Floor Statements

Mr. President, today I am introducing with the cosponsorship of Senator McCain and Senator Baucus the Auditor Independence and Tax Shelters Act, a bill designed to strengthen auditor independence by prohibiting audit companies from selling tax shelter services to the publicly traded companies they audit and to the officers and directors of those companies.

Last year, Senators McCain, Baucus and I each participated in investigations conducted by our respective Committees, the Committees on Commerce, Finance, and Governmental Affairs, into corporate misconduct by Enron and other major U.S. companies, including participation in misleading accounting and tax practices. These investigations led each of us to focus on the role of accounting firms in, not only going along with publicly traded companies' using abusive tax shelters, but also selling them the very tax shelters they used to overstate their earnings on their financial statements.

In fact, the Permanent Subcommittee on Investigations, on which I am the Ranking Minority Member, has spent the last year investigating the roles played by accounting firms and other professional organizations such as banks, investment advisors and law firms, in developing, marketing and implementing abusive tax shelters. The Finance Committee held a hearing today on this same topic.

Tax shelters have become a huge business in this country. An 1998 article in Forbes magazine--five years ago--described how tax shelter use was growing even then:

Pay attention. These letters are prime evidence of a

thriving industry that has received scant public notice: the

hustling of corporate tax shelters. These shelters are being

peddled, sometimes in cold-call pitches, to thousands of

companies. Will the shelters hold up in court? Maybe yes,

maybe no, but many schemes capitalize on the fact that

neither the tax code nor the IRS can keep up with the exotica

of modern corporate finance. Hesitant at first to

participate, respectable accounting firms, law offices and

public corporations have lately succumbed to competitive

pressures and joined the loophole frenzy.

A March 2003 article in BusinessWeek magazine states that U.S. corporations are some of the biggest players in the tax shelter game:

The federal tax rate for corporations is 35%, but few pay

that much. . . . Many have achieved the Holy Grail of

corporate finance: steadily growing profits coupled with a

dramatically shrinking tax burden. . . . [I]n the late 1990s,

the hunt for tax breaks became a much bigger business. . . .

Tax avoidance became a competitive sport, with even blue-chip

companies aggressively benchmarking their effective tax rates

against those of rivals. According to a recent Harvard

University study, U.S. companies avoided paying tax on nearly

$300 billion in income in 1998.

Recently, the New York Times reported that a consultant's report prepared for the IRS but not released to the public until now will show that ``corporate tax cheating in 2000 cost the government $14 billion to $18 billion'' in revenues during that one year alone.

Accounting firms are in the thick of the tax shelter activity, earning tens of millions of dollars in fees. According to Bowman's Accounting Report, the Big Four accounting firms, PricewaterhouseCoopers, Deloitte & Touche, KPMG, and Ernst & Young, brought in $5.6 billion of U.S. tax practice revenues in 2001, more than twice the tax-related revenues these companies posted in 1995. While some of these fees are the result of tax return preparation work, our Subcommittee investigation indicates that significant fees were generated by tax shelter services provided to wealthy individuals and corporations.

Increased tax shelter activity has not only led to substantial U.S. tax revenue loss, it has complicated U.S. tax enforcement efforts and undermined taxpayer confidence in the federal tax compliance system, leading the IRS to designate abusive tax shelters as an enforcement priority.

The IRS has accordingly begun a major effort to combat this form of tax avoidance. In 2002, for example, the IRS issued about 200 summonses seeking tax shelter related information from 30 accounting firms and other tax shelter promoters, and filed suit against two major accounting firms, KPMG and BDO Seidman, and two major law firms, Jenkens & Gilchrist and Sidley Austin Brown & Wood, to obtain information about their tax shelter activities. In addition, the Securities Exchange Commission and the new Public Company Accounting Oversight Board have expressed serious concerns about accounting firms that audit publicly traded companies while wearing two hats: those of the tax shelter promoter and those of the auditor auditing the same tax shelters it has promoted.

That issue is the focus of our legislation.

Auditors of publicly traded companies are supposed to be independent watchdogs charged with determining whether a company's financial statements are accurate and fairly report the company's finances. But multiple accounting scandals involving billions of dollars at companies like Enron, Tyco, Healthsouth, Aldelphia, and MCI-WorldCom have rocked investor confidence in auditors and severely damaged the reputation of the U.S. accounting profession. These accounting scandals showed again and again that our laws and financial systems were insufficient to ensure that U.S. auditors were doing their jobs.

In response, Congress passed the Sarbanes-Oxley Act of 2002. A primary purpose of that law was to strengthen auditor independence and restore investor confidence in U.S. financial statements. Among other measures, it established the new Public Company Accounting Oversight Board to strengthen auditing standards, investigate and discipline auditor wrongdoing, and oversee auditing practices to ensure adequate financial statement reviews. While the Sarbanes-Oxley Act is a landmark piece of legislation--replacing decades of self-policing in the accounting industry with independent oversight--a number of reform issues remain unresolved.

One key, longstanding issue that continues to compromise auditor independence is the role played by accounting firms in developing and selling tax shelters to public companies they audit.

As part of their review of public company financial statements, auditors are supposed to review the company's tax practices to ensure that the company is not understating its tax liability and overstating its earnings. But in some cases, the same accounting firm is also pitching tax shelters to that client, many of which rely on aggressive and novel interpretations of tax law. If a company buys one of these tax shelters from its accounting firm, the unacceptable result is that the accounting firm can then turn around and audit the company's financial statements and, in effect, audit its own work, a situation that strikes at the heart of auditor independence.

In some cases, the accounting firm may have even negotiated ``success fees'' which are contingent upon a tax shelter's success in reducing a client's tax burden. In such cases, accounting firms will audit tax transactions in which they have a direct financial interest, creating a conflict of interest between the firm's income and auditing responsibilities, and making it highly unlikely that questions will be raised about a tax shelter that the firm itself sold to its client.

Similar conflicts may arise when accounting firms offer tax shelter services to the officers and directors of the companies they audit. One case extensively discussed in the media involves a major accounting firm which not only audited Sprint Corporation, a publicly traded company, but also sold tax shelters to the Sprint CEO and other Sprint executives. These tax shelters supposedly eliminated taxes owed on millions of dollars in personal compensation from stock options given by Sprint to its executives. When the value of the stock options later fell,

the accounting firm apparently analyzed strategies that could have lowered the individuals' taxes but increased the company's taxes, pitting the individual against the company, with the same accountant on both sides of the equation. Sprint eventually fired several of the executives and recently announced it was also changing auditors. In addition, Sprint has instituted a new policy barring its auditor from providing any financial services to its executives.

