HOMES Act

Mr. President, I ask for the regular order on amendment No. 3823.

I am asking for the regular order on amendment No. 3823.

I ask for the regular order.

The managers of the amendments are trying to get amendments brought up. I am ready to go, and they asked if I was ready to go.

Mr. President, amendment No. 3823 deals with agricultural competition and increased consolidation in the agricultural industry. The amendment is cosponsored by me, Senator Grassley, and two Democrats--Senator Kohl and Senator Harkin.

I wish to make it very clear--and I will get into some detail--there may be some people who feel the amendment I have put before the Senate is exactly the same as a bill Senator Kohl and I had introduced previously. It is very slimmed down from that bill. So any staff who is watching the debate and getting nervous about an amendment coming up that every big industry in the United States may find fault with, we are talking about a very slimmed-down version of it. I will explain all that shortly.

I have been concerned with competition in the agricultural marketplace and increased competition in the agricultural industry for quite some time now. You have heard me speak about it on the floor. We have had hearings on it. I had hearings in the Senate Finance Committee, as well as hearings I participated in under both Republican and Democratic chairmanships of the Judiciary Committee.

Agriculture, as you know, is a fairly risky business. I know that from personal experience because I have lived and worked on a farm all my life. But for some time, working in agriculture has become even more difficult for the little guy. The trend has been for companies in the agricultural sector to consolidate. I am talking about businesses that serve agriculture with input. I am talking about industry that processes agriculture. So there has been consolidation in that industry. I am not talking about the consolidation of farms. There has been that as well. That has been going on since 1790, when 90 percent of the people in this country were farmers. Today, 2 percent of the people in this country are farmers. I am talking about the impact of agriculture agribusiness consolidation and the impact upon the 2 percent of the people in this country who are farmers.

This consolidation has created new business giants impacting competition in the marketplace for the family farmers, for producers, and for consumers. Family farms and independent producers are feeling the pressure of concentration in agriculture. Small and independent producers are seeing fewer choices--who the farmer can buy from and to whom the farmer can sell.

All this consolidation in industry at both the horizontal and vertical levels leads to the very real possibility of fewer product choices and higher prices for consumers.

I don't believe all mergers are, per se, bad, and I don't believe all are wrong and all lead to unfairness. But I think at the same time we need to make sure--we need to make very sure--open and fair access to the marketplace is preserved for everyone. We need to make sure large businesses are not acting in a predatory or anticompetitive manner. We need to make sure family farmers and independent producers can compete on a level playing field. We need to make sure consumers have as many choices as possible.

So I am not talking just about mergers and lack of competition being harmful just to farmers, I am talking about the impact that might have on consumers paying more. The antitrust laws are all about protecting consumers, not about protecting producers. But in the case of family farmers, they are purchasers of input, and so they are consumers. But they also have to make sure that the marketplace is protected for the ultimate end-consumer, the consumer of our agricultural products.

By looking out for these things, you know what we end up doing, Mr. President? We keep our economy strong because of competition. We keep our agricultural community vibrant. We keep it competitive. And hopefully, in the end, we keep our consumers happy, with quality food at a relatively inexpensive price. American consumers don't know that, but they already have that environment from our farmers. We take too much for granted in America, so I am not so sure consumers know that, and I like to remind them from time to time.

So we have this amendment before us. It is an amendment cosponsored, as I said, by Senator Kohl and Senator Harkin. The language of this amendment draws from a bill that Senator Kohl, Senator Thune, and I introduced earlier this year--S. 1759. It is called the Agriculture Competition Enhancement Act, ACE for short. We call it the ACE Act. However--and this is the point I started out with--I wish to make clear that this amendment which is being offered to the farm bill is quite different from the ACE Act as originally introduced earlier this year. Amendment No. 3823, which I have called up here under regular order, does not include all the provisions of S. 1759 and either eliminates provisions in that bill or incorporates many changes to address concerns raised by members of the agricultural industry, by the administration, as well as Senators on both sides of the aisle.

I also worked with the chairman and ranking member of the Judiciary Committee because this bill, S. 1759, was referred to the Judiciary Committee. Because we are offering it as an amendment to this bill, I also worked with the ranking member of the Agriculture Committee to address issues that were in that original S. 1759, which I was hoping to offer here, to take care of some opposition to this bill coming up and yet still accomplishing quite a bit about the problems I see with lack of competition. So the amendment I have called up under regular order is the product of these discussions we had with business, with agricultural leaders, with the White House--or I should say with the administration generally, not necessarily the White House--and, of course, with the Judiciary Committee members and the ranking member of the Agriculture Committee.

Now, I want to explain what this bill does after having explained to you, as I just did, that it is not what we had introduced as a bill.

First, the amendment would create an Agriculture Competition Task Force to study problems in agricultural competition, establish ways to coordinate Federal and State activities to address competition problems in agriculture, and make recommendations to Congress. In particular, the task force would establish a smaller working group on buyer power to study the effects of concentration, the effects of monopsony, and the effects of oligopsony in agriculture, and make recommendations to the Department of Justice and to the Federal Trade Commission on and for agricultural guidelines. The task force will help give our antitrust regulators real insight and expertise specific to the farm community that I believe is currently lacking when they address competition issues in agriculture.

Second, the amendment would require the Justice Department and the Federal Trade Commission to issue agricultural guidelines, taking into account the special conditions of the agriculture industry, and require the Department of Justice and the Federal Trade Commission to report to Congress on the guidelines.

Both the Senate Judiciary Committee and the Agriculture Committee heard witnesses in several hearings testify that there is a need for agriculture-specific guidelines when the Department of Justice and the Federal Trade Commission look at agriculture mergers.

Currently, the Department of Justice and the Federal Trade Commission have guidelines for specific industries and issues, such as health care and intellectual property, but not for agriculture. So it makes sense-- not just to me but to these many experts in agriculture and antitrust law that we heard in these several hearings before our committees--that our Federal regulators should have agricultural guidelines because of the special circumstances and special characteristics particular to the agriculture industry and particularly because there tends to be, in Washington, DC, outside of the Agriculture Department, little consideration and understanding of the unique industry of agriculture. Some people would say that even within the U.S. Department of Agriculture there is a lack of understanding in Washington, DC, of what the problems of agriculture are all about.

I don't pretend that even with the adoption of this amendment we are necessarily going to bring about the total understanding that there ought to be for the 2 percent of the people in this country who produce food for the other 98 percent, as well as a lot of surplus that is exported beyond. But whatever we can do to help, and particularly when there are policy decisions made dealing with agriculture when it is not fully understood, if we can just get some attention on agriculture in those areas, I think we will be taking a giant step forward.

Those characteristics I am talking about include monopsony, which is a situation where there is a single purchaser of goods, and oligopsony, which is a situation where there are few buyers who, at the same time, have a disproportionate amount of market power.

Third, the amendment would formalize the Department of Agriculture's review of agriculture mergers with the Justice Department and the Federal Trade Commission, requiring the Department of Agriculture to provide comments on larger mergers in the industry--mergers that submitted second requests for information under the Clayton Act. That is already a process that is in law.

Currently, the Justice Department or the Federal Trade Commission informally consults with the Department of Agriculture when they analyze ag mergers. These agencies have what we call a memorandum of understanding to consult with each other. But I believe, following on the advice of experts who have testified on this matter before the Agriculture Committee, that the current process--meaning the current process of the memorandum of understanding--does not sufficiently ensure that farm community concerns are adequately considered.

Far more than the Justice Department and far more than the Federal Trade Commission, the Department of Agriculture has extraordinary knowledge and expertise in agricultural matters. The Department of Agriculture formulates agricultural policy for our great Nation and works closely with the farm community and agricultural industry about various concerns. They have experts and economists who know and work with the data on a daily basis. The Department of Agriculture is the office that can best assess the true impact of ag mergers and other business transactions for farmers, ranchers, and independent producers, as well as the trickle-down effect on the consumer. So that is why it makes sense that the role the Department of Agriculture plays presently in antitrust review of ag mergers be more than just a memorandum of understanding; that, in fact, it be permanent and a formal role, not one that is informal and loosely contained in the memorandums.

Moreover, having such a requirement of formal participation or consultation is not some new novel idea. I wish I could claim a new novel idea. Other agencies, such as the Federal Communication Commission or the Department of Transportation, formally participate in the review of mergers in their industries. They render formal decisions that are then shared with the FTC or the Department of Justice. So along the lines of the precedent set by the FCC and the Department of Transportation, I am asking that we do the same thing with the Department of Agriculture and the FTC and the Department of Justice.

I hope I have described to you what is a very modest approach, much more modest than the ideas Senator Kohl and I had in the bill that I am saying I am offering a stripped-down version of here. I basically put in statute what the Department of Justice and the Federal Trade Commission are allegedly already supposed to be doing with the U.S. Department of Agriculture. The approach we advocate in this amendment will ensure that all of agriculture's concerns and needs are fully discussed when Federal agencies examine proposed ag business mergers. By guaranteeing inclusion and openness, we will go a long way toward alleviating understandable anxiety about an increasingly concentrated industry.

Finally, the amendment would provide for additional resources to the Department of Justice and the U.S. Department of Agriculture's GIPSA division to enhance their ability to look at agricultural transactions and competition issues.

I want my colleagues to know that we worked very closely with several

agricultural and antitrust experts on the language contained in this very amendment, as we did in the original bill. The amendment is supported by a number of farm groups, and I would like to read these to you: the Organization for Competitive Markets, the Campaign for Contract Agriculture Reform, the Center for Rural Affairs, Food and Water Watch, the Institute for Agriculture and Trade Policy, R-CALF USA--and just in case people don't understand that acronym, those are people who are cattle producers but who aren't necessarily affiliated with the National Cattlemen's Association. They could have dual memberships, but they do have some different points of view. Then another organization is the Sustainable Agriculture Coalition, and lastly the Western Organization of Resource Councils.

Mr. President, I ask unanimous consent to have printed in the Record a December 10, 2007, letter in support of this amendment.

