Discount Pricing Consumer Protection Act

Mr. President, I use today to introduce legislation essential to consumers receiving the best prices on every product from electronics to clothing to groceries. My bill, Discount Pricing Consumer Protection Act, will restore the nearly century old rule that it is illegal under antitrust law for a manufacturer to set a minimum price below which a retailer cannot sell the manufacturer's product, a practice known as ``resale price maintenance'' or ``vertical price fixing''. Last June, overturning a 96-year-old precedent, a narrow 5-4 Supreme Court majority in the Leegin case incorrectly interpreted the Sherman Act to overturn this basic

rule of the marketplace which has served consumers well for nearly a century. My bill will correct this misinterpretation of antitrust law and restore the per se ban on vertical price fixing.

The reasons for this legislation are compelling. Allowing manufacturers to set minimum retail prices will threaten the very existence of discounting and discount stores, and lead to higher prices for consumers. For nearly a century the rule against vertical price fixing permitted discounters to sell goods at the most competitive price. Many credit this rule with the rise of today's low price, discount retail giants--stores like Target, Best Buy, Walmart, and the internet site Amazon, which offer consumers a wide array of highly desired products at discount prices.

From my own personal experience in business I know of the dangers of permitting vertical price fixing. My family started the Kohl's department stores in 1962, and I worked there for many years before we sold the stores in the 1980s. On several occasions, we lost lines of merchandise because we tried to sell at prices lower than what the manufacturer and our rival retailers wanted. For example, when we started Kohl's and were just a small competitor to the established retail giants, we had serious difficulties obtaining the leading brand name jeans. The traditional department stores demanded that the manufacturer not sell to us unless we would agree to maintain a certain minimum price. Because they didn't want to lose the business of their biggest customers, that jeans manufacturer acquiesced in the demands of the department stores--at least until our lawyers told them that they were violating the rule against vertical price fixing.

So I know first hand the dangers to competition and discounting of permitting the practice of vertical price fixing. But we don't need to rely on my own experience. For nearly 40 years until 1975 when Congress passed the Consumer Goods Pricing Act, Federal law permitted States to enact so-called ``fair trade'' laws legalizing vertical price fixing. Studies the Department of Justice conducted in the late 1960s indicated that prices were between 18-27 percent higher in the states that allowed vertical price fixing than the states that had not passed such ``fair trade'' laws, costing consumers at least $2.1 billion per year at that time.

Given the tremendous economic growth in the intervening decades, the likely harm to consumers if vertical price fixing were permitted is even greater today. In his dissenting opinion in the Leegin case, Justice Breyer estimated that if only 10 percent of manufacturers engaged in vertical price fixing, the volume of commerce affected today would be $300 billion dollars, translating into retail bills that would average $750 to $ 1,000 dollars higher for the average family of four every year.

Defenders of the Leegin decision argue that today's giant retailers such as Wal-Mart, Best Buy or Target can ``take care of themselves'' and have sufficient market power to fight manufacturer efforts to impose retail prices. Whatever the merits of that argument, I am particularly worried about the effect of this new rule permitting minimum vertical price fixing on the next generation of discount retailers. If new discount retailers can be prevented from selling products at a discount at the behest of an established retailer worried about the competition, we will imperil an essential element of retail competition so beneficial to consumers.

In overturning the per se ban on vertical price fixing, the Supreme Court in Leegin announced this practice should instead be evaluated under what is known as the ``rule of reason.'' Under the rule of reason, a business practice is illegal only if it imposes an ``unreasonable'' restraint on competition. The burden is on the party challenging the practice to prove in court that the anti-competitive effects of the practice outweigh its justifications. In the words of the Supreme Court, the party challenging the practice must establish the restraint's ``history, nature and effect.'' Whether the businesses involved possess market power ``is a further, significant consideration'' under the rule of reason.

In short, establishing that any specific example of vertical price fixing violates the rule of reason is an onerous and difficult burden for a plaintiff in an antitrust case. Parties complaining about vertical price fixing are likely to be small discount stores with limited resources to engage in lengthy and complicated antitrust litigation. These plaintiffs are unlikely to possess the facts necessary to make the extensive showing necessary to prove a case under the ``rule of reason.'' In the words of FTC Commissioner Pamela Jones Harbour, applying the rule of reason to vertical price fixing ``is a virtual euphemism for per se legality.''

