To change the definition of Internet access service.

INTERNET TAX NONDISCRIMINATION ACT

The PRESIDING OFFICER. The clerk will report the bill by title.
The assistant legislative clerk read as follows:

A bill (S. 150) to make permanent the moratorium on taxes
on Internet access and multiple and discriminatory taxes on
electronic commerce imposed by the Internet Tax Freedom Act.

Pending:

McCain amendment No. 2136, in the nature of a substitute.
Stabenow amendment No. 2141 (to amendment No. 2136) to
express the sense of the Senate that the White House and all
executive branch agencies should respond promptly and
completely to all requests by Members of Congress of both
parties for information about public expenditures.

The PRESIDING OFFICER. The Senator from Arizona.

Amendment No. 2136 Withdrawn

Mr. McCAIN. Mr. President, I now withdraw the pending substitute
amendment No. 2136.
The PRESIDING OFFICER. The Senator has a right to withdraw the
amendment.

Amendment No. 3048

Mr. McCAIN. Mr. President, I send a new substitute amendment to the
desk.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:

The Senator from Arizona [Mr. McCain] proposes an amendment
numbered 3048.

The amendment is as follows:

(Purpose: To extend the moratorium on taxes on Internet access and
multiple and discriminatory taxes on electronic commerce imposed by the
Internet Tax Freedom Act for 4 years, and for other purposes)

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Internet Tax
Nondiscrimination Act''.

SEC. 2. FOUR-YEAR EXTENSION OF INTERNET TAX MORATORIUM.

(a) In General.--Subsection (a) of section 1101 of the
Internet Tax Freedom Act (47 U.S.C. 151 note) is amended to
read as follows:
``(a) Moratorium.--No State or political subdivision
thereof may impose any of the following taxes during the
period beginning November 1, 2003, and ending November 1,
2007:
``(1) Taxes on Internet access.
``(2) Multiple or discriminatory taxes on electronic
commerce.''.
(b) Conforming Amendments.--
(1) Section 1101 of the Internet Tax Freedom Act (47 U.S.C.
151 note) is amended by striking subsection (d) and
redesignating subsections (e) and (f) as subsections (d) and
(e), respectively.
(2) Section 1104(10) of the Internet Tax Freedom Act (47
U.S.C. 151 note) is amended to read as follows:
``(10) Tax on internet access.--
``(A) In general.--The term `tax on Internet access' means
a tax on Internet access, regardless of whether such tax is
imposed on a provider of Internet access or a buyer of
Internet access and regardless of the terminology used to
describe the tax.
``(B) General exception.--The term `tax on Internet access'
does not include a tax levied upon or measured by net income,
capital stock, net worth, or property value.''.
(3) Section 1104(2)(B)(i) of the Internet Tax Freedom Act
(47 U.S.C. 151 note) is amended by striking ``except with
respect to a tax (on Internet access) that was generally
imposed and actually enforced prior to October 1, 1998,''.
(c) Internet Access Service; Internet Access.--
(1) Internet access service.--Paragraph (3)(D) of section
1101(d) (as redesignated by subsection (b)(1) of this
section) of the Internet Tax Freedom Act (47 U.S.C. 151 note)
is amended by striking the second sentence and inserting
``The term `Internet access service' does not include
telecommunications services, except to the extent such
services are purchased, used, or sold by a provider of
Internet access to provide Internet access.''.
(2) Internet access.--Section 1104(5) of that Act is
amended by striking the second sentence and inserting ``The
term `Internet access' does not include telecommunications
services, except to the extent such services are purchased,
used, or sold by a provider of Internet access to provide
Internet access.''.

SEC. 3. GRANDFATHERING OF STATES THAT TAX INTERNET ACCESS.

The Internet Tax Freedom Act (47 U.S.C. 151 note) is
amended--
(1) by redesignating section 1104 as section 1105; and
(2) by inserting after section 1103 the following:

``SEC. 1104. GRANDFATHERING OF STATES THAT TAX INTERNET
ACCESS.

``(a) Pre-October 1998 Taxes.--
``(1) In general.--Section 1101(a) does not apply to a tax
on Internet access that was generally imposed and actually
enforced prior to October 1, 1998, if, before that date, the
tax was authorized by statute and either--
``(A) a provider of Internet access services had a
reasonable opportunity to know, by virtue of a rule or other
public proclamation made by the appropriate administrative
agency of the State or political subdivision thereof, that
such agency has interpreted and applied such tax to Internet
access services; or
``(B) a State or political subdivision thereof generally
collected such tax on charges for Internet access.
``(2) Termination.--This subsection shall not apply after
November 1, 2006.
``(b) Pre-November 2003 Taxes.--
``(1) In general.--Section 1101(a) does not apply to a tax
on Internet access that was generally imposed and actually
enforced as of November 1, 2003, if, as of that date, the tax
was authorized by statute and--
``(A) a provider of Internet access services had a
reasonable opportunity to know by virtue of a public rule or
other public proclamation made by the appropriate
administrative agency of the State or political subdivision
thereof, that such agency has interpreted and applied such
tax to Internet access services; and
``(B) a State or political subdivision there-of generally
collected such tax on charges for Internet access.
``(2) Termination.--This subsection shall not apply after
November 1, 2005.''.

SEC. 4. ACCOUNTING RULE.

The Internet Tax Freedom Act (47 U.S.C. 151 note) is
amended by adding at the end the following:

``SEC. 1106. ACCOUNTING RULE.

``(a) In General.--If charges for Internet access are
aggregated with and not separately stated from charges for
telecommunications services or other charges that are subject
to taxation, then the charges for Internet access may be
subject to taxation unless the Internet access provider can
reasonably identify the charges for Internet access from its
books and records kept in the regular course of business.
``(b) Definitions.--In this section:
``(1) Charges for internet access.--The term `charges for
Internet access' means all charges for Internet access as
defined in section 1105(5).
``(2) Charges for telecommunications services.--The term
`charges for telecommunications services' means all charges
for telecommunications services, except to the extent such
services are purchased, used, or sold by a provider of
Internet access to provide Internet access.''.

SEC. 5. EFFECT ON OTHER LAWS.

The Internet Tax Freedom Act (47 U.S.C. 151 note), as
amended by section 4, is amended by adding at the end the
following:

[[Page S4403]]

``SEC. 1107. EFFECT ON OTHER LAWS.

``(a) Universal Service.--Nothing in this Act shall prevent
the imposition or collection of any fees or charges used to
preserve and advance Federal universal service or similar
State programs--
``(1) authorized by section 254 of the Communications Act
of 1934 (47 U.S.C. 254); or
``(2) in effect on February 8, 1996.
``(b) 911 and E-911 Services.--Nothing in this Act shall
prevent the imposition or collection, on a service used for
access to 911 or E-911 services, of any fee or charge
specifically designated or presented as dedicated by a State
or political subdivision thereof for the support of 911 or E-
911 services if no portion of the revenue derived from such
fee or charge is obligated or expended for any purpose other
than support of 911 or E-911 services.
``(c) Non-tax Regulatory Proceedings.--Nothing in this Act
shall be construed to affect any Federal or State regulatory
proceeding that is not related to taxation.''.

SEC. 6. EXCEPTION FOR VOICE AND OTHER SERVICES OVER THE
INTERNET.

The Internet Tax Freedom Act (47 U.S.C. 151 note), as
amended by section 5, is amended by adding at the end the
following:

``SEC. 1108. EXCEPTION FOR VOICE AND OTHER SERVICES OVER THE
INTERNET.

``Nothing in this Act shall be construed to affect the
imposition of tax on a charge for voice or any other service
utilizing Internet Protocol or any successor protocol. This
section shall not apply to Internet access or to any services
that are incidental to Internet access, such as e-mail, text
instant messaging, and instant messaging with voice
capability.''.

SEC. 7. EFFECTIVE DATE.

The amendments made by this Act take effect on November 1,
2003.

The PRESIDING OFFICER. The Senator from Arizona.
Mr. McCAIN. Mr. President, this substitute, which I will describe in
more detail in a minute, is, I hope, a fair and true compromise between
the opposing sides in this debate. At least I hope it is viewed by a
majority of the Senate as such.
I also understand there are very strongly held views on this issue.
This is not the first time we have been to the Senate floor on this
issue. This is the third time we have had debate and votes on it, and
each time it becomes more difficult because we are talking about a lot
more money, a lot more involvement, a lot more taxes and, of course, as
technology evolves, of greater importance to America, whether it be
economically, whether it be entertainment, or politically. The rise of
the Internet in political campaigns in America today is one of the most
recent phenomena.
I hope since we have, at least according to a letter I received from
Senator Alexander, boiled down our differences to four major
differences--I in no way understate the importance of those
differences, but there are only four--perhaps we could propose
amendments and vote on those four differences and, in the meantime,
continue our dialog in trying to reach a reasonable compromise.
I would like to point out it does no one any good for us to leave
this issue in limbo. If we are going to allow taxation of the Internet
in a broad variety of ways, then the Senate should decide to do so. If
we are going to adopt this compromise, then the Senate should do so.
The House, as we know, long ago passed legislation.
This particular legislation, before I offered a substitute amendment,
was reported out of the committee 10 months ago. I hope all will act
together in good faith and try and resolve it.
By the way, those four major differences, as defined in the letter to
me from Senator Alexander, are definition, voice over IP, duration, and
grandfather clause. I hope we can address each of those either, as I
said, in the form of negotiation or in the form of amendments which
would be up or down.
I have been told the majority leader says we are going to complete
action on this bill by Thursday night late. The Democrats have a
retreat beginning on Friday which we all respect. I hope we can get a
lot done so we do not find ourselves here at a very late hour on
Thursday night.
Mr. President, I offer this amendment to the Internet Tax
Nondiscrimination Act which offers, I believe, a true and fair
compromise. On one end of the spectrum are those who do not believe the
tax moratorium should be extended, and on the other end are those who
want to make it permanent. This proposal, I believe, offers a middle-
ground alternative to this debate and addresses the concerns State and
local governments have expressed, while retaining some--many have said
too few--aspects of the bill that was favorably reported by the
Commerce Committee last year.
Before I summarize the substance of the amendment, I would like to
spend a moment addressing a couple criticisms that have been raised
about the compromise proposal.
First, I have heard a few Members talk about how consideration of S.
150 is moving too fast and that Members and their staffs have not had
adequate opportunity to consider the substance of this matter.
With all due respect to my colleagues who believe this has been a
less than deliberative process, I can think of few debates recently in
which Members have had more time to prepare and negotiate. We voted the
bill out of the Commerce Committee in July of last year. The Finance
Committee, after requesting a sequential referral, discharged the bill
without amending it.
Throughout this time, Members, including Senators Dorgan, Hollings,
Allen, Wyden, Sununu, and many others who have spoken on this floor
about this matter, continued to negotiate the substance of the
legislation.
During that time, we heard from State and local groups such as the
National Governors Association and the National Association of
Counties. They had several opportunities, and did, to provide
significant input.
We are here after almost 1 year of considering this matter, not
because we have not discussed the issue thoroughly enough. Nor are we
here because we have not properly defined Internet access or otherwise
adequately dealt with the specifics of the Internet tax moratorium. We
are debating this measure because the two opposing sides will not budge
from their positions.
To be clear, the compromise amendment will not likely move those who
are firmly on one side or the other. As Senator Voinovich said
yesterday, for some Members the philosophical divide in this debate may
be ``too deep to bridge.'' Its purpose is only to offer a compromise
that other Members can vote for knowing that it strikes a reasonable
balance between those who want a permanent and broad Internet access
tax moratorium and those who want no moratorium at all.
Second, some Members who do not want to reinstate the Internet tax
moratorium have expressed their view that the amendment is not a true
compromise; that it does not go all the way to meeting their concerns
about State and local revenues. I must respond to them by saying the
amendment is a compromise precisely because it does not completely
satisfy one side or the other. However, the amendment does protect a
significant portion of the $20 billion in tax revenues from
telecommunications services that States and localities claim they could
lose as a result of S. 150.
In fact, even using the most aggressive revenue loss estimates
available, it appears what is at stake is not more than 3.5 percent of
total State and local tax revenues from telecommunications services. In
my opinion, that is not just a compromise but a very generous
concession to those who want to defeat the Internet tax moratorium. To
criticize this proposal at this point as somehow not enough is just an
empty exercise in moving the proverbial goalpost of this debate.
It seems to me the goalpost continues to move so much that it would
not surprise me to hear at the end of this week that some Members
actually support a Federal law requiring States to tax Internet access.
I remind my colleagues that this debate is about striking a balance
between S. 150, the Allen-Wyden bill, and S. 2084, the Alexander-Carper
bill.
Clearly, this amendment goes a long way to compromising with the
opponents of the Internet tax moratorium. Again, I have to repeat this
because it is a crucial point: This body does not typically operate by
capitulating 100 percent to one side or the other on a particular
matter that is before it. In its normal course of business, the Senate
compromises, and that is exactly what this amendment does.
Simply put, the amendment offered today is truly a reasonable
compromise that addresses a host of concerns the States and localities
have raised over the past 10 months. Throughout the negotiation
process, State and local

[[Page S4404]]

groups have asked for a temporary extension to the Internet tax
moratorium. Specifically, they have asked for a 2-year extension of the
moratorium. The compromise amendment would extend the moratorium for 4
years.
Why 4 years? If we do it for 2 years, we would almost automatically
be back revisiting the issue immediately when one looks at the process
we have just been through. I think 4 years is a great deal less than
permanent and not much more than 2 years, as the opponents of this
legislation have alleged.

Another concern we have heard from State and local government is
extending the Internet tax moratorium would somehow impact traditional
telephone services. This amendment would ensure that State and local
revenues from traditional phone service would not be impacted in any
way, shape, or form. Again, the amendment would accommodate a concern
raised by States and localities to the full satisfaction of State and
local authorities.
State and local governments have also expressed concern that this
bill would hamper their ability to tax voice services provided over the
Internet. This amendment addresses that matter by setting forth a broad
definition of services, including voice services that are provided over
the Internet that would not be considered Internet access and therefore
not be subject to the Internet tax moratorium. Once again, I believe
this provision should fully address the concern of State and local
governments.
The list of concessions made to State and local government interests
in the amendment is extensive. For example, the compromise amendment
would clarify that the Internet tax moratorium does not apply to
nontransactional taxes such as taxes on net income, net worth, or
property value. The amendment would clarify that otherwise taxable
services would not become tax free solely because they are offered as a
package with Internet access. The amendment would grandfather for 3
years, from November 1, 2003, the States that were taxing Internet
access in October 1998. It would grandfather for 2 years, from November
1, 2003, the States that began to tax--according to many, improperly--
Internet access after October 1998. It would ensure that universal
service would not be affected by the moratorium. It would ensure that
9-1-1 and e-9-1-1 services would not be affected by the moratorium.
Finally, it would ensure that regulatory proceedings that do not relate
to taxation would not be impacted by the Internet tax moratorium.
I want to point out again, there are really 10 compromises offered in
this: the 4-year moratorium, the 3-year phaseout of the grandfather
clause, the 2-year grandfather of taxes on DSL, and voice over IP
carve-out. It clarifies taxes covered. It clarifies the House's
language on DSL. It provides a clear and uniform accounting rule. The
universal service fees are unaffected. As I mentioned, e-9-1-1 taxes
are unaffected, and nontax regulatory powers are unaffected.
I hope we can move forward if there is not agreement. Meanwhile, we
continue to discuss the issue.
The PRESIDING OFFICER. The Senator from North Dakota.
Mr. DORGAN. Mr. President, my colleague from Arizona talks about four
issues. There are three of them we really ought to be able to reach
agreement on reasonably soon, and the other one is a very difficult
issue, there is no question about that. That is the definition. But on
grandfathering and VOIP, for example, the length of time of a
moratorium, frankly, I think we can reach an agreement on those three
areas.
Frankly, if we are able to reach an agreement on the definition, I do
not care much about the grandfathering. I know some of my colleagues
do, but that is a lot less important to me. I would also say that the
length of a moratorium on Internet taxation is of much less importance
to me as well. I would be willing to lengthen it by a substantial
number of years provided we have the right definition. So I think the
thing that is going to be difficult for us but one that we should
attempt to resolve is this definition.
I want to just make this point: If the purpose of those who are most
insistent on moving this legislation--and there are several in the
Chamber who have really worked on this a long time--would be, for
example, to create a broad new exemption from taxation for certain
services and certain parts of the backbone of the Internet and so on,
then that is a problem. I do not support that. I do not think we ought
to carve out things that are now being taxed by State and local
governments and say, by the way, we are going to federally preempt
that. If that is not the purpose, though, then we surely should be able
to find common ground on a definition that works.
My hope is that as we proceed we will understand that all of us--I
think I speak for all of us--believe we ought to have a moratorium on
taxing the Internet, that is, the connection to the Internet. I support
that. I believe virtually all of us in this Chamber would agree we
ought not levy punitive or discriminatory taxes on the Internet. I
believe we would all agree on the goal that we would want to encourage
through public policy the build out of broadband and the use of the
Internet and particularly advanced telecommunications services. All of
those represent areas of broad, substantial agreement in the Senate
Chamber.
As we work through this now, the one area where I think we have
substantial difficulties is trying to understand what each side means
with respect to the definition of Internet service. How far up the
backbone of the Internet does it go? Is it a definition that, in fact,
would prevent the taxation of certain services that are now taxed, and
on which State and local governments rely for that revenue? If that is
the case, we ought to know that and discuss that. If it is not the
case, we should be able to reach an agreement on the definition.

