Jon Kyl

Mr. KYL

Mr. KYL. Thank you, Mr. President

Mr. KYL. Mr. President, this conference, which was the 34th meeting of the United States and Mexican parliamentarians, covered a wide range of topics. It focused in two general areas: On the economic and political issues. On the economic issues, matters that were discussed included the implementation of NAFTA and other hemispheric free-trade issues, the issues regarding economic stabilization for the Mexican economy, border cooperation in a whole variety of different ways, problems relating to immigration and, most important, combating illegal drugs. I might note just in that regard that the communique notes in the strongest possible terms, the delegates believe that both countries need to work even more closely together to solve this problem that is so critical to both of our countries. We also included in the communique follow-up mechanisms that would enable us to continue our work together as parliamentarians, including the possibility that we would meet with our Canadian counterparts as well in a three-part kind of meeting. Mr. President, the key, I think, to this meeting was a recognition that perhaps more than any other time in history, the Congresses of our two countries have changed dramatically. We are aware of the fact that for the first time in 40 years, the Republican Party now controls both Houses of the U.S. Congress, and that is creating great changes in our legislative policy. By the same token, the Congress in Mexico is undergoing substantial change as well. In addition to the fact that you have four different parties in the Congress, the parliamentarians who met this weekend all noted that the role that the Congress is playing in Mexico is a much more active and robust role than has been true in years past. Therefore, the areas of cooperation between the two Congresses take on an even greater importance as both of our countries face the next few years and going into the next century. So, Mr. President, it is with a great deal of pride and with a degree of humility that I appear with these members of the House and Senate of Mexico and present them to you and, again, express my very strong sense that this kind of meeting is critical to the future of our two countries which share a 2,000-mile-long border and have a very bright future together. We treat that border as an opportunity, and I think that was the keyword in the entire conference, was the opportunity that is presented by the working together of our two countries. Mr. President, now we have the privilege of going to the White House and meeting with President Clinton. We know that that meeting will be fruitful as well. I note finally that there were seven Senators from the United States who attended that meeting, as well as both Ambassadors from the United States and Mexico. Therefore, it was a most productive conference. Thank you, Mr. President.

Mr. KYL. Mr. President, I rise to introduce to you and to especially welcome representatives from the Mexican Senate and House of Representatives who met with us in Tucson this last weekend as the delegation of the United States-Mexico Interparliamentary Conference. It is my honor to present these ladies and gentlemen to you. I ask unanimous consent that each of their names be printed in the proceedings of the U.S. Senate, along with a copy of the joint communique, a communique that came out of that conference.

Mr. KYL

Mr. KYL. Mr. President, I ask unanimous consent to proceed as in morning business.

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

Mr. KYL

Mr. KYL. Unlike Strom Thurmond, we are going to be gone by the end of 30 years. But I see the point. If the Senator will just yield for one final comment, I appreciate the arguments the Senator has made. I think what I am suggesting is something that is correct on principle. I would not want it to impede good legislation. I tried to suggest a couple of areas of possible ways of dealing with the issue and would be happy to continue to pursue those areas should anyone be interested. On my behalf, I am not doing this for anybody in my State, because we do not have this. But I urge my colleagues to support the amendment and enable us perhaps with a little stronger leverage to go back and construct something that would make a little more sense. I thank the Senator for yielding.

Mr. KYL. Mr. President, I wonder if the Senator from Rhode Island would engage in a colloquy with me regarding this legislation?

Mr. KYL. Mr. President, I appreciate his characterization of my remarks. They are precisely as he described them. I appreciate the difficult dilemma that a chairman always has in trying to get legislation which is not uniformly agreed to and, therefore, requires some compromise. Having conceded that much, first I want to make a very quick point, because there is some misinformation, I think, being conveyed, and that is that our amendment does not permit refinancing. This is not something that the Senator from Rhode Island addressed but was addressed earlier. Under our amendment, I make it clear, that refinancing is committed so you are not bound by the original financing. Entities can refinance, and however long it takes for either the original bond issue or the refinanced bond issue to be repaid, that would be the length of time that this exemption under my amendment would pertain.

Mr. KYL. I believe that is correct, yes.

Mr. KYL. I am sorry, yes. The Senator from Rhode Island is correct. In subsection (B): (A) shall not be construed to preclude refinancing of the capital costs of a facility, but if, under the terms of a refinancing, completion of the scheduled for payment of capital costs will occur after the date on which completion would have occurred. * * * Then the authority expires at the earlier of those two dates. The Senator is correct. With respect to the issue generally that a community should have the right to grant a monopoly, and that the remedy is to vote them out of office--the argument posited against this--I ask my colleague this question: It is true that if a municipality, a county government or whatever, creates this monopoly they could be voted out of office. But is it not true that the U.S. Congress, by this legislation, will have created the situation where despite these people being voted out of office, the contract, under the bill as written--the contract term, or as long as it takes to refinance, or even the point at which the useful life ceases to exist, after it has been extended, up to 30 years--would still allow the monopoly to continue? So the candidates themselves may be defeated but that which they constructed, because we protected it, would continue to exist?

