Wind Power Tax Incentives Act of 2005

Mr. President, today I am introducing the Natural Gas Price Reduction Act of 2005 and the ``Tax Provisions for Natural Gas Price Reduction Act of 2005.'' I send to the desk two pieces of legislation. One is the substantive provisions of the bill and one is the tax provisions of the bill.

Mr. President, I offer the legislation on behalf of myself and the Senator from South Dakota, Mr. Johnson, who is the lead Democratic sponsor on the legislation. I do so with appreciation to the chairman of our Energy and Natural Resources Committee, Chairman Pete Domenici, and the staff of that committee who have worked very closely with us on the development of this comprehensive piece of legislation, and with thanks to my own staff, Sharon Segner, who has worked on it for several months.

This is a piece of legislation to address aggressively and comprehensively the rising cost of natural gas in the United States. This is legislation for the blue-collar worker, for the American farmer, and for the American homeowner.

Natural gas prices in the United States are at record levels. We have gone from having the lowest natural gas prices in the industrial world to the highest. These high prices are threatening millions of our jobs. Our farmers are getting a 10-percent pay cut. Homeowners are having a hard time paying their heating and cooling bills because of our contradictory policies.

Our policies boil down to this: We are restricting the supply of natural gas, and we are encouraging the use of natural gas. You do not have to go very far in an economics class at the University of Oklahoma or the University of Tennessee to know that if you restrict supply and encourage demand, the inevitable result is higher prices. And higher prices is a very serious problem for U.S. workers, U.S. homeowners, and U.S. farmers.

Only an ambitious and comprehensive approach that both increases supply and controls demand can lower the price of natural gas and keep our economy growing. This is not a question of tweaking our natural gas policy. It is time, aggressively, to revamp it. We need aggressive conservation. We need aggressive use of alternative fuels. We need aggressive research and development. We need aggressive production. And, for the time being, we need aggressive importation of liquefied natural gas from other parts of the world.

Here on this chart is an idea of where we are today. This is the United States of America: $7 per unit for natural gas--the highest in the industrialized world. Until recently, we had the lowest natural gas prices in the world.

What that means is large parts of our industries--the chemical industry, for example--were built on the idea of $1.50 or $2 for natural gas, but today it is $7.

A million Americans work in those blue-collar manufacturing jobs in every State in our country. Now, if they are paying $7 here, and it is $5.55 in Canada and $5.15 in the United Kingdom and $2.65 in Turkey and $1.70 in the Ukraine, where do you suppose,

though, a million blue-collar jobs are going to be 5 years from now, if we do not do something about the $7 price? They are not going to be in the United States. They are going to be moving out of the United States, to the United Kingdom, to Germany, to the Ukraine, to other parts of the world. And people are going to be writing their Congressmen and saying: Why didn't you do something?

So here is what we can do. By aggressive conservation, I mean setting stronger appliance and equipment standards for natural gas efficiency so that a commercial air conditioner will cool the same while using less natural gas doing it. Those standards have been generally agreed upon by environmental groups with the industry. If they were put in place, by a rough estimate, they might save the equivalent energy that could be produced by 30 or 35 powerplants.

By aggressive use of alternative fuels, I mean, for example, fully commercializing coal gasification. Coal gasification is taking this abundant supply of coal we have in the United States--we are the ``OPEC,'' the ``Saudi Arabia'' of coal; we have a 400- or 500-year supply--and finding a clean way to use it instead of importing oil from a part of the world where people are blowing each other up.

That means starting with support so we can have six coal gasification plants in this country by the year 2013. Coal gasification means, you burn the coal to create gas, and then you burn the gas to create power. If we can do that commercially, we will not only be passing a clean energy bill, we will be passing a clean air bill, because if you do that, you remove most of the mercury, most of the nitrogen, most of the sulfur. And by additional research, we may be able to find a way to recapture the carbon that is produced and put that in the ground and solve the carbon problems that a lot of people are talking about around the world.

In addition to helping ourselves, we would help ourselves by helping others. China and India and other parts of the world are building hundreds of coal plants. We would much rather them build a coal gasification plant, one that is clean and does not contribute to air pollution. Because if China and India and Brazil build dirty coal plants, that air blows around the world, and it blows into Tennessee and it blows into South Carolina. It blows into Oklahoma.

So aggressive alternative fuels is a part of a natural gas supply. Aggressive research and development includes investment and research in gas hydrates. Gas hydrates is gas that is in the ground. Methane hydrates hold tremendous potential to provide abundant supplies of natural gas. Hydrates are like ice solid structures, consisting of water and gases, mainly methane, compressed to greater than normal densities.

Coastal U.S. areas are rich in this resource. The United States is estimated to contain one-fourth of the world's supply. We need to find a way to use that gas so we do not have $7 per unit natural gas prices. That sends millions of jobs overseas. That cuts the income of farmers. And that raises home heating prices and cooling prices for residential Americans.

Aggressive production means, among other things, allowing States to selectively waive the Federal moratoria on offshore production of gas and collect significant revenues from such production. Let me give you an example. Within the last few weeks, the legislature of Virginia decided it might like to explore the idea of drilling for gas offshore. Now, why would Virginia want to do that? Because there is probably a lot of gas offshore. What would that mean for Virginia? Well, they could put a gas rig out in the ocean, beyond 20 miles, so nobody in Virginia or North Carolina could see it, run a pipeline underground to Virginia, and take their share of the revenues. And they can lower taxes in Virginia and put the rest of the money in a trust fund to build the best colleges and universities in America. That is what they could do in Virginia.

If Tennessee had a coastline, and I were Governor of Tennessee, that is what I would be asking the Congress to let me do.

I think as other Governors and other legislatures and other people look at Texas and Louisiana and Alabama and see what they are doing and decide that they can in an environmentally sensitive way exercise a State option to drill for gas in Federal waters so far out you can't see it, that they will find that a good option because it will help lower the price of gas. It can build up the schools and keep taxes down, and it can avoid other worse forms of energy.

For example, you would have to have 46 square miles of windmills, these things that are 100 yards tall, in order to equal one gas rig that you couldn't see out in the ocean. This is a State option. Aggressive importation of liquefied natural gas starts with giving the Federal Energy Regulatory Commission exclusive authority for siting and regulating what we call LNG terminals. This means importing liquefied natural gas from other parts of the world. There is a lot of it around the world. They freeze it and put it in tankers, and they bring it here and put it in our pipelines, and then we have it.

That seems like a pretty big waste of effort when we have plenty of natural gas here in the United States that we don't have access to. But if we want an adequate supply of natural gas, we are going to have to import some from around the world, and that means we are going to need terminals to which to bring it. Some of them may be offshore. They might be 10, 12, 14 miles offshore. Some of them, like the four we have today, may need to be onshore. There is no silver bullet. There is no single answer. That is why we need aggressive conservation. If, for example, the United States adopted the conservation attitudes towards natural gas that California did a few years ago, it might equal what 50 powerplants could produce in the United States. If that is so, we ought to do it today. That would begin to bring this $7 figure down.

Aggressive use of alternative fuels such as coal gasification. I also would say nuclear power is the most obvious alternative fuel to natural gas. If we had more nuclear power, we would use less natural gas. In our country today, what do you suppose we are using to create electricity when we need more electricity even though the cost of it is $7 a unit, the highest in the world? Natural gas, because natural gas plants can be built for a few hundred million dollars, and we have created an environment where we can't use nuclear.

We haven't built a new nuclear plant since the 1970s, even though we invented the technology, even though France has 80 percent of its power now produced by nuclear power, even though Japan builds a new nuclear plant every year or so. We invented it. Our Navy has operated nuclear reactors since the 1950s without ever having a single accident. It is a clean, obvious alternative to $7 natural gas, and we haven't built a plant since the 1970s. So we need to think seriously about aggressive conservation, aggressive use of alternative fuels, aggressive research and development for solar, for methane hydrates, aggressive production, and that includes giving States the option of deciding whether they would like to drill offshore and take some of the revenues and put some of the revenues into a conservation fund, and aggressive importation of liquefied natural gas from overseas at least for the time being.

In March of 2002, the Secretary of Energy requested that the National Petroleum Council undertake an extensive study on the natural gas crisis. That advisory council produced a study. It talked about the results I have described. Our Senate Energy Committee, under the chairman, Senator Domenici, has paid a lot of attention to that report. Senator Domenici hosted what we called a natural gas roundtable that was well attended by Senators and went on for 3 or 4 hours. There were more than 100 proposals presented.

I am chairman of the subcommittee of that full committee, and so my purpose today is to take many of the ideas that we heard that made the most sense, some of which people haven't been willing to advocate, and put them into the discussion. Again, because I do not want to be a Senator who 10 years from now somebody comes up to and says: How did you let farmers get a 20-percent pay cut because of $7, $8, $9 natural gas; how did you let millions of jobs in the chemical industry, the auto industry go overseas because of $7, $8, and $9 natural gas; how did you let prices of natural gas for home heating

or cooling get so high that middle-income Americans can't even afford to heat their homes? I don't want to be that kind of Senator. So I am here today with a comprehensive proposal across the board even though some of the ideas will create that kind of controversy.