Senator Allen, for example, and many others who have been at this,
Senator Wyden and on the other side Senators Carper and Alexander and
many others--we need to once again get our heads together and see if we
can find agreement on this definition. But until that happens and
unless that happens, it is my guess we are just going to be around here
spinning our big old tractor wheels and nothing is going to happen. We
are not going to pass legislation.
We are not going to agree to amendments. I am guessing the consensus
wouldn't exist to do that. I wouldn't object to going to vote on some
things, speaking for myself, but we have a lot of work to do to reach
some sort of compromise. Let me say to my colleague Senator McCain, I
recall being in meetings with him a year ago and beyond that, and the
attempt was to try to figure out, how can we find common ground? How
can we extend the moratorium that then existed? We never got to the
point of reaching any kind of agreement, but it wasn't because of any
lack of effort on the part of the chairman of the committee. I am here.
I will be here during consideration of this, and I want to work with
Senator McCain and others to see if we can find a way to make this
work.
I yield the floor.
The PRESIDING OFFICER. The Senator from Texas.

Amendment No. 3049 to Amendment No. 3048

Mrs. HUTCHISON. Mr. President, I send an amendment to the desk and
ask for its immediate consideration.
The PRESIDING OFFICER. The clerk will report the amendment.
The legislative clerk read as follows:

The Senator from Texas [Mrs. Hutchison] proposes an
amendment numbered 3049 to amendment No. 3048.

Mrs. HUTCHISON. I ask unanimous consent that the reading of the
amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:

(Purpose: To change the definition of Internet access service)

At the appropriate place, insert the following:

SEC. __. CHANGE IN DEFINITION OF INTERNET ACCESS SERVICE.

Paragraph (10) of section 1105 of the Internet Tax Freedom
Act, as redesignated by this Act, is amended--
(1) by striking ``The term'' and inserting the following:
``(A) In general.--The term''; and
(2) by adding at the end the following:
``(B) General exception.--The term does not--
``(i) include a tax levied upon or measured by net income,
capital stock, net worth, or property value; or
``(ii) apply to any payment made for use of the public
right-of-way or made in lieu of a

[[Page S4405]]

fee for use of the public right-of-way, however it may be
denominated, including but not limited to an access line fee,
franchise fee, license fee, or gross receipts or gross
revenue fee.''.

Mrs. HUTCHISON. Mr. President, I thank the Senator from Arizona, the
chairman of the Commerce Committee, and the distinguished ranking
member, Senator Dorgan, for bringing this to the floor. As has been
said by everyone, I think, we have been talking about this issue for a
long time. It is such a crucial issue for many States and many cities,
that we must get it right.
I think the bill of Senator Allen, the underlying bill, and now the
bill of Senator McCain are attempting to do something that is right.
They are attempting to assure that interstate commerce is not
obstructed by taxes on Internet access.
I am afraid, however, that the language is not clear enough as it
deals with franchise taxes and right-of-way fees that have been in
place in cities in many States in our country for a long time. That is
why I have introduced an amendment that will clarify the definition of
what is excepted from this Internet access tax ban. It says:

. . . any payment made for the use of a public right-of-way
or made in lieu of a fee for use of the public right-of-way,
however it may be denominated, including but not limited to
an access line fee, a franchise fee, license fee or gross
receipts or gross revenue fee.

I think we have found out since we started debating this issue years
ago that cities determine their franchise fees, their right-of-way
fees, in many different ways. I think it is very important that we not
make a mistake here that would cause years of litigation, after which a
city might win, it might lose, but it would certainly disrupt what it
has been doing. The franchise fee is basically a local tax, not on
Internet access, not meant to be on Internet access.
My position is that we should not tax Internet access. I do believe
it is a taxation of interstate commerce. However, I think that once you
get off the basic access, just as we have telephone lines' access, use
of right-of-way, that we must create a level playing field so a line
that is used for telephone and an Internet computer line will be able
to be taxed in the same way.
In my State of Texas, prior to 1999 cities were compensated by
telecommunications providers for the use of their rights-of-way
pursuant to individual franchise agreements negotiated between the
telecommunications company and the cities.
In the late 1990s, Texas cities and the providers began negotiating
and drafting major compromises that would lead to more uniformity, more
regulatory certainty. So the Texas law has established a uniform method
of compensating cities for use of public rights-of-way. It is called a
per access line fee. It is implemented to compensate cities for use of
public rights-of-way.
The access lines are reported by the individual telecommunications
providers to the Texas Public Utility Commission. The PUC then applies
the individual city rate per access line to the total number of lines
that a particular city may have within their corporate limits. It is a
fair and equitable system that is used in Texas. An average city gets
about 3.5 percent of its general revenue from telecommunications right-
of-way compensation fees.
Passing Federal legislation that would call into question the
validity of this Texas system could have disastrous effects on the
ability of Texas cities to provide essential services such as police
and fire, water, waste water, and parks, just to name a few. The right-
of-way fees represent as much as $39 million annually to the city of
Dallas; $9 million for Fort Worth; and $15 million for the city of San
Antonio.
Cities in California, Nevada, Florida, Kentucky, and other States
would also be adversely affected by the bill as it is written. So I am
trying to clarify why franchise fees should be included. I am hoping we
are all trying to go in the same direction here. I just want to make
sure that we don't make a mistake.

There will be people who say it is really covered. It is covered in
the underlying law. It is covered in the amendment that is offered by
Senator McCain and the one underlying by Senator Allen. People will say
that. However, it is not clear and the city attorneys and these Texas
cities and other States have looked at the language and they are very
concerned they are going to be in litigation over this issue. If we
know today that it is not clear, after the lawyers have looked at it,
why not be sure? Why not be sure?
Everyone I have talked to believes that right-of-way and franchise
fees should not be disturbed. It is part of the level playing field we
are trying to create. My amendment will make it very clear what is
accepted by definition. This should not have any impact on Internet
access as both of the underlying bills would try to protect that from
taxation. But it does protect cities, particularly since we have
certain laws in some States that do have a component of a gross
receipts fee within the access line issue, and I hope we will not step
on a State with its local issues, trying to stay consistent with what
has been done and accepted through all these years by passing this law
without being very clear.
Mine is a clarification amendment.
Mr. WYDEN. Will my colleague yield?
Mrs. HUTCHISON. I am happy to yield to the Senator.
Mr. WYDEN. I want to make sure I understand this. Cable already pays
a franchise fee when the streets are torn up in order to offer cable.
My understanding of this amendment is that now there would be a new
special tax for right-of-way for the very same service.
In effect, my reading of this is that cable would be taxed twice.
They already get hit with a franchise fee and now your right-of-way
provision would allow for a new special fee, which troubles me, again,
because it has been our point all along through Internet access that
you have already paid once.
Could my colleague from Texas clarify? Otherwise, I would have to
strongly oppose this.
Mrs. HUTCHISON. Mr. President, I appreciate the question.
This is, of course, not to put a new tax in place. This is to try to
acknowledge that different cities and different States have different
definitions of franchise tax. It happens that in Texas there is a
gross-receipts component in the franchise right-of-way access tax. It
is a standardized law now for the cities of Texas, for cable companies
and telecommunications companies.
We have a different definition which I am trying to protect.
Certainly these cities have already made their contracts with their
cable companies. This is not meant to change contracts; it is meant to
allow the contracts which are in existence and use a well recognized
and different definition of franchise or right-of-way tax.
The PRESIDING OFFICER. The Senator from Arizona.
Mr. McCAIN. Mr. President, this amendment excludes from the
definition of tax on Internet access transactional taxes such as gross
receipts or gross revenue fees, constitutes an end run around Internet
tax freedom, and eviscerates the moratorium itself. If we allow this to
exclude payments made for use of the public right-of-way, including
access line fees, franchise fees, et cetera, this amendment should be
rejected.
I move to table the amendment, and I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The question is on agreeing to the motion.
The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. McCONNELL. I announce that the Senator from South Carolina (Mr.
Graham) and the Senator from Pennsylvania (Mr. Specter) are necessarily
absent.
Mr. REID. I announce that the Senator from Florida (Mr. Graham) and
the Senator from Massachusetts (Mr. Kerry) are necessarily absent.
The PRESIDING OFFICER (Mr. Chafee). Are there any other Senators in
the Chamber desiring to vote?
The result was announced--yeas 64, nays 32, as follows:

[Rollcall Vote No. 72 Leg.]

YEAS--64

Allard
Allen
Baucus
Bayh
Bennett
Bond
Boxer
Brownback
Bunning
Burns
Campbell
Cantwell
Chambliss
Cochran
Coleman
Collins
Conrad
Craig
Crapo
Daschle
Dayton
DeWine
Dole
Dorgan
Ensign
Fitzgerald
Frist

[[Page S4406]]

Grassley
Gregg
Hagel
Harkin
Hatch
Inhofe
Johnson
Kohl
Kyl
Leahy
Lincoln
Lott
Lugar
McCain
McConnell
Mikulski
Miller
Murkowski
Murray
Nelson (NE)
Nickles
Pryor
Reed
Reid
Roberts
Rockefeller
Santorum
Sessions
Shelby
Smith
Snowe
Stabenow
Stevens
Sununu
Talent
Warner
Wyden

NAYS--32

Akaka
Alexander
Biden
Bingaman
Breaux
Byrd
Carper
Chafee
Clinton
Cornyn
Corzine
Dodd
Domenici
Durbin
Edwards
Enzi
Feingold
Feinstein
Hollings
Hutchison
Inouye
Jeffords
Kennedy
Landrieu
Lautenberg
Levin
Lieberman
Nelson (FL)
Sarbanes
Schumer
Thomas
Voinovich

NOT VOTING--4

Graham (FL)
Graham (SC)
Kerry
Specter
The motion was agreed to.
Mr. LOTT. Mr. President, I move to reconsider the vote.
Mr. DORGAN. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
The PRESIDING OFFICER. The Democratic leader is recognized.

Amendment No. 3050

(Purpose: To eliminate methyl tertiary butyl ether from the United
States fuel supply, to increase production and use of renewable fuel,
and to increase the Nation's energy independence)

Mr. DASCHLE. Mr. President, I have an amendment at the desk to the
underlying bill.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:

The Senator from South Dakota [Mr. Daschle] proposes an
amendment numbered 3050.

Mr. DASCHLE. Mr. President, I ask unanimous consent that further
reading of the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
[The amendment is printed in today's Record under ``Text of
Amendments.'']
Mr. DASCHLE. Mr. President, I want very much to be able to continue
to work on the underlying bill and find a way to resolve many of the
outstanding issues. I think we have made some progress today.
Obviously, this is a piece of legislation that provides an
opportunity for many of us who have concerns about other matters
relating to our Senate agenda as well.
I was very concerned this morning to read in Energy Daily that the
leadership has abandoned its plan to bring up the comprehensive Energy
bill in May, and may wait now until fall to revisit comprehensive
energy legislation.
Now, nearly 6 months after we could have enacted an Energy bill with
the renewable fuels standard and other important components there is no
prospect now of action on the legislation any time soon. So I have no
recourse but to offer the renewable fuels amendment to another
legislative vehicle, which I have done with this amendment.
The amendment is very straightforward. It is based on language that
has passed in the Senate on two previous occasions. It eliminates the
reformulated gasoline program, RFG, oxygenate standard and replaces it
with a renewable fuels standard that sets a 10-year schedule for
assured growth in ethanol demand.
It contains the same waiver authority agreed to in the energy
conference report, strikes all liability protection for MTBE as well as
ethanol.
It also bans MTBE within 4 years.
Over two-thirds of the Senate has now gone on record in support of a
renewable fuels standard and the renewable fuels standard we create
with this legislation. It has been reported out of committee twice,
passed by the Senate twice, both times by a margin of more than two-
thirds. A similar proposal has been reported out of the Environment and
Public Works Committee and is pending now on the Senate calendar.
Last June, 68 Senators voted to add at that time the Frist-Daschle
RFS amendment to the Energy bill. It is time to break the impasse.
As I said, my first choice would have been to bring the Energy bill
to the floor, have a good debate, and send it on to the President
without the MTBE liability immunity.
However, the Energy bill conference report stalled last November
because of bipartisan opposition to the special interest MTBE liability
relief provision included in that legislation, in spite of the efforts
made by many of us to warn that is exactly what would happen. Dropping
the liability protection from the bill for both MTBE and ethanol would
have attracted more than enough votes to enact the Energy bill. Yet
despite the direct intervention by President Bush, the defenders of
MTBE liability relief remain defiant.
Senator Frist placed a revised energy bill without MTBE on the Senate
calendar last February, now almost 3 months ago. He has not chosen to
call up that bill.
Today, Energy Daily has reported our Republican friends have
abandoned plans to move comprehensive energy legislation any time in
the near future. That is troubling for many of us who wanted to see it
pass. Now we have little choice but to offer very important components
of this bill to other legislation that may move through the Senate as
well as the House.
The energy tax provisions, for example, that Senator Frist placed on
the calendar have now been added to the FSC/ETI bill. Senators Cantwell
and Bingaman are leading the effort to pass stand-alone electricity
standards to address the circumstances that caused the blackout last
August.
It appears it is time to shift gears, not only for the tax provisions
and the reliability standards, but for the renewable fuels standard as
well. This bipartisan amendment is a careful balance of the often
desperate and competing interests and a compromise in the finest
tradition of the Senate. As I have said on many occasions, two-thirds
of the Senate is on record in support of the bill. So I hope we can get
legislation such as this considered quickly.

Cloture Motion

Mr. DASCHLE. Mr. President, I send a cloture motion to the desk. We
can vitiate it if we get an agreement on a rollcall vote shortly. I am
very concerned that we move this legislation quickly and
comprehensively. This amendment is yet another attempt to do that in
this body.
I ask that the motion be reported.
The PRESIDING OFFICER. The cloture motion having been presented under
rule XXII, the Chair directs the clerk to read the motion.
The assistant legislative clerk read as follows:

Cloture Motion

We, the undersigned Senators, in accordance with the
provisions of Rule XXII of the Standing Rules of the Senate,
hereby move to bring to a close the debate on the Daschle
amendment No. 3050 to S. 150:
Thomas Daschle, Harry Reid, Jeff Bingaman, Kent Conrad,
Byron L. Dorgan, Tom Harkin, Dick Durbin, Max Baucus,
Daniel L. Akaka, Evan Bayh, Debbie Stabenow, Mark
Dayton, Jay Rockefeller, Ben Nelson, Tim Johnson, Carl
Levin.

The PRESIDING OFFICER. The Senator from Mississippi.
Mr. LOTT. Mr. President, I was not aware, and I do not believe the
manager of the legislation who is temporarily off the floor was aware,
this amendment would be offered at this time. He will return shortly. I
am sure there are going to be some discussions about the amendment and
the appropriate way for us to deal with it.
I understand the importance of this amendment that has been offered
by Senator Daschle to a number of Senators on both sides of the aisle.
I agree we should have a national energy policy. We have been talking
about it for at least 3 years or longer. Yet here we stand today with
no national energy policy. We do not have legislation on the books that
gives incentives for more production of oil and gas to relieve some of
the regulatory problems that delay or make it almost impossible to have
nuclear plants, hydropower, conservation, alternative fuels, ethanol--
the whole package. Yet last year, the Senate passed energy legislation.
The House passed it. We had a conference.
Problems developed in the conference, and we have not been able,
unfortunately, to move the energy legislation through the Senate
because we have not been able to get 60 votes, even though we had, I
think, 57 or 58 who voted for the bill.
I still think we should find a way to get this legislation through a
conference or through to completion and

