[Congressional Record Volume 146, Number 141 (Tuesday, October 31, 2000)]
[House]
[Pages H11701-H11704]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




        CHAPTER 12 EXTENSION AND BANKRUPTCY JUDGMENT ACT OF 2000

  Mr. GEKAS. Mr. Speaker, I move to suspend the rules and pass the bill 
(H.R. 5540) to extend for 11 additional months the period for which 
chapter 12 of title 11 of the United States Code is reenacted, as 
amended.
  The Clerk read as follows:

                               H.R. 5540

       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 ``Chapter 12 Extension and 
     Bankruptcy Judgeship Act of 2000''.

     SEC. 2. AMENDMENTS.

       (a) Extension of Chapter 12.--Section 149 of title I of 
     division C of Public Law 105-277, as amended by Public Law 
     106-5 and Public Law 106-70, is amended--
       (1) by striking ``July 1, 2000'' each place it appears and 
     inserting ``June 1, 2001''; and
       (2) in subsection (a)--
       (A) by striking ``September 30, 1999'' and inserting ``June 
     30, 2000''; and
       (B) by striking ``October 1, 1999'' and inserting ``July 1, 
     2000''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall take effect on July 1, 2000.

     SEC. 3. BANKRUPTCY JUDGESHIPS.

       (a) Temporary Judgeships.--
       (1) Appointments.--The following bankruptcy judges shall be 
     appointed in the manner prescribed in section 152(a)(1) of 
     title 28, United States Code, for the appointment of 
     bankruptcy judges provided for in section 152(a)(2) of such 
     title:
       (A) One additional bankruptcy judge for the eastern 
     district of California.
       (B) Four additional bankruptcy judges for the central 
     district of California.
       (C) One additional bankruptcy judge for the district of 
     Delaware.
       (D) Two additional bankruptcy judges for the southern 
     district of Florida.
       (E) One additional bankruptcy judge for the southern 
     district of Georgia.
       (F) Two additional bankruptcy judges for the district of 
     Maryland.
       (G) One additional bankruptcy judge for the eastern 
     district of Michigan.
       (H) One additional bankruptcy judge for the southern 
     district of Mississippi.
       (I) One additional bankruptcy judge for the district of New 
     Jersey.
       (J) One additional bankruptcy judge for the eastern 
     district of New York.
       (K) One additional bankruptcy judge for the northern 
     district of New York.
       (L) One additional bankruptcy judge for the southern 
     district of New York.
       (M) One additional bankruptcy judge for the eastern 
     district of North Carolina.
       (N) One additional bankruptcy judge for the eastern 
     district of Pennsylvania.
       (O) One additional bankruptcy judge for the middle district 
     of Pennsylvania.
       (P) One additional bankruptcy judge for the district of 
     Puerto Rico.
       (Q) One additional bankruptcy judge for the western 
     district of Tennessee.
       (R) One additional bankruptcy judge for the eastern 
     district of Virginia.
       (2) Vacancies.--The first vacancy occurring in the office 
