[Congressional Record Volume 154, Number 108 (Friday, June 27, 2008)]
[Senate]
[Pages S6328-S6330]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
By Mr. KERRY (for himself, Ms. Snowe, Mr. Kennedy, Mr. Schumer,
Ms. Stabenow, Mr. Durbin, Ms. Landrieu, Ms. Collins, Mrs.
Clinton, Mr. Harkin, Mr. Dodd, and Mr. Sanders):
S. 3223. A bill to establish a small business energy emergency
disaster loan program; to the Committee on Small Business and
Entrepreneurship.
Mr. KERRY. Mr. President, with the temperatures pushing 90 degrees
here in Washington, today might strike some as an odd time to introduce
a bill on heating fuels. But for those of us who know the costs of a
cold winter ahead, the real fuel crisis is now--and the clock is
ticking when it comes to Washington's ability to step in and help
before it's too late and this problem becomes a crisis and another
state of emergency is declared on Massachusetts. Now and in the coming
weeks, families and businesses will be sitting down to sign their
heating fuel contracts, with record prices creating impossible
decisions between feeding one's family and heating the home, and laying
off employees or going further into debt.
This week the Committee on Small Business and Entrepreneurship held a
hearing entitled ``Examining Solutions to Cope with the Rise in Home
Heating Oil Prices'' in which we heard testimony on the effect the
historic spike in heating oil prices is having on small businesses.
Nationally, 7.7 million households heat their homes with home heating
oil. In Massachusetts, more than 963,000 households use home heating
oil delivered by over 800 distributors, many of them small businesses.
It is reality--not rhetoric--that price spikes will force people to
decide whether to feed their families or heat their homes, and will
force small businesses to layoff employees and in some cases shut their
doors. The Energy Information Administration is projecting that heating
oil prices will be up 56 percent in 2009 as compared with 2007, and
even that estimate may be modest. Prices for a gallon of home heating
oil sit at over $4.50 today compared with less then a dollar 10 years
ago. That means consumers will have to pay thousands more than ever
before to heat their homes this winter, and small businesses who rely
on these and other fuels to heat their businesses will face
skyrocketing bills at a time when the economy and the credit crunch are
already squeezing their bottom lines.
While oil companies are reaping record profits, small business owners
are hard hit by these price spikes. Most heating oil distribution is
done by small businesses who are victimized many times over by the
rising price of fuel. Their accounts receivables go through the roof--
which isn't a pretty picture, especially during a credit crunch. Their
customers have a difficult time paying their bills and rising credit
card fees eat into their margins. The volatility in the market also
causes price hedging--a practice of locking into a price in order to
buy certainty--to rise from a few cents a gallon a few years ago to
upwards of 40 cents a gallon today, rendering almost useless this tool
that used to be helpful in giving distributors and consumers an
insurance policy against more crippling prices during the winter when
the market pressures were greater. These problems are affecting small
businesses who work with other heating fuels as well, such as kerosene,
propane, and natural gas.
There are many viable and successful small businesses that need
assistance to get through times when heating fuel prices spike. This is
why I, along with Senator Snowe, am reintroducing the Small Business
Energy Emergency Relief Act to provide assistance through affordable,
low-interest Small Business Administration disaster loans to small
businesses that have suffered economic
[[Page S6329]]
harm and can't pay their bills because of the huge price increases in
heating oil, propane, kerosene, and natural gas. Whether they are small
fuel distributors or business owners who rely on those fuels to heat
their stores, many small businesses are dependent on these four heating
fuels.
This bill would amend the Small Business Act to authorize the Small
Business Administration to make disaster loans of up to $1.5 million,
and an exception can be made by the Administrator for higher loans if
the borrower constitutes a major source of employment, to assist small
businesses that have suffered substantial economic injury as the result
of a significant increase in the price of kerosene, propane, natural
gas, or heating oil. Heating fuel prices would have to go up by 50
percent over the average price during the same 10-day period in the
previous 2 years to trigger an energy emergency declaration from the
President or the Administrator, though a Governor of a State that has
experienced a significant rise in the price of home heating oil may
also request assistance for small businesses in that State.