Mr. KYL. I think that makes my point. We ought to be very, very careful when we are seeking ways to get around the U.S. Supreme Court decision interpreting the Constitution; that we should do so in the narrowest way possible. I think what we have done here is, in order to accommodate the special desires of different Senators from different States to go beyond just the repayment obligations but to actually continue to act as a monopoly so they will have a competitive advantage over others who might wish to provide the same kind of service, that in constructing the compromise we have, I think, gone too far and acted beyond the principle which justifies the more limited grandfathering, if you will, more limited exemption which I provided for in my amendment. That is why, while I certainly recognize the difficulties the chairman has in cobbling together a compromise in something of this nature, I suggest colleagues may wish to support my amendment. I hope they would support my amendment. If that means we then have to go back and do some more working of the bill, then at least it might be done from a better basis. I might ask the Senator from Rhode Island another question here. I can understand, under a very limited circumstance, why we might want to recognize a contract term which extends beyond the term for refinancing or financing bonds. There are basically three reasons why the monopoly is being granted here. One, to allow the refinancing to occur--both of us have agreed on that. Two, in order to extend the exemption to the point that contracts are outstanding. And, three, to extend it when something has been done to the plant to extend its useful life. I can understand a limited rationale in the second situation and we both provided for the first. What I cannot understand is a rationale for the third aspect of the exemption whereby, simply because it makes economic sense to do so, or the jurisdiction in question decides to do something to the plant to extend its useful life, that fact ought to occasion us to grant an additional exemption. At that point there is no longer contract obligation that might be more difficult to fulfill. There is no more investor interest out there. This is simply, perhaps, a very rational decision to extend the life of the plant, but not one which creates in my mind any rationale for extending the grant of authority here. Would the Senator from Rhode Island care to respond to that?

Mr. KYL. If I could respond, I appreciate that fact. And I suspected that basically was the rationale for it. But it does seem to me that just because the operators of the plant want a monopoly does not necessarily mean that is good public policy or that we ought to go along with it. By definition, if at the time bonds have been paid off-- since I doubt seriously these plants are constructed by anything other than bond issues--but once the bonds have been paid off, they have been built. They may continue to have high operating costs. But at that point it is the citizens of the State and the community whose interests we ought to have in mind, which is the rationale behind the interstate commerce clause in the first place, that a State should not grant a monopoly to either a private business or a State enterprise to extract more money from the taxpayers of the community than is necessary. And if a private investor or some other competitor can build a plant, can come up with the capital to do so and compete favorably with an institution that has already been totally financed by public funds and had that financing repaid, then at that point public policy would suggest that the people are more benefited by the lower prices and the competition because, by definition, they are the ones who are getting the contract rather than the older, outmoded or very expensive facility that we have been protecting in the meantime. So I guess I can recognize that the owners or operators of the plants may wish to stay in business without competition. I still am not clear as to why that should occasion us to grant an exemption from an otherwise constitutional prohibition here. As I say, I can understand the rationale as to the first point as to the bonds, and to some extent on the contracts, but on this third area here--and what I am searching for here is a possible accommodation with the chairman and others who would be involved in this--I just really fail to see the rationale for the third. Perhaps that is something we could explore an agreement on.

