Carl Levin

Mr. LEVIN

Mr. LEVIN. No. There has been no agreement on the Domenici amendment.

Mr. LEVIN. Mr. President, I yield 5 minutes to Senator McCain.

Mr. LEVIN

Mr. LEVIN. Mr. President, we have received now a letter from the Chairman of the Joint Chiefs of Staff representing all of the chiefs urging the Senate to continue their unequivocalness to continue the 2005 round of base realignment and closures as authorized by Congress. They are pleading with us not to leave this issue unresolved because the savings which are essential for the transformation of our military are savings they want to achieve. They are working very hard on the transformation of our military. They clearly intend there be a global posture review, and there will be a global posture review, taking into account the closing of bases overseas. There is a commission that must be created this year and is required to report to us on the review of the overseas military facility structure. This is referred to in the amendment. As I understand it, they have not yet been appointed, but it is required that the leadership appoint that commission, and it is required, obviously, that the Secretary of Defense and Department of Defense next year, in making their recommendations, take into account the very report this amendment says should be taken into account. So we have a global posture review which is underway. It will be completed. We have a commission to review overseas military facilities. That is all in place. It is all ongoing. It is all in order. There is a logic to it all in terms of looking at the overseas bases first. I could not agree more with the Senator from Mississippi and the Senator from North Dakota. Of course, you will look at overseas bases first. That is what is going on now. That is the global posture review. That is the commission on the review of the overseas military facility structure which is in the process of being appointed and will report this year. But to disrupt all that and to leave every base in the United States in limbo for another 2 years is not doing a favor either to our military structure or to the bases around our country. We all have bases. Are we going to leave them nervous? Are we going to leave them in limbo for 2 more years? That is not doing them a favor and it is doing a significant disfavor to our military posture and the requirement that we transform, as the chief said, the combat capability of the Department of Defense. I hope this amendment would be rejected.

Mr. LEVIN. No objection.

Mr. LEVIN. Will the chairman yield?

Mr. LEVIN. If the Senator from Mississippi will yield, forgive me, I join our chairman in urging all of our colleagues to bring the amendments to the floor, share the language with us, and allow us to move expeditiously on this bill by doing that. We are going to proceed, as the chairman indicated, tomorrow morning on the floor to consider amendments at the same time that we are holding a hearing with the three generals who have been outlined. We can do both at the same time with the cooperation of all of our Members. We have the cooperation of all of our Members.

Mr. LEVIN. I wonder if the Senator would amend that to 12:40?

Mr. LEVIN

Mr. LEVIN. I am happy to.

Mr. LEVIN. Mr. President, I ask unanimous consent that the order for the quorum call be dispensed with.

Mr. LEVIN. Mr. President, I join with our chairman of the Senate Armed Services Committee, Mr. Warner, in bringing S. 2400, the National Defense Authorization Act for fiscal year 2005 to the Senate floor. This bill is the product of 45 hearings, 3 days of markup, and countless hours of hard work by the members and the staff of the Armed Services Committee. Throughout this process, Senator Warner has led the committee with his usual fairness and graciousness. There was a unanimous vote of our members in support of this bill, which is a tribute to the able leadership of my dear friend and the balanced approach which Senator Warner takes always in matters under consideration by our committee. He chairs this committee in the finest tradition of the Senate Armed Services Committee, and I commend him for it. I wish every Senator could see him in action as he chairs our committee. Senator Warner has balanced the committee's legislative and oversight responsibilities over the last several weeks so there has been an additional challenge that Senator Warner has had to face as we have worked to report out this bill while at the same time beginning vital oversight over the abuses of Iraqi detainees at Abu Ghraib prison. Without delaying the markup schedule, Senator Warner promptly scheduled a series of briefings and hearings on the prison abuse issue, with more to come. That means more work for all of us, for our staff, but it was the right and the necessary thing to do. Senator Warner has an equal determination, which I join, to have a comprehensive and prompt, hopefully, series of hearings into all aspects of this issue. The bill reported by the Senate Armed Services Committee will promote the national defense, improve the quality of life of our men and women in uniform, and make the investments we need to meet the challenges of the 21st century. First and foremost, the bill before us continues the increases in compensation and quality of life that our service men and women and their families deserve as they face the hardships imposed by continuing military operations around the world. For instance, the bill authorizes a 3.5-percent increase across the board for military personnel in terms of their pay, and it authorizes a permanent increase in the rate of special pay for duties subject to hostile fire and imminent danger. We authorize a permanent increase in the rate of family separation allowance. The bill authorizes a new benefit option under TRICARE which makes available for the first time an opportunity for all members of the selected Reserve and their families to participate in TRICARE. The bill authorizes an increase of $400 million over the President's budget request for enhanced health benefits for reservists. Second, the bill would make key investments that are needed to help address the challenges our military faces today and will continue to face in the future. I am particularly pleased that the bill would add $900 million to the President's budget to fund additional up-armored Humvees and add-on ballistic protection to provide force protection for our soldiers in Iraq and Afghanistan. The bill adds $600 million to the President's budget for additional force protection gear and combat clothing for service members. Our bill adds $450 million to the President's budget for advanced research that will help enhance force protection, combat terrorism, and counter the threat of proliferation of weapons of mass destruction. The bill adds $47 million to the President's budget to field an additional seven weapons of mass destruction civil support teams, which fulfills a requirement established in last year's bill. Third, our bill contains a number of important provisions designed to improve the efficiency and the transparency of the operation of the Department of Defense. For instance, the bill would direct the Secretary of Defense to develop comprehensive DOD policy and procedures for the prevention of and response to incidents of sexual assault involving military members. The bill requires the Secretary to take specific steps to improve the management and oversight of contractors performing security, intelligence, law enforcement, and criminal justice functions in Iraq and other areas where U.S. forces are engaged in military operations. The bill establishes a commission on the National Guard and Reserve which will study the roles and missions of the Reserve components, and the bill strengthens the framework for oversight for addressing the Department's continuing financial management problems. Finally, the bill before us appropriately does not include two particularly troublesome legislative proposals. It does not include a provision that would delay or water down the base closure process. The committee continues to support the senior military and civilian leadership of the Department of Defense in concluding that another round of base closures is critical to meeting our future national security needs, and the bill does not include proposals advanced by the administration that would exempt certain military activities from key environmental requirements, including the Clean Air Act, the Resource Conservation and Recovery Act, and the Superfund law. There are, of course, provisions in this bill on which there are disagreements, as we would expect. I would like to mention a few areas in which I have serious concerns. I am disappointed that the bill, like the President's initial budget submission, fails to provide the money that we all know will be needed to support our day-to-day military operations in Iraq and Afghanistan. From the beginning of this year, the administration insisted that because we do not yet know the exact cost of our operations in Iraq and Afghanistan next year, that it would be premature to include any cost for those operations in the budget. The exact costs of a military operation, or even the normal operations of the Department of Defense, for that matter, are never known. That is not an adequate reason for not submitting a budget, and it is an inadequate reason for failing to include in that budget costs that we believe can be reasonably estimated and that we believe will be incurred in the next fiscal year. If Congress does not act to provide substantial funding for ongoing military operations this year, there is a significant risk that the military services will find themselves in serious financial difficulty earlier next year. The Pentagon has some flexibility to move funds to pay for ongoing operations, but shifting funds away from other priorities can only take the military so far. That is why the Senate Budget Committee included $30 billion for ongoing military operations in the Senate budget resolution earlier this year, and that is why the administration finally has acknowledged the problem, a week and a half ago, and agreed to submit a proposal for a $25 billion budget amendment. This money is needed to support our troops in the field, and they deserve more than just an IOU. I commend our chairman for holding a hearing in this matter. I think it was a very useful hearing. There was almost a consensus in our committee, or close to it, that there should be an amendment which would be offered, hopefully on this bill, which would provide the funds that are necessary for our troops for the operations we know will be taking place next year but to do it in a responsible manner where the Congress carries out its role of being a check and a balance on the executive branch and not just issuing a blank check. The chairman's initiative in holding this hearing and having the witnesses there who were called I believe will lead to the proper resolution of this matter--hopefully in an amendment that everybody can support.

