[House Report 106-1050]
[From the U.S. Government Publishing Office]
Union Calendar No. 612
106th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 106-1050
_______________________________________________________________________
SUMMARY OF ACTIVITIES
__________
A REPORT
of the
COMMITTEE ON SMALL BUSINESS
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
January 2, 2001.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
__________
U.S. GOVERNMENT PRINTING OFFICE
89-060 WASHINGTON : 2001
COMMITTEE ON SMALL BUSINESS
JIM TALENT, Missouri, Chairman
LARRY COMBEST, Texas NYDIA VELAZQUEZ, New York
JOEL HEFLEY, Colorado JUANITA MILLENDER-McDONALD,
DONALD MANZULLO, Illinois California
ROSCOE BARTLETT, Maryland DANNY DAVIS, Illinois
FRANK LoBIONDO, New York CAROLYN McCARTHY, New York
SUE KELLY, New York BILL PASCRELL, Jr., New Jersey
STEVE CHABOT, Ohio RUBEN HINOJOSA, Texas
PHIL ENGLISH, Pennsylvania DONNA CHRISTIAN-GREEN, Virgin
DAVID McINTOSH, Indiana Islands
RICK HILL, Montana ROBERT BRADY, Pennsylvania
JOSEPH R. PITTS, Pennsylvania TOM UDALL, New Mexico
JOHN E. SWEENEY, New York DENNIS MOORE, Kansas
PAT TOOMEY, Pennsylvania STEPHANIE TUBBS JONES, Ohio
JIM DeMINT, South Carolina CHARLES A. GONZALEZ, Texas
EDWARD PEASE, Indiana DAVID PHELPS, Illinois
JOHN THUNE, South Dakota GRACE NAPOLITANO, California
MARY BONO, California BRIAN BAIRD, Washington
Harry J. Katrichis, Chief Counsel
Michael Day, Minority Staff Director
STANDING SUBCOMMITTEES
----------
Subcommittee on Empowerment
JOSEPH R. PITTS, Pennsylvania, Chairman
PHIL ENGLISH, Pennsylvania JUANITA MILLENDER-McDONALD,
JIM DeMINT, South Carolina California
FRANK LoBIONDO, New Jersey DENNIS MOORE, Kansas
ED PEASE, Indiana STEPHANIE TUBBS JONES, Ohio
TOM UDALL, New Mexico
------
Subcommittee on Government Programs and Oversight
ROSCOE BARTLETT, Maryland, Chairman
MARY BONO, California DANNY K. DAVIS, Illinois
PATRICK TOOMEY, Pennsylvania RUBEN HINOJOSA, Texas
RICK HILL, Montana CHARLES GONZALEZ, Texas
Vacancy Vacancy
------
Subcommittee on Regulatory Reform and Paperwork Reduction
SUE KELLY, New York, Chairwoman
LARRY COMBEST, Texas WILLIAM PASCRELL, Jr., New Jersey
DAVID McINTOSH, Indiana ROBERT BRADY, Pennsylvania
JOHN E. SWEENEY, New York DENNIS MOORE, Kansas
JOHN THUNE, South Dakota Vacancy
------
Subcommittee on Tax, Finance, and Exports
DON MANZULLO, Illinois, Chairman
STEVE J. CHABOT, Ohio CAROLYN McCARTHY, New York
PHIL ENGLISH, Pennsylvania RUBEN HINOJOSA, Texas
PATRICK J. TOOMEY, Pennsylvania CHARLES GONZALEZ, Texas
Vacancy GRACE NAPOLITANO, California
------
Subcommittee on Rural Enterprises, Business Opportunities and Special
Small Business Problems
FRANK LoBIONDO, New Jersey, Chairman
RICK HILL, Montana DONNA CHRISTIAN-CHRISTENSEN,
JIM DeMINT, South Carolina Virgin Islands
JOHN THUNE, South Dakota DAVID PHELPS, Illinois
JOHN E. SWEENEY, New York TOM UDALL, New Mexico
BRIAN BAIRD, Washington
LETTER OF TRANSMITTAL
----------
U.S. House of Representatives,
Committee on Small Business,
Washington, DC, January 2, 2001.
Hon. Jeff Trandahl,
Clerk, U.S. House of Representatives,
Washington, DC.
Dear Mr. Trandahl: On behalf of the Committee on Small
Business of the U.S. House of Representatives, I am pleased to
transmit the attached Summary of Activities of the Committee on
Small Business for the 106th Congress.
This report is submitted in compliance with the
requirements of Rule XI, clause 1(d), of the Rules of the House
of Representatives with respect to the activities of the
Committee, and in carrying out its duties as stated in the
Rules of the House of Representatives.
The purpose of this report is to provide a reference
document for Members of the Committee, the Congress and the
public which can serve as a research tool and historic
reference outlining the Committee's legislative and oversight
activities conducted pursuant to Rule X, clauses 1(o), 2(b) and
(c), and 3(k), of the Rules of the House of Representatives.
This document is intended to serve as a general reference tool
and not as a substitute for the hearing records, reports and
other Committee files.
Sincerely,
James M. Talent, Chairman.
C O N T E N T S
----------
Page
Chapter I--Introduction.......................................... 1
1.1 Historical Background.................................... 1
1.2 Extracts from the Rules of the House of Representatives.. 2
1.3 Number and Jurisdiction of Subcommittees................. 3
1.4 Disposition of Legislation Referred to the Committee..... 4
Chapter II--The Small Business Administration.................... 7
2.1 SBA Programs in General.................................. 7
2.2 SBA Business Loans....................................... 7
2.3 Disaster Assistance Loans................................ 8
2.4 Small Business Investment Companies...................... 9
2.5 The 8(a) Program......................................... 9
2.6 Surety Bond Guarantees................................... 10
2.7 Small Business Development Programs...................... 10
2.8 Small Business Innovation Research....................... 11
2.9 Small Business Technology Transfer....................... 11
2.10 Export Assistance....................................... 12
2.11 Office of Advocacy...................................... 13
Chapter III--Hearings and Meetings Held By the Committee on Small
Business and its Subcommittees, 106th Congress................. 15
3.1 Full Committee........................................... 15
3.2 Subcommittee on Empowerment.............................. 16
3.3 Subcommittee on Government Programs and Oversight........ 16
3.4 Subcommittee on Regulatory Reform and Paperwork Reduction 17
3.5 Subcommittee on Tax, Finance, and Exports................ 17
3.6 Subcommittee on Rural Enterprises, Business
Opportunities, and Special Small Business Problems....... 18
Chapter IV--Publications of the Committee on Small Business and
its Subcommittees, 106th Congress.............................. 19
4.1 Reports.................................................. 19
4.2 Hearings Records......................................... 20
Chapter V--Summary of Legislative Activities of the Committee on
Small Business, 106th Congress................................. 25
5.1 H.R. 68 the Small Business Investment Company Corrections
Act of 1999, Public Law 106-9............................ 25
5.2 H.R. 391 Small Business Paperwork Reduction Act
Amendments of 1999....................................... 28
5.3 H.R. 413 Program for Investment in Micro-Entrepreneurs
Act of 1999.............................................. 29
5.4 H.R. 439, Paperwork Elimination Act of 1999.............. 33
5.5 H.R. 440, Microloan Program Technical Corrections Act of
1999, Public Law 106-22.................................. 36
5.6 H.R. 774 Women's Business Centers Amendments Act of 1999,
Public Law 106-17........................................ 38
5.7 H.R. 775, Year 2000 Readiness and Responsibility Act,
Public Law 106-37........................................ 39
5.8 S. 314, Small Business Year 2000 Readiness Act, Public
Law 106-8................................................ 42
5.9 S. 388 (H.R. 818) Disaster Mitigation Coordination Act of
1999, Public Law 106-24.................................. 43
5.10 S. 791 (H.R. 1497) Women's Business Center
Sustainability Act, Public Law 106-165................... 45
5.11 H.R. 1568, Veterans Entrepreneurship and Small Business
Development Act, Public Law 106-50....................... 49
5.12 H.R. 1882, Small Business Review Panel Technical
Amendments Act of 1999................................... 55
5.13 H.R. 2392, Small Business Innovation Research Program
Reauthorization Act of 2000, Public Law 106-554.......... 60
5.14 H.R. 2614, The Certified Development Company Program
Improvement Act of 1999, Public Law 106-554.............. 68
5.15 H.R. 2615, To Amend the General Business Loan Program,
Public Law 106-554....................................... 72
5.16 H.R. 2848, New Markets Initiative Act of 1999, Public
Law 106-554.............................................. 76
5.17 H.R. 3843, Small Business Reauthorization Act of 2000,
Public Law 106-554....................................... 83
5.18 H.R. 3845, Small Business Investment Corrections Act of
2000, Public Law 106-554................................. 88
5.19 H.R. 4464, BusinessLINC Act of 2000, Public Law 106-554. 93
5.20 H.R. 4530, New Markets Venture Capital Program Act of
2000, Public Law 106-554................................. 95
5.21 H.R. 4890, The Small Business Contract Equity Act of
2000..................................................... 103
5.22 H.R. 4897, Equity in Contracting for Women Act of 2000,
Public Law 106-554....................................... 103
5.23 H.R. 4923, Community Renewal and New Markets Act of
2000, Public Law 106-554................................. 109
5.24 H.R. 4943, The Small Business Federal Acquisition
Simplification Act of 2000............................... 111
5.25 H.R. 4944, Export Working Capital Improvement Act of
2000, Public Law 106-554................................. 115
5.26 H.R. 4945, The Small Business Competition Preservation
Act of 2000, Public Law 106-554.......................... 118
5.27 H.R. 4946, The National Small Business Regulatory
Assistance Act of 2000................................... 122
Chapter VI--Summary of Other Legislative Activities of the
Committee on Small Business.................................... 129
6.1 Committee Meetings....................................... 129
6.1.1 Organizational Meetings............................ 129
6.1.2 Oversight Agenda for the 106th Congress............ 131
6.2 Budget Views and Estimates............................... 131
6.2.1 Fiscal Year 2000 Budget............................ 135
6.2.2 Fiscal Year 2001 Budget............................ 135
Chapter VII--Summary of Oversight, Investigations, and Other
Activities of the Committee on Small Business.................. 141
7.1 Summary of Committee Oversight Plan and Implementation... 141
7.1.1 Oversight of the Small Business Administration..... 141
7.2 Summaries of the Hearings Held by the Committee on Small
Business................................................. 141
7.2.1 H.R. 68, The Small Business Investment Company
Technical Corrections Act of 1999.................... 141
7.2.2 Review of Women's Business Centers................. 142
7.2.3 Review of SBA's FY 2000 Budget Request............. 143
7.2.4 Small Business Year 2000 Readiness Act............. 145
7.2.5 The Kyoto Protocol--The Undermining of American
Prosperity?.......................................... 146
7.2.6 Electronic Commerce: The Benefits and Pitfalls of
Conducting Business Over the Internet................ 147
7.2.7 SETRA: Fair and Simple Tax Relief for Small
Business............................................. 148
7.2.8 Association Health Plans: Giving Small Businesses
the Benefits They Need............................... 150
7.2.9 H.R. 1568, The Veterans Entrepreneurship and Small
Business Development Act of 1999..................... 151
7.2.10 Proposed Amendments to the 7(a) and 504 Loan
Programs............................................. 152
7.2.11 OSHA's Draft Safety and Health Program Rule....... 154
7.2.12 EPA's Expansion of 112(r) of the 1990 Clean Air
Act Amendments to Include Propane.................... 156
7.2.13 Contract Bundling and Federal Procurement Problems
Facing Small Businesses.............................. 157
7.2.14 Small Farm Tax Burdens, Columbia, MO.............. 159
7.2.15 Building a Stronger Agricultural Community, Joint
Committee Field Hearing, Kansas City, Missouri....... 160
7.2.16 H.R. 296, Which Will Establish a Voluntary
Regulatory Compliance Program Administered by the
Existing Network of Small Business Development
Centers--Field Hearing, Hudson, NY................... 161
7.2.17 Helping Agricultural Producers ``Re-Grow'' Rural
America.............................................. 163
7.2.18 The Proposed Changes to Part 9 of the Federal
Acquisition Regulation Relating to Contractor
Responsibility....................................... 164
7.2.19 Proposition 65's Effect on Small Business......... 166
7.2.20 The Department of Defense's Contract Bundling..... 167
7.2.21 The Skilled Workforce Enhancement Act............. 169
7.2.22 Association Health Plans--Promoting Health Care
Accessibility........................................ 170
7.2.23 Reauthorization of the SBA and the Fiscal Year
2001 Budget Request.................................. 171
7.2.24 Helping Agricultural Producers ``Re-Grow'' Rural
America.............................................. 174
7.2.25 Cash Versus Accrual: The Policy Implications of
the Growing Inability of Small Businesses to Use
Simple Tax Accounting................................ 175
7.2.26 Economic Accomplishments of Round II Empowerment
Zones, Mecca, CA..................................... 177
7.2.27 Small Business and Online Music................... 178
7.2.28 Regulatory Reform Initiatives and Their Impact on
Small Business....................................... 179
7.2.29 Rural Health Care Services: Has Medicare Reform
Killed Small Business Providers?..................... 181
7.2.30 Hearing on Improving the Office of Advocacy....... 183
7.3 Summaries of the Hearings held by the Subcommittees on
Empowerment.............................................. 185
7.3.1 Barriers to Minority Entrepreneurship.............. 185
7.3.2 Small Business, Big gains: How Economic Renewal
Creates Safer Neighborhoods.......................... 186
7.3.3 Welfare to Work: What is Working, What is Next?.... 187
7.3.4 The Digital Divide: Bridging the Technological Gap. 189
7.3.5 The Start-Up Success Accounts of 1999 (HR 2372).... 191
7.3.6 Joint Hearing with the Subcommittee on Rural
Enterprises, Business Opportunities, and Special
Small Business Problems on the Aging of Agriculture:
Empowering Young Producers to Grow For the Future.... 192
7.3.7 Bridging the Technological Gap: Initiatives to
Combat the Digital Divide............................ 194
7.3.8 Digital Divide, Carson, CA......................... 195
7.4 Summaries of the Hearings held by the Subcommittee on
Government............................................... 197
7.4.1 Joint hearing with the Subcommittee on Regulatory
Reform and Paperwork Reduction on Small Business
Advocacy Review Panels............................... 197
7.4.2 Women's Business Enterprises....................... 198
7.4.3 Conserving Natural Resources and Examining Related
Emerging Technologies................................ 199
7.4.4 The Small Business Innovation Research (SBIR)
Program.............................................. 200
7.4.5 Electro-Magnetic Pulse (EMP)--Should this be a
Problem of National Concern to Businesses Small and
Large as well as Government?, Laurel, MD............. 201
7.4.6 The Burden that Needless Regulations and Lack of
Common Sense in Enforcement of Regulations Place Upon
Small Businesses..................................... 202
7.4.7 Are Federal Programs providing Effective
Procurement Assistance to Small Businesses?.......... 203
7.4.8 Going Public--The End of the Rainbow for Small
Business?............................................ 204
7.4.9 The SBA Computerized Loan Monitoring System--A
Progress Report...................................... 205
7.4.10 Public Law 106-50, ``Veterans Entrepreneurship and
Small Business Development Act of 1999''............. 206
7.4.11 The Present and Future of E-Commerce for Small
Businesses in the Private Sector and with Federal
Government Agencies.................................. 207
7.4.12 Effectiveness of Government Programs, Ellicott
City, MD............................................. 208
7.4.13 Women in Business................................. 209
7.4.14 The Future of Small Business: What Lies Ahead..... 210
7.5 Summaries of the Hearings held by the Subcommittee on
Regulatory Reform and Paperwork Reduction................ 212
7.5.1 The Impact of Federal Regulations on Small
Businesses in the Hudson Valley, White Plains, NY.... 212
7.5.2 The United States Postal Service's Regulations
Regarding Commercial Mail Receiving Agencies (CMRAs). 213
7.5.3 Hearing to Examine Barriers and Solutions to
Economic Development................................. 214
7.5.4 OSHA's Proposed Ergonomics Standard: Its Impact on
Small Business....................................... 216
7.5.5 The Impact of Fuel Prices on Small Business,
Valhalla, NY......................................... 218
7.5.6 The Impact of Fuel Prices on Small Business,
Castleton, NY........................................ 220
7.5.7 The Quality of Regulatory Analysis................. 221
7.5.8 The National Ombudsman's 2000 Report to Congress
and the Regulatory Fairness Program.................. 223
7.6 Summaries of the Hearings held by the Subcommittee on
Rural Enterprises, Business Opportunities, and Special
Small Business Problems.................................. 224
7.6.1 H.R. 957, The Farm and Ranch Risk Management Act... 224
7.6.2 Joint Hearing with the Subcommittee on Tax,
Finance, and Exports on What Would Repealing the
Death Tax Mean to Small Business?.................... 225
7.6.3 The Future of Round II Empowerment Zones........... 227
7.6.4 The Effects of the Roadless Policy on Rural Small
Business and Rural Communities....................... 228
7.7 Summaries of the Hearings held by the Subcommittee on
Tax, Finance, and Exports................................ 230
7.7.1 What has OPIC done for Small Business Lately?...... 230
7.7.2 Do Unilateral Economic Trade Sanctions Unfairly
Penalize Small Business?............................. 231
7.7.3 Measuring Improvements in the U.S. Export
Assistance Network................................... 233
7.7.4 Making the Work Opportunity Tax Credit a Success
For Small Business................................... 234
7.7.5 Trade with China Helps Small Business Exporters
Work................................................. 235
7.7.6 The Impact of Banning Snowmobiles Inside National
Parks on Small Business.............................. 236
7.7.7 Helping Small Dry Cleaners Adopt Safer
Technologies: Without Losing Your Shirt.............. 238
7.7.8 The Impact of the Complexity of the Tax Code on
Small Business: What Can be Done About It?........... 240
Union Calendar No. 612
106th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 106-1050
======================================================================
SUMMARY OF ACTIVITIES
_______
January 2, 2001.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed.
_______
Mr. Talent of Missouri, from the Committee on Small Business, submitted
the following
R E P O R T
SUMMARY OF ACTIVITIES
CHAPTER ONE
INTRODUCTION
This is the thirteenth summary report of the standing
Committee on Small Business. The action by the House of
Representatives in adopting House Resolution 988 on October 8,
1974, provided that the Committee be established as a standing
committee, and upgraded the Permanent Select Committee on Small
Business by giving the Committee legislative jurisdiction over
small business matters in addition to the oversight
jurisdiction it had historically exercised.
The adoption of the House rules in the 94th through the
106th Congress confirmed this action and continued the process
begun on August 12, 1941, when, by virtue of House Resolution
294 (77th Congress, 1st session), the Select Committee on Small
Business was created. In January 1971, the House designated the
Select Committee as a Permanent Select Committee; and, on
October 8, 1974, the 93rd Congress, recognizing the importance
of the work performed on behalf of this nation's small
businesses, provided that the Committee should thereafter be
established as a standing committee.
1.1 Historical Background
The history of the Select Committee on Small Business from
its inception in 1941 during the 77th Congress through 1972,
the end of the 92nd Congress, may be found in House Document
93-197 (93rd Congress, 2nd session), entitled ``A History and
Accomplishments of the Permanent Select Committee on Small
Business.''
The Committee is bipartisan recognition that the nation's
small business people represent a major segment of our business
population and our nation's economic strength. This committee,
continuing its vital oversight responsibilities, serves as the
advocate and voice for small business as well as the focal
point for small business legislation.
In recognition of the importance of the Committee, the
House of Representatives has established the Committee's
membership at 36 Members. The following Members were named to
constitute the Committee in the 106th Congress:
Republicans included:
James M. Talent (MO), Chairman; Larry Combest (TX);
Joel Hefley (CO); Donald A. Manzullo (IL); Roscoe G.
Bartlett (MD); Frank A. LoBiondo (NJ); Sue W. Kelly
(NY), Vice Chairwoman; Steve Chabot (OH); Phil English
(PA); David M. McIntosh (IN); Rick Hill (MT); Joseph R.
Pitts, (PA); Michael P. Forbes (NY) (resigned July 17,
1999); John E. Sweeney (NY); Patrick J. Toomey (PA);
Jim DeMint (SC); Edward A. Pease (IN); John R. Thune
(SD); Mary Bono (CA).
Democrats included:
Nydia M. Velazquez (NY), Ranking Minority Member;
Norman Sisisky (VA) (resigned February 22, 1999);
Juanita Millender-McDonald (CA); Danny K. Davis (IL);
Carolyn McCarthy (NY); Bill Pascrell, Jr. (NJ); Ruben
Hinojosa (TX); Donna MC Christensen (VI); Robert A.
Brady (PA); Tom Udall (NM); Dennis Moore (KS);
Stephanie Tubbs Jones (OH); Charles A. Gonzalez (TX);
David D. Phelps (IL); Grace F. Napolitano (CA); Brian
Baird (WA); Janice D. Schakowsky (IL) (resigned March
25, 1999); Shelley Berkley (NV) (named May 25, 1999);
Mark Udall (CO) (named May 25, 1999).
1.2 Extracts From the Rules of the House of Representatives
------
RULE X
ORGANIZATION OF COMMITTEES
Committees and Their Legislative Jurisdictions
1. There shall be in the House the following standing committees,
each of which shall have the jurisdiction and related functions
assigned by this clause and clauses 2, 3, and 4. All bills,
resolutions, and other matters relating to subjects within the
jurisdiction of the standing committees listed in this clause shall be
referred to those committees, in accordance with clause 2 of rule XII,
as follows:
* * * * * * *
(o) Committee on Small Business
(1) Assistance to and protection of small business, including financial
aid, regulatory flexibility, and paperwork reduction.
(2) Participation of small-business enterprises in Federal procurement
and Government contracts.
GENERAL OVERSIGHT RESPONSIBILITIES
2. (b)(1) In order to determine whether laws and programs
addressing subjects within the jurisdiction of a committee are being
implemented and carried out in accordance with the intent of Congress
and whether they should be continued, curtailed, or eliminated, each
standing committee (other than the Committee on Appropriations) shall
review and study on a continuing basis--
(A) the application, administration, execution, and
effectiveness of laws and programs addressing subjects within
its jurisdiction;
(B) the organization and operation of Federal agencies and
entities having responsibilities for the administration and
execution of laws and programs addressing subjects within its
jurisdiction;
(C) any conditions or circumstances that may indicate the
necessity or desirability of enacting new or additional
legislation addressing subjects within its jurisdiction
(whether or not a bill or resolution has been introduced with
respect thereto); and
(D) future research and forecasting on subjects within its
jurisdiction.
(2) Each committee to which subparagraph (1) applies having more
than 20 members shall establish an oversight subcommittee, or require
its subcommittees to conduct oversight in their respective
jurisdictions, to assist in carrying out its responsibilities under
this clause. The establishment of an oversight subcommittee does not
limit the responsibility of a subcommittee with legislative
jurisdiction in carrying out its oversight responsibilities.
(c) Each standing committee shall review and study on a continuing
basis the impact or probable impact of tax policies affecting subjects
within its jurisdiction as described in clauses 1 and 3.
SPECIAL OVERSIGHT FUNCTIONS
* * * * * * *
3. (k) The Committee on Small Business shall study and investigate
on a continuing basis the problems of all types of small business.
1.3 Number and Jurisdiction of Subcommittees
There will be five subcommittees as follows:
--Empowerment (five Republicans and four Democrats)
--Government Programs and Oversight (five Republicans and four
Democrats)
--Regulatory Reform and Paperwork Reduction (five Republicans and
four Democrats)
--Rural Enterprises, Business Opportunities and Special Small
Business Problems (five Republicans and four Democrats)
--Tax, Finance and Exports (five Republicans and four Democrats)
During the 106th Congress, the Chairman and ranking minority member
shall be ex officio members of all subcommittees, without vote, and the
full committee shall have the authority to conduct oversight of all
areas of the committee's jurisdiction.
In addition to conducting oversight in the area of their respective
jurisdiction, each subcommittee shall have the following jurisdiction:
EMPOWERMENT
Promotion of business growth and opportunities in economically
depressed areas.
Oversight and investigative authority over regulations and
licensing policies that impact small businesses located in high risk
communities.
General oversight of programs targeted toward urban relief.
GOVERNMENT PROGRAMS AND OVERSIGHT
Small Business Act, Small Business Investment Act, and related
legislation.
Federal Government programs that are designed to assist business
generally.
Small Business Innovation and Research Program.
Participation of small business in Federal procurement and
Government contracts.
Opportunities for minority and women-owned businesses, including
the SBA's 8(a) program.
Oversight and investigative authority generally.
REGULATORY REFORM AND PAPERWORK REDUCTION
Oversight and investigative authority over the regulatory
and paperwork policies of all Federal departments and agencies.
Regulatory Flexibility Act.
Paperwork Reduction Act.
Competition policy generally.
RURAL ENTERPRISES, BUSINESS OPPORTUNITIES AND SPECIAL SMALL BUSINESS
PROBLEMS
Promotion of business growth and opportunities in rural
areas.
Oversight and investigative authority over agricultural
issues that impact small businesses.
General promotion of business opportunities.
Oversight and investigative authority over novel issues of
special concern to small business.
TAX, FINANCE AND EXPORTS
Tax policies and its impact on small business.
Access to capital and finance issues generally.
Export opportunities and promotion.
1.4 Disposition of Legislation Referred to the Committee
A total of 47 House bills and 3 Senate bills were referred
to the Committee on Small Business during the 106th Congress.
The Committee ordered 22 bills reported to the House, for which
20 reports were filed. Two bills, H.R. 4890 and H.R. 4943, were
ordered reported and referred to the Committee on Government
Reform for further consideration. Of the 20 bills reported, 19
passed the House, and 17 were enacted into law. Of the 26 bills
considered by the Committee, 23 passed the House and 20 were
enacted into law either individually or as a part of broader
legislation. For a summary of the Committee's legislative
activities, please refer to Chapter Five of this report.
During the first session of the 106th Congress, the
Committee began a program of considering specific legislative
initiatives designed to improve Small Business Administration
programs. These ``rifle-shot'' bills were meant to allow the
Committee to concentrate on each program or initiative
individually on its merits rather than as part of a large
complex omnibus bill. They were H.R. 68, H.R. 440, H.R. 774,
H.R. 818, H.R. 1497, H.R. 2392, H.R. 2614, H.R. 2615, H.R.
3843, and H.R. 3845.
These technical corrections bills, affecting the Small
Business Investment Company, Microloan, Women's Business
Center, Small Business Innovation and Research, Disaster Loan,
Certified Development Company and General Business Loan
programs were introduced, considered, and reported by the
Committee in the first session. The House also passed most of
this legislation by overwhelming margins before August 15,
1999. H.R. 68, H.R. 440, H.R. 774, H.R. 818, and H.R. 1497 all
became individual public laws. The remaining bills were later
included in P.L. 106-554, the Consolidated Appropriations Act
for 2001. Summaries of these bills may be found in Chapter 5 of
this report.
Several individual initiatives were also considered during
the first session of the 106th Congress, including H.R. 775,
Y2K indemnity legislation, and S. 314, a Y2K loan program. Both
of these programs were passed in order to assist small business
in dealing with any potential adverse affects of the year 2000
rollover. The Committee also continued its efforts in aiding
small business with the federal paperwork burden by passing
H.R. 439, the Paperwork Elimination Act, which mandates that
federal agencies began accepting, but not requiring, electronic
submission of documents.
In addition, Chairman Talent authored and passed a
significant veterans' assistance bill, H.R. 1568, the Veterans
Entrepreneurship and Small Business Development Act, which was
enacted in August of 1999 as P.L. 106-50. The bill improved
veterans' access to small business programs and established a
framework for comprehensive transition assistance for
servicemen entering civilian life. A summary of H.R. 1568 can
be found in Chapter 5 of this report.
In the second session the Committee dealt primary with
efforts to assist underserved communities through the New
Markets Venter Capital Act, H.R. 4530, and H.R. 4464, the
BusinessLinc Act. This legislation along with H.R. 4923, the
American Community Renewal Act, established new programs to
assist low income communities through a combination of tax
incentives, financing programs, faith-based drug abuse and
education initiatives, and regulatory relief. This legislation
was part of a bipartisan effort between Chairman Talent,
Speaker Hastert, and President Clinton which was signed into
law as a part of H.R. 4577, the Consolidated Appropriations Act
for 2001. For a full summary of this legislation see Chapter 5
of this report.
In addition, in the second session the Committee passed and
saw enacted several bills relating to small business and
federal procurement. H.R. 4897, the Women's contracting Equity
Act was authorized by Ms. Velazquez and added as part of H.R.
4577. It will strengthen efforts to include women-owned small
businesses in the federal process. The Committee also passed
H.R. 4945, which required the federal agencies to begin
collecting data on the practice of ``bundling'' contracts. This
practice, which involves combining contracts for ease of
administration, has resulted in significant hardship for small
businesses unable to bid on these large consolidated offerings.
This legislation as well was included in the Consolidated
Appropriations Act for 2001.
CHAPTER TWO
THE SMALL BUSINESS ADMINISTRATION
The Committee on Small Business has both legislative and
oversight jurisdiction over the Small Business Administration
(SBA), an independent Federal agency chartered in 1953 to
``aid, counsel, assist and protect the interests of small
business.''
During the 106th Congress, the Committee conducted a series
of legislative and oversight hearings focused on producing
specific pieces of legislation to ``fine tune'' the Small
Business Administration's programs following up on the
comprehensive reauthorization bill implemented in the 104th
Congress. These hearings resulted in passage of a number of
significant reforms in the basic operations of the SBA. This
legislation is described in Chapter 5 of this report.
The major programs administered by the SBA are briefly
described below.
2.1 SBA Programs in General
The SBA operates through 10 Regional offices, 85 District
and Branch offices and has a staff of approximately 3,300
permanent employees and a varying number of temporary disaster
employees (as many as 1,600 in 1997). It provides loans and
loan guarantees, both for business purposes and disaster
recovery; assistance to small business in obtaining government
contract; and management and technical assistance through paid
and volunteer staff. It also administers a surety bond program
for contractors unable to obtain bonds, which are a
prerequisite to bidding for, or performing, certain contracts.
The SBA also serves as an advocate for all small businesses,
conducts economic research and monitors the implementation of
small business legislation and programs at other agencies, such
as the Regulatory Flexibility Act and the Small Business
Innovation Research Program. The SBA administers a portfolio of
more than 463,000 loans for more than $35.2 billion of which
$6.9 billion involve loans to disaster victims.
2.2 SBA Business Loans
A major function of the SBA is to make capital available or
small businesses at terms and conditions that are more
favorable than they can normally secure in the private sector.
In addition to its general business loan program the SBA also
has specialized loan programs designed to help small businesses
with equity, long-term asset-based, and forms of specialized
financing.
Most SBA financial assistance is provided in the form of
guarantees of commercial loans. Such guarantees can be for as
much as 80 percent of loans up to $100,000 or 75 percent of
loans up to the statutory maximum of $750,000. (Guarantees of
up to $1 million can be approved for certain fixed-asset
financings that promote public policy objectives set forth in
the Small Business Act.) The interest rates on guaranteed loans
are negotiated between the borrower and lender subject, in most
cases, to a maximum of 2.75 percent above the prime rate. In
fiscal year 1996, SBA approved 45,845 7(a) guaranteed loans
totaling $7.7 billion and 6,884 504 program loans total $2.4
billion; in fiscal year 1997 the agency approved 45, 288 7(a)
guaranteed loans total $9 billion and 4,131 504 program loans
totaling $1.4 billion; in fiscal year 1998 the SBA approved 42,
268 7(a) loans totaling $8.53 billion and 4,930 504 program
loans totaling $1,77 billions, in fiscal year 1999 the SBA
approved 40,477 7(a) loans totaling $9.47 billion and 5,156 504
loans totaling $1.96 billion, and in fiscal year 2000 the SBA
approved 40,141 7(a) loans totaling $9.54 billion and 4,455 504
loans totaling $1.8 billion.
Certain applicants who could not obtain commercial loans,
even with a government guarantee, were eligible to apply for
SBA direct loans. Between October 1, 1985 and September 30,
1994, eligibility for this type of assistance was limited to
qualified businesses owned by individuals with low incomes or
located in areas of high unemployment, Vietnam-era or disabled
veterans, the handicapped or organizations employing them,
business certified under the minority business capital
ownership development program and certain non-profit
intermediary microlenders.
Beginning on October 1, 1994, funding for direct loans was
limited to the handicapped and intermediary microlenders as
part of the Administration's budget request. Funds for loans to
the handicapped were eliminated in 1996 at the Administration's
request. The Microloan program was made permanent in 1997 and
currently includes over 110 intermediaries. Intermediaries
normally borrow approximately $1 million and relend it in
amounts not to exceed $25,000. Microloan intermediaries
received 31 loans totaling $14.5 million dollars in FY 1998. In
fiscal year 1999 intermediaries received 65 loans for $27.2
million.
2.3 Disaster Assistance Loans
The SBA provides loan assistance to disaster victims,
including homeowners, businesses and non-profit institutions.
When a disaster strikes it is important that damaged property
be replaced or repaired and businesses be provided with
adequate working capital to facilitate their recovery as
quickly as possible. SBA disaster loans serve this purpose and
minimize disruptions to jobs, business revenues and taxes. In
so doing, they play a vital role in restoring the economic
health of disaster stricken communities. Often making the
difference in the survival of businesses necessary to that
recovery. During fiscal year 1997, 49,515 disaster loans were
approved for $1.138 billion dollars to businesses, homeowners
and others affected by hurricanes, tornadoes, floods and other
disasters. During fiscal year 1998, 30,154 disaster loans were
approved for $728.1 million. In fiscal year 1999, 29,214
disaster loans were approved for $731 million and in fiscal
year 2000 21,899 disaster loans were approved for $761 million.
2.4 Small Business Investment Companies
There is a continuing need for venture capital for new and
growing small businesses. Small businesses have historically
been the origin for new technological developments and
expansion. An important source of this venture capital has been
the SBA's Small Business Investment Company (SBIC) Program.
SBICs supply equity capital and long-term financing to
small firms for expansion, modernization and initial equity
financing of their operations. SBICs also often provide
sophisticated technical and managerial advice. They are
licensed, regulated and, in part, financed by the SBA through
government backed debentures. An SBIC finances small firms in
two general ways--through straight business loans or through
venture capital equity type investments. In fiscal year 1997,
300 SBICs, with private capital of $5.1 billion, provided their
small clients with $2.4 billion in 2,733 financing. During
fiscal year 1998, 319 SBICs with $6.3 billion in private
capital provided $3.2 billion in 3,456 financing, in 1999 the
SBIC program provided over $4.2 billion in small business
venture capital. In fiscal year 2000 the 395 participants in
the SBIC program had total resources of $15.4 billion and
provided $5.46 billion in investments in 3,060 small
businesses.
The SBA also administered the Specialized Small Business
Investment Company (SSBIC) Program, which was similar to the
SBIC program SSBICs agree to make investments solely in small
business concerns owned by socially or economically
disadvantaged individuals. However, the SSBIC program suffered
from heavy losses and legislation was passed in the 104th
Congress to restructure the SSBIC program. In fiscal year 1997,
the SSBIC program was merged into the overall SBIC program and
all existing SSBICs became SBICs. Under the combined program
each SBIC, regardless of its size, will be required to invest
at least 20% of its aggregate dollar investments in ``smaller
enterprises''--a small business with a net income of $2 million
or less and a net worth of $6 million or less. This will enable
SBICs to cover the SMA markets as SSBICs but from a more stable
and financially sound basis. A reserve of debenture funding
will also be available for smaller SBICs in lieu of the funding
mechanism for SSBICs. In 2000 SSBICs provided $62.8 million in
investment in smaller enterprises.
2.5 The 8(a) Program
In addition to financial programs available to businesses
owned by socially and economically disadvantaged individuals
the SBA also administers a business development program for
such concerns, the Minority Small Business and Capital
Ownership Development program. Participants in this program are
eligible for the preferential award of Federal contracts under
the authority of section 8(a) of the Small Business Act, under
which SBA acts as a ``conduit'' by channeling selected federal
contracts to firms owned and operated by socially and
economically disadvantaged individuals. In fiscal year 1997,
4,733 prime contracts with a value of $3.7 billion were awarded
to 8(a) firms. When option years on previous contracts are
included the total amount rises to $6.3 billion. In 1998, the
Administration released new regulations designed to expand
eligibility in the 8(a) program to more individuals, including
women. While this action was taken by the Administration in
hopes of curing Constitutional questions surrounding the 8(a)
program further legal challenges are expected. In fiscal year
200 the 8(a) program assisted qualified businesses in obtaining
over 25,750 contract awards and options for a total of $4.29
billion.
2.6 Surety Bond Guarantees
Small business contractors and subcontractors who seek
public and private construction contracts are often required to
furnish surety bond guaranteeing the completion of the
contracted work. The SBA provides assistance to such
contractors by extending guarantees of up to 90 percent to
surety insurance companies. These guarantees enable small
contractors to obtain bonding more easily. The SBA's bonding
assistance is accomplished through the Prior Approval Program
or the Preferred Surety Bond Program. Bid bonds as well as
performance and/or payment bonds may be guaranteed on contracts
up to $1,250,000. The SBA will pay a surety participating in
the Prior Approval Program 90 percent of a loss incurred if:
(1) the total amount of the contract is $100,000 or less; and
(2) the bond was issued on behalf of a small business owned and
controlled by socially and economically disadvantaged
individuals. Otherwise, SBA will pay a surety in an amount not
to exceed an administrative ceiling of 80 percent of a loss on
bonds issued to other than disadvantaged concerns in excess of
$100,000. Under the Preferred Surety Bond program, the SBA's
guarantee is limited to 70 percent of the bond for all small
businesses on contracts that do not exceed a face value of
$1,250,000. In fiscal year 1997, 12,292 bid bond guarantees
produced 4,021 final bond guarantees for a total contract
amount of over $818 million. In fiscal year 1998, 10,445 bid
bond guarantees produced 2,860 final bond guarantees, resulting
in total bond guarantees of $531 million. In fiscal year 1999,
9,399 bid bond guarantees were issued resulting in $ million
in final guarantees, and in fiscal year 2000, 5,239 bid bond
guarantees resulting in $115 million worth of final guarantees.
2.7 Small Business Development Programs
The SBA's economic development assistance programs support
SBA loan recipients and other small business owners and
managers through individual counseling, management training and
guidance materials. These programs are keyed to furthering the
establishment, growth and success of small business. It is
estimated that managerial deficiencies cause nine out of ten
business failures.
SBA programs can identify management problems, develop
solutions and help implement and expand business plans. In
addition to its own business development officers, SBA relies
heavily on national organizations such as the 13,000 member
Service Corps of Retired Executives (SCORE) to expand its
capacity for individual counseling.
An important component of SBA's management assistance
capabilities is the Small Business Development Center (SBDC)
program. The SBDC program is a cooperative effort by
universities, the Federal government, State and local
governments and private sector organizations to provide
specialized management and technical assistance to small
businesses. Originating as a pilot program at one university in
1976, the SBDC program has expanded to include 56 operating
SBDCs in all 50 states, Puerto Rico and the Virgin Islands.
There are over 900 branch centers located throughout the States
at colleges, universities, and local government offices. In
fiscal year 1998, the SBDC program received $77.8 million in
Federal funds; in fiscal year 1999, the SBDC program received
$85 million in Federal funds; and in fiscal year 2000 the SBDC
program received $88 million.
2.8 Small Business Innovation Research
The Small Business Innovation Development Act of 1982,
signed into law on July 22, 1982, provides for the
establishment of Small Business Innovation Research grants
programs at each of the Federal agencies with extramural
research budgets in excess of 4100 million. The Act also
requires the establishment of annual goals for small business
research awards in all agencies with R&D budgets in excess of
$20 million. The funding level of SBIR programs is derived from
statutorily fixed percentages of an agency's R&D budget.
Through the SBIR program nearly $1 billion was awarded to
small firms in fiscal year 1997. For fiscal year 1998, SBIR
awards from the 11 participating agencies exceeded $1 billion.
The SBIR program is highly competitive and provides funds
for the feasibility testing of innovative ideas with Phase I
and Phase II funding grant levels of $100,000 and $750,000 per
grant, respectively. Third phase SBIR encourages the
commercialization of innovative technology using private
follow-on funding or government contracts when appropriate.
Roughly 40 percent of SBIR projects result in commercially
successful products. In fiscal year 1998, Phase I proposals
resulted in 3,022 awards for $256 million. In Phase II, 1,320
grants were awarded for $763 million. In fiscal year 1999 there
were 3,334 Phase I awards totaling $299 million and 1,256 Phase
II awards for a total of $797 million. Final numbers for fiscal
year 2000 were not available at the time of publication of this
report. The SBA Office of Innovation, Research and Technology
monitors the implementation of the program at each
participating agency.
2.9 Small Business Technology Transfer
The Small Business Technology Transfer (STTR) program was
established by Title II of Public Law 102-564, the Small
Business Research and Development Enhancement Act of 1992, and
authorized for an initial three year demonstration, beginning
in 1994. Building upon the established model of the SBIR
program, the STTR program provides the basis for structured
collaboration between small technology entrepreneurs and non-
profit research institutions, such as universities and
Federally-funded Research and Development Centers (FFRDCs) to
foster commercialization of the results of Federally-sponsored
research. The STTR pilot program was made permanent in 1997 as
part of the Small Business Reauthorization Act of 1997.
The STTR program seeks to stimulate technological
innovation and increase private sector commercialization of
innovations derived from basic research as well as mission-
oriented advanced research and development undertaken by
Federal agencies. The program assures that small business is
not excluded from the extramural research and development (R&D)
activities conducted by Federal agencies, those undertaken by
private sector sources and often dominated by Federally-
supported institutions such as universities and FFRDCs.
To assure a baseline of small business participation and to
maintain stable funding for technology commercialization, like
the SBIR program the STTR program requires a participating
Federal agency to reserve a small percentage of its external
R&D budget for the program. The STTR program also uses the
highly competitive three stage process designed to identify and
nurture only the most promising technology innovations, seeking
to move them to full commercialization under the technical and
entrepreneurial leadership of small business owners. Unlike the
SBIR program, however, the STTR program requires a small
business to collaborate with a non-profit research institution.
In fiscal year 1997, 1,101 Phase I proposals were submitted
resulting in 260 Phase I awards for $24 million. 165 Phase II
proposals were submitted resulting in 89 Phase III awards for
$44 million. In fiscal year 1998 208 Phase I awards were made
and 108 Phase II awards for a total of over $64 million for
small business research. In fiscal year 1999 251 Phase I awards
were made for $24.2 million and 78 Phase II awards for $40.5
million. Final numbers for fiscal year 2000 were unavailable at
the time of publication of this report.
2.10 Export Assistance
The SBA is authorized to promote the increased
participation of small businesses in international trade. To
offset some of the inherent disadvantages to successful small
business participation in international trade, the SBA, the
Department of Commerce, other government agencies and private
associations work together to identify, inform, motivate and
provide access to financial assistance for the small businesses
seeking to enter into business transactions abroad. The goal of
the SBA's program is to continue to facilitate financial
assistance and other appropriate management and technical
assistance to small business concerns that have the potential
to become successful exporters.
The SBA's export counseling and training includes one-on-
one counseling through SCORE volunteers with significant
international trade expertise, access to university and
counseling, assistance from professional international trade
management consulting firms, referral to other public or
private sector expertise, free consultation through the Export
Legal Assistance Network (ELAN) program, which enables small
businesses interested in starting export operations to consult
with international trade attorneys from the Federal Bar
Association, and access to publications on international trade
and export marketing.
The SBA's financial export assistance includes several loan
programs, depending upon the purpose for which the funds are to
be used. Exporters may obtain funds for fixed asset
acquisitions during start-up or expansion and for general
working capital needs through the general 7(a) loan program.
Export Trading Companies (ETCs) can qualify for SBA's business
loan guaranty program, provided that they are for-profit ETCs
and have no bank equity participation.
The Export Working Capital Program (EWCP) allows a
guarantee on private sector loans of up to $750,000 for working
capital. The guarantee percentage for loans is 90 percent.
Loans made under the EWCP program generally have a 12 month
maturity, subject to two twelve-month renewal options. The
loans can be for single or multiple export sales and can be
extended for pre-shipment working capital and post-shipment
exposure coverage, although the proceeds cannot be used to
acquire fixed assets. In fiscal year 1997, the SBA approved 400
guaranteed loans under the EWCP, totaling $140.3 million; in
fiscal year 1998, the agency approved 413 loans for a total of
$158 million: and in fiscal year 1999 429 loans were approved
for $169 million.
Through the 7(a) program, the SBA also offers export
assistance through guarantees of international trade loans,
which provide long-term financing to small businesses engaged
in international trade, as well as those businesses adversely
affected by import competition. The SBA can guarantee loans up
to $1.25 million. In fiscal year 1997, the SBA made 48
international trade loans totaling $18.1 million; in fiscal
year 1998, 18 international trade loans were approved for a
total of $11.1 million.
2.11 Office of Advocacy
The SBA Office of Advocacy was created in 1976, pursuant to
Title II of Public Law 94-305, with various stated ``primary
functions'' and other ``continuing'' duties. The law provides
for the President to appoint a Chief Counsel of Advocacy,
subject to the advice and consent of the Senate. The mandated
mission of the Office of Advocacy is to represent and advance
small business interests before the Congress and other Federal
departments and agencies for the purpose of enhancing small
business competitiveness.
The eleven statutorily prescribed ``primary functions'' of
the Office of Advocacy are: (1) examining the role of small
business in the American economy; (2) assessing the
effectiveness of all Federal subsidy and assistance programs
for small business; (3) measuring the cost and impact of
government regulations on small business and making legislative
and non-legislative recommendations for the elimination of
unnecessary or excessive regulations; (4) determining the
impact of the tax structure on small business and making
legislative and other proposals for reform of the tax system;
(5) studying the ability of the financial markets to meet the
credit needs of small business; (6) determining availability
and delivery methods of financial and other assistance to
minority enterprises; (7) evaluating the efforts of Federal
departments and agencies, business and industry to assist
minority enterprises; (8) recommending ways to assist the
development and strengthening of minority and other small
businesses; (9) recommending ways for small business to compete
effectively and to expand, while identifying common causes for
small business failures; (10) developing criteria to define
small business; and (11) advising and consulting with the
Chairman of the administrative Conference of the United States
on the amount of fees and other expenses awarded during the
fiscal year by the Federal government to plaintiffs who prevail
in administrative proceedings before Federal departments and
agencies.
The law also prescribes a number of ``continuing'' duties
of the Office of Advocacy, which include: (1) serving as a
focal point for receiving complaints and suggestions regarding
Federal agency policies and activities that affect small
business; (2) counseling small businesses on problems in their
relationships with the Federal government; (3) proposing
changes in policies and activities of all Federal departments
and agencies to better fulfill the purposes of the Small
Business Act; (4) representing small business before other
Federal departments and agencies whose policies and activities
may affect small business; and (5) enlisting the cooperation of
others in the dissemination of information about Federal
programs that benefit small business.
In 1980, the Regulatory Flexibility Act (Public Law 96-354)
enlarged the responsibilities of the Office of Advocacy to
include the monitoring of federal Departments' and agencies'
compliance with the Act's requirements, performing regulatory
impact analyses, and making annual reports to Congress. Also in
1980, Public Law 96-302 required the SBA Administrator to
establish and maintain a small business economic database to
provide Congress and the Administration with information on the
economic condition of the small business sector. The statute
prescribed twelve categories of data and required an annual
report on trends. Although none of these database functions
were expressly delegated to the Office of Advocacy by statute,
they have historically been assigned to the Office of Advocacy
by the SBA Administrator.
The Office of Advocacy also has regional advocates who
monitor small business and regulatory activities at the State
level and disseminate relevant information about small business
issues. In fiscal year 1997, the Office of Advocacy had a
budget of $3.7 million to carry out its statutory duties and
other activities; in fiscal year 1998, its budget was $4.5
million.
Recent estimates from the Office of Advocacy show that,
through its efforts in reducing unnecessary regulations, over
$20 billion has been saved by small business.
CHAPTER THREE
HEARINGS AND MEETINGS HELD BY THE COMMITTEE ON SMALL BUSINESS AND ITS
SUBCOMMITTEES, 106TH CONGRESS
3.1 Full Committee
------------------------------------------------------------------------
Date Subject and location
------------------------------------------------------------------------
January 7, 1999......................... Hearing, H.R. 68, The Small
Business Investment Company
Technical Corrections Act of
1999; Washington, DC.
February 11, 1999....................... Hearing, SBA's Women's
Business Centers Program;
Washington, DC.
February 24, 1999....................... Hearing, The Small Business
Administration's FY 2000
Budget; Washington, DC.
March 10, 1999.......................... Small Business Year 2000
Readiness Act; Washington,
DC.
April 29, 1999.......................... Hearing, The Kyoto Protocol--
The Undermining of American
Prosperity; Washington, DC.
May 26, 1999............................ Hearing, Electronic Commerce:
The Benefits and Pitfalls of
Conducting Business over the
Internet; Washington, DC.
June 9, 1999............................ Hearing, SETRA, Fair and
Simple Tax Relief for Small
Business; Washington, DC.
June 10, 1999........................... Hearing, Association Health
Plans: Giving Small
Businesses the Benefits They
Need; Washington, DC.
June 23, 1999........................... H.R. 1568, the Veterans
Entrepreneurship and Small
Business Development Act of
1999; Washington, DC.
June 24, 1999........................... Hearing, Proposed Amendments
to the 7(a) and 504 Loan
Programs; Washington, DC.
July 22, 1999........................... Hearing, OSHA's Draft Safety
and Health Program Rule;
Washington, DC.
July 29, 1999........................... Hearing, EPA's Expansion of
112r of the 1990 Clean Air
Act Amendments to include
Propane; Washington, DC.
August 4, 1999.......................... Hearing, Contract Bundling and
Federal Procurement Problems
Facing Small Businesses;
Washington, DC.
August 10, 1999......................... Field Hearing, Small Farm Tax
Burdens; Columbia, Missouri.
August 24, 1999......................... Field Hearing, Joint House and
Senate Small Business
Committees, Building a
Stronger Agricultural
Community; Kansas City, MO.
September 2, 1999....................... Field Hearing, H.R. 296, which
will establish a Voluntary
Regulatory Compliance Program
Administered by the Existing
Network of Small Business
Development Centers (SBDCs);
Hudson, New York.
September 29, 1999...................... Hearing, Helping Agricultural
Producers ``Re-Grow'' Rural
America; Washington, DC.
October 21, 1999........................ Hearing, The Proposed Changes
to Part 9 of the Federal
Acquisition Regulation
Relating to Contract
Responsibility
(``Blacklisting'');
Washington, DC.
October 28, 1999........................ Hearing, Proposition 65's
Effect on Small Business;
Washington, DC.
November 4, 1999........................ Hearing, Department of
Defense's Contract Bundling
Policy; Washington, DC.
February 2, 2000........................ Hearing, The Skilled Workforce
Enhancement Act; Washington,
DC.
February 16, 2000....................... Hearing, Association Health
Plans--Promoting Health Care
Accessibility; Washington,
DC.
March 1, 2000........................... Hearing, Reauthorization of
the SBA and the Fiscal Year
2001 Budget Request;
Washington, DC.
March 15, 2000.......................... Hearing, Helping Agricultural
Producers ``Re-Grow'' Rural
America; Washington, DC.
April 5, 2000........................... Hearing, Cash Versus Accrual:
The Policy Implications of
the Growing Inability of
Small Businesses to Use
Simple Tax Accounting;
Washington, DC.
April 27, 2000.......................... Field Hearing, Economic
Accomplishments of Round II
Empowerment Zones;
Washington, DC.
May 24, 2000............................ Hearing, Small Business and
Online Music; Washington, DC.
June 7, 2000............................ Hearing, Regulatory Reform
Initiatives and their Impact
on Small Business;
Washington, DC.
June 14, 2000........................... Hearing, Rural Health Care
Services: Has Medicare Reform
Killed Small Business
Providers?; Washington, DC.
June 21, 2000........................... Hearing, on Improving the
SBA's Office of Advocacy;
Washington, DC.
------------------------------------------------------------------------
3.2 Subcommittee on Empowerment
------------------------------------------------------------------------
Date Subject and location
------------------------------------------------------------------------
March 23, 1999.......................... Hearing, Barriers to Minority
Enterprise; Washington, DC.
May 11, 1999............................ Field Hearing, Small Business,
Big Gains, How Economic
Renewal Creates Safer
Neighborhoods; The Nehemiah
Cooperative Community Center,
Washington, DC.
May 25, 1999............................ Hearing, Welfare to Work: What
is Working, What is next?;
Washington, DC.
July 27, 1999........................... Hearing, The Digital Divide:
Bridging the Technology Gap;
Washington, DC.
November 2, 1999........................ Hearing, H.R. 2372, The Start-
Up Success Accounts of 1999
(SUSA); Washington, DC.
November 3, 1999........................ Joint Hearing, Subcommittee on
Empowerment and Subcommittee
on Rural Enterprises,
Business Opportunities, and
Special Small Business
Problems, The Aging of
Agriculture: Empowering Young
Producers to Grow for the
Future; Washington, DC.
March 28, 2000.......................... Hearing, Bridging the
Technological Gap:
Initiatives to Combat the
Digital Divide; Washington,
DC.
April 26, 2000.......................... Field Hearing on the Digital
Divide; Mecca, California.
------------------------------------------------------------------------
3.3 Subcommittee on Government Programs and Oversight
------------------------------------------------------------------------
Date Subject and location
------------------------------------------------------------------------
March 11, 1999.......................... Joint Subcommittee Hearing,
Subcommittee on Regulatory
Reform and Paperwork
Reduction and the
Subcommittee on Government
Programs and Oversight, Small
Business Advocacy Review
Panels; Washington, DC.
March 25, 1999.......................... Hearing, Women's Business
Enterprises; Washington, DC.
April 23, 1999.......................... Hearing, Conserving Natural
Resources and Examining
Related Emerging
Technologies; Washington, DC.
May 27, 1999............................ Hearing, The Small Business
Innovation Research (SBIR)
Program; Washington, DC.
June 1, 1999............................ Field Hearing, Electro-
Magnetic Pulse (EMP)--Should
this be a Problem of National
Concern to Businesses Small
and Large as well as
Government?; The Johns
Hopkins University, Laurel,
Maryland.
July 27, 1999........................... Hearing, The Burden that
Needless Regulations and Lack
of Common Sense in
Enforcement of Regulations
Place upon Small Businesses;
Washington, DC.
August 18, 1999......................... Field Hearing, Are Federal
Programs Providing Effective
Procurement Assistance to
Small Businesses?; Chicago,
IL.
October 14, 1999........................ Hearing, Going Public--The End
of the Rainbow for a Small
Business?; Washington, DC.
February 29, 2000....................... Hearing, The SBC Computerized
Loan Monitoring System--A
Progress Report; Washington,
DC.
March 14, 2000.......................... Joint hearing with
Subcommittee on Benefits of
the Veterans Affairs
Committee on Public Law 105-
50, ``Veterans
Entrepreneurship and Small
Business Development Act of
1999''; Washington, DC.
April 11, 2000.......................... Hearing, The Present and
Future of E-Commerce for
Small Businesses in the
Private Sector and with
Federal Government Agencies;
Washington, DC.
April 25, 2000.......................... Field Hearing on Impact of
Federal and Community-Based
Programs on Main Street
America and Various Segments
of the Small Business
Community; Elliott City,
Maryland.
June 8, 2000............................ Hearing, Women in Business;
Washington, DC.
September 28, 2000...................... Hearing, The Future of Small
Business: What Lies Ahead?;
Washington, DC.
------------------------------------------------------------------------
3.4 Subcommittee on Regulatory Reform and Paperwork Reduction
------------------------------------------------------------------------
Date Subject and location
------------------------------------------------------------------------
March 11, 1999.......................... Joint Subcommittee Hearing,
Subcommittee on Regulatory
Reform and Paperwork .
September 1, 1999....................... Field Hearing, The Impact of
Federal Regulations on Small
Business in the Hudson
Valley; White Plains, New
York.
October 19, 1999........................ Hearing, U.S. Postal Service's
Regulations Regarding
Commercial Mail Receiving
Agencies (CMRAs); Washington,
DC.
November 22, 1999....................... Field hearing, Barriers and
Solutions to Economic
Development on Northern New
Jersey; Paterson, New Jersey.
April 13, 2000.......................... Hearing, OSHA's Proposed
Ergonomics Standard: Its
Impact on Small Business,
Washington, DC.
April 18, 2000.......................... Field Hearing, Impact of Fuel
Prices on Small Business;
Valhalla, New York.
April 18, 2000.......................... Field Hearing, Impact of Fuel
Prices on Small Business;
Castleton, New York.
June 8, 2000............................ Hearing, The Quality of
Regulatory Analysis;
Washington, DC.
June 15, 2000........................... Hearing, The National
Ombudsman 2000 Report to
Congress and the Regulatory
Fairness Program; Washington,
DC.
------------------------------------------------------------------------
3.5 Subcommittee on Tax, Finance, and Exports
------------------------------------------------------------------------
Date Subject and location
------------------------------------------------------------------------
May 13, 1999............................ Hearing, What would Repealing
the Death Tax Mean to Small
Business?; Washington, DC.
May 18, 1999............................ Hearing, What has OPIC done
for Small Business Lately?;
Washington, DC.
June 24, 1999........................... Hearing Do Unilateral Economic
Trade Sanctions Unfairly
Penalize Small Business?;
Washington, DC.
September 9, 1999....................... Hearing, Measuring
Improvements in the U.S.
Export Assistance Network;
Washington, DC.
May 4, 2000............................. Hearing, Making the Work
Opportunity Tax Credit a
Success for Small Business;
Washington, DC.
May 16, 2000............................ Hearing, Trade with China
Helps Small Business
Exporters Work; Washington,
DC.
July 13, 2000........................... Hearing, The Impact of Banning
Snowmobiles Inside National
Parks on Small Business;
Washington, DC.
July 20, 2000........................... Hearing, Helping Small Dry
Cleaners Adopt Safer
Technologies: Without Losing
Your Shirt; Washington, DC.
September 7, 2000....................... Hearing, The Impact of the
Complexity of the Tax Code on
Small Business: What Can Be
Done About It?; Washington,
DC.
------------------------------------------------------------------------
3.6 Subcommittee on Rural Enterprises, Business Opportunities, and
Special Small Business Problems
------------------------------------------------------------------------
Date Subject and Location
------------------------------------------------------------------------
April 27, 1999.......................... Hearing, H.R. 957, The Farm
and Ranch Risk Management
Act. (FARRM); Washington, DC.
November 3, 1999........................ Hearing, Joint Subcommittee on
Empowerment and Subcommittee
on Rural Enterprises,
Business Opportunities, and
Special Small Business
Problems, The Aging of
Agriculture: Empowering Young
Producers to Grow for the
Future; Washington, DC.
June 7, 2000............................ Hearing, The Future of Round
II Empowerment Zones;
Washington, DC.
July 11, 2000........................... Hearing, The Effects of the
Roadless Policy of Rural
Small Business and Rural
Communities; Washington, DC.
------------------------------------------------------------------------
CHAPTER FOUR
PUBLICATIONS OF THE COMMITTEE ON SMALL BUSINESS AND ITS SUBCOMMITTEES,
106TH CONGRESS
4.1 Reports
------------------------------------------------------------------------
House Report Number Title and date
------------------------------------------------------------------------
106-1................................... Report to accompany H.R. 68,
Small Business Investment
Company Technical Corrections
of 1999; January 19, 1999.
106-8 (Part 1).......................... Report to accompany H.R. 39,
The Small Business Paperwork
Reduction Act of 1999;
February 5, 1999.
106-11 (Part 1)......................... Report to accompany H.R. 439,
Paperwork Elimination Act of
1999; February 8, 1999.
106-12.................................. Report to accompany H.R. 440,
Microloan Program Technical
Corrections Act of 1999;
February 8, 1999.
106-33.................................. Report to accompany H.R. 818,
A bill to amend the Small
Business Act to authorize a
pilot program for the
implementation of disaster
mitigation measures by small
businesses; March 1, 1999.
106-47.................................. Report to accompany H.R. 774,
Women's Business Center
Amendments Act of 1999; March
10, 1999.
106-184 (Part 2)........................ Report to accompany H.R. 413,
Program for Investment in
Microentrepreneurs Act of
1999; July 2, 1999.
106-278................................. Report to accompany H.R. 2614,
Certified Development Company
Program Improvements Act of
1999; August 2, 1999.
106-279................................. Report to accompany H.R. 2615,
A bill to amend the Small
Business Act to make
improvements to the general
business loan program, and
for other purposes; August 2,
1999.
106-365................................. Report to accompany H.R. 1497,
Women's Business Centers
Sustainability Act of 1999;
October 5, 1999.
106-206 (Part 1)........................ Report to accompany H.R. 1568,
Veterans Entrepreneurship and
Small Business Development
Act of 1999; June 29, 1999.
106-520................................. Report to accompany H.R. 3845,
Small Business Investment
Corrections Act of 2000;
March 14, 2000.
106-522................................. Report to accompany H.R. 3843,
Small business
Reauthorization Act of 1999;
March 14, 2000.
106-643 (Part 1)........................ Report to accompany H.R. 1882,
Small Business Review Panel
Technical Amendments Act of
1999; May 25, 2000.
106-706 (Part 1)........................ Report to accompany H.R. 2848,
New Markets Initiative Act of
1999; June 28, 2000.
106-784................................. Report to accompany H.R. 4464,
A bill to amend the Small
Business Act to authorize the
Administrator of the Small
business Administration to
make grants and to enter into
cooperative agreements to
encourage the expansion of
business-to-business
relationships and the
provision of certain
information; July 25, 2000.
106-785................................. Report to accompany H.R. 4530,
A bill to amend the Small
Business Act to authorize the
Administrator of the Small
Business Administration to
establish a New Market
Venture Capital Program, and
for other purposes; July 25,
2000.
106-858................................. Report to accompany H.R. 4945,
Small Business Competition
Preservation Act of 2000;
September 18, 2000.
106-879................................. Report to accompany H.R. 4897,
A bill to amend the Small
Business Act to provide
Federal contracting
assistance to small business
concerns owned and controlled
by women; September 21, 2000.
106-880................................. Report to accompany H.R. 4944,
Export Working Capital Loan
Improvement Act of 2000;
September 21, 2000.
106-881................................. Report to accompany H.R. 4946,
National Small Business
Regulatory Assistance Act of
2000; September 21, 2000.
------------------------------------------------------------------------
4.2 Hearing Records
------------------------------------------------------------------------
Serial No. Held by Date, title, and location
------------------------------------------------------------------------
106-1.................. Full................ January 7, 1999: H.R. 68,
Amending Section 20 of
the Small Business Act
and Make Technical
Corrections in Title III
of the Small Business
Investment Act;
Washington, DC.
106-2.................. Full................ February 11, 1999: Review
of Women's Business
Centers; Washington, DC.
106-3.................. Full................ February 24, 1999: The
Small Business
Administration's FY 2000
Budget; Washington, DC.
106-4.................. Joint Regulatory March 11, 1999: Joint
Government. Subcommittee Hearing,
Subcommittee on
Regulatory Reform and
Paperwork Reduction and
the Subcommittee on
Government Programs and
Oversight, Small
Business Advocacy Review
Panels; Washington, DC.
106-5.................. Full................ March 12, 1999: Small
Business Year 2000
Readiness Act;
Washington, DC.
106-6.................. Empowerment......... March 23, 1999: Barriers
to Minority
Entrepreneurship;
Washington, DC.
106-7.................. Government.......... March 25, 1999: Women's
Business Enterprises;
Washington, DC.
106-8.................. Government.......... April 23, 1999:
Conserving Natural
Resources and Examining
Related Emerging
Technologies;
Washington, DC.
106-9.................. Rural............... April 27, 1999: H.R. 957,
the Farm and Ranch Risk
Management Act. (FARRM);
Washington, DC.
106-10................. Full................ April 29, 1999: The Kyoto
Protocol--The
Undermining of American
Prosperity; Washington,
DC.
106-11................. Empowerment......... May 11, 1999: Field
Hearing, Small Business,
Big Gains, How Economic
Renewal Creates Safer
Neighborhoods; The
Nehemiah Cooperative
Community Center,
Washington, DC.
106-12................. Joint Tax Rural..... May 13, 1999: What Would
Repealing the Death Tax
Mean to Small Business?;
Washington, DC.
106-13................. Tax................. May 18, 1999: What has
OPIC done for Small
Business Lately?
Washington, DC.
106-14................. Empowerment......... May 25, 1999: Welfare to
Work: What is Working,
What is Next?
Washington, DC.
106-15................. Full................ May 26, 1999: Electronic
Commerce: The Benefits
and Pitfalls of
Conducting Business over
the Internet;
Washington, DC.
106-16................. Government.......... May 27, 1999: The Small
Business Innovation
Research (SBIR) Program;
Washington, DC.
106-17................. Government.......... June 1, 1999: Field
hearing, Electro-
Magnetic Pulse (EMP)--
Should this be a Problem
of National Concern to
Businesses Small and
Large as well as
Government?; The Johns
Hopkins University,
Laurel, MD.
106-18................. Full................ June 9, 1999: SETRA, Fair
and Simple Tax Relief
for Small Business;
Washington, DC.
106-19................. Full................ June 10, 1999:
Association Health
Plans, Giving Small
Business the Benefits
They Need; Washington,
DC.
106-20................. Full................ June 23, 1999: H.R. 1568,
the Veterans
Entrepreneurship and
Small Business
Development Act of 1999;
Washington, DC.
106-21................. Full................ June 24, 1999: Proposed
Amendments to the 7(a)
and 504 Loan Programs;
Washington, DC.
106-22................. Tax................. June 24, 1999: Do
Unilateral Economic
Trade Sanctions Unfairly
Penalize Small Business?
Washington, DC.
106-23................. Full................ July 22, 1999: OSHA's
Draft Safety and Health
Program Rule;
Washington, DC.
106-24................. Government.......... July 27, 1999: The Burden
that Needless
Regulations and Lack of
Common Sense in
Enforcement of
Regulations Place upon
Small Business;
Washington, DC.
106-25................. Empowerment......... July 27, 1999: The
Digital Divide: Bridging
the Technology Gap;
Washington, DC.
106-26................. Full................ July 29, 2999: EPA's
Expansion of 112r of the
1990 Clean Air Act
Amendments to include
Propane; Washington, DC.
106-27................. Full................ August 4, 1999: Contract
Bundling and Federal
Procurement Problems
Facing Small Business;
Washington, DC.
106-28................. Full................ August 10, 1999: Small
Farm Tax Burdens;
Columbia, MO.
106-29................. Government.......... August 18, 1999: Are
Federal Programs
Providing Effective
Procurement Assistance
to Small Businesses?;
Chicago, IL.
106-30................. Full................ August 24, 1999: Joint
House and Senate Small
Business Committees
hearing, Building a
Stronger Agricultural
Community; Kansas City,
MO.
106-31................. Regulatory.......... September 1, 1999: The
Impact of Federal
Regulations on Small
Businesses in the Hudson
Valley; White Plains,
NY.
106-32................. Full................ September 2, 1999: H.R.
296, which will
establish a Voluntary
Regulatory Compliance
Program Administered by
the Existing Network of
Small Business
Development Centers
(SBDCs); Hudson, NY.
106-33................. Tax................. September 9, 1999,
Measuring Improvements
in the U.S. Export
Assistance Network;
Washington, DC.
106-34................. Full................ September 29, 1999:
Helping Agriculture
Producers ``Re-Grow''
Rural America;
Washington, DC.
106-35................. Government.......... October 14, 1999: Going
Public--The End of the
Rainbow for a Small
Business?; Washington,
DC.
106-36................. Regulatory.......... October 19, 1999: U.S.
Postal Service's
Regulations Regarding
Commercial Mail
Receiving Agencies
(CMRAs); Washington, DC.
106-37................. Full................ October 21, 1999: The
Proposed Changes to Part
9 of the Federal
Acquisition Regulation
Relating to Contract
Responsibility
(``Blacklisting'');
Washington, DC.
106-38................. Full................ October 28, 1999:
Proposition 65's Effect
on Small Business;
Washington, DC.
106-39................. Empowerment......... November 2, 1999: The
Start-Up Success
Accounts of 1999 (SUSA),
H.R. 2372; Washington,
DC.
106-40................. Joint Empowerment November 3, 1999: Joint
Regulatory. Subcommittee on
Empowerment and
Subcommittee on Rural
Enterprises hearing,
Business Opportunities,
and Special Small
Business Problems: The
Aging of Agriculture:
Empowering Young
Producers to Grow for
the Future; Washington,
DC.
106-41................. Full................ November 4, 1999: Full
Committee Hearing on
Department of Defense's
Contract Bundling
Policy; Washington, DC.
106-42................. Full................ February 9, 2000: Hearing
on the Skilled Workforce
Enhancement Act;
Washington, DC.
106-43................. Full................ February 16, 2000:
Hearing on Association
Health Plans--Promoting
Health Care
Accessibility;
Washington, DC.
106-44................. Government.......... February 29, 2000: The
SBC Computerized Loan
Monitoring System--A
Progress Report;
Washington, DC.
106-45................. Full................ March 1, 2000:
Reauthorization of the
SBA and the Fiscal Year
2001 Budget Request.
Washington, DC.
106-46................. Government.......... March 14, 2000: Public
Law 105-50, ``Veterans
Entrepreneurship and
Small Business
Development Act of
1999''; Washington, DC.
106-47................. Full................ March 15, 2000: Helping
Agricultural Producers
``Re-Grow'' Rural
America; Washington, DC.
106-48................. Empowerment......... March 28, 2000: Bridging
the Technological Gap:
Initiatives to Combat
the Digital Divide;
Washington, DC.
106-49................. Full................ April 5, 2000: Cash
Versus Accrual: The
Policy Implications of
the Growing Inability of
Small Businesses to Use
Simple Tax Accounting;
Washington, DC.
106-50................. Government.......... April 11, 2000: The
Present and Future of E-
Commerce for Small
Businesses in the
Private Sector and with
Federal Government
Agencies; Washington,
DC.
106-51................. Regulatory.......... April 13, 2000: OSHA's
Proposed Ergonomics
Standard: Its Impact on
Small Business;
Washington, DC.
106-52................. Regulatory.......... April 18, 2000: The
Impact of Fuel Prices on
Small Business;
Castleton, NY.
106-53................. Regulatory.......... April 18, 2000: The
Impact of Fuel Prices on
Small Business;
Valhalla, NY.
106-54................. Empowerment......... April 25, 2000:
Empowerment Subcommittee
Field Hearing on the
Digital Divide; Carson,
CA.
106-55................. Government.......... April 27, 2000:
Effectiveness of
Government; Ellicott
City, MD.
106-56................. Full................ April 26, 2000: The
Future of Round II
Empowerment Zones;
Mecca, CA.
106-57................. Tax................. May 4, 2000: Making the
Work Opportunity Tax
Credit a Success for
Small Business;
Washington, DC.
106-58................. Tax................. May 16, 2000: Trade with
China Helps Small
Business Exporters Work;
Washington, DC.
106-59................. Full................ May 24, 2000: Small
Business and Online
Music; Washington, DC.
106-60................. Full................ June 7, 2000: Regulatory
Reform Initiatives and
their Impact on Small
Business; Washington,
DC.
106-61................. Rural............... June 7, 2000: The Future
of Round II Empowerment
Zones; Washington, DC.
106-62................. Government.......... June 8, 2000: Women in
Business; Washington,
DC.
106-63................. Regulatory.......... June 8, 2000: The Quality
of Regulatory Analysis;
Washington, DC.
106-64................. Full................ June 14, 2000: Rural
Health Care Services:
Has Medicare Reform
Killed Small Business
Providers?; Washington,
DC.
106-65................. Regulatory.......... June 15, 2000: Hearing on
the National Ombudsman
2000 Report to Congress
and the Regulatory
Fairness Program;
Washington, DC.
106-66................. Full................ June 21, 2000: Hearing on
Improving the SBA's
Office of Advocacy;
Washington, DC.
106-67................. Rural............... July 11, 2000: Hearing on
the Effects of the
Roadless Policy of Rural
Small Business and Rural
Communities; Washington,
DC.
106-68................. Tax................. July 13, 2000: The Impact
of Banning Snowmobiles
Inside National Parks on
Small Business;
Washington, DC.
106-69................. Tax................. July 20, 2000: Helping
Small Dry Cleaners Adopt
Safer Technologies:
Without Losing your
Shirt; Washington, DC.
106-70................. Tax................. September 7, 2000:
Hearing, The Impact of
the Complexity of the
Tax Code on Small
Business: What Can be
Done About it?;
Washington, DC.
106-71................. Government.......... September 28, 2000:
Subcommittee on
Government Programs and
Oversight, The Future of
Small Business; What
Lies Ahead?; Washington,
DC.
106-72................. Regulatory.......... November 22, 1999:
Barriers and Solutions
to Economic Development
on Northern New Jersey,
Paterson, NJ
------------------------------------------------------------------------
CHAPTER FIVE
LEGISLATION ACTED ON BY THE COMMITTEE ON SMALL BUSINESS IN THE 106TH
CONGRESS
5.1 H.R. 68--The Small Business Investment Company Technical
Corrections Act of 1999, Public Law No. 106-9
Legislative History
------------------------------------------------------------------------
Date Action
------------------------------------------------------------------------
H.R. 68:
January 6, 1999......................... Referred to the House
Committee on Small Business.
January 7, 1999......................... Committee Consideration and
Mark-up Session Held.
January 7, 1999......................... Ordered to be Reported by
Voice Vote.
January 19, 1999........................ Reported by the Committee on
Small Business. H. Rept. 106-
1.
January 19, 1999........................ Placed on the Union Calendar,
Calendar No. 1.
February 2, 1999........................ Mr. Talent moved to suspend
the rules and pass the bill,
as amended.
February 2, 1999........................ Considered under suspension of
the rules. (consideration: CR
H286-288).
February 2, 1999........................ At the conclusion of debate,
the Yeas and Nays were
demanded and ordered.
Pursuant to the provisions of
clause 5, rule I, the Chair
announced that further
proceedings on the motion
would be postponed.
February 2, 1999........................ Considered as unfinished
business. (consideration: CR
H293-294).
February 2, 1999........................ On motion to suspend the rules
and pass the bill, as
amended. Agreed to by the
Yeas and Nays: (2/3
required): 402-2 (Roll no.
7). (text: CR H286-287).
February 2, 1999........................ Motion to reconsider laid on
the table. Agreed to without
objection.
February 4, 1999........................ Received in the Senate.
February 22, 1999....................... Read twice and referred to the
Committee on Small Business.
March 22, 1999.......................... Senate Committee on Small
Business discharged by
Unanimous Consent.
March 22, 1999.......................... Measure laid before Senate by
unanimous consent.
(consideration: CR S3062-
3063).
March 22, 1999.......................... Senate struck all after the
Enacting Clause and
substituted the language of
S. 364.
March 22, 1999.......................... Passed Senate in lieu of S.
364 with an amendment by
Unanimous Consent. (text: CR
S3062-3063).
March 23, 1999.......................... Mr. Talent moved that the
House suspend the rules and
agree to the Senate
amendment.
March 23, 1999.......................... On motion that the House
suspend the rules and agree
to the Senate amendment.
Agreed to by voice vote.
(text: CRH1490-1491).
March 23, 1999.......................... Motion to reconsider laid on
the table Agreed to without
objection.
March 23, 1999.......................... Message on Senate action sent
to the House.
March 23, 1999.......................... Cleared for White House.
March 25, 1999.......................... Presented to President.
April 5, 1999........................... Signed by President.
April 5, 1999........................... Became Public Law No. 106-9.
------------------------------------------------------------------------
Need for Legislation
Congress revamped the SBIC program in the 103d Congress to
provide for a new form of leverage geared specifically towards
equity investment in small businesses. Over the ensuring years,
as the new program has become established, certain deficiencies
have come to light; in addition, certain statutory provisions
have become obsolete. Moreover, the nature of the SBIC industry
has changed. The result is a participating securities industry
made up primarily of smaller SBIC's. The fact that these
smaller SBIC's are dominating the program points to shifting
dynamics in the SBIC program. Smaller, start-up investments are
more typical and, therefore, the demand for leverage has
shifted to smaller individual placements.
H.R. 68 seeks to correct these deficiencies, and remove
provisions that may produce confusion due to changes in law and
the character of the SBIC program. First, H.R. 68 will modify
the SBIC program to exclude contingent obligations from the
calculation of interest in loans made by SBICs. These
contingent obligations include financial tools like royalties,
warrants, conversion rights and options. Many small businesses
use these devices to help buy down the interest rates on their
financings. Unfortunately, current law has forced SBA and the
SBICs to try and include these options as part of the interest
applicable for a determination of the maximum applicable
interest rate. These valuations have resulted in confusion and
uncertainty for all concerned and have often resulted in the
loss of financing opportunities for small businesses.
