A bill to amend the Internal Revenue Code of 1986 to provide that reimbursements for costs of using passenger automobiles for charitable and other organizations are excluded from gross income, and for other purposes.

Mr. President, I have sought recognition to introduce the Withholding Tax Relief Act of 2009, which would repeal Section 511 of the Tax Increase Prevention and Reconciliation Act of 2005. Section 511 will require a 3 percent withholding on all Government contracts beginning on January 1, 2011.

This legislation was sponsored in the 110th Congress by Senator Larry Craig, S. 777, and with his retirement, I have decided to continue to press for its passage to protect small businesses, contractors, and State and local governments who will be unfairly burdened by this onerous provision.

In 2006 Congress enacted tax relief on capital gains, dividends, and the Alternative Minimum Tax, AMT, as part of the Tax Increase Prevention and Reconciliation Act of 2005. These provisions provide important incentives for small businesses by encouraging investment that can lead to job creation and economic growth. At the same time, the Section 511 withholding tax provision was inserted at the last minute by conferees as a revenue raiser. As a result, the legislation which was intended to provide tax relief ended up containing a $7 billion tax penalty on Government contractors.

If no action is taken to repeal this provision, Section 511 will institute a 3 percent tax withholding on all local, State, and Federal Government payments, effective on January 1, 2011. This will apply to Governments with expenditures of $100 million or more, and will affect payments on Government contracts as well as other payments, such as Medicare, grants, and farm payments. Impacted firms will ultimately get a refund when they file their tax return if the amount withheld is in excess of what is actually owed.

The proponents of Section 511 argue that it will be an effective tool to close the tax gap--the difference between what American taxpayers owe and what they actually pay. However, an examination of the mechanics of the provision support a different conclusion. At the time of passage, Section 511 was estimated to increase revenue by $7 billion from 2011 to 2015. However, $6 billion of that amount is attained solely because of the initial collection on contracts in 2011, not because of an actual revenue increase from increased

tax compliance. Estimates show that Section 511 will only generate $215 million in 2012 and increases slightly in each of the 3 years thereafter.

While I support efforts to close the tax gap, those efforts must be weighed on a case-by-case basis against the unintended harm that is done to those impacted. For example, the 3 percent figure is an arbitrary amount and does not take into account the company's taxable income or tax liability. As a result, an honest taxpaying contractor in a loss year could be without access to the withheld capital for a significant period of time, only to see it returned when it files its taxes. Many of these firms do not have extra capital on hand to get by and, because some file yearly returns as opposed to quarterly returns, will not receive a refund on the amount withheld for 12 to 18 months. In many cases, businesses operate with a profit margin that is smaller than 3 percent of the contract; and in some cases, there is no profit at all. In these cases, Section 511 will effectively withhold entire paychecks--interest free--thereby impeding the cash flow of small businesses, eliminating funds that can be used for reinvestment in the business, and forcing companies to pass on the added costs to customers or finance the additional amount.

Section 511 will also impose significant administrative costs on the Federal, State, and local governments who are required to create, or expand, collections staffing to comply. The Congressional Budget Office, CBO, said the provision constitutes an unfunded mandate on the State and local governments. According to CBO, the projected costs of Section 511 will exceed the $50 million unfunded mandate annual threshold. On a Federal level, there is evidence that the high cost of preparation is unnecessary. For example, the Department of Defense estimated that the costs to comply with the 3 percent withholding requirement could be in excess of $17 billion over the first 5 years, which is more than any estimated revenue gains.

There is strong support from a number of stakeholders for repeal of the Withholding Tax requirement, including the Associated Builders and Contractors, U.S. Chamber of Commerce, National Association of Manufacturers, National Federation of Independent Business, and American Farm Bureau Federation.

I am pleased that this legislation garnered the support of 260 cosponsors in the House of Representatives, H.R. 1023, in the 110th Congress, with a broad mix of support from both parties. For example, cosponsors from the Pennsylvania delegation included Representatives Altmire, Brady, Carney, Doyle, English, Gerlach, Holden, Murphy, Pitts, Platts, Sestak, and Shuster. In the Senate, I will seek to build on the efforts of Senator Craig and the 15 other cosponsors, including myself.

At the time of passage of the Tax Increase Prevention and Reconciliation Act of 2005, Congress had not adequately debated the merits of the withholding requirement in a committee hearing or with debate in either body. An issue of this magnitude deserves proper debate, and had that occurred, it is difficult to believe that Congress would have included Section 511. For these reasons, I urge my colleagues to support repeal of this unfair tax penalty.

