Jon Kyl

Mr. KYL

Mr. KYL. Mr. President, I wish to respond to some of the comments made relative to my amendment by various Senators who have spoken since I laid that amendment down earlier this afternoon. First, I ask unanimous consent to print in the Record two letters from the Public Service Commission of the State of Florida, both dated March 18, 2002, one to the Honorable Bill Nelson and the other to the Honorable Bob Graham, the two Senators from the State of Florida.

Mr. KYL. Mr. President, I asked the question of the staff people, who have read and reread and reread the underlying bill and the Bingaman amendment, if there was any limitation on from where the credits came. And they told me they could find none. There is no State limitation, no border between the United States and Canada, or other border, so that indeed you could end up with a worldwide credit system, not just one as among the different States of the United States.

Mr. KYL. I say to the Senator, I think he is on to something here. That is really a third reason why there would be a disincentive to produce new renewables here in the United States. The Senator is quite right. There would be an incentive to acquire those credits from abroad because you could undoubtedly do it much cheaper because there would be so much hydroenergy produced out of this dam. Of course, Senator Bingaman can answer this question, but under his amendment, if we were--obviously, we will not be able to do this--able to build a dam here in the United States, you would not be able to get any renewable credit from that. The only way you get any credit from hydro would be if you went back in and made the generator more efficient. Then all you would get is that incremental improvement in output in terms of renewable credit. As I understand it, the Three Gorges dam is essentially constructed, but the generation equipment has not yet been embedded in it. Therefore, if that is the situation when the bill becomes effective, that would qualify as incremental electrical generation above and beyond what the dam produced on the effective date of the act.

Mr. KYL. I am happy to yield.

Mr. KYL. Second, if I could, I would like to make a couple of points in conclusion and then respond to any questions or comments that Senator Bingaman would like to make, and I also want to hear what our ranking member, Senator Murkowski, wants to say because I know he and I were both looking forward to having an opportunity to work on this issue in the Energy Committee. As I noted, we didn't have that opportunity. I appreciate what the Senator from Georgia just said. As a former Governor of the State, he appreciates, probably more than most of us, the responsibilities of the publicly elected officials and the need to know what works and what does not work in any given State and what is fair for the people within their State. That is really the basis for the Kyl-Miller amendment: to allow the States to determine what is in their best interest. I note that in more than 90 utilities across the country there is already a green pricing policy, what they call green pricing, which allows consumers to request and pay for the cost of this green power. In other words, they can say, I want 50 percent of my power to come from renewable sources, or whatever it is, and whatever the cost of that is, the utility is required to provide that power to them and charge that cost to them. That is a customer's option. That is one of the specific provisions in the Kyl-Miller amendment. Obviously, this would be preempted, as with the other State programs, with the underlying Bingaman amendment. I also make the point that I did not make earlier, which is that the administration, Secretary Spencer Abraham specifically, has told me he is supportive of the Kyl amendment and not supportive of the Bingaman proposal. Another thing I want to do is make the point that section 263 of the bill allows the Federal Government to purchase a percentage of its electricity from renewable sources--I am quoting now--``but only to the extent economically feasible and technically practicable,'' and the minimum required purchase is 7.5 percent, while section 265 imposes a 10-percent mandate on private utilities, and it does not include the ``economically feasible and technologically practicable'' waiver. So again, there is another double standard here. The Federal Government is not required to do as much as the private utilities are required to do and has a special waiver that it can exercise. If this is such a great idea, why wouldn't we apply it to the Federal Government just as much as we would to the private sector? I do not really have an answer to that. I make a point, too, that with respect to the cost-benefit analysis, one of the concerns I have had is that the ability of States to provide power through renewables is not without tradeoff. I will show you a couple charts that illustrate this point. In the case of the Southwest, where we have a lot of sunshine, maybe this is the ``Saudi Arabia for solar power,'' but it is at significant cost. This chart illustrates the fact that you are going to have to have an enormous quantity of desert covered with these reflective mirrors, about 2,000 acres of solar panels, it is estimated, to produce the energy equivalent to 4,464 barrels of oil per day. Two thousand acres of ANWR would produce a million barrels of oil a day. So for the equivalent 2,000 acres: In one case, you get a million barrels of oil, and in the other case you get the equivalent of 4,400 barrels of oil. It would take 448,000 acres, or two-thirds of the entire State of Rhode Island, of solar panels to produce as much energy as the 2,000 acres of ANWR that are available for energy production here. I do not know exactly how many square miles, but one of the assessments was it would take 2,000 square miles to produce the same amount of energy that would be produced by a nuclear generating facility. If that is true, you would have a corridor 5 or 10 miles wide on either side of the highway all the way from Tucson to Phoenix with these reflective mirrors. I have not done the environmental analysis of that. I know it would not be very attractive. I do not know what the other costs to the environment would be. But that is the problem. We have had no environmental analysis. The same problem exists with respect to wind generation. Wind generation, we understand, has certain environmental consequences. It is not very friendly to birds, although with more and more of the Federal subsidy, they have been working on ways to design the propellers so they turn more slowly and therefore give the birds a little bit better chance. But 2,000 acres of wind generators produce the energy equivalent to only 1,815 barrels of oil each day; again, compared to a million barrels of oil that would be produced out of the same number of acres in ANWR. It would take 3.7 million acres of wind generators, or all of the States of Connecticut and Rhode Island combined, to produce as much energy as just 2,000 acres of ANWR. Now the 2,000 acres, we have said before, is roughly the equivalent of Dulles International Airport. So you can get an idea, if you take Dulles Airport on the one hand and the States of Connecticut and Rhode Island on the other hand, you get a little bit of an idea of some of the tradeoffs involved. I do think there has been adequate consideration of the kind of tradeoffs that would be required to produce the massive amounts of energy that are called for under this legislation as a substitute for other ways of producing power. As I understand it, the way the Bingaman amendment works is that each public power, or, that is to say, investor-owned utility supplier, would be annually required to report to the Secretary of Energy several facts: One, how much their electric retail load is; what percentage of that was produced by renewable fuels; how they acquired that renewable fuel--was it by production purchased through a wholesaler or renewable credit, or in whatever form it was--and then there would be an audit done. In the first year, it would be 1 percent required, the year 2005; and it would escalate to 10 percent by the year 2019. You would exclude the eligible renewables, municipal waste, and hydro from that, and the credits would have to be from sources other than existing hydro. The only way you could get additional hydro, or any hydro credit, would be if you did something such as rewinding the generators or, in some other way, added to the efficiency of a particular unit. As I said earlier, you could acquire, at a 200-percent market cost, a credit from the Department of Energy as well, even though energy would not be producing any new power. What would the cost of this be? According to the Energy Information Administration of the Department of Energy, you are looking at a cost, starting in the year 2005, of about $2 billion, escalating, by the year 2020, to a cost of about just a little bit under $12 billion per year. And most of that would be from production. There would be a small amount through penalty payments because of the assumption not a whole 100 percent of the production could actually be achieved at that point. Every year thereafter, for the next 10 years, you would be paying $12 billion a year. So you are talking about $88 billion of gross cost, in addition to $12 billion each year thereafter until the year 2030. That is a lot of money that would have to be paid by the retail customers of the utilities. Just a couple questions, and then I will give Senator Bingaman a chance to respond and perhaps answer some of these questions. I made the point before that it does not appear to me the generation of the renewables is required to be within the State in which the electricity is sold. So, presumably, you would have a credit trading system throughout the United States. And I do not even see a limitation to power produced in the United States. As a matter of fact, as I understand it, as drafted, incremental hydro from B.C. Hydro would count, and then a retail supplier from the United States could use that as a required percentage to be achieved under the legislation. One of the concerns--I guess another question I would have--is whether there is actually a reverse incentive not to produce power with renewables. I know that is the intention of the sponsors of the amendment. But I think it could quite work in exactly the opposite direction. Because of the tradeable credits that are being created under this legislation, you would actually have an interest in withholding those credits from the market and even preventing the siting of any new generation. Here is the concern I have for those of us who are in the West where there is some potential for some new generation. In my State of Arizona, in the State of Nevada, in the State of New Mexico, and others, a very large percentage of the land is owned by the U.S. Government. In the State of Arizona, only 12 percent or 13 percent of the land is privately owned. Another 12 or 13 percent is owned by the State. The rest is held in trust by the U.S. Government. In Nevada, it is approximately 90 percent. You would have to have a lot of permits to cross Nevada Federal lands for either the generation or the transmission. Every action is a Federal action. They have to have an environmental impact statement. And the opportunities to prevent the establishment of energy generation and transmission throughout the Western United States are substantial. I suspect there would be an incentive on the part of those who have a monopoly on the generation of this power right now to maintain that monopoly by finding ways to throw roadblocks in the way of the production of this power, especially those States, as I said, where there is substantial Federal land-ownership such as my State of Arizona. Both because there would be an incentive to withhold the credits from the market in order to enhance their value and because there would be the natural tendency to use the Government yet again to advance economic purposes by withholding approval of competitive generation, I suspect there could be actually a diminution in renewable generated power than an enhancement of that power. I am especially sensitive to the concerns of those from California who charge that there was a deliberate attempt to withhold energy from the California market which jacked up the prices there. And we all know that California consumers suffered as a result of much higher prices just 1 year ago. These are some of the concerns and questions I have. I am anxious to understand how the amendment is intended to work and how it could be made to work in such a way that it would not be as costly as I indicated; how it would not be discriminatory; how it would not preempt the States that already have programs such as this, that I indicated; how it wouldn't impact the environment in a negative way; how it would not result in the trading of credits to the detriment of the retail purchasers in States that would have to buy those credits; and, in fact, how it would work in States such as Maine where you already have a very high percentage of renewable energy required, 30 times the amount that is required in my own State of Arizona. Yet there would not be any credit for the sale of that to other States, notwithstanding their high production from renewable energy. To cite an analogy, one of my staff members said he didn't quite understand why this was such a great idea. I tried to explain it to him. He said: I still don't understand. Grapefruit is really good for you, but I don't quite understand. Should the Federal Government then pass a law that mandates 10 percent of all the fruit sold in the country be grapefruit? He said: That might help my State of Arizona because we grow a lot of grapefruit. I guess we could set up a trading deal where people in New York would have to buy a credit since they couldn't actually produce grapefruit. Since it is so good for you, if I am in a preferred position politically, I might have the clout to pass a law that says that 10 percent of the fruit has to be grapefruit. That might be a good idea. I really don't think that it is any business of the Federal Government to impose that on the American people. Let the free market work. Let's get back to deregulation. That is what this whole electric section of the energy bill was supposed to be about in the first instance: To deregulate, to reduce cost; not to reregulate and increase costs; to provide more local control of the situation, not more Federal control. This underlying Bingaman amendment goes exactly in the wrong direction, which is why Senator Miller and I have proposed an amendment to require the States to look at this but not require them to impose any particular percentage mandate. Let's let each State decide what is best for their local retail electrical customers. If after a period of years that we carry these significant tax credits, where we are promoting renewables, we still haven't gotten to the point where people think we need to be, we can take another look at this. My guess is we are going to continue to march on to produce as much of this energy as we can in an economic and feasible way, and the percentage is going to increase over time. And we can at that time determine whether we want to replace some of the existing generation with this kind of new generation. Now is not the time to be imposing this kind of requirement on the country with its additional costs, with its discrimination, and with so many questions that could have been answered, had we done this in committee, that obviously have not been answered. I ask my colleagues to support the Kyl amendment. Let's lay this Bingaman amendment aside, see how things work for a while before we try to regulate the market with a brandnew, very costly and discriminatory Federal mandate.

