Craig Thomas

Mr. THOMAS

Mr. THOMAS. Mr. President, in keeping with the agreement with the minority leader, I will not introduce the amendment at this time, but I would like to talk about the amendment. Mr. President, what we are going to deal with today is an amendment, which will be a second-degree amendment and substitute for the electric title in the Energy bill. As you know, we have talked about the Energy bill for a good long time on the Senate floor. We have talked about it in committee, and we talked about it last year. So what has happened is the chairman of the committee has done a great job of seeking to take the information that came forward in our discussions in the past about the electric title of the Energy bill and make it more compatible with the issues that have arisen during the previous discussions, and to put it together into an amendment. That is what we will be dealing with. I am very pleased we have come together on the committee with an amendment that deals with most of the concerns about people, with a recognition that there is a changing world in terms of electrical supply and the way it is distributed throughout the country. If we are, in fact, to develop an Energy policy that is designed to give guidance to what happens regarding energy over the next several years, then this is a very important amendment and very important portion of the Energy bill. As we look at ourselves and our families and businesses and our economy, there is probably nothing that impacts us more than electricity. It is in everything we do--whether it is lights, heat, businesses, whatever, we are involved with electricity. Each of us wants to have it for ourselves and our families. So we need to make some changes and some policy that moves us in that direction. The challenges facing the electric industry affect our economy and our environment, and developing a policy on this electric component is one of the most challenging aspects of the entire energy debate. Chairman Domenici's efforts and his leadership on this issue have been tremendous. He has worked with all the interested parties to develop a very carefully crafted and balanced product. I will comment a little later on the whole package of letters of support we have received from various associations and users. These letters of support come from the National Rural Electric Cooperative Association, American Public Power Association, the Large Public Power Council, each advocating passage of the electric substitute amendment without modification. We have talked about the number of amendments that are out there. Here is one we have already gone through, seeking to talk about and having opportunity for input from all the various interests. We believe this section is ready for adoption without modification. There are letters of support from the electric industry itself. The administration has also expressed its support for the electricity amendment. In a letter dated July 25, the Secretary of Energy wrote that the Domenici amendment ``will effectively modernize our Nation's antiquated electricity laws.'' Secretary Abraham stated that the amendment ``protects consumers, ensures the development of wholesale markets that are transparent and free of manipulation, facilitates open access to the transmission system, increases electric supply, promotes energy efficiency, improves reliability, encourages demand response, and appropriately balances Federal and State responsibilities.'' These supporters in the administration are right. The proposed electricity title is much needed and will accomplish some of the following: It establishes mandatory reliability rules. What is more important to us in electricity than reliability? It expands the transmission system efficiently on a regional basis. It will promote more open access to the transmission grid. The way things have changed, more and more electricity is developed in market generators and has to be moved to the market in order to make it work. You have to have a transmission grid. It ensures priority on transmission lines for native load customers. This is so that where transmission lines serve certain areas, they are the first priority, and later you can add to the transmission grid. It will allocate the costs of expanding the transmission system fairly, so that the cost doesn't have to be shared excessively by those already on the line with new users. It repeals the PUHCA to allow for more investment. This law was passed some time ago. It limits who can be involved in the ownership and investment of electric utilities and transmissions. It changes that so that there still are restrictions to be enforced by the enforcement agencies, but it allows for more investment. It reforms PURPA. That is the law that required the purchase of various kinds of alternative energies at a lower price than the market might demand. It still allows for that purchase, and it will require it in some instances, but it takes away that mandatory aspect and allows competitive markets to work. It strengthens consumer protection also with increased transparency and oversight. In the last several years, on the west coast we have seen the need for oversight and transparency. This provides for that. These are important issues that need to be addressed as part of a comprehensive, integrated, strategic energy policy. Let me remind us that this is a policy we are talking about. So we need to have some foresight into it. It is not daily detail, it is a policy for where we go in the future to provide the kind of result that we would like to see. Our action now on this amendment will help reduce regulatory uncertainty. It will provide much needed direction in an industry that is at a crossroads. That is where we are. The Domenici electricity amendment is the best solution available, and it deserves all of our support. It also deserves it soon, so that we can complete this job and get it out on the ground in the country. Let me take some time to describe the electricity amendment in a fairly broad sense. The first part of the electricity amendment proposes modifications and additions to the Federal Power Act's definitions. These proposed changes are needed to accommodate conforming changes and defining terms of art used by the industry. Specifically, the terms affected are: electric utility; transmitting utility; regional transmission organizations, RTOs; independent transmission organizations, or ITOs. Subtitle A has to do with reliability. The reliability subtitle sets forth a new framework to ensure greater reliability in the transmission grid. Today, transmission grid stability is maintained through voluntary compliance with reliability rules promulgated by the North American Electric Reliability Council. This subtitle directs FERC, the Federal Energy Regulatory Commission, to implement a final rule to certify an electric reliability organization that will set and enforce mandatory reliability rules for the safe operation of the transmission grid. Mandatory reliability rules are needed due to the increased number and the complexity of transmission on the grid and more extensive wholesale competitive markets. This reliability subtitle is based on consensus language developed by the North American Electric Reliability Council and the Western Governors Association. I will point out here that there are