Second, under H.R. 68, a provision in the Small Business
Investment Act that reserves leverage for smaller SBICs will
also be repealed. Changes in SBA policy regarding applications
for leverage, statutory changes in the availability of
commitments for SBICs, and the makeup of the industry present
the possibility that that provision may, in fact, create
conflicts and confusion.
Third, H.R. 68 will increase the authorization levels for
the participating securities segment of the SBIC program. The
authorization levels will rise from $800 million to $1 billion
dollars in fiscal year 1999, and from $900 million to $1.2
billion dollars in fiscal year 2000. These increases are
necessary to meet the rising demand for this section of the
SBIC program.
Fourth, H.R. 68 modifies a test for determining the
eligibility of small businesses for SBIC financing. Current
statutory language does not account for small businesses
organized in pass-through tax structures such as S
corporations, limited liability companies, and certain
partnerships. These organizations do not pay taxes at the
enterprise level, but instead pass through income and the
ensuing tax liabilities to their partners and shareholders.
Consequently, many of these small businesses face difficulties
when the income test is applied to them, and are often declared
ineligible for financing they should receive.
Finally, H.R. 68 will allow the SBA greater flexibility in
issuing trust certificates to finance the SBIC program's
investments in small businesses. Current law allows fundings to
be issued every six months or more frequently. This inhibits
the ability of the SBICs and the SBA to form pools of
certificates that are large enough to generate serious investor
interest. Allowing more time between fundings will permit SBA
and the industry to form larger pools for sale in the market,
thereby increasing investor interest and improving the interest
rates for the small businesses financed.
Section-by-Section Analysis
Section 1. Short Title
Designates the bill as ``The Small Business Investment
Company Technical Corrections Act of 1999''.
Section 2. SBIC Program
(1) Paragraph (a) of section 2 modifies section 308(i)(2)
of the Small Business Investment Act of 1958 to exclude
contingent obligations from the calculation used to determine
the maximum allowable interest rate in an SBIC financing.
Contingent obligations include financial tools such as options,
warrants, conversion rights and royalties. Because such devices
are contingent and speculative their correct valuation has been
a problem for small businesses, SBICs and the SBA.
(2) Paragraph (b) changes Section 20 of the Small Business
Act to increase the authorization levels for participating
securities under the SBIC program. The authorizations are
increased from $800 million to $1 billion dollars in fiscal
year 1999, and from $900 million to $1.2 billion dollars in
fiscal year 2000.
(3) The first part of paragraph (c) removes subparagraph
(13) of Section 303(g) of the Small Business Investment Act (15
U.S.C. 683(g)). That provision reserves 50% of participating
securities leverage for Small Business Investment Companies
with private capital of less than $20 million until the fourth
fiscal quarter. While the Committee continues to be interested
that all SBICs have access to the funding needed to complete
their investments, we also recognize that this provision is no
longer necessary. Only 12 of the 60 SBICs in the participating
leverage program have more than $20 million in private capital,
and the original concern that a few large SBICs would dominate
the program has proved unfounded. It appears that most SBIC
equity placements are in smaller early-stage businesses, and
consequently most participating securities SBICs are
established as smaller funds.
(4) The second part of paragraph (c) establishes a test for
small businesses formed as tax ``pass-through'' entities such
as S corporations or limited liability companies. Such
businesses will have their small business investment
eligibility determined by multiplying their net income by the
combined federal and state corporate tax rate and then
subtracting the result from their net income. That result will
serve as the small business' estimated ``after-tax income'' for
the purpose of determining eligibility. This removes an
uncertainty in the statute that meant a C corporation with as
much as $9 million in pretax income could be a small business
but a pass-through S corporation with $6,000,001 in income was
ineligible.
(5) The final part of paragraph (c) changes Section 320 of
the Small Business Investment Act to allow issuance of Small
Business Administration-backed trust certificates not less than
every twelve months rather than the current standard of every
six months. SBA would retain the discretion to issue guarantees
and trust certificates at shorter intervals if appropriate. The
change will give SBA increased flexibility in negotiating the
terms and costs associated with the placement of certificates,
either by contract or public offering. This will ultimately
benefit the small businesses seeking financing since the rates
sought by SBICs are reflected in the rates charged to small
businesses.
5.2 H.R. 391--Small Business Paperwork Reduction Act Amendments of
1999
Legislative History
------------------------------------------------------------------------
Date Action
------------------------------------------------------------------------
H.R. 391:
January 19, 1999........................ Referred to the Committee on
Government Reform, and in
addition to the Committee on
Small Business, for a period
to be subsequently determined
by the Speaker, in each case
for consideration of such
provisions as fall within the
jurisdiction of the committee
concerned.
January 19, 1999........................ Referred to House Government
Reform.
February 3, 1999........................ Committee Consideration and
Mark-up Session Held.
February 3, 1999........................ Ordered to be Reported by
Voice Vote.
January 19, 1999........................ Referred to House Small
Business.
February 5, 1999........................ Reported by the Committee on
Government Reform, H. Rept.
106-8, Part I. Filed late,
pursuant to previous special
order.
February 5, 1999........................ House Committee on Small
Business Granted an extension
for further consideration
ending not later than Feb. 5,
1999.
February 5, 1999........................ Placed on the Union Calendar,
Calendar No. 7.
February 5, 1999........................ Committee on Small Business
discharged.
February 9, 1999........................ Rules Committee Resolution H.
Res. 42 Reported to House.
Rule provides for
consideration of H.R. 391
with 1 hour of general
debate. Previous question
shall be considered as
ordered without intervening
motions except motion to
recommit with or without
instructions. Measure will be
considered read. Bill is open
to amendments.
February 11, 1999....................... Rule H. Res. 42 passed House.
February 11, 1999....................... Considered under the
provisions of rule H. Res.
42.
February 11, 1999....................... House resolved itself into the
Committee of the Whole House
on the state of the Union
pursuant to H. Res. 42 and
Rule XXIII.
February 11, 1999....................... The Speaker designated the
Honorable Jo Ann Emerson to
act as Chairwoman of the
Committee.
February 11, 1999....................... H.AMDT.6 Amendment (A001)
offered by Mr. McIntosh.
Amendment provides that a
fine may be imposed for a
first time paperwork
violation if such violation
has the potential to cause
serious harm to the public
interest; and adds two
representatives from the
Department of Health and
Human Services, including a
member from the Health Care
Financing Administration, to
the task force on
streamlining paperwork
requirements for small
business concerns.
February 11, 1999....................... H.AMDT.6 On agreeing to the
McIntosh amendment (A001)
Agreed to by voice vote.
February 11, 1999....................... H.AMDT.7 Amendment (A002)
offered by Mr. Kucinich.
Amendment sought to strike
provisions which waive a fine
for a first time paperwork
violation and require that
agencies establish a policy
for eliminating, delaying, or
reducing fines in appropriate
circumstances.
February 11, 1999....................... H.ADMT.7 On agreeing to the
Kucinich amendment (A002)
Failed by recorded vote: 210-
214 (Roll No. 19).
February 11, 1999....................... The House rose from the
Committee of the Whole House
on the state of the Union to
report H.R. 391.
February 11, 1999....................... The previous question was
ordered pursuant to the rule.
February 11, 1999....................... The House adopted the
amendment as agreed to by the
Committee of the Whole House
on the state of the Union.
February 11, 1999....................... On passage Passed by recorded
vote: 274-151 (Roll No. 20).
February 11, 1999....................... Motion to reconsider laid on
the table Agreed to without
objection.
February 12, 1999....................... Received in the Senate.
February 22, 1999....................... Read twice and referred to the
Committee on Governmental
Affairs.
October 19, 1999........................ Committee on Governmental
Affairs. Hearings held.
------------------------------------------------------------------------
The bill would amend chapter 35 of Title 44, United States
Code, for the purpose of facilitating compliance with certain
Federal paperwork requirements, to establish a task force to
examine the feasibility of streamlining paperwork requirements
applicable to small businesses, and for other purposes. The
Committee did not prepare a report on this bill. Further
information can be found in House Report 106-8, Part I,
prepared by the Committee on Government Reform.
5.3 H.R. 423--Program for Investment in Micro-Entrepreneurs Act of
1999
Legislative History
------------------------------------------------------------------------
Date Action
------------------------------------------------------------------------
H.R. 413:
January 19, 1999........................ Referred to the House
Committee on Banking and
Financial Services.
February 12, 1999....................... Referred to the Subcommittee
on Financial Institutions and
Consumer Credit.
May 26, 1999............................ Subcommittee on Financial
Institutions and Consumers
Credit Discharged.
May 26, 1999............................ Committee Hearings Held.
May 26, 1999............................ Committee Consideration and
Mark-up Session Held.
May 26, 1999............................ Ordered to be Reported by
Voice Vote.
June 14, 1999........................... Reported (Amended) by the
Committee on Banking and
Financial Services. H. Rept.
106-184, Part I.
June 14, 1999........................... Referred sequentially to the
House Committee on Small
Business for a period ending
not later than July 2, 1999
for consideration of such
provisions of the bill as
fall within the jurisdiction
of that committee pursuant to
clause 1(o), rule X.
June 24, 1999........................... Committee Consideration and
Mark-up Session Held.
June 24, 1999........................... Ordered to be Reported
(Amended) by Voice Vote.
July 2, 1999............................ Reported (Amended) by the
Committee on Small Business.
H. Rept. 106-184, Part II.
July 2, 1999............................ Placed on the Union Calendar,
Calendar No. 126.
------------------------------------------------------------------------
Need for Legislation
One of the greatest challenges to small or micro
entrepreneurs is access to capital. Often before they can grow
their businesses several needs must be addressed.
Traditionally, these needs are in the areas of training,
education or general capacity building. The Program for
Investment in Microentrepreneurs was created to assist
entrepreneurs and community development through the
establishment of a grant program.
The passage of the PRIME Act will create an additional
federal microenterprise assistance-related program. Currently,
there are a number of such programs dispersed throughout
various agencies of the federal government. The SBA conducts
the main program, the 7(m) Microloan program, which permanently
authorized in the Fall of 1997. Through the 7(m) program, SBA
provides loans and grants to nonprofit microenterprise
intermediaries which, in turn, provide small loans and
technical assistance to microentrepreneurs. In addition to the
technical assistance with SBA's 7(m) Microloan program provides
in conjunction with its loans, it provides technical assistance
even without the loan component. Through its Non-lending
Technical Assistance Provider (``NTAP'') program, SBA can
provide up to $125,000 in capacity building grants--like the
PRIME Act--that are not tied to loans for the explicit purpose
of capacity building. In addition to the 7(m) program, SBA
administers other technical assistance and capacity building
programs through the Small Business Development Center
(``SBDC'') Program to provide technical assistance to current
and prospective small business owners; and the Women's Business
Development Program, which provides technical assistance to
women entrepreneurs who are economically disadvantaged.
Additional microenterprise programs are administered through
HHS, HUD, Labor, Agriculture and Commerce.
Because of the potential for duplication, the Committee
worked to ensure that the PRIME program will work with existing
federal microenterprise technical assistance and capacity
building grant programs, especially those that already exist at
the Small Business Administration. PRIME has the ability to
make capacity building and technical assistance grants, just as
the SBA Microloan program. But, in addition to the technical
assistance and capacity building that both SBA and PRIME can
do, the SBA 7(m) Microloan program can make loans in the area
of entrepreneur development and loans that are tied to
technical assistance.
The Committee believes that PRIME can play an important
role in supplementing the current microenterprise technical
assistance programs administered through the SBA. This is
especially true given the fact that PRIME's purpose is to focus
on only technical assistance and capacity building, an area
that has been historically under-funded. The PRIME program
should never extend beyond the level of providing technical
assistance and capacity building. Hearings and Committee action
made clear that CDFI does not possess the infrastructure to
support and administer a Microloan program, and that the PRIME
Act is not structured in a way to create a framework to
administer loans in a safe and sound manner.
Section-by-Section Analysis
Section 1. Provision of Technical Assistance to Microentrepreneurs
Section 1 amends Title I of the ``Riegle Community
Development and Regulatory Improvement Act of 1994'' by adding
a new subtitle, ``Subtitle C--Microenterprise Technical
Assistance and Capacity Building Program'' which includes the
following sections:
Section 171. Short title
This Section designates new Subtitle C as the ``Program for
Investment in Microentrepreneurs Act of 1999'' (PRIME Act).
Section 172. Definitions
This section defines terms as they apply to the PRIME Act.
Section 173. Establishment of program
This section requires the Treasury Secretary to establish a
microenterprise technical assistance and capacity building
grant program which shall provide assistance from the CDFI Fund
in the form of grants to qualified organizations.
Section 174. Uses of assistance
This section provides that grants can be used for
assistance to provide training, technical assistance, capacity
building and educational assistance targeted to microenterprise
and microenterprise development organizations that serve low
income entrepreneurs. The Committee added language prohibiting
the PRIME Act to be used as a loan program. The Committee
further believes that funding for this program should be
focused in manner that provides the maximum assistance directly
to the microentrepreneurs and not in manner that would have
only secondary or limited benefits for the microenterprise
community.
Section 175. Qualified organizations
This section defines a qualified organization as a non-
profit microenterprise development organization as one that has
a demonstrated record of assisting disadvantaged entrepreneurs,
an intermediary private nonprofit entity that serves
microenterprise development organizations, or an Indian tribe
if it can certify that a nonprofit microenterprise development
program exists in the area.
Section 176. Allocation of assistance; subgrants
This section provides the manner in which funding is to be
used and defines the parameter under which organizations will
participate in the program. The Committee added language
ensuring that all participants of SBA's 7(m) Microloan program
will be eligible for funding under PRIME. It is critical to
PRIME's success, that those participants in the SBA's 7(m)
program be included in the PRIME program. CDFI should make
every effort to ensure that participants of SBA's 7(m)
Microloan program are included in the PRIME program. The 7(m)
intermediaries have the institutional experience and expertise
to help the PRIME program hit the ground running, and allow the
program work efficiently and effectively.
Section 177. Matching requirements
This section provides matching requirements from sources
other than the Federal government equal to fifty percent of
each dollar provided by the CDFI Fund. Sources of matching
funds may include fees, grants, gifts, funds from loan sources,
or in the form of in-kind resources, grants, or loans to the
organization.
In the case of an applicant with severe economic
constraints on sources available for matching funds, the
Administrator may reduce or eliminate the matching requirement.
Not more than 10% of the total funds made available under the
Act may be excepted from the matching requirements.
Section 178. Applications for assistance
This section requires the CDFI Fund to establish procedures
for submission of applications for assistance.
Section 179. Recordkeeping
This section establishes record keeping requirements for
organizations that receive PRIME Act grants, including an
annual report in which the organization discloses its
activities, financial conditions, and its success in satisfying
the terms and conditions of its assistance agreement.
Section 180. Report
This section requires the Administrator to submit to the
House and Senate Small Business and Banking Committees, within
one year after CDFI has awarded and funded the first grant, and
annually after that, the following information: (1) the number
and locations of the organizations funded under the grant
program; (2) the amount of each grant made to a qualified
organization; (3) a description of the matching contributions
provided by each qualified organization receiving a grant; (4)
the numbers and amounts of sub-grants made by qualified
organizations to small business concerns; (5) each grant made
under the program, the purpose for which the grant funds were
used.
Section 181. Authorization
This section authorizes appropriations of $15 million for
fiscal year 2000, $25 million for fiscal year 2001, $30 million
for fiscal year 2002, and $35 million for fiscal year 2003.
Section 182. Implementation
This section directs the administrator to develop
regulations for the implementation of the program. Prior to the
development of these regulations and before any grants are
awarded, the Administrator is to enter into a Memorandum of
Understanding with the Small Business Administration. This
should include, but not be limited to such items as outreach
and information to organizations. This agreement must be
completed within 60 days of enactment of the legislation. The
Committee encourages both SBA and CDFI to complete this
agreement quickly, and the committee will closely monitor the
progress of this agreement to ensure that this is carried out
in an expeditious manner. Should issues arise that make
completion of the MOU by the 60 day deadline impossible, it is
the Committee's hope that a third party, such as the Office of
Budget and Management, would be available to assist in
resolving any outstanding issues.
Prior to the issuing any proposed preliminary, interim or
final regulations, the Administrator of the fund must provide
the Administrator of SBA 60 days to comment and suggest changes
to these regulations that reflect SBA's experience in the area
of assisting micro-entrepreneurs and to ensure that the two
programs do not duplicate services already provided by SBA.
Section 2. Administrative Expenses
Section 2 increases the CDFI Fund's authorized
administrative expenses from $5,550,000 to $6,100,000 to
accommodate administration of the PRIME Act.
Section 3. Conforming Amendments
This section makes technical and conforming amendments.
5.4 H.R. 439--Paperwork Elimination Act of 1999
Legislative History
------------------------------------------------------------------------
Date Action
------------------------------------------------------------------------
H.R. 439:
February 2, 1999........................ Referred to the Committee on
Government Reform, and in
addition to the Committee on
Small Business, for a period
to be subsequently determined
by the Speaker, in each case
for consideration of such
provisions as fall within the
jurisdiction of the committee
concerned.
February 2, 1999........................ Referred to House Government
Reform
February 3, 1999........................ Referred to the Subcommittee
on National Economic Growth,
Natural Resources and
Regulatory Affairs.
February 2, 1999........................ Referred to House Small
Business.
February 3, 1999........................ Committee Consideration and
Mark-up Session Held.
February 3, 1999........................ Ordered to be Reported by
Voice Vote.
February 8, 1999........................ Reported by the Committee on
Small Business. H. Rept. 106-
11, Part I.
February 9, 1999........................ Mrs. Kelly moved to suspend
the rules and pass the bill.
February 9, 1999........................ Considered under suspension of
the rules.
February 9, 1999........................ At the conclusion of debate,
the Yeas and Nays were
demanded and ordered.
Pursuant to the provisions of
clause 5, rule I, the Chair
announced that further
proceedings on the motion
would be postponed.
February 9, 1999........................ Considered as unfinished
business.
February 9, 1999........................ On motion to suspend the rules
and pass the bill Agreed to
by the Yeas and Nays: (2/3
required): 413-0 (Roll no.
13).
February 9, 1999........................ Motion to reconsider laid on
the table Agreed to without
objection.
February 11, 1999....................... Received in the Senate.
February 22, 1999....................... Read twice and referred to the
Committee on Governmental
Affairs.
------------------------------------------------------------------------
Need for Legislation
As part of continuing efforts to enable the Federal
government to take advantage of the Information Age, the
Committee recognized the need to encourage and monitor the
progress of Federal agencies in their efforts to utilize new
``information technology'' to reduce the public cost of meeting
the Federal government's information needs. Moreover, a
specific need exists to allow those small businesses,
taxpayers, and others with access to computers and modems to
use them when dealing with the Federal government.
Witnesses before the Small Business Committee have
estimated that the American public expends an amount of time
and effort equal to 510 billion dollars, or some 9 percent of
the Gross Domestic Product in 1992, in order to meet the
Federal government's information needs. Small businesses bear a
disproportionate share of that cost.
The Federal government is lagging behind the rest of the
nation in using new technology. Individuals can now send and
receive mail, accomplish their personal banking transactions,
and even read a newspaper from a personal computer or phone.
Individuals should be able to conduct much of their business
with the government electronically as well. Legislation is
needed to seize the opportunity which the Information Age and
new information technologies have presented to reduce the huge
cumulative burden of meeting the Federal government's
information demands.
Clearly, the need exists to promote and monitor efforts to
minimize the burdens of Federal paperwork demands upon small
businesses, educational and nonprofit institutions, Federal
contractors, state and local governments, and other persons
through the use of alternative information technologies,
including the use of electronic submission, maintenance, or
disclosure of information as a substitute for paper.
Congressional oversight activities will be enhanced by
requiring reporting on the progress of agencies and how
regulatory burdens have been reduced.
Congress took an important first step towards using this
technology last year when it included in the Omnibus
Appropriations Act of 1998 (P.L. 105-277) legislation sponsored
by Senator Spencer Abraham which requires the development of
procedures for the use and acceptance of electronic signatures
by Executive agencies of the U.S. Government. This legislation
was of particular importance to the Committee on Small Business
because it included one provision that had been part of the
previous versions of the Paperwork Elimination Act that the
Committee considered in the 104th and 105th Congresses. This
particular provision gave the authority to the Director of OMB
to provide direction and oversee the acquisition and use of
alternative technologies that provide for the electronic
submission, maintenance, or disclosure of information as a
substitute for paper. The Paperwork Elimination Act of 1999
(H.R. 439) complements this legislation by clarifying the
authority and responsibilities of the Director of OMB, as well
as placing specific requirements on Federal agencies.
The Paperwork Elimination Act of 1999 amends chapter 35,
Title 44, United States Code, otherwise known as the Paperwork
Reduction Act of 1995, by requiring all Federal agencies to
provide the option of electronic submission of information,
electronic compliance with regulations, and electronic
disclosure of information to all who must comply with Federal
information demands. Furthermore, Federal agencies would be
prohibited from collecting information until they have first
published a notice in the Federal Register detailing how the
information may be maintained, submitted, or disclosed
electronically. The Director of OMB would be required to
oversee the implementation of electronic submission,
compliance, and disclosure of information. The Director of OMB
would also be required to monitor and report on the progress of
Federal agencies in meeting these requirements, as well as how
regulatory burdens on small businesses have been reduced.
The Paperwork Elimination Act of 1999 emphasizes that
opportunities for the public to use electronic technologies for
data submission should be optional. The Act will in no way
hinder the ability of small businesses and individuals without
access to computers and modems to comply with Federal paperwork
requirements. The Act merely requires Federal agencies to
consider and provide the option to those who wish and are able
to use the technology.
Section-by-Section Analysis
Section 1. Short Title
This legislation is entitled the `Paperwork Elimination Act
of 1999'.
Section 2. Promotion of Use of Electronic Technology
The Director of the Office of Management and Budget (OMB)
is required to promote the acquisition and use of electronic
submission, maintenance, or disclosure of information as a
substitute for paper as an option for entities complying with
the regulatory information needs of Federal agencies. This
provision is added to sec. 3504(h) of the Paperwork Reduction
Act (44 U.S.C. 35) which outlines the Director's obligations to
advance the use of information technology.
Section 3. Assignment of Tasks and Deadlines
Sec. 3505(a)(3) of the Paperwork Reduction Act requires the
Director of OMB, in consultation with the General Services
Administration (GSA), National Institute of Standards and
Technology (NIST), National Archives and Records Administration
(NARA), and Office of Personnel Management (OPM), to develop
and maintain a government-wide strategic plan for information
resources management. This provision amends sec. 3505(a)(3) by
inserting the requirement to include in this plan a progress
report on the extent to which the paperwork burden on small
businesses and individuals has been relieved as a result of the
use of electronic submission, maintenance, or disclosure of
information as a substitute for paper.
Section 4. Federal Agency Responsibilities
Subsection (a) amends sec. 3506(c)(1)(B) of the Paperwork
Reduction Act to require each Federal agency, when it is
appropriate to provide respondents with the option of
submitting, maintaining, or disclosing information
electronically when complying with Federal regulations.
Subsection (b) amends sec. 3506(c)(3)(C) of the Paperwork
Reduction Act to require each Federal agency to certify to the
Director of OMB each collection of information that it
undertakes has reduced to the extent practicable the burden of
paperwork on small businesses and individuals by allowing for
the optional submission, maintenance, or disclosure of
information electronically.
Subsection (c) amends sec. 3506(c)(3)(J) of the Paperwork
Reduction Act to require each Federal agency to certify to the
Director of OMB that, to the extent practicable, it used
alternative information technologies to reduce burden, improve
data quality, and make agencies more efficient and responsive
to the public.
Section 5. Public Information Collection Activities; Submission to
Director; Approval and Delegation
This provision amends sec. 3507(a)(1)(D)(ii) of the
Paperwork Reduction Act to prohibit Federal agencies from
collecting information until they have first published a notice
in the Federal Register describing how the information may, if
appropriate, be electronically submitted, maintained, or
disclosed by a respondent.
Section 6. Responsiveness to Congress
This provision amends sec. 3514(a)(2) of the Paperwork
Reduction Act to require the Director of OMB, when responding
to Congress annually or at other times, to report on how the
collection of information by electronic means has affected
regulatory burdens on small businesses and other persons. This
report must specifically include any instance in which the
electronic maintenance, submission, or disclosure of
information has added to the regulatory burden on small
businesses. It should also specifically identify instances
referring to the information required from small businesses by
the Internal Revenue Service.
5.5 H.R. 440.--Microloan Program Technical Corrections Act of 1999,
Public Law No. 106-22
Legislative History
------------------------------------------------------------------------
Date Action
------------------------------------------------------------------------
H.R. 440:
February 2, 1999........................ Referred to the House
Committee on Small Business.
February 8, 1999........................ Committee Consideration and
Mark-up Session Held.
February 8, 1999........................ Ordered to be Reported by
Voice Vote.
February 8, 1999........................ Reported by the Committee on
Small Business. H. Rept. 106-
12.
February 8, 1999........................ Placed on the Union Calendar,
Calendar No. 10.
February 9, 1999........................ Mr. Talent moved to suspend
the rules and pass the bill,
as amended.
February 9, 1999........................ Considered under suspension of
the rules. (consideration: CR
H492-494)
February 9, 1999........................ At the conclusion of debate,
the Yeas and Nays were
demanded and ordered.
Pursuant to the provisions of
clause 5, rule I, the Chair
announced that further
proceedings on the motion
would be postponed.
February 9, 1999........................ Considered as unfinished
business. (consideration: CR
H524-525)
February 9, 1999........................ On motion to suspend the rules
and pass the bill, as amended
Agreed to by the Yeas and
Nays: (2/3 required): 411-4
(Roll no. 12). (text: CR
H492)
February 9, 1999........................ Motion to reconsider laid on
the table Agreed to without
objection.
February 11, 1999....................... Received in the Senate.
February 22, 1999....................... Read twice and referred to the
Committee on Small Business.
March 25, 1999.......................... Senate Committee on Small
Business discharged by
Unanimous Consent.
March 25, 1999.......................... Measure laid before Senate by
unanimous consent.
(consideration: CR S3554-
3566)
March 25, 1999.......................... Amendment SP 248 proposed by
Senator Enzi for Senator
Kerry.
March 25, 1999.......................... S.AMDT.248 Proposed by Senator
Enzi for Senator Kerry.
March 25, 1999.......................... S.AMDT.248 Amendment SP 248
agreed to in Senate by
Unanimous Consent.
March 25, 1999.......................... Amendment SP 248 agreed to in
Senate by Unanimous Consent.
March 25, 1999.......................... Passed Senate with an
amendment by Unanimous
Consent. (consideration: CR
S3554-3566)
April 12, 1999.......................... Message on Senate action sent
to the House.
April 12, 1999.......................... Mr. Pease moved that the House
suspend the rules and agree
to the Senate amendment.
April 12, 1999.......................... On motion that the House
suspend the rules and agree
to the Senate amendment
Agreed to by voice vote.
(text: CR H1817-1818)
April 12, 1999.......................... Motion to reconsider laid on
the table Agreed to without
objection.
April 12, 1999.......................... Cleared for White House.
April 15, 1999.......................... Presented to President.
April 27, 1999.......................... Signed by President.
April 27, 1999.......................... Became Public Law No. 106-22.
------------------------------------------------------------------------
Need for Legislation
The microloan program was made permanent on December 2,
1997 as a provision of P.L. 105-135, the Small Business
Reauthorization Act of 1997. At that time, changes were also
implemented to modify the loan loss reserve for microloan
intermediaries. The loan loss reserve language in P.L. 105-135
specified that microloan borrowers were required to maintain a
loss reserve of 15 percent of their outstanding microloans for
the first five years of their participation in the program.
After that, intermediaries were to be required to maintain a
loss reserve equal to 10 percent of their outstanding loans or
twice their loss rate, whichever was greater.
Unfortunately, this provision was interpreted by the SBA to
mean an amount equal to twice an intermediary's aggregate
losses. For example: If an intermediary had average annual
losses of five percent over five years the SBA would not impose
a loss reserve of ten percent (twice the annual rate) as
intended by the Congress. They would instead impose a loss
reserve of fifty percent (twice the aggregate annual losses
over five years).
This interpretation created an immense burden on microloan
intermediaries. As a result, at the end of the 105th Congress,
the Senate Committee on Small Business added language similar
to H.R. 440 to H.R. 3412 to remedy the situation.
Unfortunately, this language, as part of the larger bill,
failed to pass the Congress before adjournment.
Shortly thereafter, the Chairmen of the House and Senate
Committees on Small Business, Representative James M. Talent
and Senator Christopher Bond, and their colleagues,
Representative Nydia Velazquez and Senator John Kerry, the
Ranking Democratic Members of the Committees, wrote to SBA
Administrator Aida Alvarez requesting her forbearance in
applying the loan loss regulations. (A copy of that letter is
attached as an Appendix).
H.R. 440 will correct this interpretation and clearly
establish that the loan loss reserve will be fifteen percent
for the first five years for all intermediaries, and that
intermediaries may apply for a reduction of the reserve to
reflect their actual annual average loss rate, but no less than
ten percent.
The loan loss reserve reduction is to be based on the
actual annual average loss rate over a five-year period. The
Committee expects that intermediaries will request such reviews
no more than annually, and that such reviews will not affect
the SBA's ability to conduct further reviews for oversight and
management purposes.
H.R. 440 also replaces the cap on the amount of microloan
funds that can be made available to intermediaries in any one
State. This cap was originally imposed to ensure that microloan
funds would not be used disproportionately in those States with
more aggressive microloan programs. As the program has matured,
however, this restriction has become unnecessary.
Section-by-Section Analysis
Section 1. Short Title
This act may be cited as the ``Microloan Program Technical
Corrections Act of 1999''.
Section 2. Technical Corrections
This section eliminates the language in paragraph
7(m)(7)(B) restricting the amount of loan funds made available
to any single state, and replaces it with language requiring
SBA to maintain a minimum amount ($800,000) of funding
available each year for each State's intermediaries. This
amount is subject to available appropriations and the approval
of the Small Business Administration. Any funds that are
reserved by the SBA for the purposes of this provision may be
released at the beginning of the third fiscal quarter.
This section also inserts language requiring SBA to not
only select and approve intermediaries but also make sure that
some funding is available to them.
Section 3. Loan Loss Reserves
This section changes the loan loss reserve required to be
established by microloan intermediaries. The loss reserve
provides a hedge for the SBA against the failure of an
intermediary.
Under the new language all intermediaries will be required
to have a 15 percent loss reserve for their first five years.
After five year intermediaries may request a review by the SBA.
Existing intermediaries may request a review based on the most
recent five year period. If an intermediary's five year average
annual loss rate is lower than 15 percent then the SBA may
reduce the loss reserve requirement for the intermediary, but
no lower than 10 percent. The request for a review is to be an
annual review. However, this review is not to be interpreted to
preclude any reviews initiated by the SBA for the purposes of
program oversight.
5.6 H.R. 774--Women's Business Centers Amendments Act of 1999, Public
Law No. 106-17
Legislative History
------------------------------------------------------------------------
Date Action
------------------------------------------------------------------------
H.R. 774:
February 23, 1999....................... Referred to the House
Committee on Small Business.
February 25, 1999....................... Committee Consideration and
Mark-up Session Held.
February 25, 1999....................... Ordered to be Reported by
Voice Vote.
March 10, 1999.......................... Reported by the Committee on
Small Business, H. Rept. 106-
47.
March 10, 1999.......................... Placed on the Union Calendar,
Calendar No. 29.
March 16, 1999.......................... Mrs. Kelly moved to suspend
the rules and pass the bill,
as amended.
March 16, 1999.......................... Considered under suspension of
the rules. (consideration: CR
H1276-1279)
March 16, 1999.......................... At the conclusion of debate,
the Yeas and Nays were
demanded and ordered.
Pursuant to the provisions of
clause 5, rule I, the Chair
announced that further
proceedings on the motion
would be postponed.
March 16, 1999.......................... Considered as unfinished
business. (consideration: (CR
H1301-1302)
March 16, 1999.......................... On motion to suspend the rules
and pass the bill, as amended
Agreed to by the Yeas and
Nays: (2/3 required): 385-23
(Roll no. 51). (text: CR
H1276)
March 16, 1999.......................... Motion to reconsider laid on
the table Agreed to without
objection.
March 17, 1999.......................... Received in the Senate, read
twice.
March 24, 1999.......................... Passed Senate without
amendment by Unanimous
Consent. (consideration: CR
S3299-3300)
March 24, 1999.......................... Cleared for White House.
March 25, 1999.......................... Message on Senate action sent
to the House.
March 26, 1999.......................... Presented to President.
April 6, 1999........................... Signed by President.
April 6, 1999........................... Became Public Law No. 106-17.
------------------------------------------------------------------------
Need for Legislation
The bill is a product of the information gathered at the
hearing on the Women's Business Center Program held on February
11, 1999. Based on information gathered at the hearing, Members
on both sides of the aisle and the Administration agreed that a
comprehensive study of the Women's Business Center Program is
needed.
Therefore, the Committee chose a two-step approach to
address the issues raised at the hearing. The first step is
H.R. 774, which addresses the two most immediate concerns, the
funding ratio for Women's Business Centers for their fifth year
of funding and the authorization of appropriations. The
majority of Federally funded centers will enter their fifth and
final year of funding this coming July. Currently they must
raise 2 non-federal dollars to obtain 1 Federal dollar. This
ratio creates an immense fund raising burden for Women's
Business Centers, which will no longer receive Federal funds
after July 2000. Thus, H.R. 774 changes the ratio in the fifth
year to 1 non-Federal dollar for each Federal dollar.
The second step for the Committee entails a hearing to
follow completion of the GAO study which is currently
contemplated. It is hoped that the study will improve the
Committee's understanding of where and how the program should
grow as we consider additional legislation later this year.
Section-by-Section Analysis
Section 1. Short Title
This act maybe cited as the ``Women's Business Center
Amendments Act of 1999''.
Section 2. Conditions of Participation
This section eliminates subparagraphs (B) and (C) of
Section 29(c)(1) of the Small Business Act, changing the
funding ratio in the fifth year to 1 non-Federal dollar for
each Federal dollar so that in the third, fourth and fifth
years the ratio is 1:1.
This bill will be considered effective as of October 1,
1998.
Section 3. Authorization of Appropriations
This section increases the authorization of appropriations
from $8 million to $11 million.
5.7 H.R. 775--Year 2000 Readiness and Responsibility Act, Public Law
No. 106-37
Legislative History
------------------------------------------------------------------------
Date Action
------------------------------------------------------------------------
H.R. 775:
February 23, 1999....................... Referred to the Committee on
the Judiciary, and in
addition to the Committee on
Small Business, for a period
to be subsequently determined
by the Speaker, in each case
for consideration of such
provisions as fall within the
jurisdiction of the committee
concerned.
February 23, 1999....................... Referred to House Judiciary.
April 13, 1999.......................... Committee Hearings Held.
April 29, 1999.......................... Committee Consideration and
Mark-up Session Held.
May 4, 1999............................. Committee Consideration and
Mark-up Session Held.
May 4, 1999............................. Ordered to be Reported
(Amended) by the Yeas and
Nays: 15-14.
February 23, 1999....................... Referred to House Small
Business.
May 7, 1999............................. Reported (Amended) by the
Committee on the Judiciary.
H. Rept. 106-131, Part I.
Filed late, pursuant to
previous special order.
May 7, 1999............................. House Committee on Small
Business Granted an extension
for further consideration
ending not later than May 7,
1999.
May 7, 1999............................. Committee on Small Business
discharged.
May 7, 1999............................. Referred sequentially to the
House Committee on Commerce
for a period ending not later
than May 11, 1999 for
consideration of such
provisions of the introduced
bill as fall within the
jurisdiction of that
committee pursuant to clause
1(f), rule X.
May 11, 1999............................ Committee on Commerce
discharged.
May 11, 1999............................ Placed on the Union Calendar,
Calendar No. 72.
May 11, 1999............................ Rules Committee Resolution H.
Res. 166 Reported to House.
Rule provides for
consideration of H.R. 775
with 1 hour of general
debate. Previous question
shall be considered as
ordered without intervening
motions except motion to
recommit with or without
instructions. After general
debate the bill shall be
considered for amendment
under the five-minute rule.
The rule makes in order as an
original bill for the purpose
of amendment, the Committee
on the Judiciary amendment in
the nature of a substitute
now printed in the bill,
modified by the amendments
printed in part 1 of H. Rept.
106-134 accompanying the
rule. Measure will be
considered read. Specific
amendments are in order.
Makes in order only those
amendments printed in part 2
of H. Rept. 106-134; provides
that the amendments may be
offered only by a Member
designated in the report,
shall be considered as read,
debatable for the time
specified in the report, not
be subject to amendment, and
not be subje * * *
May 12, 1999............................ Rule H. Res. 166 passed House.
May 12, 1999............................ Considered under the
provisions of rule H. Res.
166, (consideration: CR H3013-
3053; text of measure as
reported in House: CR H3026-
3030).
May 12, 1999............................ House resolved itself into the
Committee of the Whole House
on the state of the Union
pursuant to H. Res. 166 and
Rule XXIII.
May 12, 1999............................ The Speaker designated the
Honorable Ray LaHood to act
as Chairman of the Committee.
May 12, 1999............................ H.AMDT.80 Amendment (A001)
offered by Mr. Davis (VA).
Amendment changes the
effective date to January 1,
1999 and defines damage to
mean punitive, compensatory,
and restitutionary relief.
May 12, 1999............................ H.AMDT.80 On agreeing to the
Davis (VA amendment (A001)
Agreed to by voice vote.
May 12, 1999............................ H.AMDT.81 Amendment (A002)
offered by Mr. Moran (VA).
Amendment clarifies that none
of the provisions of the bill
shall apply to any claim
based on personal injury,
including any claim asserted
by way of counterclaim, cross
claim or third party claim;
and clarifies that third
party defendants brought into
Y2K personal injury claims
are not provided with the
liability protections
contained in the bill.
May 12, 1999............................ H.AMDT.81 On agreeing to the
Moran (VA) amendment (A002)
Agreed to by voice vote.
May 12, 1999............................ H.AMDT.82 Amendment (A003)
offered by Ms. Jackson-Lee
(TX). Amendment clarifies the
notification provisions of
the bill to provide that the
particularity requirement
contained in the bill does
not exclude the use of
layman's terms.
May 12, 1999............................ H.AMDT.82 On agreeing to the
Jackson-Lee (TX) amendment
(A003) Agreed to by voice
vote.
May 12, 1999............................ H.AMDT.83 Amendment (A004)
offered by Mr. Scott.
Amendment sought to delete
section 304 which caps the
amount that may be awarded
for punitive damages in Y2K
litigation.
May 12, 1999............................ H.AMDT.84 Amendment (A005)
offered by Mr. Nadler.
Amendment sought to delete
title IV that covers Y2K
class action lawsuits.
May 12, 1999............................ H.AMDT.83 On agreeing to the
Scott amendment (A004) Failed
by recorded vote: 192-235
(Roll no. 124).
May 12, 1999............................ H.AMDT.84 On agreeing to the
Nadler amendment (A005)
Failed by recorded vote: 180-
244 (Roll no. 125).
May 12, 1999............................ H.AMDT.85 Amendment (A006) in
the nature of a substitute
offered by Mr. Conyers.
Amendment in the nature of a
substitute sought to delete
provisions that place a cap
on punitive damages; provide
for a cooling off period and
alternative dispute
resolution procedures;
prohibit frivolous class
action lawsuits; and impose a
duty on plaintiffs to
mitigate damages.
May 12, 1999............................ H.AMDT.85 On agreeing to the
Conyers amendment (A006)
Failed by recorded vote: 190-
236 (Roll no. 126).
May 12, 1999............................ The House rose from the
Committee of the Whole House
on the state of the Union to
report H.R. 775.
May 12, 1999............................ The previous question was
ordered pursuant to the rule.
May 12, 1999............................ The House adopted the
amendment in the nature of a
substitute as agreed to by
the Committee of the Whole
House on the state of the
Union.
May 12, 1999............................ Mr. Conyers moved to recommit
with instructions to
Judiciary.
May 12, 1999............................ The previous question on the
motion to recommit with
instructions was ordered
without objection.
May 12, 1999............................ On motion to recommit with
instructions Failed by
recorded vote: 184-246 (Roll
no. 127).
May 12, 1999............................ On passage Passed by recorded
vote: 236-190 (Roll no. 128).
May 12, 1999............................ Motion to reconsider laid on
the table Agreed to without
objection.
May 13, 1999............................ Received in the Senate. Read
twice. Placed on Senate
Legislative Calendar under
General Orders. Calendar No.
113.
June 15, 1999........................... Measure laid before Senate by
unanimous consent.
(consideration: CR S6998).
June 15, 1999........................... Senate struck all after the
Enacting Clause and
substituted the language of
S. 96 amended.
June 15, 1999........................... Passed Senate in lieu of S. 96
with an amendment by Yea-Nay
Vote. 62-37. Record Vote No:
165.
June 16, 1999........................... Senate insists on its
amendment asks for a
conference, appoints
conferees McCain; Stevens;
Burns; Gorton; Hollings;
Kerry; Wyden From the
Committee on Commerce,
Science, and Transportation.
June 16, 1999........................... Senate appointed conferees.
Hatch; Thurmond; Leahy From
the Committee on the
Judiciary.
June 16, 1999........................... Senate appointed conferees.
Bennett; Dodd From the
Special Committee on the Year
2000 Technology Problems.
June 23, 1999........................... Message on Senate action sent
to the House.
June 24, 1999........................... Mr. Goodlatte asked unanimous
consent that the House
disagree to the Senate
amendment, and agree to a
conference.
June 24, 1999........................... On motion that the House
disagrees to the Senate
amendment, and agree to a
conference Agreed to without
objection.
June 24, 1999........................... Motion to reconsider laid on
the table Agreed to without
objection.
June 24, 1999........................... Mr. Conyers moved that the
House instruct conferees.
June 24, 1999........................... DEBATE--The House proceeded
with 1 hour of debate on the
motion to instruct the
managers of the part of the
House at the conference on
the disagreeing votes of the
two houses on the amendment
of the Senate to the bill to
ensure that their eventual
report to the House reflects
due regard for the
substantive concerns of the
high-technology community and
the possible implications of
the ``y2k'' date change on
that community and on the
Nation's economy; the
substantive inputs of the
Administration and of the
bipartisan Leaderships in the
Congress on the issues
committed to conference; and
the sense of the House that a
decision not to follow this
process will lead to a
failure to enact legislation.
June 24, 1999........................... On motion that the House
instruct conferees Agreed to
by the Yeas and Nays: 426-0
(Roll no. 253).
June 24, 1999........................... Motion to reconsider laid on
the table Agreed to without
objection.
June 24, 1999........................... The Speaker appointed
conferees From the Committee
on the Judiciary, for
consideration of the House
bill and the Senate
amendment, and modifications
committed to conference:
Hyde, Sensenbrenner,
Goodlatte, Conyers, and
Lofgren.
June 24, 1999........................... The Speaker appointed
conferees From the Committee
on Commerce, for
consideration of section 18
of the Senate amendment, and
modifications committed to
conference: Bliley, Oxley,
and Dingell.
June 24, 1999........................... Conference held.
June 29, 1999........................... Conferees agreed to file
conference report.
June 29, 1999........................... Conference report H. Rept. 106-
212 filed. (text: CR H5066-
5073).
June 30, 1999........................... Rules Committee Resolution H.
Res. 234 Reported to House.
Rule provides for
consideration of the
conference report to H.R. 775
with 1 hour of general
debate. Previous question
shall be considered as
ordered without intervening
motions. Rule waives all
points of order against the
conference report and against
its consideration.
July 1 1999............................. Rule H. Res. 234 passed House.
July 1, 1999............................ Mr. Goodlatte brought up
conference report H. Rept.
106-212 for consideration
under the provisions of H.
Res. 234.
July 1 1999............................. The previous question was
ordered without objection.
July 1, 1999............................ On agreeing to the conference
report Agreed to by the Yeas
and Nays: 404-24 (Roll no.
265).
July 1, 1999............................ Motions to reconsider laid on
the table Agreed to without
objection.
July 1, 1999............................ Conference papers: message on
House action held at the desk
in Senate.
July 1, 1999............................ Conference report considered
in Senate.
July 1, 1999............................ Senate agreed to conference
report by Yea-Nay Vote. 81-
18. Record Vote No: 196.
July 1, 1999............................ Message on Senate action sent
to the House.
July 1, 1999............................ Cleared for White House.
July 16, 1999........................... Presented to President.
July 20, 1999........................... Signed by President.
July 20, 1999........................... Became Public Law No. 106-37.
------------------------------------------------------------------------
The bill establishes certain procedures for civil actions
brought for damages relating to the failure of any device or
system to process or otherwise deal with the transition from
the year 1999 to the year 2000, and for other purposes. The
Committee on Small Business did not prepare a report on this
bill. Further information on the bill can be found in House
Report 106-134 prepared by the Committee on the Judiciary and
the report of the conferees, House Report 106-212.
5.8 S. 314.--Small Business Year 2000 Readiness Act, Public Law No.
106-8
Legislative History
------------------------------------------------------------------------
Date Action
------------------------------------------------------------------------
S. 314:
January 27, 1999........................ Read twice and referred to the
Committee on Small Business.
February 5, 1999........................ Committee on Small Business.
Ordered to be reported
without amendment favorably.
February 23, 1999....................... Committee on Small Business.
Reported to Senate by Senator
Bond without amendment. With
written report No. 106-5.
February 23, 1999....................... Placed on Senate Legislative
Calendar under General
Orders. Calendar No. 18.
March 2, 1999........................... Measure laid before Senate by
unanimous consent.
(consideration: CR S2059-
2069)
March 2, 1999........................... Passed Senate without
amendment by Yea-Nay Vote. 99-
0. Record Vote No: 28. (text:
CR S2068-2069)
March 3, 1999........................... Received in the House.
March 3, 1999........................... Referred to the House
Committee on Small Business.
March 12, 1999.......................... Committee Hearings Held.
March 3, 1999........................... Message on Senate action sent
to the House.
March 23, 1999.......................... Mr. Talent moved to suspend
the rules and pass the bill.
March 23, 1999.......................... Considered under suspension of
the rules. (consideration: CR
H1488-1490)
March 23, 1999.......................... On motion to suspend the rules
and pass the bill Agreed to
by voice vote. (text: CR
H1488-1489)
March 23, 1999.......................... Motion to reconsider laid on
the table Agreed to without
objection.
March 23, 1999.......................... Cleared for White House.
March 25, 1999.......................... Presented to President.
April 2, 1999........................... Signed by President.
April 2, 1999........................... Became Public Law No. 106-8.
------------------------------------------------------------------------
S. 314 requires the SBA to establish a limited-term loan
program (hereinafter referred to as the `Y2K loan program')
pursuant to which the SBA would guarantee loans made by private
lenders to assist small businesses in correcting Y2K computer
problems. The bill permits a financial institution originating
loans under the Y2K loan program to process the loans in
accordance with the requirements of any existing loan program
established under the SBA's 7(a) business loan program in which
such lender is eligible to participate. The Committee did not
prepare a report on this legislation. More information can be
found in Senate Report 106-5 prepared by the Senate Committee
on Small Business.
5.9 S. 388 (H.R. 818)--Disaster Mitigation Coordination Act of 1999,
Public Law No. 106-24
Legislative History
------------------------------------------------------------------------
Date Action
------------------------------------------------------------------------
H.R. 818:
February 24, 1999....................... Referred to the House
Committee on Small Business.
February 25, 1999....................... Committee Consideration and
Mark-up Session Held.
February 25, 1999....................... Ordered to be Reported by
Voice Vote.
March 1, 1999........................... Reported by the Committee on
Small Business. H. Rept. 106-
33.
March 1, 1999........................... Placed on the Union Calendar,
Calendar No. 18.
March 2, 1999........................... Mr. Talent moved to suspend
the rules and pass the bill.
March 2, 1999........................... Considered under suspension of
the rules.
March 2, 1999........................... On motion to suspend the rules
and pass the bill Agreed to
by voice vote.
March 3, 1999........................... Received in the Senate and
read twice and referred to
the Committee on Small
Business.
S. 388:
February 8, 1999........................ Read twice and referred to the
Committee on Small Business.
(text of measure as
introduced: CR S1370-1371)
March 25, 1999.......................... Senate Committee on Small
Business discharged by
Unanimous Consent.
March 25, 1999.......................... Passed Senate without
amendment by Unanimous
Consent. (consideration: CR
S3566; text: CR S3566)
April 12, 1999.......................... Received in the House.
April 12, 1999.......................... Held at the desk.
April 12, 1999.......................... Message on Senate action sent
to the House.
April 12, 1999.......................... Mr. Thune moved to suspend the
rules and pass the bill.
April 12, 1999.......................... Considered under suspension of
the rules (consideration: CR
H1814-1817)
April 12, 1999.......................... On motion to suspend the rules
and pass the bill Agreed to
by voice vote. (text: CR
H1815)
April 12, 1999.......................... Motion to reconsider laid on
the table Agreed to without
objection.
April 12, 1999.......................... Cleared for White House.
April 15, 1999.......................... Presented to President.
April 27, 1999.......................... Signed by President.
April 27, 1999.......................... Became Public Law No. 106-24.
------------------------------------------------------------------------
Need for Legislation
Since 1953, the Small Business Administration has
administered the disaster loan program authorized by Section
7(b) of the Small Business Act. This program provides loans to
help small businesses and homeowners to rebuild after natural
disasters. In past years the loan program has spent billions of
dollars helping small businesses recover from natural
disasters. In fiscal year 1998, the SBA lent $728 million for
30,154 disaster loans; in 1997 it lent $1.1 billion for 49,515
disaster loans. The SBA's highest demand for disaster loans
came in 1994, when it loaned over $4.1 billion due to the
Northridge Earthquake in California.
The cost of disaster assistance has risen over the past
several years due to increases in construction and other costs.
By implementing a program to help small businesses use
techniques that would lessen damage in the event of natural
disasters the possibility exists to save millions of dollars in
potential losses. The Federal Emergency Management Agency
(FEMA) currently manages ``Project Impact'' which works in
conjunction with communities and businesses on mitigation
policies and techniques. Passage of H.R. 818 will complement
and further these efforts at mitigation by offering small
businesses low interest loans for disaster mitigation.
Section-by-Section Analysis
Section 1. Short Title
This act may be cited as the ``Disaster Mitigation
Coordination Act of 1999''.
Section 2. Pilot Program
(a) This paragraph authorizes the Administrator to
establish a pilot program to make loans to small businesses and
homeowners for the purpose of mitigating the effects of natural
disasters. These loans will be made in support of a formal
mitigation program established by the Federal Emergency
Management Agency. These mitigation techniques will be varied
and include a variety of activities including building
improvements, relocation, etc.
(b) This paragraph authorizes SBA to lend up to $15,000,000
each year through 2004 in support of the disaster mitigation
pilot program. These funds will come from existing Section 7(b)
disaster loan appropriations and will be subject to
appropriations available for that program.
(c) This paragraph requires the Administrator of the SBA to
report to Congress on January 31, 2003. The report will
document the number of loans made, the areas served by the
pilot, and the estimated savings to the government as a result
of the program.
S. 388 establishes a pilot program for making loans to
small businesses for the purpose of implementing techniques and
technologies that will mitigate the effects of natural
disasters. The Small Business Administration (SBA) currently
administers a disaster loan program that lends to small
businesses and homeowners affected by natural disasters.
Implementation of S. 388 will enable the SBA to lend to small
businesses in disaster prone areas and help them avert and
lessen the costs of future diaster-inflicted damages. The cost
of disaster assistance has risen over the past several years
due to increases in construction and other costs.
By implementing a program to help small businesses use
techniques that would lessen damage in the event of natural
disasters the possibility exists to save millions of dollars in
potential losses. The Federal Emergency Management Agency
(FEMA) currently manages ``Project Impact'' which works in
conjunction with communities and businesses on mitigation
policies and techniques.
5.10 S.791 (H.R. 1497--Women's Business Center Sustainability Act,
Public Law No. 106-165
Legislative History
------------------------------------------------------------------------
Date Action
------------------------------------------------------------------------
H.R. 1497:
April 20, 1999.......................... Referred to the House
Committee on Small Business.
September 30, 1999...................... Committee Consideration and
Mark-up Session Held.
September 30, 1999...................... Ordered to be Repoorted in the
Nature of a Substitute
(Amended) by Voice Vote.
October 5, 1999......................... Reported (Amended) by the
Committee on Small Business.
H. Rept. 106-365.
October 5, 1999......................... Placed on the Union Calendar,
Calendar No. 206.
October 19, 1999........................ Mrs. Kelly moved to suspend
the rules and pass the bill,
as amended.
October 19, 1999........................ Considered under suspension of
the rules.
October 19, 1999........................ On motion to suspend the rules
and pass the bill, as amended
Agreed to by voice vote.
October 19, 1999........................ Motion to reconsider laid on
the table Agreed to without
objection.
October 20, 1999........................ Received in the Senate and
read twice and referred to
the Committee on Small
Business.
S. 791:
April 14, 1999.......................... Read twice and referred to the
Committee on Small Business.
September 30, 1999...................... Committee on Small Business.
Ordered to be reported with
an amendment in the nature of
a substitute favorably.
November 2, 1999........................ Committee on Small Business.
Reported to Senate by Senator
Bond with an amendment in the
nature of a substitute. With
written report No. 106-214.
November 2, 1999........................ Placed on Senate Legislative
Calendar under General
Orders. Calendar No. 372.
November 5, 1999........................ Measure laid before Senate by
unanimous consent.
(consideration: CR S14212-
14218; text as reported in
Senate: CR S14212-14213).
November 5, 1999........................ S.AMDT.2543 Proposed by
Senator Domenici for Senator
Kerry. Kerry amendment to S.
791 to make an amendment with
respect to the funding
formulas and the selection
process.
November 5, 1999........................ S.AMDT.2543 Amendment SP 2543
agreed to in Senate by
Unanimous Consent.
November 5, 1999........................ The committee substitute as
amended agreed to by
Unanimous Consent.
November 5, 1999........................ Passed Senate with an
amendment by Unanimous
Consent. (text: CR S14216-
14218).
November 8, 1999........................ Received in the House.
November 8, 1999........................ Meassage on Senate action sent
to the House.
November 8, 1999........................ Held at the desk.
November 18, 1999....................... Mrs. Kelly asked unanimous
consent to take from the
Speaker's table and consider.
November 18, 1999....................... Considered by unanimous
consent. (consideration: CR
H12864-12866).
November 18, 1999....................... On passage Passed without
objection. (text: CR 11/19/99
H12864-12866).
November 18, 1999....................... Motion to reconsider laid on
the table Agreed to without
objection.
November 18, 1999....................... Cleared for White House.
December 1, 1999........................ Presented to President.
December 9, 1999........................ Signed by President.
December 9, 1999........................ Became Public Law No. 106-165.
------------------------------------------------------------------------
Need for Legislation
The Small Business Administration's Women's Business
Program provides five-year grants, matched by non-Federal
dollars, to private-sector organizations to establish business-
training centers for women. Depending on the needs of the
community being served, centers teach women the principles of
finance, management and marketing, as well as specialized
topics such as how to get a government contract or how to start
a home-based business. The centers are located in rural, urban
and suburban areas, and direct much of their training and
counseling assistance toward socially and economically
disadvantaged women.
In spite of the impressive growth, according to the data
from the 1998 Women's Economic Summit, women-owned businesses
account for only 18 percent of all small-business gross
receipts, and they are dramatically under-represented in the
nation's two most lucrative markets: corporate buying and
government contracting. Based on this data and hearing
testimony, the Committee finds the need for the Women's
Business Centers continues, and this is no time to diminish or
dismantle the infrastructure we have invested in for the past
decade.
This legislation draws on testimony given before the
Committee over the past year. According to testimony given by a
member of the Association of Women's Business Centers at a
hearing held February 11, 1999, the program is in danger of
losing effective centers. Many centers need every penny to run
their programs and it is increasingly difficult to raise the
required matching funds. Losing the matching funds would
compound the problem because they would have to raise twice as
much money, the competition for foundation and private-sector
dollars has become scarcer with each year that government
funding has diminished, and they would not have any leverage to
challenge those foundations and private corporations to give/
match.
H.R. 1497 seeks to improve Congressional oversight of the
Women's Business Center program and balance the need for
developing new centers while sustaining currently funded and
graduated sites. There are four main components to this
balanced approach. First, the legislation increases oversight
and review of women's business centers. SBA is directed to do
an annual programmatic and financial examination of each center
and then to analyze the results to determine whether the center
is programmatically and financially viable. The Committee
recognized a need for such an examination because a GAO study
on the Women's Business Centers program released on September
2, 1999, found `limitations in SBA's records and databases' for
the years 1989 through 1998. Accordingly, if centers don't
provide the information required, if the information is
inadequate, or if the results are poor, the SBA can withhold
grant extensions or grant renewals. Second, H.R. 1497 requires
the SBA to issue the requests for proposals (RFP) for new
centers and centers competing for sustainability grants at the
same time in order to better manage the selection and award
process. Third, based on the conditions described in the bill,
the Committee intends for the selection panel to judge merit on
how well a center provided service to its market under its
first award and how it plans to service its market in the next
five years. Fourth, H.R. 1497 goes a step further by requiring
the SBA as part of the final selection process to complete a
site visit of each center competing for a sustainability grant.
Recognizing that site visits are expensive, this bill makes
available the equivalent of $275,000 per year proportionate to
appropriations to be used for site visits and other uses.
Fourth, H.R. 1497 incrementally raises over four years the
annual authorization levels from $12 million in FY 2000 to
$14.5 million in fiscal year 2003. The Committee increased the
authorization levels to ensure that there are adequate monies
to fund 45 existing centers, an average of 8 recompeting
centers, and an average of 10 new centers per year. This bill
establishes very specific requirements for appropriations.
First, of those amounts, the bill reserves a percentage of
money each fiscal year for sustainability grants.
Section-by-Section Analysis
Section 1. Short Title
The Act is entitled the ``Women's Business Centers
Sustainability Act of 1999''.
Section 2. Private Nonprofit Organizations
This section amends the act to clarify that all Women's
Business Centers must be private nonprofit organizations
(501(c) organizations) instead of private organizations.
Section 3. Increased Management Oversight and Review of Women's
Business Centers
This section directs the SBA to do an annual programmatic
and financial examination for each center and then to analyze
the results to determine whether the center is programmatically
and financially viable. The Committee recognized a need for
such an examination because a GAO study on the Women's Business
Centers program published on September 2nd found `limitations
in SBA's records and databases' for the years 1989 through
1998. Accordingly, if centers don't provide the information
required, if the information is inadequate, or if the results
are poor, the SBA can withhold grant extensions or grant
renewals.
Section 4. Women's Business Centers Sustainability Pilot Program
Subsection (a)(1) establishes four-year competitive grant
program. Each grant cycle is for five fiscal years. There will
be two separate selection rounds for the sustainability grants
in each year of the pilot. In the first round, centers in the
final year of their five-year grant project can compete. If
there are funds unawarded from the first round, there will be a
second round for graduated centers to compete. A graduated
center is considered a center that no longer receives federal
funds from the Women's Business Center Program, but is still
actively providing business programs and services to its local
market.
Subsection (a)(2) describes five conditions for
participation. The conditions include requiring certification
that the applicant is a private nonprofit organization;
maintenance of records of its past performance; and submission
of a plan that demonstrates a center's ability to records of
its past performance; and submission of a plan that
demonstrates a center's ability to better meet the needs of the
market through fundraising in the next 5 years.
Subsection (a)(3) sets forth the conditions for reviewing
grant applications, reporting requirements for data collection,
and a ten-year record retention of applications.
Subsection (a)(4) establishes the matching requirement.
Centers must raise cash or in-kind contributions from non-
Federal sources. Consistent with the last three years of the
initial five-year grant, centers must raise the equivalent of
one non-Federal dollar to each Federal dollar.
Subsection (a)(5) requires the SBA to issue all requests
for proposals (proposals to establish new centers as well as
proposals seeking the sustainability pilot grants) at the same
time. This provision is intended to ensure that new centers and
sustained centers get equal consideration during the
application review process and that funds are appropriately
awarded.
Subsection (b) authorizes appropriations for the term of
the pilot.
Subsection (b)(1) incrementally raises over four years the
annual appropriations from $12 million in FY2000 to $14.5
million in fiscal year 2003. The Committee increased the
authorization levels to ensure that there are adequate monies
to fund 45 existing centers, an average of 8 recompeting
centers, and an average of 10 new centers per year. New centers
and existing centers are awarded matching grants of up to
$150,000 per year. Recompeting centers are awarded matching
grants of up to $125,000. The funds appropriated over the next
four fiscal years are available until used so that if
insufficient qualified applications are received, the program
can carry over unawarded funds for use later in the pilot.
Subsection (b)(2) sets aside the equivalent of $275,000 per
year for the Office of Women's Business Ownership to use for
selection panel costs including site visits of all final
contenders for sustainability grants, post-award conferences
and oversight costs.
Subsection (b)(3) reserves specific percentages each year
to fund centers with sustainability pilot grants. The
subsection also sets forth exceptions for the use of unawarded
funds. First, if the funds for the first round of
sustainability pilot grants are not fully awarded, the money
can be used for grants to graduated centers. Then, if reserved
funds remain after funding sustainability grants for qualified
graduated centers, the money can be used for new centers or to
expand programs to better meet the needs of a market.
Conversely, if the funds intended for new centers and
maintenance of existing centers are not fully awarded, the
funds can be used for sustainability grants.
Subsection (c) section establishes the guidelines. The SBA
must issue guidelines to implement this Act within 30 days of
enactment.
Section 5. Effective Date
This section establishes that this Act takes effect on
October 1, 1999.
5.11 H.R. 1568--Veterans Entrepreneurship and Small Business
Development Act, Public Law No. 106-50
Legislative History
------------------------------------------------------------------------
Date Action
------------------------------------------------------------------------
H.R. 1568:
April 27, 1999.......................... Referred to the Committee on
Small Business, and in
addition to the Committee on
Veterans' Affairs, for a
period to be subsequently
determined by the Speaker, in
each case for consideration
of such provisions as fall
within the jurisdiction of
the committee concerned.
April 27, 1999.......................... Referred to House Small
Business.
June 23, 1999........................... Committee Hearings Held.
June 23, 1999........................... Committee Consideration and
Mark-up Session Held.
June 23, 1999........................... Ordered to be Reported
(Amended) by Voice Vote.
April 27, 1999.......................... Referred to House Veterans'
Affairs.
May 20, 1999............................ Referred to the Subcommittee
on Benefits.
June 29, 1999........................... Reported (Amended) by the
Committee on Small Business.
H. Rept. 106-206, Part I.
June 29, 1999........................... House Committee on Veterans'
Affairs Granted an extension
for further consideration
ending not later than June
29, 1999.
June 29, 1999........................... Committee on Veterans' Affairs
discharged.
June 29, 1999........................... Placed on the Union Calendar,
Calendar No. 120.
June 29, 1999........................... Mr. Talent moved to suspend
the rules and pass the bill,
as amended.
June 29, 1999........................... Considered under suspension of
the rules. (consideration CR
H5016-5026)
June 29, 1999........................... On motion to suspend the rules
and pass the bill, as amended
Agreed to by voice vote.
(text: CR H 5016-5021)
June 29, 1999........................... Motion to reconsider laid on
the table Agreed to without
objection.
June 30, 1999........................... Received in the Senate and
read twice and referred to
the Committee on Small
Business.
July 15, 1999........................... Committee on Small Business.
Ordered to be reported with
an amendment in the nature of
a substitute favorably.
August 4, 1999.......................... Committee on Small Business.
Reported to Senate by Senator
Bond with an amendment in the
nature of a substitute. With
written report No. 106-136.
August 4, 1999.......................... Placed on Senate Legislative
Calendar under General
Orders. Calendar No. 254.
August 5, 1999.......................... Measure laid before Senate by
unanimous consent.
(consideration: CR S10520-
10522)
August 5, 1999.......................... Amendment SP 1617 proposed by
Senator Brownback for Senator
Bond.
August 5, 1999.......................... S.AMDT.1617 Proposed by
Senator Brownback for Senator
Bond. To make amendments with
respect to the Board of
Directors of the National
Veterans Business Development
Corporation.
August 5, 1999.......................... Amendment SP 1617 agreed to in
Senate by Unanimous Consent.
August 5, 1999.......................... S.AMDT.1617 Amendment SP 1617
agreed to in Senate by
Unanimous Consent.
August 5, 1999.......................... The committee substitute as
amended agreed to by
Unanimous Consent.
August 5, 1999.......................... Passed Senate with an
amendment by Unanimous
Consent.
August 5, 1999.......................... Message on Senate action sent
to the House.
August 5, 1999.......................... Mr. Talent asked unanimous
consent that the House agree
to the Senate amendment.
August 5, 1999.......................... On motion that the House agree
to the Senate amendment
Agreed to without objection.
(text: CR H7462-7467)
August 5, 1999.......................... Motion to reconsider laid on
the table Agreed to without
objection.
August 5, 1999.......................... Cleared for White House.
August 11, 1999......................... Presented to President.
August 17, 1999......................... Signed by President.
August 17, 1999......................... Became Public Law No. 106-50.
------------------------------------------------------------------------
Need for Legislation
Over the years, the Nation has recognized the debt owed to
citizens who serve in defense of our Constitution and the
American ideals of free speech, personal liberty, and free
enterprise. H.R. 1568 builds on the best examples of this
public policy from our Nation's history. From the beginning of
the Republic, when the Continental Congress provided land
grants to Revolutionary War veterans, we have helped veterans
with self-employment and self-sufficiency. 150 years later, the
1944 Servicemen's Readjustment Act, or ``G.I. Bill of Rights of
World War II'' provided loan guarantees for returning World War
II, and later Korean War, veterans. In the ten years following,
the Federal Government provided over 280,000 small business and
farm loans to veterans to help include them in the post-war
boom and use their talents to propel that boom.
Unfortunately, the Nation's efforts on behalf of veterans
have diminished drastically in the intervening 45 years. Over
the years, the interests of veterans, particularly the service-
disabled, have fallen on infertile ground. While specifically
included as a priority of the SBA at its creation, the Office
of Veterans Affairs and the needs of veterans have been
diminished systematically at the SBA. Elimination of the direct
loan program for veterans in fiscal year 1995, at then
Administrator Phil Lader's request, resulted in serious
diminution of financial assistance of veterans. Total loan
dollars dropped from $22 million dollars in loans in 1993 to
$10.8 million in 1998. Likewise, training and counseling for
veterans dropped from 38,775 total counseling sessions for
veterans in 1993 to 29,821 sessions in 1998.
While the current SBA Administrator, Aida Alvarez, has made
efforts to halt this slide it is evident that more must be
done. Teamwork and self-confidence are the hallmarks of our
veterans. With that in mind, H.R. 1568 proposes to give
veterans the goals they need to do the job. SBA's activities
and priorities will be strengthened, but a framework must be
established to allow veterans and small businesses share their
knowledge and skills. By establishing the National Veterans
Business Development Corporation, Congress will set in place a
permanent mechanism for meeting our obligations to our service
men and women.
H.R. 1568 will also fulfill a long unmet need to assist our
military reservists who are small business owners. Often these
individuals, called to service at short notice, come back from
fighting to protect our freedoms only to find their businesses
in shambles. H.R. 1568 will establish loan deferrals, technical
and managerial assistance, and loan programs for these citizen
soldiers so that while they risk their lives they need not risk
their livelihoods.
Section-by-Section Analysis
Section 1. Short Title
Designates the bill as the ``Veterans Entrepreneurship and
Small Business Development Act of 1999''.
Section 2. Table of Contents
TITLE I--GENERAL PROVISIONS
Section 101. Findings
This section describes Congressional findings regarding the
sacrifices and efforts of veterans and their value to the
American economy as small business owners.
Section 102. Purpose
Describes the purpose of the Act, to encourage the SBA and
other agencies to implement further efforts to assist veterans,
particularly service-disabled veterans in the formation and
growth of small businesses.
Section 103. Definitions
Establishes definitions of veteran owned and service-
disabled veteran owned small business concerns. The term
``service-disabled veterans'' is based on the definition in
Title 38 of the US Code.
TITLE II--VETERANS BUSINESS DEVELOPMENT
Section 201. Office of Veterans Business Development
Establishes an Office of Veterans Business Development and
the position of Associate Administrator for Veterans Business
Development at the Small Business Administration. This position
will be responsible for the formulation, execution, and
promotion of programs to provide assistance for small
businesses owned and controlled by veterans. There are
currently at least ten Associate Administrators at the SBA. A
minimum of four are required by law, and the titles of only two
are specified.
Section 202. National Veterans Business Development Corporation
This section establishes a federally chartered corporation,
the National Veterans Business Development Corporation, for the
purpose of guiding and monitoring public and private sector
initiatives to assist the Nation's veterans in their efforts to
form and grow small businesses. The most significant single
purpose of the corporation will be to work with the public and
private sectors to establish an independent nationwide network
of business assistance and information centers for veterans.
The Corporation will be managed by a Board of Directors
appointed in a bipartisan fashion by the President based on
recommendations from the Congress. It will have the power to
raise and disburse funds, establish initiatives, and award
grants in furtherance of its goal of establishing a cohesive
assistance and information network for veteran owned business.
The NVBDC will also establish an advisory board on
professional certification to work on the problems service
members with military technical training face in transitioning
into the private sector workforce. The board will be composed
of representatives of professional certification organizations,
such as the Coalition for Professional Certification and
veterans organizations such as the American Legion. In
addition, the Board of Directors of the NVBDC shall invite
representatives of the Armed Services and the Department of
Labor to participate.
While they will have no mandate to change or enforce
regulations, the Committee hopes that the military and private
sector will work in a cooperative fashion to satisfy both the
Armed Services training requirements and the public sector's
need for standard certification and provide transitioning
service members with an easy entrance to civilian life. To
start the NVBDC it will have an initial authorization of $2
million in the first year and $4 million in the second and
third years, dropping back to $2 million in the fourth and
final year. After the fourth year the Corporation will be self
funded from private donations and no longer be eligible for
federal funds.
Section 203. Advisory Committee on Veterans Affairs
Establishes an eight member committee to provide
independent advice and policy recommendations to the SBA,
Congress, and the President. The committee will conduct
hearings, collect information from federal agencies, develop,
monitor and promote programs to aid veteran's business
development, and issue an annual report to the Congress. The
Committee will terminate on September 30, 2004 and its
responsibilities will devolve onto the National Veterans
Business Development Corporation.
TITLE III--TECHNICAL ASSISTANCE
Section 301. Score Program
This section requires the Service Corps of Retired
Executives (SCORE) and the SBA to establish a program for
directing management and technical assistance to veteran-owned
small business and veterans wishing to establish small business
concerns. SCORE provides advice and technical assistance to
small businesses free of charge through a nationwide network of
volunteers.
Section 302. Entrepreneurial Assistance
This section requires the Small Business Development Center
(SBDC) system and the SBA to establish a program for outreach
and assistance to veterans and veteran-owned small businesses.
SBDC's provide free management and technical assistance to
small business owners through over 900 sites located at
colleges and universities nationwide.
Section 303. Military Reservists Technical Assistance
Establishes a program of technical and managerial
assistance, through the SBA, for military reservists who are
self-employed or are small business owners and are called to
active military duty. Requires the SBA to enhance its publicity
of such assistance for the duration of Operation ``Allied
Force''.
TITLE IV--FINANCIAL ASSISTANCE
Section 401. General Business Loans
Includes service-disabled veterans with handicapped
individuals in provisions requiring that loan making decisions
shall be resolved in favor of the prospective borrower. H.R.
1568 also clarifies that this provision applies only to
guaranteed loans and makes no requirement that the SBA
reinstitute the direct loan programs eliminated in the
Administration budget submission in 1995. According to the
Administration's testimony on June 23, 1999 such a result was
not desired by the SBA. Therefore, an amendment was offered to
specify and reinforce the Administration's opposition to those
programs.
Section 402. Assistance to Active Duty Military Reservists
Requires the SBA to establish a system for loan deferrals
for small business owners called up for active duty. Also
requires the SBA to make economic injury disaster loans
available to self-employed individuals who are called to active
duty for the National Guard and Reserves.
Section 403. Microloan Program
Makes veterans eligible for assistance under the SBA's
microloan program which provides small loans (under $25,000) to
people seeking initial financing for small business start-up or
expansion.
Section 404. Delta Loan Program
Includes veteran owned small businesses in the eligibility
categories for assistance under the DELTA loan program at the
SBA.
Section 405. State Development Company Program
Includes the formation and creation of veteran-owned small
business in the public policy goals sought in the 504 loan
program for construction and long-term equipment loans.
TITLE V--PROCUREMENT
Section 501. Subcontracting
Requires the inclusion of small business concerns owned and
controlled by veterans in the mandatory subcontracting clause
in all government contracts that establishes subcontracting
plans.
Section 502. Procurement Assistance
This section requires the SBA to establish a three percent
goal for contracting with small business concerns owned and
controlled by service disabled veterans.
TITLE VI--REPORTS AND DATA
Section 601. Reporting Requirements
Requires the heads of each federal agency to report to the
Small Business Administration concerning contracting with
veteran owned and service-disabled veteran owned small
businesses.
Section 602. Report on Small Business and Competition
Requires the SBA to include information on small business
concerns owned by veterans and service disabled veterans in the
annual report on small business participation and opportunities
in federal procurement.
Section 603. Annual Report
This section requires the Administrator to submit an annual
report to Congress on the needs of veteran owned small business
and the progress of programs designed to aid and promote
veterans small business ownership. The Administrator shall also
provide statistical information on veterans participation in
SBA programs.
Section 604. Information Collection
Requires the collection of procurement data on veterans and
service-disabled veteran owned small businesses, and collection
of information on the procurement practices of each federal
agency. All such information is to be made available to any
small business concern requesting it. The information is also
to be distributed to federal procurement officers. Also
requires the SBA and VA to work to establish a database on
veteran owned small business concerns.
TITLE VII--MISCELLANEOUS PROVISIONS
Section 701. Administrator's Order
Requires the administrator to strengthen and reissue the
order implementing the provisions of P.L. 93-237 which requires
the SBA to fully include veterans in all the programs, purposes
and activities of the agency.
Section 702. Office of Advocacy
Requires the Chief Counsel for Advocacy of the US Small
Business Administration to include an evaluation of the efforts
of the federal government to assist veteran owned small
business concerns as one of his primary functions. The Chief
Counsel is also required to provide statistical information on
veterans utilizing of federal programs. Also requires the Chief
Counsel to make recommendations to the Administrator of SBA and
Congress on programs and efforts to assist veteran owned small
business concerns.
Section 703. Fixed Asset Small Business Loans
Requires the Government Accounting Office to conduct a
study of the feasibility of using the VA home ownership loan
program as a source of fixed asset financing for veteran-owned
small businesses.
5.12 H.R. 1882--Small Business Review Panel Technical Amendments Act
of 1999
Legislative History
------------------------------------------------------------------------
Date Action
------------------------------------------------------------------------
H.R. 1882:
May 20, 1999............................ Referred to the Committee on
the Judiciary, and in
addition to the Committee on
Small Business, for a period
to be subsequently determined
by the Speaker, in each case
for consideration of such
provisions as fall within the
jurisdiction of the committee
concerned.
May 20, 1999............................ Referred to House Judiciary,
May 21, 1999............................ Referred to the Subcommittee
on Commercial and
Administrative Law.
May 20, 1999............................ Referred to House Small
Business.
May 25, 1999............................ Committee Hearings Held.
May 25, 1999............................ Ordered to be Reported.
May 25, 2000............................ Reported by the Committee on
Small Business. H. Rept. 106-
643, Part I.
July 20, 2000........................... Referred sequentially to the
House Committee on Ways and
Means for a period ending not
later than Sept. 15, 2000 for
consideration of such
provisions of the bill as
fall within the jurisdiction
of that committee pursuant to
clause 1(s), rule X.
September 15, 2000...................... House Committee on Ways and
Means Granted an extension
for further consideration
ending not later than Sept.
19, 2000.
September 19, 2000...................... House Committee on Ways and
Means Granted an extension
for further consideration
ending not later than Sept.
25, 2000.
September 25, 2000...................... House Committee on Ways and
Means Granted an extension
for further consideration
ending not later than Sept.
26, 2000.
September 26, 2000...................... House Committee on Ways and
Means Granted an extension
for further consideration
ending not later than Sept.
29, 2000.
September 29, 2000...................... House Committee on Ways and
Means Granted an extension
for further consideration
ending not later than Oct. 6,
2000.
October 6, 2000......................... House Committee on Ways and
Means Granted an extension
for further consideration
ending not later than Oct.
13, 2000.
October 13, 2000........................ House Committee on Ways and
Means Granted an extension
for further consideration
ending not later than Oct.
20, 2000.