     of a bankruptcy judge in each of the judicial districts set 
     forth in paragraph (1) shall not be filled if the vacancy--
       (A) results from the death, retirement, resignation, or 
     removal of a bankruptcy judge; and
       (B) occurs 5 years or more after the appointment date of a 
     bankruptcy judge appointed under paragraph (1).
       (b) Extensions.--
       (1) In general.--The temporary office of bankruptcy judges 
     authorized for the northern district of Alabama, the district 
     of Delaware, the district of Puerto Rico, the district of 
     South Carolina, and the eastern district of Tennessee under 
     paragraphs (1), (3), (7), (8), and (9) of section 3(a) of the 
     Bankruptcy Judgeship Act of 1992 (28 U.S.C. 152 note) are 
     extended until the first vacancy occurring in the office of a 
     bankruptcy judge in the applicable district resulting from 
     the death, retirement, resignation, or removal of a 
     bankruptcy judge and occurring--
       (A) 8 years or more after November 8, 1993, with respect to 
     the northern district of Alabama;
       (B) 10 years or more after October 28, 1993, with respect 
     to the district of Delaware;
       (C) 8 years or more after August 29, 1994, with respect to 
     the district of Puerto Rico;
       (D) 8 years or more after June 27, 1994, with respect to 
     the district of South Carolina; and
       (E) 8 years or more after November 23, 1993, with respect 
     to the eastern district of Tennessee.
       (2) Applicability of other provisions.--Except as provided 
     in paragraph (1), section 3 of the Bankruptcy Judgeship Act 
     of 1992 (28 U.S.C. 152 note) shall continue to apply to the 
     temporary office of bankruptcy judges referred to in such 
     paragraph.
       (c) Technical Amendments.--Section 152(a) of title 28, 
     United States Code, is amended--
       (1) in paragraph (1) by striking the first sentence and 
     inserting the following:
       ``Each bankruptcy judge authorized to be appointed for a 
     judicial district as provided in paragraph (2) shall be 
     appointed by the United States court of appeals for the 
     circuit in which such district is located.''; and
       (2) in paragraph (2)--
       (A) in the item relating to the middle district of Georgia, 
     by striking ``2'' and inserting ``3''; and
       (B) in the collective item relating to the middle and 
     southern districts of Georgia, by striking ``Middle and 
     Southern . . . . . . 1''.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Pennsylvania (Mr. Gekas) and the gentlewoman from Wisconsin (Ms. 
Baldwin) 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 
and to include extraneous material on H.R. 5540.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Pennsylvania?
  There was no objection.
  Mr. GEKAS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, this legislation extends the life of chapter 12 in the 
Bankruptcy Code as we know it today. Chapter 12 is devoted to a special 
kind of bankruptcy relief that is granted to the farm community and to 
farmers who feel the

