Floor Statements

Mr. President, let me just say a few words about why this amendment is not a good amendment and one that should be voted down.

This would cap the interest rate for consumer credit extensions at 30 percent in this country, and, frankly, would preempt many States' usury laws unless the State has a lower interest rate.

In other words, preemption of State laws is something we sought to avoid in this bill. We have refused to do so in the homestead provisions, so there is no reason to touch the State usury laws as well.

There is no dispute that lending agencies are already heavily regulated. We have already restricted usury rates on first-lien loans. Additionally, special usury provisions in the National Bank Act and Federal Deposit Act preempt State usury laws for national State banks.

We did not preempt these State laws haphazardly as we would do today by passing the Dayton amendment.

I believe we should stick with the bill as written. We have taken this into consideration. We have worked long and hard over 8 years to get this right. And, frankly, I think this amendment is an inappropriate amendment and should be voted down.

I hope our colleagues will vote it down.

I yield the remainder of our time.

Mr. President, I ask for the yeas and nays.

Mr. President, I rise in opposition to the Nelson amendment, although I commend the Senator from Florida in his work on this issue of identity theft. This amendment is written so broadly, it actually invites fraud despite its well-intentioned purposes. I understand there will be several hearings on the issue of identity theft, and I look forward to working with my friend from Florida and my other colleagues to find a solution. But for now, this is written so broadly that I think it actually invites fraud. I hope my colleagues will oppose the amendment because it would cause a lot of difficulty on this bill.

I am happy to yield.

I do. But it is written so broadly that anybody who claims they have been defrauded, whether they have or have not, qualifies under your amendment. That is way too broad under this bill. I am happy to work with the distinguished Senator, and we will see what we can do later in this Congress. I hope everybody will vote down this amendment.

I move to lay that motion on the table.

The motion to lay on the table was agreed to.

Mr. President, this amendment would provide a nearly fourfold increase in claim amounts and strike the time period. That means it would be much harder to confirm a plan under Chapter 11. It will cost us jobs, because the debtor companies would not be able to survive the bankruptcy process.

My colleague from the Finance Committee is concerned about the co- provisions. Rest assured, they are bad. We all know how many compromises have been made on this bill. This amendment would undo years of hard work.

I urge my colleagues to vote no on this amendment.

I yield the remainder of my time.

I ask for the yeas and nays.

Mr. President, this is an important matter, but this amendment is too. I ask Members to vote no on the amendment.

Mr. President, I rise today in opposition to the Feingold amendment. I explained yesterday why I oppose this provision and would like to summarize my remarks today.

First off, I commend Senator Feingold's commitment to the elderly. He is very sincere in his efforts. We all are concerned about our senior citizens.

I have worked particularly hard on this bill to make sure there are provisions that protect the elderly along with women and children and I think that my colleagues who have worked with me on this bill recognize this fact. We have lots of protections in this bill.

Senator Grassley is the lead sponsor of this bill and he has a long track record of working with the elderly on Social Security and Medicare and other issues, as I do. I serve on the Finance Committee with Senator Grassley, who chairs that committee. We were both proud to have played a role in bringing prescription drug coverage to our seniors under the Medicare program in the landmark medicare reform bill that was enacted last Congress.

My opposition to this amendment has nothing to do with the elderly. I believe that this bill takes their concerns to heart.

I would not object if every State in the Nation passed laws that would put a similar floor--or a higher floor--in their respective homestead laws. But that choice belongs to the States, and not the Federal Government. There is a long history in bankruptcy law of deference to States on issues like homestead provisions.

The hard reality is that nearly every State in the country has vehemently defended their homestead laws. If you do not believe me you can ask the Senators from States like Texas, Florida, and Kansas. They have all been involved in reaching the compromise that has been achieved in this legislation on this issue over the past 8 years.

It is a grand compromise that both sides of the Hill will accept if we vote down the Feingold amendment. The Feingold amendment would bring the bill down.

If some States wish to change their laws, that is their prerogative. A key purpose of this bill, and the purpose of the current homestead provisions, is to curb fraud and abuse.

The provisions of S. 256 impose a 10-year look back for fraud. They impose a 2-year residency requirement that is designed to prevent wealthy debtors from moving from States with low homestead exemptions to States with high or unlimited exemptions and then filing for bankruptcy. They are a compromise--a balance--of States' rights and Federal imperatives under bankruptcy law, and we must let the provisions stand as written. This amendment will upset that balance and could act to bring this bill down.

The reason has nothing to do with a hostility to the elderly, or to any other class of persons, but because the homestead provisions have taken years to negotiate and are the result of difficult choices and compromises. There are many members of this body who would like to see the homestead provisions changed in some fashion, but to accommodate them any further than what presently exists in the bill would likely force other Senators to oppose the legislation.

I urge my colleagues to reject the Feingold amendment, however well intentioned it may be, because this is a grand compromise of a bill that I don't believe the distinguished Senator from Wisconsin has ever supported. The fact of the matter is, if his amendment were agreed to, he would not support this bill. And the reason he would not is because he would not agree to the compromise we have in the bill which the vast majority of Members of Congress on both sides of the aisle in both Houses have agreed to.

I hope we can vote down the Feingold amendment.

I reserve the remainder of my time.

Mr. President, it is my understanding the distinguished Senator from Alabama will have 2 minutes before the Akaka amendment. Is that correct?

He does not need time from my time at this time.

Mr. President, I would be happy to yield some of my time at this point, and then I will have an additional 1 minute immediately before the vote.

Let me answer my dear colleague from Wisconsin. My point is he has never been for this bill. Frankly, he knows this language in this bill is the result of tremendous compromise between the House and the Senate. His amendment, would bring this bill down. All of us would like to make changes. This is a complex bill. I think

all of us, if we could be dictator for a day, would put our own imprint on this bill. But this is 8 years of work, and I don't want to see this bill brought down because one person doesn't agree with one provision. In the viewpoint of the distinguished Senator from Wisconsin, most of the protections he doesn't agree with. He is not going to vote for this bill, whether his amendment is agreed to. All his amendment does is create a confusion and a situation where literally this bill could go down.

We have to get this bill in a form which the House will accept, and this is the form in which the House will accept it.

I yield the remainder of my time to the distinguished Senator from Alabama.

Mr. President, I yield the remainder of my time.

Mr. President, I ask for the yeas and nays.

Madam President, I sat here and listened to my dear colleague from Massachusetts, and almost everything he has spoken about is a flaw in the current bankruptcy system we are trying to change. It is the current bankruptcy system that we have been trying to change for 8 solid years. And guess who one of the principal voices against changing it is? Why, none other than my distinguished friend from Massachusetts, and my distinguished friend from Illinois, who make these great populous arguments on the floor that sound so good. I do not want to characterize them in my Utah terminology, but they are not accurate.

How is that for being a person who uses discretion?

If you listened to the distinguished Senator from Massachusetts, you would think this country can spend trillions of dollars solving every person's problem. I have been here 29 years. I have never heard the distinguished Senator from Massachusetts once ask: Where are we going to get the money to pay for this? How do we pay for this? How do we justify it?

It is easy to talk about taking care of everybody in every way, universal health care, and to decry a Medicare reform bill that adds no less than $400 billion, but maybe as much as $750 billion now-- according to CBO, OMB, and other analysts--and say it does nothing for the poor when that is exactly what it does do, a lot for the poor.

In the 8 years we have tried to correct these infirmities in the bankruptcy bill, we have not had any help from many who are speaking on this floor criticizing this bill today. They have never been for any change unless it is their change in bankruptcy, changes they could not get through the Senate floor. And we have come up with a bill that has been basically passed by huge majorities every time it comes up on the floor because we are trying to correct some of the things the distinguished Senator from Massachusetts is complaining about.

Yet I do not believe--and I can't speak for him--that we have a chance of having him vote for final passage of this bill. It may be because he differs with part of it, as I do. But I am trying to do the best we can in two legislative bodies that have great difficulty passing legislation as complicated as this with as many nuances and changes as this will make in the current laws that will be for the betterment of people in our society and in our country today.

I rise today in total opposition to these two Kennedy amendments. I commend Senator Kennedy for his longstanding commitment to health issues. Most of the health care bills that work in this country are Hatch-Kennedy or Kennedy-Hatch bills over the last 28 years. He knows he can't accuse me of not having compassion for the poor and for those who have difficulty. We wouldn't have passed them had it not been for bipartisan efforts of Republicans and Democrats. So don't let anybody get on this floor and act as though only one side cares about the poor. That is not only a joke, it is a sad joke at that.

I know how devoted the Senator from Massachusetts is, and I share his general concerns about people in our society today who are hard-working people. However, I do not believe these two amendments are the answer to their problems. We accepted the Sessions amendment yesterday. It speaks directly to the circumstances surrounding serious medical conditions, which would be a major change over current law that I believe the distinguished Senator from Massachusetts and others, including the distinguished Senator from Illinois, will vote against in the end because they don't agree with some aspects of this bill. I don't agree with some aspects of this legislation, but I have worked my guts out to try and get a compromise here that will help the poor, that will help our society and will make people more honest, that will stop some of the fraud and abuse.

To continually make this sound as though it is a credit card company bill--give me a break.

I note the distinguished Senator from Massachusetts mentioned the Warren study when he says that half or thereabouts of the people go into bankruptcy because of medical conditions. That study is so flawed, nobody who is in their right mind is going to accept everything in it. First of all, it includes all gambling; that is a medical condition. Drug abuse and alcohol abuse, they are medical conditions. I agree maybe that may be. But those are voluntary medical conditions. It may be somebody is crazy because they gamble all the time. I have known compulsive gamblers. But is it a medical condition that justifies allowing people to cheat their creditors, as is going on in this country today? I don't think most people would agree with that. If you look at the statistics in the Warren report, you have to say: My gosh, why would anybody rely on that?

I believe it is worth pointing out that that report includes gambling debts as a medical condition under the rubric of medical expenses. Let's get real.

This bankruptcy bill is fair. It is needed. I pointed out several abuses yesterday, and I am sure will point out more before this debate is over.

The issues the distinguished Senator from Massachusetts has raised are important ones, as far as I am concerned. Make no mistake about it. But I think we ought to change current law to address them. This bill does to a large degree.

All we hear from Democrats over the years is: We need a means test so the rich pay more. Why are they suddenly against a means test to protect the poor, a means test that requires those who can pay something against their debts rather than every 5 years go into bankruptcy after running up bills galore? Why shouldn't they have to pay or at least try to pay? A means test protects those who are designated poor. And frankly, there are other rules in this new bill that will protect those who are above the means test better than current law.

I would suggest to the distinguished Senator from Massachusetts, if he wants to correct some of these problems--all of which he has raised under current law as though they are going to be caused by this bill-- he ought to vote for this bill, because it takes dramatic steps to change in current law the things he has been complaining about and that I happen to be concerned about as much as he is and others on this floor as well on both sides.

For 8 years we have fought to bring both sides of this floor together. For 8 years we have fought to bring both Houses of Congress together. For 8 years we have tried to correct these deficiencies in the Bankruptcy Code. This bill doesn't correct everything, but it does make strides. It does make real efforts to try and not only be fair but to get people to be responsible for their debts when they have the ability to be responsible for their debts.

The issues the distinguished Senator from Massachusetts has raised are important ones. Make no mistake about it. But let me shine a little more light on these issues. The people the distinguished Senator from Massachusetts and the distinguished Senator from Illinois have held out as victims of the means test will be in fact protected by that test. That is what is amazing to me, how we can hear these populous arguments on the floor as though that is reality. We have heard this so many times. As the decibel level goes up, the reality of those arguments is less and less real.

The Sessions amendment yesterday makes sense, trying to do something about what the distinguished Senator from Massachusetts is complaining about. The things he is complaining about are in the current law we are trying to change. The means test protects the poor.

Now are there going to be problems with any bill that comes out of the Congress? Sure. We have to make an effort to do the best we can to resolve these problems and this bill does make the best effort we can between both Houses of Congress to do so.

I might add that the other amendment of the distinguished Senator from Massachusetts provides a homestead exemption for medically distressed debtors. Well, medically distressed debtors should be taken care of under the Sessions amendment because he specifically provides for that.

We had a vote this morning on a homestead amendment. We all know we cannot accept the amendment. It is an issue for the States, pure and simple. The reason we can't is because after 8 years of careful, serious negotiations, after 8 years of that, we have arrived at a compromise that, though imperfect, is the best we can do. That is what legislating is all about. I wish we could make every bill perfect. Unfortunately, we have to deal with imperfect people. Some of us may think we are perfect and that everybody should do exactly what we think they should do. That isn't reality around here.

So we do the best we can. After 8 years, after multiple votes, and after votes overwhelmingly in favor of this bill, because it makes tremendous changes from current law that do protect the poor, and others as well, and those who are losing billions of dollars because of it--at least millions, because of fraud--we are trying to do what has to be done.

Let me make a few remarks about the Kennedy amendment and why it should be rejected. Yesterday, we acted to adopt the Sessions amendment by a broad 63-to-32 bipartisan vote. The Sessions amendment included medical costs as a factor to be considered under the special circumstances provisions under chapter 13. That amendment will allow those who make those decisions to determine whether people are going to be inordinately hurt by being pushed into chapter 13. You have to believe there are idiots in the system who will not resolve these types of major problems, especially the ones the distinguished Senator from Massachusetts has been talking about.

Please recall that under the so-called means test Senators Durbin and Kennedy are trying to vilify today--when they are always arguing for means tests for the rich--will only result in about 10 percent of those who file for bankruptcy will be required to repay any of their debts out of future earnings. That is right, only 10 percent right off the bat. Eighty percent of those individuals who make under the median income will ever face the prospect of paying past debts out of future earnings. Of the remaining 20 percent, only about one-half will ever be required to pay. When all is said and done, only about 1 in 10 of those who filed for bankruptcy will ever be required to pay past debt from future earnings under the means test.

Medical expenses will be eligible as a factor in determining if and how much money will be repaid by those relatively few--1 in 10--who qualify under the mischaracterized means test. That is not an onerous test; it is fair. It treats medical expenses fairly. That is what we accomplish with the bipartisan 63-to-32 basically overwhelming vote on the Sessions amendment yesterday.

Now, the Senator from Massachusetts opposes this bill. That is no secret. He has opposed every bill we have brought up here in the last 8 years. We should oppose his amendment because the bill already adequately responds to the subject matter of his amendment. By the way, again, all of the litany of bad things that are happening to people, and especially the hard-working poor, are occurring under the current bankruptcy system we are trying to change and make better.

I will also acknowledge that I wish I could make this bill even better. But in all honesty, we are to a point where if we want to correct the wrongs in society that are occurring in bankruptcy, this is the chance to do it, and then let us work in the future to correct what needs to be corrected in this bill. But this is the only chance we have to correct some of the ills the distinguished Senator from Massachusetts is bringing out here today. I commend him for being concerned about those ills, but if he is, he ought to be voting for this bill because we at least do something about it. It may not be exactly what he wants; it is not exactly what I want; but it is the best we can do when we consider this bicameral legislative body called the Congress of the United States.

Again, I want to speak in favor of S. 256--and I think I have been-- the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. This issue has become more important over the last 8 years, when we started to work on reforming the system. It is more important than ever today. Bankruptcies are up markedly.

Over the past decade, look at how they have gone up on this chart. From 1947, all the way up to 2003, you can see how, since about the late 1980s, it automatically shoots up like mad. I know people in Utah who run up all the debts they can for 5 years, then go into bankruptcy, and then they do it again. This is happening much more than it should. As we pointed out yesterday, we have more bankruptcies in 1 year now than they had in the whole Depression of 10 years.

The bankruptcy system can be improved. It seems unlikely that consumer bankruptcy abuses are going to get better without this legislation. I will recount some of the glaring facts about this problem. First, we are seeing more bankruptcies filed every year than in the entire decade of the Great Depression, as I have mentioned. Our economy has generally grown over the last 10 years, and we have enjoyed relatively low unemployment and low interest rates. But despite this, we continue to see record numbers of bankruptcy filings every year. Why is that?

One factor may be that too many people view bankruptcy as an easy way to erase their debts, rather than as a means of last resort. This affects all consumers. When creditors are left without payment, they have to pass these costs on to all of the rest of us. It costs us in terms of higher interest rates, higher downpayment requirements, shorter grace periods, higher penalty fees, late charges, and retailers are forced to raise prices, all because of the abuse of the bankruptcy system, which this bill would do a great deal to correct.

If you want to help the poor, vote for this bill because this bill will save the poor at least $400 a year, minimally, for each household. Bankruptcy can also cost job loss among those who are victims of uncollected obligations. Part of the problem with the current bankruptcy system is that it allows certain higher income individuals to wipe away debts that they can and should be required to pay. Some have mischaracterized provisions in the bill that require some individuals to repay past debts with future earnings. The provision in the bill--the so-called means test--applies only to those persons above the median income. Where a higher income debtor has the means to repay, the means test established in the bill would require such debtor to shoulder more responsibility in paying the bills they have incurred. For debtors below the median income--which is over 80 percent of all filings--there would be no presumption of abuse. But even for those above the median with means to repay a substantial part of their debts, a judge would still have the ability to allow a liquidation bankruptcy to proceed in cases of hardship.

This is not the onerous bill that some of my colleagues would have you believe. Throughout the course of the debate over the last four Congresses, we have had different arguments from opponents of this legislation. It is always the same opponents. Some of those failing arguments are rearing their heads again in this debate. And again, the arguments they are making basically criticize current law that we are trying to change with the bankruptcy bill, we believe for the better. Can you find some flaws in this? Of course, and so can I. But it is head and shoulders over current law and over some of the illustrations my friends on the other side have brought up.

Let me take a few minutes to dispel a few of the more prominent myths about the bill. First, some suggested that higher debt burdens have led to the dramatic spike in bankruptcy filings over the last 25 years. The basic measurement for establishing financial distress shows that this is simply not the case. The debt service ratio--a measurement of income to expenses--has remained relatively constant over the last 25 years, as this chart behind me illustrates. The bottom red line shows the bankruptcy filings per 1,000 families from 1980 up until 2001. The black line on the top is the debt service ratio. This shows that bankruptcies have not increased due to a decreased ability to make payments on debt obligations. Examining the lowest 20 percent of income earners shows that even when the debt service ratio in these categories declined or stayed the same, bankruptcies overall still climbed dramatically, as the next chart reveals.

The bottom line, as you can see, is consumer liabilities between 1979 and 2001. The red line represents consumer assets between 1979 and 2001. The green line happens to be the consumer net wealth between 1979 and 2001. They have all gone up--even the bottom line, the consumer liabilities--but not very much. The others have gone up much more. The consumer assets and consumer net wealth have gone up much more.

Another measurement of financial distress is net wealth, the amount of assets against liabilities. But this test, too, shows that even as net wealth has soared, as was shown on that prior chart, bankruptcy filings have soared as well.

This chart makes the point. The bottom line is revolving disposable personal income. That has gone up from 1959 to 2003. The red line is the nonrevolving disposable personal income. As one can see, that has gone down. The black line on top is the total disposable personal income which has basically remained the same, except it has gone up a little bit in these past years.

Another exaggerated myth is that increased use of credit cards is the cause for more and more bankruptcies. But, again, the facts strongly suggest this simply is not the case. When there has been an increase in the use of credit card debt, this was largely due to a substitution for other high-interest debt.

The chart behind me shows that while revolving debts, such as credit cards, have increased as a percentage of disposable personal income, there is a corresponding decrease in nonrevolving debt. The net effect is that overall consumer indebtedness has remained roughly the same.

Others have tried to argue that increases in housing costs are a major reason for skyrocketing bankruptcy filings, but the amount of income going into mortgage expenses has remained steady over the years. According to Professor Warren's book, ``The Two-Income Trap,'' which was cited favorably by the distinguished Senator from Illinois, Mr. Durbin, yesterday, in the early seventies, mortgage payments constituted 14 percent of a typical family's income.

Here is a chart showing the allocation of income. The red part on the left, the large part, which is 46 percent, happens to be discretionary income. The purple small part is health insurance, and that amounts to 3 percent. Discretionary is 46 percent. The mortgage people are paying is now 14 percent, about the same as it has always been, in that little section of red. The yellow is automobile, which is 13 percent of income, and taxes are 24 percent.

In all honesty, 30 years later, according to Professor Warren, this percentage actually fell to 13 percent. As this chart shows, the mortgage went down to 13 percent. Obviously, attributing the rise in the bankruptcy rate to higher mortgage payments does not appear to be borne out by the facts. Further debunking this myth is the fact that default rates on mortgages have also remained fairly steady over the years.

Another prominent myth about this issue is that about 50 percent of all bankruptcy filings is caused by medical debts. We heard the distinguished Senator from Massachusetts in very excited terms talk about these type of debts, medical debts. Undoubtedly, there are many bankruptcies caused by medical debts. This is why this bill makes several exceptions for treatments of health expenses and health insurance, something that does not exist today. These exceptions do not exist today. This is why we were so pleased yesterday that the Senate adopted the Sessions amendment that explicitly identified medical costs as a factor to be taken under consideration by a bankruptcy judge in deciding whether there are special circumstances that affect a debtor's ability to pay.

But the study cited for the proposition that 50 percent of bankruptcies are medically related is misleading at best. This claim is based on the study conducted by Professor Elizabeth Warren, but this study does not even purport to claim that medical bills were the primary basis for half of bankruptcy filings, as the charts of the Senator from Massachusetts seem to indicate; the study merely claims that about half the filings were medically related. This is a distinction with a real difference, but we did not hear the difference as our friend from Massachusetts was describing this. Only a definition of the health problem that is stretched beyond recognition could lead to the conclusion that these filings were medically caused. The study actually classifies gambling as a medical cause. Gracious, come on. Give me a break. Gambling?

Finally, let us look at two other exaggerated explanations for bankruptcy filings: unemployment and divorce. With respect to unemployment, this chart shows that even as unemployment has dropped, bankruptcy filings continue to increase.

Let me refer to this next chart. The red dots represent the unemployment rate. It has been going down since basically 1981. The black dots show the bankruptcies per 1,000 families, and they have gone up dramatically, as one can see. If there was a correlation between unemployment and bankruptcy, we would have expected bankruptcy filings to decrease over the last 25 years, but this obviously has not been the case. In fact, just the opposite has occurred.

Again, on divorce rates, bankruptcies have increased by a huge percentage, even as we have seen a modest decline in the divorce rate over the last 25 or so years. The red line at the bottom shows bankruptcies per 1,000 households. Look how it has gone up since about 1987. The black dots represent the divorce rate per 1,000 households. That went up, but it is now headed down. That is a good thing for our society. I am glad to see that. But the bankruptcy rates keep going up.

The bottom line is that despite the low interest rates, low unemployment, steady debt ratios, and steady increase in net wealth, bankruptcy filings continue to set record highs. Frankly, these facts suggest another reason to explain the increase in bankruptcy filings is that it is simply too easy for some relatively high-income debtors to simply wipe away their debts and stick all the rest of us in society with them, even where they have the means to pay a substantial share of the obligations. It is absolutely unfair to saddle all consumers with the increased costs associated with these off-the-chart levels of filings. This bankruptcy bill we are debating today will cut down on some of these abuses and bring back some sense of accountability to the high-income debtors.

Let me say again, it is one thing to come on this floor and give these wonderful populist talks about how much they love to help the poor when, in fact, this bill will do more to help the poor than all those talks in the world. And to complain about this bill when what they are really doing is complaining about the current system, it is amazing to me.

The only thing I can conclude is some people who make these arguments actually must believe the people out there are really stupid and that populist arguments really count today, like they used to when people did not have the education Americans have today. That is what those populist arguments are all about. It is easy to stand on the floor, shake your fist, scream and shout, and talk about how bad things are when they are bad because we are not changing them. It is amazing to me, absolutely mind-boggling to me.

I respect anybody who wants to change these laws and make them better. The only way we are going to do that is to pass this bill, and the only way we are going to pass this bill through both Houses is to pass this bill without amendment.

If we want to make some changes, let's do it. We have now been 8 years through this stuff, and the same old tired, wornout saw arguments are still being made by the people who complain about the current system as though this bill is going to make the current system worse. It is going to make it better.