Mr. LEVIN. No objection.

Mr. LEVIN. Mr. President, I commend the Senator from Texas for her leadership. She has been very patient and has allowed us to be very thorough. As a result, I think the amendment which she sponsors is very valid, and not only will pass overwhelmingly, hopefully for the good it does, but also will make it through conference. I commend her for her tenacity on this issue. I hope it is successful. It fills some gaps which need to be filled.

Mr. LEVIN. Mr. President, will the Senator yield while I add my thanks to the Senator from Maine for the contribution she makes to the committee. She highlighted a number of initiatives she has undertaken on the committee. In addition to those very strong efforts on the part of the Senator from Maine, she has been such a major contributor in the strength of the committee over the years that I wanted to acknowledge that along with our chairman of the committee.

Mr. LEVIN. I thank the chairman. We are indeed doing that. Another thing the bill does that it should not do, in my judgment, is to provide more than $10 billion for missile defense, including more than a half billion dollars for additional interceptors, without imposing basic ``fly before you buy'' requirements on the program. In the course of the markup, an amendment was offered that would have required the missile defense program to comply with the same operational testing requirements that are applicable to other acquisition programs of the Department of Defense. It was defeated. Another amendment was offered that would have cut the funding for the production of additional interceptors or to fence that funding, restrict that funding until operational testing and evaluation of these interceptors is completed. That amendment was also defeated, as was the first, on a closely divided vote. It is unfortunate that the administration is so insistent on deploying a missile defense system as soon as possible that it is unwilling to comply with even the most basic operational test and evaluation requirements. If we want a missile defense that works rather than one that sits on the ground and soaks up money, we should not shy away from realistic testing requirements. The law and common sense require realistic testing requirements. Right now, they are not going to be followed. Another problem: The bill contains full funding of $27 million for the robust nuclear earth penetrator and the advanced nuclear weapons concept initiative, an increase of over $7.5 million authorized for these programs last year. The administration's budget for the outyear reflects a commitment to developing an earth penetrator, which is likely to cost on the order of $1 billion to produce and deploy. The bill also includes $9 million--a 50-percent increase over fiscal year 2004--for the advanced nuclear weapons concepts initiative to look at new options for nuclear weapons. By pursuing this earth penetrator and the new nuclear weapons concepts, the administration continues to send the wrong message about weapons proliferation. At a time when the United States is trying to dissuade other countries from going forward with nuclear weapons development--we oppose North Korea's pulling out of the nuclear nonproliferation treaty, and we are spending over $1 billion to prevent the spread of nuclear weapons material and technology--these actions that are proposed by the administration send a terrible message. We are telling others not to go down the road to more and more nuclear weapons. But instead of being a leader in the effort to prevent the proliferation of nuclear weapons, we are recklessly driving down that same road. In short, the United States is following a policy we would not tolerate and do not accept in others. I hope the Senate will reverse the administration's proposals as leaving us and the world less secure and more likely to face the proliferation of nuclear weapons, and the proliferation of those weapons is the greatest threat we face. Finally, the bill contains two troubling provisions that would erode more than 30 years of congressional policy relative to high-level radioactive waste. These provisions were adopted on closely divided votes. One provision provides that the Department of Energy will have virtually unchecked discretion to reclassify or decree that high-level radioactive waste in South Carolina is not high-level radioactive waste. This ability to reclassify the waste opens the door to the Department of Energy to leave high-level radioactive waste in the ground in South Carolina and could lead to the same result in other States. That is because the second provision I referred to would require the States of Idaho and Washington to acquiesce in the Department of Energy's desire to reclassify high-level radioactive waste as they want to do in South Carolina before Idaho and Washington could continue to receive money to pump liquid high-level radioactive waste out of the tanks that are present in those States. Taken together, these two provisions begin to undo years of effort to make sure high-level radioactive waste will be disposed of safely to protect the public and the environment. It is disingenuous to pretend that high-level radioactive waste is anything other than high-level radioactive waste. The cavalier treatment of high-level radioactive waste could pose a very real risk environment to the health of our citizens down the line. As we begin consideration of this bill, the men and women of our Armed Forces--both Active and Reserve--remain deployed in harm's way in many areas of the globe and are being subjected to almost daily arms attacks in Iraq and Afghanistan. We join together--every Member of this body--in standing behind our troops and expressing pride in their extraordinary accomplishments on the battlefield. This bill will help provide them with the equipment they need and the compensation and benefits they deserve. Let me again conclude by thanking Senator Warner for the leadership he has shown in bringing this bill to the floor, and I know we look forward to receiving amendments and considering amendments on this bill as the week progresses. I yield the floor.

Mr. LEVIN

Mr. LEVIN. Mr. President, I ask unanimous consent that privilege of the floor be granted to Christopher Povak of Senator Lieberman's staff during consideration of S. 2400.

