Richard Lugar

Mr. LUGAR

Mr. LUGAR. Mr. President, at 10:25 a.m. on June 4, 1942, a Japanese armada including four carriers was steaming east towards Midway Island, 1150 miles west of Pearl Harbor in the Central Pacific. Its objectives: Invade the strategically situated atoll, seize the U.S. base and airstrip, and, if possible, destroy what remained of our Pacific fleet after the surprise attack on Pearl Harbor the preceding December. At 10:30 a.m. three of the four Japanese carriers and their aircraft were a flaming shambles. Moments before, Japanese fighter cover had swatted down torpedo bomber squadrons from the U.S. carriers Enterprise, Hornet, and Yorktown--the final, fatal mission for 35 of 41 American planes and 68 of 82 pilots and gunners. But their courageous attack had drawn the fighters down to deck level, leaving the skies nearly empty for the 37 U.S. dive bombers who then appeared and, in five fateful minutes, changed the course of history. By nightfall, the fourth Japanese carrier, too, was a blazing wreck, a fitting coda to a day that reversed forever the military fortunes of Imperial Japan. ``So ended,'' wrote Churchill, ``the battle of June 4, rightly regarded as the turning point of the war in the Pacific.'' With Sir Winston, of course, the question at times was whether the event could rise to the level of his prose. Midway measured up. ``The annals of war at sea,'' he intoned, ``present no more intense, heart-shaking shock'' than Midway and its precursor in the Coral Sea--battles where ``the bravery and self-devotion of the American airmen and sailors and the nerve and skill of their leaders was the foundation of all.'' Few today pause to remember Midway, now six decades past. Fewer still recall the American leader whose nerve and skill were paramount in what historians consider one of the two or three most significant naval battles in recorded history. He was an unlikely figure, a little-known, soft-spoken, publicity-averse 56-year-old Rear Admiral from Indiana named Raymond Ames Spruance. Yet it is doubtful that any other American in uniform contributed more than this quiet Hoosier to our World War II triumph--a foundation for every blessing of peace and prosperity we now enjoy. I heard Admiral Spruance speak in February 1946, when I was 13 years old and he visited Shortridge High School in Indianapolis, his alma mater and soon to be mine. Our teachers were excited as they shepherded my junior high classmates and me into the auditorium for a joint assembly with the high schoolers. But nothing about the speech was particularly vivid or exciting to this member of the youthful audience. I recall little more than the talk about our recent victory in the Pacific--with little hint from the modest man on stage about his personal involvement, at one crucial juncture after another, in making that victory possible. Only years later did I really understand how large a role Raymond Spruance had played on the stage of actual events, starting at Midway. His very presence at the battle--replacing the flamboyant William ``Bull'' Halsey, temporarily shore-bound with a skin ailment--had been happenstance. Yet it was Spruance, with no prior carrier combat experience, who at the key moment made the crucial command decision to launch all available aircraft, which led to the devastation of the enemy carriers. It was Spruance who then preserved that turning-point victory, instinctively resisting Japanese attempts over the next two days to lure the American fleet into a trap--a trap subsequent U.S. intelligence would confirm was indeed waiting. It was Spruance, as famed Navy historian Samuel Eliot Morison would write, who ``emerged from the battle one of the greatest admirals in American naval history.'' It was also Spruance who, when complimented on Midway years after the War, would say, ``There were a hundred Spruances in the Navy. They just happened to pick me for the job.'' Herman Wouk's masterful ``War And Remembrance'' has the best rejoinder, which the author puts in the mouth of a fictional wartime adversary: ``In fact, there was only one Spruance and luck gave him, at a fateful hour, to America.'' Speaking in their own voices, Wouk and other Americans of faith would quarrel only with the word ``luck.'' Midway would prove but the first of many Spruance-led successes. As Commander of the newly formed Fifth Fleet, he would lead American operations in the Gilberts, then in the Marshalls, and then in the Marianas, including the invasion of Saipan. (Among the fighting men under Spruance's overall command during this 1943-44 period was a young aviator--the war's youngest commissioned Naval pilot--named George Bush). Spruance would then command 1945's crucial, hard-fought invasions of Iwo Jima and Okinawa, the latter involving some 1,200 vessels and 548,000 men, an amphibious operation on a scale surpassed only by Normandy. Throughout, he maintained the unassuming attitude that downplayed his own role at Midway. Unlike some of his contemporaries (and in marked contrast to the spirit of our own age), Spruance avoided publicity and abjured self-promotion, which he saw as a threat to effective command. ``A man's judgment is best,'' said Spruance, ``when he can forget himself and any reputation he may have acquired, and can concentrate wholly on making the right decision.'' These are words to live by for any leader. Spruance, both during the war and in his later service as President of the Naval War College and Ambassador to the Philippines, lived them as few other leaders in any age and any field of endeavor have managed. One consequence was that he forwent levels of recognition and reward accorded others who, though fully worthy, were certainly no more worthy than he. Serious historians and scholars, however, never doubted the merits of the man whose biography is aptly titled ``The Quiet Warrior.'' Among all the war's combat admirals ``there was no one to equal Spruance,'' wrote Morison. ``He envied no man, regarded no one as rival, won the respect of all with whom he came in contact, and went ahead in his quiet way winning victories for his country.'' That was surely enough for Spruance, who passed away in December 1969. But I do not think it should be enough for us, his countrymen, who are the beneficiaries of the victories he won. That is why I have introduced legislation authorizing and requesting President Bush to promote Raymond Spruance--the ``quiet warrior'' under whom the President's father once served--to the five-star rank of Fleet Admiral of the United States Navy. I believe this posthumous honor should be the fitting, and final, promotion among America's World War II Armed Forces, even as we anticipate dedication of a national memorial honoring all who served in that conflict. It is fitting, first of all, because it corrects an oversight. Near the end of the war, Congress authorized four five-star positions each in the Army and in the Navy. The new generals of the Army were George Marshall, Douglas MacArthur, Dwight Eisenhower and Henry ``Hap'' Arnold--later redesignated general of the Air Force. The first three five-star admirals were Pacific commander-in-chief Chester Nimitz, wartime CNO Ernest King, and William Daniel Leahy, President Roosevelt's chief of staff and Chairman of the Joint Chiefs. But an internal battle raged for months over whether the fourth fleet admiral would be the colorful Halsey--who was ultimately selected--or his more reticent colleague, the victor at Midway. Later, when Congress authorized another five-star post for the ``GI General,'' Omar Bradley, it overlooked creating a fifth Navy five-star opening, which unquestionably would have gone to Bradley's ocean-going counterpart, Raymond Spruance. Typically, Spruance stayed away from these controversies. His one comment came in 1965, when he wrote a friend: So far as my getting five-star rank is concerned, if I could have had it along with Bill Halsey, that would have been fine; but, if I had received it instead of Bill Halsey, I would have been very unhappy over it. Well, Raymond Spruance can now have five-star rank ``along with Bill Halsey.'' He deserves it, the more so because he did not seek it. It is an oversight that he was not given it earlier. But these are reasons enough to correct that oversight now. And there are other reasons we should pay Raymond Spruance this posthumous honor, reasons that have as much to do with us as with him. What we choose to honor says a great deal about who we are. Much of what our political and popular culture ``honors'' today--with celebrity and fortune and swarms of media attention is the foolish and flighty, the sensational and self-indulgent. Too often, the pursuits made possible by freedom are unworthy of the sacrifices that preserved freedom itself. Those sacrifices were made by earlier generations inspired by a simpler, sturdier set of values, values that included duty to country and, when necessary, self-sacrifice on her behalf. If we cherish and would preserve the blessings of freedom, we must hold up before our children--who daily see too many less worthy models--those who willingly made the sacrifices that kept freedom alive. No one served the values of freedom more fully or nobly, and with less thought of personal praise or fame, than Raymond Spruance. On any list of the great Allied military leaders of World War II, his character and his contributions to victory stand in the very first rank. It is simple justice to him, and fitting and proper for us, now to award him actual rank commensurate with such character and contributions. My hope is that my colleagues and the President will agree--so that history henceforth will honor Fleet Admiral Raymond Ames Spruance, the quiet Hoosier warrior whose triumph at Midway opened the door to America's triumph in the Pacific.

Mr. LUGAR

Mr. LUGAR. Mr. President, I would like to announce that the Committee on Agriculture, Nutrition, and Forestry will meet on March 6, 2001, in SH-216 at 9 a.m. The purpose of this hearing will be to review nutrition and school lunch programs.

Mr. LUGAR

Mr. LUGAR. The Senator from North Dakota is correct. Identifying the presence of DON in malting barley is important because the presence of DON reduces the price producers receive for their barley. Malting barley purchasers are affected because DON can affect the characteristics of the products they make with that barley.

Mr. LUGAR. We also suggest that GIPSA consider ceasing the use of the ``Optional Procedure,'' under which they measure to the tenth of one part per million, and use only the ``Standard Procedure,'' where measurements are rounded to the nearest whole number.

