Ed Markey

Mr. MARKEY

Mr. MARKEY. Mr. Speaker, I yield 5 minutes to the gentleman from Michigan [Mr. Conyers]. (Mr. CONYERS asked and was given permission to revise and extend his remarks.)

Mr. MARKEY. Mr. Speaker, I yield 2 minutes to the gentleman from Pennsylvania [Mr. Klink].

Mr. MARKEY

Mr. MARKEY. Mr. Speaker, I rise in strong opposition to the conference report on Interior and related agencies appropriations. There are a number of reasons to oppose this ill-conceived legislation, and I have discussed some of them in previous debates on this bill. Today, I would like to focus on one shortcoming that is particularly disturbing about the legislation, and that is its failure to provide adequate funding for energy efficiency programs at the Energy Department. DOE's efficiency programs support the development of new energy efficient technologies that prevent pollution, create jobs, make our economy more competitive, and save consumers precious dollars. Unfortunately, the Republican majority has elected to slash funding for our energy efficiency efforts by 28 percent from the fiscal year 1995 enacted budget. Of particular concern is the nearly 50 percent cut in low-income weatherization assistance. This program leverages over $100 million dollars in outside money, enabling low-income Americans to better handle winter and summer energy costs. Because of these debilitating cuts, many thousand fewer homes will become energy efficient this year. President Clinton has vowed to veto the fiscal year 1996 Interior appropriations bill if and when a conference report clears the Congress. A recent statement of administration policy on the Interior bill stated that, ``Funding for [energy efficiency] programs must be restored significantly in order to reach acceptable levels.'' I strongly encourage the President to stand firm on his commitment to energy efficiency as a solution which protects the environment and helps the economy. The President is quite right to criticize this legislation for failing to adequately fund the energy conservation programs within the DOE. The level of funding in H.R. 1977 is inadequate to carry on the important work of these programs. Many House Members continue to support the President's position on this matter. I urge defeat of the conference report and request that the attached letter to the President, which was signed by 68 House Members, be included in the Record. Congress of the United States, Washington, DC, December 6, 1995. Re H.R. 1977--energy conservation programs Hon. William J. Clinton, The President, The White House Dear Mr. President: We want to take this opportunity to strongly endorse the Statements of Administration Policy of November 7, 1995 and October 19, 1995, in which you indicated that the Department of Interior and Related Agencies Appropriations Bill for Fiscal Year 1996 (H.R. 1977) should and would be vetoed for a variety of reasons. We share your concern that this legislation does not adequately fund the energy conservation programs within the Department of Energy (DOE). The funding level for these programs of $553 million is identical to the first conference report funding level and remains $215 million (or 28 percent) below fiscal year 1995 appropriations and 38 percent below your budget request. We believe that this level of funding is inadequate to carry on the important work of these programs. As you know, DOE's energy conservation programs help every American by saving consumers precious dollars, making the economy more efficient and internationally competitive, and improving the environment by preventing pollution. These programs largely work with the private sector to develop and deploy new and more efficient technologies, as well as saving energy on the local level through state energy conservation programs (SECP) and low-income weatherization. We concur with OMB Director Alice Rivlin's statement that ``funding for these programs must also be restored significantly to reach acceptable levels.'' The approximately 50 percent reduction in funding for low- income weatherization and SECP is of special concern to us. Many thousand fewer homes will receive economically empowering energy efficiency improvements this winter because of the proposed Congressional cuts. We applaud your continuing leadership in this area and stand ready to support you in insisting on a strong federal energy efficiency program. Sincerely, Edward J. Markey; Sidney R. Yates; Frank Pallone, Jr.; Martin Olav Sabo; Barney Frank; John D. Dingell; Joe Moakley; Vic Fazio; Ronald V. Dellums; John W. Olver; Jerrold Nadler; Patrick J. Kennedy; Lucille Roybal- Allard; Bernard Sanders; Dale E. Kildee; Alcee Hastings; Sam Farr; James P. Moran; Earl Hilliard; Maurice Hinchey; Jim McDermott; Robert T. Matsui; Harry Johnston II; James A. Traficant; Carolyn Maloney; Nita M. Lowey; Ike Skelton; Charles E. Schumer; Thomas J. Manton; John Lewis; William Clay; Jose Serrano; Anthony C. Beilenson; Lane Evans; Gerry E. Studds; Sam Gejdenson; Jack Reed; Nydia Velazquez; Ed Towns; John Conyers; Richard E. Neal; George E. Brown, Jr.; Rosa DeLauro; Ed Pastor; Peter DeFazio; David E. Skaggs; Sherrod Brown; Eliot Engel; Tom Barrett; Bill Richardson; Elizabeth Furse; Sander Levin; Henry Waxman; George Miller; James Oberstar; Ron Wyden; Louis Stokes; Louise Slaughter; Lynn Rivers; Bruce Vento; Earl Pomeroy; Barbara Kennelly; Major Owens; Patricia Schroeder; David R. Obey; Benjamin L. Cardin; David Bonior; Tim Johnson.

