[Congressional Record Volume 147, Number 25 (Wednesday, February 28, 2001)]
[House]
[Pages H447-H449]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               FAMILY FARMER BANKRUPTCY RELIEF EXTENSION

  Mr. SENSENBRENNER. Mr. Speaker, I move to suspend the rules and pass 
the bill (H.R. 256) to extend for 11 additional months the period for 
which chapter 12 of title 11 of the United States Code is reenacted.
  The Clerk read as follows:

                                H.R. 256

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

     SECTION 1. AMENDMENTS.

       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''.

     SEC. 2. EFFECTIVE DATE.

       The amendments made by section 1 shall take effect on July 
     1, 2000.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Wisconsin (Mr. Sensenbrenner) and the gentlewoman from Wisconsin (Ms. 
Baldwin) each will control 20 minutes.
  The Chair recognizes the gentleman from Wisconsin (Mr. 
Sensenbrenner).
  (Mr. SENSENBRENNER asked and was given permission to revise and 
extend his remarks, and include extraneous material.)
  Mr. SENSENBRENNER. Mr. Speaker, I will include in the Record the 
Congressional Budget Office's cost estimate of H.R. 256.


                             General Leave

  Mr. SENSENBRENNER. Mr. Speaker, I ask unanimous consent that all

[[Page H448]]

Members may have 5 legislative days within which to revise and extend 
their remarks on H.R. 256.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Wisconsin?
  There was no objection.
  Mr. SENSENBRENNER. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I rise in support of H.R. 256. Chapter 12 is a form of 
bankruptcy relief only available to family farmers enacted on a 
temporary basis to respond to the particularized needs of farmers in 
financial distress. As a part of the Bankruptcy Judges, United States 
Trustees and Family Farmer Bankruptcy Act of 1986, chapter 12 has been 
extended several times since 1986 until it lapsed on July 1 of last 
year.
  Absent chapter 12, farmers are forced to file for bankruptcy relief 
under the Bankruptcy Code's other alternatives. None of these forms of 
bankruptcy relief, however, work quite as well for farmers as chapter 
12. Chapter 11, for example, will require a farmer to sell the family 
farm to pay the claims of creditors. With respect to chapter 13, many 
farmers would simply be ineligible to file under that form of 
bankruptcy relief because of its debt limits. Chapter 11 is an 
expensive process that does not accommodate the special needs of 
farmers.
  In the last Congress, the House on two occasions passed legislation 
that would have extended chapter 12. Unfortunately, the other body did 
not act on these bills and chapter 12 expired on July 1, 2000 as a 
result. By virtue of H.R. 256, chapter 12 will be reenacted retroactive 
to July 1, 2000 and extended for 11 months to June 1 of this year. I 
must note, however, that H.R. 333, the Bankruptcy Abuse Prevention and 
Consumer Protection Act of 2001, a bill that will be considered on the 
floor tomorrow, will make chapter 12 a permanent fixture of the 
Bankruptcy Code for family farmers. I urge my colleagues to vote for 
H.R. 256.

                                                    U.S. Congress,


                                  Congressional Budget Office,

                                Washington, DC, February 26, 2001.
     Hon. F. James Sensenbrenner, Jr.,
     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. 256, a bill to 
     extend for 11 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 Lanette J. 
     Walker, who can be reached at 226-2860.
           Sincerely,
                                                 Barry B. Anderson
                                   (For Dan L. Crippen, Director).
       Enclosure.


               congressional budget office cost estimate

     H.R. 256--A bill to extend for 11 additional months the 
         period for which chapter 12 of title 11 of the United 
         States Code is reenacted
       H.R. 256 would extend chapter 12 of title 11 of the U.S. 
     Code until June 1, 2001. Chapter 12, which was created by the 
     Bankruptcy Judges, United States Trustees, and Family Farmer 
     Bankruptcy Act of 1986 (Public Law 99-554), specifies 
     bankruptcy procedures available only to family farmers with 
     regular annual income and is intended to facilitate an 
     efficient and expeditious bankruptcy process. The 
     authorization for such bankruptcy proceedings expired July 1, 
     2000.
       CBO estimates that enacting H.R. 256 would have no 
     significant budgetary impact. It would result in a small loss 
     of offsetting collections to the U.S. Trustee System Fund, 
     thus causing an insignificant increase in net outlays from 
     this fund in 2001. In addition, CBO estimates that enacting 
     H.R. 256 would result in a negligible loss of offsetting 
     receipts and revenues in 2001. Because H.R. 256 would affect 
     direct spending and governmental receipts pay-as-you-go 
     procedures would apply. The bill 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.
       Based on information from the Executive Office of the 
     United States 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 are recorded in three different places in 
     the budget. Portions of the fees are recorded as governmental 
     receipts (revenues), as offsetting collections to the 
     appropriation for the U.S. Trustee System Fund, and as 
     offsettting receipts to the Administrative Office of the 
     United States Courts (AOUSC). The percentage of the fees 
     allocated among these accounts varies by chapter. Because 
     only 300 to 400 bankruptcy cases are likely to be affected by 
     the bill, it would have only a small effect on the amount of 
     fees collected in 2001.
       The CBO staff contact for this estimate is Lanette J. 
     Walker, who can be reached at 226-2860. This estimate was 
     approved by Robert A. Sunshine, Assistant Director for Budget 
     Analysis.