Again, I will acknowledge it is not a perfect bill. My gosh, nothing is around here. But it will make a great difference in some of the complaints that have been lodged against current law.

This bankruptcy bill we are debating today will cut down on some of these abuses and bring back some sense of accountability to these high- income debtors. It will stop some of the fraud and abuse that is going on. It will

make everybody a little more responsible. We put in a lot of other provisions that make corporate America more responsible as well.

Could we do more? I suspect we could, but not and pass the bill. That is my bottom line right now after 8 years of doing this, after passing it four times overwhelmingly in the Senate and overwhelmingly in the House but not being able to get it signed because the one time it did go to the President, President Clinton pocket vetoed it. So I urge my colleagues to join me in supporting this measure. I hope my colleagues will help us finally pass this important measure because it is long overdue. It will help to resolve an awful lot of the problems that we hear complaints about on the floor today by those who have done everything they could over the last 8 years to kill this bill.

If we passed both of the amendments of the distinguished Senator from Massachusetts, even if we could agree that they were good amendments-- and they are not--I guarantee my colleagues he is not going to vote for this bill. He never has, and I do not think he ever will. His reasons are his own, and they are important reasons to him, but I suggest that if our colleagues really mean they want to do something about these awful current situations, this is the bill to do it with. If this bill does not prove to be everything that we would like it to be, let us work in the next session of Congress or immediately thereafter to start trying to make changes that might help.

This bill is a step in the right direction. It is a very important step forward, and we certainly should not allow any killer amendments on this bill that would make it impossible to pass once again.

Hopefully I have been fair to my colleagues. I have tried to be. But I cannot just sit here and let these type of arguments be made without some response, especially since I have heard them over and over again. The complaints are always about current law and some of the aspects of this bill that they just do not like that are essential in order to pass the bill.

So I hope my colleagues will vote against both of these amendments. I am going to do everything in my power to see that they are both defeated.

I yield the floor.

Mr. President, I ask unanimous consent that the Committee on Armed Services be authorized to meet during the session of the Senate on March 2, 2005, at 4:30 p.m., in closed session to receive a classified briefing regarding Department of Defense human intelligence activities.

Mr. President, I ask unanimous consent that the Committee on Energy and Natural Resources be authorized to meet during the session of the Senate on Wednesday, March 2, 2005, at 10 a.m., to receive testimony on the President's proposed budget for fiscal year 2006 for the Forest Service.

Mr. President, I ask unanimous consent that the Committee on Foreign Relations be authorized to meet during the session of the Senate on Wednesday, March 2, 2005, at 9 a.m., to hold a hearing on foreign assistance.

Mr. President, I ask unanimous consent that the Select Committee on Intelligence be authorized to meet during the session of the Senate on March 2, 2005, at 2:30 p.m., to hold a closed briefing.

Mr. President, as I listened to the distinguished Senator from West Virginia speak against filibuster reform, I wanted to make a few points that he did not say, at least as far as I could tell. I did not hear every word of his speech, but I did hear enough of it.

Number one, he did not say that killing judicial nominations by filibuster is part of Senate tradition, nor could he have said that because for the first time in history, we have had filibusters of judicial nominees. Only President Bush's judicial nominees have been filibustered by our colleagues on the other side, and in every case where they were filibustered, those nominees had majority support.

So filibustering judges is not a part of the tradition of the Senate, nor has it ever been.

Some have said that the Abe Fortas nomination for Chief Justice was filibustered. Hardly. I thought it was, too, until I was corrected by the man who led the fight against Abe Fortas, Senator Robert Griffin of Michigan, who then was the floor leader for the Republican side and, frankly, the Democratic side because the vote against Justice Fortas, preventing him from being Chief Justice, was a bipartisan vote, a vote with a hefty number of Democrats voting against him as well. Former Senator Griffin told me and our whole caucus that there never was a real filibuster because a majority would have beaten Justice Fortas outright. Lyndon Johnson, knowing that Justice Fortas was going to be beaten, withdrew the nomination. So that was not a filibuster. There has never been a tradition of filibustering majority supported judicial nominees on the floor of the Senate until President Bush became President.

Number two, if I recall it correctly, the distinguished Senator from West Virginia did not say ruling such filibusters out of order is against the rules. I do not believe he said that because it is not against the rules. At least four times in the past, some of which occurred when Senator Byrd, the distinguished Senator from West Virginia, was the majority leader in the Senate, there have been attempts to change the Senate's rules on the filibuster. Admittedly, I think in some of those cases the Senate backed down and changed the rules, but the effort was made to change the rules, and in the eyes of the Senator from West Virginia and others they should have and could have been changed by majority vote.

Let me say, in fact, all of the examples the Senator from West Virginia cited of legislative filibusters would not be affected by the constitutional option. That is a constitutional option that would allow judicial nominees an up-or-down vote.

That is a very important distinction because never before have judicial nominees been filibustered. Never before has one side or the other, in an intemperate way, decided to deprive the Senate as a whole from not just its advice function, but its consent function. We consent, or withhold that consent, when we vote up or down on these nominees.

Filibustering against the legislative calendar items has been permitted since 1917, and with good reason. I, for one, agree that this is a very good rule. But those filibusters happen on the legislative calendar. That is the calendar of the Senate; it is our legislative responsibility. The filibuster rule, Rule XXII, is to protect the minority. Frankly, I would fight for that rule with everything I have. But executive nominees, filibustering on the executive calendar is an entirely different situation. And it is one that was not addressed in Senator Byrd's remarks.

I myself had never looked at this very carefully until this onslaught of filibusters against 11 appellate court judges took place on this floor. Then I started to look at it, and others have, too, and we now realize there is a real disregard of a constitutional principle by these unwarranted and, I think, unjustified and unconstitutional filibusters. In these particular cases, every one of those people-- every one--had a bipartisan majority waiting to vote on the floor. This distinction is ultimately the critical one. Should a minority be able to permanently prevent a vote on a majority supported judicial nominee? I think the answer is clearly no, and there is nothing in the distinguished Senator from West Virginia's remarks that contradict that conclusion.

Mr. President, I listened with a great deal of interest to my colleague's remarks with regard to the bankruptcy. I will have a few things to say about those remarks in just a few minutes.

Mr. President, I rise in support of the bill, S. 256, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. The essence of this bill is simple. This legislation is designed to make our bankruptcy system more fair and efficient. As well, this bill would cut down on the ability to abuse the current system.

Before I detail some of the abuses of the system that is being abused, I want to make some other points. First, as I said yesterday, this bill has been in the making for 8 years. The Senate passed it three times already. Prior to Senate passage, the Judiciary Committee held an extensive set of hearings and several markups on this bill. This bipartisan, bicameral bill is ripe for passage. I am pleased to report that yesterday the White House released the following statement of the administration policy on the bill. It is short and to the point and it says the following:

The administration supports Senate passage of S. 256 as

reported by the Senate Judiciary Committee. These commonsense

reforms to the Nation's bankruptcy laws will help curb abuses

of bankruptcy protections, reduce uncertainty in financial

markets through improved financial contract netting rules,

increase financial education to prevent unnecessary filings

and help avoid future credit problems, promote international

trade through coordination of cross-border insolvency cases,

and provide increased protection for family farmers facing

financial distress.

I am pleased that the administration's SAP stressed some of the pro- consumer aspects of the bill. While we want to see that those people who borrow money pay it back and that the value of personal property and responsibility is observed, we also want to help keep citizens out of bankruptcy in the first place.

When honest people simply get over their heads financially, we want to give them a fair chance to have a fresh start. Where there are some who are clearly gaming the present system, there are many who find themselves in unfortunate financial circumstances. Given a chance to begin fresh, they can learn from their experiences and once again become the prudent, bill-paying consumers all of us are taught to be.

The data tell us there is a problem and it is a growing problem. Bankruptcy filings are way up, and I mean way up.

We are fortunate to live in a time of unprecedented economic growth. Stretching all the way back to the Presidency of Ronald Reagan, we have generally seen a sustained increase in economic activity. Personal assets and net worth have grown, when compared with individual liabilities. Yet, precisely at this time, bankruptcy filings have blown through the roof.

These facts might help to put it in perspective. Bankruptcies doubled in the 1980s. They doubled again from 1990 to 2003. In 2004 alone, there were 1.6 million more bankruptcies than during the entire Great Depression. There will be more bankruptcies filed this year than in the entire decade of the Great Depression combined.

What explains this dramatic rise in filings? Probably several reasons are at play. Certainly, one of the critical reasons behind the rising tide of filings under the Bankruptcy Code, as years of study document, are the actions of those who flagrantly abuse our generous bankruptcy laws.

Many of those opposed to the bill suggest that bankruptcy filings were up because more and more people face economic hardship. To some extent, this is no doubt true. But we also know, however, that many bankruptcies stem from old-fashioned, outright fraud and abuse.

This potential for abusing the system was not fully anticipated when Congress created our current Bankruptcy Code in 1978. A key purpose of this bill is to help crack down on the abuses of the system. In its simplest terms, our bankruptcy laws attempt to distinguish between those who can and those who cannot repay their debts. When a case is filed under chapter 7 of the Bankruptcy Code, the debtor is required to surrender his assets to a bankruptcy trustee for liquidation and distribution to creditors, except for those assets that are exempt under State or Federal law. Yet under this provision of law, the debtor's future income is protected from creditors.

By contrast, those who file for bankruptcy under chapter 13 retain possession of their assets, but pay all or a portion of their debts through plans approved by the bankruptcy court.

For some contemplating bankruptcy, this makes for a simple strategy: Do everything you can to get into chapter 7. Chapter 7 protects all of your future income from creditors. Once you are protected by chapter 7, you pay off secured creditors--such as your mortgageholder--first.

Only then do unsecured creditors get their chance to get paid back.

Experts tell us about 70 percent of consumer bankruptcy filings are chapter 7 filings, and 95 percent of those make no distribution at all to unsecured creditors.

Let me repeat those statistics because they are important. About 70 percent of consumer bankruptcy filings are chapter 7 filings, and 95 percent of those make absolutely no distribution at all to unsecured creditors.

If you are listening to this debate and you are a creditor, these statistics mean you have only a small chance to be repaid if you are an unsecured creditor.

The problem with this is, according to the FBI, about 10 percent of these chapter 7 filings are fraudulent. So what if only 10 percent of filers are abusing the system? This represents $3 billion in costs that can be recovered rather than being passed along to consumers. You and I and everybody else pay for these abuses of the system. We all end up paying for it. The problem with this is, according to the FBI, about 10 percent of these chapter 7 filings are fraudulent. One can understand the financial motive of a debtor running up his or her unsecured credit card debt to pay down his or her secured mortgage just before filing chapter 7, even though he or she knows full well the debts will never be paid back.

The data suggest to many experts that some relatively high-income debtors truly belong in chapter 13 where they will have to establish a plan for repayment for at least some debts. In theory, our bankruptcy courts have the opportunity to defy chapter 7 filing because of ``substantial abuse.'' Yet with so many bankruptcy filings, our courts are often overwhelmed, and in practice few people are bounced out of chapter 7, no matter their actual ability to repay their debts. It should come as no surprise, then, that a few bad apples who could afford to pay some of their debts actively seek to avoid chapter 13 and get into the often less onerous treatment of chapter 7. A key component of S. 256 is a means test that will help prevent such gaming of the system.

Some have attempted to criticize this commonsense safeguard as somehow taking away bankruptcy protection. Let me be clear. The means test does no such thing. All it does is identify those who can repay at least some of their debts. It makes certain they enter into a chapter 13 reorganization and repayment plan rather than let them simply walk away from their obligations, no matter how steep or outrageous. Believe me, there is strong evidence to support this improvement in the law.

The U.S. Trustee Program has been challenging and documenting abuse now for some time. The following examples show why changes are needed in the current system. The primary function of the U.S. Trustee Program is to identify fraud and abuse in the bankruptcy system. In fiscal year 2002, there were 1,470,430 bankruptcy case filings. With such a large number of filers, there will always be those who will try to game the system.

Although some opponents of the bill may minimize the problem of abuse, consider these facts: The U.S. Trustee Program successfully pursued 5,000

chapter 7 debtors for ``substantial abuse'' of the bankruptcy system. The program prevented the discharge of an estimated $59 million of unsecured debt through fraudulent chapter 7 filings. In addition, the Trustee Program obtained disgorgement of more than $1.3 million in attorney's fees in consumer and business cases and imposed almost $534,000 in sanctions against attorneys. This indicates that bankruptcy fraud is no small problem and that reforms are in order.

The evidence of fraud is so widespread that many believe it is no longer sufficient to rely on watchdogs to police these abuses after they have occurred. We must take proactive steps to prevent them from happening in the first place. That is what S. 256 does. The means test contained in the bill will provide a uniform standard to bankruptcy judges to evaluate the ability of bankruptcy filers to repay debts. With some people gaming the current system to avoid paying debts they have taken on, we must make sure that the people who file in chapter 7 actually belong in chapter 7. We should not absolve people of their debts when they have the means to pay them back. Bankruptcy law has always meant that.

This is no exaggeration. Just consider these examples, if you will.

I am told one debtor in California sought to discharge $188,000 in unsecured debt. This person had more than $10,000 a month in expenses. She paid $4,500 a month on the mortgage for her house in San Juan Capistrano and then paid another $2,500 a month on rent for an apartment in Silicon Valley. This woman was spending $7,000 a month for two homes. The simple fact was, however, if the woman got rid of just one of the homes, she would likely be able to fund a chapter 13 plan and repay, rather than ignore her debts. This does not seem to me to be too much to ask. In fact, it just makes common sense.

In another instance, a woman in Dallas filed for chapter 7 bankruptcy attempting to discharge $122,527 in credit card debt. But this is not exactly a hard-luck case, by the way. She was a commercial airline pilot who earned $11,500 per month and paid $3,100 per month for a mortgage on a $385,000 home. Some have cast a skeptical eye on her decision to buy a $50,000 Mercedes just before declaring bankruptcy in order to replace the recently repossessed $90,000 Mercedes. If that is what happened, it just plain is not right.

When somebody obtains 36 credit cards, runs up $283,075 in bills, and then tries to discharge that debt through a chapter 7 filing--as I understand was the case of one gentleman in California--it is not enough to sit back and blame aggressive marketing by credit card companies. We have heard that old saw year after year. Frankly, there is a lot of abuse out there.

One person in Miami sought to discharge $163,744 in unsecured debt even though he had the means to purchase $232 in lottery tickets every month.

Then there is the case of a Tampa couple who had a combined monthly income of $7,000 and a monthly budget of $6,756. Included in that budget was a car payment of $965 a month. In addition to their secured debt, they owed $350,000 in unsecured debt. This consisted of $200,000 in credit card debt and $150,000 in personal loans. They attempted a chapter 7 filing. This couple was bringing in more than they were spending, but they wanted to walk away from it all. Yet a review of their banking records showed that one spouse withdrew hundreds of dollars every month at ATM machines at local casinos. They had money to play blackjack but not pay back there debts. Something, it seems to me, is just not right about that.

We are a compassionate nation, but we should not be fools. A discharge of debt is serious business, but for sound public policy reasons, the United States has decided to allow it in certain circumstances. We want to give our neighbors who get in over their heads a chance to get out of their financial troubles.

Frankly, I suspect that for a majority of those individuals who file for bankruptcy, it must be their worst nightmare, but for some, as I just described, it is a way to avoid responsibility. We do not want to encourage bankruptcy for anyone. When a person takes on a debt, that person makes a promise to pay, and they ought to pay it if they have the capacity to do so.

There is something inherently unfair in denying full restitution to creditors. That being said, as a matter of longstanding public policy, we have decided to allow some people a fresh start and the opportunity to discharge their debts through a chapter 7 liquidation. But many fear that in some instances, our lax policing of those who attempt a chapter 7 filing actually encourages additional bankruptcies.

As a matter of public policy, we must say that those relatively high- income debtors, those capable of paying back their substantial debts, should at least pay something back, and that is all we are requiring here. From now on, those who are capable of financial reorganization, rather than outright liquidation, will have to keep their promises or at least some of their promises.

Some opponents of this legislation minimize these abuses. They deride the means test we devised to solve this problem. The fact is, 80 percent of people filing for bankruptcy will be automatically removed from the means test because their incomes fall below the safe harbor of the median State income. Only 20 percent are asked to answer this rather reasonable question: After medical expenses, schooling expenses, health care premiums, living expenses, and a regular budget, do you have an ability to pay back some of your debt?

That is all. Only 10 percent of the people currently filing for bankruptcy will be moved into chapter 13 under this test. Contrary to the image of a crippling lifetime commitment to one's debtors, those repayment plans are only between 3 and 5 years.

Who passes the means test of this bill? Eighty percent are excluded for falling below the State median income. Another 10 percent are excluded after taking into account school, health, and living expenses. So only 10 percent of bankruptcy filers will ever be moved into repayment plans. I do not think it is too much to ask that these relatively high-income debtors, who can afford to pay their debts, pay back some of what they owe.

To the extent that our current Bankruptcy Code encourages some bankruptcies, I am hopeful that this reform will discourage some of them. The experts and data tell us there are some with high salaries, profligate spending habits, and the ability to pay back their debts. Our laws should not be to just allow them to walk away.

The fact that this type of misconduct is occasionally prevented does not undo the need for permanent systemic reform of our laws. For every one person who is discovered in an abuse of the system, it is likely there are many others whose abuses never see the light of day. There is a culture of abuse in our bankruptcy system that should be addressed.

I am told that in Kentucky one debtor filing for chapter 7 protection failed to mention that he had transferred his one-half interest in a Florida house to his son approximately 7 years before filing for bankruptcy. How convenient. He also failed to mention his transfer of stock to his daughter within 1 year of filing. He was unable to account for the disappearance of $1.125 million in assets, including $300,000 in personal property and even $400,000 in race horses. His hope was to discharge almost $1.8 million in unsecured debt and $795,175 in secured debt.

While this may be an outlier case, the underlying problem of abuse is too frequent an occurrence. The point is not that this person is an average filer; the point is that the system is such a mess that someone would even contemplate making this type of a case.

Unfortunately, this misconduct is all too often encouraged by a bankruptcy bar that ushers people into chapter 7 without ever fully considering the client's ability to repay.

The U.S. trustees had to pursue 653 actions seeking disgorgement of debtors' attorney's fees in fiscal year 2002. At the same time, they pursued 243 other actions for attorney misconduct that resulted in $533,813 in sanctions. Over 75 attorneys were referred to State bar associations or other disciplinary boards.

In the Eastern District of Pennsylvania, a U.S. trustee review discovered that in bankruptcy filings it was common to have boilerplate information entered without regard to the individual debtor's circumstances, internally inconsistent information, and missing financial information.

These are bankruptcy factories that appear to attempt to get as many as possible into chapter 7 without so much as a cursory look at the filer's ability to repay his or her loans or debts.

For the most part, I am proud of our bankruptcy laws. When a debtor gets in over his or her head, we do not ask why. We do not cast blame. Instead, we attempt to help that person pay back the debts. Bankruptcy protection gives Americans the ability to pause, to reorganize, to start over. Bankruptcy offers those with unsustainable debts an opportunity for a fresh start. No one here wants to change this fundamental guarantee. No one wants to alter this basic framework. Yet people are taking advantage of this system. Abuses are increasingly rampant and well documented.

When some people game the system to walk away from debts that they are perfectly able to repay, an injustice occurs that has ramifications for our entire economy. And guess who has to pay for their dishonesty. You and I and everybody else because we pay an average of $400 a year for this bankruptcy system. This bill will help to bring it into a forceful, reasonable purpose.

It was estimated that in 1997 alone more than $44 billion of debt was discharged through bankruptcy. This amounts to a loss of $110 million per day. Someone has to pay for this. The American people, you and I and everybody else, end up paying the bill for at least these dishonest people.

According to one estimate, as I have said, these losses translate into a $400-a-year tax on every household in the country. That might not seem like a lot to some, but for many families $400 is a mortgage or a rent payment.

The cost of bankruptcy to taxpayers: $44 billion in debt discharged per year, or $110 million every day, a $400 yearly bankruptcy tax on every household in the country.

For all the reasons I have laid out, I urge my colleagues to support S. 256. This is a good bill. We have been at this legislation too long to allow this commonsense reform to fail.

By the way, this very same bill, with the Schumer amendment, passed with 83 votes. Without the Schumer amendment, the bill that President Clinton pocket-vetoed was basically the same as this, and it passed with 70 votes, meaning a bipartisan passage.

I will make a few comments on the Durbin amendment that seeks to address some potential problems relating to debt carried by members of our military. We all honor our military for their sacrifices, no question about it. While I am supportive of the intent of the underlying Durbin amendment, the fact is, only about 20 percent of those filing for bankruptcy will ever be subject to a means test. Only about half of those will end up having to repay some of their obligations under the means test. That means that only about 10 percent of those filing for bankruptcy will ever have to actually pay back some of their past debts with future earnings.

I suspect the 1 in 10 fraction will be smaller, perhaps much smaller, for those serving in the military. So when my friend from Illinois calls the means test an onerous test, he is overstating the case.

The purpose of the means test is simple. We are trying to determine which debtors can afford to pay a portion of their past debts from their future earnings. The Durbin amendment has several problems, but its goals are well intentioned and I commend him for his efforts. For example, it is my understanding that under the definition of ``service member,'' all of those employed as commissioned officers of the Public Health Service and the National Oceanic and Atmospheric Administration will qualify for this special treatment. There are few, if any, greater supporters of the commission core of the Public Health Service, but I do not understand why a public health service officer, working side by side with a career civil servant member at the Department of Health and Human Services, should receive any special consideration during bankruptcy proceedings. If a member of the PHS or NOAA is able to pay, as determined by this new means test, which is estimated to affect only 1 in 10 of those filing for bankruptcy today, he or she should pay like any other civil servant or member of the public.

They are well paid. They do not have to go off and borrow beyond their means. They do not have to live beyond their means. They should not have any breaks any better than the regular citizens.

I think the distinguished minority whip has raised and will continue to raise very important points, and I look forward to working with him and the entire Senate to address those points.

If bad actors are preying on our military personnel through nefarious payday loans or other questionable practices, then I encourage Senators Shelby and Sarbanes, the head of our Banking Committee in the Senate, to look into the issue. If there are other social issues that face our military personnel, then we as Members of Congress have an obligation to examine those issues indepth and find the right fixes.

The Durbin amendment also has an additional problem. This involves his creation of a broad exemption to the delicate homestead compromise already so painstakingly embodied in this bill. We have gone over and over it and have finally come to this compromise that does not please everybody, or anybody for that matter, but it is an important compromise and an important aspect of this bill.

We know the Senators from the States of Florida and Texas have made it clear that this issue is important to them. This is an area where we have tried to defer wherever possible to the States, even though other Senators view some of the States' exemptions with skepticism. We should all recognize that opening the door on the homestead provision could work to unravel this bill.

This is also the case with Senator Feingold's amendment on the homestead exemption. This issue is not new. We have debated it year after year, and we have come to a plausible compromise that has passed year after year. This question has been debated over and over again. We have achieved a compromise on the homestead exemption that has demonstrated the ability to win overwhelming support in both Chambers. Both the Durbin amendment and the Feingold amendment tend to upset the balance that has been achieved on this important issue.

As I look at and examine the Durbin amendment, I have identified a few additional concerns. For example, under the terms of the amendment both ``real or personal property that the debtor or dependent of the debtor uses as a residence,'' what does this language mean? How could personal property be used as a residence?

The bottom line is this amendment has many ambiguities. In addition, several of its principal components come into tension with long-settled provisions of this bill such as the homestead and the means test

As all of my colleagues know, there is a right way and a wrong way of doing things. Indeed, many Members of the minority and some of the majority have made that very point with regard to how the USA PATRIOT Act was put together. Senator Durbin has raised some important issues we must take the time to explore properly, and I believe Senator Sessions has appropriately and adequately addressed the central concern of the Senator from Illinois, which is to allow the facts and circumstances of military personnel to be considered in bankruptcy proceedings.