Mr. President, I ask unanimous consent that a list of supporters to this bill be provided in the Record.

Mr. President, I have sought recognition to introduce legislation to expand a widely-used business tax benefit whereby business owners balance-out net losses over prior years when the firm has a net operating gain. Spreading out this tax liability helps a business to decrease the adverse impact of a difficult year. At the current time, there is a critical need for pro-growth policy initiatives to ensure an economic recovery.

Specifically, this legislation increases the general net operating loss, NOL, carryback period from 2 years to 5 years in the case of an NOL for any taxable year ending during 2007, 2008, or 2009. As an example, a company could offset NOLs in 2008 against positive income it earned in 2003-2007; resulting in a refund paid in 2009. NOLs represent the losses reported by a company within a taxable year and, under current law, generally may be carried back 2 years and forward 20 years for tax purposes.

Under current law, NOLs are not allowed to reduce Alternative Minimum Tax, AMT, liability by more than 90 percent. My legislation would eliminate this limit. This second provision is necessary for this bill to achieve its goal of allowing firms dollar-for-dollar access to their NOLs. This is because firms with temporarily low income are more likely both to create NOLs and to find themselves subject to the AMT.

From an economic standpoint, the key impact of the bill will be to lower the user cost of capital for firms and to encourage business fixed investment for those firms that were profitable in the past 5 years but are not profitable at the current time. Such firms will receive an immediate refund for their current costs.

The U.S. Chamber of Commerce, National Association of Manufacturers, and National Federation of Independent Business, NFIB, have all been supportive of this proposal in previous years.

Similar legislation was considered in the 110th Congress, but was not enacted. During consideration of the Recovery Rebates and Economic Stimulus for the American People Act of 2008, an amendment drafted by the Senate Finance Committee leadership included this important provision, as well as other items. On February 6, 2008, the Senate rejected this broader package on a procedural vote, leaving it just 1 vote short of the 60 that were required. Ultimately, that bill included tax rebates for individuals and capital investment incentives for businesses. Following that debate, I introduced the NOL carryback provision as a stand-alone bill, S. 2650, with 7 cosponsors.

Over the long-term, this is a low cost proposal for the taxpayer that can stimulate economic growth. According to a February 2004 report entitled ``Stimulating Job Creation and Investment: Economic Impact of NOL Carryback Legislation,'' by Kevin A. Hassett, Ph.D, and Brian C. Becker, Ph.D, ``If enacted, this expansion of the carryback period would result in current-year refunds for many companies that otherwise would have to wait until future years to apply NOLs. Having done so, however, would reduce the quantity of losses that are carried forward, and hence increase, relative to baseline, tax revenue in the future. As such, the tax revenue implications are negative initially, but positive in the future.'' The Joint Committee on Taxation estimated that passage of a similar provision as part of the Senate Finance Committee Stimulus package, which I referenced earlier in my statement, would have cost $15 billion in 2008 and $5.1 billion over 10 years.

I urge my colleagues to support this important legislation that will help numerous industries that are currently struggling to survive in a harsh economic downturn.

Mr. President, I have sought recognition to introduce legislation to extend two important provisions that were enacted as part of the Economic Stimulus Act of 2008: 50 percent Bonus Depreciation; and Increased $250,000 limit for the Small Business Expensing Allowance.

I introduced S. 2539 and cosponsored S. 269 similar legislation in the 110th Congress.

I support tax policies to spur new business investments through the use of partial and full expensing. When a company buys an asset that will last longer than one year, the company cannot, under most circumstances, deduct the entire cost and enjoy an immediate tax benefit. Instead, the company must depreciate the cost over the useful life of the asset, taking a tax deduction for a part of the cost each year. By allowing firms to deduct the cost of a new asset in year one, expensing spurs new investments quickly and drives immediate job creation.

As part of the Economic Stimulus Act of 2008--passed by Congress and signed by the President on February, 13, 2008--I successfully included my legislation, S. 2539, to allow for an immediate 50 percent ``bonus depreciation'' on new equipment purchases. This provision only applied to purchases made in 2008 and my legislation would extend the benefit for an additional year.

The Economic Stimulus Act of 2008 also provided a 1-year boost in the Section 179 Small Business Expensing Allowance. This provision, which also applies to equipment, was increased to a $250,000 limit for 2008. Absent further action, the benefit reverts to $125,000 in 2009 and will expire at the end of 2010 and revert to $25,000. On January 25, 2008, I cosponsored legislation, S. 269, to increase the Small Business Expensing Allowance and to make it permanent. This legislation I am introducing today would extend the $250,000 limit for an additional year.