Mr. KYL. I would like to say to the Senator from Alaska, I have a couple more points I want to make before I conclude as does, I know, Senator Bingaman. I ask unanimous consent to have printed in the Record numerous letters in support of the Kyl amendment.

Mr. KYL. That is certainly acceptable to me, and I appreciate the sentiment of the Senator from New Mexico. I simply saw my colleague from Georgia and wanted him to have an opportunity to interrupt my presentation.

Mr. KYL. Mr. President, I have laid down an amendment to the underlying Bingaman amendment, which I think sets up a classic choice for our colleagues. We have been selling this energy bill and especially the electricity section of it as promoting competition, the market economy, and deregulation. The underlying Bingaman bill is exactly the opposite of deregulation. It is reregulation by the U.S. Government in a new and extraordinary way. The amendment I have laid down is an attempt to move forward with deregulation, keeping the Federal Government out of the business of telling Americans what they have to do. The Bingaman amendment reminds me of the old Soviet-style command economy, where the Soviet government told the people of Russia what it was going to have produced and they had to buy it. It did not allow choice of production or consumption. The United States understands that is a road to ruin, but the Bingaman amendment says the U.S. Government is going to mandate, to require, to compel that 10 percent of the electricity sold at retail in this country be produced with certain fuels, certain politically correct fuels. They have been described as renewables, but not all renewables count because some renewables are more equal than others, to borrow the phrase from the animal farm. No, only those politically correct renewables will count toward the requirement that 10 percent of the electricity the people of this country buy in the future be from this particular energy source. It does not matter how much it costs. It does not matter what good it does. It does not matter how hard it is to do. It does not matter how discriminatory it is among different people within the country. None of that matters. What matters is that people in Washington know best, and so the U.S. Government is going to tell people how much electricity they have to buy from these unique sources of fuel: Biomass, wind, solar, and geothermal. Other renewables such as hydropower, for example, do not count. There is something wrong with hydropower. That is the underlying Bingaman amendment. The Kyl amendment says let us leave it up to the States. Fourteen States already require some percentage production of electricity with renewables, as defined by the States. They are moving toward the production of power through this so-called green energy, and that is fine. My own State has a requirement that 2 percent of the energy sold at retail be produced in this fashion, all the way up to the State of Maine requirement that 30 percent be produced through this kind of renewable fuel, and that is fine. What the Kyl amendment says is each electric utility shall offer to retail consumers electricity produced from renewable sources, to the extent it is available. Then it defines renewable sources to include solar, wind, geothermal, landfill gas, biomass, hydroelectric, and any others as the State may determine are appropriate. Then it says that nothing in the act affects the authority of the State to establish a program requiring that a portion of the energy source come from renewables. So we require the States to take a look at it, but we do not tell them what they have to do because I do not think we know best. I know the conditions in the State of Arizona are a lot different from the conditions in New York, for example. I do not think that New Yorkers would be able to produce much solar electrical power, but we can sure do that out in Arizona. I heard my colleague from North Dakota, Mr. Dorgan, say his State of North Dakota had been defined as the Saudi Arabia of wind. I say wonderful. Then let them produce electricity through wind power. I am not stopping them. Senator Bingaman is not stopping them from doing that. The State of North Dakota can produce 100 percent of its power from wind generation if it wants. It is interesting to me that North Dakota is not in that list of States that requires any production of retail electricity from renewable fuels--Arizona, Connecticut, Hawaii, Illinois, Iowa, Maine, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, Pennsylvania, Texas, Wisconsin. Where is the Saudi Arabia of wind? It is not here. The people of North Dakota who have all of this resource must have some reason why they are not taking advantage of it. And since we are providing a tax credit of a billion dollars a year to those who produce electricity through these renewables, one would think that would be a big incentive. As a matter of fact, that is how we are getting the renewable produced energy in the country today. We provide a carrot, a big tax credit. We just extended it for 2 more years in this bill at a cost of $2 billion. So there is a big incentive to produce electricity with taxpayer subsidy. As I recall, the subsidy is something like 1.7 cents per kilowatt hour for wind generation, which is about 40 percent or so of the cost of producing the power. That is a pretty generous subsidy. So if a State such as North Dakota has that much capacity to produce it, then why does it not produce it? Why does the Senator from that State say, look, we have decided, or we have not decided, to require this in our own State, but we are going to require it for everybody else and then maybe it will work for us. Maybe what they are saying is we can have a lot of production in our State if everybody else has to buy it from us. Maybe that is it. As a matter of fact, it transpires that there are a couple of utilities that apparently have access to a lot of wind generation, and they are lobbying pretty hard to get this bill passed. The reason? They are going to get the U.S. Government to tell everybody else they have to buy power from these particular producers. We have always been against oligarchy, monopolies, in this country. Why would the U.S. Government force people to buy a particular kind of energy knowing it is only produced by a very few sets of utilities today? Talk about a windfall. I suggest the Energy Committee ought to look at this very carefully, take a little inventory of who is producing this and who is not. My guess is there are a very few, very special people who are going to benefit from this big time. I would like to know who they are. I would like to know to whom they have contributed in their campaigns. I would like to know whom they have lobbied. There has been criticism of energy people talking to Vice President Cheney before he came up with the administration's energy plan. I would like to know who, on behalf of these particular utilities, has talked to whom and what kind of support there is to enrich this small group of utilities that would take advantage of this particular amendment. I would like to know that. However, we did not have any markup in the Energy and Natural Resources Committee. That was taken away from the Energy and Natural Resources Committee on which I sit. We had no opportunity to get into that. We are going to be asking some of those questions. We never had a cost-benefit analysis. We have no idea whether this is going to do any good and, if so, how much good, and how you can quantify it, but we do know how much it will cost. On the order of $88 billion, for starters. That is only until the year 2020. After that, it is $12 billion a year. Who pays? The electric customers. Is it equal for all of the electric customers in the country? No, it turns out it is not. If you are fortunate enough to be a State that can produce this renewable energy electricity, it will not cost. You get to sell credits to the States that do not produce it. They have to buy the credits. What do they get for that? Nothing. They do not get any electricity. What they get is a pass from the Federal Government from having to build those renewable energy sources themselves. What we are doing is creating a big new market in electric credits. This is a la Enron--not producing anything but creating credits. As a matter of fact, as I read the Bingaman amendment, it is not restricted to production in the United States. In fact, I believe it is contemplated British Columbia electrical production could be imported into the United States for the credits it would be provided. As a matter of fact, I don't understand why other countries would not get into this, too. The Three Gorges Dam in China might well qualify. Since the generators have not been put in the Three Gorges Dam, that would be incremental additional electrical production by hydro--the only way you can count hydro. Since it is not limited by the current language, as I read the amendment, what we are doing is creating a trading market in electrical renewable energy credits which might well enrich not just a few special companies in the United States but some foreign countries as well. Who pays the tab? The electrical retail consumer. I have this challenge for my friends who think it is a wonderful idea: How will they feel when somebody runs an ad against them in their next campaign that says: Are you sick and tired of high electric energy rates? You have Senator So-and-So to thank for that because he got a bill passed that required, by the authority of the U.S. Government, your electrical retail seller to buy 10 percent of the energy from these costly renewables or, if you do not buy that, to buy the credits. The credits, of course, will cost a lot of money. As a matter of fact, these credits probably will become a very valuable commodity. The way the Bingaman amendment works, as I understand it, the generator does not get the credits. If I have an electrical generating facility in Arizona and I decide to create a lot of solar-powered generation and I know there is a big market for electricity in California, I sell a lot of this power to California so the folks in Los Angeles can air-condition their homes or for whatever they need the power. I don't get the credit for that. The retailer in Los Angeles is the one that gets the credit for whatever renewable fuel is used in the production of that electricity. What does that mean? First of all, if I have any retail customers myself, I will try to keep that power. Although electricity is fungible, I will somehow try to allocate it to my retail customers. But if I have extra power, what I might do is, instead of applying it to my requirement, I might simply say I have this much on the market, and I will withhold it from the market, and I will see how much it would bring on the market. Of course, our friends from California complained about the fact that Enron and others withheld energy from the market, thus driving the cost up. A retail seller in Los Angeles is going to need a lot of renewable power in order to meet this mandate. Where is that company going to get the renewable power? It will have to buy it from somebody. If that electricity or those credits are withheld from the market long enough, the cost of the credits will escalate substantially. There is nothing in the bill that prevents that. There is no regulatory regime, although I am sure once we get going, there will be a very big regulatory regime. It is fraught with potential for fraud and abuse. Once we see all of that happening, we will have to have a director of this and that, with a big bureaucracy and a lot of law enforcement and penalties in order to enforce the law so it will not be abused. We will have the Enron situations, and there will be a big hue and cry, and we will all want to prevent that, so we will establish more bureaucracy. The Soviet survival command economy will march on as we have to enforce the policy we dictate. What are we going to do? Are we going to force people to sell the credits they have accumulated? Are we going to say they can only sell them for a certain amount of money? As I read the Bingaman amendment, there is one other place you can buy the credits. You can buy them from someone who has already produced the power or, I gather, if it is not available, you can buy it from the Department of Energy. The Department of Energy, even though it does not produce anything, would be able to sell these credits at something like 200 percent their value or 3 cents a kilowatt hour. Actually, the Federal Government might make some money on this. Who pays the tab? The retail electric customers. Is that what this is all about: Another way to tax the American people? It kind of sounds like it to me. As a matter of fact, there are two new taxes in this legislation. One is the tax of which I just spoke, and the other is a Btu tax by any other name. Remember when we defeated the Btu tax? It was a tax on coal-fired, oil-fired, gas-fired, and nuclear production of electricity. We said: That is not fair. That is what is embodied in the Bingaman amendment and the underlying bill. We are favoring some energy sources over others. What are the ones in disfavor, out of favor? Nuclear, coal, hydro, oil, and gas. That is how we produce about 98 percent of the power in the country today. Those are out of favor. The people who get their electricity from those sources will pay a tax to those who are willing to pay for and generate the power through the renewable fuels or who buy the credits. There will be a tremendous transfer of wealth in this country. If you live in the State of New York and New York has a hard time producing wind power or solar-powered generation, then the retail seller in New York will have to somehow acquire credits to offset the fact that you cannot generate that kind of power in New York. Who is going to pay the cost of those credits? The retail customers of the New York utilities. And to whom are they going to be paying them? They are going to be paying them to the favored States, those that actually could produce this renewable fuel energy. This is the equivalent of a Btu tax. If you are going to get your power from coal or nuclear, for example, you are going to pay a big premium. Your customers are going to have to pay because you are not producing electricity with the favored fuels. That is wrong. This legislation is costly, it is discriminatory, it walks away from deregulation, and imposes a massive new regulation of what we can buy in this country, it is anti-American, and it also will favor the few to the cost of the many. We don't even know who those few are. They know who they are. They are lobbying for this legislation. But I suggest we better know who they are before we vote on it or this is going to come around and bite folks. I know some of my colleagues say, Oh, I need a green vote. I need to impress my environmentalists. I have two responses to that. Vote your conscience. Do whatever you want to do. But if you are just trying to do this to impress some environmental constituents, think about all the rest of the constituents, the ones who have to buy electricity. Do they count? They are the ones who are going to have to pay the bill. I hope they remember at election time that they are just as important as this environmental community that wants a green vote out of some of my colleagues. Why are you willing to impose a requirement on others that they buy a particular product that one of your friends has to sell? To me that is very unfair. This is one more thing that makes this unfair. There was a point of order that lay against part of this amendment as it pertained to a mandate on the municipalities and State-owned and co-ops and others that are the political subdivisions that generate and sell power. Because it would have required a significant expense for them, it was an unfunded mandate and would have been subject to a point of order. So Senator Bingaman has wisely agreed to take the mandate out as it relates to those particular sellers of power and generators of power. I think that is a good thing. The problem is, it creates a great disparity and distinction between those generators on the one hand and the investor-owned generators and sellers on the other hand. Now we have a massive discrimination. The municipals do not have to comply but the investor-owned utilities do have to comply. To their credit, the power association for the municipals, and many of the individual municipals and political subdivisions that are currently exempted, have taken the position that the underlying Bingaman bill is still a bad proposition. It is bad on principle, regardless of the fact they do not have to comply with it now. But they are also concerned that in the end they will have to comply, that they were only removed from its provisions because a point of order lay, and that there would be an attempt later to include them in it--among other things, because it is unfair for one group of utilities to be treated one way and another group to be treated another way. I appreciate that they have not backed off their opposition to the bill notwithstanding the fact that temporarily they are not subject to its provisions. I note the cosponsor of my amendment to leave this to the States, the Senator from Georgia, is present. For the purpose of allowing him to comment on this for a moment, I would like to yield to him and then, when he has completed all he wants to say, regain the time so I can make some more comments. I would like to yield to my colleague from Georgia, Senator Miller.