So my colleagues are clear, once again to repeat, Senator Kohl and I listened very carefully to the concerns expressed by companies and groups that contacted us about S. 1759, the original Agriculture Competition Enhancement Act--we call that ACE for short-- and in response to those concerns, we made significant changes and elimination to the language which has been incorporated in this amendment. This amendment does not make any substantive changes in antitrust laws. I am going to address that a little more specifically because that is one of the things we have heard against this amendment. Maybe it would be an applicable criticism of the bill but not of this amendment.

Also, there is no mandatory adoption of the task force recommendations on the guidelines to which I have referred. The constitutional issues raised have been taken care of and more contentious provisions have been eliminated. The bottom line is the concerns that were raised by certain companies, as well as the Justice Department and the FTC, about our previous iterations of the ACE bill have been taken care of in the amendment. The bottom line is, this amendment is very much an attempt to address everyone's concerns and to reach a fair compromise because I think we could have gone a lot further and been even a lot more aggressive in dealing with agricultural competition issues. I had a hard time convincing Senator Kohl we ought to make these changes, but he has agreed as well.

There is a real need for this amendment. We need it to beef up our ability to address competition issues in agriculture and to address concerns with consolidation in the industry. My amendment is an itty- bitty step in the right direction; maybe some would say too small of a step but still a good first step at getting something done.

I urge my colleagues to support the Grassley-Kohl-Harkin amendment.

I do have some other things I want to say, but I do not want to take all the time right now. I do want to speak about some of the differences between what was in our bill and what is in our

amendment. I am willing to yield the floor if other people want to speak on the amendment that I have before us.

Mr. President, I listened to the Senator from Kansas. I am a farmer. I am not a lawyer like he is. He is a lawyer and farmer, so he might have some intuition. But I would just like to have him come, and I will deliver it to his desk--he needs to read my amendment. What he has said is an analysis of the bill that Senator Kohl and I introduced, but that is not the amendment. Maybe he missed my opening remarks, but I went to great length in those opening remarks to explain how my amendment differs from the bill. I want to point that out to the Senator from Kansas because I think I have addressed every concern he has presented to the Senate in his very good speech.

I have taken care of his concerns, and I am going to mention those concerns he has brought up, and then I am going to go to some length to tell you how I have taken care of that. But there is no special counsel amendment in this bill, as the Senator from Kansas has said. There are no additional reviews of transactions that have already taken place. That was in the original bill. It is not in this amendment.

He spoke two or three times about changing the burden of proof. That was in the original bill. It is not in this slimmed-down amendment. There is no burden of proof shifting in the amendment.

The task force that we provided for has no review or study provisions in the amendment, as indicated by the Senator from Kansas.

Now I am going to go into some detail, because obviously people are not listening to anything I have said. I want to state in a more elaborate way how this bill differs--this amendment differs from the bill that I said Senator Kohl and I first introduced, and the length we went to take care of concerns that the White House, the administration has raised, concerns that both the ranking member and the chairman of the Judiciary Committee raised, because this bill was referred to Judiciary, and then lastly, working with the ranking member of the Agriculture Committee, to address concerns he had.

There has been a lot of smoke and mirrors--I think you heard some of that--about the provision of the bill, and most of those charges are not factual, as I have indicated.

The fact is, this amendment is very different from the bill Senator Kohl and I introduced earlier this year. This amendment is also different from another amendment I had already filed to this bill. Let me list some of the things

that are not in our amendment that are before us in 3823.

I am hearing that people are concerned about the shifting of the burden of proof in the amendment. The burden-of-proof shifting provision that was in the prior iteration has been eliminated. It is not in this amendment. There are no substantive changes to antitrust laws at all.

I am hearing concerns about reviews that will be done after mergers have been approved. The provisions that allow the task force to do a study of agricultural mergers that were approved within the past 10 years have been eliminated, not in this amendment.

In addition, the provisions requiring the Justice Department and the Federal Trade Commission to review ag mergers 5 years after they have been approved have been eliminated as well.

The provision creating an Assistant Attorney General for Agricultural Antitrust at the Justice Department has been eliminated. In other words, it is not in the amendment pending before the Senate.

The constitutional concerns raised by the administration, not by Senator Brownback, about the agricultural competition task force are gone, the constitutional concerns.

We changed the provisions requiring adoption by the Justice Department of task force working group recommendations on agricultural guidelines. The amendment now has the Justice Department and the Federal Trade Commission consulting with the task force working group on the guidelines.

Any so-called constitutional concerns have been eliminated. We have made other changes to the prior writings of this amendment and/or the bill, all of which were incorporated in amendment 3823. We made these changes to address concerns that we agreed with, and we made changes in order to reach a fair compromise.

The fact is, big business and the agricultural giants do not want anything that might put up any sort of review by people who know something about agriculture, of their expansion and concentration efforts. The fact is, our Federal antitrust regulators refuse to recognize that agriculture is unique and should have industry-specific guidelines to make sure that special circumstances of the agricultural landscape are considered.

This brings about consideration, this does not bring about any change. Any movement to them, no matter how small, to try to address concentration and competition issues in agriculture is going to be decried by the powerful interest groups and their lobbyists. So when something reasonable is suggested, such as the Grassley-Kohl-Harkin amendment No. 3823, we still are going to get the outrageous claims that this is a bad amendment. The reality is the sky is not falling.

I advise my colleagues, particularly the Senator from Kansas, to read the amendment. Forget about the bill he has been referring to. Instead, listen, and stop listening to those sensational cries being made by agribusiness and their allies. We need to pass this amendment.

I yield the floor.

I will probably do that. Let me make an inquiry. Can I do that, Mr. President, without setting aside or yielding my right to continue discussion of this amendment?

I yield.

Amendment No. 3771

I do not have a whole lot more to say about this bill if you want to move on. But I do want to continue to correct a couple of things the Senator from Kansas has spoken about.

First, I was listening as he was quoting from the Department of Justice letter. And he may have a later letter, but those exact words that he was reading from appear in a November 15 letter that Senator Leahy received as chairman of the Judiciary Committee with objections from the Department of Justice.

But those objections are about the bill S. 1759, the bill that I said we have modified considerably as an amendment here, so that it does not do all of the things that have been attributed to it.

OK.

But in the paragraph you were quoting, it says exactly the same thing in the letter I got of November 15 in which they were commenting on 1759, and they surely can't find the same fault with the amendment that they found with the bill because we met with them and made changes according to what they asked us to do.

My staff corrects me that we didn't actually meet with the Department of Justice, but we were well aware of the changes they were demanding, and those changes are taken into consideration in this legislation.

Then we keep hearing from the Senator from Kansas about investigations and reviews. Get that out of your system. I have spoken twice on that issue--no reviews, no investigation.

Then when you hear all of these faults the bill is going to bring about--you are going to increase the cost of food to the consumer or maybe decrease profitability to the farmer--I don't see that anything like that is a result of a task force that is going to help the Justice Department and the FTC in determining whether mergers are anticompetitive. These are guidelines. They are not making decisions. The Department of Justice and the FTC will be making those decisions. But is there anything wrong with having a little bit of input into agricultural issues before those two agencies from experts in this town in the Department of Agriculture who may have some understanding of agriculture? I don't think the sky is going to fall if you have that sort of input.

I hope we can vote on my amendment and move on. I will only speak to the extent I have to to continue to defend misunderstandings of what the amendment does as opposed to what the original bill did.

Before I consent to that, and I probably will, as the manager of the amendment, is there any determination you can give me when we can vote on this or are we going to stack votes and vote all at once?

I will not object.

Mr. President, for the past five years, I have been working with my colleagues to close the Enron loophole that, since 2000, has exempted electronic energy markets for large traders from government oversight. This loophole opened the door to price manipulation and excessive speculation, and American consumers have been paying the price ever since with sky-high prices for crude oil, natural gas, gasoline, diesel fuel, home heating oil, propane, and other energy commodities vital to a functioning U.S.

economy. That is why I am pleased to stand before the Senate today in support of bipartisan legislation, sponsored by Senator Feinstein, myself, Senator Snowe and others, that will close the Enron loophole and put the cop back on the beat in all U.S. energy markets in an effort to stop price manipulation and excessive speculation.

I would like to thank a number of my colleagues for not only making this bipartisan legislation possible, but also agreeing to include it in the farm bill today. Senator Harkin, chairman of the Committee on Agriculture, played a key role in getting us together and encouraging us to resolve our differences. Senator Chambliss, the committee's ranking republican, agreed to address the problems we identified and helped work through our differences. Senator Feinstein of California provided unending determination needed to get this problem solved. There are many more who played a critical role in this legislation as well, including Senator Bingaman, Senator Snowe, Senator Dorgan who cosponsored our original bill, S. 2058, the Close the Enron Loophole Act, and Senator Crapo who helped us produce a bipartisan product.

I thank not only the Senators, but also their staffs who put in many hours on this legislation, provided invaluable expertise, and repeatedly came up with creative solutions to tough problems. I would like to thank in particular Dan Berkovitz of my subcommittee staff who has lived with this issue for the last 5 years and devoted so much time, work, and expertise to it.

A stable and affordable supply of energy is, of course, vital to the national and economic security of the United States. We need energy to heat and cool our homes and offices, to generate electricity for lighting, manufacturing, and vital services, and to power our transportation sector--automobiles, trucks, boats, and airplanes.

Over 80 percent of our energy comes from fossil fuels--oil, natural gas, and coal. About 50 percent is from oil and natural gas. The U.S. consumes around 20 million barrels of crude oil each day, over half of which is imported. About 90 percent of this oil is refined into products such as gasoline, home heating oil, jet fuel, and diesel fuel.

The crude oil market is the largest commodity market in the world, and hundreds of millions of barrels are traded daily in the various crude oil futures, over-the-counter, and spot markets. The world's leading exchanges for crude oil futures contracts are the New York Mercantile Exchange--NYMEX--and the Intercontinental Exchange, known as ICE Futures in London.

Natural gas heats the majority of American homes, is used to harvest crops, powers 20 percent of our electrical plants, and plays a critical role in many industries, including manufacturers of fertilizers, paints, medicines, and chemicals. It is one of the cleanest fuels we have, and we produce most of it ourselves with only 15 percent being imported, primarily from Canada. In 2005 alone, U.S. consumers and businesses spent about $200 billion on natural gas.

