[Congressional Record Volume 155, Number 164 (Thursday, November 5, 2009)]
[Senate]
[Pages S11207-S11212]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. LANDRIEU (for herself and Mr. Nelson, of Florida):
  S. 2731. A bill to improve disaster assistance provided by the Small 
Business Administration, and for other purposes; to the Committee on 
Small Business and Entrepreneurship.
  Ms. LANDRIEU. Mr. President, I come to the floor today to speak on an 
issue that is of great importance to my home State of Louisiana--
Federal disaster preparedness. As you know, along the Gulf Coast, we 
keep an eye trained on the Gulf of Mexico during hurricane season. This 
is following the devastating one-two punch of Hurricanes Katrina and 
Rita of 2005 as well as Hurricanes Gustav and Ike last year. Our 
communities and businesses are still recovering from these disasters--
some from a disaster that devastated the Gulf Coast almost 5 years ago. 
For this reason, as Chair of the Senate Committee on Small Business and 
Entrepreneurship disaster preparedness is one of my top priorities. 
While the Gulf Coast is prone to hurricanes, other parts of the country 
are no strangers to disaster. For example, the Midwest has tornadoes, 
California experiences earthquakes and wildfires, and the Northeast 
sees crippling snowstorms. So no part of our country is spared from 
disasters--disasters which can and will strike at any moment. With this 
in mind, we must ensure that the Federal Government is better prepared 
and has the tools necessary to respond quickly, effectively following a 
disaster.
  As I mentioned, everyone around the country is familiar with the 
impact of Hurricanes Katrina and Rita on the New Orleans area and the 
southeast part of our state. Images from the devastation following 
these storms, and the subsequent Federal levee breaks, were transmitted 
around the country and around the world. This is because Katrina was 
the deadliest natural disaster in United States history, with 1,800 
people killed--1,500 alone in Louisiana. Katrina was also the costliest 
natural disaster in United States history with over $81.2 billion in 
damage. In Louisiana, we had 18,000 businesses catastrophically 
destroyed and 81,000 businesses economically impacted. I believe that, 
across the entire Gulf Coast, some estimates ran as high as 125,000 
businesses impacted by Katrina and Rita. While we have made significant 
progress in rebuilding infrastructure, housing, and our economy, I 
continue to hear from individual business owners who are struggling to 
fully recover. These business owners tell me that they have not been 
hit by one disaster but three: Hurricane Katrina in 2005, Hurricane 
Gustav in 2008, and the economic downturn. Louisiana was slow to feel 
the brunt of the credit crunch and economic meltdown but last year we 
began to see the drying up of investments and the shrinking of 
consumers' pocketbooks.
  One business owner that I have met with is Charles R. ``Ray'' 
Bergeron. He and his wife own Fleur de Lis Car Care Center in New 
Orleans, Louisiana. Small Business Administration, SBA, Administrator 
Karen Mills and I toured Mr. Bergeron's business during a visit to New 
Orleans on June 30, 2009. As a result of Hurricane Katrina, Mr. and 
Mrs. Bergeron found themselves having to take out two loans, one for 
their house and another for their small business. Pre-Katrina, Fleur de 
Lis Car Care Center had 8 employees. As of our visit in June, they were 
down to 2 employees not including Mr. Bergeron. They have a $225,000 
SBA disaster loan with a standard 30-year term. According to Mr. 
Bergeron, he will not pay it off until he is 101 years old. The 
business was back at about 40 percent of pre-Katrina sales, due in 
large measure to the population not being back. Their neighborhood is 
mostly empty homes. He attributes part of slow population recovery to 
high flood insurance premiums, high property taxes and high homeowner's 
insurance. These are the type of businesses that we must ensure keep 
their doors open: businesses that took the initiative to re-open right 
after the disaster. These ``pioneer'' businesses serve as anchors to 
the community in the early days of recovery. If residents see their 
favorite restaurant open or the local gas station, they are more likely 
to come back to rebuild their homes.