Mr. KYL

Mr. KYL. Mr. President, while I was presiding, the Senator from New Hampshire made some comments relative to the amendment I had just introduced and spoken on. I regret he is not here, but I would like to respond to those remarks. They were well put, and I appreciate the cooperative spirit in which he gently opposed my amendment. I wish to respond to the points he made to illustrate why I still think my amendment should be adopted. As you will recall, my amendment provides very simply that the grandfathering of monopoly status that these facilities need because the Supreme Court has declared them unconstitutional ought to be limited to the period of time that it takes for these facilities to repay the bonds; that beyond that time there is no rationale, at least no rationale that the Senate ought to be a party to, that once the bonds are paid off, the investor's money has been returned in full, there is no rationale for protecting the municipality from competition in the handling of garbage. That is why my amendment would cut it off at that point and not allow the remaining exceptions, which include expanding the life of the plant, or the useful life of the plant to some unknown length of time with a 30-year time limit or for contracts that are in existence. It would limit the grandfathering to that which is necessary or required but not beyond. Mr. President, the Senator from New Hampshire made the point that investors believed that they would have the protection of the law and we ought to give it to them, and that is precisely what my amendment does--no less but no more. It says to those investors, you get your money back when the bonds are fully paid off; that then but only then does this exemption from the U.S. Constitution apply. So we give them that grace period. That is point No. 1. Point No. 2. The Senator from New Hampshire said, well, there is a provision in this carefully crafted compromise for upgrades of facilities. And my response to that is, yes, that is there, but it is not needed and certainly not deserved. It creates a giant loophole which in effect means that all that the owners of these plants have to do is to provide some kind of upgrade to their facility--I presume that is anything beyond usual maintenance--and up to a 30-year period they can foreclose all competition. That is un-American, it is unconstitutional, and it is not something that the Senate should be a party to, Mr. President. That is why my amendment specifically would not permit this special monopoly to exist beyond the time that it takes to repay the bonds. You cannot just fix your facility up and say we have extended its useful life and we want to continue to have a monopoly during the useful life of the plant. That would not be a justifiable reason, and I know of no reason which justifies that particular exemption. None has been suggested. Third, our colleague from New Hampshire made the point that innocent people were impacted as a result of the Supreme Court decision, and that is true. My guess is that most of the people who invested in these bonds had no idea that the Supreme Court would declare the whole practice unconstitutional. Agreeing with the principle that those innocent people should be protected, my amendment does precisely that. It protects them. It says that until those bonds are paid off, the monopoly status of the facility is protected. So, in other words, the bonds get paid off, the investors get made whole, all of those innocent people have their investment returned, and they lose nothing as a result of my amendment. Mr. President, there are other innocent people involved in this as well. These are the people who are required to pay the higher taxes because of the unreasonably high prices extracted by virtue of the fact that this is a monopoly. That is why we have antitrust laws. That is why our Constitution contains a clause that says that States cannot interfere with interstate commerce. But that is what has been done in this case. That is what the Supreme Court outlawed. And the U.S. Senate ought to pay attention not only to the innocent people who invested, who are totally protected under my amendment, but also the totally innocent people of the State who are having to pay two, three, four times as much; the EPA estimates 40 percent more than they would otherwise have to pay as a result of this monopoly status that is being granted. So if the argument is that we should protect innocent people, then the Senate should adopt my amendment. Finally, and the real reason why I think there is an objection to my amendment is that it might unravel a carefully crafted compromise. Mr. President, that is the unprincipled but very pragmatic reason frequently given to opposing amendments in this Chamber and in the other body. We have all been a party to those. It is compromises and no one argues against that practice. But there are certain situations where there are fundamental principles involved. And where fundamental principles are involved, we need to be very, very careful about justifying opposition to principles on the basis of compromise. In other words, Mr. President, there are some things that ought not to be compromised. One of them is the United States Constitution. When the Supreme Court says that a practice is unconstitutional, we ought to be very, very careful how we override that decision. We ought to do it in the narrowest possible way. That is what my amendment does. It says, until the bonds are repaid, we will grant these municipalities a monopoly power that nobody else can get, that the United States Supreme Court says is unconstitutional but, recognizing that investment decisions were made based upon the previous existing law, we will acknowledge that that exemption should last at least until the bonds are paid off. But my amendment says, at that point, no further. We do not need to go any further. No one else needs protection here. All we are doing at that point is creating a monopoly protection which creates higher prices and prevents the free market from operating. Now it may be true that standing on that principle will cause a bill to unravel; that if my amendment were to pass, there is insufficient support then for the legislation to get it passed. My response to that is that we do much better politically in this body when we do what is right and that, if we will stick to principles, in the end we will get the kind of legislation that is necessary; that we make mistakes when we compromise principle for the sake of getting something through rather than for the sake of doing what is right. This is a constitutional issue. I would perhaps suggest an analogy here. Mr. President, what if a municipality had passed an ordinance declaring that certain speech could no longer be engaged in in the community, and everyone rose up in arms and said, ``Why that is unconstitutional''? A lawsuit was brought and the Supreme Court says, ``That is correct. You cannot impede free speech. Municipality, your actions are unconstitutional.'' And the municipality said, ``But we have a real need to impede free speech in this particular area.'' Do you not think that the U.S. Senate would be very, very careful about granting an exemption from the Constitution, in effect, here; would be very, very careful? Obviously, we could not constitutionally do that, but we would want to be as limited as possible in crafting legislation that would meet the constitutional standards the Court laid down. That is what we should be doing in this case, because the Court has already spoken. The Court has said that States that have this flow control do so in violation of the U.S. Constitution. So, in trying to figure out a way around that, we ought to be as careful and as limited as possible, not as expansive as we can think of. And that is why my amendment, I submit, is the only constitutional, commonsense course of action that the Senate can take to protect those situations where there has been an investment made until the investment is paid off. But, after that, no more monopoly. And if that should cause the compromise to break apart, then it would be necessary, as the Senator from New Hampshire said, to go back to the drawing board and redo it. And I think that would be a good thing. But my hope would be, Mr. President, that it would not cause the compromise to fall apart; that we would all recognize that a limited exemption is all right to pass, we should pass it, but that we should not do more than that simply because some Senators might want to, in effect, overreach beyond what is really necessary or appropriate given the Supreme Court's decision. So with all due respect to my friend and colleague from New Hampshire, who really helped to make the argument in principle to what I am saying but found it necessary to object nonetheless because of the position he finds himself in, I suggest the best way to a deal with this issue is to adopt my amendment, provide full protection for all those who need protection, but to limit the exemption to that point. Mr. President, we are going to be voting on the Kyl amendment at 2:30 and, unless our colleagues, who have not been here on the floor, are watching from wherever they may be, it is going to be very confusing what this is all about, because this was not part of the committee action. I just urge my colleagues to consider this, to ask questions about this, come to the floor to engage me in a colloquy if that is their desire. I would be happy to answer any questions I can. No one--no one--has made the case why we should extend to the useful life of a project a special exemption after the bonds have already been paid off; how it is that an operator cannot simply add something to the plant and say they have extended the useful life, thereby going to the full 30-year limit of this legislation. No one has made the case of why that should be the law. And until that case is made, if it can be made, we should not accept that proposition in dealing with something as sacred as a constitutional principle here. Mr. President, I will ask my colleagues, again, to support the Kyl amendment when we vote on it at 2:30. At this time, I suggest the absence of a quorum.