Mr. MARKEY

Mr. MARKEY. Mr. Speaker, this is a bad bill. It is basically the first step of a two-step process which we are going to see within this Congress. The first [[Page H 14190]] step is putting the EPA on a starvation diet. Squeeze down the amount of money they have to clean up Superfund sites. That is what this bill does. Meanwhile, at the same time, in the Committee on Commerce, there is a Superfund gutting bill which does at least two things, but more. One, it puts a cap of only 125 more sites that can ever be cleaned up under Superfund. Ever. Only 125. There is at least 1,200 or 1,500 more sites in the country, but that is all it will be, 125. Second, it gives polluter rebates. It is the Ed McMahon polluter's clearinghouse sweepstakes. The Superfund bill in the Committee on Commerce says to polluters, congratulations, you may have already won millions of dollars in fabulous cash rebates. All you have to do is wait for Congress to pass that bill that is in Commerce right now, and soon our prize van will be on its way to your corporate headquarters with a rebate check in hand to pay you for cleaning up sites that you willfully or negligently polluted in the past, draining out all remaining money that is in Superfund. So think of this as the one-two punch. Finishing off Superfund once and for all, drain the revenues here so that we cannot clean up any of the existing sites that are on the list, sorry, and then put a cap on any future sites in the next bill coming down the line. Mr. Speaker, we must vote no here so that we can have the full debate we need on what the responsibility is of the Government of this country to clean up these neighborhood nightmares across the country.

Mr. MARKEY

Mr. MARKEY. Mr. Speaker, I rise today to recognize and applaud Emily Kumpel of Wakefield, MA, for her outstanding dedication and service to others in need. Although she is only 11 years old, this sixth grader has done [[Page E 2316]] more to help those less fortunate than herself than most people do in their entire lives. When Emily was a third grader and only 8 years old, she and her older sister Amy helped organize a charity auction to benefit a Boston area homeless shelter. Working with other children their age, they wrote to celebrities and asked them to autograph squares of material which were later made into patchwork pillows and auctioned. Together with their friends, Emily and Amy raised over $4,000 for homeless children and their families. Eighteen months ago while researching South Africa, Emily learned about the effects of apartheid on the citizens of South Africa. Anxious to help improve their quality of life, Emily became a key organizer of the South African book drive. As the youth chairperson, Emily collected over 10,000 books for an elementary school in the Capetown area and received an award of $3,000 to be used toward the cost of shipping. Emily Kumpel should serve as a role model for all of us, both young and old. Her work on behalf of the homeless and the children of South Africa illustrates her deep commitment to the advancement of humanitarian goals. Emily truly is an amazing individual, and she deserves our respect and admiration.