[[Page H11702]]

burdens of the debt that has caused them to seek bankruptcy relief.

                              {time}  2215

  What we have at this moment is a kind of a hiatus. We are waiting for 
the Senate to act on what is euphemistically called the Gekas-Grassley 
bankruptcy reform bill which contains an extension, a permanent status 
for chapter 12, actually. What we are doing here is filling a vacuum 
between last June and the time that we have consumed since then waiting 
for action by the Senate. This temporary extension will take us into 
next year and will offer this special relief for our farmers on a 
continuing basis, as well as the extension of some temporary judgeships 
that are needed for the current flow of bankruptcy across the Nation, 
five extensions of temporary judgeships and 23 appointments of 
temporary judges, all of this in the context of the burgeoning world of 
bankruptcy which is plaguing our country and which has created a 
workload that requires special attention.
  This legislation has drawn broad support from all those who observe 
bankruptcy, who work in bankruptcy, who legislate as we do in the arena 
of bankruptcy, and who are eager to see reforms occur throughout the 
system.
  Mr. Speaker, I reserve the balance of my time.
  Ms. BALDWIN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, H.R. 5540, introduced by the gentleman from Michigan 
(Mr. Smith), would extend chapter 12 of the bankruptcy code for an 
additional 11 months. Chapter 12 is the safety net of last resort for 
our farmers. It expired 4 months ago, on July 1, 2000. That means that 
if in the last 4 months a family farmer in my State of Wisconsin, or 
anywhere else in the United States, has needed the protection of 
chapter 12, they have not had it. Farmers in the most dire of economic 
circumstances do not have that protection today. Fortunately, this bill 
takes effect retroactively.
  I am pleased that the House earlier passed a permanent and expanded 
chapter 12 bankruptcy provision as part of H.R. 2415. However, it 
appears unlikely that the bill will pass into law this session. 
Therefore, temporary extension of chapter 12 is needed to ensure that 
farmers are given the economic security that they need.
  Chapter 12 is tailored to meet the unique economic realities of 
family farming during times of severe economic crisis. With chapter 12, 
Congress created a chapter of the bankruptcy code that provides a 
framework to prevent family farms from going out of business. At the 
time of its enactment in 1986, Congress was unable to foresee whether 
chapter 12 would be needed by America's family farmers indefinitely. 
Congress has extended chapter 12 four times since then. The law 
expired, as I said, on July 1, 2000. We must extend this law and 
ultimately make it permanent. The family farm is the backbone of the 
rural economy in Wisconsin and all over the Nation. Without chapter 12 
protection, a family farmer has little choice but to liquidate all 
assets, sell the land, equipment, crops and herd to pay off creditors 
if an economic crisis hits. This means losing the farm. Losing a farm 
means losing a supplier of food and a way of life. When a family 
decides it can no longer afford to farm, many times that farm is lost 
forever to development or sprawl.
  With chapter 12 in place when an economic disaster hits America's 
farmers, a family's farmland and other farm-related resources cannot be 
seized by creditors. A bankruptcy judge for the Western District of 
Wisconsin notes that chapter 12 has been used in his jurisdiction more 
than 50 times over the past year. Obviously, in this time of severe 
economic farm crisis, chapter 12 is needed. Our farmers must have the 
assurance that if they must reorganize their farm in order to keep 
their farm, they can do so. Chapter 12 must be there for them.
  Chapter 12 must also be there for us. In order to protect America's 
food supply, it is in our country's best interest to protect family 
farms from foreclosure. Mr. Speaker, family farmers in Wisconsin are 
having a tough time. Wisconsin dairy farmers continue to be at the same 
price disadvantage they have been subject to for over 60 years. 
Wisconsin pork producers, like pork producers everywhere, are losing 