Mr. KYL

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

Mr. KYL. Mr. President, let me conclude by summarizing in this fashion. What we are dealing with here is municipalities coming to Congress and asking for relief from a Supreme Court decision which said that what certain States had done in the past, limiting the free flow of interstate commerce, in this case in treating garbage, solid waste, was an unconstitutional infringement on the commerce clause, and so unless the Congress acts, these arrangements that have been entered into by the States will not be able to proceed in a monopoly fashion. They will have to compete with the private market. As the EPA report notes, the private market is quite capable of working in this area. And so some municipalities have said, well, since we made our decision on good faith, based upon the law as we knew it, we should at least be protected to the extent that it takes us to pay off the investment, to pay off the bonds, and my amendment would grant that grandfathering authority. We would say to these municipalities, whatever the length of your bond period is to pay off those bonds, we will grant you the authority to create a monopoly so you have no competition, if that is what you want, and you can pay off those bonds. But you should not be entitled to have a monopoly beyond that point. What this amendment boils down to, Mr. President, is which side you are on. Are you for saying that for the period of time that it takes a municipality to pay off the bonds we should grant this grandfathering exception, or should we grant even further extensions, and here are the two that are most frequently cited. In some cases it is said that a municipality has a contract to accept waste and dispose of it lasting longer than the period of the bond repayment. So let us hypothetically assume you have a 20-year bond and a 30-year contract. They would argue that the length of time for the monopoly protection should be 30 years, not 20 years. There is absolutely no logic to that whatsoever. Once the 20 years has elapsed, the bonds have been paid, the facility now exists debt free, it ought to be able to compete, for the last 10 years of its contract, with anybody in the private market who comes along with the necessity of raising the capital to construct a facility to compete with that municipal facility and then to treat this garbage at a lesser rate. In any event, the city has the contract for the remaining 10 years, and the other contracting party is required to comply with the terms of the contract. So there are two reasons why there is no reason to extend the grandfathering protection, monopoly protection, of this legislation beyond the term that it takes to repay the debt. No. 1, the party providing the garbage has to fulfill its end of the contract regardless of what we do, so the municipality is protected in that regard. And No. 2, the municipality has a free facility, in effect, a facility that is private market under those circumstances, then there is something drastically wrong and the Congress should not be creating a monopoly to permit that to occur. As I noted, EPA has noted there is neither a problem with environmental laws nor a problem with generating fees for other purposes here. So that is the first argument that is raised, that we should extend it to the contract period. The other is more amorphous, and that is that we should extend this to the useful life of the plant. That is in effect selling the entire concept of the free market down the drain. We may as well say let us have socialized garbage. If we are saying that the municipality can have the monopoly protection for the entire life of the plant, then we are providing no opportunity for competition whatsoever. Is it not enough that we allow them the monopoly protection until they have repaid all of their debts? Is it not enough that a contracting party would still have to abide by the terms of the contract and sell its garbage to the city under the terms of that contract? Are we now being asked to also extend this monopoly power to the useful life of the plant, whatever they may define that to be? It is a very unclear definition as to what that is. And there are not very many plants that are that well planned whose life can be extended without modernizing the plant. So we want municipalities to do this. That is fine. So municipalities are asking for virtually unlimited power. With that in mind, the committee has wisely said ``enough.'' At 30 years, enough is enough. We will not extend this protection beyond 30 years. That was a wise thing for the committee to do. But I submit the committee should not have gone that far; that it ought to be sufficient that the municipality is granted the monopoly protection until all of its obligations for repayment of the bonds have been satisfied. At that point, it ought to have to compete along with anybody else. And for us to grant an exemption beyond that is to do something which the U.S. Supreme Court has said is violative of the commerce clause of the Constitution. And our oath requires us not to do that. That is why, despite the fact that I have no interest in this--my State is not involved. I have no municipality or county government in the State of Arizona contacting me on this because we are not a State that does this. So I have no personal interest in this, or political interest. But it does seem to me that as Senators we have an obligation to do what is right as a country. The legislation which the committee has crafted has very carefully taken care of very severe problems in very specific situations. Those States--and I would mention one, New Jersey--have been accommodated under the committee legislation. It is not necessary to broaden this exemption any beyond what my amendment would provide for. So, Mr. President, I would be happy to engage in a colloquy with anyone who would like to inquire further as to the effect or intent of my amendment. I intend eventually to call for a vote. I will be very happy to debate this under a time agreement, starting with whenever anyone would wish to enter into such an agreement. But I certainly hope that my colleagues will realize that the municipalities that need this relief are not in a position to hold leverage over our head. The U.S. Senate does not have to succumb to what municipalities would desire or like to have in this regard, but only that which they need. And that is all that we ought to be granting them if we are talking about monopoly power in an area where the free market should work just fine, again, according to the Environmental Protection Agency. I yield the floor at this point. If no one wishes to examine my views on this at this point, I suggest the absence of a quorum.

