Paul Wellstone

Mr. WELLSTONE

Mr. WELLSTONE. Will the Senator yield for a question?

Mr. WELLSTONE. My understanding is 25 percent.

Mr. WELLSTONE. I would be pleased to yield on the Senator's time.

Mr. WELLSTONE. I thank my colleague. I reserve the remainder of my time.

Mr. WELLSTONE. Mr. President, how much time do I have remaining?

Mr. WELLSTONE. Mr. President, let me respond to the third question. Then I will just finish up. But the first question actually raised by my colleague from Alabama raises an interesting question. In response to the third question, I say to my colleague from Alabama, I very much appreciate what he said. That is why I was very careful in the beginning saying--I learned a long time ago to assume good faith on the part of other colleagues, to basically assume people are doing what they think is right. I would not suggest that my colleague is a pawn of anybody. What I said was that the amendment, whatever the intention, has the effect, will have the effect, of intimidation of the public health community and will have the effect of and amounts to an effort in terms of its effect to intimidate the attorney general in Minnesota and the State of Minnesota. That is exactly true, and in that respect, it is a tobacco company amendment. Mr. President, actually--to go back to Minnesota--I find it interesting that what happened apparently is Minnesota went to a contingency fee, and then as a result of that, the tobacco companies challenged this in court. So now we have an amendment on the floor which is another way of essentially trying to deal with this arrangement in Minnesota. I do not think we in the U.S. Senate should be doing this as it affects different States. Mr. President, just a little bit of history to bring us to where we are right now. So what happened is that unnamed colleagues--I mean, it was not the tobacco industry; they did not actually sit down in the committee and put the amendment in--somebody tucked the amendment in. Old politics, back room politics, you know, it just happens in the dark, just happens behind the scenes. I mean, once upon a time people viewed that as being clever legislators. It just does not work that way any longer. So my colleagues come to the floor, and they essentially say, ``Look, let's just at least knock that out. That ought not be in there.'' That is what this amendment is about. That would be a proposition that we could have an up-or-down vote on. When I was back in Minnesota and the stories broke that in the tax bill we had this $50 billion tax break, tax credit, tax giveaway to the tobacco industry, people in Minnesota were saying to me, ``Congratulations, Paul. You voted against that tax bill. You voted against that budget bill. You knew, and a lot of other people didn't.'' And I said to them, ``You know, I've got be honest. I voted against that bill for other reasons. I didn't know. I would love to tell you I was the one person who did and that is why I voted against it, but actually I didn't know.'' This was just sort of tucked in there. Some Senators, Representatives--one, two; I do not know how many--put it in there. It was very cleverly done. But my colleagues have come to the floor and said, ``Look, we didn't know that was in there. This is not the way it's supposed to work. This is not exactly a political process with a lot of accountability. We ought to take it out. We can have an up-or-down vote on that.'' Now what we have is an amendment with the intended effect to intimidate advocates of public health. I mean, that is not the motivation, but that would be the effect of it. I do not know that it is an intended effect. It probably isn't. But the effect of it would be to intimidate advocates of public health, to intimidate States like Minnesota where we have plowed through, again, 30 million pages of documents. The Minnesota case is rated by top tobacco stock analysts at Bernstein Research as ``the biggest threat'' to the industry. And I can see exactly what is going on here. This is an amendment that is a dream come true for the tobacco industry to try to go after States like Minnesota, to try to make sure that States cannot go through with this. If that is what happens, then we all lose. So, Mr. President, let me just make it clear that this amendment, if passed, would have the effect of intimidating the public health community, advocates for the public health community, and States like Minnesota that promised to bring to light, in what would be a huge court proceeding, information that will be vital to the public health of this country. This amendment is not neutral in its effect. This is a tobacco industry amendment. That is what this is all about. Therefore, I urge my colleagues to vote no. As a Senator from Minnesota, I am proud that the Minnesota case is viewed as the biggest threat to the industry. I am proud that the trial is going to begin in January 1998. I am proud that, I think, a whole lot of information is going to come to light and we are really going to learn much more about what exactly has been going on within this industry and how it has affected our families and how it has affected our children. But, Mr. President, this amendment is a get Minnesota amendment. This amendment, with its caps, is an effort to go after Minnesota, to go after advocates for Minnesota, to go after the public health community, to make sure that we do not have lawyers that are working on this and to make sure that ``the biggest threat'' to the industry court case may never take place. It is an outrageous amendment. I hope colleagues will see it for what it is and it will be voted down resoundingly. Mr. President, I yield the floor. Mr. KENNEDY addressed the Chair.

