Veterans Prescription Drugs Assistance Act

Mr. President, this week, American taxpayers face another Federal income tax deadline. The date of April 15 stabs fear, anxiety, and unease into the hearts of millions of Americans. Every year during ``tax season,'' millions of Americans spend their evenings poring over page after page of IRS instructions, going through their records looking for information and struggling to find and fill out all the appropriate forms on the Federal tax returns. Americans are intimidated by the sheer number of different tax forms and their instructions, many of which they may be unsure whether they need to file. Given the approximately 325 possible forms, not to mention the instructions that accompany them, simply trying to determine which form to file can in itself be a daunting and overwhelming task. According to a 2002 study conducted by the Tax Foundation, American taxpayers, including businesses, spend more than 5.8 billion hours and $194 billion each year in complying with tax laws. That works out to more than $2,400 per U.S. household. Much of this time is spent burrowing through IRS laws and regulations which fill 17,000 pages and have grown from 744,000 words in 1955 to over 6.9 million words in 2000. By contrast, the Pledge of Allegiance has only 31 words, the Gettysburg Address has 267 words, the Declaration of Independence has about 1,300 words, and the Bible has only about 1,773,000 words.

The majority of taxpayers still face filing tax forms that are far too complicated and take far too long to complete. According to the estimated preparation time listed on the forms by the IRS, the 2004 Form 1040 is estimated to take 13 hours and 35 minutes to complete. Moreover this does not include the estimated time to complete the accompanying schedules, such as Schedule A, for itemized deductions, which carries an estimated preparation time of 5 hours, 37 minutes, or Schedule D, for reporting capital gains and losses, shows an estimated preparation time of 6 hours, 10 minutes. Moreover, this complexity is getting worse each year. Just from 2000 to 2004 the estimated time to prepare Form 1040 jumped 34 minutes.

It is no wonder that well over half of all taxpayers, 56 percent according to a recent survey, now hire an outside professional to prepare their tax returns for them. However, the fact that only about 30 percent of individuals itemize their deductions shows that a significant percentage of our taxpaying population believes that the tax system is too complex for them to deal with. We all understand that paying taxes will never be something we enjoy, but neither should it be cruel and unusual punishment. Further, the pace of change to the Internal Revenue Code is brisk--Congress made about 9,500 tax code changes in the past thirteen years. And we are far from being finished. Year after year, we continue to ask the same question--isn't there a better way?

My flat tax legislation would make filing a tax return a manageable chore, not a seemingly endless nightmare, for most taxpayers. My flat tax legislation will fundamentally revise the present tax code, with its myriad rates, deductions, and instructions. This legislation would institute a simple, flat 20 percent tax rate for all individuals and businesses. This proposal is not cast in stone, but is intended to move the debate forward by focusing attention on three key principles which are critical to an effective and equitable taxation system: simplicity, fairness and economic growth.

My flat tax plan would eliminate the kinds of frustrations I have outlined above for millions of taxpayers. This flat tax would enable us to scrap the great majority of the IRS rules, regulations and instructions and delete most of the 6.9 million words in the Internal Revenue Code. Instead of billions of hours of non-productive time spent in compliance with, or avoidance of, the tax code, taxpayers would spend only the small amount of time necessary to fill out a postcard- sized form. Both business and individual taxpayers would thus find valuable hours freed up to engage in productive business activity, or for more time with their families, instead of poring over tax tables, schedules and regulations.

My flat tax proposal is dramatic, but so are its advantages: a taxation system that is simple, fair and designed to maximize prosperity for all Americans. A summary of the key advantages are:

Simplicity: A 10-line postcard filing would replace the myriad forms and attachments currently required, thus saving Americans up to 5.8 billion hours they currently spend every year in tax compliance.

Cuts Government: The flat tax would eliminate the lion's share of IRS rules, regulations and requirements, which have grown from 744,000 words in 1955 to 6.9 million words and 17,000 pages currently. It would also allow us to slash the mammoth IRS bureaucracy of approximately 117,000 employees, creating opportunities to put their expertise to use elsewhere in the government or in private industry.

Promotes Economic Growth: Economists estimate a growth due to a flat tax of over $2 trillion in national wealth over seven years, representing an increase of approximately $7,500 in personal wealth for every man, woman and child in America. This growth would also lead to the creation of 6 million new jobs.

Increases Efficiency: Investment decisions would be made on the basis of productivity rather than simply for tax

avoidance, thus leading to even greater economic expansion.

Reduces Interest Rates: Economic forecasts indicate that interest rates would fall substantially, by as much as two points, as the flat tax removes many of the current disincentives to savings.

Lowers compliance costs: Americans would be able to save or invert up to $194 billion they currently spend every year in tax compliance.

Decreases fraud: As tax loopholes are eliminated and the tax code is simplified, there will be far less opportunity for tax avoidance and fraud, which now amounts to over $120 billion in uncollected revenue annually.

Reduces IRS costs: Simplification of the tax code will allow us to save significantly on the $10 billion annual budget currently allocated to the Internal Revenue Service.

The most dramatic way to illustrate the flat tax is to consider that the income tax form for the flat tax is printed on a postcard--it will allow all taxpayers to file their April 15 tax returns on a simple 10- line postcard. This postcard will take 15 minutes to fill out.

At my town hall meetings across Pennsylvania, there is considerable public support for fundamental tax reform.

This is a win-win situation for America because it lowers the tax burden on the taxpayers in the lower brackets. For example in the 2004 tax year, the standard deduction is $4,850 for a single taxpayer, $7,150 for a head of household and $9,700 for a married couple filing jointly, while the personal exemption for individuals and dependents is $3,100. Thus, under the current tax code, a family of four which does not itemize deductions would pay taxes on all income over $22,100--that is personal exemptions of$12,400 and a standard deduction of $9,700. By contrast, under my flat tax bill, that same family would receive a personal exemption of $30,000, and would pay tax on only income over that amount.

The tax loopholes enable write-offs of some $393 billion a year. What is eliminated under the flat tax are the loopholes, the deductions in this complicated code which can be deciphered, interpreted, and found really only by the $500-an-hour lawyers. That money is lost to the taxpayers. $120 billion would be saved by the elimination of fraud because of the simplicity of the Tax Code, the taxpayer being able to find out exactly what they owe.

This bill is modeled after a proposal organized and written by two very distinguished professors of law from Stanford University, Professor Hall and Professor Rabushka. Their model was first introduced in the Congress in the fall of 1994 by Majority Leader Richard Armey. I introduced the flat tax bill--the first one in the Senate--on March 2, 1995, Senate bill 488. On October 27, 1995, I introduced a Sense of the Senate Resolution calling on my colleagues to expedite Congressional adoption of a flat tax. The Resolution, which was introduced as an amendment to pending legislation, was not adopted. I reintroduced my legislation in the 105th Congress with slight modifications to reflect inflation-adjusted increases in the personal allowances and dependent allowances. I re-reintroduced the bill on April 15, 1999--income tax day--in a bill denominated as S. 822. I then introduced my flat tax legislation as an amendment to S. 1429, the Tax Reconciliation bill; the amendment was not adopted. During the 108th Congress, I introduced my flat tax legislation once again on April 11, 2003. On May 14, 2003, I offered an amendment to the Tax Reconciliation legislation urging the Senate to hold hearings and consider legislation providing for a flat tax; this amendment passed by a vote of 70 to 30 on May 15, 2003. I then testified on this issue at a subsequent hearing held by the Joint Economic Committee on November 5, 2003.

