Derivatives Trading Integrity Act of 2009

Mr. President, I am pleased to introduce, along with Senators Kyl, Reid, Durbin, McConnell, Bingaman, Ensign, Schumer, Inhofe, McCaskill, Kerry, Bayh, Alexander, Grassley, Nelson of Florida, Johnson, and Cantwell the Combat Methamphetamine Enhancement Act of 2009.

This Act is designed to address problems that the Drug Enforcement Administration, DEA, has identified in the implementation of the Combat Methamphetamine Epidemic Act of 2005. I was pleased to join former Senator Talent in drafting, introducing, and securing the passage of the original bill. I am pleased to introduce this legislation today to ensure that it operates as Congress intended.

The bill that I introduce today would clarify that all retailers, including mail order retailers, who sell products that contain chemicals often used to make methamphetamine--like ephedrine, pseudoepedrine and phenylpropanolamine--must self-certify that they have trained their personnel and will comply with the Combat Meth Act's requirements; require distributors to sell these products only to retailers who have certified that they will comply with the law; require the DEA to publish the list of all retailers who have filed self-certifications, on the DEA's website; and clarify that any retailer who negligently fails to file self-certification as required, may be subject to civil fines and penalties.

The Combat Methamphetamine Epidemic Act that we passed in 2006 has been a resounding success. The number of methamphetamine labs in the United States has declined dramatically now that the ingredients used to make methamphetamine are harder to get.

The Combat Meth Act that became effective in September 2006 included important new provisions for retailer self-certification, employee training, requiring products to be placed behind counters, packaging requirements, required sales logbooks, and limits on the amounts that a person can purchase in a given day and over a 30-day period.

Now, because of that law's implementation, the number of methamphetamine labs decreased from about 12,000 labs to about 7,300 labs a 41 percent decrease in just 1 year. Once the bill was enacted into law, the number of meth ``super labs'' in my home State of California declined from 30 in 2005 to only 17 in 2006.

Fewer meth labs means more than just less illegal drug production. According to the Fresno Bee, the DEA has noted that in 2003, 3,663 children were reported exposed to toxic meth labs nationwide but that number had been reduced to 319 in 2006.

So things are moving in the right direction, and that is good news. But with more thousands of methamphetamine labs still operating in the U.S., and children still being exposed to their toxins, it is also clear that there is still work to be done.

After the Combat Meth Act became law, DEA examined how the retailer self-certification process was working. On May 16, 2007, DEA sent letters to the 1,600 distributors who they believed were selling products that contained ephedrine or pseudoephedrine, asking them to turn over lists of the retail stores that they sell to, so that DEA could check to see how many of those retailers had self-certified as that law requires.

Rather than actively assisting the DEA in its efforts, about \3/4\ of the distributors failed or declined to provide any information about the retail stores.

The distributors who did cooperate provided DEA with the names of 12,375 retail customers. When DEA checked those out, it found that about 8,300 of those retail stores had never self-certified as the law requires.

Based on these findings, the DEA estimates that nationwide, as many as 30,000 additional retail sellers of products are not complying with the law.

In short, retailers' non-compliance with the self-certification requirement appears to be widespread, and undercuts the effectiveness of the Combat Meth Act.

Unfortunately, there is no effective way for law enforcement to determine the universe of who is, and who is not, obeying the law. Currently, there is no requirement that retailers notify the DEA before they start selling products with these listed chemicals.

Retailers can likely avoid negative consequences if they are ever confronted with their failure to self-certify. Currently, the law imposes sanctions only for willful and reckless refusals to self- certify. There is no punishment available if a retailer negligently fails to self-certify as required. Not even civil sanctions are available.

In short, without distributors restricting the supply of these products to retailers who have self-certified, retailers may simply take their chances, rather than self-certifying as the law intended, figuring that they'll never get caught, or if they do get caught, that they will never be punished.

It is unacceptable that, over two years after the Combat Meth Act imposed this requirement and became fully effective, tens of thousands of retailers still are not following the law. It is unacceptable that distributors of these products can continue to profit off of their sales to retailers who are not complying, or are even refusing to comply with the law.

So this bill is designed to make the Combat Meth Act more effective, by putting in place a process that will ensure that every retailer who orders these products that can be used to make methamphetamine must comply with the law before they can get and resell the products.

First, it will require that all retail sellers of products with these listed chemicals must file self-certifications, closing a loophole that now exists for mail-order retailers.

Second, the DEA will be required to post all self-certified retailers on its

website, so that advocacy groups and others who are concerned about methamphetamine in their communities can identify retailers who are selling these products without complying with the law, and can notify the authorities.