October 20, 2000........................ House Committee on Ways and
Means Granted an extension
for further consideration
ending not later than Oct.
25, 2000.
October 25, 2000........................ House Committee on Ways and
Means Granted an extension
for further consideration
ending not later than Oct.
26, 2000.
October 26, 2000........................ House Committee on Ways and
Means Granted an extension
for further consideration
ending not later than Oct.
27, 2000.
October 27, 2000........................ House Committee on Ways and
Means Granted an extension
for further consideration
ending not later than Oct.
28, 2000.
October 28, 2000........................ House Committee on Ways and
Means Granted an extension
for further consideration
ending not later than Oct.
29, 2000.
October 29, 2000........................ House Committee on Ways and
Means Granted an extension
for further consideration
ending not later than Oct.
30, 2000.
October 30, 2000........................ House Committee on Ways and
Means Granted an extension
for further consideration
ending not later than Oct.
31, 2000.
October 31, 2000........................ House Committee on Ways and
Means Granted an extension
for further consideration
ending not later than Nov. 1,
2000.
November 1, 2000........................ House Committee on Ways and
Means Granted an extension
for further consideration
ending not later than Nov. 2,
2000.
November 2, 2000........................ House Committee on Ways and
Means Granted an extension
for further considering
ending not later than Nov. 3,
2000.
November 3, 2000........................ House Committee on Ways and
Means Granted an extension
for further consideration
ending not later than Nov. 4,
2000.
November 4, 2000........................ House Committee on Ways and
Means Granted an extension
for further consideration
ending not later than Nov.
14, 2000.
November 14, 2000....................... House Committee on Ways and
Means Granted an extension
for further consideration
ending not later than Dec. 5,
2000.
December 5, 2000........................ House Committee on Ways and
Means Granted an extension
for further consideration
ending not later than Dec. 7,
2000.
December 7, 2000........................ House Committee on Ways and
Means Granted an extension
for further consideration
ending not later than Dec.
15, 2000.
------------------------------------------------------------------------
Need for Legislation
The development of H.R. 1882 has been a two-year effort
spearheaded by the work of the Subcommittee on Regulatory
Reform and Paperwork Reduction and the Subcommittee on
Government Programs and Oversight, which have held three joint
hearings on the Small Business Advocacy Review Panel Process.
The Subcommittees also commissioned a General Accounting Office
(GAO) report that examined how the panel process was being
implemented. The oversight hearings by the Subcommittees, as
well as the GAO report, revealed several areas in which the
panel proceeds could be clarified and strengthened. H.R. 1882
reflects these changes.
The General Accounting Office interviewed a number of small
entity representatives who had participated in the panel
process. Based on these interviews, as well as input from the
participating agencies, the GAO report contained several
suggestions about how the panel process could be strengthened.
These suggestions primarily focused on the following four
issues: (1) adjusting the time frames in which the panels are
conducted, (2) ensuring that there is an adequate mix of
representatives from the small entities that could be affected
by the rule, (3) enhancing the methods that the panels used to
gather comments, and (4) improving the background materials
provided by the regulatory agencies.
Issues of panel process timing were one area that GAO
highlighted. Several small entity representatives who had
participated in the panel process said that they would have
liked to have had more advance notice of panel meetings and
telephone conference calls with the panels. Some of these
representatives said that short advance notice had prevented
them from participating in certain efforts. One individual, who
had been identified as a possible small entity representative,
said that short notice of these meetings prevented him from
participating in the panel process at all. Most of those who
voiced this concern said that they would have liked additional
notice for panel meetings and telephone conference calls to
avoid conflicts with other scheduled commitments.
Other small entity representatives that are interviewed
said that they felt that they were not given enough time to
study the materials that were provided to them by the covered
agency. Many of these small entity representatives also said
that an additional one to two weeks would have allowed them to
consult with others (e.g., members of their professional
associations) before providing comments.
One small entity representative said that requiring
comments from the representatives shortly after they receive
materials from the agencies prevents them from providing the
panels with an in-depth perspective regarding the draft rule.
To address these concerns, H.R. 1882 requires the covered
agency to wait at least 30 days after information is provided
to the small entity representatives before convening a review
panel in order to provide time to review the materials that are
provided to them and to make any necessary scheduling
adjustments.
Another issue raised by the GAO report was the composition
of individuals who are chosen to be small entity
representatives (SERs). A consensus emerged that the best mix
of small entity representatives is one that includes both
individual small business owners and representatives from
associations and other regulatory consultants that represent
the interests of small entities. The individual small business
owners provide valuable `hands-on' insights, while association
representatives and other regulatory consultants generally have
more resources available to devote to examining the proposed
rule and have, in many cases, more expertise to understand the
often technical nature of proposed regulations. H.R. 1882
addresses this by ensuring that the agency has the authority to
identify both sets of individuals to participate as small
entity representatives. Additionally, requiring the Chief
Counsel for Advocacy to concur with each small entity
representative chosen by the agency, as the legislation does,
provides an added check on the selection process to help ensure
that a good mix of SERs is identified.
Another issue that was raised as a result of the GAO report
was the method that the review panels use to collect advice and
recommendations from the small entity representatives. For the
most part, the review panels have relied on telephone
conference calls with the SERs to gather input during the panel
process. While most SERs said that they viewed telephone
conference calls as an efficient way for the review panel to
gather comments, others felt that telephone conference calls
limited the amount of discussion that could take place between
themselves and the panel.
Most of these small entity representatives also expressed a
preference for face-to-face meetings instead of telephone
conference calls because they believed the discussions would be
fuller and would provide greater value to the panels. When
telephone conference calls were used, some small entity
representatives said they found it confusing when there were
numerous participants on the phone at once. One of these
representatives, for example, suggested setting an agenda to
clarify participation in the telephone conference calls. H.R.
1882 helps to address this issue by requiring the review panel
to accommodate requests for face-to-face oral presentations.
This will help to ensure that the small entity representatives
who wish to devote the time and resources to making face-to-
face presentations will have the ability to participate to the
fullest extent. It also recognizes that conference calls are
still probably the most efficient way to gather recommendations
in a timely manner, and allows review panels the ability to
continue using the current method of obtaining comments from
the SERs.
The final major change that H.R. 1882 makes is that it
requires the Internal Revenue Service (IRS) to meet the
requirements of the panel process. The addition of the IRS to
this process reflects the many complaints that this Committee
has received from small businesses across the nation that the
IRS, when developing regulations, repeatedly ignores small
businesses' unique requirements. It is also done with the
understanding that the IRS has historically been abysmal in
meeting the requirements of the regulatory Flexibility Act.
By extending the SBREFA panel process to the IRS, we are
helping small businesses deal with one of the most troublesome
agencies they face. The IRS places one of the largest burdens
on small businesses. The goal of H.R. 1882 is to bring the IRS
regulation-making process into the light of day, and open it up
to discussion. Small businesses must be allowed to participate
in the dialogue. They must be a part of the process. Anything
less is unfair--especially when it involves an institution like
the IRS, which has a major impact on small business.
Section-by-Section Analysis
Section 1. Short Title
Designates the bill as the `Small Business Review Panel
Technical Amendments Act of 1999'.
Section 2. Findings and Purposes
(a) The Congress finds the following:
(1) A vibrant and growing small business sector is critical
to creating jobs in a dynamic economy.
(2) Small businesses bear a disproportionate share of
regulatory costs and burdens.
(3) Federal agencies must consider the impact of their
regulations on small businesses early in the rulemaking
process.
(4) The Small Business Advocacy Review Panel process that
was established by the Small Business Regulatory Enforcement
Fairness Act of 1996 has been effective in allowing small
businesses to participate in rules that are being developed by
the Environmental Protection Agency and the Occupational Safety
and Health Administration.
(b) The purposes of this Act are the following:
(1) To provide a forum for the effective participation of
small businesses in the Federal regulatory process.
(2) To clarify and strengthen the Small Business Advocacy
Review Panel process.
(3) To expand the number of Federal agencies that are
required to convene Small Business Advocacy Review Panels.
Section 3. Ensuring Full Analysis of Potential Impacts on Small
Entities of Rules Proposed by Certain Agencies
Section 3 rewrites section 609(b) of the Regulatory
Flexibility Act (Chapter 6 of Title 5, United States Code),
making several technical amendments to small business advocacy
review panel process. First, it clarifies who has
responsibility for choosing the small entity representatives
(SERs). The current statute allows both the Chief Counsel for
Advocacy and the agency to identify small entity
representatives. This dual appointment method causes confusion
and weakens accountability over the small entity representative
appointment procedure. The legislation corrects this by
specifying that it is the agency's responsibility to choose the
small entity representatives, but requires the Chief Counsel to
concur with each SER identified by the agency. Second, it
clarifies that the covered agency cannot convene the review
panel until at least 30 days after the covered agency transmits
information about the draft proposed rule to the small entity
representatives. This is designed to address the problem that
small entity representatives identified of not having enough
time to review the information that was provided to them. Under
this change, the small entity representatives would have at
least 30 days to review the information provided to them. This
change would also give the agency promulgating the rule some
flexibility in deciding when to convene its review panel, while
at the same time not unnecessarily delaying the process. Third,
it clarifies that a small entity representative shall have the
opportunity to give an oral presentation to the review panel if
the small entity representative so desires. Fourth, it changes
the way in which the final report of the review panel is
handled. Currently, there is no requirement that the report of
the review panel be printed in the Federal Register. Nor is
there any requirements as to when the report of the review
panel should be made public as part of the rulemaking record.
As a practical matter, not everyone can come to Washington, DC,
to inspect a covered agency's rulemaking record. The
legislation merely requires that the report of the review panel
be printed in the Federal Register within 120 days. A number of
those who have participated in the panel process have
complained that they did not know whether their advice and
recommendations were addressed by the covered agency because
the panel report was not made public in a timely manner. The
legislation corrects this situation by requiring a covered
agency to print the report of the review panel in the Federal
Register together with the notice of proposed rulemaking, or as
a separate item if the notice of proposed rulemaking occurs
more than 120 days after the report is completed.
Section 4. Definitions
Section 4 amends section 609(d) of the Regulatory
Flexibility Act (Chapter 6 of Title 5, United States Code) to
include the Internal Revenue Service of the Department of the
Treasury as one of the covered agencies that must convene small
business advocacy review panels. Currently, the advocacy review
panel requirements only apply to the Environmental Protection
Agency and the Occupational Safety and Health Administration of
the Department of Labor.
Section 4 also defines the term ``small entity
representative'' to mean a small entity, which is already
defined in the Regulatory Flexibility Act, or an individual or
organization that represents a small entity. This clarification
was made in the legislation to underscore the fact that
representatives from small business associations and other
trade groups, as well as regulatory consultants, often have
more resources and expertise available to participate in the
panel process than do individual and small entities. There is
no disagreement that actual small business owners bring
experience and insights that are vital to a successful review
panel. However, representatives of trade associations and other
regulatory consultants who represent the interests of small
entities can also be valuable participants that should not be
excluded from the panel process.
Section 5. Effective Date
This section states that the changes made by H.R. 1882
shall take effect ninety days after the legislation is enacted.
5.13 H.R. 2392--Small Business Innovation Research Program
Reauthorization Act of 2000, Public Law No. 106-554
Legislative History
------------------------------------------------------------------------
Date Action
------------------------------------------------------------------------
H.R. 2392:
June 30, 1999........................... Referred to the Committee on
Small Business, and in
addition to the Committee on
Science, for a period to be
subsequently determined by
the Speaker, in each case for
consideration of such
provisions as fall within the
jurisdiction of the committee
concerned.
June 30, 1999........................... Referred to House Small
Business.
July 1, 1999............................ Committee Consideration and
Mark-up Session Held.
July 1, 1999............................ Ordered to be Reported
(Amended) by Voice Vote.
June 30, 1999........................... Referred to House Science.
September 23, 1999...................... Reported by the Committee on
Small Business. H. Rept. 106-
329, Part I.
September 23, 1999...................... House Committee on Science
Granted an extension for
further consideration ending
not later than Sept. 23,
1999.
September 23, 1999...................... Committee on Science
discharged.
September 23, 1999...................... Placed on the Union Calendar,
Calendar No. 193.
September 27, 1999...................... Mrs. Kelly moved to suspend
the rules and pass the bill,
as amended.
September 27, 1999...................... Considered under suspension of
the rules. (consideration: CR
H8762-8767).
September 27, 1999...................... On motion to suspend the rules
and pass the bill, as amended
Agreed to by voice vote.
(text: CR H8763).
September 27, 1999...................... Motion to reconsider laid on
the table Agreed to without
objection.
September 28, 1999...................... Received in the Senate and
read twice and referred to
the Committee on Small
Business.
March 21, 2000.......................... Committee on Small Business.
Ordered to be reported with
an amendment in the nature of
a substitute favorably.
May 10, 2000............................ Committee on Small Business.
Reported to Senate by Senator
Bond with an amendment in the
nature of a substitute. With
written report No. 106-289.
May 10, 2000............................ Placed on Senate Legislative
Calendar under General
Orders. Calendar No. 541.
July 19, 2000........................... Measure laid before Senate.
(consideration: CR S7285-
7293; text of measure as
reported in Senate: CR S7285-
7287)
July 19, 2000........................... S.AMDT.3944 Amendment SA 3944
proposed by Senator Burns for
Senator Bond. (consideration:
CR S7291-7293) To provide a
complete substitute.
July 19, 2000........................... S.AMDT.3944 Amendment SA 3944
agreed to in Senate by
Unanimous Consent.
July 19, 2000........................... The committee substitute as
amended agreed to by
Unanimous Consent.
July 19, 2000........................... Passed Senate with an
amendment by Unanimous
Consent.
July 20, 2000........................... Message on Senate action sent
to the House.
September 25, 2000...................... House agreed to Senate
amendment with an amendment
pursuant to H. Res. 590.
September 26, 2000...................... Message on House action
received in Senate and at
desk: House amendment to
Senate amendment.
October 2, 2000......................... Senate agreed to the House
amendment to the Senate
amendment with an amendment
(SA 4286) by Unanimous
Consent. (consideration: CR
S9631-9642; text as Senate
agreed to House amendments CR
S9631-9639).
October 2, 2000......................... S.AMDT.4286 Amendment SA 4286
proposed by Senator Kyl for
Senator Bond. (consideration:
CR S9639; text: CR S9639) To
provide for a complete
substitute.
October 2, 2000......................... S.AMDT.4286 Amendment SA 4286
agreed to in Senate by
Unanimous Consent.
October 3, 2000......................... Message on Senate action sent
to the House.
October 25, 2000........................ Included in H.R. 5545.
H.R. 5545:
October 25, 2000........................ Referred to the House
Committee on Small Business.
(Several bills are engrossed
by reference in the H.R. 2614
conference report: H.Rept.
106-1004. This includes H.R.
5538, the Minimum Wage Act of
2000; H.R. 5542, the Taxpayer
Relief Act of 2000; H.R.
5543, the Medicare, Medicaid,
and SCHIP Benefits
Improvement and Protection
Act of 2000; H.R. 5544, the
Pain Relief Promotion Act of
2000; and H.R. 5545, the
Small Business
Reauthorization Act of 2000.
The bill texts are included
in the conference report.)
H.R. 2614:
October 26, 2000........................ Conference report H. Rept. 106-
1004 filed. (text of
conference report: CR 10/25/
2000 H10909-11188).
October 26, 2000........................ Rules Committee Resolution H.
Res. 652 Reported to House.
Rule provides for
consideration of the
conference report to H.R.
2614 with 1 hour of general
debate. Previous question
shall be considered as
ordered without intervening
motions except motion to
recommit with or without
instructions. Waives points
of order against the
conference report and against
its consideration.
October 26, 2000........................ Conferees agreed to file
conference report.
October 26, 2000........................ Conference papers: Senate
report and manager's
statement held at the desk in
Senate.
October 26, 2000........................ Rule H. Res. 652 passed House.
October 26, 2000........................ Mr. Talent brought up
conference report H. Rept.
106-1004 for consideration
under the provisions of H.
Res. 652.
October 26, 2000........................ The previous question was
ordered without objection.
October 26, 2000........................ On agreeing to the conference
report Agreed to by the Yeas
and Nays: 237-174, 1 Present
(Roll no. 560).
(consideration: CR H11243-
11264)
October 26, 2000........................ Motions to reconsider laid on
the table Agreed to without
objection.
October 26, 2000........................ Motion to proceed to
consideration of measure
agreed to in Senate by Yea-
Nay Vote. 55-40. Record Vote
Number: 286. (consideration:
CR S11097-11098)
October 26, 2000........................ Motion to proceed to
consideration of conference
report to accompany H.R. 2614
agreed to by Unanimous
Consent.
October 26, 2000........................ Conference report considered
in Senate by motion.
(consideration: CR S11098-
11100, S11104, S11107-11111)
October 31, 2000........................ Motion to proceed to
consideration of conference
report to accompany H.R. 2614
agreed to by Unanimous
Consent.
October 31, 2000........................ Conference report considered
in Senate by motion. (The
H.R. 2614 conference report
[H. Rept. 106-1004]
incorporated several bills.
This included H.R. 5538--
Minimum Wage; H.R. 5542--
Taxapyer Relief; H.R. 5543--
Medicare, Medicaid, and SCHIP
Benefits Improvement and
Protection; H.R. 5544--Pain
Relief Promotion; and H.R.
5545--Small Business
Reauthorization. H.R. 5661 is
a subsequent Medicare,
Medicaid and SCHIP Benefits
Improvement and Protection
bill. H.R. 5667 is a
subsequent Small Business
Reauthorization bill. H.R.
4577, Consolidated
Appropriations Act 2001,
incorporates by reference the
provisions of H.R. 5661, H.R.
5667, and other bills. The
text of these bills is
printed in the H.R. 4577
conference report: H. Rept.
106-1033 [text of conference
report: CR 12/15/2000 H12100-
12439].)
H.R. 5667:
December 15, 2000....................... Referred to the House
Committee on Small Nusiness
incorporating the provisions
of H.R. 2392.
December 15, 2000....................... Enacted by reference in H.R.
4577 (H. Conf. Rept. 106-
1033)
H.R. 4577:
December 15, 2000....................... Conference report H. Rept. 106-
1033 filed.
December 15, 2000....................... Mr. Young (FL) brought up
conference report H. Rept.
106-1033 by previously agreed
to special order.
December 15, 2000....................... The previous question was
ordered without objection.
December 15, 2000....................... On agreeing to the conference
reprot Agreed to by the Yeas
and Nays: 292-60 (Roll no.
603).
December 15, 2000....................... Motions to reconsider laid on
the table Agreed to without
objection.
December 15, 2000....................... Senate agreed to conference
report by Unanimous Consent.
December 15, 2000....................... Message on Senate action sent
to the House.
December 15, 2000....................... Cleared for White House.
December 15, 2000....................... Presented to President.
December 21, 2000....................... Signed by the President as
Pub. L. No. 106-554 (H.R.
4577, Consolidated
Appropriations Act 2001,
incorporates the provisions
of several bills by
reference. This includes H.R.
5656--Labor HHS Education
Appropriations; H.R. 5657--
Legislative Branch
Appropriations; H.R. 5658--
Treasury Appropriations; H.R.
5666--Miscellaneous
Appropriations--except
section 123 relating to the
enactment of H.R. 4904; H.R.
5660--Commodity Futures
Modernization; H.R. 5661--
Medicare, Medicaid and SCHIP
Benefits Improvement and
Protection; H.R. 5662--
Community Renewal Tax Relief
and Medical Savings Accounts;
H.R. 5663--New Markets
Venture Capital Program; and
H.R. 5667--Small Business
Reauthorization. The text of
thee bills is printed in the
H.R. 4577 conference report:
H. Rept. 106-1033 [text of
conference report: CR 12/15/
2000 H12100-12439].)
------------------------------------------------------------------------
Need for Legislation
The Small Business Innovation Research Program
Reauthorization Act of 2000 (H.R. 2392) was introduced on June
30, 1999, and referred to the House committees on Small
Business and Science. Both Committees held hearings and the
House Committee on Small Business reported H.R. 2392 on
September 23, 1999 (H.Rept. 106-329). The purpose of the bill
was to reauthorize the program and improve certain technical
areas concerning right to data, reporting requirements. In the
interest of moving the bill to the floor of the House of
Representatives promptly, the Committee on Science agreed not
to exercise its right to report the legislation, provided that
the House Committee on Small Business agreed to add the
selected portions of the Science Committee version of the
legislation, as Sections 8 through 11 of the House floor text
of H.R. 2392. H.R. 2392 passed the House without further
amendment on September 27.
On March 21, 2000, the Senate Committee marked-up H.R. 2392
and on May 10, 2000, reported the bill (S.Rept. 106-289). The
Senate Committee struck several of the sections originating
from the House Committee on Science and added sections not in
the House-passed legislation, including a requirement that
Federal agencies with Small Business Innovation Research (SBIR)
programs report their methodology for calculating their SBIR
budgets to the Small Business Administration (SBA) and a
program to assist states in the development of small high-
technology businesses. Negotiations then began among the
leadership of the Senate and House Committees on Small Business
and the House Committee on Science (hereinafter referred to as
the three committees). The resultant compromise text contains
all major House and Senate provisions, some of which have been
amended to reflect a compromise position. A section-by-section
explanation of the revised text follows. For purposes of this
statement, the bill passed by the House of Representatives is
referred to as the ``House version'' and the bill reported by
the Senate Committee on Small Business is referred to as the
``Senate version.''
Section-by-Section Analysis
Section 101. Short Title; Table of Contents
The compromise text uses the Senate short title: ``Small
Business Innovation Research Program Reauthorization Act of
2000.'' The table of contents lists the sections in the
compromise text.
Section 102. Findings
The House and Senate versions of the findings are very
similar. The compromise text uses the House version of the
findings.
Section 103. Extension of the SBIR Program
The House version extends the SBIR program for seven years
through September 30, 2007. The Senate version extends the
program for ten years through September 30, 2010. The
compromise text extends the program for eight years through
September 30, 2008.
Section 104. Annual Report
The House version provides for the annual report on the
SBIR program prepared by the SBA to be sent to the Committee on
Science, as well as to the House and Senate Committees on Small
Business that currently receive it. The Senate version did not
include this section. The compromise text adopts the House
language.
Section 105. Third Phase Assistance
The compromise text of this technical amendment is
identical to both the House and Senate versions.
Section 106. Report on Programs for Annual Performance Plan
This section requires each agency that participates in the
SBIR program to submit to Congress a performance plan
consistent with the Government Performance and Results Act. The
House and Senate versions have the same intent. The compromise
text uses the House version.
Section 107. Output and Outcome Data
Both the House and Senate versions contain sections
enabling the collection and maintenance of information from
awardees as is necessary to assess the SBIR program. Both the
Senate and House versions require the SBA to maintain a public
database at SBA containing information on awardees from all
SBIR agencies. The Senate version adds paragraphs to the public
database section dealing with database identification of
businesses or subsidiaries established for the commercial
application of SBIR products or services and the inclusion of
information regarding mentors and mentoring networks. The House
version further requires the SBA to establish and maintain a
government database, which is exempt from the Freedom of
Information Act and is to be used solely for program
evaluation. Outside individuals must sign a non-disclosure
agreement before gaining access to the database. The compromise
text contains each of these provisions, with certain
modifications and clarifications, which are addressed below.
With respect to the public database, the compromise text
makes clear that proprietary information, so identified by a
small business concern, will not be included in the public
database. With respect to the government database, the
compromise text clarifies that the inclusion of information in
the government database is not to be considered publication for
purposes of patent law. The compromise text further permits the
SBA to include in the government database any information
received in connection with an SBIR award the SBA
Administrator, in conjunction with the SBIR agency program
managers, consider to be relevant and appropriate or that the
Federal agency considers to be useful to SBIR program
evaluation.
With respect to small business reporting for the government
database, the compromise text directs that when a small
business applies for a second phase award it is required to
update information in the government database. If an applicant
for a second phase award receives the award, it shall update
information in the database concerning the award at the
termination of the award period and will be requested to
voluntarily update the information annually for an additional
period of five years. This reporting procedure is similar to
current Department of Defense requirements for the reporting of
such information. When sales or additional investment
information is related to more than one second phase award is
involved, the compromise text permits a small business to
apportion the information among the awards in any way it
chooses, provided the apportionment is noted on all awards so
apportioned.
Section 108. National Research Council Reports
The House version requires the four largest SBIR program
agencies to enter into an agreement with the National Research
Council (NRC) to conduct a comprehensive study of how the SBIR
program has stimulated technological innovation and used small
businesses to meet Federal research and development needs to
make recommendations on potential improvements to the program.
The Senate version contains no similar provision. The study was
designed to answer questions remaining from the House
Committees' reviews of these programs and to make sure that a
current evaluation of the program is available when the program
next comes up for reauthorization.
The compromise text makes several changes to the House
text. The compromise text adds the National Science Foundation
to the agencies entering the agreement with the NRC and
requires the agencies to consult with the SBA in entering such
agreement. It also expands on the House version, which requires
a review of the quality of SBIR research, to require a
comparison of the value of projects conducted under SBIR with
those funded by other Federal research and development
expenditures. The compromise text further broadens the House
version's review of the economic rate of return of the SBIR
program to require an evaluation of the economic benefits of
the SBIR program, including economic rate of return, and a
comparison of the economic benefits of the SBIR program with
that of other Federal research and development expenditures.
The compromise text allows the NRC to choose an appropriate
time-frame for such analysis that results in a fair comparison.
The three committees believe that a comprehensive report on
the SBIR program and its relation to other Federal research
expenditures will be useful in program oversight and will
provide Congress with an understanding of the effects of
extramural Federal research and development funding provided to
large and small businesses and universities.
Section 109. Federal Agency Expenditures for the SBIR Program
The Senate version requires each Federal agency with an
SBIR program to provide the SBA with a report describing its
methodology for calculating its extramural budget for purposes
of SBIR program set-aside and requires the Administrator of the
SBA to include an analysis of the methodology from each agency
in its annual report to the Congress. The House version has no
similar provision. The compromise text follows the Senate text
except that it specified that each agency, rather than the
agency's comptroller, shall submit the agency's report to the
Administrator. The three committees intend that each agency's
methodology include an itemization of each research program
that is excluded from the calculation of its extramural budget
for SBIR purposes as well as a brief explanation of why the
agency feels each excluded program meets a particular
exemption.
Section 110. Policy Directive Modifications
The House version includes policy directive modifications
in Section 9 and the requirement of a second phase commercial
plan in Section 10. The Senate version includes policy
directive modifications in Section 6. The Senate version and
now the compromise text require the Administrator to make
modifications to SBA's policy directives 120 days after the
date of enactment rather than the 30 days contained in the
House version. The compromise text drops the House policy
directive dealing with awards exceeding statutory dollar
amounts and time limits because this flexibility is already
being provided administratively. Addressed below is a
description of the policy directive modifications contained in
the compromise text that were not included in both the Senate
version and the House version.
Section 10 of the House version requires the SBA to modify
its policy directives to require that small businesses provide
a commercial plan with each application for a second-phase
award. The Senate version does not contain a similar provision.
The compromise text requires the SBA to modify its policy
directives to require that a small businesses provide a
``succinct commercialization plan for each second phase award
moving towards commercialization.'' The three committees
acknowledge that commercialization is a current element of the
SBIR program. The statutory definition of SBIR, which is not
amended by H.R. 2392, includes ``a second phase, to further
develop proposals which meet particular program needs, in which
awards shall be made based on the scientific and technical
merit and feasibility of the proposals, as evidenced by the
first phase, considering among other things the proposal's
commercial potential * * *'', and lists evidence of commercial
potential as the small business's commercialization record,
private sector funding commitments, SBIR Phase III commitments,
and the presence of other indicators of the commercial
potential. The three committees do not intend that the addition
of a commercialization plan either increase or decrease the
emphasis an agency places on the commercialization when
reviewing second-phase proposals. Rather, the commercialization
plan will give SBIR agencies a means of determining the
seriousness with which individual applicants approach
commercialization.
The commercialization plan, while concise, should show that
the business has thought through both the steps it must take to
prepare for the fruits of the SBIR award to enter the
commercial marketplace or government procurement and the steps
to build business expertise as needed during the SBIR second
phase time period. The three committees intend that agencies
take into consideration the stage of development of the product
or process in deciding whether an appropriate commercialization
plan has been submitted. In those instances when at the time of
the SBIR Phase II proposal, the grantee cannot identify either
a product or process with the potential eventually to enter
either the commercial or the government marketplace, no
commercialization plan is required.
The compromise text also adds new provisions that were not
contained in either the Senate version or the House version.
Current law (Section 9(j)(3)(C) of the Small Business Act)
requires that the Administrator put in place procedures to
ensure, to the extent practicable, that an agency which intends
to pursue research, development or production of a technology
developed by a small business concern under an SBIR program
enter into follow-on, non-SBIR funding agreements with the
small business concern for such research, development, or
production.
The three committees are concerned that agencies sometimes
provide these follow-on activities to large companies who are
in incumbent positions or through contract bundling without
written justification or without the statutorily required
documentation of the impracticability of using the small
business for the work. So that the SBA and the Congress can
track the extent of this problem, the compromise text requires
agencies to record and report each such occurrence and to
describe in writing why it is impractical to provide the
research project to the original SBIR company. Additionally,
the compromise text directs the SBA to develop policy
directives to implement the new subsection (v), Simplified
Reporting Requirements. This subsection requires that the
directive regarding collection of data be designed to minimize
the burden on small businesses; to permit the updating the
database by electronic means; and to use standardized
procedures for the collection and reporting of data.
Section 103(a)(2) of P.L. 102-564, which reauthorized the
SBIR program in 1992, added language to the description of a
third phase award which made it clear that the third phase is
intended to be a logical conclusion of research projects
selected through competitive procedures in phases one and two.
The Report of the House Committee on Small Business (H. Rept.
102-554, Pt. I) provides that the purpose of that clarification
was to indicate the Committee's intent that an agency which
wishes to fund an SBIR project in phase three (with non-SBIR
monies) or enter into a follow-up procurement contract with an
SBIR company, need not conduct another competition in order to
satisfy the Federal Competition in Contracting Act (CICA).
Rather, by phase three the project has survived two
competitions and thus has already satisfied the requirements of
CICA, set forth in section 2302(2)(E) of that Act, as they
apply to the SBIR program. As there has been confusion among
SBIR agencies regarding the intent of this change, the three
committees reemphasize the intent initially set forth in H.
Rpt. 102-554, Pt. 1, including the clarification that follow-on
phase III procurement contracts with an SBIR company may
include procurement of products, services, research, or any
combination intended for use by the Federal government.
Section 111. Federal and State Technology Partnership Program
This section establishes the FAST program from the Senate
version, which is a competitive matching grant program to
encourage states to assist in the development of high-
technology businesses. The House version does not contain a
similar provision. The most significant changes from the Senate
version in the compromise text are an extension of the maximum
duration of awards from three years to five and the lowering of
the matching requirement for funds assisting businesses in low
income areas to 50 cents per federal dollar, as advocated by
Ranking Member Velazquez of the House Small Business Committee.
The compromise text combines the definitions found in the
Senate version of this section and the mentoring networks
section.
Section 112. Mentoring Networks
The Senate version sets forth criteria for mentoring
networks that organizations are encouraged to establish with
matching funds from the FAST program and creates a database of
small businesses willing to act as mentors. The compromise
text, except for relocating the program definitions to Section
111, is the same as the Senate text. The House version did not
contain a similar provision.
Section 113. Simplified Reporting Requirements
This section is not in either the House or the Senate
versions. It requires the SBA Administrator to work with SBIR
program agencies on standardizing SBIR reporting requirements
with the ultimate goal of making the SBA's SBIR database more
user friendly. This provision requires the SBA to consider the
needs of each agency when establishing and maintaining the
database. Additionally, it requires the SBA to take measures to
reduce the administrative burden on SBIR program participants
whenever possible including, for example, permitting updating
by electronic means.
Section 114. Rural Outreach Program Extension
This provision, which was not in either the House or the
Senate versions, extends the life and authorization for
appropriations for the Rural Outreach Program of the Small
Business Administration for four additional years through
fiscal year 2005. It is the intent of the three committees that
this program be evaluated on the same schedule and in the same
manner as the FAST program. Among other things, the evaluation
should examine the extent to which the programs complement or
duplicate each other. The evaluation should also include
recommendations for improvements to the program, if any.
5.14 H.R. 2614 The Certified Development Company Program Improvement
Act of 1999, Public Law No. 106-554
Legislative History
------------------------------------------------------------------------
Date Action
------------------------------------------------------------------------
H.R. 2614:
July 27, 1999........................... Referred to the House
Committee on Small Business.
July 29, 1999........................... Committee Consideration and
Mark-up Session Held.
July 29, 1999........................... Ordered to be Reported by
Voice Vote.
August 2, 1999.......................... Reported by the Committee on
Small Business. H. Rept. 106-
278.
August 2, 1999.......................... Placed on the Union Calendar,
Calendar No. 166.
August 2, 1999.......................... Mrs. Kelly moved to suspend
the rules and pass the bill.
August 2, 1999.......................... Considered under suspension of
the rules. (consideration: CR
H6789-6792)
August 2, 1999.......................... On motion to suspend the rules
and pass the bill Agreed to
by voice vote. (text: CR
H6789-6791)
August 2, 1999.......................... Motion to reconsider laid on
the table Agreed to without
objection.
August 3, 1999.......................... Received in the Senate and
read twice and referred to
the Committee on Small
Business. 3/21/2000:
Committee on Small Business.
Ordered to be reported with
an amendment in the nature of
a substitute favorably.
May 9, 2000............................. Committee on Small Business.
Reported to Senate by Senator
Bond with an amendment in the
nature of a substitute. With
written report No. 106-280.
May 9, 2000............................. Placed on Senate Legislative
Calendar under General
Orders. Calendar No. 531.
June 14, 2000........................... Measure laid before Senate.
(consideration: CR S5154-
5159; text of measure as
reported in Senate: CR S5154-
5155)
June 14, 2000........................... S.AMDT.3431 Amendment SA 3431
proposed by Senator Allard
for Senator Bond.
(consideration: CR S5156) To
make an amendment with
respect to timely
Administration action on
geographic expansion
applications, use of
unobigated funds, and the
HUBZone program, and for
other purposes.
June 14, 2000........................... S.AMDT.3431 Amendment SA 3431
agreed to in Senate by
Unanimous Consent. (text CR
S5156)
June 14, 2000........................... The committee substitute as
amended agreed to by
Unanimous Consent.
June 14, 2000........................... Passed Senate with an
amendment by Unanimous
Consent.
June 15, 2000........................... Message on Senate action sent
to the House.
June 27, 2000........................... House agreed to Senate
amendment with an amendment
pursuant to H. Res. 533.
(consideration: CR H5190-
5194)
June 28, 2000........................... Message on House action
received in Senate and at
desk: House amendment to
Senate amendment.
July 25, 2000........................... Senate disagreed to House
amendment requested
conference and appointed
conferees. Bond, Burns and
Kerry. (consideration: CR
S7574-7575; text as Senate
disagreed to House amendment:
CR S7574-7575)
July 26, 2000........................... Message on Senate action sent
to the House.
October 11, 2000........................ Mrs. Kelly asked unanimous
consent that the House insist
upon its amendment to the
Senate amendment, and agree
to a conference.
October 11, 2000........................ On motion that the House
insist upon its amendment to
the Senate amendment, and
agree to a conference Agreed
to without objection.
(consideration: CR H9796)
October 11, 2000........................ The Speaker appointed
conferees: Talent, Armey, and
Velazquez.
October 11, 2000........................ Motion to reconsider laid on
the table Agreed to without
objection.
October 26, 2000........................ Conference report H. Rept. 106-
1004 filed. (text of
conference report: CR 10/25/
2000 H10909-11188)
October 26, 2000........................ Rules Committee Resolution H.
Res. 652 Reported to House.
Rule provides for
consideration of the
conference report to H.R.
2614 with 1 hour of general
debate. Previous question
shall be considered as
ordered without intervening
motions except motion to
recommit with or without
instructions. Waives points
of order against the
conference report and against
its consideration.
October 26, 2000........................ Conferees agreed to file
conference report.
October 26, 2000........................ Conference papers: Senate
report and manager's
statement held at the desk in
Senate.
October 26, 2000........................ Rule H. Res. 652 passed House.
October 26, 2000........................ Mr. Talent brought up
conference report H. Rept.
106-1004 for consideration
under the provisions of H.
Res. 652.
October 26, 2000........................ The previous question was
ordered without objection.
October 26, 2000........................ On agreeing to the conference
report Agreed to by the Yeas
and Nays: 237-174, 1 Present
(Roll no. 560).
(consideration: CR H11243-
11264)
October 26, 2000........................ Motions to reconsider laid on
the table Agreed to without
objection.
October 26, 2000........................ Moton to proceed to
consideration of measure
agreed to in Senate by Yea-
Nay Vote. 55-40. Record Vote
Number: 286. (consideration:
CR S11097-11098)
October 26, 2000........................ Motion to proceed to
consideration of conference
report to accompany H.R. 2614
agreed to by Unanimous
Consent.
October 26, 2000........................ Conference report considered
in Senate by motion.
(consideration: CR S11098-
11100, S11104, S11107-11111)
October 31, 2000........................ Motion to proceed to
consideration of conference
report to accompany H.R. 2614
agreed to by Unanimous
Consent.
October 31, 2000........................ Conference report considered
in Senate by motion.
(consideration: CR revisions
of H.R. 5661, H.R. 5667, and
other bills. The text of
these bills is printed in the
H.R. 4577 conference report:
H. Rept. 106-1033 [text of
conference report: CR 12/15/
2000 H12100-12439].)) (The
H.R. 2614 conference report
[H. Rept. 106-1004]
incorporated several bills.
This included H.R. 5538--
Minimum Wage; H.R. 5542--
Taxpayer Relief; H.R. 5543--
Medicare, Medicaid, and SCHIP
Benefits Improvement and
Protection; H.R. 5544--Pain
Relief Promotion; and H.R.
5545--Small Business
Reauthorization. H.R. 5661 is
a subsequent Medicare,
Medicaid and SCHIP Benefits
Improvement and Protection
bill. H.R. 5667 is a
subsequent Small Business
Reauthorization bill. H.R.
4577, Consolidated
Appropriations Act 2001,
incorporates by reference the
provisions of H.R. 5661, H.R.
5667, and other bills. The
text of these bills is
printed in the H.R. 4577
conference report: H. Rept.
106-1033 [text of conference
report: CR 12/15/2000 H12100-
12439].)
H.R. 5667:
December 15, 2000....................... Referred to the House
Committee on Small Business
incorporating the provisions
of H.R. 2614.
December 15, 2000....................... Enacted by reference in H.R.
4577 (H. Conf. Rept. 106-
1033)
H.R. 4577:
December 15, 2000....................... Conference report H. Rept. 106-
1033 filed.
December 15, 2000....................... Mr. Young (FL) brought up
conference report H. Rept.
106-1033 by previously agreed
to special order.
December 15, 2000....................... The previous question was
ordered without objection.
December 15, 2000....................... On agreeing to the conference
report Agreed to by the Yeas
and Nays: 292-60 (Roll no.
603).
December 15, 2000....................... Motions to reconsider laid on
the table Agreed to without
objection.
December 15, 2000....................... Senate agreed to conference
report by Unanimous Consent.
December 15, 2000....................... Message on Senate action sent
to the House.
December 15, 2000....................... Cleared for White House.
December 15, 2000....................... Presented to President.
December 21, 2000....................... Signed by President as Pub. L.
No. 106-554 (H.R. 4577,
Consolidated Appropriations
Act 2001, incorporates the
provisions of several bills
by reference. This includes
H.R. 5656--Labor HHS
Education Appropriations;
H.R. 5657--Legislative Branch
Appropriations; H.R. 5658--
Treasury Appropriations; H.R.
5666--Miscellaneous
Appropriations--except
section 123 relating to the
enactment of H.R. 4904; H.R.
5660--Commodity Futures
Modernization; H.R. 5661--
Medicare, Medicaid and SCHIP
Benefits Improvement and
Protection; H.R. 5662--
Community Renewal Tax Relief
and Medical Savings Accounts;
H.R. 5663--New Markets
Venture Capital Program; and
H.R. 5667--Small Business
Reauthorization. The text of
these bills is printed in the
H.R. 4577 conference report:
H. Rept. 106-1033 [text of
conference report: CR 12/15/
2000 H12100-12439].)
------------------------------------------------------------------------
Need for Legislation
It has been ten years since the Committee acted to increase
the maximum guarantee amount in the 504 program. To keep pace
with inflation, the maximum guarantee amount should be
increased to approximately $1,250,000. However, the Committee
believes that a simple increase to $1,000,000 is sufficient.
This increase is especially needed in the 504 program because
it is primarily a real estate based program, and the cost of
commercial real estate has increased markedly in the last
several years.
The 504 program currently operates with a zero subsidy
rate. Like other credit programs, pursuant to the Budget Act of
1990, the 504 program is funded according to Office of
Management and Budget calculations of the annual taxpayer
subsidy cost of the program. This subsidy cost is calculated by
an estimation of the net present value of one year's loans plus
fees and recoveries from defaulted loans minus losses. Losses
are estimated based on historical assumptions. The fees in the
504 program cover all these costs resulting in a program that
operates at no cost to the taxpayer. H.R. 2614 will reauthorize
these fees.
H.R. 2614 adds women-owned businesses to the current list
of businesses eligible for the larger public policy oriented
loans of up to $1,300,000. This continues the Committee's
efforts to increase SBA's assistance to women-owned businesses.
The Committee has noted the increasingly important role women-
owned businesses play in the economy and believes this change
is needed to ensure the expansion of this sector of our
economy.
The legislation makes the Premier Certified Lender Program
pilot and the Liquidation Pilot Program permanent. Both of
these programs have shown the benefits of granting increased
lending and liquidation authority to the CDCs.
In response to SBA's plans to implement asset sales, H.R.
2614 includes language requiring the SBA to notify CDCs prior
to including a 504 loan in an asset sale. The committee takes
this action in order to ensure there is adequate cooperation.
The Committee supports the SBA's intent to move forward with
the asset sales program, but does not wish this action to come
at the expense of the SBA's partners.
Section-by-Section Analysis
Section 1. Short Title
This Act may be cited as the ``Certified Development
Company Program Improvements Act of 1999.''
Section 2. Maximum Debenture Size
Maximum loan/debenture size is increased from $750,000 to
$1,000,000 for regular debentures. Public policy loan/
debentures are increased from $1,000,000 to $1,300,000 for
public policy debentures. This increase is commensurate with
inflation since the current debenture levels were established.
Section 3. Women-owned Businesses
Women-owned businesses are added to the list of concerns
eligible for the higher debentures available for the policy
concerns. Current policy goals include lending to low-income
and rural areas, and loans to businesses owned by minorities.
Section 4. Fees
Currently, the 504 program levies fees on the borrower,
CDC, and the participating bank. The bank pays a one-time fee
whereas the borrower and CDC pay a percentage of the
outstanding balance annually in order to provide operational
funding for the 504 program. Currently these fees sunset on
October 1, 2000. This legislation would continue the fees
though October 1, 2003.
Section 5. Premier Certified Lenders Program
The Preferred Certified Lenders Program is granted
permanent status. The current demonstration program terminates
at the end of FY 2000.
Section 6. Sale of Certain Defaulted Loans
SBA is required to give any certified lender with
contingent liability 90 days notice prior to including a
defaulted loan in a bulk sale of loans. No loan may be sold
without permitting prospective purchasers to examine SBA
records on the loan.
Section 7. Loan Liquidation
Section 510 is added to the Small Business Investment Act
of 1958 in order to create a program permitting CDCs to handle
the liquidation of defaulted loans. This program replaces the
pilot program authorized by PL 105-135, the Small Business
Reauthorization Act of 1997. A permanent program would permit
OMB to score savings achieved by the program when computing the
subsidy rate for the 504 program.
In order to participate in the liquidation program, a CDC
must have made at least 10 loans per year for the past three
years and have at least one employee with 2 years of
liquidation experience or be a member of the Accredited Lenders
Program with at least one employee with 2 years of liquidation
experience. Both groups are required to receive training. PCLP
participants and current participants in the pilot program
automatically qualify.
CDCs have the authority to litigate as necessary to
foreclose and liquidate, but SBA could assume control of the
litigation if the outcome might adversely affect SBA's
management of the program or if SBA has additional legal
remedies not available to the CDC. All Section 510 participants
are required to submit a liquidation plan to SBA for approval,
and SBA has 15 days to approve, deny, or express concern with
the plan. Further SBA approval of routine liquidation
activities is not required.
CDCs are able to purchase indebtedness with SBA approval,
and SBA is required to respond to such a request within 15
days. Likewise, CDCs are required to seek SBA approval of any
workout plan, and SBA must respond to that request within 15
days. With SBA approval, a CDC may compromise indebtedness.
Such approval must be granted, denied, or explained within 15
days of receipt by SBA.
5.15 H.R. 2615--To Amend the General Business Loan Program, Public Law
No. 1066-554
Legislative History
------------------------------------------------------------------------
Date Action
------------------------------------------------------------------------
July 27, 1999........................... Referred to the House
Committee on Small Business.
July 29, 1999........................... Committee Consideration and
Mark-up Session Held.
July 29, 1999........................... Ordered to be Reported by
Voice Vote.
August 2, 1999.......................... Reported by the Committee on
Small Business. H. Rept. 106-
279.
August 2, 1999.......................... Placed on the Union Calendar
No. 167.
August 2, 1999.......................... Mr. Talent moved to suspend
the rules and pass the bill.
August 2, 1999.......................... Considered under suspension of
the rules.
August 2, 1999.......................... On motion to suspend the rules
and pass the bill Agreed to
by voice vote.
August 2, 1999.......................... Motion to reconsider laid on
the table Agreed to without
objection.
August 3, 1999.......................... Received in the Senate and
read twice and referred to
the Committee on Small
Business.
October 25, 2000........................ Included in H.R. 5545.
H.R. 5545:
October 25, 2000........................ Referred to the House
Committee on Small Business.
(Several bills are engrossed
by reference in the H.R. 2614
conference report: H. Rept.
106-1004. This includes H.R.
5538, the Minimum Wage Act of
2000; H.R. 5542, the Taxpayer
Relief Act of 2000; H.R.
5543, the Medicare, Medicaid,
and SCHIP Benefits
Improvement and Protection
Act of 2000; H.R. 5544, the
Pain Relief Promotion Act of
2000; and H.R. 5545, the
Small Business
Reauthorization Act of 2000.
The bill texts are included
in the conference report.)
H.R. 2614:
October 26, 2000........................ Conference report H. Rept. 106-
1004 filed (text of
conference report: CR 10/25/
2000 H10909-11118)
October 26, 2000........................ Rules Committee Resolution H.
Res. 652 Reported to House.
Rule provides for
consideration of the
conference report to H.R.
2614 with 1 hour of general
debate. Previous question
shall be considered as
ordered without intervening
motions except motion to
recommit with or without
instructions. Waives points
of order against the
conference report and against
its consideration.
October 26, 2000........................ Conferees agreed to file
conference report.
October 26, 2000........................ Conference papers: Senate
report and manager's
statement held at the desk in
Senate.
October 26, 2000........................ Rule H. Res. 652 passed House.
October 26, 2000........................ Mr. Talent brought up
conference report H. Rept.
106-1004 for consideration
under the provisions of H.
Res. 652.
October 26, 2000........................ The previous question was
ordered without objection.
October 26, 2000........................ On agreeing to the conference
report Agreed to by the yeas
and nays: 237--174, 1 Present
(Roll no. 560).
(consideration; CR H11243-
11264)
October 26, 2000........................ Motions to reconsider laid on
the table Agreed to without
objection.
October 26, 2000........................ Motion to proceed to
consideration of measure
agreed to in Senate by Yea-
Nay Vote. 55--40. Record Vote
Number: 286. (consideration:
CR S11097-11098)
October 26, 2000........................ Motion to proceed to
consideration of conference
report to accompany H.R. 2614
agreed to by Unanimous
Consent.
October 26, 2000........................ Conference report considered
in Senate by motion.
(consideration: CR S11098-
11100, S11104, S11107-11111)
October 31, 2000........................ Conference report considered
in Senate by motion. (The
H.R. 2614 conference report
[H. Rept. 106-1004]
incorporated several bills.
This included H.R. 5538--
Minimum Wage; H.R. 5542--
Taxpayer Relief; H.R. 5543--
Medicare, Medicaid, and SCHIP
Benefits Improvement and
Protection; H.R. 5544--Pain
Relief Promotion; and H.R.
5545--Small Business
Reauthorization. H.R. 5661 is
a subsequent Medicare,
Medicaid and SCHIP Benefits
Improvement and Protection
bill. H.R. 5667 is a
subsequent Small Business
Reauthorization bill. H.R.
4577, Consolidated
Appropriations Act 2001,
incorporates by reference the
provisions of H.R. 5661, H.R.
5667, and other bills. The
text of these bills is
printed in the H.R. 4577
conference report: H. Rept.
106-1033 [text of conference
report: CR 12/15/2000 H12100-
12439].)
H.R. 5667:
December 15, 2000....................... Referred to the House
Committee on Small Business
incorporating the provisions
of H.R. 2615.
December 15, 2000....................... Enacted by reference in H.R.
4577 (H. Conf. Rept. 106-
1033)
H.R. 4577:
December 15, 2000....................... Conference report H. Rept. 106-
1033 filed.
December 15, 2000....................... Mr. Young (FL) brought up
conference report H. Rept.
106-1033 by previously agreed
to special order.
December 15, 2000....................... The previous question was
ordered without objection.
December 15, 2000....................... On agreeing to the conference
report Agreed to by the Yeas
and nays: 292--60 (Roll no.
603).
December 15, 2000....................... Motions to reconsider laid on
the table Agreed to without
objection.
December 15, 2000....................... Senate agreed to conference
report by Unanimous Consent.
December 15, 2000....................... Message on Senate action sent
to the House.
December 15, 2000....................... Cleared for White House.
December 15, 2000....................... Presented to President.
December 15, 2000....................... Signed by President as Pub. L.
No. 1096-554 (H.R. 4577,
Consolidated Appropriations
Act 2001, incorporates the
provisions of several bills
by reference. This includes
H.R. 5656--Labor HHS
Education Appropriations;
H.R. 5657--Legislative Branch
Appropriations; H.R. 5658--
Treasury Appropriations; H.R.
5666--Miscellaneous
Appropriations--except
section 123 relating to the
enactment of H.R. 4904; H.R.
5660--Commodity Futures
Modernization: H.R. 5661--
Medicare, Medicaid and SCHIP
Benefits Improvement and
Protection; H.R. 5662--
Community Renewal Tax Relief
and Medical Savings Accounts;
H.R. 5663--New Markets
Venture Capital Program; and
H.R. 5667--Small Business
Reauthorization. The text of
these bills is printed in the
H.R. 4577 conference report:
H. Rept. 106-1033 [text of
conference report: CR 12/15/
2000 H12100-12439].)
------------------------------------------------------------------------
Need for Legislation
It has been ten years since the Committee acted to increase
the maximum guarantee amount in the 7(a) program. To keep pace
with inflation, the maximum guarantee amount should be
increased to approximately $1,250,000. However, the Committee
believes that a simple increase to $1,000,000 is sufficient.
This allows room for the few larger loans made under the 7(a)
program while not encouraging lending that may be better served
through other avenues. The legislation also institutes a cap
prohibiting loans with a gross amount of $2 million.
The 7(a) program also faces a problem regarding early
repayment of large loans, which jeopardizes the subsidy rate.
H.R. 2615 will remedy this problem by assessing a fee to the
borrower for prepayment within the first 3 years of a loan with
a term in excess of 15 years. The increase in prepayments is
due to a variety of factors. There have been some instances of
misuse of the program by businesses seeking bridge financing.
There have been cases where, due to the strong economy, lenders
have approached borrowers offering improved terms, effectively
``skimming'' loans and avoiding the need to process credit
analyses. This effectively removes authorization dollars from
the program which could have been used for other loans.
Congress has, over the past several years, been concerned
with the availability of loans of the lower end of the 7(a)
spectrum and has made changes in order to accommodate the
making of such loans. As a result, since 1994, the number of
loans made under $100,000 have increased significantly. In 1998
alone, 53% of the 7(a) loans made were under $100,000. This
compares with only 37% in 1994. While this figure fluctuates,
the general trend is most definitely upward. Consistent with
previous efforts H.R. 2615 includes a number of provisions
designed to encourage lenders to make these loans and to
encourage small business borrowers to seek them.
Finally, H.R. 2615 recognizes that current 7(a) program
rules prohibit loans for passive investment. When Congress last
reauthorized the 504 program, it modified a similar restriction
in order to permit the financing of projects where less than
20% of a business space will be rented out when the small
business borrower in question will occupy the remaining space.
The Committee believes that it is time that we provide similar
options to 7(a) borrowers.
Section-by-Section Analysis
Section 1. Levels of Participation
Increases the guarantee percentage on loans of $150,000 or
less to 80%. The 80% guarantee level currently extends only to
loans of $100,000 or less. This guarantee increase is one of
the changes proposed to encourage the availability of smaller
loans.
Section 2. Loan Amounts
This provision will increase the maximum guarantee amount
to 1 million dollars. The maximum gross loan amount will be
capped at 2 million dollars. The language would prohibit SBA
from placing a guarantee on any loan over 2 million dollars
regardless of the guaranteed amount. Consequently, the largest
loan available would be a 2 million dollar loan with a 50%
guarantee. The largest loan available at the maximum guarantee
rate of 75% would be $1,333,333. The cap on loans over 2
million dollars will effectively remove a number of large loans
that have been made with only a minimal guarantee, loans which
use up loan authority at a disproportionate rate. In 1998,
roughly thirty loans over 2 million dollars were made.
Section 3. Interest on Defaulted Loans
This will remove the provision that reduced SBA's liability
for accrued interest on defaulted loans. This provision was
added to the program in 1996 as a method of reducing the
subsidy cost of the program. It has come to the Committee's
attention that the expected savings have not materialized.
Section 4. Prepayment of Loans
This provision will reduce the incentive for early
prepayment of 7(a) loans. It will assess a fee to the borrower
for early prepayment of any loan with a term in excess of 15
years. Early prepayment will be defined as any prepayment
within the first three years after disbursement. The prepayment
fee will be determined by the date of the prepayment--5% in the
first year, 3% in the second year, 1% in the third year. The
fee will be based on ``excess prepayment'' which is defined as
prepayment of more than 25% of the outstanding loan amount. In
the event of an excess prepayment the fee would be assessed on
the entire outstanding loan amount.
Section 5. Guarantee Fees
This section changes the guarantee fee for loans of
$150,000 or less to 2%. Currently, the guarantee fee of 2% is
only for loans under $100,000. Loans over $100,000 currently
have a guarantee fee of 3%. The section also provides for an
incentive for lenders to make smaller loans (under $150,000) by
allowing them to retain \1/4\ of the guarantee fee.
Section 6. Lease Terms
Under existing 7(a) rules, loan proceeds may not be used
for investment purposes. This includes purchase or construction
of property to be leased to others. Currently, 7(a) loans may
be used to construct property which will be used solely by the
borrower.
In 1997, Congress modified this rule for the 504 program to
allow for projects where a small portion of a property might be
rented out permanently, but the borrower's main focus was the
construction of a permanent location. This provision would
allow the same authority for 7(a) loans. Borrowers would be
allowed to lease up to 20% of a property in which they will
occupy the remaining 80%.
5.16 H.R. 2848--New Markets Initiative Act of 1999, Public Law No. 106-
554
Legislative History
------------------------------------------------------------------------
Date Action
------------------------------------------------------------------------
H.R. 2848:
September 13, 1999...................... Referred to the Committee on
Banking and Financial
Services, and in addition to
the Committees on Ways and
Means and Small Business, for
a period to be subsequently
determined by the Speaker, in
each case for consideration
of such provisions as fall
within the jurisdiction of
the committee concerned.
September 13, 1999...................... Referred to House Banking and
Financial Services.
September 24, 1999...................... Referred to the Subcommittee
on Housing and Community
Opportunity.
April 12, 2000.......................... Subcommittee on Housing and
Community Opportunity
Discharged.
April 13, 2000.......................... Committee Consideration and
Mark-up Session Held.
April 13, 2000.......................... Ordered to be Reported
(Amended) by Voice Vote.
September 13, 1999...................... Referred to House Ways and
Means.
September 13, 1999...................... Referred to House Small
Business.
June 28, 2000........................... Reported (Amended) by the
Committee on Banking and
Financial Services. H. Rept.
106-706, Part I.
June 28, 2000........................... House Committee on Ways and
Means Granted an extension
for further consideration
ending not later than July
28, 2000.
June 28, 2000........................... House Committee on Small
Business Granted an extension
for further consideration
ending not later than July
28, 2000.
July 28, 2000........................... Committee on Ways and Means
discharged.
July 28, 2000........................... Committee on Small Business
discharged.
July 28, 2000........................... Placed on the Union Calendar,
Calendar No. 464.
H.R. 4530:
May 24, 2000............................ Referred to the House
Committee on Small Business.
May 25, 2000............................ Committee Consideration and
Mark-up Session Held.
May 25, 2000............................ Ordered to be Reported by
Voice Vote.
July 25, 2000........................... Reported by the Committee on
Small Business. H. Rept. 106-
785.
July 25, 2000........................... Placed on the Union Calendar,
Calendar No. 452.
October 25, 2000........................ Included in H.R. 5545
H.R. 5545:
October 25, 2000........................ Referred to the House
Committee on Small Business.
(Several bills are engrossed
by reference in the H.R. 2614
conference report: H. Rept.
106-1004. This includes H.R.
5538, the Minimum Wage Act of
2000; H.R. 5542, the Taxpayer
Relief Act of 2000; H.R.
5543, the Medicare, Medicaid,
and SCHIP Benefits
Improvement and Protection
Act of 2000; H.R. 5544, the
Pain Relief Promotion Act of
2000; and H.R. 5545, the
Small Business
Reauthorization Act of 2000.
The bill texts are included
in the conference report.)
H.R. 2614:
October 26, 2000........................ Conference report H. Rept. 106-
1004 filed. (text of
conference report: CR 10/25/
2000 H10909-11188).
October 26, 2000........................ Rules Committee Resolution H.
Res. 652 Reported to House.
Rule provides for
consideration of the
conference report to H.R.
2614 with 1 hour of general
debate. Previous question
shall be considered as
ordered without intervening
motions except motion to
recommit with or without
instructions. Waives points
of order against the
conference report and against
its consideration.
October 26, 2000........................ Conferees agreed to file
conference report.
October 26, 2000........................ Conference papers: Senate
report and manager's
statement held at the desk in
Senate.
October 26, 2000........................ Rule H. Res. 652 passed House.
October 26, 2000........................ Mr. Talent brought up
conference report H. Rept.
106-1004 for consideration
under the provisions of H.
Res. 652.
October 26, 2000........................ The previous question was
ordered without objection.
October 26, 2000........................ On agreeing to the conference
report Agreed to by the Yeas
and Nays: 237--174, 1 Present
(Roll no. 560).
(consideration: CR H11243-
11264)
October 26, 2000........................ Motions to reconsider laid on
the table Agreed to without
objection.
October 26, 2000........................ Motion to proceed to
consideration of measure
agreed to in Senate by Yea-
Nay Vote. 55--40. Record Vote
Number: 286. (consideration:
CR S11097-11098)
October 26, 2000........................ Motion to proceed to
consideration of conference
report to accompany H.R. 2614
agreed to by Unanimous
Consent.
October 26, 2000........................ Conference report considered
in Senate by motion.
(consideration: CR S11098-
11100, S11104, S11107-11111)
October 31, 2000........................ Motion to proceed to
consideration of conference
report to accompany H.R. 2614
agreed to by Unanimous
Consent.
October 31, 2000........................ Conference report considered
in Senate by motion. (The
H.R. 2614 conference report
[H. Rept. 106-1004]
incorporated several bills.
This included H.R. 5538--
Minimum Wage; H.R. 5542--
Taxpayer Relief; H.R. 5543--
Medicare, Medicaid, and SCHIP
Benefits Improvement and
Protection; H.R. 5544--Pain
Relief Promotion; and H.R.
5545--Small Business
Reauthorization. H.R. 5661 is
a subsequent Medicare,
Medicaid and SCHIP Benefits
Improvement and Protection
bill. H.R. 5667 is a
subsequent Small Business
Reauthorization bill. H.R.
4577, Consolidated
Appropriations Act 2001,
incorporates by reference the
provisions of H.R. 5661, H.R.
5667, and other bills. The
text of these bills is
printed in the H.R. 4577
conference report: H. Rept.
106-1033 [text of conference
report: CR 12/15/2000 H12100-
12439].)
H.R. 5667:
December 15, 2000....................... Referred to the House
Committee on Small Business.
December 15, 2000....................... Enacted by reference in H.R.
4577 (H. Rept. 106-1033)
H.R. 4577:
December 15, 2000....................... Conference report H. Rept. 106-
1033 filed.
December 15, 2000....................... Mr. Young (FL) brought up
conference report H. Rept.
106-1033 by previously agreed
to special order.
December 15, 2000....................... The previous question was
ordered without objection.
December 15, 2000....................... On agreeing to the conference
report Agreed to by the Yeas
and Nays: 292--60 (Roll no.
603).
December 15, 2000....................... Motions to reconsider laid on
the table Agreed to without
objection.
December 15, 2000....................... Senate agreed to conference
report by Unanimous Consent.
December 15, 2000....................... Message on Senate action sent
to the House.
December 15, 2000....................... Cleared for White House.
December 15, 2000....................... Presented to President.
December 21, 2000....................... Signed by President. (H.R.
4577, Consolidated
Appropriations Act 2001,
incorporates the provisions
of several bills by
reference. This includes H.R.
5656--Labor HHS Education
Appropriations; H.R. 5657--
Legislative Branch
Appropriations; H.R. 5658--
Treasury Appropriations; H.R.
5666--Miscellaneous
Appropriations--except
section 123 relating to the
enactment of H.R. 4904; H.R.
5660--Commodity Futures
Modernization; H.R. 5661--
Medicare, Medicaid and SCHIP
Benefits Improvement and
Protection; H.R. 5662--
Community Renewal Tax Relief
and Medical Savings Accounts;
H.R. 5663--New Markets
Venture Capital; and H.R.
5667--Small Business
Reauthorization Act. The text
of these bills is printed in
the H.R. 4577 conference
report: H. Rept. 106-1033
[text of conference report:
CR 12/15/2000 H12100-12439].
------------------------------------------------------------------------
Need for Legislation
In an era of unprecedented economic growth and prosperity,
there remain many economically distressed communities, both
rural and urban, where many people have not benefited to any
great degree from the most recent economic expansion enjoyed by
our Nation. In these communities, levels of unemployment,
poverty, and other indicia of social distress, remain
stubbornly high--yet untapped market opportunities exist to
establish and expand businesses and to develop jobs and
community assets.
There is bipartisan consensus in Congress that the federal
government can and should play a role in encouraging
investments in these communities. For several years both
Republicans and Democrats have proposed and supported granting
tax and regulatory relief, including capital gains tax relief
to businesses operating within distressed areas. Many of these
proposals were part of H.R. 815, the `American Community
Renewal Act,' introduced by Representatives Jim Talent and J.C.
Watts, which would have designated a number of these areas as
`renewal communities' eligible for such benefits. The House has
already passed the tax provisions of H.R. 815, and this
Committee has passed provisions relating to HUD property
disposition within these communities as part of H.R. 1776, the
American Homeownership and Economic Opportunity Act of 2000.'
The Administration has also proposed a series of programs,
collectively known as the ``New Markets Initiative,'' also
intended to foster economic development in low-income
communities. These proposals include tax credits for businesses
in these areas (`New Markets Tax Credits'), a small business
component (establishing a `New Markets Venture Capital
Program'), and the formation of a number of companies intended
to make relatively large scale equity and credit investments in
distressed areas--APICs. The FY 2000 VA/HUD Appropriations Act
provided that $20 million in credit subsidy would be available
for use by APICs for Fiscal Year 2000 if the program was
authorized by June 30, 2000. If the program is not authorized
by that date, the funding reverts to the Community Development
Financial Institutions program administered by the Department
of the Treasury.
The APIC portion of the New Markets Initiative falls under
the jurisdiction of this Committee. The proposal is closely
related in concept to the Small Business Investment Companies
(`SBIC') program currently administered by the Small Business
Administration (SBA), except that the SBIC program is limited
in the size of projects it can serve and that SBICs invest in
ventures only, not real estate. Community development
organizations maintain that the infusion of additional amounts
on equity capital is especially vital for enabling large-scale
investments to occur in distressed areas. Importantly, these
investments would be economically viable as freestanding
business entities, providing a profitable return to investors.
However, because the costs of establishing these businesses in
some of these distressed areas are higher relative to other
areas due to a variety of factors (remediation of environmental
contamination, for example), the return on investors equity is
not as high as demanded by these investors. APICs are intended
to lessen the cost of capital so that these large-scale
investments would be made.
APICs are not intended to fund or subsidize the operations
of businesses, that are not economically viable. On the
contrary, the goal of these entities is to encourage the
establishment of fundamentally sound businesses in certain
locations. Possible uses for APICs' funds include the
establishment of a new facility, such as a call center, data
processing ``back office,'' or factory, by a large company (or
a small company joint venturing with a large one). In addition,
a mid-size manufacturing company seeking to increase production
could use APIC investments for expansion of an existing
facility, the upgrading equipment or the hiring of new
employees. Other uses could include expansion of the service
area of a mid-size service company, such as a trucking company,
building contractor, or home health care firm; development of a
multi-tenant shopping center; or opening or expanding a large
retail company in a new geographic area. Buyout of a company to
be revitalized in its existing facility, acquisition of the
property of a departing large company, and development of an
incubator or industrial park, or investment in another fund
that invests in businesses locating or expanding in targeted
low-to-moderate income areas are all methods whereby an APIC
could fulfill its public purpose investment role.
By passing this APIC legislation, the hope and expectation
of this Committee is that a bipartisan, comprehensive package
of measures to help revitalize America's distressed urban and
rural communities, which would include the best elements of the
American Community Renewal Act and the New Markets Initiative,
be enacted this year.
Section-by-Section Analysis
Section 301. Short Title
The act may be cited as the ``America's Private Investment
Companies Act''.
Section 302. Findings and Purpose
Section 302 finds that: (1) people living in distressed
areas, both urban and rural, characterized by high levels of
joblessness, poverty, and low incomes, have not adequately
benefited from economic expansion experienced by the Nation as
a whole; (2) the costs of joblessness and poverty to our Nation
are very high; and (3) there are significant untapped markets
in our Nation, and many of these are in areas that are
underserved by institutions that can make equity and credit
investments.
Purposes of this title are to: (1) license private for-
profit community development entities that will focus on making
equity and credit investments for large-scale business
developments that benefit low-income communities; (2) provide
credit enhancement for those entities for use in low-income
communities; and (3) provide a vehicle under which the economic
and social returns on financial investments made pursuant to
this Act may be available both to the investors in these
entities and to the residents of the low-income communities.
Section 303. Definitions
Defines terms used in legislation, including
``Administrator'', ``agency'', ``APIC'', ``community
development entity'', ``HUD'', ``license'', ``low-income
community'', ``low-income person'', ``private equity capital'',
``qualified active business'', ``qualified debenture'',
``qualified low-income community investment'', and
``Secretary''.
Section 304. Authorization
Authorizes the Secretary of HUD to license and regulate
America's Private Investment Companies (`APICs'). The number of
APICs licensed at any one time would depend upon the amount of
budget authority available to support the total credit subsidy
provided to the APICs, subject to a first year limitation of 15
APICs. After the initial appropriation, the Secretary is
authorized to license and allocate credit subsidy to additional
APICs, or, as provided, increase the credit subsidy allocated
to an APIC as reward for high performance. Any such credit
subsidy increase shall be provided only to an APIC that has
been licensed for not less than two years, and pursuant to a
competition among eligible APICs. The Secretary shall establish
criteria for selecting among APICs eligible for a credit
subsidy increase, which criteria shall include such factors as
the financial soundness and performance of the APICs as
measured by achievement of the public performance goals
required under the Act.
Requires that the HUD Secretary consult with the
Administrator of the Small Business Administration and the
Secretary of the Treasury in establishing regulations,
requirements or procedures regarding the financial soundness
and management of APICs. Authorizes budget authority of $36
million in credit subsidy for Fiscal Year 2000 to guarantee an
estimated $1 billion in debt. An additional $36 million would
be authorized to be appropriated for each of Fiscal Years 2001-
2003, with an additional $1 million authorized for the
administrative expenses incurred in carrying out the Act for FY
2000-FY 2003. Requires APICs to be regulated by HUD in
cooperation with SBA and the Department of the Treasury. The
Secretary is authorized to impose fees and charges for the
operation of APICs.
Section 305. Selection of APICs
Establishes procedures for selection of APICs, sets forth
minimum eligibility requirements, and sets forth selection
criteria to be used by the Secretary in selecting among
applicants for licensing as APICs. An entity applying for an
APIC license must: (1) be a private, for-profit entity that
qualifies as a `community development entity' as defined in the
legislation; (2) have a minimum private equity capital of $25
million; (3) have qualified financial management, with
experience in direct equity investment and portfolio management
and expertise in community development settings, as determined
by the Secretary; (4) be structured to preclude financial
conflict of interests between the APIC and its manager or
investors; (5) submit an investment strategy with evaluation
benchmarks; (6) submit a statement of public purpose goals,
examples of which are delineated in the statute; (7) agree to
comply with other federal requirements imposed from time to
time (i.e., Executive Orders or OMB circulars); and (8) satisfy
any other application criteria that the Secretary may impose by
regulation or notice.
The Secretary shall select eligible entities for licensing
based on a competition. Selections shall be made on the basis
of the extent to which the entity is expected to meet or exceed
the selection criteria set forth in the legislation. Selection
criteria include factors such as the APICs capacity, investment
strategy, public purpose goals, and other criteria the
Secretary may establish to carry out the purposes of this Act.
To the extent practicable, in selecting APICs the Secretary
shall strive for geographic diversity and a diversity of the
types of APICs chosen so that both rural and urban communities
are served by the program. Of those APICs selected in the first
year, at least one must be devoted primarily to making
investments on Native American lands.
Section 306. Operations of APICs
Set forth the requirements for the operation of APICs.
Requires that substantially all APIC investments that use
government-guaranteed proceeds be in qualified low- to
moderate-income (LMI) areas, and prohibits an APIC from having
an investment in any one business that would amount to more
then 35% of the APIC's equity capital plus the limit of
outstanding debt allowable (the leverage limit) under Section
306(c)(2) of this title.
Provides that an APIC may issue debentures guaranteed by
the Secretary pursuant to the provisions of the Act. The total
amount of debentures that an APIC may have outstanding at any
one time shall not exceed 200% of the equity capital of the
APIC. An APIC may not have more than $300 million in face value
of debentures issued at any one time. Sets forth requirements
for repayment by APIC of debt.
Includes an ``anti-pirating'' provision prohibiting APICs
from using funds to make an investment that would assist
directly in the relocation of any industrial or commercial
plant, facility or operation from one area to another if such
relocation would result in a significant loss of employment in
the labor area from which the relocation occurs. Also provides
for reuse of debenture proceeds of sale of Treasury securities
and excludes APIC from the definition of debtor under
bankruptcy provisions.
Section 307. Credit Enhancement by the Federal Government
AUthorizes HUD to make commitments to guarantee the timely
payment of all principal and interest on qualified debentures
issued by the APICs. The qualified debentures guaranteed by HUD
would be senior to any other debt or equity. The qualified
debentures could be issued by APICs for up to 21 years and
could be pooled and sold.
Section 308. APIC Requests for Guarantee Actions
Set forth procedures for APICs to request loan guarantees
from HUD, which shall include a description of the manner in
which the APIC intends to use the proceeds from such debentures
and a certification from the APIC that it is in substantial
compliance with: (1) the terms of this Act and applicable laws;
(2) the terms and conditions of its license; (3) requirements
relating to the allocation and use of New Market Tax Credits.
The APIC must also provide any other requirements established
by the Secretary. Sets forth procedures for compliance with
provisions of the National Environmental Policy Act of 1969
regarding environmental reviews.
Section 309. Examination and Monitoring of APIC
Requries that the Secretary examine and monitor the
activities of APICs for compliance with sound financial
management practices and for satisfaction of program goals.
Requires the Secretary to establish annual or more frequent
reporting requirements for APICs. Requires that each APIC have
an independent annual audit conducted annually. The Secretary,
in consultation with the Administrator of the SBA and the
Secretary of the Treasury, shall establish requirements and
standards for such audits. Not less than every two years, the
Secretary shall examine the operations and portfolio of each
APIC to assure compliance with sound financial management
practices.
Provides that in carrying out its monitoring of HUD's
responsibilities under this Act, the Inspector General of HUD
shall consult, as appropriate, with the Inspectors General of
the Department of the Treasury or the Small Business
Administration, and may enter into memoranda of understanding
as may be necessary to carry out this function. Requires the
Secretary to report to Congress annually regarding the
operations, activities, financial health and achievements of
APICs, listing each investment made by each APIC. Requires the
General Accounting Office not later than two years after the
date of enactment of the Act, to submit a report to Congress
regarding the operation of the APIC program.
Section 310. Penalties
Authorizes the Secretary to impose penalties on any APIC
that commits an act of fraud, mismanagement or noncompliance
with regulations. Penalties include civil monetary penalties
not to exceed $10,000 cease-and-desist orders, suspension or
revocation of an APIC's license for very serious infractions,
or other penalties that the Secretary determines to be less
burdensome than the aforementioned penalties.
Section 311. Effective Date
Provides that the Act shall take effect six months after
the date of enactment. Authority of the Secretary to issue
regulations, standards, guidelines or licensing requirements,
and the authority of any official to enter into agreements or
memoranda of understanding regarding such issuances, shall take
effect upon enactment of the legislation.
Section 312. Sunset
Provides that the Secretary may not license any APIC, nor
provide credit subsidy for any APIC, after the expiration of
the five-year period beginning upon the date the Secretary
awards the first APIC license. The section does not affect any
license or credit subsidy provided for an APIC before the
expiration of such period.
5.17 H.R. 3843--Small Business Reauthorization Act of 2000, Public Law
No. 106-554
Legislative History
------------------------------------------------------------------------
Date Action
------------------------------------------------------------------------
H.R. 3843:
March 8, 2000........................... Referred to the House
Committee on Small Business.
March 14, 2000.......................... Reported by the Committee on
Small Business. H. Rept. 106-
522.
March 14, 2000.......................... Placed on the Union Calendar,
Calendar No. 291.
March 14, 2000.......................... Rules Committee Resolution H.
Res. 439 Reported to House.
Rule provides for
consideration of H.R. 3843
with 1 hour of general
debate. Previous question
shall be considered as
ordered without intervening
motions except motion to
recommit with or without
instructions. Measure will be
read by section. Bill is open
to amendments. At the
conclusion of consideration,
H. Res. 432 is laid on the
table.
March 15, 2000.......................... Rule H. Res. 439 passed House.
March 15, 2000.......................... Considered under the
provisions of rule H. Res.
439 (consideration: CR H1032-
1039; text of measure as
reported in House: CR H1038).
March 15, 2000.......................... House resolved itself into the
Committee of the Whole House
on the state of the Union
pursuant to H. Res. 439 and
Rule XXIII.
March 15, 2000.......................... The Speaker designated the
Honorable Ray LaHood to act
as Chairman of the Committee.
March 15, 2000.......................... H.AMDT.595 Amendment (A001)
offered by Mr. Traficant.
(consideration: CR H1038-
1039) Amendment requires the
SBA to conduct a study to
determine the average time
that the SBA requires to
process an application for
each type of loan or loan
guarantee made under the
Small Business Act.
March 15, 2000.......................... H.AMDT.595 On agreeing to the
traficant amendment (A001)
Agreed to by voice vote.
(text: CR H1038)
March 15, 2000.......................... The House rose from the
Committee of the Whole House
on the state of the Union to
report H.R. 3843.
March 15, 2000.......................... The previous question was
ordered pursuant to the rule.
March 15, 2000.......................... The House adopted the
amendment as agreed to by the
Committee of the Whole House
on the state of the Union.
March 15, 2000.......................... On passage Passed by the Yeas
and Nays: 410-11 (Roll no.
49).
March 15, 2000.......................... Motion to reconsider laid on
the table Agreed to without
objection.
March 20, 2000.......................... Received in the Senate and
Read twice and referred to
the Committee on Small
Business.
October 25, 2000........................ Included in H.R. 5545.
H.R. 5545:
October 25, 2000........................ Referred to the House
Committee on Small Business.
(Several bills are engrossed
by reference in the H.R. 2614
conference report: H. Rept.
106-1004. This includes H.R.
5538, the Minimum Wage Act of
2000; H.R. 5542, the Taxpayer
Relief Act of 2000; H.R.