Over the years and prior to my legislative efforts on behalf of flat tax reform, I have devoted considerable time and attention to analyzing our nation's tax code and the policies which underlie it. I began the study of the complexities of the tax code over 40 years ago as a law student at Yale University. I included some tax law as part of my practice in my early years as an attorney in Philadelphia. In the spring of 1962, I published a law review article in the Villanova Law Review, ``Pension and Profit Sharing Plans: Coverage and Operation for Closely Held Corporations and Professional Associations,'' 7 Villanova L. Rev. 335, which in part focused on the inequity in making tax-exempt retirement benefits available to some kinds of businesses but not others. It was apparent then, as it is now, that the very complexities of the Internal Revenue Code could be used to give unfair advantage to some. Einstein himself is quoted as saying ``the hardest thing in the world to understand is the income tax.''

The Hall-Rabushka model envisioned a flat tax with no deductions whatever. After considerable reflection, I decided to include in the legislation limited deductions for home mortgage interest for up to $100,000 in borrowing and charitable contributions up to $2,500. While these modifications undercut the pure principle of the flat tax by continuing the use of tax policy to promote home buying and charitable contributions, I believe that those two deductions are so deeply ingrained in the financial planning of American families that they should be retained as a matter of fairness and public policy--and also political practicality. With those two deductions maintained, passage of a modified flat tax will be difficult, but without them, probably impossible.

In my judgment, an indispensable prerequisite to enactment of a modified flat tax is revenue neutrality. Professor Hall advised that the revenue neutrality ofthe Hall-Rabushka proposal, which uses a 19 percent rate, is based on a well-documented model founded on reliable governmental statistics. My legislation raises that rate from 19 percent to 20 percent to accommodate retaining limited home mortgage interest and charitable deductions.

This proposal taxes business revenues fully at their source, so that there is no personal taxation on interest, dividends, capital gains, gifts or estates. Restructured in this way, the tax code can become a powerful incentive for savings and investment--which translates into economic growth and expansion, more and better jobs, and raising the standard of living for all Americans.

The key advantages of this flat tax plan are threefold: First, it will dramatically simplify the payment of taxes. Second, it will remove much of the IRS regulatory morass now imposed on individual and corporate taxpayers, and allow those taxpayers to devote more of their energies to productive pursuits. Third, since it is a plan which rewards savings and investment, the flat tax will spur economic growth in all sectors of the economy as more money flows into investments and savings accounts.

Professors Hall and Rabushka have projected that within seven years of enactment, this type of a flat tax would produce a 6 percent increase in output from increased total work in the U.S. economy and increased capital formation. The economic growth would mean a $7,500 increase in the personal income of all Americans. No one likes to pay taxes. But Americans will be much more willing to pay their taxes under a system that they believe is fair, a system that they can understand, and a system that they recognize promotes rather than prevents growth and prosperity. My flat tax legislation will afford Americans such a tax system.

I ask unanimous consent that a copy of my flat tax postcard, a variety of specific cases that illustrate the fairness and simplicity of this flat tax, and an example flat tax table be printed in the Record following my statement.

I ask unanimous consent that the text of this bill be printed in the Record.

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Mr. President, I have sought recognition today to introduce the Prescription Drug and Health Improvement Act of 2005 to reduce the high prices of prescription drugs for Medicare beneficiaries. I introduced a similar version of this bill in the 108th Congress, S. 2766. To increase the likelihood that this bill may become law this bill does not include a costly provision which would have closed the gap in prescription drug costs for Medicare beneficiaries.

Americans, specifically senior citizens, pay the highest prices in the world for brand-name prescription drugs. With 45 million uninsured Americans and many more senior citizens without an adequate prescription drug benefit, filling a doctor's prescription is unaffordable for many people in this country. The United States has the greatest health care system in the world; however, too many seniors are forced to make difficult choices between life-sustaining prescription drugs and daily necessities.

The Centers for Medicare and Medicaid Services estimate that in 2004 per capita spending on prescription drugs rose approximately 12 percent, with a similar rate of growth expected for this year. Much of the increase in drug spending is due to higher utilization and the shift from older, lower cost drugs to newer, higher cost drugs. However, rapidly increasing drug prices are a critical component.

High drug prices, combined with the surging older population, are also taking a toll on State budgets and private sector health insurance benefits. Medicaid spending on prescription drugs increased at an average annual rate of nearly 19 percent between 1998 and 2002. Until lower priced drugs are available, pressures will continue to squeeze public programs at both the State and Federal level.

To address these problems, my legislation would reduce the high prices of prescription drugs to seniors by repealing the prohibition against interference by the Secretary of HHS with negotiations between drug manufacturers, pharmacies, and prescription drug plan sponsors and instead authorize the Secretary to negotiate contracts with manufacturers of covered prescription drugs. It will allow the Secretary of HHS to use Medicare's large beneficiary population to leverage bargaining power to obtain lower prescription drug prices for Medicare beneficiaries.

Price negotiations between the Secretary of HHS and prescription drug manufacturers would be analogous to the ability of the Secretary of Veterans Affairs to negotiate prescription drug prices with manufacturers. This bargaining power enables veterans to receive prescription drugs at a significant cost savings. According to the National Association of Chain Drug Stores, the average ``cash cost'' of a prescription in 2001 was $40.22. The average cost in the Veterans Affairs (VA) health care system in fiscal year 2001 was $22.87.

In the 108th Congress, in my capacity as chairman of the Veterans' Affairs Committee, I introduced the Veterans Prescription Drugs Assistance Act, S. 1153, which was reported out of committee, but was not considered before the full Senate. In the 109th Congress, I have again introduced the Veterans Prescription Drugs Assistance Act, S. 614.

This legislation will broaden the ability of veterans to access the Veterans Affairs' Prescription Drug Program. Under my bill, all Medicare-eligible veterans will be able to purchase medications at a tremendous price reduction through the Veterans Affairs' Prescription Drug Program. In many cases, this will save veterans who are Medicare beneficiaries up to 50 percent on the cost of prescribed medications, a significant savings for veterans. Similar savings may be available to America's seniors from the savings achieved using the HHS bargaining power, like the Veterans Affairs bargaining power for the benefit of veterans. These savings may provide America's seniors with fiscal relief from the increasing costs of prescription drugs.

I believe this bill can provide desperately needed access to inexpensive, effective prescription drugs for America's seniors. The time has come for concerted action in this arena. I urge my colleagues to move this legislation forward promptly.