thousands of dollars every month. Soybean prices are at record lows and 
have seen a 36 percent decline in 3 years. In the past 6 years alone, 
Wisconsin has lost over 7,000 family farms at a rate equivalent to five 
per day.
  The picture is similar nationally. In 1950, there were 5.6 million 
farms averaging 213 acres each in the country. In 1998, there were only 
2.2 million farms averaging 432 acres each. Our families must have the 
assurance that if they are to reorganize their farms to keep their 
farms, they can do so. Farmers, like all of us, should be able to plan 
for their futures.
  I support the passage of H.R. 5540 and hope that it becomes law 
quickly. I also look forward to assuring that chapter 12 becomes a 
permanent protection so that family farmers do not again face 
expiration of bankruptcy protection.
  Mr. Speaker, I reserve the balance of my time.
  Mr. GEKAS. Mr. Speaker, I yield myself such time as I may consume.
  I want the Record to show that Susan Jensen-Conklin, the resident 
expert on bankruptcy, assisted us in not just this but on all phases of 
our work in bankruptcy; and Ray Smietanka, the chief counsel of our 
subcommittee, has also contributed handily to all of this.
  Mr. Speaker, I yield 4 minutes to the gentleman from Michigan (Mr. 
Smith).
  Mr. SMITH of Michigan. Mr. Speaker, the gentlewoman from Wisconsin 
(Ms. Baldwin) talked to me going out the hall here maybe 3 weeks ago 
and I said, Shall we introduce the bill to last another 6 months? The 
gentlewoman from Wisconsin said, No, let's do it at least till June. 
This is somewhat of a frustration for us, I think, because there have 
been some that thought by only temporarily extending chapter 12 
bankruptcy, which is vital for farmers that happen to be down on their 
luck, if we leave that out and only do it temporarily, somehow it is 
going to encourage the passage of the full bankruptcy package. I would 
hope something could happen on that package. Tomorrow morning the 
Senate is voting on cloture. The odds are that the bill will go to the 
President. Then the President has got to make a decision. But somehow 
there have got to be changes, that people that borrow money are not 
burdened by yet higher interest rates, because it is too easy to go 
into bankruptcy.
  Likewise, talking to the gentleman from New York (Mr. Nadler), it is 
reasonable to conclude that some of those lenders probably are more 
eager to loan because they usually can go into the assets of that 
individual and end up making money at whatever interest rate they might 
be charging. Chapter 12 of the bankruptcy code is a very special 
provision available to America's family farmers in times of hardship. 
It allows family farms to reorganize their assets rather than liquidate 
them under the bankruptcy code. Without chapter 12, Mr. Speaker, many 
farmers would be forced to sell their farming equipment, which would 
mean that the farmer no longer has the plow and the planter and the 
disc and the cultivator and the milking machines that they need to make 
money on the farm. So without chapter 12, to file under chapter 11 or 
13, it is a particular hardship on this kind of family farm business.
  It is limited to family farmers, because under the provisions of this 
law, it specifically limits these chapter 12 provisions to a definition 
of the family farmer; and it eliminates many of the barriers that 
family farmers face when they seek to reorganize under chapter 11 or 
chapter 13.
  Some have thought, as I mentioned, that continuing this as a 
temporary would somehow motivate the passage of the full bill. However, 
this is my fourth bill that has temporarily extended the chapter 12 
bankruptcy for farmers that has passed through this Chamber. So I am 
not sure it is the motivator that some would hope.
  In terms of amending this bill to add the judges, I objected to that 
simply because I do not want provisions in the bill that some Senators 
have indicated that they disagree with to slow down and reduce by any 
way the assurance that this bill is going to pass into law.
  Let me say again, this relief is narrowly tailored to family farmers. 
Family farmers are those with debts less than $1.5 million, with 80 
percent of their assets consisting of farm assets