substantial differences in different parts of the country with respect particularly to the movement of energy. In the West where there is more generated, sometimes the movement is out of the generation market into the consumptive market, where in the Northeast, for example, there is less generation and more movement there. So you need to make these changes and that is what the reliability subtitle seeks to do. The provision is supported by a number of other groups and associations because they know greater reliability means greater opportunity--greater opportunity for investment. In addition to NERC and the Western Governors Association, supporters of the reliability section include the Edison Electric Institute, the Institute of Electrical and Electronics Engineers, the Canadian Electricity Association, the National Association of Regulatory Utility Commissioners, the National Association of State Utility Consumer Advocates, the American Public Power Association, the National Electrical Manufacturers Association, the National Rural Electric Cooperative Association, American Electric Power, Pepco Holdings, Inc., the Transmission Access Policy Study Group, TXU Corporation, and the Western Electricity Coordinating Council. That is a broad representation of the whole Nation in terms of what we need to be doing with reliability. As to subtitle B, regional markets, here again the subtitle recognizes the regional differences and seeks to promote the regional market in a careful and fair manner. The first section of this subtitle delays the finalization of the Federal Energy Regulatory Commission's standard market design proposed rulemaking until July 1, 2005. This was a rule that came out from FERC some time ago that, in the view of most people, took too much authority to the national level and did not leave enough with the local and regional level. This is designed to change that situation. FERC seems agreeable to that change. This delays any order of that kind until July 1, 2005. Given the controversy surrounding SMD and FERC's willingness to revisit and revise its approach in the white paper, a delay until July 1, 2005, preceded by a notice of proposed rulemaking and opportunity for public comment is, we believe, a balanced solution. The timeframe allows FERC to develop a rulemaking true to the principles and terms outlined in the white paper regarding deference to the States--that is very important, deference to the States--and permits those regions that are working on their own unique marketing designs to continue to do so. This is a recognition of the fact there needs to be some Federal oversight. We are going to have a national movement of electricity and, at the same time, recognize those unique aspects of various regions, and this is designed to balance that situation. This subtitle includes a sense of Congress that RTO formation be voluntary. The subtitle also provides that nothing in the Energy bill authorizes FERC to mandate the formation of RTOs. We will hear more about that point, I am sure. The fact is it does not mandate; it allows the States and regions to make these decisions, which I think is very important. This subtitle emphasizes RTO formation, which is very important, and it promotes fair and open access to electric transmission service; benefits retail consumers; facilitates wholesale competition; improves efficiencies in the transmission grid management; promotes grid reliability; removes opportunities for unduly discriminatory or preferential transmission practices; and provides for efficient development of transmission infrastructure needed to meet the growing demands of competitive wholesale markets. There has been a great change in how electricity is generated and distributed. A number of years ago, a company had the job of being a distribution unit, to go to the retail, to go to your house, my house, and businesses in a community. They generated their own electricity, and it was a confined package right there. Over the last number of years, more than 30 percent of wholesale power is generated by what we call market generators that do not make retail distribution. Therefore, to be competitive and to give us a better price, that electricity has to move about to the companies that do the distribution, and that is what this whole issue is about. This subtitle authorizes Federal power marketing agencies, such as the Bonneville Power Administration and Western Area Power Administration, to join RTOs. They are a very important part of the generation and distribution in these areas, and they, too, can come along with the States to put together these regional organizations. This subtitle includes a regional consideration section which encourages discussion between States and FERC on how to improve transmission and wholesale markets. Issues to be considered include elimination of pancake rates, that is, multiple cumulative charges for transmission service across successive locations in a single region, and the resolution of seams issues, to improve transmission exchanges between regions. These are very important to a uniform statewide average rate of transmission pricing. Subtitle C, which involves transmission access and protecting service obligations, is very important. The first section of this subtitle is designed to ensure load-serving entities are a priority on the transmission grid to fulfill their service obligation to the native load end users. This section balances the service obligation needs of both transmission owners and transmission-dependent entities, such as municipals and co-ops. The section allows this priority only to the extent required to provide the load-serving entities' native load obligation. This means if you have powerplants, retail merchants, and customers, and you want to use that line to go on to new customers, the first priority is to those being served, the native load, and that is important to our part of the country. FERC-lite is just what it says: The ideas that were put forth by the Federal agency now are toned down with more emphasis given to the opportunity for States and regions to have input. The open access, or FERC-lite section, promotes principles of fair access to the transmission system by requiring that all transmitting utilities, regulated or unregulated, have rates, terms, and conditions for transmission service that are not discriminatory or preferential. The FERC-lite provision will not diminish the local control benefits upon which many unregulated transmitting utilities depend. Small unregulated transmitting utilities, such as distribution co-ops, as well as unregulated transmitting utilities that do not own or operate significant transmission facilities, are exempt from the FERC-lite. The section on participant funding directs FERC to issue regulations about the allocation of costs associated with transmission expansion. This section clarifies who has to pay for what in transmission expansion. This clarification will promote certainty and investment in our energy infrastructure. It really defines benefits. Those who benefit from the expansion will be expected to pay for the expansion. Under this section, a regional transmission organization, an RTO, or an independent system operator may submit a plan regarding transmission costs to FERC, and FERC will give substantial deference to the comments filed by