I ask unanimous consent that the text of the bill be printed in the Record.

Mr. President, I have sought recognition to explain briefly the provisions of legislation I have introduced today that would direct the Secretary of the Army to award the Combat Medical Badge (CMB), or a similar badge to be designed by the Secretary of the Army, to pilots and crew of the Army's helicopter medical ambulance units--commonly referred to by their call sign ``DUST OFF''--who have flown combat missions to rescue and aid wounded soldiers, sailors, airmen, and Marines.

The legacy of the DUST OFF mission was brought to my attention by a group of Pennsylvania constituents who have been sharing the DUST OFF story in an attempt to persuade the Army to recognize the service and sacrifice DUST OFF crews made, especially during the Vietnam War, in saving the lives of thousands of fallen comrades by extracting the wounded from forward positions to bases where they would receive life- saving medical care.

The Army began using helicopters to evacuate wounded soldiers during the Korean War. However, because of their smaller size, Korean War helicopters were used solely as a means of transporting the wounded from the combat zones. It was not until the early 1960's that a group of Army aviators envisioned using the newer, larger, UH-1A ``Huey'' helicopters to serve as mobile air ambulances where a medic and crew could provide life-saving treatment en route to the medical aide station.

The road to establish air ambulance units within the Army was rocky and uncertain. Combat commanders often considered the use of helicopters for this purpose a diversion of valuable resources. However, through determination, skill, and the American fighting spirit, air ambulance crews proved they were a valuable and reliable resource in providing support to the combat mission. Indeed, between 1962 and 1973, DUST OFF crews evacuated more than 900,000 allied military personnel and Vietnamese civilian casualties to medical assistance sites.

Captain John Temperelli, Jr. was the first commander of the 57th Medical Detachment, Helicopter Ambulance, who would lead the first DUST OFF unit in Vietnam. Army Captain Temperelli is considered the ``pioneer'' of DUST OFF; however, it was Army Major Charles L. Kelly, the unit's third commander, who would establish the traditions and the motto that DUST OFF crews hold sacred today.

Major Kelly, like his predecessors, believed in the mission of rescuing fallen comrades so much so that he gave his life to the mission. On July 1, 1964, Major Kelly and his crew received a call to evacuate a wounded soldier. When they arrived, Major Kelly was instructed by an American advisor on the ground to leave the area; the landing zone was too ``hot.'' Major Kelly responded with the phrase that would become the DUST OFF motto: ``When I have your wounded.'' As Major Kelly hovered over the battlefield, an enemy bullet struck him in the heart; he was killed. It was with news of Major Kelly's death and the story of DUST OFF's dedication to the wounded that DUST OFF earned its permanency in the Army.

I received a book written by a Pennsylvania native, Army Chief Warrant Officer 5 Mike Novosel, titled DUSTOFF: The Memoir of an Army Aviator. Mr. Novosel--a Medal of Honor recipient who served two tours in Vietnam and was a veteran of two other wars--knows first hand the sacrifice, courage and dedication to duty that DUST OFF crews displayed in Vietnam and continue to display today. In his two tours as a DUST OFF pilot in Vietnam, Mr. Novosel flew 2,543 missions and extracted 5,589 wounded. In his book, Mr. Novosel shares many amazing stories of landing in ``hot'' landing zones to allow his medic and crew chief, who were also exposed to enemy fire, to rescue and care for the wounded. But as Mr. Novosel has said, his experience as a DUST OFF pilot was not uncommon. Thousands of brave soldiers risked their lives every day by flying into combat zones to evacuate the wounded.

I am honored that Mr. Novosel and others have brought the story of DUST OFF to my attention. It is my sincere hope that the Army will recognize DUST OFF pilots and crew with an appropriate badge which acknowledges the combat service of these brave individuals. When the War Department created the Combat Medical Badge (CMB) in WWII, as a companion to the Combat Infantryman Badge (CIB) it did so to recognize that ``medical aidmen . . . shared the same hazards and hardships of ground combat on a daily basis with the infantry soldier.'' DUST OFF pilots and crew equally shared the hazards and hardships of ground combat with the infantry soldier. The fact that they were not directly assigned or attached to a particular infantry unit a fact that, under current Army policy, makes them eligible to receive a CIB or CMB should not bar special recognition of their service, service that one author has characterized as ``the brightest achievement of the U.S. Army in Vietnam.''

On July 29, 2003, I chaired a hearing of the Senate Committee on Veterans Affairs to hear testimony from DUST OFF participants about their experiences under fire. I gave the Army an opportunity to explain its position and,

perhaps, rethink its opposition to the awarding of an appropriate designation to DUST OFF crew members. Based on testimony offered by three Vietnam veterans--Chief Warrant Officer, Ret., Michael J. Novosel, M.O.H., Chief Warrant Officer, Ret., John M. Travers, and Mr. William Fredrick ``Fred'' Castleberry--I am now more convinced than ever of the worthiness of this legislation. Following the July 29, 2003, hearing, I introduced this legislation--S. 1487 in the 108th Congress. The bill was referred to the Committee on Armed Services, which has jurisdiction over this matter. Unfortunately, the bill never made its way out of committee which is why I am re-introducing this important legislation today.

Army officials recently decided to create a ``Close Combat Badge'' (CCB) for non-infantry soldiers that recognizes their direct participation in ground combat. However, this badge will not be awarded to DUST OFF Medical Helicopter Evacuation Crew Members who have yet to be properly recognized.

On the Vietnam Veterans Memorial are etched the names of over 400 medics, pilots, and crew that gave their lives so others might live. The forward thinking, enthusiasm, and dedication of DUST OFF crews in Vietnam are attributes seen in today's DUST OFF crews. I urge my colleagues to support this legislation which would recognize the nature of the service these individuals have performed, and continue to perform, while serving on DUST OFF crews.

Mr. President, I have sought recognition to introduce legislation that will honor the importance of the steel industry in the Commonwealth of Pennsylvania and the Nation by creating the ``Steel Industry National Historic Site'' to be operated by the National Park Service in southwestern Pennsylvania.

The importance of steel to the industrial development of the United States cannot be overstated. A national historic site devoted to the history of the steel industry will afford all Americans the opportunity to celebrate this rich heritage, which is symbolic of the work ethic endemic to this great Nation. The National Park Service recently reported that Congress should make remnants of the U.S. Steel Homestead Works an affiliate of the national park system, rather than a full national park, an option which had been considered in prior years, and which I proposed in legislation during the 107th Congress. Due to the backlog of maintenance projects at national parks, the legislation offered today instead creates a national historic site that would be affiliated with the National Park Service. There is no better place for such a site than in southwestern Pennsylvania, which played a significant role in early industrial America and continues to today.