I support S. 256, the bankruptcy bill, and I hope others will as well. We have come very far with this bill, after 8 tough years of work, after repeatedly passing it by overwhelming votes, and then having it shot down because of a killer amendment that gets put on by our colleagues who claim they are working in support of it. We should pass this bill. We should pass it in as clean a form as possible.

Let me say with regard to credit card debt, I think it is a nice, populist appeal here, to blame all the credit card companies for the problems everybody has in our society today. Look, we have an intelligent society, a highly educated society, and I think everybody knows when they take those credit cards and they accrue debt, they are supposed to repay that debt. Frankly, we have far too many people taking advantage of credit cards and not paying their debt.

Where there is fraud, we should go after any credit card company that

commits fraud or abuse against our fellow citizens. But this bill does not fail to resolve these issues.

Could we improve this bill? Yes, I think we could improve it. But if we did, some on the other side would say that is too tough of an improvement. Could others on this side improve it? I suppose so. Could some on that side improve it? I would hope so, but so far we have accepted an awful lot of what the other side has wanted. This bill has been passed by overwhelming votes over the last 8 years, at least four times, as I recall it. At one time it passed through both Houses of Congress and was pocket vetoed by President Clinton.

I would like to make one last point. Unfortunately I have to oppose the Feingold amendment on the homestead matter. I think the purported purpose of the amendment is well intentioned, but I am concerned that it may act to upset the delicate balance and painfully negotiated provisions relating to homestead exemptions. This amendment by Senator Feingold is, I know, well intentioned. But this amendment confuses an important and bipartisan issue, namely the care of the elderly, in a way that could sink this important legislation.

I have worked tirelessly to make sure there are provisions in this bill to protect the elderly, along with women and children, and I think every one of my colleagues who has worked with me on this bill recognizes that fact. The simple truth is this amendment and others like it could kill this bill. The reason has nothing to do with a hostility to the elderly or to any other class of persons, but because the homestead provisions have taken years to negotiate and are the result of painful choices and compromises. They are not totally satisfactory to me, either. But the fact of the matter is, it is the best we can do.

There are many Members of this body who would like to see the homestead provisions changed in some fashion, but to accommodate them any further than what presently exists in this bill would force other Senators who are strong supporters of this legislation to oppose it.

My opposition to this amendment has nothing to do with the elderly and I would not object if every State in the Nation passes laws that would put a similar floor or a higher floor under their respective homestead laws, but that choice belongs to the States and not to the Federal Government. There is a long history in bankruptcy law of deference to States on this issue. Nearly every State in the country has vehemently defended their homestead laws.

I must say I think some States wish to change their laws. If they do, that is their prerogative. The purpose of this bill and the purpose of the current homestead provisions is to curb fraud and abuse. The current provisions impose a 10-year look back for fraud. They impose a 2-year domiciliary requirement that is designed to prevent wealthy debtors from moving from States with low homestead exemptions to States with high or unlimited exemptions and then filing for bankruptcy. These provisions are a compromise, a balance of States rights and Federal imperatives under bankruptcy law and we must let the provision stand as written. I oppose the Feingold amendment and I hope my colleagues on the floor will oppose these amendments as well.

I yield the floor.

Mr. President, I ask that my remarks be as in morning business.

THE PRESIDING OFFICER. The Senator from Utah is recognized.

I thank the Chair.

boy scouts of america land transfer act of 2005

Mr. President, I rise today to speak to the Boy Scouts of America Land Transfer Act of 2005. This important legislation will allow the exchange of two small parcels of land between the Utah National Parks Council of the Boy Scouts of America and Brian Head Ski Resort.

In a 1983 land patent, the Bureau of Land Management granted roughly 1,300 acres to the Utah National Parks Council of the Boy Scouts of America to be used as a Boy Scout camp. The Scout camp, known as Camp Thunder Ridge, is situated in the mountains adjacent to Brian Head Ski Resort and near Cedar Breaks National Monument.

At the time the land patent was granted, a local rancher owned a parcel of land adjacent to the camp and another parcel right in the middle of the camp. Several years ago, the rancher gave those lands to Brian Head Ski Resort. The Scouts need to obtain the land, totaling 120 acres, from Brian Head. However, under the patent, land cannot be sold or exchanged without an act of Congress.

While Camp Thunder Ridge is located in a steep, rough, mountainous area, much of the land the Boy Scouts seek is flat, making it particularly important for the camp. Obtaining the land would make it possible for the Scouts to make the camp's shooting area and archery range safer and would allow them to improve and expand their camping facilities. It also would allow for the installation of much-needed septic tanks.

I am a strong supporter of the Boy Scouts of America. The Boy Scouts have a long tradition of instilling strong values in young men.

Scout camps such as Camp Thunder Ridge give young men the opportunity to learn vital skills, fulfil merit badge requirements, and otherwise improve themselves. This small land exchange will allow Camp Thunder Ridge to more fully help these young men learn and grow.

For their part, Brian Head Ski Resort is seeking to expand their operations and have received preliminary approval from local officials. The local planning commission, however, has required them to build an emergency exit from their property. The only place to build such a road is through land owned by the Boy Scouts. The exchange will allow Brian Head to construct the access road and comply with county fire safety regulations.

The Boy Scouts have been working for more than 20 years to secure the lands in question, and Brian Head needs to build a road on lands currently owned by the Scouts. This exchange is desperately needed by both parties, and I urge my colleagues to support this important legislation.

Mr. President, I rise in support of S. 256, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. The purpose of this bill is to make our bankruptcy system more fair and efficient. Every citizen has a stake in this bill. It is obvious that bankruptcy filers have a lot at stake in this legislation.

In recent years, the number of bankruptcies has been on the rise, and I understand that today more bankruptcies are filed every year than during the entire decade of the Great Depression, and this chart shows that. It begins in the year 1900. It is basically a flat line until we get to about 1984--actually, 1995--and then it heads straight up. These are bankruptcy filings per 100,000 population, and they have gone up dramatically over the years. Annual bankruptcy filings have now reached about 1.6 million Americans, and this is up significantly since the time we started working on the overhaul of the bankruptcy system now 8 years ago.

One of the key goals of legislation we have before us today is to make sure the system is not abused by the unscrupulous who leave their creditors high and dry. At the same time, the concept of allowing those citizens who have become saddled by debt to use bankruptcy to get a fresh start is firmly entrenched in the American legal system. Gone are the days of debtor prisons.

We want to treat debtors fairly and give those who become overwhelmed by debt a second chance. We do not want

to send a signal to those who for whatever reason get into a financial hole that it is okay to go deeper in that hole prior to filing for and become absolved by bankruptcy. We want to give those in debt a fair second chance to bring their fiscal houses in order.

We also want to treat creditors fairly. At the end of the day, it is law-abiding, bill-paying citizens who pay for the bankruptcy of others, regardless of whether the debts involved were taken on by con men or those whose situations simply got out of hand.

As this debate goes forward, it is important for all to understand that according to some experts, a conservative estimate is that every American family pays about $400 a year in a hidden tax associated with bankruptcies, taxes they should not have to pay. I am told that others place the fair estimate of this hidden bankruptcy tax in the range of $550 per person per year. There are numerous examples of people who take advantage of loopholes today at the expense of everyone else tomorrow.

We recently heard from a Wisconsin credit union president who testified before the Judiciary Committee about a young couple who wanted a clean financial slate before they got married. What did they do? They ran up their credit card purchases. One of them prepaid a car loan with the credit union to have the other cosigner released. Then, although they were both employed full-time, they filed for bankruptcy to wipe out their debt. Their credit union and its members had to absorb the $3,000 in credit card debt and then another couple of hundred dollars on the car itself. Bankruptcy relief was never meant to allow this kind of abuse. Hard-working Americans, including the members of credit unions nationwide, have been victimized by abusers of the current bankruptcy system long enough.

Bankruptcy abuse also hurts our Nation's small businesses. Without reforms from this bill, losses from bankruptcy abuse will continue to break the backs of the Nation's small businesses and retailers, which work with slim profit margins and have even smaller margins for error.

Throughout this debate, I want those who pay their bills in full and on time to understand that our attempt to rebalance some of the aspects of the bankruptcy system will have a positive impact on their pocketbooks each time they go to the store. In effect, we all pay for the bankruptcies of others through this ``hidden tax.'' In some respects, I suppose one could view this bill as a tax cut for the responsible people.

While one large impact of bankruptcy is felt in the wallet, perhaps the most important principle involved in this is when one borrows money, they need to take personal responsibility to pay it back. Personal responsibility is a core American value. This legislation, which has been crafted over years of debate and compromise, reflects that basic value.

We are mindful of the old adage there is no such thing as a free lunch. When some people do not pay their credit card bills, the rest of us pay for them in the form of increased prices. We do not get off. We have to pay for it. Great strain is placed on businesses, particularly small businesses, when customers do not pay for their purchases.

While we want to be fair to those who are in serious debt, we must also be mindful that sometimes it is employees and their families who have to pay through lost salary increases or even pay cuts or job loss when some do not pay their bills. No firm can expand or even maintain its operations or stay in business for long if a substantial portion of goods and services it sells is not paid for by its customers. We all simply have a stake in bankruptcy policy and, therefore, we all have a stake in this bill.

Unfortunately, our current system allows certain people with the ability to repay at least some of their debt load to take advantage of the system at the expense of everyone else. Today, individuals with relatively high incomes can run up substantial debts and then too easily use bankruptcy to get out of honoring them. In the end, all of us pay for those who abuse the system.

As I will describe, one of the key improvements made by this bill is to devise a new and equitable system to see that those who declare bankruptcy will be called upon to repay a fair portion of their past debts with future earnings if they are able to do so. This is the so- called means test that I will describe in a few minutes.

First, I will take a few minutes to highlight some of the key proconsumer provisions of this bill. S. 256, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, includes a debtor's bill of rights with new consumer protections to prevent the bankruptcy mills from preying upon those who are uninformed of their legal rights and needlessly pushing them into bankruptcy. This is an important improvement over current law and helps rectify the current practice whereby some, both debtors and creditors alike, lose out in the long run to some shady legal advisers who take their fees and run.

The bill also includes new consumer protections under the Truth in Lending Act, such as new required disclosures regarding minimum monthly payments and introductory rates for credit cards. It protects consumers from unscrupulous creditors with new penalties on creditors who refuse to negotiate reasonable payment schedules outside of bankruptcy.

Our bill provides penalties on creditors who fail to properly credit planned payments in bankruptcy. It includes credit counseling programs to help people avoid the cycle of indebtedness. This is an important provision for consumers.

Except for those with evil motivations and a willingness to take advantage of the system, no one likes to be in debt. This bill helps consumers learn how to better protect their financial resources. S. 256 provides for a protection of educational savings accounts, and it gives equal protection for retirement accounts or retirement savings in bankruptcy. These provisions will help our children and our parents have adequate resources.

The bankruptcy legislation also contains important changes in current law that will benefit women and children. We have heard some people complain that our bankruptcy laws do not adequately take care of women and children. Through our years of work on this bill, we have tried to make the law more protective in these areas, and this bill accomplishes that goal.

Current law provides that child support obligations are seventh in overall priority among unsecured claims. This bill dramatically changes the world with respect to child support. This bill contains a large set of provisions addressing the treatment of child support, including making domestic support obligations first in priority after certain required expenditures.

I will repeat that for emphasis. Child support goes from seventh to first in priority within its category for repayment under this bill. From seventh in line to top priority, this is a big change. Unfortunately, those who have slow walked this bill for the last 8 years have prevented this important change from taking effect.

The legislation also includes a provision that makes staying current on child support a condition of getting a discharge in bankruptcy. It makes debt discharge in bankruptcy conditional upon full payment of past due child support and alimony. S. 256 makes domestic support obligations automatically nondischargeable without the costs of litigation. It prevents bankruptcy from holding up child custody, visitation, and domestic violation cases. It helps eliminate administrative roadblocks in the current system so children can get the support they need. All of these measures are valuable additions and changes in the bankruptcy laws.

It is in the best interests of women and children to pass this bill. It is a tremendous improvement for children and families over current law. That is why there is such overwhelming support for this legislation from the child support professionals across the country-- the very people who go after deadbeats to help get children the financial support they need.

That is not all. Let me cite a few more improvements over current law for women and children.

The bill makes the payment of child support arrears a condition of plan confirmation. It provides stronger and more comprehensive notice requirements and more information for easier child support collection. It provides help in tracking down deadbeats.

It allows for claims against a deadbeat parent's property. It allows for

payment of child support with interest by those with means. It facilitates wage withholding to collect child support from deadbeat parents.

As I have just described, there are many important provisions in this bill for children, women, and the aged. I hope that we can finally get this bill to the President's desk for signature. This is a bill that is way overdue.

This legislation, S. 256, also requires extensive new disclosure requirements by creditors in the area of reaffirmations and more judicial oversight of reaffirmations to protect people from being pressured into agreements against their interests.

These are important provisions. Let me explain why.

Reaffirmation agreements commonly occur in conjunction with bankruptcy proceedings when debtors agree to repay a debt they would not otherwise have to pay. These reaffirmation agreements can be very helpful to debtors as they seek to reestablish their good financial status with their creditors as they emerge from bankruptcy.

By increasing disclosure requirements and judicial oversight, the reaffirmation process can operate to the advantage of debtor and creditor alike.

Next, I would like to briefly describe one of the key features of the bill, the means test, and how it relates to, and will improve, the overall operation of our bankruptcy system.

The premise behind the means test is that those who are able to pay all, or some, of their past debts should do so. The means test helps the courts determine who can and who can not repay their debts and, perhaps most importantly, how much they can afford to pay.

The challenge is to set this figure at the right level, neither too high nor too low.

If the figure is set too high, the debtor may be placed in a vicious cycle from which he or she can never escape and get a fair chance to start over. Of course, if the repayment schedule is set too low, the debtors will escape responsibility at the expense of those who they owe.

Through this new means test, in certain circumstances, the bill requires those filing for bankruptcy to pay a fair but not overly burdensome portion of their future earnings.

The means test allows for a straight deduction of actual expenses for the care and support of an elderly, chronically ill, or disabled household member, or member of the debtor's immediate family.

This test allows for a straight deduction for food and clothing expenses.

This test allows for up to $1,500 to be deducted per child for educational purposes.

This test includes an allowance for housing and utilities costs.

This test includes all the categories enumerated under the National Standards, Local Standards and Other National Expenses issued by the Internal Revenue Service.

This test allows for the straight deduction of expenses incurred in maintaining the safety of the debtor and the family of the debtor from family violence.

This test includes a special circumstances safety valve that allows debtors to adjust their income or expenditures based on unforeseen circumstances such as military activation and deployment or unexpected and catastrophic medical conditions.

Finally, this test includes a safe harbor provision which exempts debtors below their respective State median incomes.

After all of these exemptions are applied, including the safe harbor, it is estimated that 90 percent of debtors will not be affected by the changes in the repayment provisions of this bill.

Who constitutes the remaining 10 percent? They are the people who can afford to pay at least some of their debts. And that is what the means test is all about.

All of these changes that I have described are important. Many of us have worked for many years on this bill. Frankly, some of us think this bill has already taken way too many years to complete.

I want to take a few minutes describing the extensive legislative history of the bill. This is important for many reasons. One of those reasons is that this history will reveal that this measure has already been fully debated and this bill reflects literally dozens and dozens of compromises along its 8-year journey.

I will describe the nadir of this bill when President Clinton pocket vetoed the legislation after Congress adjourned in the fall of 2000.

This bill has had broad bipartisan support from the very beginning.

In the Senate, Senators Grassley and Biden have been at this for a long time, as have many others on both sides of the aisle.

When we debate amendments over the next few days, I want my colleagues to pay close attention to those who are offering amendments.

If what occurred at the Judiciary Committee mark-up of the bill repeats itself on the floor, it might be the case that many amendments will be offered by that relatively small group of Senators who have steadfastly opposed this bill each step of the way during the last 8 years. If that is the case, we must examine their amendments with both exacting scrutiny and heavy skepticism.

It is one thing to attempt to improve a bill and bring it more to your liking, it is another matter altogether to try to scuttle a bill. This can be a fine line on any bill. But with a bill with the extensive history as this, it is easier to assess who is trying to get this bill over the goal line finally and who is trying to push us out of bounds and into yet another period of legislative overtime.

The House and Senate have been engaged in the process of deliberating on this issue since 1997, back during the 105th Congress. Turning back the clock to 1997, we see that the comprehensive bankruptcy reform bill was developed and passed in both bodies by overwhelming votes. The actual substance of bankruptcy reform legislation has been a bipartisan, bicameral effort.

The successful work by each chamber of Congress in 1997 was followed by the appointment of conferees, negotiations with the House, and, in October of 1998, an overwhelming vote by House Members in favor of the conference report. Unfortunately, the Senate did not complete its vote on final passage before the end of the Congress.

Next, in February of 1999, Congressman Gekas and Senator Grassley reintroduced the same bankruptcy bill agreed to by both bodies during the previous conference committee. That bill passed the House in May by an overwhelming margin. Later that same month, the Senate Judiciary Committee marked up our bill and we reported it from committee.

Finally, in February of 2000, after months of procedural delays and debate on the Senate floor, the reform legislation passed by another impressive margin of 83 to 14.

I suspect this body will approve this bill by a similar lopsided margin when a vote on final passage is taken in this Congress if we can get to a vote on final passage. There are some who have indicated they are going to filibuster this bill. We will have to see. But there have been far too many people, on both sides of the aisle, who promised they would work to get this bill through, and they should fight against any filibuster.

Turning back to the year 2000 after the bipartisan 83-14 vote, the Senate then requested a conference. This should be a routine matter, but the objection of a single Senator blocked the appointment of conferees. As a result, the House and Senate had to turn to an informal conference process.

With a great deal of effort by Members on both sides of the aisle, we reached a compromise agreement on over 400 pages of legislation.

Ultimately, both the House and Senate were able to pass that conference report in another series of decisive votes in the fall of 2000.

However, President Clinton chose to pocket-veto the legislation and (refused to sign it into law, despite the overwhelming support. Once again, the stone pushed by Sisyphus was at the bottom of the mountain.

Representative Gekas introduced the bill, yet again, in January of 2001. The conference report for that bill, H.R. 333, became the backbone of the legislation pending before us today. It too, had overwhelming support, except for what is now understood to be a poison- pill amendment.

I will not take the time today to discuss just how this important comprehensive change in the bankruptcy bill got waylaid in the eleventh hour

by this problematical and, many believe, perhaps mostly hypothetical and politically motivated, provision.

We all know that this bill has repeatedly won the overwhelming approval of our colleagues in both Houses of Congress.

Before we began a conference meeting on an earlier version a few years ago I referred to that meeting as being the last leg of a legislative marathon. I was wrong then--but I hope, and I have every confidence, that this floor debate represents the final beginning of that last leg.

We succeeded in finally enacting the class action reform bill 2 weeks ago and I am hopeful that we can duplicate this success with the bankruptcy bill over the next several days.

As many have said, this is a compromise bill that enjoys broad bipartisan support among Democrats and Republicans, and conservatives and liberals.

Even after having worked for 8 years already, we agreed to make some additional compromises in the Judiciary Committee during mark-up 2 weeks ago to satisfy some concerns of our colleagues on the other side of the aisle. Those compromises were difficult to make, but we have made them.

I should add that there are some on our side of the aisle, such as Senator Cornyn, who would like to make additional changes in this bill. He has a very substantial proposal addressing the issue of venue reform. It is an area in which he has special expertise from his experiences with some important bankruptcies that affected many citizens of Texas but were litigated out of State.

There are things I would like to see changed in the bill.

But I also recognize that many have cooperated and compromised in order to reach the state where this legislation is today. Given the extensive and lengthy history of this bill, I think it best for my colleagues to refrain from offering controversial amendments on this vehicle at this time--and I will do so because I know that any further amendments might scuttle this bill.

This bill provides new consumer protections, helps children in need of child support, and makes other necessary reforms to a system that is open to abuse.

I want to stress the fact that this legislation does not make it more difficult for people to file for bankruptcy, but it does eliminate some of the opportunities for abuse that exist under the current system.

This is a good bill. We should pass it promptly and send it to the House.

It is possible that during this debate that some may falsely suggest that this bill unfairly treats low-income persons. Let me tell you at the outset that the poor are not affected by the means test. The legislation provides a safe harbor for those who fall below the median income, so they are not subjected to the means test at all. What the means test is designed to do, and what it will do, is to prevent abuse by those who can and should pay a portion of their debts wit future earnings. It will stop the fraud. It will stop the abuse of a system that has been going on through some of these unscrupulous lawyers and bankruptcy helpers.

Another misconception that I have heard again and again from opponents of the bill is that this legislation will not let people file for bankruptcy relief when they need it. The fact is that this legislation does not deny anyone access to bankruptcy relief, it just requires those who have the means to repay their debts based on their income and ability to pay.

It is that simple. It is fair. It is a long overdue change for the better.

Some opponents of this legislation have also claimed that it somehow hurts women and children. This falsehood is particularly disturbing for me to hear, because I have had a long history of advocating for children and families in Congress, and I have worked tirelessly, provision by provision, to make this legislation dramatically improve the position of children and ex-spouses who are entitled to domestic support. I have already told you in some detail why these allegations are baseless and how this bill works to help women and children.

I look forward to participating in this debate.

This is a very good bill.

It represents years of bipartisan, bicameral work. It is time we pass this bill. This President will sign this bill.

I hope that we will not get sidetracked by nonrelevant or counterproductive, controversial amendments on a consensus bill that has been so long in the making.

I hope there will not be any frivolous amendments or amendments designed to kill the bill or message amendments trying to make political points rather than solve the problems we have regarding bankruptcy.

Let us pass this bill for the fourth and final time and get on to other business.

I urge all of my colleagues to support S. 256, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.

Mr. President, I suggest the absence of a quorum.

Mr. President, just before we went into recess on February 17, the distinguished majority leader introduced, and the Senate passed by unanimous consent, a resolution commending the public life of our dear former colleague, Senator Howard Baker. I did not have the opportunity to speak to this resolution then, and I wish to add a few words today.

I commend the current majority leader for taking a few moments from our busy Senate schedule that Friday to introduce and pass a resolution commending a former majority leader, my former colleague and dear friend, Howard Baker, for his lifetime of public service. All of us who know Ambassador Baker, or have had the great pleasure of serving under him, on either side of the aisle, will see this as certainly the least controversial act this Senate will pass this year.

I have known Howard Baker my entire Senate career--there are very few here who came to this body before Senator Baker did, back in 1966. And to know Howard Baker is to know consummate Southern grace and manners, to know a man who it is almost as much a pleasure to disagree with as it is to agree with. In my many years serving with Senator Baker, and under him, as my Republican Leader, when I first arrived, and as the majority leader, during the first 6 years of the Reagan administration, I had a few occasions where we stood on different sides of an issue, but many more where we did the people's business side-by-side. Our cause was always stronger when we had the intelligence and perseverance of Howard Baker on our side, and, on the few occasions where we did disagree, my arguments always had to be stronger because of the scrutiny and deliberation of my colleague's same intelligence and perseverance.

Majority Leader Baker did such a superb job during the first 6 years of the Reagan administration that President Reagan wisely chose him as his Chief of Staff for the last, often difficult, 2 years of his administration. It was a wise choice.

A few years later, Howard Baker made his own very wise choice. After being widowed, he married another one of our most distinguished colleagues, former Senator Nancy Landon Kassebaum. I can honestly say that I have never seen a better collaboration between two Senators I hold in the highest regard.

As we all know, our distinguished former colleague's service to the Nation was not over yet. He served our Nation with great distinction in one of the most important ambassadorial positions we have, the United States Ambassador to Japan.

Mr. President, when they teach civics in our primary and secondary schools

today, the textbook writers would be wise to have a lesson on the career of Howard Baker. His character and example, and the policies he advanced, would be admired by all who, unlike some of us, have not had the opportunity to know this man in person. The textbook writers should wait a while longer, however, as I hope and expect that Howard Baker's life of public service continues, for the good of the Nation and the good of all of us. I heartily co-sponsor this resolution and offer my warmest congratulations to former Senator Baker, and his wife, former Senator Kassebaum.