I have summarized in a few words the provisions of a 250-page piece of legislation.

We were ambushed in the United States on September 11, 2001. Even though you could argue that we might have known it was coming, terrorism wasn't new on September 11, 2001.

I remember being in a meeting with Prime Minister Rabin of Israel in 1994. At the end of a long day, I asked him: What is the greatest challenge threatening the world? And he said terrorism. That was many years before we were attacked. He was right. He was dead within a few months at the hands of terrorists within his own country. We didn't see the terrorism coming. We were ambushed, and we have paid a terrible price--in lives, in dollars. We have had to create whole new departments. We have had to interrupt the lives of thousand of national guardsmen and Army reservists and send them overseas, some to die and some to be wounded, because of terrorism. Maybe we couldn't have seen exactly that act coming, but we knew it was out there.

We are about to have another big surprise. That is to our standard of living. We are 5 to 6 percent of all the people in the world. Yet we produce a third of all the money in the world. We could wake up 10 years from now and that picture could be very changed. One way is if we lose our brainpower advantage. And we could lose it. Half of our new jobs have been created by science and technology since the end of World War II. And if we go through our budget balancing, deficit controlling exercise for the next 10 years and we don't double investments for the physical sciences and retake the lead in advanced computing, and if we don't see that we have plenty of graduate students in science and engineering, we are going to find most of the R&D will be done in other parts of the world. We are going to find most of the engineers who produce this brainpower that creates jobs in other parts of the world.

They are thinking in China, and they are thinking in India. There is no real good reason why the United States should make a third of all the money in the world every year with just 5 or 6 percent of the people, and we have so little. So they are keeping their bright people home. They are building up their universities. They are doing what we need to keep doing. That is one place we could get a big surprise.

But the other is in energy. We have taken energy for granted for a long time. I know I come from Tennessee. We have had the Tennessee Valley Authority. It has sat there since the 1930s, and it has produced reliable, low-cost electricity. Homes that have never been lit, barns that have never been lit, rural areas that have never been lit have enjoyed that. That is within my lifetime.

And then while I was Governor in the 1990s, I remember that one of the big attractions for Saturn and Nissan and the automobile industry coming into Tennessee was low-cost reliable power. But when I had a natural gas roundtable last fall in Tennessee, there was the president of Saturn, the president of Nissan, the head of the Tennessee Farm Bureau. There was the head of the University of Tennessee. They were all saying: We can't live in Tennessee on $7 natural gas. What do they do if they can't? It is very easy what they do. They don't have to have those jobs in Tennessee or South Carolina. They can move them to Germany, they can move them to Mexico, they can move them to Canada, and they are doing it every day.

And Tennessee Eastman in the upper part of east Tennessee, which we think is just like the great Smokey Mountains, has been there so long. There are 12,000 people there, real good incomes. What do they use to make chemicals there? They use natural gas.

How long are they going to be there? If we have $7 gas and they have $3 and $4 gas in other parts of the world, I am afraid they are not going to be there too long. And somebody is going to say to me: What did you do about it? At least my answer is I stood up on the floor of the Senate and said this is not the time to tweak our natural gas policy.

We do not need to sit around and wait for a big surprise on energy like we had a big surprise on September 11 on terrorism. We need an aggressive policy. We need a comprehensive policy. We need aggressive conservation. That is where we should start. We need aggressive alternative fuels. That means nuclear and that means coal gasification. We need aggressive research and development, whether it is hydrogen or whether it is solar, or whether it is methane gas hydrates. We need aggressive production. We have lots of gas in the United States. We should be using it if we have $7 gas.

For the time being, we need to create the terminals that will permit us to import enough liquefied natural gas to get that $7 price down to $6 or $5 or $4.

Mr. President, I thank Senator Johnson from South Dakota for joining me in this comprehensive aggressive approach. I thank Senator Domenici for taking the lead on an energy bill. I thank Senator Bingaman, who is the ranking Democrat on our committee, because I notice on our committee a greater sense of urgency, a greater sense of bipartisan cooperation on coming up with an energy bill this year. Our blue-collar workers, our farmers, our homeowners in Tennessee and across this country expect it from us.

Senator Johnson's and my contribution today is to introduce this comprehensive 250-page bill and to get on the table all the aggressive ideas we can think of that make sense about how to reduce the price of natural gas for workers, for farmers, and for homeowners. We hope it contributes to the discussion. We hope we find lots of these provisions in an ambitious energy bill.

I look forward to working with my colleagues, as I know Senator Johnson does, on a bipartisan basis to help lower the price of natural gas, keep our jobs, keep our homes cool and warm, and make it possible for farmers to make a living.

Natural gas prices are at record levels and the highest of any industrialized country. High natural gas prices are threatening our jobs, our farms, and hurting Americans who are trying to heat and cool their homes. Only an ambitious, comprehensive approach that both increases supply and controls demand can lower the price of natural gas and keep our growing economic recovery from becoming recent history.

This is not a question of tweaking our natural gas policy. It is time to aggressively revamp it. We need aggressive conservation, aggressive use of alternative fuels, aggressive research and development, aggressive production and for the time being, aggressive imports of liquefied natural gas.

Aggressive conservation, for example, means setting stronger appliance and equipment standards for natural gas efficiency so that a commercial air conditioner will cool the same while using less natural gas to do it.

Aggressive use of alternative fuels, for example, means fully commercializing coal gasification, starting with support for the deployment of six coal gasification plants by 2013. Coal gasification means that you burn coal to produce power but get the much lower pollution output of using natural gas.

Aggressive research and development includes investment in research of gas hydrates. Methane hydrates hold tremendous potential to provide abundant supplies of natural gas. Hydrates are ice-like solid structures consisting of water and gases, mainly methane, compressed to greater than normal densities. Coastal U.S. areas are rich in this resource. The U.S. is estimated to contain one-fourth of the world's supply.

Aggressive production means, among other changes, allowing states to selectively waive the federal moratoria on off-shore production and collect significant revenues from such production.

And aggressive importation of liquefied natural gas starts with giving the Federal Energy Regulatory Commission exclusive authority for siting and regulating LNG terminals, while still preserving states' authorities under the Coastal Zone Management Act and other acts.

In March 2002, Secretary of Energy Abraham requested that the National Petroleum Council undertake an extensive study on the natural gas crisis.

That council, a Federal advisory committee to the Secretary of Energy, produced in late 2003 one of the most extensive policy studies and recommendations on the natural gas crisis to date. Since that time, other prominent groups, such as the National Commission on Energy Policy, have also produced extensive studies on the natural gas crisis. In October 2004, I held a roundtable on the impact of soaring natural gas prices on Tennessee farmers and jobs. The Senate Energy Committee has held numerous hearings over the last 2 years and recently held an extensive natural gas roundtable on the subject on January 24, 2005. Over 100 proposals were submitted to the Senate Energy Committee on natural gas issues.

The conclusion of all of these forums has been clear.

High natural gas prices are threatening our country's economic competitiveness and costing us jobs. For example, high natural gas prices have been the equivalent of a 10 percent pay cut to American farmers.

The situation is urgent.

There are no silver bullets. We cannot conserve our way out of this problem, nor can we drill our way out of this problem. We will need to be aggressive on all fronts, in order to keep our industries competitive.

High natural gas costs are also tied to high oil prices. We need to address both natural gas and oil prices in order to lower natural gas costs.

Our country has contradictory policies on natural gas--on one hand, we encourage its use. On the other hand, we limit access to its supply. We need to amend our contradictory natural gas and environmental policies.

That's why I am introducing the ``Natural Gas Price Reduction Act.'' It is an aggressive, bold approach to tackle this issue. This 250-page legislation is an attempt to start a very difficult, but balanced, legislative discussion in the United States Senate on natural gas prices. I have taken the best ideas that I have heard in these roundtable discussions and from the various policy studies. I have met with hundreds of people in the past year discussing natural gas prices. This legislation is an attempt to be more aggressive on all areas impacting natural gas prices--energy efficiency and fuel diversity, natural gas supply, and improved infrastructure for importation of liquefied natural gas.

Half our Nation's increase in natural gas demand in the last decade has come from the power sector. So to conserve natural gas, one must not only reduce consumption of gas itself, but also of electricity. And, as I noted, since oil prices affect natural gas prices, conserving oil is also important. My bill addresses conservation in five ways.

The bill creates a 4-year national consumer education program on the urgent need for energy conservation. A statewide California effort to educate energy consumers resulted in savings of 10 percent at peak usage--the equivalent of five-and-a-half 1,000 Megawatt coal-powered power plants. My bill aims to take that effort to the entire nation.

The legislation sets higher appliance and equipment standards for natural gas efficiency. These standards have been negotiated between consumer and industry representatives and are codified in the bill. For example, the standards would require a new kitchen oven to produce the same heat while using less natural gas to do it. The American Council for an Energy-Efficient Economy estimates that these standards will reduce natural gas use by about 125 BCF in 2010 and 525 BCF in 2020. In addition these standards will reduce peak electric demand by about 33,500 MW in 2020, equivalent to 34 coal power plants of 1000 MW each, and will save consumers and businesses more than $60 billion.

