Internet Tax Nondiscrimination Act
Mr. President, this amendment incorporates a whole energy bill. It has many provisions that are deeply flawed. But we are voting on whether to end debate on a complicated, flawed energy bill before debate has even begun, making it very…
Mr. President, this amendment incorporates a whole energy bill. It has many provisions that are deeply flawed. But we are voting on whether to end debate on a complicated, flawed energy bill before debate has even begun, making it very difficult to correct those flaws.
The Senate passed a comprehensive and balanced energy bill in July 2003. Then, after weeks of closed-door meetings with virtually no input from Democratic conferees, the Republicans put forward a ``take it or leave it'' energy conference report that was drastically different than the bill that the Senate passed. I voted against cloture on the conference report in November 2003 because it was deeply flawed and had been produced by a flawed process. The Domenici amendment, the energy bill, which is before the Senate today, suffers from that same problem. There are simply too many provisions on the negative side of the ledger for me to support it, and because this is a cloture vote, voting yes would make it difficult to consider amendments.
At a time when crude oil prices are at 13-year highs, gasoline prices are reaching new record highs daily, diesel prices are breaking records, and high jet fuel prices are straining our airline industry, the Senate should be considering legislation that would do something to lower oil prices. The bill however, would push oil, gasoline, diesel, and jet fuel prices even higher by directing the Department of Energy, DOE, to ``as expeditiously as practicable acquire petroleum in amounts sufficient to fill the Strategic Petroleum Reserve to the [1 billion] barrel capacity.'' By directing DOE to take tens of millions of barrels of oil off the market at a time when supplies are tight and prices high--as they have been for the past 2 years--this bill would tighten supplies in the commercial inventories even further, drive oil and gasoline prices even higher, and keep private sector inventories from building back to normal levels.
The bill would fill the SPR in a manner that is inconsistent with two recent amendments adopted by the Senate. Last fall, the Senate unanimously approved an amendment that Senator Collins and I offered to the Interior Appropriations bill, directing DOE to develop procedures to minimize the cost to the taxpayer and maximize the overall supply of oil in the United States when acquiring oil for the SPR. This amendment expressed the sense of the Senate that the DOE's current procedures for filling the SPR have raised oil prices, are too costly for the taxpayers, and have not improved our overall energy security. Unfortunately, this amendment was not included in the Interior Appropriations conference report, and the administration has continued to fill the SPR without regard to the price or supply of oil. This is a significant reason oil and gasoline prices are so high today.
In light of the continuing rise in oil and gasoline prices, and the administration's refusal to suspend SPR shipments, the Senate approved an amendment that Senator Collins and I offered last month to the budget resolution for FY 2005. Our amendment would cancel the planned delivery of 50 million barrels of oil to the SPR from now through sometime in 2005 that would have completed the filling of the reserve. The SPR is 93 percent filled already. Our amendment is being considered in the House-Senate conference on the budget resolution.
By directing the DOE to fill the SPR to 1 billion barrels--300 million barrels above its current capacity of 700 million barrels--the bill before the Senate today would worsen a SPR policy that is 180 degrees opposite from the direction the Senate just approved in the Senate budget resolution.
By increasing deposits in a government reserve at a time when commercial supply is scarce and prices are high, oil companies will meet the additional demand for crude oil for the reserve by removing oil from their own inventories rather than purchasing high-priced oil on the spot market. Since the price of oil is so closely tied to inventory levels, filling the SPR under these market conditions both depletes private sector inventories and pushes up prices for America's consumers.
Two years ago, the DOE's own staff explained this as follows: ``Essentially, if the SPR inventory grows, and OPEC does not accommodate that growth by exporting more oil, the increase comes at the expense of commercial inventories. Most analysts agree that oil prices are directly correlated with inventories, and a drop of 20 million barrels over a 6-month period can substantially increase prices.''
For these reasons, in 2002, DOE SPR staff recommended against buying more oil for the SPR in tight markets. The administration chose to ignore these warnings. SPR deliveries proceeded. As the DOE staff predicted, oil supplies tightened, private inventory levels fell, and prices climbed.
In summary, the direction in the bill to DOE to fill the Strategic Petroleum Reserve by another 300 million barrels, to a total level of 1 billion barrels, is likely to increase the cost of crude oil and crude oil products, such as gasoline, home heating oil, and diesel and jet fuel, to American consumers and businesses, with no benefits to our national security.
The electricity provisions of the bill before us are also deeply flawed. Instead of improving our current situation, I believe they will make it worse. The massive power failure of August 2003, on top of the massive price manipulation perpetrated by Enron and others, provided additional proof--proof that should not have been needed--that the United States' deregulated energy markets are not functioning well to secure a supply of energy against interruption.
