[Congressional Record Volume 144, Number 107 (Monday, August 3, 1998)]
[House]
[Pages H6901-H6903]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   PRIVATE TRUSTEE REFORM ACT OF 1998

  Mr. GEKAS. Mr. Speaker, I move to suspend the rules and pass the bill 
(H.R. 2592) to amend title II of the United States Code to provide 
private trustees the right to seek judicial review of United States 
trustee actions related to trustee expenses and trustee removal, as 
amended.
  The Clerk read as follows:

                               H.R. 2592

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Private Trustee Reform Act 
     of 1998''.

     SEC. 2. SUSPENSION AND TERMINATION OF PANEL TRUSTEES AND 
                   STANDING TRUSTEES.

       Section 586(d) of title 28, United States Code, is 
     amended--
       (1) by inserting ``(1)'' after ``(d)'', and
       (2) by adding at the end the following:
       ``(2) A trustee whose appointment to the panel or as a 
     standing trustee is terminated or who ceases to be assigned 
     to cases filed under title 11 may obtain judicial review of 
     the final agency decision by commencing an action in the 
     United States district court for the district in which the 
     panel member or standing trustee resides, after first 
     exhausting all available administrative remedies, which if 
     the trustee so elects, shall also include an administrative 
     hearing on the record. Unless the trustee elects to have an 
     administrative hearing on the record, the trustee shall be 
     deemed to have exhausted all administrative remedies for 
     purposes of this section if the agency fails to make a final 
     agency decision within 90 days after the trustee requests 
     administrative remedies. The Attorney General shall prescribe 
     procedures to implement this paragraph.''.

     SEC. 3. EXPENSES OF STANDING TRUSTEES.

       Section 586(e) of title 28, United States Code, is amended 
     by adding at the end the following:
       ``(3) After first exhausting all available administrative 
     remedies, an individual appointed under subsection (b) of 
     this section may obtain judicial review of final agency 
     action to deny a claim of actual, necessary expenses under 
     this paragraph by commencing an action in the United States 
     district court in the district where the individual resides.
       ``(4) The Attorney General shall prescribe procedures to 
     implement this subsection.''.

     SEC. 4. PROCEDURES FOR AND STANDARD OF REVIEW.

       Section 157 of title 28, United States Code, is amended--
       (1) by redesignating subsections (d) and (e) as subsections 
     (e) and (f), respectively, and
       (2) by inserting after subsection (c) the following:
       ``(d)(1) In conducting judicial review under section 
     586(d)(2) or section 586(e)(3) of this title, the district 
     court shall determine whether to retain the case or to refer 
     the case to a bankruptcy judge in the district. Any 
     bankruptcy judge to whom a case is referred shall submit a 
     recommendation for disposition to the district court based 
     solely on a review of the administrative record before the 
     agency, and a final order or judgment shall be entered by the 
     district court after considering the bankruptcy judge's 
     recommendation, and after reviewing those matters to which 
     any party has timely and specifically objected. The decision 
     of the agency shall be affirmed unless it is unreasonable and 
     without cause based upon the administrative record before the 
     agency.
       ``(2)(A) The district courts of the United States shall 
     have jurisdiction to review final agency decisions under 
     subsection 586(d)(2) and final agency actions under 
     subsection 586(e)(3).
       ``(B) Bankruptcy judges are authorized to submit to such 
     courts recommendations in accordance with paragraph (1).''.


[[Page H6902]]


  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Pennsylvania (Mr. Gekas) and the gentlewoman from California (Ms. 
Lofgren) each will control 20 minutes.
  The Chair recognizes the gentleman from Pennsylvania (Mr. Gekas).