Mr. LEVIN

Mr. LEVIN. Mr. President, this week our Nation's police officers gathered in Washington, DC to commemorate National Police Week. The week long tribute to our Nation's Federal, State, and local police officers honors those who have died in the line of duty and those who continue to serve and protect us at great personal risk everyday. The first National Police Week was celebrated in 1962 when President John F. Kennedy signed an Executive Order designating May 15 as Peace Officers Memorial Day and the week in which that date falls as ``Police Week.'' Every year since, tens of thousands of Federal, State and local police officers have come to Washington to honor those that have made the ultimate sacrifice. In addition to a number of other events, police officers join for a candle light vigil at the National Law Enforcement Officers Memorial. The first memorial service took place on May 15, 1982. On that date, approximately 125 police officers assembled in the Senate park to honor the law enforcement officers who had been killed that year. Over the past 22 years, over 3,000 law enforcement officers from around the country have been so honored. Today, there are approximately 870,000 sworn law enforcement officers serving in the United States. Over the past 10 years, a total of 1,658 law enforcement officers have died in the line of duty, of which 145 were killed in 2003. Over the course of this week, all 145 of these officers have been honored and tonight their names will be added to National Law Enforcement Officers Memorial. One way we can further honor the sacrifices of these brave men and women is to pass sensible gun safety legislation. A number of my colleagues, with my support, have sought to do just that. That is why I cosponsored the Gun Show Background Check Act introduced by Senator Reed. I support that bill because I believe it is an important tool to help to prevent guns from getting into the hands of criminals. This bill simply applies existing law governing background checks to persons buying guns at gun shows. It is supported by a variety of law enforcement organizations including the International Association of Chiefs of Police, Major Cities Chiefs of Police, National Black Police Association, Police Foundation and National Troopers Coalition. The law enforcement community has also asked Congress to reauthorize the 1994 Assault Weapons Ban. The 1994 law banned a list of 19 specific weapons, as well as a number of other weapons incorporating certain design characteristics such as pistol grips, folding stocks, bayonet mounts, and flash suppressors. The assault weapons ban also prohibited the manufacture of semiautomatic weapons that incorporate at least two of these military features and which accept a detachable magazine. This law is scheduled to expire on September 13, 2004. I support the efforts of the law enforcement community who are calling for legislation extending the law. In 1994, I voted for the assault weapons ban and, last month, I joined a bipartisan majority of the Senate in voting to extend the assault weapons ban for 10 years. Law enforcement support for the assault weapons ban is broad. It includes the International Association of Chiefs of Police, the Major Cities Chiefs Association, the Police Foundation, the Police Executive Research Forum, the International Brotherhood of Police Officers, the National Association of School Resource Officers, the National Fraternal Order of Police, National Organization of Black Law Enforcement Executives, the Hispanic American Police Command Officers Association, and the National Black Police Association. I hope the Senate will stand with our Nation's law enforcement community and support these important pieces of gun safety legislation. I know all of my colleagues join me in remembering those who have served and continue to serve in our Nation's law enforcement community and thanking them for their sacrifices. (At the request of Mr. Daschle, the following statement was ordered to be printed in the Record.) Mr. SARBANES. This week, beginning May 9th, we celebrate National Police Week, culminating in Peace Officers' Memorial Day on May 15th. It is a time for us to remember the dedicated men and women who put their lives on the line every day to make our communities safer. In 1962, President John F. Kennedy designated May 15th as Peace Officers' Memorial Day, and the week in which May 15th falls as National Police Week. During this week, tens of thousands of law enforcement officers from around the world converge on Washington, DC to participate in activities highlighting the importance of law enforcement to citizens' daily lives. This past year, 154 police officers were killed in the line of duty. That is 154 fathers, mothers, brothers, sisters, daughters, and sons who did not go home to the families waiting for them at the end of the workday. Since the National Law Enforcement Officers Memorial Fund started keeping such statistics, 16,500 police officers have been killed in the line of duty. In my home State of Maryland, we have lost a total of 246 police officers. On average, one law enforcement officer is killed somewhere in America every 53 hours. The risk encountered by those law enforcement officers serving in communities throughout this country--men and women who get up every morning to go to work knowing it is entirely possible they will not come home at the end of the day-- is enormous. Such commitment deserves more than one week to appreciate. We spend a lot of time, especially in this day and age, as we should, worrying about and praying for the nearly 150,000 young men and women serving in our armed services in Iraq and Afghanistan. At the same time, I believe it is important to reflect on the 870,000 men and women serving in law enforcement who protect our homeland day in and day out. These are the police officers who ensure that our children get to school safely, that our roads are safe from the dangers of speeding or drunk drivers, that ensure our neighborhoods are protected from the violence associated with gangs and drugs, and that come to our aid when tragedy strikes. I want to make mention of a few poignant examples of the risk that those involved in this profession face every day. Maryland State Police Trooper First-Class Anthony Jones was killed last week when a drunk driver struck him while he was fulfilling his duty seeking to help another trooper respond to a car accident. Trooper Jones left behind a wife and two daughters. Then there is Detective Thomas Newman of the Baltimore City Police Department who was shot to death in 2002 in retaliation for his testifying against a man who had shot another police officer in 2001. Detective Newman was ambushed by three assailants who continued to fire at him even after he fell to the ground. Also deserving of our thoughts and prayers this week are the families of Prince George's County Sheriffs Deputies Elizabeth Magruder and James Arnaud. The two were shot and killed while serving a court order for an emergency psychiatric evaluation on a man in Prince George's County. Magruder left behind a husband and four-year-old son while Arnaud left behind a wife, son, daughter and grandchildren. These are just a few examples of the brave men and women who put their lives on the line so that all of us can sleep more soundly at night. The sacrifices they and their families have made are too numerous to count and to deep for words to express. But at least during this National Police Week, we are able to take a moment to appreciate their efforts and the efforts of their colleagues that are still serving. As St. John said, ``No one has greater love than this, to lay down one's life for one's friends.''

Mr. LEVIN

Mr. LEVIN. Madam President, I ask unanimous consent that our amendment No. 3120 at the desk be modified and called up.

Mr. LEVIN. Madam President, I ask unanimous consent that further reading of the amendment, as modified, be dispensed with.