Mr. LUGAR

Mr. LUGAR. Mr. President, today the Committee on Agriculture, Nutrition, and Forestry conducted a business meeting where the committee funding resolution, committee rules and subcommittee assignments were considered favorably and passed out of the Committee. I ask unanimous consent that a copy of the rules of the committee and a memorandum of understanding be printed in the Record.

Mr. LUGAR

Mr. LUGAR. Mr. President, I rise today with Senator Evan Bayh to introduce the Southern District of Indiana Temporary Judgeship Act. This legislation will help remedy the strain experienced by the Federal Court for the Southern District of Indiana from its extremely heavy caseload. The Southern District's caseload far exceeds the national average and is more than any other district court in the 7th Circuit. Indeed, the most recent report of the Judicial Business of the United States Courts indicates that the Southern District had 599 filings per judge, compared to a national average of 474. Over the last 10 years, the area of Indiana comprising the Southern District has seen explosive population growth, the designation of the penitentiary at Terre Haute, IN, as the place of confinement for those sentenced to death under federal law, and a large increase in the amount of multi-district litigation. Yet, despite these changes, Indiana has not had a new judgeship added since 1990. I am pleased, therefore, to join with Senator Bayh to help ensure that the delivery of justice is unimpeded. There is wide agreement about the need for this additional judgeship, and the Judicial Conference of the United States has called upon Congress since 1996 to add a temporary judge to the Southern District. I urge my colleagues to support this legislation.

Mr. LUGAR

Mr. LUGAR. Mr. President, I rise today with Senator Evan Bayh to introduce the Southern District of Indiana Temporary Judgeship Act. This legislation will help remedy the strain experienced by the Federal Court for the Southern District of Indiana from its extremely heavy caseload. The Southern District's caseload far exceeds the national average and is more than any other district court in the 7th Circuit. Indeed, the most recent report of the Judicial Business of the United States Courts indicates that the Southern District had 599 filings per judge, compared to a national average of 474. Over the last 10 years, the area of Indiana comprising the Southern District has seen explosive population growth, the designation of the penitentiary at Terre Haute, IN, as the place of confinement for those sentenced to death under federal law, and a large increase in the amount of multi-district litigation. Yet, despite these changes, Indiana has not had a new judgeship added since 1990. I am pleased, therefore, to join with Senator Bayh to help ensure that the delivery of justice is unimpeded. There is wide agreement about the need for this additional judgeship, and the Judicial Conference of the United States has called upon Congress since 1996 to add a temporary judge to the Southern District. I urge my colleagues to support this legislation.

Mr. LUGAR

Mr. LUGAR. Mr. President, I would like to announce that the Committee on Agriculture, Nutrition, and Forestry will meet on February 28, 2001 in SR-328A at 9:00 a.m. The purpose of this hearing will be to review the status of conservation programs in the current farm bill and to conduct a committee business meeting to discuss the committee rules and budget. committee on indian affairs

Mr. LUGAR. Mr. President, I would like to announce that the Senate Committee on Agriculture, Nutrition, and Forestry will meet on March 1, 2001 in SH-216 at 9:00 a.m. The purpose of this hearing will be to review the status of conservation programs in the current farm bill. committee on agriculture, nutrition, and forestry

Mr. LUGAR

Mr. LUGAR. Mr. President, I rise today to introduce the Rural America Prosperity Act of 2001. I am pleased that Senator Roberts, Senator McConnell, and Senator Burns joined as cosponsors of this bill. A Republican controlled Congress in 1996 produced a sweeping reform of farm programs. Farmers were no longer told by the government what crops they had to plant. Farmers were no longer forced by the government to idle part of their land in exchange for program payments. That farm bill disentangled farmers from government controls and enabled them to make production decisions based on market signals. Freeing farmers from excessive, and often counterproductive, government controls is an important step, but we still need to do more to give farmers the tools they need to succeed. Specifically, we need to work to open foreign markets for our agricultural commodities and products, ease the tax and regulatory burden, and provide new risk management tools for farmers. The Rural America Prosperity Act of 2001, which we are introducing today, will help us meet these unfulfilled promises to rural America. There are three tax provisions in this legislation that I have long advocated as crucial to the financial health of farmers. First is the repeal of the estate tax. A repeal of this tax, which has prevented some farms from being passed from one generation to the next, is essential. We are proposing the same 10-year phase-out of the estate tax which Congress passed last year but President Clinton vetoed. Excluding capital gains from the sale of farmland would put production agriculture on the same footing as homeowners who benefit from a capital gains exclusion for their home. The deduction of health care insurance premiums is needed for farmers and others who are self- employed. Last year Congress provided over $8 billion to improve the federal crop insurance program. While crop insurance is an important risk management tool, today we offer two other risk management tools for farmers--income averaging and FARRM accounts. Three years ago Congress made income averaging a permanent risk management tool for farmers when calculating taxes. Unfortunately, the interaction between income averaging and the alternative minimum tax has prevented many farmers from receiving the benefit of income averaging. This bill fixes that problem. Under this bill, farmers will be able to contribute up to 20 percent of annual farm income into a FARRM account and deduct this amount from their taxes. This is an important tool for managing financial volatility associated with farming. We also address regulatory reform in our bill. We are seeking a review of existing and proposed regulations to determine the cost of compliance for farmers, ranchers and foresters. We want to determine if there are more cost-effective ways for farmers, ranchers and foresters to achieve the objectives of these regulations. Finally, we must do more to help develop new markets abroad for our farm commodities and agricultural products. Opportunity lies in developing countries where growing wealth allows for increased demand for meat and processed commodities. Authorizing fast-track authority for the President to negotiate international trade agreements may be the single most important thing we can do to facilitate exports. We also need to address sanctions. Sanctions that prohibit the export of U.S. agricultural products into the sanctioned country are often morally indefensible because they deny necessities to people, not the offending government. Such sanctions also deny markets for U.S. agricultural products which are then captured by our competitors. This legislation only affects commercial sales (excluding all Government subsidized trade programs) involving United States agricultural commodities, livestock, and value-added products. This legislation represents what I believe is necessary to further the historic reforms initiated in the farm bill almost five years ago. I urge my colleagues to cosponsor this bill. I will encourage my colleagues and the new Bush administration to work to enact these proposals. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. LUGAR

Mr. LUGAR. Mr. President, I rise today to introduce the Rural America Prosperity Act of 2001. I am pleased that Senator Roberts, Senator McConnell, and Senator Burns joined as cosponsors of this bill. A Republican controlled Congress in 1996 produced a sweeping reform of farm programs. Farmers were no longer told by the government what crops they had to plant. Farmers were no longer forced by the government to idle part of their land in exchange for program payments. That farm bill disentangled farmers from government controls and enabled them to make production decisions based on market signals. Freeing farmers from excessive, and often counterproductive, government controls is an important step, but we still need to do more to give farmers the tools they need to succeed. Specifically, we need to work to open foreign markets for our agricultural commodities and products, ease the tax and regulatory burden, and provide new risk management tools for farmers. The Rural America Prosperity Act of 2001, which we are introducing today, will help us meet these unfulfilled promises to rural America. There are three tax provisions in this legislation that I have long advocated as crucial to the financial health of farmers. First is the repeal of the estate tax. A repeal of this tax, which has prevented some farms from being passed from one generation to the next, is essential. We are proposing the same 10-year phase-out of the estate tax which Congress passed last year but President Clinton vetoed. Excluding capital gains from the sale of farmland would put production agriculture on the same footing as homeowners who benefit from a capital gains exclusion for their home. The deduction of health care insurance premiums is needed for farmers and others who are self- employed. Last year Congress provided over $8 billion to improve the federal crop insurance program. While crop insurance is an important risk management tool, today we offer two other risk management tools for farmers--income averaging and FARRM accounts. Three years ago Congress made income averaging a permanent risk management tool for farmers when calculating taxes. Unfortunately, the interaction between income averaging and the alternative minimum tax has prevented many farmers from receiving the benefit of income averaging. This bill fixes that problem. Under this bill, farmers will be able to contribute up to 20 percent of annual farm income into a FARRM account and deduct this amount from their taxes. This is an important tool for managing financial volatility associated with farming. We also address regulatory reform in our bill. We are seeking a review of existing and proposed regulations to determine the cost of compliance for farmers, ranchers and foresters. We want to determine if there are more cost-effective ways for farmers, ranchers and foresters to achieve the objectives of these regulations. Finally, we must do more to help develop new markets abroad for our farm commodities and agricultural products. Opportunity lies in developing countries where growing wealth allows for increased demand for meat and processed commodities. Authorizing fast-track authority for the President to negotiate international trade agreements may be the single most important thing we can do to facilitate exports. We also need to address sanctions. Sanctions that prohibit the export of U.S. agricultural products into the sanctioned country are often morally indefensible because they deny necessities to people, not the offending government. Such sanctions also deny markets for U.S. agricultural products which are then captured by our competitors. This legislation only affects commercial sales (excluding all Government subsidized trade programs) involving United States agricultural commodities, livestock, and value-added products. This legislation represents what I believe is necessary to further the historic reforms initiated in the farm bill almost five years ago. I urge my colleagues to cosponsor this bill. I will encourage my colleagues and the new Bush administration to work to enact these proposals. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. LUGAR

Mr. LUGAR. Mr. President, I rise today to join my esteemed colleague and Ranking Democratic Member of the Agriculture Committee from Iowa, Senator Harkin, in once again introducing legislation to help ensure that antitrust laws impacting agriculture are properly enforced. Mr. President, the face of rural America is rapidly changing. Ever- changing technologies, developments in biotechnology and concentration in production agriculture and agribusiness are developing a new profile in rural areas. Farmers in my home state of Indiana have many questions and concerns related to these rapid changes. Many remain to be convinced that appropriate oversight of merger and acquisition activity in ag business is a reality. The intent of this legislation is to establish the Office of Special Counsel for Agriculture in the Antitrust Division of the Justice Department. While this office will focus on reviewing ag business mergers and acquisition activity, it will also serve as an information resource for American agriculture producers wanting to provide input on antitrust-related issues. It is important to note, Mr. President, that shortly after introduction of this legislation in 1999, Attorney General Reno, on her own initiative, established the Office of Special Counsel for Agriculture and appointed Mr. Doug Ross to that position. While the perspective of Attorney General Ashcroft is not yet known on this matter, this legislation is a signal, a strong statement, that the Chairman and the Ranking Democratic Member of the Senate Agriculture Committee are in favor of greater transparency and consideration to those issues surrounding ag business mergers in the United States.