  In order to help ongoing recovery efforts in the Gulf Coast, and to 
give the SBA more tools to respond after a future disaster, I am 
introducing the Small Business Administration Disaster Recovery and 
Reform Act of 2009. This legislation builds off of SBA disaster reforms 
enacted last year and also provides targeted assistance for Gulf Coast 
recovery. My bill also includes an important provision authorizing SBA 
to help families impacted by defective drywall manufactured in the 
People's Republic of China.
  In terms of immediate recovery assistance, Title I of the bill 
includes three provisions which I believe will help both Gulf Coast 
businesses as well as families nationwide dealing with toxic drywall in 
their homes. First, this bill amends Section 12086 added by SBA 
disaster reforms in the 2008 Farm Bill. This provision created a Gulf 
Coast Disaster Loan Refinancing Program. The intent of the program, as 
I understand it from my colleagues in the House of Representatives, was 
to allow Gulf Coast businesses and homeowners to defer for up to 4 
years, payments on SBA disaster loans. This provision certainly had 
good intentions, however, we are a year on and the program has yet to 
be implemented. That is because in practice the program would likely be 
re-amortizing the same debt and, under the Credit Reform Act, to 
refinance a $1,000,000 disaster loan would require $1,000,000 in 
additional funding. To try to salvage this program, my bill would 
require SBA to report back to Congress in 30 days with recommendations 
on improving this program. These recommendations could include such 
additional options as modifying the end of the deferment date of loans, 
reducing interest payments on loans, extending out the term of loans to 
35 years or other changes to the program that might make it more 
workable. I believe this program is on the right track, Congress just 
needs advice from the SBA on how we can make it work better to actually 
help people in the Gulf Coast.
  The next provision in Title I relates to minority businesses in the 
Gulf Coast that were impacted by Hurricanes Katrina and Rita. Everyone 
is familiar with the images and the cost of these storms, but they may 
not be too familiar with the impact on individual businesses. In 
particular, I am speaking about the affects of Hurricanes Katrina and 
Rita on minority firms in the Gulf Coast. As a result of these storms, 
many minority firms in the Gulf Coast were disrupted and thus lost 
valuable time for participating in the 8(a) program. The 8(a) business 
development initiative, created under the Small Business 
Administration, helps minority entrepreneurs access Federal contracts 
and allows companies to be certified for increments of three years. 
These contracts are vital to the revival of these impacted areas. 
However, as currently structured the program allows businesses to 
participate for a limited length of time, 9 years, after which they can 
never re-apply nor get back into the program. It is imperative that we 
provide contracting assistance to our local minority businesses.
  My bill includes a provision which would tackle this problem in three 
important ways. First, the bill extends 8(a) eligibility for program 
participants in Katrina/Rita-impacted areas in Louisiana, Mississippi, 
and Alabama by 24 months. The bill would also apply to any areas in the 
state of Louisiana, Mississippi and Alabama that have been designated 
by the Administrator of the Small Business Administration as a disaster 
area as a result of Hurricanes Katrina or Rita. Lastly, the bill would 
require the administrator of the Small Business Administration to 
ensure that every small business participating in the 8(a) program 
before the date of enactment of the Act is reviewed and brought into 
compliance with this act. This requirement would ensure that any 
eligible previous 8(a) participants will be allowed back into

[[Page S11208]]

the program. As such, these key provisions would ensure that these 
businesses continue to play a vital role in rebuilding their 
communities. I note that I introduced a similar provision as part of S. 
3285, the Disadvantaged Business Disaster Eligibility Act during the 
110th Congress. Last Congress, the proposal passed the House of 
Representatives but we were unable to pass the legislation here in the 
Senate before we adjourned for the year. I look forward to renewing my 
fight this Congress as I believe that this is a commonsense proposal 
which would not cost a great deal. It would, however, make a huge 
difference for these businesses impacted by Katrina and Rita.