Today, only part of the natural gas futures market is regulated. Natural gas produced in the United States is traded on NYMEX and on an unregulated ICE electronic trading platform headquartered in Atlanta, GA. The price of natural gas in both the futures market and in the spot or physical market depends on the prices on both of these U.S. exchanges.

The ``Enron loophole'' is a provision that was inserted at the last minute, without opportunity for debate, into commodity legislation that was attached to an omnibus appropriations bill and passed by Congress in late December 2000, in the waning hours of the 106th Congress. This loophole exempted from U.S. government oversight the electronic trading of energy commodities by large traders. The loophole has helped foster the explosive growth of trading on unregulated electronic energy exchanges. It has also rendered U.S. energy markets more vulnerable to price manipulation and excessive speculation, with resulting price distortions.

Since 2001, the Permanent Subcommittee on Investigations, which I chair, has been examining the vulnerability of U.S. energy commodity markets to price manipulation and excessive speculation. Beginning in 2002, we have held 6 days of hearings and issued 4 reports on issues related to inflated energy prices.

The subcommittee first documented some of the weaknesses in U.S. crude oil markets in a 2003 staff report I released which found that crude oil prices were

Affected by trading not only on regulated exchanges like the

NYMEX, but also on unregulated ``over-the-counter'' (OTC)

markets which have become major trading centers for energy

contracts and derivatives. The lack of information on prices

and large positions in these OTC markets makes it difficult

in many instances, if not impossible in practice, to

determine whether traders have manipulated crude oil prices.

In June 2006, the subcommittee issued a staff report entitled, ``The Role of Market Speculation in Rising Oil and Gas Prices: A Need to Put the Cop Back on the Beat.'' This bipartisan staff report analyzed the extent to which the increasing amount of financial speculation in energy markets had contributed to the steep rise in energy prices over the past few years. The report concluded that: ``[s]peculation has contributed to rising U.S. energy prices,'' and endorsed the estimate of various analysts that the influx of speculative investments into crude oil futures accounted for approximately $20 of the then- prevailing crude oil price of approximately $70 per barrel.

The 2006 report recommended that the CFTC be provided with the same authority to regulate and monitor electronic energy exchanges, such as ICE, as it has with respect to the fully regulated futures markets, such as NYMEX, to ensure that excessive speculation in the energy markets did not adversely effect the availability and affordability of vital energy commodities through unwarranted price increases.

In June 2007, the subcommittee released another bipartisan report-- ``Excessive Speculation in the Natural Gas Market.'' Our report found that a single hedge fund named Amaranth had dominated the U.S. natural gas market during the spring and summer of 2006, and Amaranth's large- scale trading significantly distorted natural gas prices from their fundamental values based on supply and demand.

The report concluded that the current regulatory system was unable to prevent these distortions because much of Amaranth's trading took place on an unregulated electronic market and recommended that Congress close the ``Enron loophole'' that exempted such markets from regulation.

The report describes in detail how Amaranth used the major unregulated electronic market, ICE, to amass huge positions in natural gas contracts, outside regulatory scrutiny, and beyond any regulatory authority. During the spring and summer of 2006, Amaranth held by far the largest positions of any trader in the natural gas market. According to traders interviewed by the subcommittee, during this period natural gas prices for the following winter were ``clearly out of whack,'' at ``ridiculous levels,'' and unrelated to supply and demand. At the subcommittee's hearing in June of this year, natural gas purchasers, such as the American Public Gas Association and the Industrial Energy Consumers of America, explained how these price distortions increased the cost of hedging for natural gas consumers, which ultimately led to increased costs for American industries and households. The Municipal Gas Authority of Georgia calculated that Amaranth's excesses increased the cost of their winter gas purchases by $18 million. Also at the hearing the New England Fuel Institute and the Petroleum Marketers Association of America made clear how rampant speculation in energy trading harms the smaller businesses that trade in energy commodities.

Finally, when Amaranth's positions on the regulated futures market, NYMEX, became so large that NYMEX directed Amaranth to reduce the size of its positions on NYMEX, Amaranth simply switched those positions to ICE, an unregulated market that is beyond the reach of the CFTC. In other words, in response to NYMEX's order, Amaranth did not reduce its size; it merely moved it from a regulated market to an unregulated market.

This regulatory system makes no sense. It is as if a cop on the beat tells a liquor store owner that he must obey the law and stop selling liquor to minors, yet the store owner is allowed to move his store across the street and

sell to whomever he wants because the cop has no jurisdiction on the other side of the street and none of the same laws apply. The Amaranth case history shows it is clearly time to put the cop on the beat in all of our energy exchanges.

At the subcommittee's 2007 hearings, both of the major energy exchanges, NYMEX and ICE, testified that they would support a change in the law to eliminate the current exemption from regulation for electronic energy markets, in order to reduce the potential for manipulation and excessive speculation. Consumers and users of natural gas and other energy commodities--the American Public Gas Association, the New England Fuel Institute, the Petroleum Marketers Association of America, and the Industrial Energy Consumers of America--also testified in favor of closing the Enron loophole. That testimony helped galvanize the current effort to produce legislation in this area.

Just last week, my subcommittee teamed up with Senator Dorgan's Subcommittee on Energy to hold still another hearing examining how excessive speculation is continuing to add to crude oil prices, harming consumers and the American economy as a whole. During that hearing, Senators from both sides of the aisle expressed the need to develop new tools to address this problem.

The legislation being added to the farm bill today will do just that. It will help fix a number of the problems identified in the subcommittee's hearings and reports. Most importantly, it will put an end to the Enron-inspired exemption from government oversight now provided to electronic energy trading markets set up for large traders. By ending that exemption, this legislation will restore the ability of the Commodity Futures Trading Commission--CFTC--to police all U.S. energy exchanges to prevent price manipulation and excessive speculation.

The legislation would do more than require CFTC oversight; it would also require electronic exchanges, for the first time, to begin policing their own trading operations and become self-regulatory organizations in the same manner as futures exchanges like NYMEX. Specifically, the legislation would establish 5 ``core principles'' to which electronic exchanges must adhere, each of which parallels core principles already applicable to other CFTC-regulated exchanges and clearing facilities. Implementing these core principles would require an electronic exchange to monitor the trading of contracts which the CFTC has determined affect energy prices, ensure these contracts are not susceptible to manipulation, require traders to supply information about these contracts when necessary, supply large trader reports to the CFTC related to these contracts, and publish daily trading data on the price, trading volume, opening and closing ranges, and open interest for these contracts.

In addition, the electronic exchanges would have to establish position limits and accountability levels for individual traders buying or selling these contracts in order to prevent price manipulation and excessive speculation. Electronic exchanges are intended to implement these position limits and accountability levels in the same way as futures exchanges like NYMEX. Moreover, it is intended that the CFTC will take steps to ensure that the position limits and accountability levels on all exchanges are comparable to prevent traders from playing one exchange off another.

In implementing these core principles, electronic exchanges are given the same flexibility accorded to other CFTC regulated entities, subject to CFTC approval. In addition, the legislation states explicitly that, when implementing the requirements for position limits, accountability levels, and emergency authority to require reductions of positions, the electronic exchanges are allowed to take into account differences between trades which are cleared and not cleared, and the CFTC would police implementation of those core principles in an appropriate manner recognizing those differences.

Although the legislation provides an electronic trading facility with flexibility to implement the core principles, in the same manner as futures exchanges have with respect to the core principles applicable to them, and the flexibility to take into account the differences between cleared and uncleared trades in certain circumstances, in all instances the CFTC has the ultimate responsibility and authority to interpret the core principles, establish rules or guidance as to how they should be applied, and determine whether a facility or exchange is complying with the core principles.

The legislation would also require electronic exchanges to establish procedures to prevent conflicts of interest and anti-trust violations in their operations. These provisions parallel core principles already applicable to other CFTC-regulated exchanges and clearing facilities and are intended to function in a similar manner. These provisions are not restricted to trades involving contracts that affect energy prices, but apply to the entire exchange to ensure it operates in a fair manner.

In addition to requiring electronic exchanges to become self- regulatory organizations, the legislation would require the CFTC to oversee these exchanges in the same general way that it currently oversees futures exchanges like NYMEX. The legislation also, however, assigns the CFTC a unique responsibility not present in its oversight of other types of exchanges and clearing facilities. The legislation would require the CFTC to review the contracts on each electronic exchange to identify those which ``perform a significant price discovery function'' or, in other words, have a significant effect on energy prices. The CFTC would make this determination by looking at such factors as whether the electronic exchange's contract is explicitly linked to a contract used on a futures exchange; whether the electronic exchange's contract price is used by traders to set prices in other contracts; whether traders take positions in the contract and use those positions to arbitrage prices in other energy markets; and whether the contract is traded in sufficient volume to affect market prices. The CFTC can also look at other factors to determine if a contract is affecting energy prices. Contracts designated by the CFTC as performing a significant price discovery function are those that would be policed by both the exchange and the CFTC.

The legislation directs the CFTC to conduct a rulemaking to implement this requirement. The legislation also states clearly that a CFTC determination that a contract performs a significant price discovery function is a determination that is within the Commission's discretion; this determination is not intended to be subject to formal challenge through administrative proceedings. The legislation would also require the CFTC to review the contracts at an electronic exchange on at least an annual basis to determine which perform significant price discovery functions. This review is not intended to require the CFTC to conduct an exhaustive examination of every contract traded on an electronic exchange, but instead to concentrate on those contracts that are most likely to meet the criteria for performing a significant price discovery function. The legislation also directs the electronic exchange to bring to the CFTC's attention any contract which it believes is affecting energy prices.

To enable the CFTC to conduct oversight of its operations, in particular to prevent price manipulation and excessive speculation, electronic exchanges are required to file large trader reports with the CFTC for trades involving contracts that perform a significant price discovery function. These are the same large trader reports already filed by other CFTC-regulated exchanges and clearing facilities. In addition, electronic exchanges found to be trading contracts that perform a significant price discovery function are treated as a ``registered entity'' under the Commodity Exchange Act. This designation ensures that the CFTC has the same enforcement authority over electronic exchanges as it has with respect to other exchanges and clearing facilities to ensure compliance with its regulatory and statutory requirements.