Mr. LUGAR

Mr. LUGAR. Mr. President, I rise today to join my esteemed colleague and Ranking Democratic Member of the Agriculture Committee from Iowa, Senator Harkin, in once again introducing legislation to help ensure that antitrust laws impacting agriculture are properly enforced. Mr. President, the face of rural America is rapidly changing. Ever- changing technologies, developments in biotechnology and concentration in production agriculture and agribusiness are developing a new profile in rural areas. Farmers in my home state of Indiana have many questions and concerns related to these rapid changes. Many remain to be convinced that appropriate oversight of merger and acquisition activity in ag business is a reality. The intent of this legislation is to establish the Office of Special Counsel for Agriculture in the Antitrust Division of the Justice Department. While this office will focus on reviewing ag business mergers and acquisition activity, it will also serve as an information resource for American agriculture producers wanting to provide input on antitrust-related issues. It is important to note, Mr. President, that shortly after introduction of this legislation in 1999, Attorney General Reno, on her own initiative, established the Office of Special Counsel for Agriculture and appointed Mr. Doug Ross to that position. While the perspective of Attorney General Ashcroft is not yet known on this matter, this legislation is a signal, a strong statement, that the Chairman and the Ranking Democratic Member of the Senate Agriculture Committee are in favor of greater transparency and consideration to those issues surrounding ag business mergers in the United States.

Mr. LUGAR

Mr. LUGAR. Mr. President, I rise to introduce a resolution expressing the need for establishing an international education policy for the United States. I am pleased to join Senator Kerry and other colleagues from both sides of the aisle in this endeavor. Ask any American Ambassador in any U.S. Embassy what their most valuable programs are and many will respond by citing those programs which promote international cooperation and understanding. Educational and cultural exchanges typically rank high on their list because they are integral to our foreign policy and national security interests and build enormous good will abroad. Our resolution reflects the same priority to international education. It expresses the need for an international education policy that enhances our national security, advances our foreign policy and strengthens our global competitiveness. Our resolution states: 1. That all college graduates should have knowledge of a second language and another geographic area of the world; 2. That we should enhance and streamline our educational infrastructure to strengthen international expertise--this should include our employment practices, our tax laws, visa and immigration procedures, educational advising and other areas for improving international education programs; 3. That we should increase U.S. student participation in study abroad programs. For now, only about one percent of our college population study abroad; 4. That we should increase the diversity of countries, languages, and subjects in our study abroad and exchange programs; and 5. We should promote and expand the number, diversity and educational levels of citizen and international professional exchange programs. We are introducing this resolution because we believe that improved international education and global literacy are important elements of a sound foreign policy. They help: build a foundation of trust and knowledge on which the conduct of international affairs must take place; narrow the distance with other cultures and societies with whom we increasingly interact and share burdens; our competitiveness in international commerce and trade in an increasingly global economy--95 percent of the world's population live outside the United States and are potential customers and knowing the language, the culture, and the customs of other countries helps improve doing business abroad; develop skills to manage our political relations with other countries as we address diverse challenges to stability, national security and economic growth; and in sharing our values (e.g., democracy and freedom) and know-how with others and to acquire values and know-how from others. We know that international cultural and educational programs played a key role in helping to end the cold war and build the post-Cold War era through interpersonal contacts, grass-roots exchanges and other forms of international engagement. Success in promoting international education programs today and in the future will help promote democratic values and international cooperation. They can serve to reduce poverty and injustice and promote new leaders and new leadership skills in the U.S. and abroad that are essential to a better world. Forty-six years ago, I traveled to study at Oxford University, England, where I had the unique opportunity to meet and study with student leaders and scholars from Asia, Africa, the Middle East, and other parts of the world. Those two years made a difference in my life and I have been indebted ever since to the experiences and the idealism I learned at the time. I hope colleagues will share our enthusiasm for international education and will join us in urging the development of a sound, cohesive and constructive international education policy for the United States.

Mr. LUGAR

Mr. LUGAR. Mr. President, I would like to announce that the Committee on Agriculture, Nutrition, and Forestry will meet on January 30, 2001 in SH-216 at 9 a.m. The purpose of this hearing will be to review the Report from the Commission on 21st Century Production Agriculture. committee on indian affairs

Mr. LUGAR

Mr. LUGAR. Mr. President, I rise today to offer legislation amending the Residential Substance Abuse Treatment program, known as R-SAT, to enable jurisdictions below the state level to realize greater benefits from the program. The R-SAT program allows the Attorney General to make grants for the establishment of treatment programs within local correctional facilities, but only a few jurisdictions have been able to take advantage of these grants. The legislation that I am offering today will address this problem by establishing a separate Jail-Based Substance Abuse Treatment Program, or J-SAT. Under this new program, states will be explicitly authorized to devote up to 10 percent of the funds they receive under R-SAT to qualifying J-SAT programs. This legislation will provide matching funds to jail-based treatment programs that meet several criteria. First, the program must be at least three months in length. This is the minimum amount of time for a treatment program to have the desired effect. To qualify for funding, a program must also have been in existence for at least two years. This criterion is intended to ensure that jurisdictions that already have demonstrated a commitment to treatment programs at the local level receive first priority for funding. It also ensures that scarce treatment resources are allocated to programs with a demonstrated track record of success. The third criterion for programs seeking J-SAT funding is that the treatment regimen must include regular drug testing. This is necessary to ensure that an objective measure of the program's success is available. Grant recipients also are encouraged to provide the widest range of aftercare services possible, including job training, education and self-help programs. These steps are necessary to leverage the resources devoted to solving the problem of substance abuse, and to give individuals involved in treatment the best possible chance for successful rehabilitation. This legislation passed the Senate during the 106th Congress, and I am offering the J-SAT bill again because substance abuse and problems arising from it continue to put a severe strain on the resources of local jurisdictions throughout the nation. The Office of National Drug Control Policy indicates that approximately three-fourths of prison inmates--and over half of those in jails or on probation--are substance abusers, yet only a small percentage of inmates participate in treatment programs while they are incarcerated. The time during which drug-using offenders are in custody or under post-release correctional supervision--whether at a state or local level--presents a unique opportunity to reduce drug use and crime through effective drug testing and treatment programs. Research indicates that programs like J-SAT can help to reduce the strain on our communities by cutting drug use in half, by reducing the criminal activity that results from drug habits, and by reducing arrests for all crimes by up to 64 percent. Jail-based treatment programs are cost effective. The Office of National Drug Control Policy states that treatment while in prison and under post-incarceration supervision can reduce recidivism by roughly 50 percent. Moreover, former Assistant Health Secretary Philip Lee has estimated that every dollar invested in treatment can save $7 in social and medical costs. For these reasons, I ask my colleagues to support the Jail-Based Substance Abuse Treatment legislation that I am introducing today. I also ask unanimous consent that the bill be printed in the Record.