Mr. LEVIN. Madam President, I am offering this amendment along with our colleague, Senator Coleman. I understand the amendment has been cleared now on both sides of the aisle. I very much appreciate the effort that has been put into this matter by Senator Grassley and Senator Baucus. They have been battling abusive tax shelters for years now, and it is a privilege to join them in this fight by providing the IRS with stronger enforcement tools. Abusive tax shelters are undermining the integrity of our tax system, robbing the Treasury of tens of billions of dollars each year, and shifting the tax burden from high income corporations and individuals onto the backs of the middle class. The bill before us contains a host of important reforms to combat abusive tax shelters, including codifying and strengthening the definition of when a shelter has ``economic substance.'' But there is an area where the underlying bill falls short and unnecessarily so. That's on the penalties for the people who design and sell the abusive shelters. The bill sets the penalty at 50 percent of the fees earned by these promoters, meaning they get to keep half of their ill-gotten gains. That is the provision that our amendment addresses, but we significantly toughen this provision in a way which I think this body will totally approve. The amendment I originally filed proposed raising the penalty on abusive tax shelter promoters and those who aid or abet tax evasion to 150 percent. Today we have reached a compromise, agreeing to set the penalty at 100 percent, which will ensure that those who peddle abusive tax shelters will not get to keep a single penny of their ill-gotten gains. The issue is whether when you have an abusive tax shelter, one which robs the Treasury of millions of dollars, the people who cook up those tax shelters are going to be penalized in any significant way. Will the accountants or the lawyers or the investment bankers--the people who design these deceptive and sham tax shelters, which are abusive and have no economic purpose, except to avoid taxes--will they be deterred from doing this? And if they do it, will they be penalized, at least to the extent of having their ill-gotten gains being taken back from them? That is the issue. The current law is like a slap on the wrist. It is like a parking ticket. These abusive tax shelters, which have been designed by the banks and the accounting firms, and which have made them millions of dollars, result in a maximum fine of $1,000 under current law. What our amendment does is say, if you design and promote an abusive tax shelter which has no economic substance and you are found responsible for doing that, the IRS can get all of your fee that is ill-gotten and wrongfully obtained for cooking up that tax shelter--not $1,000 of the fee, not half of the fee, as was originally proposed in the bill, but the entire fee is going to be recoverable by the IRS. We can take a quick look at one of these tax shelters. This is called Flagstaff. I am not going to try to explain what that tax shelter you are looking at does. It is obviously inexplicable. It has all of this mumbo jumbo, all of these boxes and arrows that were intended by JP Morgan Chase to create an impression of economic activity when there was none. That is what this bowl of spaghetti is all about: to create a sham impression that there was some economic substance to these transactions when, in fact, there was no economic substance. They were cooked up in order to create the appearance of economic substance and, thereby, obtain a tax deduction for them. The question is, when that happens, whether we are going to say to these firms that design these tax shelters for Enron, or for whoever: We are not going to let you, the designers, the perpetrators--who are called aiders and abettors in the law, but are really the promoters of the tax shelters--we are not going to let you keep those ill-gotten fees. We are going to recover those for the Treasury of the United States. That is the only real deterrent we have. I want to quickly show how some of these firms analyze these fees they get. Again, we are talking about millions of dollars in fees. These are cookie-cutter tax shelters that are designed and sold by the hundreds to people who can use a tax deduction for, usually, their capital gains, but are not engaged in economic activity which would justify the non-payment of tax on these capital gains. This is what KPMG did when analyzing one of their phony tax shelters: First, they look at the financial exposure to the firm. It is minimal. So what they are saying is: Hey, we can engage in this. We can get away with it because there is no financial exposure. . . . we conclude that the penalties would be no greater than $14,000 per $100,000 in KPMG fees. . . . For example, our average deal would result in KPMG fees of $360,000 with a maximum penalty exposure of only $31,000. They do a cost-benefit analysis. They cook up and design an abusive tax shelter and then say: Now should we really go with this? Shall we peddle this, promote it, look for people who can benefit from it, sell it for hundreds of thousands of dollars and take the risk that we will be caught? Because what happens if we are caught? We are going to be paying a few thousand dollars in penalties and making $100,000. Our maximum exposure, our financial exposure, is minimal. That is what this amendment changes. Last November, the Permanent Subcommittee on Investigations, on which Senator Coleman is the chairman and I am the ranking member, held hearings that provided an inside look at how respected accounting firms, banks, investment advisors, and lawyers have become high-powered engines behind the design and sale of abusive tax shelters. These hearings were the culmination of a year-long investigation into abusive tax shelters, which first began by pulling the curtain away from one of Enron's sham tax transactions. At the November hearings, we released a report by my subcommittee staff on four case histories of abusive tax shelters developed and marketed by KPMG. At the hearings themselves, we heard from a number of accounting firms, banks, investment firms, and others. One of the key findings of the subcommittee investigation was that it was not taxpayers visiting their tax advisors that provided the engine for the creation of abusive tax shelters, but rather hordes of tax advisors cooking up one complex scheme after another, and then peddling them to potential customers. There are legitimate tax shelters and abusive ones. The abusive shelters are marked by one characteristic: there is no real economic or business rationale other than a tax reduction. We found the abusive shelters being packaged up as generic ``tax products'' with boiler-plate legal and tax opinions, followed by elaborate marketing schemes to peddle these products to literally thousands of taxpayers across the country. It is the insight gained during our close look at these shelters that led me and Senator Coleman to introduce the Tax Shelter and Tax Haven Reform Act, S. 2210. While the Levin-Coleman bill addresses a wide range of tax shelter issues, our amendment focuses on one key issue: the woefully inadequate penalties that are now on the books for the tax shelter promoters who concoct and peddle abusive shelters. Existing tax shelter penalties are a joke. They provide no deterrent at all. The story begins with Enron, and I think the Enron scandal has shown us one reason this amendment is so important. The Flagstaff example I talked about earlier was designed to save Enron more than $60 million in taxes. The whole scam was built around a sham $1 billion loan that was issued to Enron but was repaid in nanoseconds, and then used to claim various tax benefits as well as creating a false impression of profits on the balance sheet. JP Morgan Chase designed and sold this concoction to Enron for more than $5 million. After Enron collapsed and this scam came to light, we learned that JP Morgan had sold the same abusive tax shelter to at least one other company as well. Under Section 6700 of the tax code prohibiting the promotion of abusive tax shelters, JP Morgan was subject to a whopping $1,000 penalty. Let me repeat: For one tax shelter which was abusive because it was a sham and a deception, JP Morgan Chase's ill-gotten gain from one company, Enron, was $5 million. Its penalty exposure to the IRS under current law was $1,000. As IRS Commissioner Mark Everson said when he testified at our tax shelter hearings, the current tax shelter promoter penalty is ``chump change.'' To continue quoting Commissioner Everson: ``We need significantly increased penalties to hit the promoters who don't get the message where it counts, in their wallets.'' Our tax shelter investigation found some fascinating documents as well, including one I have shown here today in the KPMG memo that shows a particular tax shelter promoter performing a specific cost-benefit analysis when deciding whether or not to take the risk of peddling an abusive shelter. The third paragraph of this KPMG memo says: First, the financial exposure to the Firm is minimal. Based upon our analysis of the applicable penalty sections, we conclude that the penalties would be no greater than $14,000 per $100,000 in KPMG fees. . . . For example, our average deal would result in KPMG fees of $360,000 with a maximum penalty exposure of only $31,000. The fact that all KPMG could lose if caught was a small part of its fee was a driving consideration in KPMG's decision to take the risk. This memo is proof that weak penalties encourage tax shelters and that tough penalties would deter them. Congress needs to enact meaningful, tough penalties to deter promoters from pocketing any gains from designing and peddling abusive tax shelters. We need to deter folks from making a cost-benefit analysis that encourages the promotion of a tax shelter they know is not likely to withstand scrutiny. Our amendment would do just that by strengthening penalties for promoting abusive tax shelters. Our amendment focuses on two key penalties. The first is the penalty for promoting an abusive tax shelter under Tax Code section 6700. The second is the penalty for aiding and abetting tax evasion under Tax Code section 6701. It would increase the penalty for both types of misconduct. Currently, the penalty under section 6700 of the Tax Code is the lesser of $1,000 or 100 percent of the promoter's gross income derived from the prohibited tax shelter. That means in most cases, the maximum fine is $1,000. That figure is laughable, when many abusive tax shelters are selling for $100,000 or $250,000 apiece. Our investigation uncovered tax shelters that were sold for millions each. The Enron tax avoidance scam sold for more than $5 million. We also saw instances in which the same so-called tax product was sold to more than 100 clients. A $1,000 fine is like a parking ticket for raking in millions illegally. The bill before us is an improvement over the status quo, but an unnecessarily modest one. It would increase the penalty for promoting an abusive tax shelter to 50 percent of the promoters' gross income from the prohibited tax shelter. Why should anyone who pushes an abusive tax shelter--an illegal tax shelter that robs our Treasury of much needed revenues--get to keep half of his ill-gotten gains? And what deterrent effect is created by a penalty that allows promoters to keep half of their fees if caught, and all of them if they are not? That half-hearted penalty is not tough enough to do the job that needs to be done. At the very least, a meaningful penalty for those who peddle abusive tax shelters must ensure that the tax shelter promoter does not profit from its wrongdoing. It must require the wrongdoer to disgorge every penny of the income obtained from selling the shelter. Our amendment would do just that. My original amendment would have gone further. It would have created a maximum penalty equal to 150 percent of the promoter's gross income from the prohibited tax shelter. Under that penalty, the first 100 percent would have forced the disgorgement of the ill-begotten gains, and the remaining 50 percent would have imposed what I consider to be an actual penalty on top of that. But today, our amendment does not go that far. It stops at 100 percent. While that is not as tough as called for in the Levin-Coleman bill, it is a reasonable compromise and will ensure that those who promote abusive tax shelters will lose 100 percent of their ill-gotten gains. The underlying bill has the same problem in the way it addresses many professional firms the accountants, law firms, banks, and investment advisors that aid and abet the use of abusive tax shelters and enable taxpayers to carry out abusive tax schemes. The underlying bill takes the same half-hearted approach of denying only 50 percent of the gross income obtained by the aider and abettor, and allowing the wrongdoer to keep half of its ill-gotten gains. Just as we do with tax shelter promoters, our amendment would raise the penalty under tax code section 6701 to 100 percent of the aider or abettor's gross income, thereby denying them 100 percent of their ill-gotten gains. In addition, our amendment would make an important change to section 6701 itself by eliminating a provision which limits the penalty to persons who prepare tax returns. Instead, our amendment would apply the penalty to all wrongdoers who knowingly aid and abet the understatement of tax liability, not just tax return preparers. Finally, while I am pleased that today we have reached agreement to accept a 100 percent penalty, I would like to take this opportunity to observe that penalties that cause wrongdoers to not only disgorge their ill-gotten gains, but also pay a monetary fine on top of that are fair and provide a meaningful deterrent. There is no reason why those who concoct and peddle these shenanigans should get off any easier than the taxpayers who use them. Just last week the IRS came out with an initiative to allow taxpayers who used a tax shelter known as ``Son of Boss'' to come clean. This tax shelter was marketed beginning in the late 1990s and was one of the tax shelters we looked at during our investigation. Under the terms of the IRS initiative, taxpayers are required to come forward and pay 100 percent of the tax they tried to escape. On top of that, the IRS can impose a penalty that ranges up to an additional 40 percent. That means the taxpayer faces up to a 140 percent penalty. Son of Boss is a hellaciously complicated tax shelter that was dreamed up and carried out by tax shelter promoters and other professionals. The taxpayers who bought this shelter have to cough up 100 percent plus. It is only fair that the tax shelter promoters who made so many millions of dollars in profit on these schemes should do no less. It is also important to realize that Congress has frequently set penalties for corporate misconduct and financial crimes that require wrongdoers to disgorge 100 percent of their ill-gotten gains plus pay a penalty on top of that, and courts have upheld those penalties as both constitutional and enforceable. For example, under current law, violation of the federal securities laws results in 100% disgorgement plus a civil fine of up to 100 percent, for a total civil penalty equal to 200 percent. In the special case of insider trading, violations result in 100 percent disgorgement plus a civil fine of up to 300 percent, for a total civil penalty equal to 400 percent. Manipulation of commodity markets results in a civil fine of up to 300 percent. False claims submitted to the Federal Government result in a civil fine of up to 300 percent. Even the tax code has penalties of this magnitude; for example, personally profiting from a charity results in a civil fine of up to 200 percent. Men and women in our military are putting their lives on the line every day for our nation. To make sure we can provide them with the resources they need, all Americans need to contribute their fair share in taxes. While the bill before us improves the tax shelter penalties over current law, we can and should do much better. We need penalties that truly deter those who make a profit from peddling abusive tax shelters and aiding and abetting tax evasion, not penalties that would allow the promoters to keep half of their ill-gotten gains. It is long past time to stop in their tracks the shelter abusers and the promoters who push them. This amendment would send the message to promoters that their tax schemes are unfair and unpatriotic. Again, I appreciate the bill managers accepting it into the bill. I also thank Senator Coleman for being such a strong advocate of this approach, putting in the law a real deterrent to end these abusive tax shelters which have cost the Treasury and the average taxpayers of this country, who have to share the burden, so many tens of billions of dollars. That is now hopefully going to end. Again, I thank the chairman and ranking member of the Finance Committee for the way they have worked with us to adopt this amendment.