One last issue. Another provision in the legislation states that its provisions are not intended to limit or affect the jurisdiction of the CFTC or any other agency involved with protecting our markets from price manipulation and excessive speculation. A legal battle is going on in the courts right now over enforcement actions by the CFTC

and the Federal Energy Regulatory Commission accusing Amaranth of manipulating or attempting to manipulate natural gas prices. This legislation is not intended to affect that court battle in any way. We are all waiting to see how it plays out and how the courts will interpret the law. This legislation is intended to play an absolutely neutral role in those enforcement actions, and should not be interpreted as changing the status quo in any way.

The provisions I have just discussed are the product of lengthy negotiations and compromises over the best way to close the Enron loophole. They seek to provide stronger government oversight of U.S. energy markets, while preserving the legitimate trading operations of electronic exchanges like ICE. Senator Feinstein and I have introduced a number of bills over the years to tackle this problem, each of which took a somewhat different approach to strike the right balance. My latest effort, introduced a few months ago with Senator Dorgan and others, was S. 2058, the Close the Enron Loophole Act. While that bill is more comprehensive than the legislation being added to the farm bill today, the combined legislation before us now preserves our bill's intent and ensures that both the exchanges and the CFTC can enforce prohibitions against price manipulation and excessive speculation. That, to me, is the most important aspect of the legislation and why I support it today.

The legislation reflects input from the CFTC, industry, consumer groups, and a wide range of Senators. Some compromises were made, but again, those compromises did not weaken the ability of the CFTC to police out energy markets--in fact, if this legislation is enacted into law, the CFTC will be in a stronger position since 2000 to protect our markets from trading abuses.

The House is working on similar legislation, so I am hopeful that we can get something enacted into law as part of the farm bill early next year. I will be working to ensure that the enforcement provisions we have worked so hard to include in this legislation are preserved.

In addition to these provisions closing the Enron loophole, the farm bill will include a host of other provisions to reauthorize and strengthen the Commodity Exchange Act. Those provisions include stronger civil and criminal penalties for manipulation, better enforcement authority for currency exchange trading abuses, among others, all of which I support. I thank my colleagues for including them in the farm bill as well.

Preventing price manipulation and excessive speculation in U.S. energy markets is not an easy undertaking. I thank my colleagues, industry, consumers and others for their good-faith suggestions to improve the legislation that is now before the Senate. Recent cases have shown that market abuses and failures did not stop with the fall of Enron. They are still with us. We cannot afford to let the current situation continue, allowing energy traders to use unregulated markets to avoid regulated markets. It is time to put the cop back on the beat in all U.S. energy markets. The stakes for our energy security and for competition in the market place are too high to do otherwise.

Intent of the Commodity Exchange Act

The Senator from New Mexico raises an interesting and important question, on which I have conferred with the CFTC. In addition to the savings clause in section 13203(c)(2) that preserves FERC's jurisdiction under its statutes as a threshold matter, I believe that FERC's jurisdiction over these transactions would, in any event, be preserved. It is my view that the kinds of cash transactions that you cite would not be captured within the amendment's ``significant price discovery contract'' test. The test is reserved for those transactions conducted ``in reliance'' on the exemption

in paragraph 2(h)(3) of the Commodity Exchange Act. Because the CEA does not apply to cash transactions for purposes of regulation, these transactions cannot, by definition, be conducted ``in reliance'' on this exemption. As such, FERC's authority in this area is preserved on all accounts.

For many of the same reasons I have cited in relation to natural gas markets, I believe--and it is certainly my intention, as one of the amendment's authors--that FERC's authority over RTOs would be unaffected. To my knowledge, no RTO operates pursuant to the exemption in paragraph 2(h)(3) of the Commodity Exchange Act. Moreover, the savings clause in section 13203(c)(2) makes abundantly clear that FERC's existing authorities are preserved.

Mr. President, pursuant to the unanimous consent agreement, I send an amendment to the desk.

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

Mr. President, I am going to make a brief opening statement because I know the Senator from Oklahoma, Mr. Inhofe, would like to take the floor and has to go to a committee meeting. I am going to stay here to manage this bill while Senators Dodd and Shelby are off to a Banking Committee hearing with the head of the Federal Reserve, Mr. Bernanke.

The rules of the Senate are written so that virtually any Senator can stop the train. It is a strange way to do business around here, but it is the way we have done it historically. The so-called filibuster is where a Senator can take to the floor and say: Stop. I don't want this to go forward. Literally, that interrupts the proceedings of the Senate until that Senator yields the floor or is persuaded by an agreement to cooperate with the progress that is needed.

This bill is critically important for America. It is relating to our housing crisis--and it is a crisis. We proposed, on the Democratic side, a housing stimulus bill that had five or six component parts and that I thought was a good, fair, and important piece of legislation. It included a provision that may have been one of the major provisions of that bill I had authored related to the Bankruptcy Code. It turns out this was the most controversial part of the Democratic housing stimulus package. It drew more fire than anything else. There were other provisions even the President objected to, but it seemed like most of the opposition was directed at my amendment, which I will describe.

There came a time this week, though, where we were going to return to the bill with the controversy associated with it--this Democratic stimulus package--where an opportunity presented itself. Senator Shelby from Alabama, the ranking Republican on the Banking Committee, approached Senator Dodd, the chairman, and suggested we try to work this out. In fact, that effort was undertaken with the blessing and approval of both Harry Reid, the majority leader, and Senator McConnell, the Republican leader. A lot of hard work went into the compromise. The staff, as usual, had to burn the midnight oil to get this bill ready--not just the Banking Committee but also the Finance Committee. The end result is the substitute amendment that is pending before the Senate at this moment.

I will tell you, as I walked through this substitute amendment, this compromise, this effort, I found there was a glaring omission--my amendment was gone. The bankruptcy amendment I offered on the original bill had been stripped from it. I wasn't surprised. There was a genuine effort and undertaking to find common ground between Republicans and Democrats. Clearly, there was opposition to my proposal. I had an option at that point, as a Senator--and every Senator has this option-- to stop the train, to hold things up, and say that is the end of the story. I have seen it done, where some Senators have made a career by being obstinate, saying nothing will happen until I get my way. Sometimes they prevail but not always. The net result is an elongated Senate process and a lot of wasted time.

Those who follow the Senate proceedings on C-SPAN may be familiar with the so-called quorum call, which basically means nothing happens but for a clerk who, every 5 or 10 minutes, reads a name to remind people we still have a pulse in the Senate. But that is a delay, it is a lack of effort, and it is a waste of time. So I made the decision not to use my right as a Senator to stop this bill. I thought that would have been selfish, self-centered and, honestly, didn't serve the purpose we are all trying to serve. All I asked in return was to be able to offer this amendment. All I ask my colleagues, in return, is to give me a vote. I don't know if I can prevail. It has substantial opposition. I wish to give my point of view, state my case for the amendment, and I welcome those who are opposed to do the same.

In fact, I am prepared to do something that is rarely done on the floor of the Senate today. I am prepared to stand here and debate my amendment. I welcome those who oppose it, and I would debate it on the merits of what I have to offer. You don't see that much anymore in this great deliberative body. People give their speeches and leave. I will stick around and I will be prepared to debate the merits of it and then I will accept the decision of the Senate as to whether this amendment should be included in the package.

All I ask is that, in good faith, those who oppose the amendment give us a timely debate and a vote. Let's not drag this out forever. There are Members on both sides of the aisle who would like to offer their amendments. I wish to say, at the outset, I will not be unreasonable in the debate time I ask for. I hope we can reach an agreement where we can actually have a complete debate and vote on this amendment by 12:15 today. I am prepared to do that. As I said, whatever the decision of the Senate, I accept it. Let's move forward.

When I ran for the Senate--I left the House of Representatives--I did it because I respected this institution. I knew so many fine people who served here, and I looked forward to the possibility that on the floor of the Senate we could engage and debate on the issues of our time, and those following debate in the gallery or through C-SPAN would hear both sides of the debate and form their own opinions and feel like we were doing our job. Let's do that on this amendment.

On the bankruptcy amendment I have offered with Senator Reid, let's have that kind of debate.

I am going to yield now to the Senator from Oklahoma at this point and ask unanimous consent to reclaim the floor after he completes his remarks.

Mr. President, I ask the Senator, would he state publicly the time he thinks he might need?

Then, I ask unanimous consent that when 30 minutes has expired, or if the Senator has not used all that, I be allowed to reclaim the floor and describe the amendment I have laid at the desk.

Mr. President, I yield 10 minutes to the Senator from Pennsylvania before we claim the floor to describe my amendment.

Mr. President, pending before the Senate is an amendment to the housing bill, which I offered earlier and on which I have asked the Republican side to consider a unanimous consent request so that we can debate and vote on it still this morning. I hope they will consider that in a timely manner. I am prepared to offer an equal amount of time to both sides of the aisle on the substance of this amendment and then accept a vote at 12:15.

We have proffered this unanimous consent request, and I hope, in the interest of time and fairness, that the Republican minority will accede to this request, or if they wish to modify it, let us know as quickly as possible.

Here is what this amendment is all about. We have 2 million people about to lose their homes. These are people who bought a home with a subprime mortgage. A subprime mortgage usually meant some exotic brew of terms for a mortgage which didn't exist traditionally or historically. It might be an adjusted rate mortgage where you pay a low interest rate on the front end and then, after 1 year, 3 years, or 5 years that interest rate would go up. There were even mortgages offered that were interest only, so that people were paying low monthly payments of interest but not retiring the debt on the house. The principal debt remained the same. The theory was that as long as the value of real estate was going up in America, you couldn't go wrong. No matter what deal you signed up for to get into a house, if the house was going to appreciate in value, don't worry about it.

There were also people who took that mortgage on their home and consolidated a lot of other debts they had on cars and other things, home improvements, and put it all in that mortgage so that they had a mortgage debt that was actually greater than the current value of the home.