Mr. WELLSTONE. Sorry. You have the third question. I will be pleased to yield for the third question.

Mr. WELLSTONE. That is my understanding. If I could go on--I think I have the floor--I was going to say to my colleague, it is my understanding also that the tobacco industry challenged that and that they lost in court. Then in response to the second question, actually what my colleague from Illinois said was what I was going to say as well. Again, I am not a lawyer, but it is pretty clear to me that it is fine to get the compensation for the copying or whatever needs to be done with all the documents, but somebody has go through those documents, somebody has to read the documents, and somebody has to try to determine what those documents really are saying in terms of culpability, in terms of what might have happened. That is, of course, the work that the lawyers are doing on behalf of the public health community. But, Mr. President, since there isn't a third question, let me go back because there are other colleagues on the floor. And I will be pleased to----

Mr. WELLSTONE. Mr. President, why not take all three questions and then answer all three of them.

Mr. WELLSTONE. I will be pleased to.

Mr. WELLSTONE. I thank the Chair. Mr. President, I rise today on the floor of the Senate to express my strongest opposition to an amendment which I am sure has been offered in good faith but the effect of which really will be to intimidate advocates of public health and, in particular, I think amounts to an intimidation of the attorney general of the State of Minnesota and, again, the public health community who have hired legal advocates on their behalf and on the behalf, I might add, of the collective public health people in this country. Mr. President, let me give a little bit of information about Minnesota's tobacco case, because this amendment does not have a neutral effect. My colleague, Senator Durbin from Illinois, last night pointed this out. In a State like Minnesota we have pored through 36 million pages, 36 million documents, in what promises to be the biggest court case this winter. This will bring to light a tremendous amount of information in all likelihood, I think, dealing with some very serious abuses by the tobacco industry, which could lead to a very far-reaching and major financial settlement for Minnesota and also lead the way for other States. It also could lead the way toward some really dramatic protection for people in this country. This amendment amounts to nothing less than an effort to intimidate advocates of public health and to intimidate the attorney general of the State of Minnesota. The $250 per hour or $5 million cap altogether does not take into account, as my colleague from Illinois mentioned last night, different efforts that have taken place in different States. But to me, again, regardless of the motivation, the effect of this amendment is a get Minnesota amendment and, I might add, it really goes after, again, most importantly, advocates of public health. I have no idea--I am not a lawyer--what the particular arrangements are between the attorney general and the contract with lawyers who are working with our State, but I doubt very seriously that we, the U.S. Senate, have the constitutional right to directly intervene in that. I do know this amounts to nothing less than an effort to get people to back down. I don't think that will happen, I say to my colleagues, not in Minnesota. Let me say a little bit about Minnesota's tobacco case. Minnesota is the first State in the Nation to charge the tobacco industry with consumer fraud and antitrust violations and the second State to seek Medicaid reimbursement. It is the only State with a private co-plaintiff, Blue Cross and Blue Shield of Minnesota. Minnesota's outside counsel, Robins, Kaplan, Miller, & Ciresi, has a national reputation for resolving complex litigation battles against corporate giants, including the Dalkon shield case and the Bhopal, India, chemical spill case. This case was launched in August 1994. There are 36 million documents. The State has won the majority of pretrial motions and all appeals, including one in the U.S. Supreme Court. The State has secured 30 million pages of documents through discovery. Minnesota has the largest collection of tobacco documents in the world, housed in two secured depositories in Minneapolis and London. Public documents already cited as evidence in the case have detailed youth marketing, enhancement of the effect of nicotine, admissions of health problems, and other disclosures central to Minnesota's allegations. Most of the evidence remains under seal at the tobacco industry's insistence. The court is reviewing tobacco companies' most secret documents, formerly hidden under attorney-client privilege claims, for possible disclosure. That is the current status. The Minnesota case is rated by top tobacco stock analysts at Bernstein Research as ``the biggest threat'' to the industry. The trial begins January 1998. I think that is what this is all about, at least in its effect. Minnesota's court case is the biggest threat to the industry. We will see a disclosure of information that will be so critical to the health of people all across the country. This amendment amounts to an effort at intimidation toward the advocates of public health who have hired lawyers as their advocates and, again, I think is really aimed right at the State of Minnesota, really aimed right at the attorney general of Minnesota. This is a tobacco industry amendment. This industry doesn't want a State like Minnesota to go forward. This industry doesn't want lawyers out there representing the public health community. Let's be realistic about it. The only way you can go through all these documents, the only way you can put together this kind of case, the only way you can go after these tobacco companies, these giants, is by having lawyers working for you. That is what the State of Minnesota has done. That is what the public health community has done. This amendment is an amendment aimed at trying to bring a halt to this process. Mr. President, I am not, again, an attorney, but I will raise two or three final points. One, I don't really know how we in the Senate can say to the attorney general of Minnesota or the State of Minnesota, whatever your contractual arrangements are--and I don't even know what they are with lawyers representing your State--we're going to come in and essentially declare that null and void; we're going to supersede that contractual arrangement. I don't even know if we can do that. No. 2, I will just tell you that when you are talking about 30 million pages of documents through discovery, this cap is not neutral in its effect on a State like Minnesota, and $5 million compared to what Minnesota might very well be able to accomplish by way of a damage suit, by way of compensation for the people of Minnesota, by way of information for the public, by way of what information comes to those of us in the Congress, by way of what we can do with that information to protect the public health really amounts to hardly anything. Finally, Mr. President, there is a world of difference between $5 million and the amount ultimately that that kind of legal counsel on behalf of the public health community will be able to obtain, again, by way of financial compensation and by way of information and by way of protection for the public health, all of which has to do with research and protection of people's health in this country. So let us just be real clear about this amendment. This is the tobacco company's dream amendment. That is what this is all about. And that is what this vote is all about. I think my colleagues will be making a big mistake if they do not think that people cannot see through this. Just a little bit of chronology here so that people in the country understand this debate right now. And I think they do already. My colleague from Illinois, Senator Durbin, joined by Senator Collins, Republican from Maine, in a bipartisan effort, came to the floor of the Senate--let us just be sort of historical about this for a moment--and said, wait a minute, we had this tax package, and we had this budget bill, and that is what it was supposed to be all about. And lo and behold, somebody slipped in a $50 billion relief package for the tobacco companies that they could use as credit toward any final compensation that they owed to people in this country. My colleague from Illinois was very polite. I will be just as polite because I do not really know who did it. He said that the tobacco industry's lobbyists put this in the bill. They did not actually, literally do that. Senators and Representatives did that. Actually, the tobacco companies' lobbyists are very powerful, obviously. We see it again with this amendment. But they are not actually so powerful, as the Chair knows, that they can actually directly write the amendment, literally be the ones who put the amendment in in the conference committee. They cannot actually do that. They cannot actually sit there and pretend like they are Senators and Representatives. Actually some Senator or Representative has to do that.