  The last recovery-related provision in Title I of the bill is focused 
on families impacted by defective drywall manufactured in the People's 
Republic of China. Since 2006, more than 550 million pounds of drywall 
have been imported to the United States from China. This drywall was 
used because at the time there was a shortage of product by domestic 
drywall producers and there was increased demand due to recovery from 
the 2004/2005 hurricanes and the housing boom. In the last 20 months, 
however, countless homeowners across the country have reported serious 
metal corrosion, noxious fumes, and health concerns. Reported symptoms 
have included bloody noses, headaches, insomnia, and skin irritation. 
Preliminary testing has confirmed that imported defective drywall is 
the problem, but these tests have not been able to pinpoint the problem 
substance in the drywall.
  Just last week, the Consumer Product Safety Commission, CPSC, 
released additional preliminary results of this drywall which did not 
identify the exact cause but did outline areas for concern. First, CPSC 
tested Chinese drywall and compared it with U.S.-made drywall. Chinese 
drywall contained elemental sulfur and higher levels of strontium--both 
not in domestic drywall. These findings are similar to May 2009 test 
results from the Environmental Protection Agency, EPA. Strontium and 
sulfur, in increased levels, have been linked to possible health 
problems. CPSC also carried out chamber testing on emissions from 
samples of Chinese-made and domestic drywall. Early results show that 
Chinese drywall emits volatile sulfur compounds at a higher rate than 
U.S. drywall. Further testing is underway to determine the specific 
compounds being emitted. Lastly, Federal officials analyzed indoor air 
results from 10 homes in Florida and Louisiana. This study led to a 
preliminary finding of detectable concentrations of two known 
irritants: acetaldehyde and formaldehyde. The concentrations were at 
levels that could worsen asthma or other conditions, especially when 
air conditioners were off/not working. Later this month, the CPSC is 
expected to release more comprehensive information on Chinese drywall. 
This includes results of a 50-home air sampling project and a 
preliminary engineering analysis of potential electrical/fire safety 
issues related to metal corrosion. Key to any results would be Federal 
recommendations on testing and remediation protocols for Chinese 
drywall. This would be crucial for homeowners who currently have no 
definitive way to prove they have Chinese drywall in their homes or 
procedures to remove the product for good.
  In total, as of last week the CPSC had received 1,900 incident 
reports from 30 States, the District of Columbia and Puerto Rico. The 
majority of these reports, 1,317, came from Florida, with Louisiana 
next, 339, followed by Virginia, 69, Mississippi, 63, and Alabama, 32. 
These figures demonstrate that this problem is not just an obstacle to 
Gulf Coast recovery efforts but may also pose a threat to homeowners 
across the country.
  To help homeowners struggling with this defective product, I have 
worked closely over the past few months with my Senate colleagues from 
Florida and Virginia. This summer, Senator Bill Nelson and I were 
successful, along with the leadership of the Senate Appropriations 
Committee, in pushing the CPSC to allocate $2,000,000 in unobligated 
funds to help the Chinese drywall investigation. Senator Nelson and 
Senators Mark Warner and Jim Webb from Virginia also wrote to the 
Internal Revenue Service inquiring if they could assist homeowners. The 
IRS indicated in July that homeowners may be able to claim a casualty 
loss on their tax returns if they have Chinese drywall that emits an 
unusual or severe concentration of chemical fumes that causes extreme 
and unusual damage. We have also written to the Federal Emergency 
Management Agency, FEMA, inquiring if the agency could provide 
emergency rental assistance as it has done in the past.
  In July, my Senate colleagues and I wrote to the SBA asking what they 
could do under existing authority to help these families. In its 
October 29, 2009, response to this letter, SBA indicated that it did 
not currently have the authority to assist homeowners impacted by 
drywall. This is because, under the current law, SBA's definition of a 
disaster only includes typical natural disasters such as tornadoes, 
hurricanes, wildfires, or snowstorms. However, it is my understanding 
that for previous disasters, there is a precedent in Congress 
authorizing SBA to respond to a specific disaster and one instance 
where Congress tasked $25,000,000 in existing funds to help ongoing 
recovery efforts. Manufacturers of this product should bear the 
majority of the financial burden for remediation but I believe there is 
a limited role for SBA to play in assisting homeowners with toxic 
drywall.