[[Page S4407]]

send it to the President. If we do not, a pox on all our houses because
problems are here. They are going to stay, and they are going to get
worse. We are not going to conserve. We are not going to produce. We
are not going to do anything. We are at the mercy, then, of countries
all over the world to provide the oil for over 50 percent of our energy
needs in this country. This is dangerous.
We need a national energy policy because of economic security and
national security. So I agree we need to do this. I do not agree with
all the features in it. I did not like some of the provisions added at
the end in the conference. I have my reservations about some of the
renewable fuels. I have reservations about a lot of it, but I voted for
it, and I am prepared to vote for it again in its current form with
warts or with another problem. We should deal with this problem.
There is one way we will not deal with it comprehensively or deal
with it at all, probably, and that is to pick it apart, pick all the
meat off the bones of this national energy policy legislation. Piece by
piece we will devour this good legislation, for example by putting a
piece of it on the FSC/ETI jobs growth bill. If we put tax policies
there, put ethanol here, or put it somewhere else, and start picking it
apart piece by piece, what will happen is we will probably not get a
comprehensive bill, and we probably will not even get the pieces. This
is not wise.
I do not have the impression that it has been indicated by our
leadership that we are not going to do an energy bill. I think it is on
the agenda to be considered further, and it should be considered
further.
We should work in a bipartisan and a bicameral way to get this
legislation done. For that reason, I think it is a huge mistake to come
pull out this one piece a lot of people do like and stick it on this
legislation, because it is one of the engines that could possibly pull
us to a national energy policy.
We will have discussion over the next few minutes about the way we
would like to deal with it. But I personally do not think we should be
adding this nongermane amendment, a critical part of the Energy bill,
on this bill.
I would also like to say briefly that I think we have a good
compromise package which Senator McCain, the chairman of the Commerce
Committee, has developed. He has worked over a long period of time with
both the proponents and opponents to see if we could find compromise
language on this Internet tax issue that was acceptable to get the job
done.
It has not been easy because neither side wants to give. The
proponents do not want even a 4-year moratorium. They want a permanent
moratorium on Internet access taxes. I have in the past been inclined
to be in that camp.
However, I have listened to Senator Alexander and Senator Voinovich.
I have heard from the Governor of my own State, and there is an
argument on the other side, there is no question about this. We need to
deal with this whole issue in a comprehensive way. The Commerce
Committee needs some time and it will not be easy.
I went through the legislative process for telecommunications reform
that we passed in 1996. We worked on it for 2 years. It was very
laborious and it had the possibility of just falling apart right up
until the end. It will probably take us a couple of years to get
further comprehensive telecommunications reform done. In the meantime,
we should have in place a moratorium on taxing the Internet. In fact, I
believe there is an overwhelming majority that agrees. We saw the vote
yesterday. I know that was not a vote on the substance, but anytime
around here of late that there is a vote of 74 to 11 to go to the
substance of a bill, that is pretty strong.
I believe most Senators want to get this moratorium in place. Could
we tinker with it here or there? Surely, and there will be legitimate
amendments that we should consider.
We are on the legislation now. We can begin the amendment process. We
have had a relevant amendment. Senator Alexander, the opponents, were
reasonable and have allowed us to do this. They are going to have some
really good and tough amendments that we are going to have to deal
with, and that is the way the legislative process is supposed to work,
I think. To have voted against proceeding to this bill at all would
have been it. The year would have been over if we could not get on the
substance of a bill of this nature with such a strong majority being in
favor of getting results.
So the 4-year moratorium that is in this proposal that makes Internet
access 100-percent tax free, while taking care to narrow the definition
of Internet access to ensure that traditional telephone service is not
included and while excluding voice over Internet protocol, is the right
way to go. The Commerce Committee is already beginning to have hearings
on comprehensive telecom legislation, and that will be the appropriate
place to address matters such as voice over Internet protocol.
Senator Sununu has introduced legislation on VOIP, or voice over
Internet protocol. We should not address that until we know exactly
what we are doing. Certainly, we should not be saying that taxes are
going to begin to be assessed in this area until we have thought it
through. The compromise does grandfather States that taxed Internet
access prior to the 1998 Internet Tax Freedom Act, and there are some
10 or 11 States that are in that category. This legislation would
extend that grandfather status for 3 more years. For a 2-year period,
it grandfathers the States that currently tax Internet access but were
not protected under the 1998 grandfather clause.
So that is an oversimplification, but basically the rest of the bill
just incorporates the common components between the two bills that were
pending, the Alexander bill and the Allen bill. We should go forward
with this legislation. We should get the job done.
What is happening once again is that while we have had one amendment
that is germane to the substance, we now have an energy amendment being
offered to the Internet tax moratorium. We hear there will be other
nongermane amendments. This is the Senate. That is the way we do
business, but we have work to do. We all agree this is something we
want to do in a bipartisan way. My colleagues should take their shot or
take their shots but make them count, and let's not get hung up on this
legislation and drag it out with nongermane killer or poison
amendments, because it will wind up killing or doing great damage to
what I think is a reasonable compromise.
Again, I understand the Senate rules very well. My colleagues can
offer anything on any subject at any time, unless there is agreement to
the contrary. So Senators on both sides can dump their outbasket on
this bill, but that would be a mistake. I do not believe the leadership
on either side wants that to happen.

The best thing that could happen is for the Senators to get this off
of our agenda right now. Let's get it off our backs. My colleagues
would like to be able to vote both ways, or not be able to vote at all.
We cannot do that because the moratorium has already ended and there
are a lot of innovative people out there thinking of ways to tax
Internet access.
Before my colleagues vote to allow a tax on the Internet, they should
check with their children. If my colleagues have teenagers or kids in
college, they will tear their head off. They do not want this
interconnection to the Internet to be taxed, and if we were to go
around and ask Senators if they want that, no, we do not want that.
Let's vote on this issue. Let's deal with the substantive amendments
and the germane amendments, if my colleagues want to offer a couple of
relevant amendments.
I plead with the Senate, do not make this a punching bag because, if
we do, we are going to show once again that we are incompetent to
produce anything.
We did a pension bill. We saw we could do it. It still may not be
perfect, but we got it done. This is one of those issues that is
bipartisan. We need to get it done, and we need to get it done this
week. I hope my colleagues will join in finding a way to make that
happen.
I yield the floor.
The PRESIDING OFFICER. The Senator from North Dakota.
Mr. DORGAN. Mr. President, the amendment that has been offered a few
moments ago by my colleague Senator Daschle is not some mysterious
amendment. It is not some amendment that was offered under some
mysterious procedure. This is the way the

[[Page S4408]]

Senate allows amendments to be offered.
Senator Daschle has offered an amendment that deals with the subject
of energy, and specifically renewable fuels. My colleague from
Mississippi, Senator Lott, indicated that it is the way the Senate can
do business. He is absolutely correct about that. The rules allow this
amendment to be offered. However, I point out that the Senate really
does not do business much anymore. We are not voting much. We are kind
of at parade rest. If there was a ``gone fishing'' sign, it would long
ago have been hung on all three doors of the Senate.
There is very little activity in the Senate. Very little is
happening. I expect that is one of the reasons my colleague offered
this amendment to this bill.
I will talk for a moment about the Energy bill. The Senator from
Mississippi and the Senator from South Dakota both indicated that we
ought to have an energy policy, and indeed we should. I was a conferee
on the Energy bill. I signed the conference report, much to the
consternation of some of my friends, because I thought on the whole it
advanced our country's interest in energy.
It was not perfect. There were some things in it I did not like much,
but the fact is, it came to the Senate floor and it lost by two votes.
Everyone in this Chamber understands why it lost. It lost by two votes
because the White House and the majority over in the House of
Representatives decided to put in a retroactive waiver for liability of
MTBE. They stubbornly persisted and demanded it be part of the bill
even when they were told it was likely to kill the bill.

They preferred the bill die rather than take out that provision, the
provision that was a favoritism provision for a few enterprises. So the
bill died. Now they want to blame others for the death of that energy
bill. It does not wash. That energy bill died on the Senate floor, lost
by two votes, because there were some that stubbornly persisted in
putting a favor in that bill for some of their friends and they would
not back away from it. So they lost the bill. They were willing to let
the bill go down because of that.
For example, that bill contained important provisions that I thought
advanced the country's interests: production incentives, conservation,
an efficiency title, a renewable fuels title. I will talk for a moment
about the renewable fuels title because that is the subject of Senator
Daschle's amendment.
I think the renewal fuels title is very important and advances this
country's interests. I am a strong supporter of it. Incidentally, I
will support this amendment, and I hope we get a vote on this
amendment. It does not do damage to the underlying bill at all. We can,
should, and will, in my judgment, have a vote on this amendment.
If we are not going to do a big energy bill, if instead of this week
having energy on the Senate floor, which I would have preferred, we
have the underlying Internet tax bill, if the priority is always going
to be something other than an energy bill for the majority leader, then
we have no choice but to take provisions of this energy bill that we
think advances this country's interests, bring it to the Senate floor,
and see if we can legislate on it.
I will now talk about the renewable fuels provision. The renewable
fuels provision is pretty simple. Drive to the gas pump this afternoon
and see what is going on. We used to see 55 percent of our oil came
from off of our shores. It is now 60 percent. Sixty percent of the oil
every single day that we use in this country comes from other parts of
the world, much of it very troubled.
We are putting this country at great risk if we do not understand
that endangers this country's economy, that endangers the opportunity
for us to expand, grow, and promote opportunity in the future. Yet
people seem oblivious to it. They say it is 60 percent coming from
offshore, from Saudi Arabia, from Iraq, from Venezuela, from Kuwait, so
what? Well, I think many of us understand the so what.
This country's economy, this country's well-being in the future, is
held hostage by others, some of whom wish this country ill. In the new
age of terrorism, we would be well advised to understand that this
excessive and growing dependence on foreign sources of oil, foreign oil
specifically, is very dangerous to this country.
My colleague offers an amendment that says at least one part of the
Energy bill dealing with renewable fuels allows us to increase supply
of energy in this country in a very significant way that is not only
friendly to the environment but allows us to grow some energy in
America's fields. It allows us to be innovative in creating new forms
of energy to extend America's energy supply. Let me use ethanol as an
example. Incidentally, let me say, for those who have heartburn over
the offering of this amendment, 69 Senators have already voted for this
amendment. This will not be a big problem if you just allow us to have
the vote, put it on the bill. If the bill gets signed by the President,
we have at least advanced this portion of the Energy bill.

But let me talk for a moment about ethanol. The ability to take the
drop of ethanol from a kernel of corn and have the protein feedstock
left and use that drop of alcohol to extend America's energy supply--
good for us. That is called renewable energy. It expands the supply of
energy. It means we can grow our energy in our fields.
We have a prodigious appetite for energy in our country. As all of us
know, when the price of energy goes way up, the price of gasoline at
the pumps continues to increase relentlessly, and we know we have to do
something. It ought to be a warning sign.
My colleague brings to the floor of the Senate a sensible, thoughtful
provision that had wide bipartisan support in this Chamber. What he
says is pretty simple. He says if it is the case that we didn't have
energy on the floor last month, last week, this week, next month, or
even this summer, if that is the case, if that is what the majority
wishes to do, to not put the Energy bill back on the Senate floor and
allow us to work on that to get a good energy bill, then at least let's
take portions of the bill that we know had strong bipartisan support
and move that because that will strengthen this country.
Once again, let me say to those who counsel let's wait, let's just
wait, the question is, Wait for what? Wait for fall? Wait for October?
Wait for September? Nobody else is waiting. The price of gasoline is
not waiting. The threat to our supply of oil is not waiting.
Read yesterday's newspapers about terrorists who want to interrupt
the supply of oil. They are not waiting. Why should we wait to
construct a sensible energy policy for this country's future? Why
should we wait, above all, to move forward a provision that has strong,
broad bipartisan support in this Chamber?
This is not the time to wait. This is time for us to move forward and
understand that our economy, our Nation is at peril with respect to an
energy supply if we do not advance those portions of the Energy bill
that strengthen this country.
I, for example, believe we ought to advance the conservation title
and we ought to advance the efficiency title, both of which are very
important. My colleague offers, I think, perhaps the easiest and
perhaps the most important provision dealing with renewable fuels. The
easiest why? Because almost three-fourths of the Senate agree with it.
Yet the amendment gets offered and we will have people walking around
here choking on it. Nobody ought to choke on this amendment. The Senate
ought to agree that this amendment makes sense. This amendment has
previously been agreed to. This amendment advances this country's
energy interests. We ought to agree to this amendment. Not yesterday,
not tomorrow--now. This is not heavy lifting.
The only thing that is difficult in this Senate these days is that we
are not doing anything. We face some real serious challenges in this
country. We have an economy in trouble. We have energy problems. We are
involved in a war in Iraq and a war in Afghanistan. We are beset by the
terrorist threat. The fact is, this place is at parade rest. So my
colleague Senator Daschle comes to the Senate floor and offers
something that says, let's move on this subject; let's step forward;
let's do the right thing; let's vote; let's advance this country's
energy supply by passing the renewable fuels section of the Energy
bill.
I understand. I managed the bill on this side on the Internet tax
issue. I

[[Page S4409]]

understand this is inconvenient, but inconvenience is a small price to
pay, incidentally, for advancing that important portion of this energy
bill. I commend Senator Daschle for offering this, and I will strongly
support it and hope we can move it quickly.
Let me just say as one person who is managing this on the floor of
the Senate--I can't speak for the majority, but let me speak for the
minority managing this--this should not take much time at all. My guess
is Senator Daschle would agree to a very short time limit on debate. We
have already debated this particular issue and had votes on it, so this
should not interrupt us more than 30 minutes or an hour, after which we
will have expressed ourselves as a Senate to move a very important
piece of this energy bill--the renewable fuels portion of the Energy
bill--forward with this legislation.
My hope is that is what we will decide to do. There is a possibility,
however, that what happens the minute someone offers an amendment like
this is this place goes into some sort of apoplectic seizure; it shuts
down; we go into a quorum call. Why? Because people want to gnash and
wipe their brow and wring their hands and fret on what to do because
they can't deal with this. The way to do it is to put it up for a vote,
have about 70 Senators vote for it, and add it to this underlying
legislation, so that in the end we will have this important piece of
the Energy bill for the American people. That will be good for this
country and good for the American people, and when we have done it, I
will say good for the American Senate as well.
I yield the floor.
Mr. REID. Mr. President, I have the highest regard for the
distinguished junior Senator from Mississippi, Senator Lott, but on
this issue I disagree with him. I believe we have to move forward on
energy legislation any way we can. If it is piecemeal, let's do that.
The people of the State of Nevada are suffering from high gasoline
prices. We have the second or third highest gas prices in all America.
For example, the bill we are going to take up next week, the FSC
bill, in that bill I think very importantly the managers of that bill
added to that some very important tax provisions that deal with energy.
There are some short-term solutions I will speak to briefly, but there
are some long-term solutions we must address.
Senators Baucus and Grassley in the FSC bill address that. What have
they done? They have provided tax credits for alternative energy. The
tax credit for wind has expired. They are going to add, if we pass that
legislation, a tax credit for solar, a tax credit for geothermal. This
is the solution to the energy problems we have in this country. It will
happen. It is only a question of time, when it is to happen. We need
not depend forever on the vagaries of what OPEC does. We have to depend
on what we can do.
People come to this Senate floor and say we need to produce our way
out of the problem we have. We cannot do that. The United States has,
even counting ANWR, less than 3 percent of the entire oil reserves in
the world. Ninety-seven percent-plus of the oil is someplace other than
the United States. So it is common sense that we cannot produce our way
out of the problems we have today. We can do some things with the oil
that we do have. We can make it better. We can have some of our smaller
producing wells produce a little more. We can do some with exploration.
But the answer is not that. We cannot produce our way out of the
problems we have with oil.
So what can we do? The one thing we can do is do something with
alternative energy. The Nevada test site in the deserts of Nevada has
been the site for almost 1,000 nuclear explosions, some above the
ground, some below the ground. At the Nevada test site, if you put
solar panels on the Nevada test site you could produce enough
electricity to serve the entire United States. The Nevada test site
with solar panels could produce enough electricity to satisfy all the
needs of this country.
We know that wind energy is doing very well. In the Midwest there are
some farmers making more money on their windmills producing electricity
than they are from the crops they produce. We know that Nevada has been
said to be the Saudi Arabia of geothermal. We have, not unlimited, but
huge amounts of geothermal power in the State of Nevada. You can drive
places in Nevada and see steam coming out of the ground naturally. It
is because of geothermal. Some wells have been tapped. The problem with
tapping the resources we have with geothermal is the people have no tax
credits to do it like they had for wind. If we did that, there would be
immediately, in Nevada, a tremendous surge in the production of
electricity which would feed our state, California, and other parts of
the West with badly needed electricity. There would not be any
pollution. The same, of course, applies to solar. So we need to do
that.
There are some other solutions to problems we have. Of course, among
the long-term solutions I did mention is more fuel-efficient vehicles.
We certainly need to do a better job in that regard.
In recent years, there have been two major releases of oil from the
Strategic Petroleum Reserve--during the Clinton years and during the
first Bush years. It was done because it brought down the price of oil.
For example, in January 16, 1991, there was a decision made to
release oil from our petroleum reserve. The next day crude oil prices
fell from $32 to $21 a barrel. Of course, it dropped. We have done it
on two separate occasions--during the Clinton years and the first Bush
years. It made a difference.
A second release occurred. After that second release, within a week
of the time the Strategic Petroleum Reserve was being used, the price
of oil dropped from $37 to $31 per barrel.
Right now the price of oil is near $40 a barrel. Why doesn't the
President release this oil from the petroleum reserve? I don't know. I
know one thing. It would certainly be a help if that happened. It would
increase the supply in this country. As supply is increased, we would
have a lessening of prices.
The other thing which I think is extremely important is that we
recognize there are other ways of bringing down the cost of oil. One
thing the President could do is use his bully pulpit and his influence,
which we understand is significant with the Saudis. Bob Woodward just
published a book that said they knew about the war before anybody in
the Congress knew about it.
Also, of course, we have been told the President has been assured
that in September they will start releasing more oil. That will also
bring down the cost of oil. I suggest rather than waiting until this
fall the President do something now to pressure the Saudis into
releasing more oil. They have cut by 10 percent their production of oil
which began on April 1.
These countries are supposed to be our friends. We have young
Americans giving their lives in Iraq right now to make that part of the
world safer and more stable. It doesn't seem right the Saudis and other
OPEC nations are not recognizing what we are doing for them.
We also know there are other things that can happen. The bill that
was defeated on the Senate floor last year had a lot of problems with
it. Senator McCain referred to it as a ``hooters and polluters'' bill
because of all of the ornaments that have been attached to the so-
called ``Christmas tree.''
There are things which we need to do. People have said, Well, these
things the President can do now do not matter. Getting the Saudis to
increase the supply of oil would matter and, of course, having more oil
come out of our strategic reserve would matter. The other thing the
President could do is say let us stop buying oil to be put in the SPR
right now. Some analysts suggest prices will only go down by 10 to 20
cents a gallon. That is significant.
In Nevada where the prices are approaching $2.50 a gallon, it seems
to me that would be a help. Anything would help. As far as I am
concerned, that is a good enough reason to do it.
Consumers need immediate relief. We are talking about as much as a
million barrels of oil a week. That is about how much we put in the SPR
which we are buying from the OPEC nations when they cranked up the
price of oil. It doesn't make sense to do that. This isn't the huge
supply of oil that comes into this country on a weekly base, but it
still is a lot. It will make a difference.
The latest price spike in Nevada was caused, they say, by the
shutting down of the refinery in northern California

[[Page S4410]]

which produces only 165,000 barrels of oil a day, or 1.5 million
barrels a week. If that is the case, that is the same amount of oil we
are buying from OPEC to put in the SPR. That logically would indicate
the price should come down.
I think if we are going to do anything for energy in this country, we
have to take it piecemeal: Do ethanol, and do what we are going to do
next week with the legislation that has been crafted by Senators
Grassley and Baucus to give tax credits to the people who will produce
good, clean energy.