5543, the Medicare, Medicaid,
and SCHIP Benefits
Improvement and Protection
Act of 2000; H.R. 5544, the
Pain Relief Promotion Act of
2000; and H.R. 5545, the
Small Business
Reauthorization Act of 2000.
The bill texts are included
in the conference report.)
H.R. 2614:
October 26, 2000........................ Conference report H. Rept. 106-
1004 filed. (text of
conference report: CR October
25, 2000 H10909-11188)
October 26, 2000........................ Rules Committee Resolution H.
Res. 652 Reported to House.
Rule provides for
consideration of the
conference report to H.R.
2614 with 1 hour of general
debate. Previous question
shall be considered as
ordered without intervening
motions except motion to
recommit with or without
instructions. Waives points
of order against the
conference report and against
its consideration.
October 26, 2000........................ Conferees agreed to file
conference report.
October 26, 2000........................ Conference papers: Senate
report and manager's
statement held at the desk in
Senate.
October 26, 2000........................ Rule H. Res. 652 passed House.
October 26, 2000........................ Mr. Talent brought up
conference report H. Rept.
106-1004 for consideration
under the provisions of H.
Res. 652.
October 26, 2000........................ The previous question was
ordered without objection.
October 26, 2000........................ On agreeing to the conference
report Agreed to by the Yeas
and Nays: 237-174, 1 Present
(Roll no. 560).
(consideration: CR H11243-
11264)
October 26, 2000........................ Motions to reconsider laid on
the table Agreed to without
objection.
October 26, 2000........................ Motion to proceed to
consideration of measure
agreed to in Senate by Yea-
Nay Vote. 55-40. Record Vote
Number: 286. (consideration:
CR S11097-11098)
October 26, 2000........................ Motion to proceed to
consideration of conference
report to accompany H.R. 2614
agreed to by Unanimous
Consent.
October 26, 2000........................ Conference report considered
in Senate by motion.
(consideration: CR S11098-
11100, S11104, S11107-11111)
October 31, 2000........................ Motion to proceed to
consideration of conference
report to accompany H.R. 2614
agreed to by Unanimous
Consent.
October 31, 2000........................ Conference report considered
in Senate by motion. (The
H.R. 2614 conference report
[H. Rept. 106-1004]
incorporated several bills.
This included H.R. 5538--
Minimum Wage; H.R. 5542--
Taxpayer Relief; H.R. 5543--
Medicare, Medicaid, and SCHIP
Benefits Improvement and
Protection; H.R. 5544--Pain
Relief Promotion; and H.R.
5545--Small Business
Reauthorization. H.R. 5661 is
a subsequent Medicare,
Medicaid and SCHIP Benefits
Improvement and Protection
bill. H.R. 5667 is a
subsequent Small Business
Reauthorization bill. H.R.
4577, Consolidated
Appropriations Act 2001,
incorporates by reference the
provisions of H.R. 5661, H.R.
5667, and other bills. The
text of these bills is
printed in the H.R. 4577
conference report: H. Rept.
106-1033 [text of conference
report: CR October 15, 2000
H12100-12439].)
H.R. 5667:
December 15, 2000....................... Referred to the House
Committee on Small Business
incorporating the provisions
of H.R. 3843.
December 15, 2000....................... Enacted by reference in H.R.
4577 (H. Conf. Rept. 106-
1033).
H.R. 4577:
December 15, 2000....................... Conference report H. Rept. 106-
1033 filed.
December 15, 2000....................... Mr. Young (FL) brought up
conference report H. Rept.
106-1033 by previously agreed
to special order.
December 15, 2000....................... The previous question was
ordered without objection.
December 15, 2000....................... On agreeing to the conference
report Agreed to by the Yeas
and Nays: 292-60 (Roll no.
603).
December 15, 2000....................... Motions to reconsider laid on
the table Agreed to without
objection.
December 15, 2000....................... Senate agreed to conference
report by Unanimous Consent.
December 15, 2000....................... Message on Senate action sent
to the House.
December 15, 2000....................... Cleared for White House.
December 15, 2000....................... Presented to President.
December 21, 2000....................... Signed by President as Pub. L.
No. 106-544 (H.R. 4577,
Consolidated Appropriations
Act 2001, incorporates the
provisions of several bills
by reference. This includes
H.R. 5656--Labor HHS
Education Appropriations;
H.R. 5657--Legislative Branch
Appropriations; H.R. 5658--
Treasury Appropriations; H.R.
5666--Miscellaneous
Appropriations--except
section 123 relating to the
enactment of H.R. 4904; H.R.
5660--Commodity Futures
Modernization; H.R. 5661--
Medicare, Medicaid and SCHIP
Benefits Improvement and
Protection; H.R. 5662--
Community Renewal Tax Relief
and Medical Savings Accounts;
H.R. 5663--New Markets
Venture Capital Program; and
H.R. 5667--Small Business
Reauthorization. The text of
these bills is printed in the
H.R. 4577 conference report:
H. Rept. 106-1033 [text of
conference report: CR
December 15, 2000 H12100-
12439].)
------------------------------------------------------------------------
Need for Legislation
The Small Business Administration provides a variety of
services for small business--financial assistance, technical
assistance, and disaster assistance.
Financial Assistance
The Small Business Administration provides approximately
$11 billion in financing to small business annually. This
financing is made available through a variety of programs.
SBA's largest financial program is the Section 7(a) general
business loan program. The 7(a) program offers loans to small
businesses through local lending institutions. These loans are
provided with an SBA guarantee of up to 80 percent and are
limited to a maximum of $750,000. The 7(a) program has a
subsidy rate of 1.16% for fiscal year 2000 and an appropriation
of $107 million, permitting $9.8 billion in lending.
The Section 504 loan program provides construction,
renovation and capital investment financing to small businesses
through certified development companies (CDCs). These CDCs are
SBA licensed, local business development organizations which
provide loans of up to $750,000 for small businesses, in
cooperation with local banks. CDCs provide 40% of the financing
package, while the bank provides 50%, and the small business
provides a 10% down payment. CDC funding is obtained through
issuance of an SBA guarantee debenture. The 504 program
currently operates at no cost to the taxpayer but does require
authorization.
The microloan program provides small loans of up to $25,000
to borrowers in low-income areas. In fiscal year 1999 the
program provided $29 million in loans. In addition, the program
has a technical assistance aspect that provides managerial and
business expertise to microloan borrowers. Microloans are made
by intermediary organizations that specialize in local business
development. The program has a subsidy rate of 8.54%.
The Small Business Investment Company (SBIC) program
provides over $1.5 billion in long term and venture capital
financing for small business annually. SBICs are venture
capital firms that leverage private investment dollars with SBA
guaranteed debentures or participating securities. The SBIC
debenture program currently operates at a zero subsidy rate and
requires no taxpayer subsidy. The participating securities
program has a 1.8% subsidy rate.
Technical Assistance
The SBA provides technical and managerial assistance to
small businesses through four primary programs--Small Business
Development Center (SBDCs), the Service Corps of Retired
Executives (SCORE), the 7(j) technical assistance program, and
the Women's Business Center program.
SBDCS are located primarily at colleges and universities
and provide assistance through 51 center sites and
approximately 970 satellite offices. Through a formula of
matching grants and donations SBDCs offer small businesses
guidance on marketing, financing, start-up, and other areas.
The program currently receives $84 million in appropriations.
SCORE provides small business assistance on-site through
the volunteer efforts of its members. SCORE volunteers are
retired business men and women who offer their expertise to
small businesses. SCORE volunteers are reimbursed for their
travel expenses and SCORE receives funding as well as a website
and offices in Washington, DC.
The 7(j) program provides financing for technical
assistance to the minority contracting community primarily
through courses and direct assistance from management
consultants. In addition, the program provides assistance for
participants to attend business administration classes offered
through several colleges and universities.
The Women's Business Center program provides five year
grants matched by non-federal funds to private sector
organizations to establish business training centers for women.
Depending on the needs of the community, centers teach women
the principles of finance, management and marketing as well as
specialized topics such government contracting or starting
home-based businesses. There are currently 81 centers in 47
states in rural, urban and suburban locations.
Disaster Assistance
The Small Business Administration also provides disaster
loan assistance to homeowners and small businesses nationwide.
This program is a key component of the overall Federal recovery
effort for communities struck by natural disasters. This
assistance is authorized by section 7(b) of the Small Business
Act which provides authority for reduced interest rate loans.
Currently the interest rate fluctuate according to the
statutory formula--a lower rate, not to exceed four percent is
offered to applicants with no credit available elsewhere, while
a rate of a maximum of eight percent is available for other
borrowers.
Section-by-Section Analysis
Section 1. Short Title
This Act may be cited as the ``Small Business
Reauthorization Act of 2000''.
Section 2. Reauthorization of Small Business Programs
This section provides the authorized appropriation levels
for the following programs: Section 7(a) general business
loans, Section 504 Certified Development Company loans, direct
microloans, guaranteed microloans, microloan technical
assistance, Defense Transition (DELTA) loans, Small Business
Investment Company debentures, Small Business Investment
Company participating securities, Surety Bonds guarantees,
SCORE, disaster loans, and salaries and expenses. The following
are the authorization levels for the financial programs:
[In millions]
------------------------------------------------------------------------
2001 2002 2003
------------------------------------------------------------------------
7(a)............................. $14,500 $15,000 $16,000
504.............................. 4,000 4,500 5,000
Microloan........................ 60 80 100
Microloan TA..................... 50 70 90
Microloan gty.................... 200 250 300
SBIC debentures.................. 1,500 2,500 3,000
SBIC part. Securities............ 2,500 3,500 4,000
Surety bonds..................... 4,000 5,000 6,000
------------------------------------------------------------------------
This section also authorizes the Service Corps of Retired
Executives (SCORE). SCORE will be authorized at 5, 6, and 7
million dollars for fiscal years 2001, 2001, and 2003,
respectively.
Section 2 also contains provisions authorizing funding for
salaries and expenses at the Small Business Administration.
These authorizations are established as ``such sums as may be
necessary''. However, separate authorizations are established
for direct administration of the 7(a), 504 and microloan
programs and for the operations of the Office of Investment.
The committee intends that the funds authorized for the direct
administration of the loan programs be used solely for
headquarters operations and not field services. These
operations are authorized at 14, 16 and 17 million dollars for
fiscal years 2001, 2002, 2003, respectively.
Section 3. Additional Reauthorizations
This section reauthorizes six programs:
(a) Small Business Development Centers Program--Increases
the authorization level from $95,000,000 to $125,000,000.
(b) Drug Free Workplace--Extends authorization through
fiscal year 2003 at $5,000,000 per year.
(c) HUBZones--Authorizes appropriations of $10,000,000 per
year through fiscal year 2003.
(d) National Women's Business Council--Increases
reauthorization to $1,000,000 per year and extends
authorization through fiscal year 2003.
(e) Very Small Business Concerns--Extends authorization
through September 30, 2003.
(f) SDB Certification--Extends authorization through
September 30, 2003.
5.18 H.R. 3845--Small Business Investment Corrections Act of 2000,
Public Law 106-554
Legislative History
------------------------------------------------------------------------
Date Action
------------------------------------------------------------------------
H.R. 3845:
March 8, 2000........................... Referred to the House
Committee on Small Business.
March 14, 2000.......................... Reported by the Committee on
Small Business. H. Rept. 106-
520.
March 14, 2000.......................... Placed on the Union Calendar,
Calendar No. 289.
March 14, 2000.......................... Mrs. Kelly moved to suspend
the rules and pass the bill,
as amended.
March 14, 2000.......................... Considered under suspension of
the rules. (consideration: CR
H940-942)
March 14, 2000.......................... On motion to suspend the rules
and pass the bill, as amended
Agreed to by voice vote.
(text: CR H940-941)
March 14, 2000.......................... Motion to reconsider laid on
the table Agreed to without
objection.
March 20, 2000.......................... Received in the Senate and
Read twice and referred to
the Committee on Small
Business.
October 25, 2000........................ Included in H.R. 5545.
H.R. 5545:
October 25, 2000........................ Referred to the House
Committee on Small Business.
(Several bills are engrossed
by reference in the HR. 2614
conference report: H.Rept.
106-1004. This includes H.R.
5538, the Minimum Wage Act of
2000; H.R. 5542, the Taxpayer
Relief Act of 2000; H.R.
5543, the Medicare, Medicaid,
and SCHIP Benefits
Improvement and Protection
Act of 2000; H.R. 5544, the
Pain Relief Promotion Act of
2000; and H.R. 5545, the
Small Business
Reauthorization Act of 2000.
The bill texts are included
in the conference report.)
H.R. 2614:
October 26, 2000........................ Conference report H. Rept.
106-1004 filed. (text of
conference report: CR 10/25/
2000 H10909-11188)
October 26, 2000........................ Rules Committee Resolution H.
Res. 652 Reported to House.
Rule provides for
consideration of the
conference report to H.R.
2614 with 1 hour of general
debate. Previous question
shall be considered as
ordered without intervening
motions except motion to
recommit with or without
instructions. Waives points
of order against the
conference report and against
its consideration.
October 26, 2000........................ Conferees agreed to file
conference report.
October 26, 2000........................ Conference papers: Senate
report and manager's
statement held at the desk in
Senate.
October 26, 2000........................ Rule H. Res. 652 passed House.
October 26, 2000........................ Mr. Talent brought up
conference report H. Rept.
106-1004 for consideration
under the provisions of H.
Res. 652.
October 26, 2000........................ The previous question was
ordered without objection.
October 26, 2000........................ On agreeing to the conference
report. Agreed to by the Yeas
and Nays: 237-174, 1 Present
(Roll no. 560).
(consideration: CR H11243-
11264)
October 26, 2000........................ Motions to reconsider laid on
the table Agreed to without
objection.
October 26, 2000........................ Motion to proceed to
consideration of measure
agreed to in Senate by Yea-
Nay Vote. 55-40. Record Vote
Number: 286. (consideration:
CR S11097-11098)
October 26, 2000........................ Motion to proceed to
consideration of conference
report to accompany H.R. 2614
agreed to by Unanimous
Consent.
October 26, 2000........................ Conference report considered
in Senate by motion.
(consideration: CR S11098-
11100, S11104, S11107-11111)
October 31, 2000........................ Motion to proceed to
consideration of conference
report to accompany H.R. 2614
agreed to by Unanimous
Consent
October 31, 2000........................ Conference report considered
in Senate by motion. (The
H.R. 2614 conference report
[H. Rept. 106-1004]
incorporated several bills.
This included H.R. 5538--
Minimum Wage; H.R. 5542--
Taxpayer Relief; H.R. 5543--
Medicare, Medicaid, and SCHIP
Benefits Improvement and
Protection; H.R. 5544--Pain
Relief Promotion; and H.R.
5545--Small Business
Reauthorization. H.R. 5661 is
a subsequent Medicare,
Medicaid and SCHIP Benefits
Improvement and Protection
bill. H.R. 5667 is a
subsequent Small Business
Reauthorization bill. H.R.
4577, Consolidated
Appropriations Act 2001,
incorporates by reference the
provisions of H.R. 5661, H.R.
5667, and other bills. The
text of these bills is
printed in the H.R. 4577
conference report: H. Rept.
106-1033 [text of conference
report: CR 12/15/2000 H12100-
12439].)
H.R. 5667:
December 15, 2000....................... Referred to the House
Committee on Small Business
incorporating the provisions
of H.R. 3845.
December 15, 2000....................... Enacted by reference in H.R.
4577 (H. Conf. Rept. 106-
1033)
H.R. 4577:
December 15, 2000....................... Conference report H. Rept. 106-
1033 filed.
December 15, 2000....................... Mr. Young (FL) brought up
conference report H. Rept.
106-1033 by previously agreed
to special order.
December 15, 2000....................... The previous question was
ordered without objection.
December 15, 2000....................... On agreeing to the conference
report Agreed to by the Yeas
and Nays: 292-60 (Roll no.
603).
December 15, 2000....................... Motions to reconsider laid on
the table Agreed to without
objection.
December 15, 2000....................... Senate agreed to conference
report by Unanimous Consent.
December 15, 2000....................... Message on Senate action sent
to the House.
December 15, 2000....................... Cleared for White House.
December 15, 2000....................... Presented to President.
December 21, 2000....................... Signed by President. (H.R.
4577, Consolidated
Appropriations Act 2001,
incorporates the provisions
of several bills by
reference. This includes H.R.
5656--Labor HHS Education
Appropriations; H.R. 5657--
Legislative Branch
Appropriations; H.R. 5658--
Treasury Appropriations; H.R.
5666--Miscellaneous
Appropriations--except
section 123 relating to the
enactment of H.R. 4904; H.R.
5660--Commodity Futures
Modernization; H.R. 5661--
Medicare, Medicaid and SCHIP
Benefits Improvement and
Protection; H.R. 5662--
Community Renewal Tax Relief
and Medical Savings Accounts;
H.R. 5663--New Markets
Venture Capital Program; and
H.R. 5667--Small Business
Reauthorization. The text of
these bills is printed in the
H.R. 4577 conference report:
H. Rept. 106-1033 [text of
conference report: CR 12/15/
2000 H12100-12439].)
------------------------------------------------------------------------
Need for Legislation
Definition of Small Business Concern
SBA regulations currently prohibit an SBIC from owning a
controlling interest in the voting stock of a small business or
otherwise exercising control of the small business.
These regulations were put in place to ensure that SBICs
did not become holding companies and to protect small business
from over aggressive investment. During the life of the program
several exceptions have been put in place recognizing the
reality of equity investment. These include control for a
start-up company, when a major investment is undertaken, for a
troubled company, breach of agreement, and most recently for
those businesses that are located in low and moderate income
area (LMIs). Through the administering and oversight of these
regulations the Committee believes the result has been to
create a complicated and sometimes burdensome process for both
SBA and SBICs.
While the intent of the regulation was the protection of
small business it has resulted in keeping parties to an SBIC
investment from structuring the investment in ways that may be
most reasonable and acceptable from both operating and market
perspective. The Committee made these changes recognizing the
reality of venture capital investment, however the amendment is
not intended to foster SBICs becoming holding companies for
operating small business concerns. In today's venture capital
world venture funds may act as incubators of business ideas by
creating and capitalizing small businesses to nurture
technology in the early stages of its development. In such
cases SBICs may need to create, capitalize and operate small
business concerns in the early years.
Furthermore, the Gramm-Leach-Bliley Bank Modernization
Act--which grants banks authority to conduct venture capital
operations without an SBIC license--does not prohibit control.
To the contrary, it explicitly permits control during the
investment period. The proposed amendment would make the Small
Business Investment Act consistent with the new banking law and
would serve as an incentive for banks to retain their SBIC
operations--to the benefit of U.S. small businesses.
Definition of Long Term
The term ``long-term'' as found in Section 102 of the Act
has been interpreted to mean a period of time equal to a
minimum of five years for all SBIC investments other than those
made in ``Disadvantaged Businesses.'' For the latter, the
minimum period is four years.
This interpretation does not allow SBICs and small
businesses to fashion investment agreements that are flexible
enough to meet the needs of both parties in accordance with the
dictates of the commercial marketplace.
This interpretation has no counterpart in any other area of
business commerce. To the contrary, Generally Accepted
Accounting Principles (GAAP) define ``long-term'' as any period
of time greater than one year in duration. Likewise, tax law
defines ``long-term'' for capital gains purposes as a period
greater than one year. The proposed amendment would make SBIC
law consistent with GAAP and tax law and apply the same
standard for all SBIC investments.
The Gramm-Leach-Bliley Bank Modernization Act--which gives
banks authority to conduct venture capital operations without
an SBIC license--places no restrictions on the period of time
for investments. The proposed amendment will be consistent with
the new bank law and would serve as an important incentive for
banks to retain their SBIC operations--to the benefit of U.S.
small businesses seeking financing. Without the amendment, many
banks may choose to operate all their venture capital
operations outside the SBIC program--to the detriment of small
businesses served by the SBIC program.
Subsidy Fees
An additional 1 percent interest obligation was imposed on
SBICs in 1996 in order to reduce the Small Business
Administration's appropriated cost, as determined by the
Administration's subsidy model, for supporting the SBIC
program. Since then changes in the program coupled with a
stricter examination and licensing program at SBA have
significantly reduced the subsidy cost of both the Debenture
and Participating Securities programs. At least part of the 1
percent in additional interest is no longer required in the
Debenture program to keep the subsidy rate at zero. The same
may soon be true for the Participating Securities program as
well. In fact, current estimates show that the 1 percent fee is
overcharging the SBICs (and their small business clients),
resulting in a hidden tax on the program.
Changing the law as proposed would allow the Administration
to adjust the additional interest and prioritized payment rates
annually based on annual subsidy rate calculations. A similar
approach is already in place for the SBA's 504 loan program
which operates at no cost to the taxpayer and has consistently
reduced its fees.
Distribution
Under current law, SBICs may make prioritized payment
distributions, profit distributions, and other optional
distributions (e.g., distributions of capital on any date with
prior SBA approval). Tax distributions, however, may only be
made at the end of calendar year quarters.
The practical impact of this restriction is that SBICs are
forced to either delay otherwise permitted interim
distributions (that would include tax distributions) to the end
of a quarter or split their distributions into two
distributions--tax distributions (made at the end of a quarter)
and all other distributions (made at any time during a
quarter).
Postponing an entire distribution to the end of a quarter
has negative cash flow and internal rate of return (IRR)
implications for SBICs. Consequently, most SBICs will opt to
split their distributions. Splitting distributions requires the
preparation, submission, and SBA review of two sets of
documents when one would otherwise suffice. This results in
inefficient use of both SBA and SBIC time and resources.
The proposed amendment is technical in nature and will have
no substantive impact on the SBIC program. However, it will
save time and expense for both SBA and SBICs by eliminating
duplicative filings and inefficient use of SBA resources.
Section-by-Section Analysis
Section 1. Short Title
This Act may be cited as the ``Small Business Investment
Corrections Act of 2000''.
Section 2. Definitions
(a) Small Business Concern
Inserts the following language in section 103(5)(A)(i) of
the Small Business Investment Act--``regardless of the
allocation of control during the investment period under any
investment agreement between the business concern and the
entity making the investment''. This phrase clarifies that a
venture capital investment agreement from an SBIC may cause a
change in control of a small business, but that such a change
will not affect the eligibility of the small business concern.
The Committee does not intend that SBICs become holding
companies hence the language references the period of the
investment agreement. Further, the Committee retains the
authority for SBIC examinations to inquire into ``illegal
control'' by SBICs, though the committee expects such control
to be that exercised outside an investment agreement.
(b) Long Term
Inserts the following paragraph in section 103 of the Small
Business Investment Act.
``(17) The term long term, when used in connection with
equity capital or loan funds invested in any small business
concern or smaller enterprise, means any period of time not
less than 1 year.'' The language changes the definition of a
long term investment to harmonize it with the tax and banking
laws.
Section 3. Subsidy Fees
This provision amends sections 303(b) and 303(g)(2) of the
Small Business Investment Act to allow the Administration to
adjust the fee assessed on debentures and participating
securities up to a maximum of one percent. The fee will be
adjusted to keep the subsidy cost of the programs at zero or as
close as possible to zero.
Section 4. Distributions
This section amends section 303(g)(8) of the Small Business
Investment Act in order to allow SBICs to make distributions at
any time during a calendar quarter based on the maximum
estimated tax liability.
Section 5. Conforming Amendments
H.R. 3845 streamlines the successful Small Business
Investment Company (SBIC) program. The SBIC program allows
private companies with SBA approval to provide venture and
start up financing to small businesses.
First, the bill modifies the definition of control for SBIC
investment in small business, eliminating a cumbersome five
prong test and setting a clear statutory standard. H.R. 3845
was also modify the definition of long term investment under
the Act, changing it from five years to one year, in order to
harmonize that definition with accepted business practice and
the tax and banking laws. Third, the bill allows the
Administration to adjust the subsidy fee for the SBIC program
to maintain the subsidy rate of the program at zero. Finally,
the bill makes a change to the distribution language in the
Investment Act, allowing the SBICs more flexibility in making
distributions to their investors and will simplify the
accounting and tax procedures at SBICs.
5.19 H.R. 4464--BusinessLINC Act of 2000, Public Law No. 106-554
Legislative History
------------------------------------------------------------------------
Date Action
------------------------------------------------------------------------
H.R. 4464:
May 16, 2000............................ Referred to the House
Committee on Small Business.
May 25, 2000............................ Committee Consideration and
Mark-up Session Held.
May 25, 2000............................ Ordered to be Reported in the
Nature of a Substitute
(Amended) by Voice Vote.
July 25, 2000........................... Reported (Amended) by the
Committee on Small Business
H. Rept. 106-784
July 25, 2000........................... Placed on the Union Calendar,
Calendar No. 451.
October 25, 2000........................ Included in H.R. 5545.
H.R. 5545:
October 25, 2000........................ Referred to the House
Committee on Small Business.
(Several bids are engrossed
by reference in the H.R. 2614
conference report: H. Rept.
106-1004. This includes H.R.
5538, the Minimum Wage Act of
2000; H.R. 5542, the Taxpayer
Relief Act of 2000; H.R.
5543, the Medicare, Medicaid,
and SCHIP Benefits
Improvement and Protection
Act of 2000; H.R. 5544, the
Pain Relief Promotion Act of
2000; and H.R. 5545, the
Small Business
Reauthorization Act of 2000.
The bill texts are included
in the conference report).
H.R. 2614:
October 26, 2000........................ Conference report H. Rept. 106-
1004 filed. (text of
conference report: CR 10/25/
000 H10909-11188).
October 26, 2000........................ Rules Committee Resolution H.
Res. 652 Reported to House.
Rule provides for
consideration of the
conference report to H.R.
2614 with 1 hour of general
debate. Previous question
shall be considered as
ordered without intervening
motions except motion to
recommit with or without
instructions. Waives points
of order against the
conference report and against
its consideration.
October 26, 2000........................ Conferees agreed to file
conference report.
October 26, 2000........................ Conference papers: Senate
report and manager's
statement held at the desk in
Senate.
October 26, 2000........................ Rule H. Res. 652 passed House.
October 26, 2000........................ Mr. Talent brought up
conference report H. Rept.
106-1004 for consideration
under the provisions of H.
Res. 652.
October 26, 2000........................ The previous question was
ordered without objection.
October 26, 2000........................ On agreeing to the conference
report Agreed to by the Yeas
and Nays: 237-174, 1 Present
(Roll no. 560).
(consideration: CR H11243-
11264).
October 26, 2000........................ Motions to reconsider laid on
the table Agreed to without
objection.
October 26, 2000........................ Motion to proceed to
consideration of measure
agreed to in Senate by Yea-
Nay Vote. 55-40. Record Vote
Number: 286. (consideration:
CR S11097-11098).
October 26, 2000........................ Motion to proceed to
consideration of conference
report to accompany H.R. 2614
agreed to by Unanimous
Consent.
October 26, 2000........................ Conference report considered
in Senate by motion.
(consideration: CR S11098-
11100, S11104, S11107-11111).
October 31, 2000........................ Motion to proceed to
consideration of conference
report to accompany H.R. 2614
agreed to by Unanimous
Consent.
October 31, 2000........................ Conference report considered
in Senate by motion. (The
H.R. 2614 conference report
[H. Rept. 106-1004]
incorporated several bills.
This included H.R. 5538--
Minimum Wage; H.R. 5542--
Taxpayer Relief; H.R. 5543--
Medicare, Medicaid, and SCHIP
Benefits Improvement and
Protection; H.R. 5544--Pain
Relief Promotion; and H.R.
5545--Small Business
Reauthorization. H.R. 5661 is
a subsequent Medicare,
Medicaid and SCHIP Benefits
Improvement and Protection
bill. H.R. 5667 is a
subsequent Small Business
Reauthorization bill. H.R.
4577, Consolidated
Appropriations Act 2001,
incorporates by reference the
provisions of H.R. 5661, H.R.
5667, and other bills. The
text of these bills is
printed in the H.R. 4577
conference report: H. Rept.
106-1033 (text of conference
report: CR 12/15/2000 H12100-
12439]).
H.R. 5667:
December 15, 2000....................... Referred to the House
Committee on Small Business.
December 15, 2000....................... Enacted by reference in H.R.
4577 (H. Rept. 106-1033).
H.R. 4577:
December 15, 2000....................... Conference report H. Rept. 106-
1033 filed.
December 15, 2000....................... Mr. Young (FL) brought up
conference report H. Rept.
106-1033 by previously agreed
to special order.
December 15, 2000....................... The previous question was
ordered without objection.
December 15, 2000....................... On agreeing to the conference
report Agreed to by the Yeas
and Nays: 292--60 (Roll no.
603).
December 15, 2000....................... Motions to reconsider laid on
the table Agreed to without
objection.
December 15, 2000....................... Senate agreed to conference
report by Unanimous Consent.
December 15, 2000....................... Message on Senate action sent
to the House.
December 15, 2000....................... Cleared for White House.
December 15, 2000....................... Presented to President.
December 21, 2000....................... Signed by President. (H.R.
4577, Consolidated
Appropriations Act 2001,
incorporates the provisions
of several bills by
reference. This includes H.R.
5656--Labor HHS Education
Appropriations; H.R. 5657--
Legislative Branch
Appropriations; H.R. 5658--
Treasury Appropriations; H.R.
5666--Miscellaneous
Appropriations--except
section 123 relating to the
enactment of H.R. 4904; H.R.
5660--Commodity Futures
Modernization; H.R. 5661--
Medicare, Medicaid and SCHIP
Benefits Improvement and
Protection; H.R. 5662--
Community Renewal Tax Relief
and Medical Savings Accounts;
H.R. 5663--New Markets
Venture Capital Program; and
H.R. 5667--Small Business
Reauthorization. The text of
these bills is printed in the
H.R. 4577 conference report:
H. Rept. 106-1033 [text of
conference report: CR 12/15/
2000 H12100-12439].)
------------------------------------------------------------------------
Need for Legislation
Despite the unprecedented economic prosperity we are
experiencing in this country, there are several areas of the
country that have still not achieved parity. These areas are
primarily inner cities, rural areas, and Native American
communities. BusinessLINC will enable business opportunities
for small businesses who would otherwise have no access to
outside larger markets. While these small businesses have
strong potential, they are located in communities where
corporate America would not necessarily look. BusinessLINC will
break that barrier. When the BusinessLINC model has been
applied in the past, small businesses have seen growth as much
as 45 percent. With this assistance, the local community will
be charting its own path to recovery. The ``LINC'' in
BusinessLINC stands for ``Learning, Information, Networking,
and Collaboration.''
Section-by-Section Analysis
Section 1. Short Title
Designates the bill as the ``BusinessLINC Act of 2000.''
Section 2. Authorization
This Section amends the Small Business Act by Adding a new
paragraph (m), ``BusinessLINC grants and cooperative
agreements.''
Paragraph (1) allows the Administrator to make grants or
enter into cooperative agreements with any coalition/
combination of private and/or public entities to (a) promote
business-to-business relationships between large and small
businesses and (b) to provide online information and a database
of companies that are interested in mentor-protege programs.
Paragraph (2) specifies that the Administrator may make
grants as long as the coalition/combination of public and/or
private entities provides an amount, either in kind or in cash,
equal to the grant amount for the purposes delineated in
paragraph (1) above.
Paragraph (3) specifies the authorization for the program
for fiscal years 2001 through 2003. This amount shall be
$6,600,000 for each of the three fiscal years.
5.20 H.R. 4530--New Markets Venture Capital Program Act of 2000,
Public Law No. 106-554
Legislative History
------------------------------------------------------------------------
Date Action
------------------------------------------------------------------------
H.R. 4530:
May 24, 2000............................ Referred to the House
Committee on Small Business.
May 25, 2000............................ Committee Consideration and
Mark-up Session Held.
May 25, 2000............................ Ordered to be Reported by
Voice Vote.
July 25, 2000........................... Reported by the Committee on
Small Business. H. Rept. 106-
785.
July 25, 2000........................... Placed on the Union Calendar,
Calendar No. 452.
October 25, 2000........................ Included in H.R. 5545.
H.R. 5545:
October 25, 2000........................ Referred to the House
Committee on Small Business.
(Several bills are engrossed
by reference in the H.R. 2614
conference report: H. Rept.
106-1004. This includes H.R.
5538, the Minimum Wage Act of
2000; H.R. 5542, the Taxpayer
Relief Act of 2000; H.R.
5543, the Medicare, Medicaid,
and SCHIP Benefits
Improvement and Protection
Act of 2000; H.R. 5544, the
Pain Relief Promotion Act of
2000; and H.R. 5545, the
Small Business
Reauthorization Act of 2000.
The bill texts are included
in the conference report).
H.R. 2614:
October 26, 2000........................ Conference report H. Rept. 106-
1004 filed. (text of
conference report: CR October
25, 2000 H10909-11188)
October 26, 2000........................ Rules Committee Resolution H.
Res 652 Reported to House.
Rule provides for
consideration of the
conference report to H.R.
2614 with 1 hour of general
debate. Previous question
shall be considered as
ordered without intervening
motions except motion to
recommit with or without
instructions. Waives points
of order against the
conference report and against
its consideration.
October 26, 2000........................ Conferees agreed to file
conference report.
October 26, 2000........................ Conference papers: Senate
report and manager's
statement held at the desk in
Senate.
October 26, 2000........................ Rule H. Res. 652 passed House.
October 26, 2000........................ Mr. Talent brought up
conference report H. Rept.
106-1004 for consideration
under the provisions of H.
Res. 652.
October 26, 2000........................ The previous question was
ordered without objection.
October 26, 2000........................ On agreeing to the conference
report Agreed to by the Yeas
and Nays: 237-174, 1 Present
(Roll no 560).
(consideration: CR H11243-
11264).
October 26, 2000........................ Motions to reconsider laid on
the table Agreed to without
objection.
October 26, 2000........................ Motion to proceed to
consideration of measure
agreed to in Senate by Yea-
Nay Vote. 55-40. Record Vote
Number: 286. (consideration:
CR S11097-11098).
October 26, 2000........................ Motion to proceed to
consideration of conference
report to accompany H.R. 2614
agreed to by Unanimous
Consent.
October 26, 2000........................ Conference report considered
in Senate by motion.
(consideration: CR S11098-
11100, S11104, S11107-11111)
October 31, 2000........................ Motion to proceed to
consideration of conference
report to accompany H.R. 2614
agree to by Unanimous
Consent.
October 31, 2000........................ Conference report considered
in Senate by motion. (The
H.R. 2614 conference report
[H. Rept. 106-1004]
incorporated several bills.
This included H.R. 5538--
Minimum Wage; H.R. 5542--
Taxpayer Relief; H.R. 5543--
Medicare, Medicaid, and SCHIP
Benefits Improvement and
Protection; H.R. 5344--Pain
Relief Promotion; and H.R.
5545--Small Business
Reauthorization. H.R. 5661 is
a subsequent Medicare,
Medicaid and SCHIP Benefits
Improvement and Protection
bill. H.R. 5667 is a
subsequent Small Business
Reauthorization bill. H.R.
4577, Consolidated
Appropriations Act 2001,
incorporates by reference the
provisions of H.R. 5661, H.R.
5667, and other bills. The
text of these bills is
printed in the H.R. 4577
conference report: H. Rept.
106-1033 [text of conference
report: CR December 15, 2000
H12100-12439].).
H.R. 5667:
December 15, 2000....................... Referred to the House
Committee on Small Business.
December 15, 2000....................... Enacted by reference in H.R.
4577 (H. Rept. 106-1033).
H.R. 4577:
December 15, 2000....................... Conference report H. Rept. 106-
1033 filed.
December 15, 2000....................... Mr. Young (FL) brought up
conference report H. Rept.
106-1033 by previously agreed
to special order.
December 15, 2000....................... The previous question was
ordered without objection.
December 15, 2000....................... On agreeing to the conference
report Agreed to by the Yeas
and Nays: 292-60 (Roll no.
603).
December 15, 2000:...................... Motions to reconsider laid on
the table Agreed to without
objection.
December 15, 2000....................... Senate agreed to conference
report by Unanimous Consent.
December 15, 2000....................... Message on Senate action sent
to the House.
December 15, 2000....................... Cleared for White House.
December 15, 2000....................... Presented to President.
December 21, 2000....................... Signed by President as Pub. L.
No. 106-554 (H.R. 4577,
Consolidated Appropriations
Act 2001, incorporates the
provisions of several bills
by reference. This includes
H.R. 5656--Labor HHS
Education Appropriations;
H.R. 5657--Legislative Branch
Appropriations; H.R. 5658--
Treasury Appropriations; H.R.
5666--Miscellaneous
Appropriations--except
section 123 relating to the
enactment of H.R. 4904; H.R.
5660--Commodity Futures
Modernization; H.R. 5661--
Medicare, Medicaid and SCHIP
Benefits Improvement and
Protection; H.R. 5662-
Community Renewal Tax Relief
and Medical Savings Accounts;
H.R. 5663--New Markets
Venture Capital Program
(incorporating the provisions
of H.R. 4530); and H.R. 5667--
Small Business
Reauthorization. The text of
these bills is printed in the
H.R. 4577 conference report:
H. Rept. 106-1033 [text of
conference report: CR
December 15, 2000 H12100-
12439].)
------------------------------------------------------------------------
Need for Legislation
The purpose of H.R. 4530 the ``New Markets Venture Capital
Program Act of 2000,'' is to promote economic development,
wealth and job opportunities in low income (LI) areas by
encouraging venture capital investments and offering technical
assistance to small enterprises. The central goal of the
legislation is to fulfill the unmet equity investment needs of
small enterprises primarily located in LI areas.
The bill creates a development venture capital program by
amending the Small Business Investment Act to authorize the
U.S. Small Business Administration (SBA) to enter into
participation agreements with 10 to 20 New Markets Venture
Capital (NMVC) companies in a public/private partnership. It
further authorizes SBA to guarantee debentures of NMVC
companies to enable them to make venture capital investments in
smaller enterprises in LI areas. And it authorizes SBA to make
grants to NMVC companies, and to other entities, for the
purpose of providing technical assistance to smaller
enterprises that are financed, or expected to be financed, by
such companies.
The Act will also enhance the ability of existing Small
Business Investment Companies (SBICs) to invest in LI areas. It
allows them to have access to the leverage capital authorized
under the program, without entering into a participation
agreement with SBA to act as an NMVC company. H.R. 4530 also
enhances the ability of existing Specialized Small Business
Investment Companies (SSBICs) to invest in LI areas. It allows
them to have access to the operational assistance grant funds
authorized under the program, also without entering into a
participation agreement with SBA to act as an NMVC company.
Section-by-Section Analysis
Section 1. Short Title
Designates the bill as the ``New Markets Venture Capital
Program Act of 2000.''
Section 2. New Markets Venture Capital Program
This Section amends Title III of the Small Business
Investment Act of 1958 by adding new Sections 351 through 368
to establish the ``New Markets Venture Capital Program.''
H.R. 5545 will add the following new sections to the Small
Business Investment Act:
Section 351. Definitions
Establishes definitions for developmental venture capital,
New Markets Venture Capital Companies, low- or moderate-income
geographic area, operational assistance, participation
agreement, and Specialized Small Business Investment Companies
as used in the legislation.
``Developmental venture capital'' is defined as equity
capital investment in small businesses, with a primary
objective of fostering economic development in low income
geographic areas. For the purposes of this Act, the Committee
considers equity capital investments to mean stock of any class
in a corporation, stock options, warrants, limited partnership
interests, membership interests in a limited liability company,
joint venture interests, or subordinated debt with equity
features if such debt provides only for interest payments
contingent upon earnings. Such investments must not require
amortization. They may be guaranteed; but neither the Equity
capital investment nor the guaranteed may be secured.
A ``New Markets Venture Capital Company'' is defined as a
company that has been approved by the Administration to operate
under the New Markets Venture Capital Program, and has entered
into a participation agreement with the Administration to make
equity investments and provide technical assistance to small
enterprises located in low- or moderate-income areas.
The term ``low income geographic area'' means a census
tract, or the equivalent county division as defined by the
Bureau of the Census for purpose of defining poverty areas, in
which the poverty rate is not less than 20 percent. In those
areas in a metropolitan area 50 percent or more of the
households must have an income equal to less than 60 percent of
the median income for the area. In rural areas the median
household income for a tract must not exceed 80 percent of the
statewide median household income. This definition also
includes any area located within a HUBZone, an Urban
Empowerment Zone or an Urban Enterprise Community, or a Rural
Empowerment Zone or a Rural Enterprise Community.
The term ``low income individual'' is included for the
purpose of allowing waivers of the low income area requirement
for areas of significant economic disadvantage that may not
otherwise qualify. A low income individual is defined as
someone whose income does not exceed 80 percent of the area
median income in metropolitan areas, or 80 percent of either
the area or statewide median income in rural areas.
The term ``operational assistance'' is defined as
management, marketing, and other technical assistance that
assists a small business concern with business development.
``Participation agreement'' is defined as an agreement
between the Administration and an NMVC Company detailing the
company's operating plan and investment criteria; and requiring
that investments be made in smaller enterprises at least 80
percent of which are located in low income geographic areas.
``Specialized Small Business Investment Company'' means any
small business investment company that was licensed under
section 301(d) as in effect before September 30, 1996.
Section 352. Purposes
Describes the purposes of the Act, which are:
(1) to promote economic development and the creation
of wealth and job opportunities in low- or moderate-
income geographic areas and among individuals living in
such areas by encouraging developmental venture capital
investments in smaller enterprises primarily located in
such areas; and
(2) to establish a developmental venture capital
program, with the mission of addressing the unmet
equity investment needs of small entrepreneurs located
in low- or moderate-income areas; to be administered by
the Small Business Administration; to enter into a
participation agreement with NMVC companies; to
guarantee debentures of NMVC companies to enable each
such company to make developmental venture capital
investments in smaller enterprises in low- or moderate-
income geographic areas; and to make grants to NMVC
companies for the purpose of providing operational
assistance to smaller enterprises financed, or expected
to be financed, by such companies.
Section 353. Establishment
Authorizes the SBA to establish the NMVC Program, under
which the SBA may form New Markets Venture Capital companies by
entering into participation agreements with firms that are
granted final approval under the requirements set forth in
Section 354 and formed for the purposes outlined in Section
352.
This Section also authorizes SBA to guarantee the
debentures issued by the NMVC Companies as provided in Section
355; and to make operational assistance grants to NMVC
Companies and other entities in accordance with Section 358.
Section 354. Selection of the New Markets Venture Capital Companies
Establishes the criteria to be followed by SBA in selecting
the NMVC Companies. This section provides for specific
selection criteria to be developed by the SBA--based on the
criteria enumerated in this legislation--and designed to ensure
that a variety of investment models are chosen and that
appropriate public policy goals are addressed. Geographic
dispersion must also be taken into account in the selection
process.
H.R. 5455 requires Program participants to satisfy the
following application requirements:
(1) Each NMVC must be a newly formed, for-profit
entity with at least $5 million of contributed capital
or binding capital commitments from non-Federal
investors, and with the primary objective of economic
development in low- or moderate-income geographic
areas.
(2) Each NMVC's management team must be experienced
in some form of community development or venture
capital financing.
(3) Each NMVC must concentrate its activities on
serving its investment areas, and submit a proposal
that will expand economic opportunities and address and
the unmet capital needs within the investment areas.
(4) Each applicant must submit a strong proposal to
provide operational assistance, including the possible
use of outside, licensed professionals.
(5) Each NMVC must have binding commitments (in cash
or in-kind) for operational assistance and overhead,
payable or available over a multi-year period not to
exceed 10 years, in an amount equal to 30% of its
committed and contributed capital. These commitments
may be from any non-SBA source and the cash portion may
be invested in an annuity payable semi-annually over a
multi-year period not to exceed 10 years.
The Committee is well aware that it will be difficult for
some NMVCs to raise their entire operational assistance match
during the application stage. Those NMVCs that are unable to
raise the required match, but have submitted a reasonable plan
to the Administrator to meet the requirement, may be granted a
conditional approval from the Administrator and be allowed to
draw one dollar of federal matching funds for every dollar of
private funds raised provided that (for the purpose of final
approval) they raise at least 20 percent of the required
matching funds, and have at least 20 percent of the match on
hand when applying for additional grant funds.
The Committee believes that it is important to give NMVCs
the flexibility to obtain the required private operational
assistance funds, however, from a safety and soundness
standpoint, federal assistance funds should not be placed at
greater risk than private assistance funds.
This conditional approval shall be made with the
expectation that the required capital funding commitments will
be obtained within two years of the conditional approval.
The bill also authorizes SBA to select firms that have
experience with investing in enterprises located in low income
areas to participate as NMVCs. SBA will enter into an agreement
with each NMVC setting forth the specific terms of that firm's
participation in the program. Each agreement will be tailored
to the particular NMVC's operations and will be based on the
NMVC's own proposal, submitted as part of the NMVC's
application form. The agreement will require that investments
be made by the NMVC in smaller enterprises, at least 80% of
which are located in low income geographic areas.
In order for an investment to be counted toward the 80%
goal under H.R. 5545, the investment must be made in a small
business concern located in an LI area. This ensures that the
New Markets Venture Capital Company Program will focus
investment capital where it is most needed, rather than
duplicating existing SBA programs.
Section 359. Bank Participation
Allows any national bank, and any member bank of the
Federal Reserve System to invest in an NMVC company formed
under this legislation so long as the investment would not
exceed 5 percent of the capital and surplus of the bank.
Banks that are not members of the federal Reserve system
are allowed to invest in an NMVC company formed under this
legislation so long as such investment is allowed under
applicable State law, and so long as the investment would not
exceed 5 percent of the capital and surplus of the bank.
Section 360. Federal Financing Bank
Establishes that Section 318 of the Small Business
Investment Act does not apply to any NMVC Company created under
this legislation.
Section 361. Reporting Requirements
Establishes reporting requirements for the NMVC Companies.
Specifically, the NMVC companies are required to provide to SBA
such information as the Administration requires, including:
information related to the measurement criteria that the NMVC
proposed in its program application; and, for each case in
which the NMVC makes an investment or a grant to a business
located outside of an LMI area, a report on the number and
percentage of employees of the business who reside in an LMI
area.
Section 362. Examinations
Requires that each NMVC company shall be subjected to
examinations made at the direction of the Investment Division
of SBA. This section allows for examinations to be conducted
with the assistance of a private sector entity that has both
the necessary qualifications and expertise.
It is the intent of the Committee that the oversight of the
NMVC program be modeled after that developed for the SBIC
program and administered by SBA's Investment Division.
Oversight should include a close working relationship between
SBA analysts and NMVC management teams, detailed reporting
requirements, frequent on-site examinations to evaluate
performance and conformance with the operating plan, and
careful analysis of the firm's economic impact.
Section 363. Injunctions and Other Orders
Grants SBA the power of injunction over NMVC companies and
the authority to act as a trustee or receiver of a company if
appointed by a court.
This section of the legislation closely tracks the existing
injunction provision (Section 311) of the Small Business
Investment Act of 1958. Again, it is the Committee's intent
that oversight of the NMVC program be modeled after that
developed for the SBIC program and administered by SBA's
Investment Divisions. This oversight should include a close
working relationship between SBA analysts and NMVC management
teams, detailed reporting requirements, frequent on-site
examinations to evaluate performance and conformance with the
operating plan, and careful analysis of the firm's economic
impact.
Section 364. Additional Penalties for Noncompliance
Grants SBA or the Attorney General the authority to file a
cause of action against an NMVC company for non-compliance.
Should a court find that a company violated or failed to comply
with provisions of this legislation or other provisions of the
Small Business Investment Act of 1958, this section grants SBA
the authority to void the participation agreement between the
company and the SBA.
Section 365. Unlawful Acts and Omissions; Breach of Fiduciary Duty
Defines what is to be considered as a violation of this
legislation, who is considered to have a fiduciary duty, and
who is ineligible to serve as an officer, director, or employee
of any NMVC company because of unlawful acts.
This section of the legislation closely tracks the unlawful
acts provision (Section 314) of the Small Business Investment
Act of 1958. It is the Committee's intent to grant SBA the same
authority over NMVC companies that it has over Small Business
Investment Companies with respect to unlawful acts and the
breach of fiduciary responsibility.
Section 366. Removal or Suspension of Directors or Officers
Grants SBA the authority to use the procedures set forth in
Section 313 of the Small Business Investment Act of 1958 to
remove or suspend any director or officer of an NMVC company.
Section 367. Regulations
Authorizes the Small Business Administration to issue such
regulations as it deems necessary to carry out the provisions
of the legislation.
Section 368. Authorization of Appropriations
Authorizes appropriations for the Program for Fiscal Years
2001 through 2006. This section authorizes such subsidy budget
authority as necessary to guarantee $150,000,000 of debentures
and $30,000,000 to make operational assistance grants.
The Committee estimates that the Program will only require
a one-time appropriation of $45 million--$15 million for loan
guarantees and $30 million for operational assistance grants.
This $15 million will allow SBA to back $150 million in loans
to small business in low- or moderate-income areas.
Section 368(c). Conforming Amendment
Makes a conforming change to the Small Business Investment
Act of 1958 to account for the changes made by this
legislation.
Section 368(d). Calculation of Maximum Amount of SBIC Leverage
Allows Small Business Investment Companies (``SBICs'') to
obtain additional access to leverage outside the statutory
caps. The exemption of the SBICs, however, is limited only to
investments they make in LMI areas.
This section provides that investments made in LI areas
will not apply against the leverage cap of the individual SBIC
as long as the total amount invested through the program does
not exceed 50% of the SBIC's paid-in-capital.
Section 368(e). Bankruptcy Exemption for New Markets Venture Capital
Companies
Adds NMVC companies to the list of entities that may not be
considered a debtor under a Title 11 bankruptcy proceeding.
Section 368(f). Federal Savings Associations
Amends the ``Home Owners Loan Act'' to allow federal
savings associations to invest in an NMVC company formed under
this legislation so long as the investment would not exceed 5
percent of the capital and surplus of the savings association.
5.21 H.R. 4890--The Small Business Contract Equity Act of 2000
Legislative History
------------------------------------------------------------------------
Date Action
------------------------------------------------------------------------
H.R. 4890:
July 19, 2000........................... Referred to the Committee on
Small Business, and in
addition to the Committee on
Government Reform, for a
period to be subsequently
determined by the Speaker, in
each case for consideration
of such provisions as fall
within the jurisdiction of
the committee concerned.
July 19, 2000........................... Referred to House Small
Business.
July 27, 2000........................... Committee Consideration and
Mark-up Session Held.
July 27, 2000........................... Ordered to be Reported by
Voice Vote.
July 19, 2000........................... Referred to House Government
Reform.
July 21, 2000........................... Referred to the Subcommittee
on Government Management,
Information and Technology.
------------------------------------------------------------------------
The Small Business Reauthorization Act of 1997 requires
federal agencies wishing to consolidate two or more procurement
requirements in a bundled contract to analyze whether the
savings from the bundle will be substantial and measurable. The
Small Business Administration developed regulations to
implement this requirement. Despite these efforts, contract
bundling continues unabated and it remains unclear whether the
government actually is achieving measurable savings or other
benefits from the bundling of contracts. For example, testimony
before the Committee raised serious concerns whether the Marine
Corps regional cook and chill contract for food service
constitutes an improvement over the existing base-by-base food
service arrangements.
The Small Business Reauthorization Act of 1997 was a start
but did not provide sufficient teeth to prevent procuring
agencies from bundling contracts unwisely. The Small Business
Contract Equity Act of 2000 is an effort to provide the Small
Business Administration with the teeth necessary to stop
unwarranted contract bundling. The SBA will be given the
authority to approve the bundling analyses that the procuring
agency must perform pursuant to the Small Business
Reauthorization Act of 1997. If the SBA finds the study to be
inadequate, the agency is not permitted to issue the
solicitation until it has obtained the approval of the
Administrator. The bill further provides that the Administrator
may not approve any agency study for any bundled contract for
one fiscal year if the procuring agency has not met one or more
of the small business prime contract utilization goals set
forth in section 15(g)(2) of the Small Business Act (20% for
small businesses, 5% for socially and economically
disadvantaged businesses, and 5% for women-owned businesses).
5.22 H.R. 4897--Equity in Contracting for Women Act of 2000, Public
Law No. 106-554
Legislative History
------------------------------------------------------------------------
Date Action
------------------------------------------------------------------------
H.R. 4897:
July 19, 2000........................... Referred to the House
Committee on Small Business.
July 27, 2000........................... Committee Consideration and
Mark-up Session Held.
July 27, 2000........................... Ordered to be Reported by
Voice Vote.
September 21, 2000...................... Reported by the Committee on
Small Business. H. Rept. 106-
879.
September 21, 2000...................... Placed on the Union Calendar,
Calendar No. 530.
October 25, 2000........................ Included in H.R. 5545.
H.R. 5545:
October 25, 2000........................ Referred to the House
Committee on Small Business.
(Several bills are engrossed
by reference in the H.R. 2614
conference report: H.REPT.
106-1004. This includes H.R.
5538, the Minimum Wage Act of
2000; H.R. 5542, the Taxpayer
Relief Act of 2000; H.R.
5543, the Medicare, Medicaid,
and SCHIP Benefits
Improvement and Protection
Act of 2000: H.R. 5544, the
Pain Relief Promotion Act of
2000; and H.R. 5545, the
Small Business
Reauthorization Act of 2000.
The bill texts are included
in the conference report.).
H.R. 2614:
October 26, 2000........................ Conference report H. Rept. 106-
1004 filed. (text of
conference report: CR 10/25/
2000 H10909-11188) Rules
Committee Resolution H. Res.
652 Reported to House. Rule
provides for consideration of
the conference report to H.R.
2614 with 1 hour of general
debate. Previous question
shall be considered as
ordered without intervening
motions except motion to
recommit with or without
instructions. Waives points
of order against the
conference report and against
its consideration.
October 26, 2000........................ Conferees agreed to file
conference report.
October 26, 2000........................ Conference papers: Senate
report and manager's
statement held at the desk in
Senate.
October 26, 2000........................ Rule H. Res. 652 passed House.
October 26, 2000........................ Mr. Talent brought up
conference report H. Rept.
106-1004 for consideration
under the provisions of H.
Res. 652.
October 26, 2000........................ The previous question was
ordered without objection.
October 26, 2000........................ On agreeing to the conference
report Agreed to by the Yeas
and Nays: 237-174, 1 Present
(Roll no. 560).
(consideration: CR H11243-
11264).
October 26, 2000........................ Motions to reconsider laid on
the table Agreed to without
objection.
October 26, 2000........................ Motion to proceed to
consideration of measure
agreed to in Senate by Yea-
Nay Vote. 55-40. Record Vote
Number: 286. (consideration:
CR S11097-11098).
October 26, 2000........................ Motion to proceed to
consideration of conference
report to accompany H.R. 2614
agreed to by Unanimous
Consent.
October 26, 2000........................ Conference report considered
in Senate by motion.
(consideration: CR S11098-
11100, S11104, S11107-11111).
October 31, 2000........................ Motion to proceed to
consideration of conference
report to accompany H.R. 2614
agreed to by Unanimous
Consent.
October 31, 2000........................ Conference report considered
in Senate by motion. [The
H.R. 2614 conference report
(H. Rept. 106-1004]
incorporated several bills.
This included H.R. 5538--
Minimum Wage; H.R. 5542--
Taxpayer Relief; H.R. 5543--
Medicare, Medicaid, and SCHIP
Benefits Improvement and
Protection; H.R. 5544--Pain
Relief Promotion; and H.R.
5545--Small Business
Reauthorization. H.R. 5661 is
a subsequent Medicare,
Medicaid and SCHIP Benefits
Improvement and Protection
bill. H.R. 5667 is a
subsequent Small Business
Reauthorization bill. H.R.
4577, Consolidated
Appropriations Act 2001,
incorporates by reference the
provisions of H.R. 5661, H.R.
5667, and other bills. The
text of these bills is
printed in the H.R. 4577
conference report: H. Rept.
106-1033 [text of conference
report: CR 12/15/2000 H12100-
12439].).
H.R. 5667:
December 15, 2000....................... Referred to the House
Committee on Small Business
incorporating the provisions
of H.R. 4897.
December 15, 2000....................... Enacted by reference in H.R.
4577 (H. Conf. Rept. 106-
1033).
H.R. 4577:
December 15, 2000....................... Conference report H. Rept. 106-
1033 filed.
December 15, 2000....................... Mr. Young (FL) brought up
conference report H. Rept.
106-1033 by previously agreed
to special order.
December 15, 2000....................... The previous question was
ordered without objection.
December 15, 2000....................... On agreeing to the conference
report Agreed to by the Yeas
and Nays: 292-60 (Roll no.
603).
December 15, 2000....................... Motions to reconsider laid on
the table Agreed to without
objection.
December 15, 2000....................... Senate agreed to conference
report by Unanimous Consent.
December 15, 2000....................... Message on Senate action sent
to the House.
December 15, 2000....................... Cleared for White House.
December 15, 2000....................... Present to President.
December 21, 2000....................... Signed by President. (H.R.
4577, Consolidated
Appropriations Act 2001,
incorporates the provisions
of several bills by
reference. This includes H.R.
5656--Labor HHS Education
Appropriations; H.R. 5657--
Legislative Branch
Appropriations; H.R. 5658--
Treasury Appropriations; H.R.
5666--Miscellaneous
Appropriations--except
section 123 relating to the
enactment of H.R. 4904; H.R.
5660--Commodity Futures
Modernization; H.R. 5661--
Medicare, Medicaid and SCHIP
Benefits Improvement and
Protection; H.R. 5662--
Communmity Renewal Tax Relief
and Medical Savings Accounts;
H.R. 5663--New Markets
Venture Capital Program; and
H.R. 5667--Small Business
Reauthorization. The text of
these bills is printed in the
H.R. 4577 conference report:
H Rept. 106-1033 [text of
conference report: CR 12/15/
2000 H12100-12439].)
------------------------------------------------------------------------
Need for Legislation
There are approximately nine million women-owned businesses
according to the statistics of the United States Small Business
Administration. Women-owned businesses employ over 27 million
people and are a vital element in the unprecedented growth and
productivity of the American economy. Nearly half of the
business owned by women provide goods and services to the
federal government according to the National Foundation for
Women Business Owners.
From 1997 to 1999, the number of federal government
contracts awarded to women decreased by more than 38 percent.
So while the private sector was increasing the use of women-
owned small businesses, the federal government utilization was
decreasing.
Congress recognized the valuable contribution of women-
owned businesses when it established a five percent procurement
goal in the Federal Acquisition Streamling Act of 1994
(`FASA'). However, data from the Federal Procurement Data
System shows that the highest utilization of women-owned
businesses was 2.47 percent in 1999--not even half of the
statutory goal. The Committee finds that this simply is
unacceptable.
The Committee has heard testimony concerning the reasons
for the failure of the federal government to achieve the five
percent goal. Contract bundling, or the consolidation of
smaller contract requirements into larger contracts, makes it
difficult for women-owned small businesses to file responsive
bids to bundled solicitations. The federal government also is
increasing the use of the Federal Supply Schedule which
increases the efficiency for purchasing commercial off-the-
shelf items. However, only 30 percent of the contractors on
Federal Supply Schedules are small businesses and an even
smaller amount are women-owned small businesses. Nothing in the
Federal Supply Schedule contracting process mandates that a
contracting officer select specific contractors for an award.
Thus, being on the Federal Supply Schedule does not guarantee
that the contractor will be used for the purchase of goods and
services. The Federal Supply Schedule, while increasing the
efficiency of government procurements for commercially
available items, also may perpetuate the use of well-known
firms that are not women-owned businesses.
As the Committee has seen on numerous occasions, the drive
for efficiency in procurement often places Congressionally-
mandated contracting goals for small businesses in general, and
women-owned businesses in particular, in jeopardy. Current
procurement practices enable contracting officers to reserve
competition among small businesses for contracts in value
between $2,500 and $100,000 if the contracting officer finds
that there will be at least two responsible small businesses to
bid on the contract. The Committee believes that a similar
mechanism should be established for women-owned small
businesses in historically underrepresented industries. This
would help contracting officers meet the procurement goal for
women established in FASA while still ensuring that government
receives the benefits of competitive bidding for goods and
services.
The Committee believes that this action is necessary even
though the President issued Executive Order 13,157 on May 23,
2000 affirming the Administration's goal of increasing
opportunities for women-owned small business. The Executive
order provides a mechanism by which the Small Business
Administration and the Office of Federal Procurement Policy
within the Office of Management and Budget can monitor and
measure compliance with the women-owned procurement goal in
FASA. The Executive Order also would authorize the collection
and dissemination of best practices among agencies for
achieving the procurement goal established in FASA. However,
the Executive order does not provide any tool by which
contracting officers can identify and utilize women-owned small
business. The Committee believes that the goals expressed in
FASA and reaffirmed in the Executive Order will not be achieved
without the use of some mandatory tool which enables
contracting officers to identify women-owned small businesses
and establish competition among those businesses for the
provision of goods and services to the federal government.
Section-by-Section Analysis
Section 1. Short Title
Designates the bill as the `Equity in Contracting for Women
Act of 2000'.
Section 2. Procurement Program for Women's Small Business Concerns
This section modifies section 8 of the Small Business Act
by adding a new subsection (m) to establish a procurement
program for Women's Small Business Concerns.
Paragraph (1) gives the same definition to a ``contracting
officer'' as provided under the Office of Federal Procurement
Policy Act.
Paragraph (1) also defines a `small business concern owned
and controlled by women' as one that is at least 51 percent
owned and controlled by women who are economically
disadvantaged. The Committee intends that the Small Business
Administration develop standards for the determination of
economic disadvantage which are consistent with other Small
Business Administration programs designed to assist
`economically disadvantaged' small business concerns.
Paragraph (2) authorizes federal agencies to reserve any
contract for competition by small business concerns owned and
controlled by women if the following criteria are satisfied:
(a) the firm is a responsible bidder; (b) the contracting
officer expects that two or more small business concerns owned
and controlled by women will submit bids on the contract; (c)
the contract is for the procurement of goods and services in an
industry identified by the Administrator of the Small Business
Administration as one in which small business concerns owned
and controlled by women are historically underrepresented; (d)
if the anticipated award amount of the contract does not exceed
$5,000,000 for a manufacturing business or $3,000,000 for all
other contracts; (e) if the contracting officer can anticipate
that the award will be made at reasonable price; and (f) if the
concern is certified as a small business concern owned and
controlled by women.
The Committee intends that a certification by any federal,
state or local governmental entity should satisfy this last
criterion as long as the certification tracks the definition of
small business concern owned and controlled by women as used in
this Act. However, the Committee does not intend for the
Administrator to establish a certification program for small
business concerns owned and controlled by women.
In addition, the Committee expects that the contracting
officers will accept self-certification so long as the
documentation provided along with the response to the
solicitation enables the contracting officer to determine that
the bidder is a small business concern owned and controlled by
women as used in this Act. The Committee expects that the
Administrator will develop documentation standards that will be
utilized by all contracting officers. For purposes of
developing standards of documentation, the Committee does not
expect that the Administrator should duplicate the
documentation requirements for its 8(a) program. Nevertheless,
the documentation should be sufficiently demanding so that a
contracting officer can pierce the veil of various business
enterprises to ensure that the bidder meets the definition set
forth in this Act. Thus, the Committee expects that
documentation would enable the contracting officer to apply
attribution rules set forth in Title 13 of the Code of Federal
Regulations to determine whether the bidder is a small business
concern owned and controlled by women.
The Committee does not intent that the contracting program
established in this Act provide a basis for contracting
officers to award contracts on a sole-source basis to small
business concerns owned and controlled by women. Rather, the
Committee intends that contracting officers utilize the
contracting mechanism established in this Act to identify small
business concerns owned and controlled by women in industries
in which they are historically represented as prime contractors
and competitively bid those contracts. Ultimately, the
Committee expects that the process for identifying these small
business concerns owned and controlled by women will lead to
greater utilization of small business concerns owned and
controlled by women throughout the federal government and not
just in contracts designated in this Act.
Paragraph (3) requires that the Administrator conduct a
study in order to identify those industries in which small
business concerns owned and controlled by women are
underrepresented in obtaining federal contracts. The Committee
expects the Administrator's study to focus on those industries
in which small business concerns owned and controlled by women
are underrepresented at the prime contractor level. The study
shall evaluate, on an industry-by-industry basis the specific
industries and regions of the United States that are
underrepresented. In order for the program established in this
Act to conform with Adarand Constructors v. Pena, 515 U.S. 200
(1995), the Committee expects that the Administrator's study
will mirror the `benchmarking' study performed by the
Department of Commerce for small disadvantaged businesses.
Pargraph 4 requires the Administrator to establish
procedures for verifying the eligibility of businesses for the
program established by this Act. The Committee reiterates its
intent that the Act not be used by the Administrator to
establish a certification program. Instead, the Committee
expects the Administrator to develop regulations which will
efficiently and rapidly resolve disputes over eligibility
without unduly burdening small businesses.
Paragraph 4 also requires the Administrator to develop
regulations by which the Small Business Administration can
quickly and in a cost-effective manner verify the accuracy of
any certification, such as, but not limited to, the development
of lists of other federal, state, and local certifications that
it will accept.
Paragraph 4 also authorizes, but does not mandate, the
Administrator to provide for periodic examinations of the
program including random program examinations in order to
determine that respondents to solicitations are businesses
eligible under this Act. The Committee expects that such
examinations will not be intrusive but will be sufficient to
determine that other governmental organizations are providing
adequate certifications and that self-certification is not
being abused. The Committee does not intend that these periodic
or random examinations be transformed into an ongoing
certification program.
Paragraph 4 also requires government agencies, including
those specified in the Act, to provide information and
assistance to the Administrator in order to carry out the
purposes of the Act.
Paragraph (4) also makes clear that small business concerns
will be subject to penalties beyond those set forth in the
Small Business Act should they misrepresent their status under
this Act.
5.23 H.R. 4923--Community Renewal and New Markets Act of 2000, Public
Law No. 106-554
Legislative History
------------------------------------------------------------------------
Date Action
------------------------------------------------------------------------
H.R. 4923:
July 24, 2000........................... Referred to the Committee on
Ways and Means, and in
addition to the Committees on
Banking and Financial
Services, Small Business, and
Commerce, for a period to be
subsequently determined by
the Speaker, in each case for
consideration of such
provisions as fall within the
jurisdiction of the committee
concerned.
July 24, 2000........................... Referred to House Ways and
Means
July 24, 2000........................... Referred to House Banking and
Financial Services.
July 31, 2000........................... Referred to the Subcommittee
on Housing and Community
Opportunity.
July 24, 2000........................... Referred to House Small
Business.
July 24, 2000........................... Referred to House Commerce.
July 25, 2000........................... Mr. English moved to suspend
the rules and pass the bill.
July 25, 2000........................... Considered under suspension of
the rules. (consideration: CR
H6797-6841).
July 25, 2000........................... On motion to suspend the rules
and pass the bill Agreed to
by the Yeas and Nays: (\2/3\
required): 394-27 (Roll no.
430). (text: CR H6797-6816).
July 25, 2000........................... Motion to reconsider laid on
the table Agreed to without
objection.
July 26, 2000........................... Received in the Senate.
July 27, 2000........................... Read the first time. Placed on
Senate Legislative Calendar
under Read the First Time.
September 5, 2000....................... Read the second time: Placed
on Senate Legislative
Calendar under General
Orders. Calendar No. 780.
H.R. 5542:
October 25, 2000........................ Referred to the Committee on
Ways and Means, and in
addition to the Committees on
Education and the Workforce,
Banking and Financial
Services, and the Budget, for
a period to be subsequently
determined by the Speaker, in
each case for consideration
of such provisions as fall
within the jurisdiction of
the committee concerned.
October 25, 2000........................ Referred to House Ways and
Means.
October 25, 2000........................ Referred to House Education
and the Workforce.
November 14, 2000....................... Referred to the Subcommittee
on Employer-Employee
Relations. (Several bills are
incorporated in the H.R. 2614
conference report: H.Rept.
106-1004. This includes H.R.
5538, the Minimum Wage Act of
2000; H.R. 5542, the Taxpayer
Relief Act of 2000; H.R.
5543, the Medicare, Medicaid,
and SCHIP Benefits
Improvement and Protection
Act of 2000; H.R. 5544, the
Pain Relief Promotion Act of
2000; and H.R. 5545, the
Small Business
Reauthorization Act of 2000.
The bill texts are included
in the conference report.).
October 25, 2000........................ Referred to House Banking and
Financial Services.
October 25, 2000........................ Referred to the Subcommittee
on Financial Institutions and
Consumer Credit.
October 25, 2000........................ Referred to the Subcommittee
on Housing and Community
Opportunity.
October 25, 2000........................ Referred to House Budget.
H.R. 5545:
October 25, 2000........................ Referred to the House
Committee on Small Business.
(Several bills are engrossed
by reference in the H.R. 2614
conference report: H. Rept.
106-1004. This includes H.R.
5538, the Minimum Wage Act of
2000; H.R. 5542, the Taxpayer
Relief Act of 2000; H.R.
5543, the Medicare, Medicaid,
and SCHIP Benefits
Improvement and Protection
Act of 2000; H.R. 5544, the
Pain Relief Promotion Act of
2000; and H.R. 5545, the
Small Business
Reauthorization Act of 2000.
The bill texts are included
in the conference report.)
H.R. 2614:
October 26, 2000........................ Conference report H. Rept. 106-
1004 filed. (text of
conference report: CR 10/25/
2000 H10909-11188).
October 26, 2000........................ Rules Committee Resolution H.
Res. 652 Reported to House.
Rule provides for
consideration of the
conference report to H.R.
2614 with 1 hour of general
debate. Previous question
shall be considered as
ordered without intervening
motions except motion to
recommit with or without
instructions. Waives points
of order against the
conference report and against
its consideration.
October 26, 2000........................ Conferees agreed to file
conference report.
October 26, 2000........................ Conference papers: Senate
report and manager's
statement held at the desk in
Senate.
October 26, 2000........................ Rule H. Res. 652 passed House.
October 26, 2000........................ Mr. Talent brought up
conference report H. Rept.
106-1004 for consideration
under the provisions of H.
Res. 652.
October 26, 2000........................ The previous question was
ordered without objection.
October 26, 2000........................ On agreeing to the conference
report Agreed to by the Yeas
and Nays: 237-174, 1 Present
(Roll No. 560)
(consideration: CR H11243-
11264).
October 26, 2000........................ Motions to reconsider laid on
the table Agreed to without
objection.
October 26, 2000........................ Motion to proceed
consideration of measure
agreed to in Senate by Yea-
Nay Vote 55-40. Record Vote
Number: 286. (consideration:
CR S11097-11098).
October 26, 2000........................ Motion to proceed to
consideration of conference
report to accompany H.R. 2614
agreed to by Unanimous
Consent.
October 26, 2000........................ Conference report considered
in Senate by motion.
(consideration: CR S11098-
11100, S11104, S11107-11111).
October 31, 2000........................ Motion to proceed to
consideration of conference
report to accompany H.R. 2614
agreed to by Unanimous
Consent.
October 31, 2000........................ Conference report considered
in Senate by motion. (The
H.R. 2614 conference report
[H. Rept. 106-1004]
incorporated several bills.
This included H.R. 5538--
Minimum Wage; H.R. 5542--
Taxpayer Relief; H.R. 5543--
Medicare, Medicaid, and SCHIP
Benefits Improvement and
Protection; H.R. 5544--Pain
Relief Promotion; and H.R.
5545--Small Business
Reauthorization. H.R. 5661 is
a subsequent Medicare,
Medicaid and SCHIP Benefits
Improvement and Protection
bill. H.R. 5667 is a
subsequent Small Business
Reauthorization bill. H.R.
4577, Consolidated
Appropriations Act 2001,
incorporates by reference the
provisions of H.R. 5661, H.R.
5667, and other bills. The
text of these bills is
printed in the H.R. 4577
conference report: H. Rept.
106-1033 [text of conference
report: CR 12/15/2000 H12100-
12439].).
H.R. 5662:
December 14, 2000....................... Referred to the House
Committee on Ways and Means.
(Incorporated by reference
and text printed in the H.R.
4577 conference report: H.
Rept. 106-1033 [text of
conference report: CR 12/15/
2000 H12100-12439]. H.R. 4577
is the Consolidated
Appropriations Act 2001.).
H.R. 4577:
December 15, 2000....................... Conference report H. Rept. 106-
1033 filed.
December 15, 2000....................... Mr. Young (FL) brought up
conference report H. Rept.
106-1033 by previously agreed
to special order.
December 15, 2000....................... The previous question was
ordered without objection.
December 15, 2000....................... On agreeing to the conference
report Agreed to by the Yeas
and Nays: 292-60 (Roll No.
603).
December 15, 2000....................... Motions to reconsider laid on
the table Agreed to without
objection.
December 15, 2000....................... Senate agreed to conference
report by Unanimous Consent.
December 15, 2000....................... Message on Senate action sent
to the House.
December 15, 2000....................... Cleared for White House.
December 15, 2000....................... Presented to President.
December 21, 2000....................... Signed by President as Pub. L.
No. 106-554 (H.R. 4577,
Consolidation Appropriations
Act 2001, incorporates the
provisions of several bills
by reference. This includes
H.R. 5656--Labor HHS
Education Appropriations;
H.R. 5657--Legislative Branch
Appropriations; H.R. 5658--
Treasury Appropriations; H.R.
5666--Miscellaneous
Appropriations--except
section 123 relating to the
enactment of H.R. 4904; H.R.
5660--Commodity Futures
Modernization; H.R. 5661--
Medicare, Medicaid and SCHIP
Benefits Improvement and
Protection; H.R. 5662--
Community Renewal Tax Relief
and Medical Savings Accounts;
H.R. 5663--New Markets
Venture Capital Program; and
H.R. 5667--Small Business
Reauthorization. The text of
these bills is printed in the
H.R. 4577 conference report:
H. Rept. 106-1033 [text of
conference report: CR 12/15/
2000 H12100-12439].
------------------------------------------------------------------------
To amend the Internal Revenue Code of 1986 to provide tax
incentives for the renewal of distressed communities, to
provide for 9 additional empowerment zones and increased tax
incentives for empowerment zone development, to encourage
investments in new markets, and for other purposes.
5.24 H.R. 4943--The Small Business Federal Acquisition Simplification
Act of 2000
Legislative History
------------------------------------------------------------------------
Date Action
------------------------------------------------------------------------
H.R. 4943:
July 25, 2000........................... Referred to the Committee on
Small Business, and in
addition to the committee on
Government Reform, for a
period to be subsequently
determined by the Speaker, in
each case for consideration
of such provisions as fall
within the jurisdiction of
the committee concerned.
July 25, 2000........................... Referred to House Small
Business.
July 27, 2000........................... Committee Consideration and
Mark-up Session Held.
July 27, 2000........................... Ordered to be Reported by
Voice Vote.
July 25, 2000........................... Referred to House Government
Reform.
July 31, 2000........................... Referred to the Subcommittee
on Government Management,
Information and Technology.
------------------------------------------------------------------------
Need for Legislation
The Committee has held a number of hearings concerning the
inability of the Federal government to meet small business
contracting objectives and to treat small businesses fairly in
the procurement process. In addition, the Committee and its
members often hear complaints from small businesses who are
subcontractors that they are unable to obtain prompt
reimbursement from prime contractors for goods and services
provided directly, or indirectly through the prime contractor,
to Federal agencies.
The Act would encourage the use of Federal governmentwide
commercial purchase cards, instead of the present lengthy
paper-based process, in making small purchases up to $100,000
from small businesses. An annual report on the use of Federal
governmentwide commercial purchase cards would be submitted to
the Office of Advocacy.
The General Accounting Office is required to perform a one-
time audit of the use of Federal governmentwide commercial
purchase cards by the ten largest procuring agencies to
determine the number and amount of acquisitions from small
businesses. The report is to be made to the House and Senate
Committees on Small Business.
The Act would improve the subcontracting process for small
businesses by mandating that the failure to pay a subcontractor
(absent a failure to perform on the part of the subcontractor)
constitutes a material breach of the prime contract with the
Federal government. Upon the determination of such a breach,
the Federal government is authorized to make direct payment to
the small business from amounts withheld from the prime
contractor.
In addition, the Act would require that prime contractors
certify that they will obtain goods and services from
subcontractors who are small businesses and who were used in
preparing the bid submitted to the Federal government. Finally,
the Act mandates that prime contractors announce on the
Internet subcontracting opportunities contained in small
business subcontracting plans required under 8(d) of the Small
Business Act. Previously such opportunities were not widely
circulated.
Section-by-Section Analysis
Section 1. Short Title
Designates the bill as the ``Small Business Federal
Acquisition Simplification Act of 2000.''
Section 2. Procurement Using Government-wide Commercial Purchase Cards
This section amends the Small Business Act by adding a new
subsection (p) pertaining to procurements using government-wide
commercial purchase cards. The words ``authorized individual,''
``goods or services,'' and ``government-wide commercial
purchase card'' are defined.