Mr. KYL. Mr. President, I ask unanimous consent to lay aside the pending business for the purpose of sending an amendment to the desk.

Mr. KYL. Mr. President, I send an amendment to the desk.

Mr. KYL

Mr. KYL. Mr. President, the Bush administration is currently involved in negotiations to settle a dispute regarding the importation of Canadian softwood lumber. Softwood lumber is essential for building quality, affordable homes in the United States. Its price and availability have a major impact on the U.S. economy, workers and consumers. The U.S. homebuilding industry employs 6.5 million people. The Census Bureau estimates a price increase of $1,500 for the average new home--expected if an export tax or duty is imposed on Canadian softwood lumber coming into the U.S.--which would prevent approximately 450,000 families from qualifying for a home mortgage. These families are likely to be less advantaged groups in the population. Quite simply, Canadian softwood lumber is needed here. It has different qualities than the lumber produced in the U.S. and is used for different purposes. The southern yellow pine produced in the U.S. cannot replace Canadian spruce-pine-fir, which is used by American home builders for interior walls. These homebuilders use U.S. southern yellow pine for decks and flooring because of its strength and ability to accept hard treatment. But if southern yellow pine were used in interior walls, unlike Canadian spruce-pine-fir, it could twist, warp and shrink causing nails to ``pop.'' Obviously, this would result in problems for home builders and consumers. There are a number of proposed settlements that raise legal and practical concerns. These proposed settlements range from the imposition by the Canadian government of an ``export tax'' on the sale of Canadian lumber to U.S. companies, to mandated minimum prices established by both governments. Such settlements will cause volatility in lumber markets without adequately considering the disadvantages for U.S. consumers. I urge the administration to base its decision on existing U.S. and international trade law, and I implore the administration to exclude from any settlement provisions that would impose a de facto, foreign country-imposed sales tax on U.S. homebuyers.