                             General Leave

  Mr. GEKAS. Mr. Speaker, I ask unanimous consent that all Members may 
have 5 legislative days within which to revise and extend their remarks 
on H.R. 2592, as amended.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Texas?
  There was no objection.
  Mr. GEKAS. Mr. Speaker, I yield myself such time as I may consume.
  Today we consider a truly significant piece of legislation within the 
world of the courts, and particularly the bankruptcy courts. This bill, 
the one before us now, has been jointly cosponsored by the gentleman 
from Virginia (Mr. Goodlatte), the gentleman from Texas (Mr. Smith), 
and the gentleman from Georgia (Mr. Barr).
  It attempts, and does succeed, or else we would not be here at this 
moment, in striking a well-deserved balance between the respective 
rights of the private trustees, which play a gigantic role in the world 
of bankruptcy, and those of the U.S. Trustees' Office, which is charged 
with the responsibility of guidelining, as it were, the work and cases 
of the private trustees.
  Where before we had conflict as to the assignment of cases and 
whether or not a private trustee could be removed from a case, or 
whether or not future cases would be withheld from a private trustee, 
all these issues were points of tremendous conflict. This bill goes a 
long way in resolving all of those particular problems that may have 
arisen and could arise in the future.
  In addition to that, this bill seeks to provide certain methodologies 
of judicial review when a decision by a U.S. Trustee or otherwise is 
inimical in the minds of the private trustees to their interests.
  This bill, after negotiation on a wide range of issues, also resolved 
that particular one, so now the question of who should review a 
decision made, those kinds of decisions that adversely, in their minds, 
affect the private trustees, that has been settled by the language of 
this bill.
  Then this bill, with amendments, makes one additional substantive and 
three technical revisions to the version of the bill as we reported to 
the House out of the full committee.
  In response to concerns raised by representatives of the Federal 
judiciary, the bill, as amended, deletes the provision that would have 
permitted a magistrate judge to make proposed recommendations to the 
district court for final disposition. As a result, the district court, 
under the now amended version of H.R. 2592, may dispose of the matters 
that are the subject of this bill, or allow, when appropriate, 
bankruptcy judges to make proposed recommendations. The other other 
amendments, are strictly technical.
  Mr. Speaker, I reserve the balance of my time.
  Ms. LOFGREN. Mr. Speaker, I yield myself such time as I may consume.
  (Ms. LOFGREN asked and was given permission to revise and extend her 
remarks.)
  Ms. LOFGREN. Mr. Speaker, this legislation attempts to balance two 
very important public interests, giving the office of the United States 
Trustee the ability to oversee the administration of bankruptcy 
estates, and to ensure that private trustees perform their job honestly 
and efficiently.
  For the most part, the private trustees do an outstanding job, and 
they deserve our respect. This legislation would provide due process 
rights for private trustees in those instances in which they disagree 
with the decision by the U.S. Trustee to stop assigning cases, or in a 
dispute over expense reimbursement.
  It is a product of the hearings by the Subcommittee on Commercial and 
Administrative Law, as well as lengthy and careful negotiations between 
the Department of Justice, the sponsors, and interested parties, 
including the trustees and the bankruptcy judges. I would note that 
this is of interest, as well, to bankruptcy lawyers on all sides who 
value and strive for a system that is efficient and fair.
  It is my understanding that the Department of Justice still has some 
concerns about this legislation, but it is my hope that in the spirit 
of cooperation which has moved this legislation to this point, that the 
sponsors and the Department of Justice will be able to resolve any 
remaining issues, and get this legislation to the President before the 
end of this Congress.
  I am sure that whatever minor issues need resolving can indeed be 
resolved, and I would urge that my colleagues vote for this bill, that 
we move forward with this reform.
  Mr. Speaker, I reserve the balance of my time.
  Mr. GEKAS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, many times in the full Committee on the Judiciary we 
come to an impasse, borne out of questions raised right at the time we 
are in markup or in full consideration of a particular bill. Many times 
members on other side will request that the bill be put off until 
negotiations can occur on parcels of that bill could be negotiated, and 
a final bill represent the views of all of the members of the Committee 
on the Judiciary.
  This bill was a perfect example of the willingness on the part of 
many to continue negotiations and talks on contentious issues until 
full resolution could be made of the problems.
  Mr. Speaker, I reserve the balance of my time.
  Ms. LOFGREN. Mr. Speaker, I yield myself such time as I may consume.
  I would note that, in agreement with the chairman, this is certainly 
one where we are not suggesting delay or defeat. Everyone has worked in 
good faith, and I think this deserves our support.
  Mr. GOODLATTE. Mr. Speaker, I rise today in strong support of H.R. 
2592, the Private Trustee Reform Act of 1998. This bill reflects 
several months of negotiations between the private trustees and the 
Executive Office of the U.S. Trustee, and while it was modified 
slightly from the compromise approved by the Judiciary Committee last 
month, the core principles agreed upon by both sides remain in the 
bill. The bill has recently gained the support of the National 
Association of Bankruptcy Judges as well.
  Mr. Speaker, I introduced this legislation last year to restore 
fairness and equity to the relationship between the United States 
Trustee and private standing trustees. Specifically, this legislation 
amends title 28 of the U.S. Code to provide private trustees the right 
to seek judicial review in court, in certain cases following an 
administrative hearing on the record, of U.S. Trustee actions related 
to trustee expenses and trustee removal.
  The bill provides for judicial review of decisions by the U.S. 
Trustee to terminate, suspend, or cease assigning cases to a panel or 
standing trustee including a decision not to reappoint the trustee to a 
panel. This section includes language giving the panel or standing 
trustees the option of an administrative hearing on the record and 
includes a maximum of a 90 day time frame for agency review should the 
panel or standing trustee not elect to have an administrative hearing 
on the record.
  The bill also provides for judicial review of a decision by the U.S. 
Trustee to deny a claim of actual, necessary expenses by a standing 
trustee. It does not allow for an administrative hearing on the record, 
but would require the standing trustee to exhaust all available 
administrative remedies before seeking judicial review.
  Finally, the bill provides (1) procedures for and (2) the standard of 
review for conducting judicial review. It allows the district court to 
retain the case or refer it to a bankruptcy judge in the same district 
for a recommendation. I strongly support the inclusion of this 
provision because I believe that bankruptcy courts are best situated to 
make informed judgments about these issues. Bankruptcy judges 
understand which expenses are justified and which are not, as well as 
the nature and purpose of those expenses. Additionally, bankruptcy 
judges understand the full ramifications of a decision to cease 
assigning cases to a private trustee.
  If the case is referred, the district judge shall enter a final order 
or judgement after considering that recommendation and after reviewing 
those matters to which any party has timely and specifically objected.
  The decision of the agency shall be affirmed unless it is 
unreasonable or without cause based upon the administrative record 
before the agency.
  As I mentioned at the outset, H.R. 2592 is simply about fairness--
fairness to those who dedicate themselves to their duties as private 
trustees. It is also about firmness in the review process, as the U.S. 
Trustee should be subject to the same checks and balances as other 
government agencies are required to bear.