  Mr. Speaker, I reserve the balance of my time.
  Ms. BALDWIN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, the bipartisan legislation before us, H.R. 256, which I 
am sponsoring with the gentleman from Michigan (Mr. Smith) would 
restore needed bankruptcy protection for family farmers.
  Last June the authorization for chapter 12 of the Bankruptcy Code 
expired. Since that time, family farmers who must turn to the 
Bankruptcy Code have faced almost certain liquidation of their assets 
and an end to their family farms and their way of life.
  Our legislation, H.R. 256, would restore chapter 12 to the Bankruptcy 
Code through May 31, 2001. The bankruptcy reform bill which is 
scheduled for floor action tomorrow, that is H.R. 333, includes a 
permanent reauthorization of chapter 12.
  But since the current authorization has expired, farmers need 
immediate relief. With planting season just about to begin, farmers 
need to know that they can reorganize and keep their farms. With milk 
at lowest prices in decades, far below the break-even point, dairy 
farmers need to know that they have this option, too.
  Our bill would provide security for family farmers in crisis; the 
security that they need to decide whether they can stay in business 
during these incredibly difficult times.
  I urge my colleagues to support this bill.
  Mr. Speaker, I reserve the balance of my time.
  Mr. SENSENBRENNER. Mr. Speaker, I yield 5 minutes to the gentleman 
from Michigan (Mr. Smith), the author of the bill.
  Mr. SMITH of Michigan. Mr. Speaker, I thank the chairman for yielding 
me this time. I thank the gentlewoman from Wisconsin (Ms. Baldwin) for 
joining with me in introducing this bill. I thank the chairman 
especially for expediting the bill, bringing it to the floor, along 
with the full bankruptcy bill tomorrow.
  This is so very important. The first thing I would urge is for the 
United States Senate to try to immediately move this bill into effect.
  Let me tell my colleagues the predicament. Since last July, farmers 
have not had the availability of chapter 12 which was originally 
designed and specifically written to accommodate their needs in a 
bankruptcy situation. We are now facing an environment in United States 
agriculture where commodity prices are at record lows. Many farmers 
that had become highly leveraged are now facing bankruptcy or the 
potential for bankruptcy.
  Chapter 11 and chapter 13 do not accommodate the needs of a family 
farmer. In too many cases they simply have to sell out their equipment 
or other property. To tell a farmer to reorganize, but at the same time 
urging, insisting that that farmer sell their means of production, 
their livelihood, the way they can work themselves out of debt means 
often that those farmers are put out of business.
  Congress I think has long recognized, Mr. Speaker, that farmers face 
special circumstances in bankruptcy not faced by other debtors. 
Congress provided special provisions for farmers in section 75 of the 
Bankruptcy Act in 1933. And certainly when Congress held hearings to 
determine whether the Bankruptcy Code adequately provided for family 
farmers, Congress concluded that it did not.
  The enactment of chapter 12 removed many barriers that family farmers 
face when filing for a bankruptcy. For example, it is more streamlined 
and less complex and expensive than chapter 11 which is more suitable 
for large corporations.
  A farmer, a dairy farmer, in fact, in Wisconsin has a herd of 65 cows 
and 60 heifers and is facing low commodity prices, depressed milk 
prices. He has part of his operation in a corporation designed to pass 
the farm on to his

[[Page H449]]