Mr. LUGAR

Mr. LUGAR. Mr. President, I rise today to offer legislation amending the Residential Substance Abuse Treatment program, known as R-SAT, to enable jurisdictions below the state level to realize greater benefits from the program. The R-SAT program allows the Attorney General to make grants for the establishment of treatment programs within local correctional facilities, but only a few jurisdictions have been able to take advantage of these grants. The legislation that I am offering today will address this problem by establishing a separate Jail-Based Substance Abuse Treatment Program, or J-SAT. Under this new program, states will be explicitly authorized to devote up to 10 percent of the funds they receive under R-SAT to qualifying J-SAT programs. This legislation will provide matching funds to jail-based treatment programs that meet several criteria. First, the program must be at least three months in length. This is the minimum amount of time for a treatment program to have the desired effect. To qualify for funding, a program must also have been in existence for at least two years. This criterion is intended to ensure that jurisdictions that already have demonstrated a commitment to treatment programs at the local level receive first priority for funding. It also ensures that scarce treatment resources are allocated to programs with a demonstrated track record of success. The third criterion for programs seeking J-SAT funding is that the treatment regimen must include regular drug testing. This is necessary to ensure that an objective measure of the program's success is available. Grant recipients also are encouraged to provide the widest range of aftercare services possible, including job training, education and self-help programs. These steps are necessary to leverage the resources devoted to solving the problem of substance abuse, and to give individuals involved in treatment the best possible chance for successful rehabilitation. This legislation passed the Senate during the 106th Congress, and I am offering the J-SAT bill again because substance abuse and problems arising from it continue to put a severe strain on the resources of local jurisdictions throughout the nation. The Office of National Drug Control Policy indicates that approximately three-fourths of prison inmates--and over half of those in jails or on probation--are substance abusers, yet only a small percentage of inmates participate in treatment programs while they are incarcerated. The time during which drug-using offenders are in custody or under post-release correctional supervision--whether at a state or local level--presents a unique opportunity to reduce drug use and crime through effective drug testing and treatment programs. Research indicates that programs like J-SAT can help to reduce the strain on our communities by cutting drug use in half, by reducing the criminal activity that results from drug habits, and by reducing arrests for all crimes by up to 64 percent. Jail-based treatment programs are cost effective. The Office of National Drug Control Policy states that treatment while in prison and under post-incarceration supervision can reduce recidivism by roughly 50 percent. Moreover, former Assistant Health Secretary Philip Lee has estimated that every dollar invested in treatment can save $7 in social and medical costs. For these reasons, I ask my colleagues to support the Jail-Based Substance Abuse Treatment legislation that I am introducing today. I also ask unanimous consent that the bill be printed in the Record.

Mr. LUGAR

Mr. LUGAR. Mr. President, I am pleased to introduce a series of bills intended to address the burden that estate taxes place on our economy. The estate tax hinders entrepreneurial activity and job creation in many economic sectors. As Chairman of the Senate Agriculture Committee, I have held hearings on the impact of the estate tax on farmers, ranchers, and rural communities. The effects of inheritance taxes are far reaching in the agricultural community. Citing personal experiences, witnesses described how the estate tax discourages savings, capital investment, and job formation. One such story came from a Hoosier, Mr. Woody Barton. He is a fifth generation tree farmer living in the house his great grandparents built in 1885. I visited his 300 acres of forested property recently and can attest to their beauty. Typical of many farmers, Mr. Barton is over 65 years old and wants to leave this legacy to his four children. But he fears that the estate tax may cause his children to strip the timber and then sell the land in order to pay the estate tax bill. His grandmother logged a portion of the land in 1939 to pay the debts that came from the death of her husband. In essence, each generation must buy back the hard work and dedication of their ancestors from the federal government. Mr. Barton believes, and I agree, that the actions of Congress have more impact on the outcome of his family's land than his own planning and investment. This should not be the case. The estate tax falls disproportionately on our agricultural producers. Ninety-five percent of farms and ranch operations are sold proprietorships or family partnerships, subjecting a vast majority of these businesses to the threat of inheritance taxes. According to USDA figures farmers are six times more likely to face inheritance taxes than other Americans. And commercial farm estates--those core farms that produce 85 percent of our nation's agricultural products-are fifteen times more likely to pay inheritance taxes than other individuals. The threat of estate taxes to family farms will become even more prevalent if nothing is done. With the average farmer approaching 60 years of age, farm families throughout the country are about to confront the burden of estate taxes as they prepare to pass their farm onto the next generation. Recently, the USDA estimated that between 1992 and 2002, more than 500,000 farmers will have retired. Demographic studies indicate that a quarter of all farmers could confront the inheritance tax during the next 20 years. In light of this problem, today I offer several bills to provide relief to those impacted by the estate tax. This is the third consecutive Congress that I have offered this series of bills on the first day of bill introduction. I am optimistic that this will be the Congress that will finally repeal the estate tax. My first bill would repeal the estate and gift taxes outright. My second bill would phase out the estate tax over five years by gradually raising the unified credit each year until the tax is repealed after the fifth year. My third bill would immediately raise the effective unified credit to $5 million. My last bill would raise the gift tax exemption from $10,000 to $25,000. I believe that the best option is a simple repeal of the estate tax. However, even if the estate tax is not repealed, the unified credit must be raised significantly. Despite our most recent success in raising the exemption level, inflation has caused a growing percentage of estates to be subjected to the estate tax. My second bill is intended to highlight this point and provide a gradual path to repeal. My third bill focuses on relieving the estate tax burden that falls disproportionately on farmers and small business owners. By raising the exemption amount to $5 million, 96 percent of estates with farm assets and 90 percent of estates with non-corporate business assets would not have to pay estate taxes, according to the IRS. The final bill raising the gift tax exemption from $10,000 to $25,000 would provide Americans with an additional tool for passing productive assets to the next generation. This level has not been adjusted since 1982. Despite its modest beginnings in 1916, the estate tax has mushroomed into an exorbitant tax on death that discourages savings, economic growth, and job formation by blocking the accumulation of entrepreneurial capital and by breaking up family businesses and farms. With the highest marginal rate at 55 percent, more than half of an estate can go directly to the government. By the time the inheritance tax is levied on families, their assets have already been taxed at least once. This form of double taxation violates perceptions of fairness in our tax system. If we are sincere about boosting economic growth, we must consider what effect the estate tax has on a business owner deciding whether to invest in new capital goods or hire a new employee. The Heritage Foundation estimates that repealing the estate tax would annually boost our economic output by $11 billion, create 145,000 new jobs and raise personal income by $8 billion. These figures underscore the current weight of this tax on our economy. One might expect that for all the economic disincentives caused by the estate tax, it must at least provide a sizable contribution to the U.S. Treasury. But in reality, the estate tax only accounts for about 1 percent of federal taxes. It cannot be justified as an indispensable revenue raiser. Given the blow delivered to job formation and economic growth, the estate tax may even cost the Treasury money. Our nation's ability to crease new jobs, new opportunities, and new wealth is damaged as a result of our insistence on collecting a tax that earns less than 1 percent of our revenue. But this tax affects more than just the national economy. It affects how we as a nation think about community, family, and work. Small businesses and farms represent much more than assets. They represent years of toil and entrepreneurial risk taking. They also represent the hopes that families have for their children. Part of the American Dream has always been to build up a business, farm, or ranch so that economic opportunities and a way of life can be passed on to one's children and grandchildren. I know first-hand about the dangers of this tax to agriculture. My father died when I was 24, leaving his 604-acre farm in Marion County, Indiana, to his family. I helped manage the farm, which had built up considerable debts during my father's illness. Fortunately, after a number of years, we were successful in working out the financial problems and repaying the money. We were lucky; that farm remains in our family. But many of today's farmers and small business owners are not so fortunate. Only about 30 percent of businesses are transferred from parent to child, and only about 12 percent of businesses make it to a grandchild. Mr. President, I was delighted that during the last Congress we were able to pass the Death Tax Elimination Act. Despite its ultimate veto, this legislative step was an important one and will hopefully carry over momentum to this congress. As we take up this issue again in the coming months, the bills that I have introduced will provide policymakers with a range of options as they seek to mitigate the burdens of the estate tax. Doing so will lead to expanded investment incentives and job creation and will reinvigorate an important part of the American Dream. I am hopeful that Senators will join me in the effort to free small businesses, family farms, and our economy from this counterproductive tax. I ask unanimous consent that my four bills be printed in the Record.

Mr. LUGAR. Mr. President, I rise today with Senators Leahy, Fitzgerald, Harkin, Roberts, Dodd, DeWine, Reid, Santorum, and Bayh to introduce the Good Samaritan Hunger Relief Tax Incentive Act, bipartisan legislation aimed at increasing food donations to our nation's food banks. Next week, Congressman Tony Hall, who has been a leader in Congress in the fight against hunger, will introduce companion legislation in the House of Representatives. This bill would provide important incentives for farmers, restaurant owners, and corporations to donate food to front-line organizations that serve the hungry. The demand on our nation's food banks, church pantries, soup kitchens and shelters continues to rise. According to an August 2000 report on Hunger Security by the U.S. Department of Agriculture, 31 million Americans (around 10 percent of our citizens) are living on the edge of hunger. One segment of our population--families with incomes between 50 and 130 percent of the poverty level--has experienced an increase in the number of households that are food insecure since 1995. This study confirms what food bank managers and workers have been telling me-- while many families are moving from welfare to work, these families are still vulnerable to hunger and are using food banks to supplement their nutritional needs. Unfortunately, many food banks cannot meet this increased demand for food. A December 1999 study by the U.S. Conference of Mayors found that requests for emergency food assistance increased by an average of 18 percent in American cities over the previous year and that 21 percent of emergency food requests could not be met. These figures are troubling because of the enormous amount of food that goes unused annually. The United States Department of Agriculture estimates that up to 96 billion pounds of food goes to waste each year in the United States. If a small percentage of this wasted food could be redirected to food banks, we could make important strides in our fight against hunger. In many ways, current law is a hindrance to food donations. The tax code provides corporations with a special deduction for donations to food banks, but it excludes farmers, ranchers, and restaurant owners from the same tax incentive. For many of these businesses, it is more cost effective to throw away food than to donate it to charity. The Good Samaritan Hunger Relief Tax Incentive Act would address this inequity by extending the special deduction to all business taxpayers and by increasing it to the fair market value of the donation. The hunger relief community believes that these changes will markedly increase food donations. One Hoosier food bank, Second Helpings of Indianapolis, estimates that this legislation will cause an additional 400,000 pounds of food to be donated to its coffers. This bipartisan legislation, which enjoys the support of Republicans and Democrats alike, has been endorsed by a diverse set of organizations, including America's Second Harvest Food Banks, the Salvation Army, the American Farm Bureau Federation, the National Farmers Union, the National Restaurant Association, the Grocery Manufacturers of America, At-Sea Processors Association, California Emergency Foodlink, Council of Chain Restaurants, National Cattlemen's Beef Association, National Fisheries Association, and the National Milk Producers Federation. Last year, this legislation unanimously passed the Senate as part of an agricultural tax amendment offered by Senator Grassley to H.R. 8, the Death Tax Elimination Act. Although the measure was ultimately stripped from the underlying legislation, the vote indicated strong support for this legislation in the Senate. I am hopeful that Congress will thoughtfully address the hunger problem in the U.S. by passing this bill into law.