Mr. MARKEY

Mr. MARKEY. Mr. Speaker, I yield myself 3 minutes. Mr. Speaker, until a Supreme Court decision 18 months ago, aiding and abetting liability was the primary method through which professionals who assist securities fraud to succeed, lawyers, accountants and investment bankers, who were deemed to be responsible in defrauding investors, were made liable by aiding and abetting prosecution. Even the Supreme Court majority recognized the need for restoration of aiding and abetting liability. In the words of Justice Kennedy, to be sure, aiding and abetting a wrongdoer ought to be actionable in certain instances. The issue, however, is not whether imposing private liability on aiders and abettors is good policy but whether aiding and abetting liability is covered by the statute. This statute that we are debating here today has no aiding and abetting liability for those who have participated in the construction of fraud perpetrated against innocent investors. The SEC argued, in the Supreme Court, in favor of aiding and abetting liability. Since the court decision, the SEC has urged Congress to restore aiding and abetting liability. Chairman Levitt testified that of 400 pending SEC enforcement cases, 80 to 85 rely on aiding and abetting theories of liability. Not one shred of evidence was presented before the House or the Senate that called into question the legitimacy of these SEC cases. Yet this bill would jeopardize many of them, perhaps even all of them, because it fails to codify that the SEC has authority.

Mr. MARKEY. Mr. Speaker, I reserve the balance of my time.

Mr. MARKEY. Mr. Speaker, I yield 3 minutes to the gentleman from Texas (Mr. Gonzalez), the ranking minority member of the Committee on Banking and Financial Services. [[Page H 14052]]

Mr. MARKEY. Mr. Speaker, I yield myself 30 seconds. Mr. Speaker, I rise to compliment the work of Timothy Forde and Consuela Washington, who were the two counsels for the minority who worked on this bill throughout the course of this year. They developed an alternative bill which dealt fully with all of the frivolous lawsuits that had been brought over the past decade and would have cured the problem. I just want to recognize their good work at this time, and also mention the work of Jeffrey Duncan and Alan Roth and their help on this. Mr. Speaker, I yield 2 minutes to the gentleman from Pennsylvania (Mr. KLINK).

Mr. MARKEY. Mr. Speaker, I yield 3 minutes to the gentleman from California [Mr. Berman]. (Mr. BERMAN asked and was given permission to revise and extend his remarks.)

Mr. MARKEY. Mr. Speaker, I yield 2 minutes to the gentleman from New Jersey [Mr. Torricelli].

Mr. MARKEY. Mr. Speaker, the bill would jeopardize many of these cases, perhaps all of them, because it fails to codify. Now, a report in last week's National Law Journal highlighted a number of extraordinary statistics from fraud cases brought by the Government as a result of the S&L debacle. Four thousand directors or CEO's of failed S&L's or the professionals who work for them were sent to prison as a result of criminal frauds they perpetrated or assisted. In addition, 1,500 defendants were convicted but were not sent to prison. That is one of the most extraordinary and most disturbing statistics I have ever heard. Four thousand senior thrift executives and their key financial advisors were convicted and imprisoned for financial fraud and crimes. Mr. Speaker, I reserve the balance of my time.

Mr. MARKEY. Mr. Speaker, I do not want to call into question the Chair, but I only read three paragraphs.

Mr. MARKEY. Mr. Speaker, I yield 4 minutes to the gentleman from Michigan [Mr. Dingell]. (Mr. DINGELL asked and was given permission to revise and extend his remarks.)

Mr. MARKEY. Mr. Chairman, I yield myself 3 minutes. Mr. Speaker, the first and perhaps the most important overall criticism of this bill is it severely undercuts the deterrent function of the laws against fraud. Those are the first protections that the marketplace provides to investors to induce them into the marketplace so that, in fact, there are robust, long-term levels of investment in our economy. Let me give the specific concerns which we have about this bill. It is absolutely unbelievable. First, the new safe harbor provision. We should call it a safe ocean. By the way, the SEC is going to need a two-ocean navy to police this safe ocean which is constructed in this bill. It confers immunity from liability even for intentionally fraudulent forward-looking statements, intentional written misrepresentations about forward-looking information. Even if for the express purpose of defrauding investors, it may be entirely immunized from liability as long as they are accompanied by meaningful cautionary language. Second, the new safe harbor, safe ocean, may rescind the duty to update past projections, even if a company learns that they were false and misleading. A company's duty to provide [[Page H 14051]] updated information if it learns that a previous forward-looking statement is false may be eliminated based on the language in the draft conference report. If so, the company would be free to leave false information in the public domain and to withhold, to withhold accurate, updated information even if its purpose is to deceive or mislead investors. Third, a new provision invites the courts to legalize reckless conduct. The conference report fails to codify the recklessness standard used by the Federal courts and expressly instructs the courts not to infer from the legislative history of this bill any congressional intent to endorse recklessness as a liability standard. The conference report, furthermore, eliminates the SEC's ability to prosecute those who recklessly aid and abet fraud. The conference report fails to restore any form of civil liability for those who aid and abet fraud. The conference report fails to restore a reasonable standard of limitations, only 3 years. It took years, many more than 3 years, to find out what frauds were perpetrated under Garn-St Germain that passed this House in 1981. We were learning in 1987 and 1988 and 1989. We are telling poor, innocent investors if they cannot find out what these malefactors are engaged in in 3 years, we are sorry, they have lost their life savings. That is wrong. It is an unreasonable number and the S&L crisis instructs us that it is wrong. We should do better by the investors of this country.