Investors, our markets, and the American public deserve better. The legislation we are introducing today would end these auditor conflicts by prohibiting auditors from providing tax shelter services to both the publicly traded companies they audit and to those companies' officers and directors. In addition, the bill would codify four common-sense principles of auditor independence that would assist public companies in analyzing what services may compromise auditor independence.

Our bill would build upon the Sarbanes-Oxley Act which took the first step last year to address the conflict of interest problems that arise when accounting firms provide tax services to the companies they audit. Seeking to limit a wide range of possible conflicts of interest, the Act broadly prohibited auditors from providing any tax service to an audit client without first obtaining the approval of the audit committee of the company's board of directors.

The SEC took the next step when it proposed regulations to implement the Sarbanes-Oxley Act. The SEC issued a draft proposal that essentially would have prohibited auditors from selling any tax shelters to their audit clients. The draft SEC proposal also contained the four principles that would have helped company audit committees evaluate whether other tax services proffered by auditors would impair auditor independence. Unfortunately, under heavy lobbying pressure from accounting firms in the tax shelter business, the SEC dropped both of these important provisions from the final regulation.

So we need to legislate. Our bill would, first, prohibit accounting firms that audit publicly held companies in the United States from providing tax shelter services either to the companies they audit or to the companies' officers and directors. The bill defines tax shelter services by referring to existing law, using language in an existing definition of tax shelters in section 6111(d) of the tax code. The bill would prohibit auditors from providing to their audit clients those services related to designing, promoting or executing tax transactions which have tax avoidance or evasion as a significant purpose and which generate fees for the auditing firm exceeding $100,000. It is intended that questions about whether particular tax-related services fall within this definition would be resolved by corporate audit committees when asked by their accounting firm to approve the company's paying for the particular services. The audit committee could consult with the IRS, SEC, or other experts in reaching its decision.

If an audit committee were to approve tax shelter services that should have been barred, the bill does not provide new penalties or enforcement authority, but makes use of the existing oversight authority of the SEC and Public Company Accounting Oversight Board to enforce compliance with federal law. That means, for example, if an audit committee were to allow its auditor to provide prohibited tax shelter services, the SEC or Public Company Accounting Oversight Board could use their existing oversight authority to require the company to ``cease and desist'' paying for the services or to prohibit the accounting firm from providing the services. If appropriate, the SEC could also order the public company, the accounting firm, or both, to pay a monetary penalty for violating the tax shelter services prohibition.

The legislation would further reduce potential conflicts by codifying four principles of auditor independence that public company audit committees would be required to apply when determining what non-audit services an auditor can provide. These principles have been repeatedly cited in SEC efforts to strengthen auditor independence and were also cited during debate on the Sarbanes-Oxley Act. They provide that auditor independence is compromised when auditors: 1. audit their own work; 2. perform management functions for their clients; 3. act as advocates on behalf of their clients; or 4. act as promoters of their clients' stock or other financial interests.

To better ensure auditor independence, our bill would require audit committees to apply these four principles when considering what services, not otherwise prohibited, an auditor may provide to their company. If an audit committee were to find that the proposed auditor service would reasonably result in a violation of one of the above principles, the audit committee would have to disallow the proffered service.

Experts in the financial and accounting industries agree that auditors should not be permitted to provide tax shelter services to their audit clients. In January of this year, The Conference Board's blue-ribbon Commission on Public Trust and Private Enterprise, co- chaired by John Snow before he became Secretary of the Treasury, concluded the following:

[P]ublic accounting firms should limit their services to

their clients to performing audits and to providing closely

related services that do not put the auditor in an advocacy

position, such as novel and debatable tax strategies and

products that involve income tax shelters and extensive off-

shore partnerships or affiliates. . . . The Commission

believes that any work performed by the company's outside

auditors [should] be closely related to the audit. Auditors'

development and recommendations of new tax strategies for

their clients is not closely related to the audit, and, in

our opinion, removes focus from their audit work and poses a

potential conflict of interest. Furthermore, the development

and recommendations of these strategies have often been

accompanied by ``success fees.'' In turn these strategies, if

implemented, were often then subject to an audit by the firm.

This practice, in our opinion, is highly undesirable. The

firm's need for impartiality in conduct of the audit is in

direct conflict with the financial incentives to provide tax

strategies which themselves must be audited.

William McDonough, Chairman of the Public Company Accounting Oversight Board, has indicated that the Board is also considering whether to ban auditors from providing tax shelter services to their audit clients and will be closely monitoring how accounting firms audit a company's tax liabilities and any company use of tax shelters. In testimony before the Finance Committee earlier today, Mr. McDonough stated:

While the SEC made clear that it did not consider

conventional tax compliance and planning to be a threat to

auditor independence, it distinguished such traditional

services from the marketing of novel, tax-driven, financial

products, which the SEC noted raise some serious issues. . .

. [T]he AICPA has also suggested that ``advice on tax

strategies having no business purpose other than tax

avoidance is an appropriate dividing line for activities that

should be prohibited to auditing firms registered under the

Sarbanes-Oxley Act.'' Thus, there appears to be consensus

that auditors ought not to be selling abusive tax shelters to

audit clients.

In an unrelated Wall Street Journal interview, Mr. McDonough was described as saying that ``[w]hat he finds problematic is `very creative tax work' . . . . `There is no way you can do that and claim to be independent,' he said.''

The Sarbanes-Oxley Task Force formed by the American Bar Association's Section of Taxation, has also expressed support for barring auditors from providing tax shelter services to their audit clients. In a comment letter supporting the proposed ban in the SEC regulations on auditor independence, the Task Force wrote:

We believe that tax shelter products raise particular

auditor independence concerns. Companies purchasing tax

shelter products are exposed to a variety of risks over and

above the calculation of tax liability. An accounting firm

that markets a tax shelter product to a registrant should be

prohibited from conducting the audit of the registrant

because it cannot be expected to fairly evaluate the risks

inherent in the tax shelter product.

Our legislation has been endorsed by a number of public interest groups working to strengthen auditor integrity, renew investor and consumer confidence in the financial statements of U.S. publicly traded companies, and curb abusive tax shelters. The Consumer Federation of America, Consumers Union, Consumer Action, U.S. Public Interest Research Group, and Common Cause have stated in a letter of endorsement: ``Passage of this bill is one of the most important steps Congress could take to ensure that last

year's corporate reform efforts have their intended effect of restoring real independence to the 'independent' audit and, with it, a reasonable level of reliability to public companies' financial disclosures.''

Our bill's reforms are straightforward. Auditors should not audit their own work, including evaluating a tax shelter that the auditor itself sold to its audit client. Auditors should not sell personal tax shelters to the officers and directors of its audit clients, due to the conflicts of interest that can arise. Publicly traded companies ought to have explicit guidance to help them avoid auditor conflicts of interest, and the best guidance we can give them is the four auditor independence principles that have long guided SEC and Congressional action in this area.