These so-called subprime mortgages were being written right and left. In the old days, going back to when I first bought a home, there used to be pretty close scrutiny of your credit record. They used to require 10 percent of the value of the home as a downpayment, or 5 percent. You had to pay points; in other words, thousands of dollars at the closing. It was pretty tough in those days.

Well, the whole climate of home lending changed with the subprime mortgages. More and more people moved into homes. The values of homes were mushrooming, and it looked as though we were just riding the crest of a wave. Well, guess what happened. The wave crested and started to fall. And when it fell with the subprime mortgages, a lot of people were hurt. The

so-called adjustment of the mortgage took place and an affordable monthly payment became unaffordable. All of a sudden, the low interest rate blossomed into a much larger interest rate. Or perhaps a family stumbled--somebody lost a job, a divorce, a serious illness in the family--and with that stumble, they missed a few payments.

Well, now, add this up into a nation of 300 million people, and we end up with 2 million folks who face the prospect of losing their homes. Now, a lot of people say, well, isn't it a darned shame. But why did they sign up for those crazy things to start with? They should have used better judgment. They should accept their medicine at this point and maybe they will be a little smarter the next time around.

If it were that easy, we could write it off as the moral hazard of making a bad decision, of irresponsible borrowing. But it turns out to be more significant. Two million people losing their home in a nation of 300 million doesn't sound like much, but 2 million people losing their home will affect the value of homes around them.

What is the value of my home in Springfield, IL? Well, if you ask an appraiser or realtor, they will say: I don't know, but I will tell you what I will do. I will look at other homes in the neighborhood that have gone for sale--comparable sales, comparable values. So they look up and down the block and around the block, in the neighborhood, and look at what homes are selling for, comparing them to my home, and they come up with a valuation on my home.

Well, if down the block and around the corner a home was foreclosed upon--in other words, the people were forced out of the home, there was a forced sale of the home, and it was sold for less than fair market value--that value will be calculated into the appraisal of my home. The experts tell us that 2 million people losing their homes in America will drag down the value of 44 million homes. It is a ripple effect.

As the value of homes declines, more people face the reality that the mortgage principal, the amount they owe on the mortgage, is greater than the value of their home. The shorthand term they use is, you are ``underwater.'' Your mortgage value, your mortgage principal is greater than the value of your home, so you can't borrow against the value of your home anymore. You are already in debt over the value of your home. That is the third ripple.

Then there is the fourth, the mentality of buyers across America. This is the one that troubles me the most. For over 70 percent of people in America, if you ask them are they going to buy a home, and they say no, when you say: Can't you get a mortgage, they say: Yes, we can get a mortgage. Why won't you buy a home? They say: I don't think it is a good investment.

Seventy percent of people in America today say buying a home, real estate, is not a good investment. Why? They are afraid the $500,000 home today will be worth $450,000 next year--not a smart deal.

As long as this mentality is out there, the housing industry is flat. That doesn't hurt just your realtors and your developers, it hurts homebuilders, skilled craftsmen, people who supply homes--from those who are gardeners and do the landscaping, to furniture--you name it. All of these related industries are slowing down into this recession which Mr. Bernanke finally conceded yesterday may be on the horizon. That is why addressing this home crisis is important--not just for 2 million people who had the mortgages, but if we do not deal with those 2 million people losing their homes, it is going to have a dampening effect on our entire economy. It is going to hurt all of us.

A recession is a period of time in which businesses fail, jobs are lost, consumer confidence is low, the economy slows down. It happens in a free market economy. But you do not want it to go on too long because it can have a long-term negative impact.

What we are trying to do today is to pass a bill to breathe some life back into the housing industry and housing market in America. The bill is good, and it has a lot of good provisions. I am happy to support it. I think there are things in this bill which will be of value to us as a nation. I think virtually every one of them has some impact, some positive impact. But there is not a single one of them that will have the positive impact of the amendment I offer. Here is what the amendment says.

Currently--now--if you find you cannot pay your bills and you still have a job, you can go into chapter 13 in bankruptcy. You go to the bankruptcy court and say: I am in a mess. I am in over my head. I have more debt than I can take care of. Will the bankruptcy court work with my creditors so I can have an arrangement to pay off my debts? I would have to change the terms of some of the debts, but at the end of the day I will get out of this mess.

The bankruptcy court takes a look at it and decides whether it is going to work. You may be dreaming. You may not even have a chance. Your creditors may not want to cooperate. So this chapter 13 is just an effort to try to help people get out of this mess.

We think about 600,000 people facing mortgage foreclosure will take this option and go to bankruptcy court. If they go into the bankruptcy court and try to work out their debts and keep their homes, they have a problem. Under current bankruptcy law, you cannot modify the terms of the mortgage on your home. In other words, at the end of the day, you are still stuck with that same subprime mortgage that may have toppled you in the first place. The reason I offer this amendment and the reason I want to change that one provision is because it is fundamentally unfair.

If I walk into a bankruptcy court and I own a farm and I say I cannot make my farm payments, my mortgage on my farm, the bankruptcy court has the legal authority to change the mortgage terms on my farm or on my ranch or on my vacation condo--I don't own one--or on the big boat I just bought and on which I can't make the payments. The bankruptcy court can change every single one of those, but it cannot change or modify the mortgage on your home. Why? Of all of the things in the world they can change, why not that?

It turns out that by tradition it has never happened. So I bring the amendment and propose the court be given that authority.

The group that is opposed to this, screaming bloody murder, is none other than the mortgage bankers, the same people who brought us the subprime mortgage mess. They do not want to see the terms of their subprime mortgages changed in court. And they say: If you change them, interest rates will go up.

What I did, working with that industry, is say: I will apply this to a narrow group of people, the most limited group I can find that still has some impact on this issue, and I will narrow the discretion of the bankruptcy court. So listen to where this amendment takes us.

First, you have to qualify to go into court. We changed the law sometime a few years ago. To qualify to go into bankruptcy court you have to have a certain income; you have to go through certain processes and disclosures--even credit counseling. All that is required before you can walk into the court.

Second, this only applies to your home. I don't want a person walking in saying: I bought 100 acres down in southern California and I need help--no way. Just your home.

Third, it only applies to existing mortgages as of the date of the enactment of this bill. A mortgage you enter into after the day this bill is enacted would not apply.

Fourth, the court can only reduce the principal on the mortgage--the amount that you owe--no lower than the fair market value of the home. You protect the lender. If you go through foreclosure and have an auction, it can sell for a lot less than fair market value. So fair market value is the bottom line.

Fifth, the interest rate the bankruptcy court can impose can be no lower than the prime rate plus a premium for risk.

Sixth, the term of the mortgage can be no more than 30 years.

And then, seventh--and we did this saying to the banking industry: What more can you ask? If in the next 5 years you sell that home and it has appreciated in value, any increase in value over the fair market value as of the date of the bankruptcy goes to the lender, not to the owner. What more can we do to protect these bankers--fair market value on one end, any appreciation in value on the other end. And they still oppose it.

I hope my colleagues in the Senate will take a look at this. The credit unions support this because they don't get into the crazy loan business that some of these mortgages did. A group that includes the AARP, groups all across America, consumer groups, they understand this is only reasonable. The New York Times has editorialized in favor of it. I think this is an approach which will help a number of people. It is narrow and focused. It is limited in its scope, and it is really directed toward giving people another chance to stay in their homes. They still have to pay the mortgage. They don't get off the hook, but they can stay in their homes.

Stabilizing the housing market, stabilizing your neighborhood and my neighborhood, breathing some life back into this housing industry, that is the way to turn this recession around. This amendment I offer on the Bankruptcy Code will help more people than all of the provisions combined in the rest of this housing act. This reaches a lot of people. Hundreds of thousands could qualify. I urge my colleagues on both sides of the aisle to please consider this amendment.

Mr. President, at this point I see two of my colleagues on the Senate floor, Senator Smith of Oregon and Senator Kerry of Massachusetts, and I would like to yield to them for whatever periods they would like to speak and then reclaim the floor on my amendment.

Mr. President, let me make a unanimous consent request that when the two Senators have completed their remarks I be recognized again on my amendment.

Mr. President, will the Senator yield for a question?

Mr. President, if I could very briefly, because I know others are here to speak, I would like to distinguish, if I can, three or four approaches where we differ between us.

The first element that is important--and I wish to make sure it is clear for the record--my amendment gives to the bankruptcy court the authority to modify the mortgage. But under your amendment, or your approach, the ultimate decision on whether a mortgage is going to be modified still has to be approved by the lending institution; is that not correct?

Mr. President, if the Senator will yield for only two or three more questions.

I might acknowledge the fact that currently those lenders can renegotiate the terms of a mortgage without a bankruptcy court and that giving them the last word is going to diminish, I believe, the likelihood that they would agree to anything by the bankruptcy court.

I might also say that under chapter 12 bankruptcies and on farm loans a few years ago, we gave this authority to the Bankruptcy Court and the lenders said: Oh, interest rates will go up, and they didn't.

But I wish to ask this specific question. My amendment limits these modifications to mortgages that are subprime mortgages, and the Specter bill, S. 2133, says these modifications would apply to any type of loan, even prime fixed rate mortgages. Is that not correct?

Mr. President, I wish to also ask the Senator from Pennsylvania, through the Chair: Is it true that the Senator limits the application of his modification of mortgages by the Bankruptcy Court to families earning less than 150 percent of State median income, which would be somewhere in the range of $60,000 to $70,000 a year in most States--annual income of most States--and would not cover those, for example, in the State of California and other States where they have higher incomes and higher mortgages?

I thank the Senator for yielding.

I might say to the Chair, I have spoken to the Senator in the hopes that we can bring this to a vote. I have spoken to the minority leader, Senator McConnell, and he has said there are other Members who wish to come to the floor to speak on this amendment, and I hope they will. There is no point in dragging this out indefinitely. There are many other amendments that are going to be offered and I wish to bring this to a vote.

I thank the Senator from Pennsylvania for yielding for a question.

Mr. President, I would like to speak on the Grassley amendment. I am certainly willing to yield to the Senator from Iowa, if he wants to have his colleague from Wisconsin speak right with him or if he wants to go afterwards.