The President in his State of the Union message said he wanted to
move to a hydrogen economy. If we are going to depend on a hydrogen
economy, we have to do something about producing hydrogen and use
something other than fossil fuel to produce it, which only compounds
the pollution. The only way you can have a hydrogen economy is produce
the hydrogen by using alternative energy--sun, wind, or geothermal.
I hope we can, as Senator Dorgan has indicated, move forward very
quickly and dispose of this legislation. If people vote the way they
did the last time, this should go away very quickly. For people who
say, I voted for it once, I am not going to this time because it is
different form and it is stand alone, it seems to me it should be
easier to do it that way than when it was in the bill which had so many
different problems.
I commend and applaud the Senator from South Dakota for moving this
particular piece of legislation which will improve the energy needs of
this country.
I hope we look long term and do things other than what we have been
doing; that is, try to produce our way out of the situation that is so
desperate for the people in Nevada who have the third or fourth highest
gas prices in America.
The PRESIDING OFFICER. The Senator from Illinois.
Mr. DURBIN. Mr. President, I ask unanimous consent to be added as a
cosponsor of the amendment offered by Senator Daschle.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DURBIN. Mr. President, I rise in strong support of this
amendment. I have listened to the arguments propounded by the Senator
from Mississippi in reference to this amendment.
First, we shouldn't shy away from this amendment for fear of being
overworked. It was announced at our luncheon today we have had exactly
11 votes in the last 4 weeks in the Senate. There is certainly room for
more activity here, and certainly activity should be focusing on
important national issues such as energy.
Energy security is important for our Nation's future and it is a
critical part of our foreign policy. Make no mistake: Our focus on the
Middle East is about a lot of different issues, but it certainly is
about the issue of energy and its future and America's dependence on
external sources for its energy. That dependence has led to some
terrible circumstances.
We are faced in the Midwest and across the Nation with high gasoline
prices. In the city of Chicago and across the State of Illinois and all
around our Nation, we are seeing gasoline prices reach record highs. If
you ask why is this situation, I am afraid to say the culprit is very
obvious: OPEC, the oil cartel in the Middle East, has decided to
restrict the flow and supply of oil to the United States. By cutting
off supply, demand forces the price up. They know that. We are,
frankly, at their mercy.
Interestingly, during the last Presidential campaign when Governor
Bush of Texas was running against Vice President Gore, he said at one
point if he faced that situation as President of the United States he
would take direct action against OPEC to bring down their prices and
force them to supply oil to the United States. And yet weeks have gone
by and none of that has occurred. In fact, businesses and families and
workers all across the Nation are being held captive by the OPEC oil
cartel.
Isn't it ironic that at the same moment we have sent over 100,000
Americans to risk their lives for security and stability in the Middle
East, at a time when we are placing our military in the Middle East to
stabilize it for many of these oil-producing countries, they have
turned on us and said despite our jobless recovery and despite our
recession they are going to restrict the flow of oil to the United
States, knowing full well the hardship which it creates.
If Bob Woodward is accurate in his book, it is scandalous to believe
the Saudis are doing this with the understanding that at some time
before the election they will start sending more oil to the United
States so gasoline prices will come down and benefit the current
administration. That is what has been stated.
Prince Bandar, the ubiquitous diplomat in Washington, was the one who
was brought in by this administration to be forewarned about the
invasion of Iraq even before Members of Congress. He is such an
important diplomat and international businessman that the
administration felt his counsel was more important than the counsel of
Members of Congress of both political parties.
If Mr. Woodward is correct in his assertions in his book, that there
has been some sort of an agreement that the price of gasoline is going
to go up, creating some discomfort, but come down just in time for an
election surprise, an October surprise, that is awful; it is really
unfair to the American people.
Why do we bring this amendment to the floor today? Well, Senator
Daschle and Senator Dorgan, as well as Senator Reid of Nevada, have
made the case that this is a part of the Energy bill which we can pass
today. We can pass it with a limited amount of debate and with an
overwhelming, bipartisan rollcall, reflecting the support which alcohol
fuels have in the Congress.
We know this fuel source is good for America. First, it is homegrown.
We do not have to depend on foreign companies and foreign nations to
befriend the United States.
We can grow the corn and other feedstocks that are necessary to make
ethanol.
Second, it is definitely going to be an improvement on the
environment. We know that by using alcohol fuels, we reduce pollution,
which is a very positive thing.
Third, from a selfish point of view of the Corn Belt, we know that as
more demand for corn is created by more production of ethanol, the
price of corn goes up, farm incomes go up, and Federal payments go
down. So it is a positive effect from three different perspectives.
Some argue we are making a mistake by trying to go at this one issue
at a time; rather, we should bring the whole Energy bill before us. I
saw Senator Domenici from New Mexico on the floor a few moments ago. No
one has worked harder on this bill than Senator Domenici. I know his
bitter disappointment when the bill failed by two votes, with
bipartisan opposition, last December. I was one of the Senators who
voted against it.
There were many provisions of that bill which I support, including
the ethanol provision. But, frankly, at the end of the process, the
Energy bill had become a dog's breakfast. It turned out to be a
smorgasbord of special interest groups. They went out and included
provisions in that energy bill which were nothing short of scandalous.
Senator Maria Cantwell from the State of Washington came to the floor
and echoed an earlier comment made by Senator John McCain--Senator
Cantwell, a Democrat; Senator McCain, a Republican--in which they said
this bill had been dominated by hooters, polluters, and corporate
looters. Now, it is a great phrase. When you parse it, you understand
what they are talking about.
Imagine, the Energy bill we were being asked to vote for included a
provision helping someone in the State of Louisiana build a strip mall
for a Hooters restaurant. Now, I have never been lucky enough to go in
a Hooters restaurant. I am sure there is a great deal of energy in a
Hooters restaurant. I cannot believe it is the key to America's energy
future. But it was part of that bill.
When it came to the polluters, take a look at the assessment of
environmental groups of the Energy bill, which we rejected. Almost to a
person, these environmental groups said we were relaxing standards when
it came to air pollution; we were turning our back on sound energy
policy coupled with sound environmental policy.

[[Page S4411]]

When it came to the corporate looters, whether you are dealing with
electricity or oil, I think it is obvious. As we debate today this
energy issue, across the street from us, in the Supreme Court, they are
weighing the arguments in a case that has been brought against the
Bush-Cheney administration, a case brought by groups that believe there
should be full disclosure of the special interests that came to the
table, the outside special interest groups that helped to write the
Energy bill.

The Bush-Cheney administration--particularly Vice President Cheney--
has been so adamant to continue to conceal and keep secret the sources
of information which led to that energy bill that the case has gone all
the way to the U.S. Supreme Court. That is, frankly, because many of
those who came to the table must be a great embarrassment to this
administration. It has been said, it has been admitted by some, that
Enron--and those were the glory days when Enron was still close friends
with the White House--Enron was in on the writing of this energy bill.
It is no surprise. Just read the bill. It was a bill that, frankly, had
too many of those special interest groups writing too many provisions.
So here we come today with a proposal by Senator Daschle which is
long overdue. It tends to take away all of the chaff and leave the
wheat.
Let's go to the important part of the Energy bill where there is
bipartisan consensus. Thank goodness we no longer have to labor with
those provisions which provided a sweetheart deal for the producers of
MTBE. MTBE is a fuel additive that has been put in gasoline for over 20
years in order to make engines run smoother. But over 20 years ago,
they discovered that MTBE might work in your engine, but outside it was
dangerous to the environment. It is not biodegradable. So if MTBE
should leak from an underground fuel tank and get into the water supply
of an individual with a well or a town that relies on an aquifer, it
could make the water undrinkable and, in fact, potentially dangerous to
public health.
European studies link MTBE contamination to the cancer-causing agents
which, frankly, we are finding too often in our environment.
So the producers of MTBE knew about this problem in 1984, continued
to sell the product, and now communities across America are being
inundated with MTBE pollution.
In my State of Illinois, over 25 villages and towns have MTBE
contamination. Over 200,000 people in my State live in an area where
they are trying to cope with MTBE contamination of their water supply--
a danger to families, a danger to businesses.
So what did this energy bill say? Along came a provision in the
Energy bill which said the producers of MTBE, unlike any other company
in the United States of America, should not be held accountable in
court for their wrongdoing. If they knowingly sold a toxic and
dangerous product, which caused damage to an individual, to their
health, then, frankly, the Energy bill said: We are going to give them
a pass. We are going to say they cannot be held accountable in court.
Let the individuals bear the burden of the cost of the medical bills
and cleaning up their water supply. Let the villages and towns pay the
millions of dollars necessary to overcome MTBE contamination.
That is the reason I voted against that energy bill. I went back to
Illinois to a meeting of my Illinois Farm Bureau, a group that was very
strong for this ethanol provision, and it was a cool reception. They
wanted to know why, after some 20 years on Capitol Hill, I turned my
back on ethanol.

Well, I told them. I am still for ethanol. I still believe in it. I
support this amendment. But I do not believe in the special interest
favors that were included in that energy bill. They understood. Many of
those same farmers came to me afterward and said: We understand
completely. You ought to clean up that bill. You ought to pass the good
provisions that are good for America and get rid of the rest of that
mess.
Well, we are trying to do that today. Senator Daschle's leadership
has brought an important part of this bill forward. Ethanol is not just
an American homegrown energy source; in my part of the world, ethanol
is a job source, and we desperately need jobs in America. We have lost
over 2 million jobs under the Bush-Cheney administration. We have lost
hundreds of thousands of manufacturing jobs just in the State of
Illinois. Ethanol plants being built around the Midwest, around the
Nation, will create good-paying jobs in rural areas, something we
desperately need. I think it is important we do it.
For those who say, ``Well, why don't we wait until later,'' we cannot
afford to wait. The highway bill, which should have been passed last
year, that would have created millions of jobs across America, has been
stalled in this Republican Congress now for 2 straight years. The
battle between the White House and the Republican leadership I cannot
even explain at this point, but for reasons that will only be known to
them, they have held up the passage of the highway bill at exactly the
wrong moment, the moment when we need jobs so much in America.
Passage of this amendment on the ethanol provision will get us moving
toward more investment, more capital creation, and more production of
ethanol and construction of ethanol plants across America. That is a
positive, not just for the Midwest but for our Nation.
I commend Senator Daschle. I think, frankly, we should face this
issue. We should debate it in a timely fashion. We should vote on it.
If the 69 or 70-plus Senators who have stood with ethanol on a
bipartisan basis in the past will continue to do so in the future, we
can make this part of this bill and send it to the President for his
signature, and say to those who have been waiting for some hope: When
it comes to dealing with energy, we have an important part of this bill
that we have succeeded in passing.
Many other challenges remain on energy. We can face them, but let's
do the right thing. Let's adopt the Daschle ethanol amendment today.
I yield the floor.
The PRESIDING OFFICER (Mr. Hagel). The Senator from Arizona.
Mr. McCAIN. Mr. President, I regret that I was not here at the time
the Democratic leader offered his amendment. But, of course, it would
not have mattered really much whether I was here.
I wonder, since we have seen a singular lack of progress in the last
few months, particularly in the last few weeks--literally every piece
of legislation, with the rarest exception, has been loaded up with
extraneous amendments and has had to be brought down. Of course, I have
only been here for 18 years. That is not a long time compared to some.
But I have to say, I am unaccustomed to this kind of procedure where in
good faith we brought this bill to the floor, in good faith we voted
cloture on the motion to proceed, and then the Democratic leader stands
up and proposes a totally, completely, absolutely extraneous amendment,
an entire piece of legislation, the Energy bill, which has been hard
fought in this body many times, as an amendment on the Internet tax
moratorium bill, without warning, without saying what he was going to
do, without having the courtesy to inform me as the chairman of the
committee and the manager of the bill. If he had, I would have thought,
well, maybe we ought to not bring it up. The temperature is 85 degrees
in Phoenix today. It is not raining there like it is outside. Why don't
we just go home? Why don't we go home, relax with our constituents and
our families and friends, rather than go through this charade of
telling Americans that we are legislating.

There was an old line in the cold war era. The Russians said: We
pretend to work and they pretend to pay us. Well, we pretend to work
and we are still getting paid. We are not working. We are not doing
anything.
I say to my friend the minority leader and to my friend from Nevada--
and they are my friends--what is this all about? You know very well
that if an Internet moratorium is passed, an energy bill will not be
part of it. Now we are going to go through the parliamentary charade of
having somebody offer a second-degree amendment and somebody else will
do a substitute, and then somebody else will offer a second-degree
amendment. What am I supposed to tell my constituents, the taxpayers,
we are doing here in Washington?

[[Page S4412]]

If I had a townhall meeting and said, yes, we had an Internet tax
moratorium bill, a bill that is vitally important to both sides as far
as whether taxation is going to be imposed on transactions over the
Internet, which some 70 or 80 percent of the American people engage in
now--billions of dollars--we are going to decide in a parliamentary
fashion whether those transactions should be taxed or not taxed, and if
so, under what circumstances--this is the third time we have revisited
this issue. Ten months ago we passed it.
The Senator from Tennessee will tell me how many hundreds of hours he
has devoted to this issue. The Senator from Virginia will tell me how
many hundreds of hours he has devoted to it. What do we do? We take up
the bill. We have debated it for barely 2 days. And what do we have?
The Energy bill as an amendment to the Internet tax moratorium bill.
What am I supposed to tell my constituents? I will tell you what they
are going to say: We don't get it. That is what they are going to say:
We don't get it. Yes, it is important to me, Senator, whether the State
and local governments can tax the things I buy on the Internet. Some
people say they should; some people say they should not. But can't you
guys and women get together and make a decision on it so I will be
relieved of this lack of knowledge as to what the future holds?
What about all those people who are starting businesses that do
business over the Internet? What about them? I am sorry, sir, we can't
address this issue because we have to take up the Energy bill.
I certainly wouldn't say it is all about ethanol. I certainly
wouldn't say it is about a product that we have created a market for
which has absolutely, under no circumstances, any value whatsoever
except to corn producers and Archer Daniels Midland and other large
agribusinesses.