The qualifications for an economic injury disaster loan are the same
as for economic injury loans for a physical disaster. A small business
must have demonstrated economic injury as a result of the price
increases; demonstrate the inability to pay its bills; be unable to
locate financing elsewhere; and demonstrate the ability to repay the
loan. As in years past, the bill retains a provision authored by
Senators Harkin and Kohl to amend the Consolidated Farm and Rural
Development Act to authorize the Secretary of Agriculture to make loans
to farm operations that qualify as a small business and that have
suffered substantial economic injury on or after October 1, 2007, as
the result of a significant increase in energy costs in connection with
an energy emergency declaration by the President or the Secretary.
This bill has been a collaborative process over many years, which is
demonstrated by other provisions that we have retained, including one
by Senator Levin to allow small businesses to use the proceeds of the
loans not only for working capital to recover from the economic injury
of the energy costs but also to convert their systems to use
alternative or renewable energy sources. That was complimented by a
provision added by Senator Enzi to allow the proceeds for cogeneration
systems.
This bill was originally introduced in the 107th Congress as S. 295
and it passed the full Senate with 34 cosponsors. Since then, it has
passed the Senate twice more, both times in the 109th Congress, once as
an amendment to H.R. 6, the Energy Policy Act of 2005, and once as part
of a larger Katrina relief amendment to H.R. 2862, only to be dropped
in conference both times. Furthermore, this bill has passed the
Committee on Small Business and Entrepreneurship several times,
including in 2006 as a stand alone bill and in 2007 as part of the
Small Business Disaster Response and Loan Improvements Act.
With heating fuel prices soaring to never before seen heights, and
with no end in sight, it is time we pass this bill and make it law.
Small businesses across the country already operate on razor thin
margins, and the spike in heating fuels this winter will push many
otherwise successful businesses over the edge and into bankruptcy. With
the credit markets tightening, giving these small businesses low
interest loans to help them make it through the winter is a common
sense, low cost way to help small businesses, save jobs, and secure the
backbone of our economy.
I would like to thank Senator Snowe for her tireless work on these
issues and for cosponsoring this bill, and I ask that this statement is
printed for the record. I would also like to thank Senators Kennedy,
Schumer, Stabenow, Landrieu, Durbin, Collins, Clinton, Harkin, Dodd,
and Sanders for joining me as original cosponsors, and I ask that all
Senators join me in supporting this bill that will help save small
businesses across this country who are struggling to adjust to the
world of skyrocketing energy prices that we must deal with today.
Mr. President, I ask unanimous consent that the text of the bill be
printed in the Record.
There being no objection, the text of the bill was ordered to be
printed in the Record, as follows:
S. 3223
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 ``Small Business Energy
Emergency Relief Act of 2008''.
SEC. 2. DEFINITIONS.
In this Act--
(1) the terms ``Administration'' and ``Administrator'' mean
the Small Business Administration and the Administrator
thereof, respectively; and
(2) the term ``small business concern'' has the same
meaning as in section 3 of the Small Business Act (15 U.S.C.
632).
SEC. 3. FINDINGS.
Congress finds that--
(1) a significant number of small business concerns in the
United States, nonfarm as well as agricultural producers, use
heating oil, natural gas, propane, or kerosene to heat their
facilities and for other purposes;
(2) a significant number of small business concerns in the
United States sell, distribute, market, or otherwise engage
in commerce directly related to heating oil, natural gas,
propane, and kerosene; and
(3) significant increases in the price of heating oil,
natural gas, propane, or kerosene--
(A) disproportionately harm small business concerns
dependent on those fuels or that use, sell, or distribute
those fuels in the ordinary course of their business, and can
cause them substantial economic injury;
(B) can negatively affect the national economy and regional
economies;
(C) have occurred in the winters of 1983 to 1984, 1988 to
1989, 1996 to 1997, 1999 to 2000, 2000 to 2001, 2004 to 2005,
2006 to 2007, and 2007 to 2008; and
(D) can be caused by a host of factors, including
international conflicts, global or regional supply
difficulties, weather conditions, insufficient inventories,
refinery capacity, transportation, and competitive structures
in the markets, causes that are often unforeseeable to, and
beyond the control of, those who own and operate small
business concerns.
