. President, and it is not good. Let me also say, with regard to this myth about the lack of medical isotopes, the fact is that DOE's Argonne National Laboratory characterized this very claim as a ``myth,'' adding that the U.S.- developed low-enriched uranium foil target ``has been successfully irradiated, disassembled, and processed in Indonesia, Argentina, and Australia.'' Furthermore, HEU exports for use as targets in medical isotope production are not prohibited under current law, and no such export has ever been denied under that law, as I said. Current law is intended to encourage conversion to low-enriched uranium, which can't be used to make nuclear bombs. But in no way does it prohibit the export of highly enriched uranium. We are not at the technological stage where we can mass produce through low-enriched uranium. The bottom line is this: Current law has been working, as the Senator from Idaho so eloquently noted. It provides the medical isotopes we need. No export license has ever been denied. Recently, the Secretary of Energy made the point that we are trying to convert, eventually, to low-enriched uranium, and the current law that requires recipients of highly enriched uranium to work with us toward that goal has worked very well toward this end. Why would we eliminate that requirement of cooperation, when we are trying to make sure that this highly enriched uranium doesn't proliferate around the globe? As I said, a company in Canada that is currently working with us has enough of this stuff for two bombs. It would not be a good idea for us to allow further proliferation of highly enriched uranium around the world when we are concerned about terrorists getting a hold of a nuclear weapon. Let's keep the law in place. I urge my colleagues to support the Schumer amendment.