The Patriot Act

THE PATRIOT ACT

BREAK IN TRANSCRIPT

STOPPING INDECENT PROGRAMMING

Mr. WYDEN. Mr. President, as the session winds down this year, I wanted to take a few minutes and bring to the attention of the Senate a new development that I think will be of great interest to millions of parents and families across the country. As the distinguished President of the Senate knows from our service in the other body, parents are greatly concerned that their children are bombarded every day with obscene, indecent, profane, and violent entertainment on television. Parents come up to us as legislators and say: What are you going to do to stop this trash? What are you going to do to keep indecent programming away from our children's eyes and ears?

Of course, we all wish for an ideal world where parents would take the most direct action, which is simply to turn the television set off. That is something that can be done without any Government role. But with parents working--and very often both parents working two jobs each to try to make ends meet--that is not always possible.

So as I began to look at how to solve the indecency problem, I asked what could the Government do in this area to better protect our kids from indecent programming on television? I also asked how to do it in a way without a big government bureaucracy program, a one-size-fits-all approach or where the Federal Government would regulate the actual content of the programs on our television sets.

As I began the search to try to figure out a responsible approach to the problem of indecent programming for children, one of the things I found is one of the cable companies and the big television programmers have set up a special tier of programming for those people who are interested in sports and those people who are interested in movies. I looked at it and found that not only had cable companies done this, it seemed to be working as well. They found a way to do it that the subscribers like and which was profitable. I said to myself, if that kind of approach works for sports fans and movie fans, why can we not do it for families as well? Why can we not have a special tier of programming that is appropriate for children and works for families, the way we have special programming for sports and movies?

So earlier in this session, I introduced the Kid Friendly TV Programming Act, which would require all video service providers to implement a tier of television programming that is appropriate for children. In my bill, a kids' tier is defined as a group of 15 or more television stations blocked off in a separate channel area with both programming and commercials on it that are purely kid friendly. Parents would be able to subscribe to this block of stations separate from their regular programming, knowing the programming on their television will not carry material that is obscene, indecent, profane, sexual, or gratuitously violent. In introducing this legislation, it seemed to hit the criteria that were most important to me: more wholesome choices for parents and families but not a one-size-fits-all Government mandate. The Government would put the focus where it ought to be, which is to give parents a block or tier of channels separate from regular programming where there would not be material inappropriate for our children.

After I introduced the legislation, Chairman Stevens and the ranking minority member Senator Inouye of the Commerce Committee, also made an important effort in holding a roundtable discussion on the problem of indecency, which provided some very valuable exposure for the issue. I want to express my appreciation to both of them for their leadership on this matter.

I also want to express my appreciation to the chairman of the Federal Communications Commission, Kevin Martin, who has discussed this issue with me on a number of occasions. He gave a great boost to this effort several weeks ago at the forum that was held on indecent programming, where he came out and said that a kids' tier of programming would be a responsible, practical way to make sure our Nation's children had more wholesome choices on television.

This week, spurred on by the legislation, the work of Chairman Martin, and the good bipartisan work done by Senator Stevens and Senator Inouye, the cable industry took a small step in the right direction when six cable companies, including Time Warner and Comcast, announced they plan to offer a kids' tier of programming in 2006.

Having listened for months to arguments that kids' tier is not going to be profitable and it is not going to be practical, we saw the industry finally come to an understanding that it was time to get serious about this problem.

Yesterday, Time Warner released the details of their kids' tier offer. I was pleased to see that their proposal included G-rated stations that run child friendly content 24 hours a day. However, it is unclear what will be included in the package that parents must purchase in order to purchase the kids' tier. Parents still may have to subscribe to a tier that includes stations that carry foul language, excessive violence, and inappropriate sexual content in order to subscribe to the kids' tier.

That is not what my legislation called for at all. It said we had to have alternatives to the kind of inappropriate programming that is out there now. But in order to subscribe to Time Warner's kids' tier, families might also have to subscribe to service which could include inappropriate programming for children.