Together, a ban on auditors providing tax shelter services to their audit clients and a codification of the four auditor independence principles to guide public companies away from auditor conflicts of interest could go a long way to restoring the confidence of investors in the U.S. auditing profession, financial reporting system, and capital markets. I urge my colleagues to support this common-sense and much-needed legislation.

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

Mr. President, there are very many things in the Emergency Supplemental Appropriations for Iraq and Afghanistan Security and Reconstruction bill with which I strongly disagree. For example, I object to the virtually unfettered ability of administration officials to move dollars from one classification of Iraqi relief and reconstruction to other classifications. And I object to Ambassador Bremer's unilateral approach to spend U.S. taxpayer's money on such things as zip codes for Iraq, expensive business school scholarships, and a honey pot for high-priced U.S. consultants.

Nevertheless, I will vote in favor of this bill. I do so in order to provide $67 billion to support the American troops who are in harm's way in Iraq and Afghanistan and elsewhere. And I do so because the Senate wisely decided last night to provide one-half of the funding for Iraqi reconstruction as a loan, which could become a grant only if 90 percent of Iraq's bilateral debt was forgiven. I have long maintained that Iraqis must have a stake in the reconstruction of their own country and Iraqis must have a say in decisions that affect their future. The Bayh, et al., amendment gives them the investment in their own future that is so important to them and to us.

Mr. President, last week the Brady Campaign to Prevent Gun Violence United, with the Million Mom March, released a report entitled ``Disarming Domestic Violence Abusers.'' This report provides a guide for closing loopholes in State gun laws that allow domestic violence abusers to purchase or possess firearms and offers Congress some insight into how to help our States effectively enforce gun safety laws.

Under current Federal law, domestic violence abusers subject to restraining orders or convicted of domestic violence are prohibited from owning guns. Despite the law, some domestic violence offenders continue to gain access to firearms.

The Brady report proposes a number of ways to keep guns out of the hands of domestic violence offenders. Among the suggestions are ensuring that restraining orders clearly state that the possession of a firearm is prohibited and that restraining orders be entered into state and national databases used to conduct background checks on gun sales. Further, the report recommends that law enforcement remove firearms from the scene of domestic violence incidents. Finally, stopping domestic abusers from buying additional guns requires background checks on the sale of all firearm transfers, including those that take place at gun shows.

The deadly combination of domestic violence and guns put many women and families at great risk. While Federal laws provide a general framework to prevent abusers from purchasing or possessing firearms, the Federal laws will not be effective in protecting women from armed abusers until every State enacts complementary laws. I urge my colleagues to read the Brady Campaign's report and to support Federal efforts that assist States with enforcing our Nation's gun safety laws.

Mr. President, I first thank the Senators who have been so deeply engaged in coming up with a bipartisan amendment. It is critically important there be a bipartisan amendment relative to issues of war, peace, reconstruction, and the aftermath of war. I congratulate them on it. I support this amendment.

The administration has requested approximately $20 billion for the reconstruction of Iraq and the entire sum is intended to be a grant. We are told that Saddam Hussein's debts are so great that we cannot contemplate the new Iraq taking out a loan against their huge resource, the second largest oil reserves in the world, perhaps $1 trillion or more, so that they can become involved in their own reconstruction. Only a grant, we are told, will do, even though this is a country with a tremendous resource. We are told they cannot contribute to their own reconstruction financially.

It was just last March Deputy Secretary of Defense Wolfowitz said that ``we are dealing with a country that can really finance its own reconstruction, and relatively soon.'' And it can. It surely can help finance its own reconstruction and would be far better off if it did help to finance its own reconstruction.

If the Iraqis possessed billions of dollars in gold bullion, I cannot imagine anyone talking about granting them $20 billion. They have $1 trillion in liquid goal. Yet the suggestion for us to propose to Iraq that they can stand on their own feet, that they can contribute to their own reconstruction by a tiny fraction of that asset being used, somehow or other that does not mean we are leading--I reject that. We have led with our lives, almost 350 American lives. Every one of those lives shows resolve. Every one of the 1,700 Americans who have been injured show resolve. And we are going to continue to show resolve with our lives on the line.

To suggest that Iraq, with an asset of $1 trillion, somehow or other should not be part of its own reconstruction financially is portrayed here as a lack of leadership. To me, it is a central element of wisdom and recognizing that Iraq has a right to be treated as a country that has great resources, great capabilities and we need to treat them as a partner.

What is missing from the Bremer plan is a sense of ownership by Iraq of its own reconstruction. The money involved in the plan is U.S. money being appropriated to a U.S. administrator, who is going to spend the money pretty much as he sees fit. That is not the best way to succeed in Iraq. The best way is Iraq having the will to succeed.

There has been a suggestion that somehow or other we do not have the resolve if we become partners with Iraq. It is quite the opposite. Iraq must have the will to succeed and contribute to its own reconstruction with a tiny fraction of its own resources as a reflection of that will to succeed.

If Iraqi money were involved, I don't think this plan would have proposed new ZIP Codes for Iraq; sending Iraqi students, at huge expense, to business schools; some kind of a big honeypot for U.S. consultants. Is that how the Iraqis would be spending their money? I doubt it. When we talked to the Iraqis who came here, we asked them if they had a role in this plan? We were told, no; this was our plan.

This has got to be their plan for their own reconstruction. They have to own it. It is their country. We can help them. We can be a partner, and God knows we have been. All the blood that we have shed for their liberation has surely made us a partner. Nobody is going to be able to misconstrue this as our aiming at their oil resource. No one can misconstrue a grant of $10 billion, and a following loan of another $10 billion if others will contribute, as somehow or other targeting their resources. Nobody is going to buy it. There may be an effort made to misconstrue it, but nobody is going to buy that. We shed too much blood. We have spent too much money in Iraq for this to be misconstrued this way.

One other thing: Our simply giving them billions without their participating, and then our deciding how to spend it, is going to keep America as the target of terrorists, not just because of the military power that we deploy so visibly, but because of the reconstruction projects that we choose so unilaterally. If an electric power plant is built with our money--it's a visible U.S. target for terrorists. If its built with Iraqi money--it's less of a lightening rod.

The distinction is important in another way. Iraqis will have more incentives to protect and to fight what their money builds. For those reasons alone, the future of Iraq will be more assured if Iraqis have the financial stake to succeed.

This has to be a partnership. We must join with Iraq in the reconstruction. We should not dominate. We should not control. We should not determine. Their resources should be

spent on their own reconstruction, with them, surely in part, choosing their priorities as to what is important for them.