Here we go now. Here we go. The Democrats have a retreat on Friday,
so we are not going to be here on Friday. No, we are not going to work
5 days this week. Actually, 3, excuse me. And here we go, now we are
going to spend late this afternoon jockeying back and forth.
I am sure there may be a headline in South Dakota that says: Senator
Daschle fights for ethanol. I bet there will be a whole lot of press
releases, too, and maybe even the distinguished Senator from North
Dakota will be fighting for ethanol, too. Meanwhile, we are not
addressing the issues that the American people care about.
Right now they care about whether we are going to tax the Internet. I
urge my colleagues to tell us, all I want to know is, are we going to
spend between now and when we go out of session at the beginning of
October in this kind of back and forth?
My side is also guilty, I freely admit. Are we going to spend that
time between now and the beginning of October, when we will break to
take the electioneering from the floor of the Senate out to our
respective States, and do this or are we going to seriously legislate
as the American people sent us here to do?
Obviously, I am upset because this is a bill I have been working on
for a long time, an issue I have been involved in for many years.
Obviously, I am upset by it. I apologize if I have offended any of my
colleagues. But at the same time, this has been going on now for
months. This is not the first time we have done this. This is about the
50th time, again, on both sides of the aisle. So why don't we make a
decision. We are going to attach the minimum wage or we are going to
attach lawyers' fees or medical malpractice or one of these; we are
going to attach them all back and forth. And we will be able to force
votes on it, but unfortunately, we don't legislate.
Why don't we make a decision? Why don't the leaders and all 100 of us
get together and decide what we are going to do and what we are not
going to do. At least the taxpayers may find some comfort in the
knowledge that at least we would tell them what we are doing.
I would imagine that as we speak we will have some amendment and then
a second-degree amendment, and we will fill up the tree, which probably
very few living Americans understand, including Members of this body,
but we will consult the Parliamentarian as to how the mechanics work.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The Senator from Virginia.
Mr. McCAIN. I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. DORGAN. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DORGAN. Mr. President, I know my colleague from Virginia wishes
to speak on the bill, and perhaps the Senator from New Mexico does.
Let me say to my friend from Arizona, I understand his angst about
this. But this is not a new procedure. The Senator from Arizona has
employed the same procedure, as have I, as now does Senator Daschle
today--that is, offering an amendment that does not relate to the
underlying legislation.
There is a reason that happens. The reason that happens is the
passion one has for legislating on a specific issue that doesn't get
resolved because someone else won't allow you to bring it and debate it
on the floor. So you offer an amendment under the rules of the Senate
to another piece of legislation. That is what happened here. I say to
my colleague, he has employed the same tactic, as have I.
Mr. McCAIN. Never.
Mr. DORGAN. I will be glad to recite them. I will not do it at this
moment. There were line-item veto amendments, motor voter, and others.
Senator Daschle has not offered an amendment for the purpose of a
headline in South Dakota. I happen to support renewable fuels and
ethanol, and have for a long while. I make no apology for that, nor
would Senator Daschle, because I think it advances this country's
energy interests.
The reason it has to be offered now, according to Senator Daschle--
and we all understand this--is we had an energy bill that failed here
by two votes. I would have preferred we pass an entire energy bill in
this Senate. I voted for it and I signed the conference report. I
worked with the chairman of the Energy Committee. I would have
preferred that to pass because it had titles in four areas I supported.
I didn't agree with a colleague who said a few minutes ago he thought
there were things that were unworthy and rendered it something we
should not have passed. There were things in the Energy bill that were
unworthy and I didn't support, but on balance I believed it would
advance this country's interests. It failed by two votes in the Senate.
That bill contained production incentives, conservation efficiency,
and renewable fuels. The issue of renewable fuels is not new. We have
worked on this for a long time. If we cannot get the Energy bill, then
we ought to get the renewable fuels piece at least. That has such wide,
strong support here in the Senate. We have voted on it. I believe it
was 69 votes in favor of that provision. We had bipartisan, strong
support for that provision.
So if we cannot get the Energy bill, let's at least take that which
will, in my judgment, be beneficial to this country's long-term
economic and energy interests. That is what Senator Daschle offers this
amendment for on this bill, because the other opportunities don't
exist. If somebody said, well, let's bring an energy bill to the floor
this week, rather than this bill, or bring it to the floor next week--
and I am guessing; I don't speak for Senator Daschle--he would have
said let's do that, because he supports certain provisions of that
bill, voted for it, was the author of the renewable fuels provision and
ethanol provision. So my guess is he certainly would want that to
happen. But because we are now told the Energy bill will take a back
seat to this, that, and the other thing, and that it will now perhaps
be fall before we talk about it on the floor of the Senate, Senator
Daschle had every right--perhaps an obligation--to come here and say: I
have a passion about this, let's advance this. This is an opportunity.

Again, let me say I will bet, if I do a bit of research, perhaps
almost all of us on the floor, with the possible exception of the
Senator from Virginia, because he has been here fewer years--

[[Page S4413]]

but I would find everybody now on the floor has offered an extraneous
amendment to pending legislation. That is not unusual. It is called for
in the Senate rules. We face it every time we bring up a bill. What
would be counterproductive is if you offer an amendment that becomes
like throwing a wrench into the crankcase; you strip all the gears and
shut everything down. That is trouble.
That is not the case here. We have already voted on this. We know
there is wide bipartisan support. This isn't throwing a wrench in the
crankcase; this is advancing a part of the Energy bill that ought to
advance.
I will repeat, you have to be completely oblivious to reality not to
understand we have a serious energy problem. Part of it is going to be
solved by enhanced production, part by conservation, and part by
efficiency. But another part of it is going to be solved some way,
someday, somehow by a renewable fuels title that represents an
advancement in our ability to produce ethanol and other renewable
fuels. We are going to do that. We can do it sooner or later. We can do
it now or we can wait. But I submit to you this: Given what we face in
this world, the threat of terrorism, cutting off an energy supply to
our country, 60 percent of our oil coming from outside of our shores,
much from troubled parts of the world, we had better get the entire
Energy bill up and get it done. I pledge--and I think the Senator from
New Mexico will recognize I was a constructive part of his
deliberations and voted for it and signed the conference report--I will
again be a constructive part of those deliberations.
But if we are not going to get an energy bill up here, my colleague
has every right to come to the floor and try to advance this renewable
fuels provision. I support that. It is an appropriate thing to do. I
don't believe it should impede us in any way. We can do it in a half
hour. We know it, we know what it is, and we know what it will do for
this country. It cannot be suggested this somehow is going to slow down
this bill; it will not and it need not. The only thing that will do
that is if those who decide they don't want this piece of the Energy
bill to advance decide to find a way to interrupt this amendment.
Having said all that, I will say again it is not about headlines for
anybody. It is about the right of Senator Daschle to offer an amendment
that is important, which has already been discussed in the Senate. I
hope the Senate will have a vote on it and pass it and move on and deal
with the underlying bill and pass it when we have solved the definition
problem. I support a moratorium, and I believe since we have had a
moratorium for 5 years previous, we can find a way to solve the
definition problem and continue a moratorium with respect to Internet
taxation.
I yield the floor.
The PRESIDING OFFICER. The Senator from New Mexico is recognized.
Mr. DOMENICI. Mr. President, I wish the Senator from Arizona were
here, because I would like to tell him I agree with many of the things
he said. I certainly did not come to the floor--in fact, I left after
the last vote, assuming I would not be back down here. I thought we
were going on with something and that his bill, which had been debated,
although it had a number of small amendments--I thought it would go
through here and become law. But I have to admit between that little
visit to my office and what I got on the phone about 25 minutes ago
were very different. I don't want to be accusatory; I just want to say
the minority leader, over a long period of time, has been in the same
predicament we have all been in with reference to an Energy bill. He
has been in the same predicament regarding ethanol as we have. We
produced the first bill this year that had ethanol in it. As a matter
of fact, everybody remembers that comprehensive bill was defeated by
two votes in a cloture. It got 58 votes--that first one.
What we have is somebody has taken a piece of the Energy bill and
attached it not directly to the McCain amendment but to the tree on the
side, as an amendment which will fail when McCain passes. Nonetheless,
I guess making the point that you had a vote on ethanol does somebody
something.

Amendment No. 3051 to Amendment No. 3050

Mr. DOMENICI. Mr. President, I want to suggest I am very pleased this
happened, because I now send to the desk S. 2095 as an amendment to the
Daschle amendment.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:

The Senator from New Mexico [Mr. Domenici] proposes an
amendment numbered 3051 to amendment No. 3050.

Mr. DOMENICI. Mr. President, I ask unanimous consent that further
reading of the amendment be dispensed with.
Mr. REID. I object.
The PRESIDING OFFICER. Objection is heard.
The legislative clerk continued with the reading of the amendment.
Mr. REID. Parliamentary inquiry, Mr. President.
The PRESIDING OFFICER. The Senator from Nevada.
Mr. REID. Can the Chair give the Senator from Nevada an idea of how
long it would take to read the amendment?
The PRESIDING OFFICER. The Parliamentarian advises the Chair that the
inquiry is not in order while the amendment is being read.
Mr. DOMENICI. I did not hear the Chair.
The PRESIDING OFFICER. The Parliamentarian advises the Chair that an
inquiry is not in order during the reading of an amendment.
Mr. DOMENICI. I ask unanimous consent that the reading of the
amendment be dispensed with.
Mr. REID. I object.
The PRESIDING OFFICER. There is objection. The clerk will continue
with the reading of the amendment.
The legislative clerk continued with the reading of the amendment.
Mr. REID. Parliamentary inquiry, Mr. President.
The PRESIDING OFFICER. The inquiry is not in order.
Mr. REID. It is not in order?
The PRESIDING OFFICER. The regular order is the reading of the
amendment. The clerk will continue.
The legislative clerk continued with the reading of the amendment.
Mr. DOMENICI. Mr. President, I ask unanimous consent that the reading
of the amendment be dispensed with.
Mr. REID. Reserving the right to object.
The PRESIDING OFFICER. The Senator may not reserve the right to
object.
Mr. REID. I object.
The PRESIDING OFFICER. Objection is heard. The clerk will continue
with the reading of the amendment.
The legislative clerk continued with the reading of the amendment.
Mr. DOMENICI. Mr. President, I ask unanimous consent that there be a
temporary holdup in the reading of the amendment.
The PRESIDING OFFICER. Is there objection?
Mr. REID. I object. I don't know what ``temporary'' means.
Mr. DOMENICI. Will the Senator object if it was understood that the
reading could continue as soon as we finish our discussion?
Temporarily, just 5 minutes per side and then the reading will
continue.
Mr. REID. Reserving the right to object, Mr. President, it is my
understanding the Senator from New Mexico is asking that there be 10
minutes of debate equally divided; following that, the reading of the
amendment will continue?
The PRESIDING OFFICER. Is there objection?
Mr. DOMENICI. And nothing will change.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DOMENICI. Mr. President, might I engage in a conversation with
the distinguished Senator from Nevada and talk for a minute and tell
him what is happening?
What I sent to the desk is a bill we will now call S. 2095, the
comprehensive bill that we took to the Senate floor that Senator Dorgan
alluded to. It was H.R. 6. We heard arguments that it was too
expensive. This bill is no longer expensive. As a matter of fact, it is
negative cost. It puts money back in the Treasury.
We heard that Republicans could not vote for it, and some Democrats,
because of MTBE. That is out of this bill. It is no longer there.
I went back to the drawing board, took out direct spending, the
raising of revenue was taken out of this bill, and

[[Page S4414]]

it was put in another bill. So there is no raising of revenue that goes
in this bill. It is in the tax bill that will be up next week.
What I came to the floor of the Senate to do, and I say this to the
distinguished acting leader of the minority, was to see, rather than
piecemeal this bill, if we couldn't get an agreement that S. 2095 could
become the subject matter and that we may have three or four or five
amendments to a side. That is what I propound to the Senator from
Nevada.
I know how strongly Senator Daschle feels about this energy bill as
it pertains to all the items he wants, including ethanol, and all the
other items I described. He would have no objection to any of them.
MTBE is out of the bill. It is no longer subject to criticism because
it costs too much. As a matter of fact, it is about as cheap a bill as
you can get and still get an energy bill.
It does a lot of exciting things. With reference to the electric
grid, it does great things to eliminate gridlock and to do other very
important activities. I do not want to waste the time of Senator Reid
going through this bill because I think he knows what we are doing and
he knows what he is doing.
I want to save this energy bill. I want to make sure everybody knows
it is still alive and that it is good what happened here because some
time in the next couple of days, we are going to prove that this energy
bill still lives. I do not intend to kill the amendment of Senator
McCain. That is not my purpose. I want to make sure everybody knows and
everybody in this country knows we have a good energy bill that is
alive, and we have the tax portion alive in another area. Frankly, I
did not think we could get this far. But I thank the distinguished
minority leader for opening up this door.
He opened it a little bit, and I made a nice wide door and put in the
whole bill. That is what this is about. A little tiny piece of the bill
yielded an opportunity to put the whole bill in here. Now all I ask is
that we sit down and make an agreement that this bill be looked at--I
could say to the distinguished Senator who spoke about a bill that had
been passed some time ago, I can almost guarantee him that if he liked
that bill, he will much more like this bill than the one he voted for
before. It is much better. It is much more streamline. It accommodates
a lot more interests, and I believe we could get an overwhelming
majority of votes for it.
I want to close by saying if there is anybody in this country who
does not know there is an energy crisis, then they must have been
sleepwalking for the last 6 months because we are in a crisis of high
order.
I am offering a way to make sure we keep alive an energy bill that
will work.
I yield the floor and reserve the remainder of my time.
The PRESIDING OFFICER. The Senator from Nevada.
Mr. REID. Mr. President, it goes without saying, but I will say it
again, I have worked with Senator Domenici during my entire 18 years in
the Senate. During more than half of that time, he and I have worked as
the chairman or ranking member, as the majority of the Senate goes back
and forth, on one of the most important subcommittees there is in the
appropriation process, Energy and Water, so we have worked very closely
together.
We are partners in that legislation, and he is my friend. However, on
this energy bill let me say this: First, today of all days is a day
when the Supreme Court of the United States was hearing a most
important case, a case the Vice President of the United States has
stalled for 3\1/2\ years. He had meetings during the transition period
after President Bush and he were elected, meetings with people from the
energy field, oil companies, automobile manufacturers, but we are not
certain, people from the nuclear industry.
All the American people have asked for in 3\1/2\ years is tell us who
they met with, what they talked about, and when the meetings took
place. He has refused. Now this matter has gone to the Supreme Court,
and that argument was held today. These were secret meetings, I guess
is what they are, and if there was ever a time in the history of the
country where we need to debate the energy crisis, as some refer to it
openly, it is today. The first step to that would be to find out who
the Vice President met with, why he met with them, what he talked
about, and how long the meetings took place. He has refused to do that.
I also say that this country has arrived at a point in time where we
are not going to be able to do major legislation. Let me give some
examples with rare exception. Take, for example, the endangered species
bill. The endangered species bill has caused problems in the State of
North Dakota, and I know this because I have heard my two colleagues
from North Dakota talk about the problems of the endangered species law
in North Dakota. But it is not limited to North Dakota; the endangered
species law is a problem for most States in the country. The State of
Nevada ranks 34th in the number of listings for endangered species.
A number of years ago Senator Baucus, Senator Chafee, Senator
Kempthorne and I tried to do a major revision of that bill. We could
not do it. In that same Environment and Public Works Committee, there
was a decision made that we needed to do something about Superfund. We
could not. We have tried. Senator Smith, Senator Lautenberg, and others
on that committee tried. They were at loggerheads. They could not come
up with a major revision of that bill.
So the decision has been made by most legislators that the way to
improve the Superfund law that now exists is to improve it by bits and
pieces. The way to improve the endangered species law in this country
is to do it by bits and pieces. The Energy bill is the same thing.
I say to my friend, we are not going to pass a bill that the Senator
from Arizona referred to as the hooters and polluters bill. Why was it
referred to as the hooters and polluters bill? Well, many of us think
it did nothing to clear up the environment. Where did the hooters come
in? One of the ornaments attached to the Christmas tree bill was to
give a financial stipend to a Hooters operation some place in the
southern part of this country. That is where it got its name.

We are not going to pass major legislation on energy in the near
future. What we can do, though, is pass the part on which there is
general bipartisan agreement. Ethanol is an example. More than two-
thirds of the Senate voted for that legislation. It seems to me
entirely logical that we should dispose of that matter. It would do
some good to help the energy crisis we all acknowledge is in this
country.
As I spoke about earlier today, I throw bouquets to Senators Baucus
and Grassley for having done what they did in the recent FSC bill by
including in that something that is extremely important--section 45,
production tax credits for renewable resources--that expands and
extends a credit for wind, geothermal, solar, and biomass. That is
important. We should pass that measure next week. I think we are going
to do that. We should do the ethanol bill now.
My friend from Arizona, the distinguished senior Senator from
Arizona, asked, What is going on in the Senate?
The PRESIDING OFFICER. The Senator's times has expired.
Mr. REID. I ask that the Senator from Nevada be given an extra 4
minutes and the Senator from New Mexico be given an equal amount of
time.
The PRESIDING OFFICER. Is there objection? Without objection, it is
so ordered.
The Senator from New Mexico.
Mr. DOMENICI. Is it possible we could take that off the reading of
the amendment?
Mr. REID. It is possible. I will think about it after.
Mr. DOMENICI. We would think that it would, but that is a guess,
although it would be a pretty good guess.
Mr. REID. I ask unanimous consent that I be given 4 additional
minutes, an extra 4 minutes be given to the Senator from New Mexico,
and then we go back to reading the amendment when I finish.
The PRESIDING OFFICER. Is there objection? Without objection, it is
so ordered.
The Senator from Nevada.
Mr. REID. Mr. President, what I was saying is the Senator from
Arizona asked, What is going on in the Senate? I mean, can anyone
imagine--and I am paraphrasing--they offered an amendment to energy on
a bill that deals with the Internet tax?

[[Page S4415]]

My friend from Arizona, who is one of the most astute politicians
this country has ever seen, knows what is going on. We are in the
Senate. This has been going on for more than 200 years. We have the
right to do that. In years past, no one ever considered it anything out
of the ordinary.
The problem we have in the Senate today is we do not do anything. In
the last 4 weeks, we have voted 11 times. Why? Because amendments are
offered to important legislation like FSC and there is a desire to have
a vote, for example, on overtime. How much time does Senator Harkin
want to debate that? He will take 10 minutes and vote on it. We have
not been given that privilege.
So what is going on in the Senate today is what has gone on for 200
years. The difference is, nothing is ever brought to conclusion because
people do not want to vote. The majority has made a decision they do
not want to vote, so we do not vote.