In July, our Antitrust Subcommittee conducted an extensive hearing into the Leegin decision and the likely effects of abolishing the ban on vertical price fixing. Both former FTC Chairman Robert Pitofsky and current FTC Commissioner Harbour strongly endorsed restoring the ban on vertical price fixing. Marcy Syms, CEO of the Syms discount clothing stores, did so as well, citing the likely dangers to the ability of discounters such as Syms to survive after abolition of the rule against vertical price fixing. Ms. Syms also stated that ``it would be very unlikely for her to bring an antitrust suit'' challenging vertical price fixing under the rule of reason because her company ``would not have the resources, knowledge or a strong enough position in the market place to make such action prudent.'' Our examination of this issue has produced compelling evidence for the continued necessity of a ban on vertical price fixing to protect discounting and low prices for consumers.

The Discount Pricing Consumer Protection Act will accomplish this goal. My legislation is quite simple and direct. It would simply add one sentence to Section 1 of the Sherman Act--the basic provision addressing combinations in restraint of trade--a statement that any agreement with a retailer, wholesaler or distributor setting a price below which a product or service cannot be sold violates the law. No balancing or protracted legal proceedings will be necessary. Should a manufacturer enter into such an agreement it will unquestionably violate antitrust law. The uncertainty and legal impediments to antitrust enforcement of vertical price fixing will be replaced by simple and clear legal rule--a legal rule that will promote low prices and discount competition to the benefit of consumers every day.

In the last few decades, millions of consumers have benefited from an explosion of retail competition from new large discounters in virtually every product, from clothing to electronics to groceries, in both ``big box'' stores and on the Internet. Our legislation will correct the Supreme Court's abrupt change to antitrust law, and will ensure that today's vibrant competitive retail marketplace and the savings gained by American consumers from discounting will not be jeopardized by the abolition of the ban on vertical price fixing. I urge my colleagues to support this bill.

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

Mr. President, I use today to introduce legislation essential to consumers receiving the best prices on every product from electronics to clothing to groceries. My bill, Discount Pricing Consumer Protection Act, will restore the nearly century old rule that it is illegal under antitrust law for a manufacturer to set a minimum price below which a retailer cannot sell the manufacturer's product, a practice known as ``resale price maintenance'' or ``vertical price fixing''. Last June, overturning a 96-year-old precedent, a narrow 5-4 Supreme Court majority in the Leegin case incorrectly interpreted the Sherman Act to overturn this basic

rule of the marketplace which has served consumers well for nearly a century. My bill will correct this misinterpretation of antitrust law and restore the per se ban on vertical price fixing.

The reasons for this legislation are compelling. Allowing manufacturers to set minimum retail prices will threaten the very existence of discounting and discount stores, and lead to higher prices for consumers. For nearly a century the rule against vertical price fixing permitted discounters to sell goods at the most competitive price. Many credit this rule with the rise of today's low price, discount retail giants--stores like Target, Best Buy, Walmart, and the internet site Amazon, which offer consumers a wide array of highly desired products at discount prices.

From my own personal experience in business I know of the dangers of permitting vertical price fixing. My family started the Kohl's department stores in 1962, and I worked there for many years before we sold the stores in the 1980s. On several occasions, we lost lines of merchandise because we tried to sell at prices lower than what the manufacturer and our rival retailers wanted. For example, when we started Kohl's and were just a small competitor to the established retail giants, we had serious difficulties obtaining the leading brand name jeans. The traditional department stores demanded that the manufacturer not sell to us unless we would agree to maintain a certain minimum price. Because they didn't want to lose the business of their biggest customers, that jeans manufacturer acquiesced in the demands of the department stores--at least until our lawyers told them that they were violating the rule against vertical price fixing.

So I know first hand the dangers to competition and discounting of permitting the practice of vertical price fixing. But we don't need to rely on my own experience. For nearly 40 years until 1975 when Congress passed the Consumer Goods Pricing Act, Federal law permitted States to enact so-called ``fair trade'' laws legalizing vertical price fixing. Studies the Department of Justice conducted in the late 1960s indicated that prices were between 18-27 percent higher in the states that allowed vertical price fixing than the states that had not passed such ``fair trade'' laws, costing consumers at least $2.1 billion per year at that time.

