[House Report 106-45]
[From the U.S. Government Publishing Office]
106th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 106-45
_______________________________________________________________________
FAMILY FARMER BANKRUPTCY EXTENSION
_______________________________________________________________________
March 9, 1999.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Gekas, from the Committee on the Judiciary, submitted the following
R E P O R T
together with
ADDITIONAL VIEWS
[To accompany H.R. 808]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Judiciary, to whom was referred the
bill (H.R. 808) to extend for 3 additional months the period
for which chapter 12 of title 11 of the United States Code is
reenacted, having considered the same, reports favorably
thereon with amendments and recommends that the bill as amended
do pass.
TABLE OF CONTENTS
Page
The Amendment.............................................. 2
Purpose and Summary........................................ 2
Background and Need for Legislation........................ 2
Hearings................................................... 3
Committee Consideration.................................... 3
Vote of the Committee...................................... 3
Committee Oversight Findings............................... 4
Committee on Government Reform Findings.................... 4
New Budget Authority and Tax Expenditures.................. 4
Congressional Budget Office Cost Estimate.................. 4
Constitutional Authority Statement......................... 6
Section-by-Section Analysis................................ 6
Changes in Existing Law Made by the Bill, as Reported...... 6
Additional Views........................................... 7
The amendments are as follows:
Strike out all after the enacting clause and insert in lieu
thereof the following:
Section 149 of title I of division C of Public Law 105-277 is
amended--
(1) by striking ``April 1, 1999'' each place it appears and
inserting ``October 1, 1999'',
(2) in subsection (a)--
(A) by striking ``September 30, 1998'' and
inserting ``March 31, 1999'', and
(B) by striking ``October 1, 1998'' and inserting
``April 1, 1999'', and
(3) by striking subsection (c).
SEC. 2. EFFECTIVE DATE.
The amendments made by section 1 shall take effect on April 1,
1999.
Amend the title so as to read:
A bill to extend for 6 additional months the period for
which chapter 12 of title 11 of the United States Code is
reenacted.
The Amendment
Inasmuch as H.R. 808 was ordered reported with a single
amendment in the nature of a substitute, the contents of this
report constitute an explanation of the bill as so amended.
Purpose and Summary
H.R. 808 extends the reenactment of chapter 12, a
specialized form of bankruptcy relief for family farmers, for a
six-month period ending on October 1, 1999.
Background and Need for the Legislation
On February 23, 1999, Representative Nick Smith (R-Mich.)
(for himself and Representatives George Gekas (R-Pa.), David
Minge (D-Minn.), Ronnie Shows (D-Miss.), Bill Barrett (R-Neb.),
James Leach (R-Iowa), J.C. Watts, Jr. (R-Okla.), Sherwood
Boehlert (R-NY), and John McHugh (R-NY)) introduced H.R. 808 to
extend chapter 12 of title 11 of the United States Code.
Chapter 12 is a specialized form of bankruptcy relief
available only to a ``family farmer with regular annual
income,'' \1\ a defined term.\2\ It permits eligible family
farmers, under the supervision of a bankruptcy trustee,\3\ to
reorganize their debts pursuant to a repayment plan.\4\ The
special attributes of chapter 12 make it better suited to meet
the particularized needs of family farmers in financial
distress than other forms of bankruptcy relief, such as chapter
11 \5\ and chapter 13.\6\
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\1\ 11 U.S.C. Sec. 109(f).
\2\ 11 U.S.C. Sec. 101(19).
\3\ 11 U.S.C. Sec. 1202.
\4\ 11 U.S.C. Sec. 1222.
\5\ For example, chapter 12 is typically less complex and expensive
than chapter 11, a form of bankruptcy relief generally utilized to
effectuate large corporate reorganizations.
\6\ Chapter 13, a form of bankruptcy relief for individuals seeking
to reorganize their debts, limits its eligibility to debtors with debts
in lower amounts than permitted for eligibility purposes under chapter
12. Cf. 11 U.S.C. Sec. Sec. 109(e), 101(18).
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Chapter 12 was enacted on a temporary seven-year basis as
part of the Bankruptcy Judges, United States Trustees, and
Family Farmer Bankruptcy Act of 1986 \7\ in response to the
farm financial crisis of the early- to mid-1980's.\8\ It was
subsequently extended on August 6, 1993 to September 30,
1998.\9\ Last year, chapter 12 was further extended until April
1, 1999 as part of the Omnibus Consolidated and Emergency
Supplemental Appropriations Act, 1999.\10\
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\7\ Pub. L. No. 99-554, Sec. 255, 100 Stat. 3088, 3105 (1986).
\8\ See U.S. Dept. of Agriculture, Info. Bull. No. 724-09, Issues
in Agricultural and Rural Finance: Do Farmers Need a Separate Chapter
in the Bankruptcy Code? (Oct. 1997). As one of the principal proponents
of this legislation explained:
I doubt there will be anything that we do that will have
such an immediate impact in the grassroots of our country
with respect to the situation that exists in most of the
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heartland, and that is in the agricultural sector. . . .