Goods and services purchased by an authorized individual
using a government-wide commercial purchase card shall be from
a small business unless no small business concern: (1) provides
goods or services of the same kind or a comparable nature; (2)
can provide the goods or services within the required time
schedule; or (3) can meet the quality standards.
Nothing in the subsection would change or modify the
Javits-Wagner-O'Day Act with respect to goods and services
acquired from the blind and the several disabled. If goods or
services available from a small business are purchased from a
large business using a government-wide commercial purchase
card, the transaction must be reported to the chief procurement
official for the agency and the reasons for the purchase
documented.
Before purchasing goods and services of a value of $2,500
or less with a government-wide commercial credit card the buyer
need not obtain a plethora of price information or price
quotations. Instead, the buyer may consider: (1) the
competitive nature of the marketplace in which the goods or
services are sold; (2) recent acquisition of similar goods and
services; (3) dollar amount of the proposed acquisition; and
(4) past experience concerning the prices of specific vendors.
When purchasing goods and services of a value of more than
$2,500 but less than $25,000 with a government-wide commercial
purchase card, the buyer must obtain pricing information from
two or more small businesses who deal in the type of goods and
services sought. The pricing information can come from printed
price lists or catalogs, oral or written price quotations, and
prices obtained from the Internet. In addition to price, the
buyer may also consider previous experience with the vendor,
customer surveys, and other reasonable information.
Large-value acquisitions, $25,000 to $100,000, using a
government-wide commercial purchase card, the buyer must
advertise the procurement, consider price quotations received,
and solicit price quotations or offers from at least 3 small
businesses concerns, including at least one of the following:
(1) a small business concern owned and controlled by socially
and economically disadvantaged individuals; (2) a small
business concern owned and controlled by women; and (3) a small
business concern owned and controlled by veterans. In addition,
the buyer may consider, besides price, the competitive nature
of the market place, the vendor's past performance, and the
urgency of the proposed acquisition.
Each Federal agency is required to maintain, or contribute
to the maintenance of, a comprehensive source list of small
business concerns that are vendors of goods and services of the
kind the Federal agency purchases. Each list is to identify
whether a vendor is: (1) a small business concern owned and
controlled by socially and economically disadvantaged
individuals; (2) a small business concern owned and controlled
by women; or (3) a small business concern owned and controlled
by veterans.
Not later than 90 days after the end of each fiscal year,
each Federal agency is required to publish a report concerning
the use of government-wide commercial purchase cards during the
previous year. The information reported by each Federal agency
with respect to the use of purchase card acquisitions is to
include the following: (1) the total dollar value of such
acquisitions; (2) the total dollar value purchased from small
business concerns; (3) the total dollar value purchased from
large businesses; (4) the total dollar value purchased from
small business concerns owned and controlled by socially and
economically disadvantaged individuals; (5) the total dollar
value of acquisitions from small business concerns owned and
controlled by women; and (6) the total dollar value of
acquisitions from small business concerns owned and controlled
by veterans.
Section 3. Procurement Audit and Report to Congress
The General Accounting Office is required to conduct an
audit and make a report to Congress, not later than January 1,
2002, concerning the purchase by the 10 largest Federal
agencies of goods and services from small businesses using
governmentwide commercial purchase cards.
The report is to provide information concerning: (1) the
total dollar amount of goods and services purchased in
acquisitions of $100,000 or less that were acquired from small
business concerns and from other than small business concerns;
(2) the total dollar amount of goods and services acquired in
acquisitions of $2,500 or less that were acquired from small
businesses and from other than small business concerns using a
government-wide commercial purchase card; and (3) the total
dollar amount of goods and services acquired in acquisitions of
$100,000 or less using, and not using, a government-wide
commercial purchase card from small business concerns owned and
controlled by socially and economically disadvantaged
individuals, small business concerns owned and controlled by
women, and small business concerns owned and controlled by
veterans.
The report is to evaluate the comprehensive nature and
accuracy of the source lists of small businesses that Federal
agencies are required by the Act to maintain. Further, the
report is to provide information concerning the rules and
regulations promulgated to implement the Act, and, where
applicable, to make recommendations to minimize noncompliance
and to increase Federal acquisitions from small businesses in
accordance with the Act.
Section 4. Direct Payment to Subcontractors
This subsection makes the failure of a prime contractor to
make payment to a subcontractor that is a small business and
that has performed as required by the subcontract a material
breach of the contract with the Federal agency. Thirty days
after payment is due the small business, the Federal agency may
withhold the amount due the subcontractor from payment due the
prime contractor and the Federal agency can make direct payment
to the small business. Within 180 days after the passage of the
Act the Federal Acquisition Regulation and the Defense
Acquisition Regulation is to be amended to implement the
provisions of this subsection.
Section 5. Subcontracting Certification
This subsection amends the Small Business Act to require
that a bidder must pledge to acquire articles, equipment,
supplies, services, or materials or obtain the performance of
construction work from subcontractors who are small businesses
named in the bid or proposal in the amount and quality used in
preparing the bid or proposal unless the subcontractor is no
longer in business or can no longer meet the quality, quantity,
or delivery date.
Seciton 6. Internet Announcement of Certain Subcontracting
Opportunities
The subsection requires the offer or bidder to pledge to
provide information on the Internet concerning subcontracting
opportunities under small business utilization plans required
by section 8(d) of the Small Business Act. Not later than 10
days after the award of a contract for which a section 8(d)
subcontracting plan is required, the winning bidder or offeror
is required to provide on the Internet information concerning
the name and address of the offeror or bidder, the individual
within the employ of the offeror or bidder who is responsible
for administering the subcontracting program; and, a list of
anticipated subcontracting opportunities.
In order to ensure that small businesses have an equitable
opportunity to complete for subcontracts, not less than 30 days
before the award of a contract with respect to each section
8(d) subcontracting opportunity, each bidder or offeror is
required to provide on the Internet: (1) the name and address
of the offeror or bidder; (2) information concerning the
individual who is the buyer; (3) a description of the quality,
quantity, and anticipated delivery date of the goods or
services to be acquired; (4) the procurement procedures to be
followed in awarding the subcontract; and, a statement that all
responsible sources that are small business concerns may submit
a bid, proposal, or quotation, as appropriate.
Section 7. Definition of Internet
In the Act, the term ``Internet'' has the same meaning as
in section 230(f)(1) of the Communications Act of 1934.
5.25 H.R. 4944--Export Working Capital Loan Improvement Act of 2000,
Public Law No. 106-554
Legislative History
------------------------------------------------------------------------
Date Action
------------------------------------------------------------------------
H.R. 4944:
July 25, 2000........................... Referred to the House
Committee on Small Business.
July 27, 2000........................... Committee Consideration and
Mark-up Session Held.
July 27, 2000........................... Ordered to be Reported by
Voice Vote.
September 21, 2000...................... Reported by the Committee on
Small Business. H. Rept. 106-
880.
September 21, 2000...................... Placed on the Union Calendar,
Calendar No. 531.
September 26, 2000...................... Mr. Manzullo moved to suspend
the rules and pass the bill.
September 26, 2000...................... Considered under suspension of
the rules. (consideration: CR
H8084-8086).
September 26, 2000...................... On motion to suspend the rules
and pass the bill Agreed to
by voice vote. (text: CR
H8084).
September 26, 2000...................... Motion to reconsider laid on
the table Agreed to without
objection.
September 27, 2000...................... Received in the Senate and
Read twice and referred to
the Committee on Small
Business.
October 25, 2000........................ Included in H.R. 5545.
H.R. 5545:
October 25, 2000........................ Referred to the House
Committee on Small Business.
(Several bills are engrossed
by reference in the H.R. 2614
conference report: H. Rept.
106-1004. This includes H.R.
5538, the Minimum Wage Act of
2000; H.R. 5542, the Taxpayer
Relief Act of 2000; H.R.
5543, the Medicare, Medicaid,
and SCHIP Benefits
Improvement and Protection
Act of 2000; H.R. 5544, the
Pain Relief Promotion Act of
2000; and H.R. 5545, the
Small Business
Reauthorization Act of 2000.
The bill texts are included
in the conference report).
H.R. 2614:
October 26, 2000........................ Conference report H. Rept. 106-
1004 filed. (text of
conference report: CR 10/25/
2000 H10909-11188) Rules
Committee Resolution H. Res.
652 Reported to House. Rule
provides for consideration of
the conference report to H.R.
2614 with 1 hour of general
debate. Previous question
shall be considered as
ordered without intervening
motions except motion to
recommit with or without
instructions. Waives points
of order against the
conference report and against
its consideration.
October 26, 2000........................ Conferees agreed to file
conference report.
October 26, 2000........................ Conference papers: Senate
report and manager's
statement held at the desk in
Senate.
October 26, 2000........................ Rule H. Res. 652 passed House.
October 26, 2000........................ Mr. Talent brought up
conference report H. Rept.
106-1004 for consideration
under the provisions of H.
Res. 652.
October 26, 2000........................ The previous question was
ordered without objection.
October 26, 2000........................ On agreeing to the conference
report Agreed to by the Yeas
and Nays: 237-174, 1 Present
(Roll no. 560).
(consideration: CR H11243-
11264).
October 26, 2000........................ Motions to reconsider laid on
the table Agreed to without
objection.
October 26, 2000........................ Motions to proceed to
consideration of measure
agreed to in Senate by Yea-
Nay Vote. 55-40. Record Vote
Number: 286. (consideration:
CR S11097-11098).
October 26, 2000........................ Motion to proceed to
consideration of conference
report to accompany H.R. 2614
agreed to by Unanimous
Consent.
October 26, 2000........................ Conference report considered
in Senate by motion.
(consideration: CR S11098-
11100, S11104, S11107-11111).
October 31, 2000........................ Motion to proceed to
consideration of conference
report to accompany H.R. 2614
agreed to by Unanimous
Consent.
October 31, 2000........................ Conference report considered
in Senate by motion. (The
H.R. 2614 conference report
[H. Rept. 106-1004]
incorporated several bills.
This included H.R. 5538--
Minimum Wage; H.R. 5542--
Taxpayer Relief; H.R. 5543--
Medicare, Medicaid, and SCHIP
Benefits Improvement and
Protection; H.R. 5544--Pain
Relief Promotion; and H.R.
5545--Small Business
Reauthorization. H.R. 5661 is
a subsequent Medicare,
Medicaid and SCHIP Benefits
Improvement and Protection
bill. H.R. 5667 is a
subsequent Small Business
Reauthorization bill. H.R.
4577, Consolidated
Appropriations Act 2001,
incorporates by reference the
provisions of H.R. 5661, H.R.
5667, and other bills. The
text of these bills is
printed in the H.R. 4577
conference report: H. Rept.
106-1003 [text of conference
report: CR 12/15/2000 H12100-
12439].).
H.R. 5667:
December 15, 2000....................... Referred to the House
Committee on Small Business
incorporating the provisions
of H.R. 4944.
December 15, 2000....................... Enacted by reference in H.R.
4577 (H. Conf. Rept. 106-
1033).
H.R. 4577:
December 15, 2000....................... Conference report H. Rept. 106-
1033 filed.
December 15, 2000....................... Mr. Young (FL) brought up
conference repot H. Rept. 106-
1033 by previously agreed to
special order.
December 15, 2000....................... The previous question was
ordered without objection.
December 15, 2000....................... On agreeing to the conference
report Agreed to by the Yeas
and Nays: 292-60 (Roll no.
603).
December 15, 2000....................... Motions to reconsider laid on
the table Agreed to without
objection.
December 15, 2000....................... Senate agreed to conference
report by Unanimous Consent.
December 15, 2000....................... Message on Senate action sent
to the House.
December 15, 2000....................... Cleared for White House.
December 15, 2000....................... Presented to President.
December 21, 2000....................... Signed by President as Pub. L.
No. 106-554 (H.R. 4577,
Consolidated Appropriations
Act 2001, incorporates the
provisions of several bills
by reference. This includes
H.R. 5656--Labor HHS
Education Appropriations;
H.R. 5657--Legislative Branch
Appropriations; H.R. 5658--
Treasury Appropriations; H.R.
5666--Miscellaneous
Appropriations--except
section 123 relating to the
enactment of H.R. 4904; H.R.
5660--Commodity Futures
Modernization; H.R. 5661--
Medicare, Medicaid and SCHIP
Benefits Improvement and
Protection; H.R. 5662--
Community Renewal Tax Relief
and Medical Savings Accounts;
H.R. 5663--New Markets
Venture Capital Program; and
H.R. 5667--Small Business
Reauthorization. The text of
these bills is printed in the
H.R. 4577 conference report:
H. Rept. 106-1033 [text of
conference report: CR 12/15/
2000 H12100-12439].)
------------------------------------------------------------------------
Need for Legislation
According to the Department of Commerce, between 1987 and
1997, the number of small business exporters tripled, going
from 66,000 to 202,000. Small businesses now account for 31
percent of total merchandise export sales spread throughout
every industrial classification. The fastest growth among small
business exporters has been with companies employing fewer than
20 employees. These very small businesses represented 65
percent of all exporting companies in 1997.
Even though the number of small business exporters tripled,
they form less than one percent of all small businesses in the
United States. Among these firms, nearly two-thirds of small
business exporters sold to just one foreign market in 1997. In
fact, 76 percent of small business exporters sold less than
$250,000 worth of goods abroad. In other words, these are
``casual'' exporters. The key is to encourage more small
businesses to enter the trade arena and to encourage ``casual''
small business exporters into becoming more active. Improving
and increasing the availability of financing for export
transactions is one way to help ease the anxiety expressed by
many small businesses fearful of selling abroad.
In response to this data, complaints from small business
exporters about the lack of trade financing, and several
hearings on the problems faced by small business exporters and
improvements to the various small business export promotion
programs of the federal government, Representative Donald
Manzullo, Chairman of the Subcommittee on Tax, Finance &
Exports of the Small Business Committee, introduced H.R. 4944,
the Export Working Capital Loan Improvement Act of 2000.
Section-by-Section Analysis
Section 1. Short Title
Designates the bill as the ``Export Working Capital
Improvement Act of 2000''.
Section 2. Sale of Guaranteed Loans Made for Export Purposes
This section amends Section 5(f)(1)(C) of the Small
Business Act by exempting loans made under section 7(a)(14) of
the aforementioned Act from the disbursement requirement.
Section 7(a)(14) of the Small Business Act is the provision in
law that governs the EWCP loan program. This change will allow
EWCP loans to be sold on the secondary market prior to full
disbursement.
Secondary market sales of guaranteed loans are conducted
every six months. This bill will exempt Export Working Capital
Loans from the requirement that all 7(a) loans be disbursed to
the borrower prior to being included in a secondary market
sale. EWC loans are often approved, disbursed and repaid so
quickly that they miss the window for inclusion. The change
will allow their inclusion prior to disburse to make sure they
can be included in the secondary market sale.
5.26 H.R. 4945--The Small Business Competition Preservation Act of
2000, Public Law No. 106-554
Legislative History
------------------------------------------------------------------------
Date Action
------------------------------------------------------------------------
H.R. 4945:
July 25, 2000........................... Referred to the House
Committee on Small Business.
July 27, 2000........................... Committee Consideration and
Mark-up Session Held.
July 27, 2000........................... Ordered to be Reported by
Voice Vote.
September 18, 2000...................... Reported by the Committee on
Small Business. H. Rept. 106-
858.
September 18, 2000...................... Placed on the Union Calendar,
Calendar No. 514.
September 19, 2000...................... Rules Committee Resolution H.
Res. 582 Reported to House.
Rule provides for
consideration of H.R. 4945
with 1 hour of general
debate. Previous question
shall be considered as
ordered without intervening
motions except motion to
recommit with or without
instructions. Measure will be
considered read. Bill is open
to amendments.
September 20, 2000...................... Rule H. Res. 582 passed House.
September 20, 2000...................... Considered under the
provisions of rule H. Res.
582. (consideration: CR H7876-
7885)
September 20, 2000...................... House resolved itself into the
Committee of the Whole House
on the state of the Union
pursuant to H. Res. 582 and
Rule XXIII.
September 20, 2000...................... The Speaker designated the
Honorable John Cooksey to act
as Chairman of the Committee.
September 20, 2000...................... The House rose from the
Committee of the Whole House
on the state of the Union to
report H.R. 4945.
September 20, 2000...................... The previous question was
ordered pursuant to the rule.
September 20, 2000...................... On passage Passed by the Yeas
and Nays: 422-0 (Roll no.
482). (text: CR H7884)
September 20, 2000...................... Motion to reconsider laid on
the table Agreed to without
objection.
September 21, 2000...................... Received in the Senate and
Read twice and referred to
the Committee on Small
Business.
October 25, 2000........................ Included in H.R. 5545
H.R. 5545
October 25, 2000........................ Referred to the House
Committee on Small Business.
(Several bills are engrossed
by reference in the H.R. 2614
conference report: H. Rept.
106-1004. This includes H.R.
5538, the Minimum Wage Act of
2000; H.R. 5542, the Taxpayer
Relief Act of 2000; H.R.
5543, the Medicare, Medicaid,
and SCHIP Benefits
Improvement and Protection
Act of 2000; H.R. 5544, the
Pain Relief Promotion Act of
2000; and H.R. 5545, the
Small Business
Reauthorization Act of 2000.
The bill texts are included
in the conference report.)
H.R. 2614
October 26, 2000........................ Conference report H. Rept. 106-
1004 filed. (text of
conference report: CR 10/25/
2000 H10909-11188)
October 26, 2000........................ Rules Committee Resolution H.
Res. 652 Reported to House.
Rule provides for
consideration of the
conference report to H.R.
2614 with 1 hour of general
debate. Previous question
shall be considered as
ordered without intervening
motions except motion to
recommit with or without
instructions. Waives points
of order against the
conference report and against
its consideration.
October 26, 2000........................ Conferees agreed to file
conference report.
October 26, 2000........................ Conference papers: Senate
report and manager's
statement held at the desk in
Senate.
October 26, 2000........................ Rule H. Res. 652 passed House.
October 26, 2000........................ Mr. Talent brought up
conference report H. Rept.
106-1004 for consideration
under the provisions of H.
Res. 652.
October 26, 2000........................ The previous question was
ordered without objection.
October 26, 2000........................ On agreeing to the conference
report Agreed to by the Yeas
and Nays: 237-174, 1 Present
(Roll no. 560).
(consideration: CR H11243-
11264)
October 26, 2000........................ Motions to reconsider laid on
the table Agreed to without
objection.
October 26, 2000........................ Motion to proceed to
consideration of measure
agreed to in Senate by Yea-
Nay Vote. 55-40. Record Vote
Number: 286. (consideration:
CR S11097-11098)
October 26, 2000........................ Motion to proceed to
consideration of conference
report to accompany H.R. 2614
agreed to by Unanimous
Consent.
October 26, 2000........................ Conference report considered
in Senate by motion.
(consideration: CR S11098-
11100, S11104, S11107-11111)
October 31, 2000........................ Motion to proceed to
consideration of conference
report to accompany H.R. 2614
agreed to by Unanimous
Consent.
October 31, 2000........................ Conference report considered
in Senate by motion. (The
H.R. 2614 conference report
[H. Rept. 106-1004]
incorporated several bills.
This included H.R. 5538--
Minimum Wage; H.R. 5542--
Taxpayer Relief; H.R. 5543--
Medicare, Medicaid, and SCHIP
Benefits Improvement and
Protection; H.R. 5544--Pain
Relief Promotion; and H.R.
5545--Small Business
Reauthorization. H.R. 5661 is
a subsequent Medicare,
Medicaid and SCHIP Benefits
Improvement and Protection
bill. H.R. 5667 is a
subsequent Small Business
Reauthorization bill. H.R.
4577, Consolidated
Appropriations Act 2001,
incorporates by reference the
provisions of H.R. 5661, H.R.
5667, and other bills. The
text of these bills is
printed in the H.R. 4577
conference report: H. Rept.
106-1033 [text of conference
report: CR 12/15/2000 H12100-
12439].)
H.R. 5667
December 15, 2000....................... Referred to the House
Committee on Small Business
incorporating the provisions
of H.R. 4945.
December 15, 2000....................... Enacted by reference in H.R.
4577 (H. Conf. Rept. 106-
1033)
H.R. 4577
December 15, 2000....................... Conference report H. Rept. 106-
1033 filed.
December 15, 2000....................... Mr. Young (FL) brought up
conference report H. Rept.
106-1033 by previously agreed
to special order.
December 15, 2000....................... The previous question was
ordered without objection.
December 15, 2000....................... On agreeing to the conference
report Agreed to by the Yeas
and Nays: 292-60 (Roll no.
603).
December 15, 2000....................... Motions to reconsider laid on
the table Agreed to without
objection.
December 15, 2000....................... Senate agreed to conference
report by Unanimous Consent.
December 15, 2000....................... Message on Senate action sent
to the House.
December 15, 2000....................... Cleared for White House.
December 15, 2000....................... Presented to President.
December 21, 2000....................... Signed by President as Pub. L.
No. 106-554 (H.R. 4577,
Consolidated Appropriations
Act 2001, incorporates the
provisions of several bills
reference. This includes H.R.
5656--Labor HHS Education
Appropriations; H.R. 5657--
Legislative Branch
Appropriations; H.R. 5658--
Treasury Appropriations; H.R.
5666--Miscellaneous
Appropriations--except
section 123 relating to the
enactment of H.R. 4904; H.R.
5660--Commodity Futures
Modernization; H.R. 5661--
Medicare, Medicaid and SCHIP
Benefits Improvement and
Protection; H.R. 5662--
Community Renewal Tax Relief
and Medical Savings Accounts;
H.R. 5663--New Markets
Venture Capital Program; and
H.R. 5667--Small Business
Reauthorization. The text of
these bills is printed in the
H.R. 4577 conference report:
H. Rept. 106-1033 [text of
conference report: CR 12/15/
2000 H12100-12439].)
------------------------------------------------------------------------
Need for Legislation
Contract bundling is one of the most important issues
facing small business today. The federal government spends
nearly 200 billion dollars a year procuring goods and services.
Although Congress has made it a goal for federal agencies to
spend at least 20 percent of their procurement dollars with
small businesses, the federal government has not met that
objective. Federal government procurement policies apparently
place a greater premium on efficiency and the reduction of
workload for contracting officers than the goals of a diverse,
competitive industrial base. The ultimate losers will be the
American taxpayer who will face the long-term prospect of
procuring lower quality goods and services at higher prices.
Bundling of contracts is performed by all federal agencies
but one agency, the Department of Defense, stands out as the
agency with the most adverse impact on small business
participation as prime contractors. To the extent that the
Department actually achieves substantial cost savings or
significant improvements in the quality of goods and services
procured, bundling is at least defensible. However, the
Committee has examined a number of contracts and has not found
supportable justifications for these contracts.
For example, the Department of Defense issued a contract
for the provision of telecommunication services to the three
largest long-distance carriers in the United States who would
provide, on a competitively-bid task order arrangement,
interstate interexchange (long-distance) circuits for the
transmission of voice and data between various Department
installations. Ostensibly, the limitation on the number of
firms eligible to bid was necessitated by security concerns.
However, an examination of the task order requests reveals that
the need for security was not an issue in many of the task
orders. Thus, the Department, at substantial expense to the
taxpayers (competition under the prior system was significantly
greater resulting in substantially lower prices for
telecommunication services), bundled a contract without any
clear need to do so.
The Committee has also examined the consolidation of Marine
Corps mess hall services. The Department of the Navy currently
provides messhall services on a base-by-base contract. Many
current providers are small businesses. Despite evidence that
demonstrates improvements in quality of both the food and the
service, the Department of Navy decided to consolidate these
messhall contracts into two large regions utilizing central
kitchen preparation techniques known as ``cook and chill.'' The
Department of Navy has not been able to justify that the
contract will save money or provide higher quality meals to
Marine Corps personnel.
Numerous other examples of bundling exist at the Department
of Defense and other government agencies. At a Committee
hearing on the Department of Defense's bundling policies, the
Principal Deputy Under Secretary for Acquisition, Mr. David
Oliver, promised that he would commission a study of the
effects of bundling on small business. Some months later, Mr.
Oliver admitted that the Department lacked the data needed to
conduct an appropriate study of bundling.
The absence of data on bundling also affects the
Administrator's ability to implement the Small Business
Reauthorization Act of 1997. That legislation required federal
agencies not to bundle contracts unless the procuring agency
could demonstrate that the bundle would result in measurably
substantial benefits, such as cost savings, quality
improvements, reduction in acquisition cycle times, or better
terms and conditions. The procuring agency then must identify
those benefits to be derived from contract bundling and that
the anticipated benefits of the proposed bundled contract
justify the use of bundling. Should the Administrator of the
Small Business Administration disagree with the conclusions of
the procuring agency, the Administrator is entitled to file an
appeal contesting the procuring agency's bundle to the head of
the agency. The Administrator has never won such an appeal.
Section-by-Section Analysis
Section 1. Short Title
Designates the bill as the ``Small Business Competition
Preservation Act of 2000.''
Section 2. Database, Analysis, and Annual Report with Respect to
Bundled Contracts
This section amends section 15 of the Small Business Act by
adding a new subsection (p) to establish the requirements for
maintenance of a contract bundling database, analysis of
bundled contracts, and reporting requirements to the House and
Senate Small Business Committees.
Paragraph (1) defines the term bundled contract. In the
Small Business Reauthorization Act of 1997, the term ``bundled
contract'' was defined as a contract that consolidated existing
contract requirements. This definition is adopted by H.R. 4945.
Paragraph (2) mandates that the Administrator establish a
database no later than 180 days after the effective date of the
statute. The database will contain information on each bundled
contract awarded by a federal agency as defined in paragraph
(1) and the number of small businesses that used to provide
services as prime contractors but are no longer doing so as a
result of the bundled contract. The Committee expects that the
Administrator will receive data from its Procurement Center
Representatives as well as the Directors of the Office of Small
and Disadvantaged Business Utilization. Furthermore, the
Committee expects that the Administrator will construct this
database with already existing funds and does not believe that
a separate authorization or appropriation is needed to maintain
this database because maintenance of the database constitutes a
vital adjunct to the Administrator's responsibilities under
subsection (a) of section 15.
Paragraph (3) requires that the Administrator analyze
bundled contracts that are recompeted as bundles when their
initial terms expire. The Committee expects that the
Administrator will use the database of bundled contracts
established in paragraph (2) to determine which contracts need
to be analyzed pursuant to this paragraph. However, if a
recompeted bundle somehow is not included in the database
established pursuant to paragraph (2), the Committee expects
that the Administrator will undertake the analysis mandated by
this paragraph.
For each contract recompeted as a bundled contract, the
Administrator will be required to calculate the amount of
savings and benefits from the bundled contract. The
Administrator also will be required to estimate whether the
savings and benefits will continue and whether such savings and
benefits would be greater if the contract was divided into
separate solicitations more suitable for award to small
businesses. The Committee expects that the Administrator will
utilize this analysis in pursuing any appeal of a bundling
contract as set forth in subsection (a) of section 15.
Paragraph (4) requires the Administrator to file an annual
report on contract bundling with the House and Senate Small
Business Committees. The report is required to contain data on
the number of small businesses displaced as prime contractors
as a result of contract bundling sorted by industrial
classification. The Committee expects that the report will
utilize the new North American Industrial Classification rather
than the old Standard Industrial Classification.
The report also shall contain a description of the bundling
activity for each federal agency during the preceding fiscal
year including the number of contracts bundled, the total
dollar value of the bundled contracts, the justification for
each bundled contract, the cost savings realized by the
contract, the Administrator's estimate of whether the savings
will continue for any recompeted bundled contract, the extent
to which the bundled contract complied with agency's
subcontracting plan, the total dollar value awarded to small
business subcontractors, the total dollar value previously
awarded to small business prime contractors prior to the
bundling of the contract, the impact that bundling has on the
ability of small business to compete as prime contractors, and
the effect that has on the industry.
5.27 H.R. 4946--The National Small Business Regulatory Assistance Act
of 2000
Legislative History
------------------------------------------------------------------------
Date Action
------------------------------------------------------------------------
H.R. 4946:
July 25, 2000........................... Referred to the House
Committee on Small Business.
July 27, 2000........................... Committee Consideration and
Mark-up Session Held.
July 27, 2000........................... Ordered to be Reported
(Amended) by Voice Vote.
September 21, 2000...................... Reported (Amended) by the
Committee on Small Business.
H. Rept. 106-881.
September 21, 2000...................... Placed on the Union Calendar,
Calendar No. 532.
September 26, 2000...................... Mr. Sweeney moved to suspend
the rules and pass the bill,
as amended.
September 26, 2000...................... Considered under suspension of
the rules. (consideration: CR
H8081-8084).
September 26, 2000...................... On motion to suspend the rules
and pass the bill, as amended
Agreed to by voice vote.
(text: CR H8081-8083).
September 26, 2000...................... Motion to reconsider laid on
the table Agreed to without
objection.
September 27, 2000...................... Received in the Senate and
Read twice and referred to
the Committee on Small
Business.
------------------------------------------------------------------------
Need for Legislation
During the past twenty years, the Federal Register--the
compendium of federal regulatory initiatives and changes--
ballooned from 42,000 pages to a record 73,879 pages in 1999.
This crush of federal dictates is particularly troubling to
small businesses who find it increasingly difficult to meet
these burgeoning regulatory requirements while at the same time
trying to successfully operate their businesses in an expanding
competitive global environment. Often, small business owners do
not learn about their failure to comply with a regulation or
that a new regulatory requirement has been imposed until an
inspector or auditor walks through the door.
The result is neither beneficial to the small business
owner nor the federal government. Federal regulations exist to
achieve some statutory objective; noncompliance hinders the
reaching of these statutory goals. Small business owners
certainly would be more interested in complying with federal
regulations than paying penalties and fines. However, the
amount of information including regulations and concomitant
guidance, simply overwhelms small business owners.
In 1996, Congress took action in an effort to alleviate
this problem. The Small Business Regulatory Enforcement
Fairness Act provided that federal agencies are required to
produce plain-English compliance guides for any regulation that
would have a significant economic impact on a substantial
number of small businesses. Of course, if small business owners
do not know about the regulatory changes, the existence of such
compliance guides does little to assist them. Some mechanism
must exist to make small businesses more aware of their
regulatory obligations.
Even more important than making small businesses aware of
the regulations is providing them with assistance needed to
understand and comply with the regulations. A regulation may
only take up ten or eleven pages of text, but the explanation
for what those ten or eleven pages mean may encompass as much
as three hundred pages of dense, triple-columned, single-spaced
pages in the Federal Register. Most small business owners do
not have the time to go through this dense prolixity. And even
if they did, they would not understand it unless they were
knowledgeable in the field. The Committee believes that greater
assistance must be provided to small business owners in helping
them comply with complex regulatory issuances. Otherwise, a
divide could develop between those businesses, usually large,
with the resources to comply and those, usually small, without
such resources. The small businesses will be at risk for
penalties, fines, and audits while large businesses will not. A
regulatory compliance assistance program operated through the
small business development centers could provide substantial
assistance in ensuring such a divide does not occur.
The Small Business Administration oversees a number of
mechanisms for delivering advice to small business owners. One
of the most effective is the Small Business Development Center
program. Operated in conjunction with colleges and
universities, the small business development centers assist
small businesses in solving problems concerning the operations,
manufacturing, engineering, technology, exchange and
development, personnel administration, marketing, sales,
merchandising, finance, accounting, and business strategy
development. The small business development centers utilize the
resources and the expertise of colleges and universities. In
addition, the small business development centers, like the
Agricultural Extension Service, also provide a focal point for
information retrieval, coordination of federal and state
government services, and referral to experts. Historically, the
small business development centers have focused on financial,
management, and marketing activities of small businesses.
The Committee believes that small business development
centers can provide an effective mechanism for dispensing
regulatory compliance information and advice. However,
regulatory compliance, unlike many of the other activities
undertaken by the small business development centers, has
significant legal consequences. Therefore, the Committee
believes that a pilot program to examine how the regulatory
compliance assistance will operate in selected small business
development centers is a preferred strategy to simply
authorizing all small business development centers to provide
regulatory compliance assistance.
Section-by-Section Analysis
Section 1. Short Title
Designates the bill as the ``National Small Business
Regulatory Assistance Act of 2000.''
Section 2. Purpose
This section expresses the purpose of the legislation--to
establish a pilot project within certain Small Business
Development Centers to provide and coordinate regulatory
compliance assistance to small businesses.
Section 3. Small Business Regulatory Assistance Pilot Program
This section establishes the pilot program by creating a
new Section 34 of the Small Business Act.
Section 34(a)(1) defines the term ``Association'' to be the
association established pursuant to Section 21 of the Small
Business Act which represents the majority of small business
development centers. That organization is the Association of
Small Business Development Centers.
Section 34(a)(2) defines the term ``Participating Small
Business Development Center'' as a small business development
center selected to participate in the pilot program established
under this section.
Section 34(a)(3) defines the term ``Regulatory Compliance
Assistance'' as assistance provided by a participating small
business development center to a small business concerning
compliance with federal regulations.
Section 34(a)(4) defines the term ``Small Business
Development Center'' means a small business development center
described in section 21 of the Small Business Act.
Section 34(a)(5) defines the term ``State'' to include all
fifty states and the District of Columbia, the Virgin Islands,
and Guam.
Section 34(b) authorizes the Administrator of the Small
Business Administration to establish a pilot program for
selected small business development centers to provide small
businesses with regulatory compliance assistance.
Section 34(c)(1) authorizes the Administrator to enter into
arrangements with the small business development centers
selected under this section for the provision of regulatory
compliance assistance. The participating small business
development centers are required to provide access to
information and resources on regulatory compliance, including
contact information for federal and state compliance and
technical assistance similar to those established under section
507 of the Clean Air Act Amendments of 1990. Numerous other
federal and state agencies have non-punitive compliance
assistance programs and the Committee expects that the
participating small business development centers will maintain
all necessary contact information with those federal and state
agencies.
Section 34(c)(1) also requires that the selected small
business development centers establish various training and
educational activities. The Committee expects that selected
centers will utilize their contacts with federal and state
agencies to obtain compliance pamphlets, videos, books, and any
compliance guides issued pursuant to the Small Business
Regulatory Enforcement Fairness Act. In addition, the Committee
expects that participating centers will hold lectures and
seminars on regulatory compliance including updates on
compliance based on regulatory changes.
Section 34(c)(1) also mandates that the selected small
business development centers provide confidential counseling on
a one-on-one basis at no charge to small businesses seeking
regulatory compliance assistance. The Committee recognizes that
compliance with regulations inculcates legal rights and
responsibilities of small business owners. Therefore, section
34(c) prohibits any regulatory compliance counseling that would
be considered the practice of law in the jurisdiction in which
the small business development center is located or in which
such counseling is conducted.
Section 34(c)(1) also requires the provision of technical
assistance. Such counseling may include the arrangement of
meetings with technical experts known to the participating
small business development centers as long as such counseling
again is done on a one-on-one basis at no charge to the small
business. For example, the participating small business
development center may arrange a meeting with a professor of
engineering to discuss the best way that the particular small
business might be able to comply with regulations promulgated
pursuant to the Clean Water Act.
Section 34(c)(2) requires each participating center to file
a quarterly report with the Association of Small Business
Development Centers. The report shall provide a summary of the
compliance assistance provided under the pilot program. The
report also must contain any data and information obtained by
the participating small business development center from a
federal agency concerning compliance which the federal agency
intends to be disseminated to small business concerns.
Section 34(c)(2) requires that reports be filed with the
Association in an electronic format. The Committee expects the
Administrator to promulgate regulations, which will provide for
a consistent format of the report. The Committee believes that
such consistency is necessary for the accurate compilation of
data and proper assessment of the effectiveness of the pilot
program.
Section 34(c)(2) also permits, but does not require,
participating small business development centers to make
interim reports if such reports are necessary or useful. For
example, a participating small business development center may
receive inconsistent compliance information from a federal
agency. By alerting the Association prior to the issuance of
the quarterly report, the federal agency may be able to issue a
clarification that may eliminate confusion, save compliance
costs, and improve small business compliance.
One of the critical concerns to small businesses is that
discussions of compliance assistance could be revealed to
federal agencies which would lead to fines and penalties. The
Committee recognizes this and prohibits the disclosure of the
names or addresses of any concern receiving compliance
assistance under this pilot program unless the Administrator is
ordered to make such disclosure pursuant to a court order or
civil or criminal enforcement action commenced by a federal or
state agency. The Committee expects that participating small
business development centers will only respond to formal agency
requests such as civil investigative demands, subpoenas, and
the like. The Committee does not expect that the participating
small business development centers will accede to simple verbal
requests from federal or state agencies.
Section 34(d) requires the Administrator and the
Association to enter into a contract for the Association to act
as repository of data and information submitted by the
participating small business development centers. The Committee
believes that a central repository is necessary in order to
determine whether federal agencies are providing consistent
compliance information on a national basis.
Section 34(d) also requires that the Association transmit
an annual report to the President, the Small Business and
Agriculture Regulatory Enforcement Ombudsman, and the House and
Senate Small Business Committees. The report will contain: (a)
data on the types of information provided by the participating
small business development centers; (b) the number of small
businesses that contacted the participating small business
development centers; (c) the number of small businesses
assisted by participating small business development centers;
(d) information on the outreach activities of the participating
small business development centers; (e) information regarding
each case known to the Association in which participating small
business development centers provided conflicting advice
regarding compliance with federal regulation to one or more
small businesses; (f) and any recommendations for improving the
regulatory environment of small businesses. The Committee
believes that this information is necessary to properly
evaluate the utility of the pilot program. More importantly,
the report will reveal whether similarly situated small
businesses are receiving consistent regulatory compliance
assistance.
Section 34(d) also requires the Association to provide a
report three years after the establishment of the pilot program
evaluating the effectiveness of the program. The report also
should contain any suggested modifications to the pilot
program. Finally, the Association should provide its opinion
concerning whether the program should be continued and expanded
to include more small business development centers. It is the
expectation of the Committee that the pilot program will be
sufficiently successful to expand the program to other small
business development centers.
Section 34(e) requires the Administrator to select two
participating centers from each of the Small Business
Administration's ten federal regions as those regions exist on
the date of enactment of this Act. The Administrator shall
consult with the Association and give the Association's
recommendations substantial weight. The Administrator is
prohibited from selecting two small business development
centers from the same state. The Committee expects that the
selected development centers will be open to serve any small
business located in that state.
Section 4. Promulgation of Regulations
Section 4 authorizes the Administrator to promulgate
regulations to implement that this pilot program no later than
180 days after the enactment of the Act. Such regulations only
shall be promulgated after the public has been given an
opportunity for notice and comment. The Committee believes that
the Administrator can and should accomplish the issuance of
regulations within the deadline set by statute. The Committee
considers this Act to be some other law for purposes of section
603 of Title 5 of the United States Code.
CHAPTER SIX
SUMMARY OF OTHER LEGISLATIVE ACTIVITIES OF THE COMMITTEE ON SMALL
BUSINESS
6.1 Committee Meetings
6.1.1 organizational meeting
On January 6, 1999, the Committee on Small Business held an
organization meeting. The purpose of this meeting was three-
fold: (1) to consider and adopt the Committee rules for the
106th Congress, (2) to consider and adopt the Committee's
oversight plan for the 106th Congress, and (3) to approve the
subcommittee assignments for Members of the Committee. The
Committee accomplished these three tasks in record time (less
than 20 minutes) with little discussion. Both the Committee
rules and oversight plan were adopted, without amendment, by
voice vote.
The text of the Committee's oversight plan follows:
6.1.2 OVERSIGHT PLAN FOR THE COMMITTEE ON SMALL BUSINESS
106TH CONGRESS
U.S. HOUSE OF REPRESENTATIVES
CONGRESSMAN JAMES M. TALENT, CHAIRMAN
Rule X, clause 2(d)(1), of the Rules of the House requires each
standing Committee to adopt an oversight plan for the two-year period
of the Congress and to submit the plan to the Committees on Government
Reform and Oversight and House oversight not later than February 15 of
the first session of the Congress.
The oversight plan of the Committee on Small Business includes
areas in which the Committee expects to conduct oversight activity
during the 106th Congress. However, this plan does not preclude
oversight or investigation of additional matters as the need arises.
OVERSIGHT OF THE SMALL BUSINESS ADMINISTRATION
The Committee will conduct hearings on all the major programs of
the Small Business Administration to determine their effectiveness and
possible options for improvements.
FINANCIAL AND MANAGEMENT/TECHNICAL ASSISTANCE PROGRAMS
The Committee will conduct hearings on the effectiveness and
efficiency of the SBA's major programs. Particular emphasis will be
placed on improving the economic efficiency of these programs. A number
of the SBA's key programs will be the subject of oversight hearings by
the Committee. These include:
7(a) General Business Loan Programs (Spring, 1999)
Certified Development Company Program (Spring, 1999)
SBIC Program (Winter, 1999)
Microloan Program (Winter, 1999)
SBDC (Spring, 1999)
Disaster Loan (Winter, 1999)
ADVOCACY
The Office of Advocacy was created to provide small business with
an effective voice inside the Federal government. The Committee will
conduct hearings on how to strengthen this voice and make sure that the
Office of Advocacy continues to effectively represent the interests of
small business. (summer, 1999)
TECHNOLOGY AND RESEARCH ASSISTANCE
Small Business Innovation Research
The Small Business Innovation Research (SBIR) program aids small
businesses in obtaining federal research and development funding for
new technologies. (Summer, 1999)
Small Business Technology Transfer
Committee oversight will focus on the program's success at helping
small business access technologies developed at federal laboratories
and put that knowledge to work.
FEDERAL PROCUREMENT
The Committee will examine needed changes in federal procurement.
The Committee will investigate the implementation of recent legislation
dealing with ``bundling'' and the effect it is having on small
businesses involved in government contracting. (Ongoing)
GOVERNMENT & NON-PROFIT COMPETITION
The Committee will examine the extent to which non-profit
organizations and the federal government itself compete with small
business. Our focus will include activities in both the private sector
and government procurement. (Winter, 2000)
REGULATORY FLEXIBILITY
The Committee will continue its oversight of agency implementation
of the Regulatory Flexibility Act, as amended by the Small Business
Regulatory Enforcement Fairness Act. (Ongoing)
SBREFA
The Committee will be conducting oversight hearings on agency
implementation of the Small Business Regulatory Enforcement Fairness
Act (SBREFA), which was enacted during the second session of the 104th
Congress. (Ongoing)
PAPERWORK REDUCTION
The Committee will continue its oversight of agency implementation
of the Paperwork Reduction Act, as amended. (Ongoing)
GOVERNMENT REGULATION
The Committee will continue to examine the regulatory activities of
various federal agencies and assess the impact of regulations on the
small business community. (Ongoing)
TAXATION
The Committee will continue to conduct oversight hearings into ways
to reduce the tax burden on small business. These hearings will include
not only the fiscal but the paperwork burden of the federal tax system
and federal enforcement efforts. (Ongoing)
ELECTRIC UTILITY DEREGULATION
The Committee will conduct oversight hearings on the potential
effects of electric utility deregulation on small business. (Summer,
1999)
GOVERNMENT PERFORMANCE AND RESULTS ACT
The Committee will continue consultations with the SBA regarding
the preparation and implementation of strategic plans and performance
plans as required under the Government Performance and Results Act.
(Ongoing)
EMPOWERMENT
The Committee will conduct oversight hearings over regulations and
licensing policies that impact small businesses located in high risk
communities. The Committee will also examine the promotion of business
growth and opportunities in economically depressed areas, and will
examine programs targeted towards relief for low income communities.
(Ongoing)
6.2 Budget Views and Estimates
Pursuant to Section 301(c) of the Congressional Budget Act
of 1974, the Committee prepared and submitted to the Committee
on the Budget its views and estimates on the fiscal year 2000
and 2001 budgets with respect to matters under the Committee's
jurisdiction.
6.2.1 fiscal year 2000 budget
The President's proposed budget for FY 2000 requested an
increase of $41 million dollars over FY 1999, for a total
request of $761 million dollars. It also requested contingency
emergency appropriations in the amount of $233 million. These
contingency amounts would be for anticipated disaster loan
spending. On February 25, 1999, the Committee on Small Business
met to approve views and estimates for the Small Business
Administration for submission to the Committee on the Budget.
While the Committee believed that many of the provisions of
the budget were reasonable, it could not agree with all of the
spending proposed in the FY 2000 budget submission. The views
and estimates divided the Small Business Administration into
five areas; (1) Financial Program, (2) Assistance Programs, (3)
Disaster Assistance, (4) Salaries and Expenses, and (5) Office
of Inspector General.
SMALL BUSINESS FINANCIAL PROGRAMS
Summary
The FY 2000 SBA proposed budget for small business
financial assistance discussed building a twenty-first century
financial management organization and providing assistance for
small business. The President's Budget requested a total of
$200,118,000 in subsidy budget authority for financial
programs.
7(a) LOANS
This is the SBA's leading loan guarantee program. The
Administration proposal for appropriations for this program was
based on an estimated program demand of $10.5 billion in loans,
requiring $155 million in budget authority. The Committee
believed that request to be adequate. Recent SBA estimates for
demand for 7(a) had proved accurate. However, industry
estimates place demand at a level of $11 billion dollars.
The Committee was more concerned over reports from the GAO
that SBA subsidy cost estimates were inflated. This has the
potential to lead to overcharging of small business borrowers,
and reduced subsidy costs would allow the Congress greater
flexibility in budgeting.
504 LOANS
Thanks to legislation passed in the 104th Congress, the 504
program has a zero subsidy rate; which means that the program
requires no appropriations. This was accomplished through heavy
fees that were placed on borrowers and lenders--fees needed to
offset a severe subsidy rate.
The Administration believed that the Section 504 loan
program would not require appropriations for FY 2000, and would
also be able to lower fees to the program's borrowers. However,
larger improvements were yet to appear in the program's
liquidation performance, the largest single factor in the
subsidy rate equation. The Committee also had concerns that
subsidy estimate problems exist in the 504 as well as the 7(a)
program.
The Committee agreed that no appropriation would be needed
for this program but was concerned with the apparent
uncertainty in the subsidy rates.
SMALL BUSINESS INVESTMENT COMPANY PROGRAM
The SBA proposed a significantly increased program level
for the SBIC program, but also projected a decrease in
appropriations due to revisions in the subsidy rate. The
Committee supported the requested budget amount.
The Administration anticipated a demand for $1.5 billion in
participating securities leverage at a subsidy cost of $25.8
million. They also anticipated $800 million in demand for
debenture leverage at no cost due to a zero subsidy rate. This
rate was based in large part on the absence of default on any
SBIC debenture since 1992.
MICROLOAN PROGRAM
The SBA requested a 100% increase in funding for the
microloan program for FY 2000. The SBA believed that program
demand would increase by an overwhelming amount. This increase
reflected the Administration's desire to expand this program
into all sectors of the country. However, the Committee was
troubled by the SBA's simultaneous support for the PRIME/CDFI
microloan proposed for the Treasury Department. If the
microloan program at SBA was, in fact, highly effective at
assisting entrepreneurs in underserved areas, why was PRIME/
CDFI necessary? If the SBA program was not effective then why
was such a dramatic increase requested? The Committee believed
this estimate might have been valid, but not in light of the
conflicting and duplicative PRIME/CDFI program.
The Committee also continued to urge greater efforts by the
SBA to make the guaranteed microloan program a viable option;
current regulations appear to have been drafted in a fashion
that discourages participation.
TECHNICAL ASSISTANCE PROGRAMS
Summary
The FY 2000 SBA budget submission proposed some significant
increases in spending on its non-credit business assistance
programs. While these programs represent well-intentioned
efforts to aid small business, there is an increased tendency
to fragment rather than consolidate these efforts. In addition,
areas of proven value appeared to be targeted for cuts to
support other initiatives that might have been redundant.
MICROLOAN TECHNICAL ASSISTANCE
The microloan program requested $32 million in technical
assistance funds. These funds represent a hidden subsidy cost
to the microloan program. While the reported subsidy rate of
this program was relatively low, there was evidence that the
technical assistance grants to the microlenders were, in fact,
going to support operational expenses of the lenders rather
than counseling. The Committee reserved judgment on the need
for this additional funding. The Committee was particularly
concerned that the need for this funding was duplicative of
funding proposed in the PRIME/CDFI program, and vice versa.
BUSINESS INFORMATION CENTERS/USEACs
The SBA proposed level funding for these programs. However,
the agency failed to explain whether it intended to co-locate
any of these centers with existing Small Business Development
Centers. In fact, there are instances in several cities where
these centers are located in separate sites within blocks of
each other, rather than in a single central location. The
Committee tentatively supported these projects but would like
the SBA to provide more substantial information.
SMALL BUSINESS DEVELOPMENT CENTERS (SBDCs)
The SBA proposed a significant (nearly 25%) cut in funding
for the SBDC program. This proposal was unacceptable. The SBA
proposed stripping a quarter of the funding from this program
and asked the SBDCs to institute fees instead. SBDCs are
currently statutorily prohibited from charging fees. Fees are
allowed in other programs; but if the statutory prohibition was
lifted and the draconian cuts implemented, SBDCs would become
the only program forced to charge fees.
ONE STOP CAPITAL SHOPS
The SBA FY 2000 budget proposed a significant (210%)
increase in funding for this program, from $3.1 million to $10
million. The SBA proposed to open the shops in each of the
newly declared Empowerment Zones. The Committee noted that
information regarding the use, services and merits of One Stop
Capital Shops is limited. The Committee was also concerned that
the efforts of this program and Business Information Centers
was duplicating efforts best left to other more established
programs.
NEW MARKET VENTURE CAPITAL COMPANIES
The Administration proposed $15 million in subsidy budget
authority to support $100 million in lending from these NMVCCs.
The Administration's FY 2000 budget also proposed $30 million
in grant money for New Markets Venture Capital Companies. These
NMVCCs would make SBIC loans in Low & Moderate Income areas.
This meant the Administration planned to spend $45 million in
order to make $100 million in loans in LMI areas.
The Committee found this unjustified, particularly in light
of the fact that regular SBICs did $660 million in lending to
LMI areas in the previous year without this program. While the
Committee supported the goal of increasing lending in LMI
areas, it could not support the inordinately high cost of this
proposal.
DISASTER ASSISTANCE
The President's FY 2000 SBA budget submission asked for
authority for $934 million in disaster loans, representing the
ten-year average of disaster loan needs. However, the budget
requested only $39.4 million in budget authority. The
Administration requested that the remaining $158 million in
appropriations be allocated on an emergency off-budget basis.
The SBA based this request on the fact that disaster loan funds
were frequently provided through supplemental appropriations.
This explanation was only partially correct.
Disaster loans have been supplemented with emergency funds
over the years. This has come in response to situations of
extreme need, to what SBA has called ``mega-disasters,'' like
the Northridge, CA Earthquake. In addition, Congress has often
segregated funds to be used on a contingency basis, often
representing carryover from previous appropriations.
The Committee disagreed with the SBA's plan to place nearly
80% of the anticipated appropriations off-budget. While the
Committee agreed that all of the requested ten-year average
might not be needed it is ``budget-busting'' at its worst to
place 80% of the anticipated loans off-budget.
The budget also placed a large portion of the required
administrative costs off-budget. $934 million in loans would
require approximately $116 million in loan administration
funds. The SBA also anticipated approximately $45 million in
general S&E costs from disaster loans for a total of $161
million in administrative costs. The Committee noted that the
SBA has requested $86 million (more than 50%) of these funds on
budget. The Committee believed that release and use of
administrative funds should track the loan demand.
Consequently, if SBA saw fit to request only 20% of the loan
funds then they would need only 20% of the administrative
funds.
SALARIES AND EXPENSES
For FY 2000 the SBA requested an increase in non-disaster
staffing and expenses. In the previous two years full-time
equivalents have grown from the FY 1997 actual of 2,915 to an
FY 1999 estimate of 3,133. This was an eight percent increase.
With more functions being outsourced, privatized and
automated it was difficult to comprehend the need for staffing
increases. SBA's staffing efforts needed rethinking. If SBA was
truly to become a cutting edge financial services agency with
high-tech facilities it should have required fewer employees
due to increased productivity.
The FY 1999 proposal showed an increase of 16 net FTEs over
FY 1998. The FY 2000 budget showed that there was in fact a 154
FTE increase. In the FY 2000 budget the number of FTEs would
rise again by 42 FTES.
In addition, the number of positions at the agency had
risen 97 positions beyond what was requested in the FY 1999
budget. How were they justified as part of the FY 2000 base
request when they were not part of the FY 1999 increase
request. The Committee understood that there was a hiring
freeze at the SBA; its continuation was encouraged until those
hiring discrepancies were explained.
The Committee also noted that the SBA requested an
additional $5 million for retraining and relocating employees
and buying out employees. However, no detail was forthcoming on
the nature of this retraining, or the destination of the
relocated employees.
OFFICE OF INSPECTOR GENERAL
The Committee generally supported the proposed increase for
the Office of Inspector General. The Committee agreed that
further vigilance was required not only for the loan programs
but also for the myriad grant-based assistance programs which
require more scrutiny due to their less easily quantifiable
parameters. The Committee also believed that funding was
required for the Inspector General's efforts at stemming fraud
in the disaster loan program.
Conclusion
The SBA continues to provide important services to the
small business community. However, SBA's FY 2000 budget was,
unfortunately, lacking in consistency. There was an increase in
new unjustified programs at the expense of proven, popular
programs. $233 million of reasonable disaster spending was
masked by budget gimmicks. Meanwhile, federal employment was
increased without accounting for performance or effectiveness.
Streamlining and productivity enhancing technology appeared to
be used to support bureaucratic growth.
Minority views were also submitted.
6.2.2 fiscal year 2001 budget
The President's proposed budget for FY 2001 requested
$1.062 billion for the Small Business Administration, an
increase of $336 million over FY 2000. On February 16, 2000 the
Committee on Small Business met to consider and approve views
and estimates on the fiscal year 2001 budget for the Small
Business Administration. These views and estimates were then
submitted to the Committee on the Budget.
While the Committee believed that many of the provisions of
the budget were reasonable, it could not agree with all of the
spending proposed in the FY 2001 budget proposal. The views and
estimates divided the Small Business Administration into five
areas; (1) Financial Programs, (2) Assistance Programs, (3)
Disaster Assistance, (4) Salaries and Expenses, and (5) Office
of Inspector General.
SMALL BUSINESS FINANCIAL PROGRAMS
Summary
The FY 2001 SBA proposed budget for small business
financial assistance discussed building a twenty-first century
financial management organization and providing assistance for
small business. The President's Budget requested a total of
$332.25 million in subsidy budget authority for financial
programs, an increase of $65.45 million over FY2000 levels.
7(a) LOANS
This is the SBA's leading loan guarantee program. The
Administration proposal for appropriations for this program was
based on an estimated program demand of $11.5 billion in loans,
requiring $142.6 million in budget authority. The Committee
believed this request was adequate. Recent SBA estimates of
demand for 7(a) have proved accurate.
504 LOANS
The Administration believed that the Section 504 loan
program would not require appropriations for FY 2001, and would
be able to continue to lower fees to the program's borrowers.
Improvements have appeared in the program's liquidation
performance, the largest single factor in the subsidy rate
equation and a source of significant concern to the Committee.
The Committee agreed that no appropriation would be needed
for this program but was concerned that a report on recoveries
within the program has not yet been completed.
SMALL BUSINESS INVESTMENT COMPANY PROGRAM
The Administration proposed an increased program level for
both parts of the SBIC program. The Administration requested a
$1.9 million increase in subsidy budget authority for the
participating securities program. This would increase subsidy
budget authority from $24.3 million to $26.2 million and
increase the program level to $2 billion. The Committee
supported the requested budget amount of $26.2 million.
The Administration also requested an increase in subsidy
budget authority for the debenture program. In FY 2000 the
debenture program operated at a zero subsidy rate and required
no appropriations and provided up to $800 million dollars in
leverage. The FY 2001 request would be $500 million in
debenture leverage, an amount higher than the estimated FY2000
demand of $450 million. However, the request came with an
increased cost in subsidy budget of $3.9 million because the
subsidy rate has increased to 0.78%. SBA informed the Committee
that this estimate was in error. Consequently, the request for
subsidy budget authority was inflated. While the Committee
supported the requested program level it had concerns over the
change in subsidy costs. The Committee reserved judgment on the
need for appropriations absent a full accounting.
MICROLOAN PROGRAM
The SBA requested a more than 100% increase in funding for
the microloan program for FY 2001. The program level would
increase from $29 million to $60 million, and subsidy budget
authority would increase from $2.5 million to $5.3 million.
The Committee expressed its desire that a portion of the
requested increase be channeled to the guaranteed microloan
program. SBA had continuously frustrated this program through
lack of effort and regulations drafted in a fashion to
discourage participation. That program offers an opportunity to
expand the program at a reduced subsidy rate through
established local lenders. This would not only provide a
reduced cost to the taxpayer, but would provide microloan
clients with exposure to traditional lending outlets.
ASSISTANCE PROGRAMS
Summary
The FY 2001 SBA budget submission proposed significant
increases in spending on its non-credit business assistance
programs. While these programs represent well-intentioned
efforts to aid small business, there is a tendency to fragment
rather than consolidate these efforts. The SBA proposed or
increased several new, unauthorized programs at a cost of
millions. The Committee had concerns over how these funds would
be spent.
DRUG-FREE WORKPLACE
The Administration requested no funding for this program.
Further, it listed the program, fully authorized in Section
27(g) of the Small Business Act, as a Congressional Initiative.
This, in spite of the fact that the Public Law authorizing this
program passed the House of Representatives and Senate with
overwhelming support and was enthusiastically signed by the
President.
The Committee objected to this budget position which
ignored concrete and significant efforts to improve the small
business climate and workplace conditions.
MICROLOAN TECHNICAL ASSISTANCE
The Administration requested $45 million in technical
assistance funds for the Microloan program. The Committee
reserved judgment on the need for this additional funding. The
Committee was particularly concerned that the need for this
funding was duplicative of funding proposed in the PRIME/CDFI
program, and vice versa.
ADVOCACY DATABASE
The Administration proposed $1.5 million for the Office
Advocacy to support research and economic analysis. The
Committee supported this proposal.
WOMEN'S BUSINESS COUNCIL
The Administration proposed increasing funding for the
Women's Business Council from $400,000 to $1 million. The
Committee supported the work of the Council but believed this
request required further justification.
WOMENS BUSINESS CENTERS
The Administration proposed increasing funding of this
program to $12 million. The Committee supported this proposal
and the excellent work performed by the centers.
BUSINESS INFORMATION CENTERS/USEACs
The Administration proposed increased funding for these
programs. BICs would increase from $500,000 to $700,000. USEACs
would increase from $3.1 million to $3.5 million. However, the
agency still failed to explain whether it intends to co-locate
any of these centers with existing Small Business Development
Centers.
The Committee supported the BIC and USEAC projects but
requested SBA to provide more substantial information on the
activities of these sites and improve performance.
SMALL BUSINESS DEVELOPMENT CENTERS (SBDCs)
The Administration proposed $85 million in funding for the
SBDC program. This proposal was a vast improvement over
previous requests. The Administration also proposed $3 million
to establish Native American SBDCs. The Committee supported
that request.
HUBZONES
The Administration requested increased funding for this
program from $3 million to $5 million. The Committee believed
that, rather than pursuing staffing and funding increases, the
SBA could better serve HUBZones businesses by implementing a
simplified, on-line application process and outreach through
established programs. Such an approach, combined with auditing
support, would enable the program to reach far more small
businesses than the 800 reached to date. This approach should
be promoted in the final regulations for full implementation of
this program.
ONE STOP CAPITAL SHOPS
The SBA FY2001 budget proposed a significant (210%)
increase in funding for this program, from $3.1 million to $10
million. The Committee notes that information regarding the
use, services and merits of One Stop Capital Shops is limited.
SBA reported that OSCS counseled 53,000 people last year and
yet this resulted in only 530 loans. One percent was not an
impressive return for a program designed to provide access to
capital.
E-COMMERCE
The Administration requested $5 million to fund a new,
unauthorized, program designed to teach small business about
doing business over the Internet. While the Committee
appreciated the SBA's belated interest in this area it was
reluctant to fund a program of this cost without significant
information regarding its application and availability.
BUSINESS-LINC
This was another unauthorized program. The Administration
proposed increasing this program from an initial $1.5 million
to $6.6 million. The Committee received no information
regarding the operation and organization of this program and,
therefore, opposed any increased funding.
SBIR PHASE III
The Administration proposed $15 million in unauthorized
grants for Phase III SBIR participants. The Committee made
clear that the original intent of the SBIR program was to
provide grants for ONLY the first two phases of SBIR
participation. At that point the participant is expected to
have developed outside sources of financing and support for
Phase III. The Committee strongly opposed this proposal.
NEW MARKET VENTURE CAPITAL COMPANIES
The Administration proposed $21 million in subsidy budget
authority to support $150 million in lending by these NMVCCs.
The Administration's FY 2001 budget also proposed $30 million
in technical assistance grant funding for New Markets Venture
Capital Companies. These NMVCCs will make SBIC loans in Low &
Moderate Income areas. This meant the Administration planned to
spend $51 million in order to make $150 million in loans in LMI
areas.
The Committee found this questionable, particularly in
light of the fact that regular SBICs made $800 million in
investments in LMI areas in the previous year--without this
program. The Committee doubted that the SBA could implement
this program quickly enough to justify any further
appropriations.
DISASTER ASSISTANCE
The President's FY 2001 SBA budget submission asked for
authority for $871 million in disaster loans, representing the
ten-year average of disaster loan needs. The budget requested
$142.1 million in subsidy budget authority to support these
loans.
The budget also requested administrative costs of $154
million. The SBA anticipated that $30 million in general S&E
costs would derive from disaster loan administrative costs. The
Committee believed that release and use of these administrative
funds should track loan demand. Consequently, if SBA uses only
20% of the loan funds then they should need only 20% of the
administrative funds transferred to general S&E.
The Committee supported this request and is pleased that
the Administration ceased manipulating disaster loan funding
requests in order to shelter increases in other programs.
SALARIES AND EXPENSES
For FY 2001 the Administration requested an increase in SBA
non-disaster staffing and expenses. In FY1997-FY1999 full-time
equivalents grew from the FY 1997 actual of 2,915 to an FY 1999
estimate of 3,133. That was an eight percent increase.
The FY 2000 budget submission showed an increase of 54 FTEs
over FY 1998, with a request for a further 42 FTEs. In FY2001
there was no mention of FTEs in the budget submission. Why was
that information missing?
The number of positions at the agency apparently dropped
from 3,123 in FY1999 to 2,977 for the FY2000 estimate. For
FY2001 the Administration requested 86 new SBA positions. The
resulting positions number would still be 63 ``slots'' below
FY1999. However, without the FTE count it is difficult to judge
actual employment. 20 of these positions would serve the new
NMI program.
The Committee noted that the Administration requested an
additional $4 million for retraining and relocating employees
and buying out employees. However, no details were forthcoming
regarding the nature of this retraining, or the destination of
the relocated employees. This is the second year that was
proposed with no explanation of the retraining required.
OFFICE OF INSPECTOR GENERAL
The Committee generally supported the proposed increase for
the Office of Inspector General to $14.1 million. The Committee
agreed that further vigilance will be required not only for the
loan programs but also for the myriad grant-based assistance
programs. The Committee suggested that additional funding be
allocated evenly between audit and investigative uses.
Conclusion
The SBA continues to provide important services to the
small business community. However, SBA's FY 2001 budget is,
unfortunately, lacking in consistency. There is an increase in
new unjustified programs at the expense of proven, useful
programs. The unfortunate result is a budget document that is
more of a wishlist than a serious or significant planning
document.
Minority views were also submitted.
CHAPTER SEVEN
SUMMARY OF OVERSIGHT, INVESTIGATIONS AND OTHER ACTIVITIES OF THE
COMMITTEE ON SMALL BUSINESS AND ITS SUBCOMMITTEES
7.1 Summary of Committee Oversight Plan and Implementation
Pursuant to rule X, clause 2(d)(1), of the Rules of the
House of Representatives, the Committee on Small Business
adopted, on January 6, 1999, an oversight agenda for the 106th
Congress. (For a discussion of the Committee's consideration of
the oversight agenda refer to section 6.1.1 of this report.)
The House rule also requires that each Committee summarizes its
activities undertaken in furtherance of the oversight agenda as
well as any additional oversight actions taken by the
Committee.
In the following portions of Chapter Seven, the provisions
of the oversight agenda are addressed in the hearing summaries
of the Committee and its subcommittees. A summary of each
hearing conducted by the full Committee appears in section 7.2
of this report and summaries of each subcommittee hearing
appear in sections 7.3 through 7.7 of this report. An overview
of the Committee's legislative activities appears in Chapter
Five of this report.
7.1.1 OVERSIGHT OF THE U.S. SMALL BUSINESS ADMINISTRATION
106TH CONGRESS
U.S. HOUSE OF REPRESENTATIVES
JAMES M. TALENT, CHAIRMAN
OVERSIGHT OF THE SMALL BUSINESS ADMINISTRATION
The Committee conducted hearings on all the major programs of the
Small Business Administration to determine their effectiveness and
possible options for improvements.
FINANCIAL AND MANAGEMENT/TECHNICAL ASSISTANCE PROGRAMS
The Committee conducted hearings on the effectiveness and
efficiency of the SBA's major programs. Particular emphasis will be
placed on improving the economic efficiency of these programs. A number
of the SBA's key programs were the subject of oversight hearings by the
Committee. These included:
7(a) General Business Loan Programs
Certified Development Company Program
SBIC Program
Microloan Program
SBDC
Disaster Loan Program
ADVOCACY
The Office of Advocacy was created to provide small business with
an effective voice inside the Federal Government. The Committee will
conduct hearings on how to strengthen this voice and make sure that the
Office of Advocacy continues to effectively represent the interests of
small business.
TECHNOLOGY AND RESEARCH ASSISTANCE
Small Business Innovation Research
The Small Business Innovation Research (SBIR) program aids small
businesses in obtaining federal research and development funding for
new technologies.
Small Business Technology Transfer
Committee oversight focused on the program's success at helping
small business access technologies developed at federal laboratories
and put that knowledge to work.
FEDERAL PROCUREMENT
The Committee examined needed changes in federal procurement. The
Committee investigated the implementation of recent legislation dealing
with ``bundling'' and the effect it is having on small businesses
involved in government contracting.
GOVERNMENT & NON-PROFIT COMPETITION
The Committee examined the extent to which non-profit organizations
and the Federal Government itself competes with small business. Our
focus included activities in both the private sector and government
procurement.
REGULATORY FLEXIBILITY
The Committee continued its oversight of agency compliance with the
Regulatory Flexibility Act, as amended by the Small Business Regulatory
Enforcement Fairness Act.
SBREFA
The Committee conducted oversight hearings on agency implementation
of the Small Business Regulatory Enforcement Fairness Act (SBREFA),
which was enacted during the second session of the 104th Congress.
PAPERWORK REDUCTION
The Committee continued its oversight of agency implementation of
the Paperwork Reduction Act, as amended.
GOVERNMENT REGULATION
The Committee continued to examine the regulatory activities of
various federal agencies and assess the impact of regulations on the
small business community.
TAXATION
The Committee continued to conduct oversight hearings into ways to
reduce the tax burden on small business. These hearings included not
only the fiscal but also the paperwork burden of the federal tax system
and federal enforcement efforts.
ELECTRIC UTILITY DEREGULATION
The Committee conducted oversight hearings on the potential effects
of electric utility deregulation on small business.
GOVERNMENT PERFORMANCE AND RESULTS ACT
The Committee continued consultations with the SBA regarding the
preparation and implementation of strategic plans and performance plans
as required by the Government Performance and Results Act.
EMPOWERMENT
The Committee conducted oversight hearings on regulations and
licensing policies that impact small businesses located in high-risk
communities. The Committee also examined the promotion of business
growth and opportunities in economically depressed areas, and examined
programs targeted towards relief for low-income communities.
7.2 Summaries of the Hearings Held by the Full Committee on Small
Business
7.2.1 h.r. 68, the small business investment company
technical corrections act of 1999
Background
The purpose of H.R. 68 is to make certain amendments to
Title III of the Small Business Investment Act of 1958 and
amend Section 20 of the Small Business Act. The technical
corrections proposed by H.R. 68 would improve the flexibility
of the SBIC program and allow program by small businesses.
Congress revamped the SBIC program in the 103d Congress to
provide for a new form of leverage geared specifically towards
equity investment in small businesses. Over the ensuring years,
as the new program has become established, certain deficiencies
have come to light; in addition, certain statutory provisions
have become obsolete. H.R. 68 will modify the SBIC program to
exclude contingent obligations from the calculation of interest
in loans made by SBICs; repeal provisions in the Small Business
Investment Act that reserves leverage for smaller SBICs;
increase the authorization levels for the participating
securities segment of the SBIC program; modify a test for
determining the eligibility of small businesses for SBIC
financing; and allow the SBA greater flexibility in issuing
trust certificates to finance the SBIC program's investments in
small businesses.
Summary
On Thursday, January 7, 1999, the Committee on Small
Business held a brief hearing to consider the provisions of
H.R. 68. Testifying at the hearing was Mr. Lee Mercer,
President of the National Association of Small Business
Investment Companies. Mr. Mercer reiterated his testimony from
the 105th Congress regarding the beneficial effects that H.R.
68 would have on the SBIC program. He recognized the
improvements in management that occurred in the program over
recent years and strongly recommended the corrections contained
in H.R. 68. Mr. Mercer explained the five provisions and the
effect they would have in detail. The hearing was in essence a
reprise of the hearing held the previous year to discuss the
provisions of H.R. 3412.
Mr. Hinojosa asked questions concerning the establishment
of the cost of money for the SBIC program through the secondary
market. Mr. Mercer explained that the cost was variable and
fluctuated in correspondence with changes in the 10-year
Treasury rate and the varying spread requirements of
institutional investors. Ms. Napolitano also asked Mr. Mercer
about the various examples of the effect and impact of the SBIC
program.
For further information on this hearing, refer to Committee
publication 106-1.
7.2.2 review of women's business centers
Background
The Committee met on February 11, 1999 to discuss the
administration of the SBA's Women's Business Centers Program
and what obstacles it faces. Women's Business Centers provide
courses, workshops, mentor services and access to financing
designed for women building businesses. These centers often
target-low-income women.
Summary
The witnesses at this hearing included: Lori Smith, founder
and chairman of the board of the Oklahoma Women's Business
Center, also representing the Association of Women's Business
Centers; Linda Wharton, Small Business Owner and Client,
Philadelphia Women's Business Development Center; and Betsy
Myers, Associate Deputy Administrator, Office of
Entrepreneurial Development of the Small Business Association.
Ms. Smith spoke of her worries regarding the sustainability
of the Women's Business Centers program. She believes the
program was instrumental in her own success as a small business
owner, and she does not want to see the program phased out. She
stated that in order to sustain the growth of women business
owners, Congress must maintain and sustain the infrastructure
of women's business centers nationwide; incorporate flexibility
into the program by allowing Women's Business Centers to re-
compete for funding, strengthen the association between the
Women's Business Centers; support the expansion of the program
but not at the expense of the program's successes; reconsider
the match requirement, especially in the fifth year for an
initial grant; and increase the authorization for the Women's
Business Centers to $12 million.
Ms. Wharton spoke of the help she received from her local
Women's Business Center. She stated that this program was
instrumental in her ability to launch HerSport, the company she
owns with two women partners. She stated that the needs of men
and women differ when starting a business, and that the Women's
Business Centers program provides essential help in leveling
the playing field.
Ms. Myers testified that the Women's Business Centers
program is essential. She stated that they are certainly
filling a need in communities across America, and that the
Small Business Administration should do everything possible to
sustain the program.
For further information on this hearing, refer to Committee
publication 106-2.
7.2.3 review of sba's fy 2000 budget request
Background
The Small Business Administration provides a variety of
services for small businesses--financial assistance, technical
assistance, and disaster assistance.
Financial Assistance
The Small Business Administration provides approximately
$11 billion in financing to small businesses annually. This
financing is made available through a variety of programs.
SBA's largest financial program is the Section 7(a) general
business loan program. The 7(a) program offers loans to small
businesses through local lending institutions. These loans are
provided with an SBA guarantee of up to 80 percent and are
limited to a maximum of $750,000. The 7(a) program has a
subsidy rate of 1.16% for fiscal year 2000 and an appropriation
of $107 million, permitting $9.8 billion in lending.
The Section 504 loan program provides construction,
renovation and capital investment financing to small businesses
through certified development companies (CDCs). These CDCs are
SBA licensed, local business development organizations which
provide loans of up to $750,000 for small businesses, in
cooperation with local banks.
The Microloan program provides small loans of up to $25,000
to borrowers in low-income areas. In fiscal year 1999 the
program provided $29 million in loans. In addition, the program
has a technical assistance aspect that provides managerial and
business expertise to microloan borrowers. Microloans are made
by intermediary organizations that specialize in local business
development.
The Small Business Investment Company (SBIC) program
provides over $1.5 billion in long term and venture capital
financing for small businesses annually. SBICs are venture
capital firms that leverage private investment dollars with SBA
guaranteed debentures or participating securities. The SBIC
debenture program currently operates at a zero subsidy rate and
requires no taxpayer subsidy. The participating securities
program has a 1.8 percent subsidy rate.
Technical Assistance
The SBA provides technical and managerial assistance to
small businesses through four primary programs--
Small Businesses Development Centers (SBDCs) are located
primarily at colleges and universities and provide assistance
through 51 center sites and approximately 970 satellite offices
and offer small businesses guidance on marketing, financing,
start-up, and other areas.
The Service Corps of Retired Executives (SCORE) which
provides small business assistance on-site through the
volunteer efforts of its members. SCORE volunteers are retired
businessmen and women who offer their expertise to small
businesses.
The 7(j) technical assistance program provides financing
for technical assistance to the minority contracting community
primarily through courses and direct assistance from management
consultants and assistance for participants to attend business
administration classes offered through several colleges and
universities.
The Women's Business Center program provides business
training centers for women and teach women the principles of
finance, management and marketing as well as specialized topics
such as government contracting or starting home-based
businesses. There are currently 81 centers in 47 states in
rural, urban and suburban locations.
Disaster Assistance
The Small Business Administration also provides disaster
loan assistance to homeowners and small businesses nationwide.
This program is a key component of the overall Federal recovery
effort for communities struck by natural disasters. This
assistance is authorized by section 7(b) of the Small Business
Act which provides authority for reduced interest rate loans.
Currently the interest rates fluctuate according to the
statutory formula--a lower rate, not to exceed four percent is
offered to applicants with no credit available elsewhere, while
a rate of a maximum of eight percent is available for other
borrowers.
Summary
On February 24, 1999 at 10:00 a.m., the Committee on Small
Business convened a hearing to discuss the Administration's
budget submission for fiscal year 2000, their legislative
proposals, and the reauthorization of the SBA's programs. The
Committee received testimony from one witness: Hon. Aida
Alvarez, Administrator of the Small Business Administration.
Ms. Alvarez's testimony outlined the Administration's
request, and concentrated on the Administration's ``New Markets
Initiative''. She was joined in some of her responses by Mr.
Greg Walter, Deputy Chief Financial Officer of the SBA, and Mr.
John Gray, Associate Administrator for Investment.
During the hearing Chairman Talent questioned Administrator
Alvarez on the lack of funding for the Veterans Business
Outreach program. The Chairman also raised questions about an
apparent rise in the request for administrative expenses in the
budget submission.
Ranking Member Velazquez questioned the Administrator on
the New Markets Initiative. Representatives Kelly and Forbes
questioned the Administration's proposal to mandate that Small
Business Development Centers charge fees. Mr. Forbes expressed
concern that the Administration's proposal would effectively
reduce funding for SBDCs by 25%, and those commensurate cuts
were not being imposed on other programs.
Representative Pascrell questioned the Administrator on the
efforts to improve lending to African-American and Latino-
American small businesses and expressed concern over the drop
in lending to those groups.
Representative Udall questioned the Administrator regarding
assistance for Native American communities.
Representatives Tubbs-Jones and Schakowsky questioned the
Administrator on efforts to increase lending in low-income
communities.
Representative Forbes closed the hearing with questions
about the Administration's proposal to take disaster assistance
funding off budget.
For further information on this hearing, refer to Committee
publication 106-3.
7.2.4 the small business year 2000 readiness act
Background
The full Committee on Small Business met to review the
Small Business Year 2000 Readiness Act (S. 314), which passed
the Senate on March 2, 1999 and became Public Law 106-8 on
April 5, 1999.
The bill requires the Small Business Administration to
establish a limited-term loan program whereby the agency
guarantees the principal amount of a loan made by a private
lender to assist small businesses in correcting Y2K computer
problems. The program's start-up phase would be expedited by
making each lender that currently participates in the SBA's
7(a) business loan program eligible to participate in the Y2K
loan program.
Summary
One panel testified at the hearing: Ms. Jeanne Sclater,
Deputy Associate Deputy Administrator, Office of Capital
Access, Small Business Administration (SBA); Mr. David
Schaefer, Vice President, Armfield, Harrison & Thomas, Inc.;
Mr. Todd McCracken, President, National Small Business United;
and Mr. Harris Miller, President, Information Technology
Association of America.