SEC. 4. SMALL BUSINESS ENERGY EMERGENCY DISASTER LOAN
PROGRAM.
(a) In General.--Section 7(b) of the Small Business Act (15
U.S.C. 636(b)) is amended by inserting immediately after
paragraph (9) the following:
``(10) Energy emergencies.--
``(A) Definitions.--In this paragraph--
``(i) the term `base price index' means the moving average
of the closing unit price on the New York Mercantile Exchange
for heating oil, natural gas, or propane for the 10 days, in
each of the most recent 2 preceding years, which correspond
to the trading days described in clause (ii);
``(ii) the term `current price index' means the moving
average of the closing unit price on the New York Mercantile
Exchange, for the 10 most recent trading days, for contracts
to purchase heating oil, natural gas, or propane during the
subsequent calendar month, commonly known as the `front
month';
``(iii) the term `heating fuel' means heating oil, natural
gas, propane, or kerosene; and
``(iv) the term `significant increase' means--
``(I) with respect to the price of heating oil, natural
gas, or propane, any time the current price index exceeds the
base price index by not less than 50 percent; and
``(II) with respect to the price of kerosene, any increase
which the Administrator, in consultation with the Secretary
of Energy, determines to be significant.
``(B) Authorization.--The Administration may make such
loans, either directly or in cooperation with banks or other
lending institutions through agreements to participate on an
immediate or deferred basis, to assist a small business
concern that has suffered or that is likely to suffer
substantial economic injury as the result of a significant
increase in the price of heating fuel occurring on or after
October 1, 2007.
``(C) Interest rate.--Any loan or guarantee extended under
this paragraph shall be made at the same interest rate as
economic injury loans under paragraph (2).
``(D) Maximum amount.--No loan may be made under this
paragraph, either directly or in cooperation with banks or
other lending institutions through agreements to participate
on an immediate or deferred basis, if the total amount
outstanding and committed to the borrower under this
subsection would exceed $1,500,000, unless such borrower
constitutes a major source of employment in its surrounding
area, as determined by the Administrator, in which case the
Administrator, in the discretion of the Administrator, may
waive the $1,500,000 limitation.
``(E) Declarations.--For purposes of assistance under this
paragraph--
``(i) a declaration of a disaster area based on conditions
specified in this paragraph shall be required, and shall be
made by the President or the Administrator; and
``(ii) if no declaration has been made under clause (i),
the Governor of a State in which a significant increase in
the price of heating fuel has occurred may certify to the
Administration that small business concerns have suffered
economic injury as a result of such
[[Page S6330]]
increase and are in need of financial assistance which is not
otherwise available on reasonable terms in that State, and
upon receipt of such certification, the Administration may
make such loans as would have been available under this
paragraph if a disaster declaration had been issued.
``(F) Use of funds.--Notwithstanding any other provision of
law, loans made under this paragraph may be used by a small
business concern described in subparagraph (B) to convert
from the use of heating fuel to a renewable or alternative
energy source, including agriculture and urban waste,
geothermal energy, cogeneration, solar energy, wind energy,
or fuel cells.''.
(b) Conforming Amendments Relating to Heating Fuel.--
Section 3(k) of the Small Business Act (15 U.S.C. 632(k)) is
amended--
(1) by inserting ``, significant increase in the price of
heating fuel'' after ``civil disorders''; and
(2) by inserting ``other'' before ``economic''.
(c) Effective Period.--The amendments made by this section
shall apply during the 4-year period beginning on the date on
which guidelines are published by the Administrator under
section 6.