Mr. MARKEY. Mr. Speaker, I yield 2 minutes to the gentleman from Oregon [Mr. Wyden], the Democratic nominee for the Senate. (Mr. WYDEN asked and was given permission to revise and extend his remarks.)

Mr. MARKEY. Mr. Speaker, can we get a recap of the time at this point?

Mr. MARKEY. Mr. Speaker, I yield 3 minutes to the gentleman from Michigan [Mr. Conyers], the ranking member on the Committee on the Judiciary. (Mr. CONYERS asked and was given permission to revise and extend his remarks.)

Mr. MARKEY

Mr. MARKEY. Mr. Speaker, I yield 4 minutes to the gentleman from Michigan [Mr. Dingell], ranking Democrat on the Committee on Commerce.

Mr. MARKEY. Mr. Speaker, I yield myself 2 minutes. Mr. Speaker, just so that all who are listening can understand, the cases which we are talking about at this time constitute one-tenth of 1 percent of all cases brought in Federal district court, approximately 125 companies a year. Yes, we agree that frivolous suits have to be dealt with and we can construct a guaranteed procedural safeguard to ensure that they are not brought. But what we have here is a specific attempt to ensure that this [[Page H 14053]] one category is stigmatized but all of the other frivolous lawsuits are not dealt with; 125 companies sued under this, tens of thousands of companies suing other companies, mostly for breach of contract. Listen to this: Here is a quote from a small high technology company in its prospectus. Here is what it says: ``Litigation in the software development industry has increasingly been used as a competitive tactic, both by established companies seeking to protect their existing position and by emerging companies attempting to gain access to the market.'' Imagine that, companies suing other companies trying to keep them off balance. Using the courts for that purpose, Pennzoil versus Texaco, Polaroid versus Kodak, tens of thousands of cases a year. Why do we not apply the very same procedural and substantive test for frivolousness to those cases? If our courts are being clogged, use them for those cases as well. They are the same lawyers, the very same lawyers giving the very same advice, but now in companies suing companies. I will tell my colleagues why they do not want it, because businesses want to preserve the right to bring frivolous cases against other businesses. They just do not want to be sued by investors, investors from their very own company. This is what the debate is all about, not whether or not frivolous cases should be dealt with. They should be, but whether or not in fact we are dealing with the problem that exists in the clogged courthouses of this country. This bill deals with an ice cube, not the iceberg which is out there of frivolous lawsuits which should be dealt with. This bill should be defeated. Mr. Speaker, I yield such time as he may consume to the gentleman from California [Mr. Farr]. (Mr. FARR of California asked and was given permission to revise and extend his remarks.) [Mr. FARR of California addressed the House. His remarks will appear hereafter in the Extensions of Remarks.]

Mr. MARKEY. Mr. Speaker, I object to the vote on the ground that a quorum is not present and make the point of order that a quorum is not present.