Mr. KYL. Mr. President, I ask unanimous consent to lay aside the pending amendment for the purpose of offering an amendment which is at the desk.

Mr. KYL. Mr. President, the amendment which I offer now will tighten the flow control provisions of title II to more accurately reflect what I believe is the committee's intent; namely, to authorize flow control for a limited period of time to ensure that States and political subdivisions are able to service the debt that they incurred for the construction of solid waste management facilities prior to the Carbone decision. Flow control is inherently anticompetitive. It was ruled a violation of the Constitution's commerce clause by the U.S. Supreme Court in the Carbone case. The Court ruled: State and local governments may not use their regulatory power to favor local enterprise by prohibiting patronage of out-of-State competitors of their facilities. While Justice O'Connor in a concurring opinion noted Congress' power to authorize local imposition of flow control, I do not believe it is in the public interest to sanction these Government monopolies intrastate, and it could impede competition, particularly for any more than the minimum amount of time required for State and local governments to pay off the debt that they incurred prior to the Supreme Court decision. So my amendment would authorize flow control authority only until the debt incurred prior to the Carbone decision is repaid. During the period for which flow control is authorized, revenues derived from tipping fees and other fees charged at the flow control designated facility--these are net of revenues used for operation and maintenance of the facility, of course--must be used to pay off the debt obligations. This amendment would permit the refinancing of debt to allow State and local governments to take advantage of lower interest rates when they are available. However, flow control authority would end on the date on which the original debt would have been repaid or the date on which the refinanced debt is repaid, whichever is earlier. Mr. President, it appears to me that flow control has only one purpose; and, that is, to protect State or local monopolies that have developed in the disposal of municipal solid waste. That only hurts taxpayers, and there is no good reason for it. Flow control does not offer the benefit of added protection for human health and the environment either. According to a March 1995 report by the Environmental Protection Agency: Protection of human health and the environment is directly related to the implementation and enforcement of federal, State, and local environmental regulations. Regardless of whether State or local governments administer flow control programs, States are required to implement and enforce federally approved regulations that fully protect human health and the environment. Accordingly, there are no empirical data showing that flow control provides more or less protection. That is the end of quoting from the EPA report. In other words, disposal facilities, whether public or private, must meet the same standards of environmental protection. Flow control does not add to the environmental protection. Flow controls do result in substantially increased costs to communities across the country. That can have negative impacts on the environment due to the extent that it creates incentives for illegal dumping. In fact, in a column that appeared in the Washington Times on March 23 of this year, the mayor of Jersey City, Bret Schundler, noted; All of the illegal dumping that New Jersey is now suffering from because of the soaring costs of waste disposal. In New Jersey, where flow control is in place, the price of disposal is approaching $100 per ton. That compares to an average of about $35 per ton in areas without flow control. Although flow controls do not typically add as much as that to the cost of disposal in other parts of the country, the increased costs can still be substantial. A study just released by National Economic Research Associates found that flow controls increase disposal costs on average $14 a ton, or 40 percent. That is 40 percent, Mr. President, that flow controls add to the cost of disposal. That is an additional cost that individuals and businesses must ultimately bear. For example, again, Mayor Schundler notes that flow control prevents his community from reducing property taxes or taking advantage of lower cost alternatives. That is wrong and it is unnecessary. Some might say that flow control is needed to ensure sufficient waste management capacity or to help State and local governments achieve goals for source reduction, reuse and recycling. Again EPA's answer is no. In its March report, EPA stated, and I am quoting: There are no data showing that flow controls are essential either for the development of new solid waste capacity or the long-term achievement of State and local goals for source reduction, reuse and recycling. What about the necessity of flow control to finance new landfills or landfill expansions? Again EPA's answer is no. Again quoting: Flow controls do not appear to have played a significant role in financing new landfills. In fact, Mr. President, EPA goes on to note that private landfill firms have demonstrated their ability to raise substantial capital from publicly issued equity offerings, indicating that investors are willing to provide capital for the expansion of landfills without flow control guarantees. In other words, the private sector is willing and able to accommodate the demand for landfill capacity. In some instances, flow control laws have not merely been used to generate revenues to finance construction and O&M costs but also for the purpose of funding other activities, like recycling, composting, and hazardous waste collection, to name a few. That would be fine if State and local governments were not using the force of law to compel the use of specified facilities at specified rates, if they competed in the free market. But they are using statutory authority to compel certain sites. Users are therefore required, by law, to subsidize other activities. To the extent that we are considering limited flow control relief to help protect State and local investments, the revenues derived should be used solely for that purpose and not other things. My amendment will limit the use of revenues to that purpose. Mr. President, our goal here should not be to preserve anticompetitive practices but to establish a framework for orderly transition, to allow limited relief for State and local governments that had in good faith made commitments based on the law as they understood it prior to the Carbone decision. I hope my colleagues will join me in supporting this amendment and resist efforts to carve out exceptions to protect or extend local monopoly power. And, Mr. President, for the benefit of my colleagues, I ask that the full text of Mayor Schundler's column be printed in the Record.