Mr. President, I want to speak in opposition to the Grassley amendment. I appreciate the heart of the Senator from Iowa, and his intent. He has been consistent. He has been longstanding and heartfelt on this issue. I have been in the meetings he has called with the head of packing and stockyard compensation about concerns of concentration in the agricultural industry. I have seen him press on this issue. I agree with his heart on this amendment and his effort and his desire.

I absolutely disagree with this amendment. I agree with the sentiment, what he is trying to get done. This is not the way. I would like to express to this body what I believe, clearly, will take place in my State were this amendment to pass.

The cattle industry is a major industry in my State. We are third in the number of cattle on ranches and feed yards--6.4 million. There are more than twice as many cattle than people in my State. It is big business. It is a feed yard business where a lot of cattle from all over the country come to be fed out and processed. It is a very big business. It is $6.25 billion in cash receipts a year in my State, my rural State.

This is a business where there are a lot of contractual engagements and obligations back and forth. A man may have cattle from Alabama, and he puts them on a feed yard near Dodge City, KS. The processing plant is near Dodge City and the feed yard may have a contractual arrangement with the processor, saying: I am going to deliver you a thousand head of cattle a day for every working day. That keeps your processing plant orderly and organized. In exchange for that, I am going to get a higher value of cattle that he then passes on to that Alabama cattleman who owns the cattle there.

It is an arrangement that has worked to produce a very highly effective system. Some people do not like the scale of it. In many respects I do not. I would rather it be dispersed to a huge number of family farms across the country the way it used to be, like the farm where I grew up where we had chickens and pigs and cattle. Instead, we have much more integrated operating units. But this would go right at the heart of this industry, as far as changing the burden of proof and changing it on one specific industry. It will not have the intended effect of recreating the family farm system. That is not what is going to be the spill-out of this.

What will end up taking place is the Alabama cattleman is going to end up getting less money for his cattle, and the consumer is going to get less of a directed product they want. I want to develop that for the body, to explain why I like the heart of the people proposing this, but this will not produce the results they want.

The amendment creates an Agricultural Competition Task Force with the stated purpose to examine problems in agricultural competition. The task force has virtually unlimited authority to investigate transactions and business arrangements in the livestock industry--read special counsel for agriculture. It puts in several millions of dollars in that area. The task force is unaccountable to anyone. It is not required to hold public meetings nor abide by the Administrative Procedure Act nor acquire evidence from all parties. Under this amendment, the livestock industry and entire agricultural industry could be subject to limitless reviews of transactions.

I think the biggest piece I have concern about--and I have concerns about

this as a lawyer, and as an agricultural lawyer I have concerns about this. This is the area that I taught in. This is the area I have written in. I have written on the Packers and Stockyards Act. It is an important piece of legislation that this Government passed in the 1920s, when we had a very diffuse agriculture with a very monopolistic packing industry. We said this is not fair, so we are creating the Packers and Stockyards Act to oversee this structure. That is what they have been charged with doing.

In this particular amendment they would shift the burden of proof in the justice system and say this is a guilty transaction, monopolistic in nature, and then you prove your way out of it. To support that, I want to quote from the Department of Justice letter they wrote on the particular provisions. I understand my colleague from Iowa has changed some of the provisions but not this piece of it.

This would change the standards of certain mergers, acquisitions, and actions under the Clayton Act. That is the base bill. In particular, in all agricultural merger cases brought by the Government, Federal and State, and all private cases where the merging parties' combined market share is 20 percent or more--this is the DOJ letter--it puts the burden of proof on the defendant to show the transaction would not substantially impact or lessen competition or tend to create problems in the marketplace.

I am paraphrasing monopoly in the marketplace at the end.

The current setting is, no, we have to prove that against the individual or the group. To date, the Federal antitrust laws apply unaltered to mergers across virtually all industries, with the overriding objective to protect competition to the benefit of consumers because the Department has not been prevented from challenging anticompetitive mergers. They can challenge, and do now, in agriculture under the current legal standards. Shifting the burden of proof is unnecessary. This is a big deal, to shift the burden of proof on one particular industry, and then also to put in industry-specific guidelines.

Let me tell you what is taking place now. I described the situation of an Alabama cattle producer who puts cattle on feed in Kansas, who gets more money for his cattle because they are on feed there and because that feed yard guarantees a certain flow of cattle. If you put this in place, it has lawyers paid for by the Government to go out and examine any contract that is taking place. It can go, pick a feed yard, a Kansas feed yard, and it can go out and say: You have a contractual arrangement with this packer, and we are going to examine that.

Now, you pay for lawyers to say this is not a noncompetitive transaction--and they are going to have to hire lawyers to do that. They are going to end up having a big legal bill on a shifted burden, where the guilt is assumed, not innocence is assumed. It is going to be different from any other industry around. You are going to then have people driving down the price of the commodity. And you have a number of groups that are in these innovative market mechanisms. I described one earlier, a group of people at the Knight Feedyard that have certified hormone-free, antibiotic-free beef. It is a group of producers. They formed an association. They go to a big packer and say: Will you process our cattle and deliver it to the shelves in Connecticut and New York as hormone-free, additive-free, antibiotic- free beef? The packer agrees to do so. That is a contractual arrangement that will be subject to investigation, that will be presumed guilty under this.

My Kansas producers, under this innovative marketing approach that they initiated, get a substantial benefit by being able to market this sort of product that the consumer wants, and they have to go to a major packer to do it because he is the person--that is the group that can process cattle and get it to the shelf in a good quality state.

But my guys are the ones who get the money out of the system. They will be presumed guilty. It will be presumed to violate this. It will be subject to a great deal of legal investigation taking place, and my belief is it will not happen. Then my producers get less money for their cattle, and the consumers do not get the product they want. This is a specialty product that people want. It costs more to produce this type of beef and the consumer is not going to get that product and my cattlemen are going to get less money for their product.

I appreciate the heart of the proposal. What it is going to end up doing is getting less money to cattlemen in particular. I can't speak for other agricultural or livestock industries as well as I can for business that is in my State. The National Cattleman's Beef Association is strongly opposed to this amendment. The Department of Justice is opposed to this amendment for reasons of shifting standards for one industry but not for any others; for having different standards for that industry. The cattlemen believe it is going to hurt them substantially, subject them to a number of legal costs that they do not currently have and that they cannot afford to deal with. It is going to hurt the consumer as well.

While I appreciate the intent, I appreciate the presentation of it-- my family farms. My brother is a farmer. This is not going to take us in the right direction. I believe the route to go is what we have been doing in the Packers and Stockyards Administration and having industry standards that are similar across all industries, and that we should support the Packers and Stockyards Administration, support the laws that are there, fund those entities--which I support doing--maintaining those standards but allowing these innovative approaches to take place for a major industry in my State and for my producers and cattle producers across the country.

I know others want to speak on this issue. I may speak on it again in a while.

I yield the floor.

Mr. President, I wish to respond to the good Senator from Iowa and a couple of his comments about the amendment. But first I ask unanimous consent to insert in the Record after my statement a letter from the Department of Justice opposing the bill.

Mr. President, we just received this from the Department of Justice. They state in the first paragraph:

The Department of Justice strongly opposes the amendment.

To read their summation sentence, which I do not think is fair, given the detail and the work the Senator from Iowa has gone into on this, and substantial changes that he has made--we have been reviewing his amendment. I have the amendment.

But in the DOJ summary sentence, they state this:

However, DOJ believes certain provisions included in the

amendment would not accomplish its stated goal of protecting

rural communities and family farms and ranches, but instead

would unnecessarily duplicate

existing collaboration efforts, increase costs and

uncertainty and may hinder effective antitrust enforcement

and harm competition in agriculture and other industries.

Therefore DOJ strongly opposes the amendment.

Then they go on further to develop the points they have here. As I said, I appreciate the modifications the Senator from Iowa has made. I can tell you in my State, and in the cattle industry, they view this as hurting the price that they are going to be able to get for cattle is the bottom line issue. They view this as driving up substantially their legal costs, and most farmers do not like to have any legal costs, let alone having a number of legal costs.

They believe this is going to do it, and that is not--that is coming from the National Cattlemen's Beef Association, it is coming from the Kansas Livestock Association, where I was a couple of weeks ago at their annual meeting. This was one of their lead concerns, and the reason it was one of their lead concerns is they are looking at that and saying: Look, we are going into a number of different marketing transactions now, and we feed cattle for a lot of people around the country.

My guess is a fair number of Iowa's cattle are on feed in my State in Kansas, and that that is taking place is a good thing. We invite more farms to come there because of the efficiency, of our feeding operations, because of the weather conditions for those, because of the packers that are located there, and the efficiency of being able to do that, and then of these innovative marketing arrangements so that they can get a premium price for Angus cattle that come out of Iowa or Alabama or California or somewhere else. They are able to get a premium price for those because they do special things. They say we are going to keep these Angus fed separately here, and we are going to track them through the whole system. Then we are going to make sure they are hormone free, if that is what the group wants, or we are going to do something else to have premium beef that is going to be marketed only in certain high-end restaurants.

All of that segments the marketplace, but those segmented marketplaces are through contractual arrangements, and they get a premium to the producer that will be under investigation with this. That is why DOJ opposes it. That is why the Kansas Livestock Association, when I was meeting with them, was very fearful of this.

I appreciate some of the changes that were made and were noted here. The base concerns remain what was stated here by the Department of Justice and by the Kansas livestock producers.

Now, different people look at this different ways. A lot of us are deeply concerned, and have been for some time, about the concentration that has taken place in the agriculture business. How do you go at it differently? I spent 6 years as agriculture secretary in Kansas, and many times was trying to come up with innovative, different market segments, whether we could do it on a small scale, farmers' markets, and getting products closer to consumers, whether we can do different products which are coming out now.

We are a big cotton producer in Kansas, looking at canola oil--some of it got going; some of it did not--or confection of sunflower seeds which are under contract, I might point out as well.

So we went through a period we are not making enough money off of the commodity-based business, and we have got to segment this. But when you segment it, that generally requires some sort of identity being preserved and some sort of contractual relationship. And, yes, you get a benefit for that, you get paid more than someone who just has a commodity product.