Mr. President, today I rise to speak on the recent passing of Corporal Matthew Reed Smith of the United States Marine Corps. Corporal Smith was a native of West Valley City, UT, who died in a helicopter crash near the town of Rutbah, Iraq. Corporal Smith was one of 29 Marines and one Navy sailor who lost their lives in that fateful accident. Today, I know the Senate will join me in honoring their memory as heroes who died in performance of their duty. The sacrifice of these brave servicemen will be remembered forever.

Corporal Smith, during his younger years, often dreamed of being in the Armed Forces. I have been told that as a child he would play make- believe with his brothers on the hill in front of their home and that he always insisted on being the ``Marine.'' Nicknamed the ``Three Musketeers'' by their mother, Corporal Smith and his two brothers grew up doing the things they loved most, camping, hunting, wrestling, and riding their motorbikes in the mountains.

Corporal Smith joined the Marines because ``they were the first ones in there.'' As a Marine, he fought bravely to expel the insurgents from the city of

Fallujah. There were times during the fighting when he could hear the bullets whistling past his head. His best friend lost an arm and a leg in the Battle for Fallujah.

Being unable to obtain leave in order to attend the wedding of his brother last March, members of his family made a life-size cutout of Corporal Smith and moved it around the dance floor as the night progressed. On learning of Corporal Smith's death, his family placed the cutout in the living room of their home. That silhouette of Corporal Smith, dressed sharply in his Marine uniform, today remains in our hearts as a symbol that he served his country with honor and courage.

Recently, I had the opportunity to visit a website created to honor him. I was struck by the number of comments and sentiments that clearly showed that Corporal Smith was a true friend and loved by all who knew him. In one particularly moving tribute, a fellow mourner wrote that he could not imagine Corporal Smith departing this life ``in any other way than selflessly serving others.''

Mr. President, it is a privilege to learn about the extraordinary life of such a man.

Mr. President, today I rise in strong support of the nomination of Judge Michael Chertoff to become Secretary of Homeland Security.

Voting in favor of Judge Chertoff and commending him on his remarkable accomplishments is beginning to become a habit for us.

At the beginning of President Bush's first term, Judge Chertoff was nominated to become Assistant Attorney General for the Criminal Division. To this position, he brought years of experience as a Federal prosecutor in New York and a highly successful term as the U.S. attorney for the District of NewJersey.

As a prosecutor, Judge Chertoff handled a wide variety of complex crimes that included successfully prosecuting a RICO murder case involving the third-ranking member of the Genovese La Cosa Nostra Family and others. The principal defendants were convicted of conspiring to murder John Gotti and murdering a mob associate. They each received 75 to 80 year prison terms.

He also successfully prosecuted the Mafia Commission Case, which charged

the bosses of all five New York La Cosa Nostra Families with operating a national commission through a pattern of racketeering acts such as extortion, loan sharking, and the murders of a mafia boss and two associates.

Upon his confirmation, Mr. Chertoff ran the Criminal Division of the Department of Justice during the trying days after September 11. As Senator Collins stated:

since 9/11, Judge Chertoff has established himself as a

leading expert on the legal and national security issues

surrounding the war on terror.

After this period, in which I worked closely with the Criminal Division of the Justice Department to formulate the PATRIOT ACT, Judge Chertoff was nominated to the third Circuit and was confirmed by a vote of 88 to 1.

As we all know, becoming a judge on the 3rd Circuit is a lifetime appointment and the culminating achievement of many outstanding legal careers. Few leave the bench before retirement. However, Judge Chertoff is not a man who will shirk from his duty. His nation called and asked him to sacrifice. He answered that call and stood up to be counted during a period of war.

This is true not only for the time that he spent affiliated with the Justice Department but in his everyday practice. For example, Judge Chertoff served as special counsel to the New Jersey Senate Judiciary Committee in its investigation of racial profiling.

Under his counsel, the committee held nine hearings examining racial profiling allegations, concluding that the former attorney general had misled the committee and had attempted to cover up the extent of racial profiling in New Jersey from the U.S. Department of Justice.

After a convicted rapist was mistakenly released from prison, Mr. Chertoff again served as special counsel for the New Jersey Senate Judiciary Committee during its hearings into the application of Megan's Law, which requires State correction officials to notify prosecutors 90 days prior to the release of a sex offender, and the reasons why it was not being systematically employed by the State.

Mr. Chertoff also represented three indigent defendants on death row in Arkansas through a program operated by the NAACP Legal Defense Fund. The death sentences of all three defendants were overturned on the appeal that he handled.

I understand that Judge Chertoff received the unanimous approval of the Homeland Security and Governmental Affairs Committee, with one member voting ``present.'' I believe that this is not only a reflection on the judge's credentials but a realization that securing the homeland is not a partisan issue, but a commitment by the Government to its people that we will find the best leaders to defend our Nation. Judge Chertoff time and time again has set the standard by which others will have to follow.

Mr. President, it has been my privilege to know Judge Chertoff for a number of years and I can honestly say that the President has made an inspired decision in this nomination.

Mr. President, today is going to be an important day for the American public because the Senate will adopt legislation that takes a significant step forward in improving our Nation's civil justice system. I commend my colleagues on both sides of the aisle for coming together on this very important bipartisan bill. Our work in this body bodes well for the Senate's ability to tackle important issues in the 109th Congress.

Let me now take a couple of minutes to address the pending amendment, Senator Feingold's amendment, that would add a provision to S. 5 requiring Federal courts to consider remand motions in class actions within a specified period. This amendment is based on the questionable premise that Federal courts move too slowly and consumer claims will stall while plaintiffs are waiting for courts to rule on jurisdictional issues.

In fact, in many cases, Federal courts move more quickly than the State courts. Resolving remand motions is always their first course of business, and we are moving these cases to Federal courts.

The amendment also fails to recognize the important considerations a judge must make as part of a remand decision. Like other amendments that have been offered, this proposal would result in a less workable bill, not a better one. This amendment should be rejected.

The fact is, the Federal courts do not drag their feet in dealing with remand motions. Federal courts always consider jurisdictional issues first, as they must, before allowing discovery or other substantive motions. The Supreme Court has repeatedly held that jurisdiction is a threshold matter that must be decided prior to other substantive issues in a case. Courts take up jurisdiction as the first course of business already. The amendment is, therefore, unnecessary.

I also want to correct the misunderstanding that Federal courts drag their feet in dealing with class actions generally. This is not the case. In fact, Federal courts generally move more quickly than State courts when it comes to class actions. A recent 2004 study by the Federal Judicial Center found that State courts are far more likely than Federal courts to let class actions linger without ruling on class certification. Moreover, the median time for final disposition of a civil claim filed in Federal court throughout this country is 9.3 months; the median time to trial in a civil matter in State court is 22.5 months. Let me repeat that: 9.3 months in Federal courts versus 22.5 months in State courts for civil claims to be disposed. The dates showing the Federal courts act more than twice as fast as State courts come from the nonpartisan Administrative Office of the United States Courts. There is simply no evidence that States proceed more quickly. Thus, the alleged problem that this amendment would fix is nonexistent. It does not exist.

Take, for example, the case cited by Senator Feingold yesterday, Lizana v. DuPont. It did take a year to rule on the motion to remand, but it is my understanding that the court's docket reveals at the time the court was considering the motion, there were numerous briefings and motions on both sides and numerous hearings to determine whether to remand. The court was hardly sitting on its hands. If anything, this case shows that the courts may require more than 180 days to make a correct decision. They were moving, and moving ahead, and moving ahead with dispatch. But it was a complicated case and it took a little longer. It may very well take more than 180 days, and in some cases, it certainly will.

Another case cited in support of the amendment was Gipson v. Sprint. But when you look at the facts, the facts do not show much support for the amendment at all. Again, it is my understanding the docket reveals that the court was very busy on the case before the ruling on the motion to remand was even handed down. In fact, one of the motions the court was contending with was a motion for continuance filed by, you guessed it, plaintiffs' counsel. This means it was the plaintiffs who wanted the court to delay its ruling. How can anyone complain about the time it takes for a district court not to rule on a remand motion when there are scores of docket entries in a single year and the plaintiffs themselves were seeking delays?

Some opposed to this amendment suggested that defendants will use removal as a delay tactic, but Federal law already penalizes defendants who engage in such tactics. The Federal law governing removal gives judges discretion to make a defendant pay the plaintiff's attorney's fees if remand is granted. In addition, rule 11 of the Federal Rules of Civil Procedure gives Federal judges the authority to levy sanctions for frivolous filings. Thus, the law already addresses concerns about improvident removals.

The bottom line is that this amendment will make it unnecessarily difficult for judges to issue fair rulings in these more complicated cases. And class actions generally are more complicated cases. By forcing judges to decide remand motions by a certain date, as the Feingold amendment would do, that amendment fails to recognize that in some cases the jurisdictional issues will be complex, requiring discovery, substantial briefing, and hearings before the judge.

At times, courts consider several remand motions jointly in order to conserve judicial resources, such as in multidistrict litigation, or MDL, as it is called, and this may, in a limited number of complex cases, result in a slightly longer time period for resolution as well. Forcing judges to rush these issues in all cases regardless of their complexity could result in a denial of due process in these cases where the judge cannot fully comprehend and resolve the issue, or issues, in the time allotted by the Feingold amendment.

The reality is that most remand motions will be decided in less time than the amendment requires, but in some cases they will require more time. We should not create rules of law that force judges to decide issues without full and fair consideration. And that is exactly what the Feingold amendment would do.

Finally, there is a reason the time limits make sense for remand appeals and not for initial rulings on remand motions. In contrast to district courts, which often must develop a factual record to address remand issues, an appeals court that is asked to review a remand order will be provided with a full record from which to reach a decision. Often, the appeals court's decision will be based simply on a reading of the law, and it will, thus, be less time-consuming than the district court's decision.

Even a 180-day time limit may be too stringent in some circumstances. Extending it to district court judges will make it more difficult for them, in some cases, to do their jobs in a fair and efficient fashion.

So I hope our colleagues will vote down the Feingold amendment. Frankly, it is another poison pill amendment that would probably scuttle this bill for another year. We have already been on this bill for 6 solid years. We have a consensus in this body to pass it. We know if we pass it in the form that it is in, the House will take it. We know it will become law because the President will sign it into law. Frankly, I hope this amendment will be voted down for all of those reasons.

Mr. President, I suggest the absence of a quorum.

Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. President, I would like to talk more generally about the Class Action Fairness Act because it responds to a serious abuse of the class action system that is on the rise; namely, the filing of copycat or duplicative lawsuits in State courts.

Over the past several years, we have seen a rise in the number of class action lawsuits filed in a few State courts known for tilting the playing field in favor of the plaintiffs' bar; in other words, dishonestly, basically, getting the courts to not do justice. These courts, referred to as ``magnet courts'' for their attractive qualities to enterprising plaintiffs' lawyers, certify class

actions with little regard to defendants' due process rights. They award substantial attorneys' fees as part of class settlements, and they approve coupon settlements to the class members that are sometimes worth little more than the paper on which they are printed.

It has not taken the plaintiffs' lawyers long to figure out which courts are good for their bank accounts. There was an 82-percent increase in the number of class actions filed in Jefferson County, TX, between the years of 1998 and 2000. During the same time span, Palm Beach County, FL, saw a 35-percent increase. The most dramatic increase, however, has occurred in Madison County, IL. Madison County has seen an astonishing 5,000-percent increase in the number of class action filings since 1998.

Let me just refer to this bar chart. It shows that the number of class actions filed in State courts has skyrocketed under current law: Palm Beach County, 35 percent in just 2 years or 3 years; Jefferson County, 82 percent in the same 2 or 3 years; and Madison County, over 5,000 percent. And then this chart shows the overall increase in State courts: 1,315-percent growth.

Now, in their effort to gain a financial windfall in class action cases, some aggressive plaintiffs' lawyers file copycat class action lawsuits. This tactic helps explain the dramatic increase in filings in these magnet courts. Here is how the copycat class action strategy works: Competing groups of plaintiffs' lawyers, and sometimes even the same lawyers, file nearly identical class action lawsuits asserting similar claims on behalf of essentially the same class in State courts around the country. Some lawyers file duplicative actions in an effort to take a potentially lucrative role in an action. Other times, these duplicative actions are the product of forum shopping by the original lawyers who file similar actions in different State courts around the country, perhaps with the sole purpose of finding a friendly judge willing to certify the class.

Because these duplicative actions are filed in State courts of different jurisdictions, there is no way to consolidate or coordinate these cases. As a result of the separate, redundant litigation of copycat lawsuits, our already overburdened State courts can become clogged with complicated class actions that potentially affect the rights and recoveries of class members throughout the entire country.

There is not a single magnet State court in this country that has not encountered the copycat phenomenon. For example, it is my understanding that in Shields v. Allstate County Mutual Insurance Company, filed in Jefferson County, TX, in the year 2000, three named plaintiffs sought certification of a nationwide class comprised of members who were insured by three insurance companies. At the very same time this action was brought in Jefferson County, no fewer than nine similar actions, representing a similarly situated class and alleging the identical claims, were pending in Madison County, IL, against the same insurance companies.

Another example of copycat lawsuits is Flanagan v. Bridgestone/ Firestone, filed in Palm Beach County, FL. Now, this lawsuit was but one of the approximately 100 identical class actions filed in State courts throughout the country in the wake of the Ford/Firestone tire recall in the year 2000.

One of the most obvious problems with copycat lawsuits is that they place new burdens on an already stressed State court system. Class actions are large, complex lawsuits with potential ramifications in jurisdictions across the country. Our State courts are courts of general jurisdiction that deal with issues ranging from domestic disputes to routine traffic offenses. They are simply not the best entity to handle the growing number of these complex lawsuits being filed across the country where multiple parties and multiple issues are involved.

S. 5 will mitigate the growing burden on our State courts by providing a means through which truly national class actions will be resolved in the most appropriate forum; that is, the Federal courts.

Over the past several months, I have heard some opponents of this bill argue that the Class Action Fairness Act will somehow result in a delay or even a denial of justice to consumers. They have argued that State courts resolve claims more quickly, and that removing these actions will result in the overburdening of our Federal courts. I have yet to see or hear a single shred of persuasive evidence to support these claims. In fact, according to the data, a strong case in the opposite direction can be made. According to two separate examinations of the State and Federal court systems conducted by the Court Statistics Project and Administrative Office of the U.S. Courts, the average State court judge is assigned nearly three times--nearly three times--as many cases as a Federal court judge. The increase of State court class actions further compounds this burden and interferes with the ability of the State court judges to provide justice to their citizens.

In fact, the Illinois Supreme Court has repeatedly criticized its own Madison County, IL, State court for its horrible backlog. The backlog is the result of the local court's willingness to take on cases that have nothing to do with Madison County, the county in which they sit. In fact, one Madison County State court judge expressed his willingness to take on cases that have little or no connection to Madison County, or even Illinois, for that matter, when he stated:

I am going to expand the concept that all courts in the

United States are for all citizens of the United States. . .

.

The fact is, when cases are accepted that have nothing to do with the State in which they are filed, it is difficult to see how justice is served. When the cases are forced to remain in State court because some plaintiff's lawyers have exploited the system by engineering the composition of the class and the defendants, both the class members and the defendants can easily be deprived of justice. In some cases, it appears that the interests disproportionately served are those of the class counsel who stand to receive millions in attorney's fees upon the swift approval of a proposed settlement while their clients receive next to nothing.

Despite claims to the contrary, S. 5 will not flood or remove all class actions to Federal court. Instead the bill acts to decrease the number currently falling in State court dockets. Most of the cases that would be removed to the Federal courts under the bill are precisely the type of cases that should be heard by such courts in the first place; namely, large national class actions affecting citizens in and around the country, including the very copycat lawsuits I have discussed today.

Class actions generally have three things in common. No. 1, they involve the most people. No. 2, they involve the most money. And No. 3, they involve the most interstate commerce issues. Taken as a whole, the national implications of class actions are far greater than many of the cases filed and heard by the Federal courts today. With this in mind, one is left to wonder how anyone could argue that these actions are not deserving of the attention of our Federal courts.

As Chief Justice Marshall noted:

However true the fact may be, that the tribunals of the

States will administer justice as impartially as to those of

the nation, to parties of every description, it is not less

true that the Constitution itself either entertains

apprehensions on this subject, or views with such indulgence

the possible fears and apprehensions of suitors, that it has

established national tribunals for the decision of

controversies between aliens and citizens, or between

citizens of different States.

When the Framers of the Constitution created the Federal courts in article 3 of the Constitution, they gave them jurisdiction over cases involving large interstate disputes, cases such as class actions. Contrary to the claims of opponents of this bill, article 3 does not require complete diversity amongst parties to a claim.

The Class Action Fairness Act will also help protect the interests of consumer class members from copycat lawsuits. When duplicative lawsuits are pending in different States, a settlement or judgment in any one case has the potential to make every other pending case moot. This winner-takes-all scenario acts as an incentive for plaintiffs' lawyers with multiple class actions to seek a quick settlement in the case, even if the settlement does no more than make the lawyers involved rich. The bona fide claims of the plaintiffs to the other class actions are wiped out by the settlement. That is not fair, but that is what is happening.

Sometimes they file multiple suits so they can force a settlement with a simple settlement demand. And what company wouldn't pay the defense costs to get out of this type of abusive jurisdiction of the various courts throughout the country.

What this means is that while one injured consumer in one court of the country recovers for their injuries, an identically injured consumer in another part of the country may get nothing. The quick settlement of a copycat lawsuit may essentially steal the ability for similarly situated plaintiffs to fully or fairly recover for their injuries, especially if the forum-shopped court is going to pull this kind of stuff and favor certain attorneys over others and certain clients over others rather than do what is just under the law.

Under S. 5, many of these copycat lawsuits would be removed to Federal court and consolidated to ensure that all similarly situated plaintiffs received the same recovery under any settlement. Unlike State courts, Federal courts are equipped with a mechanism for consolidating similar claims. In the Federal court system, a judge may consolidate multiple identical lawsuits found in various jurisdictions into one proceeding before a single Federal court known as the multidistrict litigation panel or MDL. The MDL panel has proven to be a valuable tool for preventing abuse, judicial waste, and disparate outcomes in Federal courts.

Under this system, much of the time-consuming pretrial activity in the lawsuit is heard by a single court. This serves to help protect against the plaintiffs' lawyer from making a separate deal for some plaintiffs that is not in the best interests of all class members. And by the way, for those who argue that consumers are being hurt by this bill, guess how many consumers are hurt by a collusion between plaintiffs' counsel and a particular corporation to settle in one State that wipes out everybody else throughout the country.

That happens. It happens because we have not solved these problems. This bill goes a long way toward solving some of these problems.

S. 5 solves this very problem by ensuring that a plaintiff's claim is not extinguished by the settlement of the duplicative action in another part of the country. This bill protects consumers in areas where they are not protected under current law.

Before I close, I want to stress that this bill does not change substantive law. The Class Action Fairness Act does not make it any harder or easier to file or win a lawsuit unless, of course, winning is unjustly based upon an uneven playing field. In other words, courts who homer the cases because they want to help certain attorneys who have supported them for their election to those State court positions.

This bill is one that is long overdue. As Chief Justice Rehnquist stated:

We can no longer afford the luxury of State and Federal

courts that work at cross-purposes or irrationally duplicate

one another.

This bill is a procedural bill that applies common sense to streamline the court system. The underlying substantive law is the same for class actions whether they are in Federal or in State court. This bill is a balanced, modest approach to solving some of the most abusive problems in our current civil justice system. Members on both sides of the aisle have worked long and hard to formulate a bipartisan bill, and we are succeeding in this bipartisan effort on behalf of the American people.

I steadfastly support the Class Action Fairness Act and urge my colleagues to do so as well, because it is the right thing to do. It is the right thing to do for the legal profession and for the plaintiffs who deserve compensation.

I have been in some pretty tough cases in my day, but I have never seen a case I could not win if the case was the right thing to bring. I would not bring it if it were not the right thing to bring. I loved being in Federal court, time I could get there. I also loved being in State court. I never wanted a judge to lean my way or the other way. I wanted the judge to be down the middle, and if that is the case, I thought I stood a good chance of winning the case.

We are talking about unfair advantage here in these magnet courts, these forum-shopped areas. Madison County has become the ``poster child'' for magnet courts. It deserves its reputation.

This is an important bill. This is a bill that makes sense. This bill does not deprive anybody of rights. This is a bill that will resolve a lot of these conflicts and problems, and it is a bill that I think will help all within the legal community to live within certain legal and moral constraints.

Mr. President, I suggest the absence of a quorum.

Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. President, I ask unanimous consent that at 12:30, the Senate resume debate on the Feingold amendment, and that the time be equally divided in the usual form; provided that at 12:40, 10 minutes later, the Senate proceed to a vote in relation to the Feingold amendment, with no intervening action or debate and no amendments in order to the amendment prior to the vote. I further ask consent that following that vote, debate be equally divided between the two leaders or their designees until the hour of 3 p.m.; provided further that the time between 2:20 and 2:40 be equally divided between Senator Specter and Senator Leahy; and that at 2:40, the final 20 minutes be reserved, with the Democratic leader in control of 10 minutes, to be followed by the majority leader for the final 10 minutes; provided further that at 3 o'clock, the Senate proceed to a vote in relation to the Durbin amendment, with no amendment in order to the amendment prior to the vote. I further ask unanimous consent that following that vote the bill be read the third time and the Senate proceed to a vote on passage of the bill, with no intervening action or debate. Finally, I ask that no other amendments be in order other than the two above-mentioned amendments.

Mr. President, I suggest the absence of a quorum.

Mr. President, I ask unanimous consent that the Committee on Armed Services be authorized to meet during the session of the Senate on February 10, 2005, at 9:30 a.m., in open session to receive testimony on the defense authorization request for fiscal year 2006 and the future years defense program.

Mr. President, I ask unanimous consent that the Committee on Banking, Housing, and Urban Affairs be authorized to meet during the session of the Senate on February 10, 2005, at 10:00 a.m., to conduct a hearing on ``The Role of the Government-Sponsored Enterprises in the Mortgage Market.''

Mr. President, I ask unanimous consent that the Committee on Foreign Relations be authorized to meet during the session of the Senate on Thursday, February 10, 2005, at 9:30 a.m., to hold a hearing on the Tsunami.

Mr. President, I ask unanimous consent that the Committee on the Judiciary be authorized to meet to conduct a hearing on Thursday, February 10, 2005 at 10:15 a.m. on ``Bankruptcy Reform.'' The hearing will take place in the Dirksen Senate Office Building Room 226.

Witness List

Mr. Kenneth Beine, President & CEO, Shoreline Credit Union, Two Rivers, WI; Mr. Malcom Bennett, President, International Realty & Investments, Inc., Los Angeles, CA; Mr. Dave McCall, Director, District 1, United Steel Workers of America, AFL-CIO, Columbus, OH; Mr. R. Michael Stewart Menzies, Sr., President & CEO, East Bank and Trust Company, Easton, MD; Mr. Philip Strauss, Retired Attorney, Family Support Bureau in the Office, District Attorney Office in San Francisco, on behalf of the National Child Support Enforcement Association, San Francisco, CA; Ms. Maria Vullo, Partner, Paul, Weiss, Rifkind, Wharton & Garrison LLP, New York, NY; Prof. Elizabeth Warren, Leo Gottlieb Professor of Law, Harvard Law School, Cambridge, MA; and Prof. Todd J. Zywicki, Visiting Professor of Law, Georgetown University Law Center, Washington, DC.

Subcommittee on Oversight of Government Management, the Federal

Workforce, and the District of Columbia

Mr. President, I ask unanimous consent that the Subcommittee on Oversight of Government Management, the Federal Workforce, and the District of Columbia be authorized to meet on Thursday, February 10, 2005 at 10:00 a.m. for a hearing entitled, ``Unlocking the Potential within Homeland Security; the New Human Resources System.''