Given the tremendous economic growth in the intervening decades, the likely harm to consumers if vertical price fixing were permitted is even greater today. In his dissenting opinion in the Leegin case, Justice Breyer estimated that if only 10 percent of manufacturers engaged in vertical price fixing, the volume of commerce affected today would be $300 billion dollars, translating into retail bills that would average $750 to $ 1,000 dollars higher for the average family of four every year.

Defenders of the Leegin decision argue that today's giant retailers such as Wal-Mart, Best Buy or Target can ``take care of themselves'' and have sufficient market power to fight manufacturer efforts to impose retail prices. Whatever the merits of that argument, I am particularly worried about the effect of this new rule permitting minimum vertical price fixing on the next generation of discount retailers. If new discount retailers can be prevented from selling products at a discount at the behest of an established retailer worried about the competition, we will imperil an essential element of retail competition so beneficial to consumers.

In overturning the per se ban on vertical price fixing, the Supreme Court in Leegin announced this practice should instead be evaluated under what is known as the ``rule of reason.'' Under the rule of reason, a business practice is illegal only if it imposes an ``unreasonable'' restraint on competition. The burden is on the party challenging the practice to prove in court that the anti-competitive effects of the practice outweigh its justifications. In the words of the Supreme Court, the party challenging the practice must establish the restraint's ``history, nature and effect.'' Whether the businesses involved possess market power ``is a further, significant consideration'' under the rule of reason.

In short, establishing that any specific example of vertical price fixing violates the rule of reason is an onerous and difficult burden for a plaintiff in an antitrust case. Parties complaining about vertical price fixing are likely to be small discount stores with limited resources to engage in lengthy and complicated antitrust litigation. These plaintiffs are unlikely to possess the facts necessary to make the extensive showing necessary to prove a case under the ``rule of reason.'' In the words of FTC Commissioner Pamela Jones Harbour, applying the rule of reason to vertical price fixing ``is a virtual euphemism for per se legality.''

In July, our Antitrust Subcommittee conducted an extensive hearing into the Leegin decision and the likely effects of abolishing the ban on vertical price fixing. Both former FTC Chairman Robert Pitofsky and current FTC Commissioner Harbour strongly endorsed restoring the ban on vertical price fixing. Marcy Syms, CEO of the Syms discount clothing stores, did so as well, citing the likely dangers to the ability of discounters such as Syms to survive after abolition of the rule against vertical price fixing. Ms. Syms also stated that ``it would be very unlikely for her to bring an antitrust suit'' challenging vertical price fixing under the rule of reason because her company ``would not have the resources, knowledge or a strong enough position in the market place to make such action prudent.'' Our examination of this issue has produced compelling evidence for the continued necessity of a ban on vertical price fixing to protect discounting and low prices for consumers.

The Discount Pricing Consumer Protection Act will accomplish this goal. My legislation is quite simple and direct. It would simply add one sentence to Section 1 of the Sherman Act--the basic provision addressing combinations in restraint of trade--a statement that any agreement with a retailer, wholesaler or distributor setting a price below which a product or service cannot be sold violates the law. No balancing or protracted legal proceedings will be necessary. Should a manufacturer enter into such an agreement it will unquestionably violate antitrust law. The uncertainty and legal impediments to antitrust enforcement of vertical price fixing will be replaced by simple and clear legal rule--a legal rule that will promote low prices and discount competition to the benefit of consumers every day.

In the last few decades, millions of consumers have benefited from an explosion of retail competition from new large discounters in virtually every product, from clothing to electronics to groceries, in both ``big box'' stores and on the Internet. Our legislation will correct the Supreme Court's abrupt change to antitrust law, and will ensure that today's vibrant competitive retail marketplace and the savings gained by American consumers from discounting will not be jeopardized by the abolition of the ban on vertical price fixing. I urge my colleagues to support this bill.

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

Mr. President, the urban demands we have placed on our water supplies and ecosystem have resulted in significant water shortages in communities across the Nation. Water quality and quantity are in jeopardy if local, State, and Federal Governments do not support the implementation of cost-effective projects that enhance and increase potable water supplies.