State regulatory authorities, other appropriate State officials, and stakeholders of the RTO or ISO regarding such a plan. With regard to subtitle D, amendments to the Public Utility Regulatory Policies Act of 1978, the most challenging part of the PURPA reform addressed in this section has to do with mandatory purchase and sale requirements affecting qualified facilities, or QF. Many have argued that PURPA has resulted in above-market electricity prices because it forces utilities to buy power they may not need. Thanks to the hard work of Senators Nickles, Landrieu, and Alexander, a compromise was reached which will ensure that qualifying facilities are legitimate and not just generation facilities masquerading as QFs and abusing QF benefits. The compromise prospectively terminates the mandatory purchase and sale requirements affecting QFs when a competitive wholesale market exists and sets forth new criteria for future QFs to ensure they are fundamentally designed to support commercial or industrial processes. The stakeholders, which include the American Chemistry Council, International Paper, and the Alliance for Competitive Energy, worked together to help craft this language with the Senators and strongly support the principles of ensuring fair and legitimate practices. This subtitle also includes provisions on net metering, smart metering, and demand response that require States to consider the benefits of these policies. What this really means is instead of being forced to buy the energy that is excessive to some manufacturing group, it will have to be in a competitive market. They will be legitimate qualifying facilities and will not be forced, as it was in the past, but yet will still be able to include these producers as available energy. Subtitle E is provisions regarding the Public Utility Holding Company Act of 1935. This is an outdated statute that imposes barriers to competition and discourages investment in generation and transmission. PUHCA limits that are now in place limit geographic and product diversification and impose many burdensome filing requirements. PUHCA is also a barrier to the formation of regional energy markets because it would apply to regional transmission organizations. Repealing PUHCA does not preclude State and Federal regulators from protecting ratepayers. They can still take a look at who is doing the investing and whether the returns generated go back to the right group and create a good price for users, and they will be able to invest, not divert, the money, but they will continue to be overseen by existing regulators. The Department of Justice and the Federal Trade Commission will continue to protect against antitrust violations. The Securities and Exchange Commission, which currently oversees PUHCA, has recommended on a number of occasions that PUHCA be repealed and certain consumer protections transferred to FERC. That is what we seek to do here. Market transparency and antimanipulation enforcement, of course, are very important subjects, now more than ever because of what happened in California and elsewhere on the west coast. This subtitle directs FERC to issue rules to establish an electronic information system to provide information about the availability and the price of wholesale market and transmission services to ensure that such information will be treated with confidentiality, when necessary, and used to protect consumers in competitive markets. Here again the allegation--and I am sure to some extent it is true-- was these are the kinds of manipulations that happened in California and on the west coast, and this is designed to prohibit the filing of false information regarding the price of wholesale electricity and the availability of transmission capacity. It prohibits round-trip trading, where there were apparently some funny tricks played on the west coast. This will prohibit those kinds of things. It expands those who can file complaints and who will be subject to FERC investigation; increases the penalty under the Federal Power Act and the National Gas Act; amends the Federal Power Act refund effective date to the date of filing. It makes it work so the purpose for which it was designed can be carried out. Subtitle G is consumer protections. Of course, all of us are interested in that. A number of consumer protections are included in the amendment. The first one includes a revised section 203 of the Federal Power Act which will offer FERC limited expansion of its merger review authority. Justification for this expansion review is needed to balance the repeal of PUHCA, which we just talked about, and the potential effects on holding company structures. So we are making some of the changes that need to be made because of outdated laws and we are replacing the oversight that needs to be there so it will still be transparent and visible. The new section would apply to transactions only that are in excess of $10 million. So this is designed to deal with major transactions. In addition, 203 would highlight factors such as consumer protection financial integrity, evaluating whether a transaction is consistent with the public interest. These are things that all of us recognize need to be there. That is why utility commissions have been in effect in States to sort of have an oversight. Even though we want the private market to be stronger and more effective, there still needs to be protection for consumers because there are not lots of choices always in terms of energy. A new section requires FERC to adopt rules for consideration of applicants. It also directs the Federal Trade Commission to issue rules regarding information disclosures. So overall, the Domenici electricity amendment is balanced. It is a fair package that creates a more efficient electricity grid, increases investment in utility infrastructure, and enhances consumer protections. These are basically the issues we will be faced with again in the future. We want electricity available. We want it at a reasonable price. We know the market can have something to do with that if there is competition, but if there is competition there has to be oversight. If we are going to be able to move electricity, there has to be a grid. If there is going to be a grid, there has to be agreement among States in regions. These are the kinds of things we deal with. It is fairly complicated. On the other hand, there are pretty basic things that need to be done and have not been done for a very long time. Of course, we must keep in mind, as we do all of these things, some of the basic fundamentals we want to protect, and that is there are State opportunities to make a decision for local power; that we can show the difference between regional needs by having RTOs that have the authority to do this. If we are going to have a nationwide grid to be able to move power to make it more efficiently used, there has to be some Federal authority as well. This seeks to develop that balance. This amendment is balanced. It is a fair package. It creates a more efficient grid, increases investment, and enhances consumer protections. The amendment is supported by the administration as well as a number of stakeholders' groups such as the National Rural Electric Cooperative. I have a number of letters in support of the amendment and I ask unanimous consent that they be printed in the Record.