Both of these provisions merely accelerate a benefit that will be given to firms over a longer span. To that end, the cost will be higher in year one, but tax revenue will be higher in the years thereafter. According to the Joint Committee on Taxation, the cost of the ``bonus depreciation'' provision as part of the Economic Stimulus Act of 2008 was $43.9 billion in 2008, but just $7.4 billion over 10 years. The Small Business Expensing Allowance provision was scored at $900 million in 2008, and only $100 million over 10 years.

These provisions were included in a broader package drafted by Senators Baucus, Grassley, Kennedy, and Enzi at the end of the 110th Congress. I look forward to working with these Members to seek extension of these expiring provisions in the 111th Congress.

Enactment of these provisions was an important step in the direction of allowing full expensing of new equipment. I urge my colleagues to support these pro-growth policies that create incentives for business expansion and long-term economic growth.

Mr. President, I rise today to introduce the Medicare Quality and Payment Reform Act of 2009. This legislation will help improve the quality and efficiency of the Medicare program by analyzing readmission and resource use and adjusting Medicare payments accordingly. In addition, the legislation develops a large scale pilot project to allow for episodic payments to organized groups of multispecialty and multilevel providers for select, high cost diagnosis. Reforms such as these have been recommended by the non- partisan Medicare Payment Advisory Commission or ``MedPAC,'' the Commonwealth Fund and many other experts. In their December 2008 Budget Options report, the Congressional Budget Office, CBO, estimates reforms such as these could result in more than 28 billion dollars in savings to the Federal Government over 10 years.

For several years, growth in healthcare spending, including in the Medicare program, has far exceeded the rate of inflation for all other goods and services without a concomitant rise in health care quality. According to the 2007 report of the McKinsey Global Institute, ``Accounting for the Costs of Healthcare in The United States,'' the U.S. spends almost half a trillion dollars more on healthcare than other similarly situated countries, when adjusted for population and income. Moreover, according to a 2008 Dartmouth report, total waste in the U.S. healthcare system accounts for approximately $700 billion. These data are startling and deeply troubling to me and many of my colleagues in the Congress. As we move to consider comprehensive healthcare reform legislation in the 111th Congress, it is critical that we consider bold and decisive reforms to incentivize quality and efficiency in the U.S. healthcare system.

Many experts tell us that the present fee-for-service payment system does little to encourage the prevention of readmissions or control the volume of care and cost of services delivered. MedPAC, CBO, and others believe this fee-for-service distortion is a major driver of excess spending in the healthcare system. Consequently, per-beneficiary spending varies between regions by as much as one-third without any measurable difference in patient outcomes. In addition, a la carte health care delivery focuses on individual procedures and patient interactions without much regard for the integration of care and appropriate mix of services necessary.

For example, MedPAC reports that within 30 days of discharge, 17.6 percent of Medicare admissions are readmitted for which Medicare spent $15 billion in 2005. The Commonwealth Fund Commission on a High Performance Health System found that Medicare 30-day readmission rates varied from 14 percent to 22 percent with respect to the lowest and highest decile of states.

MedPAC and other expert groups report that the bundling of Medicare payments around episodes of care will align financial incentives within the program to maximize quality and efficiency for Medicare beneficiaries. It is

critical to note that such reforms not only lower overall healthcare costs but also have the potential to lower Medicare beneficiaries out of pocket expenses while improving their health. For example, the Medicare Participating Heart Bypass Center Demonstration conducted from 1990 to 1996 explored the utility of payment bundling. In this demonstration, participating centers were reimbursed with a bundled payment for episodes of care related to heart bypass cases. The demonstration resulted in reduced spending on laboratory diagnostics, pharmacy services, intensive care, and unnecessary physician consults while still maintaining a high quality of care. In the end, the demonstration saved the Medicare program approximately 10 percent on cost of bypass treatments.

There is considerable agreement in the health policy community about a move toward ``episodic'' or bundled payments. The 16th Commonwealth Fund/Modern Health Care Opinion Leaders Survey, released November 3, 2008, found that more than \2/3\ respondents reported that the fee-for- service system is not effective at encouraging high quality and efficient care. More than \3/4\ of respondents prefer a move toward bundled per patient payments. Shared accountability for resource use also was favored as a means for improving efficiency, and \2/3\ of the experts surveyed supported realigning provider payment incentives to improve efficiency and effectiveness.