[[Page H6903]]

  Ms. JACKSON-LEE of Texas, Mr. Speaker, although this measure is still 
being negotiated by the parties involved, I believe that this 
legislation is an excellent initial effort to streamline the Federal 
bankruptcy system.
  By establishing a procedure for private bankruptcy trustees to 
contest their removal from cases, this bill provides the foundation for 
a more efficient Federal bankruptcy system.
  Under this measure, if the U.S. Trustee (part of the Justice 
Department) declines to reappoint a trustee or assign future cases to a 
trustee, the affected trustee may seek administrative review, judicial 
review, or both. Thus, this measure would create ``on the record'' 
administrative hearings for affected trustees.
  This bill also provides jurisdiction to the U.S District Court over 
trustee challenges of administrative rulings from the Office of the 
U.S. Trustee.
  I am pleased that we are working hard to protect the due process 
interests of the trustees. By providing adequate hearing and judicial 
review processes, we can fashion both an efficient and fair Federal 
bankruptcy structure.
  Although the Justice Department and Bankruptcy judges still have some 
concerns that need addressing, I find our progress very heartening. I 
hope that the involved parties will continue to negotiate until a 
workable solution becomes reality.
  Ms. LOFGREN. Speaker, I yield back the balance of my time.
  Mr. GEKAS. Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Pennsylvania (Mr. Gekas) that the House suspend the 
rules and pass the bill, H.R. 2592, as amended.
  The question was taken; and (two-thirds having voted in favor 
thereof), the rules were suspended and the bill, as amended, was 
passed.
  The title of the bill was amended so as to read:

       A bill to amend title 28 of the United States Code to 
     provide trustees the right to seek administrative and 
     judicial review of the refusal of a United States trustee to 
     assign, and of certain actions of a United States trustee 
     relating to expenses claimed relating to, cases under title 
     11 of the United States Code.

  A motion to reconsider was laid on the table.

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