Mr. THOMAS. Madam President, I certainly agree with the Senator's point. That, of course, is one of the reasons we need to finish this bill. We talk all the time about restructuring. Frankly, the fact is, the electric industry and the suppliers have already changed, and we are behind times. This is not so much a matter of restructuring as it is to design a set of policies and a set of restrictions and constraints that fit with what is happening in the industry. Much of that a few years ago-- selling power three times and going through a number of people and different hands--did not happen. Now it is happening. Now we have to do something to catch up. That is part of what we are doing in this bill.

Mr. THOMAS

Mr. THOMAS. Yes. I was going to follow up on what has been said.

Mr. THOMAS. Madam President, I rise to discuss similarly what our floor leader said a few moments ago in terms of this bill before us. We are here to talk about the Defense appropriations. We have gone on now for a couple of days focusing on this matter of uranium from Africa. It seems to me that we need to focus on the issue that is before us and that is supporting our troops where they are, the Defense appropriations that we have, and probably the most important, certainly the largest appropriations that is before us. I have been listening now for some days and listening to the media, the charge that the 16 words President Bush uttered during his January State of the Union have been false. This is what he said: The British government has learned that Saddam Hussein recently sought significant quantities of uranium from Africa. That is what was said. So we say this may be false because in fact the British Government continues to stand by the assertion even if the CIA does not. So what Mr. Bush said about what the British believed was true in January, and it is still true today. That is what the British believed. Now do we need to take a look at our intelligence system? Of course, that is very important to us. But anyone who thinks every piece of intelligence is going to have certified truthfulness behind it, of course, is being naive. Because that is not the way things work. It is so clear this is so political that it really is kind of hard to accept. In fact, there are ads out now, political ads, assailing the President's credibility, and they go ahead and quote what the President said. But interestingly enough, they leave off the words ``the British government has learned.'' They leave those off. Doesn't this give you some feeling that we are taking this a little more politically than we are anything else? It seems to me that is the case. We are here now and this whole matter of weapons of mass destruction is an issue we are all concerned about. But this matter of uranium is not the reason we are in Iraq. Saddam Hussein used chemical weapons on his own people, his neighbors. Clearly, the production facilities were making chemical and biological weapons. There is no question about that. In September 1980, Iraq invaded Iran, and Iraq used chemical weapons. In 1988, chemical weapons were used against Iraqi Kurdish, killing 5,000 Kurds. After Operation Desert Storm, February 18, 1991, in the terms of the cease-fire, Iraq accepted the conditions of the U.N. Security Council resolution. That resolution required Iraq to fully disclose and permit the dismantling of the weapons of mass destruction. That did not happen. That is why we are there. This idea of leading us off the track because of the uranium is not really the issue. Should we look at our intelligence system? Of course. We do that constantly. But we don't need to take away the dollars that are in this bill for those agencies while we take a look at it. There is nothing more important in the world today than to have intelligence. I just think we need to cut through some of the things that have been going on here and we need to get down to what issues there are that affect our defense and the American people and deal with those. Politics is fine, but this is not the place to continuously use items that are obviously just political and try to take away the credibility of the President, which is one of his greatest assets, and I understand that. I understand that we are in an election cycle and so on. I really think it is time to deal with the important issues. We are having hearings. I think we need to move on and deal with the issues before us--to continue to clean up the situation in Iraq, look for peaceful solutions. That is really what it is all about. I will not take any more time. For a couple of days, I have been listening to this constant recital of the same sort of thing. It seems to me it is pretty clear where we are. We are in Iraq for a number of reasons, this being a very slight impact on the decisionmaking. What we are really intent on doing is getting on with these appropriations bills, supporting our military, providing a strong military so we can continue to do the things we have to do. But this idea of continuing to try to contain an issue and make it something more than it really is seems to me to be worn out. I hope we can move forward. We have a lot to do. We need to deal with the issues that are before us. I don't think this particular amendment is useful. We already have a system for looking at this. Withholding money pending a third-party operation simply doesn't make sense. I hope we will table this amendment. I yield the floor.

Mr. THOMAS. Madam President, my understanding was that I was going to have 10 minutes, then we would go to Senator Conrad, and then the Senator from Minnesota.

Mr. THOMAS

Mr. THOMAS. Mr. President, I would like to announce for the information of the Senate and the public that the following hearing has been scheduled before the Subcommittee on National Parks of the Committee on Energy and Natural Resources. The hearing will be held on Tuesday, July 29, 2002 at 2:30 p.m. in room SD-366 of the Dirksen Office Building in Washington, DC. The purpose of the hearing is to receive testimony on the following bills: S. 808, to provide for expansion of Sleeping Bear Dunes National Lakeshores; S. 1107, to enhance the recreational fee demonstration program for National Park Service, and for other services; and H.R. 620, to authorize the Secretary of the Interior to provide supplemental funding and other services that are necessary to assist the State of California or local educational agencies in California in providing educational services for students attending schools located within the Park. Because of the limited time available for the hearings, witnesses may testify by invitation only. However, those wishing to submit written testimony for the hearing record should send two copies of their testimony to the Committee on Energy and Natural Resources, United States Senate, SD-364 Dirksen Senate Office Building, Washington, DC 20510-6150. For further information, please contact Tom Lillie at (202) 224-5161 or Pete Lucero at (202) 224-6293.

Mr. THOMAS

Mr. THOMAS. Mr. President, I would like to announce for the information of the Senate and the public that the following hearing has been scheduled before the Subcommittee on National Parks of the Committee on Energy and Natural Resources: The hearing will be held on Thursday, July 24, 2003 at 2:30 p.m. in room SD-366 of the Dirksen Senate Office Building in Washington, DC. The purpose of the hearing is to conduct oversight of the competitive sourcing effort within the National Park Service. Specifically, the Subcommittee would like to gain a better understanding of the process for determining inherently governmental positions, the number of positions being evaluated, the time schedule and cost for the evaluation, the process for keeping personnel informed during the evaluation, the progress made to date, and the effect on National Park Service management responsibilities. Because of the limited time available for the hearings, witnesses may testify by invitation only. However, those wishing to submit written testimony for the hearing record should send two copies of their testimony to the Committee on Energy and Natural Resources, United States Senate, SD-364 Dirksen Senate Office Building, Washington, DC 20510-6150. For further information, please contact Tom Lillie at (202) 224-5161 or Pete Lucero at (202) 224-6293.

Mr. THOMAS

Mr. THOMAS. Mr. President, we are on this subject now. We are out of morning business; is that correct?