You know, William Jennings Bryan in his famous speech, the
Cross of Gold, almost 60 years ago [sic], stated these
words: ``Destroy our cities and they will spring up again
as if by magic; but destroy our farms, and the grass will
grow in every city in our country.''
This legislation will hopefully stem the tide that we have
seen so recently in the massive bankruptcies in the family
farm area.
132 Cong. Rec. 28,147 (1986) (statement of Rep. Mike Synar (D-
Okla.)).
\9\ Pub. L. No. 103-65, 107 Stat. 311 (1993).
\10\ Pub. L. No. 105-277, Sec. 149 (1998).
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Hearings
No hearings were held on H.R. 808.
Committee Consideration
In light of the imminent April 1, 1999 sunset date for
chapter 12, the bill was held at the full Committee on the
Judiciary for markup. On March 2, 1999, the Committee met in
open session and ordered favorably reported the bill H.R. 808
with amendment by a voice vote, a quorum being present.
Vote of the Committee
1. A substitute offered by Mr. Gekas to extend chapter 12
to October 1, 1999 to the amendment offered by Ms. Baldwin to
H.R. 808 to extend chapter 12 to July 1, 2001. Adopted 14 to 8.
AYES NAYS
Mr. Hyde Mr. Conyers
Mr. Gekas Mr. Nadler
Mr. Coble Mr. Scott
Mr. Gallegly Mr. Watt
Mr. Canady Ms. Jackson Lee
Mr. Goodlatte Ms. Waters
Mr. Chabot Mr. Delahunt
Mr. Barr Ms. Baldwin
Mr. Hutchinson
Mr. Pease
Mr. Rogan
Mr. Graham
Ms. Bono
Mr. Rothman
2. An amendment, as amended by Mr. Gekas' substitute,
offered by Ms. Baldwin to H.R. 808 to extend chapter 12 until
October 1, 1999. Adopted 22 to 0.
AYES NAYS
Mr. Hyde
Mr. Gekas
Mr. Coble
Mr. Gallegly
Mr. Canady
Mr. Goodlatte
Mr. Chabot
Mr. Barr
Mr. Hutchinson
Mr. Pease
Mr. Rogan
Mr. Graham
Ms. Bono
Mr. Conyers
Mr. Nadler
Mr. Scott
Mr. Watt
Ms. Jackson Lee
Ms. Waters
Mr. Delahunt
Mr. Rothman
Ms. Baldwin
Committee Oversight Findings
In compliance with clause 3(c)(1) of Rule XIII of the Rules
of the House of Representatives, the Committee reports that the
findings and recommendations of the Committee, based on
oversight activities under clause 2(b)(1) of Rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.
Committee on Government Reform Findings
No findings or recommendations of the Committee on
Government Reform and Oversight were received as referred to in
clause 3(c)(4) of Rule XIII of the Rules of the House of
Representatives.
New Budget Authority and Tax Expenditures
Clause 3(c)(2) of House Rule XIII is inapplicable because
this legislation does not provide new budgetary authority or
increased tax expenditures.
Congressional Budget Office Cost Estimate
In compliance with clause 3(c)(3) of Rule XIII of the Rules
of the House of Representatives, the Committee sets forth, with
respect to the bill, H.R. 808, the following estimate and
comparison prepared by the Director of the Congressional Budget
Office under section 402 of the Congressional Budget Act of
1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, March 4, 1999.
Hon. Henry J. Hyde,
Chairman, Committee on the Judiciary,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 808, a bill to
extend for 6 additional months the period for which chapter 12
of title 11 of the United States Code is reenacted.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Susanne S.
Mehlman, who can be reached at 226-2860.
Sincerely,
Dan L. Crippen
Enclosure
cc: Hon. John Conyers, Jr.,
Ranking Minority Member.
H.R. 808--A bill to extend for 6 additional months the period for which
chapter 12 of title 11 of the United States Code is reenacted
CBO estimates that enacting H.R. 808 would result in no
significant impact on the federal budget. Because this bill
would affect both direct spending and receipts, pay-as-you-go
procedures would apply, but CBO estimates that such effects
would not be significant. H.R. 808 contains no
intergovernmental or private-sector mandates as defined in the
Unfunded Mandates Reform Act and would impose no costs on
state, local, or tribal governments.
H.R. 808 would extend for six additional months chapter 12
of Title 11 of the U.S. Code, which was created by the
Bankruptcy Judges, United States Trustees, and Family Farmer
Bankruptcy Act of 1986 (Public Law 99-554). Chapter 12, which
is due to expire on April 1, 1999, specifies bankruptcy
procedures available only to family farmers with regular annual
income and is intended to facilitate an efficient and
expeditious bankruptcy process.