Mr. WELLSTONE. I would be pleased to.

Mr. WELLSTONE. My understanding is that on the first arrangement--and I am just learning about the arrangement right now--it is a contingency fee, which was challenged by the tobacco industry, and the tobacco industry lost that in court, in response to your first question. On the second question, I think, still, it does not have anything to do with the----

Mr. WELLSTONE. I yield to my colleague from Illinois.

Mr. WELLSTONE. I thank the Chair. Mr. President, and colleagues, I shall be brief. I, too, thank the majority leader, the minority leader, Senator Sessions, and Senator Durbin for their cooperation. Mr. President, this amendment is very simple and straightforward, and in a way the context for this is Minnesota. But it really affects all of our States. This amendment just says that nothing in the act may be construed to interfere with, or abrogate, any agreement previously entered into between any State and private attorney with respect to litigation involving tobacco. For example, in Minnesota the case is in a State court. What are we doing? I am not a lawyer. But what are we doing here in the U.S. Senate telling Minnesota that its contract with lawyers that are working with the State of Minnesota could be declared null and void? What are we doing saying that to the State of Minnesota, or what are we doing saying that to any State? I thought we had a States rights Congress. This goes just in precisely the opposite direction. Mr. President, again a little bit of information about Minnesota, so we know what is at stake here. I mean I am out here fighting for my State of Minnesota. But I think this is important to all of our States. I cannot believe that my colleagues want to be in a position of arguing against the proposition that we should pass an amendment that tells the State it has to abrogate its contract with attorneys that are representing that State in State court. That is absolutely unbelievable. Mr. President, in Minnesota, against some background, is the first State in the Nation to charge the tobacco industry with consumer fraud and antitrust violations. It is the second State calling for Medicaid reimbursement. It is the only State with a private coplaintiff, Blue Cross and Blue Shield of Minnesota. The case was launched in August 1994. We have won the majority of pretrial motions, and all appeals, including the one that went to the U.S. Supreme Court. Minnesota secured 30 million pages of documents through discovery. Minnesota has the largest collection ever of tobacco documents in the world, housed in two secured depositories in Minneapolis and London. The Minnesota case is rated by the top tobacco stock analysts of Burnstein Research as the ``biggest threat to the industry.'' I want to talk about what that means--``biggest threat to the industry.'' We go to trial in January. This trial stands to be important not just for Minnesota but for the whole Nation--not just in terms of financial compensation for my State, for the people in my State, but the discovery, the information that will come to light about past abuses, about what the tobacco industry has known, about marketing techniques, and all of the rest. This amendment, which is an amendment albeit for my State of Minnesota but really applies to every single State, just says to colleagues that in whatever action we take let us be clear that nothing that we are doing here can be construed to interfere with or abrogate any agreement previously entered into between any State and private attorney or attorneys with respect to litigation involving tobacco. We have a case in Minnesota. It is in State court. What are we doing in the Congress telling Minnesota that it will have to abrogate its contract with attorneys? The arrangement is made with attorneys so those attorneys can represent the public health community, so those attorneys can represent the State of Minnesota and people in Minnesota, so those attorneys can represent all of us who would like to see these documents and this information come to light. I do not think this is constitutional and I certainly think it is inappropriate.