Mr. KYL

Mr. KYL. Mr. President, I heard the distinguished minority leader speak a couple of hours ago on behalf of the resolution which he submitted to the Senate for its consideration, and hopefully a vote perhaps Tuesday of next week, in which he called for moving forward in a way that was less politicized with respect to judicial nominations. He had just witnessed the defeat in the Senate Judiciary Committee of his candidate for the Fifth Circuit Court of Appeals from his State of Mississippi. The President had nominated this fine man, Judge Thomas Pickering. The judge currently sits on the Federal district court. President Bush nominated him to serve on the Fifth Circuit. The minority leader had witnessed his defeat in the committee just a few moments before and expressed himself, I thought, quite eloquently, without anger but with a great deal of sadness. I share that sadness tonight because I think a very fine man has been ill treated. Some of my colleagues have said the process was fair. And I don't argue that the process was unfair. But what I argue was unfair was the characterization of the man. It was done so that there would be a reason to vote against him. As I will point out in a moment, I think the real reason there were objections to Judge Pickering was that he was a conservative from Mississippi nominated by President Bush. There were too many groups on the outside. Yes, I do think they had some influence with Members of the Senate and characterized him as an extremist, as out of the mainstream, and therefore it became difficult for some Senators to vote for him. I wish to make it clear that this was not a vote by the Senate. For those who might be watching, what happened today was the Senate Judiciary Committee voted along party lines to defeat his nomination. The majority would not agree to send him to the Senate, as has been done in a few cases, without a recommendation, or even with a negative recommendation. The reason is that had he come to the full Senate for consideration, because of the expressions of support by some members of the majority party, it is clear he would have been confirmed. They were unwilling to let the full Senate vote on him so that he could be confirmed. There is a question about the advice and consent clause of the Constitution which speaks to the advice and consent of the Senate being exercised by just 10 members of the Judiciary Committee. I think that perhaps is the right of the majority on the Judiciary Committee. But I am not necessarily certain--at least certain in some cases--that it is the right thing to do. It was not a full Senate vote that defeated Judge Pickering; it was just the committee. The unfair characterization of Judge Pickering was designed to find some reason or some rationale for voting against him. Why do I say that? There were a lot of different charges: One, that he was a racist. No Senator was ever willing to stand up to make that charge. There were cases cited. But nobody was ever willing to make that charge. There was a suggestion that he had collected some letters to support him and that it was unethical. There is no ethics provision that says that one way or the other. As a matter of fact, none of us can stand up and say, yes, or, no, it wasn't. But I think had a decision been made on that basis alone, it would have been extraordinarily unfair. The American Bar Association, which rated Judge Pickering well qualified, considered all of these matters, obviously. Certainly, the American Bar Association's imprimatur of qualification has been one of the standards most of the members on the majority side have held up as justifying a vote for or against a nominee. When the ABA says this candidate is qualified, it is a little hard for me to justify an assertion that somehow he was unethical because he collected letters of support on his behalf and presented them to the full Senate. There was an argument made that he had done a lot of reversals. I heard that for several weeks. This morning before the committee, Senator Hatch debunked that totally. The reversal rate is good by any standard. If you take the total number of cases, it is far below the average judge. If you take the number of appeals, it is below the average judge. If you are going to say how his record stands up against all other judges, he is much better than the average Federal judge. The reversal rate--25 out of some 5,000 cases--is hardly a reason to vote against him. That was debunked. This morning, I heard that the reason one Senator was voting against him was that the nomination was so controversial that it was polarizing. I must say, it is a little like saying, don't you stick your chin out at me or I will hit you, and you will have started a fight. It is hard for me to figure this one out because some outside groups object to a candidate, create a fuss and a stir about the candidate, and the candidate, therefore, becomes controversial. We are supposed to vote against him? There have been a lot of controversial people in history. I cited this morning people such as Martin Luther King, Jr., Sir Thomas More, and Justice Hugo Black. History is replete with great people who were indeed controversial. In fact, it took courage to stand up for them at the time that they were controversial. But they were right. And the people who stood with them at the time have been validated in their view of what was right, and in their courage. It seems to me as constitutional officers we have an obligation to follow our constitutional duty and make our decision based on whether a person is qualified or not, not based upon whether that person is controversial. There is also a very significant undercurrent of retribution. Hardly any conversation about Judge Pickering could occur without members of the majority party saying: And let us remind you of all of the judges who were treated unfairly when Republicans were in power in the Senate and President Clinton was the President. Only one judge was defeated on the floor of the Senate, and I do not think any were defeated in the committee, as Judge Pickering was today. But there were some judges who did not get a hearing. Maybe there were too many. But I think that it is quite unfair to try to dream up reasons to vote against somebody if the real reason is that you do not like what happened to some of President Clinton's nominees. That is not right. We talk about the cycle of violence in the Middle East and say we have to stop it. Yet some people apparently are willing to maintain a different kind of cycle of retribution in the Senate. I think what it boils down to is a matter of philosophy. I think, if people are honest with themselves, a lot of this boils down to the fact that some members of the majority are uncomfortable supporting a conservative nominated by President Bush. And some on the committee have been courageous enough to, in fact, say that. One of the Senators from the majority this morning said: Look, I think that he's out of the mainstream. I think that President Bush is nominating waves of conservative ideologues, and that offends my sense of what is proper, and, therefore, I am going to vote against that kind of nominee. That is an honest statement, at least, even though I think it is very wrong. But I think that really is the reason why a lot of people decided not to support this nominee. And the question is, A, are they right? And, B, is that right? Well, are they right? I do not doubt that Judge Pickering may be characterized as a conservative, but he has been on the Federal bench for a long time, and I have not seen anybody say that his decisions reflected some kind of conservative bias. Moreover, one man's conservative is another man's mainstreamer, or however you want to characterize it. I think we get on a slippery slope when a Senator from New York says, for example: Why, those candidates are outside the mainstream. They are conservative ideologues. I say: Gosh, they look pretty good to me. Of course, I am a conservative from Arizona. So it is all in the eye of the beholder. The question is, Who got elected as President of the United States? I remember when Al Gore said in one of the debates with George Bush: You don't want to elect George Bush because, if he gets elected, he will nominate conservatives to the bench. Everybody in the country knows that whoever is elected President is going to nominate people they like to the bench. President Clinton nominated a lot of people I thought were pretty liberal. I did not vote for all of them, but I voted for a lot of them because they were qualified, I had to admit. But I thought they were liberal. They were liberal. And I did not like that. And they have added to liberal courts. But, again, he was elected President, not me. I am a conservative from Arizona. You can characterize President Clinton however you want to characterize him. He had the right to nominate candidates of his choice because he got elected by the whole country. And so did George Bush. I daresay that George Bush probably is a better representative of the mainstream of America than a lot of individual Senators in this body who are answerable to specific constituencies in Arizona or New York or New Jersey or Minnesota or whatever State it might be. Therefore, I think it is wrong for any of us to have a litmus test of politics determining our vote for judges on the courts. I think if they are qualified, if the ABA says they are qualified, if we acknowledge they are qualified, then we should not be voting against them just because of their judicial philosophy. That brings me to the conclusion here. When I saw the distinguished minority leader express himself tonight, after his fellow Mississippian had been defeated in the Senate committee, and he offered his sense of the Senate, I admired Senator Lott because what he was saying, in effect, was: I am not going to forget this personally. But it is time to move on and stop this business of retribution, this business of saying Clinton judges were treated unfairly, so, therefore, we are justified in doing the same to President Bush's nominations. What Trent Lott was saying was let's move on. Let's stop this nonsense. And the way we can do it is to begin to deal with the backlog of circuit court nominees that we face today. And he pointed out the statistics. Only one of the nine nominees of just about a year ago--on May 9--have even had a hearing. There is no excuse for that. There is absolutely no reason that all nine of these candidates could not have had a hearing. Judge Pickering is only one. The other eight have not had hearings. Miguel Estrada, for example: No hearing. He is right here. There is no problem. He can have a hearing. But it is going to be a year before he can even conceivably have a hearing now. There is clearly something wrong when that is the situation. So what Senator Lott said was let's have a sense of the Senate and agree as a Senate that at least those eight nominees of May 9, 2001, should have a hearing by May 9, 2002; that is not too much to ask; and it isn't. So I hope all of my colleagues will join us in supporting it. Now, that does not guarantee it, but it expresses the sense of the Senate that we ought to do it. I think that is a good way for us to begin to put some of this acrimony behind us. I remain disappointed about Judge Pickering. I am resigned to the fact that he is not going to be, at least for now, confirmed to the circuit court. But I do think we can learn from this exercise, adopt Senator Lott's resolution, agree to hold hearings on these judges, and then, of course, follow through with action by the committee and then action by the full Senate. The statistics are such that in order for this Senate to confirm the same number of judges that were confirmed for President Reagan, the first President Bush, and President Clinton, in their first 2 years of office--the measure for the end of this current year--we would have to hold a hearing every single week--we, the Senate Judiciary Committee, of which I am a member--that we are in session until the end of this year, with five district court judges and one circuit court judge per hearing. We would have to do that every single week. And the committee would have to vote on five district court nominees and one circuit court nominee. The full Senate would have to vote on five district court nominees and one circuit court nominee every single week. That is just for us to confirm the same number of judges for President Bush, the second, as we confirmed for his father and for President Clinton and for President Reagan. Obviously, we have dug ourselves a big hole. We have to start to get out of this hole. An old rancher friend of mine once said: If you're in a hole and want to get out, the first thing you want to do is stop digging. We have to stop the delay and the recrimination and get on to confirming qualified judges. The best way to do that is to commit to holding hearings and having the Judiciary Committee vote on those nominees. If they vote a nominee down, all right, but let's make sure it is on the qualifications and not some excuse. Then bring those nominees who are supported to the floor so the full Senate can act on them as a body. I support Senator Lott's resolution. I hope my colleagues will do so when we have a chance to vote on it, perhaps Tuesday, so we can move beyond the kind of actions that I believe characterize Judge Pickering's rejection today. I hope this is the last time we will have to have a conversation such as this. I appreciate the Presiding Officer's patience.

Mr. KYL

Mr. KYL. Mr. President, I would like to address the Senate in morning business.

Mr. KYL

Mr. KYL. Yes.