So I say to my friend from Arizona, we are doing what has been
historically done in this body. Some may ask, Well, Senator Reid, why
would you ask this amendment be read? Because I feel that offering this
amendment of some 800 to 900 pages is only a message that says we are
going to continue doing business in the Senate the way we have all year
long and do nothing. Everybody knows that we are not going to pass
this. It is the same as the endangered species. It is the same as
Superfund. We are not going to pass a hooters and polluters bill.
We can take bits and pieces out of that legislation and do some good
for this country. I repeat: To do the section 45 production tax credit
would be a tremendous boon to this country. We would be able to start
producing energy alternatively. It would help the capital markets.
There would be construction jobs. I think it is the right way to go.
I am disappointed that my friend from New Mexico, who has worked
hard--as my friend from North Dakota said, no one has worked harder on
this energy bill than my friend from New Mexico, the distinguished
senior Senator, but I say to him, someone I should not be giving advice
to because he has far more experience than I have, this bill is not
going to pass. I repeat for the third time, look at what we have tried
to do with endangered species, look what we have tried to do with
Superfund. Those are only two of the numerous other pieces of
legislation we need to work on, but let's do them piece by piece. That
will be my suggestion.
I will give some thought to taking away my objection to reading the
amendment, but I am going to give some thought to that because I think
offering this amendment is only a way of preventing our moving forward
on this important legislation. I have spoken to the manager of this
bill. He thinks that working with Senator McCain, the chairman of the
Commerce Committee, that we can come up with a compromise in a
reasonable period of time. It is totally appropriate that we dispose of
Senator Daschle's amendment. People should vote it up or down. More
than two-thirds of the Senate approved it at one time. Why should that
change?
The PRESIDING OFFICER. The Senator from New Mexico.
Mr. DOMENICI. First, I wish to talk about what is going on in the
Senate. I could hardly believe my friend--and he is my friend; what he
said about our working together is true, but I could hardly believe my
ears when he suggested that the Republicans are keeping us from voting
in the Senate. I mean, I have a list of what has been going on for the
last 3 months. You know, it is nothing. It is not because of the
Republicans, but the Democrats on every issue have said they want to
filibuster it. We have had more clotures in the last 3 months than any
3 months in the history of the Republic, unless there was one after
another on one bill of which I am unaware. So let's talk about that in
reality.
Let me say to my good friend Senator Reid, if he thinks there is only
one good provision in this bill that everybody might vote for, let me
tick off what is in this bill and ask you if you think it would be 51
or 61 votes for it. Let me start: Encouraging the production of
domestic oil without violating the environment; encouraging the
development of more natural gas from three sources, all American;
encourage the building of necessary infrastructure such as the Alaska
natural gas pipeline; encourage more renewable energy--everybody speaks
about it, this bill promotes it, and we can't pass it--promote energy
efficiency; promote clean coal technology; increase R&D on a variety of
technologies and improve our electricity grid.
These are the things in this bill. I don't care how big it is, how
many pages are in it. If the distinguished minority leader can bring up
one piece of it because it is popular, then I believe I ought to be
entitled to bring up the rest of the bill which is also popular.
Remember, there is no MTBE in it. If we would have brought that first
bill here without MTBE in it, it would have already passed; we would be
finished. Yet this bill is more stripped down than that. Because in
addition to MTBE not being in it, I have already told you that it
doesn't cost anything. I have told you the tax provisions are somewhere
else, and I have just given you a litany of what is in it.
I submit, before we are finished, if it takes all night or however
long you want us to be here reading it, that we will have a vote and it
will be a cloture on this bill and I submit there will be two of them.
There will be one on Senator Daschle's and one on Senator Domenici's. I
believe Senator Daschle's will fail and I believe mine will pass, and
what we will have is we will have the hope and have alive the idea that
a good Energy bill, which we have gone through and swept with all kinds
of brushes to make it a bill that everybody likes, will be pending
before us.
I am hopeful that in the process we will not have taken so much time
that Senator McCain can't get his bill done. I am very hopeful of that.
I hope Senator McCain's staff understands that all I have been speaking
of, unless we have to stay here all night and tomorrow to get this
read, I am looking for the time, looking ahead here and figuring that
you can get your amendment done and we can get an important decision by
this institution, in light of the terrific price of gasoline, whether
they want an energy bill or not. That is going to be a good one to
watch and it will be a good one to have a vote on, I will tell you.
How much time do I have remaining?
The PRESIDING OFFICER. The Senator has 1 minute 15 seconds remaining.
Mr. DOMENICI. And how much does Senator Reid have?
The PRESIDING OFFICER. The Senator has 8 seconds.
Mr. DOMENICI. Do you want to yield our time back?
Mr. REID. I would like an additional 1 minute on our side with the
same rule in effect
Mr. DOMENICI. I would take 1 in addition in case you say something
that needs to be rebutted.
The PRESIDING OFFICER. Without objection, it is so ordered. The
Senator from Virginia.
Mr. ALLEN. I ask the Senator from New Mexico to yield for the purpose
of a question.
Mr. DOMENICI. Certainly.
Mr. ALLEN. Mr. President, I ask the Senator from New Mexico, while
all this discussion is going on about the underlying bill, and while it
is interesting to talk about endangered species and Supreme Court cases
and so forth, and energy is important, clean coal and new sources of
natural gas are important, and oil, and a variety of other things, the
fuel cell and so forth--at any rate, the reality is when you speak of
endangered species, there are endangered jobs in rural America.
Even though this debate is on the ethanol matter, the Corn Growers
Association is very much strongly in favor of making sure there is no
taxation on the Internet. They realize how important that is; that this
measure be passed for jobs and economic growth in rural America. There
are 35 States in the Corn Growers Association.
I would ask the Senator from New Mexico, what is the purpose of
reading this title of this bill as opposed to acting on the Energy
bill, which I consider a detour and a tangent off of the Internet
access tax issue, or even addressing issues from those who want to tax
the Internet and may want to put on some more amendments? Why do we
have to spend time listening to the melodious

[[Page S4416]]

voice of our clerk reading off the title of your amendment?
Mr. DOMENICI. Senator, I yielded to you without knowing you were
going to use all the time I had remaining.
Mr. ALLEN. I am sorry.
Mr. DOMENICI. If there is anybody I would like to do that for, I
would do it for you, but how much time do I have remaining?
The PRESIDING OFFICER. The Senator has 32 seconds remaining.
Mr. DOMENICI. Senator, I am going to try to answer your question when
I get back on my feet, but I yield the floor at this point.
The PRESIDING OFFICER. The Senator from Nevada.
Mr. REID. Mr. President, the Senator from New Mexico has stated the
bill he offered is not the so-called hooters and polluters bill, so
named by the distinguished Senator from Arizona, but in fact it is a
slimmed down version of that bill.
I ask through the Chair of my friend from New Mexico, is that, in
fact, the case? Could you answer that yes or no? The bill that is now
before the Senate is a slimmed down version of the so-called hooters
and polluters bill?
Mr. DOMENICI. Senator, I can only do that in dollars. The original
bill cost $31-plus billion; this one costs negative $1.2 billion.
Mr. REID. I ask, does this bill have in it the section 45 production
tax credit?

Mr. DOMENICI. No, it does not.
Mr. REID. I ask my friend from New Mexico, would you support--
supporting your bill here, that is the one I have offered as an
amendment, would you support the FSC bill with the section 45
production tax credit in it?
Mr. DOMENICI. Sure.
Mr. REID. Mr. President, I am going to, at this time, that being the
case, recognizing that what the Senator has offered is a slimmed down
version and is not the original bill, and that he would support the
provision in the FSC bill--I think a combination of those two might
make some interesting votes here in the next day or two--I withdraw my
objection to waiving reading the amendment.
The PRESIDING OFFICER. Without objection, it is so ordered.
(The amendment is printed in today's Record under ``Text of
Amendments.'')
Mr. DOMENICI. Could the Senator tell me what you said about votes in
the next couple of days? I didn't get it.
The PRESIDING OFFICER (Mr. Alexander). The Senator from Nevada.
Mr. REID. I know the Senator from Virginia wants to speak on the
underlying bill. I will be as brief as I can.
What I told the Senator from New Mexico, through the Chair, is that
it was my understanding that the bill that was offered in the form of
an amendment was nearer the original bill that was offered and cloture
was not invoked on it previously. I have been told by my staff and
others that it is a slimmed down version of the original bill. That was
confirmed by the Senator from New Mexico.
I further went on to say, to ask the Senator from New Mexico if it
had the section 45 production tax credit in it. He said no. I then went
further and said, would he, the Senator from New Mexico, support the
FSC bill, which does have the production tax credits in it, and he said
he would.
I then said, that being the case, that we have a smaller version of
the original Energy bill than I originally thought, and, further, that
he would support the FSC bill, including the production tax credit
provision that was placed in there by Senators Grassley and Baucus. I
then said I think that is going to make for some interesting votes in
the next few days.
Mr. DOMENICI. So you said about 2 days? I still didn't get that.
Mr. REID. I would assume the alternatives, I say through the Chair to
my friend from New Mexico. I assume the majority has a number of
alternatives. They can debate endlessly the amendment you have offered,
the amendment the Senator from Arizona has offered, and we already have
cloture having been filed on the minority leader's amendment--so it is
possible, I don't know if the majority has made that decision, they
could file cloture on your amendment.
Mr. DOMENICI. That is correct.
Mr. REID. They could file cloture on the amendment of the Senator
from Arizona. That is why I said in a couple of days. It takes 2 days
for these cloture motions to ripen. Maybe Thursday we could have a vote
on all these matters, and I said it would make for some interesting
votes.
Mr. DOMENICI. Mr. President, I suggest the absence of a quorum. I
don't quite understand, I say to both Senators. I want to help, but I
don't understand.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. McCAIN. Mr. President, I ask unanimous consent that the order for
the quorum call be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. McCAIN. Mr. President, could I ask what the parliamentary
situation is?
The PRESIDING OFFICER. There is a pending Domenici second-degree
amendment to the pending Daschle first-degree amendment to the
underlying text of the bill.
Mr. McCAIN. So we are debating the Domenici second-degree amendment
to the Daschle amendment to the substitute or to the original S. 150.
The PRESIDING OFFICER. That is correct.
Mr. McCAIN. I yield the floor. I thank the Chair.
The PRESIDING OFFICER. The Senator from Virginia.
Mr. ALLEN. Mr. President, I have been listening to the debate and the
reading of titles of amendments. We have seen detours, political
posturing, partisanship, criticizing of the Vice President, and all
sorts of cover for past obstructionism.
Obviously, things such as the geothermal are important. Clean-coal
technology is important. Biomass, solar photovoltaic, energy policy,
exploration of the North Slope of Alaska, natural gas pipelines for
greater quantities of natural gas--all of that is very important. Then
you listen to people talk about endangered species. A Senator was
talking about endangered species. I am thinking: You know what is
endangered in this country--particularly out in rural areas--is jobs
for people in rural America.
The main point of this debate and where we are supposed to be today
is those who want to have the Internet free from taxation and others
who have other ideas. The Senator from Texas, Senator Hutchinson, had
an amendment. We voted on it, and we are supposed to be considering
other amendments on Internet tax. Now we are off on a tangent of
ethanol. First it was ethanol, and now it is the larger Energy bill. I
was thinking the key people who like the ethanol provision are people
who grow corn in America.
There is an association, the American Corn Growers Association. To
get everyone to focus a second on the main issue, which is whether the
Internet ought to be taxed at the State and local level, I will share
with my colleagues what the American Corn Growers Association actually
thinks of S. 150, the bill to make sure there is not taxation on the
Internet.
They said they support S. 150. They want to make the existing Federal
moratorium against State and local taxes on Internet access, as well as
multiple and discriminatory taxes targeting interstate commerce,
permanent and national in scope. They feel the bill would ensure
technological neutrality so all Internet users, including their
members--being the corn growers--are protected by the Federal
moratorium no matter what technology they use to access the Internet.
The Corn Growers Association feels the new technologies are
particularly key to ensuring Internet access to rural America.
They are exactly right, whether that is through DSL lines, through
wireless, satellites, or electric power lines, there are a variety of
ways rural America needs to get access to broadband.
The American Corn Growers Association, which represents people and
interests of corn producers in 35 States, works very hard to enhance
farm income. They care about protecting rural communities. They say
they recognize the need to have a strong and stable farm economy, not
just for the farmers, but for consumers, as well. They feel the
Internet Tax Freedom Act and S. 150 is intended to exempt access to the
Internet from taxation, including, they recognize, transmission. The
Corn

[[Page S4417]]

Growers feel to exempt from taxation the transmission is an integral
part of accessing the Internet. They feel failure to amend the existing
law would make consumers susceptible to substantial taxation of their
Internet access. They also say even the definition of Internet access
is outdated and does not cover all forms of technology used to access
the Internet that exists today.
The wording of the original statute is exclusive of consideration of
the multiple technological advancements and changes that have developed
in business since 1998. This is inadequate, says the Corn Growers
Association, and will almost certainly result in new taxes imposed on
Internet users. They feel keeping the current language in place will
perpetuate a competitive disadvantage among providers by exempting some
of the types of high-speed Internet access while other types would be
taxable.
We have the American Corn Growers Association, which undoubtedly
would be for ethanol provisions proposed on the floor, but clearly the
American Corn Growers Association, as well as dozens of organizations,
whether technologically involved or not, care a great deal about
whether broadband is going to be taxed.
All these parliamentary procedures and all these delays and tangents
and detours take us away from the point at hand and the decision that
needs to be made by the Senate. It ought to be done as quickly as
possible. The question before us is whether American consumers are
going to be hit on average with 17-percent telecommunication taxes on
their monthly Internet service bill. The question is whether Internet
service bills will look like a telephone bill, with multiple taxes from
the localities, from the States, and even the Federal Government.
My friends, it is absolutely essential, I say to my colleagues, that
we act on the Internet access tax issue. As more and more taxes get
imposed, it is nearly impossible to ever get those taxes off. Look at
your telephone bill. There is a slew of taxes; some that are
incomprehensible. There is one tax placed on there in 1898 as a luxury
tax. It was a luxury tax in 1898 to finance the Spanish-American War.
Guess what? We are still paying that tax. That war has been over for
over 100 years.
That is why it is important we act and not delay, not dawdle, not get
off on tangents. If we do get off the point, we need to get back on the
subject, the point of voting and taking a stand on whether Members
stand on the side of freedom and opportunity for people by not having
Internet access hit with 17-percent taxes or more, or whether we will
stand on the side of freedom, where the broadband can get rolled out--
not just to city areas and suburban areas, but out to the country, to
rural areas so people can have access if they have their own business,
access to sell goods or services all over the world, or all over the
country, as the case may be.
If we continue to delay on this issue, we will see what has happened
in the last 2 years. What has happened in the last 2 years, a little
over 2 years, is unelected bureaucrats come up with revenue rulings or
taxation rulings that have found a loophole in the original moratorium
and have started imposing taxes, about $40 million worth of taxes
across the country. That is not a great deal in money, but nevertheless
taxing DSL is a great concern to many. When they tax Internet access,
that means fewer people can afford it. The reason most people do not
have Internet access is they cannot afford it. We are concerned about
an economic digital divide. If you want to close the divide and make
sure people all over this country have greater ability to have access
to the Internet, and the benefits therefrom--whether education, access
to information, commerce, telemedicine, a variety of other
applications, particularly with broadband--then we must not tax
Internet access. Adding taxes will not help.
I hope we will make a decision this week. Let the American people
know where we stand. More importantly, let those companies that will
have to make investments in the range of tens of millions of dollars to
serve various areas know what the policy of this country will be. In
the past, the question has been one of freedom--making sure the
Internet was free from taxation. We see great growth, great
opportunity. That should be the approach for the future, from my point
of view.
A decision needs to be made so the folks planning expansion of the
Internet--those companies, those entrepreneurs--know what the playing
field will be in the future. It is my view, looking at the votes,
whether on the motion to proceed or the most recent amendment from the
senior Senator from Texas, the vast majority of the Senators realize
the Internet ought to remain free from burdensome, onerous taxation. A
majority of the Senators recognize we need to update the definition of
Internet access to make sure the DSL, wireless and other methods of
accessing the Internet, are not subject to these burdensome taxes.
From these votes, at least in the early indications, it appears that
a majority of Senators recognizes that we ought to be closing the
economic digital divide. A strong majority of Senators recognizes there
are innovations, there are new ideas, and we want to make sure this
country will be in the lead for adaptations, the benefits, prosperity,
and opportunity that will flow from new advancements in technology. We
certainly do not want to be increasing the costs to anybody in this
country for logging on to the Internet everyday.
In my view, if the Senate does not act, if the Senate does not invoke
cloture and pass an updated Federal moratorium on Internet access
taxation, what we will see are State and local tax commissars imposing
telecommunication-based taxes that average about 17 percent on the
Internet. This moratorium that we are trying to get action on here on
the Senate floor is designed to protect consumers and avert the adverse
impact of taxation on real people in our real world and in our economy.