Mr. WELLSTONE. Mr. President, I send an amendment to the desk.

Mr. WELLSTONE. Mr. President, I thank the Chair. Amendment No. 1126 to Amendment No. 1078

Mr. WELLSTONE

Mr. WELLSTONE. I thank the Chair. I will wait until tomorrow, then, to speak. Mr. SESSIONS addressed the Chair.

Mr. WELLSTONE. Mr. President, I wonder whether, with the support of my colleagues, rather than taking up more time tonight, I might ask unanimous consent to be included in the sequence of that order to be able to speak once we start for 5 minutes or 10 minutes? I will not do it tonight.

Mr. WELLSTONE. Mr. President, might I ask the manager a question? I had come to the floor to speak tonight, but I know it is late and people may be anxious to leave. What would be the order of business tomorrow? Is there additional time on the amendment of the Senator from Alabama?

Mr. WELLSTONE. No. Mr. President, I would be prepared to lay the amendment down tomorrow morning as early as he wants.

Mr. WELLSTONE. I had been home and I followed the debate on the amendment of the Senator from Alabama, and I had wanted to come over here and respond to that.

Mr. WELLSTONE. Yes. I say to my colleague from Pennsylvania, that is correct. I am prepared to lay this down tomorrow and debate it for 1 hour, if there are no second-degree amendments.