kids, and; therefore, he cannot even use chapter 13. Being forced to 
use chapter 11 may very well put that farmer out of business because 
chapter 12 is not available.
  Another dairy farmer that I am aware of struggles to make a go of it 
with a 100 head herd which, Mr. Speaker, was about the size of my own 
herd right before I decided to get out of the dairy business and come 
into Congress. Because this particular farmer has more debt relative to 
assets than a lender will tolerate, he needs to restructure. Under 
chapter 12, he could rewrite his notes. If chapter 12 is not there, 
again, this farmer may very well be forced to sell his property and go 
out of business.
  The enactment of chapter 12 has, according to testimony cited by the 
commission, reduced family farm failures. The commission concluded, and 
I would quote here, ``The test of time has revealed that chapter 12 
generally provides financially distressed family farmers with an 
effective framework within which to reorganize their operations and 
restructure their debts.''
  Now, although this provision was originally created as a temporary 
one, the commission recommended the Congress made it permanent. That is 
what our Committee on the Judiciary did in the full bankruptcy bill.
  I urge my colleagues to move this forward, to move it to the Senate. 
I would urge that the Senate immediately consider the importance of 
this. Farmers have been without this provision since last July. This 
legislation simply extends it 3 months until June, a temporary 
extension which is so important.
  Bankruptcy courts and bankruptcy judges are trying to hold in 
abeyance some of those farmers cases that need chapter 12 to survive. I 
hope we can move ahead quickly. I thank, again, the Committee on the 
Judiciary for moving this bill so quickly.
  Mr. BEREUTER. Mr. Speaker, this Member rises today to express his 
support for H.R. 256, which extends chapter 12 bankruptcy for family 
farms and ranches until June 1, 2001. In fact, this legislation makes 
chapter 12 retroactively effective as of July 1, 2000, which is the 
previous expiration date. This legislation is very important to the 
nation's agriculture sector. It should have been enacted last year.
  First, this Member would thank the distinguished gentleman from 
Michigan (Mr. Smith) for introducing this legislation (H.R. 256). This 
Member would also like to express his appreciation to the distinguished 
gentleman from Wisconsin (Mr. Sensenbrenner), the chairman of the 
Judiciary Committee, for his efforts in getting this measure to the 
House floor for consideration.
  This Member supports this extension of chapter 12 bankruptcy since it 
allows family farmers to reorganize their debts as compared to 
liquidating their assets. Using the chapter 12 bankruptcy provision has 
been an important and necessary option for family farmers throughout 
the Nation. 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, it will be another very painful blow to an agricultural sector 
already reeling from low-commodity prices. Not only will many family 
farmers have no viable option but to end their operations, it will also 
cause land values to likely plunge. Such a decrease in value of 
farmland will affect the ability of family farmers to earn a living. In 
addition, it will impact the manner in which banks conduct their 
agricultural lending activities. Furthermore, this Member has received 
many contacts from his constituents supporting the extension of chapter 
12 bankruptcy because of the situation now being faced by our Nation's 
farm families--it is clear that the agricultural sector is hurting.
  In closing, for these aforementioned reasons and many others, this 
Member urges his colleagues to support H.R. 256.
  Mr. ETHERIDGE. Mr. Speaker, I rise today in strong support of this 
bill to extend for 11 months chapter 12 bankruptcy for America's small 
farmers. I also want to thank the Chairman, Mr. Sensenbrenner, and the 
ranking member, Mr. Conyers, of the House Judiciary Committee for 
moving so expeditiously in passing H.R. 256 out of committee and 
bringing it here to the floor today.
  Chapter 12 of the bankruptcy code allows farmers the option to 
reorganize debt over 3 to 5 years rather than having to liquidate their 
assets when they declare bankruptcy. It also encourages responsible 
efforts by farmers facing bankruptcy by requiring them to designate 
income not needed for farm operations or family costs to pay off their 
debt. As these payments are made, chapter 12 prevents foreclosure on 
the family farm.
  And we are talking about family farms here. To qualify for bankruptcy 
protection, these farmers will have to have at least 50 percent of 
their gross annual income coming from farming, no less than 80 percent 
of debts resulting in farm operations, and total debts not more than 
$1.5 million.
  It saddens me that this legislation is necessary in order to save 
family farms around the nation. But while most Americans have been 
enjoying the benefits of an unprecedented prosperous economy, family 
farmers have suffered from prolonged, depressed commodity prices. And 
most recently, farmers are confronting rising input costs for energy 
and fertilizer.
  We are taking action today to make sure that small farmers can stay 
on their land and work through these hard times. With signs pointing to 
a possible slowdown in the American economy as a whole, I believe we 
should permanently extend the chapter 12 farmer bankruptcy provision. 
Small farmers should have one less worry every morning when they get up 
to harvest America's bounty that each of us enjoys every day.
  I am pleased to cosponsor this legislation that we will be passing 
today and thank the bill's managers for their efforts to see it enacted 
into law. I strongly support this legislation on behalf of the 
hardworking, God-fearing farmers of North Carolina's Second District 
and across America.
  Ms. BALDWIN. Mr. Speaker, I yield back the balance of my time.
  Mr. SENSENBRENNER. 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 Wisconsin (Mr. Sensenbrenner) that the House suspend the 
rules and pass the bill, H.R. 256.
  The question was taken.
  The SPEAKER pro tempore. In the opinion of the Chair, two-thirds of 
those present have voted in the affirmative.
  Mr. SENSENBRENNER. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX and the 
Chair's prior announcement, further proceedings on this motion will be 
postponed.

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