Mr. KYL

Mr. KYL. Mr. President, the pending business is the Jeffords amendment. I am going to speak briefly to that. I am also going to assume we are going to be disposing of that amendment sometime around 5 o'clock. If the vote on that amendment is in the negative, then I will offer an amendment in the nature of a second degree to the underlying Bingaman amendment. I will discuss that. In order to conserve time, I will discuss some elements of that right now, while there is no other business pending. I will have to go back to the Judiciary Committee and vote on the Pickering nomination as soon as that rollcall starts. I can at least take some of the time necessary to respond to my colleague from Vermont and also describe the amendment I intend to offer. I am going to show the nature of the cost of the Jeffords amendment and the underlying Bingaman amendment in a moment on the charts behind me. I will describe the issue before us and what my approach is, as opposed to the approach that has been presented so far by the Senators from New Mexico and Vermont. The underlying bill has a premise, which is that it is a good thing for the U.S. Government to foster the increased production of electricity through so-called renewable energy sources. Now, current law does that through a series of incentives--some tax breaks--to entities that develop windmill farms or solar energy production or other kinds of so-called renewable electrical energy production. That costs quite a bit of money--about a billion dollars a year. But the idea is that we need to foster the development of these renewable sources because they are good energy; whereas, existing nuclear and oil-fired, coal-fired, or gas-fired are not the preferred sources of energy production. Today there is something in the neighborhood of 2 percent of our energy being supplied by so-called renewables. The definition of renewable, by any logic, would also include hydropower. That, as I understand it, accounts for about another 7 percent of the electrical generation in the country. So the total of renewables would be about 9 percent. But, of that, only 2 percent is the nonhydro kind of energy. The idea is to get that to a much higher percentage. In fact, I have to put a footnote here. One of the problems is that the Bingaman amendment has been very much in flux. It has changed at least three times since last night at 11 o'clock--that I am aware of-- in terms of the amount of coverage. I am not sure right now whether it mandates that 8.5 percent of the electricity be generated by renewables and what the definition is or whether it is 10 percent. It has gone back and forth yesterday and today. The underlying bill has a philosophy that the U.S. Government must now go beyond the mere incentives for renewable energy electricity production and move toward a mandate, and that the U.S. Government now has the responsibility to tell utilities all over the United States of America that they must, under penalty of law--severe penalties, which I will get to in a moment--produce a certain percentage of their electricity through the use of these so-called renewable energy sources, such as solar, wind power, biomass, and the like--10 percent, as I understand it. Again, I think the underlying Bingaman amendment may be 8.5 percent now, but it is not clear to me at this time. That is a mandate not just on the States but one that will directly impact all electric customers throughout the United States because, obviously, most utilities are not just going to say, thank you, we will be happy to pay for that. It costs a lot more than production through nuclear, coal, or gas. I think they are going to pass those costs on to the consumers. That is what they are entitled to do and probably will do. We are talking about basically a Btu tax on the electric customers of the United States of America. I say a Btu tax because the reality is that the cost is going to be shifting to the people who buy their power that is produced by coal or nuclear or gas from those who produce it from these so-called renewable sources of energy production. The way the U.S. Government will do this is through a Federal law, which we are debating right now, on a mandate to the State that the utilities in the State must achieve this level of production within a timeframe. Essentially, the timeframe goes for the next 15 years-- roughly, from 2005, when it begins, to 2020, a 15-year period. We have the cost calculations for that. I will get though that in a moment. There is an alterative way to do this. Senator Jeffords said, ``10 percent isn't good enough; I propose we go to 20 percent.'' I hope my colleagues will agree that is not a good idea, that we do not want to mandate that kind of percentage on the States. In fact, we should not mandate anything. That goes to my alternative, which is to say the States must consider all of these alternatives, including a mandate of a percentage of renewable energy production, even consideration of a program, a so-called green program whereby customers within a State would be entitled to buy renewable energy as long as they were willing to pay the cost of it, and the producers there must produce that energy so that under the law, all of the States would have to consider all of these different options, but they would be required to implement no particular option. It is the difference, on the one hand, between those of us in the Senate and the House of Representatives knowing what is best for the entire country: We know that 10 percent or 20 percent or 8.5 percent is exactly the right number; that we should mandate production through renewable energy sources regardless of what the cost of that may be, versus my proposal which says: We can suggest to the States that they consider different forms of incentives or even mandates if they want to do that, but we should leave it up to the States to decide what they want to implement. There are three or four different reasons that I think this is a better approach. First, obviously, is I do not think the source of all wisdom in the United States resides in 100 U.S. Senators. I think there are a lot smarter people in the States with respect to the particular needs of their States. I point out to the distinguished Presiding Officer, for example, that on the east coast, the opportunities for solar and wind power are not great. So the net result of the passage of the Bingaman amendment or the underlying bill or the Jeffords amendment is going to be a huge transfer of wealth from New Jersey, New York, Massachusetts, and other States, to States such as mine, Arizona, which has lots of sunshine and can produce lots of solar energy, and California that has lots of solar energy opportunities and windmills to produce wind energy. There will be a huge transfer of wealth. Why? Because the law will say: If you do not produce electricity through these renewable sources, then you have to pay a penalty, you basically have to buy credits from those States that do, and that is going to cost you money. Do you get electricity from it? No. You just pay money, and that keeps you out of trouble. You do not get any electricity for what you are paying. But the cost of the penalties or the cost of doing this either way is going to be passed on to your electric customers. I say to any of my friends from the States that are not blessed, shall we say, with a lot of wind or sun: Get ready, you are going to be sending a lot of money to States in the Southwest, States such as Arizona that I represent. Let me give an idea of the cost. Let's look at how much it is going to cost to develop this renewable production capability. It is represented by the blue. It starts in the year 2005 on the far left- hand side where the arrow is pointing. That is about $2 billion a year cost to produce this much power with renewable sources. This is gross cost. The far line on the chart is the year 2020. The blue line goes up to about $10 billion a year to produce the power, but under the law, as the bill is currently written, there would be little incentive to continue to build the facility since it sunsets. My understanding is the amendment may remove the sunset, but the total cost is the same either way. The red represents the penalties that will have to be paid because you cannot build the generating capability to meet the requirement called for under the law. That would total just about $12 billion a year in the year 2020. Whether it is the actual construction of the facilities or the payment of the penalties, we are talking just under $12 billion a year. Much of that, as I said, is going to be paid by States that do not develop the generation but have to buy the credits and send them to the States that do provide the generation and excess amount of that generation. The total amount of that is $88 billion over the 15-year period. That is $88 billion gross cost. To show what the pending Jeffords amendment will do, it is even worse. The Jeffords amendment: Starting in the year 2005, $20 billion a year, which goes up to, in the year 2020, more than $22 billion a year; again, the production capacity lining out at about $13 billion a year and the remainder in penalty, but there is a total gross cost of about $23 billion, and the total cost over the 15 years is about $181 billion. Have we done a cost-benefit analysis to understand what we are going to be getting with $181 billion? These charts are produced by the U.S. Department of Energy. They have done the numbers, but nobody has done a cost-benefit analysis of what we are going to get out of this. Some say: Maybe this will replace some of the fuels that are currently being used, such as coal or oil, and therefore there will be less demand for those particular fuels, so the cost of those fuels will go down, so energy produced by coal or gas will go down--you get the idea. That may happen, but obviously we are still talking about a huge cost to implement this law. Let's just take a wild presumption and say that all of this generation replaced the generation from natural gas and it drove the gas prices down to such an extent that we ended up with a wash, which is not the case even according to the Department of Energy, but even if we did that, what would that represent? It represents a Btu tax, as I said, on nuclear, coal, oil, and gas production, and even hydro production, as a matter of fact, and a big wealth transfer from States that would have to buy the credits to States that generate the electricity from the preferred fuels, these so-called renewable sources. I think that is bad public policy. It is arrogant on the part of the Federal Government to mandate something such as this, to presume we would know the right mix of fuels to use in producing electricity in this country, to require that some States would get hurt by it more than other States, to not have ever done any kind of cost-benefit analysis, notwithstanding the huge costs involved. I am assuming, by the way, that this is possible, that we can do this, even though 2 percent of the generation today is through the so- called renewable sources. This is why President Bush supports our approach, which is a voluntary approach by the States where the States can determine themselves what mandate to impose. By the way, 14 States already have a mandate. My State has a 2- percent mandate. The State of Maine has a 30-percent mandate. Texas has a mandate. What the President believes is each State should be able to decide for itself, based on its unique circumstances, what is possible in that State. It may be in my State it is possible to do a lot of wind and solar generation. It may not be so possible in New Jersey or New York. That is why each State ought to determine for itself what the mix should be, of course, based upon what it is willing to impose upon the retail and wholesale customers in the respective States. I spoke with the Secretary of Energy today, who assured me I could represent to all of my colleagues that he supports the Kyl amendment, that he opposes the underlying Bingaman amendment and the underlying bill and, of course, the Jeffords amendment, which would all impose by Federal mandate a standard for renewable portfolio. Let me address this cost in another way. As I said, this is a mandate. The Federal Government already provides an incentive, and the cost of that incentive right now is about $2 billion over a 2-year period. This is the production tax credit which will be renewed, extended, and expanded in terms of its scope. That is what came out of the Finance Committee, on which I sit. We are going to be providing for expanded and extended tax credits for the production of electricity through these renewable fuels. It is not necessary for the U.S. Government to mandate it as long as we can achieve that result through the use of the tax incentives which we will be, as I say, dealing with here a little bit later on, but that is what came out of the committee. I want now to address briefly this question of discrimination. It is apparent to me that the effort being made is to round up votes by picking and choosing between the politically correct fuels and those that are not politically correct and making some other changes in the amendments so some areas are impacted and other areas are not. Let me give an illustration. We know this underlying amendment of Senator Bingaman and the amendment of Senator Jeffords that is pending would both impose significant unfunded mandates on the States and localities. Part of this is due to the fact that States would have to buy credits. Part of it is due to the fact there are a lot of municipal power producers in almost every State. It is my understanding--and I would love to be corrected by the Senator from New Mexico if I am wrong on this--that as a result of the fact that a point of order would lie against his amendment because of this unfunded mandate, the provision with respect to municipal generation or public subdivision generation, Federal or State or local, has been removed from the bill. I will assume, unless I am corrected, that is the case. I am seeing a nod, so that is good. I do not think we should impose this mandate on our political subdivisions. So that would remove the point of order with respect to the generation. I am not sure with respect to the purchase of credits, and I would have to analyze that. But at least what we have done is to say that 10 percent of the power, more or less, that is produced in the country by the municipal generators would not be subject to this mandate. In my State I have a fairly large public power producer and a bunch of little co-ops and a couple of very large investor-owned utilities. So I ask: Is it fair for the Senate to impose upon one group a mandate that 10 percent or 20 percent or even 8\1/2\ percent of power be generated by renewables, whereas it would not apply to the political subdivisions? I am happy for the political subdivisions. I am glad they do not have the mandate applied to them, although they do in the case of Arizona because the State applies a mandate, but that is the determination of the State. I do not think it is fair. I think it is discriminatory. I also understand hydro is treated a little differently; that hydro is only considered a renewable resource. Now if water is not renewable, I do not know what is. Water over the dam has always been considered a renewable, the best of the renewable resources, but it is not politically correct by certain environmental groups and so it is not included, except to the extent there are incremental economic improvements or efficiency improvements in the electrical generation facility, the dam through which the water passes. You rewind the turbines and that gives a greater efficiency, and apparently you get some credit for doing that. But otherwise you get no credit for hydrogeneration. I understand Senator Collins will have an amendment to say, wait a minute, in Maine we do a lot of hydrogeneration and we should get some credit for that. I understand that may be accepted. I do not know whether or not it will be, but clearly there is discrimination going on when one kind of clearly renewable resource counts but another kind does not count. Why would we have a double credit for solar energy or energy produced on Indian lands versus biomass or hydro, for that matter, or wind? Why is that? Perhaps the authors of the bill could explain that to us. In other words, my point about discrimination is we have done some picking and choosing, some winners and losers. It, again, is the arrogance of Federal power that we decide what is best. Based upon science? Based upon the merits? No, based upon what it is going to take to get the amendment passed. That is what is happening. Let us get real specific about it. What we are doing is trying to construct something that can pass, and what I am saying is that the fairest and most nondiscriminatory way of all is to say, let each State decide for itself. That is really fair. So if New Mexico decides to do solar generation, it can do that. If my State of Arizona says, wait a minute, you mean we are going to have to put acres and acres of shiny mirrors in our pristine desert that we love to look at because it is so beautiful--that is the way we could generate that power in Arizona is through solar--that is how we would have to do it? We are going to be required to degrade our environment by putting--I do not know how many hundreds of acres of mirrors it would take to generate this solar power; that is how we would do it, I guess---- I think the State of Arizona would say that is environmentally unacceptable; we are not going to do that. We are not going to spoil the beauty of our State, not to mention what would happen to the flora and fauna that could be affected in an adverse way by such a massive amount of solar in the State of Arizona. I think we would like to make that decision ourselves. If it is possible to produce, let us say, 3 percent of power through solar generation in Arizona, and our people in the State decide that can be done and it can be done in an environmentally sensitive way, and that is a good thing, then let the State of Arizona decide that. I do not think representatives from the State of Florida, which also has a lot of good sun, or the State of Vermont, which may not have quite as much sun, should be dictating that to the State of Arizona. I have one more point, and then I will make the rest of my points later. The procedure--and I will close very quickly--as I understand it, is we have the underlying bill, that pending to that is a Bingaman amendment that would reduce the Federal mandate to 8\1/2\ percent, but it still would be a Federal mandate--and correct me if I am wrong on that, but it would exclude the municipal providers and it has a phase- in period different from the underlying bill; those are some of the essential differences between that and the underlying bill--that the pending second-degree amendment is a Jeffords amendment that would mandate 20 percent and does not exclude the municipal generators, and if that is defeated, then we would be back to the point I could offer my second-degree amendment, which very simply provides that the States must consider the alternative of renewable fuels generation, as well as consumer choice, so the consumers could require that they be provided renewable fuel electricity if they are willing to pay for it but it would be up to each individual State as to what to order. What I would hope is we would defeat the Jeffords amendment, that we could then approve the Kyl amendment which would be a substitute for the underlying Bingaman amendment, and there may be later some clarifying amendment by Senator Collins that we would consider at that point. That would deal with the subject of renewable fuels, and I think it would do so in a fair way, in a nondiscriminatory way, in a way that would not necessarily cost as much, although each State could decide to impose those costs on themselves if they chose to do so in a way that would be consistent with the President's energy plan and a way that I suggest to my colleagues would be much more likely to be successful with our House colleagues in a conference on this bill. So I hope when we get to the point, after I have offered my amendment, we will be able to support that which will have the effect of defeating the underlying Bingaman amendment. Excuse me. I stand corrected. I am advised the Bingaman amendment is still at 10 percent, but it pushes out to the year 2019. So it is still a 10-percent mandate.