Mr. President, I ask unanimous consent that the Select Committee on Intelligence be authorized to meet during the session of the Senate on February 10, 2005 at 2:30 p.m. to hold a closed meeting.

Mr. President, I rise in opposition to the amendment offered by my colleague from Arkansas. At best, this amendment is unnecessary. At worst, it will create a loophole that some enterprising plaintiffs' lawyers will surely manipulate in order to keep their lucrative class action lawsuits in State court.

Before I go into more details about the problems with the amendment, I would like to point out that the National Association of Attorneys General does not endorse this measure, nor has it pushed for its inclusion in the class action bill. One would expect that if the current bill somehow impairs the ability of State attorneys general to bring lawsuits on behalf of their citizens, we would have a position from them by now. But we do not, and the association's silence speaks volumes about the merits of this amendment.

Let me first note that this amendment, which excludes from the scope of this legislation any ``civil action brought by or on behalf of, the Attorney General of any State,'' is unnecessary. Let me explain why.

State attorneys general have authority under the laws of every State in this country to bring enforcement actions to protect their citizens. These suits, known commonly as parens patriae cases, are similar to class actions to the extent that the attorney general represents a large group of people.

But let me be perfectly clear that they are not class actions.

There is no certification process, there are no representative class members named in the complaint, and plaintiffs' attorneys who stand to gain millions of dollars in fees. Rather, they are unique lawsuits authorized under State constitutions or State statutes that are brought on behalf of the citizenry of a particular State. These actions are brought typically in consumer protection matters under State law and usually involve local disputes. As such, S. 5 in no way affects these lawsuits.

To underscore, I direct my colleagues to section 1711(2) of the bill which explicitly defines a ``class action'' to mean any civil action filed in a district court of the United States under rule

23 of the Federal Rules of Civil Procedure, or any civil action that is removed to a district court of the United States that was originally filed under a State or rule of judicial procedure authorizing an action to be brought by one or more representatives as a class action.

This statutory definition makes it perfectly clear that the bill applies only to class actions, and not parens patriae actions. Class actions being those lawsuits filed in Federal district court under rule 23 of the Federal rules of civil procedure or lawsuits brought in State court as a class action. Neither of these conditions are met when compared to the nature of a parens patriae action, and consequently, are excluded from the reach of this bill.

What I think the proponents of this amendment are really concerned about is the impact of this bill on State attorneys general if they choose to pursue an action other than a parens patriae action. But this possibility does not make this amendment necessary.

First, attorneys general are not required to use class actions to enforce their State laws and protect their citizens. To the contrary, their main weapon has been, and continues to be, the parens patriae action authorized under State statute.

Second, this legislation has been carefully crafted to distinguish between truly local suits and those that involve national issues. Thus, if an attorney general brings a class action, and that class action involves matters of truly local concern, it will certainly fall under one of the bill's exceptions. On the other hand, if the lawsuit is aimed at an out-of-State corporation for conduct that affects citizens in multiple States, or if the lawsuit is interstate in nature, then that suit should be removed to Federal court. Removal of such a case is particularly appropriate because there would likely be similar suits brought in a number of courts, and one of the central purposes of this legislation is to promote judicial efficiency and fairness by allowing copy-cat class actions to be coordinated in one Federal proceeding.

As I noted earlier, this amendment is not only unnecessary, it actually creates opportunities for gaming. If this legislation enables State attorneys general to keep all class actions in State court, it will not take long for plaintiffs' lawyers to figure out that all they need to do to avoid the impact of S. 5 is to persuade a State attorney general to simply lend the name of his or her office to a private class action. In other words, plaintiffs' lawyers will try to keep interstate class actions in State court by simply naming that State's attorney general at the end of complaint as a cocounsel or of-counsel. Undoubtedly, we will see arguments that if an attorney general merely sends in a letter saying that he/she is sympathetic 10 the action, the lawsuit will be exempt from the bill's provisions. I think this is the very type of forum shopping that S. 5 is supposed to eliminate and we should not be encouraging it now.

Indeed, to give the potential gaming some real life perspective, I direct your attention, Mr. President, to an article from the Boston Globe which reports that the Massachusetts attorney general had made arrangements with private plaintiffs' attorneys to prosecute a consumer-oriented class action against the drug store chain Walgreens. Under the arrangement, the plaintiffs lawyers pocketed hefty fees while the state AG's office received a portion of the settlement money.

But the article reports that this privatization arrangement has drawn criticism because the settlement did very little to benefit consumers. The article reports that too little of the settlement money actually went to consumers, but rather to groups such as Public Citizen, the American Lung Association, and Massachusetts Bar Association. Perhaps more troubling about the article is the alleged campaign contribution ties between the private attorneys who prosecuted these cases and the State attorney general office.

Given the close ties between this State AG and private attorneys, I find that this amendment will only encourage these types of arrangements in the future that do not benefit consumers.

We do not want to risk creating a situation in which State attorneys general can be used as pawns so that class action lawyers can remain in one of their magic jurisdictions and avoid the import of this bill. S. 5 would put an end to class action reform without diminishing in any way the ability of State attorneys general to discharge their duty to protect their citizens--and to do so in State court. I urge my colleagues to vote against this amendment.

Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. President, I would like to take a moment to demonstrate just how out of balance the class action has become and to underscore why we need to get this bill passed.

Before I do, I want to make it clear that I do not object to class lawsuits. Legitimate class action lawsuits are helpful, when they are legitimate, when there is a good cause of action, when people really have been abused.

Legitimate cause of actions do not have to seek out these favorable jurisdictions where the law is stacked against the defendants, which is what this bill helps to cure. When they are legitimate and brought in the best interest of the class members, class action lawsuits are a vital part of our judicial system. They can serve as a means to ensure that injured parties who might otherwise go unrepresented have the opportunity to have their injuries redressed.

However, in recent years we have witnessed a disturbing trend where some lawyers are bringing and settling class action lawsuits in which the chief interests actually being served appear to be those of the lawyers and not the people for whom they are bringing the actions. Too often the plaintiffs' attorneys recover millions of dollars in attorney's fees while the class action members get little more than a coupon, if that.

While we must acknowledge that there have been a few isolated instances of abusive settlements in the Federal courts, these are the rare exception. By contrast, numerous examples of abusive class action settlements

originate from the State courts. As we have noted in the Judiciary Committee report in the 108th Congress, the Class Action Fairness Act is a ``modest, balanced bill to address some of the most egregious problems in class action practice.'' It is not, however ``intended to be a panacea that will correct all class action abuses.''

This bill is the result of intense bipartisan negotiations and is our best effort to address a problem that is pervading our State court system. Abuse of the class action system has reached a critical point, and it is time that we as a legislative body address the problem. The public is increasingly aware of the system's unfairness. News programs, such as ABC's ``20/20,'' have covered the rise in class action jurisdictions in certain magnet jurisdictions, magnet meaning jurisdictions where these extortionate suits are brought because they can get a tremendous advantage regardless of whether they are right or wrong.

Scores of editorials have called for actions in newspapers all across this country. Abuse of the class action system has even become the inspiration for popular literature. In 2003, the author, John Grisham, released a book entitled ``The King of Torts.'' Grisham's novel takes its reader into the world of the mass tort/class action lawyer where clients are treated like chattel and bargaining chips. The value of a potential action is not measured by the merit of the claim but on the number of class members that can be rounded up. The end game is not the pursuit of justice for the class members and clients, but in the pursuit of a hefty attorney's fee.

Although Grisham's book is intended as fiction, it is hard to distinguish it from the facts of our broken class action system.

Let me read a few passages:

Nobody earns ten million dollars in six months. . . . You

might win it, steal it, or have it drop out of the sky, but

nobody earns money like that. It's ridiculous and obscene.

Now this quote may come from a fictional story, but it is too often too close to the truth. This short novel written by Grisham demonstrates the problems with our class action system all too well. As his book shows, with drug manufacturers the sad but inevitable fact is that people are injured every day in this country by products they buy, and justice does require that they receive just compensation for their injuries.

Frequently, class actions are the best way to compensate large groups of injured consumers. Yet, Grisham's novel, ``The King of Torts,'' also shows that the financial reward of a settlement is so great that the class action system has attracted a small group of unscrupulous lawyers who will do anything, say anything, and sue anything or anybody--not to help their clients but to line their own pockets.

We keep hearing this is not a crisis, that not everyone is gaming the system. Everyone in this body knows, however, that a few bad apples can spoil the bunch. In this case, these few lawyers are hurting our civil justice system. This reform is one small step toward restoring some balance to that system. What I have read in this work of fiction is too often fact today. Everybody knows it. Without question, many of today's class actions are nothing more than business opportunities for some lawyers to strike it rich and too often they have little, if anything, to do with fairly compensating the injured class members.

Some law firms make no secret of this. One law firm actually states on its Web site that it has brought over 24 nationwide class actions in Madison County, IL, a court notorious for approving settlements that benefit the lawyers, and that it specializes in class actions that seek less than $500 in damages for class members. Plaintiffs beware.

I am told, for example, of a law firm that explicitly acknowledges that the more potential class members there are to a claim, the more the case is worth their while. Specifically, the ``frequently asked questions'' section of their firm's Web site states:

More claimants means greater potential liability for

defendants. Because there is greater potential liability,

these lawsuits become worthwhile for lawyers to prosecute on

a contingent-fee basis.

Worthwhile, indeed. Worthwhile for the lawyers.

A small handful of wealthy lawyers is profiting from the class action system. According to an article appearing in the 2001-2002 edition of the Harvard Journal of Law and Public Policy five firms accounted for nearly half of the class action lawsuits filed in Madison County, IL, and Jefferson County, TX.

Of the lawsuits filed in these districts, many allege the same causes of action, represent the same class of plaintiffs that are brought against many of the same parties within an industry.

While these lawyers might have something to gain, the same cannot clearly be said with respect to plaintiffs, consumers, and those employed by defendant companies, who lose their jobs as a result of these types of lawsuits.

It is evident that a few key courts have been singled out by a small group of legal players in the class action world. This point is reinforced by a 2003 study conducted by the Institute for Civil Justice/RAND and funded jointly by the plaintiffs and defense bar to determine who gets the money in class action settlements. The study found that in State court consumer class settlements, it is the class counsel and not their clients who often walk away with a disproportionate share of the settlement.

What do their clients get? Well, quite simply, not enough. I believe that the many hard-working and honest class action lawyers should be compensated for their hard work and efforts. The overwhelming number of lawyers are honorable people. They are honest. They are hard working. Only a few are causing the lion's share of trouble. The majority of the honest ones are not searching for jackpot jurisdictions where the judges and the lawyers are in cahoots and somehow always find against the defendants.

I also believe such compensation should be reconcilable with a fair recovery for the client. I have supported large recovery for trial lawyers when I thought it was justified. Quite honestly, it is simply not right when our judicial system allows lawyers to walk away with millions of dollars while in some cases their clients walk away with nothing more than a coupon good toward a future purchase of the very product that was the subject matter of the class action to begin with.

I do not know about my colleagues, but when I have a problem with a product, sometimes the last thing I want to do is buy that product or have anything to do with the company or firm that makes that particular product. Frankly, keep your coupon and show me the money. If the coupons were so good, one would expect the lawyers would request that they be paid in coupons, not money.

In real life, we are too often reminded of the legendary fictional case Jarndyce v. Jarndyce of Charles Dickens' ``Bleak House'' in which legal fees ate up the whole estate so that the intended beneficiaries could not benefit.

Consider the case of Degradi v. KB Holdings, Inc., in Cook County, IL. The suit alleged that KB Toys, one of the Nation's largest toy retailers, engaged in deceptive pricing practices in some of their products. Specifically, the suit alleged that the prices of certain products were marked to appear reduced when in fact the apparently reduced price was the market price.

In the settlement with KB Toys over these allegedly deceptive pricing practices, the toy store paid attorney's fees and costs of $1 million and not one dime of cash to class members. As part of the settlement, the store held an unadvertised 30-percent-off sale on selected products. That is laughable. Under the terms of the settlement agreement, the toy retailer agreed to offer a 30-percent discount on selected products between October 8 and October 14, 2003. In other words, they held a week-long sale that was not even publicly advertised. By the time most of the class members learned about the sale, their opportunity to recover under the terms of the settlement had passed.

In fact, an independent analyst stated that KB Toys would likely benefit from the settlement because they were driving traffic. What did the class counsel get? They got $1 million. Good work if one can get it, but not necessarily a good outcome for their clients.

Then there was the 1998 class action filed in Fulton County, GA, alleging

that Coca-Cola improperly added sweeteners to apple juice. In this Coca-Cola case, in the settlement of a class action lawsuit alleging that Coca-Cola improperly added sweeteners to apple juice, it was the lawyers who got a sweet deal--$1.5 million in fees and costs. Unfortunately, class members came up empty again, receiving 50-cent coupons but no cash. So each of them got 50-cent coupons while the lawyers walked away with $1.5 million in attorney's fees.

As my colleagues know, I am a lawyer. In my practice, I represented both plaintiffs and defendants. I have watched some of the greatest lawyers appear in court when I started to practice law in Pittsburgh, PA, such as James McArdle. When Jimmy McArdle tried a case, the courtroom was always filled with young and old lawyers who wanted to watch a master at work. He brought one of the first cases against the tobacco industry.

He lost that one, but it was the case that paved the way to clean up the tobacco industry in this country.

I supported many of the tobacco class action lawyers because I thought what they did was in the best interests of their clients and the American public. But this current class action system is out of whack and needs to be fixed. I understand many of these classes are comprised of hundreds if not thousands of members, and I do not begrudge class action attorneys a reasonable fee award. But when the class member gets a 50-cent coupon and the lawyers get $1.5 million because the company has to settle rather than take a chance of going on and getting killed in a forum-shopped court, then you can see why I am upset about this.

There is also the case of Scott v. Blockbuster, Inc. Blockbuster Video was named as a defendant in 23 class action lawsuits brought by consumers, alleging that they were charged excessive late movie return fees. In 2001, Blockbuster agreed to enter into a settlement agreement. Under the terms of the settlement, which was approved by a Jefferson County, TX, State court, the class attorneys received approximately $9.25 million in attorney's fees while the class members received--you guessed it--coupons. Each class member got a $1-off, or buy one get one free coupon. Experts have predicted only 20 percent of the class members will even redeem these coupons.

I am pleased the bill before us at least ties legal fees to the actual amount of redeemed coupons. If only 1,000 people redeem those $1 coupons, the attorneys would be entitled to a percentage of that $1,000 but not $9.25 million.

I have described a few of the many class action settlements streaming out of our State court system. Many State courts appear at times to be nothing more than rubberstamps for the lawyers' proposed settlement agreements. This is not civil justice.

In that Jefferson County case, the company, Blockbuster, had to settle. They could not risk going to trial in that particular jurisdiction because of the outrageous verdicts that are granted by jurors who appear to be compromised.

This is akin to legalized extortion. Too often it appears that the chief interests served by these settlements are those of the class counsel and not the class members. This bill does not prevent class action suits, but it does stop some of these excesses.

The Class Action Fairness Act would alleviate many of the problems present in the current class action system by allowing truly national class actions to be filed in or removed to Federal court. Some of our colleagues have indicated the consumer will be lost here because they will not be able to bring these cases. Give me a break. Of course they will be able to bring these cases. But they have to be brought in a legitimate way, in Federal court where it is much less likely that they will be hammered by political judges who are in cahoots with the plaintiffs' lawyers in that jurisdiction. Federal courts as a general rule will adequately dispense justice in these matters. So the suits can be brought. This will level the playing field that has become tilted in many jurisdictions in the last few years.

It also reforms the way Federal courts would approve proposed settlements with basic requirements such as a hearing and a finding by the court that the settlement is fair, reasonable, and adequate.

This is the second time the Class Action Fairness Act has come to the Senate floor, but we have been working on it for 6 years. When we failed to achieve cloture by one vote in the preceding Congress--by one vote we failed to achieve cloture--we sat down with several Democratic Senators to reach bipartisan agreement on a bill. We know it is difficult for them to work on this bill because the largest hard money contributor to Democrats in the Senate happens to be the American Trial Lawyers Association. Some people believe Democrats are owned by them. I do not believe that. I know there are many wonderful lawyers in the American Trial Lawyers Association. Most are decent, honorable people, and I know many of them. But there are some who are unscrupulous, and they are the ones who have been fighting this reform. And they have the means to do so since they have become billionaires as a result of these coupon cases won in jackpot jurisdictions.

The bill we are considering today is the result of all of these negotiations. S. 5, the Class Action Fairness Act of 2005, presents this Congress with an opportunity to correct some of the dubious practices currently found in the class action system, and to protect the average consumer.

The first response I have is that this amendment is based on a faulty premise. Federal courts do not have a hard and fast rule against certifying multistate class actions. Rather, both Federal and State courts conduct a fair, full inquiry before certifying a class, to ensure that common legal issues predominate, as required by the Federal rule governing class actions. Put simply, this Bingaman-Feinstein amendment, as amended by Senator Feinstein, would toss State laws and procedural fairness out the window for the sake of allowing nationwide class actions. It would reverse nearly 70 years of established Supreme Court case law that requires Federal courts to apply the proper State laws when they hear claims between citizens of different States.

It would reverse numerous decisions by State supreme courts rejecting the application of one State's laws to class action claims that arise in 50 States, and it would seriously undermine the ability of plaintiffs and defendants alike to have a fair trial.

Most importantly, it would have the perverse effect of perpetuating the very magnet court abuses that this legislation seeks to end. The reason for this requirement is self-evident. The whole point of a class action is to resolve a large number of similar claims at the same time. If the differences among class members' legal claims are too great, a class trial will not be fair or practical. In some circumstances, Federal courts have found that the law of different States was sufficiently similar that a class could go forward. In other cases, they have found that the differences were too great to have a fair class trial.

The proposed amendment would take away the discretion of Federal judges to make these important decisions. It is as though we do not trust our Federal judges. In this case, we can trust them.

Proponents of the amendment conveniently ignore the fact that Federal law in this issue is quite consistent with the approach taken by numerous State supreme courts which have refused to certify cases where the differences in State law would make it impossible to have a fair and manageable trial.

In fact, the proposed amendment would reverse decisions by the Supreme Courts of California, Texas, New York, and numerous other States that have rejected nationwide class actions under such circumstances.

Second of all, Federal courts already use subclassing where appropriate. Subclassing basically means dividing a class into a couple of smaller classes whose claims are similar. Rule 23 of the Federal Rules of Civil Procedure, the nearly 40-year-old rule governing class actions, explicitly gives courts the option to use subclasses to account for variations in a class as long as the class would still be manageable and fair--for example, if a case involves State law that can easily be divided into three or four groups, subclassing would be appropriate if the trial would otherwise be manageable. At the same time, if subclassing were used in every

situation that involves different State laws, in some cases there would be so many subclasses that it would be impossible to have a manageable or even a fair trial.

Under current law, Federal judges have discretion to decide when subclassing makes sense.

This approach is working. Why would we change it?

The amendment not only changes it but makes it even worse.

Finally, the amendment would hurt consumers by subverting State law. The proposed amendment suggests that if subclassing will not work, the courts should simply respect State laws to the extent practical. What does that mean? How does a court partially carry out a State law? Judges are responsible for carrying out the law, period--not for carrying out the law to the extent practical.

By suggesting the Federal courts should ignore variations in State laws when respected State law is impractical, this provision would perpetuate the very problem that the class action bill is trying to fix. For example, in the notorious Avery vs. State Farm case, a county judge applied Illinois law to claims that arose throughout the country, ruling that insurers could not use aftermarket parts in making auto accident repairs even though several States had passed laws encouraging and even requiring the use of these more economical parts to keep down the costs of insurance premiums. The approach taken by the Avery judge--condoned by the proposed amendment--hurts consumers by denying them the protection of their State laws.

Some State legislatures have adopted particularly strong laws in certain areas because their citizens have expressed strong feelings about those issues--for example, privacy or consumer fraud. Under this amendment, citizens of such States will not be entitled to the protection of their States laws in nationwide class actions. Instead, their claims will be subject to some compromise law created by a judge who allowed for a class action trial. That is not justice. That is not good law. That is not a good way to approach things. That is not good procedure.

For all of these reasons I urge our colleagues to vote against the Bingaman-Feinstein amendment and keep this bill intact. We also know that should that amendment pass, this bill is dead. One more time, it will be dead. I hope we have enough Senators who realize the importance of getting this bill through and getting these egregious harms straightened out to pass this bill without amendment.

Let me refer one more time to Dickie Scruggs' comments which he made at a luncheon--``Asbestos for Lunch''--which was a panel discussion at the Prudential Securities Financial Research and Regulatory Conference on June 11, 2002, in New York.

I happen to admire Dickie Scruggs. He is very sharp. He is smart. He has made a billion dollars from practicing law, and I think he has made it legitimately--mainly in the tobacco cases. I have worked very closely with the attorneys in those cases. I have a lot of respect for him. He is an honest man.

When this honest man, a top trial lawyer, one of the best in the country, who is a plaintiffs' lawyer, who has brought class actions, who understands the whole system better than those lawyers, says this, I think we ought to pay attention to it. Here is what he said at that luncheon, and he is one of the leading plaintiffs' lawyers in the country. He said:

[w]hat I call the ``magic jurisdictions'' . . . [is] where

the judiciary is elected with verdict money.

What does he mean by that? He means the attorneys make so much money that they in turn can give a small percentage of that money to these judges so they can get elected and reelected. So there is an interest in the courts in making sure the attorneys make a lot of money so they can get their share to be reelected.

Let me start at the beginning again. It is best heard in full. Here is what Dickie Scruggs said:

[W]hat I call the ``magic jurisdictions, . . . [is] where the

judiciary is elected with verdict money. The trial lawyers

have established relationships with the judges that are

elected; they're State Court judges; they're popul[ists].

They've got large populations of voters who are in on the

deal, they're getting their [piece] in many cases. And so,

it's a political force in their jurisdiction, and it's almost

impossible to get a fair trial if you're a defendant in some

of these places. The plaintiff lawyer walks in there and

writes the number on the blackboard, and the first juror

meets the last one coming out the door with that amount of

money . . . The cases are not won in the courtroom. They're

won on the back roads long before the case goes to trial. Any

lawyer fresh out of law school can walk in there and win the

case, so it doesn't matter what the evidence or the law is.

He said it better than anybody on this floor has said it. And he is a trial lawyer. He said it is almost impossible to get a fair trial if you are a defendant in some of these places. He is talking about Madison County, IL, Jefferson County, TX, jurisdictions in Mississippi, and other jurisdictions throughout the country. I do not want to name them all. The fact is that is what he is talking about. It is impossible to get a fair trial.

I wonder. I have heard my colleagues come on the Senate floor and say there were only two cases a year in Madison County. Come on. That ignores all the threatened cases, demand letters, and settled cases for what are basically defense costs--whatever it costs the company to hire their law firm to defend them because they cannot afford to go to a verdict in that particular jurisdiction because that verdict money is what supports the judges to begin with. They are as interested as anybody in making sure that those verdicts are big, even if they are unjust.

That is what this is all about--and the Bingaman amendment, as amended by my dear friend, Senator Feinstein from California, continues to perpetuate this system.

This is not an overwhelming antilawyer bill. This is not an overwhelming bill that takes away consumers' rights. In fact, it is not a bill that takes away consumers' rights at all. This is not a bill that is unfair. This is a bill that will straighten out these egregious, wrongful actions by some of these jurisdictions by putting these important cases in courts where it is much more likely that justice will prevail. That is what this bill does. It will not prevent anybody from suing. It will not prevent anybody from recovering. It is just that these cases will be tried in Federal jurisdictions in these very prestigious Federal courts, as they should be because of the diversity problems that are presented by these cases, and it is much more likely that we will have less fraud, less unfairness, less jackpot justice in the Federal courts than lawyers are allowed to forum shop them in remote counties with little attachment to the parties.

I suggest the absence of a quorum.

Mr. President, what is the parliamentary state of affairs?

Have no amendments been presented?

I ask the distinguished Senator from Massachusetts if he is prepared to submit an amendment. If he is, I would be happy to yield to him instead of making my comments.