The bill creates tax incentives and provides regulatory relief to enable manufacturing facilities to more easily produce their own power and steam from a single source--a process called cogeneration or CHP which saves money and energy while also reducing pollutants. A CHP system can produce the same electrical and thermal output at 75 percent fuel conversion efficiency as compared to 49 percent separate steam and power. This is a 50 percent gain in overall efficiency, resulting in a 35 percent fuel savings. Large industrial plants, such as International Paper, Alcoa and Eastman in my home State of Tennessee all use cogeneration in their manufacturing processes. More companies could do the same, and the bill particularly focuses on providing incentive for smaller cogeneration projects.

The Alexander bill provides incentive for public utilities to utilize their natural gas plants based on efficiency. The process of activating different power plants to meet demand during a given day is called ``dispatching.'' For example, on a hot summer day in Tennessee, the demand for electricity, for air conditioning, might be highest in the early afternoon, so then a power company would have to dispatch the most power plants to provide the energy. But during the cooler night, they might dispatch less plants since less power is needed. If power companies dispatched their most efficient plants first, this would save us a significant amount of natural gas. As you can see, the highest saving will be in the medium-term--2010-2015--but real savings continue for many years.

Our reliance on foreign oil is the silent elephant in the room when it comes to high natural gas prices. My legislation includes a provision that requires the President report to Congress annually on efforts to reduce U.S. dependence on imported petroleum 1.75 million barrels a day from projected 2013 levels, almost 10 percent. As I noted earlier, oil and gas are usually produced together; and, typically, there is a 6:1 ratio between natural gas and oil prices. Reducing dependence on foreign oil will help bring natural gas prices down.

Conservation of natural gas and related energy sources is critical to lowering prices and keeping our manufacturing and farming jobs here in the United States. But conservation alone is not enough. The second focus must be to develop alternative sources of energy. The ``Keep Manufacturing and Farming Jobs in the United States Act'' encourages the use of three alternative fuels:

The bill initiates a national coal gasification strategy. Eastman Chemical in Kingsport, TN, has been using coal gasification with a 95% availability factor for the past 20 years. Tampa Electric has successfully demonstrated large-scale coal gasification. It is time for this process to be more widely used. Coal gasification is a process whereby gas derived from burning coal is used as a source of energy or a raw material. When used in a power plant, coal gasification means that you burn coal but get the much lower pollution output of using natural gas. My legislation provides up to $2 billion in tax or other incentives to support the construction of six new coal gasification power plants. Similarly, the legislation provides up to $2 billion in assistance for industrial gasification projects. The bill also provides streamlined permitting for coal gasification facilities. Coal is an abundant resource in the United States; we should use it to produce clean energy and raw material for industrial applications.

Solar energy is another clean, alternative fuel source that could be developed further. Solar energy can be used directly for heating as well as to create electricity. To push an aggressive solar energy strategy, the Alexander legislation provides tax incentives for investment in solar power generation. Specifically, it provides businesses a tax credit for investing in geothermal or solar heating and/or power generation--10 percent heating, 25 percent for generating or displacing electricity.

My bill also contains language to invest in new technologies to use hydrogen to power fuel cell vehicles. The language in this bill mirrors language I offered in the last session of Congress on the Energy Bill that would have enacted President Bush's Hydrogenl/Fuel Cell Initiative. When I visited Japan last year, I visited a hydrogen fuel station--that looked much like a gas station--and saw fuel cell vehicles that range from small cars to SUVs. These cars not only allow us to use an alternative fuel source but are also great for the environment--their only byproduct is water vapor. The bill invests in research and development of technologies and infrastructure for 2 hydrogen and fuel cell vehicles.

Methane hydrates hold tremendous potential to provide abundant supplies of natural gas. Hydrates are ice-like solid structures consisting of water and

gases--mainly methane--compressed to greater than normal densities. Coastal US areas are rich in this resource--the U.S. is estimated to contain one-fourth of the world's supply. My bill invests $200 million over the next 4 years in research for this promising new resource, a number consistent with recommendations from the National Commission on Energy Policy.

Conserving natural gas and using alternative fuels will take us a long way to reducing gas prices and keeping jobs here in the U.S., but we must also address the other side of the equation: supply. As Energy Committee members learned at our Natural Gas Roundtable, our current policy encourages consumption of natural gas while restricting the supply. We need to stop putting unnecessary restrictions on production and supply of natural gas, and my legislation does so by addressing production off-shore and in the Rocky Mountains as well as the importation of liquid natural gas from abroad.

We have plenty of natural gas here in the U.S., we just cannot get to it. There are large fields off the coasts, especially the Atlantic, and in the Rocky Mountains. There is no reason for natural gas prices here in the U.S. to be so high when we have so much available here--if only we would use it.

Today, there are two moratoria on our outer continental shelf, OCS--a congressional moratorium and a Presidential moratorium. The Atlantic Coast--40 miles off the coast is believed to be largely natural gas- prone. The Pacific Coast is believed--to be mainly oil-prone. The Gulf of Mexico is both. Today, when production is greater than 9 miles offshore, a State that has oil and gas production gets zero percent of the production revenues. This is radically different than onshore production; on Federal lands, States get 50 percent of the production revenues. Alaska gets 90 percent of the production revenues. In order to have a constructive dialogue on OCS production, the right framework needs to be established.

My legislation provides the Department of the Interior with the legal authority to issue natural gas only leases. Currently, Interior can only issue combination gas and oil leases. Since there is greater hesitation about the environmental impact of producing oil off-shore, issuing natural gas-only leases may alleviate some concerns.

It also instructs the Secretary of the Interior to draw the state boundary between Alabama and Florida regarding Lease 181--a disputed area off the coast of both states in the Gulf of Mexico in which Alabama may wish to permit production while Florida may not. The boundaries shall be drawn using established international law. Under my bill, portions of Lease 181, which are not in the state of Florida and greater than 30 miles off of the coast of Alabama, shall be leased by December 31, 2007. However, of those portions of Lease 181 that are in the State of Florida, the State of Florida may keep the moratoria. Leasing would not be allowed to interfere with U.S. military operations in the Gulf Coast.

Finally, under the bill, States will have the authority to request studies of natural gas resources off their coasts and be permitted to waive Federal moratoria on offshore production. The states shall not have the authority to lift the moratoria at National Marine Sanctuaries or National Wildlife Refuge Area. The State of Virginia recently engaged on this issue, and the state ought to have the ability to license off-shore production--especially if it is far enough off-shore that you cannot even see it from land. My bill also allows States to collect significant revenue from such production, and designates that a portion of revenues also go to a conservation royalty. The conservation royalty would be shared equally by the Federal land and water conservation fund, state land and water conservation fund and wildlife grants.

Importing liquefied natural gas--LNG--requires the infrastructure to receive it. LNG comes to the U.S. by ship, and terminals to receive these ships and unload LNG must be built and appropriate infrastructure developed to transport gas from those terminals to users across the country.

My bill streamlines the development of offshore liquefied natural gas terminals. The siting of LNG terminals has become a difficult issue since we all want cheaper natural gas, but no one seems to want an LNG terminal in ``their backyard.'' The Alexander legislation gives FERC clear authority for regulating liquid natural gas terminals, but, unlike a related House bill, still preserves States' authorities under the Coastal Zone Management Act and other acts. I hope this will provide some balance so that LNG terminals can be sited, but environmental concerns will play a significant role in choosing their sites. In an effort to speed the siting of pipelines that allow natural gas to reach all parts of the country, the bill also requires that FERC grant or deny a terminal or pipeline application within one year.

Our country is facing an energy crisis. We are consuming more and more electricity. Gasoline prices are poised to reach all time highs. The price of oil is up. And so, too, is the price of natural gas.

The bill I introduce today, the ``Natural Gas Price Reduction Act,'' addresses high natural gas prices. Natural gas is not just used for heating homes, a source of electricity, it is a raw material for industries, and it is an important component in fertilizers used by farmers. High natural gas prices have cost farmers a 10-percent pay cut and are shipping manufacturing and chemical jobs overseas. We can not afford to let this problem fester any longer.

Bold action is required, and that is what my legislation provides. This bill takes a comprehensive approach to addressing the problem by encouraging conservation, developing alternative fuel sources, and reducing roadblocks to the production and importation of natural gas. I urge my colleagues to support it.

Mr. President, we are on the eve of a turning point in the energy future of our country. As we move closer to voting on a comprehensive energy bill, we have a truly historic opportunity to transform the way we think about energy. We have an opportunity to make a decisive step away from dependence on foreign imports and fossil fuels and toward an independent future based on the abundant natural human and technological resources found right here within our borders.

As we wean ourselves from the oil fields of the unstable Middle East and other parts of the world and rely increasingly on field crops and fuel cells produced in America's heartland, we will build an energy future that will make us more secure and a future of which we can be proud.

This is the bottom line. When we talk about moving toward energy independence in this country, we are talking primarily about reducing America's dependence on imported oil. Petroleum accounts for more than 85 percent of our energy imports. As everyone is acutely aware, much of the 85 percent comes from some of the world's most unstable and, in some cases, openly hostile countries.