Mr. THOMAS. I thank the Chairman. I am very pleased to come to the floor this afternoon and join my colleagues to address an issue that has a crippling effect on the health care system. It has helped take out of control Medicare costs, malpractice costs. I guess specifically I am interested in it for my own State, of course, as well as everyone else's. Some providers have seen premiums jump as much as 81 percent in 2 years. Rural areas are disproportionately impacted. Often there is no other provider to fill in when a doctor is forced to close shop. That has been the case in my State. Recent studies by HHS show that in States where they have enacted limits on noneconomic damages in lawsuits, there are about 12 percent more physicians per capita than there are where there is no such cap. So we are beginning to not only test the costs but whether we have providers. That is a very important one. OB/GYN services have been especially impacted in my State, where 9 out of 54 recently surveyed have either stopped delivering babies or plan to do so because of rising liability costs. I have listened to my friend from Illinois talk about this issue. Obviously it is going to be a controversial issue. There are different views, very different views, but it is not a new solution. It is one that has been in place and has proven to work in many of the States. It also is interesting that we have talked a lot--I happen to be involved with the rural health caucus. We have spent 2 weeks previous to this talking about Medicare. And we talk about, frankly, who is going to pay, but we seldom ever talk about what the costs are and what we could do about reducing some of the costs that put people out of touch with their own physician. This is one that is proven. This is one that does work. It is here to be acted upon. As to the discussion on the other side of the aisle that maybe we are in too much of a hurry, this has been on our minds and on our floor and in our States for a very long time. This is not a new idea as a matter of fact. I just wanted to show one little chart I think is interesting. That is to show that reforms do work as a matter of fact. This says, ``2003 Premium Survey Data Selected by Specialties, $1 million to $3 million limits.'' Here are the specialties. Los Angeles, CA; Denver which has the limitation versus similar to what is here; New York, Nevada, Illinois, Florida do not. Then take a look here at internal medicine. Here is an $11,000 premium, $9,000 premium. Over here where there is no control--$16,000, $19,000, $26,000, $56,000. Down here is the OB/GYN. In these cases where there is some limitation, $54,000, which is obviously too much anywhere, and $30,000. But look over here where there are none, none of the controls we are talking about here, $89,000, $107,000, $102,000, $200,000. It does work. It does work. Medical Liability Monitor is the source of these numbers. It isn't as if we are talking about something that is untested, something that we don't know about. It is not as if we are talking about a new problem of which we were not aware. The fact is, we have physicians living in Cheyenne, WY, who drive to Colorado for this reason. Can you imagine Wyoming being one of the highest places to pay. You wouldn't think that, would you? I think this is something that has a good deal of merit, something that we need to talk about. We have cited some of the things that are peculiar to our own States. We have a doctor in Wheatland, WY, who over the last several years has delivered more than 2,000 babies in about four different counties. He has been the major provider of services there. He has quit operating. He has quit delivering babies. Sheridan, a little larger town, has one of two OB/GYNs in the area. His medical malpractice insurance costs over $60,000 a year. So we are in the position, then, when providers drop out of communities like this, where people are forced to drive 2 to 3 hours before they can get services. We have talked a lot, and we have a lot of concerns about rural health care. And it is difficult to keep providers in those areas. When you have one or two who leave, you have none. And so it is really quite different to be in our area. The Wyoming physician population ranks 47th out of 50 States. So every physician is very valuable to us. Forty percent of our family physicians are over the age of 50, and we are going to see more retirements. We are going to see more movement, particularly if there are disincentives to serve such as this cost of malpractice insurance. So we need to deal with this. As I said, this idea that is being promoted has been in place. We know that it works. Is it going to solve all the problems of cost? Of course not. But we know this one will solve some of the problems of cost, and we can move forward to find some other ones. As I said, we talk all the time about health care and who is going to pay. But as all health care costs keep going up 12 or 13, 14 percent a year, we have to begin sometime to take a look at how we can contain some of the costs so that somebody will be able to pay for it. One of our orthopedic surgeons in Teton County, Jackson Hole, WY, has seen a 300-percent increase in liability premiums in the last 12 months. Without trauma care in Jackson, these people have to go to Salt Lake City. This is the kind of additional difficulty we have. We all pay for medical liability costs. All patients pay the escalating costs generated by the Nation's dysfunctional medical liability system. And these increased premiums are the result. It also reduces the access to care, especially specialty care. So every taxpayer pays the price. We think we can reduce Federal spending in Medicare, Medicaid, the Federal Employees Benefits Plan. It is suggested we can reduce this by $14 billion in 10 years. This would be a savings to everyone. Local and State governments could save over $8 billion over that period of time. So it isn't just a focus on a few people. This is the kind of thing that would save us all money and I think would make our lives much better. What we are doing--and I think there needs to be a little explanation of it, to talk about it--doesn't limit damages to $250,000. It limits noneconomic damages to $250,000. So if someone needs care, if somebody needs various things that are economic costs, those things are not there. We want to make sure we listen carefully to what is being said here. So what we are seeking to do, of course--it seems to me reasonable-- is to set reasonable limits on noneconomic damages, provide for a quicker review of liability claims, assure claims are filed within a reasonable limit of time, and educate folks that frivolous suits only add to the overall cost of care for everyone. We spend a lot of time talking about who should pay. I have already discussed that but rarely do we talk about the costs. They are becoming increasingly important to us. This bill is modeled after California's liability reform bill. California's law stabilized the State's medical liability insurance market, increasing patient access to care, saving more than $1 billion a year in liability premiums. As I said, specifically it allows unlimited economic damages. Past and future medical expense, loss of past and future earnings, cost of domestic services, these things are not limited. It establishes a reasonable limit on noneconomic damages which is exactly what we are seeking to do. States, however, would have the flexibility to establish or maintain their own laws on damage awards. It establishes a fair share rule that allocates damages properly and fairly in proportion to the party's degree of fault. There is a sliding scale for attorney's contingency fees; therefore, maximizing recovery for patients, which this is really all about. It authorizes periodic payments to injured parties rather than one lump payment. It is interesting to me, it does seem to present kind of strange politics. We argue on the other side of the aisle all the time about health care and that we ought to pay and make sure everybody has health care and so we will do it with taxes so that they are appealing to those people who need help in terms of costs. But when we come up with something that will impact the costs, suddenly the sympathy shifts over to the trial lawyers. It is sort of interesting to try to argue both sides, when there is a certain amount of conflict here. I think this is a real opportunity for us to do some things that will be helpful to everyone, whether they are taxpayers, patients, physicians, or whatever. We have a chance to do something with that. Now is our opportunity. It is not a new problem. I think it is time we act. I am pleased to be among the sponsors. I want to work to see that this moves forward.