I have long supported efforts to preserve and enhance this historical steel-related heritage through the Rivers of Steel Heritage Area, which includes the City of Pittsburgh, and seven southwestern Pennsylvania counties: Allegheny, Armstrong, Beaver, Fayette, Greene, Washington and Westmoreland. I have sought and been very pleased with congressional support for the important work within the Rivers of Steel Heritage Area expressed through appropriations levels of roughly $1 million annually since fiscal year 1998. I am hopeful that this support will continue. However, more than just resources are necessary to ensure the historical recognition needed for this important heritage. That is why I am introducing this legislation today.

It is important to note why southwestern Pennsylvania should be the home to the national site that my legislation authorizes. The combination of a strong workforce, valuable natural resources, and Pennsylvania's strategic location in the heavily populated northeastern United States allowed the steel industry to thrive. Today, the remaining buildings and sites devoted to steel production are threatened with further deterioration. Many of these sites are nationally significant and perfectly suited for the study and interpretation of this crucial period in our Nation's development. Some of these sites include the Carrie Furnace complex, the Hot Metal Bridge, and the Unites States Steel Homestead Works, which would all become a part of the Steel Industry National Historic Site under my legislation.

Highlights of such a national historic site would commemorate a wide range of accomplishments and topics for historical preservation and interpretation from industrial process advancements to labor-management relations. It is important to note that the site I seek to become a national site under this bill includes the location of the Battle of Homestead, waged in 1892 between steelworkers and Pinkerton guards. The Battle of Homestead marked a crucial period in our Nation's workers' rights movement. The Commonwealth of Pennsylvania, individuals, and public and private entities have attempted to protect and preserve resources such as the Homestead battleground and the Hot Metal Bridge. For the benefit and inspiration of present and future generations, it is time for the federal government to join this effort to recognize their importance with the additional protection I provide in this bill.

I would like to commend my colleague, Representative Mike Doyle, who has been a longstanding leader in this preservation effort and who has consistently sponsored identical legislation in the U.S. House of Representatives. I look forward to working with southwestern Pennsylvania officials and Mr. August Carlino, President and Chief Executive Officer of the Steel Industry Heritage Corporation, in order to bring this national historic site to fruition. We came very close to passing this bill in the 108th Congress with its passage in various forms in the House and Senate. However, Congress adjourned prior to final passage of the same bill in both chambers. Therefore, today I reintroduce this legislation and urge its swift passage.

Mr. President, I have sought recognition to reintroduce the ``Veterans Prescription Drugs Assistance Act of 2005,'' a bill which seeks to assist Medicare-eligible veterans struggling with the costs of prescription medications.

In the 108th Congress, I worked with my colleagues to provide a prescription drug benefit for all Medicare-eligible seniors. Today, I offer legislation to allow Medicare-eligible veterans to obtain prescription drugs from the Department of Veterans Affairs (VA) at the significantly discounted costs that VA, as a high-volume purchaser of prescriptions medications, is able to secure in the marketplace.

On May 23, 2003, I introduced similar legislation--S. 1153 in the 108th Congress. In my capacity as Chairman of the Veterans Affairs Committee in the 108th Congress, I held a hearing on June 22, 2004, and heard testimony from Senate colleagues, Veterans Administration officials, and various veterans service organizations on this important legislation. On July 20, 2004, the Committee on Veterans Affairs reported out S. 1153 by a vote of 10 yeas and 5 nays. Unfortunately, the full Senate did not consider this measure.

In 2003, former Veterans Affairs Secretary Anthony J. Principi was forced to limit access to VA care--which continues to this day--by suspending new enrollments of non-service-disabled middle and higher income veterans who were not enrolled for care as of January 17, 2003. The Secretary was forced to so act because the number of patients provided care by VA had more than doubled in just five years and, as a result, VA's medical care system had been overwhelmed. As a consequence, VA was unable to provide timely access to healthcare for all veterans who had sought it and appointment waiting times had grown to alarming levels. But in almost every news story that followed the Secretary's difficult decision, it was noted that many of the new

enrollees who had overwhelmed VA's capacity to provide care were Medicare-eligible veterans who were able to get Medicare-financed care elsewhere but who were seeking access to the relatively generous prescription drug program provided to veterans under VA care.

Currently, VA provides enrolled patients with prescription medications for $7 for each 30-day supply. But to get such prescriptions, the veteran must obtain the full range of medical care from VA. This fact, coupled with former VA Secretary Principi's decision to close enrollment, means that veterans who are now, or who will be, eligible for Medicare who had not enrolled for VA care prior to January 17, 2003, will be unable to access VA's generous prescription drug benefits. This legislation would provide some relief for those veterans. In addition, I anticipate that it may induce some VA-enrolled Medicare-eligible veterans--those who were happy with their Medicare-financed care but who enrolled for VA care to gain access to VA-supplied drugs--to return to non-VA care with knowledge that they will be able to get their non-VA prescriptions filled through VA. Enactment of this provision, then, would reduce--not exacerbate--VA patient backlog numbers.

The premise of this legislation is straightforward. VA fills and distributes more than 100 million prescriptions each year for its 4.7 million veteran-patients. As a result, it has significant purchasing power--power which, coupled with VA's formulary program, allows it to negotiate very favorable prices for prescription drugs. According to the National Association of Chain Drug Stores, the average ``cash cost'' of a prescription in 2003 was $59.28. The average VA per- prescription cost in 2003 was just under $25--more than 50 percent less. This bill would allow veterans to access these significant discounts simply by providing a written prescription from any duly licensed physician, presumably one he or she has seen under the Medicare program.

By reintroducing this legislation today, I seek to afford Medicare- eligible veterans access to such discounts. I do not propose that VA be directed to supply drugs to all Medicare-eligible veterans at VA expense, or even with a partial VA subsidy. VA has stated that such a mandate would divert VA funding which, clearly, is already stretched to the limit--away from VA priority patients: the service-connected, the poor, and those with special needs. I accept VA's statement of concern. I accept and I insist that scarce funding be directed, first, to meet the needs of priority patients. This legislation, therefore, requires that VA recover the costs of drugs it supplies under this program from veterans who bring their prescriptions from outside doctors to VA.

I do not propose to tell VA in this bill how to recover these costs. VA is better positioned than I to make such judgments. Thus, my legislation provides flexibility to VA to design and test payment mechanisms to best accomplish cost recovery while still easing veterans' access to the drugs they need. It might be that enrollment fees, a co-payment structure, or a simple ``cost-plus'' for administrative expenses pricing format, or some combination of those mechanisms works best. It might be that different approaches work best in different regions of the country. I intend for the VA to experiment with different pricing structures to determine what works best. However, I also intend that veterans get a break on prescription drug pricing.

Those who would first benefit from this program are World War II and Korean War veterans who answered their country's call over 50 years ago. As they age, many desperately need relief from high drug prices. My purpose is not to minimize the work of the drug companies. Their discoveries have truly been marvels, but that is precious little comfort to a Medicare participant who, whatever the drug's overall utility might be, cannot afford both the drug and food or shelter or heat.

The premise of this legislation is simple: veteran access to VA market-driven discounts. Yet, the assistance it could provide might be profound. I urge my colleagues to support this bill so that the problem might be solved, or at least reduced, for seniors who served. They deserve it, and we should do it.