SEC. 5. AGRICULTURAL PRODUCER EMERGENCY LOANS.
(a) In General.--Section 321(a) of the Consolidated Farm
and Rural Development Act (7 U.S.C. 1961(a)) is amended--
(1) in the first sentence--
(A) by striking ``operations have'' and inserting
``operations (i) have''; and
(B) by inserting before ``: Provided,'' the following: ``,
or (ii)(I) are owned or operated by such an applicant that is
also a small business concern (as defined in section 3 of the
Small Business Act (15 U.S.C. 632)), and (II) have suffered
or are likely to suffer substantial economic injury on or
after October 1, 2007, as the result of a significant
increase in energy costs or input costs from energy sources
occurring on or after October 1, 2007, in connection with an
energy emergency declared by the President or the
Secretary'';
(2) in the third sentence, by inserting before the period
at the end the following: ``or by an energy emergency
declared by the President or the Secretary''; and
(3) in the fourth sentence--
(A) by inserting ``or energy emergency'' after ``natural
disaster'' each place that term appears; and
(B) by inserting ``or declaration'' after ``emergency
designation''.
(b) Funding.--Funds available on the date of enactment of
this Act for emergency loans under subtitle C of the
Consolidated Farm and Rural Development Act (7 U.S.C. 1961 et
seq.) shall be available to carry out the amendments made by
subsection (a) to meet the needs resulting from energy
emergencies.
(c) Effective Period.--The amendments made by this section
shall apply during the 4-year period beginning on the date on
which guidelines are published by the Secretary of
Agriculture under section 6.
SEC. 6. GUIDELINES AND RULEMAKING.
(a) Guidelines.--Not later than 30 days after the date of
enactment of this Act, the Administrator and the Secretary of
Agriculture shall each issue such guidelines as the
Administrator or the Secretary, as applicable, determines to
be necessary to carry out this Act and the amendments made by
this Act.
(b) Rulemaking.--Not later than 30 days after the date of
enactment of this Act, the Administrator, after consultation
with the Secretary of Energy, shall promulgate regulations
specifying the method for determining a significant increase
in the price of kerosene under section 7(b)(10)(A)(iv)(II) of
the Small Business Act, as added by this Act.
SEC. 7. REPORTS.
(a) Small Business Administration.--Not later than 12
months after the date on which the Administrator issues
guidelines under section 6, and annually thereafter until the
date that is 12 months after the end of the effective period
of section 7(b)(10) of the Small Business Act, as added by
this Act, the Administrator shall submit to the Committee on
Small Business and Entrepreneurship of the Senate and the
Committee on Small Business of the House of Representatives,
a report on the effectiveness of the assistance made
available under section 7(b)(10) of the Small Business Act,
as added by this Act, including--
(1) the number of small business concerns that applied for
a loan under such section and the number of those that
received such loans;
(2) the dollar value of those loans;
(3) the States in which the small business concerns that
received such loans are located;
(4) the type of heating fuel or energy that caused the
significant increase in the cost for the participating small
business concerns; and
(5) recommendations for ways to improve the assistance
provided under such section 7(b)(10), if any.
(b) Department of Agriculture.--Not later than 12 months
after the date on which the Secretary of Agriculture issues
guidelines under section 6, and annually thereafter until the
date that is 12 months after the end of the effective period
of the amendments made to section 321(a) of the Consolidated
Farm and Rural Development Act (7 U.S.C. 1961(a)) by this
Act, the Secretary shall submit to the Committee on Small
Business and Entrepreneurship and the Committee on
Agriculture, Nutrition, and Forestry of the Senate and the
Committee on Small Business and the Committee on Agriculture
of the House of Representatives, a report that--
(1) describes the effectiveness of the assistance made
available under section 321(a) of the Consolidated Farm and
Rural Development Act (7 U.S.C. 1961(a)); and
(2) contains recommendations for ways to improve the
assistance provided under such section 321(a), if any.
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