[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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