I am pleased I can say on the Senate floor that at least some people in the industry have recognized the need for a kids' tier of cable programming across our country. For a long time, whenever I brought this up, they basically said western civilization would end if we have this kind of programming that meets the needs of parents and families. At least we have seen baby steps to address this issue.

What is needed is not different than what parents have at the candy-free checkout lane at the supermarket. Just like parents should not have to take their kids past all the candy to check out at the grocery store, parents should not be forced to surf through obscene programs in order to get to the programs for kids that are appropriate.

In the days ahead I want to make sure that children across the country have an opportunity to have access to this kind of good quality programming, that the kids' tier is implemented properly, and that it does not depend on which community one is in. While a family in Corvallis or Portland in my home State would have a kids' tier available to them because they are served by Comcast, a family in Pendleton or Hood River would not because they receive their cable through a different company. Until all video service providers are offering a kids' tier the job will be incomplete.

My legislation requires that all video service providers institute a kids' tier. I want to make sure families get this option. It is my intent to watch the developments we have seen in the last couple of weeks with respect to Time Warner and Comcast very closely. I am very appreciative of what Chairman Martin has done in this area because he has given great visibility to the question of improving children's programming.

I see Senator Pryor is in the Chamber as well. He has done excellent work on the Commerce Committee on this issue of indecent programming for children.

If we do not see this kind of tier of kid friendly programming done right across this country, I am going to come back to the Senate and push for my original legislation. The private sector has taken baby steps in the right direction, but there is still a great deal left to do. With millions of kids being exposed to indecent, profane, and violent programming, it is important to do this job right, and the Senate ought to stay at it on a bipartisan basis until it is done.

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FEDERAL TRADE COMMISSION NOMINATIONS

Mr. WYDEN. Mr. President, in the final hours of this session of the Senate, the Senate is going to approve two nominees to the Federal Trade Commission. I take a few minutes tonight to describe why I want to be on record tonight against the nomination of both these individuals.

When it comes to energy, the Federal Trade Commission essentially is out of the consumer protection business. Well over a year ago, I released a report documenting the Federal Trade Commission's campaign of inaction when it comes to protecting our consumers at the gas pumps. My report documented how the Federal Trade Commission has refused to challenge oil industry mergers the Government Accountability Office says would raise gas prices at the pump by 7 cents a gallon alone on the west coast.

My report also documented how the Federal Trade Commission failed to act when refineries had been shut down or to stop anticompetitive practices such as redlining and zone pricing. Since then nothing has changed.

Despite what we saw recently--record high prices for consumers, and record profits by major oil companies--what we have seen is a record level of inaction by the Federal Trade Commission on behalf of energy consumers.

In the last few months, when we saw the price of gasoline soar to an all-time record high, the Federal Trade Commission was invisible. As far as I can tell, the Federal Trade Commission failed to take any action at all in the wake of the hurricanes in the gulf that sent the price of gas skyrocketing to over $3 a gallon across the country.

If you do a Google search on FTC and gasoline prices, nothing at all comes up to indicate that the Federal Trade Commission has taken any action on behalf of energy consumers. What you do find are statements by the Chair of the Federal Trade Commission arguing against giving the agency additional authority to protect consumers against price gouging at the pump.

For example, the Federal Trade Commission Chair recently made the statement opposing an effort here in the Senate to have a price gouging law because ``they are not simple to enforce and they could do more harm to consumers.''

The fact, however, is a number of States do have price gouging laws. Two State attorneys general testified at a joint hearing recently here in the Senate that these laws are, in fact, beneficial.

In her testimony before a joint Senate hearing last month, the Chair of the Federal Trade Commission, Debra Majoras, described what I believe to be an astoundingly serious theory of consumer protection when she essentially said there is no need for a Federal price gouging law no matter how high the price of gasoline goes. The argument was by Ms. Majoras that gasoline price gouging is a local issue even if the price gouger is a major multinational oil company.

FTC officials also testified before the Congress that the agency has no authority to stop price gouging by individual companies.