This legislation makes three broad reforms to the Medicare program leading to higher quality and more efficient care. First, the legislation requires the U.S. Department of Health and Human Services, HHS, to report on risk adjusted readmission rates and resource use to Medicare providers, and over time, to the public. Second, the legislation establishes risk-adjusted benchmarks based upon these data that, over time, will be utilized to adjust Medicare payments. Finally, the legislation institutes a voluntary ``episodic payment'' pilot program.

Readmission will be defined by the Secretary of HHS and will include a time frame of at least 30 days between the initial diagnosis and readmission, insure that the readmission rate captures readmissions to any hospital and not be limited to the initial health care provider entity, and verify that the diagnosis for both initial and readmission are related. Within 1 year from enactment, HHS will be tasked with confidentially reporting to provider entities risk adjusted for readmission rates and risk adjusted resource use for select high-volume diagnosis-related groups, DRG, associated with high-rates of readmission. After 3 years, HHS will publically release these reports with an annual review of the list of DRGs reported. The data reported will be risk adjusted taking into account variations in health status and other patient characteristics. Physician's not reporting these data to HHS for analysis will be penalized; although physicians do have the ability to apply for hardship exceptions.

The legislation requires HHS to establish benchmarks for risk adjusted readmission rates and resource utilization for a given DRG and within 2 years of enactment, report to Congress on methodologies used to develop such benchmarks. Three years from the date of enactment, the base operating DRG payment to hospitals not meeting the established benchmarks will be reduced by 1 percent or an amount that is proportionate to the number of readmissions exceeding the benchmark. The Secretary of HHS will devise a mechanism to allocate accountability among providers associated with the episode of care with regard to penalty distribution. The benchmark and penalty will be evaluated and updated annually.

The legislation goes further and establishes a voluntary pilot program to allow for bundled episodic payments to organized groups of multispecialty and multilevel providers for select high cost interventions. Payments would be risk adjusted and would cover all Medicare Part A and B costs associated with a hospitalization episode including care delivered 30 days after discharge. Payments would be issued to the participating provider group which, in turn, would reimburse negotiated payments to all individual providers associated with episode of treatment. The pilot would include testing models in a variety of settings including rural and underserved areas. The initial pilot will begin 2 years from date of enactment and continue for a period of 5 years. If the pilot proves successful, the Secretary of HHS will have the authority to expand the payment mechanism to a larger set of providers.

I urge my colleagues to join me in supporting this important piece of legislation.

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

Mr. President, I am pleased to reintroduce legislation today that would increase the mileage reimbursement rate for volunteers.

Under current law, when volunteers use their cars for charitable purposes, the volunteers may be reimbursed up to 14 cents per mile for their donated services without triggering a tax consequence for either the organization or the volunteers. If the charitable organization reimburses any more than that, they are required to file an information return indicating the amount, and the volunteers must include the amount over 14 cents per mile in their taxable income. By contrast, for 2009, the mileage reimbursement level permitted for businesses is 55 cents per mile, nearly four times the volunteer rate.

During this economic downturn we are asking volunteers and volunteer organizations to bear a greater burden of delivering essential services, but the 14 cents per mile limit is imposing a very real hardship for charitable organizations and other nonprofit groups. This was an even harsher constraint on volunteer activity when gasoline prices spiked last summer.

I have heard from a number of people in Wisconsin on the need to increase this reimbursement limit. One of the first organizations that brought this issue to my attention was the Portage County Department on Aging. Volunteer drivers are critical to their ability to provide services to seniors in Portage County, and the Department on Aging depends on dozens of volunteer drivers to deliver meals to homes and transport people to their medical appointments, meal sites, and other essential services.

As many of my colleagues know, nutrition is one of the most vital services provided under the Older Americans Act and ensuring that meals can be delivered to seniors or that seniors can be taken to meal sites is an essential part of that program. As I discovered during my ten years as Chair of the Wisconsin State Senate Committee on Aging, the senior nutrition programs not only provide needed nutrition services, but in many cases, the congregate meals program provides an important community contact point for seniors who may live alone, and the meals program may be the point at which many frail elderly first come into contact with the network of services that can help them. For that reason, the senior nutrition programs are often at the heart of the aging services network, and as such are essential for many critical services that frail elderly may need.

Unfortunately, Federal support for the senior nutrition programs has stagnated in recent years, increasing pressure on local programs to leverage more volunteer services to make up for that lagging Federal support. The 14 cents per mile reimbursement limit has made it far more difficult to obtain those volunteer services. Portage County reported that at 14 cents per mile, many of their volunteers cannot afford to offer their services.