Third, distributors of these products will only be allowed to sell to retailers who have self-certified, which they will be able to verify by checking the DEA's public website. Once recalcitrant retailers are faced with the real and immediate economic consequence of a possible cut-off of their desire to purchase these products, I am confident that most will file self-certifications as the law requires.

Finally, the bill clarifies that even a negligent failure to self- certify, if proven, can give rise to civil sanctions.

This is a common-sense bill, designed to strengthen the implementation of the Combat Methamphetamine Epidemic Act. This bill would create incentives to ensure that the self-certification process of the law is made both effective and enforceable.

I urge my colleagues to support this legislation.

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

Mr. President, I am pleased to introduce, along with Senators Grassley and Bayh, the Saving Kids from Dangerous Drugs Act of 2009.

Over the last 2 years, Federal, State, and local law enforcement have increasingly seen drug dealers flavoring and marketing their illegal drugs to appeal to minors, using techniques like combing drugs with candy and other flavorings to entice younger users. This bill would increase the criminal penalties that apply when criminals do this. This bill will ensure these appalling tactics are criminalized and severely punished.

The problem of flavoring illegal drugs to entice minors is well documented. A 2007 USA Today Article entitled ``Flavored Meth Use on the Rise'' stated that ``reports of candy-flavored methamphetamine are emerging around the nation, stirring concern among police and abuse prevention experts that drug dealers are marketing the drug to younger people.''

The flavoring of meth to appeal to minors is widespread across the Nation. In California, police have made repeated seizures of strawberry-flavored meth and local drug counselors warn that it also comes in cola, cherry, and orange flavors.

Strawberry flavoring packets were found in a meth lab raid in Arkansas in May of 2007. Similar seizures of flavored meth have been made in Minnesota, Mississippi, Missouri, Nevada, North Carolina, Oregon, and Virginia. Two people were arrested for manufacturing cotton candy flavored meth in Colorado in March of 2008.

The candying and flavoring of controlled substances is not limited to methamphetamine. As recently as March of this year, the DEA seized 1\1/ 2\ pounds of strawberry flavored powdered cocaine in Modesto, CA.

DEA agents in California have also purchased cocaine with lemon, coconut, and cinnamon flavoring. It has also documented other controlled substances like marijuana and hash oil infused into candy bars and soda pop.

Drug dealers are even selling boxes of ``Pot Tarts'' that look exactly like commercial available Pop Tarts.

Federal, State and local law enforcement all agree that such flavoring is done to entice more minors to use these illegal drugs.

This bill would help address this growing problem by criminalizing the flavoring, coloring and marketing of such drugs and would impose enhanced penalties for these offenses.

Under current law, there is already an enhanced penalty if someone distributes drugs to a minor. The maximum sentence is doubled, and tripled for a repeat offense, and there is a minimum of at least a year in prison. But this enhancement only applies if there is an actual distribution of the drug to a minor. Even possession with intent to distribute flavored or candied drugs doesn't qualify.

This bill would fix this loophole. If someone manufactures, creates, distributes, or possesses with intent to distribute a schedule I or II controlled substance that is combined with a candy, marketed or packaged to appear similar to a candy product, or modified by flavoring or coloring with the intent to sell to a minor, they would face enhanced penalties.

The bill sends a strong and clear message to drug dealers--if you flavor or candy up your drugs to make them more appealing to our children, there will be a very heavy price to pay. It will make drug dealers think twice before flavoring up their drugs, and punish them appropriately if they don't.

The bill is supported by the National Narcotics Officers Association Coalition, which is comprised of 44 State narcotics officers' associations.

I urge my colleagues to join me in supporting this bill.

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

Mr. President, today, I am reintroducing legislation--the Derivatives Trading Integrity Act--which calls for establishing stronger standards of openness, transparency and integrity in the trading of financial swaps and other over-the-counter derivative contracts as a critical step toward rebuilding and restoring confidence in the financial system. Over the years, the Commodity Futures Trading Commission and laws enacted by Congress have allowed instruments that are in form and function futures contracts to be privately negotiated without the safeguards provided through trading on exchanges regulated by the Commodity Futures Trading Commission, CFTC.

The economic downturn in this country is forcing us to examine all contributing factors to the crisis in our financial markets. By restoring reasonable safeguards and regulation of swaps, including credit default swaps, along with all other futures contracts, this legislation will go a long way to restore confidence in the markets and reestablish soundness and integrity in the financial system. My bill will end the unregulated ``casino capitalism'' that has engendered great risks in swaps trading. And it will bring these transactions out into the sunlight where they can be monitored and appropriately and responsibly regulated. This legislation will establish authority and safeguards to ensure that parties can meet their obligations to manage and reduce danger and risk to the entire financial system and economy.