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

Mr. KYL. Might I inquire, my understanding is the pending second- degree amendment would have to be disposed of before I could offer my second-degree amendment. It would have to be defeated. I guess it could prevail either way. Then I would offer a second-degree amendment.

Mr. KYL

Mr. KYL. I thank the Senator from Nevada for his courtesy. I will summarize my remarks and try to find another time to expand on some of my thoughts. I appreciate his courtesy. There is a big difference between what the President has proposed in terms of an energy policy and the bill we are beginning to debate on the floor of the Senate. The President's energy policy, I believe, was a very well balanced set of recommendations that would have helped achieve the goal of energy efficiency, less dependence upon foreign sources of oil, and a series of steps of progress toward changes in our policy that would result in more environmentally friendly fuels and a variety of reforms almost everybody is willing to support. Unfortunately, the President's proposals were not met with support by many on the other side of the aisle. As a result, even though I believe there was sufficient support in the Energy Committee, on which I sit, for many of the reforms that the President has proposed, our committee was not allowed to deal with this matter. The only hearings held were a long time ago and did not deal with most of the specifics of the legislation. We were never permitted to mark up the legislation. In fact, the bill that is on the floor today has undergone iterations, and I am not precisely sure I have the very last version. In terms of process, we are suffering under an inhibition of the primary committee of jurisdiction never having had the opportunity to work out details, to try to smooth out rough edges, and resolve differences that probably could be resolved if we had taken the time to do that in the committee structure. It is hard to write a complex bill during its consideration on the floor of the Senate. Yet that is what we will have to do. As a result, I am afraid we are not going to end up with a product that would be nearly as good as it would have otherwise been. Let me mention several aspects of the bill that are going to need a lot of work. I will briefly address four or five of them. The bill is written to restructure the electric energy industry. This is a very complex and difficult subject. I think it is done in a very clumsy way. It preempts a lot of State authority. It gives a lot of authority to FERC, largely at the expense of the States. It gets the Federal Government involved in retail matters, with a utility serving its customers in matters such as real-time pricing, net metering, and consumer protection issues. That is not the business of the Federal Government. It gives FERC broad authority with respect to the interstate transmission grid. There is some authority here. One can make the case that on interstate matters FERC should be able to help open up the market for easier transmission of energy. I think we can work some provisions out that provide broader authority to FERC even in that area. We have to be careful that we do not ``socialize the costs,'' which is the term used by one official, with respect to how the costs will be allocated. We are going to have to treat the costs in a very fair way and make sure the existing customers are not the losers, that a utility that currently serves them can continue to do that, and they will not have to pay the cost of someone else coming to connect to the grid. There are a lot of issues with respect to this electric restructuring to which we are going to have to pay attention that we could have resolved in committee if we had the opportunity. The second has to do with nuclear power. The bill itself, unfortunately, does not adequately deal with the need to modernize the law with respect to the provision of nuclear power. It does extend the Price-Anderson Act for 10 years but only for DOE contractors. For those not aware, that is the liability protection that has historically been provided to nuclear generators to ensure that they would be able to provide the power and not have to worry about the insurance costs for some catastrophic accident. There will be an amendment offered to add the NRC licensees, which are the commercial powerplant operators, to this Price-Anderson protection. I believe that will pass. I think most recognize that is going to be necessary. There are 103 nuclear powerplants operating in the United States today, including 3 in my home State of Arizona. They supply almost a quarter of the power in the United States in a very environmentally safe manner--no emissions, no gases such as nitrogen oxide, sulfur dioxide, or other gases that threaten the environment. Nuclear energy, of course, is the most efficient. It costs 1.83 cents per kilowatt hour compared to 2.08 per kilowatt hour for coal-fired plants. We need to work to ensure that the nuclear provisions of the bill are modernized. We will have amendments to present to do that. One of the most contentious parts of the bill relates to increasing our ability to generate oil and gas production in the United States so we do not have to rely so much on foreign sources of oil. This gets primarily into the question of whether we should be able to explore for oil in an area of Alaska that was set aside for that purpose by the U.S. Government some years ago, an area called the Arctic National Wildlife Refuge or ANWR. The facts have gotten very confused by people who do not support this proposal. The area we are talking about is about the size of the State of South Carolina. But the amount of land that would actually be exposed to exploration is no larger than the footprint of an airport in most of our communities, including, if you want the exact acreage, Dulles Airport outside of Washington, DC, or Sky Harbor Airport in my home State of Arizona. Out of an area the size of South Carolina, we have an area the size of an airport in which the drilling would occur. It is simply not possible to have the degradation of the environment that some claim with the modern technology that would be used to provide for this production and the small area and the environmentally friendly ways in which it would be done. The drilling pads are 80 percent smaller than they were a generation ago. You can literally get oil 6 miles away by drilling down 2 or 3 miles and drilling out 2 or 3 miles and in that way keep your footprint to a very small area. The critics have said there is not very much oil, so it is not worth the effort. I will state how much: It is 600,000 barrels of oil per day, which is almost the same amount of oil we are importing from the country of Iraq. It is the supply of oil we get from the country of Iraq for 40 years. That is a lot of oil. If we get into a conflict with Iraq, we will wish we had an alternative source so we would not have to rely upon purchasing it from Iraq. Suffice it to say, if we are going to be serious about increasing our energy production, we are going to have to be able to drill for oil in Alaska. There is a provision of the bill dealing with CAFE standards, setting the miles per gallon that cars have to meet. While all Members are desirous of trying to improve the miles per gallon that our cars meet, the only way we have found to do that has, as a result, caused an increased number of automobile fatalities. The National Academy of Sciences, certainly an unbiased source, found that previous fuel economy measures likely resulted in 1,300 to 2,600 additional crash fatalities annually, which is the equivalent, according to the National Safety Council, of wiping out the recent hard-won gains of safety belt use, airbags, or drunk driving legislation. The point is we have had a lot of people unnecessarily killed on our highways because we have had to make cars lighter in order to meet these CAFE standards. It seems to me we have to weigh the benefits that might be achieved--might be achieved--in terms of fuel savings on the one hand and the saving of lives that would be achieved on the other hand if we do not carelessly move forward with these CAFE standards. Once again, we will have an amendment that will have to deal with that. I will have amendment also to deal with other subjects. There will be other amendments that will attempt to improve the underlying bill. My bottom line is this. In this brief opening set of comments, I just want to make the point that the bill before us is not the bill that the President recommended. It is not the bill that I think could have come out of committee. It is a bill that requires a lot of work. It is going to take a lot of time. When we try to do the amending process on the floor of the Senate, we don't necessarily end up with the best of products--just because of the way we have to proceed. It is regrettable we have to do it that way, but since we are opened up to a series of amendments, then I think we will have to have the indulgence of everyone as we present and debate those amendments and hopefully get them passed.

Mr. KYL. I move to lay that motion on the table. The motion to lay on the table was agreed to.