Mr. LUGAR

Mr. LUGAR. Mr. President, I rise today with Senators Leahy, Fitzgerald, Harkin, Roberts, Dodd, DeWine, Reid, Santorum, and Bayh to introduce the Good Samaritan Hunger Relief Tax Incentive Act, bipartisan legislation aimed at increasing food donations to our nation's food banks. Next week, Congressman Tony Hall, who has been a leader in Congress in the fight against hunger, will introduce companion legislation in the House of Representatives. This bill would provide important incentives for farmers, restaurant owners, and corporations to donate food to front-line organizations that serve the hungry. The demand on our nation's food banks, church pantries, soup kitchens and shelters continues to rise. According to an August 2000 report on Hunger Security by the U.S. Department of Agriculture, 31 million Americans (around 10 percent of our citizens) are living on the edge of hunger. One segment of our population--families with incomes between 50 and 130 percent of the poverty level--has experienced an increase in the number of households that are food insecure since 1995. This study confirms what food bank managers and workers have been telling me-- while many families are moving from welfare to work, these families are still vulnerable to hunger and are using food banks to supplement their nutritional needs. Unfortunately, many food banks cannot meet this increased demand for food. A December 1999 study by the U.S. Conference of Mayors found that requests for emergency food assistance increased by an average of 18 percent in American cities over the previous year and that 21 percent of emergency food requests could not be met. These figures are troubling because of the enormous amount of food that goes unused annually. The United States Department of Agriculture estimates that up to 96 billion pounds of food goes to waste each year in the United States. If a small percentage of this wasted food could be redirected to food banks, we could make important strides in our fight against hunger. In many ways, current law is a hindrance to food donations. The tax code provides corporations with a special deduction for donations to food banks, but it excludes farmers, ranchers, and restaurant owners from the same tax incentive. For many of these businesses, it is more cost effective to throw away food than to donate it to charity. The Good Samaritan Hunger Relief Tax Incentive Act would address this inequity by extending the special deduction to all business taxpayers and by increasing it to the fair market value of the donation. The hunger relief community believes that these changes will markedly increase food donations. One Hoosier food bank, Second Helpings of Indianapolis, estimates that this legislation will cause an additional 400,000 pounds of food to be donated to its coffers. This bipartisan legislation, which enjoys the support of Republicans and Democrats alike, has been endorsed by a diverse set of organizations, including America's Second Harvest Food Banks, the Salvation Army, the American Farm Bureau Federation, the National Farmers Union, the National Restaurant Association, the Grocery Manufacturers of America, At-Sea Processors Association, California Emergency Foodlink, Council of Chain Restaurants, National Cattlemen's Beef Association, National Fisheries Association, and the National Milk Producers Federation. Last year, this legislation unanimously passed the Senate as part of an agricultural tax amendment offered by Senator Grassley to H.R. 8, the Death Tax Elimination Act. Although the measure was ultimately stripped from the underlying legislation, the vote indicated strong support for this legislation in the Senate. I am hopeful that Congress will thoughtfully address the hunger problem in the U.S. by passing this bill into law.

Mr. LUGAR

Mr. LUGAR. Mr. President, I am pleased to introduce a series of bills intended to address the burden that estate taxes place on our economy. The estate tax hinders entrepreneurial activity and job creation in many economic sectors. As Chairman of the Senate Agriculture Committee, I have held hearings on the impact of the estate tax on farmers, ranchers, and rural communities. The effects of inheritance taxes are far reaching in the agricultural community. Citing personal experiences, witnesses described how the estate tax discourages savings, capital investment, and job formation. One such story came from a Hoosier, Mr. Woody Barton. He is a fifth generation tree farmer living in the house his great grandparents built in 1885. I visited his 300 acres of forested property recently and can attest to their beauty. Typical of many farmers, Mr. Barton is over 65 years old and wants to leave this legacy to his four children. But he fears that the estate tax may cause his children to strip the timber and then sell the land in order to pay the estate tax bill. His grandmother logged a portion of the land in 1939 to pay the debts that came from the death of her husband. In essence, each generation must buy back the hard work and dedication of their ancestors from the federal government. Mr. Barton believes, and I agree, that the actions of Congress have more impact on the outcome of his family's land than his own planning and investment. This should not be the case. The estate tax falls disproportionately on our agricultural producers. Ninety-five percent of farms and ranch operations are sold proprietorships or family partnerships, subjecting a vast majority of these businesses to the threat of inheritance taxes. According to USDA figures farmers are six times more likely to face inheritance taxes than other Americans. And commercial farm estates--those core farms that produce 85 percent of our nation's agricultural products-are fifteen times more likely to pay inheritance taxes than other individuals. The threat of estate taxes to family farms will become even more prevalent if nothing is done. With the average farmer approaching 60 years of age, farm families throughout the country are about to confront the burden of estate taxes as they prepare to pass their farm onto the next generation. Recently, the USDA estimated that between 1992 and 2002, more than 500,000 farmers will have retired. Demographic studies indicate that a quarter of all farmers could confront the inheritance tax during the next 20 years. In light of this problem, today I offer several bills to provide relief to those impacted by the estate tax. This is the third consecutive Congress that I have offered this series of bills on the first day of bill introduction. I am optimistic that this will be the Congress that will finally repeal the estate tax. My first bill would repeal the estate and gift taxes outright. My second bill would phase out the estate tax over five years by gradually raising the unified credit each year until the tax is repealed after the fifth year. My third bill would immediately raise the effective unified credit to $5 million. My last bill would raise the gift tax exemption from $10,000 to $25,000. I believe that the best option is a simple repeal of the estate tax. However, even if the estate tax is not repealed, the unified credit must be raised significantly. Despite our most recent success in raising the exemption level, inflation has caused a growing percentage of estates to be subjected to the estate tax. My second bill is intended to highlight this point and provide a gradual path to repeal. My third bill focuses on relieving the estate tax burden that falls disproportionately on farmers and small business owners. By raising the exemption amount to $5 million, 96 percent of estates with farm assets and 90 percent of estates with non-corporate business assets would not have to pay estate taxes, according to the IRS. The final bill raising the gift tax exemption from $10,000 to $25,000 would provide Americans with an additional tool for passing productive assets to the next generation. This level has not been adjusted since 1982. Despite its modest beginnings in 1916, the estate tax has mushroomed into an exorbitant tax on death that discourages savings, economic growth, and job formation by blocking the accumulation of entrepreneurial capital and by breaking up family businesses and farms. With the highest marginal rate at 55 percent, more than half of an estate can go directly to the government. By the time the inheritance tax is levied on families, their assets have already been taxed at least once. This form of double taxation violates perceptions of fairness in our tax system. If we are sincere about boosting economic growth, we must consider what effect the estate tax has on a business owner deciding whether to invest in new capital goods or hire a new employee. The Heritage Foundation estimates that repealing the estate tax would annually boost our economic output by $11 billion, create 145,000 new jobs and raise personal income by $8 billion. These figures underscore the current weight of this tax on our economy. One might expect that for all the economic disincentives caused by the estate tax, it must at least provide a sizable contribution to the U.S. Treasury. But in reality, the estate tax only accounts for about 1 percent of federal taxes. It cannot be justified as an indispensable revenue raiser. Given the blow delivered to job formation and economic growth, the estate tax may even cost the Treasury money. Our nation's ability to crease new jobs, new opportunities, and new wealth is damaged as a result of our insistence on collecting a tax that earns less than 1 percent of our revenue. But this tax affects more than just the national economy. It affects how we as a nation think about community, family, and work. Small businesses and farms represent much more than assets. They represent years of toil and entrepreneurial risk taking. They also represent the hopes that families have for their children. Part of the American Dream has always been to build up a business, farm, or ranch so that economic opportunities and a way of life can be passed on to one's children and grandchildren. I know first-hand about the dangers of this tax to agriculture. My father died when I was 24, leaving his 604-acre farm in Marion County, Indiana, to his family. I helped manage the farm, which had built up considerable debts during my father's illness. Fortunately, after a number of years, we were successful in working out the financial problems and repaying the money. We were lucky; that farm remains in our family. But many of today's farmers and small business owners are not so fortunate. Only about 30 percent of businesses are transferred from parent to child, and only about 12 percent of businesses make it to a grandchild. Mr. President, I was delighted that during the last Congress we were able to pass the Death Tax Elimination Act. Despite its ultimate veto, this legislative step was an important one and will hopefully carry over momentum to this congress. As we take up this issue again in the coming months, the bills that I have introduced will provide policymakers with a range of options as they seek to mitigate the burdens of the estate tax. Doing so will lead to expanded investment incentives and job creation and will reinvigorate an important part of the American Dream. I am hopeful that Senators will join me in the effort to free small businesses, family farms, and our economy from this counterproductive tax. I ask unanimous consent that my four bills be printed in the Record.