Based on information from the Executive Office of the
United States Trustees (U.S. Trustees), CBO expects that
without the temporary extension of chapter 12, family farmers
filing for bankruptcy would split their filings about evenly
between chapter 11 and chapter 13. Chapter 12 has a $200 filing
fee and does not require the bankrupt party to pay quarterly
fees to the government. Chapter 11, in contrast, requires an
$800 filing fee as well as quarterly filing fees. (On average,
$1,000 is collected per case.) Chapter 13 requires only a $130
filing fee. Bankruptcy fees appear in two different places in
the budget. Some of the fees are recorded as governmental
receipts (revenues); others are recorded as offsetting
collections to the U.S. Trustee System Fund and the
Administrative Office of the United States Courts (AOUSC). The
percentage of the fees allocated between these two accounts
varies by chapter.
Assuming that half the annual caseload--about 500 cases--
would be affected by this bill, its enactment would result in a
negligible loss in revenues and a loss in offsetting
collections of less than $500,000 in 1999. The loss of
offsetting collections would reduce the amount available for
spending by the U.S. Trustees and the AOUSC; however, CBO
estimates that no additional appropriations would be required
to replace this projected loss of fees because it would be
matched by a reduction in workload associated with chapter 11
and chapter 13 cases, resulting in no net budgetary effect.
The CBO staff contact for this estimate is Susanne S.
Mehlman, who can be reached at 226-2860. This estimate was
approved by Robert A. Sunshine, Deputy Assistant Director for
Budget Analysis.
Constitutional Authority Statement
Pursuant to clause 3(d)(1) of Rule XIII of the Rules of the
House of Representatives, the Committee finds the authority for
this legislation in Article I, Section 8, Clause 4 of the
United States Constitution.
Section-By-Section Analysis
Section 1. Amendments. This provision amends section 149 of
title I of division C of the Omnibus Consolidated and Emergency
Supplemental Appropriations Act, 1999 \11\ to provide that
chapter 12 of title 11 of the United States Code, as in effect
on March 31, 1999, is reenacted for the period beginning on
April 1, 1999 and ending on October 1, 1999. It also specifies
that all cases commenced or pending under chapter 12 shall be
conducted and determined under such chapter as if such chapter
were continued in effect after October 1, 1999.
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\11\ Id.
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Section 2. Effective Date. The amendments made by H.R. 808
take effect on April 1, 1999.
H.L.C.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, existing law in which no change
is proposed is shown in roman):
SECTION 149 OF TITLE I OF DIVISION C OF THE OMNIBUS CONSOLIDATED AND
EMERGENCY SUPPLEMENTAL APPROPRIATIONS ACT, 1999
* * * * * * *
Sec. 149. (a) Chapter 12 of title 11 of the United States
Code, as in effect on [September 30, 1998] March 31, 1999, is
hereby reenacted for the period beginning on [October 1, 1998]
April 1, 1999, and ending on [April] October 1, 1999.
(b) All cases commenced or pending under chapter 12 of
title 11, United States Code, as reenacted under subsection
(a), and all matters and proceedings in or relating to such
cases, shall be conducted and determined under such chapter as
if such chapter were continued in effect after [April] October
1, 1999. The substantive rights of parties in connection with
such cases, matters, and proceedings shall continue to be
governed under the laws applicable to such cases, matters, and
proceedings as if such chapter were continued in effect after
[April] October 1, 1999.
[(c) This section shall take effect on October 1, 1998.]
Additional Views on H.R. 808
While we are gratified that chapter 12 of the Bankruptcy
Code will be extended for an additional six months under this
legislation as reported, we are disappointed that family
farmers will continue to face uncertainty about the future of
their legal protections under the Bankruptcy Code during this
serious farm crisis.
An amendment, offered by Ms. Baldwin, that would have
extended chapter 12 permanently was ruled out-of-order on a
procedural technicality. A subsequent amendment, offered by Ms.
Baldwin, that would have extended chapter 12 for two years was
amended down to six months on a largely party-line vote.
The opposition to extending chapter 12 beyond six months is
particularly inexplicable considering that chapter 12's
permanent extension has strong bi-partisan support in both
chambers. Our family farmers deserve to know that if they need
to reorganize their debts in order to save their farm, chapter
12 will be there. With only a six-month extension, family
farmers may begin to make premature decisions regarding farm
bankruptcy in order to assure that the protections now in the
law are available to them. There is no substantive reason to
hold family farmers hostage while Congress deliberates larger
bankruptcy reform.
We support this extension of chapter 12, but we are
disappointed that the Majority has proved unwilling to grant to
family farmers the permanent protection they need and deserve.
John Conyers, Jr.
Jerrold Nadler.
Zoe Lofgren.
Sheila Jackson Lee.
Maxine Waters.
William D. Delahunt.
Tammy Baldwin.
Anthony D. Weiner.