Mr. KYL

Mr. KYL. Madam President, on January 28, I addressed the reasons why I believe the President is correct to move this nation forward in the deployment of a national missile defense. I pointed out then that the threat is too great not to proceed when the technical means are at hand. Today, I wish to address the issue of the costs of defending America against the threat of ballistic missile attack. At the end of January, the Congressional Budget Office released yet another of its reports purporting to show the costs to the American taxpayer of a system to defend the United States against such an attack. Opponents of missile defense rushed to use the study to bolster their arguments. For reasons I will discuss, portions of the CBO report are seriously flawed, and opponents' cost arguments are fallacious. Today, I intend to set the record straight, and to demonstrate that we can afford missile defense. The first problem with the CBO report is that it was prepared at the request of national missile defense skeptics various Senators who carefully defined the options they wanted analyzed in their letter to the CBO. As a result, CBO, as with its April 2000 report, provides a selection of options, with high and low estimates for each option, none of which necessarily reflects the actual system that will be built. Each is representative only of possibilities, and many are not being contemplated. As such, CBO's estimates tend to range from around $40 billion over 14 or 15 years to around $187 billion. The high-end numbers, however, are derived from options that exceed anything the Department of Defense is considering. Options that can be used to inflate the cost of missile defenses include increasing the number of land-based interceptor sites, the number of X-band radars on land and at sea, the number of satellites in constellations, the number of ships that will have to be built versus modifying existing ships for sea-based assets, and so on. Also, CBO's cost estimates vary widely, depending upon which of its scenarios and assumptions one wishes to use. For example, its April 2000 report includes cost estimates for one and two ground-based sites with varying numbers of interceptors and X-Band radars and associated space-based sensors, ranging from $29 billion to $60 billion. This wide variance in estimates--a factor of 100--renders its analysis virtually meaningless, except for the rhetorical use of opponents. The high range of the new study--$187 billion--is CBO's estimate of the cost of a 3-site national missile defense system and a full constellation of space-based lasers--an option not planned by the either the Clinton or Bush Administrations. This tactic of inflating the cost of national missile defense was similarly employed in the 2000 study. At least part of the reason for this methodology again can be laid at the feet of the report's sponsors. CBO has estimated the cost of a national missile defense employing the artificially derived assumptions required by the letter from the Senators. It was their letter, not any Department of Defense plan, that required the CBO study to include the cost of the nonexistent third site. The same letter also requested cost estimates for a stand-alone sea-based midcourse system, despite the fact that no such system is envisioned by the Administration. It should, therefore, be no surprise that CBO came up with a high estimate in the neighborhood of $187 billion to build the national missile defense system defined by its skeptics rather than the Defense Department. To CBO's credit, it denied the request of the sponsors' letter to include in its estimate Brilliant Pebbles--canceled in 1993--and appropriately treated as ``conceptual'' the sea-based boost-phase kinetic energy idea. CBO explained its reluctance to factor into its study cost estimates for Brilliant Pebbles by noting that: the most recent complete technical description of [Brilliant Pebbles] dates from 1992 [and] little additional work has been done on space-based interceptors since Brilliant Pebbles was terminated early in the Clinton Administration. With regard to a sea-based boost phase kinetic energy, it writes that: sea-based boost-phase defenses are . . . currently in the very early stages of conceptual development [and] there are substantial uncertainties regarding the needed capabilities, system architecture, technologies, and schedule for developing and deploying such defenses. I should note that I remain a strong supporter of Brilliant Pebbles and hope that it is seriously pursued at some point in the future. That the program's revival would entail financial costs is, of course, a given, if it were ever actually considered. CBO did include an estimated cost of $68 billion for a 24-satellite constellation of Space-Based Lasers, despite the Appropriations Committees having killed the long-range program, the Administration's budget request reflecting little emphasis on that program, and despite the fact that very little is known about the characteristics of any such satellites that may eventually be built. CBO also included in its estimate the construction of nine new AEGIS ships, each outfitted with 35 advanced interceptors, while omitting consideration of the possibility of converting existing AEGIS ships for the new mission. At the request of the Senators who requested the study, CBO also priced options as though they will all develop and deploy concurrently, and without regard for the relationships between programs. In other words, it estimated program costs in what we call a ``stovepipe'' fashion: programs exist parallel to and independent of each other. Deliberately ignored by the report's congressional sponsors is the common base from which these programs develop and from which they will operate, for example, feeding off of common sensor and processors. Once again, CBO warned against using such an approach. To quote again from its cover letter to Senators: (A)s you requested, CBO's assumptions about the architecture and components of the sea-based system reflect its use as a stand-alone system, not as an adjunct to a ground-based system. To summarize, then, CBO's high-end estimates are derived from the following questionable practices requested by Senators: No. 1, use of exaggerated scenarios, for example, the third ground- based site and the construction of new ships; No. 2, inclusion of drawing board programs that may or may not be included in some distant architecture, but certainly won't be developed concurrent with other covered programs; and No. 3, use of pricing and inventory requirement methodologies that may bear little or no relationship to a national missile defense system. The second problem with the analysis is the context. It assumes circumstances similar to other weapon acquisition programs. But the development of missile defenses, does not easily allow for such analysis. Unlike a new aircraft, for example, there is no existing national missile defense system from which to draw comparisons to programs under development. A decade of lost opportunity has left us with no alternatives but to field the systems currently under development. Yet, look at some of CBO's assumptions from its April 2000 report, which attempt to redefine a missile defense program to some hypothetical norm: Differing estimates for procurement arise for two reasons. First, CBO believes that in addition to the 100 deployed interceptors, the system would need 82 additional interceptors to use in testing and to replace ones lost in accidents or engagements. The Administration puts the number of additional interceptors at 47. However, CBO's larger figure is more consistent with the experience of previous missile programs. It includes 20 additional interceptors for operational testing and evaluation because CBO assumes that the system will need a total of 30 tests over its first five years of operations. (The Peacekeeper missile program conducted about 20 tests during its initial five years of operations, and the Navy's Trident missile program conducted about 40 tests in its first five years.) In addition, CBO projects that a greater number of spare interceptors (20 instead of five) will be necessary to replace ones that are destroyed during engagement or tests and to allow for unforeseen events such as damage during maintenance. The problem with this approach is that it estimates the cost of a make-believe program. It devises a program it thinks will be necessary and runs the numbers on that. With regard to the number of additional interceptors required for testing and spares, for example, CBO relies on the histories of ballistic missile programs that have no bearing on or relationship to the air defense interceptors being contemplated. To summarize, then, the CBO report includes a very wide variance of costs, depending upon a number of variables, many of which may bear no relationship to the eventual system architecture, and it derives assumptions based upon the experience of programs that have little or no relationship to the components of a missile defense system. The second point relates to the tactics of missile defense opponents. Missile defense opponents, such as the sponsors of the CBO report, invariably employ a series of misleading arguments to advance their case against missile defense. One is the misuse of total program life- cycle costs. Another involves the use of improperly derived cost estimates by adding together numbers that even CBO clearly states should not be added. A third argument used by missile defense opponents is that money spent on missile defense programs comes at the expense of other programs. With regard to argument number one, it is not fair to evaluate the cost of a program without spreading it out over the life of the program. But many missile defense opponents do precisely that. CBO's estimates are for a 14-year time span. To cavalierly throw total program life-cycle costs around without regard to annual expenditures is to distort the debate over the program's value. As one analyst exposed the problem: Estimating the cost of missile defenses over a 14-year period would have been akin to devising a similar cost estimate in 1958 for the cost of five generations of intercontinental ballistic missiles (the Titan I, the Titan II, the Minuteman I, II, and III) through 1972. If the procurement cost of these systems--likely more than $200 billion--had been debated prior to the decision to develop ballistic missiles, perhaps Congress would have been equally shocked by the ``sticker price'' of deploying a nuclear deterrent for the next 14 years. The second argument or tactic of missile defense opponents involves a misuse of data contained in the CBO report despite CBO warnings. For example, if one simply adds the various high-end estimates, ignoring the lower estimates and CBO's own caveats against taking such an approach, it could appear as though the cost of a National Missile Defense system would exceed $180 billion. And it turns out that is exactly the conclusion the report's congressional sponsors emphasize. In their prepared statement issued upon release of the report, the three senators wrote the following: ``The report . . . shows that developing, deploying, and maintaining a modest layered system that includes ground, sea and space-based elements could easily cost well over $150 billion.'' Yet, the CBO stated in its cover letter to the Senate sponsors, ``The cost estimates that CBO has prepared for individual systems should not be added together to yield an estimate of the total potential costs of national missile defense.'' But that is precisely what Senate opponents of missile defense are doing. Missile defense opponents use the high-end CBO estimate as a baseline from which the rhetoric escalates to even higher cost estimates. Some examples: One of our esteemed colleagues, in a floor statement on June 25, stated the following: The Congressional Budget Office in an April 2000 report concluded that the most limited national missile defense system would cost $30 billion . . . If we hope to defend against the accidental launch of numerous highly sophisticated missiles of the type that are now in Russia's arsenal, the Congressional Budget Office estimated that the cost will almost double, to $60 billion . . . This is what the Congressional Budget Office had to say in March 2001: Those estimates from April 2000 may now be too low . . . Is it any wonder that some critics believe that a workable national missile defense system will cost more than $120 billion? From $30 billion to $120 billion. Another Senator was described in the New York Times on September 11 as saying that: ``The cheapest system proposed by the Bush Administration . . . would cost $60 billion over 20 years, but could rise to as much as $120 billion . . . A more complicated system that would combat decoys or munitions that carry biological weapons--known as a layered defense would cost between one- quarter trillion and half a trillion dollars,'' Mr. Biden said. This Senator is reported to have said, that quickly, the estimated cost to defend the American public from ballistic missile attack, in the eyes of those who oppose any such defenses, went from CBO's lowest number of $40 billion to ``one-quarter trillion.'' Exaggeration? Yes. Inevitably, cost estimates for missile defense are used out of context. The use of exaggerated lump-sum figures to portray national missile defense in the most negative light is intellectually dishonest. Even many critics of national missile defense claim to support the components to defend against shorter range missiles, like Iraqi Scuds. Taking such support for theater missile defense programs into account, the remaining portion of the overall missile defense budget allocated for defense of American cities usually represents less than two percent of the defense budget. That's right: less than two percent. The fiscal year defense appropriations bill included $331 billion. Of the $8.2 billion in that bill authorized for missile defense, only $3.8 billion is directed toward the so-called midcourse segment, which includes the ground and sea-based systems capable of intercepting intercontinental-range missiles. That amounts to one percent of the fiscal year 2002 defense budget for national missile defense. I will repeat that. That amounts to one percent of the fiscal year 2002 defense budget for national missile defense. For fiscal year 2003, the defense budget request is $379 billion. The