[[Page H11703]]

and 50 percent of their income coming from farm income. This ensures 
that it is only family farmers that qualify for these provisions.
  Again, hopefully sometime we are going to be able to make this 
permanent.
  Mr. Speaker, Chapter 12 of the bankruptcy code is a special provision 
available to America's family farmers in times of hardship. It allows 
family farms to reorganize their assets rather than liquidate them 
under our bankruptcy code. Without Chapter 12, Mr. Speaker, many 
farmers would be forced to sell off their farming equipment, which 
would mean that the farmer could no longer reorganize and farm in order 
to pay debtors.
  Chapter 12 eliminates many of the barriers that family farmers face 
when seeking to reorganize under either Chapter 11 or Chapter 13 of the 
bankruptcy code. Unlike these others, however, Chapter 12 expired last 
June and needs to be renewed. Leaders in both the House and the Senate 
have hoped a total bankruptcy reform bill would become law with 
provisions to make chapter 12 permanent. My bill, H.R. 5540, would 
extend it, retroactively, through May of 2001. My preference and what 
this Congress should pass, is to make Chapter 12 permanent. Some have 
thought that continuing Chapter 12 as a temporary provision would 
somehow encourage Congress and the President to pass the complete 
bankruptcy reform package into law. However, we have now passed four of 
my bills for temporary extension out of this chamber. So Chapter 12 as 
a motivator has failed.
  This relief is narrowly tailored to family farmers. Family farmers 
are those with debt less than $1.5 million, with 80% of their assets 
consisting of farm assets and 50% of their income from farm income. 
This ensures that it is only family farmers that qualify for these 
provisions.
  Again, hopefully, we'll be able to enact Chapter 12 permanently when 
we pass much needed bankruptcy overhaul legislation. But we need to 
make sure that Chapter 12 is available to our constituents in the 
interim and it's vital that we pass this legislation before Congress 
adjourns.
  Ms. BALDWIN. Mr. Speaker, I yield 4 minutes to the distinguished 
gentleman from New York (Mr. Nadler), the ranking member of the 
Subcommittee on Commercial and Administrative Law.
  Mr. NADLER. Mr. Speaker, today we consider legislation to give family 
farmers another reprieve from the brinkmanship the Republican majority 
has been playing with the protection available under chapter 12 of the 
bankruptcy code. While I seriously doubt that anyone will vote against 
this bill, it is unfortunate that we are still playing politics with 
the future of family farmers in America. I do want to commend the 
gentlewoman from Wisconsin (Ms. Baldwin), who has consistently and 
energetically fought to protect family farmers, sometimes against 
enormous odds. In the Committee on the Judiciary, on the floor of the 
House and in discussions with leadership and with her colleagues, she 
has been a powerful voice for the family farmer and truly one of their 
best advocates.
  The legislation we are considering today is the result of her 
bipartisan efforts along with the efforts of the gentleman from 
Michigan (Mr. Smith), whose commitment to family farmers is similarly 
without question. Yet despite this bipartisan support, we go on with 
temporary extension after temporary extension. In fact, the political 
games being played with family farmers have been so extreme that 
chapter 12 was actually permitted to go out of existence last July 1. 
Each time, every year we have extended chapter 12 by a scant few 
months. This bill does so for 11 months. This has been going on for 
years.
  Why do we continue to string family farmers along? Why not finally 
pass a permanent extension? What policy justification can there 
possibly be to enact the permanent extension of chapter 12 when there 
is bipartisan agreement in both Houses that we should do so? I have yet 
to hear any policy justification. So it would be preferable to pass a 
permanent extension bill today. But this temporary bill is the best we 
can get in this Congress, so I urge everyone to approve it.
  This legislation will also extend, finally, a number of temporary 
bankruptcy judgeships and provide for additional bankruptcy judgeships 
in areas where increasing workloads necessitate them. This judgeship 
legislation has always been noncontroversial in this House. It was 
passed by the House in the form of a bill sponsored by the gentleman 
from Illinois (Mr. Hyde), the gentleman from Pennsylvania (Mr. Gekas), 
the gentleman from Michigan (Mr. Conyers), and myself 4 years ago.
  There has been no disagreement that these additional judgeships are 
absolutely necessary. In fact, the gentleman from Georgia (Mr. 
Kingston), who has introduced his own bill on this subject, has joined 
me and the gentleman from Michigan (Mr. Dingell) as cosponsors of this 
legislation. As with chapter 12, there is no policy argument against 
providing the necessary judicial resources to process cases fairly and 
in a timely manner. Delay costs everyone, debtors and creditors alike. 
We owe it to families and businesses in our communities to ensure that 
our courts can function fairly and normally. No additions to the 
bankruptcy bench have been made since 1992 despite the many speeches 
delivered on this floor concerning the large rise in bankruptcy 
filings. These additions to the bench are long overdue and should be 
approved.
  Mr. Speaker, if we do not pass this bill, cases will be delayed in 
overcrowded courts and families will lose their farms. We should do the 
people's business and pass this bipartisan, noncontroversial bill 
today.