That is what we should all want for Iraq. And our simply saying, here is $20 billion, these are the ways we will spend the $20 billion--is not the way to help Iraq get back on its feet. It is the way to signal to the world that we control, we dominate, and that is the worst message that we can send to the world.

Mr. President, do I have time remaining?

Mr. President, my own preference would have been, instead of a direct loan from us, that there be a loan from a third party, guaranteed by us. That is my preference because that would have taken away any possibility of misconstruing what we are doing, any propaganda value that might be gained by anybody else by saying somehow or other the United States is going to be a creditor, therefore, we have designs on Iraq. That could have been avoided if there were a third party making the loan, with our guarantee. If this amendment were not adopted--and I hope it will be--I would offer such a loan guarantee amendment as a preferable way to go. But this amendment is preferable to the grant approach of the administration.

I yield the floor.

Mr. President, I commend the services of Dennis Hertel, who is retiring after 6 years as a director of the Northeast-Midwest Institute. Dennis has ably served as chairman of the Institute's policy committee.

Dennis, as all my colleagues know, also is a former Congressman from Michigan. He served with distinction on both the Armed Services and Merchant Marine and Fisheries Committees.

I serve as a cochair of the Northeast-Midwest Senate Coalition's Great Lakes Task Force. For many years, the bipartisan Coalition and the Institute have provided valuable services to the State of Michigan and the entire Northeast-Midwest region. Dennis Hertel has been particularly effective in ensuring that the Institute's work is relevant to policymakers. He also has been a valued champion of protecting and restoring the Great Lakes. I am pleased to commend his leadership at the Northeast-Midwest Institute.

Mr. President, I bring the National Instant Criminal Background Check Improvement Act, formerly called the Our Lady of Peace Act, to the attention of my colleagues. On March 12, 2002, a priest and a parishioner were killed at the Our Lady of Peace Church in Lynbrook, NY, by a man who was able to obtain a gun despite the fact that he had a prior disqualifying mental health commitment and a restraining order that should have prevented him from purchasing a gun. The man who committed this double murder passed a Brady background check because the NICS database did not have the necessary information to determine that he was ineligible to purchase a firearm.

The NICS Improvement Act would provide funding to fix the hole in the current NICS background check system caused by the failure of many states to computerize and update their criminal history records. While the Brady check system currently provides fast responses to firearms dealers for over 90 percent of gun purchasers within a few minutes, responses are occasionally delayed because information concerning state and local convictions is not up-to-date or available. This can result in delays for some who lawfully seek to purchase a gun and the failure to block gun sales to some unlawful purchasers. To fix this problem States need adequate funding to input and update criminal history data. This bill would provide $1 billion to help States do just that.

This is not a small problem. According to Americans for Gun Safety, 25 States have automated less than 60 percent of their criminal conviction records. Twenty States do not automate domestic violence or temporary restraining order records. This shortcoming in our public safety system, according to AGS statistics, has allowed over 10,000 prohibited buyers to obtain a gun because the background check could not be completed within the three business days as required by the law.

The NICS Improvement Act has been sponsored by Senators on both sides of the aisle, and I urge my colleagues to support it.

Mr. President, I voted for the McConnell amendment, as modified, because I believe that it is appropriate to recognize and commend the men and women of our Armed Forces for their bravery, professionalism and dedication during the military campaigns in Afghanistan and Iraq; to honor the sacrifice of those who died or were wounded and to convey our deepest sympathy and condolences to their families and friends; and to support the efforts of communities across the Nation who are honoring our troops.

Although I voted for the amendment, I want to make clear that I have some reservations about some parts of it. For example, I do not believe that the planning for the post-Saddam portion of the military campaign in Iraq was done well. Additionally, I want to note my concern that there may be unacceptable profiteering by some contractors in the post- Saddam period in Iraq.

Mr. President, I have cosponsored the Schumer sense-of- the-Congress amendment which is before the Senate. The amendment calls upon the Attorney General to appoint an independent special counsel to investigate allegations that a high ranking official or officials within the Bush administration purposely disclosed to the media the identity of a CIA agent involved in clandestine operations.

If these allegations are true, they are extremely serious. In fact, the individual or individuals who provided this information to the media may well have committed a felony under federal law. Such a disclosure could endanger the CIA operative involved, former Ambassador Joseph Wilson's wife, and makes it impossible for her to continue to function as a clandestine CIA operative. This act could also endanger a number of individuals, assets, contacts and even mere acquaintances of the CIA operative. And, this act may send a cold shiver down the spine of every CIA employee and asset now operating under cover anywhere in the world. If the administration itself will not safeguard their identities, how can they feel secure? These are men and women playing absolutely critical roles in the defense of our national security. The role in our security of such individuals gathering intelligence around the world has been all the more clear since September 11, 2001.

Mr. President, this amendment seeks to send a clear message that we believe that the American people deserve a credible and independent investigation not influenced by or even weakened by the perception of influence which results from an appointee of the President investigating high level administration officials. An appointment of a special counsel of unquestioned integrity and credibility is the only way to assure that independence. I hope the majority will permit a vote on this sense-of-the-Congress amendment today and that the Senate will adopt this amendment.

Mr. President, on September 18, 2003, the Bureau of Justice Statistics released its annual report on the National Instant Criminal Background Check System, also known as NICS. According to its report, approximately 136,000, or 1.7 percent, of the 7.8 million of the gun checks performed by the NICS system resulted in a denial. Since its inception, the NICS database has prevented approximately 976,000 individuals from illegally acquiring a firearm. The report went on to note that 66 percent of the rejections were due to a felony record or outstanding warrant, and about 14 percent were rejected for a domestic violence misdemeanor conviction or restraining order.

Earlier this year, the Americans for Gun Safety Foundation released a report entitled, ``The Enforcement Gap: Federal Gun Laws Ignored.'' The report analyzed the Justice Department's record enforcing and prosecuting gun laws. The report examined prosecution data acquired under the Freedom of Information Act from the Justice Department for fiscal years 2000 through 2002. The AGS study reveals a significant gap between the number of Federal gun crimes committed and the number of Federal prosecutions initiated.

The report found that 20 of the 22 major Federal gun laws are rarely prosecuted. The two statutes consistently enforced are laws against the use of a firearm in the commission of a Federal crime and a felon in possession of a firearm. The 20 laws that address other illegal firearm activity, including gun trafficking, firearm theft, lying on a criminal background check form, removing firearm serial numbers, and selling guns to minors are rarely enforced according to the AGS study.

The statistics in the AGS report are startling. According to AGS, in the fiscal year ending September 30, 2002, U.S. Attorneys filed only 578 cases against individuals who lied on the criminal background check form to purchase a firearm despite the fact that over 100,000 people were denied purchases for that reason. President Bush and Attorney General Ashcroft pledged to vigorously enforce the gun laws on the books, but the AGS report seems to indicate that the Bush administration has failed to live up to the promise. I believe vigorous law enforcement is a critical step toward reducing gun violence. I urge the Justice Department to step up its efforts to prosecute not only people who commit gun crimes, but those who illegally seek to buy a gun.