Mr. THOMAS

Mr. THOMAS. Mr. President, I would like to announce for the information of the Senate and the public that the following hearing has been scheduled before the Subcommittee on National Parks of the Committee on Energy and Natural Resources: The hearing will be held on Tuesday, July 8, 2003, at 10 a.m., in room SD-366 of the Dirksen Senate Office Building in Washington, DC. The purpose of the hearing is to conduct oversight of the maintenance backlog, land acquisition backlog, and deficit in personnel within the National Park System, including the impact of new park unit designations on resolving each of these concerns. Because of the limited time available for the hearings, witnesses may testify by invitation only. However, those wishing to submit written testimony for the hearing record should send two copies of their testimony to the Committee on Energy and Natural Resources, United States Senate, SD-364 Dirksen Senate Office Building, Washington, DC 20510-6150. For further information, please contact Tom Lillie at (202) 224-5161 or Pete Lucero at (202) 224-6293. committee on energy and natural resources

Mr. THOMAS

Mr. THOMAS. Mr. President, I rise today to recognize the 140th Anniversary of the Wind River Reservation. On July 2, 1863, the U.S. Government and the Shoshone people signed the Fort Bridger Treaty, creating the Shoshone Reservation, which included over 44 million acres in what is now Colorado, Utah, Idaho, and Wyoming. This area was reduced to roughly 3 million acres by the second Fort Bridger Treaty of July 3, 1868, and was later renamed the Wind River Reservation during the 1930s. Today, the reservation is roughly more than 2 million acres, one of the largest in the country, and is located in central Wyoming's beautiful Wind River Basin. It remains the contemporary home of the Eastern Shoshone and Northern Arapaho tribes. Chief Washakie, a distinguished statesman of the Shoshone people, was one of the few Indian leaders to successfully negotiate with the U.S. Government in determining the reservation's location. For centuries, American Indians who traveled through this area referred to it the Warm Valley of the Wind River because of surrounding hot springs. Renowned for his courage on the battlefield, and talent in diplomacy, the people of Wyoming selected Chief Washakie to represent our State, in the U.S. Capitol Building, as one of our two contributions to Statuary Hall. The northern band of Arapahos began to make the Wind River Reservation a more permanent home during the last 1870s, though they were not signatories to either of the Fort Bridger Treaties. Under the leadership of men such as Black Coal, Sharp Nose, Little Wolf and White Horse, the Northern Arapahos settled in Wyoming, while the southern band of Arapahos was moved to a reservation in western Oklahoma. Wind River country encompasses mountains, streams, lakes and forests, and was favored by the Northern Arapaho over the hot and arid Oklahoma landscape. The Wind River Indian Reservation is one of Wyoming's great historical, cultural, and natural treasures. A grave site for Sacajawea, the young Shoshone woman who helped guide the Lewis and Clark expedition through Shoshone lands in the early 1800s, can be visited on the reservation. Both tribes continue to host several powwows during the spring and summer months that draw visitors and members of tribes from across the country. Later this week, the Eastern Shoshone will be celebrating the Treaty Days Powwow. As we look back on the past 140 years, I would like to pay tribute to the important contribution American Indians have made to our history and our culture. Throughout my time in Congress, I have had the pleasure to work with tribal leaders from both tribes on the Wind River Reservation. I would like to thank Vernon Hill, chairman of the Eastern Shoshone Business Council and Burton Hutchinson, Sr., chairman of the Northern Arapaho Business Council, for their leadership as we work to ensure the prosperity of the Wind River Reservation for future generations.

Mr. THOMAS

Mr. THOMAS. I ask unanimous consent to lay aside the pending amendments.

Mr. THOMAS. This extends the opportunity to directly pay medical health consultants. I will discuss it later. In the meantime, I will set it aside for later discussion.

Mr. THOMAS. I send an amendment to the desk.

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

Mr. THOMAS

Mr. THOMAS. Mr. President, I ask unanimous consent that an intern, Samantha Muirhead, be granted privilege of the floor.

Mr. THOMAS

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

Mr. THOMAS. Mr. President, I agree with what the Senator just said. I ask unanimous consent that the order of amendments provide that when a Republican amendment is offered, it be considered in an alternating fashion with the Democrat amendments; provided further, that it be in order for the amendment to be offered in any Republican slot.

Mr. THOMAS. Mr. President, certainly we are dealing with an issue and a proposal where there are huge differences. And there have been huge differences for some time. The Senator from New York represents quite a different point of view from several years past. What we are trying to do is to provide better service, provide some options, provide some modernization of a program that is 40 years old, that has never been changed. So the question really is, How do we best serve all of the people who are in need of service? The question is not, How do we maintain and grow a Federal program, and keep it all Federal? That is not really what most of us have in mind. We want to look at some alternatives. We want to look for choice, where people who wish to stay in the program as it now exists may do that. And that is what this bill provides. But it also provides an opportunity to move to something that could be different, have some choices, could even in fact be more efficient, more effective. I am afraid it is hard for me to accept the idea that Government programs are more efficient than the private sector. I don't think there is much evidence of that. Certainly what we are talking about here is having some opportunities for a change, some opportunities for some alternatives. I understand there will be those who will be resisting those changes, but nevertheless we do have a bipartisan bill before us that incorporates that opportunity. We want to do it. We are concerned, of course, about having services that reach out to everyone in rural areas. I think I am about as concerned about rural areas as anyone in this body. I come from one of the most rural States. I have to tell you how pleased I am that we have in this bill a substantial program for rural health care, one, by the way, that was turned down by many of the folks who are now worried about the rural areas in the tax bill. But it is here, and it will respond to the needs of rural constituents and rural beneficiaries. And that, of course, is of vital importance to all of us. With respect to dual eligibles, the Senator, the speaker just recently, has raised a concern about how S. 1 treats seniors who are eligible for both Medicare and Medicaid programs. Those are known as dual eligibles. Under S. 1, these seniors will continue to receive their prescription drug benefit through the Medicaid program. It is alleged that by having dual eligibles remain in the Medicaid program, Congress is treating them as second-class citizens and subjecting them to lower quality benefits. I don't believe this to be the case, nor is there evidence that it is the case. We worked diligently on the development of this package and reflected these concerns that were raised all the time during last year's debate. Learning from these lessons, we decided it was most beneficial to seniors to continue to build off existing Medicare and Medicaid low- income assistance programs as far as to offer a seamless benefit. We do not want to divert scarce resources available for this benefit toward the development of a new government bureaucracy. I am confident S. 1 establishes this new benefit in a manner that will provide high quality, accessible care through a system that is familiar to seniors and easy to navigate. It is also important to note that the Medicaid program is considered by most advocates and beneficiaries to be quite generous and far superior to the current Medicare program. Recognizing that this is a program for persons with low income, the Federal Government only allows States to charge nominal copayments to receive the drug benefit. Further dual eligibles have been and should continue to remain the joint responsibility of State and Federal Governments. However, in recognizing that the Federal Government should play a dominant role in delivering this vitally important benefit, we provide in this bill $14 billion in additional Federal dollars to help pay for increased costs associated with the new prescription drug standards included in the bill. This is because the bill provides minimum standards to ensure that benefits provided through Medicaid are the same high quality as those provided through Part B of the Medicare program. For these reasons I am confident and I think our committee was confident that dual eligibles will continue to have access to prescription drugs that they deserve. Some argue we should do more, perhaps even serve this population differently, but this bill was developed in a manner that we believe utilizes scarce dollars efficiently and helps to deliver care that is consistent with the current law and easy for seniors to navigate. This is a discussion that has already been held to a great extent, how you deal with low income and to do it in a way that is consistent with what we have had in the past and was equal in benefits to what we have had in the past. That is the process that is designed here. So as we move on, I hope we can continue to provide the things that are really the purpose of this whole bill. And there are two at least. One is to provide, of course, drugs, pharmaceuticals to seniors and do it in several different ways so that it meets the needs of those seniors somewhat dependent on income. The other is to provide some opportunities to improve the distribution system for Medicare, again, a program that has been in place for 40 years, has had relatively little, if any, change. And now we have an opportunity to give some choices to the beneficiaries and develop programs that are more efficient than what we have had in the past. So it is kind of discouraging to have people stand and want not to change whatever we have had going on for 40 years. We are not talking about changing the benefits. We are not talking about the quality. We are talking about making a distribution system that meets the needs of the changes that have taken place in our society and be able to do that in a way that people would like to and will want to have choices. So as we talk about these various amendments that will be raised, I hope we will continue to take a look at what it is we have as a goal here, to be able to do these things that have been described and focus on getting the kind of results we really have in mind when we put together this proposal and continue to have bipartisan support for the bill. I yield the floor.