Mr. LUGAR

Mr. LUGAR. Mr. President, I am pleased to rise today with Senators Gramm, Harkin, Fitzgerald, Hagel, and Johnson to re-introduce the Commodity Futures Modernization Act of 2000. This legislation is the Senate companion to H.R. 5660, which Congressman Thomas Ewing introduced yesterday in the House of Representatives and which will be enacted as part of the final appropriations package today. This monumental legislation is the culmination of two years worth of hearings and hard-fought negotiations, but I am confident that the resulting legislation will greatly benefit the U.S. financial industry. I commend all the Members and staff who have contributed to this bill. In particular, I want to applaud Senator Gramm, Congressman Ewing and Senator Fitzgerald for their stewardship and determination in helping pass a bill this year. Its enactment would not have occurred without their efforts. I also want to recognize Treasury Secretary Summers, Commodity Futures Trading Commission, CFTC, Chairman Bill Rainer and Securities and Exchange Commission, SEC, Chairman Arthur Levitt as well as their staffs, who have played a pivotal role in bringing this bill together and garnering support for its passage. This bill, which re-authorizes the Commodity Exchange Act for five years, would reform our financial and derivatives laws in five primary ways. First, it would incorporate the unanimous recommendations of the President's Working Group on Financial Markets on the proper legal and regulatory treatment of over-the-counter, OTC, derivatives. Second, it would codify the regulatory relief proposal of the CFTC to ensure that futures exchanges are appropriately regulated and remain competitive. Third, this legislation would repeal the Shad-Johnson jurisdictional accord, which banned single stock futures 18 years ago. Fourth, this legislation provides certainty that products offered by banking institutions will not be regulated as futures contracts. Finally, this bill provides legal certainty for institutional equity swaps by providing the SEC with express but limited authorities over these instruments. Derivative instruments, both those that are exchange-traded and traded over-the-counter, have played a significant role in our economy's current expansion due to their innovative nature and risk- transferring attributes. The global derivatives market has a notional value that now exceeds $90 trillion. Identified by Federal Reserve Chairman Alan Greenspan as the most significant event in finance of the past decade, the development of the derivatives market has substantially added to the productivity and wealth of our nation. Derivatives enable companies to unbundle and transfer risk to those entities who are willing and able to accept it. By doing so, efficiency is enhanced as firms are able to concentrate on their core business objective. A farmer can purchase a futures contract, one type of derivative, in order to lock in a price for his crop at harvest. Likewise, automobile manufacturers whose profits earned overseas can fluctuate with changes in currency values, can minimize this uncertainty through derivatives, allowing them to focus on the business of building cars. Banks significantly lessen their exposure to interest rate movements by entering into derivatives contracts known as swaps, which enable these institutions to hedge their risk by exchanging variable and fixed rates of interests. Signed into law in 1974, the Commodity Exchange Act, CEA, requires that futures contracts be traded on a regulated exchange. As a result, a futures contract that is traded off an exchange is illegal and unenforceable. When Congress enacted the CEA and authorized the CFTC to enforce it, this was not a concern. The meanings of ``futures'' and ``exchange'' were relatively apparent. Furthermore, the over-the- counter derivatives business was in its infancy. However, in the 26 years since the statute's enactment, the OTC swaps and derivatives market, sparked by innovation and technology, has significantly outpaced the exchange-traded futures markets. Thus the definitions of a swap and a future began to blur. In 1998, the CFTC issued a document containing a concept release regarding OTC derivatives, which was perceived by many as a precursor to regulating these instruments as futures. Just the threat of reaching this conclusion could have had considerable ramifications, given the size and importance of the OTC market. The legal uncertainty interjected by this dispute jeopardized the entirety of the OTC market and threatened to move significant portions of the business overseas. If we were to lose this market, most likely to London, it would take years to bring it back to U.S. soil. The resulting loss of business and jobs would be immeasurable. This threat led the Treasury Department, the Federal Reserve, and the SEC to oppose the concept release and request that Congress enact a moratorium on the CFTC's ability to regulate these instruments until after the President's Working Group could complete a study on the issue. As a result, Congress passed a six-month moratorium on the CFTC's ability to regulate over-the-counter derivatives. Despite reservations, I supported this moratorium because it brought legal assurance to this skittish market and it allowed the Working Group time to develop recommendations on the most appropriate legal treatment of OTC derivatives. In November 1999, the President's Working Group completed its unanimous recommendations on OTC derivatives and presented Congress with these findings. These recommendations remain the cornerstone of our bill. Our bill contains several mechanisms for ensuring that legal certainty is attained and that certain transactions remain outside the Commodity Exchange Act. The first, the electronic trading facility exclusion, would exclude transactions in financial commodities from the Act if conducted: (1) on a principal to principal basis; (2) between institutions or sophisticated persons with high net worth; and (3) on an electronic trading facility. The second would exclude these transactions if (1) they are conducted between institutions or sophisticated persons with high net worth; and (2) they are not on a trading facility. These exclusions attempt to address the advent of electronic trading and the changing and innovating nature of the financial industry. Indeed, we are keenly aware that there are newly emerging electronic systems that provide for the electronic negotiation of swaps agreements between and among large banks and other sophisticated major financial institutions acting as dealers. We do not intend for these systems to come within the definition of trading facilities. The third exclusion clarifies the Treasury Amendment language already contained in the CEA. It would exclude all transactions in foreign currency and government securities from the Act unless those transactions are futures contracts and traded on an organized exchange. As recommended by the Working Group, the bill would give the CFTC jurisdiction over non-regulated off-exchange retail transactions in foreign currency. Another important recommendation of the PWG was to authorize futures clearing facilities to clear OTC derivatives in an effort to lessen systemic risk and this bill incorporates this finding. As part of the legal certainty provisions, this legislation also addresses the concern that excluding OTC derivatives from the futures laws will cause these products to be fully regulated as securities. With Senator Gramm's leadership, this legislation adopts language that would provide the SEC with limited authority over institutional swaps for fraud, manipulation and insider trading. This language will help to provide the legal certainty that these institutional transactions lack under current law. Title four of this bill also provides legal certainty for banking products. Senator Gramm has appropriately raised the concern that traditional banking products should not be subject to the CEA. This language provides an exclusion for traditional banking products as well as hybrid products that are predominantly banking in nature. New products offered by banks that are not in existence on December 5, 2000, or are otherwise not excluded from the CEA would fall under a ``jump ball'' provision of the bill. This section provides a mechanism for the CFTC and the Federal Reserve to determine whether a new non- traditional product offered by a bank should be regulated under the banking laws or the futures laws. The second major section of this legislation addresses regulatory relief. In February of this year, the CFTC issued a regulatory relief proposal that would provide relief to futures exchanges and their customers. Instead of listing specific requirements for complying with the CEA, the proposal would require exchanges to meet internationally agreed-upon core principals. The CFTC proposal creates tiers of regulation for exchanges based on whether the underlying commodities being traded are susceptible to manipulation or whether the users of the exchange are limited to institutional customers. Unsure of whether this legislation would be enacted, the CFTC went ahead and finalized its regulatory relief proposal on November 20, 2000. When enacted, this legislation will largely incorporate the CFTC's framework. A board of trade that is designated as a contract market would receive the highest level of regulation due to the fact that these products are susceptible to manipulation or are offered to retail customers. Futures on agricultural commodities would fall into this category. This bill also sets out that in lieu of contract market designation, a board of trade may register as a Derivatives Transaction Execution Facility, DTEF, if the products being offered are not susceptible to manipulation and are traded among institutional customers or retail customers who use large Futures Commission Merchants, FCMs, who are members of a clearing facility. Also, a board of trade may choose to be an Exempt Board of Trade, XBOT, and not be subject to the Act (except for the CFTC's anti- manipulation authority) if the products being offered are traded among institutional customers only (absolutely no retail) and the instruments are not susceptible to manipulation. Our bill would allow a board of trade that is a DTEF or an XBOT to opt to trade derivatives that are otherwise excluded from the Act on these facilities and to the extent that these products are traded on these facilities, the CFTC would have exclusive jurisdiction over them. With this provision, the intent is to provide these facilities that trade derivatives with a choice--if regulation is beneficial, the facility may choose to be regulated. If not, the facility may choose to be excluded or exempted from the Act. By refraining from altering certain sections of the Act, this legislation re-affirms the importance of specific authorities granted the CFTC, including its anti-fraud and anti-manipulation powers. Section 4b is the principal anti-fraud provision of the Act and the Commission has consistently used Section 4b to combat fraudulent conduct by bucket shops and boiler rooms that entered into transactions directly with their customers and thus did not involve a traditional broker-client type of relationship. There have been cases involving the fraudulent sale of illegal precious metals futures contracts marketed as cash-forward transactions (CFTC v. P.I.E., Inc., 853 F.2d 721 (9th Cir. 1988)) as well as cases involving boiler room operations fraudulently selling illegal precious metals contracts to members of the general public. (CFTC v. Wellington Precious Metals, Inc., 950 F.2d 1525 (11th Cir.), cert. denied, 113 S. Ct. 66 (1992)). This reaffirmation is consistent with both Congress' understanding of and past Congressional amendments to Section 4b that confirmed the applicability of Section 4b to fraudulent boiler rooms and bucket shops that enter into transactions directly with their customers. It is the intent of Congress in retaining Section 4b of the Act that the provision not be limited to fiduciary, broker/customer or other agency-like relationships. Section 4b provides the Commission with broad authority to police fraudulent conduct within its jurisdiction, whether occurring in boiler rooms and bucket shops, or in the e- commerce markets that will develop under this new statutory framework. The bill's last section addresses the Shad-Johnson jurisdictional accord. In 1982, SEC Chairman John Shad and CFTC Chairman Phil Johnson reached an agreement on dividing jurisdiction between the agencies for those products that had characteristics of both securities and futures. Known as the Shad-Johnson Accord, this agreement prohibited single stock futures and delineated jurisdiction between the SEC and the CFTC on stock index futures. Meant as a temporary agreement, many have suggested that the Shad- Johnson accord should be repealed. The President's Working Group unanimously agreed that the Accord should be repealed if regulatory disparities are resolved between the regulation of futures and securities. In March 2000, the General Accounting Office released a report that found that there is no legitimate policy reason for maintaining the ban on single stock futures since these products are being traded in foreign markets, in the OTC market, and synthetically in the options markets. Chairman Gramm and I sent a letter requesting the CFTC and the SEC to make recommendations on reforming the Shad- Johnson ban. On September 14, 2000, the SEC and CFTC reached an agreement on the proper regulatory treatment of these instruments, and we have incorporated this agreement into our legislation. Under the legislation, the SEC and the CFTC would jointly regulate the market for single stock futures and narrow-based stock index futures. These products will be allowed to trade on both futures and securities exchanges. Single stock futures and narrow-based stock index futures (i.e., security futures) would be statutorily defined as both securities and futures, allowing the agencies the authority to regulate these instruments. However, to avoid redundancy, our legislation exempts these products from a series of regulations and requirements under both the securities and futures laws. Margin levels, listing standards, and other key trading practices would be jointly supervised by the SEC and CFTC. At the outset, margin levels for security futures products could not be lower than comparable margin levels required in the options markets. The tax treatment of these products would be comparable to the tax treatment of options on securities to ensure a level playing field between the markets. Futures on broad-based indices would be under the exclusive jurisdiction of the CFTC. The agreement sets out a ``bright-line'' formula for determining when an index is broad-based using the number and weighting of the securities contained in the index. This formula would allow a broad-based index to contain as few as 9 securities. The goal of this legislation is to ensure that the United States remains a global leader in the derivatives marketplace and that these markets are appropriately and effectively regulated. I believe that this legislation meets these objectives while ensuring that the public's interest in the financial markets is protected. This long legislative journey began two years ago when the Senate and House Agriculture Committees held a two day roundtable, in which distinguished individuals from the financial community participated. One of those individuals was Merton H. Miller, the Nobel Prize winning professor of economics from the University of Chicago, who passed away this summer. Professor Miller, known for his disarming sense of humor, his plain-spokenness and his generosity, is dearly missed by his family, friends and colleagues. The impact of his death has been particularly hard felt by the community of friends at the Chicago futures markets. Professor Miller was the primary intellectual force behind the development of the modern financial futures market and a staunch defender of the free market system. His body of work helped bring academic legitimacy to these markets, and he is sorely missed by them. As part of our roundtable discussion, we allowed each of the participants to make one wish for the coming 106th Congress. True to his life's work in this area, Professor Miller told us that Congress needed to lessen the cost of regulation on the futures and other financial markets in order to allow these markets to survive and compete in the global economy. I find it particularly satisfying that we are able to pass this historic legislation at the end of the 106th Congress and provide Professor Miller with his wish. I am confident that his legacy will live on through the success and growth of the markets that are benefitted by this legislation.