amount requested for missile defenses is $7.8 billion. Of that amount, again, around $3 billion will go for systems designed to defend the United States. Again, that is only one percent for National Missile Defense programs. The Department of Defense's budget documents show that the annual expenditure for all missile defense programs will rise to $11 billion in 2007, a time when total defense spending is expected to be around $450 billion. So, in 2007, when national missile defense programs will be in or near the operational stage of development, and assuming they represent as much as half of all missile defense programs, they will still represent only one to two percent of defense spending, while all missile defense programs constitute two to three percent. A third argument is that missile defense will rob other needy programs of necessary funding. Some folks try to portray the missile defense programs as robbing from other more important things, more pressing national security requirements, and other needs more close to the heart of the American people. For example--and I will just quote one or two of these--the Senators, in their statement accompanying the release of the new CBO report, write: If the Administration decides to pursue such a costly program, it could draw resources away from programs to counter other, more likely and more immediate threats we know we face: terrorism, attacks with anthrax or other biological and chemical agents, the proliferation of weapons of mass destruction, and delivery systems that are far more likely to be used than are ballistic missiles, such as trucks, ships, airplanes, and suitcases. One of the Senators involved here is the majority leader. It is my understanding that the distinguished majority leader has proposed to pay for the approximately $15 billion in energy subsidies in the energy bill that we are going to be taking up perhaps this week by offsetting that with the user fees that are collected by the Customs Agency. U.S. Customs has a responsibility in this war on terror, a very serious responsibility. As these Senators pointed out, one of the likely possibilities, anyway, of threat to the United States is the delivery of a weapon of mass destruction in the cargo hold of a ship. That, of course, is exactly the kind of thing for which Customs is supposed to check. So on the one hand the distinguished majority leader is at least recorded as having suggested that we take money away from the Customs Service, money which could be spent to check this kind of thing, and pay for subsidies in the energy bill with that funding. It is my belief that we should do both. We have to leave the Customs fees with the Customs Service which has a massive responsibility. They need more money, not less, to do what we want them to do with their regular job as well as fighting the war on terror. We also need to spend the kind of money that is required to ensure that we do not have a threat from ballistic missile attack. We can and should do both. Other Senators made similar comments, but I believe these arguments are demonstrably wrong. I will illustrate why with discussion on three brief points: First of all, spending to protect our Nation from another terrorist attack; secondly, costs of other weapons programs; and, third, what I would call porkbarrel spending. According to the Office of Management and Budget, the United States had budgeted $10.3 billion to combat terrorism for fiscal year 2002. That was before September 11. Back in August, once again, the Congressional Research Service had provided my office estimated federal expenditures for border security of $14 billion for the current fiscal year. Taking into account some degree of overlap, we can reasonably surmise that between $15 billion and $20 billion was budgeted by the Bush administration for what we now call ``homeland defense'' before the attacks on the World Trade Center and the Pentagon. And this omits the $20 billion from the emergency supplemental and the cost of ongoing military operations intended to eliminate the terrorist threat emanating from Afghanistan, as well as a supplemental appropriations request we will soon receive in the range of $10 to $20 billion. The budget request for fiscal year 2003 includes $38 billion for homeland security, double the amount for 2002. In addition, the amount budgeted for national defense will be $379 billion, almost all for conventional and special forces. Compare that with the $3 billion we are spending on national missile defense. Clearly, the opponents' claims that other defense and domestic security projects, especially our efforts to deal with terrorism, are suffering because of missile defense are just plain wrong. How about other weapons programs? The total costs of any major procurement program can appear daunting. Tactical fighter modernization--the development and acquisition of the F/A-18E/F, the F-22, and Joint Strike Fighter--is anticipated, if we accept CBO's numbers, to cost $350 billion through the year 2020. To date, we have spent over $10 billion on the V-22 Osprey program, which continues to prove a developmental headache and accidents of which have cost the lives of 30 Marines. The Department of Defense calculates that the V-22 program will cost a total of $38 billion. These are all high total costs. Taken out of context, they can be exploited by opponents of individual programs. The $350 billion figure for tactical fighter modernization, in particular, has been used to buttress arguments against these aircraft, given the absence of a serious threat to U.S. air superiority. Such arguments, however, would be misleading. They ignore the imponderables, such as the need to ensure air superiority throughout much of the 21st century, and the fact that procurement costs are spread out over many years. They ignore cost-benefit analyses that demonstrate fewer units required to accomplish missions that require far greater numbers of older, less capable models. They ignore missions assigned to platforms that may not be readily apparent because they do not fit into conventional images of how such platforms are used. So, it is not persuasive to argue against missile defense based on the seemingly large total cost spent over time. Finally, what about he argument that other needs go unmet because of what we would be spending on missile defenses? We rarely hear many of these same critics decrying the expenditure of considerable amounts of taxpayer money for porkbarrel projects that contribute neither to national security nor to our economic well-being. I direct my colleagues attention, for example, to the February 6 column by Robert Samuelson in the Washington Post. Samuelson notes that, ``since 1978, federal outlays to support farmers' incomes have exceeded $300 billion.'' Samuelson goes on to write: ``But wait: Congress is about to expand the subsidies. The Congressional Budget Office estimates that new farm legislation would increase costs by $65 billion over a 10-year period, on top of the $128.5 billion of existing programs.'' These figures make what we are spending on national missile defense pale by comparison. Samuelson's column argues persuasively that the $300 billion in farm subsidies have had no--repeat, no--discernable impact on agricultural production in the United States, on farmer incomes, or on the contraction in the number of small family farms. My colleague Senator McCain regularly produces lists of items added to spending bills for purely parochial reasons. For example, he identified $3.6 billion worth of pure pork in the current year's defense appropriations bill--an amount exceeding our expenditure for national missile defense. And this is an annual phenomenon and represents just one of the 13 annual appropriations bills, all of which are loaded up with pork every year. Senator McCain estimated that the total spent on pork for fiscal year 2002 equals $15 billion three times the amount historically spent on missile defense programs per year. As a final thought, when discussing the cost of a national missile defense system, we should attempt to inject a little integrity into the process. The liberal public policy organization, The Center for Defense Information, recently published a report concluding that, since 1983, the United States has spent ``roughly $44 billion'' on national missile defense. The implication is intended to be that we have nothing to show for all that money, and should not spend more. The center further concludes that the cost of a three-site national missile defense system--the nonexistent third site that I mentioned earlier--would ``likely'' cost more than $60 billion. The $44 billion spent since 1983 on national missile defense amounts to $2.3 billion per year--less than 1 percent of defense spending. The suggestion that we have little or nothing to show for the money spent ignores two very important facts: No. 1, the research and development effort has given us a strong base of knowledge for what is technically feasible; has contributed to the development of the theater and short- range systems such as the Patriot PAC-3 that most of us agree are needed; and has generated a large number of technological spinoffs, for example, in the areas of cancer screening, computer chip production, and laser eye surgery; and, second, to the extent not all of the money was spent to produce a deployable system, we must recognize that, for 8 years, we had an administration vehemently opposed to actually developing and building a system to defend this country against missile attack. To the extent we did not make as much progress as could have been accomplished, the 8 years that were ``lost'' was because the Clinton administration was committed to the notion that we didn't need missile defenses, that arms control and deterrence would protect us against those who would do us harm. While money was spent on research, there was no commitment to actually deploy a national missile defense system. Adherence to the ABM Treaty, which was considered ``the cornerstone of strategic stability,'' was sacrosanct. As Deputy Defense Secretary Wolfowitz, in response to an inquiry regarding the eventual cost of the Bush administration's missile defense plans, said in his July 12 statement before the Armed Services Committee: . . . we have not yet chosen a systems architecture to deploy. We are not in a position to do so because so many promising technologies were not pursued in the past. The program we inherited was designed not for maximum effectiveness, but to remain within the constraints of the ABM Treaty. That is the real problem. So in conclusion, there is no question that the cost to build a national missile defense system will be high. Freedom is not free. We do not know the exact cost, both because we are struggling to make up for lost time and we were constrained by an outdated treaty from which President Bush is wisely extricating us. We do not know how many satellites we will need, because political decisions are still to be made regarding the scale of the threat against which a defensive system will be deployed. And we are only now getting a handle on questions that should have been answered years ago, for example, the feasibility of various technologies for interceptors and sensors. While we don't know precisely how much it will cost to build a national missile defense system, we do have some sense of what it could cost if we don't build one. A nuclear-armed missile targeted against New York City would do far more damage than did the aircraft that struck the World Trade Center. It would, in fact, destroy the city. The ramifications for the people, the whole country, and our national economy would, obviously, be enormous. Just to try to quantify the fiscal costs, the Congressional Research Service states that most credible projections of the cost to the insurance industry from the September 11 attacks range from $40 to $70 billion. And that's just the impact on the insurance industry. Arnaud de Borchgrave discussed the impact on the economy in a recent column in the Washington Times, stating, ``. . . the accumulated damage to the U.S. and world economies is now thought to be almost $700 billion.'' Obviously, the cost in human lives is incalculable. The cost of a system to defend against that attack would be minuscule in comparison. In fact, as pointed out, the cost of defending against terrorist attacks employing weapons of mass destruction, or even conventional weapons, far exceeds what we spend on missile defenses. The missile threat develops faster than does the means to counter it. We are neither spending extravagantly, nor inappropriately. We are seeking to deploy a layered defense that optimizes technologies that have been developed over the past two decades, and that are continuing to evolve. Opponents of national missile defense are free to continue to oppose the President's plan. That is their right. There is an old saying, though. Everyone is entitled to his or her own opinion; no one is entitled to his or her own facts. Missile defense programs should be discussed with the same respect for context and intellectual honesty that we afford the programs on which the other 98 percent of the defense budget is allocated. Only then, can we make the informed decisions we were sent here to make. That concludes my remarks on this matter of the cost of national ballistic missile defense. I spoke before on the need for national missile defense, and I will speak in the future on the question of the legal authority of the President to withdraw the United States from the 1972 ABM Treaty. I suggest the absence of a quorum.

Mr. KYL

Mr. KYL. Madam President, I ask unanimous consent to speak for 30 minutes in morning business.

Mr. KYL

Mr. KYL. Certainly.

Mr. KYL. Mr. President, let me continue. Incidentally, if there are any concerns along those lines my colleagues would like to address, I am happy to work with them on it.

Mr. KYL. I point out there are cases--in fact, one case in the Virginia system was invalidated because it did not provide adequate protection in the use of these Social Security numbers. Clearly, our authorization of this does not put a stamp of approval on any particular system. It is going to have to withstand any kind of judicial or legal attack that it is too restrictive, that it does not contain adequate protections, the number itself or any other number of challenges that might be issued.

Mr. KYL. For that explicit purpose, yes.