Despite this clear gap in the agency's authority, the agency has refused to say what additional authority it needs to go after price gouging, and others have pressed them to do for years.

There are unquestionable efforts in the private marketplace to exploit consumers, and it didn't start with Hurricane Katrina. As the Wall Street Journal documented recently, gas prices for much of this recent period have increased twice as fast as crude oil prices. Clearly, a number of oil companies are not simply passing on higher crude oil costs but are also adding substantial increases to the cost of gas above and beyond the higher cost of crude oil.

Since the early 1970s and for much of this year, there has never been the kind of disparity between increases in the price of gas and increases in the price of crude oil. This was not seen even in the days of the long gas lines following the OPEC embargo.

Over the past 30 years, gasoline prices never rose more than 5 percent higher in a year than the cost of crude increase. But in the past year, gas price increases outpaced crude by 36 percent. After Hurricane Katrina, the price difference soared even higher to 68 percent.

Further evidence of price gouging could be found in what happened on the west coast immediately following Hurricane Katrina, when prices surged 15 cents per gallon overnight. For years, oil industry officials, the Federal Trade Commission, and others have maintained that the west coast was an isolated gasoline market from the rest of the country. West coast supplies were not affected by the hurricanes. The west coast gets almost none of its gas from the gulf. If the west coast was an isolated market, as the oil industry has claimed for years, then Katrina was not a justification for jacking up gas prices on the west coast immediately after the hurricanes.

The Federal Trade Commission is the principal consumer protection agency in the Government. It is the Federal agency that can and should take action when gasoline markets go haywire as they did after the hurricanes. But instead of action, what we have repeatedly seen were excuses.

In the past, the Federal Trade Commission often claimed that it was studying the problem or monitoring the gasoline markets as an excuse for inaction on gas pricing.

Recently, the Federal Trade Commission's campaign of inaction has even extended to the studies that the agency does. The Federal Trade Commission chair testified last week that a study of gas price gouging that Congress required the FTC to complete by this month would not be ready until next spring. In effect, the campaign of inaction is now approaching the point of paralysis where the agency won't even deliver promptly on commitments that it has made to study the issue.

The agency has continued its program with inaction on behalf of gasoline consumers despite the findings by the Government Accountability Office that the agency's policies are raising prices at the pump.

In May of 2004 the Government Accountability Office released a major study showing how oil industry mergers and the Federal Trade Commission allowed to go through in the 1990s substantially increased concentration in the oil industry and increased gas prices for consumers by as much as 7 cents per gallon on the west coast.

Specifically, the Government Accountability Office found that during the 1990s the Federal Trade Commission allowed a wave of oil industry mergers to proceed, that these mergers had substantially increased concentration in the oil industry, and that almost all of the largest of the oil industry mega mergers examined by the auditors each had increased gasoline prices. Essentially, the Government Accountability Office found that the Federal Trade Commission's policies on mergers had permitted serial price gouging.

Two years ago, when current Federal Trade Commission Chair Deborah Majoras last came before the Senate for confirmation, I asked a response to the report done by the independent government auditor. Despite her promise to do so, I have yet to receive any response from the Chairman of the Federal Trade Commission.

The Government Accountability Office is not alone in documenting how Government regulators have been missing in action when it comes to protecting our consumers at the gas pump. Since 2001, oil industry mergers totalling more than $19 billion have gone unchallenged by the Federal Trade Commission, according to a recent article in Bloomberg News. The article also reported that these unchecked mergers may have contributed to the highest gasoline prices in the past 20 years.

According to the Federal Trade Commission's own records, the agency imposed no conditions on 28 of 33 oil mergers since 2001. You can see the results of the Federal Trade Commission's inaction at gas stations in Oregon and across the country. Nationwide, the Government Accountability Office found between 1994 and 2002, gasoline market concentration increased in all but four States. As a result of the Government's merger policies, 46 States now have gasoline markets with moderate or high concentration, compared to only about half that just 10 years ago.