Today, rising global demand for petroleum is driving prices for gasoline and home heating oil to record levels. This year, China passed Japan as the world's second largest consumer of energy. China's use of oil is expected to grow exponentially over the next few years. So the focus of any national energy strategy must be to reduce our dependence on foreign oil in a sustainable way and as rapidly as possible.

By far, the largest use of petroleum in this country is in the transportation sector, and 97 percent of today's transportation fuel comes from petroleum. Thankfully, we know the solution. It is technologically feasible. We need to build vehicles that use less gasoline or no gasoline, and we need to make an aggressive transition to clean, renewable domestic fuels such as ethanol, biodiesel, and fuel cells.

The goal is a future of vehicles powered by fuel cells. The hydrogen is used to create the electricity to turn the motors that turn the wheels. The power from the fuel cell comes from hydrogen that will be made by renewable resources such as wind, photovoltaic, and other forms of renewable energy.

The biggest single step right now that we can take is to improve vehicle fuel economy. This bill takes a modest step in this direction, for example, by offering tax incentives for hybrid gas-electric vehicles, but we need improvements across the board, including raising the corporate average economy standard for vehicles.

Another commonsense way to reduce reliance on fossil fuels is to make greater use of clean and homegrown fuels. This bill has several provisions that take us in the right direction on this front, starting with the robust 8-billion-plus renewable fuel standard first proposed by Senator Lugar and I and overwhelmingly approved by this Senate last week.

It is very disturbing that even with the price of ethanol well below that of gasoline, fuel blenders are still turning their backs on this cleaner, cheaper, homegrown alternative and turning instead to imports of refined gasoline.

This chart illustrates that. Right now, going back to 5 years ago, there has been a steady increase in the imports of gasoline. This is weekly total gasoline imports--thousands of barrels per day. From April 28 of 2000 until March of this year, gasoline imports increased 66 percent. This is not oil, this is gasoline. This is oil that has been refined in some foreign country, put on a tanker, and shipped to this country. So right now, we are up to just about a million barrels a day. Think about that, that is just gasoline. Not too many people know that. Most people think we are just importing oil. We are importing about a million barrels a day of refined gasoline into this country. That is at the expense of American dollars and jobs. This is taking us in the wrong direction.

A recent report by the Consumer Federation of America found consumers would be saving up to 8 cents a gallon at the pump if refiners were instead adding it to the gasoline at just 10-percent blends.

My consumers in Iowa, right now, are saving as much as 10 cents per gallon on ethanol-blended fuels, for an average savings of at least $100 a year for a typical family.

I believe Americans all across the country deserve the cost and clean air benefits that ethanol-blended fuels provide. It is imperative we insist on our strong 8-billion-gallon renewable fuels standard when this Energy bill goes to conference with the House.

In addition to the renewable fuels standard, this bill in front of us includes tax incentives for alternative motor vehicles and fuels. This is very important. But we need to act more aggressively. For example, I believe we need to mandate that gasoline vehicles sold in this country be flexible-fuel vehicles that can run on E-85; that is, 85 percent ethanol or some other biofuel.

Now, flexible-fuel vehicles only cost maybe, right now, between $100 and $200 per vehicle. That is with just a small amount that are being made. If every vehicle was a flexible-fuel vehicle, the cost per vehicle would drop way below $100 per vehicle. The savings a consumer would get on that few dollars extra added to the sticker price of a car would be more than made up for, probably within the first year or so of buying flexible fuels.

So I am saying, right now we do not have that many flexible-fuel vehicles. We need to mandate that cars sold in America--not made here, sold in America--be a flexible-fuel vehicle. You might say: Is that possible? Well, Brazil is planning on having all of its new cars flexible-fuel ready by 2008. I want to ask the question: If the Brazilians can do it, why can't we? If the Brazilians can do it, of course we can do it.

Now, of course, consumers need access to the renewable fuels. So I am glad the bill in front of us includes incentives for the installation of flexible-fuel pumps at fueling stations. So now the bill has in it, as I said, incentives for installing flexible-fuel pumps at fuel stations. But we do not have a mandate to build flexible-fuel cars.

Right now, there is a fuel savings credit that auto manufacturers get for making E-85 vehicles. It is called the CAFE credits. But it is on the assumption that these vehicles will run on E-85 at least half the time. In other words, an auto manufacturer gets the credits for building a flexible-fuel vehicle on the assumption the vehicle will use E-85 half the time.

But the truth is, most people who own flexible-fuel vehicles do not even know it. So E-85 does not get used at all for that reason, and for the reason there are not many pumps out there. So we call this the dual-fuel loophole because carmakers get the credit for alternative fuels even if no alternative fuel is used. We should close that loophole now by tying CAFE credits to the amount of flexible fuel that is actually used, or by simply letting the credit expire.

So what I am saying is we need a three-pronged approach. We have the incentives in the bill to add flexible-fuel pumps at fueling stations. Secondly, we need to provide these credits will go only--only--on the amount of flexible fuel that is actually used. Third, what I am saying is we actually need a mandate that cars sold in America be flexible fueled.

Now, another important provision of the Energy bill extends the income tax credit for the production of biodiesel, another excellent renewable fuel. Biodiesel offers tremendous energy savings by providing 3.5 times more energy than is used to produce it, and by offering improved air quality over traditional diesel.

In addition to investment in today's biofuels, we also need a strong investment in the future of bio-based fuels and products of all kinds. New technology is making it possible to produce biofuels and a host of industrial and commercial products out of biomass; that is, agricultural material such as corn stalks and wheat straw and switchgrass and wood pulp and things like that--dedicated energy crops that together are expected to produce 10 times the current volume of ethanol at prices equal to or less than that of gasoline, and, again, with tremendous benefits to our environment and our rural economy.

A recent study found that farmers can expect to earn an additional $35 per acre just by selling the excess biomass--the stalks and the straw--from traditional corn and wheat operations.

Now, ethanol made from this residual biomass is expected to have near zero or even negative net carbon dioxide emissions. How can that be? If you are using it, you are burning it, burning the fuel in a car, you put carbon dioxide into the atmosphere. That is true. But as these plants grow, they take carbon dioxide out of the atmosphere more than what is burned in the automobile. So biomass is a vital part of combating climate change.

Now, the biorefineries that produce this ethanol will also give us bio-based products to supplement or replace everyday products now made from petroleum. I have a couple of posters that indicate that. Shipping materials, building construction materials, roofing materials, elastomeric-type roofing materials, paints, hand sanitizers, and even carpets are made from renewable resources, biodegradable resources. For home and automotive use, just think of all the plastic cups, all these containers made out of petroleum now. And there are lubricants, soy oil. Even rubber tires are made out of renewable resources which are biodegradable. All of these things can be made from the biorefineries that will be producing the ethanol and the biodiesel that we will use in transportation. Many of these products are on the market, not in the future but today.

Tripling the use of bio-based products could add $20 billion in economic benefits just by the year 2010--5 years from now. Replacing the Nation's petrochemicals with bio-based equivalents would save some 700 million barrels of petroleum a year. Just replacing plastics with bio-based counterparts would save another 100 million barrels or more. So there is great potential here. We need to get serious about supporting these bio-based products, and the Federal Government needs to take the lead.

Now, I know we are talking about the Energy bill, and that is what I have been talking about. But I am just going to digress for a minute and talk about a provision that was in the farm bill that was passed in 2002 because it has a lot to do with this Energy bill. Keep in mind what I have been saying is, by getting the biorefineries going and making more ethanol and biodiesel, we have byproducts that can also be made. As I mentioned, they are the plastic containers and the building materials and things like that. There is an important provision in the farm bill, section 9002, that we worked very hard to get in the farm bill, passed and signed by the President 3 years ago this month. Section 9002 requires all Government Departments and Agencies to give a purchasing preference to bio-based products. Now, here is the exact wording. This is section 9002. This is law. It has been the law for 3 years:

Each Federal agency . . . shall--

It does not say ``may''--

shall, in making procurement decisions, give preference to

such items composed of the highest percentage of bio-based

products practicable . . . unless such items (A) are not

reasonably available; (B) fail to meet performance standards;

or (C) are available only at an unreasonable price.

So price, performance, and availability--as long as it meets those three criteria, each Federal agency shall buy them. That is what it says, period.

Think of all the plastic cups and forks used every day in the Senate cafeteria alone.

Think of the Department of Defense, think about all of the plastic materials they use in serving the troops every day. Think of the millions of gallons of metal-working fluids, lubricants, and paint used by the Department of Defense. Yet 3 years after the passage of the farm bill, we still do not have a bio-based procurement program in place in the Federal Government. That has been there. It has been the law. And we are still not doing it. McDonald's can go buy plastic cups made out of renewable resources. Good for them. Why can't the Department of Defense? Why can't the Department of Interior that operates in our national parks? Why aren't they using more biodegradable materials? The law says they are supposed to, but they are not doing it because USDA has yet to issue the rules.

Again, I bring that up because this is part and parcel of the Energy bill. This saves us energy because right now all this material is made from imported oil, or most of it. It could be made by homegrown products here in America. We need to have the Federal Government setting an example and leading the way in reducing dependence on products made from foreign oil. I am sorry to say that 3 years later we still are not doing it.