Mr. WELLSTONE

Mr. WELLSTONE. Mr. President, I am extremely pleased that we are passing this bill to reauthorize Small Business Administration programs. I commend Senators Bond and Kerry, the chairman and ranking member of the Small Business Committee, respectively, for their work. It is an excellent bill, providing adequate loan-guaranty authorization levels for SBA's two principle credit programs--the 7(a) and the 504 programs. The bill also expands and makes permanent the microloan demonstration program, which is extremely important. All three programs are popular and successful in Minnesota. Our committee held a number of hearings this year to prepare for this reauthorization bill, and as usual we have worked in a productive, bipartisan way. Our committee passed a very good bill, highlights of which I will mention momentarily. I would first like to note, however, two items which I am grateful could be included in the managers' amendment. The first is a provision clarifying SBA's policy regarding collateral in the 504 Program. The 504 Program is an excellent program. It operates through collaboration between certified development companies (CDCs), private lenders and small business borrowers. 504 loans are for larger projects than SBA's 7(a) guaranteed loans. They generally are for property, plant and equipment purchases. It is the only SBA program with job- creation and economic development as its explicit primary objective. I am proud to point out that Minnesota CDCs made 359 loans worth $122 million last year, tops in the nation for the third or fourth year in a row. I appreciate steps that were taken by SBA officials in a recent policy guidance on this matter of collateral. That policy guidance assures certified development companies that collateral is only one factor evaluated in the credit determination of a small business in the program. Furthermore, the guidance establishes that collateral in addition to a subordinate lien position on the property being financed will be required only on a case-by-case basis as determined by the Administrator. The provision now included in this bill relating to collateral simply codifies that SBA policy guidance in statute. I thank the bill's managers for including the provision at my request in their amendment. As I mentioned to my colleagues on the committee during our markup of the bill, it is occasionally necessary for Small Business Committee to save SBA from itself when it comes to policy proposals concerning its loan programs. Not too many years ago, SBA wanted to eliminate all subsidy and appropriation for the 7(a) program. We on the committee and in Congress were right in preventing them from doing so. Subsidy rate questions in the 504 Program remain somewhat unresolved. The simple fact is that demand for the 504 program has been down significantly this year. It is down even after we discount for the burst of activity last September, just before new fees went into effect, putting many deals that normally would have been done this year into last year's volume. I am pleased to say that the program's subsidy rate, which a witness from Minnesota told our committee earlier this year is ``out of whack,'' is now finally being seriously examined by the Administration despite the existence for some time of evidence that it has been based on methodology or calculations that keep the subsidy rate too high. That matters because it appears that the new fees which we have had to impose on borrowers and lenders, required by the high subsidy rate, suppressed demand for the program, exactly as both the Chairman and I said we feared might happen. That is the main reason for the amendment, which would keep collateral for 504 deals valued at market value. That is rather than at liquidation value, as had at one point been suggested by some within the Administration. The amendment does not change current SBA policy. Rather, it prevents a suggested change, which in my view would certainly have led to a further weakening of the 504 loan guaranty program. Here is the issue. Under current SBA policy, in a project valued at $1 million, 90 percent of the value of a 504 project can be financed by a CDC and a bank together in the form of loans. The remaining 10 percent is required to be provided as equity by the assisted small business. Loan collateral is limited ``generally to the assets being financed.'' This allows the program to offer attractive, 90-percent loan-to-value financing. It seems like a good deal, and it is, for borrowers and lenders. But it's also a good deal for taxpayers because this program creates jobs with no appropriation. That's why I want to keep that policy working the way it is. If we had allowed the Administration to change that policy, by switching to a ``liquidation value'' approach for collateral, as had been suggested by some within the Administration, then assisted small business people could have been required to provide up to $300,000 of their own equity as collateral, on top of the $100,000 equity already required. When demand for this program already is being suppressed by high fees brought on by high subsidy rates-- whether justified or not--this new blow to the program could have seriously harmed it. The National Association of Development Companies, which represents CDC's around the country, told some of us it felt the program could have been ``destroyed.'' So I am pleased we could address this concern in the bill. The second provision I would like to mention immediately is a matter upon which I am pleased to have collaborated with Senator Abraham. The managers also have included this provision in their amendment. It will allow microloan intermediaries to use up to 25 percent of the grants provided to them by SBA for the provision of technical assistance to provide such technical assistance to prospective borrowers--that is, not only small enterprises which are already borrowers, but to prospective borrowers, as well. I appreciate the inclusion of this provision, which allows needed flexibility on the part of microloan intermediaries. Minnesota has four microlending intermediaries, and staff from those organizations have told me how important it is that they be allowed sometimes to counsel and assist potential entrepreneurs prior to the time they are ready to become an actual borrower. In fact the very purpose of the technical assistance during this period is to allow the businessperson to reach the point in his or her business where credit is needed and he or she might become a borrower in the program. The bill reauthorizes most SBA programs for an additional 3 years. The loan guaranty authorization levels are adequate in my judgment. In the case of both the 7(a) and 504 program, they exceed industry requests. The loan authorization level for the microloan program meets the Administration's request, although I had hoped to achieve a higher level for technical assistance grant funding. As I mentioned before, the microloan program nonetheless is expanded and made permanent in this bill, steps which are justified by the program's very beneficial performance. As an original cosponsor of the legislation which first created the program, I am proud that Minnesotans who utilize it are among the nation's leaders. The very small firms which receive very small loans through the microloan program often have a big impact in their communities. The bill will allow SBA programs to continue to be among the most popular and effective business programs operated by the federal government. I know they are popular and well used in Minnesota, where I am also proud to point out that we have one of the finest SBA district offices in the country, if not the finest. The bill also addresses a concern which many small businesses across the country have brought to our attention. That is the issue of Federal Government bundling of procurement contracts. The bill takes steps to help ensure that small firms can compete for Federal contracts, and that the Government's use of bundling is strictly warranted when it occurs. Mr. President, I hope the House of Representatives also will act soon on their version of the bill, and I look forward to voting for passage of a conference report so the bill can be sent to the President. Thank you.

Mr. WELLSTONE

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