Mr. President, I listened carefully to my friend and colleague from Massachusetts, and I do think he has a few things wrong. For instance, if the vast majority of the people bringing the suit are Massachusetts citizens, under this bill they have a right to bring it in State court, if they want to, although most civil rights cases are brought in Federal court because these are 14th amendment cases.

I remember years ago arguing on this floor on these issues, and, of course, the distinguished Senator from Massachusetts and others wanted these cases brought to the Federal courts because they were so afraid some of the State courts would not do justice in civil rights cases. They were right. They wanted them in Federal court. I do not blame them.

The Federal courts are made up of judges who are nominated and confirmed for life. Because of that, they should not have any political forces that would take them away from doing justice. In all honesty, nothing in this bill would stop Massachusetts classes made up wholly of Massachusetts citizens or even a majority of Massachusetts citizens from bringing these cases in State court, if they want.

One reason the Federal courts are so clogged is because of a wide variety of cases that are now being brought in Federal court, partly caused by people on both sides of the aisle. But there is no question Federal courts are not only good courts, by and large they are basically fair courts. And by and large they are basically very sophisticated courts. And by and large they apply, in these particular cases, the laws of the States in which the suits are brought--I might add, unless there are reasons from the Federal standpoint in applying otherwise.

Now, there is nothing in this bill that stops legitimate cases from proceeding. There is nothing in this bill that takes consumer rights away. There is nothing in this bill that will not give consumers or those who are injured a day in court. There is a lot in this bill to prevent some of the phony approaches that are taken by some in the legal profession who should be ashamed of themselves. This bill corrects those kinds of injustices, those kinds of excesses, those kinds of problems.

I urge my colleagues to vote against this carve-out amendment offered by my distinguished friend from Massachusetts, Senator Kennedy.

This amendment excludes from the bill's existing jurisdictional provisions those class actions involving civil rights violations and class actions involving wage-hour disputes. But before I address the imprudence of carving out these types of cases, I would like to make it perfectly clear, as I think I have up to now, that S. 5 in no way impairs the substantive rights of litigants to bring, among other claims, civil rights and wage-hour claims. Some opponents of this bill seem ready to conveniently gloss over this critical fact in their efforts to pass bad information about what this bill does.

S. 5 is procedural in nature and simply moves larger interstate class actions to the appropriate forum where they belong in the first place: in Federal court. These class actions often involve the most money, parties from different States, and issues that transcend State lines. Yet by the same token, the bill preserves States rights to adjudicate truly local disputes on behalf of their citizens.

Now, those are facts. This bill does not take any rights away from anybody. But what we are trying to do is stop the forum shopping; in other words, finding jurisdictions that will render outrageous verdicts that basically benefit the attorneys, the lawyers, not the people for whom they are suing.

Well, let me say, first, an affirmative exclusion of civil rights cases from Federal jurisdiction runs counter to the bedrock principles of encouraging our Federal courts to adjudicate civil rights disputes. I remember, in days gone by, there was a demand that these cases be in Federal court because they are courts of primary jurisdiction under the Constitution and because, as a general rule, more justice was done.

I think this principle speaks for itself when you look at the plethora of Federal civil rights statutes extending protections against employment, housing, race, and gender discrimination. That is just to name a few. Indeed, the Federal courts' involvement with civil rights is so pervasive that Federal courts routinely hear claims brought under State civil rights laws. This is not unusual.

The Federal judiciary's extensive involvement in civil rights matters has also led to favorable results for civil rights litigants. Honest litigants are not going to lose in Federal court. It is just that simple. And they are probably more greatly protected because there is naturally less politics in Federal court.

Federal courts have a long record of certifying discrimination class actions and approving generous settlements in most of these cases.

Take, for instance, the recent Home Depot gender discrimination settlement which paid class members somewhere in the neighborhood of $65 million or the $192 million Coca-Cola race discrimination settlement in which each class member was guaranteed a recovery of at least $38,000 in cold hard cash. And, of course, there is the recent Federal court certification of the largest civil rights class action in U.S. history involving 1.6 million former and current female employees of Wal-Mart.

These are successful, proven results that belie any claim that Federal courts are somehow hostile to civil rights actions. In fact, it is laughable to now say that we have to have these in State courts when all these years we have been working hard to get these cases to Federal court so they would be adjudicated more fairly.

Some of those who support a civil rights carve-out also contend the Federal courts are overworked and incapable of handling such matters, that the State courts are better equipped. Give me a break. We have heard this concern raised repeatedly from opponents of this bill who apparently believe that if they say it enough times, the proposition may somehow turn out to be true and, at the very least, to minimize the significant deficiencies in our State courts. These critics claim that it takes 5 years to get a class action to trial in Federal courts. But do they have the raw data to back these claims? Of course, they don't.

In reality, the median time for final disposition of a civil claim filed in Federal court is 9.3 months, and the median time to trial in a civil matter in Federal court is 22.5 months. Moreover, what some of the critics hide is the fact that the State courts have experienced a much more rapid growth in civil filings than have the Federal courts. Civil filings in State trial courts of general jurisdiction have increased 21 percent since 1984, and there are delays in many State courts on civil actions that are longer than they are in Federal court.

As for filings in some of the more notable magnet State court jurisdictions, let's look at some of the figures. Just look at this chart. The number of class actions filed in State courts have skyrocketed in State courts under current law. Take Palm Beach County, FL. It has gone up 35 percent between 1998 and 2000. In Jefferson County, TX, a notorious jackpot jurisdiction, it has gone up 82 percent. In Madison County, IL, another notorious jackpot jurisdiction--in other words, a jurisdiction where defendants don't have a chance because of politics and moneys donated to judges from the trial lawyers in that particular jurisdiction, primarily--over 5,000 percent between 1998 and 2003. Why? Because it is a county that is out of whack. If the plaintiffs' attorneys can get cases in Madison County, they are going to get big verdicts, outrageous verdicts for people who aren't even sick, people who don't even have problems in some cases.

The overall increase in State courts is 1,315 percent. So don't use that argument. If you add the fact that State courts are almost always courts of general jurisdiction where they hear matters ranging from traffic violations to domestic disputes, I think you get a pretty clear picture of what our State courts are faced with in terms of workload.

As a final point, I would like to note that the Judiciary Committee soundly defeated this very amendment of the distinguished Senator from Massachusetts during markup last Congress. We reported the bill in a bipartisan 13-to-5 vote in this Congress. The committee voted against the civil rights carve-out on a solid bipartisan basis and understood the inherent problems with this amendment. This amendment lost footing in committee and should not gain traction here.

The second carve-out excludes wage and hour or timesharing claims from the bill. These are actions brought by employees against their employers for violating wage and hour restrictions imposed under applicable labor laws. While these actions are certainly important for working Americans, there is no principled basis to exclude them from this bill, not one principled reason.

Again, let me be clear about S. 5. This bill in no way affects the substantive rights of these workers to seek redress for these wage and hour claims. In other words, employees who bring wage and hour claims against their employers will still have the exact same rights they do now if this bill is enacted. The only way the bill could possibly affect these cases is by moving them to Federal court. But what the proponents of this amendment overlook is that if a wage and hour case meets the interstate criteria of the bill, then there is absolutely no reason to exclude them from Federal court. It makes no difference if the case involves a defective product, a false advertising claim, or a breach of warranty. If the class action lawsuit involves parties from different States and involves a large amount in controversy, regardless of whether the claims are predicated on State law, then the case should be heard in Federal court. This is why we have diversity jurisdiction in the first place, and it is certainly what the Founding Fathers had in mind when they drafted our Constitution.

I urge my colleagues to vote against this amendment. It establishes bad policy and is nothing more than yet another attempt to weaken the bill. This amendment, including all other carve-outs, for that matter, also flies in the face of the bipartisan compromise that is now embodied in S. 5. I intend to honor this compromise and encourage my colleagues to do the same.

Let me just say, it is unseemly to claim that the Federal courts are not as good as the State courts. And it is even worse to claim that the Federal courts should not have jurisdiction in these matters. The fact is, we have provided through the Feinstein amendment language that permits certain cases to be in State courts. But when they get to the size of the 100 or more in a class and over $5 million, these cases have to be brought in Federal court. And the reason is because of these jackpot jurisdictions that I have been pointing out that really do not do justice and are not fair.

Earlier, the distinguished Senator from Illinois was talking about how few cases are filed in Madison County, IL. What he doesn't tell you is that the minute the lawyers start talking about a class action and they send a demand letter, the companies know they are dead if the case is brought in Madison County, IL. No matter how right they may be, they are dead because the judges in that particular jurisdiction are in the pockets of the local lawyers with whom the out-of-State lawyers who have these class actions align themselves in order to go in there and get these outrageous verdicts that would not be obtained in any fair court of law.

So what do the companies do? They have no choice. They will settle for what they estimate the defense costs to be because why should they take a chance on jackpot justice? And it then becomes, in the eyes of many, a broken system of extortion, extortion by attorneys, extortion by the judges over companies that probably have little or nothing to do with Madison County, IL, but because of the current system, wind up there, either getting staggered with unjust judgments or doing what prudence tells them they have to do, and that is paying whatever they estimate the defense costs to be to get rid of the lawyers. It comes as close to legal extortion as anything I have seen.

That is what we are trying to solve here. It doesn't take away anybody's rights. It just means they will have to prove their case in Federal courts. And Federal courts are very competent courts. Judges are appointed for life. They are less political, although every

once in a while you see some politicization of Federal court, but nothing like these jackpot justice jurisdictions that are constantly used by some of these unscrupulous lawyers to get outrageous verdicts so they can collect great big fees.

Yesterday, we talked about coupon settlements--the lawyers get huge fees and the person winds up with a $5 coupon that is meaningless. That doesn't mean that some of these cases are not valid, but they could just as easily be won in Federal court, if they are valid, as they can in State courts, but not as easily as in these jackpot justice jurisdictions where justice is denied. We can throw around big corporations all we want, but businesses in this country are not all big and, even if they are, they deserve to be treated justly.

That is what our court system should be doing. It should not discriminate against them because they are large corporations. If they are fair and right, they should be treated just as fairly and rightly as anybody else.

We have come close on this bill now a number of times, very close. In November of 2003, we struck a deal that gave the Class Action Fairness Act the requisite number of votes to pass even if the bill was filibustered. We got the votes, guaranteed up to 62. It was a bipartisan compromise that allowed us to reach this commonsense agreement. Believe me, this compromise does not satisfy everybody or, for that matter, doesn't satisfy anybody.

The fact is, it is what it is--a bipartisan compromise. If I would be permitted to write the bill the way I think it should be done, I think it would be perfect, and others in this body would feel the same way. But we have worked out this bipartisan compromise and we need to stick with it.

Senator Cornyn explained this morning why he believes the bill should go further in correcting abuses in the current system, and he explained how he would fix some of these problems legally. He is not wrong, by the way. He also said he would not advance these amendments at this time because he understands the complex dynamics in arriving at the compromise bill. We have been at this for the last 6 years. That is how long we have tried to get this bill through. This bill is not perfect, by any stretch of the imagination. No bill is around here, because we have to work with 535 Members of Congress. Depending on your perspective, this bill either gave away too much or not enough.

The fact is, this bill is just about right and it is time to get it done. We know we should get it done. A supermajority of those in this body should get it done. But nearly a year and a half after we struck a deal to get it done, a series of amendments are still being offered that would scuttle this bill and, unfortunately, the amendment by the Senator from Massachusetts happens to be one of them. Let us get down to the brass tacks. It is rug-cutting time. If any amendments upset the essential compromises that have been negotiated over a long period of time, this bill will not become law. The purpose of these amendments is not to improve the bill but to destroy it. The House of Representatives will not agree--they have made it super clear--to a bill that includes amendments that gut this bill's modest and reasonable reforms. I have to say I don't blame them. They have seen this process for the last 6 years. The American people have waited for this reform for far too long. I should remind my colleagues that if we fail our constituents at this time, the memory of the American people is a long one.

I will speak today about a number of amendments that will likely be offered. In my opinion, and in the opinion of those most familiar with the bill, these amendments are poison pills, and everybody knows it. These amendments were not part of our discussions with Senators Schumer, Dodd, and Landrieu that resulted in the current bipartisan legislation. I don't mean to limit it to them. There were a whole raft of Senators on both sides of the aisle.

I will repeat that for emphasis. We had a deal. None of these amendments were part of this deal. What happened to the days when a deal was a deal? These amendments are quite literally being offered at the eleventh hour and I think for a purpose other than to improve the bill.

Let's be honest about it. Consumers, plaintiffs, and others who have rights are not going to be foreclosed from vindicating their right in a court of law. It is just that they are not going to be able to take these cases--and certainly outrageous cases--to these jackpot justice jurisdictions where justice is denied any longer--except under some loophole exceptions in this bill. But the vast majority of the problems should be solved by this bill. There are a lot of people out there who have been very badly mistreated because of the current broken tort process, who are praying we will be able to get this bill through.

Let me make this clear. If we add one of these amendments, I think the bill is dead again, even though it has had 62 prime sponsors-- people who will automatically vote for this bill and who understand the game here is to get a bill out that will do some justice in this country and stop some of the jackpot justice that has been going on.

I don't mean to denigrate anybody's amendment, but let's be fair and make it clear that this bill does not take away rights. This bill enhances rights for both sides, and not just for plaintiffs but also for defendants. So fairness in the tort system will be brought back to the forefront. In the case of civil rights and wage-and-hour disputes, look, for years we have argued they should be in Federal court. Now, all of a sudden, they don't want them in Federal court. All you can do is surmise: why is that? I think everybody knows why.

I yield the floor.

Mr. President, I notice the distinguished Senator from Wisconsin is in the Chamber, but I would like to make a few more remarks if he does not feel too badly about it.

I support this bill. I have been working on it for 6 years. It is a grand compromise. We have Democrats and Republicans. It is bipartisan. It is not perfect, but it is as good as we can do and it will do an awful lot of good.

The evidence is clear and undeniable; the well-documented abuse of the class action litigation device too often ends up victimizing plaintiffs, the very people that class actions are supposed to benefit.

These abuses cheat millions of consumers who unwittingly have their legal rights adjudicated in local courts thousands of miles away. They deny the due process rights of defendants who are relentlessly hauled into a handful of small county courts where the playing field is unfairly tilted in favor of the personal injury bar, the plaintiffs' bar.

If that were not enough, class action abuses are eroding public confidence in our civil justice system. When abuses do occur in the class action system, the public can ultimately pay dearly through spiraling prices, lost jobs, and even bankrupt companies.

I have been listening to arguments from the other side, but to give the class action problem some perspective, I want to consider just the effect of this litigation in one locale, Madison County, IL. There we find a case study in rampant misconduct within the class action system, its corrupting effect on the courts, and the desperate need for reform.

This small county in the southwestern part of that State provides all the evidence necessary to convince anyone that the legal system is currently being exploited by shameless and self-seeking plaintiffs' lawyers. Madison County, IL is a rural county. I imagine it is the type of county where maybe Abraham Lincoln first got his start as a young lawyer and an advocate for justice.

In some notes perhaps taken in preparation for a law lecture around 1850, Lincoln set the ideal for his profession, a profession practiced by many in this Chamber, including myself.

No. 1, ``Discourage litigation . . . Point out how . . . the nominal winner is often a real loser--in fees, expenses, and waste of time.''

No. 2, ``Never stir up litigation. A worse man can scarcely be found than one who does this. Who can be more

nearly a fiend than he who habitually overhauls the register of deeds in search of defective titles, whereon to stir up strife, and put money in his pocket? A moral tone ought to be infused into the profession which should drive such men out of it.''

And No. 3, ``An exorbitant fee should never be claimed.''

These words were uttered during a time when being a lawyer automatically carried with it a title of honor, integrity, and trust.

Unfortunately, Lincoln's words no longer carry much meaning for some of the lawyers who have descended on Madison County. In the land of Lincoln, the rule of law has too often been corrupted almost beyond recognition by self-interested plaintiffs' lawyers and seemingly pliant public officials. Some unscrupulous personal injury attorneys go forum shopping to find friendly jurisdictions. Certainly Madison County, IL is one of them.

Then some judges in those jurisdictions, some of whom are compromised by campaign contributions from the very same law firms arguing in their courtrooms, sometimes certify these cases with the proverbial rubber stamp, even though they are not worthy of being certified.

Finally, sympathetic local juries trying out-of-State corporations have sometimes bestowed unjustified and sometimes outrageous awards. This pattern of behavior is not only an affront to the due process rights of defendants, but it breeds disrespect for the rule of law itself.

I have heard colleagues on the other side of the aisle say, `Well, these are big corporations.' First, they aren't all big corporations, and second, even if they were, they still deserve fair treatment, due process, and an impartial justice system.

And make no mistake about it. These suits are not free. We all pay for them. The American consumer pays for the costs of these class actions.

The courthouse in Madison County, IL is what scholars now describe as a magnet court. Always on the lookout to find suitable venues for enriching themselves, entrepreneurial plaintiffs' attorneys--many of whom practice in the field of personal injury--are sucked into its orbit. The numbers alone tell the story. Over the last 5 years the number of class actions filed in the county has increased by 5,000 percent.

Let me repeat that so that astronomical figure can sink in. A 5,000- percent increase. It almost defies logic that so many national class actions are being brought in this small rural county.

In 1998, there were only two class actions filed in this county. In 2000, that number rose to 39. In 2001, there were 43 new class actions. One year later, the bridges leading to the riches of Madison County were clogged with carpetbagging lawyers as word hit the street that the local court there was giving away money as though it was Christmas morning. Enterprising plaintiffs' lawyers looking to make a quick buck knew Madison County was the place for business.

In 2004, 77 class action suits were filed. In 2003, there were another 106. Between 1998 and 2003, the number of class actions in the county rose from 2 to 106 per year. In the last 4 years, the lawyers who flocked to Madison County succeeded in having the following cases certified.

All Sprint customers in the entire Nation who have ever been disconnected on a cell phone call. That is a class action in Madison County.

Every Roto-Rooter customer in the country whose drains might have been repaired by a nonlicensed plumber.

All consumers who purchased limited edition Barbie dolls that were later allegedly offered for a lower price elsewhere.

These are just three examples of the abuses that are going on.

I know my friend from Illinois, the minority whip, Senator Durbin, is understandably protective about the state of affairs in Madison County. He points out that while many class actions are filed in Madison County, few are certified. It does not take a lot of cases like the ones I talked about to create an environment that encourages cases that are marginal at best. Through their increased filings, class action attorneys tell us a great deal of what we need to know about Madison County. That many of these cases are settled upon filing or even before they are filed tells us a lot. A demand letter from a class action attorney with a Madison County address is a dreaded piece of correspondence for any company or any defendant. If these types of cases were not such a drain on our economy, it would almost be easy to laugh at some of these cases.

We question the efficiency and fairness of a small county courthouse in Illinois adjudicating cases against national companies involving various State and Federal regulations and involving millions, if not billions, of dollars in settlements where neither the majority of plaintiffs nor the defendants are typically residents of the county. These locally elected judges, with the close assistance of interested plaintiffs' attorneys, in effect set policy for the entire Nation, defying the principles of self-government on which our Federal system is based.

This situation is a colossal mess, and a few plaintiffs' lawyers are exploiting it to the hilt, and giving all of us who love the practice of law a bad name.

The same five firms appeared as counsel in 45 of all cases filed between 1999 and 2000. Of the 66 firms appearing in these cases, 56 of them--85 percent--had office addresses outside of Madison County.

In this small county, with a population of only 259,000, there are somehow more mesothelioma claims from asbestos exposure than in all of New York City with its population of better than 8 million. One nine- member firm with an office in Madison County claims to handle more mesothelioma cases than any firm in the country.

Who benefits from all of this litigation? One Madison County judge approved a $350 million settlement against AT&T and Lucent for allegedly billing customers who leased telephones at an unfair rate. What did the lawyers get? Forty-four lawyers from four firms will split $80 million for legal fees and $4 million for expenses. And the customers? They actually lost money. After their legal fees, the average class member got hit for $6.49.

Think about that.

Lincoln's principles are a distant memory in Madison County. The Washington Post succinctly described the situation. ``Having invented a client, the lawyers also get to choose a court. Under the current absurd rules, national class actions can be filed in just about any court in the country.''

And those lawyers often pick Madison County. They are picking it because it is what some call a magic jurisdiction.

Let me refer to this chart, called ``Magic Jurisdictions.'' This is Dickie Scruggs, one of the best plaintiffs' lawyers in the country, a man I have great respect for. But in a luncheon talk on the asbestos situation at a panel discussion at the Prudential Securities Financial Research and Regulatory Conference on May 9, 2002, he had this to say. This is Dickie Scruggs. You can believe him. This man understands the litigation field. He is a billionaire from practicing law. He said:

What I call the ``Magic Jurisdictions'' is where the

judiciary is elected with verdict money. The trial lawyers

have established relationships with the judges that are

elected. They are State court judges. They are populists.

They have large populations of voters who are in on the deal.

They are getting their piece, in many cases. And so it's a

political force in their jurisdiction and it's almost

impossible to get a fair trial if you are a defendant in some

of these places. The plaintiff lawyer walks in there and

writes the number on the blackboard, and the first juror

meets the last one coming out the door with that amount of

money. The cases are not won in the courtroom. They're won

on the back roads long before the case goes to trial. Any

lawyer fresh out of law school can walk in there and win

the case, so it doesn't matter what the evidence or the

law is.

That is one of the leading plaintiffs' lawyers in the country. He was honest enough to call it the way it is in Madison County. Madison County is not the only jackpot jurisdiction, but I am concentrating on it since the distinguished Senator from Illinois has focused his remarks on our criticism of this jurisdiction.

Dickie Scruggs is a fine lawyer. I have said that. I worked with him on the tobacco settlement. He and Mississippi Attorney General Mike Moore did a good job for their clients and the American public. I am very familiar with what they did. I am familiar with the Castano Group as well, which

risked millions of dollars to bring the tobacco suits. They had an entire multifloor building filled with documents they accumulated at the cost of millions of dollars to make their case in the tobacco suits.

Dickie Scruggs is a fine lawyer. So is Mike Moore. So are the Castano Group lawyers.

Having said that, there is a reason the Super Bowl is held at a neutral site. It is clear that Madison County is not a neutral site. When it comes to class action defendants trying a class action case in Madison County, it is like shooting fish in a barrel.

Dickie Scruggs is simply too good of a lawyer to need any unfair advantage and that goes for the vast majority of plaintiffs' attorneys in our country. But there are a minority of lawyers who are causing the vast majority of our problems.

What makes for a magical jurisdiction? In a magic jurisdiction, the supposedly objective judges and jury, all stand to gain from a settlement. Madison County, as the Chicago Tribune notes, is a jackpot jurisdiction where local newspapers ``sport advertisements looking for the local plaintiff that can provide a convenient excuse to file.''

Some have concluded that this choice of venue might have something to do with the fact that in recent years the elected judges of the circuit court of Madison County have received at least three-quarters of their campaign funding from the lawyers who appear before them in these class action suits. In a simpler time, the State court would only certify a class if there was a substantial local connection. Some of the judges in Madison County have created an environment where a lifelong resident of Washington State, who worked in Washington, was allegedly exposed to asbestos in Washington, never received medical treatment in Illinois, and had no witnesses in Illinois to testify in his behalf, actually thought it was worth a shot to bring suit in a strange town halfway across the country. What was his connection to Madison County? He vacationed in Illinois for 10 days with his family nearly 50 years ago.

In this case, the court did the right thing and refused to certify this man's claim. But that a lawyer would even consider bringing it shows how far gone Madison County is. So far, the Illinois Supreme Court has taken the extraordinary step of rebuking it. As legal ethics professor Susan Koniak of Boston University School of Law explains:

Madison County judges are infamous for approving anything

put before them, however unfair to the class or suggestive of

collusion that is.

This is not justice. This is a travesty. The St. Louis Post-Dispatch, one of this Nation's great newspapers, has followed this epidemic of litigation closely. They describe the run on the Madison County courthouse as resembling ``gleeful shoppers mobbing a going out of business sale.''