Virtually all contracts now commonly referred to as swaps fall under the definition of futures contracts and function basically in the same manner as futures contracts. This bill amends the Commodity Exchange Act to eliminate the distinctions in the regulatory treatment of futures contracts among ``excluded'' and ``exempt'' commodities, and the transactions in them, and regulated, exchange-traded commodities and transactions in them. Futures contracts for all commodities would be treated the same in the law and regulations.

In addition, the bill eliminates the statutory exclusion of swap transactions from regulation, and it ends the Commodity Futures Trading Commission's authority to exempt such transactions from the general requirement that a contract for the purchase or sale of a commodity for future delivery can only trade on a regulated board of trade. In effect, this proposed change

in the law means that all futures contracts must trade on a designated contract market or a derivatives transaction execution facility. The requirement for exchange trading would thus include over-the-counter trading of financial derivatives just as it does for futures contracts in physical commodities such as corn, soybeans and petroleum.

We have seen large negative consequences from the lack of price transparency and the failure to properly measure and collateralize the risk in trading over-the-counter derivatives. The problems have not been seen in the trading of financial futures on regulated futures markets, subject to the oversight of the Commodity Futures Trading Commission.

This legislation I am introducing will establish the standard that all futures contracts trade on regulated exchanges. The regulated exchanges will work with the Commodity Futures Trading Commission to ensure that trading on the exchange is fair and equitable and not subject to abuses. The Commodity Futures Trading Commission has the experience and expertise to oversee these matters.

Bringing necessary openness, transparency, soundness, and integrity to trading in contracts which are now unregulated over-the-counter swaps and related derivatives is a key element in restoring trust and confidence in the financial system so that we can rebuild our economy on a solid foundation.

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

Mr. President, today, I am reintroducing legislation--the Derivatives Trading Integrity Act--which calls for establishing stronger standards of openness, transparency and integrity in the trading of financial swaps and other over-the-counter derivative contracts as a critical step toward rebuilding and restoring confidence in the financial system. Over the years, the Commodity Futures Trading Commission and laws enacted by Congress have allowed instruments that are in form and function futures contracts to be privately negotiated without the safeguards provided through trading on exchanges regulated by the Commodity Futures Trading Commission, CFTC.

The economic downturn in this country is forcing us to examine all contributing factors to the crisis in our financial markets. By restoring reasonable safeguards and regulation of swaps, including credit default swaps, along with all other futures contracts, this legislation will go a long way to restore confidence in the markets and reestablish soundness and integrity in the financial system. My bill will end the unregulated ``casino capitalism'' that has engendered great risks in swaps trading. And it will bring these transactions out into the sunlight where they can be monitored and appropriately and responsibly regulated. This legislation will establish authority and safeguards to ensure that parties can meet their obligations to manage and reduce danger and risk to the entire financial system and economy.

Virtually all contracts now commonly referred to as swaps fall under the definition of futures contracts and function basically in the same manner as futures contracts. This bill amends the Commodity Exchange Act to eliminate the distinctions in the regulatory treatment of futures contracts among ``excluded'' and ``exempt'' commodities, and the transactions in them, and regulated, exchange-traded commodities and transactions in them. Futures contracts for all commodities would be treated the same in the law and regulations.

In addition, the bill eliminates the statutory exclusion of swap transactions from regulation, and it ends the Commodity Futures Trading Commission's authority to exempt such transactions from the general requirement that a contract for the purchase or sale of a commodity for future delivery can only trade on a regulated board of trade. In effect, this proposed change

in the law means that all futures contracts must trade on a designated contract market or a derivatives transaction execution facility. The requirement for exchange trading would thus include over-the-counter trading of financial derivatives just as it does for futures contracts in physical commodities such as corn, soybeans and petroleum.

We have seen large negative consequences from the lack of price transparency and the failure to properly measure and collateralize the risk in trading over-the-counter derivatives. The problems have not been seen in the trading of financial futures on regulated futures markets, subject to the oversight of the Commodity Futures Trading Commission.

This legislation I am introducing will establish the standard that all futures contracts trade on regulated exchanges. The regulated exchanges will work with the Commodity Futures Trading Commission to ensure that trading on the exchange is fair and equitable and not subject to abuses. The Commodity Futures Trading Commission has the experience and expertise to oversee these matters.

Bringing necessary openness, transparency, soundness, and integrity to trading in contracts which are now unregulated over-the-counter swaps and related derivatives is a key element in restoring trust and confidence in the financial system so that we can rebuild our economy on a solid foundation.

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

Mr. President, today I am pleased to join my colleague, Senator Lincoln of Arkansas, to introduce the Medicare Home Infusion Coverage Act. As we do so, we recognize that Medicare has serious fiscal challenges. Currently, the Part A, Hospital, Trust Fund faces insolvency in 2019, when expenditures will exceed projected contributions and require additional taxpayer support to maintain the care required by our seniors and so many disabled Americans. At the same time, today Medicare beneficiaries struggle under the burden of paying nearly half of their health care costs. So the legislation we are re-introducing is vital to addressing the fiscal issues affecting Medicare.