So while there are all these machinations and maneuverings and
parliamentary procedures and political posturing and tangents and
detours, I would ask my colleagues, in the midst of this, if we are
going to have votes on all these other ideas, some of which have a
great deal of merit--and maybe, for those of us who do not want to tax
the Internet, we should feel somehow applauded or grateful that people
would want to attach salutary, positive ideas; they figure this is
going to pass, and this is the way to get those other ideas done--but
as you get on to these other nongermane issues, let's act on them
quickly, and let's also keep our eye on the ball.
While folks may care about endangered species, let's remember, real
people in the real world who we want to make sure have the
opportunities that come from having access to broadband and Internet,
whether they are a small business owner, a student, or somebody who is
looking for a better job, let's make sure we pay attention to the issue
at hand, the underlying measure; and that is, to make sure the Internet
stays free from onerous and burdensome taxation for all people all over
the United States of America.
Mr. President, I yield the floor.
The PRESIDING OFFICER. The Senator from Ohio.
Mr. VOINOVICH. Mr. President, I am kind of surprised that the Corn
Growers Association of America is supporting the Allen-Wyden
legislation. I am sure that if they really understood the ramifications
of this legislation, they would not be supportive of it because they
would understand that if that legislation passes, their real estate
taxes or other taxes they are paying would increase.
I am going to make a point of getting in touch with them. I received
the President's Award last year from the Corn Growers, from Fred Yoder,
who was their president, and worked very hard, several years ago, to
get the petroleum people and the Corn Growers together to come up with
the ethanol compromise that is now in the Energy bill.
I am glad the Senator from Virginia has pointed out they are
supporting this legislation. I am going to get in touch with them right
away and share with them some information they might not have had at
the time they came out to support this legislation.
This afternoon the Senator from Arizona quoted from a policy paper of
the National Governors Association and mentioned the criteria that the
National Governors Association said

[[Page S4418]]

should be in any bill that deals with this question of Internet
taxation. I would like to go through that policy paper and share that
with my colleagues in the Senate.
First: NGA supports, as I do and as the Presiding Officer does,
reasonable extension of the Internet Tax Freedom Act.
In this policy paper that was quoted from:

The NGA calls upon Congress to adopt S. 2084, the
``Internet Tax Ban Extension and Improvement Act.'' This
compromise bill, sponsored by Senators Alexander and Carper--

and, by the way, Senator Voinovich--

offers a reasonable extension of the moratorium while
addressing industry concerns for technological neutrality
without unduly burdening state and local governments.

I am not going to go into all these, but I ask unanimous consent that
this policy paper be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

NGA Supports Reasonable Extension of the Internet Tax Freedom Act

The National Governors Association (NGA) supports extending
the federal ban on state and local taxation of Internet
access in a manner that is technology neutral and fiscally
fair to state and local governments. Unfortunately, two
pieces of legislation currently moving through Congress
violate these basic principles. The House of Representatives
has already passed H.R. 49 and S. 150 is currently under
consideration in the Senate. By permanently expanding the
definition of tax-free Internet access, both bills rob state
and local governments of existing revenues while creating a
tax free zone for future communications services.
The NGA calls upon Congress to adopt S. 2084, the
``Internet Tax Ban Extension and Improvement Act.'' This
compromise bill, sponsored by Senators Alexander and Carper,
offers a reasonable extension of the moratorium while
addressing industry concerns for technological neutrality
without unduly burdening state and local governments.

background

Although the U.S. Constitution grants Congress broad
authority to regulate interstate commerce, the federal
government, historically, has been reluctant to interfere
with states ability to raise and regulate its own revenues.
State tax sovereignty is a basic tenet of the federalist
system and is fundamental to the inherent political
independence and viability of states. Only in the most
narrowly defined exceptions has Congress crossed that line.
The 1998 ``Internet Tax Freedom Act'' (ITFA), which imposed
a moratorium on state or local taxation of Internet access,
is one exception to this long held practice. The ITFA expired
briefly in 2000 but Congress renewed it through November 1,
2003. Designed to ``jump start'' the then-fledgling Internet
industry, the moratorium included three important
restrictions to protect states:
1) it applied only to new taxes--existing taxes were
grandfathered;
2) the definition of Internet access, while broad, excluded
telecommunication services; and
3) the bill expired after two years to allow Congress,
states and industry the opportunity to make adjustments for
rapidly developing technologies and markets.

the nga position

Today, over 130 million Americans access the Internet using
everything from dial-up modems, high-speed broadband, and
Digital Subscriber Line (DSL) offerings to wireless
technologies and even satellite and power line connections.
The Internet's broad reach and technological promise is also
transforming entire industries such as telecommunications,
which is rapidly migrating all of its services to Internet
based technologies and rolling out new services such as Voice
Over Internet Protocol (VOIP).
As Congress considers legislation to extend the moratorium,
NGA encourages members to adhere to the following guidelines
to maintain the balance struck by the original moratorium, a
balance that encouraged the growth of the Internet but still
respected state sovereignty:

1. do no harm; any extension of the moratorium should preserve existing
state and local revenues.

The original moratorium protected existing state revenues
by grandfathering tax laws in place before 1998 and
prohibiting only new taxes on Internet access. In contrast,
H.R. 49 and S. 150 would cost states much needed revenue by
repealing the grandfather clause and expanding the law to
prohibit taxes on telecommunications ``used to provide
Internet access.'' Stating that the proposed bills would
trigger a possible point-of-order under the Unfunded Mandates
Reform Act, the Congressional Budget Office (CBO) estimates
removing the grandfather provision would cost states between
$80 and $120 million annually. The effect of the second
provision could be even greater. ``[D]epending on how the
language altering the definition of what telecommunications
services are taxable is interpreted,'' the CBO said, ``that
language also could result in substantial revenue losses for
states.'' With state and local governments collecting over
$18 billion in telecommunications taxes annually, any
significant change in the taxability of telecommunications
could cost states billions of dollars. At a time when state
and local governments are facing large increases in mandatory
spending and stagnant revenue growth, Congress should not
exacerbate state fiscal problems by interfering with the
collection of existing taxes.

2. be clear; definitions matter.

The original moratorium split the definition of Internet
access into two parts: a broad and inclusive description of
Internet access and an absolute exclusion of
telecommunications services from the moratorium. The
definition read:
``Internet access means a service that enables users to
access content, information, electronic mail, or other
services offered over the Internet, and may also include
access to proprietary content, information, and other
services as part of a package of services offered to users.
Such term does not include telecommunications services.''
The exclusion of telecommunications services protected
states by clarifying that Internet access was a separate,
distinct and limited service. It also clearly preserved
existing state and local taxes on telecommunications services
that amounted to over $18 billion in 1999. The definition,
however, allowed some jurisdictions to tax the
telecommunications component of certain broadband
technologies like DSL while others remained tax-free. This
perceived inequity led to a push to alter the definition of
Internet access in H.R. 49 and S. 150 to make tax free
telecommunications services ``used to provide Internet
access,'' as a means of making the ITFA technology neutral.
This change, however, is too broad. Not only would it
prohibit taxes states and localities are collecting on DSL,
it would also exempt all telecommunications services used
anywhere along the Internet--from the end-user all the way to
and including the ``backbone.'' Compared to the original
moratorium, which expressly exempted telecommunications from
its scope, H.R. 49 and S. 150 could ultimately put at risk
most, if not all, state and local telecommunication tax
revenue. (See attached chart.)
H.R. 49 and S. 150 would also intensify a long-standing
problem with the original definition: the unlimited ability
to bundle together content and ``other services'' into a
single offering of tax-free Internet access. Services such as
VOIP highlight the risk states face from this broad
definition. Unlike traditional telecommunications services,
VOIP uses the Internet to transmit voice communications
between computers, phones and other communications devices.
Industry observers expect 40 percent of all telephone calls
in the United States to be Internet based within five
years. If VOIP is allowed to be bundled with Internet
access into a single tax-free offering, and
telecommunications used to deliver that offering are also
tax free, states could quickly see their
telecommunications tax base erode to nothing. Language in
S. 150 as amended and S. 2084 that requires service
providers to unbundled taxable services from non-taxable
Internet access is helpful, but only if the universe of
what constitutes Internet access is actually limited.

3. stay flexible--a temporary solution is better than permanent
confusion.

Rapid pace innovation in the Internet and
telecommunications industries makes it difficult to define
accurately these complex and ever-changing services. The
original moratorium was made temporary in part for this
reason--to provide Congress, industry and state and local
governments with the ability to revisit the issue and make
adjustments where necessary to accommodate new technologies
and market realities. The fact that the courts, the Federal
Communications Commission and Congress are all in the process
of examining and redefining the core elements of what
constitutes telecommunications and Internet access
underscores the need for caution. With so much uncertainty, a
temporary extension of the moratorium is the best way to
avoid unintended consequences from a permanent moratorium.

conclusion

NGA supports S. 2084 because it best reflects a balance
between state sovereignty and federal support for the
Internet. First, it protects states by drawing a line in the
sand to prohibit new taxes on Internet without interfering
with existing state laws. Second, by making the connection
from a consumer to their Internet access provider tax free,
the Alexander-Carper bill actually levels the playing field
for competing technologies without overreaching. Third, it
gives Congress, industry and states a chance to revisit the
Act by making the moratorium expire after two years. For
these reasons NGA supports S. 2084 as a true compromise that
is fair to industry, respectful of states, and good for
consumers.

STATE AND LOCAL TELECOMMUNICATIONS TAXES POTENTIALLY AT RISK UNDER H.R.
49/S. 150
[$ millions]
------------------------------------------------------------------------
Revenues at
Revenues at   risk under
risk under   S. 150 as
H.R. 49 \1\  amended \2\
------------------------------------------------------------------------
Alabama.......................................         $213         $115
Alaska........................................           18           13
Arizona.......................................          308          146
Arkansas......................................          146          101
California....................................        1,495          836
Colorado......................................          293          169
Connecticut...................................          276          170
Delaware......................................           27           17
District of Columbia..........................          120          116

[[Page S4419]]

Florida.......................................        1,490        1,059
Georgia.......................................          344          182
Hawaii........................................           51           48
Idaho.........................................           37            3
Illinois......................................        1,000          807
Indiana.......................................          265          148
Iowa..........................................          137           49
Kansas........................................          172           74
Kentucky......................................          284          192
Louisiana.....................................          207           69
Maine.........................................           67           28
Maryland......................................          369          222
Massachusetts.................................          411          256
Michigan......................................          678          477
Minnesota.....................................          226          135
Mississippi...................................          190           90
Missouri......................................          334          216
Montana.......................................           46            7
Nebraska......................................          101           59
Nevada........................................           52           22
New Hampshire.................................           65           56
New Jersey....................................          699          473
New Mexico....................................          125          101
New York......................................        1,904        1,418
North Carolina................................          308          225
North Dakota..................................           32           22
Ohio..........................................          680          345
Oklahoma......................................          258          166
Oregon........................................          113           63
Pennsylvania..................................          672          547
Rhode Island..................................          100           77
South Carolina................................          196           90
South Dakota..................................           48           25
Tennessee.....................................          348          196
Texas.........................................        1,724        1,213
Utah..........................................          160           89
Vermont.......................................           30           17
Virginia......................................          329          148
Washington....................................          492          331
West Virginia.................................           73           36
Wisconsin.....................................          363          255
Wyoming.......................................           22           13
-------------------------
Total:....................................       18,098       11,732
------------------------------------------------------------------------
\1\ H.R. 49: Figures assume the loss of all state and local
telecommunications transaction taxes and business taxes as companies
migrate their telecommunications services to the Internet.
\2\ S. 150: Includes all telecommunications taxes except for 911 fees
and business taxes such as property taxes, capital stock taxes on net
worth, or sales and use taxes on business inputs.

Source: Special Report/Viewpoint ``Telecommunications Taxes: 50-State
Estimates of Excess State and Local Tax Burden,'' Robert Cline, State
Tax Notes, June 3, 2002.

Mr. VOINOVICH. First, they talk about: ``DO NO HARM. Any extension of
the moratorium should preserve existing state and local revenues.''
The next point they make is: ``BE CLEAR. Definitions matter.''
By the way, in the area of ``DO NO HARM,'' they mention the fact:

With state and local governments collecting over $18
billion in telecommunications taxes annually, any significant
change in the taxability of telecommunications could cost
states billions [billions] of dollars. At a time when state
and local governments are facing large increases in mandatory
spending and stagnant revenue growth, Congress should not
exacerbate state fiscal problems by interfering with the
collection of existing taxes.

In terms of the definitions, they believe that:

The original moratorium split the definition of Internet
access into two parts: a broad and inclusive description of
Internet access and an absolute exclusion of
telecommunications services from the moratorium. The
definition read:
``Internet access means a service that enables users to
access content, information, electronic mail, or other
services offered over the Internet, and may also include
access to proprietary content, information, and other
services as part of a package of services offered to users.
Such term does not include telecommunications services.''
The exclusion of telecommunications services protected
states by clarifying that Internet access was a separate,
distinct and limited service.

They go on to say, under definitions:

[The House bill] and S. 150 would also intensify a long-
standing problem with the original definition: the unlimited
ability to bundle together content and ``other services''
into a single offering of tax-free Internet access. Services
such as VOIP--

That is being able to use your computer to make telephone calls--

highlight the risk states face from this broad definition.
Unlike traditional telecommunications services, VOIP uses the
Internet to transmit voice communications between computers,
phones and other communications devices. Industry observers
expect 40 percent of all telephone calls in the United States
to be Internet based within five years. If VOIP is allowed to
be bundled with Internet access into a single tax-free
offering, and telecommunications used to deliver that
offering are also tax free, states could quickly see their
telecommunications tax base erode to nothing [nothing].
Language in S. 150 as amended and S. 2084 that requires
service providers to unbundle taxable services from non-
taxable Internet access is helpful, but only if the universe
of what constitutes Internet access is actually limited.

It also goes on and talks about ``STAY FLEXIBLE. A temporary solution
is better than permanent confusion.'' Did you hear that? ``A temporary
solution is better than permanent confusion.''

Rapid pace innovation in the Internet and
telecommunications industries makes it difficult to define
accurately these complex and ever-changing services. The
original moratorium was made temporary in part for
this reason--to provide Congress, industry and state and
local governments with the ability to revisit the issue
and make adjustments where necessary to accommodate new
technologies and market realities. The fact that the
courts, the Federal Communications Commission and Congress
are all in the process of examining and redefining the
core elements of what constitutes telecommunications and
Internet access underscores the need for caution.

We are in an era right now of unbelievable change.

With so much uncertainty, a temporary extension of the
moratorium is the best way to avoid unintended consequences
from a permanent moratorium.

Their final conclusion--and I am sure the Presiding Officer is very
happy about this--is:

NGA supports S. 2084 because it best reflects a balance
between state sovereignty and federal support for the
Internet. First, it protects states by drawing a line in the
sand to prohibit new taxes on Internet without interfering
with existing state taxes. Second, by making the connection
from a consumer to their Internet access provider tax free,
the Alexander-Carper bill actually levels the playing field
for competing technologies without overreaching.

That is a point that the Presiding Officer has made several times on
the floor of the Senate.
Continuing:

Third, it gives Congress, industry and states a chance to
revisit the Act by making the moratorium expire after two
years. For these reasons NGA supports S. 2084 as a true
compromise that is fair to industry, respectful of states,
and good for consumers.

Now, I contacted the National Governors Association earlier today.
I asked them if they could opine on the McCain amendment that was so
eloquently spoken to by Senator McCain. They worked very quickly and
came back with a letter to Senator Frist, majority leader, and Senator
Daschle, Democratic leader. It is signed by Governor Brad Henry,
Oklahoma, Chair, Committee on Economic Development and Commerce, and
Governor Michael Rounds, South Dakota, Vice Chairman, Committee on
Economic Development and Commerce.
I would like to read from that letter.

Dear Senator Frist and Senator Daschle:
The National Governors Association . . . supports an
Internet access tax moratorium that benefits consumers, is
fair to industry, and does no harm to states. As the Senate
once again considers the moratorium, we urge you to oppose
efforts that would deprive states of existing tax revenues
and to support the compromise proposal to be offered by
Senator Alexander and Senator Carper and embodied in S. 2084,
the ``Internet Tax Ban Extension and Improvement Act.''
NGA supports the Alexander/Carper compromise because it
best reflects the appropriate balance between state
sovereignty and federal support for the Internet. First, it
protects states by prohibiting new taxes on Internet access
without interfering with existing state revenues. Second, by
making the connection from a consumer to their Internet
access provider tax free, the compromise language encourages
broadband deployment by leveling the playing field for all
technologies.

That is what we are trying to do. The amendment we tried to get in
last year and which will be offered by the Senator from Tennessee tries
to level the playing field for all of the providers of this access.

Third, because it is temporary, it gives Congress,
industry, consumers, and states a chance to revisit the issue
and make adjustments where necessary to accommodate new
technologies and market realities.

Here is the paragraph that I think gets to the heart of the matter:

The recent proposal by Senator McCain, while an improvement
on the bill sponsored by Senator Allen and Senator Wyden . .
. does not go far enough to protect states. By adopting the
broad definition of tax-free Internet access used in S. 150--

That is the same definition that is in the Wyden-Allen bill; the same
definition is in the amendment proposed by Senator McCain--

and terminating the grandfather protections before the end of
the moratorium, the McCain proposal would still deprive state
and local governments of existing tax revenues and violate
the principle of ``do no harm.''
The nation's governors call on the U.S. Senate to oppose
the McCain amendment and support Senator Alexander and
Senator Carper in their efforts to strike a reasonable
compromise to extend the Internet access tax moratorium.

The Senator from Tennessee, Senator Alexander, Senator Carper, and
Senator Voinovich, who is the third sponsor of S. 2084, should be very
happy

[[Page S4420]]

with the support we are getting from the National Governors
Association. I hope our colleagues take that into consideration.
In addition to the letter from the National Governors Association, I
would like to share a letter I recently received from the Ohio
Department of Taxation. In fact, I have never seen a letter from the
Department of Taxation of the State of Ohio turned around so quickly in
my life. We faxed them the McCain proposal. We asked them to give us
their opinion of the McCain amendment. I suggest to my colleagues that
before they vote on this legislation, they take it upon themselves--as
a matter of fact, I think it is an obligation for them--to get in
contact with their State departments of taxation to get a read from
them about what impact this amendment would have on their respective
States. Some of my colleagues, frankly, are supporting this and may not
want to hear the impact it is having on their State. But I think it is
incumbent upon them at least to find out what their States think about
this proposed legislation and the impact it would have on their
respective States.