Due process itself is corrupted by this circus. What is going on in Madison County too closely resembles legalized extortion in the eyes of many observers. The deck is stacked against these companies hauled to Illinois to answer these charges. The cases are sometimes heard on an expedited basis. Under these pressures they are typically given an offer they cannot refuse. Once the class is certified, they feel compelled to settle, regardless of the merits of the case. The risk of loss is simply too high. They do not even have to wait until the class is certified. They know that in most cases the class will be certified by the judges of Madison County. A simple demand causes many companies to say, `let's buy out of this for the lowest price we can, even though we do not owe them a dime. We will just settle for the attorney's fees.' These settlements are to the detriment of legitimate claims.

The class never has to be certified. No self-respecting lawyer will want to try a case in a county where the deck is totally stacked against his client. And so they settle.

Let us be clear, these are not truly local disputes.

S. 5 does nothing to remove local disputes from local courts. The suits we are talking about in Madison County and other jackpot jurisdictions are on behalf of nationwide classes of clients against corporations that do business in every State. Madison County is not chosen as the venue because of its quaint scenery. It is chosen because defendants in these class actions often do not get a fair shake in Madison County.

This is not a triumph of federalism and local decisionmaking. It is the evisceration of federalism and fairness. A bedrock principle of our federal system is that states are largely free to regulate their own particular affairs. To allow one State, in effect, to legislate for another is to violate an important principle of self-government that this country is built upon. Madison County has been flooded with class action claims and now the Nation is drowning in them. This is a classic case for Federal intervention. In fact, this is a case study for the type of intervention in Federal affairs the Constitution was meant to allow.

What happens in Madison County affects the whole country. The overwhelming majority of class actions filed in Madison County are nationwide lawsuits in which 99 percent of the class members live outside the county. As a result, decisions reached in Madison County courts affect consumers all over the country and the county's elected judges effectively set national policies on important commercial issues.

There is a place for personal injury law in the American justice system. I understand that. I am an attorney. I have tried many cases. I know that there is a legitimate and honest place for personal injury suits in our civil justice system. Americans have a sacred right to take their case to court when they are harmed by a person or product. Yet this right is seriously undermined by a seriously compromised class action regime. To help rescue it, we need to enact this reform. Today's lawyers do not take cases that come to them. They invent cases. They behave more like entrepreneurs than counsel, trying to find an issue and income stream before they find a plaintiff. They act like businessmen--the CEOs of Trial Lawyers, Incorporated.

The problem is that their business plan makes hash out of our system of impartial justice. It simply defies belief that county courts are the proper venue for multijurisdictional litigation. Some of the plaintiffs' bar have put a ``pay the lawyer first'' business model in motion in Madison County. First, find sympathetic judges. Then bankroll their campaigns. And to seal the deal, move the case through the system so fast that the defendants do not always get a fair opportunity to fully investigate the claim. Justice does demand fairness, but our system of decentralized class action litigation is fundamentally unfair to defendants, plaintiffs, and the average American who ends up footing the bill for the unjustified billion-dollar settlements.

If this were a board game, it would be ``Class Action Monopoly.'' Start at `Go', and come up with an idea for a lawsuit. Find a named plaintiff to pay off. Make allegations, no proof needed. Get out of rule 23, the Federal rule 23, free. Convince your magnet State court judge to certify the ``class.'' File copycat lawsuits in State courts all over the country. Sue as many companies in as many States possible even if they have no connection to the State.

Who gets the money? In the Columbia House case, $5 million for lawyers, discount coupons for plaintiffs. In the Blockbuster case, $9.25 million for lawyers, free movie coupons for plaintiffs. In the Bank of Boston case, $8.5 million for lawyers; some claimants even had to pay themselves.

But ``What happens to me?'' Your employer takes a hit, maybe lays you off. Your health and car insurance premiums go up. And we are all familiar with that. The lawyers win, you lose. This game gets pretty old, pretty quick. But this is this jackpot monopoly system we have in Madison County, and a whole bunch of jackpot jurisdictions in this country.

Now, the Class Action Fairness Act is an important but modest reform. It does not deprive substantive legal rights to any American. All it does is make it easier to put these national cases where they belong, and that is in our Federal courts.

According to one study, 98 of the 113 class actions filed in Madison County from 1998 to early 2002 could have been moved to Federal court under this legislation. Justice demands that we act. We cannot play around with this any more. Those who are injured will get

their day in court, but it will be Federal court, with sophisticated judges who are appointed for life, who have no reason to be unfair. By voting for S. 5, we will help make sure they get it in a court where justice can be dispensed.

I yield the floor to the distinguished Senator from Wisconsin.

Mr. President, I appreciate my two colleagues and their remarks on this very important bill. I rise to express my strong support for S. 5, the Class Action Fairness Act of 2004. This bipartisan bill represents a carefully crafted legislative solution in response to the rampant abuses of the class action litigation device currently in our State courts.

The American public will benefit from a system that fairly compensates these injured people by those who are injured by unsafe or defective products. No one disputes this. We all want a system of compensation, but we must make sure the system is fair, reasonable, and equitable.

As well, this legislation helps protect against unfair recoveries because, in the end, the public pays when defendant companies are forced to pay excessive claims and sometimes must increase prices, decrease employment, or even become bankrupt or go out of business. We ought to all understand that we all pay for that, and that is why it is important we get the laws right and that we correct injustices and distortions of the law.

Before I begin discussing the legislation, I commend the distinguished majority leader, Dr. Frist, for bringing this bill up so early in the Congress. I also commend President Bush for recognizing the importance of this issue in his State of the Union Address. Senators Grassley, Kohl, and Carper also deserve recognition for all the time and effort they have devoted to this particular bill over the last several Congresses, and without their tireless work, we would not have the bipartisan compromise bill that we have in S. 5.

Finally, I must recognize Chairman Specter for placing this bill on the Judiciary Committee agenda and reporting this legislation last week.

Over the past decade, it has become painfully obvious that class action abuses have reached troublesome proportions in our civil justice system.

It has become equally clear that the true victims of this epidemic have been everyday consumers who represent the silent majority of unnamed class members. It has become too common an occurrence for plaintiff class members not to be adequately informed of their rights or of the terms and practical implications of a proposed class action settlement.

Making matters worse, judges too often approve settlements that primarily benefit class counsel, the personal injury lawyers, rather than the class members--in other words, the victims.

Efforts to reform our class action system are nothing new to the Senate. The Senate Judiciary Committee conducted hearings in the 105th, 106th, and 107th Congresses, reporting a similar bill from the committee in the 106th on a bipartisan basis. Since then, we continue to receive substantive evidence demonstrating the drastically increasing injustice caused by class action abuses.

After working extensively with numerous legislative proposals throughout the various Congresses, we are now on the verge of taking final action on a balanced bill that I would like to spend a little bit of time explaining further.

When I say a balanced bill, I refer specifically to the operation of the bill's grant of Federal jurisdiction over interstate class actions. This key provision is located in section 4 of the bill and corrects a flaw in the current application of the Federal diversity jurisdiction statute that now prevents most interstate class actions from being adjudicated in Federal courts.

Specifically, section 4 of the bill grants the Federal district courts original jurisdiction to hear interstate class actions if, one, any member of the proposed class is a citizen of a different

State from any defendant; two, the amount in controversy exceeds $5 million; and, three, the class action lawsuit involves a class of 100 or more members.

Although I believe the three conditions I have noted are more than sufficient to achieve the right balance between Federal and State interests, S. 5 goes a step further by incorporating two additional provisions to accommodate the States' interests in adjudicating local disputes.

First, pursuant to an amendment offered by Senator Feinstein during a markup last Congress, Federal jurisdiction would not extend to any case in which two-thirds or more of the proposed class members and the primary defendants are residents of the State where the action was filed.

This exception keeps in the State courts those class actions that are prosecuted by a locally dominated plaintiffs' class with grievances against local defendants. In other words, a locally dominated lawyer- judge set of relationships that seems to be continually resulting in unjust treatment in the courts.

Similarly, the Feinstein amendment also provides that Federal courts may, based on a number of carefully proscribed factors, decline to exercise jurisdiction in middle tier cases in which two-thirds of the proposed class members and the primary defendants are residents of the same State.

To be sure, as part of the recent compromise reached last November with Senators Schumer, Dodd, and Landrieu, we further modified the Feinstein amendment by adding an additional factor for the Federal courts to consider for the middle tier of cases specifically whether there is a substantial nexus between the claims and the court selected by the plaintiffs.

I will refer to the Feinstein chart. That chart makes it very clear, in my eyes, that tier I, two-thirds or more of the proposed class members, are in-State versus in-State primary defendants. That would stay in State court.

Tier II, between one-third and two-thirds of the proposed class members are in-State versus in-State primary defendants, and one can go to either State or Federal court, subject to the judge's discretion.

Tier III, where there is one-third or fewer of the proposed class members in-State versus in-State primary defendants, those cases go to Federal court.

Although I believe the three conditions I noted are more than sufficient to achieve the right balance between Federal and State interests, section 5 goes a step further by incorporating these additional principles to accommodate States' interests in adjudicating local disputes.

The second point I was making is that States' interests in adjudicating local disputes on behalf of their citizens are further preserved through a newly created exception to Federal jurisdiction for truly local controversies. This provision, which we negotiated on a bipartisan basis last November with the three new Democratic sponsors of this bill, keeps in the State courts those class action lawsuits that satisfy the following four criteria which I will discuss in greater detail so there is no confusion on this issue.

Criterion 1, the proposed class must be primarily local, where more than two-thirds of the class members are citizens of the State where the suit was filed. This formulation resembles the two-thirds test in the Feinstein amendment I just discussed and essentially requires a large majority of the injured claimants reside within the State.

Criterion 2, the class action must be brought against at least one real defendant. The local defendant cannot be peripheral. Rather, the lawsuit must be brought against at least one defendant with a significant basis of liability and from whom significant relief is sought. This provision essentially precludes personal injury lawyers from evading Federal jurisdiction by simply naming a local defendant such as Hilda Bankston, who was unmercifully dragged into scores of class action lawsuits simply because her small family-operated pharmacy sold the diet drug phen-phen. That was the only reason she was brought in, but the real reason was because she was a pigeon sitting in the State and they used her as a device to bring all of these suits by many people who had nothing to do with the State, nothing to do with her.

Criterion 3, the principal injuries must have occurred locally. In other words, the total extent of the injuries complained of must be concentrated within the forum State. By way of an example, a nationwide drug lawsuit involving injuries spread throughout the country would certainly not qualify for this criteria. On the other hand, this criteria would be satisfied by a class action lawsuit involving a factory explosion affecting a confined geographic area.

Criterion 4, no other similar class actions can have been filed during the preceding 3 years. This criterion is intended to ensure that the exception does not apply to those class actions that are likely to be filed in multiple States based on the same or similar factual allegations against any of the same defendants.

When applying all four criteria, the local controversy exception will enable State courts to hear local class actions alleging principal injuries confined to the forum State and where the lawsuit involved litigants who predominately reside within that State. I refer to the local controversy provision chart.

As my colleagues can see, that chart for these tier III people keeps truly local claims in State court. With regard to plaintiffs, if two- thirds or more of the proposed class members are in the State and with regard to the defendants at least one in-State defendant from whom significant relief is sought--not the Hilda Bankston who was ruined by these false suits--and alleged conduct forms a significant basis of claims, and the nature of the claim's principal injuries were incurred in the State as a result of the alleged significant conduct, then those cases can be heard in State court.

I was interested in the comments of the distinguished Senator from Vermont about justice and injustice. The injustices are all on the side of those who do not want this bill because they are protecting personal injury lawyers rather than the individual claimants.

The individual claimants will have a right to go to court. It just may be that they have to go to Federal court rather than State court.

Given the addition of Senator Feinstein's three-tiered jurisdictional test and agreed-upon local controversy exception, I find it puzzling that some have represented this bill will somehow move all class actions into Federal court. We just heard some comments like that. Nothing could be further from the truth.

I urge these colleagues to read section 4 of the bill. If they cannot find comfort in this language, I urge them to look at studies showing that the bill will do nothing of the sort. If they are still skeptical, I urge them to talk to the cosponsors of the bill, including our Democratic partners, for a completely candid assessment on whether the legislation will move all class actions into Federal court. It simply will not.

These actions will be able to be brought, but there will not be the same ability to forum shop into favorable jurisdictions that act outside the law and allow unjust verdicts such as we have today.

I think the answer is perfectly clear. This bill moves to Federal court larger interstate class actions while keeping in State court local matters that are more suited for the States. Although I have focused on two provisions in S. 5, I think it is important to note that this bill contains many other changes we included so that we could build a bipartisan consensus.

After we fell one vote shy of invoking cloture the year before last, three Democratic Senators who voted against proceeding on the bill presented us with a detailed list of issues they wanted resolved before they could support class action reform legislation. After extensive discussions in November of 2003, we responded to each and every concern raised by these Senators and made the appropriate changes that are now embodied in S. 5.

As my colleagues will see, the points we have made show each Democratic concern that was raised and how we addressed those concerns.

S. 5 is a modest bill that will help to put an end to class action abuses occurring in some of our State courts. Contrary to the arguments from the bill's opponents, S. 5 does not sweep

into Federal court every conceivable class action. The bill more than adequately accommodates the States' interests in adjudicating local disputes.

I might add that the argument we are going to deprive consumers from their day in court is pure bunk. The fact is, under certain circumstances, they will have a right to be in State court or have a right, through the judge, to be in State or Federal court, and under certain circumstances that are much more fair to all litigants concerned, they will have to go to Federal court.

There is nothing wrong with going to Federal court. In fact, when I practiced law we loved to have cases that went to Federal court because people thought they were more important cases. Frankly, in most cases they were. When these cases are important, they will be tried in Federal court as well.

One thing we are concerned about, we think we have a better chance of having real justice in these cases in Federal court than to have the Hilda Bankstons of this world put out of business under what are false pretenses and manipulation of the Federal judicial system.

This legislation has been crafted and drafted through close bipartisan cooperation with several Members on the other side of the aisle, and as a result now commands a simple majority of support of this body. Despite this support, we are still faced with the obstructive tactics from a small minority that will do anything to appease the powerful and well-funded personal injury trial bar. I find this unfortunate and hope these colleagues can look beyond these special interests and do what is right for the country's ailing civil justice system.

I have always belonged to the trial bar and I think most trial lawyers are people of dedication and decency who want to do what is right, but we have seen in recent years a real subversion of the law by some trial lawyers who are interested only in money. In many respects, they are not worried about clients but worried about their own compensation system. The fact is, we need to do what is right for our country's ailing civil justice system.

The Class Action Fairness Act addresses an abuse of the class action system that has grown substantially in the past few years. I am referring to the gaming of the judicial system by unscrupulous lawyers to evade Federal diversity jurisdiction. In some cases, the filing and settling of class action lawsuits has become a virtual wheel of fortune with every spin of the wheel potentially worth millions of dollars. However, class members do not benefit from these spins of the wheel. Rather, it is the class counsels who receive millions of dollars in attorneys' fees who are the real winners of this gaming situation and of the game.

It is the sad but true fact that the most class members can expect to receive, which is an ironic twist, is a coupon good for the future purchase of the very product that was the basis of their claim to begin with.

Again, under the current tort system, it is the class action lawyers who are the real beneficiaries. They are the ones who walk away from a class action with millions in their pockets while the class members walk away with little or nothing at all but these coupons. Before I turn to some specific examples of class action lawyers gaming the system to the detriment of their clients, let me explain just how this game works.

It starts with a few class action attorneys sitting around a table, thinking of an idea for a class action lawsuit. While this idea may come from any numbers of sources, it is usually formulated and solidified after an examination of the deepest pockets in the corporate world. Naturally, they want to make money.

Once an idea for a class action is formed, it is time to find a lead or named plaintiff. The named plaintiff will inevitably be someone who is a citizen of the same State as the defendant. Why? This keeps the case in State court.

Why is this essential to winning the game? Because if the suit is in State court, the class counsels can file multiple class actions, alleging similar claims against similar defendants in multiple districts. They do this in search of a judge willing to quickly certify the class.

And because the State courts do not have a method of consolidating identical claims like we have in the Federal system, all of those claims remain pending in the various State courts around the country. The filing of multiple class actions in multiple districts gives the class counsel tremendous leverage to play hard ball with the defendant companies. By bringing class action upon class action against a company, the company is left with no other option but to settle. The alternative is to be bled dry by legal fees and face the uncertainty that one of the many courts will destroy the company by delivering a jackpot award against it.

While I suppose the class counsel would like to think of it as a game of hardball, to companies it must feel a lot like execution; and it must feel a lot like what it really is: extortion.

The real kicker is this: in some cases, many believe the only interests served by these settlements are those of the class counsel. Again, they will walk away with hundreds of thousands and sometimes millions of dollars. And what do the class members recover? Perhaps a worthless coupon.

There you have it, a successful gaming of the State tort system by the class action lawyers.

This is an intolerable practice and one that the Class A Action Fairness Act will curb.

I used to be a plaintiff's attorney. I was a defense lawyer as well. I am in no way indicting the actions of all plaintiff attorneys or class action attorneys. In many cases, plaintiff attorneys play a vital role in protecting the legitimate interests of injured consumers.

For example, I supported the efforts of the Castano group of plaintiff attorneys in the class action case against cigarette companies.

Despite the fine efforts of many, many plaintiffs' lawyers, the actions of a powerful minority of plaintiffs' attorneys have created the situation we need to remedy with this situation.

To demonstrate how class action lawyers have manipulated the tort system to their benefit, let us take a spin at the wheel and see what we come up with.

Spin the wheel again and we come to the 2003 Cook County, Illinois court-approved settlement of Degradi v. KB Holdings, Inc.

This class action alleged that KB Toys, one of the largest toy retailers in the country, manipulated toy prices to lead customers to believe that they were paying discounted prices. Specifically, the suit alleged that certain products contained an inflated reference price that was marked through in red with a lower selling price next to it.

To settle the suit, the company agreed to hold what amounted to a week long sale with a thirty percent discount on selected products. However, the company was not obligated under the terms of the settlement to advertise the discount. As a result, many of the class members eligible to receive the discount were not aware of it until long after the sale was over.

How did the game turn out for the class counsel? They won a whopping $1 million in attorneys' fees. And according to an independent analyst, KB Toys actually stood to benefit from the settlement because they were able to drive traffic into the store on the days of the discount.

All told, this was not a bad spin at the wheel for all parties concerned. That is, all parties except for the class members--in other words the people who were allegedly injured.

If you spin the wheel again you land on the in re Microsoft Litigation Settlement.

The wheel has landed on in re Microsoft Litigation Settlement.

Microsoft has been involved in multiple antitrust class action alleging that the computer giant used its control of certain programs to price gouge its customers. Ten of the class actions have been settled, including the suit brought in Johnson County, KS.

Under the terms of the settlement, class members who purchased Microsoft hardware will receive a $5 or $10 voucher toward the future purchase of particular computer hardware or software products.

If these settlement terms some like something less than a big victory for the consumers, wait until you hear about the onerous process they have to

endure in order to redeem the vouchers.

First, to even receive a voucher, a class member must first download a form from a website established for the purpose of handling the settlements, fill it out and mail it in. Then, to redeem the voucher itself, the class member must mail in the voucher with a photocopy of the original receipt and UPC code.

So the class members got some hard to redeem $5 and $10 coupons. Who then came out the big winners in the game? You guessed it, once again it was the class counsel. In these cases, they have received a mind- boggling sum in attorney's fees to the tune of hundreds of millions of dollars.

With a spin of the wheel, we come to Ramsey v. Nestle Waters North America.

This class action is better known as the Poland Springs Water class action. Let me refer to this Poland Spring Chart--this blue section which has $1.35 million on it.

The Ramsey suit alleged that Poland Spring water does not come from a spring deep in the woods of Maine as was advertised. Under the terms of the settlement approved by the Kane County, IL State court, the named plaintiff received $12,000 while the class members received discounts or free Poland Spring water of the next 5 years. The company, which denied any wrongdoing, agreed to enhance its quality control and make approximately $2.75 million in contributions to charities.

So in this round of the game, the class members got some free water. What about the class counsel? They were sitting pretty at the end of the game with $1.35 million in attorney's fees.

As Roger Parloff put it in the Forbes magazine article entitled ``Springtime for Poland,'' the settlement was ``pretty standard: next to undetectable benefits for us--some discount coupons and whatnot and $1.35 million cash for the plaintiffs' attorneys.''

That is right. Class action settlements have become so abusive that it is now standard and accepted practice for class counsel to receive millions of dollars for getting class members a bottle of water.

Now we come to the Register.com settlement, approved by the New York County, New York State Supreme Court, and affirmed by the New York Superior Court in 2003.

Register.com is the second largest domain registration company for the Internet. Those wishing to register a domain name through the company may do so for a $35 fee. But if the main name is registered, the company holds the Internet address and redirects the link to a ``Coming Soon'' page featuring promotional advertisements for Register.com and other companies until the domain nameholder develops a Web site of its own.

Michael Zurakov, serving as lead plaintiff for the class action, claimed that upon developing his own Web site, Register.com delayed in switching over the purchased domain name to him and continued to redirect the link to the promotional ``Coming Soon'' page for several months to sell advertisements. When the class counsel moved to certify the class, it was estimated that the class was comprised of approximately 3 million members.

Under the terms of the court-approved settlement, class members received $5 coupons to use. Each one got a $5 coupon to use with Register.com, assuming that the class member registered with the company again. Meanwhile, the lawyers received $642,500 in attorney fees--lawyer fees.

To quote an article appearing in Domains Magazine, ``The munificence of this reward may reflect that fact that the claim, while perhaps not utterly without a shred of merit, was not exactly the most compelling ever heard.''

However weak the suit, the class counsel had a good day at the game, taking home winnings of $642,500, especially compared to the $5 coupons each class member, so-called, got. That was the right to redeem, if they went to Register.com, and registered a name.

Cases such as this only further encourage the filing of frivolous claims by opportunistic class action counsel who are solely motivated by quick settlements that benefit only them.

Let me go to the Ameritech settlement for $16 million. This is a settlement approved by the notorious Madison County, IL, State court, one of the most abusive settlements I have ever seen.

You need to know about Madison County. Madison County is where a lot of these class actions go so they can make demand letters and get settlements as defense cases. Madison County has judges who seem to be in the pockets of the trial lawyers in Madison County who become cocounsel in these cases, and, of course, have an instant entree to the courts, and almost a guaranteed, outrageous award every time they go into court. Most of the time they don't go to court. You will find in the end very few actual cases are filed. But the demand letters are made. And these companies are so frightened over Madison County, because they know they are going to get killed if they go to court, that they almost automatically settle as a result of the demand letters. They settle for what it would cost them to defend these types of cases rather than go through the jackpot justice problem of getting slammed in a jurisdiction where apparently justice is not a measured factor.

Here we have the Ameritech settlement approved by the Madison County, IL, State court. This is one of the most abusive settlements I have ever seen.

Two suits were filed in Madison County, IL, by the same firm on behalf of customers in Michigan, Ohio, and Wisconsin, alleging that Ameritech wrongly charged customers for a wire maintenance program without informing them that the service was optional.

The settlement didn't provide customers with refunds for wrongful charges. Instead, it gave each class member a $5 pay phone card that could only be used at pay phones owned by SBC, the parent company of Ameritech, to make local and limited long distance calls within the State. Many of the class members complained that the cards were worthless to them because there were no SBC pay phones in the area. Other class members complained that the cards were worthless to them either because they did not use pay phones or because the cards contained so many restrictions that they were essentially unusable.

This was not exactly a sweetheart deal for these consumers. But how did the class action counsel come out in this round of the game?

They had a good spin of the wheel by any measure, winning $16 million in lawyer fees, while the class of people, alleged consumers who were supposedly abused, really got nothing.

We can no longer sit idly by and allow abusive settlements to continue. What will S. 5 do to help curb the gaming of our tort system?

First, the bill gives the Federal courts diversity jurisdiction over large, national class actions with at least 100 class members seeking an amount-in-controversy of $5 million.