Mr. President, the Small Business Administration 50th Anniversary Reauthorization Act of 2003 reflects a bipartisan effort that passed the Senate Small Business and Entrepreneurship Committee unanimously. This bill reauthorizes many Small Business Administration, SBA, programs for 3 years as well as authorizes a number of pilot programs.

The reauthorization bill is a great improvement over the President's proposal which would have frozen SBA programs at fiscal year 2003 funding levels for 6 years. By reauthorizing the SBA over a shorter 3- year period, as Congress has done traditionally, our

bill allows Congress to exercise closer oversight than would have been the case under a 6-year bill. Our bill is responsive to our Nation's small businesses and entrepreneurs, many of whom have no alternative credit source and allowing the SBA to make more loans to small entrepreneurs. These entrepreneurs provide the job creation and business expansion that can result from the small business loans.

I am pleased the Senate SBA reauthorization bill contains an amendment I authored to establish the Small Business Intermediary Lending Pilot Program to address the needs of expanding small business. The pilot lending program is aimed at businesses that need loans that are larger than those available under the SBA microloan program but a variety of reasons--including lack of sufficient or conventional collateral--are unable to secure the credit they need at the terms they need through conventional lenders, even with the assistance of the 7(a) program.

The pilot lending program is designed to work through local non- profit lending intermediaries. This proposal authorizes the SBA to make 1 percent, 20-year loans on a competitive basis to up to 20 non-profit lending intermediaries around the country. These loans would be used to capitalize a revolving loan fund through which the intermediary would make loans of between $35,000 and $200,000 to small businesses. Unlike the SBA microloan program there would be no technical assistance grant provided to the intermediary. All administrative costs or technical support provided to business borrowers would be covered by the interest rate spread between the lending intermediary's 1 percent loan from the SBA and the loans made to the business borrowers.

While the SBA is committed to ensuring that 7(a) lenders make smaller loans, this pilot is designed to reach a sector of small businesses that 7(a) lenders cannot and will not reach due to the perceived higher risk of these businesses. Many of our States, including Michigan, Maine and Idaho, are fortunate to have a health network of community based, non-profit intermediary lenders that are experienced and successful in meeting the needs of these businesses. This pilot program will give them additional tools to help them create badly needed jobs among small businesses.

Finally, I am pleased that the reauthorization bill contains the bill providing disaster relief for small businesses damaged by drought. This includes a provision I authored which would make eligible small businesses hurt by low water levels on the Great Lakes. I am also glad to see it includes the childcare lending pilot program to allow affordable and low interest SBA 504 loans for non-profit child care center. It is my hope that this program will spur the establishment and expansion of child care providers.

Mr. President, I am reluctant to enact a short-term extension of the highway funding bill without improving equity for donor States. At issue is the historic mistreatment of about 20 States, including Michigan, known as ``donor'' States, who, year after year, have sent more gas tax dollars to the Highway Trust Fund in Washington than were returned in transportation infrastructure spending. The remaining 30 States, known as ``donee'' States, have received more transportation funding than they paid into the Highway Trust Fund.

This came about in 1956 when Senators from a number of small and large States banded together to develop a formula to distribute Federal highway dollars that advantaged their States at the expense of the remaining States. They formed a coalition of about 30 States that would benefit from the formula and, once that formula was in place, have tenaciously defended it.

At the beginning there was some legitimacy to the large low- population predominately Western States getting more funds than they contributed to the system in order to build a national interstate highway system. Some arguments remain for providing additional funds to those States to maintain the national system and our bill will do that. However, there is no justification for any State getting more than its fair share.

Each time the highway bill is reauthorized the donor States that have traditionally subsidized other States' road and bridge projects have fought to correct this inequity in highway funding. It has been a long struggle to change these outdated formulas.

Through these battles, some progress has been made, but we still have a long way to go to achieve fairness for Michigan and other States on the return on our Highway Trust Fund contributions. At stake are tens of millions of dollars a year in additional funding to pay for badly needed transportation improvements in our States and the jobs that go with it. Unfortunately, this short-term extension bill does not make any improvements on the rate of return for donor States, even on the new funds that are included in this bill that are above last year's funding levels.

My colleagues have argued that this short-term bill is a straight ``clean'' extension of Federal highway and transit programs. They have argued that we cannot accommodate any policy changes in an extension bill such as improving the rate of return for donor States. But this bill does include one policy change. It includes an increase in funding over last year. In fairness to donor States and to bring us closer to narrowing the funding gap between donor and donee States, the additional money contained in this bill should have been distributed to donor States at a higher rate.

Unfortunately, this bill does not do this. It contains more money than last year yet fails to address the longstanding inequity. Every time we extend these programs without addressing equity, donor States lose out on getting back their fair share of gas tax dollars currently being spent in other States. There is no logical reason for some States to continue to send that money to other States to subsidize their road and bridge projects and to perpetuate this imbalance is simply unfair.

I plan to enter into a colloquy with the chairman of the Senate Environment and Public Works Committee to obtain a commitment to achieve a 95 percent rate of return for a donor State's share of its contributions to the Highway Trust Fund in the long-term transportation reauthorization bill, up from 90.5 percent under the current bill.

This is an issue of simple fairness and we should not be satisfied until we achieve it.

Mr. President, I am concerned that the 5-month highway bill extension being considered by the Senate today does not address the inequity faced by the donor States for so many years. The donor State inequity issue is the historic problem of about 20 States, including Michigan, Ohio and Oklahoma, known as ``donor'' States, who have sent more gas tax dollars year after year to the Highway Trust Fund in Washington than were returned in transportation infrastructure spending. The remaining 30 States, known as ``donee'' States, have received more transportation funding than they paid into the Highway Trust Fund. For a long time there has been no legitimacy to retaining such antiquated and unfair formulas that require taxpayers in 20 of our States to subsidize highway projects in 30 other States. We should not consider a highway bill without addressing this important issue.

It is a high priority to see that this historic inequity be corrected. At stake are tens of millions of dollars a year in additional funding to pay for badly needed transportation improvements in Michigan and the jobs that go with it. My colleague from Ohio and I have authored legislation that would bring donor States to a 95 percent rate of return on their contributions to the Highway Trust Fund. This would be up from the current minimum rate of return of 90.5 percent under the current TEA-21 bill. I am reluctant to see even a short term extension of the highway bill go through without increasing the minimum rate of return for donor States to address the inequity. I would at the very least like to get a commitment from the chairman that achieving donor State equity in a 6-year reauthorization bill in his intention and an urgent priority. I know he is as determined as we are to achieve equity for donor States.