Mr. LUGAR

Mr. LUGAR. Mr. President, I am pleased to rise today with Senators Gramm, Harkin, Fitzgerald, Hagel, and Johnson to re-introduce the Commodity Futures Modernization Act of 2000. This legislation is the Senate companion to H.R. 5660, which Congressman Thomas Ewing introduced yesterday in the House of Representatives and which will be enacted as part of the final appropriations package today. This monumental legislation is the culmination of two years worth of hearings and hard-fought negotiations, but I am confident that the resulting legislation will greatly benefit the U.S. financial industry. I commend all the Members and staff who have contributed to this bill. In particular, I want to applaud Senator Gramm, Congressman Ewing and Senator Fitzgerald for their stewardship and determination in helping pass a bill this year. Its enactment would not have occurred without their efforts. I also want to recognize Treasury Secretary Summers, Commodity Futures Trading Commission, CFTC, Chairman Bill Rainer and Securities and Exchange Commission, SEC, Chairman Arthur Levitt as well as their staffs, who have played a pivotal role in bringing this bill together and garnering support for its passage. This bill, which re-authorizes the Commodity Exchange Act for five years, would reform our financial and derivatives laws in five primary ways. First, it would incorporate the unanimous recommendations of the President's Working Group on Financial Markets on the proper legal and regulatory treatment of over-the-counter, OTC, derivatives. Second, it would codify the regulatory relief proposal of the CFTC to ensure that futures exchanges are appropriately regulated and remain competitive. Third, this legislation would repeal the Shad-Johnson jurisdictional accord, which banned single stock futures 18 years ago. Fourth, this legislation provides certainty that products offered by banking institutions will not be regulated as futures contracts. Finally, this bill provides legal certainty for institutional equity swaps by providing the SEC with express but limited authorities over these instruments. Derivative instruments, both those that are exchange-traded and traded over-the-counter, have played a significant role in our economy's current expansion due to their innovative nature and risk- transferring attributes. The global derivatives market has a notional value that now exceeds $90 trillion. Identified by Federal Reserve Chairman Alan Greenspan as the most significant event in finance of the past decade, the development of the derivatives market has substantially added to the productivity and wealth of our nation. Derivatives enable companies to unbundle and transfer risk to those entities who are willing and able to accept it. By doing so, efficiency is enhanced as firms are able to concentrate on their core business objective. A farmer can purchase a futures contract, one type of derivative, in order to lock in a price for his crop at harvest. Likewise, automobile manufacturers whose profits earned overseas can fluctuate with changes in currency values, can minimize this uncertainty through derivatives, allowing them to focus on the business of building cars. Banks significantly lessen their exposure to interest rate movements by entering into derivatives contracts known as swaps, which enable these institutions to hedge their risk by exchanging variable and fixed rates of interests. Signed into law in 1974, the Commodity Exchange Act, CEA, requires that futures contracts be traded on a regulated exchange. As a result, a futures contract that is traded off an exchange is illegal and unenforceable. When Congress enacted the CEA and authorized the CFTC to enforce it, this was not a concern. The meanings of ``futures'' and ``exchange'' were relatively apparent. Furthermore, the over-the- counter derivatives business was in its infancy. However, in the 26 years since the statute's enactment, the OTC swaps and derivatives market, sparked by innovation and technology, has significantly outpaced the exchange-traded futures markets. Thus the definitions of a swap and a future began to blur. In 1998, the CFTC issued a document containing a concept release regarding OTC derivatives, which was perceived by many as a precursor to regulating these instruments as futures. Just the threat of reaching this conclusion could have had considerable ramifications, given the size and importance of the OTC market. The legal uncertainty interjected by this dispute jeopardized the entirety of the OTC market and threatened to move significant portions of the business overseas. If we were to lose this market, most likely to London, it would take years to bring it back to U.S. soil. The resulting loss of business and jobs would be immeasurable. This threat led the Treasury Department, the Federal Reserve, and the SEC to oppose the concept release and request that Congress enact a moratorium on the CFTC's ability to regulate these instruments until after the President's Working Group could complete a study on the issue. As a result, Congress passed a six-month moratorium on the CFTC's ability to regulate over-the-counter derivatives. Despite reservations, I supported this moratorium because it brought legal assurance to this skittish market and it allowed the Working Group time to develop recommendations on the most appropriate legal treatment of OTC derivatives. In November 1999, the President's Working Group completed its unanimous recommendations on OTC derivatives and presented Congress with these findings. These recommendations remain the cornerstone of our bill. Our bill contains several mechanisms for ensuring that legal certainty is attained and that certain transactions remain outside the Commodity Exchange Act. The first, the electronic trading facility exclusion, would exclude transactions in financial commodities from the Act if conducted: (1) on a principal to principal basis; (2) between institutions or sophisticated persons with high net worth; and (3) on an electronic trading facility. The second would exclude these transactions if (1) they are conducted between institutions or sophisticated persons with high net worth; and (2) they are not on a trading facility. These exclusions attempt to address the advent of electronic trading and the changing and innovating nature of the financial industry. Indeed, we are keenly aware that there are newly emerging electronic systems that provide for the electronic negotiation of swaps agreements between and among large banks and other sophisticated major financial institutions acting as dealers. We do not intend for these systems to come within the definition of trading facilities. The third exclusion clarifies the Treasury Amendment language already contained in the CEA. It would exclude all transactions in foreign currency and government securities from the Act unless those transactions are futures contracts and traded on an organized exchange. As recommended by the Working Group, the bill would give the CFTC jurisdiction over non-regulated off-exchange retail transactions in foreign currency. Another important recommendation of the PWG was to authorize futures clearing facilities to clear OTC derivatives in an effort to lessen systemic risk and this bill incorporates this finding. As part of the legal certainty provisions, this legislation also addresses the concern that excluding OTC derivatives from the futures laws will cause these products to be fully regulated as securities. With Senator Gramm's leadership, this legislation adopts language that would provide the SEC with limited authority over institutional swaps for fraud, manipulation and insider trading. This language will help to provide the legal certainty that these institutional transactions lack under current law. Title four of this bill also provides legal certainty for banking products. Senator Gramm has appropriately raised the concern that traditional banking products should not be subject to the CEA. This language provides an exclusion for traditional banking products as well as hybrid products that are predominantly banking in nature. New products offered by banks that are not in existence on December 5, 2000, or are otherwise not excluded from the CEA would fall under a ``jump ball'' provision of the bill. This section provides a mechanism for the CFTC and the Federal Reserve to determine whether a new non- traditional product offered by a bank should be regulated under the banking laws or the futures laws. The second major section of this legislation addresses regulatory relief. In February of this year, the CFTC issued a regulatory relief proposal