They can still bring their suit, but it will be in Federal court where it is much more likely that justice will occur, fairness will occur, and decent treatment will occur.

As a result of the provision, large and national class actions may either be originally filed or removed to Federal court, a forum that is better equipped to handle these kinds of cases--and to do so fairly. They are not going to be deprived of their rights. They are just going to have to make their cases, and they are not going to be able to go to Madison County where they will have an automatic win absolutely guaranteed in the eyes of most companies which will be outrageous in nature as a general rule--or an automatic settlement for defense costs--which is as close to distortion as you can get because the companies can't afford to go to court in that particular jurisdiction with the judges the way they are, the attorneys the way they are, and all in cahoots the way they are.

Second, S. 5 contains provisions for the review and approval of proposed coupon settlements before a Federal court. It doesn't mean you can't have coupon settlements, but you are sure going to have to get the judge's approval. So these phoney coupons are going to be much fewer and much more far in between.

The bill provides that a Federal judge cannot approve a proposed coupon settlement until conducting a hearing with a written finding that the terms of the settlement are fair, reasonable, and equitable to the class members.

You would think that would be something every court in the land would want to do, but, unfortunately, we have had far too many of these class actions where that hasn't been the case, or where counsel are the ones who are basically mistreated in the end.

Our courts will no longer be used as a rubberstamp for proposed settlements. This provision ensures that the true beneficiaries of a settlement are the class members and not the lawyers who drew up the settlement.

It doesn't cost any more money to go to Federal court than it does State court. It isn't a tremendous inconvenience; it is just that you can expect the Federal judges not to be judges who are sustained by financial support by the local lawyers.

Third, this legislation requires that attorneys' fee awards be based on the actual recovery of the class members in coupon settlements. In other words, contingency fees must be based on the value of coupons actually redeemed by class members. This will give the attorneys an incentive to ensure the class members actually get something in the settlement they can use.

If you are going to get bottles of water, then the attorneys can get fees based upon how many bottles of water are gotten. I don't think many lawsuits would be brought on that basis anymore. Or, if you are going to get a coupon, they can get fees based upon how many coupons are redeemed. Or, in the case of the SBC coupons, they can get fees only to the extent that those coupons are viable and can be utilized, and how many of them are actually requested.

Practically speaking, class counsel will no longer look for a quick and hefty attorney fee settlement for themselves in which the class members recover relatively worthless coupons.

The time has come for us to put an end to this unfair system. I have heard many of my colleagues on both sides of the aisle decry the state of the current tort system. I ask my colleagues to recognize this bill as the opportunity that it is, an opportunity to end the abuses of the current tort system, or at least to make a start to ending the abuses of the current tort system and restoring confidence in our justice system.

Real good lawyers, the honest lawyers, if they bring class action lawsuits, will bring suits of viability, suits that mean something, suits that are deserving of the awards that are given, not suits just for the benefit of the lawyers involved. We have spent literally years now negotiating the provisions of this delicate compromise bill. The time has come to pass it.

I might add, this bill has evolved over a number of Congresses. We have negotiated with virtually everybody who has wanted to negotiate on this bill. We have made change after change after change. It is not a major change in our law, but it certainly will bring greater justice in our law and greater fairness and greater treatment in our law.

The fact is, we need this bill to remain intact. The House has indicated they will take this bill, if we pass it in its current form, and it will become law. There will be some attempts with amendments that may have merit that I may even like, but this bill is a result of a huge series of compromises that have taken years to achieve. We know if any amendment is added to this bill, it is very unlikely the House will take it. We are faced with the proposition of the need to vote down all amendments on this bill.

The distinguished Presiding Officer has a number of amendments he would like to add to this bill, as a distinguished former supreme court justice from the State of Texas, that would improve this bill. But he knows if we are going to pass this bill, we cannot take any amendments, including his. If we are going to take other amendments, we will have to take his. The fact is, we urge all amendments be voted down so we can pass this bill and, hopefully, get it to the House and get it passed so justice can occur.

Any Member who stands in the Senate and says consumers are going to be hurt by this bill, that we are not allowing suits to be brought, has not read the bill or is deliberately distorting what is going on. The fact is, suits can be brought, legitimate suits can be brought, there will be awards that will be made in legitimate cases, as they should be, and we all will be better off as a country if we get the tort system so that it does justice, rather than jackpot justice for a few, and in a number of instances I have been citing, for lawyers only. Unfortunately, we have people gaming this system to such a degree that this bill needs to pass. We need to straighten out the mess.

I yield the floor.

Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. President, I rise in support of the nomination of Judge Alberto Gonzales to be the next Attorney General of the United States of America. Based on my relationship with him over the last 4 years, I am certain he will make an outstanding Attorney General for all of the people in the United States.

Judge Gonzales has the education, experience, and character to make an excellent Attorney General. I know this to be the case because I have worked closely with him virtually every week, and many times every day, for 4 years on many issues, including terrorism and judicial nominations. I can tell my colleagues that he is a good man, and he is more than up to facing this challenging assignment.

Before making a few remarks in support of this nomination, I want to again commend the many contributions of Attorney General Ashcroft. We all owe him a debt of gratitude for working so hard over the last 4 years to make America safer for all of our citizens.

Unfortunately, but perhaps not unexpectedly, the Gonzales nomination has become as contentious as the nomination of Attorney General Ashcroft. I can only hope that once Judge Gonzales is sworn in as Attorney General, his opponents will work with him in good faith in the interest of the American people.

I have been here over the last 2 days as some of my colleagues have gone on at great length about what they misleadingly allege is the Bush administration torture policy and how Judge Gonzales acted to condone torture. Nothing could be further from the truth.

They attempt to make him responsible for a memo he did not write, prepared by an office he did not run, in a department in which he did not work, and they claim he gave advice that President Bush did not follow, which, of course, he did not.

In fact, the memo Judge Gonzales did not write was written by a person he did not supervise in a department in which he did not work and which was ultimately rescinded in July of 2004 and later replaced by a new memorandum.

In his effort to oppose the Gonzales nomination, my good friend from Massachusetts has now even tried to give a new name to the Bybee memorandum. This week, for the first time, the senior Senator from Massachusetts actually called it the Bybee-Gonzales memo.

I said it before, and I will say it again. Judge Gonzales did not write the memo. Yet his name is added to Bybee as if he were a coauthor. Somehow holding Judge Gonzales responsible for a memo he received is not fair.

Apparently, all Judge Gonzales did was ask a very important question of the entity within the Department of Justice, the Office of Legal Counsel, whose job it is to answer such inquiries. Is that a crime? Just because you ask for information does not mean you will agree with the information you receive.

Most importantly, we know the administration's policy. They have been very clear. The President has been clear. Judge Gonzales has been clear: No torture. That is their position. It has always been their position. Treat all detainees humanely, even those such as captured al- Qaida suspects who are not covered by the Geneva Conventions.

Regardless of what the rescinded and replaced Bybee memo says about the law, the bottom line is that the President never authorized or acquiesced in the use of torture. He never ordered torture. The February 7, 2002, memorandum that precedes the Bybee memo by months makes that clear. Judge Gonzales also never recommended torture.

The President made clear that regardless of whether there might be a theoretical right to override the Convention Against Torture, he was not and is not authorizing torture.

Several Senators correctly argued that no one is above the law. I agree with that. Judge Gonzales has also made clear that no man, including the President, is above the law. The President and Judge Gonzales never said the President could override the Convention Against Torture.

There has been some discussion at the nomination hearing in the Judiciary Committee and on the floor of the Senate about whether a President's independent duty to preserve, protect, and defend the Constitution of the United States might one day require a President not to enforce a statute enacted by Congress but viewed by the President as unconstitutional.

I want to discuss this matter a little further.

Although President Bush has clearly not to date exercised this authority--if it, indeed, does exist--some are criticizing Judge Gonzales's views of this power saying they are somehow out of the mainstream, dangerous, or even reflecting a profound disrespect for the rule of law.

Let me respond to the arguments made by several Judiciary Committee Democrats who say Judge Gonzales somehow believes the President is above the law, or that the President can pick and choose the laws or standards he will follow.

Specifically, my esteemed colleague from Vermont, the ranking minority leader of our committee, has asserted that Judge Gonzales has ``indicated that he views the President to have the power to override our law and, apparently, to immunize others to perform what would otherwise be unlawful acts. This is about as extreme a view of Executive power as I have ever heard. I believe it is not only dead wrong, as a constitutional matter, but extremely dangerous. The rule of law applies to the President, even this President.''

I have looked closely at Judge Gonzales's opinion on this issue, and I can tell you he is being wrongly criticized.

Let me talk about Judge Gonzales's position on Presidential authority.

It should go without debate that Judge Gonzales has specifically rejected that portion of the August 1, 2002, Office of Legal Counsel memorandum which asserted that the President, as Commander in Chief, possessed the constitutional authority in certain circumstances to disregard the Federal criminal prohibition against torture. He emphatically stated in his confirmation hearing that the memorandum has ``been withdrawn. It has been rejected, including that section regarding the Commander in Chief's authority to ignore the criminal statutes. So it has been rejected by the executive branch. I categorically reject it. . . . [T]his administration does not engage in torture and will not condone torture.''

That is what Judge Gonzales has already said, and every member of the committee knows that. So why would they come here and say he said otherwise when, in fact, that is explicit?

I should also point out that Judge Gonzales made it very clear that no man, including the President, is above the law. If confirmed as Attorney General, I have no doubt that he will remain faithful to his oath to defend the laws of the United States.

At the same time, however, Judge Gonzales has appropriately recognized that the President, consistent with his oath to preserve, protect, and defend the Constitution of the United States, as well as longstanding historical practice, may in rare circumstances conclude that a statute is unconstitutional. This is not new or even surprising. What is significant to me is that Judge Gonzales recognizes the gravity and limitation of this practice.

When my colleagues learn more about Judge Gonzales's views on this matter, I believe most will agree with him.

In his written answers to questions posed by Senators, Judge Gonzales noted that a decision to disregard a statute on constitutional grounds is an extremely serious matter and should be undertaken with considerable caution and care and only in extraordinary circumstances.

In response to my friend from Vermont, Senator Leahy, Judge Gonzales emphasized:

I would be reticent to conclude that statutes passed [by

Congress] are unconstitutional and would make every

reasonable effort if I am confirmed as Attorney General to

uphold and defend those statutes.

That is what a good lawyer would do.

Similarly, in responding to a question from my learned friend on the committee, the Senator from Illinois, Judge Gonzales stated:

For a President to consider whether or not to ignore a

particular law as unconstitutional, however, would pose a

question of extraordinary gravity and difficulty. I would

approach such a question with a great deal of care.

During his confirmation hearing, Judge Gonzales rendered his opinion on this delicate issue when he stated the following:

I think that . . . the executive branch should always look

very carefully with a great deal of seriousness and care

about reaching a decision that a statute passed by Congress

is somehow unconstitutional and should not be followed.

Certainly if I were confirmed, I would take my oath very,

very seriously to try to defend any act passed by Congress,

but it does appear to me, based upon my review of the history

and precedent . . . that Presidents and White Houses on both

sides of the aisle have taken the consistent position that a

President may choose to not enforce [a] statute that the

President believes is unconstitutional.

He goes on to say:

The President is not above the law. Of course, he is not

above the law. But he has an obligation, too. He takes an

oath as well. And if Congress passes a law that is

unconstitutional, there is a practice and a tradition

recognized by Presidents of both parties that he may elect to

decide not to enforce that law.

Again he goes on to say:

Whether or not the President has the authority in that

circumstance to authorize conduct in violation of a criminal

statute is a very, very difficult question, as far as I'm

concerned. And I think that any discussion relating to this

line of reasoning would be one that I would take with a great

deal of seriousness, because there is a presumption that the

statutes are, in fact, constitutional and should be abided

by. And this President does not have a policy or an agenda to

execute the war on terror in violation of our criminal

statutes.

That is what he said.

These are the statements of a man who understands that no one, including the President, is ``above the law,'' and that history and legal precedent allows, on the most serious and rarest of occasions, a President, if he believes a law is unconstitutional, to veto or even disregard such a law. Judge Gonzales appropriately described what we in this body have known for many years and through many administrations, both Republican and Democratic.

What if Congress passed a law that was discriminatory against a particular group of people? Now, I do not think Congress is going to do that, but what if it did? Should a President enforce that law knowing it is unconstitutional? I think most of us would conclude, no, he should not.

Now I want to go through the history and precedents that support Judge Gonzales's views regarding Presidential authority. Let me begin by pointing out that the Department of Justice's view that the President, in rare circumstances, may decline to enforce statutes that he finds to be unconstitutional is consistent with the position taken by the Justice Department in administrations of both parties for over 100 years.

In the 19th century, both James Buchanan's and Abraham Lincoln's Attorneys General argued that the President possesses the authority, under certain circumstances, to decline to enforce or disregard statutory provisions he views as unconstitutional. In 1860, Attorney General Jeremiah S. Black explained that ``[e]very law is to be carried out so far forth as is consistent with the Constitution, and no further.'' Thus, ``[t]he sound part of it must be executed, and the vicious portion of it suffered to drop.''

In 1861, Attorney General Edward Bates echoed this view when, in answering a question from the Secretary of the Interior as to whether the executive branch had the power ``to examine and decide upon the validity of an act of Congress, and to disregard its provisions,'' he advised that in cases where the conflict between the Constitution and a statute is ``plain and obvious,'' officials in the executive branch ``must disregard [the] statute.'' They may not, Attorney General Bates explained, ``disregard the Constitution, for that is the supreme law.''

In the 20th century, Democratic and Republican administrations consistently maintained that the President, in rare circumstances, may decline to enforce statutes he believes to be unconstitutional.

In 1918, Acting Attorney General John W. Davis of the Wilson administration agreed with the advice given by Attorney General Bates more than 50 years earlier that the President may decline to enforce a statute when its conflict with the Constitution is ``plain and obvious.''

My gosh, this is elementary law. I think almost anybody would have to agree with these conclusions, except somebody who just does not know elementary law or does not know constitutional law at all.

The Carter administration also took the position that the President may decline to enforce in certain circumstances statutes he viewed as unconstitutional. Carter administration Attorney General Benjamin Civiletti recognized that ``the Executive's duty to execute the law embraces a duty to enforce a fundamental law set forth in the Constitution as well as a duty to enforce the law founded in the Acts of Congress, and cases arise in which the duty to the one precludes the duty to the other.''

He therefore instructed in 1980 that the Education Department could implement regulations that Congress had already disapproved through the use of the legislative veto because the administration believed the statute authorizing the legislative veto to be unconstitutional.

Attorney General Civiletti, a Democrat in a Democratic administration, even went so far as to advise that the President could disregard a statutory provision forbidding the executive branch from expending money to implement regulations disapproved by legislative veto. Now, this is very significant because disregarding such a provision would constitute a violation of the Antideficiency Act, which carries with it criminal penalties.

The Carter administration's Office of Legal Counsel also took the position that ``the President's duty to uphold the Constitution carries with it a prerogative to disregard unconstitutional statutes.'' It therefore advised that if the unconstitutionality of a statute was certain, then ``the Executive could decline to enforce the statute for that reason alone.''

During the Reagan administration, Attorney General William French Smith also took the position that the President possesses the authority to disregard statutes he viewed as unconstitutional deviations from the separation of powers set forth in the Constitution.

In explaining President Reagan's decision to disregard certain provisions in the Competition in Contracting Act that he believed to be unconstitutional, Attorney General Smith stated the President's decision was ``based on the fact that in addition to the duty of the President to uphold the Constitution in the context of the enforcement of Acts of Congress, the President also has the constitutional duty to protect the Presidency from encroachment by the other branches.''

In the George H. W. Bush administration, the Office of Legal Counsel concluded in three separate opinions that the President could choose to disregard statutes that infringed on his constitutional authority. First, in 1990 the Office of Legal Counsel noted that ``[t]he Department of Justice in modern times has . . . consistently advised that the Constitution authorizes the President to refuse to enforce a law that he believes is unconstitutional.''

In another issue that occurred in 1992 which involved a statute that limited the President's ability to issue more than one passport to U.S. Government personnel, the Office of Legal Counsel concluded that the President was ``constitutionally authorized to decline to enforce [it]'' because it ``interfere[d] with the `plenary and exclusive' power of the President to conduct foreign affairs.''

In the Clinton administration, the Office of Legal Counsel in 1994 reaffirmed the view that ``there are circumstances in which the President may appropriately decline to enforce a statute that he views as unconstitutional.'' In particular, that Clinton Office of Legal Counsel in the Justice Department explained that ``[w]here the President believes that [a statute] unconstitutionally limits its powers,'' ``he has the authority to defend his office and decline to abide by [the statute], unless he is convinced that the [Supreme] Court would disagree with his assessment.''

In the Clinton administration, the Office of Legal Counsel noted that the Department of Justice in the Carter, Reagan, and Bush administrations had consistently advised that ``the Constitution provides [the President] with the authority to decline to enforce a clearly unconstitutional law,'' and we reaffirm that ``this advice [was] consistent with the views of the Framers.''

Let me also point out that the view that the President, in rare occasions, may decline to enforce a law that unconstitutionally restricts his authority has also been consistently embraced by Presidents of both parties. Let me give a few examples.

In 1920, President Wilson announced that he would refuse to carry out a provision in the Jones Merchant Marine Act directing him to terminate certain tariff-related treaty provisions because he considered such a requirement to be unconstitutional.

President Dwight D. Eisenhower, in signing an appropriations act in 1955 that contained a legislative veto provision, stated that any legislative veto would ``be regarded as invalid by the executive branch of the Government . . . unless otherwise determined by a court of competent jurisdiction.''

Similarly, Presidents John F. Kennedy, Lyndon B. Johnson, Jimmy Carter, and Ronald Reagan later issued similar signing statements regarding the invalidity of legislation containing legislative veto provisions.

Moreover, Presidents Richard M. Nixon and Gerald R. Ford announced in signing statements that they would disregard legislative provisions requiring that a congressional committee approve the exercise of Executive authority, and they should have. In fact, according to one historian's survey, it is estimated that from 1789 to 1981, there were at least 20 instances where Presidents had failed to comply with statutory provisions they viewed as unconstitutional.

In these cases, Presidents have disregarded statutes that they believed intruded on, among other powers, their Appointments Clause powers, Recommendations Clause powers, removal powers, foreign affairs powers, pardon powers, and powers as Commander in Chief. Such Presidents include James Buchanan, Chester Arthur, Grover Cleveland, William Howard Taft, Woodrow Wilson, Franklin Roosevelt, Dwight Eisenhower, Lyndon Johnson, Gerald Ford, Jimmy Carter and Ronald Reagan.

In at least four of these cases, Presidents refused to follow the law because they believed it to infringe their powers as Commander in Chief. In 1860, President Buchanan disregarded a law requiring an Army Corps of Engineers project to be supervised by a particular captain, reasoning that this requirement intruded on his powers as Commander in Chief. Likewise, Presidents Ford, Carter, and Reagan disregarded various provisions of the War Powers Act, arguing that certain consultation, notification, and termination provisions contained in the act infringed upon their constitutional authority as Commander in Chief.

Finally, I want to draw particular attention to the holdings of the U.S. Supreme Court which has implicitly agreed with the view that the President, in extraordinary circumstances, has the authority to decline to enforce statutes that he views as unconstitutional when he believes that such statutes intrude upon the constitutional prerogatives of the Presidency. In 1926, the U.S. Supreme Court upheld President Wilson's decision to remove a postmaster from office in violation of a statute requiring him to first obtain the Senate's consent. The Court held that the statute in question constituted an unconstitutional limitation on the President's power to remove executive officers, and thus that the removal of the postmaster without the Senate's consent was legal. This is the teaching of the case of Myers v. United States, 272 U.S. 52 (1926).

Most notably, not a single member of the Court in Myers found or even suggested that the President had exceeded his authority or acted improperly by refusing to comply with what he viewed as an unconstitutional statute. As a result, the Clinton administration's Office of Legal Counsel concluded that:

[t]he [Supreme] Court in Myers can be seen to have implicitly

vindicated the view that the President may refuse to comply

with a statute that limits his constitutional powers if he

believes it is unconstitutional.

More recently, four Supreme Court Justices have explicitly endorsed the position that the President may refuse to obey statutes he believes to be unconstitutional. In the 1991 case of Freytag v. Commissioner, Justice Scalia, in an opinion joined by Justices O'Connor, Kennedy, and Souter, explicitly stated that ``the means [available to a President] to resist legislative encroachment'' upon his power include ``the power to veto encroaching laws, or even to disregard them when they are unconstitutional.''

Consequently, there should be no hesitation regarding Judge Gonzales's responses to and analyses of this area of the law. He would be derelict were he to not acknowledge that there was indeed, in rare circumstances, precedents for a President to find a statute unconstitutional. It is unfair and unjustified to criticize this nominee for his accurate and, as I have just pointed out in some detail, traditional legal analysis of this issue. On top of that, these criticisms have ignored Judge Gonzales's very firm resolve that no man is above the law and that the President himself is not above the law. Sooner or later in this body we have to take people at their word. Having spent 4 years working with Judge Gonzales, I think you can take him at his word. I know you can.

I hope that this discussion puts to rest the erroneous suggestion that somehow Judge Gonzales holds some perverted view of the reach of the power of the President. President Bush certainly has never felt the need to assert this authority over the last 4 years which makes it hard to understand why it has become an issue in the Gonzales confirmation.

Of course, Judge Gonzales respects the law. Here is a man who was a justice on the Texas Supreme Court, where it was his job every day to uphold the law and mete out justice. He practiced law with one of the most prestigious law firms in the United State, Vinson and Elkins.

Here is a man who served honorably for his Country in the United States Air Force. Here is a man who was Texas's Secretary of State. And some of my colleagues say they will vote against him because he does not have the proper respect for the law. I simply do not understand this.

We know that Judge Gonzales is fully capable of acting independent of the President. It is not as if this will be the first time Judge Gonzales will be in a job that requires independence from President Bush. When he was a justice of the Texas Supreme Court, he was independent. At that time, he was no longer representing the interests of a Governor, he was representing the judicial system. He was upholding the law for those in Texas.

To suggest that he does not know how to exert his own opinions is offensive. He has done it before and he will do it again.

To those who criticize Judge Gonzales's responsiveness to questions submitted by the committee, let me just say this. When President Clinton nominated Janet Reno for the position of the next Attorney General, she was presented with 35 questions by the committee. We confirmed her--and I personally voted for her even though she did not respond to any of those questions prior to the vote. In fact, she did not submit her responses until 8 months after she was confirmed. We didn't rake her over the coals. We didn't send her 500 questions that required 250 pages of single-spaced answers. In contrast, Judge Gonzales responded to over 450 questions within 2 business days. He then responded to several series of additional questions over the next weeks. In total, he submitted 250 pages of single-spaced written responses to 500 questions posed by members of the Judiciary Committee. To claim that we do not know enough about his policy views simply is not supported by the voluminous record.

We didn't know anything about Janet Reno's policy views. We supported her because she was the nominee of the President and we believed her to be a good person and that she could do the job.

There is no excuse for people not supporting Judge Gonzales as the nominee of the President, because he is a good person and he has more than convinced any reasonable person that he can do this job.

Judge Gonzales is someone with whom I have worked very closely on many difficult issues during President Bush's first term. I didn't know him before President Bush was elected--at least I don't remember having met him. But I know him very well since he was appointed as White House Counsel. He is a first rate attorney. He is a straight shooter. He has always told it like it is, and he will tell it like it is. He is honest, hard working, intelligent, and experienced and he has said that he understands these principles.

He understands the difference between being Attorney General and the White House Chief Counsel. He understands that he represents all the people in America as Attorney General.

He came up the hard way and he is his own man. I am proud to know him. I am proud to have worked with him. I believe in the man. I believe he will do a great job. And I believe it is time for us to treat him with a little more respect than we have in the past.

I thank my colleague from Michigan. I know he probably wants to speak. I spoke at length. I apologize for that. But I thank him for his graciousness as he always listens to me, and to others as well.

I yield the floor.