Mr. President, I am reassured to hear such a strong commitment from my colleague from Oklahoma to achieve a 95-percent minimum rate of return for all States in the long-term highway reauthorization bill. I look forward to continuing to work closely with the chairman to achieve this goal and in the fight for true donor State equity.

Mr. President, it is my great pleasure to congratulate the Detroit Shock on their victory of the Women's National Basketball Association, WNBA, Championship. Last week, the Detroit Shock defeated the two-time defending WNBA champion Los Angeles Sparks, 83-78. The Detroit Shock victory is the first professional basketball championship for the city of Detroit since the Detroit Pistons won back-to-back championships in 1988 and 1989.

The Detroit Shock's exceptional season broke several WNBA records. I am proud to say that the Shock is the first team in American professional sports since 1890 to go from the worst in their league to the best the following year. The Detroit Shock finished the year with the best record in the league at 25-9. Also, Game 3 of the finals was the highest scoring WNBA finals game in the history of the league, as well as the highest attended game in the league's 7-year history. The Palace of Auburn Hills hosted the sellout crowd of 22,076 fans.

In the final game of the best of three series, Ruth Riley, the 6-foot 5-inch center for the Shock, dominated the court. She scored a career- high 27 points and was named the final's Most Valuable Player. Deanna Nolan from Flint, MI scored 17 points, including a three-point shot with less than a minute left, giving the Shock a 75-73 lead. Swin Cash, the Shock's starting forward, added 13 points, 12 rebounds, and nine assists. The league's rebounds leader and Rookie of the Year, Cheryl Ford, contributed 10 points and 12 rebounds for the Shock. The WNBA Champions were led by their head coach, Bill Laimbeer, himself an instrumental player in the Detroit Pistons' Championship. The finishing touch was added to the season when Coach Laimbeer was named the Coach of the Year.

Detroit Mayor Kwame Kilpatrick declared September 18, 2003 as Detroit Shock Day and the Palace of Auburn Hills has officially changed its address to Three Championship Drive. I am pleased to join Senator Stabenow and my colleagues in the Senate in offering my heartiest congratulations to the Detroit Shock as the players, coaches, staff, and fans celebrate their first Women's National Basketball Association Championship. I look forward to another successful season next year. And, we in Detroit hope that the Shock's worst-to-first season will serve as an inspiration to the Detroit Tigers next year.

Mr. President, I will support the Homeland Security appropriations conference report today because this funding is vital to our first responders and all of those responsible for protecting us. I am disappointed that the conference committee rejected additional funding for first responders, port security grants, aviation security, additional Customs inspectors at our borders and other protective measures. At a time when homeland security should be a top priority, we should not be underfunding these programs.

In addition to inadequate funding, the grant formula that is used to distribute funding under the Office of Domestic Preparedness State Homeland Security Grant Program is inequitable and needs to be changed. This program distributes funds using a minimum State funding formula that arbitrarily sets aside a large portion of the funds to be divided equally among the States, regardless of need. Many Federal grant programs provide a minimum State funding level to ensure funds reach all areas of the country. But the State minimum formula in this Department of Homeland Security appropriations bill, which is taken from the USA Patriot Act and sets aside 0.75 percent of the total funds as a base for each State, is unusually high and therefore inequitable. I will continue to work to change this formula so that funding is allocated in an equitable and reasonable manner.

I am also disappointed that this bill does not sufficiently address a problem known as ``corporate inversions.'' As young men and women are putting their lives on the line for us and our country, some corporations have put profits before patriotism by pretending to reincorporate in Bermuda or some other offshore tax haven to avoid paying their fair share of U.S. taxes. This process is called corporate inversion. It is unfair, it is founded on a deception, it mistreats the average American taxpayer, and it undercuts U.S. corporations that do pay their taxes. A company simply set up a shell headquarters in a tax haven, while all the benefits of living in America remain, all the benefits we would hope to provide in this bill--for instance, protection, homeland security, police, fire, port security. They take advantage of all the other services which are provided to these particular corporations. But because a shell headquarters has been opened up for a few of these corporations in Bermuda, they have avoided paying taxes.

I am disappointed that the conferees chose to allow a special benefit to these unpatriotic companies to continue to exist. Back in July, when this body debated the bill before us, the Senate adopted the amendment I offered with Senator Reid that disqualified these unpatriotic companies from competing for homeland security contracts. Unfortunately, the conference committee dropped this amendment from the bill, so those who have engaged in these so-called inversion transactions in past years can still enter into homeland security contracts.

They continue to use our roads and our law enforcement, our education system. They use our free-trade laws. But then they avoid paying taxes by opening up a post office box and a computer in a tax haven.

Inversions are unfair to the taxpayers who are left holding the bag and unfair to the U.S. companies that are doing the right thing by not inverting but who nevertheless are at a competitive disadvantage because of these sham moves. Those that engaged in these specious inversion transaction in past years can still enter into homeland security contracts--the current prohibition in the law only applies to future inverters, not those that did so previously. The competitive advantage these inverters enjoy vis-a-vis every other U.S. company, therefore remains undisturbed.

Senator Reid and I, along with other of our colleagues, have introduced a bill that would deny tax benefits to U.S. companies that invert by continuing to treat them as U.S. companies for tax purposes. This bill would not only level the playing field between these companies and their U.S. competitors, it would also save other U.S. taxpayers from having to make up an estimated $4.9 billion in lost tax revenues over the next 10 years.

I hope that we will soon have an opportunity to act on this legislation in order to address this problem.

Mr. President, I call up amendment No. 1750 and ask for its immediate consideration.

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

This amendment establishes a cost-effective program to fill the Strategic Petroleum Reserve. I understand it has been cleared by both of the managers.

Since late 2001 the Department of Energy--DOE--has been steadily adding oil to the U.S. Strategic Petroleum Reserve, SPR, in order to fill the reserve to its maximum capacity of 700 million barrels. In late 2001, the reserve held about 560 million barrels of oil; today holds nearly 620 million barrels. DOE anticipates that at the current fill rate it will reach its goal of 700 million barrels sometime in 2005.

Since early 2002, DOE has been acquiring oil for the SPR without regard to the price of oil. Prior to that time, DOE sought to acquire more oil when the price of oil was low, and less oil when the price of oil was high. In early 2002, however, DOE abandoned this cost-based approach and instead adopted the current approach, which does not consider cost when buying oil for the SPR. Since over this period the price of oil has been very high--often over $30 per barrel--and the oil markets have been tight, this cost-blind approach has increased the costs of the program to the taxpayer and, of great significance, put further pressure on tight oil markets, thereby helping boost oil and gasoline prices to American consumers and businesses.

