[Congressional Record Volume 145, Number 9 (Wednesday, January 20, 1999)]
[Senate]
[Pages S764-S765]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. GRASSLEY (for himself, Mr. Daschle, Mr. Craig, Mr. 
        Brownback, Mr. Sessions, Mr. Ashcroft, and Mr. Kohl):
  S. 260. A bill to make chapter 12 of title 1, United States Code, 
permanent, and for other purposes; to the Committee on the Judiciary.


                              safety 2000

  Mr. GRASSLEY. Mr. President, I rise today to introduce vitally 
important legislation to promote the well-being of America's family 
farms by extending chapter 12 of the Bankruptcy Code. This bill, which 
is known as ``safety 2000,'' will also make needed changes to chapter 
12 which will make it work better for family farmers. I'm pleased that 
Senator Daschle is joining with me in this effort to save family farms. 
In Iowa, pork prices recently hit an all time low. Pork producers are 
facing serious hardship, and we must make sure that those farmers who 
need bankruptcy relief to help save their farming operation have 
meaningful protections.
  Last year, again with the distinguished minority leader, I introduced 
legislation to make chapter 12 permanent. That legislation passed the 
Senate by unanimous consent. However, the legislation was not enacted 
into law. On April 1 of this year, chapter 12 will expire. Mr. 
President, we cannot let this happen.
  As the only family farmer in the Senate, I feel I have a unique 
responsibility to make sure that family farming remains a strong and 
vibrant part of American life. For generations, family farms have fed 
this country. But farming has always had rough periods.
  Allowing chapter 12 to expire will repeat a fatal mistake of the 
past. During the great depression, Congress created special bankruptcy 
protections for farmers to help them ride out the severe economic 
conditions of that tragic era. However, Congress allowed these laws to 
lapse in the 1950s. So, when farmers in Iowa confronted the farm crisis 
of the mid-1980s, they were left without effective bankruptcy relief. 
By passing my legislation, we can prevent the mistakes of the past from 
occurring again.
  I think it's very important to realize that chapter 12 is not a hand 
out or a ``get out of debt free'' card. Farmers are hard-working people 
who want the chance to learn their way. In fact, chapter 12 is modeled 
on chapter 13, where individuals set up plans to re-pay a portion of 
their debts.
  By all accounts, chapter 12 has been wildly successful. So many times 
in Washington we develop programs and laws with the best of intentions. 
But when these programs get to the real world, they don't work well. 
chapter 12, on the other hand, has worked exactly as intended. 
According to Professor Neil Harl of Iowa State University, 74 percent 
of family farmers who filed Chapter 12 bankruptcy are still farming and 
61 percent of farmers who went through Chapter 12 believe that Chapter 
12 was helpful in getting them back on their feet.

  But Chapter 12 can be made even better. ``Safety 2000'' will make 
Chapter 12 better. The bill expands the definition of family farmer so 
that more farmers can use Chapter 12. Under current law, family farmers 
can't use Chapter 12 to save their farms if a farmer has more than $1.5 
million in debt. This is too restrictive, and my bill would let farmers 
who have up to $3 million in debt use Chapter 12.
  ``Safety 2000'' also helps farmers to reorganize by keeping the tax 
collectors at bay. Under current law, farmers often face a crushing tax 
liability if they need to sell livestock or land in order to reorganize 
their business affairs. According to Joe Peiffer, a bankruptcy lawyer 
from Hiawatha, Iowa, who represents many family farmers, high taxes 
have caused farmers to lose their farms. Under the bankruptcy code, the 
I.R.S. must be paid in full for any tax liabilities generated during a 
bankruptcy reorganization. If the farmer can't pay the I.R.S. in full, 
then he can't keep his farm. This isn't sound policy. Why should the 
I.R.S. be allowed to veto a farmer's reorganization plan? ``Safety 
2000'' takes this power away from the I.R.S. by reducing the priority 
of taxes during proceedings. This will free up capital for investment 
in the farm, and help farmers stay in the business of farming.
  In conclusion, Chapter 12 works well and this legislation will make 
it work better. Let's make sure that we keep this safety net for family 
farmers in place. I urge my colleagues to think of this bill as a low-
cost insurance policy for an important part of America's economy and 
America's heritage.
  Mr. KOHL. Mr. President, I rise to join Senator Grassley as a 
cosponsor of ``Safeguarding America's Farms Entering the Year 2000.'' 
This measure would make permanent the bankruptcy code provisions that 
protect family farmers in hard times by giving them the ability to hold 
on to their farms while they reorganize their finances.
  Without prompt action by Congress, the bankruptcy laws for family 
farmers, known as Chapter 12, will expire on April 1, 1999. When 
Congress first enacted Chapter 12 in 1986 for seven years, we intended 
to make Chapter 12 permanent if it proved successful. Already, Chapter 
12 has been extended twice, in 1993 and again last year.
  Family farmers need this permanent protection because Chapter 12 
works. It takes into consideration the unique circumstances faced by 
family farmers. It recognizes our special interest in keeping family 
farms in the family, where possible. And in practice it pays off--
according to the National Bankruptcy Review Commission, farmers in 
Chapter 12 are more likely to successfully reorganize than individuals 
filing under parallel chapters.

[[Page S765]]

  The continued success of the tens of thousands of family farmers in 
Wisconsin--and millions nationwide--is important to our national 
interest. But their well-being is too often jeopardized by elements out 
of their control. For example, many Wisconsin farmers now are facing 
distress due to unusually low prices for hogs, corn and soy beans. The 
opportunity to reorganize their business under Chapter 12 may be an 
important option in these difficult times. They deserve to know that 
this protection will always be available. Thank you.
                                 ______