We also need to invest in research and commercialization of bio-based fuels and products. That is why a few weeks ago, I, along with Senators Lugar, Obama, and Coleman, introduced the National Security and Bioenergy Investment Act of 2005. Our bill promotes targeted biomass research and development in order to expand the cost-effective use of bio-based fuels, products, and power. It provides incentives for the production of the first 1 billion gallons of biofuels from cellulosic biomass; that is, crop residues like corn stocks and wheat straw, or wood chips from lumber mills. It provides bioeconomy development grants to small bio-based businesses. It creates a new Assistant Secretary position at the Department of Agriculture to carry out energy and bio- based initiatives.

It requires the Capitol complex to lead by example by procuring bio- based products. This bill has the support of a broad coalition of agricultural producers, clean energy and environment groups, and national security experts. I have a number of letters from these organizations supporting the bill.

I ask unanimous consent that the letters be printed in the Record at the conclusion of my remarks.

Mr. President, I am excited about this new bill. I hope my colleagues will get behind it. In fact, we may be offering an amendment to the Energy bill that would take a small part of that and add it to the Energy bill. I hope we can get that done this week.

America's dangerous dependence on fossil fuels extends beyond oil. Natural gas prices have skyrocketed, hurting everyone who uses gas to heat their home or fuel their appliances or to make fertilizer for our farmers. Americans now pay two to three times what Europeans pay for natural gas due to our ever-growing demand and limited availability. Farmers are hit hard. Our farmers rely on natural gas not only to heat homes and run much of their equipment but also for fertilizer in the fields. These impacts on farmers are severe and getting worse. We need an energy bill that looks for sensible ways to lower natural gas costs for all Americans. We need to look for environmentally sensitive ways to increase our supply.

That is why I keep saying, the House put in a bill to drill for oil in the Arctic National Wildlife Refuge, but we all know that oil doesn't amount to anything. Most of that oil--I could be corrected--I believe all of that oil is going to go to Japan. It is a drop in the bucket compared to what we use. But what else they have in Alaska is a lot of natural gas, and we need to pipe that natural gas from Alaska down to the lower 48. That has been on the drawing boards in the past to get that natural gas down here. And for various and sundry reasons that I don't need to go into here, it has been held up.

I call upon the Governor of Alaska to move expeditiously to reach the agreements that are necessary to get the natural gas pipeline constructed and built to deliver the natural gas down to the lower 48. They have been talking a lot about how they would pipe it down--they would liquefy it and then send it down to the west coast, or maybe to the Gulf States. That costs a lot of money when you liquefy natural gas, when we could build a pipeline that could be environmentally safe and bring that gas right down to the Midwest where it is needed, not only for the Midwest but for the upper part, the northern part of the United States. So we need to move ahead aggressively on that, and we are not doing it.

We need to look for all environmentally sensitive ways to increase supply, and we need to look for solar and biomass and wind. I am glad so many colleagues from both sides of the aisle joined together in approving the amendment offered by Senator Bingaman requiring 10 percent of this country's electricity to come from renewable resources by 2020. Wind power in particular has tremendous potential to provide clean, abundant energy in many parts of the country. Wind power generation can provide thousands of dollars in additional revenue to our farmers and ranchers and people in rural areas, while continuing to allow for crop production and grazing. Valuable incentives for wind power production exist in the section 45 wind production tax credit. However, development of this vital industry has been tied up by Congress's refusal to provide a long-term extension of this incentive.

In 2004, when extension of the production tax credit was delayed, more than $2 billion in wind power investment was put on hold. I am pleased a 3-year extension of the production tax credit for wind has been included in this bill. We could do more, much more. It should be extended longer than that, but at least this minimal amount should provide developers the certainty they need to move ahead with wind power projects.

We also need to make sure farmers and farmer co-ops can be full participants in wind power projects. The farm bill's energy title, section 906, is providing grants and loans to farmers and rural small businesses to install wind and other renewable energy systems on their property. It also supports energy-efficient improvements to farm and small business operations. This program has been a real success over the past several years. We expect it to grow substantially in the years ahead.

I have also introduced a bill, S. 715, to help more farmers and other rural citizens become active investors in wind energy by removing restrictions that are in the production tax credit. This bill I am sponsoring includes a pass through of the wind production tax credit to cooperative members, just like the small ethanol producer credit pass through right now. This will provide another needed boost to rural America's wind power development. Right now, if a co-op builds an ethanol plant, they can get the production tax credits passed through to their members. If a co-op wants to build windmills, however, they can't pass it through to their members. Hopefully, we can lift this restriction, and we can do it on this Energy bill before us.

Finally, we need to look to the longer term future, and we need to do it now by laying the groundwork. To deliver truly sustainable energy that will not add to climate change and global warming, that will not pollute the environment, we must invest in clean technologies. What I am talking about is hydrogen. It offers real potential for a clean, domestic, sustainable energy future. But only if it is produced from renewable resources. That is why we need to support research and demonstration of technologies to produce hydrogen from ethanol and other renewable resources. My bill, S. 373, the Renewable Hydrogen Transportation Act, would do just that, by funding the installation of an ethanol-to-hydrogen reformer, as well as the operation of hybrid electric vehicles converted to run on renewable hydrogen instead of gasoline.

Making hydrogen from ethanol and other renewable fuels makes a lot of sense for transportation--one, because we can use the existing ethanol production and distribution network; two, because it could well be the least expensive renewable hydrogen option available. I appreciate the willingness of the chairman and the ranking member to work with me to put this modest, but meaningful, initiative in the bill.

Again, to get to that sustainable future, we have to think about making hydrogen from renewable resources. You use the wind power. When the wind blows at night and you don't need all that electricity and you cannot store it, what do you do with it? You waste it. It is gone. But if you can use that wind at night to turn a turbine that makes electricity, and you can use that electricity to hydrolyze water-- remember the old chemistry experiment where you put positive and negative in water, and off of one comes oxygen and off of the other comes hydrogen. There are two atoms for oxygen for every atom of hydrogen. As long as those turbines are turning, we can make hydrogen. You can store hydrogen. You can save it. You can compress it. You can pipe it. So, therefore, at times when you don't need a lot of electrical power and the wind is blowing, you can make hydrogen. You can store it and take the hydrogen and put it through a fuel cell to make the electricity when you need it. The beauty of doing that is you only get one product--H2O, water. Nothing else. It doesn't pollute, doesn't add to global warming or anything. So that is the cycle that we need. Use the Sun, use the wind, hydropower, whatever is renewable, take that and make hydrogen, store it, compress it, put it through a fuel cell, and make the electricity, and the cycle starts all over again. I know a lot of this is some years down the pike. We cannot do it tomorrow. But we can start now by building assistance that will enable us to move to a renewable hydrogen-based economy in this country.

Mr. President, let me close by thanking Senator Domenici and Senator Bingaman for the extraordinary job they have done during the past months and during floor consideration of the bill. The bipartisan cooperation we are seeing is due largely to their example and impressive leadership, and the entire Senate owes them a debt of gratitude for a job well done.

Of course, we are not done yet. Hurdles remain. We are headed, though, toward concluding a strong, bipartisan bill that leads America decisively into the new world of clean, renewable, home-grown energy. When the time comes, we need to stand firm for the Senate provisions when we go to conference.

Mr. President, I yield the floor.

Exhibit 1

June 9, 2005.

Re The National Security and Bioenergy Investment Act of

2005.

Hon. Tom Harkin,

U.S. Senate,

Washington, DC.

Hon. Richard Lugar,

U.S. Senate,

Washington, DC.

Dear Senators Harkin and Lugar: The National Corn Growers

Association (NCGA), the American Soybean Association (ASA),

and the Renewable Fuels Association are writing to express

our support for the National Security and Bioenergy

Investment Act of 2005. In particular, we strongly support

the increased procurement of biobased products by Federal

agencies and all Federal government contractors. Biobased

products represent a large potential growth market for corn

and soybean growers in areas such as plastics, solvents,

packaging and other consumer goods to provide markets for

U.S.-grown crops. The biobased product industry has already

started to grow, bringing new products to consumers, new

markets to growers and new investments to our communities.

The procurement of biobased products promotes energy and

environmental security. Products made from corn and soybeans

could replace a variety of items currently produced from

petroleum, and aid in reducing dependence on imported oil.

Already the production of ethanol and biodiesel reduces

imports by more than 140 million barrels of oil. The

production of biobased products generates less greenhouse gas

than traditional petroleum-based items. There are also

tremendous opportunities for grower-owned processing

facilities and rural America and agriculture as a whole. New

jobs and investments will be brought into rural communities,

as new processing and manufacturing facilities move into

those communities to be near renewable feedstocks.

NCGA, ASA and RFA applaud your continued efforts to promote

the use of biobased I products that will encourage the

development of new markets for corn and soybeans and

ultimately help to revitalize rural economies and the

agriculture industry as a whole. We have been avid supporters

of the biobased products industry, and we look forward to

working with you as you continue to provide vision and

direction for this emerging industry.

Sincerely,

Leon Corzine,

President, National Corn Growers Association.