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

Mr. THOMAS. Mr. President, as we hear more and more about this bill, of course, it causes us to reflect on it and that is the purpose of having conversation, that is the purpose of having debate. There will be much more of that, of course, but it is interesting to listen to what is being discussed, much of it based on the fact we need more money for this and more money for that, when we are adding to Medicare $400 billion, continuing to support the basic Medicare Program as it is financially, and adding to it this additional amount. Medicare will be improved in every way as this happens. So I know it is a logical time to talk about how we might do more, how we might provide a Government program, as the Senator from New York talked about this morning, for everyone; take all the payments out, and that is a point of view. I think, however, the concept of this business of Medicare is one in which we all pay into it, we pay something for it. Obviously, one of the principles of health care is for the recipient to pay something. We have found when they do not, it is out of control entirely. We have a lot of worrisome times about Medicaid where there is no initial payment and we have overutilization. These are all part of the elements that go into it. I know it is great to talk about giving everything to everyone, but the fact is, that is not what is going to happen. We have to get a balanced program that does what we really want to do. We talk about the gaps and helping people. The fact is, there is no gap for people who are below 160 percent of poverty. If we are going to assist someone, we assist those who are less able to assist themselves. That is what it is all about. That is what we seek to do. Is it perfect? Of course not. If there were 100 of us sitting here working on the plan, we would probably have 100 different ideas as to how to do it, but we have to come to some consensus as to what our goals are and how we can best achieve those goals. Over time, it is something that is useful. We have to keep that in mind as we go forward. Obviously, there are all different kinds of ideas, such as the fact we had a tax reduction and, therefore, we should be able to spend more. We had a tax reduction because we have an economic problem. We are trying to fix the economy-- that is why we had a tax reduction--along with terrorism and other needs. To say we should pay more because we already had a tax reduction is not relative. That is not where we are. Out-of-pocket expenses, of course, are always important, and should be. That is one of the keys. Here we have a program on which we have a certain amount of money we can legitimately spend. How do we best do that? How can we deal with everyone the same? Do we do more for those with low income and those who are less able to afford it? Of course. The true out-of-pocket limit targets the drug benefit to those who need it the most. That is what it is about. The purpose of out of pocket is to protect seniors from high out-of- pocket costs. It is that simple. Spending that counts toward the out- of-pocket limit spending by the beneficiary. If the beneficiary drug is covered by some other source, such as a retiree's health plan, that money does not count out of pocket. Seniors with additional coverage are not penalized for having additional coverage. They are protected if they have $3,700 out-of- pocket spending. In addition, they continue to benefit from additional drug coverage beyond that point, of course. In addition to out-of-pocket spending by the beneficiary, spending by family members or friends also counts toward the out-of-pocket limit, as does spending by State pharmacy assistance programs, by State pharmacy plus programs. These programs target resources to lower income seniors who need additional assistance. They are in place now. Allowing this spending to count toward the out-of-pocket limits allows these lower income seniors to receive additional assistance and still be protected against prescription drug costs that are not covered by Medicare drug benefits. We should care about what the individual beneficiary has to pay, not what others pay on their behalf. This is the purpose of out-of-pocket limits in the proposal. Those who reach the amount of spending available will have 90 percent of their drug costs covered. The House and Senate bills encourage employers to continue providing benefits by allowing them to avail themselves of 100 percent of the subsidies for offering standard benefit. If employers want to provide more, they are free to do so. These are tough issues as to how we deal with some limitation on the spending and how we distribute it. We will hear more about it, and, indeed, we should. There will be finally some principles involved as to the best way to spend the amount of money that is legitimately available. I hope we continue to focus primarily on those who are in that category of 160 percent of poverty level, and that is where it will continue to be. Mr. President, we will continue to hear more. We certainly should hear more. We will continue to have more amendments, and that is fine. The Senator from Massachusetts was a member of the committee. We worked on it in the first place, and he has had an opportunity for input. Many of these proposals have already been voted on in the committee. Of course, if they are being proposed again, they were not successful in committee. Nevertheless, they should be brought up to this body, and they will. Again, my hope is we can take a look at where we want to be in the year 2006, but what we want the result to be and make the adjustments that are necessary to get us to that point and not be taking up issues that are not even a part of debate. We are going to have to be very careful that we keep it limited to the issues that do impact Medicare and are in this area. I know we will continue to do that. Mr. President, I suggest the absence of a quorum.