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

Mr. KYL

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

Mr. KYL

Mr. KYL. I move to lay that motion on the table. Mr. DOLE addressed the Chair.

Mr. KYL

Mr. KYL. Madam President, I rise to support the nomination of Deputy Secretary of Defense John Deutch to be the Director of Central Intelligence. I have had the opportunity to meet with Secretary Deutch on a number of occasions to discuss defense and intelligence issues and am impressed with his ability in both of these critical areas. As the President's new senior advisor on intelligence, John Deutch will have the responsibility of placing before the Congress a vision for the intelligence profession that embodies the lessons learned from the cold war and lessons from recent unfortunate mistakes within the agency. He will also be required to steadfastly guard against the politicization of the intelligence mission by government officials who would use intelligence resources for other ends, at the expense of the core programs. My impression of John Deutch is that he is well prepared to meet these challenges. I believe John Deutch will be someone who is prepared to think seriously about the place and purpose of intelligence in a democracy, both as he fulfills his responsibilities as a senior Government official and as he lays the President's plans and programs before the Congress. In short, Madam President, I believe John Deutch will be a fine Director of Central Intelligence and have every confidence in his ability to lead the intelligence community into the 21st century. I wholeheartedly support his nomination.

Mr. KYL

Mr. KYL. Mr. President, as a member of the committee to commemorate-- in 1996--the 3,000th anniversary of Jerusalem as the capital of the Jewish people, I am pleased to join Senator Dole and introduce the Jerusalem Embassy Relocation Implementation Act of 1995, to begin immediate construction on a United States Embassy in Jerusalem. It is historic and important that the majority leader and the Speaker of the House are the primary sponsors of this legislation in the Senate and House. For three millennia--since King David established Jerusalem as the capital of the Jewish people--Jerusalem has been the center of Jewish liturgy. Twice a year, for the last 2,000 years, Jews from around the world have offered a simple prayer: ``Next Year in Jerusalem.'' And throughout the Jewish people's long exile from the land of Israel, through the Holocaust, pogroms, and countless expulsions the ``City Upon a Hill'' served as the focal point of their aspiration to rebuild Israel. In addition to Israel's undisputable historical and biblical claim to Jerusalem, upon regaining control over East Jerusalem in 1967, Israel has restored the holy city as a place open to all for worship. Memories may be short, but it is important to remember that while Jordan occupied East Jerusalem--1948-1967--Jews were expelled and many Christians, feeling persecuted, emigrated. During this period, proper respect was not given to the spiritual importance of the city. A highway was even built on ancient burial grounds and religious sites desecrated. Yet, successive United States administrations since 1948--for fear of interfering with the ability of the United States to serve as an honest broker for Arab and Israeli claims--have refused to recognize Israeli sovereignty over Jerusalem, and have refused to locate the United States Embassy in the capital of Israel. While there is superficial logic to that concern, I believe it bases United States policy on a disingenuous position--that if Arab leaders hold out long enough, the United States might abandon our ally and force it to do the one thing Israel has made clear it will never do--abandon its claim to Jerusalem as its eternal and undivided capital. The fact is, the United States will not do that. Better that all parties understand that at the outset, rather than learning it at the unsuccessful conclusions of negotiations. United States Middle East diplomacy should be based on honesty and on the power and loyalty to our friends and our principles. Moving the Embassy to Jerusalem should aid in any peace between Israel and her neighbors by sending a clear, unambiguous message that the status of Jerusalem is not and never will be negotiable. Israel cannot under any circumstances negotiate this issue any more than Americans would negotiate over Washington being our Capital. Moving the United States Embassy to Jerusalem does no injustice to the Arab people, nor is it intended, in any way, to be disrespectful to them. During the hundreds of years in which Jerusalem was under Arab or Moslem rule, Jerusalem never served as a capital city for the rulers. And while East Jerusalem was under Jordanian control, Jordan's capital remained in Amman and was never moved to Jerusalem. Islam's holiest text, the Koran, does not mention Jerusalem a single time. Even Moslems who pray at the Al-Aksa Mosque in Jerusalem face Mecca when they pray. No one can dispute, however, the historical and spiritual vitality of Jerusalem to Israel. It is time for the United States to locate its embassy in the capital city of Israel, as is the case for every other country that the United States recognizes, whether it be ally or enemy. Those who have expressed support for United States recognition of Jerusalem as the capital of Israel now have a way to convert words to action, by supporting the Dole-Kyl-Inouye resolution, so that construction of the United States Embassy in Jerusalem will commence in time for the city's 3,000 year anniversary as the capital of the people of Israel. ``Next Year in Jerusalem.''