The Federal Trade Commission, oil industry officials, and consumer groups all agree in these concentrated markets oil companies do not need to collude in order to raise prices. The Federal Trade Commission's former general counsel, William Kovacic, has said:

It may be possible in selected markets for individual firms to unilaterally increase prices.

In other words, the Federal Trade Commission's general counsel basically admitted that oil companies in these markets can price gouge with impunity. Mr. Kovacic is one of the two nominees for the Federal Trade Commission who is now before the Senate.

Despite all of this evidence that gasoline markets around the country have become more concentrated and that in these concentrated markets individual firms can raise prices and extract monopoly profits, the Federal Trade Commission has failed to take effective action to check oil industry mergers. In the vast majority of cases, the Federal Trade Commission took no action at all.

The Federal Trade Commission's inaction on oil mergers is once again a front burner issue with the recent announcement that ConocoPhillips, an oil company formed from a series of mergers the Federal Trade Commission allowed, is acquiring Burlington Resources to create one of the largest U.S. natural gas producers. Many in the oil and gas industry expect this merger announcement will lead to a similar wave of consolidation in the natural gas industry. This, in turn, will lead to greater consolidation of the industry and fewer choices for consumers.

In addition to the inaction on merger issues, the Federal Trade Commission has also failed to act against proven areas of anticompetitive activity. Major oil companies are charging, in some instances, dealers' discriminatory ``zone prices'' that make it impossible for dealers to compete fairly with company-owned stations or even other dealers in the same geographic area. With zone pricing, one oil company sells the same gas to its own brand stations at different prices. The cost to the oil company of making the gas is the same. In many cases, the cost of delivering that gas to the service station is the same, but the price the station pays is not the same. And the station that pays the higher price is not able to compete, and eventually that station goes out of business and there is further concentration in that particular community's market.

Another example of anticompetitive practices that now occur in gas markets is a practice known as redlining. This involves oil companies making certain areas off limits to independent gas distributors, known as jobbers, who bring competition to a particular area. The Federal Trade Commission's own investigation of west coast gas markets found that the practice of redlining was rampant on the west coast, but the Federal Trade Commission concluded that it could only take action to stop this anticompetitive practice if the redlining was the result of out and out collusion, a standard that is almost impossible to prove.

In my home State, one courageous gasoline dealer took on the major oil companies and won a multimillion-dollar court judgment in a case that involved redlining. This dealer gave the evidence that was used to win his case in court to the Federal Trade Commission. The Federal Trade Commission, the premier consumer protection agency of the Federal Government, failed to do anything to help this dealer or to reign in the anticompetitive practices at issue.

In areas other than energy, the Federal Trade Commission, in my view, has made a significant contribution to protecting consumers. In other areas, the Federal Trade Commission has not hesitated to move aggressively on behalf of the consuming public. To give one example, the Federal Trade Commission created a Do Not Call Program to prevent consumers from being hassled at home. With its Do Not Call Program, the agency pushed to protect consumers to the limits of its authority and even went beyond what the courts say it had authority to do.

For some reason, in the case of energy, the Federal Trade Commission had a regulatory blind spot. That has been true, I am sad to report, in both Democrat and Republican administrations. It is a bipartisan blind spot that keeps the agency from looking out for the millions of Americans who consume gasoline and gas products every single day.

The Federal Trade Commission will not even speak out now on behalf of consumers getting gouged at the gas pump. The agency will not use its bully pulpit to even say that record high gas prices are an issue of concern that they will be looking at closely.

The FTC approach on gas prices is one, in my view, that must change. I do not intend to support the business-as-usual approach on energy that has been seen too long at the Federal Trade Commission. I have met with both the nominees to the Federal Trade Commission, Mr. William Kovacic and Mr. Thomas Rosch. I also asked them to provide me their views in writing in an effort to find out whether they would push the Commission to take a different approach from its long history of inaction in this area.

Unfortunately, neither of these individuals provided me with any compelling evidence that they are committed to and will, in fact, work aggressively to change the culture of inaction at the Federal Trade Commission with respect to consumer protection in the energy field.