Mr. THOMAS. Mr. President, I will comment on the amendment, the no premium on the donut amendment. First, let me say that I wish we did not have a gap in coverage. Unfortunately, eliminating the gap in coverage could add as much as $200 billion to the cost of this proposal. As we all know, we are working within a budget of $400 billion and this bill targets those funds to those who need it most. Most seniors, however, will not be affected by the gap in coverage at all. This is because their drug spending will not reach limit, or because they qualify for the additional assistance in the low-income benefit, or because they have additional coverage from a retiree health plan, or coverage they have purchased themselves. Most seniors will not have drug spending in a year that exceeds the benefit limit. According to the Congressional Budget Office, 80 percent of seniors will not even have prescription drug spending that exceeds the $4,500 benefit limit. That means that right off the bat only one senior in five would even have drug spending high enough to be affected by the gap in coverage at all. Now, the drug benefit package for lower income seniors does not have a gap in coverage. In drafting this bill we have targeted resources to those who need it most. We made it a priority not to have any gap in coverage for lower income seniors. This means that beneficiaries with incomes below about $15,000 and couples with incomes below about $20,000 in 2006 will have no gap in coverage. That is 41 percent of Medicare beneficiaries who are completely unaffected by the benefit limit. In addition, beneficiaries who have coverage from a retiree health plan will not be affected by the benefit limit when the plan provides that additional coverage. Today, about 32 percent of beneficiaries have retiree coverage and this bill provides generous Federal assistance to retiree-sponsored plans so that they can continue to offer coverage to their former workers. Other seniors will be able to purchase additional prescription drug coverage from their prescription drug plan or through their MedicareAdvantage plan. This additional drug coverage will be seamlessly integrated into their drug benefit package and will ensure that seniors who want additional coverage will be able to get it. As a result of the elimination of the gap for 44 percent of seniors who have lower incomes and the fact that many seniors have additional coverage, we estimate that only about 2 to 12 percent of seniors will ever be affected by the gap in coverage. Now every single beneficiary who enrolls in the drug benefit will have comprehensive coverage including coverage against catastrophic drug costs. That coverage is present even for those 2 to 12 percent who are in the gap in coverage. These seniors are always protected against higher drug costs. Any enrollee will have 90 percent of their prescription drug costs covered if they have $3,700 in out of pocket spending on prescription drugs in a year. Now Senator Graham calls the benefit limit a sick tax because he believes that seniors should not pay a premium for the coverage for catastrophic costs if they hit the benefit limit. This is like saying that you should not pay for fire insurance if your house isn't on fire. But of course that is not how insurance works. People purchase insurance to protect them against unfortunate events like a house fire, an accident, or some other tragedy. To get the coverage in your insurance policy, you pay an insurance premium. If you do not pay the premium, then your insurance policy is not going to give you the coverage. That is the same idea here with coverage for prescription drugs. Any senior who wishes to enroll in the voluntary benefit will pay a monthly premium for that coverage. The coverage is voluntary and the premium is an affordable $35 per month. And 44 percent of beneficiaries with lower incomes will have very low or no premium at all for the coverage offered in this bill. Finally, if we were to close the gap in coverage for seniors at higher income levels it could cost over $200 billion, which would require us to take benefits away from the seniors with the lowest incomes. Personally, I cannot justify that action. Of course, today's seniors receive no assistance from Medicare for outpatient prescription drugs, and this bill changes that by adding a new comprehensive prescription drug benefit to the program. The average senior will save at least 53 percent, about $1,700, off their prescription drug costs after paying an affordable monthly premium of $35. And lower income seniors will have 80 to 90 percent of their drug costs covered. We have worked hard to minimize the gap in coverage within the resources available for the proposal. We have done that. Most seniors will not have spending that hits the benefit limit, and for those who do, many of those will have coverage above the limit through the low- income benefit package, from retiree plans or from additional coverage provided by their plan. I urge my colleagues to vote against the Graham amendment. I urge we not consider the Graham amendment, that, in fact, this has been covered and is covered in the bill as it now exists and is designed to help those beneficiaries with the lower incomes. I yield the floor and suggest the absence of a quorum.

Mr. THOMAS

Mr. THOMAS. Mr. President, I ask unanimous consent that the Committee on Armed Services be authorized to meet during the session of the Senate on Friday, June 20, 2003, at 9:30 a.m., in closed session to receive briefing on Iraqi reconstruction and humanitarian assistance activities.

Mr. THOMAS

Mr. THOMAS. Mr. President, I urge my colleagues to vote against this amendment. Competition is the key to holding down costs. That is common sense. This amendment is anticompetitive because it constrains competition. I think we should oppose it. According to CBO, the competitive policies in our bill ensure that premiums and cost sharing for drug coverage will be affordable. Under S. 1, prescription drug plans that do a poor job of negotiating drug prices will have to charge a higher premium. The same goes for plans that are inefficient and wasteful. Plans that do a good job negotiating will be able to charge lower premiums. That is the marketplace. We should not micromanage it. This amendment does just that. I urge my colleagues to oppose it. I remind my colleagues, a similar amendment capping premiums at 5 percent was defeated in the Finance Committee last week by a vote of 7 to 14. I yield to my friend from Louisiana.

Mr. THOMAS. Mr. President, I yield time to the Senator from Montana.