Many serious conditions--including some cancers and drug-resistant infections--require the use of infusion therapy. Such treatment involves the administration of medication directly into the bloodstream via a needle or catheter. Specialized equipment, supplies, and professional services--such as sterile drug compounding, care coordination, and patient education and monitoring--are components of such therapy. Infusion treatment is an extensive medical treatment often lasting for several hours per day over a 6-to-8 week period.

The unfortunate fact is that under current Medicare rules, patients requiring infusion therapy must either bear that cost themselves or endure costly and unnecessary hospitalization in order to receive coverage--raising costs for both beneficiaries and Medicare alike. Current Medicare regulations authorize payment for infusion drugs, but do not pay for the services, equipment, and supplies necessary to safely provide infusion therapy in the home. Not surprisingly, even though home infusion therapy may cost as little as $100 a day, too few seniors can bear that cost.

The result is that patients are excessively hospitalized, producing costs of treatment as much as 10-20 times higher than treatment in the home. The process may even place the patient's health in jeopardy because unnecessary hospitalization places individuals at risk of exposure to a health care-acquired infection--which may be drug resistant and life-threatening.

Private health plans have long understood that home infusion therapy is not only less costly, but safer as well. Thus, private insurance coverage for home infusion therapy is common. Private plans also recognize that patients benefit from avoiding hospitalization. At home they have a familiar, comfortable environment with their family conveniently at hand--no small concerns when fighting a serious illness.

It is clear we must change the status quo, and achieve safer, more cost-effective treatment. By extending coverage of infusion therapy to the home, we will correct this inappropriate and unnecessary gap in Medicare coverage and take a significant step in reducing Medicare costs. This legislation offers an alternative to allowing our Medicare beneficiaries to be overcome with health care costs that are rising faster than inflation by reforming care delivery to emphasize high quality, lower cost services.

I hope my colleagues will join us in support of this legislation so we may further the goals of improving patient safety and reducing our escalating health care costs.

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

Mr. President, today I am introducing legislation with Senator Mikulski and 10 of our colleagues that I hope will be added to any economic stimulus package considered by Congress in the coming weeks. This bill will put the brakes on a tax break granted to U.S. companies that move U.S. jobs offshore.

The U.S. economy is facing its most serious financial challenge since the Great Depression, and we must respond aggressively. I think a new economic stimulus plan is urgently needed to help prevent the economy from sliding deeper into a long-term recession. I agree with those who say that a major goal of the stimulus package should be to create more jobs, but I think we also have an opportunity to make a change to ensure that we keep the jobs we already have.

Employers have been slashing jobs at an alarming rate--2.6 million jobs last year--to reduce operating costs. The manufacturing and construction sectors have been particularly hard hit during this downturn. The manufacturing sector laid off 791,000 workers in 2008, continuing the disturbing loss of more than 4 million U.S. manufacturing jobs since the end of 2000. Federal tax laws have contributed to this problem.

There is one thing that Congress can do immediately to stem the loss of more manufacturing jobs: repeal the perverse tax subsidy in the Federal Tax Code for U.S. companies that move manufacturing operations and American jobs overseas. Not only will this help keep good-paying manufacturing jobs here at home, it will save American taxpayers more than $15 billion in revenue over the next decade.

Unbelievably, there is an insidious tax subsidy that rewards U.S. firms that move their production overseas and then turn around and import those now foreign-made products back to the United States for sale. When a U.S. company closes down a U.S. manufacturing plant such as Huffy bicycles or Radio Flyer little red wagons, fires its American workers and moves those good-paying jobs to China or other locations abroad, U.S. tax law actually provide those companies with a large tax break called deferral--allowing them to avoid paying any U.S. income taxes on their foreign earnings until those profits are returned, if ever, to this country. If a company making the same product decides to stay in this country, on the other hand, it is required to pay immediate U.S. taxes on the profits it earns here.

Repealing this jobs export tax subsidy will not hinder the ability of U.S. firms to compete against foreign competitors in foreign markets, as some special interests have claimed. It is targeted only to U.S. firms that move production abroad and then turn around and ship those products back to this country for sale.

If there was ever a tax policy change that would help save U.S. manufacturing jobs and should be part of a robust economic stimulus plan, this is it. I urge my colleagues to cosponsor this legislation. With a new Congress and administration in place, now is the time to kill this ill-advised tax subsidy once and for all. I look forward to working with my colleagues on this important tax policy matter in the coming weeks.