[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]

      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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