Neal Bredehoeft,

President, American Soybean Association.

Bob Dinneen,

President, Renewable Fuels Association.

Mr. President, I rise today to introduce the SIMPLE Cafeteria Plan Act of 2005'' to increase the access to quality, affordable health care for millions of small business owners and their employees. I am pleased that my good friend from Missouri, Senator Bond, as well as my good friend Senator Bingaman from New Mexico have agreed to co-sponsor this critical piece of legislation.

Regrettably, our Nation's healthcare system is in the midst of a crisis. Each year, more and more Americans are unable to purchase health insurance, and there are no signs that things are improving. As evidence, the United States Census Bureau estimates that nearly 47 million people did not have health insurance coverage for all of 2002. Sadly, this number rose from 41.2 million uninsured persons in 2001--a 14.6 percent increase.

As if these numbers on a national scale are not alarming enough, the results are even more troubling when we look specifically at the small business sector of our economy. Analysis conducted by the Employee Benefit Research Institute, a nonpartisan group dedicated to ensuring that all workers have access to affordable health care, suggests that the highest rates of uninsured occur among either self-employed workers or workers whose employer employees fewer than 25 persons. When compared to workers in firms that employ 1,000 or more employees, where just 12.6 percent of those workers do not have health insurance, it becomes clear that the majority of uninsured Americans work for small enterprises. Clearly, these numbers suggest that there is a direct correlation among those persons who do not have health insurance and the size of their employer.

The question, then, is why are our Nation's small businesses, which are our country's job creators and the true engine of our national economy, so disadvantaged when it comes to purchasing health insurance.

The main reason that small business owners are not able to offer their employees health insurance is because many small business owners are able to pay only a portion of their employees' health insurance premiums or, even worse, cannot afford to provide any health insurance or other employee benefits at all. As a result, many small business workers must acquire health insurance from the private sector rather than the work place--an unfair, and far more expensive alternative.

Clearly, we have a problem on our hands. While we can debate among ourselves why this crisis exists and how we ended up here, what is not open for debate is that we need to start identifying ways to fix the system because it is simply unconscionable to do nothing while more and more Americans find themselves without health care.

As you know, I re-introduced a bill earlier this year that will go a long ways towards improving the situation by creating Associated Health Plans for small businesses. In general, this bill would permit small businesses throughout the country to band together for purposes of obtaining an insurance quote from an insurance company. By pooling these businesses together, they would pay lower premiums because of the increased risk pool.

Again, this bill would increase the number of Americans that would be able to afford health insurance because their insurance premiums would be based on a more reasonable number. The bill I am introducing today builds upon this and goes a step further by putting more small business owners and their employees on a level playing field when compared to workers of a larger company.

Specifically, many large companies and even the Federal government enable their employees to purchase health insurance and other qualified benefits with taxfree dollars. Larger companies are able to do this by qualifying for certain employee benefit delivery mechanisms under the tax code.

One such delivery mechanism is a cafeteria plan. As the name suggests, cafeteria plans are programs whereby employers offer their employees the opportunity to purchase certain qualified benefits of their choosing. The key here is that the employer provides the opportunity for the employee to purchase the benefit, and the employee is then free to chose whether to participate and which benefits to buy. Under current law, qualified benefits include health insurance, dependent-care reimbursement, and life and disability insurance. Typically, employer contributions, employee contributions, or a combination of the two fund these plans.

Cafeteria plans offer valuable benefits to employees and are popular for many reasons. Specifically, they offer employees great flexibility in selecting their desired benefits while enabling them to disregard those benefits that do not fit their particular needs. Participating employees are also able to exclude any wages that they contribute to a cafeteria plan from their Federal taxable income, Social Security, and Medicare, which means they are using more valuable pre-tax dollars to buy these benefits. Moreover, the employees are usually purchasing these benefits at a lower cost because employers are oftentimes able to obtain a reduced price for the benefits through a group rate after they establish a cafeteria plan.

Cafeteria plans also provide employers with valuable benefits, most notably as a recruiting tool. It certainly stands to reason that if more small business owners are able to offer their employees the chance to enjoy a variety of employee benefits, these owners

then will be more likely to attract, recruit, and retain more talented workers, which will ultimately increase the firm's business output. Too often, we hear that small businesses loose skilled employees to larger companies simply because a big firm is able to offer a more attractive benefit package. Given that small businesses are responsible for a majority of the new jobs created in this country, we need to reverse that trend, and this bill will go a long way in rectifying this inequity.

Clearly, cafeteria plans play a critical role in our Nation's health care system and economy in general. The problem, though, is that in order for companies to qualify for the tax benefits that cafeteria plans provide, they must satisfy strict nondiscrimination rules under the tax code. These rules exist to ensure that the benefits offered to highly compensated employees are offered to non-highly compensated employees as well. The rules also strive to ensure that non-highly compensated employees in fact receive a substantial portion of the benefits provided under the plan.

Now I want to be clear when I say that these non-discrimination rules serve a legitimate purpose. Indeed, we need to be sure that employers are not able to game the tax system by implementing these cafeteria plans, and that the cafeteria plans that qualify for preferential tax treatment are used by a majority of the employees in the company.

However, what I find to be unacceptable is the way the tax code attempts to implement this policy under the existing rules. Currently, many small businesses simply cannot satisfy these mechanical rules because, through no fault of their own, they have relatively few employees and a high proportion of owners or highly compensated individuals. As such, were a small business to create a cafeteria plan and violate the non-discrimination rules, certain workers within the company would be subject to a penalty and would be required to include a substantial portion of their contributions in their taxable income.

Consequently, many small companies simply do not even bother to implement a cafeteria plan for fear that they will violate the non- discrimination rules. According to the Employer's Council on Flexible Compensation, while 38.36 million U.S. workers had access to cafeteria plans in 1999, only 19 percent of those workers were employees of small businesses.

To improve the current situation, the bill I am introducing today will allow and encourage more small businesses to offer employees the opportunity to purchase health insurance with tax-free dollars just as larger companies and the federal government do. My bill accomplishes this by creating a Simple Cafeteria Plan, which is modeled after the Savings Incentive Match Plan for Employees (SIMPLE) pension plan. As with the SIMPLE pension plan, a small business employer that is willing to make a minimum contribution for all employees or who is willing to match contributions will be permitted to waive the non-discrimination rules that currently prevent these owners from otherwise offering these benefits. This structure has worked extraordinarily well in the pension area with little risk of abuse, and I am confident that it will be just as successful when it comes to broad-based benefits offered through cafeteria plans.

Under the SIMPLE Cafeteria Plan, small companies will not have to struggle with satisfying the burdensome non-discrimination rules that often prevent them from offering valuable employee benefits to their workers. As a result, more small business employers will be able to provide their workers with the employee benefits that are often reserved for larger employers and that are otherwise unavailable because of the non-discrimination rules.

In addition my bill will expand the types of qualified benefits that will be able to be offered under ALL cafeteria plans--both those that qualify under existing law as well as the new SIMPLE cafeteria plans that will be created. Specifically, my bill modifies the rules governing benefits offered under cafeteria plans, such as flexible spending accounts and dependent-care assistance plans that many larger employers offer their employees. These modifications will increase the likelihood that employees of small businesses will utilize the available benefits and that will increase the benefits provided for all employees.

For example, current rules impose a ``use it or lose it'' requirement with respect to flexible spending arrangement contributions. This means that the employee forfeits any money he or she contributes to the account but does not use during the plan. My bill would change that rule and allow employees to carry over up to $500 remaining in their account to the next plan year. The bill would also permit employees to carry-over any unused funds to a retirement account such as a 401(k) plan.

In either case, any carried over contributions will reduce the amount that the employee otherwise would be able to contribute to the spending arrangement in the following year so that the carry-over option will not produce a greater dollar benefit for any employee. As a result, more employees are likely to participate in these spending arrangements because they will ultimately be able to use any funds that they contribute without any fear of forfeiting them simply because the funds were not used in the year of contribution.

Additionally, this legislation modifies rules that pertain to employer-provided, dependent-care assistance plans. First, it would increase the current $5,000 annual contribution limitation of these plans to $10,000 if the contributing employee claims two or more dependents on his or her tax return. This increase is significant because it will provide these taxpayers with an opportunity to care for not only their children but also an elderly family member who is a dependent of an employee--a scenario that will become increasingly more likely as the current baby-boomer generation continues to age.

Second, this bill would amend the current non-discrimination rules that dependent-care assistance plans must satisfy. As is often the case with the majority of small business owners who cannot, through any fault of their own, satisfy the non-discrimination rules for establishing a cafeteria plan, these rules often prevent the owner from offering this valuable benefit to their employees. To remedy this inequity, this bill would change the current mechanical thresholds such that more small businesses can provide dependent-care assistance plans to their employees but in a manner that does not encourage the type of abuse that the non-discrimination rules are intended to prevent.

Small businesses are the backbone of the American economy. According to the Small Business Administration, small businesses represent 99 percent of all employers, employ 51 percent of the private-sector workforce, and contribute 51 percent of the private-sector output. It is therefore critical that small businesses owners are able to offer their employees the benefits that cafeteria plans provide so that more of our nation's workers have the opportunity to purchase quality healthcare and provide security for their families.