If volunteer drivers cannot be found, either those services will be lost, and those most vulnerable in our society will go wanting, or the services will have to be replaced by contracting with a provider, greatly increasing costs to the Department, costs that come directly out of the pot of funds available to pay for meals and other services. The same is true for thousands of other nonprofit and charitable organizations that provide essential services to communities across our Nation.

By contrast, businesses do not face this restrictive mileage reimbursement limit. As I noted earlier, for 2009 the comparable mileage rate for someone who works for a business is 55 cents per mile. This disparity means that a business hired to deliver the same meals delivered by volunteers for Portage County may reimburse their employees

nearly four times the amount permitted the volunteer without a tax consequence.

This doesn't make sense. The 14 cents per mile volunteer reimbursement limit is badly outdated. According to the Congressional Research Service, Congress first set a reimbursement rate of 12 cents per mile as part of the Deficit Reduction Act of 1984, and did not increase it until 1997, when the level was raised slightly, to 14 cents per mile, as part of the Taxpayer Relief Act of 1997.

The bill I am introducing today is identical to a measure I introduced in the 109th Congress and the 110th Congress, and largely the same as the version I introduced in the 107th and 108th Congresses. It raises the limit on volunteer mileage reimbursement to the level permitted to businesses, and provides an offset to ensure that the measure does not aggravate the budget deficit. The most recent estimate of the cost to increase the reimbursement for volunteer drivers is about $1 million over 5 years. Though the revenue loss is small, it is vital that we do everything we can to move toward a balanced budget, and to that end I have included a provision to fully offset the cost of the measure and make it deficit neutral. That provision increases the criminal monetary penalties for individuals and corporations convicted of tax fraud. The provision passed the Senate in the 108th Congress as part of the JOBS bill, but was later dropped in conference and was not included in the final version of that bill.

I also extend my thanks to the senior Senator from New York, Mr. Schumer, for including my bill in his larger omnibus volunteer driver relief measure, the GIVE Act, last year, and the junior Senator from Maryland, Mr. Cardin, for including my bill in this year's version of the GIVE Act. Both Senators are keenly aware of the need for the change provided by this bill, and I thank them for their leadership on this issue.

I urge my colleagues to support this measure. It will help ensure charitable organizations can continue to attract the volunteers that play such a critical role in helping to deliver services and it will simplify the tax code both for nonprofit groups and the volunteers themselves.

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

Mr. President, I am pleased to reintroduce legislation today that would increase the mileage reimbursement rate for volunteers.

Under current law, when volunteers use their cars for charitable purposes, the volunteers may be reimbursed up to 14 cents per mile for their donated services without triggering a tax consequence for either the organization or the volunteers. If the charitable organization reimburses any more than that, they are required to file an information return indicating the amount, and the volunteers must include the amount over 14 cents per mile in their taxable income. By contrast, for 2009, the mileage reimbursement level permitted for businesses is 55 cents per mile, nearly four times the volunteer rate.

During this economic downturn we are asking volunteers and volunteer organizations to bear a greater burden of delivering essential services, but the 14 cents per mile limit is imposing a very real hardship for charitable organizations and other nonprofit groups. This was an even harsher constraint on volunteer activity when gasoline prices spiked last summer.

I have heard from a number of people in Wisconsin on the need to increase this reimbursement limit. One of the first organizations that brought this issue to my attention was the Portage County Department on Aging. Volunteer drivers are critical to their ability to provide services to seniors in Portage County, and the Department on Aging depends on dozens of volunteer drivers to deliver meals to homes and transport people to their medical appointments, meal sites, and other essential services.

As many of my colleagues know, nutrition is one of the most vital services provided under the Older Americans Act and ensuring that meals can be delivered to seniors or that seniors can be taken to meal sites is an essential part of that program. As I discovered during my ten years as Chair of the Wisconsin State Senate Committee on Aging, the senior nutrition programs not only provide needed nutrition services, but in many cases, the congregate meals program provides an important community contact point for seniors who may live alone, and the meals program may be the point at which many frail elderly first come into contact with the network of services that can help them. For that reason, the senior nutrition programs are often at the heart of the aging services network, and as such are essential for many critical services that frail elderly may need.

Unfortunately, Federal support for the senior nutrition programs has stagnated in recent years, increasing pressure on local programs to leverage more volunteer services to make up for that lagging Federal support. The 14 cents per mile reimbursement limit has made it far more difficult to obtain those volunteer services. Portage County reported that at 14 cents per mile, many of their volunteers cannot afford to offer their services.