I am going to read a portion of this letter. It reads:

Dear Senator Voinovich:
We reviewed the text of the McCain language that you FAXed
to us this morning. Our preliminary impression is that this
bill is very similar to the version of S. 150 containing the
``managers amendment'' and has roughly the same negative
revenue impact on Ohio. Specifically, we think that the bill
would cause a state and local revenue loss of about $72
million per year. The amount would become larger as more
telecommunications services are provided through Internet
technology and/or bundled with Internet access, and as
broadband Internet access is used by more households.
Specifically, the $72 million estimate does not account for
state and local revenues lost as more phone services are
replaced by VOIP, which we believe the McCain bill will still
prohibit the states from taxing (as long as VOIP is bundled
with Internet access).

That is the way they do it. They bundle it together and under their
definition this would be exempt from taxation.

As you know, the states objected to S. 150 on several
grounds. One of the most important was the language ``the
term `Internet access' does not include telecommunications
services, except to the extent such services are purchased,
used, or sold by a provider of Internet access to provide
Internet access.''
This ``Allen-Wyden'' definition of Internet access is so
broad that it essentially can be used to exempt what we have
seen referred to as the ``Internet backbone''
telecommunications services, the ``middle mile''
telecommunications services, and the ``last mile''
telecommunications services. This is in contrast to S2084,
which you cosponsored, and which would have provided a much
more limited exemption for last mile telecommunications
services that are used to connect an end-user (e.g.
household) to an Internet service provider such as AOL or
Earthlink or Comcast.

That is the thing we don't want. We want people to have to plug into
that mile, but the thing we are concerned about is they want to go
beyond that. They want to take in the whole watermelon.

In Ohio, the impact of the S. 150 moratorium on state and
local taxation of all these telecommunications services may
not be as damaging as in some other states because Ohio
already has a broad exemption for the purchase of property
used in providing telecommunications services. Even so, we
still estimate that the annual full-year loss to Ohio from
the provision would be about $72 million.
Another notable provision of the McCain bill is the
exception of VOIP services from the tax moratorium. To the
extent that such service mimics traditional telephone
service, we believe that this means that State and local
governments would be allowed to tax VOIP services insofar as
they mimic traditional telephone services. The so-called VOIP
exception to the moratorium actually does nothing for the
states' ability to tax that or similar services that may
migrate to the Internet. Current Ohio law allows state and
local governments to tax VOIP as a telecommunications
service, as long as there is no federal preemption.
The McCain ``exception'' to the federal preemption does not
apply to services that are defined as Internet access. This
means that the exemption will not apply to voice services
that are bundled with Internet access, and since that is how
VOIP services are currently sold and probably will continue
to be sold, the exception in the McCain bill will in fact
provide no protection against states losing revenues as phone
services migrate to VOIP.

The Senator from Tennessee, the Presiding Officer, has made it very
clear if there was an amendment to that bill that made it very clear
that could continue to be taxed, that might remedy this whole issue.
The letter goes on to say:

We do not know exactly how much revenues will be lost in
the future due to the migration of currently taxable phone
service to exempt VOIP service, but it could end up being
most of Ohio's telecommunications tax revenues.

I'll read that again:

We do not know exactly how much revenue will be lost in the
future due to the migration of current taxable phone service
to exempt VOIP service, but it could end up being most of
Ohio's telecommunications tax revenues.

You know if that happens, the State is either going to reduce
services or they are going to find something else to tax. That is the
way this thing operates.
The letter concludes:

To put the estimated $72 million loss in context, in fiscal
year 2003, Ohio collected about $250 million in sales tax and
use tax from telecommunications service providers. The most
recent biennial budget bill switched local telephone
providers from the old gross receipts tax to the sales tax
and use tax, so that now the forecasted full year sales and
use tax revenue from all telecommunications providers is
about $370 million. This is at a 5 percent state tax rate--we
are ignoring the current 6 percent tax rate because it is set
to expire. . . .Thus, the estimated revenue loss from the
McCain bill (excluding the VOIP loss) is slightly less than
20 percent of total estimated Ohio telecommunications sales
tax revenues.

The fact is the McCain amendment is going to have a devastating
impact on the revenues of our States and goes far beyond the moratorium
I helped negotiate when I was chairman of the National Governors
Association, and is something we should all be concerned about.
I also want to make another couple of points, if I may. I have heard
so much today already and in the past about the fact that if we don't
get this done, everything is going to stop and it is going to be a
terrible thing for farmers and all Americans, and so on. The fact is,
Internet technology has grown unbelievably over the past year.
According to a study released by the Pew Internet and American Life
Project last week, 55 percent of American Internet users have access to
broadband, either at home or in the workplace. As a matter of fact, it
is going to keep growing because I think the Senator from Tennessee
pointed out this afternoon there are some communities that have their
own electric companies that are giving it away.
This thing is moving. We don't see anything slowing down. We are
moving fast. The report also noted home broadband usage is up 60
percent since March 2003, with half of the growth since November 2003.
You will recall back when we were debating this last year, the
allegation was, gee, if we don't get this done, everything is going to
be taxed, things are going to end up in the mud, slowed down, and we
are in trouble. Since the moratorium ended, half of this growth
occurred. So this thing is moving. This moratorium--the fact we didn't
extend it has not really impacted this one iota. DSL technology now has
a 42-percent share of the home market, which is up 28 percent since
March 2003.
Most of the growth I outlined occurred after the Internet tax
moratorium expired last November, which refutes the argument S. 150 was
necessary to help the expansion of broadband services. In addition,
April 21--a couple days ago--a major telecommunications company
released their 2004 first quarter earnings. I want to read the first
two sentences from the company's press release because it illustrates
how fast this technology is growing. This is from SBC Communications:

SBC Communications, Inc., today reported first quarter 2004
earnings of $1.9 billion, as it delivered strong progress in
key growth products. In the quarter SBC added 446,000 DSL
lines, the best ever by a U.S. telecom provider.

Some of these people who are supporting the Wyden-Allen amendment and
now McCain amendment are companies like this. They are doing well. They
are moving. They are bragging, ``We are moving ahead.'' We all know the
Federal Government today subsidizes this telecommunications industry.
If I remember correctly from a speech the Presiding Officer gave this
afternoon, it is a $4 billion subsidy from the Federal Government, and
the States--all of them--have been doing

[[Page S4421]]

everything they can to encourage this industry.
I don't know of any industry that has been treated better than this
industry. For the life of me, I cannot understand why it is they insist
on having us whack out all of the taxes they are paying. I cannot
understand it.
I think if this Senate does the right thing, what we are going to
tell this industry, which does a pretty good job of lobbying around
here and in the States--I knew it when I was Governor--we will tell
them: You know what. You are not going to get a complete release of all
the taxes you pay. It is time for you to sit down, like I did with the
petroleum industry and the Corn Growers--they came to me and wanted me
with them on ethanol, and the oil industry--and the Senator from
Oklahoma knows them well--said you have to be with us. I said, you know
something, I had Ashland Marathon Oil in Ohio, and I had my Corn
Growers and I love you both. You ought to get in the room and sit down
and talk to each other and see if you cannot work something out. Lo and
behold, after 6 months, they had a big news conference. About 20
Senators were there, and on that stage were people who, if you talked
to them 6 months before and said you are going to be on the stage
together in a compromise, would have said you are crazy. They were on
that stage and they put a compromise together.
The problem we have today in the Senate is the fact that the
telecommunications industry thinks this thing is going to go through
and they don't have to sit down and talk to State and local government
officials, or with the Commerce Committee, and work something out. I
know it can be done. I am prayerful our colleagues today understand
that and that they will come together and say we have not been able to
do this, and we will have a continuation of a moratorium. But let's sit
down and work it out. Probably the best way to do that under the
circumstances, with the time limitation we have, would probably be to
pass a 14-or 15-month extension of the current moratorium, while we can
take it back to the Commerce Committee, where we can get the
telecommunications industry in, get the Governors and other local
government officials in, and the FCC, and start to make some sense out
of this.
I thank the Senator from Tennessee, Senator Alexander, for the great
leadership he has provided on this issue. We got together last year,
and the train was moving and we got in the way of it and caught a lot
of criticism because they were accusing us of being for taxing e-mail
and the Internet and all the rest of it. That wasn't it at all. All we
wanted to do was continue a moratorium but do no harm to our States. We
probably understand that more than some Members because we are former
Governors. In my case, I am a former mayor and county commissioner, and
we also appreciate it because we all worked together for legislation in
1995--the unfunded mandates relief legislation I worked my heart out to
get passed. As a matter of fact, the pen President Clinton used to sign
that legislation is on the wall in my Senate office in the Hart
Building. The first time I set foot on the floor of the Senate was the
day the Senate passed the unfunded mandates relief legislation.
I don't like unfunded mandates. I don't think it is fair. We have
done it to the States for so many years. We finally got that
legislation passed. The American people should know this is a big
unfunded mandate, the way it is put together. We can change it and make
it fair so they are not going to see the taxes on telecommunications
disappear and then see taxes increased in some other area.
Thank you, Mr. President.
The PRESIDING OFFICER. The Senator from Oklahoma.
Mr. INHOFE. Mr. President, the Senator from Ohio and I know something
about unfunded mandates, as does the Chair. It keeps creeping up, and
we are making every effort in the committee that I chair and the
subcommittee the Senator from Ohio chairs to try to resolve that
problem. I think maybe we will because we have the right people in line
to do it. I may not agree with the Senator from Ohio on this particular
issue, but I certainly do on unfunded mandates.
I just found out that the distinguished Senator from New Mexico, Mr.
Domenici, has filed an amendment that is a slimmed-down version of the
Energy bill. I just have to stake out a position early because it is my
understanding that the safe harbor language that was in H.R. 6 that is
so fair and so necessary is not a part of the slimmed-down version. If
it is not in the bill, I am not going to be able to support the bill. I
will do everything I can for the Senator from New Mexico, but this is
very serious.
The bill should permit that manufacturers, producers, marketers,
traders and distributors of gasoline containing federally approved
oxygenate MTBE cannot be sued under a claim that it is a defective
product.
The Federal Clean Air Act Amendments of 1990 created the reformulated
gas. The reformulated gas program said they had to use oxygenates. The
most prevalent oxygenate to be used in these reformulated gases is
MTBE. In fact, EPA specifically approved MTBE for this purpose.
Here is the situation we have: We have the Government coming along
and saying, You are going to have to use MTBE. For all practical
purposes, they have said this, they have mandated it. Then they turn
around and say, We are going to let the trial lawyers in to sue you
because maybe this substance which we approved, which we endorsed, is
causing harm to someone. It is very important to understand that the
safe harbor provision is necessary to prevent the trial lawyers from
using the court system to punish companies for simply complying with
the Federal law by using a federally approved additive.
The safe harbor is narrowly targeted and does not affect any claim
against any person or any company actually responsible for spilling
gasoline containing MTBE. That is very important because I keep hearing
on this Senate floor: You let all these people off the hook who are
spilling and polluting. That is not true at all. It is very narrowly
defined.
Since September 30, 2003, in anticipation of the Energy bill, trial
lawyers, including many known for the work they have done and the
wealth they have accumulated in asbestos litigation, have as of March
25 brought over 60 groundwater contamination lawsuits in 17 States
seeking damages from over 169 different named companies that allegedly
manufactured, sold, or transported gasoline containing the federally
approved fuel additive called MTBE.
One of those companies is Frontier Oil. They have been sued. They
have never produced MTBE. They have never used it. They blended MTBE.
But they are one of the companies being sued. The lawsuits do not
allege defendants actually leaked or spilled gasoline containing MTBE
that allegedly contaminated their groundwater. The lawsuits do not even
name the actual polluters. Instead, the cases target any company that
at any time may have distributed or sold gasoline containing MTBE or
even some, as I just cited, that did not.
Defendants are vigorously defending these cases and will incur
millions of dollars in legal fees and expenses simply for having made
or sold gasoline containing a fuel additive specifically approved for
use by Congress and the EPA.
I believe it is necessary to stake out this position. I cannot think
of a fairness issue with which we have dealt that is more significantly
addressed than this one. Government comes along and says you have to
use this stuff; then they come along later and say there is something
wrong with it and we are not going to offer you any defense at all--any
defense. We are talking about huge multimillion-dollar lawsuits.
In the event this language does not end up in the legislation of the
slimmed-down bill, I will have to oppose it. I cannot conscientiously
support an energy bill that leaves everybody out to dry, particularly
in the MTBE case.
That is my position. I think there are many others who share that
position of fairness in dealing with this bill.
Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.

[[Page S4422]]

Mr. FRIST. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The ACTING PRESIDENT pro tempore (Mr. Chambliss). Without objection,
it is so ordered.

cloture motion

Mr. FRIST. Mr. President, I send a cloture motion to the desk on the
pending Domenici amendment.
The ACTING PRESIDENT pro tempore. The cloture motion having been
presented under rule XXII, the Chair directs the clerk to read the
motion.
The legislative clerk read as follows:

Cloture Motion

We the undersigned Senators, in accordance with the
provisions of rule XXII of the Standing Rules of the Senate,
do hereby move to bring to a close debate on the 2nd degree
pending amendment to Calendar No. 353, S. 150, a bill to make
permanent the moratorium on taxes on Internet access and
multiple and discriminatory taxes on electronic commerce
imposed by the Internet Tax Freedom Act:
Bill Frist, John McCain, George Allen, Pete Domenici,
Trent Lott, Chuck Hagel, Larry E. Craig, John Ensign,
Craig Thomas, Robert F. Bennett, James M. Inhofe,
Conrad Burns, Don Nickles, Orrin Hatch, Gordon Smith,
Saxby Chambliss, Mitch McConnell.

cloture motion

Mr. FRIST. Mr. President, I send a cloture motion to the desk on the
pending McCain substitute amendment.
The ACTING PRESIDENT pro tempore. The cloture motion having been
presented under rule XXII, the Chair directs the clerk to read the
motion.
The legislative clerk read as follows:

Cloture Motion

We the undersigned Senators, in accordance with the
provisions of rule XXII of the Standing Rules of the Senate,
do hereby move to bring to a close debate to the pending
McCain Substitute Amendment No. 3048 to Calendar No. 353, S.
150, a bill to make permanent the moratorium on taxes on
Internet access and multiple and discriminatory taxes on
electronic commerce imposed by the Internet Tax Freedom Act:
Bill Frist, John McCain, Jon Kyl, Norm Coleman, Jim
Bunning, Gordon Smith, Mitch McConnell, Pete Domenici,
Conrad Burns, Rick Santorum, Olympia Snowe, Judd Gregg,
Wayne Allard, Thad Cochran, Mike Crapo, Larry E. Craig,
Ted Stevens, George Allen.

Mr. FRIST. Mr. President, I ask unanimous consent that the live
quorum with respect to the three cloture votes be waived.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
Mr. FRIST. Mr. President, I am disappointed to have to come to the
Senate floor and file these cloture motions at this time. Earlier
today, I had hoped we would finally make progress on the pending
Internet tax access bill. Last week, I said we would be addressing the
Internet tax access bill Monday, Tuesday, Wednesday, and Thursday,
which I and most people felt would be sufficient time to address this
bill and allow for amendments to be debated and discussed.
We did debate and vote on a relevant amendment offered by Senator
Hutchison today. However, at the very first opportunity to offer an
amendment from the other side of the aisle, they offered a completely
nongermane amendment, which clearly is going to slow down this
legislation.
On Thursday, these cloture motions will be voted on. There will be
two cloture votes with respect to the energy amendments, but ultimately
we will have a third cloture vote and that vote will be on the
underlying substitute relating to the Internet access bill. That is the
vote that will determine if we will be going forward on this bill at
that time.
Again, I scheduled this measure with the hope of taking a few days
and allowing Senators to have that opportunity to bring their
amendments to the Senate floor to debate and vote on those amendments.
I hoped those amendments would be centering on the Internet tax bill,
the bill under consideration. The latest turn of events today means
that many Senators who have legitimate and relevant amendments are
being denied the opportunity to debate and vote on their amendments.
This is unfortunate.
That said, I remain committed to finishing the bill in a timely
fashion, and I hope that we can get back together tomorrow morning and
make appropriate plans in order to accomplish that over the course of
the next several days.
The ACTING PRESIDENT pro tempore. The Senator from Nevada.
Mr. REID. Mr. President, if the distinguished leader will yield for a
brief comment, as I said to Senator Domenici this afternoon, this
scenario that has been set up is going to create some very interesting
votes because if we move down the road where we come to a McCain
cloture vote, if cloture is invoked, then Daschle and Domenici fall. At
least that is my understanding. If that is the case, then that part of
the Energy bill would be gone. But anyway, that sets up some
interesting dynamics here.
We do at least have out here, in addition to the FSC legislation,
pieces of the original Energy bill. Who knows, we might wind up doing
something on energy.
Mr. FRIST. Mr. President, I do hope we will be able to complete the
Internet access bill and that we can work through the turn of events of
today. Again, I hope over the course of the evening people will come
back and lay out a plan to accomplish what is important to the
technology community and the communications community broadly, and that
is to be able to allow people to vote on the very important underlying
bill.

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