The ``SIMPLE Cafeteria Plan Act of 2005'' achieves those objectives, and it does so in a manner that the employers and employees are able to afford. Although the use of pre-tax dollars to acquire these benefits reduces current federal revenues, the opportunity to provide small business employees these same benefits to workers and their families rather than relying on the public sector more than justifies this minimal investment. Therefore, I urge my colleagues to join me in supporting this important legislation as we work with you to enact this bill into law.

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

Mr. President, today I am pleased to introduce with Senators Durbin and Salazar a very important piece of legislation, ``The No Child Left Behind Reform Act.'' This legislation makes three basic changes to the No Child Left Behind Act which was signed into law in January of 2002.

The No Child Left Behind Act received the support of this Senator and eighty-six of our colleagues. Like most, if not all, of our colleagues who supported this bill, I supported it because I care about improving the quality of education in America for all of our children. I believed that this law would help to achieve that goal by establishing more rigorous standards for measuring student achievement, by helping teachers do a better job of instructing students, and last but not least, by providing the resources desperately needed by our schools for even the most basic necessities to help put the reforms we passed into place.

Regrettably, the high hopes that I and many others had for this law have not been realized. The law is being implemented by the Administration in a manner that is inflexible, unreasonable and unhelpful to students. Furthermore, the law is not only failing to help teachers do their best in the classroom, it also reflects, along with other Administration policies and pronouncements, a neglect and even hostility towards members of the teaching profession.

Worse still, the Administration's promise of sufficient resources to implement No Child Left Behind's much needed reforms is a promise that has yet to be kept. Indeed, the current budget proposed by the Bush Administration underfunds No Child Left Behind by $12 billion. Since passage three years ago, the law has been funded at a level that is more than $39 billion below what was promised when the President signed the Act into law.

As a result of the failures of the current Administration to fulfill its commitment to our nation's school children under this law, those children and their teachers are today shouldering new and noteworthy hardships. Throughout the State of Connecticut, for example, students, teachers, administrators and parents are struggling to implement requirements that are often confusing, inflexible and unrealistic. And they are struggling to do so without the additional resources they were promised to put them into place. According to a recent report put together by the Connecticut State Department of Education, through 2008, it will cost the State of Connecticut $41.6 million over and above what the Federal Government is going to supply to meet the requirements of No Child Left Behind. Of that $41.6 million, $8 million will need to spent on testing alone. That is a significant amount of money--a significant amount of money that is going to fall on Connecticut taxpayers trying to simultaneously pay for their mortgage, basic health care and the rising cost of their children's tuition.

As I have said on numerous occasions in the past, resources without reforms are a waste of money. By the same token, reforms without resources are a false promise--a false promise that has left students and their teachers grappling with new burdens and little help to bear them.

The legislation I am introducing today proposes to make three changes to the No Child Left Behind Act. These changes will ease current burdens on our students, our teachers and our administrators without dismantling the fundamental underpinnings of the law.

First, the No Child Left Behind Reform Act will allow schools to be given credit for performing well on measures other than test scores when calculating student achievement. Test scores are an important measure of student knowledge. However, they are not the only measure. There are others. These include dropout rates, the number of students who participate in advanced placement courses, and individual student improvement over time. Unfortunately, current law does not allow schools to use these additional ways to gauge school success in a constructive manner. Additional measures can only be used to further indicate how a school is failing, not how a school is succeeding. This legislation will allow schools to earn credit for succeeding.

Second, the No Child Left Behind Reform Act will allow schools to target school choice and supplemental services to the students that actually demonstrate a need for them. As the current law is being implemented by the Administration, if a school is in need of improvement, it is expected to offer school choice and supplemental services to all students--even if not all students have demonstrated a need for them. That strikes me as a wasteful and imprecise way to help a school improve student performance. For that reason, this legislation will allow schools to target resources to the students that actually demonstrate that they need them. Clearly, this is the most efficient way to maximize their effect.

Finally, the No Child Left Behind Reform Act introduces a greater degree of reasonableness to the teacher certification process. As it is being implemented, the law requires teachers to be ``highly qualified'' to teach every subject that they teach. Certainly none of us disagree with this policy as a matter of principle. But as a matter of practice, it is causing confusion and hardship for teachers, particularly secondary teachers and teachers in small school districts. For example, as the law is being implemented by the Administration, a high school science teacher could be required to hold degrees in biology, physics and chemistry to be considered highly qualified. In small schools where there may be only one 7th or 8th grade teacher teaching all subjects, these teachers could similarly be required to hold degrees in every subject area.

Such requirements are unreasonable at a time when excellent teachers are increasingly hard to find. The legislation I introduce today will allow states to create a single assessment to cover multiple subjects for middle grade level teachers and allow states to issue a broad certification for science and social studies.

In my view, the changes I propose will provide significant assistance to schools struggling to comply with the No Child Left Behind law all across America. As time marches on and more deadlines set by this law approach--including additional testing, a highly qualified teacher in every classroom and 100% proficiency for all students--we have a responsibility to reassess the law and do what we can to make sure that it is implemented in a reasonable manner. In doing so, we must also preserve the basic tenets of the law--providing a world class education for all American students and closing the achievement gap across demographic and socioeconomic lines. Again, no child should left behind--no special education student, no English language learning student, no minority student and no low-income student. I stand by this commitment.

Obviously, funding this law is beyond the scope of this bill. I would note, however, that efforts to increase education funding to authorized levels have thus far been unsuccessful. Despite this, I remain committed to work to change this outcome as well. Clearly, our children deserve the resources

needed to make their dreams for a better education a reality.

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

Mr. PresIdent, I am pleased to rise today with Senators Snowe, Kennedy, Collins, Murray, Durbin, Clinton, Inouye, Levin, Lautenberg and Johnson to introduce legislation which would supply greatly needed support to college students struggling to balance their roles as parents with their roles as students. The Child Care Access Means Parents in School Act (CCAMPIS) would increase access to, support for, and retention of low-income, nontraditional students who are struggling to complete college degrees while caring for their children.

The typical college student is no longer an 18-year-old recent high school graduate. According to a 2002 study by the National Center for Education Statistics, only 27 percent of undergraduates meet the ``traditional'' undergraduate criteria of earning a high school diploma, enrolling full-time, depending on parents for financial support and not working or working part-time. This means that 73 percent of today's students are considered non-traditional in some way. Clearly, non-traditional students--older students, students with children and students with various job and life experiences--are filling the ranks of college classes. Why? Because they recognize the importance of college to future success. It is currently estimated that a full-time worker with a bachelor's degree earns about 60 percent more than a full-time worker with only a high school diploma. This amounts to a lifetime gap in earnings of more than $1 million.

Today's non-traditional students face barriers unheard of by traditional college students of earlier years. Many are parents and must provide for their children while in school. Access to affordable, quality and convenient child care is a necessity for these students. But obtaining the child care that they need is often difficult because of their limited income and non-traditional schedules, compounded by declining assistance for child care through other supports. Campus- based child care can fill the gap. It is conveniently located, available during the right hours, and of high quality and lower cost. Unfortunately, it is unavailable at many campuses. Even when programs do exist, they are often available to only a fraction of the eligible students. That is where the Dodd-Snowe CCAMPIS Act comes in.

The Dodd-Snowe CCAMPIS Act increases and expands the availability of campus-based child care in three ways. First, it raises the minimum grant amount from $10,000 to $30,000. For most institutions of higher education, $10,000 has proven too small relative to the cost and effort required to complete a federal application.

Second, the Dodd-Snowe CCAMPIS Act ensures that a wider range of students are able to access services. Present language defines low- income students as students eligible to receive a Federal Pell Grant. This language excludes graduate students, international students, and students who may be low-income but make slightly more than is allowed to qualify for Pell grants. CCAMPIS will open eligibility for these additional populations.

Third, the CCAMPIS Act raises the program's current authorization level from $45 million to $75 million so that we not only expand existing programs, but create new ones as well.

Research demonstrates that campus-based child care is of high quality and that it increases the educational success of both parents and students. Furthermore, recipients of campus-based child care assistance who are on public assistance are more likely to never return to welfare and to obtain jobs paying good wages.

Currently, there are approximately 1,850 campus-based child care programs but over 6,000 colleges and universities eligible to participate in the CCAMPIS program. Currently, CCAMPIS funds only 427 programs in states and the District of Columbia. Meanwhile, the number of non-traditional students across America is increasing. As these numbers increase, the need for campus-based child care will increase as well.

Just last week in Connecticut, I went to Eastern Connecticut State University where I met a number of students who would benefit from this legislation. One woman is attending part-time as an accounting major. She works as a restaurant supervisor and just gave birth to her first child. She is balancing work, family and school. Another woman is a junior social work major with two children. Having already received an associate's degree, she is now working towards a bachelor's degree to increase her competitiveness in the job market. A third woman is pursuing her second degree in physical and health education. A stay-at- home mom prior to re-enrolling, she has three children at home. These are the students that need our assistance--hard working parents trying to improve their lot in life for the good of their children.