Therefore, I am introducing this bill to authorize programs that will facilitate a comprehensive water supply and watershed project in southern California. Leaders and agencies across five counties in the Santa Ana Region of southern California have partnered to develop a comprehensive plan which addresses regional needs of their communities; communities whose population exceeds 3 million citizens. These communities are committed to leveraging over $1 billion in local and State funds to match the Federal Government's investment. Similar legislation has been introduced in the House of Representatives by Representative Gary Miller, together with Representatives Ken Calvert, David Dreier, Edward Royce, John Campbell, Dana Rohrabacher and Loretta Sanchez.

Specifically, this bill would fund three distinct projects, which together will help address water needs of 64,000 households and increase the region's water supply by 31,000 acre-feet per year in an environmentally sustainable manner.

This legislation could serve as a model for communities nationwide to help meet the challenges imposed by decreasing snow pack and precipitation and scarce potable water supplies that will be exacerbated by climate change.

This bill would authorize the Federal Government to spend $10 million on a cost shared basis to create wetlands along the Santa Ana River, providing an expanded natural treatment system to purify the River before it replenishes Orange County's groundwater supplies. Like all of the projects in the plan, the construction of natural treatment systems using wetlands minimizes the impacts on the environment, reduces carbon emissions, and improves the quality of our groundwater supplies without costly control technologies.

An authorization of $25 million in the expansion of groundwater desalination in the Chino Basin would increase desalination from the current 9,000 acre-feet per year to 40,000 acre-feet per year. This element of the program would provide a new fresh drinking water supply for Jurupa Community Services District, Santa Ana Mutual Water Company in Riverside County, and the cities of Norco, Chino, Chino Hills, and Ontario in San Bernardino County. These communities serve the needs of millions of citizens.

Because the Santa Ana River watershed crosses multiple jurisdictions, this legislation seeks to complement the ability to produce reclaimed water in one area with expanded desalination projects in the neighboring Chino Basin, providing a four-fold increase in the ability to desalinate groundwater supplies. The Chino Basin groundwater desalters will be the primary drinking water supply for over 40,000 new homes in Riverside and San Bernardino Counties.

The Groundwater Replenishment System, which is expected to be fully operational in just weeks, is the largest indirect potable reuse project in the world. The focal point of the system is membrane purification technology. Thus, $12 million is being requested to build an advanced water filtration technologies research center to find better, more cost-effective approaches to water purification as it relates to municipal water supply needs.

This regional plan will decrease reliability on imported water supplies from the Colorado River and California's deteriorating Bay- Delta water supply system. It will also allow for banking millions of gallons of water in our groundwater basin, protecting the region against natural disasters that could disrupt the delivery of water to Southern California from the fragile Delta and Colorado systems.

I am proud of the commitment our regional agencies have made to develop a response to meet the current and future demands for water supply. The regional plan has broad community support, solves multiple water supply problems, reduces energy consumption, restores habitat, and provides significant jobs and economic benefits to one of the Nation's most densely populated areas. I look forward to timely consideration of this legislation that could provide the road map to solving water demands across the country.

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

Mr. President, I am proud to join Senator Domenici to introduce the Preserve America and Save America's Treasures Act. This legislation will formally authorize Save

America's Treasures and Preserve America for the first time.

Nearly 10 years ago, I helped create Save America's Treasures to preserve and promote historic sites and artifacts across our country. On February 2, 1998, President Clinton established Save America's Treasures by Executive Order 13072. Save America's Treasures was originally founded as the centerpiece of the White House National Millennium Commemoration and as a public-private partnership that included the White House, the National Park Service, and the National Trust for Historic Preservation.

Save America's Treasures was envisioned as a 2-year commemorative project that would illuminate the problem of our neglected heritage and inspire Americans to help save the important treasures in their own communities. Almost 10 years later and Save America's Treasures is still going strong. This model public-private partnership has provided critical support of bricks and mortar preservation projects in every State and territory. These sites include such icons as the Star Spangled Banner, the Old North Church, Mesa Verde, Valley Forge and the last remaining architectural model of the World Trade Center. The list also includes the Founding Father's Papers, the Acoma Pueblo, President Lincoln's Cottage, and the Sewall Belmont House.