If volunteer drivers cannot be found, either those services will be lost, and those most vulnerable in our society will go wanting, or the services will have to be replaced by contracting with a provider, greatly increasing costs to the Department, costs that come directly out of the pot of funds available to pay for meals and other services. The same is true for thousands of other nonprofit and charitable organizations that provide essential services to communities across our Nation.

By contrast, businesses do not face this restrictive mileage reimbursement limit. As I noted earlier, for 2009 the comparable mileage rate for someone who works for a business is 55 cents per mile. This disparity means that a business hired to deliver the same meals delivered by volunteers for Portage County may reimburse their employees

nearly four times the amount permitted the volunteer without a tax consequence.

This doesn't make sense. The 14 cents per mile volunteer reimbursement limit is badly outdated. According to the Congressional Research Service, Congress first set a reimbursement rate of 12 cents per mile as part of the Deficit Reduction Act of 1984, and did not increase it until 1997, when the level was raised slightly, to 14 cents per mile, as part of the Taxpayer Relief Act of 1997.

The bill I am introducing today is identical to a measure I introduced in the 109th Congress and the 110th Congress, and largely the same as the version I introduced in the 107th and 108th Congresses. It raises the limit on volunteer mileage reimbursement to the level permitted to businesses, and provides an offset to ensure that the measure does not aggravate the budget deficit. The most recent estimate of the cost to increase the reimbursement for volunteer drivers is about $1 million over 5 years. Though the revenue loss is small, it is vital that we do everything we can to move toward a balanced budget, and to that end I have included a provision to fully offset the cost of the measure and make it deficit neutral. That provision increases the criminal monetary penalties for individuals and corporations convicted of tax fraud. The provision passed the Senate in the 108th Congress as part of the JOBS bill, but was later dropped in conference and was not included in the final version of that bill.

I also extend my thanks to the senior Senator from New York, Mr. Schumer, for including my bill in his larger omnibus volunteer driver relief measure, the GIVE Act, last year, and the junior Senator from Maryland, Mr. Cardin, for including my bill in this year's version of the GIVE Act. Both Senators are keenly aware of the need for the change provided by this bill, and I thank them for their leadership on this issue.

I urge my colleagues to support this measure. It will help ensure charitable organizations can continue to attract the volunteers that play such a critical role in helping to deliver services and it will simplify the tax code both for nonprofit groups and the volunteers themselves.

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

I rise today to speak on a bill I am introducing with my colleagues, Senators Dodd and Kerry, to improve the Northeast Home Heating Oil Reserve program to ensure that when our country experiences the next energy crisis we are better prepared. Specifically, I believe that this legislation will provide flexibility as well as certainty that heating oil currently sitting in New England will be used when it is most essential to the region's population.

Through Senator Dodd's leadership in 2000, Congress created the Northeast Home Heating Oil Reserve, which put in place a critical tool to reduce supply disruptions. At that point, heating oil prices were $1.49 per gallon, and while the situation has improved since the price spikes this past summer, it is clear that the Northeast remains dangerously reliant on a commodity that has shown extreme volatility in recent years. The need for of the Heating Oil Reserve was clearly demonstrated this past summer when a catastrophe was emerging for our region with heating oil reaching the unprecedented level of $5 per gallon. Thankfully, the Northeast Home Heating Oil Reserve provided a basic level of assurance that heating oil could be provided if supplies were dramatically interrupted.

However, the trigger mechanism for the release of the funds is convoluted to the point that the program's functionality is in question. Indeed, under the law, the President does not have the ability to release heating oil from the reserve even if the health and safety of the population is at risk. Rather, the current threshold for release is when the differential between crude oil and heating oil is 60 percent higher than the 5 year average. As a result, neither the overall price of heating oil nor the plight of our constituents has any factor on the release of the reserve. The formula trigger in statute is flawed to the point that the actual trigger has come close to being met not when crude oil prices are rising, but actually falling. This is clearly not the intent of the reserve.

The legislation that I am introducing with Senators Dodd and Kerry today streamlines the federal law to provide the President the discretion to release the reserve if the health and safety of the population is at risk. Furthermore, if heating oil prices are above $4 per gallon during the critical winter months, the heating oil automatically will be distributed for sale. I believe this will dramatically improve the functionality of the reserve program and I look forward to working with Chairman Bingaman and Ranking Member Murkowski of the Energy Committee to enact this legislation.