Mr. President, I rise today with my colleague from Maine, Senator Collins, to introduce legislation that will repeal two provisions of current law that reduce earned Social Security benefits for teachers and other government pensioners--the Government Pension Offset provision and the Windfall Elimination Provision.

Under current law, public employees, whose salaries are often lower than those in the private sector, find that they are penalized and held to a different standard when it comes to retirement benefits. The unfair reduction in their benefits makes it more difficult to recruit teachers, police officers, and fire fighters; and it does so at a time when we should to be doing everything we can to recruit the best and brightest to these careers.

The current Government Pension Offset provision reduces Social Security spousal benefits by an amount equal to two-thirds of the spouse's public employment civil service pension. This can have the effect of taking away, entirely, a spouse's benefits from Social Security. And, as one might guess, this provision disproportionately affects women.

The Social Security Windfall Elimination Provision reduces Social Security benefits for retirees who paid into Social Security and also receive a government pension, such as from a teacher retirement fund.

Private sector retirees receive monthly Social Security checks equal to 90 percent of their first $627 in average monthly career earnings, plus 32 percent of monthly earnings up to $3,152 and 15 percent of earnings above $3,152. Government pensioners, however, are only allowed to receive 40 percent of the first $627 in career monthly earnings, a penalty of over $300 per month.

To my mind it is simply unfair. My legislation will allow government pensioners the chance to earn the same 90 percent to which non- government pension recipients are entitled.

I do not understand why we would want to discourage people from pursuing careers in public service by essentially saying that if you do enter public service; your family will suffer by not being able to receive the full retirement benefits they would otherwise be entitled to.

Record enrollments in public schools and the projected retirements of thousands of veteran teachers are driving an urgent need for teacher recruitment. Critical efforts to reduce class sizes also necessitate hiring additional teachers. It is estimated that schools will need to hire between 2.2 million and 2.7 million new teachers nationwide by 2009.

California currently has more than 300,000 teachers, but will need to hire an additional 300,000 teachers by 2010 to keep up with California's rate of student enrollment, which is three times the national average. All in all, California has to hire tens of thousands of new teachers every year.

To combat the growing teacher shortage crisis, forty-five States and the District of Columbia now offer ``alternate routes'' for certification to teach in the Nation's public schools.

It is a sad irony that policymakers are encouraging experienced people to change careers and enter the teaching profession at the same time that we clearly tell them that we will reduce your Social Security benefits for making such a change--benefits they worked so hard to earn.

Nearly one million government retirees nationwide are affected by the Government Pension Offset and Windfall Elimination provisions, but their impact is greatest in the 12 States that chose to keep their own public employee retirement systems, including California.

According to the Congressional Budget Office, the Government Pension Offset reduces benefits for some 200,000 individuals by more than $3,600 a year. And, as I mentioned earlier, the Windfall Elimination Provision causes already low-paid public employees outside the Social Security system, like teachers, firefighters and police officers, to lose up to sixty percent of the Social Security benefits to which they are entitled. Sadly, the loss of Social Security benefits may make these individuals eligible for more costly assistance, such as food stamps.

I am also very aware that we are facing extraordinary deficits and that fixing the problem that we are talking about here today will be expensive. I am open to considering all options that move us toward our goal of allowing individuals to keep the Social Security benefits they are entitled to. The important thing for us to do is to take action that moves us in the right direction.

The reforms that led to the Government Pension Offset provision and the Windfall Elimination Provision are almost 20 years old. At the time they were enacted, I'm sure they seemed like a good idea. Now that we are witnessing the practical effects of those reforms, I hope that Congress will pass legislation to address the unfair reduction of benefits that make it even more difficult to recruit and retain public employees.

Mr. President, I rise to offer, along with Senators Warner of Virginia and DeWine of Ohio, the Assault Weapons Ban Reauthorization Act of 2005. We are joined by Senators Schumer, Mikulski, Durbin, Clinton, Boxer, Levin, Dodd and Reed, who are original cosponsors of this critical legislation.

This is the same basic legislation that passed by the Senate last year as an amendment to a bill designed to provide blanket immunity for gun manufacturers. However, once that amendment passed, the underlying bill was defeated, in part by its own sponsors, after the National Rifle Association applied intense pressure to Members of this body.

Thus we saw the ideological and extreme view of the National Rifle Association, when they sacrificed their most desired legislative priority--gun immunity legislation--because the Senate had approved the assault weapons ban and two other amendments that would save people's lives: closing the gun show loophole, and requiring trigger locks.

Although President Bush had said he supported the assault weapons ban, he refused to personally engage to help this legislation get signed into law, and the ban expired on September 13, 2004. As a result, these weapons are now once again proliferating through our neighborhoods and communities throughout the United States.

That is why, today, I am introducing the Assault Weapons Ban Reauthorization Act of 2005. This legislation mirrors the legislation I authored in the Senate and then-Congressman Schumer authored in the House in 1994.

As was done then, the legislation I am introducing would: ban the manufacturing of 19 specific types of military-style assault weapons, as well as a number of other guns based on a simple test to determine whether the guns were hunting guns or weapons of war; prohibit the manufacture of large capacity ammunition magazines--clips, drums and strips of more than ten rounds--because it is those large capacity ammunition feeding devices that can make a semiautomatic assault weapons so very deadly; and continue to exempt 670 hunting guns entirely, and it is also important to note that the ban would continue to ``grandfather'' in every gun that was made before 1994. So no innocent gun owner would lose a weapon. There will again be no confiscation component to the bill.

This legislation is not perfect. There are comparisons that were made to get it passed last time around, and since its previous enactment there have been many concerns raised about the need to tighten or alter the definition in order to make the prohibition more effective. I am open to working with my colleagues to ensure we enact the best legislation possible, but we need a first step--at a minimum Congress needs to reinstate the original assault weapons ban.

Unfortunately, we are already seeing the impact of the lapse of this law and we should not let another year pass without reinstating its protections. We know the ban worked. Supply went down. Prices went up. The use of these weapons of war in gun crimes had fallen consistently since the ban passed.

According to Department of Justice data, the proportion of these assault weapons used in crime fell more than 65 percent since the ban took effect. And these statistics are backed up by report from the Brady Campaign.

The analysis in the Brady study was performed by Gerald Nunziato, who for eight years served as the Special Agent in Charge of ATF's National Tracing Center--a man who know first hand what these numbers means.

The study found two key things:

First: ``Assault weapons banned by name in the Federal Assault Weapons Act have declined significantly as a percentage of guns ATF has traced to crime, and in absolute number of traces, since the Act was passed. Had this decline not occurred, thousands more of these banned assault weapons would likely have been traced to crime over the last 10 years.''

In other words, the assault weapons legislation signed into law ten years ago successfully dried up the use of banned assault weapons in crime. Second, arguments have arisen that despite this evidence, the ban has not really worked because gun manufacturers would simply produce copycat guns that have the same killing power as assault weapons, and use these guns in crime across the country. I agree that gun manufacturers have tried everything they could to circumvent the ban and this concern is something that may need to be addressed. But let's look at what the Brady study said about this issue.