  For this reason, the legislation I am introducing today includes an 
authorization for the SBA Administrator to provide disaster home loans 
in States in which a Governor declares a disaster because of defective 
drywall. The provision would cover drywall which entered the United 
States from China from 2004 to 2008 and is demonstrated to cause 
corrosion or property damage. I note that this provision would not 
provide SBA funds for losses or damage covered by insurance or other 
sources. This authorization also caps the funding at this program at no 
more than 25 percent of the funds appropriated for SBA disaster 
assistance. In a normal Appropriations cycle, this would equate to 
about $25,000,000 in funds or $250,000,000 in actual disaster loans. If 
enacted, this provision would go a long way towards helping these 
struggling families.
  While it is important to respond to ongoing recovery-related needs 
across the country, we must also ensure that the SBA is better prepared 
for future disasters. To these ends, my committee held a field hearing 
in Galveston, Texas on September 25, 2009. This hearing focused on the 
initial Federal response and ongoing recovery efforts from Hurricane 
Ike in 2008. The hearing was the first Congressional hearing held in 
Galveston since Hurricane Ike struck the Texas Gulf Coast last year. 
With this in mind, we were able to hear firsthand Federal, State, and 
local officials on the progress of rebuilding Galveston Island. My 
committee also heard from business owners on the challenges that 
emerged in the year that passed since Ike made landfall.
  This hearing highlighted improvements in SBA's disaster programs 
since the 2005 storms. For example, after Katrina and Rita, the Federal 
response was slow; planning was insufficient, and staff and funding 
came up short. Following the 2005 storms, it took SBA 90 days to 
process a home loan and 70 days to process a business loan. After this 
woeful performance, I pushed for a change in SBA leadership and changes 
in the way they respond to disasters. In 2006, a new SBA Administrator, 
Steve Preston, took over and, at my request, he implemented a new SBA 
Disaster Response Plan in time for the 2007 hurricane season. This plan 
was a major improvement over the unwieldy, bureaucratic procedures that 
guided SBA post-Katrina/Rita. SBA will also be submitting to Congress 
in the next few weeks 2009 revisions to the Disaster Response Plan. I 
look forward to reviewing these changes in the event that additional 
improvements are needed.
  Last year, as part of the 2008 Farm Bill, Congress also passed 
legislative reforms to SBA's disaster programs. These reforms, along 
with other key improvements: Increased SBA loan limits from $1.5 
million to $2 million; created new tools such as bridge loans or 
private disaster loans following catastrophic disasters; required 
coordination between FEMA, SBA, and the IRS; and allowed nonprofits, 
for the first time, to be eligible for SBA economic injury disaster 
loans. Earlier this year, our committee heard testimony from

[[Page S11209]]

local officials in southwest Louisiana that SBA was better prepared and 
more responsive following Gustav and Ike. As evidence of this, I note 
that it took 5 days to process a home loan following Ike, compared to 
the 90 days after Katrina and Rita. Business loans averaged a little 
over a week to process, compared to the 70 days in 2005.
  However, although we heard about improvements to SBA's disaster 
response at the Galveston hearing, we also learned of additional areas 
that SBA could further improve its operations. While SBA is processing 
loans faster, there are still complaints from disaster victims on 
paperwork and bureaucracy. For example, as of August 31, SBA had 
received about 2,400 business applications for disaster assistance in 
Galveston County. 536 of those applications were approved for $84 
million but, to date, only $24 million has been disbursed for 280 of 
these loans. In light of these facts, I am concerned that 2008 disaster 
reforms might not have gone far enough in giving SBA the tools it needs 
to help businesses and homeowners after a future disaster. Title II of 
my legislation dovetails upon the reforms from last year to improve SBA 
coordination with other disaster response agencies. This section also 
makes SBA disaster loans more effective in reaching disaster victims 
most in need of assistance.