Mr. MARKEY

Mr. MARKEY. Mr. Speaker, let me point out something that I think everyone should understand as we take up this bill today. That is that the Congressional Budget Office estimates that there will be new burdens for the Securities and Exchange Commission as a result of the passage of this legislation. Here is what CBO said: By discouraging private litigation, enacting this bill would result in an increase in the number of enforcement actions brought by the SEC. CBO expects that the number of financial fraud enforcement actions would at least double, and possibly triple. Therefore, CBO estimates the enactment of the bill would increase costs of the Securities and Exchange Commission for enforcement actions by $25 million to $50 million annually, or $125 million to $250 million over the next five years. CBO's objective analysis is extremely revealing. First, it demonstrates that the CBO believes that this legislation will prevent defrauded investors from bringing meritorious cases, leaving the burden entirely on the Securities and Exchange Commission. So the CBO has in effect confirmed our fear that this legislation goes too far and will harm innocent investors in its zeal to wipe out frivolous lawsuits. Now, one might reasonably ask whether the CBO analysis is credible, whether it is reliable, whether it is in fact accurate. That is a fair question. So we decided to look at what Republican leaders have been saying about the credibility of the CBO. Here are some of the more recent excerpts. Committee on the Budget Chairman John Kasich has made several recent comments about the CBO. In just the last few days he has said that the ``CBO has painstakingly earned its reputation for accuracy and credibility over the years.'' On the ``MacNeil-Lehrer News Hour'' 2 weeks ago, Chairman Kasich said, I guess just the ``Lehrer News Hour,'' that the ``CBO cannot be bullied; they cannot be beaten up, and their integrity will not be questioned.'' On ``Larry King Live'' just 3 weeks ago, he said, ``After using the CBO and understanding the integrity of the way they work, it's the best way to go.'' Senator Trent Lott, the Republican majority whip in the Senate, said in a press conference 3 weeks ago, ``We've got to have reliable numbers. CBO has been reliable over the years. Even this year, with some of the things we would like CBO to have said, they've said no, that's not a fact. So they are the honest brokers.'' Of course, the legislation does not include a $25 to $50 million annual supplement to the Securities and Exchange Commission to make up for some of the meritorious and nonfrivolous cases which will have to be brought by the SEC as a result of passage of this legislation, cases where there has been actual fraud. Instead, the SEC budget is frozen and they are in fact fortunate to get that, because the Senate Finance Committee has actually targeted them for a 20 percent cut, even though this is a time of record growth, activity, participation and complexity in our capital markets and, after the passage of this bill, needed additional enforcement where there are actual meritorious cases involving deliberate fraud on the part of companies, financial firms, on innocent investors across this country. By the way, the CBO is not alone in this forecast. Former Republican SEC [[Page H 14035]] Chairman Richard Breeden testified in 1991 that if securities fraud lawsuits were curtailed, the SEC would need to hire 800 to 900 additional investigators and lawyers to make up the difference. And 11 States attorneys general have criticized the legislation as an unfunded mandate. I apologize for taking so long, but this is the only time that we in the minority have had to discuss this bill this year. It is necessary for the gentleman from Michigan [Mr. Dingell] and I and others on our side to put the facts out on the case, so that historically those who in this Chamber are blessed with hindsight will be able to see in 5 years or so what in fact has happened in the aftermath of the passage of this legislation. Eleven attorneys general have criticized the legislation as an unfunded mandate. They argue in a strongly worded letter that the draft report's major provisions pose significant obstacles to meritorious fraud actions by investors and that these cases will inevitably land in the laps of already overburdened State and local prosecutors. Considered together, it is ironic that we are on the verge of abandoning a largely successful and effective system of private market- based regulation. The changes could have been made to deal with the frivolous lawsuits, but instead we are going to put the burden on State and local prosecutors, and if the Federal Government does not act, there will be a huge vacuum that will leave investors at the mercy of unscrupulous financial operators.