Second: ``The gun industry's efforts to evade the Federal Assault Weapons Act through the sale of `copycat' guns has not substantially undercut the positive effect of the statute in reducing the incidence of assault weapons among crime guns.''

In other words, even though determined gun manufacturers tried to evade the ban, they were not successful and copycat guns did not replace banned guns in equal numbers, at least when traced to crimes.

In many cases, and when dealing with many issues, I continue to find that what is most compelling is not just the statistics, but rather the real people affected by the policies we debate. It's those men, women and children that are the reason most of us come to work everyday. I'm here today to talk about this issues because of the devastating effect these guns can have on families in our neighborhoods, office buildings, street corners or schoolhouses across the country. I have said before that this issue really came home to me on July 1, 1993, just over 11 years ago, when Gian Luigi Ferri walked into 101 California Street in San Francisco carrying two high-capacity TEC-DC9 assault pistols capable of holding 30- or 50-bullet magazines. Within minutes, Ferri had murdered eight people and six others were wounded. His victims were not soldiers or even enforcement officers. These people doing everyday jobs in an everyday place. A place forever tainted by the bloodshed caused by one man and his assault weapons.

And 101 California was just one of many shootings by grievance killers, discontented employees or even schoolchildren--shooting that shows us that nobody is safe when these guns are in the hands of the wrong people. Yet five months ago, the federal ban on assault weapons expired, and once again new guns like the TEC-DC9 are allowed on our streets. The ban expired despite overwhelming public support to renew it--71 percent of all Americans support renewing the assault weapons ban, as do 64 percent of people in homes with a gun. And it expired despite overwhelming support from law enforcement and civic organizations--nearly every major law enforcement and civic organization has supported a renewal, including the Fraternal Order of Police, the Chiefs of Police, the U.S. Conference of Mayors, the National Association of Counties, and the list goes on and on.

Sadly, the ban expired despite the stated public support of President George W. Bush and former Attorney General John Ashcroft and despite the support of a majority of United States Senators--52 of us voted to renew this ban just this past March. Despite all of this support, this past September the American people were lift unprotected and made less safe. And make no mistake--when the ban expired the guns began to flow. And when the guns began to flow the safety of our communities was put in jeopardy.

One advertisement that ran in gun magazines is from ArmaLite, a company that makes post-ban rifles. ArmaLite offered a coupon for a free flash suppressor for anyone who bought one of their guns before the ban expired so that, once the ban expired, the gun could be modified to its pre-ban configuration.

The ad even states that, ``It is not legal to install this on a post ban rifle until the assault weapons ban sunsets.''

This is the kind of thing we can continue to expect--companies once again producing deadly assault weapons, high capacity clips, and dangerous accessories we worked so hard to stop almost ten years ago.

The original assault weapons ban was passed before September 11, 2001, with focus on the use of these military weapons by street criminals and gangs. But in the intervening years we have come to appreciate the significance of the threat posed by foreign terrorists. We know that al Qa'ida and other shadowy terrorist groups may plan to attack us here, at home, using these very weapons. A training manual found in Afghanistan made clear that al Oa'ida has seen the threat posed by these weapons. In fact, some of these guns are the very ones being used against our men and women in uniform in Afghanistan and in Iraq.

Simply put--these weapons are not just a law enforcement problem. They are a homeland security and counterterrorism problem. We need to take action to ensure that AK-47s and other such assault weapons cannot simply be purchased by a terrorist operative in preparation for an attack in the United States.

I am deeply disappointed that despite support of the American people, support of the Congress, and stated support of the President, the assault weapons ban was allowed to expire this past fall.

It is past time to stand up to the NRA and instead listen to law enforcement all across the nation who know that this ban makes sense and saves lives. It is past time to listen to the studies that show that crime with assault weapons of all kinds has decreased by as much as 65 percent since the ban took effect almost ten years ago.

The bottom line is that across this nation everybody knows this ban should be law. Law enforcement, mayors, cities, counties, three former Presidents, and even George W. Bush himself have said the ban should be renewed.

This time I hope, for the safety of all Americans, President Bush, Majority Leader Frist and Speaker Hastert will help re-enact this important legislation.

Mr. President, I rise today to introduce the Emergency Medical Services Act of 2005. This legislation will help to improve Federal efforts to support community-based emergency medical services across America. I am pleased to be joined by Senator Feingold in this effort.

Today, New York University's Center for Catastrophe Preparedness and Response is releasing an important report, titled ``Findings from a National Roundtable to Improve Emergency Medical Service's Homeland Security Preparedness.'' This report details concerns and recommendations from more than 50 representatives of national EMS organizations and Federal agencies. Their top recommendation was to improve EMS homeland security preparedness through enactment of the very measure we are introducing today. I would note that a former member of my staff, Tim Raducha-Grace drafted this report. Tim continues to be a champion of first responders nationwide, and I congratulate him on this latest achievement.

A comprehensive, coordinated emergency medical services system is essential to assure prompt, quality care to help individuals suffering from automobile crashes to traumatic medical emergencies, to terrorist events. The emergency medical services system serves as one of the most important parts of our health care safety net.

Unfortunately, for the past 20 years, Federal support for EMS has been both scarce and uncoordinated. At least seven Federal agencies are involved in various aspects of emergency medical services (EMS), though most agencies focus on only one segment of the EMS system and don't effectively coordinate with other agencies.

In 2001, at the request of Senator Feingold and myself, the General Accounting Office cited in its report Emergency Medical Services: Reported needs are Wide-Ranging with a Growing Focus on Lack of Data the need to increase coordination among Federal agencies as they address the needs of regional, State, or local emergency medical services systems.

This legislation would seeks to improve one of the few existing efforts to coordinate Federal support for EMS providers. This legislation would formally establish a Federal Interagency Council on Emergency Medical Services (FICEMS), and would require the National Highway Traffic Safety Administration, in coordination with the Department of Homeland Security, to provide organizational and staff support.

This legislation would enhance coordination among the Federal agencies involved with the State, local, tribal and regional emergency medical services and 9-1-1 systems. It would also help to assure Federal agencies coordinate their EMS-related activities and maximize the best utilization of established funding.

Local, State and Federal level emergency medical services systems are extremely diverse and involve numerous different agencies and organizations. To assure a viable, responsive emergency medical services system, Federal agencies need the input and advice of their non-Federal partners and from persons regulating or providing emergency medical services systems at the State and local level.

According to Tom Judge, the Executive Director of Lifeflight of Maine, and Jay Bradshaw, the State of Maine's EMS Director, improved coordination can help strengthen support for a wide range of emergency medical services, from rural EMS providers, to communications between EMS systems, to improving coordination between local EMS providers and their Federal partners.