Ms. Sclater testified that the proposed loan program would
authorize SBA to guarantee loans outside its normal credit
criteria, thus broadening the band of potentially eligible
small businesses. While she agreed that the concept of targeted
funding to small businesses to meet the Y2K threat is a
laudatory objective, she mentioned concerns about how some of
the bill's provisions could adversely impact SBA's ability to
meet borrowers' needs under the regular 7(a) business loan
program could hurt small businesses by mandating a balloon
payment loan structure.
Mr. Schaefer testified about the impact the Y2K problem is
having on his small business and he included some anecdotal
evidence from other businesses. As a property and casualty
insurance agent, he also provided insight on the awareness and
preparedness of his clients.
Mr. McCracken testified about National Small Business
United (NSBU) data that although the computer revolution has
taken hold within the small business community, thirty-eight
percent had not yet begun to address the Y2K issue. Smaller
companies with fewer than 20 employees are even less likely to
be addressing the Y2K problem.
Mr. Miller testified that because the bill provides much
needed assistance to small businesses, and, through the very
existence of such a program, serves a powerful channel of
awareness and outreach to the small business community, the
Small Business Year 2000 Readiness Act, in combination with
other Y2K legislation, will further the maximum correction of
systems in the less than 300 days remaining before the
rollover.
For further information on this hearing, refer to Committee
publication 106-5.
7.2.5 the effect of the kyoto protocol on american small
business
Background
Countries completed negotiations on the Kyoto Protocol to
the United Nations Framework Convention on Climate Change on
December 11, 1997, committing industrialized nations to
specified, legally binding ``greenhouse gas'' emission targets.
The United States agreed to reduce greenhouse asses to 7% below
the 1990 levels during the 2008 to 2012 commitment period. On
November 12, 1998, U.S. United Nations Ambassador Peter
Burleigh signed the Kyoto Protocol. The Administration has yet
to submit the treaty to the U.S. Senate for ratification.
The Administration indicated that absent developing
countries (i.e., Mexico, China and Brazil), commitment to
reduce greenhouse gases, it will not submit the protocol to the
Senate. Last November, at the latest conference of the parties
in Buenos Aires, Argentina, most developing countries declined
to accept binding emission reduction goals.
Ratification of the Kyoto Protocol will immediately impact
energy intensive small businesses such as bakeries, dry
cleaners, auto repair shops, small manufacturers, and,
ironically, recycling businesses. The Kyoto Protocol will force
small businesses to operate much smaller, less useful vehicles,
and to pay higher gas taxes and utility bills.
If the Senate ratifies the Kyoto Protocol, the
Administration plans to domestically enforce the Protocol
through a credit system. Companies will sell greenhouses gas
emissions on an open market. Firms that achieve greater than
national reductions may sell to non-compliant businesses--
allowing U.S. firms to profit for moving their operations to
developing countries, i.e., Mexico, that reject binding
reductions. It is more disastrous for small entities and start-
up firms that exponentially use more energy than 1990 levels.
Summary
The Committee examined the Kyoto Protocol to the United
Nations Framework Convention on Climate Change. The Clinton
Administration signed the Protocol in November 1998, but has
not submitted it to the Senate for ratification. The hearing
focused primarily on the Protocol's economic impacts on
American small businesses. Specifically, the hearing questioned
the ability to successfully implement the Protocol absent
developing country (i.e., China and India) participation. The
hearing challenged previous assertions by Dr. Janet Yellen,
Chair for the President's Council of Economic Advisers, that
while domestic reduction in greenhouse gases would
significantly impact the U.S. economy, the United States could
purchase credits in an international market that would permit
it to comply with its Protocol obligations without a negative
impact on the U.S. economy. In addition to Dr. Yellen, Mr.
Robert Reinstein, President, Reinstein & Associates
International, Inc. provided testimony.
For further information on this hearing, refer to Committee
publication 106-10.
7.2.6 electronic commerce: the benefits and pitfalls of
conducting business over the internet
Background
On May 26, 1999, the Committee met to discuss the benefits
and pitfalls of Electronic Commerce. According to projections
by IDC, by 2000, 46 million American consumers will be buying
on-line, each spending an average of $350. Yet, E-marketer
reported that fewer than 2 percent of the 7 million U.S. small
businesses with fewer than 100 employees conduct on-line
transactions. Furthermore, the problems of Internet tax and
increased Federal regulation of the Internet are barriers to
electronic commerce.
Summary
A diverse panel of witnesses provided the Committee Members
with valuable insight into this timely issue: Mr. Daniel O.
Hill, Deputy Assistant Administrator for Technology, Small
Business Administration (SBA); Mr. Harris Miller, President,
Information Technology Association of America; Professor Andrew
B. Whinston, Director, Center for Research in Electronic
Commerce, University of Texas at Austin; Mr. Alan Anderson,
Senior Vice President, American Institute of Certified Public
Accountants; and Mr. Brian Hanson, Founder & Owner, Hanson
Bros. Fresh Seafood, Portland, ME.
Mr. Hill testified about ways the SBA is working to
encourage small business involvement in electronic commerce,
both as users and as developers and innovators of the
technology.
Mr. Miller argued that even with a successful web site, the
benefits of e-commerce are not inevitable. E-commerce must be
supported with sound public policy. Mr. Miller argued four
challenges could harm small business access to e-commerce,
including: increased federal Internet regulation; limited small
business access to high speed telecommunications; lack of
digital trust and security; and e-commerce taxation.
Mr. Whinston testified about barriers to small business on-
line success and said the government should conduct more
research to better understand how businesses on the Internet
will operate. Then, small businesses may draw upon that pool of
information to be effective competitors in the Internet world.
Mr. Anderson testified about online security and how the
American Institute of Certified Public Accountants created CPA
Web Trust, a seal that verifies to consumers that the
organization conducted an audit of a business' integrity, the
web-site's transaction integrity, and the web-site's protection
of on-line privacy.
Mr. Hanson testified that many small businesses face
serious obstacles. He successfully incorporated e-commerce into
his business and estimates his on-line sales will reach 20-30%
of his annual sales this year. However, while researching his
company's Internet potential he found several small business
errors that keep many small businesses from functioning
effectively in the ``e-world.''
Mr. Hanson also argued that poorly designed web sites, lack
of traffic and exposure to the site, and a lack of
functionality all must be rectified to succeed on the Internet.
Small businesses often lack the technical skills, large capital
for equipment and advertising, and the time necessary to manage
their sites. Mr. Hanson said that without addressing these
concerns, his on-line venture would not have succeeded as well.
For further information on this hearing, refer to Committee
publication 106-15.
7.2.7 setra: fair and simple tax relief for small business
Background
Introduced by Chairman Talent, H.R. 2087, the Small
Employer Tax Relief Act of 1999 (SETRA) would provide fair and
simple tax relief for small business. For SETRA purposes, the
category ``small business'' generally includes C corporations,
S corporations, partnerships, limited liability companies, and
sole proprietorships averaging five million dollars
($5,000,000) or less in annual gross receipts for the three
preceding years.
First, the bill would increase the deduction for the health
insurance costs of self-employed individuals to 100 percent
immediately. Current law allows the self-employed to deduct 60
percent in 1999; 70% in 2002; and 100% in 2003. SETRA also
would clarify that an individual can lose his or her self-
employed health insurance deduction only if he or she actually
participates in another plan.
Second, the bill would increase the meal and entertainment
expenses for small business taxpayers from 50 percent to 80
percent. The bill would extend to small businesses a tax law
change provided in the Taxpayer Relief Act of 1997 for workers
with federally mandated periods of rest. The provision
increases the meal deduction incrementally by 5 percent to 80
percent by the year 2009. In 1986, all businesses could deduct
100 percent of business and travel meals as ordinary and
necessary business expenses. Congress lowered the deduction to
80 percent in 1987 and to 50 percent in 1994.
Third, the bill would increase expenses for small business.
Current law allows taxpayers to expense the cost of tangible,
depreciable personal property purchased for use in the active
conduct of a trade or business up to $19,000 in 1999; $20,000
in 2000; $24,000 in 2001 and 2002; and $25,000 in 2003. SETRA
would increase expensing for small businesses to $35,000
immediately.
Fourth, the bill would lower the top individual tax rate on
small business from 39.6 percent to 34 percent. The lower tax
rate would apply to the net income of a small business
attributable to the active conduct of a trade or business (up
to $5,000,000) and currently taxable above 34 percent.
Fifth, the bill would repeal the Federal Unemployment
surtax of 0.2 percent under current law. Specifically, the bill
amends Section 3301 of the Internal Revenue Code to provide a
Federal unemployment excise tax of 6.0 percent instead of 6.2
percent. Congress added the 0.2% surtax temporarily in 1976 to
repay government loans from the federal unemployment trust
funds. While Congress fully repaid the loans in 1987, it
continues to extend the temporary surtax.
Finally, the bill would clarify that small business
taxpayers with average annual gross receipts of $5,000,000 or
less for the three preceding years can use the cash method of
accounting without limitation, even if they use merchandise or
inventory.
Summary
James Wordsworth on behalf of the National Restaurant
Association; Frank Joseph on behalf of the National Association
for the Self-employed; Eric Wallace on behalf of the Associated
Builders and Contractors; Terry Neece on behalf of the National
Association of Women Business Owners; Brian Reardon of the
National Federation of Independent Business; Martin Regalia of
the Chamber of Commerce of the United States; and Dorothy
Coleman of the National Association of Manufacturers provided
testimony at the hearing.
Among other findings, the testimony at the hearing
established that:
Accelerating the 100 percent health insurance
deduction for the self-employed immediately would make health
care more accessible and affordable for at least 5 million
self-employed Americans, children and dependents.
Reductions in the business meal expense deduction
resulted in a disproportionate tax increase on the restaurant
and entertainment industries and on business meal users--the
majority of which are self-employed or small business
customers;
Expensing limits are too low. Increased expensing
lowers the cost of capital and would help small business
taxpayers update business equipment and keep pace with rapidly
changing technologies;
Recent increases in the top individual tax rate to
39.6 percent affect two-thirds of all small businesses--forcing
them to pay a higher tax rate than the top 34 percent tax rate
Fortune 500 companies pay.
Repealing the FUTA 0.2 percent surtax would reduce
payroll taxes on small business taxpayers without affecting
Social Security.
Legislative history indicates Congress intended
certain small entities to use the cash method of accounting
without limitation. In contrast, an Internal Revenue Service
(IRS) audit guide and recent IRS audit activities demonstrate a
broad effort to force small businesses to change from the cash
method to the accrual method of accounting.
For further information on this hearing, refer to Committee
publication 106-18.
7.2.8 association health plans: giving small businesses
the benefits they need
Background
On June 10, 1999, the Committee on Small Business held a
hearing to consider how Association Health Plans will assist
various segments of the small business population to get health
insurance. There are currently 43 million Americans without
health insurance and over 60 percent have one thing in common:
they, or a family member, are employed by a small business. A
recent study by the CONSAD Research Corporation, estimated that
as many as eight million uninsured would gain access to health
coverage through AHPs.
Historically, health insurance has been too expensive for
the average small business owner to purchase. Thus many of
those employed by small businesses are left without access to
affordable health care options. AHPs allow small employers to
join together through their trade associations to offer
affordable and quality health insurance to their employees.
AHPs ensure that small businesses are afforded the same
economies of scale, purchasing clout, and administrative
efficiency as large employers, when purchasing health
insurance. Chairman Jim Talent (R-MO) and Rep. Cal Dooley (D-
CA) introduced the Access and Choice for Entrepreneurs Act
(ACE), H.R. 1496, which would give small business owners the
opportunity to offer employees the most basic patient
protection, access to health care, through AHPs.
Summary
The hearing consisted of one panel: Ms. Terry Neese, CEO
and Founder, Terry Neese Personnel Services, and Corporate and
Public Policy Advisor, National Association of Women Business
Owners (NAWBO); Ms. Mary Nell Lehnhard, Senior Vice President,
Policy and Representation, BlueCross BlueShield Association;
Mr. Jesse Coleman, Vice President and Owner, Coleman's Hamilton
Supply Company; Ms. Patricia Gagne, Vice President, Claims
Technologies, Inc.; Mr. Joseph E. Rossman, Vice President,
Employee Benefits Operations, Associated Builders and
Contractors, Inc.; Mr. John B. Nicholson, Proprietor, Company
Flowers.
Ms. Neese testified that AHPs are especially important to
women business owners, as they are the fastest growing segment
of small business owners. She noted that while 82 percent of
all women business owners offer health coverage, only 25
percent of women-owned small businesses are able to offer
coverage and; the smaller the business the less likely it is to
offer health benefits.
Ms. Mary Nell Lehnhard testified about Blue Cross Blue
Shield's concern that AHPs would not provide comprehensive
coverage since they are exempt from covering state-mandated
benefits. She also expressed concern that plans the Department
of Labor does not have the resources necessary to regulate
AHPs.
Mr. Coleman testified that in his industry where he must
compete with large companies for employees, providing health
care is crucial in attracting and retaining good employees. He
told of his own experience as a small business owner trying to
self-insure and being unable to find affordable rates. Mr.
Coleman said that being able to participate in an ERISA plan
would help level the playing field.
Ms. Gagne testified that the Boys and Girls Clubs Workers
Association had to cease coverage in certain areas because of
rising health care costs that their members could not afford.
She noted that compliance costs, carrier fees, and insurance
company profit margins led B&GCWA to self-insure in order to
offer affordable benefits to their members. Additionally,
B&GCWA was able to provide coverage that was portable across
state lines, which benefited many of their members who moved to
start clubs in other areas. Ms. Gagne testified that AHPs build
on current ERISA framework to allow small businesses to access
affordable health care options.
Mr. Rossman testified that ABC's Insurance Trust provides a
crucial service to its small business members by negotiating
cost and coverage options on their behalf. He mentioned that
due to state reforms, ABC is being forced to increase rates,
reduce benefits, or stop coverage altogether in certain areas.
He said that AHP legislation would help ABC continue to serve
their members by providing affordable, quality health care.
Mr. Nicholson testified that his HMO recently stopped
covering him and his employees because they no longer wanted to
provide service to groups with less than ten people. He noted
that he would like to be able to look to his trade association
for guidance on this matter and that AHP legislation would give
him that resource.
For further information on this hearing, refer to Committee
publication 106-19.
7.2.9 h.r. 1568, the veterans entrepreneurship and small
business development act of 1999
Background
In July 1998, Small Business Administration Administrator
Aida Alvarez established the SBA Veterans' Affairs Task Force
for Entrepreneurship. The Task Force included representatives
from the major veterans service organizations and veterans
advocacy groups, veteran-owned businesses, SBA management board
members, and SBA resource partners. H.R. 1568, the Veterans
Entrepreneurship and Small Business Development Act of 1999
implements the Task Force's ``high priority'' recommendations
which the SBA failed to implement.
First, the bill makes veterans eligible for funds under the
microloan program which enables veterans to access capital
markets currently available to other business owners possessing
the capability to operate successful business concerns.
Second, the bill amends the Small Business Development Act
to require the Secretary of Veterans' Affairs, the
Administrator of the Small Business Administration, and the
small business development center associations to train all
veterans, including disabled veterans, in business training and
management assistance, procurement opportunities, and other
business areas.
Third, the bill creates the National Veterans Business
Development Corporation. This Corporation will coordinate
private and public resources from Federal organizations to
establish and maintain a network of information and assistance
centers for use by veterans and the public.
Finally, the bill equates veteran-owned small business
competitive opportunities to those provided to small business
concerns owned and controlled by socially and economically
disadvantaged individuals, including procurement contract
opportunities.
Summary
In July 1998, Small Business Administration Administrator
Aida Alvarez established the SBA Veterans' Affairs Task Force
for Entrepreneurship. The Task Force examined SBA's efforts to
assist veteran entrepreneurs. The SBA, however, failed to
implement the Task Force's recommendations. H.R. 1568, the
Veterans Entrepreneurship and Small Business Development Act of
1999 implements the Task Force's ``high priority''
recommendations. Betsy Myers, SBA representative; Anthony
Baskerville, Disabled American Veterans; Valerie Callaway, a
disabled veteran; John K. Lopez, Association for Service
Disabled Veterans; Emil W. Naschinski, The American Legion;
William Elmore, Data Forces Associates; Charles Foster, SBC
Telecommunications; and Steve White & Co.; provided testimony.
For further information on this hearing, refer to Committee
publication 106-20.
7.2.10 proposed amendments to the 7(a) and 504 loan
programs
Background
On June 24, 1999, the Committee on Small Business met to
discuss proposed changes to the 7(a) and 504 loan programs, the
major lending programs supported by the Small Business
Administration.
The 7(a) Program Proposals
Increase the maximum guarantee amount of a 7(a) loan to $1
million from the current limit of $750,000 in order to keep
pace with inflation, and institute a cap prohibiting loans with
a gross amount in excess of $2 million.
Remove a provision that reduced SBA's liability for accrued
interest on defaulted loans since the provision's intended
savings failed to materialize.
Three changes designed to encourage the making of smaller
loans. The 80 percent guarantee rate will be expanded from
loans under $100,000 to loans under $150,000. Likewise, the two
percent guarantee fee will now apply to loans up to $150,000,
which represents a significant savings for these small
borrowers. Finally, for small loans, a provision allowing
lenders to retain one quarter of the guarantee fee on loans
under $150,000 as an incentive to make these loans.
The last proposal modifies an SBA regulatory restriction
which prohibit loans for passive investment, and permits the
financing of projects where no more than 20% of a business
location will be rented out provided the small business
borrower in question occupies the remaining space.
504 Program Proposals
It has been ten years since any increase in the maximum
guarantee amount in the 504 program. To keep pace with
inflation, the maximum guarantee amount should be increased to
approximately $1,250,000. The Committee proposes a simple
increase to $1,000,000.
The 504 program currently operates with a zero subsidy
rate. The Committee proposed reauthorizing these fees.
The Committee also proposed adding women-owned businesses
to the current list of businesses eligible for the larger
public policy oriented loans of up to $1,300,000; and making
the Premier Certified Lender pilot program and the Liquidation
Pilot Program permanent.
Summary
On June 24, 1999, at 9:30 a.m., the Committee on Small
Business convened a hearing to discuss legislative proposals
for the 7(a) and 504 programs. The Committee received testimony
from four witnesses Mr. Fred Hochberg, Deputy Administrator of
the Small Business Administration; Mr. Anthony Wilkinson,
President of the National Association of Government Guaranteed
Lenders; Ms. Donna Faulk, Vice President for Mortgage Backed
Securities of Prudential Securities; and Mr. John Geigel of the
Wisconsin Development Finance Corporation representing the
National Association of Development Companies.
Mr. Hochberg's testimony generally supported both the 7(a)
and 504 provisions in the legislative proposal which later
became H.R. 2615 and H.R. 2614. He expressed the
Administration's opposition to the proposed 7(a) subsidy floor
provision which was removed from the final version. However,
the Committee believes this provision merits further
examination. Mr. Hochberg also expressed reservations regarding
increasing the guarantee amount; however, he stated that those
concerns were based on the draft of the bill without any
provisions to encourage smaller loans. Such provisions were
later added.
He expressed the SBA's support for reauthorizing the fees
which support the 504 program, making the Pilot Liquidation
Program permanent and making the Premier Certified Lender
Program permanent as well. Mr. Hochberg expressed the SBA's
concerns over the language regarding the treatment of 504 loans
in the SBA's planned asset sales. These concerns were later
addressed by the Committee and changes were incorporated into
H.R. 2614.
Mr. Wilkinson testified in support of the 7(a) provisions
proposed. He stated that the 7(a) lenders were particularly
supportive of some form of prepayment penalty in order to add
stability to the program. He stated that recent prepayments
raised significant concern over the effect to the program as a
whole. He also expressed support for the provisions raising the
guarantee amounts, saying that such an increase was needed to
provide some growth due to inflation. Mr. Wilkinson stated that
he did not believe that the increases in average loan size were
significant, and he noted that they fluctuated regularly.
Ms. Faulk testified in support of the prepayment penalty
provision. She testified that the commercial investors who
purchase pools of SBA guaranteed loans have faced problems due
to prepayments. Early prepayments require that loans be
stripped from pools, with a corresponding loss in income. This
results in a loss of investor confidence and interest in SBA
backed pools and a loss in credit availability for small
businesses.
Mr. Geigel's testimony concerned the provisions affecting
the 504 program. He expressed the Certified Development Company
industry's strong support of the legislative language, which
became the body of H.R. 2614. In particular, he supported the
language providing qualified development companies with the
ability to liquidate defaulted loans with minimal SBA
oversight. He expressed the 504 industry's belief that the
lenders, who had intimate knowledge of the loans, were in a
superior position to either liquidate or restructure loans. In
addition, he expressed strong support of the provisions
increasing the maximum loan/debenture size and the inclusion of
women-owned businesses as a group eligible under the public
policy lending provisions of the 504 program.
For further information on this hearing, refer to Committee
publication 106-21.
7.2.11 osha's safety and health program rule
Background
On Thursday, July 22, 1999, the Committee on Small Business
held a hearing to examine the Occupational Safety and Health
Administration (OSHA) Draft Safety and Health Program Rule.
OSHA officials have publicly stated that the Draft Rule is the
most important element of OSHA's regulatory agenda. In its
current form, the Draft Rule would require all private-sector
businesses (aside from those in the agriculture and
construction industry) to implement a safety and health
program--meeting certain enumerated requirements such as
``management leadership.'' ``employee participation,'' and
``hazard assessment.'' Proponents of the Draft Rule contend
that it takes a preventative approach to worker accidents and
provides flexibility in implementation. Opponents of the rule
contend that the terms of the rule are so vague as to preclude
honest businesses from knowing how to comply. Moreover,
opponents claim, mandatory safety programs imposed at the state
level have failed.
Concurrent with the Draft Rule, OSHA also released a
Preliminary Initial Regulator Flexibility Act (``PIRFA'')
analyzing the costs and benefits of the measure. This PIRFA
served as the basis upon which small entities provided feedback
during the Small Business Regulatory Flexibility Act (SBREFA)
panel review process. The Small Business Administration's
Office of Advocacy commissioned an independent contractor,
Policy Planning & Evaluation, Inc., to produce an independent
analysis of the methodology and rigor of the PIRFA. This rule
was docketed in the formal rulemaking process.
The hearing was convened in order to explore the merits of
the Draft Rule and the rigor of OSHA's underlying cost-benefit
analysis.
Summary
The hearing comprised three panels. The Honorable Charles
N. Jeffress, Assistant Secretary of Labor for Occupational
Safety and Health, constituted the first panel. Mr. Jasbinder
Singh, President of Policy Planning & Evaluation, Inc., and Dr.
Henry Beale, Principal Economist of Macroeconomic Applications,
Inc., composed the second panel. Mr. Baruch Fellner, a partner
at Gibson Dunn & Crutcher, and Mr. Larry Halprin, a Partner at
Keller and Heckman, composed the third panel.
Secretary Jeffress cited the results of various voluntary
safety and health programs adopted in private industry as
providing probative evidence of the likely effectiveness of
safety and health standards mandated by the Draft Rule.
Chairman Talent contended that the success of such voluntary
programs did not provide strong evidence that a mandatory
program would work given the results. Chairman Talent cited a
recent study by a senior OSHA economist which concluded that
mandatory safety and health programs are no more effective than
voluntary programs. Chairman Talent and Representative Kelly
also asserted that the terms of the draft rule were so vague as
to invite arbitrary enforcement.
Mr. Singh contended that the cost-benefit analysis used by
OSHA in its PIRFA accompanying the Draft Rule was
methodologically flawed. Mr. Singh claimed that, in reviewing
the PIRFA, it was apparent that OSHA overstated the benefits
and underestimated the costs of the Draft Rule. Dr. Beale
claimed that, although the PIRFA was poorly drafted, OSHA
possessed sufficient underlying analysis and data to support
the rule.
Misters Halprin and Fellner both criticized the vague terms
of the Draft Rule, contending that they invited arbitrary ex
poste enforcement and precluded honest businesses from
effectively discerning their compliance obligations. Misters
Fellner and Halprin also derided the Draft Rule as a violation
of OSHA's statutory authority. Moreover, both asserted that the
``record keeping exemption'' and ``grandfather clause'' touted
by OSHA as affording regulatory relief to small business were
specious and deficient.
For further information on this hearing, refer to Committee
publication 106-23.
7.2.12 epa's expansion of 112(r) of the 1990 clean air act
amendments to include propane
Background
In December 1984, storage tank in Bhopal, India
accidentally released a toxic chemical into the atmosphere
killing over 3,000, and injuring more than 200,000,
individuals. In response, Congress amended the Clean Air Act to
require the EPA to promulgate a ``list of 100 substances which
in the case of an accidental release, are known to cause or may
reasonably be anticipated to cause death, injury, or serious
adverse effects to human health or the environment.'' Congress
required the EPA to include 16 toxic chemicals on the list. In
January 1993, the Bush Administration EPA proposed to expand
the law to include propane within section 112(r). However,
propane is not toxic.
The EPA regulation, as originally drafted, would have
covered any business that stored more than 10,000 pounds or
2,300 gallons--including the average family farmer, greenhouse,
or restaurant using propane as well as small propane
distributors and dealers. Notwithstanding propane's regulation
by OSHA, DOT, and every state and local fire department, EPA
would have required these businesses, at minimum, to develop a
``worst-case'' scenario impact of a propane explosion and a
plan for dealing with that scenario, and to bring equipment and
personnel up to EPA standards for executing such a plan.
Furthermore, it would have given propane users the perverse
incentive to do one of two things: switch to an environmentally
unfriendly fuel, like fuel oil, or store less than the
threshold 10,000 pounds on site, which would have required more
frequent deliveries of propane and therefore more
transportation of flammable fuels on the highways.
As a result of these obvious problems with the regulation,
and following six years of extreme Congressional pressure, the
EPA finally raised the threshold for the application of its
regulations from 10,000 pounds to 67,000 pounds, thus exempting
most small business end users. The EPA could have avoided this
problem in the first instance if it took the Small Business
Regulatory Enforcement Fairness Act of 1996 (SBREFA) seriously.
Summary
The Full Committee questioned the Environmental Protection
Agency's expansion of section 112(r) of the 1990 Clean Air Act
Amendments to include propane. According to EPA, the 1990 Clean
Air Act Amendments allowed it to require propane dealers to
comply with regulations corresponding to section 112(r).
However, the United States District Court for the District of
Columbia enjoined the EPA's enforcement. Furthermore, Congress
enacted legislation that expressly exempted propane from
section 112(r). Chairman Talent questioned the EPA's failure to
obtain input from small businesses.
Congressman Roy Blunt (R-MO); Mr. James Makris, Director,
Chemical Emergency Preparedness and Prevention Office, U.S.
Environmental Protection Agency; Mr. and Mrs. John and Mary
Densmore, Geldbach Petroleum; and Mr. Paul Lindsey, All Star
Gas, provided testimony.
For further information on this hearing, refer to Committee
publication 106-26.
7.2.13 hearing on contract bundling and federal
procurement problems facing small businesses
Background
On August 4, 1999 the Committee on Small Business held a
hearing to address the impact of contract bundling on small
businesses. The purpose of the hearing was to examine whether
contract bundling prevented small businesses from obtaining
prime contracts from the federal government.
Contract bundling is the consolidation of two or more
procurement requirements into one contract. The consolidation
of procurement requirements can result in contract
solicitations that are so complex and large that small
businesses do not have the resources to be considered
responsive to the solicitation. Even if contracting officers
consider the small business responsive, the size of the
solicitation is likely to result in a determination that the
small business bidders do not have the technical and financial
resources to meet the conditions of the contract. For example,
if the federal government requires that an office supply
contractor be able to deliver office supplies anywhere in the
United States within 24 hours, small businesses with only a few
selected outlets probably would be considered a non-responsible
contractor and therefore would not win the contract.
The use of contract bundling has increased substantially
during the past eight years as the federal government tries to
emulate the volume-discount practices in normal commercial
contracting. However, the federal government is not a
commercial enterprise and the procurement process is used to
accomplish social and economic goals such as participation by
small businesses that commercial enterprises can ignore. In
1997, Congress passed the Small Business Reauthorization Act
which require procuring agencies to demonstrate that contract
bundling will result in measurable substantial benefits and
enables the Small Business Administration to contest the
procuring agency's conclusion.
Summary
The first panel consisted of Honorable Deidre Lee,
Administrator of the Office of Federal Procurement Policy; Dr.
Richard Hayes, Associate Deputy Administrator, United States
Small Business Administration; and Robert Neal, Director,
Office of Small and Disadvantaged Business Utilization, Office
of the Under Secretary for Acquisition and Technology,
Department of Defense.
Ms. Lee testified that the government is interested in
obtaining the best value for the federal government and, within
this requirement, trying a variety of tools to increase small
business participation. Ms. Lee also testified that the Office
of Federal Procurement Policy was working with federal agencies
to finalize rules to implement the Small Business
Reauthorization Act of 1997.
Dr. Hayes noted that the federal government was ahead of
its goal for small business utilization despite efforts at
streamlining that might lead to utilization of large businesses
for the purchase of goods and services. Dr. Hayes further noted
that the Small Business Administration worked with federal
agencies to develop alternative strategies that will increase
utilization of small businesses in the federal procurement
process. Finally, Dr. Hayes noted that the Small Business
Administration was working on finalizing regulations to
implement the contract bundling provisions of the Small
Business Reauthorization Act of 1997.
Mr. Neal testified contract bundling has occurred, at least
in part, due to contraction of the federal acquisition
workforce. Mr. Neal then discussed initiatives put in place by
the Defense Department to increase the opportunity for small
businesses through joint venturing and teaming of interested
small businesses. Mr. Neal also noted that the Defense
Department was promoting the utilization of small business
subcontractors by its prime contractors.
The second panel consisted of Mr. Terry Head, President,
Household Goods Forwarder Association; Mr. James Smith, Owner,
United Janitorial Services, Inc.; Phyllis Hill Slater,
President of Hill Slater, Inc. on behalf of the National
Association of Women Business Owners; Cathy S. Ritter,
President, Constellation Design Group on behalf of the American
Consulting Engineers Council; and Dan Moore, President of
Moore's Cafeteria Services, Inc.
Mr. Head testified that the Defense Department procurement
policy has resulted in severe reductions of the number of firms
that provide moving and storage services to military bases. Mr.
Head then noted that the reduction in the number of movers has
resulted in an increase in the cost of each move of military
personnel without any increase in the quality of service
provided to the military personnel.
Mr. Smith testified that bundling of contracts reduce the
number of janitorial contracts awarded to 8(a) contractors. Mr.
Smith went on to note that the trend for contract bundling will
hurt many small and disadvantaged businesses and the
communities that rely on those businesses.
Ms. Hill Slater noted that women-owned businesses have
problems with obtaining federal contracts and getting work as
subcontractors on federal projects even though the women-owned
businesses are qualified. Ms. Hill Slater then noted that
bundling simply erects another barrier that women-owned
businesses will have to overcome in their effort to obtain a
fair share of federal government procurement dollars.
Ms. Ritter noted that many small businesses would not have
the resources to provide services for indefinite quantity
contracts in excess of five million dollars ($5,000,000), which
is becoming the norm in federal government solicitations for
architect and engineering services. According to Ms. Ritter,
the situation is exacerbated by including diverse engineering
services in the same contract because small architecture and
engineering firms do not have the resources to handle multiple
disciplines.
Mr. Moore testified that mess hall services for the United
States Marine Corps improved dramatically after the Defense
Department privatized that service. Mr. Moore went on to note
that this improvement is in jeopardy because the Marine Corps
intends to regionalize food preparation through the use of
central kitchens and eliminate small businesses from bidding on
these contracts.
For further information on this hearing, refer to Committee
publication 106-27.
7.2.14 small farm tax burdens
Background
Chairman Talent, joined by Representative Kenny C. Hulshof
(R-MO) of the Committee on Ways and Means, held a field hearing
in Columbia, Missouri to explore the tax burdens on farmers and
ranchers.
Increasing tax burdens hinder the present and future
viability of American farmers and ranchers--the overwhelming
number of which are small businesses. Of the 2 million farms in
America, 94 percent are small farms. In addition, families own
and operate approximately 98 percent of the nation's farms and
ranches. Estate and gift (death) taxes as high as 55 percent
drain capital from--and too often force the sale of part or all
of--farm and ranch operations.
The nature of farming and ranching intensifies the burden
of high taxes. Farming and ranching is capital intensive. In
addition, farmers and ranchers hold their assets for long
periods of time. According to the United States Department of
Agriculture (USDA), agricultural assets total $1,140 billion
with real estate accounting for 79 percent of the assets. On
average, farmers and ranchers hold real estate for 30 years
with farmland increasing in value 5 to 6 times over that
period. Consequently, inflation has increased the value of
farmland and equipment dramatically.
Farming and ranching is cyclical in nature. The income of
farmers and ranchers can change dramatically due to
circumstances beyond their control. Weather disasters,
downturns in overseas markets, and the price volatility
inherent in commodity markets can lead to wild fluctuations in
farm income from one year to the next. A bill sponsored by
Representative Hulshof, the Farm and Ranch Risk Management
(FARRM) Act (H.R. 957), would allow farmers and ranchers to
make tax-deductible contributions of up to 20 percent of their
annual income into a FARRM Account (for distribution within 5
years). FARRM Account income would be taxed as ordinary income.
Summary
David Blakemore of B&B Cotton Company; Ronald, McNeall,
President of the Missouri Corn Growers Association; Dale
Ludwig, Executive Director of the Missouri Soybean Association;
Richard Erisman on behalf of the Missouri Farm Bureau; John
Cauthon, President Elect of the Missouri Cattlemen's
Association; Rick Rehmeier on behalf of the Missouri Pork
Producers Association; and Rich Palmer, President of the
Missouri Dairy Association; provided testimony at the hearing.
The witnesses testified that they are in crisis. In
addition, they stated that the average age of the nation's
producers is over 55. The transfer of many farms and ranches to
younger generations, therefore, is fast approaching. Yet, the
witnesses revealed that fathers and mothers cannot in good
conscience advise their children to stay on the family farm.
Today, 70 percent of family-owned businesses fail to make
it to a second generation, and 87 percent fail to make it to a
third generation. Eliminating death and capital gains taxes
would reduce the heavy tax burden on farmers and ranchers
directly, and would make successful transfers of small, family-
held farms and ranches to future generations more feasible. In
particular, death tax repeal is the single most fundamental act
Congress can take to protect the long-term viability of
families in agriculture.
Coupled with agricultural assistance and reform, the FARRM
Act is an exciting new tool that could help American farmers
and ranchers through a second year of crisis. Low crop yields,
low commodity prices, natural disasters, persistent trade
barriers, government regulation, and burdensome tax policies
are hurting agriculture severely.
Finally, agriculture is a business. American taxpayers in
agriculture deserve the same ability to deduct 100 percent of
their health insurance costs immediately as large companies.
Commonly, a spouse must work outside of the family farm to
obtain the benefit of health insurance coverage because of the
high, out-of-pocket cost of health insurance for the self-
employed.
For further information on this hearing, refer to Committee
publication 106-28. For related hearings, refer to Committee
publications 106-30, 106-34, and 106-40.
7.2.15 ``building a stronger agricultural community''
Background
On August 24, 1999, the Committee on Small Business of the
United States Senate and the Small Business Committee of the
United States of Representatives held a joint field hearing in
Kansas City, Missouri to explore issues critical to the
agricultural community in Missouri and across rural America.
The hearing was organized as a roundtable discussion and
explored the tax, regulatory, and trade policies affecting
farmers and ranchers. Substantially declining commodity prices
and tightening trade markets are hurting family farms and
ranches, and heighten the need for emergency relief and for
tax, regulatory, and trade reforms. Legislative initiatives
discussed included H.R. 2743, the Farm and Ranch Emergency
Assistance Act, and H.R. 2488, the Taxpayer Refund and Relief
Act of 1999.
Summary
Participants included: Julie Baker, Legislative Director
and Membership Coordinator, Missouri Farm Union, Shelbina,
Missouri; Gina Bowman-Morrill, Director of Government
Relations, Farmland Industries, Inc., Kansas City, Missouri;
Dan Cassidy, Director of National Legislative Programs,
Missouri Farm Bureau, Jefferson City, Missouri; David Drennan,
Executive Director, Missouri Dairy Association Chesterfield,
Missouri, David Durham, Producer, Missouri Soybean
Merchandising Council, Jefferson City, Missouri; Terry Ecker,
Farmer, and Member, Missouri Farm Bureau, Jefferson City,
Missouri; Richard Fordyce Farmer, and Member, Missouri Farm
Bureau, Jefferson City, Missouri; Ben Griffith, General
Manager, Central Co-op, Pleasant Hill, Missouri; Jim Guest,
President, Missouri Pork Producers Association, Columbia,
Missouri; Dale Ludwig, Executive Director and Chief Executive
Officer, Missouri Soybean Association and Merchandising
Council, Jefferson City, Missouri; Ronald McNeall, President,
Missouri Corn Growers Association, Jefferson City, Missouri; Ed
Nierman, Treasurer and Member of the Board, Missouri Dairy
Association, Concordia, Missouri; Don Nikodim, Executive
Director, Missouri Pork Producers Association, Columbia,
Missouri; Wes Shoemeyer, President, Missouri National Farmers
Organization, Clarence, Missouri; Don Shriver, Executive Vice
President, Dairy Farmers of America, Inc., Kansas City,
Missouri; Sam Stone, Vice President, Government and Member
Relations, Dairy Farms of America, Kansas City, Missouri; Jay
Truitt, Executive Vice President, Missouri Cattlemen's
Association, Columbia, Missouri; Tom Waters, Chairman, Missouri
Levee and Drainage District Association, Orick, Missouri; Bob
Wollenman, Representative, St. Joseph Area Chamber of Commerce,
St. Joseph, Missouri; Abner Womack, Executive Director, Food
Agricultural Policy Research Institute, Columbia, Maryland; and
Robert Young, Co-Director, Food Agriculture Policy Research
Institute, Columbia, Missouri.
The witnesses discussed repealing the death tax;
accelerating the 100% health insurance deduction for the self-
employed; reducing capital gains taxes; indexing capital assets
for inflation; increasing Section 179 expensing; the effects of
increasing consolidation of farming operations; providing
investment tax incentives for farmer-owned new general
cooperatives, including value-added production; Farm, Fish and
Ranch Risk Management (FFARM) Accounts; crop insurance reform;
commodity prices fluctuations, and models; impact of accession
of China into the World Trade Organization (WTO); the
Regulatory Flexibility Act; the United States Department of
Agriculture (USDA) Federal Milk Market Order proposal; effects
of Environmental Protection Agency (EPA) water quality and
waste management regulations on small business farmers; and
certain trade barriers and restrictions.
For further information on this hearing, refer to Committee
publication 106-30.
7.2.16 hearing on h.r. 296--the national small business
regulatory assistance act
Background
On September 2, 1999, the Subcommittee on Regulatory Reform
and Paperwork Reduction held a field hearing at Columbia Green
Community College in Hudson, NY to address H.R. 296--the
National Small Business Regulatory Assistance Act. The purpose
of the hearing was to determine whether Small Business
Development Centers should obtain funding from regulatory
agencies and provide regulatory counseling to small businesses.
Regulatory compliance remains one of the most challenging
tasks for small businesses. Since 1980, the federal
government's yearly compendium of rules and regulations--the
Federal Register--has increased from approximately 42,000 pages
to almost 74,000 pages. The complexity of the regulations has
increased as well. Small businesses often learn about the
failure to comply with a regulation when an inspector walks
through the door. This places small businesses owners in the
position of reacting after the fact rather than complying
before a problem arises.
Small Business Development Centers are operated by various
colleges and universities with oversight by the United States
Small Business Administration. The Small Business Development
Centers currently provide an array of small business counseling
advice. H.R. 296, introduced by Congressman Sweeney, would
authorize the Small Business Development Centers to establish a
system of voluntary regulatory compliance assistance. The Small
Business Development Centers would form partnerships to work
with various federal agencies to make non-punitive compliance
assistance accessible to small business owners.
Summary
Individuals providing testimony were Mr. Henry F. Zwack,
County Executive; Mr. Art DeCoursey, Small Business Liaison,
Occupational Safety and Health Administration, United States
Department of Labor, Mr. Jim King, State Director for the New
York State Small Business Development Centers; Mr. David
Bradley, Acting Director, New York State Office of Regulatory
Reform; Eric Ooms, Chairperson, Columbia County Farm Bureau
Dairy Committee; and Lars Andersen, Owner, Anderson
International Marketing.
Mr. Zwack testified that government over-regulation was a
hindrance to economic development in Rensselaer County. Mr.
Zwack then noted that regulations often set forth the
mechanisms for regulatory compliance in great detail. Voluntary
regulatory compliance assistance would alleviate this problem
according to Mr. Zwack. Finally, Mr. Zwack suggested that any
voluntary program operated through the Small Business
Development Centers also provide a link with state and local
governmental organizations that are providing regulatory
compliance assistance. Mr. DeCoursey testified about the
changing culture at the Occupational Safety and Health
Administration (``OSHA''). Mr. DeCoursey noted that OSHA
appointed a small business liaison. Mr. DeCoursey also
mentioned that OSHA has written a new compliance guide in plain
English, developed a small business web page, and created an
ongoing dialogue with the United States Small Business
Administration. Mr. DeCoursey stated that OSHA was seeking to
fund a pilot project in which 10 OSHA employees would be based
in various Small Business Development Centers around the
country.
Mr. King testified that Small Business Development Centers
are already helping 35,000 New York small business owners every
year. Mr. King noted that three of the most significant
regulatory agencies, EPA, OSHA, and the IRS, were beginning to
focus on compliance by smaller businesses. Mr. King noted that
small business owners were members of the community and did not
want to injure their workers or create environmental hazards.
However, Mr. King noted that fear often prevents the small
business owner from obtaining compliance assistance. Mr. King
noted that H.R. 296 would allay the fear and provide an avenue
for small business owners to obtain the type of compliance
assistance they need.
Mr. Bradley testified that he is responsible for uncovering
unnecessary New York state regulations that inhibit economic
growth. In addition, he testified that his office maintains
data on permits that may be required for opening a business in
New York. Mr. Bradley testified that H.R. 296 is needed because
a beauty salon operator is an expert in cutting hair not in
environmental regulations or tax law.
Mr. Ooms testified that farmers are also subject to
regulation. He noted that fruit growers have to comply with
immigration regulations. As a dairy farmer, he had to comply
with clean water regulations concerning concentrated animal
feedlot operations. Mr. Ooms believes that H.R. 296 would prove
useful to farmers and others in agribusinesses.
Mr. Andersen testified that his business has received
substantial and valuable assistance from Small Business
Development Centers. Mr. Andersen noted that one substantial
fine from OSHA could put him out of business. Thus, Mr.
Andersen opined that any assistance, such as that provided for
in H.R. 296, would be useful to many small business owners
whose expertise is running a business not complying with
complex, and often obscure, government regulations.
For further information on this hearing, refer to Committee
publication 106-32.
7.2.17 ``helping agricultural producers ``re-grow' rural
america''
Background
Farmers and ranchers feed and clothe America and much of
the world. On average each and every American farmer and
rancher feeds and clothes himself and 126 other people. These
agricultural producers work hard in providing the United States
with the most affordable, most abundant, and safest food supply
in the world.
Yet, record high disasters and record low commodity prices
are hurting farmers and ranchers. Current world demand for
American agricultural products is down. For example,
historically the southeastern region of Missouri, due to the
availability of river transportation to the world market, has
enjoyed, at worst, a neutral basis (difference between cash
price and futures price), and often a positive basis on corn
during August. In August 1999, corn producers in southeast
Missouri faced cash, farm-gate prices as much as $0.50 below
futures prices. The Federal government must help producers
through the tough times with both near term assistance and
future opportunities, including lifting trade barriers,
expanding export markets for U.S. farm products, and developing
new and innovative producer-owned marketing systems. Exploring
how agricultural producers can develop new, innovative,
vertically-integrated marketing systems for their products is
essential. By ensuring America's agricultural system remains
viable and profitable, Congress can help ``re-grow'' rural
America for generations to come.
Summary
Witnesses at the hearing included: Charles E. Kruse,
President of the Missouri Farm Bureau Federation; Dale Ludwig,
Executive Director of the Missouri Soybean Association; Bruce
Stockman, Executive Director of the Minnesota Corn Growers
Associaton; Jeff Ward, Director of Producer Education for the
National Pork Producers Council; Virgil Flanigan, University of
Missouri-Rolla, Director of the Center for Environmental
Science and Technology; Nickolas G. Kalaitzandonakes,
University of Missouri-Columbia, Agricultural Economics
Department; Rodney Christianson, CEO of the South Dakota
Soybean Processors; and Dayton Watkins, Rural Business-
Cooperative Services Administrator for the United States
Department of Agriculture, Rural Development/Cooperative
Development testified at the hearing.
The hearing explored the opportunities and the needs of
agricultural producers in developing value-added enterprises.
Producers, family farmers, and educators specializing in value-
added processing testified on the future of agriculture and the
benefits of value-added production. Agricultural producers--
America's original small business owners--must reach up the
agricultural marketing chain and capture some of the profits
generated by processing their raw commodities. To do so,
producer need access to technical and business assistance.
Witnesses stressed that producers are facing the second
year of the worst farm crisis in recent memory. As a result
they are looking at creative and entrepreneurial opportunities
for the future, and they expressed frustration at the inability
of producers to pool together their resources and share ideas
about value-added ventures. Witnesses, therefore, unanimously
recommended the creation of ``one-stop-shops'' to provide
business, marketing, engineering, and legal expertise to
producers in developing value-added processing and products.
At the conclusion of the hearing, producers stated they are
hopeful that Congress and federal agencies will collaborate
with producers to establish value-added projects benefiting
producer-owned groups. They highighted a variety of value-added
products currently being produced through existing producer-
owned value-added endeavors, including ethanol plants,
processing pork for pet toys, and processing soybeans into
high-grade vegetable oils.
For further information on this hearing, refer to Committee
publication 106-3.
7.2.18 proposed changes to part 9 of the federal
acquisition regulation relating to contractor
responsibility
Background
On October 21, 1999, the Committee on Small Business held a
hearing to address the proposed changes to Part 9 of the
Federal Acquisition Regulations (``FAR''). The purpose of the
hearing was to examine the impact that the change might have on
opportunities small businesses have to obtain federal
government contracts.
On July 9, 1999, the agencies with primary jurisdiction for
drafting regulations governing federal procurement published a
proposed rule in the Federal Register that would ``clarify''
the existing standards for contractor responsibility
determinations. In particular, the proposed rule would amend
section 9.104-1(d) of the FAR which currently requires that a
contracting officer, before awarding a contract, determines
that the prospective contractor has integrity and business
ethics. The proposed rule seeks to clarify this requirement by
authorizing the contracting officer to make a determination of
negligence. This would be accomplished if the contracting
officer uncovered persuasive evidence that the bidder had a
lack of compliance with the tax laws or was in substantial non-
compliance with labor laws, employment laws, environmental
laws, antitrust laws, or consumer protection laws.
Summary
The first panel of witnesses included the Honorable Tom
Davis, III (R-VA), Honorable Deidre Lee, Administrator of the
Office of Federal Procurement Policy, James Ballentine, Acting
Deputy Associate Administrator for Government Contracting and
Minority Enterprise Development, and Ms. Eleanor Spector,
Director, Defense Procurement, Department of Defense.
Representative Davis testified that the proposed rule was
ill-conceived because it was vague and permitted contracting
officers to eliminate potential contractors from obtaining a
particular contract based on mere allegations. Representative
Davis also noted the substantial number of allegations and
violations lodged against the federal government by the
Environmental Protection Agency, the Occupational Safety Health
Administration, and the Federal Labor Relations Authority.
Representative Davis summed up his testimony by noting that he
agrees with the principle that the government should only do
business with responsible contractors but that the proposed
rule could have severe unintended consequences of excluding
many small contractors from participating in the federal
government market for information technology products.
Administrator Lee noted that the proposal was drafted to
clarify existing guidelines for contracting officers. It was
not designed to implement any changes in current government
procurement law. Nor was it designed to adversely affect the
ability of small businesses to participate in the government
contracting arena, since the Administration is committed to
vigorous competition provided by small businesses.
Administrator Lee concluded that the proposed rule is a work in
progress. He is looking forward to comments from interested
entities, including small businesses, and he is willing to work
with the Committee members to craft a sound rule.
Director Spector's testimony described responsibility
determinations for lack of integrity and business ethics by
contracting officers in the Defense Department. He explained
that these are based on fraud or other criminal violations that
relate to the honesty of the prospective contractor. Director
Spector then noted that, except in rare circumstances, the
Defense Department does not conduct complete investigations of
a contractor's responsibility and when it does, the
investigation is substantially broader than simply the
contractor's integrity and business ethics. Director Spector
noted that Defense Department contracting officers would need
the assistance of other agencies in determining whether
persuasive evidence existed of non-compliance with the laws
listed in the proposed rule.
Deputy Associate Administrator Ballentine explained how the
Certificate of Competency works as an appeal process for small
businesses who have had adverse responsibility determinations
made by contracting officers. Deputy Associate Administrator
Ballentine also noted that the Small Business Administration's
Certificate of Competency program only has received 16 appeals
related to integrity and business ethics in the past three
fiscal years.
The second panel included Harry Alford, President of the
National Black Chamber of Commerce, William Kovacic and Steven
Schooner, Professors of Law at George Washington University Law
School, and Phyllis Hill Slater, Owner of Hill Slater, Inc. and
testifying on behalf of the National Association of Women
Business Owners (``NAWBO'').
Professors Schooner and Kovacic both noted that the
proposed rule does not represent a clarification of existing
law but instead represents a substantial change in federal
procurement policy. They also noted that the vague standards in
the proposed rule could lead to what amounts to a ``de facto''
debarment by the ad hoc determinations of contracting officers
without appropriate due protections for debarment, a thesis
fully supported by Mr. Alford. Mr. Alford also noted that the
proposed rule could be used as a pretext by contracting
officers to reward those in the ``old boy'' network of
government contracting. Ms. Hill Slater echoed Mr. Alford's
sentiment and also noted that the proposed rule, rather than
ensuring that federal agencies meet the goal of 5 percent
participation by women-owned businesses, will simply impose
greater costs on women-owned businesses as they may have to
spend more time and resources fighting adverse responsibility
determinations. None of the witnesses objected to the aim of
the government only dealing with law-abiding enterprises but
all concluded that the potential adverse consequences on small
business outweighed any tangible benefits.
For further information on this hearing, refer to Committee
publication number 106-37.
7.2.19 proposition 65's effect on small businesses
Background
In 1986, California passed Prop. 65 generally requires
warnings for environmental, consumer and occupational exposure
to particular chemicals the State of California has determined
may cause cancer or reproductive toxicity. If a manufacturer,
either in State or out-of-state, fails to display the requisite
warnings, Prop. 65 empowers private attorneys to enforce the
statute in place of the California Attorney General.
In 1960, Congress passed the Federal Hazardous Substances
Act (FHSA) to provide for nationally uniform consumer product
labeling requirements. In passing the FHSA, Congress recognized
that uniform labeling benefits the public. For example,
``[s]uch a labeling program would facilitate the education of
the public in the cautionary use of these products.
Informative, uniform labeling would enable physicians to
administer antidotes immediately rather than waste precious
time in determining the active ingredients of the products.''
Absent federal legislation, Congress feared states would enact
their own labeling statutes ``leading to a multiplicity of
requirements and creating unnecessary confusion in labeling, to
the detriment of the public.''
To facilitate the national uniform labeling requirements,
Congress expressly provided that the FHSA preempts State
cautionary labeling requirements. Congress empowered the
Consumer Product Safety Commission to enforce the statute,
including its preemption clause. The CPSC could use this
authority to work with California to ensure that lawsuits are
not used to force settlements out of small businesses from
around the country who have not violated the law.
Summary
The Committee on Small Business addressed California Prop.
65's effect on small businesses. In 1986, California passed
Prop. 65--the Safe Drinking Water and Toxic Enforcement Act of
1986--that requires in-state and out-of-state manufacturers to
label products that contain products known to the state of
California known to cause cancer or reproductive toxicity. If a
manufacturer fails to label the product, private lawyers can
enforce the statute against it. This statute, however, appears
to conflict with the Federal Hazardous Substances Act (FHSA)
passed by Congress in 1960 that requires nationally uniform
cautionary labeling for consumer products. California courts,
however, determined that Prop. 65 does not constitute
cautionary labeling. Marianne LaMura, Chemcoat Labs, Inc.;
Robert Klein, Lemnar, Inc.; Mark Golden, Golden Artists Colors;
Frank Strauss, Activa Products, Inc.; Sandra Skommesa, Ellis
Paint Company; Ann Brown, Chairwoman of the Consumer Product
Safety Commission; Ed Weil, Esq., Deputy Attorney General of
the State of California; Shawn Khorrami, Attorney; Jeffrey
Margulies, Attorney; discussed how the Federal government and
California can harmonize the two statutes to eliminate abusive
lawsuits.
For further information on this hearing, refer to Committee
publication 106-38.
7.2.20 the department of defense's contract bundling
policy
Background
On November 4, 1999, the Committee on Small Business held a
hearing to address the contract bundling policy of the
Department of Defense. The purpose of the hearing was to
examine how this bundling policy adversely affected the ability
of small businesses to win their fair share of prime contracts
from the Department of Defense.
Contract bundling involves the consolidation of two or more
previously separate procurement requirements into one contract.
Federal agencies that utilize contract bundling claim that they
receive higher quality goods and services delivered in a more
efficient manner. The largest practitioner of contract bundling
also is the largest procurer of goods and services in the
federal government--the Department of Defense. If the Defense
Department does not obtain higher quality goods and services
from contract bundling or reap significant cost savings, then
the purposes of contract bundling are not met. Small businesses
are hurt because they no longer are prime contractors. In the
long-run costs to the taxpayers may go up because of lessened
competition in the defense industrial base.
Summary
The first panel consisted of the Honorable David R. Oliver,
the Principal Deputy Undersecretary for Acquisition,
Technology, and Logistics at the Department of Defense. Mr.
Oliver testified that the primary objective of the Department's
acquisition policy was to enhance its war-fighting
capabilities. Bundling allows the Department to do that by
reallocating military personnel away from non-core functions
(oversight of the procurement of goods and services) to their
core function--fighting wars. Contract bundling enables the
Department of Defense to take advantage of economies of size
and scope; in essence, getting the best value at a lower cost.
Mr. Oliver also addressed specific contracts and explained that
certain contracts required bundling because of the size of the
good or service being procured. Finally, Mr. Oliver promised
the Committee to undertake a sound statistical analysis of
contract bundling and its effect on small businesses.
The second panel consisted of Mr. Paul Murphy, President of
Eagle Eye Publishers, Inc., Fairfax, VA; Mr. Craig Brooks,
President of Electra International Telecommunications,
Bethesda, MD; Ms. Josephine Ursini, Counsel to the Society of
Travel Agents in Government, Virginia Beach, VA; and Maurice
Allain, President and CEO of Phoenix Scientific Corp., Warner
Robins, GA.
Mr. Murphy testified about the study of contract bundling
he was performing under contract to the Office of Advocacy of
the United States Small Business Administration. Mr. Murphy
determined that one proposed bundled contract, the Flexible
Acquisition and Sustainment Tool (``FAST''), a bundled Air
Force contract, could lead to the displacement of numerous
small businesses as prime contractors. The database modeling
done by Mr. Murphy could be utilized in examining the impact of
other bundled contracts on the potential displacement of small
businesses as prime contractors for the Department of Defense.
Mr. Brooks testified about the bundling of
telecommunications services and the impact that it has had on
his business. Mr. Brooks noted that multiple competing
contractors, including many small telecommunications companies,
were displaced from bidding by new requirements that the
Defense Department imposed on the provision of point-to-point
long-distance telecommunication services. This displacement
occurred due to a bundled contract that provided no better
service at far higher prices than that provided by small
businesses.
Ms. Ursini testified about the bundling of personal
(leisure and holiday travel) with business travel services for
military and civilian Defense Department personnel. Ms. Ursini
noted that this bundling requirement excluded many small travel
agencies from participating in the provision of travel services
to the government. Ms. Ursini also noted that the Defense
Department considers the amount of travel purchased through a
travel agency as revenue going to the travel agency for
purposes of calculating whether the Department is meeting its
small business procurement goals. However, Ms. Ursini pointed
out that the travel agencies are merely conduits for that money
and should not be considered in calculating whether the
Department has met its small business objectives.
Mr. Allain testified about the impact of the new proposed
Flexible Acquisition and Sustainment tool or FAST that the
Department of the Air Force was preparing for use at the Warner
Robins AFB and which would be used to oversee maintenance of
planes, weapons systems, and communications at Warner Robins
and two other air bases. Mr. Allain noted that no small
business could hope to bid on such a project. He further noted
that there are numerous small businesses who are currently
prime contractors that would be displaced if the FAST contract
was adopted.
For further information on this hearing, refer to Committee
publication 106-41.
7.2.21 examining the need for the skilled workforce
enhancement act
Background
Despite growing economic prosperity, and in part because of
it, employers in various trade industries face an increasing
shortage of skilled workers. According to the results of a
study conducted in 1999 by the National Association of
Counties, seventy-five percent of the largest counties in
America report they face a shortage of skilled workers. Eighty-
five percent stated the shortage increased over the last five
years, and ninety-seven percent characterize the shortage as
serious to very serious. Officials cited manufacturing and
construction as the sectors of the U.S. economy most heavily
affected by the shortage of skilled workers.
Introduced by Chairman Talent, H.R. 1824 entitled the
Skilled Workforce Enhancement Act (SWEA) would provide small
employers with a tax credit to offset the costs of training
employees in highly skilled small business trades.
Specifically, the bill provides small employers (defined for
purposes of the bill as employers with 250 employees or less)
with a $15,000 annual tax credit per trainee. To insure
training is effective, eligible employers must provide an
employee with 2,000 hours of on-the-job training and necessary
classroom training each year (for up to four years) in exchange
for the tax credit.
The bill enumerates the ``highly skilled trades'' to
include: metalworking, roofing, masonry, heating, ventilating,
air conditioning, refrigeration (HVACR), plumbing, and
electrical contracting. Originally limited to precision
machinists, die makers, and tool and die designers, the
expanded bill includes other trades for which highly skilled
workers are in short, even shrinking, supply.
Summary
The Honorable Mike DeWine, United States Senate; William G.
Bachman, St. Louis, Missouri, on behalf of the National Tooling
and Machining Association; Thomas Bettcher, on behalf of the
Air-Conditioning and Refrigeration Institute; Chris Leto, on
behalf of the American Foundrymen's Society; John Gooding, on
behalf of the National Roofing Contractors Association; Thomas
W. Holdsworth, Director of Communications and Public Affairs,
Skills-USA-VICA; Patrick Murphy, on behalf of the Mechanical-
Electrical-Sheet Metal Alliance; and Randall G. Pence, on
behalf of the National Concrete Masonry Association; testified
at the hearing.
The witnesses testified on the shortage of skilled workers;
its effects on small business, the aging population of workers,
the high costs small employers incur in training highly skilled
workers, and the benefits of the proposed changes to SWEA.
For further information on this hearing, refer to Committee
publication 106-42.
7.2.22 association health plans--promoting health care
accessibility
Background
The Committee met on February 16, 2000 to explore ways in
which Congress can work to expand access to employer-based
health insurance so it better serves small business owners and
employees, and their dependents. Specifically, the Committee
considered how Association Health Plans (AHPs) are part of the
solution that will meet the health care needs of the small
business community, which represents over 60 percent of the 44
million uninsured individuals in the United States. The Members
discussed the need for Congress to focus not only on managed
care reform, but also on access provisions, in order to help
make the nation's healthcare system more accessible and
affordable to those who work for or own a small business. The
hearing was a continuation of a dialogue on the same topic,
which began on June 10, 1999. For information on the first
hearing, refer to Committee publication 106-19.
Summary
The one panel hearing consisted of: Dr. Paul Wilson,
Executive Director, North American Equipment Dealers
Association (NAEDA) Group Insurance Trust; Mr. James R.
Baumgardner, Acting Deputy Assistant Director for Health
Policy, Congressional Budget Office; Mary Nell Lehnhard, Senior
Vice-President, Blue Cross and Blue Shield Association; Dr.
Mark Joensen, Vice-President and Director of Health Care
Analysis, CONSAD Research Corporation; Ms. Arlene Kaplan, CEO &
Founder, Heart-to-Home; and Mr. Richard Gallo, Owner, The
Office Outlet.
Mr. Wilson testified that AHP legislation is necessary in
order to allow existing association health plans to continue to
provide affordable coverage to their members and to allow other
associations the opportunity to begin providing this crucial
benefit. He explained that NAEDA's AHP, established in 1949,
was going to be dropped by its carrier, UniCare, for groups
under 50. He added that he had contacted over 50 insurance
carriers, but none wanted association business.
Mr. Baumgardner testified about the findings reported in a
CBO paper entitled ``Increasing Small Firm Health Insurance
Through Association Health Plans and HealthMarts.'' The CBO
found that AHP and HealthMart legislation would result in only
330,000 previously uninsured people getting coverage.
Ms. Lehnhard testified that AHP legislation would not
result in a significant increase in small business owners and
employees with health coverage. She added that other problems,
including increased risk for state-regulated insurance pools,
would follow the enactment of AHP legislation.
Mr. Joensen testified on the result of a study, conducted
by the CONSAD Research Corporation, which showed AHPs would
result in an increase of 4.5 million newly insured individuals.
He added that significant savings resulting from administrative
efficiencies and economies of scale will help lower the cost of
coverage for those participating in an AHP.
Ms. Kaplan testified that, as a former member of the
Hospital Workers Union in New York, she enjoyed comprehensive
health benefits and that, now, as a small business owner, she
wishes her trade association, National Association of Women
Business Owners could help her provide quality benefits to her
employees. She pointed out that the Union and NAWBO exist as
member-service organizations and that AHP legislation would
allow trade associations to provide health benefits to their
members in the way unions are allowed to under current law.
Mr. Gallo told the Members about his personel experience as
a small business owner who is unable to offer health insurance
to his employees due to high costs estimated at $40,000
annually. He and his wife do not have insurance. He hopes that
AHPs will allow his small business to one day offer
comprehensive benefit packages similar to those large companies
are permitted to offer under ERISA.
For further information on this hearing, refer to Committee
publication 106-43.
7.2.23 the small business administration's fy 2001 budget
request
Background
The Small Business Administration provides a variety of
services for small businesses--financial assistance, technical
assistance, and disaster assistance.
Financial Assistance
The Small Business Administration provides approximately
$11 billion in financing to small businesses annually. This
financing is made available through a variety of programs.
SBA's largest financial program is the Section 7(a) general
business loan program. The 7(a) program offers loans to small
businesses through local lending institutions. These loans are
provided with an SBA guarantee of up to 80 percent and are
limited to a maximum of $750,000. The 7(a) program has a
subsidy rate of 1.16% for fiscal year 2000 and an appropriation
of $107 million, permitting $9.8 billion in lending.
The Section 504-loan program provides construction,
renovation and capital investment financing to small businesses
through certified development companies (CDCs). These CDCs are
SBA licensed, local business development organizations, which
provide loans of up to $750,000 for small businesses, in
cooperation with local banks.
The Microloan program provides small loans of up to $25,000
to borrowers in low-income areas. In fiscal year 1999 the
program provided $29 million in loans. In addition, the program
has a technical assistance aspect that provides managerial and
business expertise to microloan borrowers. Microloans are made
by intermediary oganizations that specialize in local business
development.
The Small Business Investment Company (SBIC) program
provides over $1.5 billion in long term and venture capital
financing for small businesses annually. SBICs are venture
capital firms that leverage private investment dollars with SBA
guaranteed debentures or participating securities. The SBIC
debenture program currently operates at a zero subsidy rate and
requires no taxpayer subsidy. The participating securities
program has a 1.8% subsidy rate.
Technical Assistance
The SBA provides technical and managerial assistance to
small businesses through four primary programs:
Small Business Development Centers (SBDCs) are located
primarily at colleges and universities and provide assistance
through 51 center sites and approximately 970 satellite offices
and offer small businesses guidance on marketing, financing,
start-up, and other areas.
The Service Corps of Retired Executives (SCORE) which
provides small business assistance on-site through the
volunteer efforts of its members. SCORE voltuneers are retired
businessmen and women who offer their expertise to small
businesses.
The 7(j) technical assistance program provides financing
for technical assistance to the minority contracting community
primarily through courses and direct assistance from management
consultants and assistance for participants to attend business
administration classes offered through several colleges and
universities.
The Women's Business Center program provides business
training centers for women and teaches women the principles of
finance, management and marketing as well as specialized topics
such as government contracting or starting home-based
businesses. There are currently 81 centers in 47 states in
rural, urban and suburban locations.
Disaster Assistance
The Small Business Administration also provides disaster
loan assistance to homeowners and small businesses nationwide.
This program is a key component of the overall Federal recovery
effort for communities struck by natural disasters. This
assistance is authorized by section 79(b) of the Small Business
Act which provides authority for reduced interest rate loans.
Currently the interest rates fluctuate according to the
statutory formula--a lower rate, not to exceed four percent is
offered to applicants with no credit available elsewhere, while
a rate of a maximum of eight percent is available for other
borrowers.
Summary
On March 1, 2000 at 10:00 a.m., the Committee on Small
Business convened a hearing to discuss the Administration's
budget submission for fiscal year 2001, their legislative
proposals, and the reauthorization of the SBA's programs. The
Committee received testimony from five witnesses: Hon Aida
Alvarez, Administrator of the Small Business Administration;
Mr. Anthony Wilkinson, President of the National Association of
Government Guaranteed Lenders; Mr. Lee Mercer, President of the
National Association of Small Business Investment Companies;
Mr. Woody McCutchen, Executive Director of the Association of
Small Business Development Centers; Ms. Caroline Hayashi,
representing the Association for Enterprise Opportunity; and
Mr. John Geigel, Vice President for Government Relations of the
National Association of Development Companies.
Ms. Alvarez's testimony supported the Administration's
request, and concentrated on the Administration's ``New Markets
Initiative''.
Mr. Wilkinson testified in support of the proposed 2001
budget. He also expressed his organization's support for
increase authorization levels for fiscal years 2001, 2002, and
2003. He suggested authorization levels of 14.5, 15 and 16
billion dollars for fiscal years 2001, 2002 and 2003
respectively.
Mr. Mercer testified in support of the Administration's
budget request for the SBIC program and recommended
participating securities program levels of 2.5, 3.25, and 4
billion dollars for fiscal years 2001, 2002, 2003 respectively.
He also recommended debenture program levels of 1, 1.5, and 2
billion dollars for fiscal years 2001, 2002, and 2003,
respectively.
Mr. Geigel generally supported the SBA budget for 2001. On
behalf of NADCO he suggested 504 program authorizations of
3.75, 4.5, and 5 billion dollars for fiscal years 2001, 2002,
and 2003, respectively.
Mr. McCutchen discussed the needs of the Small Business
Development Center (SBDC) program and expressed support for the
Administration's request for fiscal year 2001. However, he
asked that the committee consider reauthorizing the SBDC
program at $100 million per year.
During the hearing Chairman Talent questioned Administrator
Alvarez on the proliferation of unauthorized programs at the
SBA. In particular, he questioned the requests for $6.6 million
for the Business Linc program and $5 million for the e-commerce
initiative. The Chairman expressed doubts on the efficiency of
operating technical assistance programs at so many levels
versus a consolidation of effort and services. He was
particularly concerned that the Administrator could not provide
the Committee with a clear explanation of purpose and operation
of the Business Linc program or the e-commerce initiative.
Ranking Member Velazquez questioned the Administrator on
the status of the procurement center representatives (PCRs) at
the SBA's Office of Government Contracting. PCRs are SBA
employees stationed at major procurement centers in order to
assist in identifying and advertising procurement opportunities
for small business. Ms. Velazquez questioned why the SBA had
failed to assign PCRs to several major procurement centers and
had not requested any funding for PCR staffing in the 2001
budget. Ms. Velazquez was concerned that, for example, there
were no PCRs stationed in Virginia, a state with a large
percentage of federal procurement activity.
Representative Pascrell questioned the Administrator on the
efforts to implement the HUBZone program. Mr. Pascrell was
concerned that SBA had drafted the regulations in an overly
restrictive fashion which had caused anomalies in the program's
application. Of particular concern were instances where small
businesses were not being considered eligible for the HUBZone
program because they were literally across the street from the
designated HUBZone. Mr. Pascrell expressed his belief that
these businesses, which hired significantly from the HUBZone
communities, were being denied opportunities to participate
even though they were fulfilling the goal of the program--
employment in low income areas.
For further information on this hearing, refer to Committee
publication 106-45.
7.2.24 helping agricultural producers ``re-grow'' rural
america: providing the tools
Background
In September 1999, the Committee held a hearing (106-34)
entitled ``Helping Agricultural Producers `Re-Grow' Rural
America.'' The hearing explored the opportunities and the needs
of agricultural producers in developing value-added
enterprises. In particular, witnesses addressed the current
crisis in the agricultural community, what could be done to
lift rural America out of recession, and how agriculture could
prepare itself to weather any future down turn in prices and
production conditions. Witnesses stressed the desire of
producers to become vertically intergrated--capturing more of
the consumer dollar by adding value to their commodities--and
recommended ``one-stop-shops'' to provide business, marketing,
engineering, and legal expertise to producers in developing
value-added processing and products.
In response and working closely with the agricultural
community, Chairman Jim Talent (R-MO) and Representative John
Thune (R-SD) introduced legislation (H.R. 3513 and H.R. 3996),
entitled the ``Value-added Agriculture Development Act for
American Agriculture'' (VADAA). The legislation would create
`Agriculture Innovation Centers' to provide producers with the
business, marketing, engineering, and legal assistance they
need to develop value-added agriculture.
Summary
Panelists included: Charles E. Kruse, President, Missouri
Farm Bureau Federation, Jefferson City, Missouri; J. Gary
McDavid, Attorney at Law, Chair, Legal, Tax & Accounting
Subcommittee on Tax Legislation, National Council of Farmer
cooperatives; Rick Vallery, Executive Director, South Dakota
Wheat, Inc.; Brooks Hurst, Vice-President, Missouri Soybean
Association; John Haverhals, Former President, South Dakota
Cattlemen's Association; and Gerald Tumbleson, Past-President,
Minnesota Corn Growers' Association; testified at the hearing.
Witnesses praised the Talent-Thune VADAA legislation, and
recommended additional solutions to compliment the bill and to
provide producers with a broad-based value-added package.
Specifically, the hearing explored a 50 percent tax credit for
producers for value-added production to provide them with
access to cutting edge processing and manufacturing
technologies and help them implement these technologies in
their own plants to manufacture high value products. Chairman
Talent and Representative Thune were developing and later
introduced legislation (H.R. 4497) which would provide a 50
percent investment tax credit to producers for value-added
production. Noting this is the third year of the worst farm
crisis in recent memory, the witnesses discussed the severe
down turns in prices and production conditions leaving
agriculture in a rural recession.
For further information on this hearing, refer to Committee
publication 106-47.
7.2.25 cash versus accrual: the policy implications of the
growing inability of small businesses to use simple
tax accounting
Background
The United States Department of the Treasury (Treasury) and
the Internal Revenue Service (IRS) increasingly are litigating
against and auditing small builders, contractors, and service
providers for using the cash method of accounting. While this
seems cost ineffective and unreasonable, it forces small
business taxpayers who regularly and consistently use the cash
method of accounting for years (even decades) to pay unfair
assessments of back taxes, interest and penalties.
In addition, the Ticket to Work and work Incentives
Improvement Act of 1999 (H.R. 1180), signed into law on
December 17, 1999 (Public Law 106-170), included a revenue
provision in the Clinton Administration FY 2000 budget. The
provision repeals the installment method of accounting for
asset sales by accrual basis taxpayers (except sales of farming
property, timeshares or residential lots). This change is
blocking the sale of small and closely-held businesses, and is
devaluing them between 5 and 20 percent (8.2 percent on
average).
In both the cash method controversy and the recent repeal
of the installment method of accounting, the Treasury
Department takes the position that the mathematically precise
matching of income and expenses from an accounting perspective
supersedes all other tax policy considerations--including tax
simplification and burden. Congress specifically intended to
allow some distortion of income and expenses under the cash and
the installment methods of accounting.
Introduced by Chairman Jim Talent (R-MO), H.R. 2273 would
provide that small business taxpayers with average annual gross
receipts of $5,000,000 or less, are permitted to use the cash
method of accounting without limitation. Introduced by
Representative Wally Herger (R-CA), H.R. 3594 would restore the
installment method of accounting for accrual basis taxpayers.
Issue guidance regarding the rules related to the cash,
accrual, and installment methods of accounting. Linking the
threshold issue of which taxpayers are required to use the
accrual method of accounting to the recent installment change,
the Treasury stated in part that: ``Part of this planned
guidance generally will allow a qualified taxpayer with average
annual gross receipts of $1 million or less to use the cash
method, and thus, the installment method.''
The hearing explored the policy and regulatory
implications--and likely effects on small businesses--of
Treasury's anticipated guidance.
Summary
Joseph M. Mikrut, Tax Legislative Counsel, United States
Department of the Treasury, Washington, DC; Shane Mieras,
Project Manager, Mid-Ceiling and Drywall, Rockford, Michigan;
David E. Wulkopf, CPA, Treasurer, Beckner Painting Midwest,
Inc., St. Louis, Missouri; Roger Harris, President, Padgett
Business Services, Athens, Georgia; Pamela F. Olson, Chair-
Elect, Section of Taxation, American Bar Association; John S.
Satagaj, Managing Partner, London and Satagaj, Washington, DC;
and Abraham L. Schneier, McKevitt & Schneier, Washington, DC;
testified at the hearing.
In summary, the testimony at the hearing revealed that
Treasury's policy position on the cash and installment methods
of accounting, and the IRS' corresponding legal and audit
positions, are flawed and are hurting small businesses and
taxpayers. Allowing small businesses to use the cash method of
accounting without limitation would yield substantial tax
simplification and fairness. Therefore, witnesses believe that
Congress should pass legislation such as H.R. 2273 to remedy
recent Treasury and IRS policy changes on the ability of small
entities to use the cash method of accounting. Similarly, the
hearing disclosed there is no justifiable policy or enforcement
rationale for reversing decades of established law on the
ability of taxpayers to use the installment method of
accounting. Witnesses urged Treasury to support H.R. 3594 to
immediately restore the installment method of accounting for
all taxpayers.
For further information on this hearing, refer to Committee
publication 106-49.
7.2.26 economic accomplishments of round ii empowerment
zones
Background
On April 26, 2000, the Committee on Small Business met in
Mecca, CA to discuss the development and progress that has been
made in the Desert Communities Empowerment Zone and in Round II
Empowerment Zones in general.
In 1993, the Empowerment Zone/Empowerment Communities (EZ/
EC) program was enacted, providing Federal grants to
economically distressed rural and urban communities over a 10-
year period. In what is now referred to as Round I of the
program, 104 EZ/ECs were created and each urban and each rural
zone received $100 million and $40 million respectively in
flexible Social Services Block Grant funds, over a ten-year
period. Additionally, qualifying EZ employers were entitled to
a 20 percent tax credit on the first $15,000 of wages paid to
certain qualified Zone employees.
The Taxpayer Relief Act of 1997 authorized a second round
of EZ designations, known as Round II EZs. Designated in 1999,
Round II Zones are unable to benefit from the wage tax credit
like the Round I EZs. Additionally many EZs have not received
the funding promised to them and thus find it difficult to
carry out their economic plans for community revitalization.
Summary
Panel I consisted of Celeste Cantu, State Director (CA) of
Rural Development, U.S. Department of Agriculture; Roy Wilson,
Riverside County (CA) Supervisor; and Mark Benitez, Chairman of
the Desert Community Rural Empowerment Zone.
Ms. Cantu testified that the Desert Communities Empowerment
Zone (DCEZ) has made substantial progress since its
designation. The DCEZ has: appointed a Board of Directors and
elected officers, incorporated a community-based nonprofit
corporation, adopted a two-year, $4 million budget, established
501(C)(3) tax status, established banking and financial
services, developed a Sponsorship Agreement for the use of DCEZ
funds, and executed a Memorandum of Agreement with the USDA.
She acknowledged that the lack of full funding for the Round II
EZs are forcing them to scale back efforts set forth in their
strategic plans and secure non-EZ resources.
Mr. Wilson testified that direct government funding of
Empowerment Zones is critical for them to carry out their
intended purpose. He added that the extension of the Work
Opportunity Tax Credit to Round II EZs would be very helpful in
encouraging employment of EZ residents.