Well, now, if you say: You cannot do that, or if you do that, we are going to presume you are guilty and you are going to have to pay a lawyer to fight your way out of it. With all due respect to the people whose intent is pure on this, this is going to hurt producers in my State.

That is why many of them--not all, some--support this approach, but many would be strongly opposed to this, as the Department of Justice is.

I urge my colleagues to vote against it.

Exhibit 1

U.S. Department of Justice,

Office of Legislative Affairs,

Washington. DC, December 13, 2007.

Hon. Patrick Leahy,

Chairman, Committee on the Judiciary, U.S. Senate,

Washington, DC.

Dear Mr. Chairman: The Department of Justice (DOJ) has

reviewed Senate Amendment 3823 to H.R. 2419. DOJ works

vigorously to ensure that the benefits of competition are

maintained in all markets, including agricultural markets, to

the benefit of American consumers. However, DOJ believes that

certain provisions included in the amendment would not

accomplish its stated goal of protecting rural communities

and family farms and ranches, but instead would unnecessarily

duplicate existing collaboration efforts, increase costs and

uncertainty, and may hinder effective antitrust enforcement

and harm competition in agriculture and other industries.

Therefore, DOJ strongly opposes the Amendment.

Senate Amendment 3823 to H.R. 2419 calls on DOJ and the

Federal Trade Commission (FTC) to issue agriculture merger

guidelines. To date, the Federal antitrust laws apply

unaltered to mergers across virtually all industries, with

the overriding objective to protect competition to the

benefit of consumers. As such, there is no need for any

industry-specific merger guidelines. The Horizontal Merger

Guidelines (Guidelines) issued by the DOJ and FTC apply

consistently to mergers across the entire economy, and no

need has been demonstrated to depart from that generally

applicable approach. DOJ has not been prevented from

challenging anti competitive mergers in agriculture under the

current legal standards. To the extent that there is a

suggestion that monopsony is a problem particularly

significant to agriculture, the guidelines address monopsony

and thus no industry specific guideline is warranted for that

concern.

DOJ believes that current merger policy is sufficiently

flexible to address market conditions that may be unique to

agricultural markets. For example, DOJ and FTC recently

issued a Commentary to the Horizontal Merger Guidelines

(2006), which provides several examples of how agricultural

matters are reviewed. This commentary, DOJ's merger

challenges in matters such as General Mills/Pillsbury (2001),

Archer-Daniels-Midland/Minnesota Corn Processors (2002),

Syngenta/Advanta (2004). and Monsanto/DPt (2007), competitive

impact statements issued as part of those challenges, and the

closing statements DOJ has issued for certain agricultural

matters, demonstrate that merger policy under the Guidelines

is effective at protecting consumers and maintaining

competition in agriculture industries. Changing the well-

established policy is not necessary and could deter

efficiency enhancing transactions that would benefit

consumers by resulting in lower prices.

Subsection (c) of Senate Amendment 3823 creates an

Agriculture Competition Task Force (Task Force), made up of

representatives from DOJ, FTC, United States Department of

Agriculture (USDA), State governments and attorneys general,

small and independent farming interests, and academics or

other experts. The Task Force is charged with devoting

additional resources focused solely on agriculture industries

to study competition issues, coordinate Federal and State

activities to address ``unfair and deceptive practices'' and

concentration, and work with representatives from rural

communities to ``identify abusive practices.'' In addition,

the Task Force shall report on the state of family farmers

and ranchers. DOJ believes such a task force would at best

duplicate existing enforcement activities, and at worst could

impede existing coordination between DOJ, USDA, and state

governments by creating a bureaucratic structure that would

increase the cost to the American taxpayer without any

benefit to competition or independent farmers. Furthermore,

to the extent the amendment requires consideration of the

effects on ``rural communities'' there is no clear

explanation regarding how this factor should be considered,

and such consideration could be inconsistent with overall

antitrust objectives.

Subsection (e) of this amendment requires notification to

the USDA of Hart Scott Rodino (HSR) filings with the FTC and

DOJ as well as the sharing with the Secretary of Agriculture

of any second request materials obtained under such merger

reviews. Under this section, USDA may submit and publish

comments on whether mergers ``present significant competition

and buyer power concerns,'' such that further review by DOJ

or the FTC is warranted. Congress provided essential

confidentiality for HSR filings and for productions of

documents under that process, and no need has been shown to

change that important protection. Through the existing

Memorandum of Understanding between DOJ, the FTC and USDA,

the antitrust agencies seek expertise and information from

USDA on agriculture matters, and as part of that cooperative

relationship, USDA expresses its views regarding antitrust

merger enforcement matters, and thus no need for radical

change has been shown. In addition, concurrent jurisdiction

likely would increase costs and time delays inherent in

duplicative review and has the potential for inconsistent

standards and outcomes.

DOJ shares the concern of the amendment's sponsors that

agriculture, as a key part of our economy, should maintain

its competitive nature so that producers and consumers alike

benefit from adequate supply and choice of agricultural

products at competitive prices. Moreover, we take seriously

concerns expressed in the agriculture community about

competitiveness in the agriculture sector. However, because

Senate

Amendment 3823 has several provisions that raise concerns for

DOJ, both about unintended consequences as well as about

competition and public policy, DOJ strongly opposes these

provisions.

Thank you for the opportunity to provide our views on this

proposed legislation. The Office of Management and Budget has

advised us that there is no objection to this letter from the

perspective of the Administration's program.

Sincerely,

Brian A. Benczkowski,

Principal Deputy Assistant Attorney General.

If my colleague will yield, my letter is dated today, December 13. It is a subsequent letter to the letter the Senator is quoting from.

It is on the amendment.

Mr. President, may I inquire of the Senator from Iowa, if this is voted on, will this require a 60-vote threshold?

Yes. It is my understanding we had up to 30 minutes. It is not my intention to take that much time, but there might be someone else on our side who will want some of the time, in which case I will yield to them. So it could take that long.

Mr. President, I thank the Senator from Illinois for his cooperation. As I said, if we have any other Members of our side who wish to come down and talk about this, there was that length of time set aside. So I reserve that time for anybody else who wants to speak. If anybody is listening and they wish to use some of this 30 minutes, they are welcome to do it.

I returned 2 days ago from Iraq. It is my 18th trip in the area, in the theater. Sometimes it was Afghanistan and other areas, but it was in that zone there. I wished to take this opportunity to kind of show where we are today, how we got here, and where we are going to go. Some good things are happening over there. A lot of people don't believe it, and some people don't want to believe it.

The first thing I wish to do is try to give an indication as to where we started and how this whole thing started. We keep hearing quotes from people--and misquotes--such as General Cody. He is very certain the Army--even though it is stressed--the soldiers themselves are in a position to continue as they have been. But there is a problem. I think the world needs to know how we got into this problem in the first place.

It began in the 1990s during the Clinton administration. I have a chart. When I make this statement, people tend not to believe it is true. At that time, we downgraded the military, during those 8 years in the 1990s, by approximately $412 billion. If you look at

where we were during the beginning of the Clinton administration, that would be this black line on the chart. If you merely put into this chart the inflation rate and kept the funding of the military at a constant level, it would be this black line. However, the red line down here was the Clinton budget. The budget came in--if you added up all 8 years--at $412 billion below what the static budget would have been with inflation added.

I say that, and it sounds a little bit like something people are hearing for the first time. Yet it should not be the first time. I know there wasn't one month that went by in the 1990s that I didn't come down to the Senate floor and say this euphoric attitude that the Cold War is over and we don't need a military anymore is something that is going to come back to haunt us. Well, it has come back to haunt us. This is the problem we have. It is very much like during the Carter administration in the 1970s, when President Ronald Reagan inherited a hollow force when he took office. It was.

When you are decreasing the funding of the military over 8 years, you are dropping behind in your modernization program, and it means your force strength will be dropped, and it was a downgrading of about 40 percent.

One of the things that concerned me at that time was there is this feeling among the American people that we have the best of everything; that when our kids go into combat, they are armed and equipped with the very best equipment that is out there. Unfortunately, that is not true. It should be true. I think the American people would demand--if they knew we were having these problems--that we would give our kids the very best of everything.

I have always been very appreciative of GEN John Jumper, who, in 1998, might been the Vice Chief of the Air Force. He stood up and said Russia was making a strike vehicle--he was referring to the SU-25 and SU-30 vehicles--and selling them all over the world to countries such as China, or potential adversaries, which are better than our best strike vehicles, the F-15 and the F-16. In some areas, they were better. He talked about the stealth capabilities of what the Russians were making as opposed to what we had. At that time, there was one sale of around 240 of these vehicles to the Chinese. So they had equipment that was better than ours.

Another example is the NLOS cannon. This is the best thing we have. The Paladin is World War II technology. With the Paladin, after every shot of this cannon, you have to swab the breach. You saw pictures of this in prior wars. But this isn't acceptable because there are five countries making a better one than we are making, including South Africa.

So what we have been attempting to do, after this period of time was over, was to start upgrading, modernizing, and increasing the force strength and capability of our American military. Nonetheless, it is very significant that people realize that when this administration took over, and 9/11 came about, this was the condition of our military. It should not have been that way. The terrorist movement was active through the 1990s and during the Clinton administration.

In February of 1993, there was a car bomb planted in the underground parking garage below the World Trade Center. We knew that, and that was prior to 9/11. In June of 1996, Khobar Towers, we remember, were bombed by Hezbollah, with intelligence pointing to support by al-Qaida. The embassies in Kenya and Tanzania, in 1998, were blown up, and that was done by the terrorists. We all remember what happened in Yemen, when a small craft went into the USS Cole and killed a number of Americans. That was another terrorist attack.

So this terrorism was going on all during the time we were downsizing our military. The next thing we find out is we are in a position where we have a down-sized military, and 9/11 comes along and 3,000 Americans are killed by terrorists, and we found out other terrorist attacks were planned at that time. That is when this all started.