Another GAO report made it clear that the Center for Medicare and Medicaid Services needs to better coordinate its reimbursement with the Department of Transportation's matching grants for equipment and vehicles. Many of Maine's communities are at risk of seeing their first ambulance service closures in rural areas, such as in Rumford, ME, due to low reimbursement rates. If DOT targeted assistance to the low reimbursement areas that were at risk of shutting down, we might be able to maintain service in those areas.

Improved coordination could also strengthen the integration between local providers and Federal agencies. Substantial numbers of our Reserve and National Guard units are being called up for duty, which has hurt search and air rescue capability across Maine. While LifeFlight of Maine is called upon to provide an eye in the sky there is little to no current capability for lifting someone out of the woods when there is no space to land. If the Navy pulls the last part time aircraft out of Brunswick Naval Air station, there wouldn't be any capability at all within a reasonable response timeframe.

I am pleased to have the support of Maine's EMS Director, Jay Bradshaw, Lifeflight of Maine, the American Ambulance Association, the National Association of Maine EMS Directors, and others.

We must ensure that Federal agencies coordinate their efforts to support the dedicated men and women who provide EMS services across our Nation. I urge my colleagues to join me in supporting their efforts by cosponsoring this legislation.

Mr. President, I am pleased to join with my colleague from California, Senator Feinstein, in introducing the Social Security Fairness Act. This bill repeals two provisions of current law--the windfall elimination provision (WEP) and the government pension offset (GPO) that unfairly reduce earned Social Security benefits for many public employees when they retire.

Individuals affected by both the GPO and the WEP are those who are eligible for Federal, State or local pensions from work that was not covered by Social Security, but who also qualify for Social Security benefits based on their own work in covered employment or that of their spouses. While the two provisions were intended to equalize Social Security's treatment of workers, we are concerned that they unfairly penalize individuals for holding jobs in public service when the time comes for them to retire.

These two provisions have enormous financial implications not just for Federal employees, but for our teachers, police officers, firefighters and other public employees as well. Despite their challenging, difficult and sometimes dangerous jobs, these invaluable public servants often receive far lower salaries than private sector employees. It is therefore doubly unfair to penalize them when it comes to their Social Security benefits. These public servants--or their spouses--have all paid taxes into the Social Security system. So have their employers. Yet, because of these two provisions, they are unable to collect all of the Social Security benefits to which they otherwise would be entitled.

While the GPO and WEP affect public employees and retirees in virtually every State, their impact is most acute in 15 States, including Maine. Nationwide, more than one-third of teachers and education employees, and more than one-fifth of other public employees, are affected by the GPO and/or the WEP.

Almost one million retired government workers across the country have

already been adversely affected by these provisions. Millions more stand to be affected by them in the future. Moreover, at a time when we should be doing all that we can to attract qualified people to public service, this reduction in Social Security benefits makes it even more difficult for our Federal, State and local governments to recruit and retain the teachers, police officers, firefighters and other public servants who are so critical to the safety and well-being of our families.

The Social Security windfall elimination provision reduces Social Security benefits for retirees who paid into Social Security and who receive a government pension from work not covered under Social Security, such pensions from the Maine State Retirement Fund. While private sector retirees receive Social Security checks based on 90 percent of their first $612 average monthly career earnings, government pensioners checks are based on 40 percent a harsh penalty of more than $300 per month.

The government pension offset reduces an individual's survivor benefit under Social Security by two-thirds of the amount of his or her public pension. It is estimated that nine out of ten public employees affected by the GPO lose their entire spousal benefit, even though their deceased spouses paid Social Security taxes for many years.

What is most troubling is that this offset is most harsh for those who can least afford the loss--lower-income women. In fact, of those affected by the GPO, 73 percent are women. According to the Congressional Budget Office, the GPO reduces benefits for more than 200,000 of these individuals by more than $3,600 a year--an amount that can make the difference between a comfortable retirement and poverty.

Our teachers and other public employees face difficult enough challenges in their day-to-day work. Individuals who have devoted their lives to public service should not have the added burden of worrying about their retirement. Many Maine teachers, in particular, have talked with me about this issue. They love their jobs and the children they teach, but they worry about the future and about their financial security in retirement.

I hear a lot about this issue in my constituent mail, as well. Patricia Dupont, for example, of Orland, ME, wrote that, because she taught for 15 years under Social Security in New Hampshire, she is living on a retirement income of less than $13,000 after 45 years in education. Since she also lost survivors' benefits from her husband's Social Security, she calculates that a repeal of the WEP and the GPO would double her current retirement income.

These provisions also penalize private sector employees who leave their jobs to become public school teachers. Ruth Wilson, a teacher from Otisfield, Maine, wrote:

``I entered the teaching profession two years ago, partly in response to the nationwide pleas for educators. As the current pool of educators near retirement in the next few years, our schools face a crisis. Low wages and long hard hours are not great selling points to young students when selecting a career.

``I love teaching and only regretted my decision when I found out about the penalties I will unfairly suffer. In my former life as a well-paid systems manager at State Street Bank in Boston, I contributed the maximum to Social Security each year. When I decided to become an educator, I figured that because of my many years of maximum Social Security contributions, I would still have a livable retirement `wage.' I was unaware that I would be penalized as an educator in your State.''

In September of 2003, I chaired a Governmental Affairs Committee hearing to examine the effect that the GPO and the WEP have had on public employees and retirees. We heard compelling testimony from 73- year old Julia Worcester of Columbia, ME, who told us about her work in both Social Security-covered employment and as a Maine teacher, and about the effect that the GPO and WEP have had on her income in retirement. Mrs. Worcester worked for more than 20 years as a waitress and in factory jobs before deciding, at the age of 49, to go back to school to pursue her life-long dream of becoming a teacher. She began teaching at the age of 52 and taught full-time for 15 years before retiring at the age of 68. Since she was only in the Maine State Retirement System for 15 years, Mrs. Worcester does not receive a full State pension. Yet she is still subject to the full penalties under the GPO and WEP. As a consequence, she receives just $107 a month in Social Security benefits, even though she worked hard and paid into the Social Security system for more than 20 years. After paying for her health insurance, she receives less than $500 a month in pension income.

After a lifetime of hard work, Mrs. Worcester, is still substitute teaching at 75, just to make ends meet. This simply is not fair. I am therefore pleased to join Senator Feinstein in introducing this legislation to repeal these two unfair provisions, and I urge my colleagues to join us a cosponsors.

Mr. President, I rise today for myself and fellow Alaska Senator Ted Stevens to introduce legislation concerning a complex issue, the Quality Bank that is used to facilitate payments between shippers using the Trans-Alaska Oil Pipeline System to reflect variations in the value of different crude oil streams that are injected into the pipeline.

Since its opening in June 1977, the Trans-Alaska Pipeline System, TAPS, has carried crude oil from Alaska's North Slope to Valdez where the oil is shipped to market. The pipeline carries crude oil from various sources and of varying quality--the oil injected into the line before the pipeline's Pump Station One near Deadhorse, AK, and commingled as the blended stream of oil travels south to Valdez. The TAPS Quality Bank was established to compensate producers of higher quality crude oil for the difference in the value of the crude injected at the North Slope and that of the lower-quality commingled stream received in Valdez, since each shipper receives a quantity of the blended stream equivalent to the amount it injected into the line.