To help ensure that future generations will have an opportunity to experience our past and understand our identity as a community and as a nation, Save America's Treasure's has educated the public on preservation problems facing the buildings, sites, monuments, objects and documents that represent America's diverse cultural legacy, and it has supported preservation of historic collections and properties.

The program also supports and advances the purposes and policies of the national historic preservation program set forth by the Congress in the National Historic Preservation Act of 1966.

The President and First Lady Bush have continued to keep the historic preservation effort alive in America. President Bush announced the Preserve America initiative through Executive Order 13287 on March 3, 2003 to promote the preservation of America's heritage by actively advancing the protection, enhancement, and contemporary use of the historic properties.

Through the Preserve America initiative, Americans gain greater knowledge about our Nation's past, strengthened regional identities, increased local participation in preserving the country's cultural and natural heritage assets, and support for the economic vitality of our communities.

The legislation that Senator Domenici and I have introduced will formally authorize Preserve America and Save America's Treasures. Both of these programs have relied solely on the will of the appropriations process and lack the long-term viability provided by formal authorization. Both programs have demonstrated significant on-the- ground-results and are clearly worthy of authorized legislation to institutionalize them for future generations.

Our legislation will authorize a competitive Save America's Treasures grant program within the National Park Service in partnership with the National Endowment for the Arts, the National Endowment for the Humanities, the Institute of Museum and Library Services, and the President's Committee on the Arts and the Humanities.

It will also authorize a competitive Preserve America grant program within the Department of the Interior in cooperation with the Advisory Council on Historic Preservation and other Federal agencies.

I am proud to be an original cosponsor of this legislation that will help ensure that future generations will have an opportunity to experience our past and understand the identity of our Nation. I thank Senator Domenici for his leadership, and I hope my colleagues will join with me in approving the Preserve America and Save America's Treasures Act.

Mr. President, I rise today to introduce the Preserve America and Save America's Treasures Act to formally authorize two important historic preservation programs--the Preserve America Program and the Save America's Treasures Program. I am pleased to be joined in this effort my colleague from New York, Senator Clinton.

Both the Preserve America Program and the Save America's Treasures Program have demonstrated significant success nationwide. However, both administration programs have relied solely on the will of the appropriations process and currently lack the long-term stability provided by formal authorization. This bill would authorize these two important programs and provide for the protection of America's heritage for years to come.

The Preserve America initiative was announced by First Lady Laura Bush on March 3, 2003, and established by Executive Order 13287. The initiative was developed in cooperation with a number of Federal agency partners to encourage and support community efforts for the preservation and enjoyment of our priceless cultural and natural heritage. Since 2003, 549 cities in all 50 States have been designated Preserve America Communities, and 140 of the Preserve America Communities have received a combined total of $10 million to develop sustainable resource management strategies and sound business practices for the continued preservation and use of heritage assets.

The Save America's Treasures program began during the Clinton administration as a national effort to protect our Nation's threatened cultural treasures, including historic structures, collections, works of art, maps and journals that document our heritage and to highlight and preserve the history and culture of the U.S. The program was established by Executive Order 13072 in February 1998. Save America's Treasures was originally created as the centerpiece of the White House National Millennium Commemoration, and as a public-private partnership that included the White House, the National Park Service and the National Trust for Historic Preservation. From 1998 through 2006, over $300 million in Federal and private funding has been awarded for over 1,000 grants.

While both programs are nationwide in scope, I want to highlight the fact that the Preserve America and Save America's Treasures programs have also been very successful in my home State. Las Vegas and Silver City, NM, have been designated Preserve America communities, and 15 Save America's Treasures grants worth nearly 5 million dollars have been awarded over the years to entities throughout the State of New Mexico for various historic preservation projects. From the Palace of the Governor's Collections in Santa Fe to the Lincoln Historic District, where the outlaw Billy the Kid participated in the Lincoln County War, these programs have proved invaluable to preserving the rich heritage of New Mexico.

I am proud to offer this bill to authorize these two important historic preservation programs. I hope my colleagues will join with me in approving the Preserve America and Save America's Treasures Act.

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