I have to say--because right now I am missing a hearing, which I will go to when my remarks are finished--in talking about this stressed situation of our Army, people need to understand how we got into this situation. After my 18th trip over there, and every time in talking to the young people over there, yes, they are stressed and their families are stressed and, yes, they have had more deployments, and they should be 12 months instead of 15 months but they understand this has to be done. We cannot compromise our victory. So we went in after 9/11 for three reasons.

First, we went in to liberate Iraq from a tyrannical leader. I remember so well in 1991, after the first Iraq war, I had an occasion to be on the first freedom flight. It was 1991. There were nine of us, Democrats and Republicans. We were the first ones, in fact, to go to Kuwait City, but the Iraqis did not even know at that time the war was over. They were burning oilfields. The day would turn into night because of the smoke. That was the environment we were in at that time.

We had a person of nobility in Kuwait who had a palace by the Persian Gulf who was with us. He had a 7-year-old daughter. They went with us. Alexander Haig, Tony Cuello was one of the party who went over. At that time, he was, I believe, the Democratic whip of the House of Representatives. So it was a mixture of people. This man of nobility and his daughter wanted to see what their house looked like, if it was torn up during the first gulf war. When we got there, we found out that Saddam Hussein had used it for a headquarters. I took the little girl up to her bedroom--she wanted to see her little animals--only to find they had used her bedroom for a torture chamber, and there were body parts just scattered around in different areas. When we saw this, we realized what an animal this man we were dealing with was.

After 1991, we went back several different times, only to find that Saddam Hussein went after everybody who he suspected had been opposed to him during that first war, and he took care of them in different ways. He tortured thousands of people to death. You have to have gone over there, as I did, and looked into the graves and seen people who had been buried alive. His sons would raid weddings that were taking place. They would rape the bride, and then they would bury her alive. People who were going to be tortured to death by Saddam Hussein were begging to be dropped into the vats of acid head first so they would die quicker, or into the grinders, or the limbs that were cut off.

We really cannot draw a distinction between al-Qaida and Saddam Hussein in terms of the fact they are terrorists and they have no regard for human life. We just recently found an al-Qaida torture manual. The very things Saddam Hussein was doing in torturing people, they are doing now. Take a look at this chart. They are using flames on the throat; cutting the feet open so if they live, they will never be able to walk again; hanging by the arms while they had electrodes going in; drills used on their hands; and, of course, chopping off their limbs. This is a manual teaching them how to do it. We watched this and saw this was happening. I would think any reasonable person would say that alone would have been enough to go in to stop that reign of tyranny that was taking place at that time. But there are other reasons too.

The second reason is there were training camps located in Iraq in places such as Sargot, Ramadi, Samarra, and one of them was in Salmon Pac. Salmon Pac is a community in Iraq where they have a fuselage of a 707 on the ground, and they were teaching people how to hijack airplanes. We will never know whether the perpetrators of 9/11 were trained in Salmon Pac. We don't know that. We never will know. Nonetheless, those are four training camps in Iraq. They are all closed now. They are not training anymore. That alone is certainly itself enough reason to have gone in there.

The third reason is to help the Iraqi people create a free and democratic country. People say: Why do we care about the Iraqis? We have problems at home. Why are we spending all this money? Why do we care about what kind of democracy they have? And they thought it was impossible to start one, anyway. One reason is, if they do not do it, it is going to be a problem area for terrorists in the Middle East until they are fighting on our soil. The troops who are over there know this.

I just got back. I talked with many troops. In fact, now we have the Oklahoma 45th over there, and we visited with most of them. They understand why they are there.

What would happen? There were a lot of surrender resolutions, a lot of cut-and-run resolutions that got a lot of attention in this body. I can remember when moveon.org had the big ad campaign portraying David Petraeus, one of our great American heroes, as ``General Betray Us.'' It was unconscionable. There were resolutions to disavow what he said. There were 25 Members of this Senate body who opposed those resolutions.

When the terrorists see this, they are hoping and praying that we, the Americans, are going to leave Iraq. On August 28, 2007, Ahmadinejad made a statement. He was referring to these resolutions that are going to draw our people out of Iraq. He said:

Soon we will see a huge power vacuum in the region. Of

course, we are prepared to fill that gap. . . .

We are talking about Ahmadinejad. That is why the Iraqis are getting so cooperative with us. They don't want that vacuum filled.

I was talking the other day with BG Jimmy Cash. He is retired. He is the former command director inside the Cheyenne Mountain complex in the late 1980s. He said: I watched Iran and Iraq shoot missiles every day, all day long for months. They killed hundreds of thousands of their own people. They were fighting for control of the Middle East.

Which reminds me, when all these people are talking about weapons of mass destruction, we knew they had weapons of mass destruction then. We knew they were killing hundreds of thousands of their own people in the north, the Kurds, and they were using weapons of mass destruction to send chemical warheads up there that have the effect of burning people to death from the inside out, the most painful thing--women, babies, everybody, thousands and thousands of them.

Anyway, if he were to fill that vacuum, we do not know how long it will take for America to be a target on our soil.

If we look at what is working, one of the things I noticed on the many trips I have taken over there--about a year ago, a little more than 13 months ago, the surge began. That was General Petraeus. What did he say? GEN David Petraeus said we have to go in there with a surge capability in certain areas. He was concerned about some of the areas around the triangle. As we went in there and positioned ourselves, we found that he was right in his analysis as to where we needed to have more troops stationed--in Fallujah and Ramadi. Remember, just about 2 years ago, they declared that Ramadi would become the terrorist capital of the world. Now Ramadi is under total security, not by the United States but by the Iraqi security forces. So we have watched what has happened since that time.

One of the reasons the surge has worked so successfully is that we have had the religious leaders realizing that if we leave, Iran will come in and fill the vacuum, and they cannot have that happen. So the religious leaders, the imams, the clerics started giving positive messages about the United States of America.

A year ago, we had our defense intelligence attending the weekly meetings of the mosques. I think they meet every Friday. At that time, 85 percent of the messages that were given in the mosques by the clerics and the imams were anti-American messages. As of April of last year, almost a year ago, there had been virtually none. They are all now positive messages. What does that mean? It means that the Iraqi citizens have now--just like, Mr. President, anyplace in your State of Arkansas or elsewhere in our communities, we have Neighborhood Watch programs. Now they have them. They have their own citizens going in with bait cans, drawing circles around the undetonated IEDs so our troops will not be killed. We watched in Anbar all the incidents. They have been down from 40 a day to 10 a day. We have seen economic growth, the markets open and crowded. The large project in the Sunni Triangle is now back on track. They are going to have the capability to help their people now.

The Iraqi Army is starting to perform really well. This surprises a lot of people because they don't think the Iraqi security forces have the capability of being the type of soldiers they are today. We saw this the other day. In fact, I was over there the other day in Bucca in Basra when they went in and took care of the problems so we didn't have to do it. This is what we are seeing.

If you have any question that it is true, all you have to do is look at some of the people who never really wanted to be friends of the Bush administration who were opposed to the liberation of Iraq. One such person was Katie Couric. This shocked everybody when she was interviewed. That was in September 2007 by Bob Schieffer. This was live on TV. She had made a trip, after she had been criticizing the war, criticizing the Bush administration, criticizing the whole liberation effort. She went over and came back and said:

Well, I was surprised, you know, after I went to Eastern

Baghdad. I was taken to the Allawi market--

I have been there also--

which was near Haifa Street which was the scene of that very

bloody gun battle back in January, and you know this market

seemed to be thriving and there were a lot of people out and

about. A lot of family-owned businesses and vegetables stalls

and so you do see signs of life that seem to be normal . . .

the situation is improving.

That is not me talking, that is Katie Couric, whom we least expected that from.

We see these things happening. I always make a point when I visit with people in the markets, if I see someone carrying a little baby, I will go in there intentionally without any kind of armament, with an interpreter. The interpreter will tell us just what they are saying. And people with young kids love the Americans.

I have to say this too. We are going to see, and have seen already, a lot of accusations that we in the United States, in our Department of Defense, CIA, and the rest of agencies, are guilty of all kinds of torture. It is true that back in Abu Ghraib, when it first happened, there were some people there who did the wrong thing. I think there were 11 of them altogether. They were doing some things that were perhaps not the kinds of things we would endorse. That was taken care of by the U.S. Army. They took care of it. But that came out, and people started talking about what the Americans were doing. Yet look what is in their manual, the types of inhumane torture.

I went to Bucca. Bucca is where we have the most detainees in Iraq. I was wanting to find out for sure by going around and interviewing detainees. I interviewed, I would say, about 40 or 50 of them. I picked them out myself. I took an interpreter. Each one said: We never were tortured when we were captured. We have been detained. We will be going back to where we came from. They have become real supporters of the United States. They were treated right. They were treated humanely. They are teaching them to read. They are teaching them to study their Koran. They are teaching them carpentry and other trades because one of the biggest problems they have--it is easy to recruit people when there is total unemployment. The unemployment rate is so high. They have to feed their families some way. Now we have trained them, and they are able to go back and get jobs and take care of their families without having to do it through the military.

I just say to you, Mr. President, since this whole situation began-- and I happened to be in Fallujah during each of the two elections that took place, and I watched the Iraqi security forces go down to vote when they knew they were risking their lives. They voted the day before so they could offer security. I watched those people risking their lives--remember the purple finger--knowing their lives were at risk when they voted. This is the democracy they have been looking for. Democracy has been working. I came back this last time thinking the surge has been progressing so well; if we just keep it up, really good things are happening over there.

Considering we started with a downgrading of some $412 million in our military, then 9/11 came and we were forced into a war as a result of that, we have done so well.

Mr. President, I was a part of the draft many years ago, and I was a believer for quite a number of years,

until the first gulf war, that we should have mandatory service because I know what a great thing it did for my life. But when you go over today and you see an all-volunteer force and see what they are capable of doing and what they have done, you come back so proud that they started out down here with very little to work with, and they have been able to sustain it.

Are they overworked right now? Are they deployed too often and too long--15 months? Yes, they are. It looks as though we are going to be able to drop that down to 12 months. But the troops themselves say: Whatever it takes, we are going to do this. They know the alternative. The alternative is the war will be waged on American soil. We don't want that to happen.

Mr. President, I yield the floor.