Mr. KYL

Mr. KYL. I appreciate the comments of the Senator from Alabama. That helps to give us more background on this as well. I think he is absolutely correct, that as a matter of States rights many States have these procedures today. If they have them, we leave them in place. But to the extent that we change them by saying in effect they only apply to one party, we, at the Federal Government level, will have injected an element of unfairness and I just do not think we want to be a party to doing that. I know the Senator from Washington wishes to proceed so that is all I will say about that, but I appreciate the comments of the Senator from Alabama. I certainly agree with him on that.

Mr. KYL. Mr. President, I thank the Senator from Washington for yielding. First, I want to begin by saying that the comments of the Senator from Georgia just now are right on the mark in terms of the amendment that we will be voting on. I certainly subscribe both to what he said and what the Senator from Washington has previously said about this. My conversation, Mr. President, this morning, has to do with a very specific amendment which we will be voting on, the Kyl-McCain amendment, which will have the effect of striking section 103 of H.R. 956. This amendment preserves State law on alternative dispute resolution procedures and ensures the plaintiffs and defendants are treated equally through the ADR, or alternative dispute resolution process. The amendment strikes section 103, which says when alternative dispute resolution procedures are employed, these procedures are enforceable only against the defendant, not against the plaintiff. Currently, of course, under the State laws under which this would be applied, ADR provisions are equally applicable to the plaintiffs and to the defendants. Of course, it should remain that way. Mr. President, a fundamental tenet of American jurisprudence is that all parties go into court with equal rights. As a matter of fact, Americans, I submit, would not submit their disputes, their lives, and their fortunes to a decision by the judge or a jury if they knew that the deck was stacked against them when they began. That is precisely what this section 103 of the bill does today. That is why we are striking this section. What this section says is that when a State has an alternative dispute resolution procedure, the parties may use it. Well, that adds nothing to current law. That is the law of the States. Parties can take advantage of those alternative dispute procedures, and they should. As a matter of fact, we are trying to encourage more alternatives to proceeding through the actual trial of the case. The second part of section 103 provides for the notice by one party or the other that that party wants to invoke those procedures. Again, this amendment or this bill changes nothing in that regard. The part that changes the law and that we wish to strike is titled ``Defendant's Penalty for Unreasonable Refusal,'' meaning unreasonable refusal to go through the alternative dispute resolution process. Defendant's penalty; there is no concomitant plaintiff's penalty. In other words, the authors of this section have provided that, although to go through alternative dispute resolution, if the defendant wishes to go through that process--and we all encourage them to do so--and the plaintiff unreasonably refuses to do so, there is no penalty on the plaintiff. Mr. President, that is fundamentally unfair. It is exactly the kind of thing the American people wish Members to reform in this litigation process that we engage in in our country. The whole idea of reform here, the whole notion of what we are debating, is fairness. This provision would inject a fundamental element of unfairness where one party is penalized for not going forward with alternative dispute resolution, and the other party suffers no adverse consequences at all. It is fundamentally unfair. Now, what the provision states is that the court shall assess reasonable attorney's fees and costs against a defendant who refuses to proceed; final judgment is entered against that defendant that that refusal was unreasonable or not made in good faith. That is typical of the State alternative dispute procedures here, that where either parties says, ``Let's go to alternative dispute rather than going all the way through trial'', and the other party says, ``No, I do thought want to do that,'' and it turns out the other party loses and the court finds that that party's refusal to go through the alternative dispute resolution procedure was unreasonable or not made in good faith, then costs and attorney's fees can be assessed against that losing party. That is the law in many States today. We should preserve that law. This section of the bill changes that procedure in State law. It says, ``No, even though you say that the losing party who refuses to go through the alternative dispute resolution in good faith should have a penalty, we are going to strike that in the case of only one-half of the parties, the plaintiff.'' The plaintiff gets a free ride. The plaintiff can refuse alternative dispute resolution in bad faith and still not be penalized. A defendant who refuses alternative dispute resolution and who loses, and the court determines he has done that in bad faith, has a penalty rendered against him. Mr. President, I could argue either way that there should or should not be a penalty. I do not want to change the State law in that regard. That is why, instead of saying that the penalty would lie to both the defendant and the plaintiff, which we could have done with this amendment, we have simply said ``Let's strike the section and leave State law the way it is. State law treats both parties fairly. That is the way it should be.'' So I urge all my colleagues who for the last several days have been arguing that this is not something that the Federal Government should be involved in, that we should let the States experiment, that we should let them decide their own procedures here--I urge them to support this resolution, my amendment, because my amendment allows the State law to be preserved as it is today with no change on alternative dispute resolution. I think we want to encourage alternative dispute resolution. We will certainly not be encouraging it if we say we believe in it but only if it is a stacked deck, only if it can be used against the defendant but not against the plaintiff. It is fundamentally unfair, and we should never be a party to changing the law of the States in a way that will result in unfairness to one side or the other in litigation. So I urge my colleagues when we vote in about an hour on these various amendments to the bill to support the Kyl-McCain amendment to strike section 103 and thus preserve State ADR proceedings and preserve the balance between plaintiffs and defendants proceeding under those procedures. I yield the floor, Mr. President.