Mr. LEVIN. I yield the balance of my time to my friend from Minnesota.

Mr. LEVIN

Mr. LEVIN. Mr. President, this weekend moms from across the country will converge on Washington to join in a march remembering gun violence victims and urging President Bush to support commonsense gun safety legislation. I am proud to support the moms, and I know my colleagues will join me in commending these women for their leadership. On Mother's Day, moms will gather on the west lawn of the U.S. Capitol to bring their ``Halt the Assault'' message to the front door of Congress. These women have come to Washington to urge Members of Congress to support sensible gun safety legislation. Their leadership is desperately needed on this issue, and I applaud all of the moms who will make this journey for their commitment. After the march, the moms will spend Monday visiting our offices and urging us to support commonsense gun safety legislation. One of the moms attending this Sunday's events is Barb Case, Michigan's Million Mom March President. Mrs. Case has been a member of the Michigan Million Mom March since it first started in 2000. She will be leading as many as 500 Michigan moms to Washington. The Michigan moms will be marching in memory of the 120,000 people who have been killed by a firearm, including more than 13,000 children and teens, since 2000. Mrs. Case, along with other moms in Michigan, have united with State and local leaders to implement community efforts to address the tough issues surrounding gun violence in my home State of Michigan. And, Barb has organized Michigan's moms trip to Washington every year since the first march took place in 2000. This year's marchers are focused on the renewal and strengthening of the assault weapons ban, holding gun manufacturers accountable for their products, requiring background checks on all gun purchases, reinstating the 5-day Brady waiting period for all gun purchases, and incorporating safety standards into gun design. Michigan's moms, just like millions of moms from across the country want an America where their kids are safe from gun violence. Again, I commend all of the mothers coming to Washington this weekend for their hard work and commitment to the issue of gun safety and I hope all of my colleagues will remember these efforts when the Senate considers gun safety legislation in the coming months. I ask unanimous consent that an article from the Detroit Free Press, which discussed the issue of gun violence and this Sunday's march, be printed in the Record.