that would provide relief to futures exchanges and their customers. Instead of listing specific requirements for complying with the CEA, the proposal would require exchanges to meet internationally agreed-upon core principals. The CFTC proposal creates tiers of regulation for exchanges based on whether the underlying commodities being traded are susceptible to manipulation or whether the users of the exchange are limited to institutional customers. Unsure of whether this legislation would be enacted, the CFTC went ahead and finalized its regulatory relief proposal on November 20, 2000. When enacted, this legislation will largely incorporate the CFTC's framework. A board of trade that is designated as a contract market would receive the highest level of regulation due to the fact that these products are susceptible to manipulation or are offered to retail customers. Futures on agricultural commodities would fall into this category. This bill also sets out that in lieu of contract market designation, a board of trade may register as a Derivatives Transaction Execution Facility, DTEF, if the products being offered are not susceptible to manipulation and are traded among institutional customers or retail customers who use large Futures Commission Merchants, FCMs, who are members of a clearing facility. Also, a board of trade may choose to be an Exempt Board of Trade, XBOT, and not be subject to the Act (except for the CFTC's anti- manipulation authority) if the products being offered are traded among institutional customers only (absolutely no retail) and the instruments are not susceptible to manipulation. Our bill would allow a board of trade that is a DTEF or an XBOT to opt to trade derivatives that are otherwise excluded from the Act on these facilities and to the extent that these products are traded on these facilities, the CFTC would have exclusive jurisdiction over them. With this provision, the intent is to provide these facilities that trade derivatives with a choice--if regulation is beneficial, the facility may choose to be regulated. If not, the facility may choose to be excluded or exempted from the Act. By refraining from altering certain sections of the Act, this legislation re-affirms the importance of specific authorities granted the CFTC, including its anti-fraud and anti-manipulation powers. Section 4b is the principal anti-fraud provision of the Act and the Commission has consistently used Section 4b to combat fraudulent conduct by bucket shops and boiler rooms that entered into transactions directly with their customers and thus did not involve a traditional broker-client type of relationship. There have been cases involving the fraudulent sale of illegal precious metals futures contracts marketed as cash-forward transactions (CFTC v. P.I.E., Inc., 853 F.2d 721 (9th Cir. 1988)) as well as cases involving boiler room operations fraudulently selling illegal precious metals contracts to members of the general public. (CFTC v. Wellington Precious Metals, Inc., 950 F.2d 1525 (11th Cir.), cert. denied, 113 S. Ct. 66 (1992)). This reaffirmation is consistent with both Congress' understanding of and past Congressional amendments to Section 4b that confirmed the applicability of Section 4b to fraudulent boiler rooms and bucket shops that enter into transactions directly with their customers. It is the intent of Congress in retaining Section 4b of the Act that the provision not be limited to fiduciary, broker/customer or other agency-like relationships. Section 4b provides the Commission with broad authority to police fraudulent conduct within its jurisdiction, whether occurring in boiler rooms and bucket shops, or in the e- commerce markets that will develop under this new statutory framework. The bill's last section addresses the Shad-Johnson jurisdictional accord. In 1982, SEC Chairman John Shad and CFTC Chairman Phil Johnson reached an agreement on dividing jurisdiction between the agencies for those products that had characteristics of both securities and futures. Known as the Shad-Johnson Accord, this agreement prohibited single stock futures and delineated jurisdiction between the SEC and the CFTC on stock index futures. Meant as a temporary agreement, many have suggested that the Shad- Johnson accord should be repealed. The President's Working Group unanimously agreed that the Accord should be repealed if regulatory disparities are resolved between the regulation of futures and securities. In March 2000, the General Accounting Office released a report that found that there is no legitimate policy reason for maintaining the ban on single stock futures since these products are being traded in foreign markets, in the OTC market, and synthetically in the options markets. Chairman Gramm and I sent a letter requesting the CFTC and the SEC to make recommendations on reforming the Shad- Johnson ban. On September 14, 2000, the SEC and CFTC reached an agreement on the proper regulatory treatment of these instruments, and we have incorporated this agreement into our legislation. Under the legislation, the SEC and the CFTC would jointly regulate the market for single stock futures and narrow-based stock index futures. These products will be allowed to trade on both futures and securities exchanges. Single stock futures and narrow-based stock index futures (i.e., security futures) would be statutorily defined as both securities and futures, allowing the agencies the authority to regulate these instruments. However, to avoid redundancy, our legislation exempts these products from a series of regulations and requirements under both the securities and futures laws. Margin levels, listing standards, and other key trading practices would be jointly supervised by the SEC and CFTC. At the outset, margin levels for security futures products could not be lower than comparable margin levels required in the options markets. The tax treatment of these products would be comparable to the tax treatment of options on securities to ensure a level playing field between the markets. Futures on broad-based indices would be under the exclusive jurisdiction of the CFTC. The agreement sets out a ``bright-line'' formula for determining when an index is broad-based using the number and weighting of the securities contained in the index. This formula would allow a broad-based index to contain as few as 9 securities. The goal of this legislation is to ensure that the United States remains a global leader in the derivatives marketplace and that these markets are appropriately and effectively regulated. I believe that this legislation meets these objectives while ensuring that the public's interest in the financial markets is protected. This long legislative journey began two years ago when the Senate and House Agriculture Committees held a two day roundtable, in which distinguished individuals from the financial community participated. One of those individuals was Merton H. Miller, the Nobel Prize winning professor of economics from the University of Chicago, who passed away this summer. Professor Miller, known for his disarming sense of humor, his plain-spokenness and his generosity, is dearly missed by his family, friends and colleagues. The impact of his death has been particularly hard felt by the community of friends at the Chicago futures markets. Professor Miller was the primary intellectual force behind the development of the modern financial futures market and a staunch defender of the free market system. His body of work helped bring academic legitimacy to these markets, and he is sorely missed by them. As part of our roundtable discussion, we allowed each of the participants to make one wish for the coming 106th Congress. True to his life's work in this area, Professor Miller told us that Congress needed to lessen the cost of regulation on the futures and other financial markets in order to allow these markets to survive and compete in the global economy. I find it particularly satisfying that we are able to pass this historic legislation at the end of the 106th Congress and provide Professor Miller with his wish. I am confident that his legacy will live on through the success and growth of the markets that are benefitted by this legislation.

Mr. LUGAR

Mr. LUGAR. Yes. The system NRCS establishes for approving a rehabilitation project should not rank projects based on the local sponsor's choice of rehabilitation, as defined in the bill.

Mr. LUGAR. Yes. As with any of options for rehabilitation, the local sponsor can reject NRCS' offer to provide cost-share for a particular project. also, NRCS is never required to fund a project that it believes is not justified.