The bill before us--the Domenici amendment--would repeal the Public Utility Holding Company Act of 1934, PUHCA, long-standing consumer and investor protection legislation governing energy industry structure and consolidation. With the repeal of PUHCA, the resulting provisions of the bill before us fail to provide adequate protections to prevent industry market manipulation and consumer abuses.
The Congress needs to enact mandatory reliability legislation, and while some provisions of the bill would be an improvement over the current voluntary system of reliability standards, other provisions of this bill would take us in the wrong direction and could, in fact, make things worse. The bill fails to ensure that regional transmission organizations, RTOs, will have the authority to enforce electric reliability standards in order to prevent, or respond effectively to, another blackout. Further, the ``participant funding'' provision of this bill shifts the cost of building new electric transmission such that transmission construction will be discouraged and utilities will be encouraged not to participate in RTOs. There is a strong need for a stand-alone electricity reliability bill that sets mandatory standards, requires utilities to join RTOs, and establishes consistent rules for enforcement of standards. But the bill before us today is not the right answer.
Two provisions of the bill would significantly impede the ability of federal
and state agencies to investigate and prosecute fraud and price manipulation in energy markets. If adopted, section 1281 would impede state and Federal authority, other than the Commodity Futures Trading Commission, to investigate and prosecute wrongdoing in financial and commodity markets. It would turn the CFTC into a gatekeeper for all other federal and state investigations into matters within CFTC- regulated markets, which would be an unprecedent intrusion into the enforcement of state and federal consumer protection laws.
Section 1282 would impose a higher, criminal standard, ``knowingly and willfully'', for filing false information and for improper phony round trip trading than exists under current law. The new round trip trading provision is inconsistent with current law and the Cantwell amendment that recently passed the Senate, which prohibited market manipulation in electricity markets.
Manipulation is difficult to prove even under current law. By raising the burden of proof, this provision will make it nearly impossible to prove illegal round trip trading or wash sales. Rather than weakening the laws preventing fraud and manipulation in energy markets, the Congress should be strengthening these prohibitions.
Over the past several years, the Permanent Subcommittee on Investigations, which I previously chaired and on which I am now the ranking minority member, has investigated how Enron, financial institutions, and others have manipulated financial energy markets and prices. The record we have established is clear and dramatic. Strengthened oversight and transparency are critical to the proper functioning of our energy and financial markets. The provisions in this amendment will weaken our ability to ensure these markets are functioning properly.
There are some provisions of the bill before us that I support. The amendment contains two provisions that appear on their face to partially address the unfair air quality restrictions placed on a number of Michigan counties. These provisions do not go far enough, however, to remedy the negative impacts that I have fought against for years.
According to the Michigan Department of Environmental Quality, the Environmental Protection Agency, EPA, would not be required to act on the results of the demonstrations study that is required by the so- called Upton language included in this amendment. It also would not relieve new major sources from state new source review regulations, and it would not release Southwest Michigan from Clean Air Act provisions that mandate specific local reductions following completion of the study. Finally, it would not prevent Southwest Michigan nonattainment areas from classification bump-up if the area is unable to attain the standard by the deadline.
The so-called Barton provisions contained in this amendment would help some for two Michigan counties, Cass and Muskegon, those are the only two counties subject to transport that have been designated under Subpart 2 of Section 181 of the Clean Air Act. However, the help is modest because it is workable only if those areas fail to meet the standard by the deadline and the EPA decides to ``bump them up'' to a higher classification.
We need to do more to prevent restrictions from being placed on areas that are impacted by overwhelming transport. The potential consequences of a nonattainment designation are significant. I will continue to work with the EPA and the Congress to ensure that the Clean Air Act provisions are applied with common sense so that counties are not required to take costly actions for problems that are created downwind, which would be illogical and unfair.
The Senate has worked to create a national energy policy for years, but the bill before us today is not the right answer. Even if we were to pass it today, it will get caught in a logjam between the House and Senate on energy policy that is centered on the issue of the fuel additive methyltertiarybutylether, MTBE. The energy bill conference report that I voted against in November contained a provision that would exempt its producers from liability. In Michigan, it has been estimated that MTBE has contaminated groundwater around over 700 leaking underground storage tank sites. There are similar problems in many other states.
The crux of the matter is that the Senate will not pass legislation that includes the MTBE provision and the House will not pass legislation without it. So we are in a logjam, and I believe that any legislation that we pass will eventually come back to this body containing the MTBE liability exemption, which would then again be rejected.
We should continue work to complete a long-term, comprehensive energy plan that provides consumers with affordable and reliable energy, increases domestic energy supplies in a responsible manner, invests in energy efficiency and renewable energy sources and protects the environment and public health. But the bill before us today, offered to legislation on a completely different matter, is not the right answer. Nor is voting ``aye'' to end debate on an important bill like energy before the debate has begun.