The bipartisan amendment Senator Collins and I are offering today is simple. It would encourage DOE to consider the price and supply of oil when buying oil for the SPR. It would direct DOE to minimize the program's cost to the taxpayer while maximizing our energy security.

The Permanent Subcommittee on Investigations spend a year and a half looking at oil markets and the SPR. In March of this year my staff on the subcommittee published the repot of the investigation. In summary our investigation found:

In 2002, DOE began to fill the SPR without regard to the

price of oil.

Filling the SPR in tight market increased U.S. oil prices

and hurt U.S. consumers.

Filling the SPR regardless of oil prices increased taxpayer

costs.

Despite its high cost, filling the SPR [in 2002] did not

increase overall U.S. oil supplies.

The March report also warned that the deliveries that were then scheduled for later in 2003 would drive oil prices higher because prices were high and inventories were low. Unfortunately, this prediction turned out to be accurate.

Our Report recommended:

DOE should defer all SPR deliveries . . . until near-term

crude oil prices fall and U.S. commercial inventories

increase.

DOE should conduct a cost-benefit analysis of the previous

SPR fill policy compared to the current policy.

DOE should restore its SPR business procedures allowing

deferrals of oil deliveries to the SPR when crude oil prices

are high or commercial crude oil supplies are tight.

Both Houses of Congress support the goal of filling the SPR to its capacity. I support this goal, too. This amendment seeks to further this goal and our national energy security at least cost to the taxpayers. For many years the SPR program followed the types of procedures that DOE has recently abandoned. The SPR program office itself has recommended the DOE return to using these market-based procedures. Under the amendment DOE would continue to have the discretion to determine when to buy oil for the SPR, and under which procedures, but DOE would be encouraged to use that discretion in a way to minimize costs while maximizing national energy security.

Any successful businessperson knows the saying, ``Buy low, sell high.'' This is as true for oil as it is for pork bellies and stocks. It is as true for the Strategic Petroleum Reserve as it is for any business involving a commodity. Indeed, in a recent presentation to other countries on how to create and manage a strategic reserve, DOE itself states: ``The Key To A Successful Strategic Reserve Is Cost Control.'' DOE identifies the major cost elements of a strategic reserve as capital costs, maintenance costs, and oil acquisition costs. Once constructed, the capital costs and the maintenance costs are largely fixed. The main variable cost, therefore, is the cost of acquiring oil

for the SPR. DOE itself identifies for other countries the ``Lessons Learned to Control Oil Acquisition Costs'' as follows:

Let the markets determine your buying pattern.

Buy in weak markets.

Delay deliveries during strong markets.

Use your acquisition strategy to stabilize markets.

Prior to early 2002 DOE followed this sensible strategy when acquiring oil for the SPR. Mr. President, I ask unanimous consent that excerpts from this DOE presentation to other countries be entered into the record.

Part of this strategy--allowing deliveries to be deferred when prices were high and supplies tight--was spelled out in the ``Business Procedures'' for the SPR program issued by DOE in January 2002. The Business Procedures spell out how scheduled deliveries of oil to the SPR can be deferred. Generally, companies will ask for a deferral when the market is tight so they can meet their supply commitments to refiners who have an immediate need for the oil. DOE's procedures provided that a company could be granted a deferral in return for additional barrels of oil to be delivered at the later date. DOE calculated the amount of additional oil that would be delivered by comparing the market prices at the time of delivery was originally scheduled and at the time of the deferred delivery.

DOE's own documents state that deferrals of oil scheduled to be delivered in 2001 provided an additional 3\1/2\ million barrels of oil for the SPR at no additional cost to the Government. Deferrals of deliveries scheduled for 1999 and 2000 had added another 3\1/2\ million barrels. At an average cost of $25 per barrel, these deferrals added a total of 7 million barrels of oil to the Reserve, worth about $175 million, for no cost to the taxpayer. The SPR program projected:

The potential for savings to the Treasury if we continue to

follow this business model until the Reserve is full is

additional hundreds of millions of dollars.

But in April 2002, DOE stopped allowing deferrals of scheduled deliveries. Instead, DOE began to buy oil for the SPR without regard to the cost of oil or the supply of oil, and refused requests for deferrals. DOE has not explained the reason for abandoning its previous policy.

In addition to losing the benefits from deferrals, both in terms of oil gained and dollars saved, the abandonment of the previous policy is costing taxpayers because DOE has been paying top dollar for the oil placed into the SPR. Oil acquired for the SPR at $35 per barrel costs the taxpayers $10 more per barrel than oil acquired at $25 per barrel. Even more modest savings per barrel add up to large savings over the course of the program. In 2002, DOE's SPR program calculated:

If the SPR can average down the price of oil it injects in

the Reserve by $1 per barrel between now and 2005, the U.S.

Treasury will be better off by $125 million, a direct

benefit.

But in these times of high gas prices, the DOE shift has another highly negative effect.

Filling up the SPR affects the price of oil and gasoline. In a tight market, filling the SPR reduces the amount of oil in private sector inventories, which, because it reduces available supply, will then lead to increases in the price of oil and petroleum products, such as gasoline, diesel fuel, jet fuel, and home heating oil. When prices are high and the market is tight, refiners will use up the oil in their inventories rather than purchase new oil in an expensive market, and wait for prices to fall before buying more oil. In a tight market, therefore, the additional demand for oil created by the SPR program will lead companies to take even more oil out of their own inventories to fill Government needs. In a tight market, the net result of the SPR program will not be any overall increase in domestic oil supplies, since the amounts of oil added to the SPR will come at the expense of oil in private sector inventories. These private commercial inventories are thereby reduced as a result of filling the SPR.

Oil prices are directly related to the supply of oil. When supplies are plentiful, prices fall. When supplies are scarce, prices rise. The supply of oil is determined by the amount of oil produced in oil wells around the world and the amount of oil in storage. As either the amount of oil produced or the amount of oil in storage decreases, prices will increase. In a tight market, therefore, when supplies are scarce, filling the SPR will lead both to a decrease in private sector inventories and a corresponding increase in the price of oil.

The Department of Energy's own documents explain this effect as follows:

If we look at the SPR from the perspective of daily supply

and demand, the SPR fill rates are inconsequential. The fill

rate is 100-170,000 barrels per day compared to world

production and consumption of 75 million barrels per day.

However, when OPEC countries are determined to maintain

discipline in their export quotas, the cumulative impact of

filling the SPR becomes more significant when compared to

U.S. and Atlantic basin inventories. Essentially, if the SPR

inventory grows, the 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.