Mr. Benitez testified that full funding for Round II EZs is
necessary for the DCEZ, which is in need of infrastructure
development such as water systems. He also added that matching
and start-up funds for business development is also crucial to
the strategic plan. For instance, Allied Digital
Communications, maker of CD-rom disks is hoping to relocate to
the DCEZ, creating approximately 130 new jobs.
Panel II was comprised of Mike Bracken, Director, Coachella
Valley Economic Partnership; Harley Knox, Developer, Harley
Knox and Associates; Larry Chank, CEO, JPH Enterprises, Inc.;
and Harold Joseph, Executive Director of the Coachella Valley
Enterprise Zone Authority.
Mr. Bracken testified that he has had numerous inquiries
from Fortune 500 companies about relocating to the DCEZ area to
set up distribution centers, which would create lots of new
jobs. He noted that full funding for Round II EZs and the
hiring tax credit would make the area look even more attractive
to these businesses.
Mr. Knox testified that in his work with small
manufacturing companies who need low-cost, long term financing
for manufacturing facilities and equipment, find Empowerment
Zones appealing areas for expansion due to the tax exempt
Industrial Development Bonds and hiring tax credits. Mr. Knox
encourages full funding for Round II EZs so that companies have
incentive to move into those areas, bringing with them the
opportunity for economic prosperity.
Mr. Chank testified that funding is necessary to entice
businesses to relocate to the Cochella-Thermal area. He noted
that many companies are often reluctant to be the first to move
into an area that thus need the extra incentive provided by the
tax benefits of EZs.
Mr. Joseph spoke about the successes of the Coachella
Valley Enterprise Zone in attracting new business. He
attributed this cycle of business relocation, expansion, and
job creation to the financial incentives mandated by the state
of California, including credits against state income tax,
hiring tax credits, credits for new machinery and parts,
nontaxable investments.
For further information on this hearing, refer to Committee
publication 106-56.
7.27 small business and online music
Background
On May 24, 2000, the Committee held a hearing to examine
the new market possibilities for small music labels and
entrepreneurs created by the Internet. According to Forrester
Research, the market for donwloadable music is projected to
expand from virtually nothing in 1999 to over $1.1 billion in
2003. However, different witnesses were not in agreement over
the future of the new market. Several entities and artists are
currently suing a poplar file-sharing program, Napster, that
creates a network allowing users to swap possibly illegal
downloaded music files.
Summary
The hearing consisted of one panel of witnesses: Mr. Ric
Dube, Senior Editor/Analyst, Webnoize, Cambridge, MA; Mr. Tom
Silverman, Founder and CEO, Tommy Boy Records, New York, NY;
Mr. Peter Harter, Vice-President, Global Public Policy &
Standards, EMusic.com, Redwood City, CA; and Chuck D. Founder,
Rapstation.com.
Mr. Dube testified that although currently on-line music
sales only account for about 1 percent of CD sales, he
anticipates as Internet capabilities become more commonplace,
digital music will garner a larger percentage of the market. He
said that current on-line companies, such as Napster, are
valuable because they investigate the commercial demand for
Internet services.
Mr. Silverman testified on behalf of the Recording Industry
Association of America (RIAA). Although his label, Tommy Boy
Records is smaller and independent from the four major music
labels that dominate the industry, he said he shares their view
that file swapping programs, like Napster, are a conduit for
piracy.
Mr. Harter represents EMusic.com and testified how the
company's business model sells on-line music content while
still respecting the intellectual property rights of artists by
paying the royalties on each transaction. He said that because
the music industry is a ``$100 billion industry trapped inside
a $40 billion straitjacket,'' digital music can fill the gap of
the demand not satisfied by the four major labels.
Chuck D of the rap-group Public Enemy and founder of
Rapstation.com testified he thinks file swapping and online
opportunities create a new market that circumvents the current
power of music distribution, which he believes has been held
for too long by a small number of people. The existing
industry, according to Chuck D, stifles the flow of creative
works into the marketplace: ``I'm looking forward to the day
when there are 1 million labels and 1 million artists on the
Internet.''
For further information on this hearing, refer to Committee
publication No. 106-59.
7.2.28 regulatory reform initiatives and their impact on
small business
Background
On June 7, 2000, the Committee on Small Business held a
hearing to address efforts to reforming the regulatory process.
The hearing addressed efforts by the Clinton Administration to
reduce regulatory burdens on small business with a special
focus on the activities taken since 1995.
In 1993, President Clinton initiated the National
Performance Review in an effort to reinvent how government
operates. One aspect of that reinvention process was the
issuance of Executive Order 12,866 which was designed to ensure
that the federal agencies properly assessed their regulatory
initiatives and only issued those regulations that achieved
statutory objective in the most cost-effective manner. Two and
a half years later, President Clinton issued another directive
that all federal agencies perform a page-by-page analysis of
the Code of Federal Regulations for purposes of eliminating
unnecessary and duplicative federal regulations. At the White
House Conference on Small Business in 1995, President Clinton
announced that the federal government dramatically reduced the
size of the Code of Federal Regulations. More recently,
President Clinton directed federal agencies to issue their
regulations in plain English. The hearing was the first in a
series to be held by the Committee examining amendments to the
Paperwork Reduction Act (which is to be reauthorized in 2001)
that might reduce the cumulative regulatory impact of
recordkeeping and reporting requirements on small business.
Summary
The first panel consisted of the Honorable John T. Spotila,
Administrator of the Office of Information and Regulatory
Affairs, Office of Management and Budget. Mr. Spotila
recognized that regulatory burdens can impose substantial
burdens on small business and the Office of Information and
Regulatory Affairs is sensitive to that issue. According to Mr.
Spotila, it regularly reviews regulations to see whether the
burdens on small businesses can be reduced and tries to reduce
the cumulative impact of regulation on small businesses. Mr.
Spotila recognized that the job of reducing regulatory burdens
on small business is an ongoing process and more needs to be
done. Mr. Spotila stated that Office of Information and
Regulatory Affairs stands ready to work with the Small Business
Committee in finding solutions to reduce even further the
impact of recordkeeping and reporting requirements on small
business.
The second panel consisted of Congressman James Coyne
(Ret.), President of the National Air Transportation
Association; Alexandria, VA; Mr. Duncan Thomas, President and
Chief Executive Officer of Q-Markets, Inc., Richmond, VA on
behalf of the National Association of Convenience Stores; and
Mr. Kenneth O. Selzer, Owner of Kenneth O. Selzer Construction
Co., Cedar Rapids, IA on behalf of the National Association of
Home Builders.
Congressman Coyne first noted that the members of his
association are generally small, provide critical aviation
services from medical rescue flights to maintenance, and are
subject to regulation by numerous federal agencies--the most
significant being the Federal Aviation Administration.
Congressman Coyne noted that there seems to be a trend among
all federal agencies, but especially the Federal Aviation
Administration, to substitute regulations with informal
guidance that is binding on neither the agency nor members of
his industry. This imbues the inspectors with substantial
discretion that may be exercised arbitrarily, thereby
significantly increasing the regulatory burdens on the small
business community. This occurs without the agency undertaking
the proper analysis of those impacts as would be required had
the agency undertaken rulemaking pursuant to the Administrative
Procedure Act.
Mr. Thomas owns a number of convenience stores in inner
city Richmond, VA. Instead of focusing on improving the
operation of his stores and expanding his business, Mr. Thomas
must devote substantial management resources to reviewing over
250 pages of instructions for the completion of numerous forms
associated with the retailing of petroleum products. By his
estimates, regulatory burdens, through formal regulations or
through informal guidance, have increased by 25% since
President Clinton called for the elimination of unnecessary
regulations in 1995.
Mr. Selzer noted that homebuilders are among the most
regulated enterprises in the United States. They must contend
with a plethora of federal regulations including tax rules,
occupational safety and health guidelines, and wetland
requirements. In addition, they also must comply with various
state rules and must comply with local zoning codes. Mr. Selzer
noted that the combination of these regulatory efforts drive up
the cost of housing. Of particular note were the constant
modifications to the forms associated with obtaining a permit
to construct in a wetland. Mr. Selzer noted that the definition
continues to shift but the definition is not set out in any
rules but in guidance for the completion of a permit to
construct in a wetland. This enables EPA to continually modify
its interpretation without going through the analysis that
would be attendant to rulemaking such as those mandated by
Executive order 12,866 and the Regulatory Flexibility Act.
For further information on this hearing, refer to Committee
publication 106-60.
7.2.29 rural health care services; has medicare reform
killed small business providers?
Background
The Balanced Budget Act of 1997
The 1997 Balanced Budget Act (BBA '97) made a number of
significant changes to Medicare service delivery, particularly
for services provided by ancillary providers. Ancillary
providers are companies that offer a variety of health care
services outside of those provided at skilled nursing
facilities (SNFs), physician's offices or hospitals: Visiting
Nurses; Home I.V. care; Oxygen services; Portable EKG; Portable
X-rays; etc. These providers are especially necessary in rural
areas where hospitals and medical centers are few and far
between and SNFs and physician's offices do not have equipment.
Under BBA '97 reimbursement for the transportation for many
ancillary providers was eliminated. The purpose was to
eliminate waste, fraud, and abuse. At the same time, the Health
Care Financing Administration (HCFA) decided to eliminate
coverage for a number of previously covered medical services,
primarily services offered by ancillary providers. The result
has been devastating for the small businesses who make up the
bulk of the ancillary care providers. There is little home
health care service, or ancillary care service available now in
rural areas. Providers of services like in-home I.V., oxygen,
EKG, and visiting nurses are out of business or restrict their
service to urban and suburban areas.
Prospective Payment and Consolidated Billing
As part of BBA '97 the new concepts of ``consolidated
billing'' and ``prospective payment'' were introduced. These
essentially establish SNFs and Hospitals and large providers as
gatekeepers. Services are provided to gatekeepers who submit
consolidated bills to HCFA and then pay their providers. The
idea is to use the services of the private sector to reduce
fraud and over-billing. Prospective payment (PPS) went into
effect in 1998 for Medicare B and required all ancillary
providers to submit their bills to the nursing or other care
facility. HCFA is currently working with a consultant to figure
out exactly how to implement consolidated billing.
As HCFA requires reimbursement, the providers pass the cost
on to the small business suppliers, demanding unrealistic
discounts or delayed reimbursement. Under PPS, SNFs are
demanding large discounts from their ancillary providers and
often delaying payment. This is especially true when the SNF is
in bankruptcy. Many ancillary providers are concerned that
consolidated billing, which covers Medicare A, will only
exacerbate this problem.
This hearing provided a forum for a variety of ancillary
health care providers to discuss the problems occurring in
their industries and possible solutions.
Summary
The hearing convened at 10 a.m., June 14, 2000. The first
witness was Ms. Kathy Buto, Deputy Director of Health Plans and
Services at HCFA. Ms. Buto testified concerning the various
initiatives HCFA has started to improve health service in rural
areas. Ms. Buto was followed by Mr. Zach Evans, President of
Mobile Medical Services, a portable EKG provider. Mr. Evans
testified about the continuing inability of providers, like
himself, to serve rural areas. He testified specifically about
the numbers of towns and counties in Missouri that no longer
receive ancillary services due to BBA '97.
The third witness was Ms. Karen Woods, Executive Director
of the Hospice Association of America. Ms. Woods testified
about the continuing difficulties faced by the hospice
organizations under BBA '97. She specifically cited information
concerning the loss of service to a large number of rural
patients who rely on hospice care for assistance in coping with
chronic, fatal illness. She was followed by Mr. Norm Goldhecht,
vice-president of Diagnostic Health Systems, a portable x-ray
provider. Mr. Goldhecht testified about the inability of his
business to continue service to rural and even suburban areas.
He testified about the failure of nursing facilities or
physicians to provide care for the niche his company fills, and
the resultant disruption in care for rural Medicare recipients.
The final witness was Mr. William A. Dombi, Vice President
of the National Association for Home Care. Mr. Dombi discussed
the details of the extensive additional costs of providing
health care in rural areas. In particular, he discussed how
home health agencies have been unable to meet the needs of
patients in rural areas because of definitional problems. He
cited examples of disparities in the reimbursement system that
fail to take into account the vast differences in distances
covered by home health agencies in each state.
After the testimony of the witnesses the Members asked a
number of questions. Chairman Talent raised a concern about the
treatment of branch offices under the Medicare reimbursement
for home health care. The Chairman also questioned the wisdom
of a single set reimbursement for ancillary services regardless
of the distances covered by the provider. Finally, he discussed
the possibility of creating a voucher system for small
businesses to ease transition into the PPS system.
Ms. Velazquez questioned HCFA's apparent inequity in the
treatment of rural areas and also raised the issue of HCFA
compliance with the Regulatory Flexibility Act, in light of the
obvious disparate effect on small business.
Ms. McCarthy and Ms. Christian-Christensen both questioned
HCFA's treatment of small providers seeking reorganization and
also expressed concern over the failure of HCFA to show
flexibility in dealing with the hospice industry.
For further information on this hearing, refer to Committee
publication 106-64.
7.2.30 hearing on improving the office of advocacy
Background
On June 21, 2000, the Committee on Small Business held a
hearing on improving the operations of the Office of Advocacy.
The purpose of the hearing was to examine ways to increase the
independence and power of the Office of Advocacy.
The Office of Advocacy, headed by a Chief Counsel appointed
by the President and confirmed by the United States Senate, was
created in 1976 to represent the interests of small business in
the federal regulatory process. In 1980, the Office's portfolio
was increased to include monitoring agency compliance with the
Regulatory Flexibility Act--a statute requiring that agencies
assess the impact of their proposed and final rules and, if
they are significant, examine alternatives that will be less
burdensome. That Act also authorized the Chief Counsel to file
an amicus brief in court addressing an agency's noncompliance
with the Regulatory Flexibility Act during the rulemaking
process. The Office's power was increased again in 1996 by the
Small Business Regulatory Enforcement Fairness Act. That Act
required the Chief Counsel to obtain the views of industry on
significant proposed rules issued by EPA and OSHA and then
transmit them to those agencies prior to publication of the
proposal in the Federal Register.
Some concern exists that the Office of Advocacy is not
sufficiently independent from the President and the
Administrator of the SBA. One possible solution would be to
have a separate line item for salaries and expenses of the
office of Advocacy. Another is the creation of a three-member
commission along the lines of the Federal Trade Commission that
would operate outside the authority of the Executive Branch of
government.
Summary
The hearing consisted of one panel: the Honorable Jere W.
Glover, Chief Counsel for Advocacy, Office of Advocacy in the
United States Small Business Administration; Mr. Todd
McCracken, President of National Small Business United,
Washington, DC; Karen Kerrigan, President of the Small Business
Survival Committee, Washington, DC; Daniel R. Mastromarco,
Esq., President of The Argus Group, Alexandria, VA; Mr. Jim
Morrison, Senior Policy Advisory for the National Association
for the Self-Employed; and Keith Cole, Partner, Swidler,
Berlin, Shereff Freedman.
Mr. Glover testified that he has exercised his independence
from the President on a frequent basis. In addition, he noted
that he has been able to persuade the Administration to take
positions that are beneficial to small businesses on a number
of occasions. Mr. Glover also testified that the decision in
American Trucking Association v. EPA does not undercut his
authority with respect to oversight of agency compliance with
the Regulatory Flexibility Act. Nevertheless, Mr. Glover
objected to the creation of a Small Business Advocacy
Commission. Mr. Glover concluded his testimony by rejecting the
notion that the Office of Advocacy or a Commission should write
government-wide regulations on implementing the Regulatory
Flexibility Act.
Mr. Mastromarco, as a former Assistant Chief Counsel in the
Office of Advocacy, noted that the Chief Counsel could never be
truly independent. The Chief Counsel serves at the pleasure of
the President and can be fired by the President. True
independence will not happen until the Chief Counsel is severed
from the jurisdiction of the Administrator and the
Administration, budget requests are filed directly with
Congress (as occurs with independent regulatory agencies),
removing the Office of Advocacy from the location of the United
States Small Business Administration, and appointing a Chief
Counsel or commissioners in an Advocacy Commission for a set
term.
Ms. Kerrigan noted that the Office of Advocacy appears to
focus its energy more on being reactive, i.e., what happens
after an agency issues a proposed rule. Yet, because of its
position within the Administration, Ms. Kerrigan noted that it
cannot aggressively take positions on legislation that might
contradict those of the President. Ms. Kerrigan supported
initiatives to make the Office of Advocacy more independent but
noted that her organization was still studying the costs and
benefits of transferring the functions to an independent
commission.
Mr. McCracken testified that an effective Chief Counsel
working inside the Administration may be beneficial for small
business. However, that benefit must not be sacrificed at the
cost of the Chief Counsel's independence. Mr. McCracken noted
that the scales may be tipping too far away from independence.
Mr. McCracken and his organization support a Senate effort to
provide the Office with a separate line item in the President's
budget. He raised some concerns about the tradeoffs associated
with creating an Advocacy Commission outside of the Executive
Branch. He stated that his organization would have to consider
this issue in more depth.
Mr. Morrison concurred with Mr. McCracken in supporting the
need for a truly independent office of advocacy within the
Administration. His organization also supported the Senate's
effort to create a separate line item in the budget for the
office. Mr. Morrison also testified that the Office of Advocacy
had to be given the authority to write government-wide guidance
in order to overcome the decision in American Trucking
Association v. EPA.+
Mr. Cole noted that the Office of Advocacy must carefully
select which regulatory battles it fights to its full ability.
While resource constraints certainly play a role, Mr. Cole
noted that conflict with the Administration could lessen the
Chief Counsel's influence within the Administration. The Chief
Counsel is part of the President's team and, if the Chief
Counsel goes too far off that path, the Chief Counsel could
find itself marginalized in debates within the Administration.
Mr. Cole notes that the Commission represents an excellent
mechanism for ensuring the true independence of the Office of
Advocacy.
7.3 Summaries of the Hearings Held by the Subcommittee on Empowerment
7.3.1 barriers to minority entrepreneurship
Background
The Committee held a hearing on March 23, 1999 examining
the fact that economic opportunities are minimal to minorities.
This lack of opportunity stems from the fact that there is a
disproportionate amount of taxes and regulations placed on
small businesses. This hearing also focused on the streamlining
of zones, business codes, and other regulations necessary for
small businesses to survive--and further, necessary for the
revitalization of America's most economically strapped
communities.
The hearing was found to be necessary because of the still-
pressing issues facing minority-owned and operated small
businesses. There are more than 2 million minority-owned
businesses in the United States. Even so, companies owned and
operated by minorities are faced with bigger challenges than
other companies, and the hearing was held to investigate this
specific discrepancy.
Summary
The witnesses for this hearing included Stella Horton,
Director of Entrepreneurship at EDTEC; Yvonne Simpson, Vice
President of the Small Business Services for the Greenville, SC
Chamber of Commerce; Shelia Brooks, President and CEO of SRB
Productions, Inc.; William Mellor, President and General
Counsel for the Institute for Justice; and Hector Ricketts,
President and CEO of Queens Van Plan.
Dr. Horton stated that her belief is that with proper
education and opportunities, youth can benefit from
entrepreneurial skills, and eventually aid in the economic
development of their cities and towns. Dr. Horton described
EDTEC's ``new youth entrepreneur'' program, one which provides
opportunities for youth to have hands-on entrepreneurial
experiences, as well as entrepreneurial teaching in the
classroom. Dr. Horton emphasized that beginning with youth is
important; for learning entrepreneurial skills as an adult is
too late in the process. The skills learned, such as: setting
goals, thinking logically and sequentially, and the importance
of academic education, lead to a productive youth with high
potential in society. Dr. Horton asked that the committee
continue to move forward in its investigation of minority
entrepreneurship by developing legislation promoting
entrepreneurship training, support schools in adopting
entrepreneurial education programs, and oversee the development
of outreach programs to minorities.
Ms. Simpson's testimony described her home of Greenville
County, NC. Ms. Simpson explained that even though there has
been an almost 98 percent increase in the number of Black-owned
businesses in Greenville County, NC, the sales and receipts of
black-owned businesses has increased by only 30 percent. Ms.
Simpson said this discrepancy is unnecessary and urged the
committee to continue to delve into this issue, and to insure a
more level playing field for minority entrepreneurs through tax
incentives.
Ms. Brooks, national board member of the National
Association of Women Business Owners (NAWBO), spoke about
specific obstacles which face minority entrepreneurs, in
particular, women business owners of color. Ms. Brooks
explained that women-owned and operated businesses, while vital
to the economy, are faced with increasingly difficult
obstacles, specifically in the arena of accessing capital. Ms.
Brooks explained the ``Master Plan,'' a comprehensive plan
commended by U.S. Small Business Administration's Aida Alvarez.
Ms. Brooks stressed the importance and effectiveness of this
plan, and that it should be implemented in order to alleviate
problems incurred by minority entrepreneurs.
Mr. Mellor testified that the spirit of America is embodied
in entrepreneurial endeavors, and that minorities are missing
out on the realization of the American Dream. People who want
to earn a living for themselves and their families are faced
with countless obstacles. These factors disobey the aims of our
Founding Fathers, he explained. Mr. Mellor concluded that the
creation of jobs should be of highest priority to the nation.
Mr. Ricketts, the President and CEO of Queens Van Plan,
Inc., a commuter van service authorized by the State of New
York and the New York City Taxi and Limousine Commission, also
testified. Mr. Ricketts spoke of his difficulties dealing with
the bureaucracy associated with any kind of change he wants to
make in his business. He stated the endless processes he had to
go through to expand or change his business. Mr. Ricketts
recommended that the committee, and the government as a whole,
set the pace in eliminating government-imposed barriers to
entrepreneurs. Mr. Ricketts requested that regulations be based
on safety issues and not on the fact that a minority seeks to
compete and compete successfully.
For further information on this hearing, refer to Committee
publication 106-6.
7.3.2 small business, big gains: how economic renewal
creates safer neighborhoods
Background
The Subcommittee on Empowerment held a hearing on May 11,
1999 concerning economic renewal. Specifically, the committee
wished to examine how economic renewal helps to create safer
neighborhoods in our nation's cities. Although communities with
little economic growth, high crime rates and high unemployment
rates often deter business owners from settling in certain
areas, these communities offer distinct business advantages.
These usually include: locations near public transportation;
high population density, leading to substantive purchasing
power; and a vast, untapped labor pool. When business
flourishes in an area, the crime rate tends to fall, and the
previous hardships felt by a community are eased. Therefore,
business success will lead to economic renewal for America's
struggling communities. The committee sought to further this
search into the correlation between a community's success and
the growth of small businesses.
Summary
Robert L. Moore, President of the Development Corporation
of Columbia Heights; Todd Mosley, Executive Director of Thumbs
Up Youth Enterprises; Curtis Watkins, Director of the East
Capitol Center for Change; Albert R. Hopkins, Jr., President
and CEO of the Anacostia Economic Development Corporation; and
Celina Trevino Rosales, Executive Director of the Latino
Economic Development Corporation all testified at the hearing.
Mr. Moore focused on the evolution of the Columbia Heights
area. He stated that the area, once a profitable commercial
center, had fallen victim to a massive relocation of city
residents to rural outlying areas of Virginia and Maryland in
the early 1960's. In addition, the community experienced
rioting and damage due to the assassination of Martin Luther
King, Jr. in 1968. These factors contributed to the decision by
the federal government to buy and later level the 62-acre area.
Though they were hoping for new commercial development, the
area remained clear, and crime and drugs took over the
neighborhood. Mr. Moore stated that, if businesses would open
in the area, it would help to create jobs and thus decrease
crime and violence.
Mr. Mosley spoke of his proposed tax credit to businesses
as one way to help youth in impoverished areas. His idea is to
give a 100-percent tax credit to local employers to hire local
teenagers for part-time apprenticeships. This proposal would
broaden the tax base by placing money into the hands of youth
in the form of wages, and by providing that the same amount of
money to businesses in the form of a tax credit. Mr. Mosley
stated that this would be the way to help a community become
profitable and successful again.
Mr. Watkins spoke of his East Capitol Center for Change, a
non-profit organization serving youth and adult residents of
the 577 unit East Capitol Public Housing Development. Through
his work with this center, Mr. Watkins has seen that it is
important to expose young people to business development skills
from a young age, give tax incentives to community businesses
as well as associations and corporations who develop programs
for youths.
Mr. Hopkins, Jr. testified that he has seen a significant
change in the mindset of residents in the Anacostia/far
Southeast area since the Good Hope Marketplace was opened in
December of 1997. He used this as a concrete example to show
that business renewal creates renewal on a broader scale for an
entire community. Ms. Trevino Rosales stated that the community
of Mount Pleasant has also enjoyed a surge of confidence and
economic revitalization due to recent store openings and
construction.
For further information on this hearing, refer to Committee
publication 106-11.
7.3.3 welfare to work: what is working, what is next?
Background
On May 25, 1999, the Subcommittee on Empowerment met to
discuss various strategies geared to facilitate the transition
from welfare to gainful employment. The Subcommittee examined
the accomplishments of several welfare-to-work programs and the
lessons learned during this welfare reform transitional period.
The Subcommittee heard input from the witnesses regarding the
steps that should be taken to ensure the long-term success of
welfare reform initiatives and what strategies are successful
in moving people from dependency on public assistance, to
gainful employment and ultimately self-sufficiency.
A study conducted by the Economic and Social Research
Institute surveyed 500 small businesses and found that small
employers are seeking reliable, motivated workers with positive
attitudes, and are less concerned with the limited education
and job training of many welfare recipients. Additionally, 62%
of the employers surveyed had hired someone who was on welfare
and, of this percentage, 94% were willing to hire a welfare
recipient again. These findings suggest that since there is no
shortage of employers to hire welfare recipients, perhaps
welfare-to-work-programs are part of the solution to
facilitating the job search for welfare recipients. These
programs provide training that will help welfare recipients
portray themselves as successful candidates to prospective
employers.
The past few years have been a transitional period for
welfare reform, following the passage of the Personal
Responsibility and Work Opportunity Reconciliation Act, in
1996. This law established the Temporary Assistance for Needy
Families (TANF) program which mandates that after two years of
receiving welfare assistance, recipients must have a job or be
participating in some type of work activity or job training.
This welfare-to-work initiative ensures that welfare recipients
have the opportunity to make a long-term life improvement, by
sustaining a job, in hopes that eventually they will become
independent of government assistance. This is especially
important since participation in the TANF program limits the
receipt of welfare benefits, in most cases, to no more than 60
months in one's lifetime.
Summary
The hearing consisted of one panel: Mr. Charles A. Ballard,
Founder and CEO, Institute for Responsible Fatherhood and
Family Revitalization; Mr. Robert F. Powelson, President,
Chester County (PA) Chamber of Commerce and Industry; Mr. Peter
Cove, Founder, America Works; Mr. Eric Yergan, Owner, The
Yergan Agency.
Mr. Ballard testified that his program since its inception
in September 1998, has placed over 230 fathers and mothers in
full-time jobs. He also noted that they have a 72 percent
retention rate.
Mr. Powelson testified about his program which pairs
welfare recipients seeking job training, or entering jobs, with
a mentor in the business community. Mentors serve in a number
of capacities from helping create or fine tune resumes to
discussing daycare options. He added that this mentoring
relationship helps increase the rate of job retention and that
several other counties in Pennsylvania have expressed interest
in creating similar programs.
Mr. Cove testified about his program, America Works,
operates in seven cities and in 15 years, has placed over
20,000 welfare recipients in jobs. He added that the government
should not pay for the process for welfare-to-work programs,
rather they should pay for the results. He believes the
Department of Labor should only pay a welfare-to-work program
when a participant has worked for more than six months.
Mr. Yergan testified about his experience in hiring a
welfare recipient from Mr. Cove's program to work in his
insurance agency. He told the panel that he was most impressed
with Anna Rodriguez, a single mother of three, who was on
welfare for more than five years, finding her very competent
and eager to learn. He noted that she progressed quickly in her
job, passing classes and tests required to obtain her real
estate license. Mr. Yergan added that being able to speak with
an America Works counselor when there is a problem with a
participant in the beginning stages of employment, is
invaluable in creating a strong working relationship.
For further information on this hearing, refer to Committee
publication 106-14.
7.3.4 the digital divide: bridging the technology gap
Background
The Subcommittee on Empowerment met on July 27, 1999, to
discuss the Digital Divide, its impact on disadvantaged groups,
and initiatives to close the gap. The Digital Divide refers to
the recent trend or demographic differences in the groups that
are taking full advantage of innovative technology such as
personal computers and the Internet. A study released in July,
1999 by the U.S. Department of Commerce, National
Telecommunications and Information Administration, entitled
``Falling Through the Net: Defining the Digital Divide,'' finds
evidence of a distinct dichotomy between those who avail
themselves of electronic resources and those who do not. The
study examines the prevalence of telephones, personal
computers, and Internet access in households nationwide using
data from the Census Bureau. The analysis showed that although
connectivity in America has increased, access trends seem to be
affected by factors such as race, socioeconomic status,
geographic region, and education. The study showed that
minorities, low income families, single parent families, and
those living in rural areas have less access to the
technological tools of the Information Age.
The lack of computer proficiency and Internet access by
members of disadvantaged groups hinders their employment
prospects. The ability to successfully compete for the
increasing number of entry level, high tech jobs, requiring a
computer background, is decreased for those without access to
technology. Even an initial job search, is facilitated by the
electronic job banks found on the Internet. Further, the
Internet benefits entrepreneurs seeking to start or grow a
small business, by serving as a research tool to probe new
products, processes, and technologies. Universal access to
electronic technology will also help improve the labor pool,
creating well-prepared, technologically adept employees.
As computer and Internet technology are rapidly being
integrated into the classroom, students lacking access to
electronic resources at home, school, the library, or another
community center, may lag behind peers in their ability to
embrace and utilize these technologies. This is further
complicated by the lack of teachers possessing the skills
necessary to successfully integrate technology in the
classroom. Online classrooms are yet another educational
benefit of the Internet, allowing people to conveniently
enhance their education and even work toward post-secondary
degrees. In fact, the NTIA study found that minorities, when
using the Internet at home, are taking courses or conducting
school research online at rates higher than the national
average.
Summary
Panel I consisted of: Honorable Larry Irving, Assistance
Secretary for Communications and Information, National
Telecommunications and Information Administration (NTIA), U.S.
Department of Commerce; Ms. Maureen Lewis, General Counsel,
Alliance for Public Technology; Mr. Harris Miller, President,
Information Technology Association of America.
Mr. Irving testified on the findings of the U.S. Department
of Commerce's 1999 report ``Falling Through the Net: Defining
the Digital Divide.'' He noted that while Americans are have
advanced with respect to connectivity, there exists a disparity
in this progress on the basis of income, education, race, and
geographic location.
Ms. Lewis testified that the Alliance for Public Technology
(APT) thinks one way to combat the Digital Divide is for the
FCC to eliminate certain rules that inhibit large telephone
companies from deploying broadband infrastructure. She also
suggested that the FCC should forge partnerships with community
organizations that can pool their demand for telecommunications
services and service providers. She added that education,
training, and recognition of the economic incentive existing in
information technology, are important steps toward bridging the
gap.
Mr. Miller testified that the Information Technology
Association of America prefers to use the term ``digital
opportunity'' rather than digital divide since there is an
expected doubling of e-commerce expected in the next six
months, and that suggests opportunity, both in terms of
empowerment and economic performance. He noted that in time
market forces would level rate of access to technology since
typical technology cycles take 20 years and the World Wide Web
is only six years old. He added that the ITAA has been working
with the industry groups and the White House on incentives to
attract minorities, low-income women, and those with
disabilities to IT jobs.
Panel II consisted of: Mr. B. Keith Fulton, Director,
Technology Programs and Policy; Mr. Tim Robinson, Legislative
attorney; Ameritech Corporation; Jack Krumholtz, Director,
Federal Government Affairs, Microsoft Corporation; Mr. Thomas
Coleman, President and CEO, Technical Career Institute, Inc.
Mr. Fulton testified about the partnerships the Urban
League has with IT companies such as Bell Atlantic, EDS,
Microsoft, and Ameritech, to build 115 technology education and
access centers, ``digital campuses'' around the country. He
added that programs like e-rate have been beneficial in getting
Internet access into schools and libraries.
Mr. Robinson testified that Ameritech wants to work with
the FCC to rethink restrictive interpretation of
telecommunications law that prevents companies from
transferring information efficiently. He encouraged support of
H.R. 2420 and H.R. 1686, which would remove some of these
barriers. He added that the retail buying power of the inner
cities, where many minorities live, amounts to over $100
billion per year and that by providing the tools and IT
resources an underserved market can be tapped.
Mr. Krumholtz testified about steps Microsoft is taking to
work toward its vision of a computer and connectivity in every
household. He described programs from Libraries Online,
operating in public libraries across the country and targeting
everyone from school children to senior citizens, to Working
Connections, a partnership with American Association of
Community Colleges to provide education and workforce training
in disadvantage in distressed communities.
Mr. Coleman testified that his program, Technical Career
Institute, trains economically and socially disadvantaged
individuals for technology jobs. He added that TCI has
incorporated components targeting women and at-risk high school
students in the New York City public school system.
For further information on this hearing, refer to Committee
publication 106-25.
7.3.5 h.r. 2373, the start-up success accounts act of 1999
Background
On November 2, 1999, The Empowerment Subcommittee met to
discuss H.R. 2373, the Start-Up Success accounts act of 1999.
Introduced by Subcommittee member Jim DeMint (R-SC) and full
Committee Member Brian Baird (D-WA), the bill allows start-up,
small enterprises to save their money in tax deferred savings
accounts, giving new small businesses a tool to manage their
income and avoid the excessive tax burden. The term ``start-
up,'' for purposes of
this bill, is defined as a business in its' first five years of
existence. A small business owner may put up to 20% of his
taxable annual income, up to $200,000, into a SUSA. One may
draw from the account five years from the date of deposit, so
the account can remain active for up to ten years, but one can
make tax free contributions to the account for five years
(while their business is still a ``start-up'').
Small business owners are often counseled to reinvest their
profit into the business, thereby avoiding taxation on the
business' profits. H.R. 2373 would allow new small businesses
an alternative opportunity to use a tax deferred saving account
for profits. These savings accrued at a time when business is
profitable, could help many small businesses withstand slow
periods or periods of increased competition.
Summary
The hearing consisted of one panel: Ms. Karen Kerrigan,
Chairman, Small Business Survival Committee; Mr. Erik R. Pages,
Policy Director, National Commission on Entrepreneurship, and
Mr. Pepper Horton, CPA.
Ms. Kerrigan testified that the SUSA Act of 1999 addresses
a major problem facing many small businesses, lack of access to
capital. She noted that in 1995, delegates from the White House
Conference on Small Business ranked this issue a top priority
and that 15 out of its 60 recommendations related to access to
capital.
Mr. Pages spoke about the challenges of getting funding for
start-ups. He noted that start-ups with projected expenses of
under $50,000 can usually get needed funding through small-
scale investors, often family members, and credit cards. He
described the toughest group of start-ups to find funding for
is the $50,000-$2 million bracket, since venture capitalists
usually come through for the big dollar prospects, leaving the
medium sized businesses with the most problems accessing funds.
Mr. Pages testified that the SUSA Act would be a useful tool
for start-ups to grow using their own hard-earned money.
Mr. Horton testified that the SUSA Act would be an
effective tool in helping small business owners manage their
cash flows and avoid tax-motivated spending. He said that
currently, the tax code contains few incentives to help small
businesses get off the ground and that the SUSA Act is a step
in the right direction.
For further information on this hearing, refer to Committee
publication 106-39.
7.3.6 the aging of agriculture: empowering young farmers
to grow for the future
Background
On November 3, 1999, the Subcommittee on Empowerment and
the Subcommittee Rural Enterprises, Business Opportunities and
Special Small Business Problems met in a joint hearing to
discuss an issue that is of great concern in the agricultural
community--the lack of young people entering production
agriculture. According to the most recent Census of
Agriculture, the average age of American farmers is 54.3 years;
and there seems to be a shortage of young people waiting to
succeed our aging farmers as they prepare for retirement. This
shortage means that many seasoned farmers, with decades of
farming experience, have fewer people to pass their legacy on
to and benefit from their accumulated years of agriculture
experience. Older farmers who are looking toward retirement
often find their children are not interested in taking over the
family farm, or if they are interested, they are discouraged by
the difficulties inherent in the transfer of a farm from one
generation to the next. The estate tax, lack of access to
capital, long hours of work with marginal return on investment,
regulatory barriers, and reduced access to the global market
are some factors that dissuade aspiring young producers from
entering the field of agriculture.
Summary
Panel I consisted of: Dr. D. Scott Brown, Program Director,
Food and Agriculture Policy Research Institute (FAPRI); Mr.
John Young, Farmer, Groffton, NH; Mr. Lynn Cornwell, Vice
President, National Cattleman's Beef Association; Mr. Terry
Ecker, Farmer, Elmo, Missouri; Mr. Steve Gross, Farmer,
Manchester, Pennsylvania; Mr. Bruce Cobb, Farmer, Bridgeton,
New Jersey; and Mr. Baron Johnson, Farmer, Inman, South
Carolina.
Dr. Brown testified on the state of U.S. agriculture. He
reported that many commodities' prices are falling due to
changing supply and demand for the commodities. He expects the
2000 farm income to decline about 15 percent over the previous
year.
Mr. Young, a fourth-generation apple farmer, whose family's
orchard used to cover 600 acres is now reduced to 57, testified
that problems including financing, labor shortage, tax
complexities, and paperwork burden are contributing to the
demise of the family farm. He also mentioned the growing
necessity of an ``off-farm'' income to sustain the family.
Mr. Cornwell spoke about three factors that inhibit
prospective young farmers and ranchers from entering the
profession: the lack of return on investment, the estate tax,
and regulatory burdens.
Mr. Ecker testified about the factors he, as a young
farmer, must consider as he contemplates taking over his
family's farm. These include the cost of land and the lack of
availability of affordable land for expansion, risk management
and problems with the Federal crop insurance program, and the
lack of helpful tax incentives for producers.
Mr. Gross cited the estate tax, lack of federal and state
assistance programs, health insurance costs, and competition
with foreign producers as barriers to young people entering
production agriculture.
Mr. Cobb testified about several ways to make agriculture
an attractive business venture for aspiring young producers:
increase access to capital for start-up costs, eliminate the
estate tax, eliminate reduction in Social Security wages that
discourage older Americans from working on farms, make INS
regulation fair and clear.
Mr. Johnson spoke about the difficulty of making arming a
profitable endeavor, citing the increased cost of land and
equipment and the lack of low-interest loans available to young
farmers.
The second panel consisted of Mr. Gary Smith, Executive
Director, Chester County Development Council; Mr. John Baker,
Beginning Farm Center at Iowa State University; and Ms. Susan
Offutt, Administrator, Economic Research Service, U.S.
Department of Agriculture.
Mr. Smith spoke about the Next Generation Farm Loan
Program, a low-interest loan program operated by the state of
Pennsylvania. He testified that permitting Farm Service Agency
guarantees on aggie bonds and exempting aggie bonds from the
volume cap on industrial development bonds would help make
financing available to young farmers.
Mr. Baker spoke about the programs of the Beginning Farm
Center which include seminars on how to plan an estate and make
a business succession plan, geared toward retiring farmers, and
programs to help young farmers organize their operation so it
has greater potential to be a successful business. Mr. Baker
suggested that the USDA provide matching funds to state
organizations such as his.
Ms. Offutt testified that the method of census data
collection, in which only the primary owner's age is counted,
may be partially responsible for the increase in the average
age of farmers, since the farm may actually be operated by a
much younger farmer whose age is not recorded. She added that
over the last five years, FSA has provided over $2.5 billion in
loans to over 34,000 beginning farmers and ranchers.
For further information on this hearing, refer to Committee
publication 106-40.
7.3.7 bridging the technological gap: initiatives to
combat the digital divide
Background
On March 28, 2000, the Empowerment Subcommittee met to
discuss the various strategies geared toward bridging the
technological gap created by the Digital Divide. Specifically,
the Subcommittee examined initiatives that have been successful
in ensuring that everyone is able to access the technological
advances that are driving our information age. This hearing
furthered the Subcommittee's discussion of this matter and
charted the progress that has been made since our first hearing
on the digital divide last July. For information on the first
hearing on the Digital Divide, refer to Committee publication
105-25.
Summary
This one panel hearing consisted of: Dale Mitchell,
Executive Director, Delaware Valley Grantmakers; Leslie A.
Steen, president, Community Preservation and Development
Corporation; Scott Mills, Executive Vice President and Chief
Operating Officer, BET.com, LLC; Darrien Dash, CEO, DME
Interactive Holdings, Inc.; Harris N. Miller, President,
Information Technology Association of America; Katherine
Bushkin, Senior Vice President and Chief Communications
Officer, America Online, Inc.
The Mr. Mitchell testified that sometimes the most
effective solutions must come from those closest to the
problem. He spoke about the funding that his association's
members have given to community programs, which seek to shrink
the Digital Divide. For instance, the Free Library of
Pennsylvania's Bits and Bytes Project, funded by the William
Penn foundation, sponsors computer clubs and classes. The CIGNA
Corporation funds computer learning centers in Philadelphia and
Hartford, CT. The Pennsylvania Humanities Council, with funding
from the Howard Heinz Endowment, sponsors technology centers at
10 community sites.
Ms. Steen testified that the ``Community Preservation and
Development Corporation (CPDC) has been actively bridging the
Digital Divide for over four years in seven low income
communities in Washington, DC. She illustrated this with the
example of the Edgewood Terrace community, which was comprised
of 884 HUD subsidized apartments. The residents of Edgewood
Terrace needed jobs and the CPDC knew that information
technology was going to foster many new employment
opportunities, so they set up technology-based job training
programs. Ms. Steen described Edgewood Terrace as an electronic
village using technology as a community building tool. The CPDC
now has partnerships with local universities and corporations
to promote higher education goals and employment.
Mr. Mills testified that Bet.com, as a company serving the
on-line needs of the African American population, has developed
several strategies to combat the Digital Divide. The company
plans to offer a free Internet Service Provider (ISP) for those
who have a computer and a Personal Computer (PC)/ISP package
for those who don't. Mr. Mills noted that cost is only one
factor contributing to the Digital Divide and that the lack of
appealing content and target marketing to the African American
community also must be addressed.
Mr. Dash testified that his company, the first publicly
traded African American Internet Company, seeks to enhance the
perception in the African American and other minority
communities that the Internet has a value for them. He added
that he is Chairman of District 5 for Technology Committee in
Harlem, which promotes the Internet to young children through
both public and private partnerships.
Mr. Miller testified that the absence of minorities in the
IT field is due in part to lack of education and training in
this area. The ITAA is working to filter a more diverse cross-
section Americans into the IT community. He noted that the
Digital Divide can be seen as a ``digital opportunity'' and
that the challenge to attract underrepresented groups to the IT
field can be met through outreach, education, and internships.
Mr. Bushkin testified that America OnLine is committed to
ensuring that everyone has the chance to be part of the digital
economy. She referred to a Department of Commerce study that
reported that in two years, about 60 percent of jobs will
require high tech skills. She mentioned several factors that
would help bridge the digital divide: (1) availability of
hardware, software and affordable connectivity, (2) appropriate
skills training, (3) Internet content useful to traditionally
underserved communities, and (4) public awareness programs to
educate people on how the Internet is valuable in their lives.
For further information on this heraing, refer to Committee
publication 106-48.
7.3.8 the digital divide
Background
On April 25, 2000, the Subcommittee on Empowerment met in
the Carson City Council Chambers, Carson City Hall, 701 East
Carson Street, Carson, CA to discuss the digital divide formed
in low-income communities when they lack adequate resources to
participate in the Internet and electronic commerce. Ms. Bono
presided over the field hearing located in Ranking Member
Millender-McDonald's district.
A study released by the Commerce Department's National
Telecommunication and Information Administration found evidence
of a widening digital divide. Data from the studies show
significant differences between those groups with access to the
basic components of e-commerce, personal computers, telephones
and Internet service providers.
The Subcommittee looked at mostly non-governmental
proposals to increase access to technology coupled with proper
instruction to enhance the possibility that those who are
currently not computer and Internet proficient will come to
embrace these resources.
Summary
The hearing consisted of two panels. On the first panel,
three witnesses provided testimony: Francisco Mora, Co-Author,
``On-line Content for Low-Income & Underserved Americans;''
Warren Ashley, Director, Distance Learning, California State
University; and Jack Sutton, Executive Officer, UCLA Outreach
Steering Committee, Office of the President.
Mr. Mora shared information from his study supporting that
less than 1 percent of the information important to underserved
areas, such as local jobs, local housing, limited literacy
content, multilingual content and cultural content, is
available on the Internet. Because his study is the first of
its kind, he recommended more research in the phenomenon. He
also recommended invested in a nationwide network of community
technology centers as hubs to help residents produce and use
relevant content.
Mr. Ashley testified about the six-degree programs and five
certificate programs that can be completed without ever
physically attending California State University. He said that
when people feel they need the Internet to do business and stay
in touch with their friends they will get the equipment, access
and any help they need to use this technology.
Mr. Sutton testified on behalf of the UCLA Outreach
Steering Committee, an organization that works with fifth-eight
high schools and feeder schools in designated outreach programs
as a result of California Proposition 409 and the regent's
action on Affirmative Action. He provided his experiences with
how electronic infrastructure, computers, data communication
and other new media enable a strong economy.
Four witnesses testified on the second panel: Lynnejoy
Rogers, Director, Brown Business Center, Urban League; Sam
Covington, Director, Information Vortex, Inc.; John Bryant,
Founder and CEO, Operation Hope, Inc.; Perry Parks, Vice-
President, Government and Public Relations, Media One.
Ms. Rogers testified that as corporations become more
global in focus, they will become less supportive of urban
issues and as businesses use more automation for production,
the role of the human is bound to diminish as did the role of
the horse in the agricultural age. She said that as
technological advancement increases, people who have been
historically disenfranchised from the economic process which
develops ownership and wealth, will continue to drift towards
an existence mirroring the survival of the fittest.
Mr. Covington testified that the digital divide really is
only a reflection of the other divides that exist in the
economy. He said that competition is stymied in areas such as
education or business preventing African-Americans from
success. He said that society needs to halt these monopolistic
practices in order to allow everyone equal opportunity to
succeed.
Mr. Bryant testified about the Inner City Cyber Cafe, an
organization sponsored by Operation Hope designed to literally
bridge the technological and prospective gaps separating inner
city and mainstream communities. It provides the local
community with a comfortable, relaxed and positive atmosphere
in which to meet to conduct e-commerce related business and
research, to hold one on one business meetings, and to unleash
the enormous power of the Internet and world wide web.
Mr. Parks testified that as competition begins to take
hold, prices for Internet access lowers and more access will be
made available to the people in low-income communities. He also
stated that the technological infrastructure is in place to
bridge the digital divide.
For further information on this hearing, refer to Committee
publication 106-54.
7.4 Summaries of the Hearings Held by the Subcommittee on Government
Programs and Oversight
7.4.1 joint hearing with the Subcommittee on regulatory
reform and paperwork reduction on small business
advocacy review panels
Background
On March 11, 1999, the Subcommittee on Regulatory Reform
and Paperwork Reduction and the Subcommittee on Government
Programs and Oversight of the Committee on Small Business held
a hearing on small business advocacy review panels created by
the Small Business Regulatory Enforcement Fairness Act of 1966
(SBREFA). This hearing was in many respects a continuation of
joint hearings the two subcommittees held in April 1997 and
March 1998 in which was addressed the need for common sense in
rulemaking and the unfair financial burdens borne by small
businesses all over this Nation as a result of unscientific,
impractical and unnecessary regulations
These same hearings also examined the implementation and
performance by the Environmental Protection Agency (EPA) and
the Occupational Safety and Health Administration (OSHA) of the
panel process added by SBREFA. The panel process requires these
two agencies--EPA and OSHA--to consider and to respond fairly
to the advice and recommendations of small businesses
concerning the impact upon small businesses of proposed
regulations. In a study done for Committees of both the House
and the Senate, the General Accounting Office concluded that:
``Agency officials and small entity representatives generally
agreed that the panel process is worthwhile, providing valuable
insight and opportunities for participation in the rulemaking
process.'' The hearing considered adding the Internal Revenue
Service as one of the agencies, in addition to OSHA and EPA,
covered by the panel process.
Summary
The hearing was comprised of a single panel, which
included: Keith Cole, Partner, Swindler Berlin Shereff
Friedman; Katherine Gekker. Owner, Huffman Press; Jack
Waggener, Resource Consultants/Dames and Moore; and James
Morrison, Senior Policy Advisor, Association for the Self-
Employed. The view was expressed that the Internal Revenue
Service (IRS) should be added as an agency that must convene a
panel. The panel process was considered an achievement by
Congress in providing a voice to small businesses in expressing
concerns with respect to proposed regulation that could
adversely impact the small business community and the nation as
a whole. However, it is necessary that participants have
sufficient information concerning the intent of a rulemaking in
order to effectively comment on the proposed rule.
Better economic analyses and environmental assessments were
attributed to the panel process which was said to overall have
a positive impact on the rulemaking where panels were convened.
Through the panel process have caused rulemaking to take on a
more rational and fair approach, more work needs to be done to
make the process even better. Though it was hoped that the IRS
would look at the panel process in a favorable light, this has
not been the case and the IRS has opposed being included in the
process. A draft bill was considered that would have added the
IRS to the panel process.
For further information on this hearing, refer to Committee
publication 106-4.
7.4.2 women's business enterprises
Background
On October 8, 1997, the subcommittee on Government Programs
and Oversight held a hearing to showcase Women's Business
enterprises on a national level and to examine issues of
concern to women entrepreneur--such as the availability of
capital. This was the first hearing in almost a decade devoted
to women in business.
This second hearing, held on March 25, 1999, was a
continuing commitment to spotlight the vital nature of women's
business enterprises to the economy of this nation as a whole
and to the communities in which we live. The hearing provided,
as did the last one, a forum for learning how the private
sector is succeeding or failing to meet the needs of women in
business and to focus attention on any existing deficiencies.
The hearing provided an opportunity for women business
owners to express their views on the effectiveness of federal
government programs designed to help small business owners and
those who aspire to go into business for themselves. Lastly,
this hearing provided a vantage point for identifying problems
that women business owners encounter as the result of over-
regulation and burdensome government paperwork. the hearing
posed the question: Is the federal government a friend or foe?
Summary
The hearing was comprised of two panels. The first panel
included the Hon. Sue Kelly, a Representative from the State of
New York and the Hon. Jennifer Dunn, a Representative from the
State of Washington. The second panel included Terry Neese,
CEO, Terry Neese Personnel Services, Inc.; Georgette Mosbacher,
President, Georgette Mosbacher Enterprises, Inc.; Paula Miller-
Lester, Chairman/Publisher/Editor, Minorities and Women in
Business; Barbara Hayward, Hayward International, Inc.; and
Colleen Anderson, Executive Vice President, Wells Fargo Bank
San Francisco.
Major problems facing women in business were cited as the
need to: (1) simplify and make the tax code more fair, (2) make
sure that women have access to capital, (3) eliminate the bias
that women in business often face, (4) improve the ability of
women to receive Federal procurement contracts, and (5)
continue to reduce paperwork and burdensome regulatory
requirements.Three areas of tax relief for small businesses
were cited as immediate concerns: i.e. elimination of the death
tax, reduction in capital gains and increased deductibility of
health insurance for small, self-employed business people.
The National Association of Women Business Owners, NAWBO,
expressed concern about issues surrounding government
contracting and certification. Too little capital and too much
Federal regulation was cited by one witness as the biggest road
blocks to real success for women in business. As to the growth
of women business enterprises, a witness stated that it is
estimated that by the year 2000, women will own 40 to 50
percent of all U.S. businesses. One witness financed the start-
up of a business using a retirement fund and credit cards and
found bankers reluctant to lend to new businesses. However, an
executive of a large national bank testified that the bank had
established a $10 billion, ten-year women's loan fund and that
on the third anniversary of the fund's existence over $3.7
billion had been lent to women-owned businesses.
For further information on this hearing, refer to committee
publication 106-7.
7.4.3 conserving natural resources and examining related
emerging technologies
Background
The hearing held on April 23, 1999, highlighted the growing
need to conserve natural resources. This is because of the
limited nature of these resources and the consequences of
depending heavily, as in the case of oil imports, upon foreign
suppliers. The hearing also explored some of the new
technologies and inventions that businesses, both large and
small, are using to improve the well-being of individuals and
the planet by conserving resources and preserving and
protecting the environment. Technology and invention have been
the keystones in making the United States the world leader it
is.
A further focus of the hearing was the role of government,
and Federal regulations and paperwork in helping or inhibiting
scientific invention and technology. This hearing provided an
opportunity to evaluate whether the Federal government was a
friend or foe when it comes to research, invention,
technological change, and the introduction of new goods and
services designed to preserve our environment.
Summary
The hearing was comprised of one panel, and the witnesses
included: Dr. Albert Bartlett, Professor Emeritus, University
of Colorado; Dr. Harvey Forest, Advisor to the President,
Solarex Corporation; Mr. Robert P. Purcell, Director, Advanced
Technology Vehicles, General Motors Corporation; Mr. Edward
Clerico, President, Applied Water Management, Inc.; and
Mr.Douglas Durante, Executive Director, Clean Fuels Development
Coalition. It was projected that the world has consumed 75% of
the discovered and undiscovered petroleum that was ever in the
ground, which has left only 25% of this important resource. It
was advocated that steps be taken to tell the American people
the true state of the present oil production in the United
States and the world.
As a means of conserving petroleum, it was pointed out that
Germany and Japan have policies to encourage the use of solar
energy. It was testified that the United States was in a race
with foreign competitors to keep solar technology in the United
States where it was developed. Another impact of diminishing
petroleum reserves was that automobile manufacturing companies
in the future could not depend on the internal combustion
engine, but had to consider a number of alternatives. Research
was on-going in advanced vehicle technologies including
electric, hybrid, and fuel cell.
Turning to another area of conservation, our heavily
subsidized waste water and water systems were created in a
manner that has caused secondary impacts that have negated many
of the environmental benefits. It was proposed for the future
that more attention be given to planning for indirect use
rather than proceeding haphazardly. Again in the field of
energy conservation, it was pointed out that a number of
alternatives to petroleum-based fuels existed, e.g., alcohol,
ethanol, and methanol, natural gas, propane, and electricity,
but that further development in these technologies would be
accelerated by a more forward-looking and consistent national
energy policy.
For further information on this hearing, refer to Committee
publication 106-8.
7.4.4 the small business innovation research (sbir)
program
Background
On May 27, 1999, the Subcommittee on Government Programs
and Over-sight held a hearing that examined the performance of
the Small Business Innovation Research (SBIR) program which was
established in 1982 and was reauthorized in 1992 to extend
through the end of fiscal year 2000. The SBIR program fosters
innovative research and development by small businesses and
strengthens the country's technology base. The program has been
credited with creating new jobs, increasing productivity and
economic growth and helping combat inflation and stimulating
exports. Small high-tech companies, as a group, have shown an
ability unequaled by large businesses to produce new products,
processes and technologies. The program has found widespread
support among members of both parties. The hearing provided
program oversight and a basis for legislation reauthorizing the
program. The hearing examined recommendations for legislative
and administrative changes offered as a part of the hearing
record.
Summary
The hearing was comprised of two panels, the first panel
included: Mr. Al Behar, President and CEO, Personal Improvement
Computer Systems, Inc.; Dr. Jacqueline Haynes, Vice President/
Owner, Intelligent Automation, Inc.; Dr. Arvid Larson, Co-
Chairman, AAES R&D Task Force. The members of the panel were of
the view that the SBIR program was a success and should be
continued. It was reported that efforts were being made to
streamline the application process and modernize the review
process. As evidence of the innovative nature of the program,
one company had received nine patents and had a further patent
pending as a result of its participation in the program. One
witness viewed the program as an engine of growth, contributing
to increasing the company's business. Another witness had been
at the first hearing that authorized the program and was of the
view that the program was far more of a success than initially
envisioned.
The second panel included: Mr. Chris W. Busch, Ronan,
Montana and Mr. Daniel Hill, Assistant Administrator, Office of
Technology, Small Business Administration (SBA). It was pointed
out that rural areas have a special need for technology-based
businesses fostered by the SBIR program. One witness cited a
Harvard University study, which found that SBIR awardees grew
significantly faster--whether measured by sales or by
employment--than a matched set of firms over a 10-year period.
The Administration expressed the view that the SBIR program is
working and achieving its congressionally assigned objectives.
For further information on this hearing, refer to Committee
publication 106-16.
7.4.5 electro-magnetic pulse (emp)--should this be a
problem of national concern to businesses small and
large as well as government?
Background
On June 1, 1999, the Subcommittee on Government Programs
and Oversight held a field hearing at the Applied Physics
Laboratory, Johns Hopkins University that examined the
potential damage to our economy and national security of
Electro-Magnetic pulse (EMP). To date, the EMP threat has been
ignored by government and was not well publicized. Concerns
about the proliferation of nuclear weapons, and the possession
of such weapons by rogue nations, make the discussion of
problems associated with EMP and the magnitude of those
problems a most timely topic. Previously, few Congressional
hearings had been devoted to this topic.
Summary
The hearing was comprised of one panel that included:
Ronald J. Wilsie, Program Manager, Strategic Systems, Applied
Physics laboratory, Johns Hopkins University; Gordon K. Soper,
Group Vice President, Defense Group, Inc.; Lowell Wood, Senior
Staff Member, Lawrence Livermore National Laboratory; Col.
Richard W. Skinner, Principal Director, Command, Control,
Communications, Intelligence, Surveillance, Reconnaissance, and
Space, Office of the Assistant Secretary, Department of
Defense. The EMP threat resulting from an nuclear weapon
explosion was characterized as unique because: (1) its peak
field amplitude and rise rate are high and, (2) the area
covered by an EMP signal can be immense. The U.S. military
systems and infrastructure have been designed and built to
survive and operate effectively in an EMP environment. However,
the effects upon the civilian infrastructure could be
extensive.
The view was expressed that EMP was not being considered in
the ongoing infrastructure protection program and that, except
for hearings such as this one, the federal government was
devoting relatively little attention to this problem. It was
stated that EMP-generated high-altitude nuclear explosions have
riveted the attention of the military nuclear technical
community for thirty-five years, ever since the first
comparatively modest one very unexpectedly and abruptly turned
off the light over an extensive area in the mid-Pacific. It was
reported that the President's Commission on Critical
Infrastructure Protection found that an EMP event would
potentially devastate portions of the national infrastructure.
Robert D. Walpole, National Intelligence Officer for
Strategic and Nuclear programs, Central Intelligence Agency,
submitted a statement for the record which may be found in the
appendix of the hearing. A videotape of the hearing may be
obtained from the Library of Congress.
For further information on this hearing, refer to Committee
publication 106-17.
7.4.6 the burden that needless regulations and lack of
common sense in enforcement of regulations place
upon small businesses
Background
This hearing provided a national forum for small businesses
to express their views on whether present federal regulatory
programs are stimulating or deterring job growth and economic
development. The hearing also explored the issue of whether
Federal and State regulatory agencies in the enforcement of
regulations have lost sight of the need to be fair and to use
common sense. Is there a double standard applied in the
enforcement of regulations when the violation is caused by
government itself?
In the course of the hearing, the Subcommittee viewed and
took testimony concerning the lower step on the East front of
the Capitol which is in violation of code requirements. The
reason for pointing out the code violation with respect to the
Capitol step was not to have the step replaced at great
expense, but for the purpose of bringing reason and fairness to
the regulatory process.
Summary
The hearing consisted of one panel that included: Jay
Gullo, Mayor, New Windsor, Maryland; Michael T. Rose, National
Association of Home Builders; Kenneth Boehm, Chairman, National
Legal and Policy Center; and Alan Hantman, AIA, Architect of
the Capitol. One witness testified that he was required a
substantial expense to rip out and rebuild a wheelchair ramp
that was found to be a fraction of an inch too short. Another
witness was of the view that burdensome regulations and
excessive enforcement policies were barriers to affordable
housing. It was brought to the attention of the Subcommittee
that private enforcement groups were receiving federal funding
from HUD to bring actions against builders.
Instances were cited of regulatory abuses by federal
agencies that violated the principles of fairness and common
sense as well as the clear intent of Congress. The loss of the
apple industry and employment from apple growing in Western
Maryland was attributed to the arbitrary activities on the part
of the Legal Services Corporation. A view of the Capitol
revealed that the bottom step on the East front was two inches
higher than the other steps. There was testimony that no
specific building codes have been applied to congressional
construction projects in light of the effort to comply with
national standards. However, the Congressional Accountability
Act requires Congress to comply with OSHA.
For further information on this hearing, refer to Committee
publication 106-24.
7.4.7 are federal programs providing effective procurement
assistance to small businesses?
Background
The hearing was held on August 18, 1999 at the Urban
League, 4510 South Michigan Avenue, Chicago, Illinois. The
hearing examined the performance of the Small Business
Administration (SBA) in administering procurement and other
programs designed to assist persons to start a small business
and to grow an established small business. A number of
important issues were raised. Have SBA's and similar programs
succeeded in achieving their stated objectives? Have these
programs benefited the communities in which the small
businesses are located and in which the employees live? Have
private sector efforts proved more successful than government
sponsored programs?
The hearing also provided oversight of SBA's
entrepreneurial programs and a forum for recommendations
offered for improving SBA's performance in aiding small
businesses that want to enter the Federal procurement arena and
to take advantage of new domestic and export business
opportunities.
Summary
The hearing was comprised of two panels, the first of which
included: Ms. Ruth Sandoval, Deputy Director, Minority Business
Development Agency, Department of Commerce; Mr. Ted Cowen,
Director, Region V, SCORE; Ms. Hedy Ratner, Co-President,
Women's Business Development Center; and, Mr. Richard Hayes,
Associate Deputy Administrator, SBA. The second panel was
comprised of the following: Ms. Charlotte Harrison-Smith,
President and CEO, Millennium Data Systems; Mr. Obie Wordlaw,
CEO, Jero Medical Equipment & Supplies; Mr. Paul Lumpkin,
President, Plexus Scientific Corporation; and, Mr. Sam Johnson,
President, Best Metal Fabricators.
There was a discussion of the Phoenix System operated by
the Department of Commerce which provides minority businesses
an opportunity to register on the system and to automatically
receive contract opportunities. SCORE stated that the Chicago
chapter held two procurement workshops a year and that these
workshops included SBA, the city of Chicago the State of
Illinois, and GSA. The problems presented by contract bundling
in excluding small businesses in Federal procurements was
pointed out. The SBA discussed the PRO-NET Internet System
which allows Federal buyers to identify small businesses, but
does not, as does the Phoenix System, match buyers and sellers
or provide small businesses with procurement opportunities.
The view was expressed that the 8(a) contracting program
did not provide procurement opportunities for many businesses
that were certified 8(a) small businesses. The 8(a) and HUBzone
programs were not reaching a large percentage of those small
businesses eligible for these programs, and as a result these
programs were not providing the procurement opportunities and
businesses development intended. It was pointed out that the
area in which the hearing was held contained visual proof that
many of the programs intended to bring about positive changes
had failed to achieve their intended results.
For further information on this hearing, refer to Committee
publication 106-29.
7.4.8 going public--the end of the rainbow for small
business?
Background
The purpose of the hearing was to provide information to
small businesses about ``going public''--the process of selling
the securities of a corporation on a stock exchange. For many
small businesses, or a company that has begun as a small
business, ``going public'' can be the end of the rainbow--the
culmination of years of hard work and substantial monetary
reward for the business owners. A number of factors need to be
considered by businesses considering whether to ``go public.''
The hearing provided some of the answers to those questions. In
addition, both public and private assistance is available to
businesses considering ``going public'' and the hearing
provided a public forum for identifying sources of information
and assistance.
Summary
The hearing consisted of one panel which included Brian
Lane, Director, Division of Corporate Finance, U.S. Securities
and Exchange Commission (SEC); John T. Wall, President, and
Chief Operating Officer, NASDAQ-AMEX International, National
Association of Securities Dealers, Inc.; Michael T. Moe, CFA,
Director of Global Growth and Stock Research, Merrill Lynch;
Keith D. Ellison, Interim Director, Wharton Small Business
Development Center; and, Mark Dankberg, President and Chief
Executive Officer, VIASAT, Inc. It was noted that the SEC has a
regulation called the Seed Capital Rule, Rule 504, that permits
entrepreneurs to raise up to one million dollars free from
Federal registration. However, state registration requirements
would have to be satisfied and Federal anti-fraud rules would
apply.
The strength of U.S. financial markets was testified to by
the fact that since 1989, Nasdaq alone has brought over 4,200
new companies into the public markets and has raised over $154
billion in capital to support new businesses. In addition, U.S.
equity capital markets experienced dramatic growth during the
1990s and have gone from $3.1 trillion in 1990 to nearly $13
trillion in 1999. Technology has been the leader of the new
economy. Since 1990, there have been over 5,000 initial public
offerings (IPOs) that have raised $329 billion. One witness
testified that the characteristics that investors are looking
for in an IPO is ``high earnings growth'' and ``performance
against expectations.'' Another witness testified that ``a
successful IPO means different things to different people.''
Lastly, it was testified ``that public and private resources
available to entrepreneurs, combined with hard work,
dedication, and at least a little bit of luck, offers real
opportunities to live the American dream, starting a business
and taking it public.''
For further information on this hearing, refer to Committee
publication 106-35.
7.4.9 the sba computerized loan monitoring system--a
progress report
Background
On February 29, 2000, a hearing was held to determine the
progress the Small Business Administration (SBA) was making in
developing its 7(a) loan monitoring system. Section 233 of the
Small Business Reauthorization Act of 1997 (Public Law 105-135)
requires that SBA complete eight mandated planning actions
before the agency obligates or expends any funds for the
development and implementation of the proposed new, automated
7(a) loan monitoring system. The proposed new automated loan
monitoring system for the 7(a) loan program was the subject of
a prior hearing of this Subcommittee held on July 16, 1998.
This hearing focused on the progress SBA has made, since
the July 16, 1998 hearing, in performing and completing the
planning needed to serve as the basis for funding the
development and implementation of the 7(a) loan program
computerized loan monitoring system including the eight
planning steps required by the Act. The hearing addressed the
issues: (1) whether any planning was completed as of the
hearing, (2) the management decisions made as a result of that
planning, (3) the planning remaining to be completed, and (4)
the management decisions remaining to be made.
Summary
The hearing was comprised of one panel, which included: Mr.
Fred P. Hochberg, Deputy Administrator, SBA; Mr. Anthony R.
Wilkinson, President and CEO, The National Association of
Guaranteed Lenders, Inc.; and, Mr. Joel C. Willemssen,
Director, Civil Agencies Information Systems, Accounting and
Information Management Division, U.S. General Accounting
Agency. The need for a loan monitoring system was underscored
by the fact that the SBA loan portfolio grew over a ten year
period from $17.5 billion in 1990 to over $50 billion. However,
SBA's computer systems have not fully evolved with the growth
in the loan portfolio and are unable to meet the challenges and
the way SBA's loan products are now structured.
In 1999, 75% of all 7(a) loans were processed under the PLP
program or other limited review procedures, evidencing the
important change in SBA's role from that of a loan approver to
that of a lender regulator. SBA need timely and complete
information to fulfill its new role, while not creating a
reporting burden on either the borrower or the lender.
Nevertheless, SBA had not completed any of the eight planning
actions mandated by the Reauthorization Act, but had made
substantial progress. There was agreement among the witnesses
that planning actions needed to be taken to meet the statutory
requirements.
For further information on this hearing, refer to Committee
publication 106-44.
7.4.10 public law 106-50, ``veterans entrepreneurship and
small business development act of 1999''
Background
On March 14, 2000, the Subcommittee on Government Programs
and Oversight of the Committee on Small Business and the
Subcommittee on Benefits of the Committee on Veterans Affairs
held a joint hearing. The joint hearing examined the
implementation of Public Law 106-50, the ``Veterans
Entrepreneurship and Small Business Development Act of 1999,''
signed into law by the President on August 17, 1999. The law
requires that specific technical, financial and procurement
assistance be provided to veterans. The Department of Veterans
Affairs, the Small Business Administration (SBA), the
Association of Small Business Development Centers and the
Service Corps of Retired Executives (SCORE) are the principal
entities mandated by law to provide this assistance. The
hearing provided oversight as to the progress that had been
made in implementing the provisions of the law.
SBA is required by statute to provide special consideration
to veterans. In the past, many veterans have expressed concern
that SBA and other Federal agencies were ignoring the financial
and entrepreneurial needs of veterans who own small businesses.
The hearing provided a forum for evaluating present performance
and for recommendations for improving the future delivery of
entrepreneurial and other services to veterans.
Summary
The hearing was comprised of two panels, the first of which
included: Emile Naschinski, Assistant Director, The American
Legion; Rick Weidman, Director, Government Relations, Vietnam
Veterans of America; Geoffrey Hopkins, Member, Paralyzed
Veterans of America; Anthony Baskerville, Deputy National
Services Director, Disabled Veterans of America; and, Joseph
Forney Founder/Coordinator, Disabled Veteran Business
Enterprise Business Network. There was consensus that little
had been done at SBA to assist veterans and that veterans were
not a high priority at SBA. Continual monitoring of SBA was
necessary to see that P.L. 106-50 was followed and implemented.
Funding was necessary to get the National Veterans Business
Development Corporation up and running. The ability of veterans
to become small business owners is important to the nation as a
whole since small businesses are at the core of the American
dream. It was underscored that the unemployment rate for
paralyzed veterans was 80% and that small business ownership
was vital. Business programs for veterans is not new since the
first GI bill passed by Congress in 1944, the Department of
Veterans Affairs, then the Veterans Administration, was given
the authority to guarantee loans made to eligible veterans.
The second panel consisted of: Woodrow C. McCutchen,
Executive Director, Association of Small Business Development
Centers; W. Kenneth Yancey, Executive Director, National SCORE
Office; Darryl Dennis, Associate Deputy Administrator, SBA. It
was noted that veterans should be given an opportunity to fully
participate in the free enterprise system that their service
has preserved. Military training and discipline give veterans
important tools for starting small businesses. SCORE provides
no-cost assistance to separating military personnel through
Transition Assistance Programs on more than 15 military bases
across the country. Implementation of the law was delayed and a
great deal of progress needed to me made to implement the
provisions of the law.
For further information on this hearing, refer to Committee
publication 106-46.
7.4.11 the present and future of e-commerce for small
businesses in the private sector and with federal
government agencies
Background
This hearing, held April 11, 2000, discussed the present
progress and future potential of e-commerce and its impact on
doing business in the private and public sectors. The dollar
volume of business being conducted by means of e-commerce is
increasing at an unprecedented rate. An article in the Wall
Street Journal of Wednesday, April 5th, quoted a source that
estimated the volume of online sales as increasing by 53
percent this year to $23 billion, after doubling the previous
year to $15 billion. The same article quoted a trade
association that estimated that there were 30,000 or more web
sites on the Internet selling merchandise to consumers.
The passage of the Federal Acquisition Streamlining Act of
1994 provided an impetus to Federal agencies to use the
Internet as the preferred method of procurement. There are few,
if any, major Federal agencies that do not acquire a large
dollar volume of goods and services through e-commerce
transactions. The hearing examined both the commercial and
Federal use of e-commerce technologies such as the creation of
electronic shopping malls, in the transition to largely
paperless transactions. The hearing also looked at the training
and acquisition assistance that small businesses need or are
receiving to compete in e-commerce both in the commercial and
Federal sectors. Lastly, the hearing provided some answers to
the questions: Where are we going in e-commerce? What are the
implications of doing business in the private and public
sectors?
Summary
The hearing was comprised of two panels. The first panel
was made up of The Honorable Deidre A. Lee, Administrator for
Federal Procurement Policy, Office of Management and Budget.
The second panel was comprised of the following: Mr. Max E.
Summers, State Director, Small Business Development Centers;
Ms. Claudia Knott, Director, Joint Electronic Program Office,
Department of Defense (DOD), Mr. Major Clark, Assistant
Advocate, Office of Advocacy, Small Business Administration;
and Mr. Tony Bansal, President and CEO, Digital Commerce
Corporation. The Federal government is working on creating a
single, government-wide point of entry for electronic commerce
and for accessing business opportunities. The Administration's
strategic plan calls for reliance wherever possible, and cost-
effectiveness on commercial products and services.
It was reported that a majority of small businesses have
not learned to use the Internet effectively to sell goods and
services by means of e-commerce. Small business will need a
support structure to help them keep pace with the technological
changes in business practices. DOD has created a program office
for accelerating the application of electronic business
practices and associated information technologies. DOD has
created a central processing registry which permits small
businesses to list their products and services. The information
is available to all 800 contracting offices in DOD.
The view was expressed that Congress passed the Federal
Streamlining Act in response to the criticism that the Federal
procurement system was inefficient, too bureaucratic, and too
costly. PRO-NET was created by the Office of Advocacy to
provide information on-line about small businesses' services
and products as well as data concerning their ability to
perform. If the laws passed by Congress require that Federal
agencies use the e-commerce for procurement, it follows that
vendors in the private sector be prepared to sell
electronically. However, it is necessary to provide assistance
to small businesses to compete in the new arena of electronic
procurement.
For more information on this hearing, refer to Committee
publication 106-50.
7.4.12 effectiveness of government programs
Background
This hearing, held April 25, 2000, was one in a series of
hearings begun in April 1997 to determine the impact of Federal
and community-based programs on Main Street America and various
segments of the small business community. One of the goals of
these hearings was to learn how small business owners have
succeeded and continue to grow--whether by reliance solely upon
the private sector or with assistance by Federal, State and
local programs.
Another purpose of these hearings was to obtain views as to
the causes of the present economic prosperity and to ask, and
hopefully provide answers, to a number of related questions.
How can the present economic conditions be sustained? Has the
prosperity touched every segment of the small business
community or are there segments of the small business community
that need assistance? If so, what kind of assistance? Small
businesses have been leading the economy both in innovation and
job creation. What is needed to maintain this record well into
the 21st century?
Summary
The hearing was comprised of two panels. The first panel
included: Honorable Jere Glover, Chief Counsel, Office of
Advocacy; Mr. John C. Howard, Executive Director, Economic
Development Commission, Washington County; Mr. Richard Story,
Executive Director, Economic Development Authority, Howard
County; and, Mr. John T. Lyburn, Jr., Director, Department of
Economic Development, Carroll County. It was pointed out that
if we expect to sustain the present economic prosperity there
is a need to continue to create new small businesses and to
provide an economic climate in which new ideas can come to
fruition. The Congress and the Federal government should
nurture and visibly support procurement opportunities for small
businesses.
In order to continue to fuel the present prosperity small
businesses need to use trained workers and Federal resources to
complement state training programs. A supporting element has
been the Small Business Development Centers that have provided
free business counseling to aspiring entrepreneurs and have
provided advice to established small businesses. A danger was
seen in the competitive disadvantage small, hometown banks and
local enterprises were facing vis-a-vis large regional and
national banks that offered related services, e.g., insurance
and securities.
The second panel was comprised of: Mr. Randall Nixon,
Nixon's Farm; Mr. John Schulze, Vice President, Pizza Hut of
Maryland; Mr. Ken Williams, CEO and Director, Howard County
Chamber of Commerce. Some favorable comments were made about
the Small Business Administration's loan guarantee program.
However, there was dissatisfaction with the expense as well as
the regulatory requirements. There was further dissatisfaction
with the increasing regulatory burden that the Federal
government places on small businesses without consideration of
the monetary consequences. The view was offered that what small
businesses need is access to information, a modern business
registration system, low interest loans, and financial
assistance.
For further information on this hearing, refer to Committee
publication number 106-55.
7.4.13 women in business
Background
On October 8, 1997 and March 25, 1999, the Subcommittee on
Government Programs and Oversight held hearings to showcase
Women's Business Enterprises on a national level and to examine
issues of concern to women entrepreneurs such as the
availability of capital. This hearing, held June 8, 2000, was a
continuing commitment to spotlight the vital nature of women's
business enterprises to the economy of this nation as a whole
and to the communities in which we live. This hearing provided,
as did the previous ones, a forum for learning how the private
sector is succeeding or failing to meet the needs of women in
business and to focus attention on those deficiencies that may
exist.
The hearing, also, provided an opportunity for women
business owners to express their views as to the effectiveness
of federal government programs designed to help small business
owners and those who aspire to go into business for themselves.
Lastly, this hearing provided a vantage point for identifying
problems that women business owners encounter as the result of
over-regulation and burdensome government paperwork.
Summary
The hearing was comprised of a single panel, which
included: Laura Henderson, President and CEO, Prospect
Associates, and member, National Women's Business Counsel;
Suzane Ward Parker, President and CEO, Ward Global Enterprises,
and board member, National Black Chamber of Commerce; Linda
Keenan, Director, Association Marketing, Lucent Technologies;
Terry Neese, President and CEO, Terry Neese Personnel Services,
Inc., and Cofounder, Grassroots Impact, Inc; Diane Wirth,
President, The Solution Works, Inc., and Board secretary,
Women's Business Institute; and, Glen Mayer, Corporate
Supplier, Diversity Coordination, United Parcel Service.