Companies injecting low-quality crude oil pay into the Quality Bank, while companies injecting high quality crude receive a payment from the Quality Bank. In addition, between the North Slope and Valdez, two refineries, Flint Hills and Petro Star, withdraw a portion of the common stream from TAPS, partially refine the crude oil into products such as gasoline, diesel and jet fuel, and reinject into TAPS the other components of crude left over after their refinery processes. Each fuel extracted from the crude is called a ``cut.'' To compensate producers for the loss in value of the crude oil because of what is removed by these refineries, refiners also pay into the Quality Bank. The objective of the Quality Bank is to make monetary adjustments so that each shipper is in the same economic position it would enjoy if it received the same oil in Valdez that it delivered to TAPS on the state's North Slope.

The methodology used to determine Quality Bank payments has been a subject of controversy since the Quality Bank's creation. The problem arises because there is no independent market for the crude injected on the North Slope and thus no way to objectively determine its value. The methodology is set by the Federal Energy Regulatory Commission. Since the early 1980s, FERC-approved methodologies have been challenged in court and revised multiple times. In 1993, the majority of North Slope shippers proposed and FERC approved a settlement calling for the use of a ``distillation'' methodology, which would value crude oil based on the market price of various cuts created when the components are separated based on different boiling points--the distillation process. This methodology replaced the former ``gravity'' methodology where oil was valued based on its relative gravity.

Since 1993, disputes have focused largely on the valuation of cuts at the highest boiling points--the ``Heavy Distillate'' cut that evaporates at temperatures between 350 and 650 degrees F. and the Resid, residual, cut, which includes the portion remaining after distillation of all other cuts at boiling points up to 1050 degrees F. Two additional cuts are also at issue, the VGO and Naptha cuts.

In 1997, responding to a D.C. Circuit Court of Appeals ruling, FERC approved a settlement with a revised valuation methodology for Distillate and Resid. Under the FERC order, the new valuation methodologies were to be applied on a prospective basis only. Later, the D.C. Circuit in 1999 told FERC to revise some particular details of the Resid valuation and also held that FERC had ``failed to provide an adequate explanation'' as to why the new methodology should not be made retroactive to 1993.

Responding to the ruling, the Administrative Law Judge, who in 1997 had decided that all changes should only apply prospectively, reversed his position and released a decision in August 2004 calling for changes in the Resid and Heavy Distillate cuts to be applied retroactively, in the case of Resid to as far back as 1993. In addition, the administrative law judge decided to apply new valuations for VGO and Naptha, prospectively. Currently, the judge's decision is awaiting a final decision by the FERC on whether to impose the Initial Decision or alter it.

There are clearly major public policy implications resulting from this Quality Bank issue. While the bank is a ``zero sum'' game as far as money paid in and out of the bank is concerned, the impacts on the parties and thus on the citizens of Alaska are anything but equal.

For decades Alaskans suffered under the impacts of having to import all refined fuel products into the State from West Coast refineries. Besides higher prices caused by transportation, that left the State wholly dependent on fuel supplies that needed to travel at least 2,000 miles on average to reach Alaska consumers--sometimes through bad weather and difficult sea conditions. With the construction of in-State refineries, Alaskans finally saw greater security of supply, less dependence upon weather for shipment arrivals, and the possibility of lower fuel prices because of potentially reduced transportation costs. The greater dependability of fuel supplies improved aviation freight shipments at the Anchorage and Fairbanks international airports, helping create jobs in air freight and related industries.

But the decision of the Administrative Law Judge to apply new Quality Bank methodology assessments retroactively, places the economics of in- State refineries at risk. That in turn not only impacts the job security for the roughly 400 Alaskans who work at the refineries, but also threatens the State's energy and economic security.

The problem is that both of the refineries must make long- and short- term business decisions based on crude costs when they process crude oil into product. Refineries optimize their production slates based on current market realities. It is difficult for them to operate, given low profit margins, if oil values can change years later as a result of Quality Bank decisions. They simply have no way to make rational business decisions when the value of their products can be determined retroactively long after they can protect themselves for perceived mistakes in FERC-approved valuation methodologies. This certainly threatens the ability of the refineries to attract capital, money needed for them to modernize and meet new ultra-low sulfur diesel ``clean fuel'' requirements soon to go into effect.

The State's Congressional Delegation last fall in report language added to the Federal budget expressed its concern with the equity of long retroactive Quality Bank valuation adjustments. Last autumn we urged FERC to look carefully at the justice of the Initial Decision of the Administrative Law Judge in this case and we encouraged all of the eight parties that includes the State of Alaska, to reach an out-of- court settlement of the 1993 case to bring finality to this complex case before it harms instate refinery capabilities. At the time we avoided a legislative solution to this purely Alaskan case. We are renewing our pleas for action in a letter sent to FERC on Thursday.

In the intervening six months, while one mediation session has occurred, the parties report little or no progress toward reaching a mutually agreeable settlement. While opinions may differ on whether Congress should intervene to settle the on-going case, there is little doubt that Congress should step forward to prevent such an arcane dispute from ever again threatening Alaska's energy industry.

For that reason prior to the next mediation session, today we introduce legislation to limit the ability of FERC in the future to make retroactive the impacts of future Quality Bank valuation methodology changes. By this legislation, after December 31, 2005, FERC still will be able to change the methodology for determining the value of oil flowing through the pipeline but will not be permitted to apply changes to Quality Bank valuation methodologies on anything other than a prospective basis.

We have proposed this provision to prevent this legal nightmare from happening again. This provision will first eliminate the perverse current incentive for all sides to promote further litigation regarding Quality Bank valuations based on the expectation of a retroactive application of changes that would result in a large economic windfall. The retroactive application of valuation methodology changes encourages the sides in a dispute to sue in hopes of gaining a larger benefit in the future. This is a ``lottery,'' however, that Alaskans are guaranteed to lose.

By setting December 31, 2005, as the date that FERC can no longer apply Quality Bank valuation methodologies on a retroactive basis, the legislation will put the FERC and the litigants on record that the current dispute must be resolved by the end of this year.

Requiring FERC to apply valuation methodology changes in connection with any future disputes on a prospective basis only will eliminate the risk and uncertainty associated with the prospect of nearly unlimited retroactive application of Quality Bank payment methodology changes. That will allow all Quality Bank participants to be able to conduct business with the certainty of knowing that prices received and paid for oil today cannot be altered years down the road. In addition, this will eliminate the strong incentive that currently exists for some parties to engage in endless litigation, in hopes of gaining windfall benefits from retroactive application changes.

While we continue to call on all sides in the current dispute to compromise and settle this case now, this bill will discourage if not eliminate this type of dispute in the future--a benefit for all Alaskans.