Mr. KYL

Mr. KYL. Mr. President, during the campaign that the Senator from Oklahoma was just talking about that we just went through, I heard a phrase over and over again, ``taxation, regulation, litigation,'' the three problems in this country that we have to do something about. The Senator from Oklahoma has just spoken eloquently about the matter of regulation. This Congress is going to do a lot to reform the regulatory climate in this country, to bring some common sense back into it. The Judiciary Committee, on which I serve, just passed out a regulatory reform bill sponsored by the majority leader that is really going to get to the heart of some of the regulatory problems in our society today, bringing cost/benefit analysis and economic impact studies and risk assessments and peer review into the regulatory process, so you do not have the kind of noncommonsensical imposition of regulations such as those the Senator from Oklahoma was just talking about. Let me turn to the third item in that trilogy, the matter of litigation. We are debating today, and have been for almost 2 weeks now, legal liability reform. It is part of what the House of Representatives did, and it is part of what this Senate is committed to do as well, to reform our broken tort system. Some call it the litigation lottery. It produces a tort tax on all of America because we end up paying higher premiums for insurance, higher costs for products, and, frankly, we do not get the benefit of a lot of improvements that could be made in pharmaceuticals and in products and so on because the manufacturers are afraid to experiment with anything new because they may get sued, they may have to pay big damages, and their costs would go up. So what we are trying to do is reform that system so that all of America will benefit from improved technology, reduced insurance rates, reduced product costs, and, by the way, particularly for small businesses, not constantly suffering under the threat of being sued; also, of course, the physicians and the hospitals and other health care providers whose medical malpractice premiums have skyrocketed in recent years because of the possibility that somebody is going to sue them. They end up practicing defensive medicine, offering all kinds of services and tests that probably are not necessary but which they prescribe in order to make sure that nobody can say they did not do the absolute maximum that was necessary for the patient's good. So these are parts of the problem we are addressing in litigation reform. I would like to just isolate one specific one that I will be talking about in about an hour and a half in the context of the bill we are debating today. I have laid down an amendment to correct a small, but I think important, part of the bill that is before us today. Many States--most States, I suspect--have what are called alternative dispute resolution mechanisms, ways of resolving disputes short of going to trial. Trials are expensive. In the end, the people who win are the lawyers. So what we are trying to do is to get people not to always go to court but to try to resolve their differences short of going to court, and most States have those procedures. There is an error in the bill that is before us, section 103. It deals with alternative dispute resolution. It says when a State has alternative dispute resolution, the parties should use that. And that is fine. But then it says, if a defendant refuses to go forward when a plaintiff has made an offer in good faith and that defendant has refused the offer in good faith to go forward with the alternative dispute resolution, then you can assess attorney's fees and costs against the defendant. But there is no such provision with regard to the plaintiff refusing to go forward in good faith. Mr. President, either we should not have a penalty for either party refusing to go forward or there should be the same penalty on both parties, whichever one of them refuses to go forward in good faith. But you cannot have a situation where one of the parties has the dagger hanging over his head and the other party with no downside for refusing to go forward in good faith. One way or the other that has to be fixed. First, I said, ``Why don't we have a penalty for both parties?'' One objection was we should not be dictating at the Federal level what the States should do. Whatever people advertise there in the State, let that be. Then I say fine. My amendment simply strikes the penalty that is in the bill at the Federal level so that whatever the State law is the State law is. In effect, my amendment would return this alternative dispute resolution mechanism to the States to be enforced however the State law enforces it. Of course, in every State, if there is a penalty, the penalty applies equally to the defendant or the plaintiff, whichever one is refusing to go forward unreasonably. So, Mr. President, I think this is something I will be talking about a little bit later but something my colleagues will want to fix. Our whole justice system is about fairness. The reason we are willing to put our lives and our fortunes into the hands of one person, a judge or 12 people on a jury, is because we have faith that the system is fair. One of the reasons we are talking about litigation reform today is because a lot of people do not think it is fair. It would be the height of unfairness to have a penalty apply to one side, the defendant, but not have that same penalty apply to the plaintiff for doing the same thing--for refusing to go forward to resolve the dispute alternative to a trial. So my amendment will simply make it the same for both plaintiffs and defendants and reinstate State law as the guiding principle. I will be talking about this a little bit later. I think it goes back to the whole notion we have to reform. We have to do things fairly, and, if we do things fairly in our society today, if people think they are getting a fair break regarding regulation, as the Senator from Oklahoma talked about, regarding taxation and regarding litigation, then people gladly shoulder the burdens inherent in supporting the Government and society at large. But when they do not think they are getting a fair shake--that is, when they begin to say this whole thing has to be changed--it has to be reformed. Fortunately, at least the Senate Republicans who were just elected in the last election are here speaking every week about these kind of reforms. I think we are making a difference, Mr. President. I know my colleague from Minnesota is here and wishes to continue the debate. I yield the floor. Mr. GRAMS addressed the Chair.