Mr. LEVIN

Mr. LEVIN. Mr. President, I rise today to join my colleagues, Senators Norm Coleman, Susan Collins and Jack Reed, in introducing the Central Contractor Registry Act of 2004. The purpose of this bipartisan bill is to strengthen the ability of the Federal Government to stop tax cheats from obtaining Federal contracts or use a portion of their contract payments to repay their tax debts. In February, the Permanent Subcommittee on Investigations, on which Senator Coleman and I sit, held a hearing on a report by the General Accounting Office which disclosed that over 27,000 contractors at the Department of Defense owe $3 billion in unpaid taxes, mostly from failing to transmit payroll taxes to the IRS. Think about that for a minute--27,000 DOD contractors--more than one in every ten DOD contractors--had outstanding tax debts at the same time they were holding out their hands for taxpayer dollars. Allowing tax cheats to bid on federal contracts is a disservice to all of the honest taxpayers out there who manage to meet their tax obligations. It is a disservice to all of the military men and women who put their lives on the line for us every day. It is a disservice to all of the honest companies that compete for the same DOD contracts, since companies that do not pay their taxes have lower costs and a competitive advantage over the companies that do. Under current law, DOD has an obligation to identify any DOD contractor with unpaid taxes, to withhold up to 15 percent of their contract payments, and to forward that money to the IRS to be applied to the contractor's tax debt. The official title of the DOD program to carry out this obligation is the Federal Payment Levy Program, also sometimes referred to as the DOD tax levy program. The first step in the program is for DOD to identify tax delinquent DOD contractors who are scheduled to get a contract payment in the near future. To identify these contractors, DOD participates in a computer matching program administered by the Treasury Department that cross- checks DOD lists of upcoming contractor payments with IRS lists of delinquent taxpayers. If a match occurs, DOD is supposed to withhold money from the identified contractor's upcoming contract payments. The problem is that the DOD-IRS computer matching program has so far produced relatively few matches. In 2003, for example, DOD collected only about $680,000 of back taxes through its tax levy program instead of the $100 million that GAO estimates should have been collected. That means DOD collected less than 1 percent of the back taxes it should have. On major impediment to the computer matching program has been that it depends upon DOD's providing the correct taxpayer identification number or TIN for each of its contractors, when many DOD contractors have either failed to submit a TIN or supplied an incorrect number. When a TIN is incorrect or missing, the computer matching program is unable to determine whether the relevant DOD contractor is on the IRS list of delinquent taxpayers. Data indicates that, in one year, DOD sent the IRS over 26,000 invalid TINs that could not be used. To increase the efficiency of the computer matching program, DOD and the IRS have tried to improve the accuracy of the TINs in DOD's contractor data. The IRS has, for example, set up a computer-based TIN validation system that can electronically verify a TIN number in seconds. This electronic system is available for use by DOD and all other Federal agencies. Unfortunately, the IRS has also interpreted certain tax laws as prohibiting DOD from obtaining TIN validations for many types of contracts. In addition, in the case of TIN numbers with clerical errors, the IRS has interpreted current taxpayer confidentiality laws as prohibiting it from supplying DOD with a corrected number. The bill we are introducing today would eliminate this bureaucratic red tape and significantly increase the effectiveness of the tax levy program by increasing the accuracy of the TINs used by DOD. The bill would strengthen TIN accuracy by focusing primarily on the TINs in the Central Contractor Registry, a government-wide database of persons wishing to bid on federal contracts. This registry is currently administered by DOD, and current Federal regulations require potential bidders to self-register in the system by supplying specified information. As part of the process, registrants are currently supposed to supply a TIN, but many either do not or supply an incorrect number. The bill would, for the first time, impose a legal requirement on registrants to supply a valid TIN and would also bar contracts from being awarded to contractors who fail to supply a valid TIN. In addition, the bill would require registrants to authorize DOD to validate their TINs with the IRS and obtain a corrected TIN from the IRS, if needed and possible. This requirement would apply to all registrants in the Central Contractor Registry, no matter what type of contract is involved and whether the contract is with DOD or another Federal agency. It would also allow the IRS to supply corrected TINs where it can promptly and reasonably do so. If, by chance, a registrant managed to obtain a DOD contract without having supplied a valid TIN, the bill would direct DOD to withhold a portion of their contract payments to satisfy their tax debt as specified under existing law. Although this backup holding requirement has been on the books for years, DOD has not implemented it. The bill would require DOD to start doing so. Finally, the bill would provide a number of protections. It would require DOD and other federal procurement officials not to make TIN numbers available to the public, so that this information is kept confidential within the procurement community using the Central Contractor Registry. It would explicitly exempt from the TIN requirements any contractor, such as a foreign business, not required by U.S. law to have a taxpayer identification number. The bill would also require DOD to show in the registry database whether a particular TIN has been validated, is awaiting validation, has been found invalid, or is not required, so that procurement officials using the database will know the status of a contractor's TIN. If the IRS were to determine that a particular TIN was invalid, the bill would require DOD to give the relevant contractor an opportunity to correct the number. DOD would also be required to warn all registrants in the Central Contractor Registry of the possibility of backup withholding in the event they fail to provide a valid TIN. It is common business sense for the Federal Government to require contractors who want to be paid with Federal taxpayer dollars to allow the United States to determine whether they owe any taxes and, if so, to offset a portion of their contract payments to reduce their tax debts. To accomplish that objective, the Federal Government has to do a better job in identifying federal contractors with unpaid taxes. Our bill, by improving the accuracy of taxpayer identification numbers in the Central Contractor Registry, will strengthen DOD's ability to identify tax delinquent contractors and either deny them new contracts or reduce their tax debts. I hope all my colleagues will join us in supporting this legislation's enactment during this Congress.