Emphasis was placed on the value of the National Women's
Business Counsel as an effective advisor to Congress and the
President, and as catalyst for making the American dream come
true for women. It was projected that by 2005 women owned
businesses would increase 77 percent and generate close to $4
trillion in revenue. It was pointed out that large businesses
can be successful mentors of women owned small businesses and
that they can be successful working partners.
Two problems facing women owned small businesses was the
death tax which it was advocated should be repealed and the
change in requirements with regard to cash versus accrual
accounting for tax purposes. Access to resources, such as
obtaining a needed license, was cited as an impediment to women
starting and owning their own business. The recent growth in
women owned small businesses indicated a potential for
continued impressive growth in the future.
For further information on this hearing, refer to Committee
publication number 106-62.
7.4.14 the future of small business: what lies ahead
Background
On September 28, 2000, the Subcommittee on Government
Programs and Oversight held a hearing to review those issues of
vital concern to the small business community and main street
America. It is small businesses that are the engine driving the
present economic prosperity by spurring the creation of new
enterprises, by producing new job opportunities, and by being
leaders in technology and innovation. This hearing provided an
opportunity to learn of those issues of most concern and those
that will affect the future of small business in the United
States.
Another purpose of the hearing was to obtain
recommendations about how best to promote and sustain an
enterprise-friendly economy that rewards those who start and
grow small businesses. Suggestions were invited with respect to
legislation to assist small businesses. Also, views were sought
with respect to burdens created by Federal regulations and
paperwork--together with suggestions for improvements.
A number of questions were asked. How can the present
economic conditions be sustained? Has the prosperity touched
every segment of the small business community or are there
segments of the small business community that need assistance?
If so, what kind of assistance? Should the assistance come from
the private or public sectors? How effective are the private
solutions and government programs in addressing these needs? It
was hoped that the hearing would help to answer these and other
questions, e.g.,--What is needed to maintain this record well
into the 21st century?
Summary
The hearing was comprised of a single panel which included:
James Blann, Senior Vice-President, American Express Company;
John Hexter, Chairman, National Small Business United; Woodrow
McCutchen, Executive Director, Association of Small Business
Development Centers; Giovanni Coratolo, Director of the Small
Business Council, U.S. Chamber of Commerce; Ken Yancey,
Executive Director, Service Core of Retired Executives; and,
Anthony Raimondo, Chairman and CEO, Behlen Manufacturing
Company. Small businesses employ about one half the nations
work force and have been the source of a majority of the new
jobs. It was reported that small businesses were having a
difficult time finding a sufficient number of skilled employees
and the lack of such employees was deterring growth. Too often
job-seekers lack basic written and verbal communication skills.
The installment sales tax provision was cited as substantial
barrier to small businesses who wanted to expand through
acquisitions.
The need for a quality work force and for work force
development was underscored as well as the need for small
business owners to solve the succession problem. The present
tax structure inhibits turning over a small business to ones
children. The Nation should have a tax policy that permits
small businesses to reinvest in their own enterprises rather
than the growth of government. The present Federal tax code was
cited as the single most important impediment to continued
economic growth. It was also noted that the expansion of small
businesses is hampered by needless burdensome regulations
promulgated by Federal agencies. The proposed ergonomic
regulation proposed by the Department of Labor was cited as an
example of a regulation that would adversely effect small
businesses. Access to capital still continues to be a problem
for small businesses outside the telecommunications sector.
For further information on this hearing, refer to Committee
publication number 106-71.
7.5 Summaries of the Hearings Held by the Subcommittee on Regulatory
Reform and Paperwork Reduction
7.5.1 the impact of federal regulations on small businesses in the
hudson valley
Background
On September 1, 1999, the Subcommittee on Regulatory Reform
and Paperwork Reduction held a field hearing at the Westchester
County Association, White Plains, NY to consider the problems
of federal regulations and the burdens they impose on small
businesses in the Hudson Valley. Specifically, the hearing was
held to determine the scope of the regulatory impediments to
small business growth in the Hudson Valley and potential
solutions to the problem.
Small businesses are a key element of economic growth in
America. Nevertheless, small businesses with between 20 and 499
employees have regulatory costs averaging about $5,000 per
employee. The regulatory climate is not necessarily conducive
to fostering small business growth.
Summary
The first panel consisted of Mr. Vincent Tamagna, County
Legislator, Putnam County, NY; Mr. Lawrence Dwyer, President,
Westchester County Association; and Mr. Philip Scarano,
Westfair Communications. Mr. Tamagna testified that small
businesses require regional training resources to make small
businesses aware of regulatory requirements and available
assistance programs. Mr. Tamagna then noted that the Hudson
Valley requires high speed Internet access to enhance the
viability of the Valley as a business location. Finally, Mr.
Tamagna noted that the elimination of redundant paperwork and
creating greater flexibility for the Occupational Safety and
Health Administration would be helpful to small businesses. Mr.
Dwyer testified that there was a need to reduce excessive
regulation through the imposition of cost-benefit criteria,
periodic review of all regulations, and reduction in the
regulations imposed by the Occupational Safety and Health
Administration. Mr. Scarano testified about restrictions on
advertising in non-profit publications.
The second panel consisted of Mr. David Feldman, President,
Feldman Dry Cleaning; Mr. Scott Wexler, Executive Director,
Empire State Restaurant and Tavern Association; Dr. Stephen
Pomeroy, President, Schatz Bearing Corp.; and Mr. George
Russel, President and CEO, HQ Global Workplaces. Mr. Feldman
testified that he still faces substantial costs in complying
with regulations promulgated by the Occupational Safety and
Health Administration and the Environmental Protection Agency.
Mr. Wexler testified about the restaurant industry's concern
over reports about dioxin in food. Mr. Wexler also expressed
reservations about potential regulations from the Occupational
Safety and Health Administration concerning ergonomics and
indoor air quality. Dr. Pomeroy testified concerning the
problems associated with potential legal liability of small
businesses who have made de minimis contributions to hazardous
waste sites. Dr. Pomeroy noted that the litigation surrounding
legal liability imposes substantial costs on small businesses
without resulting in a speedier clean up of the hazardous waste
site. Mr. Russell testified about the proposed changes by the
United States Postal Service to the handling of first-class
delivered to commercial mail receiving agencies. Mr. Russell
testified that these regulations would discriminate against
commercial mail receiving agencies to the benefit of the Postal
Service and create substantial costs for many small business
owners that utilize commercial mail receiving agencies.
For further information on this hearing, refer to Committee
publication 106-31.
7.5.2 the united states postal service's regulations
regarding commercial mail receiving agencies
(cmras)
Background
The Subcommittee on Regulatory Reform and Paperwork
Reduction investigated how recent United States Postal Service
(USPS) regulations on commercial mail receiving agencies
(CMRAs) impact small and home-based business private mail box
(PMB) subscribers and CMRA franchisees. Because USPS is a
``quasi-governmental'' agency, the Subcommittee also
investigated whether USPS uses its regulatory powers to reduce
competitors' market advantage in non-monopolistic markets and
how its exemption from the Administrative Procedure Act and
Regulatory Flexibility Act allows it to create regulations
without administrative procedure. Furthermore, because the
regulations reformed the privacy safeguards in the existing
regulations, Members showed concern for boxholders that use
CMRA boxes for safety and privacy.
Summary
The hearing consisted of two panels of witnesses. The first
panel consisted of Mr. Anthony Crawford, Inspector, Mid-
Atlantic Division, United States Postal Service accompanied by
Mr. Mike Spates, Manager, Delivery, United States Postal
Service; Ms. Rachel Heskin, Communications Director, Mail Boxes
Etc.; Ms. Sandi Taylor, Strategic Technologies; and Ms. Juley
Fulcher, Public Policy Director, National Coalition Against
Domestic Violence.
Mr. Crawford and Mr. Spates testified that USPS issued the
final rule to deter mail fraud and identity theft within the
CMRA industry and to improve the safety and security of the
mail. However, USPS admitted it acted without conducting
analyses on the extent of the problem or the effectiveness or
costs of the solution.
Ms. Heskin testified that MBE, the largest CMRA franchise,
although initially opposed to the initial rulemaking, favored
an agreement it negotiated between USPS and several CMRA
franchises.
Ms. Taylor testified on behalf of her home-based business
that because of safety, privacy and service, receives mail at a
Mail Boxes Etc. since 1988. She said the onerous nature of the
regulations would cripple her business. Due to the nature of
her business, her address, phone and fax number are essential
to her operation because a large amount of her business comes
from word of mouth. For instance, when regulators changed her
area code, her revenue declined by 30%. Furthermore, she spends
about $10,000 a year advertising in trade magazines. She also
testified that she has a computer database of over 50,000 names
of people she has worked with over the years and does not have
time to update this database, much less notify every person
about her address change. Most of these people will probably
think she closed her business when they receive their letters,
``Returned as Addressed.''
Ms. Fulcher testified on behalf of the National Coalition
Against Domestic Violence that the regulations jeopardize the
privacy and safety of domestic violence victims. Because CMRAs
protect the identity of their boxholders and USPS, prior to the
regulation, could not divulge private information, people
concerned with safety and privacy use CMRAs for mail receiving.
Furthermore, both victims and shelters use private mail boxes
solely for the confidentiality and safety a CMRA provides.
The second panel consisted of Mr. James Morrison, Senior
Policy Advisor, National Association for the Self Employed
(NASE); Mr. Michael Mansfield, Assistant District Attorney,
Queens, NY, Chief of Economic Crimes Bureau; Mr. Rick Merritt,
Executive Director, Postal Watch Incorporated; Mr. Edward L.
Hudgins, Director of Regulatory Studies, CATO Institute.
Mr. Morrison testified on behalf of the NASE membership
that use CMRAs. He said USPS worked arbitrarily to create
regulations detrimental to home-based businesses. In changing
the rule to include the ``#'' sign instead of just ``PMB,''
USPS's rationale for the rule changed from improving the
security of the mail to eliminating ``misleading'' addresses.
If that is a major concern for USPS, it should clean up all
``misleading'' addresses and no single out an industry
predominantly made up of small businesses. Furthermore, Mr.
Morrison testified that USPSs should subject itself to the
Regulatory Flexibility Act in instances where its rules impact
small business.
Mr. Mansfield endorsed the regulation. His office
investigates the type of fraud and identity theft cases USPS
claimed it hoped to deter. He provided anecdotal evidence of
the types of crimes the regulations hoped to address.
Mr. Merritt testified on behalf of Postal Watch, a
grassroots USPS watchdog. He published a CATO report to address
the costs of compliance with the USPS regulations. He testified
about what compliance with the rule means for the average small
business CMRA or PMB.
Mr. Hudgins previously published a book on the
privatization of USPS. He testified abut USPS's financial need
to expand its operations outside its monopoly on first class
mail. In this instance, USPS used its regulatory power to
influence a competing market.
7.5.3 hearing to examine barriers and solutions to
economic development
Background
On November 22, 1999, the Committee on Small Business
Subcommittee on Regulatory Reform and Paperwork Reduction held
a field hearing in the Paterson Museum, 2 Market Street,
Paterson, New Jersey to examine barriers and solutions to
economic development in northern New Jersey. Held in
Subcommittee Ranking Member Bill Pascrell's Congressional
District, the hearing investigated government programs to
assist the revitalization of areas like Paterson--that
historically were at the nexus of industrialization and
manufacturing during the Industrial Revolution. Witnesses
specifically testified about the Historically Under-Utilized
Business Zone (HUBZone) program and Foreign Trade Zone program.
Summary
The hearing consisted of two panels. Mr. Francisco Marrero,
District Director, New Jersey District Office, U.S. Small
Business Administration; Mr. Dennis Puccinelli, Acting
Executive Secretary, Department of Commerce FTZ Board; Ms.
Deborah Hoffman, Executive Director, Paterson Economic
Development Corporation; Mr. Charles Miller, Associate
Director, Greater Paterson Chamber of Commerce; and Mr. Daniel
Jara, President/CEO, Statewide Hispanic Chamber of New Jersey
testified on the first panel.
Mr. Marrero testified abut the SBA's efforts in New Jersey
to assist the economic development of small businesses. He said
maintaining high quality customer service, improving small
business access to capital through lending programs, increasing
the level of participation in government procurement and
encouraging economic development of socially and economically
disadvantaged businesses are ways the SBA became a recognized
leader in stimulating economic growth and development in New
Jersey.
Mr. Puccinelli testified about the Foreign Trade Zone
program and how it encourages domestic activity by affording
special Customs advantages to offset duty advantages available
in overseas plants.
Ms. Hoffman testified on behalf of the Paterson Economic
Development Corporation, which assists companies to relocate
and expand in the City of Paterson. Because of the city's need
for future employment opportunities, Ms. Hoffman said she
believes the HUBZone and Foreign Trade Zone programs are
catalysts to maintain an aggressive stance in identifying
incentives for business relocation into Paterson.
Mr. Miller testified on behalf of the Greater Paterson
Chamber of Commerce and supported the efforts of the HUBZone
and Foreign Trade Zone programs. Specifically, Mr. Miller said
the Foreign Trade Zone program evens the playing field between
U.S. businesses and foreign competitors, enables companies to
lower costs and raise profits, entices the development and
growth of international trade, and spurs state and local
economic development to create jobs.
Mr. Jara testified on behalf of the New Jersey Hispanic
Chamber of Commerce. He said new changes within the
Administration are opening more borders for trade with Mexico
and Latin America and enabling Latino companies to become
involved in federal procurement opportunities.
The second panel consisted of Mr. Ron Gross, Vision 2020
President; Mr. Philip Russo, Time Zero/PPI Corporation; Mr.
George Waitts, President, Crown Roll Leaf, Inc.; and Ms.
Deborah Dotoli, President, Geneva Metal Products Company.
Mr. Gross testified about how foreign the Foreign Trade
Zone program is a prime economic vehicle to spur the Passaic
County economy by providing jobs and revenue and will afford
occupants with certain federal tax and tariff benefits.
Mr. Russo testified about how his business' competition
against larger government contractors forced it out of the
government procurement market. He said the HUBZone program
would create certain areas that enable his company--that moved
to Paterson 12 years ago--to become more competitive with other
businesses in government contracting.
Mr. Waitts testified on behalf of Crown Roll Leaf Inc., a
company that prospered in Paterson since 1971. He said that
although he realized a global market was forming, instead of
starting a foreign operation, the company decided to stay in
the United States. Because 17\1/2\ percent of his company's $13
million in intentional business goes towards taxes and duty
fees, the playing field is not level. He also said foreign
trade zones would be helpful in maintaining a more level
playing field to allow businesses to grow, expand or jump into
the global market.
For further information on this hearing, refer to Committee
publication 106-72.
7.5.4 osha's proposed ergonomics standard: its impact on
small business
Background
On April 13, 2000, the Subcommittee on Regulatory Reform
and Paperwork Reduction of the Committee on Small Business held
a hearing to address the impact on small business of the
Occupational Safety and Health Administration's (OSHA) proposed
ergonomics standard. The purpose of the hearing was to examine
whether small businesses could understand the proposed standard
and cost-effectively comply, or whether a new proposed standard
was needed that small businesses could efficiently implement.
On November 23, 1999, OSHA published a proposed standard
for reducing ergonomic hazards and concomitant musculo-skeletal
disorders (MSDs) in the workplace. The proposed standard places
employees into three generic categories: (a) employees engaged
in manufacturing; (b) employees involved in manual handling;
and (c) all other employees who are referred to as ``general
industry'' employees. The proposed standard applies to all
three types of workers. However, employers are required to
treat these categories of employees differently with respect to
the implementation of an ergonomics program. Employers who have
employees engaged in manufacturing or manual handling jobs must
install a management leadership program to prevent MSDs,
educate employees on the hazards of MSDs, and establish a
reporting system for employees to utilize when they get a MSD.
Employers with employees in general industry jobs need to
institute these three elements only if an employee incurs a
covered MSD. For all types of jobs, a covered MSD is one
incurred because of bio-mechanical stresses that represent a
core element of the employee's job. Once an employee incurs a
covered MSD, the employer is required to assess the causes of
the condition, fix the job (and all similarly situated jobs) so
the condition does not recur, and provide worker restriction
protection (by either transferring the employee to a different
job or allow the employee to rest at home with 90% pay) until
the employee's condition permits returning to the job or six
months which ever comes first. In lieu of this complex program,
employers may conduct ``quick fixes'' which entail the
provision of engineering or other controls that immediately
eliminate the hazard giving rise to the MSD.
Summary
The first panel consisted of the Honorable Charles N.
Jeffress, the Assistant Secretary of Labor in charge of OSHA.
Mr. Jeffress testified that the proposal was necessary to
reduce and eliminate the debilitating effects of MSDs. Mr.
Jeffress also noted that the proposed standard could be easily
implemented by small business without expending substantial
resources or hiring outside consultants and experts. Mr.
Jeffress expected that OSHA would undertake a substantial small
business outreach effort to assist them in complying with the
standard.
The second panel consisted of small business
representatives: Laura O'Shaughnessy, Corporate Secretary for
Revere Copper Products on behalf of the National Association of
Manufacturers; Mr. Charles Kremp, III, President/CEO of Kremp
Florists on behalf of the Society of American Florists; Mr.
Edward Saxon, President Conco Systems, Inc. on behalf of
National Small Business United; Mr. Leonard Russ, Bayberry Care
Center Administrator on behalf of the American Health Care
Association; and Mr. Brian Landon, Owner of Landon's Car Wash &
Laundry on behalf of the National Federation of Independent
Business.
Ms. O'Shaughnessy testified that Revere Copper Products
already has an excellent safety program protecting its workers
and that ergonomics is an infant industry in which consultants
may provide poor advice to unsophisticated small business
owners. In addition, she stated that some of the proposed fixes
that might be required would be unduly costly given the capital
expense of modifying very large manufacturing equipment.
Mr. Kremp testified that the proposed standard is not easy
to understand, that it is hard to find replacement workers for
skilled artisans, and that the implementation of engineering
controls may be difficult or impossible in those instances in
which the business owner is a lessee and does not have legal
control over the workspace.
Mr. Russ testified about the difficulty of installing
mechanical lifts for long-term care facilities, the apparent
conflict between the OSHA proposed standard and Health Care
Financing Administration regulations concerning patient care,
and the inability of his business to pass the costs of
compliance on to customers given that rates for patient care
are set by the government.
Mr. Saxon testified that small business owners do not have
the legal resources necessary to contest what might be numerous
invalid claims under the proposed standard given his experience
with worker compensation claims.
Mr. Landon reiterated the concerns of Mr. Kremp and Ms.
O`Shaughnessy concerning the difficulty in understanding the
proposed standard and noted that OSHA could tell him whether
his business was manufacturing and thus immediately covered by
the proposed standard or general industry in which case he
would delay implementation until a covered MSD occurs.
The third panels consisted of: Jennifer Woodbury, Esq.,
McDermott, Will & Emery, Ms. Jacqueline Nowell, Director of the
Occupational Safety and Health Office, United Food and
Commercial Workers Int'l Union; Frank Mirer, Ph.D., Director,
Health and Safety Dept., UAW Int'l Union; Lawrence P. Halprin,
Esq., Keller & Heckman; and John P. Cheffer, CSP, PE, on behalf
of the American Society of Safety Engineers.
Ms. Woodbury noted that although written in plain English
the rule left much unclear including such standards as what
constitutes a ``material reduction'' in MSDs.
Ms. Nowell testified that the proposed standard was
absolutely necessary because of the debilitating effects on
employees and that the standard, as had been done by businesses
working closely with UFCW, could be cost-effectively
implemented.
Dr. Mirer echoed those sentiments and noted that UAW has
negotiated a substantial number of agreements with small
businesses that allocate employees for ergonomic hazard
analysis and control.
Mr. Halprin noted that the proposed rule was based on poor
science, did not provide an adequate mechanism for solving
problems associated with MSDs, was overly broad, and he stated
that OSHA should first try additional pilot programs like those
utilized in the meatpacking industry.
Mr. Cheffer concurred with sentiments of Ms. Woodbury
concerning lack of clarity, noted that most small businesses
would have to hire expensive consultants to implement the
proposed standard, and that a middle ground standard providing
more specific guidance would be a better approach.
For further information on this hearing, refer to Committee
publication 106-51.
7.5.5 the impact of fuel prices on small business,
valhalla, ny
Background
The Subcommittee on Regulatory Reform and Paperwork
Reduction met in Valhalla, NY to discuss the impact of the
price hike on fuel on small businesses. U.S. production of oil
has dropped by nearly 20 percent since the last oil crisis in
the country. During this time, the country's reliance on
foreign oil has increased from 37 percent to nearly 57 percent
today. This has had a profound effect on districts in New York.
Summary
The witnesses for the hearing included: Robert W. Gee,
Assistant Secretary for Fossil Energy, U.S. Department of
Energy; Ms. Debra Martinez, Chairwoman and Executive Director,
New York State Consumer Protection Board; Mr. William Flynn,
Vice President, New York State Energy Research & Development
Authority; Mr. Todd Spencer, Owner-Operator, Independent
Drivers Association; Mr. Stanley Morse, Chapter President,
American Society of Travel Agents; and Mr. Joe Fanelli, Owner,
Joe's Body Shop.
Mr. Gee testified that he was aware of the difficulties
encountered by small businesses as a result of the rising costs
of fuel. He stated that the goal of the U.S. Department of
Energy was to lessen the market's volatility. Part of this
solution includes diversifying the international sources of oil
supply. He also stated that the Administration has made more
SBA loans available for heating oil distributors. Mr. Gee
additionally noted that he supports President Clinton's call to
establish a regional reserve in the northeast. Mr. Gee noted
that Congress should extend the Energy Policy and Conservation
Act to ensure organic authority for strategic petroleum
reserves. For long term aid, Mr. Gee highlighted the important
role of technology in the quest for oil alternatives.
Ms. Martinez spoke of the many hardships endured by small
businesses in New York State. She stated that Governor George
E. Pataki had worked to protect consumers and small businesses
in New York by securing the release of essential funding for
the Home Energy Assistance Program (HEAP). This will assist the
state's low income families.
Mr. Flynn stated that New York relies on heating oil more
than any other state in the nation for meeting its heating
needs. New York uses 20 percent of the total U.S. distillate
demand, and the state is the largest consumer of heating oil
and kerosene in the nation. 43 percent of New York State's
households use oil for space heating, which is over 2.9 million
households. He restated the productive efforts of Governor
Pataki, although he believes more still needs to be done.
Mr. Spencer spoke on behalf of small business truckers. He
stated that the rising cost of diesel fuel and the inability of
small business truckers to pass on those costs to customers
causes financial distress. He testified that most truckers are
having difficulty to simply break even. He warned that if
something wasn't done soon, the country will be in crisis.
Mr. Morse testified on behalf of both airline consumers and
travel agents. He spoke about how both travel agents and
consumers are negatively affected by the rising prices of fuel
due to the airlines themselves. Because airlines do not post
their fuel surcharges with their fares, consumers feel as
though they have been `tricked' by their travel agents when
their total price changes at the end of the transaction. Thus,
both the airline consumers and the travel agents are affected
by this rise in fuel prices.
Mr. Fanelli testified about his small gas station. He
stated that the rise in fuel prices is especially difficult on
small gas station owners. This is because it is easier for the
big gas stations to keep their prices down for a longer period
of time. Mr. Fanelli said that because he only has two gas
pumps at his station, he needs to keep making a profit, so he
has to raise the price.
For further information on this hearing, refer to Committee
publication 106-52.
7.5.6 the impact of fuel prices on small business,
castleton, ny
Background
The Subcommittee on Regulatory Reform and Paperwork
Reduction met in Castleton, NY to discuss the impact of the
price hike on fuel on small businesses. The price hike of fuel
has resulted in significant problems for small business,
especially in New York State.
Summary
The witnesses for the hearing included: Mr. Robert W. Gee,
Assistant Secretary for Fossil Energy, U.S. Department of
Energy; Mr. Tim Hulbert, President & CEO, Rensselaer County
Chamber of Commerce; and Mr. Dan O'Connell, Center Director,
Small Business Administration on the first panel. The second
panel consisted of: Ms. Dantaida DeGuzman, Owner, Pioneer
Fuels, Inc; Mr. Marshal Stevens, Assistant Manager, Warren
County Airport; Mr. Tom LeGrand, Owner, LeGrand Construction;
Mr. Jim Czub, National Corn Growers Association; and Mr. James
Buhrmaster, Empire State Petroleum Association, Inc.
Mr. Gee began the testimony portion of the hearing. Mr. Gee
stated that he realizes the Department does not focus on the
impacts of fuel supply problems on specific business sectors,
small businesses in particular. He outlined the major actions
the Administration was taking in hopes to alleviate the
situation for small businesses. For the immediate future, Mr.
Gee stated that the diversification of the international
sources of oil supply will greatly impact the prices of oil.
Also, Mr. Gee noted that the Administration will focus on
greater diplomacy efforts in order to attain their goals. Mr.
Gee stated that the country must focus on domestic policy in
regards to oil, as will. He testified that the United States
should focus on helping low-income persons through further
funding of the Low Income Home Energy Assistance Program and
through SBA loans. Mr. Gee explained that authorizing a
regional heating oil reserve in the Northeast as well as
extending the Energy Policy and Conservation Act would help the
problem.
Mr. Hulbert described how every single business is affected
by a price hike in fuel. Because every business receives goods
and services through road travel, increases in prices
eventually affect every part of running and maintaining a
business.
Mr. O'Connell explained the January cold snap in the
northeast, and the additional problems it caused on the fuel
prices. When there is a cold snap, the natural gas companies
requires big businesses and federal buildings to convert to a
different type of fuel source or they will suffer a penalty.
The demand caused by these customers ultimately increased the
price of oil by 50 to 60 cents per gallon. Mr. O'Connell sated
that the cold snap also caused the river to freeze, which
lengthened the travel time for oil barges, thus increasing the
cost of transportation. Mr. O'Connell stated that the main way
to combat this is through the strategic oil reserves.
The first witness from the second panel of the hearing was
Ms. DeGuzman. She spoke of her own small fuel business in New
York, and how the prices of fuel were affecting her so badly,
that it was not even a profitable business for herself and her
husband. She has another job with the State, and she and her
husband are able to live off of that. Unfortunately, Mr.
DeGuzman has not felt in control of her business this past
year, because of the fuel price hike.
Mr. Stevens testified on behalf of the aviation industry.
He stated that because every single aspect of aviation relies
on fuel, it is impossible for the aviation industry not to be
affected by rising fuel prices. He also stated that there are
industries and businesses that one does not always think about
in concordance with the aviation industry, but that are equally
affected by rising fuel prices. For instances, the fixed based
operators of the aviation industry, are most affected. These
are the businesses which service the airplanes, provide the air
charter and the flight instruction services to the customers.
Mr. LeGrand testified that his budget for fuel throughout a
year was five percent of the gross cost. However, that was
going to increase to between nine and 10 percent this year,
amounting to a monetary difference of between 12 and $18,000.
He stated that this cost increase is not something he can pass
on to his customers, so, as a small business, he must absorb
that loss.
Mr. Czub testified that the fuel price increase will raise
his costs an additional $12,000 this year. He stated that his
main concern is the prices of next year, and he urged the
government to help agriculture secure new and untraditional
markets. Additionally, Mr. Czub explained that incentives to
produce value-added products will help farmers transition and
gain more of the commodity value.
Mr. Buhrmaster explained that there were three main reasons
to the oil trouble in New York during the winter. These
included: the low inventories as a result of the OPEC nations;
the `backwardization' of the industry, where prices in future
months were less than in the current month; and the
interruptible situation, as explained in Mr. O'Connell's
testimony.
For further information on this hearing, refer to Committee
publication 106-53.
7.5.7 the quality of regulatory analysis
Background
On June 8, 2000, the Subcommittee on Regulatory Reform and
Paperwork Reduction held a hearing to address the quality of
regulatory analyses prepared by federal agencies in compliance
with various federal statutes and executive orders. The purpose
of the hearing was to assess the content of and reason for the
inadequacies and what steps, if any, Congress needed to take to
improve agency analyses.
Congress enacted the Administrative Procedure Act in 1946
with the expectation that agencies would undertake rational
rulemaking. Rational rulemaking presumes that the agency would
ascertain the scope of the problem to be addressed, design
potential solutions to the problem, seek public comment on
those solutions, and craft a final rule to address relevant
statutory criteria. By its nature, rational rulemaking requires
the use of various analytical techniques, such as cost-benefit
or cost-effective analyses, to assess various regulatory
alternatives. Subsequent to the enactment of the Administrative
Procedure Act, Congress imposed additional analytical
requirements including examination of the environmental and
small business impacts. These statutory analytical mandates
have been supplemented from time to time by Presidential
executive orders.
Despite these efforts, Congress has not been satisfied with
the regulatory analyses generated by federal agencies in recent
years. A number of reforms have been suggested to improve the
regulatory output of federal agencies, including the
establishment of an office within the General Accounting
Office, to provide Congress with an unbiased assessment of the
regulatory analyses currently required by statute and executive
order.
Summary
The panelists were Mr. Robert W. Hahn, Director, AEI-
Brookings Joint Center on Regulatory Studies; Mr. Robert P.
Murphy, General Counsel, General Accounting Office; Mr. David
S. Addington, Senior Vice President, American Trucking
Association; Mr. Sal Ricciardi, President, Purity Wholesale
Grocers, Inc. on behalf of the Pharmaceutical Distributors
Association; and Ms. Kathleen Wallman, President and CEO of
Wallman Strategic Consulting, LLC.
Mr. Hahn first testified that compliance with regulations
has an approximately $200 billion impact on the American
economy. Mr. Hahn then noted that this drag on the economy can
be alleviated by improving the quality of regulations.
Improving the quality of regulations requires an improvement in
the quality of regulatory analyses. And Mr. Hahn noted that
federal agency regulatory analyses, particularly benefit-cost
analyses, were simply inadequate to support a rational
decision-making process. Mr. Hahn finally noted that regulatory
impact analyses do not summarize their results in any standard
systematic method.
Mr. Murphy testified that the General Accounting Office has
examined a number of analyses developed in support of various
agency rulemakings. The General Accounting Office found that
many of the analyses did not incorporate the best practices set
forth by the Office of Management and Budget for conducting
regulatory impact analyses. Mr. Murphy also noted that agency
explanations of statutory exemptions from analytical
requirements, such as certification pursuant to the Regulatory
Flexibility Act or good cause to forgo notice and comment under
the Administrative Procedure Act. Mr. Murphy suggested
additional Congressional oversight might correct some of these
problems but also believed that additional guidance on unclear
statutory requirements is necessary.
Mr. Addington testified about the failure of the Department
of Transportation to perform satisfactory risk assessments and
cost-benefit analyses. Mr. Addington also noted that the
Department failed to comply with the statutory requirements set
forth in the Regulatory Flexibility Act. Mr. Addington
concluded that the Department would have issued a substantially
different rule had it complied with these analytical
requirements.
Mr. Ricciardi testified that the Food and Drug
Administration had failed to properly assess the impact of a
regulatory change on the wholesale pharmaceutical industry. Mr.
Ricciardi noted that the Food and Drug Administration
underestimated the economic impact of the proposal for purposes
of complying with a Presidential executive order. Mr. Ricciardi
also testified that the Food and Drug Administration did not
comply with the provisions of the Regulatory Flexibility Act by
failing to comprehend the adverse impact of the proposal on the
four thousand small businesses that perform wholesale
pharmaceutical sales.
Ms. Wallman first noted that the Federal Communications
Commission, unlike other agencies, is not subject to analytical
requirements imposed by the President. Ms. Wallman then
testified that the Federal Communications Commission's
implementation of the Regulatory Flexibility Act, especially
with respect to small rural telephone companies, could be
improved. In particular, Ms. Wallman testified that the Federal
Communications Commission might require more resources strictly
dedicated to compliance with the Regulatory Flexibility Act.
Finally, Ms. Wallman suggested that Federal Communications
Commission establish a standing advisory committee of small
rural telephone companies upon which the Commission staff could
rely for advice on the impact of a proposed regulation.
For further information on this hearing, refer to Committee
publication 106-63.
7.5.8 the national ombudsman's 2000 report to congress and
the regulatory fairness program
Background
On June 15, 2000, the Subcommittee on Regulatory Reform and
Paperwork Reduction held a hearing to review the United States
Small Business Administration's Small Business and Agriculture
Regulatory Enforcement Ombudsman report for the Year 2000. The
purpose of the hearing was to allow the Ombudsman to highlight
activities undertaken in the past year and make recommendations
to strengthen the office and the program.
In 1996, Congress enacted the Small Business Regulatory
Enforcement Fairness Act (``SBREFA''). Among other things,
SBREFA established a Small Business and Agriculture Regulatory
Enforcement Ombudsman within the Small Business Administration.
Ten regional fairness boards, consisting of small business
owners, also were created by SBREFA. The Ombudsman is charged
with gathering and recording comments from small businesses in
order to form an evaluation of each agency's enforcement
performance. The regional fairness boards provide small
business owners a convenient forum through which they can make
known their problems with federal agency enforcement
activities. The Ombudsman is required to compile these comments
into an annual report and provide an annual evaluation of the
customer satisfaction rating of different agencies and their
regional or local offices.
Summary
The first panel consisted of Ms. Gail McDonald, the
National Ombudsman for Small Business and Regulatory
Enforcement, United States Small Business Administration.
Accompanying Ms. McDonald were Hatem H. El-Gabri, Senior
Counsel to the Ombudsman and John T. Greiner, Director of
Regulatory Review. Ms. McDonald noted that the Year 2000 report
reveals that the tide is beginning to turn, i.e., federal
regulatory agencies are becoming more sensitive to the needs of
small business owners. Ms. McDonald, however, noted that more
work must be done including encouraging increased small
business feedback; promoting of greater agency accountability;
developing more small business-agency communication; and
fostering creative partnerships between small business and
Federal regulatory agencies.
The second panel consisted of Ann Parker Maust, President,
Research Dimensions; Giovanni Coratolo, Director of Small
Business Policy, United States Chamber of Commerce; John
Hexter, President, Hexter & Associates, Inc., on behalf of
National Small Business United; and Scott Lara, Director,
Government Affairs, Home Care Association of America. Ms. Maust
testified that a strong national infrastructure was needed to
ensure the success of the Ombudsman and Fairness Boards. Ms.
Maust noted that this not only entailed the efforts of the
Ombudsman but also the cooperation and assistance of other
Small Business Administration personnel including the
Administrator. Mr. Coratolo testified that the Ombudsman
program has resulted only in marginal changes to federal agency
compliance activities. In order to improve the effectiveness of
the program, Mr. Coratolo testified that the ombudsman function
should be transferred to the Office of Advocacy and both
offices should receive a budgetary increase. Mr. Hexter
believes that Congress must increase the resources of the
Ombudsman and grant the Ombudsman greater authority to respond
to enforcement complaints filed by small businesses. Mr. Lara
testified that the fairness boards offered home health care
providers the opportunity to voice their concerns about the
enforcement actions of the Health Care Financing
Administration. In particular, Mr. Lara noted that home health
care providers complained about the Outcome and Assessment
Information Set and the 50-50 payment method.
For further information on this hearing, refer to Committee
publication 106-65.
7.6 Summaries of the Hearings Held by the Subcommittee on Rural
Enterprises, Business Opportunites, and Special Small Business
Problems
7.6.1 h.r. 957, the farm and ranch risk management act
Background
America's farmers are overwhelmingly small businesses. Of
the more than 2 million farms in this country, 94 percent are
`small' and 98 percent are `family' farms. Recently, farmers
nationwide have been forced to endure severe financial
hardships caused by flooding, drought, and low commodity prices
in world markets. These small farmers are suffering an economic
crisis and are struggling to make ends meet. Compounding this
serious problem, farmers experience a higher degree of price
and income fluctuations than any other sector of our economy.
They need the opportunity and the tools to manage the unique
and often severe risks associated with farming and ranching
more efficiently.
Introduced by Representatives Kenny Hulshof (R-MO) and
Karen Thurman (D-FL), the bipartisan bill H.R. 957, entitled
the Farm and Ranch Risk Management Act, would allow eligible
farmers to contribute part of their taxable income into tax-
deferred FARRM Accounts. Contributions may remain in the
account tax-free for a maximum of five years and are taxable as
ordinary income upon withdrawal. The FARRM Accounts would
encourage farmers and ranchers to save up to 20 percent of
their income annually during good years to help supplement
their income during bad years.
Summary
The Honorable Kenny Hulshof (R-MO), United States House of
Representatives; Wayne Nelson, President, Communicating for
Agriculture; Ed Bergamo, Farmer, Vineland, New Jersey; Marlene
Brown, Director, Women's Committee, Iowa Farm Bureau
Federation, West Des Moines, Iowa; and Stephen Appel,
President, Washington State Farm Bureau, Olympia, Washington;
testified at the hearing.
Representative Hulshof, raised on a family farm, stressed
the importance of agriculture as the cornerstone of our economy
and of the world's food supply. Due to weather conditions,
commodity price swings, and changes in markets abroad, farmers
and the rural communities that depend on these farmers, face
adverse economic consequences that FARRM Accounts would
improve. For example, in the three years period to the current
downturn, farmers and ranchers in the state of Missouri were
profitable. Had FARRM Accounts been inplace in 1994, those
feeling the economic pinch of the farm crisis today could have
access in 1999 to the equivalent of 60 percent of a prifitable
year's income.
Similarly, the farm witnesses expressed unanimous support
for H.R. 957 as an effective and promising risk management tool
for farmers and ranchers. Intense commodity fluctuations,
market fluctuations, distribution and supply costs, and
increased volatility, plague today's farmers, including dairy,
fruit, and vegetable farmers.
For further information on this hearing, refer to Committee
publication 106-9.
7.6.2 what would repealing the death tax mean for small
business?
Background
On May 13, 1999, a joint hearing was held between the
Subcommittee on Tax, Finance, and Exports, and the Subcommittee
on Rural Enterprises, Business Opportunities, and Special Small
Business Problems of the impact of the estate or ``death'' tax
farms, ranches, and small businesses. The purpose of the
hearing was to learn of the devastation impact of the death tax
on the longevity of small, family-owned businesses.
Summary
The Hearing consisted of two panels. The first panel
allowed the co-authors of the main death tax repeal bill of the
106th Congress (the Death Tax Elimination Act--H.R. 8) to
testify about the rationale for their legislation. The
Subcommittees then heard from an academic expert and several
diverse small business witnesses about both the theoretical and
the real-life impact of the death tax on small business owners.
The first panel consisted of two witnesses--Representatives
Jennifer Dunn (R-WA) and John Tanner (D-TN), both who serve on
the House Ways and Means Committee. On February 25, 1999, both
introduced the Death Tax Elimination Act (H.R. 8), which would
gradually eliminate the death tax by five percent each year
over the period of the next 10 years, eventually bringing it
down to zero by 2009. By the time of the Subcommittee hearing,
H.R. 8 had gained 180 bipartisan cosponsors. Eventually, over a
majority of the House of Representatives, including two-thirds
of the Members of the Small Business Committee, formally
endorsed the legislation.
The second panel included six witnesses beginning with Dr.
Aldona Robbins, an academic expert from the Institute for
Policy Innovation (IPI). To put the hearing in perspective, Dr.
Robbins summarized for the subcommittee a study she recently
completed for IPI on how the estate tax negatively affects the
economy.
The next set of witnesses told real-life stories that
verified the statics and the analyses of Dr. Robbins. Jay
Platt, a rancher from Saint Johns, Arizona, and Roger Ruske, a
nursey owner from Millville, New Jersey, testified about the
impact of the death tax on agriculture.
Kevin O Sdhea, Chief Financial Officer of Shamrock Electric
in Elk Grove, Illinois and Arlene Kaplan, owner and operator of
three small home health companies in Long Island, added a non-
agricultural small business perspective. Both spoke of the
personal dimension of the death tax issue on their families.
Finally, Stephen Breitstone brought a unique perspective to
the hearing as an estate planning attorney from Mineola, Long
Island, New York. Mr. Breitsone believes that even if the death
tax is repealed, he is resourceful enough to find other lines
of work. He argued that the public policy priority should be
enhancing small business development and growth.
Thus, all the witnesses concluded that the estate or
``death'' tax places a huge burden on any small business owner
wishing to pass down the company to his or her children.
Several testified about the emotional pain the death tax
inflicts on families, causing them to make heart-wrenching
decisions about the future. Complying with the death tax takes
away from investments that could be used to expand a small
business or hire more employees. In addition, the death tax
poses a potential harmful impact on the environment and Rural
communities if larger farms and ranches are broken up into
smaller ``ranchettes'' in order for their heirs to pay their
obligations to the government. Finally, even estate planning
lawyers do not relish their job. Most would rather engage in
other legal pursuits because of the heavy toll the death tax
places on many local small business owners and their families.
It was the opinion of all the witnesses that, at a minimum,
the death tax exemption should be dramatically raised. Most
agreed that the death tax should be repealed, preferably
immediately or as part of a gradual phase-out.
For further information about this hearing, refer to
Committee publication 106-12.
7.6.3 the future of round ii empowerment zones
Background
The Subcommittee on Rural Enterprises, Business
Opportunities, and Special Small Business Problems met to
discuss the future of Round II Empowerment Zones. In 1993, the
Empowerment Zone/Empowerment Communities (EZ/EC) program was
enacted, providing Federal grants to economically distressed
rural and urban communities over a 10-year period. In what is
now referred to as Round I of the program, 104 EZ/ECs were
created and each urban and each rural zone received $100
million and $40 million respectively in flexible Social
Services Block Grant funds, over a ten-year period.
Additionally, qualifying EZ employers were entitled to a 20
percent tax credit on the first $15,000 of wages paid to
certain qualified Zone employees.
The Taxpayer Relief Act of 1997 authorized a second round
of EZ designations, known as Round II EZs. Designated in 1999,
Round II Zones are unable to benefit from the wage tax credit
like the Round I EZs. Additionally many EZs have not received
the funding promised to them and thus find it difficult to
carry out their economic plans for community revitalization.
Summary
Panel one consisted of the Honorable Mary Bono (R-CA) and
the Honorable Mike Capuano (D-MA).
Ms. Bono testified about the problems experienced by the
Desert Communities, a designated rural EZ located in Mecca, CA,
due to the government's unfulfilled funding obligation. She
highlighted H.R. 4463, legislation she introduced to provide
title 20 funding to the Round II EZs and to extend to them the
hiring tax credit.
Mr. Capuano noted that Boston, like many other Round II
EZs, has only received one third of the funds promised. He
testified that implementation of the EZs' economic renewal
plans depends largely on the funds that were promised to them.
He pointed out that it seems unfair to move on to Round III EZs
when the funding for Round II is incomplete.
Panel II consisted of Maria Matthews, Deputy Administrator
for Rural Development, Office of Community Development, U.S.
Department of Agriculture; Gerard Valazquez, Executive
Director, Cumberland County Empowerment Zone; Reverend James
Dunkins, Vice Chairman, Cumberland County Empowerment Zone.
[Reverend James Dunkins, Vice Chairman, Cumberland County
Empowerment Zone.]
Ms. Matthews testified that despite the fact that Round II
EZs have not received full funding, the rural EZs have managed
to successfully leverage the funds they did get and combine
them with other resources in order to have an impact on the
community.
Mr. Valezquez testified that the lack of funding for EZs
leads to deficits in the education, training, and
transportation of residents and thus slows the employment
process. He added that the progress of his EZ, once
flourishing, has slowed, as people are disappointed that the
resources promised to them have not been delivered.
Rev. Dunkins testified that his community's empowerment
zone works to provide stability in an area plagued by high
crime, low employment, and welfare dependency. He said that EZs
are weakened by the lack of funding because residents become
discouraged and less supportive of programs.
For further information about this hearing, refer to
Committee publication 106-61.
7.6.4 hearing on the effects of the roadless policy on
rural small business and rural communities
Background
On July 11, 2000, the Subcommittee on Rural Enterprises,
Business Opportunities and Special Small Business Problems held
a hearing to address the impact on small businesses and small
rural communities of the Clinton Administration's roadless
policy for the National Forests. The purpose of the hearing was
to determine whether the United States Forest Service
adequately considered the economic impact that its policies
will have on those businesses and communities that rely on the
National Forests for their economic well-being.
Since their inception in 1897, the National Forests have
been managed for a variety of uses including wilderness
protection, timber production, mineral extraction, and outdoor
recreation. In 1960, Congress codified this multiple use
principle in the Multiple Use Sustained Yield Act. The forests
are managed for these multiple uses according to forest
management plans developed by the United States Forest Service
pursuant to the National Forest Management Act.
The United States Forest Service has proposed a number of
modifications to its policies for managing the forests that,
when implemented in each of the forest management plans, will
reduce the amount of acres that would be eligible for the
construction of roads. By doing so, the Forest Service reduces
the ability to use these roadless areas for any thing other
than wilderness protection despite the mandate from Congress to
manage the National Forests for multiple uses.
Summary
The first panel consisted of the Honorable Charles Rawls,
the General Counsel of the United States Department of
Agriculture. He was accompanied by James R. Furnish, the Deputy
Chief of the United States Forest Service. Mr. Rawls testified
that the Service was in compliance with the Regulatory
Flexibility Act because the Service had prepared a regulatory
flexibility analysis in which it concluded that the proposal
would not have a significant economic impact on a substantial
number of small entities since no small entities are directly
regulated by the proposals. Mr. Rawls went on to testify that
the Service was open to comments on the impact of the proposal
on small entities.
The second panel consisted of Ms. Adena Cook on behalf of
the Blue Ribbon Coalition; Laura Skaer, Esq., Executive
Director of the Northwest Mining Association; and Mr. Frank
Gladics, President of the Independent Forest Products
Association. Ms. Cook testified that the proposal would inhibit
both on-road and off-road recreational vehicle use in the
forests. In turn, this would directly affect the numerous small
entities, such as campgrounds, motels, restaurants, and dealers
that rely on vehicular recreation in the national forests. Ms.
Skaer testified that the proposal would dramatically reduce the
ability of thousands of small businesses to extract hardrock
minerals from the forests. Furthermore, it would limit the
ability of these businesses to find new minerals in the
forests. Mr. Gladics testified that the National Forests are
critical to supply of timber for small businesses. The
proposals would dramatically reduce the amount of timber
harvested and could lead to the shutdown of many small mills in
rural communities throughout the Intermountain west. All three
concurred that the proposal would have a dramatic and adverse
impact on small entities, especially small businesses.
The third panel consisted of Ms. Cheryl Larson on behalf of
the L.T. Logging; Mr. Stephen Steed, Owner of Utah Forest
Products; Mr. Bruce Vincent on behalf of Communities for a
Great Northwest; Dr. Carl Fiedler, Associate Professor of
Silviculture and Forest Ecology at the University of Montana;
and Dr. Charles Keegan, Director of the Forest Industry and
Manufacturing Research at the University of Montana.
Ms. Larson testified concerning the reduction in economic
value that will be derived from the forests and how that will
hurt companies like L.T. Logging, which will be forced to
reduce employment. Ms. Larson than noted that these reductions
hurt the ability of small governments, such as those in Eureka,
to finance improvements to the school systems. Mr. Steed
testified that his company relies on the access to nearby
National Forests for his lumber. The inability to obtain lumber
from the National Forests will hinder his ability to provide
good paying jobs in remote rural areas such as Escalante. Mr.
Vincent testified how the town of Libby was working with its
business community to develop a ski resort in order to rely
less forestry and mining. However, Mr. Vincent noted that the
community's effort was stymied by the development of the
roadless policy and potential subsequent implementation in
forest management plans. Mr. Vincent summed up his testimony by
noting that the town leaders in Libby were trying to do exactly
what the government wanted--develop a less intrusive means of
extracting the economic benefits from the National Forests. Dr.
Fiedler testified about the current state of the health of the
National Forests in Montana and noted that the increase in the
roadless areas could make it more difficult to manage the
forests properly. Dr. Keegan noted that the proposal will have
a significant economic impact on a wide variety of businesses
and communities.
For further information on this hearing, please see
committee publication 106-67.
7.7 Summaries of Hearings Held by the Subcommittee on Tax, Finance,
and Exports
7.7.1 what has opic done for small business lately?
Background
On May 18, 1999, the Subcommittee on Tax, Finance, and
Exports held a hearing examining the impact of the Overseas
Private Investment Corporation (OPIC) on small business. OPIC
provides political risk insurance, in addition to project
finance, for U.S. investments overseas in developing nations
and emerging economies. OPIC needed to be re-authorized by
September 30, 1999. Thus, the hearing provided an opportunity
to review OPIC's programs for small business and encourage
support for the Export Enhancement Act of 1999 (HR 1993), which
would reauthorize OPIC for another four years.
Summary
The hearing consisted of one panel of six witnesses,
including George Munoz, President and Chief Executive Officer
of OPIC; four small businesses that directly used OPIC
programs; and one small business supplier that indirectly
benefited from OPIC programs.
Mr. Munoz outlined the history and performance of OPIC. He
than explained what OPIC plans to do to encourage more smell
businesses to use OPIC's programs. Mr. Munoz announced that
OPIC declared 1999 as the ``Year of Small Business.'' This
program included 12 initiatives to promote small business
utilization of OPIC, including a special small business phone
hotline and web page link; a streamlined application process;
and a reduction in the standard loan size from $2 million to
$250,000.
The next witness was Jane Dauffenbach, President of
Aquarius Systems, which manufacturers aquatic weed harvesters,
located in North Prairie, Wisconsin. She testified how foreign
governments constantly try to undermine her small company's
export prospects, even to the point of competing against free
donations of similar equipment. With an OPIC insurance
guarantee, she was able to win export opportunities in Africa
and Asia.
Vikram ``Raj'' Rajadhuaksah, Chairman of DLZ of Columbus,
Ohio testified about his experience with OPIC in receiving a
loan for various small hydroelectric energy projects in India.
While none of these projects would have happened without OPIC,
he encouraged the Subcommittee to press for further reforms in
OPIC to help make it more user-friendly to small business
exporters.
William Silverman of the First Republic Corporation of New
York, which owns a shellfish company that is an international
distributor of shrimp, spoke about the environmental export
opportunities to Ecuadorian shrimp farms that were created
through OPIC programs. The endeavor produced a solution to a
pollution problem (Taura Syndrome) affecting aquaculture around
the world.
Peter Bowe, President of Ellicott International of
Baltimore, Maryland, which manufacturers dredging equipment,
testified about how OPIC intervention was able to help his
company solve a problem affecting an investment in Egypt. In
Mr. Bowe's opinion, no private sector insurer could have
accomplished the same result.
Finally, Bill Herbert, Sales Manager of Johnson March
Systems of Warminster, Pennsylvania, which manufacturers custom
engineered products for electric power and petrochemical
plants, presented a small business supplier perspective.
Because their main customer, the Fuller Corporation, was able
to win export opportunities because of OPIC and the Export-
Import Bank, sales and employment grew at their company despite
a significant downturn in the U.S. market.
In conclusion, the hearing determined that OIC helps small
business, both directly and indirectly. There is still room for
improvement, but the hearing reaffirmed the need to retain OPIC
as one tool in our government's trade arsenal.
For further information about this hearing, refer to
Committee publication 106-13.
7.7.2 do unilateral economic trade sanctions unfairly
penalize small business?
Background
On June 24, 1999, the Subcommittee on Tax, Finance, and
Exports held a hearing to learn whether unilateral economic
trade sanctions imposed for foreign policy reasons bear a
disproportionate negative impact on small business exporters.
Most economic studies conclude that economic sanctions pose
some cost on the U.S. economy. The purpose of this hearing was
to determine if small businesses are unfairly penalized--not
intentionally but by practical effect--by unilateral economic
trade sanctions and to educate Members about the Enhancement of
Trade, Security, and Human Rights through Sanctions Reform Act
(H.R. 1244).
Summary
The hearing included two panels--first, a panel of Members
of Congress and second, a panel of private sector experts on
the topic of sanctions.
The main sponsors of H.R. 1244 were invited to testify
before the Subcommittee Unfortunately, at the last minute, the
main Democrat author of the bill, Representative Cal Dooley,
had a change of plans. His written statement, however, is part
of the record. Representative Phil Crane--the Chairman of the
Trade Subcommittee of the Ways and Means Committee, and the
other Republican author of H.R. 1244--spoke before the
committee. Both Members agreed that H.R. 1244 was needed to
bring about responsible reform to the sanctions decision making
process so that the U.S. government could weigh in advance the
cost of possible sanctions to our economy against the
probability of success of the sanctions. Chairman Crane also
brought to the Subcommittee's attention a similar hearing held
before his panel where Peter Bowe, president of Ellicott
Machine Corporation, a small dredging company in Baltimore,
Maryland, testified how his firm lost $10 million in sales over
the last few years because of various sanctions imposed on five
countries.
The second panel began with an academic perspective
presented by Professor Gary Clyde Hufbauer with the Institute
for International Economics (IIE). He presented the conclusions
of his study on the economic and foreign policy impact of
sanctions. He found that sanctions have been declining in
effectiveness over the past three decades and imposes a larger
cost to the economy--about $15 to $19 billion per year--than
originally thought. Dr. Hufbauer found that small businesses
are hit particularly hard by sanctions. Sanctions hurt large
firms and cost them money, but they can shift production or
make up the losses in other areas. For small firms, which may
be doing business with one or two products in a handful of
countries, sanctions could be their death knell.
The next two witnesses provided case studies about the
negative impact of sanctions on small business exporters.
First, Steen Ledger, president of ROTEC Industries, located in
Elmhurst, Illinois, testified about what happened to his 100-
employee, family-run business when the Export-Import Bank of
the United States (Ex-Im) declined to support their efforts to
win contracts associated with the Three Gorges Dam project in
China. The Clinton Administration sanctioned China for vague
environmental reasons associated with this project.
ROTEC hoped to supply $130 million worth of concrete
placing equipment to China. Because of Ex-Im's decision, they
were only able to sell $31 million of their product, $13
million of which had to be subcontracted to South Korea. In
addition, prior to Ex-Im's negative decision, ROTEC was the
only manufacturer of this specialized equipment. Because of
this sanction, a Japanese-French consortium copies ROTEC's
concepts on paper and is now a new, vigorous competitor
worldwide. thus, not only did Ex-Im's decision lose $112
million in immediate export sales for ROTEC but it also
jeopardized their long-term viability by creating another
foreign competitor. And, construction at the Three Gorges Dam
site is proceeding according to schedule, using products and
services from all over the world except the United States.
Second, Varghese George, president of the Westex Group in
Washington, DC, testified that sanctions cost his company,
which was responsible for over $80 million in exports over the
last 16 years, about $25 million in sales over the past few
years. Mr. George felt mislead by the U.S. government, which
promised to help him win export deals in emerging markets like
India, only to have the rug pulled from underneath him when
sanctions were imposed.
In conclusion, the hearing found that small business
exporters bear a disproportionate cost of the impact of
unilateral economic trade sanctions. At the same time, these
sanctions have been less and less successful over the years in
changing the behavior of the offending foreign government.
thus, all the hearing participants encouraged support for the
enhancement of Trade, Security, and Human Rights through
Sanctions reform Act (H.R. 1244) to allow more input from the
business community so that decision makers in both the
Executive and Legislative Branches can make better foreign
economic policy.
For further information about this hearing, refer to
Committee publication 106-22.
7.7.3 measuring improvements in the u.s. export assistance
center network
Background
On September 9, 1999, the Subcommittee held a hearing
examining the role of U.S. Export Assistance Centers (USEACs)
in helping small business exporters find trade opportunities
overseas. USEACs were created in 1994 in response to a
Congressional mandate to bring greater cohesion to the delivery
of export promotion services among the 19 federal agencies that
have some jurisdiction in this area. In 1996, the Subcommittee
held its first oversight hearing on this topic and discovered
that while there was a vast improvement in the delivery of
export promotion services, there was still a need for further
internal reforms (Hearing Report No. 104-90). The purpose of
this second oversight hearing was to determine if the USEACs
followed through on its promises to adopt the reforms suggested
by the Subcommittee in 1996 and see if there are areas in need
of further reform.
Summary
The hearing was comprised of one panel of four government
witnesses including Benjamin Nelson of the General Accounting
Office (GAO); Johnnie Frazier, Inspector General (IG) of the
Department of Commerce; Awilda Marquez, Director-General of the
U.S. & Foreign Commercial Service (US&FCS); Joseph Sachs, of
the Small Business Administration (SBA) and Director of the
USEAC in Long Beach, California.
Benjamin Nelson testified that the USEACs have made
remarkable improvements since 1996, particularly in the area of
coordination of the activities of the three agencies (US&FCS,
the Export-Import Bank of the United States (Ex-Im), and SBA)
that are part of the USEAC network. However, the GAO identified
one area for improvement--helping non-export ready small
businesses become exporters. Mr. Nelson commended the SBA's
Export-Trade Assistance Partnership (E-TAP) program as one
solution to educate and assist more small businesses about
exporting.
Johnnie Frazier provided the Subcommittee with an informal
``report card'' to grade the effectiveness of USEACs. On
balance, Mr. Frazier gave them a solid ``B'' because USEACs are
continuing to demonstrate their ability and potential to better
meet the needs of U.S. exporters. While there are still areas
in need of improvement, U.S. exporters are being better served
through the USEAC program than through the previously existing
programs.
Director-General Awilda Marquez described for the
Subcommittee all of the many reforms the US&FCS undertook to
further improve the delivery of export promotion services to
small businesses. As evidence of their success, she cited
internal statistics showing that in addition to almost doubling
the number of their clients since 1997, going from 44,000 to
81,000, the dollar value of the exports helped by USEAC action
more than quadrupled, going from $1 billion to $4.5 billion.
Finally, Joseph Sachs of the SBA detailed for the
Subcommittee the E-TAP program. This program is designed to
serve previously ignored small business owners who know little
or nothing about exporting. E-TAP is a trade educational
program that operates in almost half of the 19 USEACs.
In conclusion, the hearing demonstrated the effectiveness
of good legislative oversight. USEACs are now better able to
serve small business exporters than they were in 1996 because
of these reviews. The recommendations of the GAO and IG audits
were also incorporated into the Export Enhancement Act of 1999
(H.R. 1993), which reauthorized the programs of the
International Trade Administration (ITA), including the USEAC
network.
For further information about this hearing, refer to
Committee publication 106-33.
7.7.4 making the work opportunity tax credit a success for
small business
Background
On May 4, 2000, the Subcommittee on Tax, Finance, and
Exports held a hearing on the subject of the Work Opportunity
Tax Credit (WOTC). The WOTC offers employers a tax credit for
hiring hard-to-place employees, mostly former welfare
recipients. The purpose of this hearing was to examine why more
small businesses do not take advantage of this tax credit and
to explore various solutions to help make this tax credit user-
friendly for small business.
Summary
The hearing was comprised of two panels. The first panel
allowed the main cosponsors of legislation to make the WOTC a
permanent tax credit--Representatives Jerry Weller (R-IL) and
Charles Rangel (D-NY)--to discuss the need and rationale for
this bill. On June 9, 1999, Representatives Rangel, Weller, and
Amo Houghton introduced the Work Opportunity Tax Credit Reform
and Improvement Act (H.R. 2101), which would make the WOTC
permanent. By the time of the Subcommittee hearing, H.R. 2101
had gained 37 bipartisan cosponsors. Unfortunately, due to
other pressing legislative matters, Representative Rangel was
unable to personally testify before the Subcommittee but he
submitted his remarks for the record.
The second panel was comprised of four witnesses beginning
with Roger Littlejohn, who is the coordinator for the WOTC
program in the State of Tennessee. He provided a unique
perspective of what he does as a state official to lower the
fear factor among small business owners about participating in
the WOTC program. Mr. Littlejohn also called for making the
WOTC permanent because periodic breaks in legislative authority
creates enormous paperwork backlogs for states.
Rodney Carroll, as Chief Operating Officer for the Welfare
to Work Partnership, spoke about his role as a motivator to
encourage more small businesses to participate in the WOTC and
the difficulties he encounters by having the WOTC program lapse
every few years.
Ron English, owner of 10 Burger King restaurants in
Abilene, Texas and Fred Kramer, of the Marriott hotel chain,
gave an on-the-ground perspective of how the WOTC actually
works in practice. They also called for passage of H.R. 2101
because periodic disruptions in the WOTC program disadvantages
former welfare recipients they would like to hire.
It was the opinion of all the witnesses that the WOTC
program should become permanent. While in the question and
answer period there was some discussion about some of the
specifics of H.R. 2101 (most particularly, there was concern
expressed about extending this tax credit to employer
contributions to Social Security--the FICA tax--of non-
profits), the overall consensus of the hearing was to encourage
greater use of the WOTC by small businesses and in support of
the goals and aims of HR 2101.
For further information about this hearing, refer to
Committee publication 106-57.
7.7.5 trade with china helps small business exporters work
Background
On May 16, 2000, the Subcommittee on Tax, Finance, and
Exports held a hearing to determine whether or not trade with
China, and, more specifically, the recently negotiated U.S.-
China World Trade Organization (WTO) Access Agreement, benefits
small business exporters. The purpose of the hearing was to
demonstrate the value of granting China Permanent Normal Trade
Relations (PNTR) for small business exporters.
Summary
The hearing was comprised of two panels. On the first panel
was the Chairman of the Trade Subcommittee of the House Ways
and Means Committee, Representative Phil Crane of Illinois, and
the Administrator of the Small Business Administration (SBA),
Aida Alvarez, to talk about the broad outline of the benefits
of the U.S.-China WTO Agreement for small business exporters.
At the time of the hearing, the finalized House version of the
PNTR legislation had not been introduced yet (H.R. 4444) but
the general framework of the bill was open for discussion.
The second panel was comprised of five small business
exporters who have experience in doing business with customers
in China. Sharon DeDoncker of Aqua-Aerobic Systems in Rockford,
Illinois (a manufacturer of wastewater treatment equipment with
135 employees) was the first to testify. She said that passage
of PNTR for China would increase her company's sales to China
by 20 percent per year.
James Olson of Olson Technologies in Allentown,
Pennsylvania (a manufacturer of large valves to water treatment
plants with 47 employees represented by the United Steelworkers
of America) believes that PNTR with China would increase
production at Olson Technologies between 25 percent to 150
percent over the next 20 to 25 years, which would mean new
hires of union workers in Allentown.
Jeffrey Gabbour of Prestige Enterprise International in
Cincinnati, Ohio (the export arm of Robbins, Inc., which
manufactures quality residential/commercial hardwood floors,
with 14 employees) said even though exports to China makes up
less than one percent of their overall business, this agreement
wipes away many trade restrictions, which will help them win
more sales opportunities in China.
Keith Parker of Summit Environmental Corporation in
Longview, Texas (an environmental services company specializing
in fire extinguisher equipment with eight employees) has tried
but failed to export to China. PNTR for China would be good for
his small business because the agreement ensures better
protection of their patented goods.
Finally, Robert ``Bob'' Phelps, owner-operator of Phelps
Farms in Rockton, Illinois (a 2,300-acre family farm which
raises corn, soybeans, wheat, and cattle) provided an
agricultural perspective. While he does not directly export,
the vast majority of his grain and oilseed products enter the
international marketplace. Mr. Phelps said that if PNTR for
China can generate a modest five cent increase in the price of
a bushel of corn and a 10 cent increase in the price of a
bushel of soybeans, it would pay for one year of his daughter's
college education.
It was the opinion of all the witnesses that the U.S.-China
WTO Accession Agreement was good for small business exporters
and that Members of Congress should support PNTR for China
(H.R. 4444).
For further information about this hearing, refer to
Committee publication 106-58.
7.7.6 the impact of banning snowmobiles inside national
parks on small business
Background
On July 13, 2000, the Subcommittee on Tax, Finance, and
Exports held a hearing to examine the impact on small business
of a Department of Interior proposal to ban snowmobiles inside
most of our national parks. The purpose of the hearing was to
demonstrate the negative impact of this new policy on small
business and on the tax base of local communities surrounding
national parks, which depend on winter tourism.
Summary
The hearing was comprised of two panels. The first
witnesses were three bipartisan Members of Congress--
Representatives Bart Stupak (D-MI), Collin Peterson (D-MN), and
Senator Craig Thomas (R-WY). Representative Stupak spoke of the
need to resolve this issue with the input of snowmobilers on
the local level with each individual park superintendent. Rep.
Peterson focused his remarks of the negative impact this ban
would have on businesses through- out his rural Minnesota
district, whose economy has improved in recent years thanks, in
part, to increased snowmobile manufacturing. Finally, Senator
Thomas testified as to the devastating impact this snowmobile
ban would have on the ``gateway'' communities surrounding
national parks, of which Yellowstone is the most important for
his home state of Wyoming.
The second panel consisted of an advocate for the national
parks, a local economic development expert, and three small
business witnesses. Kevin Collins of the National Parks
Conservation Association led off with a vigorous defense of the
effort to significantly reduce snowmobiling in most national
parks. Mr. Collins stated that the protection of the national
parks should be the top priority because he believes
snowmobiles are extraordinarily polluting and noisy machines.
Second, he believes the alleged negative impact of this new
policy on small businesses is outlandishly exaggerated. He
cited a petition signed by 150 businesses and residents in West
Yellowstone, Montana in support of phasing-out snowmobiles in
Yellowstone National Park. Mr. Collins also cited a recent
economic study concluding that a snowmobile ban would only
cause $5 million negative impact on West Yellowstone, which, in
his view, was inconsequential. In the opinion of Mr. Collings,
banning snowmobiling on just 700 miles of road nationwide (out
of approximately 130,000 miles) will not create winter ghost
towns around the country.
Dr. James Abbott of Vermillion, South Dakota presented a
broader rural economic development perspective to the
Subcommittee. While Vermillion is not near a major national
park, tourism is the second most important industry in South
Dakota. Many people traveling to snowmobile in other national
parks stop in South Dakota on their way to their final
destination, spending an average of $281 per day (as opposed to
summer travelers who spend $144 per day). In addition,
Vermillion is home to a snowmobile manufacturing facility owned
by Polaris, employing 153 workers (including 55 students from
the University of South Dakota) and contributing $32 million
directly to the local economy ($52 million indirectly). This
represents 10 percent of the commercial tax base of Vermillion.
Dr. Abbott is concerned about this snowmobile ban because
generally factories in rural areas are the first to be phased
out in any economic downturn.
The final three witnesses were small business owners who
would be directly impacted by a snowmobile ban. Clyde Seely,
who owns or is the principal of seven small businesses
employing 220 people in West Yellowstone, Montana, testified
that a ban on snowmobiles in Yellowstone would result in a loss
of winter tourism revenue for his businesses of between 60 to
70 percent. He specifically discussed why he believes the
snowcoach alternative promoted by the National Park Service and
Mr. Collins is not a viable alternative to snowmobiles.
Bob Stein, owner of the Alger Falls Motel in Munising,
Michigan, testified how this snowmobile ban, as applied to
Pictured rocks National Lakeshore, would break up his family by
undermining the plans of his daughter and son-in-law to
purchase his motel when he retires. Closing just ten miles of
the Miners Castle trail is enough to eliminate the rational to
visit Picture Rocks in the wintertime, thus leading to a
decline of at least 30 percent of Mr. Stein's winter business.
Finally, John Lyon, owner of J & J Sports in Sycamore,
Illinois spoke of the indirect impact this proposed snowmobile
ban would have on recreational equipment dealers like himself.
Snowmobiles account for one-third of his annual revenue and a
snowmobile ban in national parks would cut directly into the
bottom line of his seven-person store.
In the question and answer period, the other witnesses on
the second panel effectively rebutted the main arguments of Mr.
Collins. First, Mr. Seely pointed out that only seven West
Yellowstone businesses signed the overly vague petition cited
by Mr. Collins. All this petition said was that a healthy park
creates a healthy economy. It was silent on the snowmobile
issue. Most of the rest of the 150 signatories were West
Yellowstone residents, not small business owners, some who
signed twice. He also mentioned that two other surveys
conducted by the West Yellowstone Chamber of Commerce found
that 90 percent of the local respondents favored snowmobiling
in Yellowstone. Second, Mr. Seely cited a more comprehensive
economic impact study recently completed by the State of
Wyoming. This study documented that a snowmobile ban in
national parks would have a $130 to $150 million negative
impact on the five county area surrounding Yellowstone, not the
$5 million figure cited by Mr. Collins. Third, Mr. Seely
discussed the recent advances in snowmobile technology (quieter
and more fuel-efficient four-stroke models that burn gasoline,
instead of oil) that will be in fully in place in this rental
fleet over the next two winters.
In conclusion, the hearing ended on a positive note with
Chairman Manzullo encouraging all interested in this debate to
keep an open mind on this issue. Instead of an outright ban on
snowmobiles in national parks, the Chairman suggested that
further restrictions on their use should be considered in order
to protect the environment and the interests of small business.
For further information about this hearing, refer to
Committee publication 106-68.
7.7.7 helping dry cleaners adopt safer technologies:
without losing your shirt!
Background
On July 20, 2000, the Subcommittee on Tax, Finance, and
Exports held a hearing on the subject Dry cleaning Tax Credit
Act (HR 1303), which would provide a 20 percent tax credit for
those businesses that purchase environmentally-friendly dry
cleaning equipment. The purpose of this hearing was to see if
this legislation would benefit the 35,000 small dry cleaning
establishments and the small manufacturers of environmentally-
friendly dry cleaning equipment.
Summary
The hearing was comprised of two panels. The first panel
allowed the two main bipartisan authors of the legislation,
Representatives Dave Camp (R-MI) and David Price (D-NC) to
discuss the need and rationale for H.R. 1303. Both spoke of the
need to address the concerns of small dry cleaners who wish to
transition to this new technology but because of the cost they
cannot afford these new machines. The purpose of H.R. 1303 is
to partially offset the high cost of liquid carbon dioxide
machines, which range in price from $100,000 to $150,000 (most
dry cleaners own machines use the hazardous percloroethelyne
(perc) chemical, which cost between $50,000 to $70,000).
The Members also made it quite clear that H.R. 1303 does
not favor one non-hazardous dry cleaning technology over
another--H.R. 1303 applies to both liquid carbon dioxide and
wet cleaning machines, which cost about $35,000 (however, wet
cleaning machines cannot be used in every dry cleaning
application). H.R. 1303 could also apply to even newer
technologies such as silicone and Rinex (a glycol-ether
compound) provided that overwhelming scientific evidence shows
these technologies are non-toxic and environmentally-friendly.
The second panel consisted of five private sector
witnesses. The first two witnesses were small dry cleaners. Tom
Ustanik of Lansing, Illinois, provided a unique perspective of
one of the very few dry cleaners in the nation who purchased
and uses a liquid carbon dioxide machine in his business. He
testified about the many benefits of this machine, both in
terms of the environment and in creating better working
conditions for his employees. Mr. Ustanik supports H.R. 1303
because he would like to speed up the purchase of more liquid
carbon dioxide machines to replace the remaining dry cleaning
machines in his shop that use perc.
Gordon Shaw of La Jolla, California testified as a former
dry cleaner who got out of the business because of the
Superfund liability fears of perc. He would like to get back
into the business but will only do so if his facilities use
liquid carbon dioxide machines. H.R. 1303 would provide a great
incentive for him to start anew and purchase this new dry
cleaning technology.
The next witness represented the national association of
dry cleaners, wet cleaners, and launderers. William Fisher,
Chief Executive Officer of the International Fabricare
Institute (IFI) of Silver Spring, Maryland, believes that H.R.
1303 is more likely to damage than help existing small dry
cleaners. He argued that liquid carbon dioxide machines are too
expensive, up to $800,000 when combined with a franchise
agreement, which he contends is well-beyond the reach of most
dry cleaners in his association. He suggested changes to the
bill to make it more acceptable to the members of his
association.
The fourth witness was Dr. Joseph DeSimone of Raleigh,
North Carolina who successfully commercialized liquid carbon
dioxide technology for dry cleaning applications. He talked
about the process by which he successfully commercialized this
technology. However, because there are no large businesses that
can license this technology from his laboratory (unlike when
Dupont licensed his carbon dioxide technology to make teflon),
H.R. 1303 is needed, Dr. DeSimone urged, in order to encourage
the spread of this technology to small dry cleaners.
The final witness provided the Subcommittee with an expert
opinion on the need for dry cleaners to transition from perc to
other environmental-friendly technology. Dr. Henry Cole,
representing the environmental group, Clean Water Action, spoke
to the dangers of perc and the need to phase-out its use. In
Dr. Cole's opinion, H.R. 1303 deserves support because it will
help dry cleaners switch from perc, which are highly toxic, to
liquid carbon dioxide and wet-cleaning machines. H.R. 1303
provides substantial long-term environmental, health and
economic benefits to the nation at a fraction of the cost of a
hazardous waste clean up.
For further information about this hearing, refer to
Committee publications 106-69.
7.7.8 the impact of the complexity of the tax code on
small business: what can be done about it?
Background
On September 7, 2000, the Subcommittee on Tax, Finance, and
Exports held a hearing on the impact of the complexity of the
tax code on small business. The purpose of the hearing was to
determine if small businesses have particularly high tax
compliance costs and discuss what can be done to alleviate this
burden.
Summary
The hearing was comprised of two panels. The first panel
allowed two Members of Congress to discus competing versions of
comprehensive tax reform. Representative John Sununu of New
Hampshire articulated the reasons why a flat tax (H.R. 1040)
would benefit small business owners. Representative Billy
Tauzin of Louisiana, the author of H.R. 2001, spoke of the need
to totally revamp the tax code by replacing it with a national
sales tax. Both set the stage for the Subcommittee by
documenting that the current tax code is massively complex and
that their ideas would help small businesses the best.
The second panel allowed Val Oveson, the National Taxpayer
Advocate at the Internal Revenue Service (IRS) of the U.S.
Department of the Treasury and five private sector experts on
the issue of the complexity of the tax code to discuss this
problem and offer suggestions for reform. First, Martin
Davidoff, a tax consultant from Dayton, New Jersey representing
the National Federation of Independent Business (NFIB) spoke
about two specific tax problems facing small business owners:
the constant change of phase-outs of certain tax credits or
deductions based on income and the complexity of the meals and
entertainment expense deduction. Mr. Davidoff reminded the
Subcommittee that a 100 percent deduction for meals and
entertainment expenses was rated the second most important
issue at the 1995 White House Conference on Small Business.
Second, Mr. Oveson testified about his work as the National
Taxpayer Advocate and addressed some specific tax areas in need
of reform and simpliciation to benefit small business. The top
areas he talked about before the Subcommittee included:
(1) reform how the IRS administers its penalties
(specifically), he called for repealing the ``failure to pay''
penalty);
(2) reform and simplify capitalization and depreciation
schedules (specifically, allow Section 179 expense deduction
for all capital assets purchased); and
(3) reform and simplify the independent contractor
definition.
Pamela Olson of the American Bar Association (ABA)
addressed the Subcommittee next to discuss her work along with
the American Institute of Certified Public Accountants (AICPA)
and the Tax Executives Institute (TEI) on their tax
simplification proposals. The recommendations she highlighted
to the Subcommittee included:
(a) Allow small businesses with gross receipts of less than
$5 million per year to use the cash method of accounting (as
opposed to the accrual method);
(2) Simplify rules governing pension plans (specifically,
minimum distribution rules and ``top heavy'' rules);
(3) Reform the definition of an independent contractor;
(4) Simplify rules limiting the ability of taxpayers to
deduct losses; and
(5) Simplify international tax rules because more and more
small businesses are becoming exporters.
David Lifson of AICPA identified for the Subcommittee
several key elements necessary to create a simpler tax system,
most important of which is to consider simplification at all
stages of the legislative and regulatory process. In addition,
he referred Subcommittee Members to the list of harmonized tax
simplification proposals submitted to Congress last February by
the AICPA, ABA, and TEI.
Scott Moody, an economist with the Tax Foundation, provided
a more academic perspective to the hearing. In his opinion, a
good tax system should be as simple as possible; not be
retroactive; be neutral in regards to economic activities; and
be stable. According to the Tax Foundation, our current code
falls far short of these goals, with the frequent changes to
the tax code and the increase in the number of words and forms.
Plus, the tax compliance burden falls disproportionately on
small businesses. In 1996, small companies with less than $1
million in assets spent at least 27 times more on compliance as
a percent of assets than larger U.S. corporations with assets
of $10 billion or more.
Finally, Todd McCracken, President of National Small
Business United, testified in favor of the Fair Tax (H.R.
2525), which is a competing national sales tax plan introduced
by Representative John Linder of Georgia. The benefits of the
Fair Tax, in Mr. McCracken's opinion, for small business
include increasing savings, eliminating the payroll tax;
removing the hidden tax on exports; and repealing the self-
employment tax.
In the question and answer period, all witnesses agreed
(despite having different views on the solution to this
problem) that at a minimum Members of Congress should resist
the temptation to change the tax laws even for the best of
reasons, because it, in the words of Mr. Oveson,
``geometrically complicates the tax code.''
For further information about this hearing, refer to the
Committee publication 106-70.