Mr. MARKEY

Mr. MARKEY. Mr. Speaker, I thank the gentleman for yielding time to me. Mr. Speaker, let me begin by saying that this bill is not controversial because there is a disagreement as to whether or not we have to crack down on frivolous lawsuits in this country. We agree upon that subject. The issue is whether or not we want to pass legislation that will become the law of this land, that will also prevent meritorious suits from being brought against those that deliberately mislead investors into expending their hard-earned money on financial investments which were, in fact, fraudulent in their nature. That is what this whole debate is about. We who oppose the bill which is being brought out on the floor today want to shut down the frivolous suits as much as anyone who is a proponent of the legislation. However, what has happened is that over the course of the year, the interest in frivolous lawsuits has been replaced by, for all intents and purposes, an interest in all lawsuits. This bill could, in fact, have been made a good bill, but it was not. Moreover, the gentleman from Michigan, Mr. Dingell, the gentleman from Texas, Mr. Bryant, the gentleman from Michigan, Mr. Conyers, along with the gentleman from Maryland, Mr. Sarbanes and the gentleman from Nevada, Mr. Bryan on the Senate side, were all excluded from participating in a meaningful way in the crafting of this legislation so that it could, in fact, be made acceptable to all Members while addressing the core issues which each and every one of us wants to see dealt with. The House bill that passed this body was 36 pages long. The bill which we are considering here today is 75 pages long. We were not allowed to see the final draft until we walked into the conference room to have the vote on this momentous piece of legislation. That is not a proper way to run the legislative process. All Members should have been included. All Members should have been given notice. All Members should have had the opportunity to make suggestions which would have been appropriate to perfect this legislation. Moreover, I think it is important for all Members to know that, as the year began, the debate surrounded the issue of the 1934 Securities Act. As we are presented with a piece of legislation on the floor today, all of the fundamental changes that have been included to address the 1934 act have now been extended to cover the 1933 Securities Act as well, even though there is no testimony, not one shred of evidence that there has been any abuse by use of the 1933 Securities Act in securities litigation cases. Let me make one final point at this juncture. We are dealing here with one-tenth of 1 percent of all cases brought in Federal district court, on average, about 125 cases a year. If this crisis of frivolous lawsuits is such a great concern to the Members on the other side, we should be dealing with the issue of companies suing other companies as well, because that is the bulk of cases in Federal district court. This only [[Page H 14033]] deals with the ability of individuals to sue companies. The reason that we are dealing with only this one area is that companies want to preserve their ability to sue other companies. Disney wants to be able to sue the Motion Picture Association for misuse of the image of Snow White. Burger King wants to be able to sue McDonald's. On and on and on and on. They use the courts in many instances as places for negotiation. But if individuals want to ban together and sue companies, well, we are going to put down a strict new set of guidelines dealing not only with those cases that are obviously frivolous but also where individuals have been deliberately misled, where material information has been withheld from investors with regard to the financial well-being of an institution. That is wrong. I think everyone should know what is going on during this debate. But most importantly, because I think it strikes at the integrity of the institution, they should understand that those who oppose the bill were completely excluded. And no rule should pass on the floor of the Congress which has in fact treated its own Members in that way.

Mr. MARKEY

Mr. MARKEY. Mr. Speaker, before the Thanksgiving holiday, we came to an agreement on a framework to work toward a balanced budget. Within this framework, we agreed to a set of priorities to guide our actions. We agreed to preserve Medicare, strengthen our educational system, and protect the environment for our children and our future. Well, today we have the opportunity to stand up for one of the priorities we outlined over a week ago. It is time to stop this Congress from rolling back existing environmental protections. In the VA-HUD appropriations bill before us now, most of the infamous regulatory riders have disappeared, but the EPA has still been put on a starvation diet. This bill radically cuts the EPA's budget, from the $7.2 billion appropriated last year, down to only $5.7 billion, a reduction of $1.5 billion, or 21 percent. The EPA enforcement budget is specifically targeted for an even larger 25 percent cut. Make no mistake, Mr. Speaker, taking the environmental cops off the beat by slashing their budget is just another way to gut strong environmental laws. The GOP cuts slash $270 million from the Superfund program. The EPA Administrator, Carol Browner, has testified that this will delay cleanups of toxic waste sites at hundreds of communities around our Nation. And at the same time this Congress is cutting the budget for environmental protection, we just sent the Defense Department $7 billion the Pentagon did not even ask for. Mr. Speaker, this all comes down to a question of priorities. Should we be giving tax cuts to the wealthy and buying more B-1 bombers, which we do not need? Or, should we be insuring that our children have clean air and clean water and that toxic waste sites in our communities get cleaned up? We cannot say one day that we believe the preservation of our environment is a national priority, and then 10 days later turn around and agree to radical cuts in environmental enforcement and cleanup programs. It is wrong, Mr. Speaker, and I urge my colleagues to vote against this proposal.

Mr. MARKEY

Mr. MARKEY. Mr. Speaker, I have no further requests for time, and I yield back the balance of my time.