                              {time}  2230

  Ms. BALDWIN. Mr. Speaker, I yield back the balance of my time.
  Mr. GEKAS. Mr. Speaker, I yield myself such time as I may consume, 
only for the purpose of also extending my gratitude to the gentleman 
from South Carolina (Mr. Graham), to the gentleman from Georgia (Mr. 
Kingston), to the gentleman from Delaware (Mr. Castle), for 
continuously contributing to the final outcome in the passage of this 
bill.
  Mr. CONYERS. Mr. Speaker, I rise in support of this legislation 
before us today. This bill extends the period in which family farmers 
may recognize their debts for ten additional months. H.R. 5540 will 
meet the needs of financially distressed family farmers by giving them 
a chance to keep their farms. In addition, this legislation will 
provide much needed bankruptcy judgeships several states including 
Alabama, California, Delaware, Georgia, Maryland, Michigan, 
Mississippi, New Jersey, New York, North Carolina, Pennsylvania, South 
Carolina, Tennessee, and Virginia.
  While I do support this legislation, I would be remiss if I did not 
raise the issue that this legislation continuously has been extended 
because we have not yet brought forth acceptable bankruptcy reform 
legislation. Although we all agree that H.R. 5540 is necessary to aid 
our nation's farmers who are facing financial distress, we are 
constantly faced with the task of renewing this legislation instead of 
making it permanent. And it is well noted that the bankruptcy court 
system is overwrought with a backlog of cases and too few judges to 
handle the caseload. Despite the need to pass a bill that addresses 
important issues such as the needs of our farmers and our children as 
well as our nation's citizens and our bankruptcy courts, the leadership 
established a stealth process allowing wealthy creditors to severely 
undermine the goal of protecting the ability of small businesses to get 
a fresh start. The process questioned the integrity of the legislative 
process of the House. While conferees were appointed, no conference 
took place. Instead, a bankruptcy bill conference report was negotiated 
by a small group of staff working for a handful of Members in a closed 
door process, although the rules dictate that conference meetings must 
held in public. The most contentious issues were considered by the 
Republican leadership, excluding Democrats. This legislation was 
attached to an unrelated conference report and passed with minimal 
public scrutiny. Thankfully, the President has threatened a veto of 
this unjust legislation.
  With H.R. 5540, we can ensure that for at least the next ten months, 
the family farmers are given the ability to engage in reorganization 
efforts. We also will make strides towards curing our nation's 
bankruptcy court system of serious backlog. I urge a ``yes'' vote.
  Mr. BEREUTER. Mr. Speaker, this Member rises today to express his 
support for H.R. 5540, which extends Chapter 12 of the Bankruptcy Code 
to June 1, 2001. Chapter 12 bankruptcy, which allows family farmers to 
reorganize their debts as compared to liquidating their assets, was 
scheduled to expire last year, but it has been extended through 
enactment of separate legislation.
  This Member would thank the distinguished gentleman from Michigan 
(Mr. Nick Smith) for introducing H.R. 5540. In addition, this Member 
would like to express his appreciation to the distinguished chairman of 
the Judiciary Committee from Illinois (Mr. Henry Hyde), and the 
distinguished ranking minority member of the Judiciary Committee from 
Michigan (Mr.

[[Page H11704]]

John Conyers, Jr.) for their efforts in expediting this measure to the 
House floor today.
  Chapter 12 bankruptcy has been a viable option for family farmers 
nationwide. It has allowed family farmers to reorganize their assets in 
a manner which balances the interests of creditors and the future 
success of the involved farmer. If Chapter 12 bankruptcy provisions are 
not extended for family farmers, this will have a drastic impact on an 
agricultural sector already reeling from low commodity prices. Not only 
will many family farmers have to end their operations, but also land 
values will likely plunge downward. Such a decrease in land values will 
affect both the ability of family farmers to earn a living and the 
manner in which banks, making agricultural loans, conduct their lending 
activities. This Member has received many contacts from his 
constituents regarding the extension of Chapter 12 bankruptcy because 
of the serious situation now being faced by our nation's farm 
families--although the U.S. economy is generally healthy, it is clear 
that agricultural sector is hurting.
  The gravity of this situation for family farmers nationwide makes it 
imperative that Chapter 12 bankruptcy is extended. Moreover, it is this 
Member's hope that Chapter 12 bankruptcy is extended permanently as 
provided in the conference report of the Bankruptcy Reform Act of 1999, 
which passed the House by a vote of 237-174, with this Member's 
support, on October 26, 2000. Unfortunately, the Senate has yet to pass 
this conference report. Furthermore, this Member is an original 
cosponsor of the Bankruptcy Reform Act, that was introduced by the 
distinguished chairman of the Judiciary Subcommittee on Commercial and 
Administrative Law from Pennsylvania (Mr. George Gekas).
  In closing, this Member would encourage his colleagues support for 
H.R. 5540, which extends Chapter 12 bankruptcy until June 1, 2001.
  Mr. GEKAS. Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Shimkus). 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. 5540, 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 extend for 11 additional months the period for 
     which chapter 12 of title 11 of the United States Code is 
     reenacted; to provide for additional temporary bankruptcy 
     judges; and for other purposes.''

  A motion to reconsider was laid on the table.

                          ____________________