Mr. LEVIN

Mr. LEVIN. Mr. President, I rise today to join my colleagues, Senators Norm Coleman, Susan Collins and Jack Reed, in introducing the Central Contractor Registry Act of 2004. The purpose of this bipartisan bill is to strengthen the ability of the Federal Government to stop tax cheats from obtaining Federal contracts or use a portion of their contract payments to repay their tax debts. In February, the Permanent Subcommittee on Investigations, on which Senator Coleman and I sit, held a hearing on a report by the General Accounting Office which disclosed that over 27,000 contractors at the Department of Defense owe $3 billion in unpaid taxes, mostly from failing to transmit payroll taxes to the IRS. Think about that for a minute--27,000 DOD contractors--more than one in every ten DOD contractors--had outstanding tax debts at the same time they were holding out their hands for taxpayer dollars. Allowing tax cheats to bid on federal contracts is a disservice to all of the honest taxpayers out there who manage to meet their tax obligations. It is a disservice to all of the military men and women who put their lives on the line for us every day. It is a disservice to all of the honest companies that compete for the same DOD contracts, since companies that do not pay their taxes have lower costs and a competitive advantage over the companies that do. Under current law, DOD has an obligation to identify any DOD contractor with unpaid taxes, to withhold up to 15 percent of their contract payments, and to forward that money to the IRS to be applied to the contractor's tax debt. The official title of the DOD program to carry out this obligation is the Federal Payment Levy Program, also sometimes referred to as the DOD tax levy program. The first step in the program is for DOD to identify tax delinquent DOD contractors who are scheduled to get a contract payment in the near future. To identify these contractors, DOD participates in a computer matching program administered by the Treasury Department that cross- checks DOD lists of upcoming contractor payments with IRS lists of delinquent taxpayers. If a match occurs, DOD is supposed to withhold money from the identified contractor's upcoming contract payments. The problem is that the DOD-IRS computer matching program has so far produced relatively few matches. In 2003, for example, DOD collected only about $680,000 of back taxes through its tax levy program instead of the $100 million that GAO estimates should have been collected. That means DOD collected less than 1 percent of the back taxes it should have. On major impediment to the computer matching program has been that it depends upon DOD's providing the correct taxpayer identification number or TIN for each of its contractors, when many DOD contractors have either failed to submit a TIN or supplied an incorrect number. When a TIN is incorrect or missing, the computer matching program is unable to determine whether the relevant DOD contractor is on the IRS list of delinquent taxpayers. Data indicates that, in one year, DOD sent the IRS over 26,000 invalid TINs that could not be used. To increase the efficiency of the computer matching program, DOD and the IRS have tried to improve the accuracy of the TINs in DOD's contractor data. The IRS has, for example, set up a computer-based TIN validation system that can electronically verify a TIN number in seconds. This electronic system is available for use by DOD and all other Federal agencies. Unfortunately, the IRS has also interpreted certain tax laws as prohibiting DOD from obtaining TIN validations for many types of contracts. In addition, in the case of TIN numbers with clerical errors, the IRS has interpreted current taxpayer confidentiality laws as prohibiting it from supplying DOD with a corrected number. The bill we are introducing today would eliminate this bureaucratic red tape and significantly increase the effectiveness of the tax levy program by increasing the accuracy of the TINs used by DOD. The bill would strengthen TIN accuracy by focusing primarily on the TINs in the Central Contractor Registry, a government-wide database of persons wishing to bid on federal contracts. This registry is currently administered by DOD, and current Federal regulations require potential bidders to self-register in the system by supplying specified information. As part of the process, registrants are currently supposed to supply a TIN, but many either do not or supply an incorrect number. The bill would, for the first time, impose a legal requirement on registrants to supply a valid TIN and would also bar contracts from being awarded to contractors who fail to supply a valid TIN. In addition, the bill would require registrants to authorize DOD to validate their TINs with the IRS and obtain a corrected TIN from the IRS, if needed and possible. This requirement would apply to all registrants in the Central Contractor Registry, no matter what type of contract is involved and whether the contract is with DOD or another Federal agency. It would also allow the IRS to supply corrected TINs where it can promptly and reasonably do so. If, by chance, a registrant managed to obtain a DOD contract without having supplied a valid TIN, the bill would direct DOD to withhold a portion of their contract payments to satisfy their tax debt as specified under existing law. Although this backup holding requirement has been on the books for years, DOD has not implemented it. The bill would require DOD to start doing so. Finally, the bill would provide a number of protections. It would require DOD and other federal procurement officials not to make TIN numbers available to the public, so that this information is kept confidential within the procurement community using the Central Contractor Registry. It would explicitly exempt from the TIN requirements any contractor, such as a foreign business, not required by U.S. law to have a taxpayer identification number. The bill would also require DOD to show in the registry database whether a particular TIN has been validated, is awaiting validation, has been found invalid, or is not required, so that procurement officials using the database will know the status of a contractor's TIN. If the IRS were to determine that a particular TIN was invalid, the bill would require DOD to give the relevant contractor an opportunity to correct the number. DOD would also be required to warn all registrants in the Central Contractor Registry of the possibility of backup withholding in the event they fail to provide a valid TIN. It is common business sense for the Federal Government to require contractors who want to be paid with Federal taxpayer dollars to allow the United States to determine whether they owe any taxes and, if so, to offset a portion of their contract payments to reduce their tax debts. To accomplish that objective, the Federal Government has to do a better job in identifying federal contractors with unpaid taxes. Our bill, by improving the accuracy of taxpayer identification numbers in the Central Contractor Registry, will strengthen DOD's ability to identify tax delinquent contractors and either deny them new contracts or reduce their tax debts. I hope all my colleagues will join us in supporting this legislation's enactment during this Congress.