Oil companies doing business with the SPR program supported DOE's business procedures in place prior to the spring of last year. These procedures afforded the contractors the flexibility to re-schedule deliveries to the SPR in accordance with market conditions. In exchange for providing the oil companies with this flexibility, the U.S. government was able to obtain additional barrels of oil for the SPR at no additional cost to the taxpayer. This enabled the Reserve to be filled faster and at less cost than if contractors were not allowed to reschedule their deliveries. These procedures were a win-win for taxpayers and the SPR.

And, of course, any increase in the price of oil will soon lead to an increase in the price of the various petroleum products, including gasoline, diesel fuel, home heating oil, and jet fuel. Hence, the SPR program affects price of basic oil products for a wide variety of American consumers and businesses.

The amendment I am offering today would encourage DOE to reinstate these ``win-win'' procedures for filling the SPR.

Mr. President, I ask unanimous consent to have printed in the Record a recent editorial critical of DOE's cost-blind approach to filling the

The editorial, in the Omaha World Herald, dated August 14, reads:

In general, we are strong supporters of keeping the

nation's Strategic Petroleum Reserve at or near capacity in

case of a national emergency. However, there is such a thing

as bad timing. We believe the administration has been making

a mistake by refilling the reserve to the tune of about 11

million barrels since the start of May. Commercial U.S. oil

stocks have been low for months. Filling the reserve just now

puts upward pressure on prices. . . . Washington should back

off until oil prices fall somewhat. Doing otherwise is

costing the Treasury unnecessarily and is punishing motorists

during summer vacation driving time.

Under our amendment DOE would retain the complete discretion to determine the pace and schedule for filling the SPR. However, DOE would be required to issue procedures to guide this discretion, and would be required to consider how to maximize our national energy security and minimize costs to the taxpayers while filling the SPR. If implemented properly, such procedures can promote our national energy security, save taxpayers money, and lower oil and gasoline prices for consumers.

Exhibit 1

Proceedings of APEC Energy Security Initiative Workshop on Elements of

Energy Security Policy in the Context of Petroleum, Amari Watergate

Hotel, Bangkok, Thailand, September 14-15, 2001

asia-pacific economic cooperation, energy working group, clean fossil

energy experts' group

Jointly Organized by: Department of Industry, Science and

Resource (ISR), Australia; The Institute of Energy Economics,

Japan (IEEJ), Japan; Ministry of Commerce, Industry & Energy

(MOCIE), Republic of Korea; Ministry of Energy, Mexico;

National Energy Policy Office (NEPO), Thailand; and

Department of Energy (DOE), United States.

Supported by: Asia Pacific Economic Cooperation (APEC) and

Ministry of Economy, Trade and Industry (METI), Japan

strategic petroleum reserve

APEC Workshop on Energy Security Policy: John Shages.

united states policy on responding to oil supply disruptions

The policy of the United States regarding oil supply

disruptions is to rely on market forces to allocate supply,

and to ordinarily supplement supply by the early drawdown of

the Strategic Petroleum Reserve in large volumes and in

coordination with our allies and trading partners.

critical elements to justify a drawdown

A Disruption Event.

Evidence of Supply Stress.

A Price Spike.

the key to a successful strategic reserve is cost control

The benefits come with a drawdown--but the number and

extent of futures disruptions is unknown.

Measuring the degree of damage from a disruption, and the

consequent benefits of a petroleum reserve, to an individual

economy is an uncertain science.

Cost is the easiest aspect to control and has the highest

probability of making the Reserve cost beneficial.

major cost elements

Capital Costs--Including land, facilities, and logistics

systems.

Maintenance Costs.

Oil Acquisition Costs.

capital costs

Dependent on location.

Technology and type of storage facilities.

Refer to the 1999 APERC Study supported by conceptual

designs and cost estimates from PBKBB, Inc.

lessons learned to control oil acquisition costs

Let the markets determine your buying pattern.

Buy in weak markets.

Delay deliveries during strong markets.

Use your acquisition strategy to stabilize markets.

Exhibit 2

[From the Omaha World Herald, Aug. 14, 2003]

Oil's Not Well--Filling the Strategic Reserve Is a Good Idea--But Not

Right Now.

In general, we are strong supporters of keeping the

nation's Strategic Petroleum Reserve at or near capacity in

case of a national emergency. However, there is such a thing

as bad timing. We believe the administration has been making

a mistake by refilling the reserve to the tune of about 11

million barrels since the start of May.

Commercial U.S. oil stocks have been low for months.

Filling the reserve just now puts upwards pressure on prices.

Every motorists sees this at the gasoline pump, where

regular-grade gas is hovering around $1.60.

Oil has again begun to flow from Iraq's vast fields, which

will help somewhat--weeks from now. Meanwhile, the strategic

reserve is at 84 percent of capacity. This seems to us a

comfortable level.

Washington should back off until oil prices fall somewhat.

Doing otherwise is costing the Treasury unnecessarily and is

punishing motorists during summer vacation driving time.

Mr. President, I move to reconsider the vote.

Mr. President, it is with great pride that I pay tribute to an exceptional educator from my home State of Michigan. On September 27th, Robert G. MacEachran will retire after 16 years as Superintendent of the Suttons Bay Public Schools. Mr. MacEachran's dedication to his students and lifelong commitment to maintaining a standard of excellence for the Suttons Bay Public Schools has made a great difference in the lives of many residents of northern Michigan.

Mr. MacEachran began his work in public education as a junior high school math teacher in the Battle Creek School District. He then moved to the East Grand Rapids School District and taught high school math for several years. With many years of teaching under his belt, he decided to pursue his longtime goal of becoming an educational administrator to ensure that schools maintained an environment that encouraged learning by stimulating the minds of all students. Mr. MacEachran moved to the Comstock Park Schools where he served as Assistant Principal, Athletic Director, and Director of Community Service.

After 22 years of service as an educator, Mr. MacEachran moved to northern Michigan and took the position of Superintendent for the Suttons Bay public school system. In this position, he has stressed the importance of using the newest technology to ensure that students have all the resources needed to enrich their learning experience. Mr. MacEachran has also made great

strides in developing new relationships between private and public schools. He developed a partnership between the local Montessori school and Suttons Bay Public Schools that incorporates the Montessori educators and their techniques into the public school curriculum. He was also pivotal in the construction of a new high school. This new building allowed all K-12 grades to be moved to new classrooms.

The dedication and innovation that Robert MacEachran has brought to the Suttons Bay Public Schools during his 16-year tenure as Superintendent and 38 years within the Michigan public school community is exceptional. He has demonstrated unwavering support for the education of Michigan's youth. The legacy that he has left within the Suttons Bay public school system will endure after his retirement. Future generations will greatly benefit from his commitment to the education and development of all children. I am confident my colleagues will join me in offering our heartfelt thanks and appreciation to Robert G. MacEachran and in wishing him well in his retirement.