Despite this prior statement about how oil companies with market power could gouge with impunity, Mr. Kovacic, the former Trade Commission general counsel, failed to identify any new authority the Federal Trade Commission needed to close the regulatory gap. On the question of whether the Federal Trade Commission needed added authority to address mergers in the petroleum industry that the GAO found had increased gasoline prices, Mr. Kovacic wrote:

I do not have any specific preliminary in mind at the moment.

Mr. Kovacic was more constructive on the question of whether there were other ways the FTC's statutory authority might be enhanced. He suggested Federal antitrust laws could be enhanced by encouraging whistleblowers to reveal illegal conduct by adding qui tam mechanisms that allow the whistleblowers to receive a percentage of the funds the government recovers from wrongdoers. I certainly agree a qui tam mechanism could provide a useful supplement to Government oversight in many areas.

It is not a substitute for the Federal Trade Commission doing its job. And Mr. Kovacic did not identify any way the Federal Trade Commission's own approach to the oil industry would change. Given the Federal Trade Commission's record, given what they have done in the last few years, essentially being AWOL when it comes to energy, Mr. Kovacic's proposal essentially amounts to contracting out the Federal Trade Commission's enforcement authority in this area.

Now, I personally believe that the Federal Trade Commission itself needs to be an aggressive watchdog, looking out for consumers at the gas pump, not passively waiting for an industry whistleblower to come forward with smoking-gun evidence before taking action. That is why I find, at this point, no evidence that Mr. Kovacic would bring a different kind of outlook to the Federal Trade Commission's work in the energy field.

Now, the other nominee, Mr. Rosch, had a more interesting proposal. He suggests restoring the Federal Trade Commission's authority to challenge unilateral conduct affecting competition, authority that the Federal Trade Commission had prior to 1994. That would be a good first step toward closing the existing gap in the Agency's regulatory authority.

Had Mr. Rosch ended his letter to me at that point, I would have been willing to support his nomination. However, he went on to undercut his case when it came to anticompetitive practices in a key area: zone pricing. In effect, before taking any action to deal with this particularly egregious and anticompetitive practice, Mr. Rosch argued for waiting for the outcome of a pending court case and for recommendations of the Antitrust Modernization Commission. So he was, in effect, saying, as the Federal Trade Commission says again and again and again in the energy field, that he wants more time to study, which means more delay and more inaction as it relates to protecting consumers from anticompetitive practices.

It is my view that we have had enough delay and enough study when it comes to the anticompetitive practices of the oil industry. I do not intend to support business as usual at the Agency, and I am not going to support business-as-usual nominees to be FTC Commissioners. I intend to continue to raise my concerns as long as the Federal Trade Commission continues to duck aggressive consumer protection efforts in an area that, for reasons that I cannot fully explain to the Senate, they are simply unwilling to take up.

This Agency, which is willing to step in in a variety of areas, such as ``do not call,'' stretches their authority to the limits and then even beyond, for some reason continues to sit on their hands when it relates to energy.

I want things to change at the Agency. I want to see a more aggressive approach on behalf of energy consumers. I am not convinced that anything will change if Mr. Kovacic or Mr. Rosch is appointed to the Federal Trade Commission. Both of these individuals are going to get approved by the Senate in the last few hours of this session.

It is my hope, in wrapping up--I see the Senator from Pennsylvania on the floor, who has patiently waited--it is my hope that these two individuals, Mr. Rosch and Mr. Kovacic, will prove that I am incorrect in the judgments I make tonight. I hope they will be aggressive. I hope they will look for opportunities to stand up for the consumer. I hope they will change this course of inaction that has been laid out by Ms. Majoras. If those two individuals, Mr. Kovacic and Mr. Rosch, take those kinds of steps, if they take the kinds of steps I have advocated tonight--to stand up for the energy consumer in this country--they will have my full support.

Mr. President, I yield the floor and suggest the absence of a quorum.

http://thomas.loc.gov/