Mr. LEVIN

Mr. LEVIN. Mr. President, this amendment incorporates a whole energy bill. It has many provisions that are deeply flawed. But we are voting on whether to end debate on a complicated, flawed energy bill before debate has even begun, making it very difficult to correct those flaws. The Senate passed a comprehensive and balanced energy bill in July 2003. Then, after weeks of closed-door meetings with virtually no input from Democratic conferees, the Republicans put forward a ``take it or leave it'' energy conference report that was drastically different than the bill that the Senate passed. I voted against cloture on the conference report in November 2003 because it was deeply flawed and had been produced by a flawed process. The Domenici amendment, the energy bill, which is before the Senate today, suffers from that same problem. There are simply too many provisions on the negative side of the ledger for me to support it, and because this is a cloture vote, voting yes would make it difficult to consider amendments. At a time when crude oil prices are at 13-year highs, gasoline prices are reaching new record highs daily, diesel prices are breaking records, and high jet fuel prices are straining our airline industry, the Senate should be considering legislation that would do something to lower oil prices. The bill however, would push oil, gasoline, diesel, and jet fuel prices even higher by directing the Department of Energy, DOE, to ``as expeditiously as practicable acquire petroleum in amounts sufficient to fill the Strategic Petroleum Reserve to the [1 billion] barrel capacity.'' By directing DOE to take tens of millions of barrels of oil off the market at a time when supplies are tight and prices high--as they have been for the past 2 years--this bill would tighten supplies in the commercial inventories even further, drive oil and gasoline prices even higher, and keep private sector inventories from building back to normal levels. The bill would fill the SPR in a manner that is inconsistent with two recent amendments adopted by the Senate. Last fall, the Senate unanimously approved an amendment that Senator Collins and I offered to the Interior Appropriations bill, directing DOE to develop procedures to minimize the cost to the taxpayer and maximize the overall supply of oil in the United States when acquiring oil for the SPR. This amendment expressed the sense of the Senate that the DOE's current procedures for filling the SPR have raised oil prices, are too costly for the taxpayers, and have not improved our overall energy security. Unfortunately, this amendment was not included in the Interior Appropriations conference report, and the administration has continued to fill the SPR without regard to the price or supply of oil. This is a significant reason oil and gasoline prices are so high today. In light of the continuing rise in oil and gasoline prices, and the administration's refusal to suspend SPR shipments, the Senate approved an amendment that Senator Collins and I offered last month to the budget resolution for FY 2005. Our amendment would cancel the planned delivery of 50 million barrels of oil to the SPR from now through sometime in 2005 that would have completed the filling of the reserve. The SPR is 93 percent filled already. Our amendment is being considered in the House-Senate conference on the budget resolution. By directing the DOE to fill the SPR to 1 billion barrels--300 million barrels above its current capacity of 700 million barrels--the bill before the Senate today would worsen a SPR policy that is 180 degrees opposite from the direction the Senate just approved in the Senate budget resolution. By increasing deposits in a government reserve at a time when commercial supply is scarce and prices are high, oil companies will meet the additional demand for crude oil for the reserve by removing oil from their own inventories rather than purchasing high-priced oil on the spot market. Since the price of oil is so closely tied to inventory levels, filling the SPR under these market conditions both depletes private sector inventories and pushes up prices for America's consumers. Two years ago, the DOE's own staff explained this as follows: ``Essentially, if the SPR inventory grows, and OPEC does not accommodate that growth by exporting more oil, the increase comes at the expense of commercial inventories. Most analysts agree that oil prices are directly correlated with inventories, and a drop of 20 million barrels over a 6-month period can substantially increase prices.'' For these reasons, in 2002, DOE SPR staff recommended against buying more oil for the SPR in tight markets. The administration chose to ignore these warnings. SPR deliveries proceeded. As the DOE staff predicted, oil supplies tightened, private inventory levels fell, and prices climbed. In summary, the direction in the bill to DOE to fill the Strategic Petroleum Reserve by another 300 million barrels, to a total level of 1 billion barrels, is likely to increase the cost of crude oil and crude oil products, such as gasoline, home heating oil, and diesel and jet fuel, to American consumers and businesses, with no benefits to our national security. The electricity provisions of the bill before us are also deeply flawed. Instead of improving our current situation, I believe they will make it worse. The massive power failure of August 2003, on top of the massive price manipulation perpetrated by Enron and others, provided additional proof--proof that should not have been needed--that the United States' deregulated energy markets are not functioning well to secure a supply of energy against interruption. The bill before us--the Domenici amendment--would repeal the Public Utility Holding Company Act of 1934, PUHCA, long-standing consumer and investor protection legislation governing energy industry structure and consolidation. With the repeal of PUHCA, the resulting provisions of the bill before us fail to provide adequate protections to prevent industry market manipulation and consumer abuses. The Congress needs to enact mandatory reliability legislation, and while some provisions of the bill would be an improvement over the current voluntary system of reliability standards, other provisions of this bill would take us in the wrong direction and could, in fact, make things worse. The bill fails to ensure that regional transmission organizations, RTOs, will have the authority to enforce electric reliability standards in order to prevent, or respond effectively to, another blackout. Further, the ``participant funding'' provision of this bill shifts the cost of building new electric transmission such that transmission construction will be discouraged and utilities will be encouraged not to participate in RTOs. There is a strong need for a stand-alone electricity reliability bill that sets mandatory standards, requires utilities to join RTOs, and establishes consistent rules for enforcement of standards. But the bill before us today is not the right answer. Two provisions of the bill would significantly impede the ability of federal and state agencies to investigate and prosecute fraud and price manipulation in energy markets. If adopted, section 1281 would impede state and Federal authority, other than the Commodity Futures Trading Commission, to investigate and prosecute wrongdoing in financial and commodity markets. It would turn the CFTC into a gatekeeper for all other federal and state investigations into matters within CFTC- regulated markets, which would be an unprecedent intrusion into the enforcement of state and federal consumer protection laws. Section 1282 would impose a higher, criminal standard, ``knowingly and willfully'', for filing false information and for improper phony round trip trading than exists under current law. The new round trip trading provision is inconsistent with current law and the Cantwell amendment that recently passed the Senate, which prohibited market manipulation in electricity markets. Manipulation is difficult to prove even under current law. By raising the burden of proof, this provision will make it nearly impossible to prove illegal round trip trading or wash sales. Rather than weakening the laws preventing fraud and manipulation in energy markets, the Congress should be strengthening these prohibitions. Over the past several years, the Permanent Subcommittee on Investigations, which I previously chaired and on which I am now the ranking minority member, has investigated how Enron, financial institutions, and others have manipulated financial energy markets and prices. The record we have established is clear and dramatic. Strengthened oversight and transparency are critical to the proper functioning of our energy and financial markets. The provisions in this amendment will weaken our ability to ensure these markets are functioning properly. There are some provisions of the bill before us that I support. The amendment contains two provisions that appear on their face to partially address the unfair air quality restrictions placed on a number of Michigan counties. These provisions do not go far enough, however, to remedy the negative impacts that I have fought against for years. According to the Michigan Department of Environmental Quality, the Environmental Protection Agency, EPA, would not be required to act on the results of the demonstrations study that is required by the so- called Upton language included in this amendment. It also would not relieve new major sources from state new source review regulations, and it would not release Southwest Michigan from Clean Air Act provisions that mandate specific local reductions following completion of the study. Finally, it would not prevent Southwest Michigan nonattainment areas from classification bump-up if the area is unable to attain the standard by the deadline. The so-called Barton provisions contained in this amendment would help some for two Michigan counties, Cass and Muskegon, those are the only two counties subject to transport that have been designated under Subpart 2 of Section 181 of the Clean Air Act. However, the help is modest because it is workable only if those areas fail to meet the standard by the deadline and the EPA decides to ``bump them up'' to a higher classification. We need to do more to prevent restrictions from being placed on areas that are impacted by overwhelming transport. The potential consequences of a nonattainment designation are significant. I will continue to work with the EPA and the Congress to ensure that the Clean Air Act provisions are applied with common sense so that counties are not required to take costly actions for problems that are created downwind, which would be illogical and unfair. The Senate has worked to create a national energy policy for years, but the bill before us today is not the right answer. Even if we were to pass it today, it will get caught in a logjam between the House and Senate on energy policy that is centered on the issue of the fuel additive methyltertiarybutylether, MTBE. The energy bill conference report that I voted against in November contained a provision that would exempt its producers from liability. In Michigan, it has been estimated that MTBE has contaminated groundwater around over 700 leaking underground storage tank sites. There are similar problems in many other states. The crux of the matter is that the Senate will not pass legislation that includes the MTBE provision and the House will not pass legislation without it. So we are in a logjam, and I believe that any legislation that we pass will eventually come back to this body containing the MTBE liability exemption, which would then again be rejected. We should continue work to complete a long-term, comprehensive energy plan that provides consumers with affordable and reliable energy, increases domestic energy supplies in a responsible manner, invests in energy efficiency and renewable energy sources and protects the environment and public health. But the bill before us today, offered to legislation on a completely different matter, is not the right answer. Nor is voting ``aye'' to end debate on an important bill like energy before the debate has begun.

Mr. LEVIN

Mr. LEVIN. Mr. President, this week mayors and police chiefs from across the country will join with the Brady Campaign to Prevent Gun Violence to urge President Bush and Congress to renew the federal Assault Weapons Ban. The 1994 law banned a list of 19 specific weapons, as well as a number of other weapons incorporating certain design characteristics such as pistol grips, folding stocks, bayonet mounts, and flash suppressors. The assault weapons ban also prohibited the manufacture of semiautomatic weapons that incorporate at least two of these military features and which accept a detachable magazine. This law is scheduled to expire on September 13, 2004. I support the efforts of the law enforcement community and local leaders who are calling for legislation extending the law. In 1994, I voted for the assault weapons ban and, last month, I joined a bipartisan majority of the Senate in voting to extend the assault weapons ban for 10 years. Law enforcement support for the assault weapons ban is broad. It includes the International Association of Chiefs of Police, the Major Cities Chiefs Association, the Police Foundation, the Police Executive Research Forum, the International Brotherhood of Police Officers, the National Association of School Resource Officers, the National Fraternal Order of Police, National Organization of Black Law Enforcement Executives, the Hispanic American Police Command Officers Association, and the National Black Police Association. In addition, mayors and police chiefs from Detroit, Los Angeles, San Francisco, Miami, Seattle, Chicago, and Washington, D.C. have joined over 200 other local leaders in sending a letter urging Congress to immediately pass a 10-year extension of the assault weapons ban. Despite broad support for this law, the National Rifle Association fought against passage of the assault weapons ban in 1994 and continues to oppose it to this day. While President Bush has indicated that he supports reauthorizing the assault weapons ban, and a bipartisan majority in the Senate is on the record supporting reauthorization, the President has failed to urge Congress to act on this important legislation before it expires on September 13th. The ban is a major public safety measure that protects citizens and police officers and I urge the President and the Congress to act immediately to reauthorize the law.