This is a modest measure that will make a major difference to students. It will offer them new hope for starting and staying in school. I am hopeful that it can be considered and enacted as part of the Higher Education Act. I look forward to working with my colleagues to move this important measure forward.

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

Mr. President, I rise today to introduce, with Senators Inhofe, Vitter, Warner, Voinovich, Isakson, Thune, Murkowski, Obama, Landrieu, Grassley, Harkin, Talent, Cornyn, Cochran, Domenici, and Coleman, the 2005 Water Resources Development Act.

The programs administered by the U.S. Army Corps of Engineers are invaluable to this Nation. They provide drinking water, electric power production, river transportation, environmental protection and restoration, protection from floods, emergency response, and recreation. Few agencies in the Federal Government touch so many citizens and they do it on a relatively small budget. They provide one- quarter of our Nation's total hydropower output; operate 456 lakes in 43 States hosting 33 percent of all freshwater lake fishing; move 630 million tons of cargo valued at over $73 billion annually through our inland system; manage over 12 million acres of land and water; provide 3 trillion gallons of water for use by local communities and business; and have prevented an estimated $706 billion in flood damage within the past 25 years with an investment one-seventh that value. During the 1993 flood alone, an estimated $19.1 billion in flood damage was prevented by flood control facilities in place at that time. Our ports move over 95 percent of U.S. overseas trade by weight and 75 percent by value. Between 1970 and 2003, the value of U.S. trade increased 24 fold, and 70 percent since 1994. That was an average annual growth rate of 10.2 percent, which was nearly double the pace of the Gross Domestic Product growth during the same period. Unfortunately, the American Society of Civil Engineers grades navigable waterways infrastructure D- with over 50 percent of the locks ``functionally obsolete'' despite increased demand.

This bipartisan bill is one that traditionally is produced by the Congress

every two years, however, we have not passed a WRDA bill since 2000 and the longer we wait, the more unmet needs pile up and the more complicated the demands upon the bill become making it harder and harder to win approval. For some, this bill is too small and for others, too big. For some, the new regulations are too onerous and for others, the new regulations are not onerous enough. Nevertheless, I believe we have struck a balance here that disciplines the new projects to criteria fairly applied while addressing a great number of water resources priorities.

With the new regulations, we have embraced a common sense bipartisan proposal by Senators Landrieu and Cochran similar to the bi-partisan House agreement that requires major projects to be subject to independent peer review and requires that necessary mitigation for projects be completed at the same time the project is completed, or, in special cases, no longer than one year after project completion. This will impose a cost on communities, particularly smaller communities, but it is not as onerous as the new regulations proposed last year which ultimately prevented a final agreement from being reached between the House and Senate.

The commanding feature of the bill is its landmark environmental and ecosystem restoration authorities. Nearly 60 percent of the bill authorizes such efforts, including environmental restoration of the Everglades, Coastal Louisiana, Chesapeake Bay, Missouri River, Long Island Sound, Salton Sea, Upper Connecticut, and the Illinois and Mississippi Rivers, and others.

Additionally, it is important to understand the budget implications of this legislation in the real world. We are contending with difficult budget realities currently and it is critical that we be mindful of those realities as we make investments in the infrastructure that supports the people in our nation who make and grow and buy and sell things so that we can grow our economy, create jobs, and secure our future. This is an authorization bill. It does not spend one dollar. I repeat, it does not spend one dollar. It makes projects eligible for funding through the appropriations process that operates within the restrictions of the budget Congress provides it. With the allocation provided, the Appropriations Committee and the Congress and the President will fund such projects deemed of the highest priority and those remaining will not be funded because the budget will not permit it. This WRDA process simply permits project consideration during the process of appropriations and I expect some will measure up and others will not. I hear some suggest that we should not authorize anything new until all other previously-authorized projects are funded. That, of course, is nonsense because it assumes falsely that all projects authorized five and 10 and 50 years ago are higher priority than those in this package. We have de-authorized a great number of projects in this bill and I expect there will be more added as we proceed and then the remainder will have to face the stingy budget process that will prioritize the rest.

While the majority of this legislation is for environmental protection and restoration, a key bipartisan economic initiative we include provides transportation efficiency and environmental sustainability on the Mississippi and Illinois Rivers.

As the world becomes more competitive, we must also. In the heartland, the efficiency, reliability, capacity, and safety of our transportation options are critical--often make-or-break. In Missouri alone, we ship 34.7 million tons of commodities with a combined value of more than $4 billion which include coal, petroleum, aggregates, grain, chemicals, iron, steel, minerals and other commodities.

As we look 50 years into the future, and as we anticipate and try to promote commercial and economic growth, we have to ask ourselves a fundamental question: should we have a system that permits and promotes growth, or should we be satisfied to restrict our growth to the confines of a transportation straight jacket designed not for 2050, but for 1950 for paddle wheel boats?

Further, we must ask ourselves if dramatic investments should be made to address environmental problems and opportunities that exist on these great waterways. In both cases, the answer is, ``Of course we should modernize and improve.''

We have a system which is in environmental and economic decline. Jobs and markets and the availability of habitat for fish and wildlife are at stake. We cannot be for increased trade, commercial growth, and job creation without supporting the basic transportation infrastructure necessary to move goods from buyers to sellers. New efficiency helps give our producers an edge that can make or break opportunities in the international marketplace.

Seventy years ago, some argued that a transportation system on the Mississippi River was not justified. Congress decided that its role was not to try to predict the future but to shape the future and decided to invest in a system despite the naysayers. Over 84 million tons per year later, it is clear that the decision was wise.

Now, that system that was designed for paddlewheel boats and to last 50 years is nearly 70 years old and we must make decisions that will shape the next 50-70 years. As we look ahead, we must promote growth policies that help Americans who produce and employ.

We must work for policies that promote economic growth, job creation, and environmental sustainability. We know that trade and economic growth can be fostered or it can be discouraged by policies and other realities which include the quality of our transportation infrastructure.

So in 20 and 30 and 40 and 50 years, where will the growth in transportation occur to accommodate the growth in demand for commercial shipping? The Department of Transportation suggests that congestion on our roads and rails will double in the next quarter century. The fact of the matter is that the great untapped capacity is on our water.

This is good news because water transportation is efficient, it is safe, it conserves fuel, and it protects the air and the environment. One medium-sized barge tow can carry the freight of 870 trucks. That fact alone speaks volumes to the benefits of water. If we can, would we rather have 870 diesel engines on the roads of downtown St. Louis, or two diesel engines on the water.

The veteran Chief Economist at USDA testified that transportation efficiency and the ability of farmers to win markets are higher prices are ``fundamentally related.'' He predicts that corn exports over the next 10 years will rise 45 percent, 70 percent of which will travel down the Mississippi.

Over the past 35 years, waterborne commerce on the Upper Mississippi River has more than tripled. The system currently carries 60 percent of our Nation's corn exports and 45 percent of our Nation's soybean exports and it does so at two-thirds the cost of rail--when rail is available.

Over the previous 12 years, the U.S. Army Corps of Engineers have spent $70 million completing a six year study. During that period, there have been 35 meetings of the Governors Liaison Committee, 28 meetings on the Economic Coordinating Committee, among the States along the Upper Mississippi and Illinois waterways, and there have been 44 meetings of the Navigation and Environmental Coordination Committee. Additionally, there have been 130 briefings for special interest groups, 24 newsletters. There have been six sets of public meetings in 46 locations with over 4,000 people in attendance. To say the least, this has been a very long, very transparent, and very representative process.

However, while we have been studying, our competitors have been building. Given the extraordinary delay so far, and given the reality that large scale construction takes not weeks or months, but decades, further delay is no longer an option. This is why I am pleased to be joined by a bipartisan group of Senators who agree that we must improve the efficiency and the environmental sustainability of our great resources.

This plan gets the Corps back in the business of building the future, rather than just haggling about predicting the future. More will need to be done later on ecosystem and lock expansions further upstream, but this begins the improvement schedule underway.

In this legislation, we authorize $1.58 billion for ecosystem restoration-almost 2 times the federal cost of lock capacity expansion which we authorize on locks 20-25 on the Mississippi River and Peoria and LaGrange on the Illinois. The new 1,200 foot locks on the Mississippi River will provide equal capacity in the bottleneck region below the 1,200 foot lock 19 at Keokuk and above locks 26 and 27 near St. Louis. Half the cost of the new locks will be paid for by private users who pay into the Inland Waterways Trust fund. Additional funds will be provided for mitigation and small scale and nonstructural measures to improve efficiency.

As we look ahead, the locks at 14-18 will have to be addressed as will further investments to ecosystem restoration efforts.

This effort is supported by a broad-based group of the States, farm groups, shippers, labor, and those who pay taxes into the Trust Fund for improvements. Of particular note, I appreciate the strong support from the carpenters, corngrowers, farm bureau, soybeans, the diverse membership of MARC2000.

I thank my colleagues and their staff for the hard work devoted to this difficult matter and I thank particularly chairman Inhofe for his forbearance. I believe that if members work cooperatively and aim for the center and not the fringe, that we can get a bill completed this year. If demands exist that the bill be away from the center toward the fringe, we will go another Congress without completing our work as we witnessed last year.