  As indicated above, when Katrina hit, our businesses and homeowners 
had to wait months for loan approvals. I do not know how many 
businesses we lost because help did not come in time. Because of the 
scale of this disaster, what these businesses needed was immediate, 
short-term assistance to hold them over until SBA was ready to process 
the tens of thousands of loan applications it received. That is why in 
last year's SBA disaster reforms, I included a provision--the Expedited 
Disaster Assistance Loan Program--to allow the SBA Administrator with 
the ability to set up a program to make short-term, low-interest loans 
to keep them afloat. These loans will allow businesses to make payroll, 
begin making repairs, and address other immediate needs while they are 
awaiting insurance payouts or regular SBA Disaster Loans.
  This provision also directed SBA to study ways to expedite disaster 
loans for those businesses in a disaster area that have a good, solid 
track record with the SBA or can provide vital recovery efforts. We had 
many businesses in the Gulf Coast that had paid off previous SBA loans, 
were major sources of employment in their communities, but had to wait 
months for decisions on their SBA Disaster Loan applications. I do not 
want to get rid of the SBA's current practice of reviewing applications 
on a first-come-first-served basis, but there should be some mechanism 
in place for major disasters to get expedited loans out the door to 
specific businesses that have a positive record with SBA or those that 
could serve a vital role in the recovery efforts. Expedited loans would 
jump-start impacted economies, get vital capital out to businesses, and 
retain essential jobs following future disasters.
  While I am proud of this provision, I believe that with a few 
additional revisions, this program could be more successful. For this 
reason, Section 201 of this bill increases the loan limit from $150,000 
to $250,000 and allows the SBA Administrator to utilize this program, 
as needed, in either a catastrophic or a major disaster. Currently, the 
program is limited only to a catastrophic disaster, despite the fact 
that another bridge loan program from the 2008 Farm Bill--the Immediate 
Disaster Assistance Loan Program--is available for both catastrophic 
and major disasters. I realize that every disaster is different and 
could range from a disaster on the scale of Hurricane Katrina or 
9/11, to an ice storm or drought. The modification in my bill would 
allow SBA additional options and flexibility in the kinds of relief 
they can offer a community. When a tornado destroys 20 businesses in a 
small town in the Midwest, SBA can get the regular disaster program up 
and running fairly quickly. You may not need short-term loans in this 
instance. But if you know that SBA's resources would be overwhelmed by 
a storm--just as they were initially with Katrina--these expedited 
business loans would be very helpful. This section also changes the 
name of the program to the ``Pioneer Business Recovery Program'' as the 
intent of the program is to help ``second responder'' or ``pioneer'' 
businesses that want to reopen immediately following a storm.
  The next provision of my bill, Section 202, increases SBA disaster 
loan limits. In particular, it is my understanding that SBA's disaster 
home loan limits have not been adjusted since the 1990s. The current 
limit for SBA disaster loans to replace personal property is $40,000, 
and the limit for SBA disaster loans to repair damaged homes is 
$200,000. My legislation would increase the limits to $80,000 and 
$400,000, respectively. The bill also increases the SBA disaster 
business loan limit from $2,000,000 to $4,000,000. I believe that these 
increases would allow SBA to better address the needs of disaster 
victims in the future.
  Section 203 of the bill authorizes SBA to create a State Bridge Loan 
Guarantee Program. This program would enhance existing partnerships 
between SBA and States which administer bridge loan programs following 
disasters. Currently, SBA consults with States pre-disaster on the 
structure of their program. This is to ensure that these programs run 
effectively and do not duplicate assistance provided by the SBA 
disaster assistance program. There are various States, including 
Louisiana and Florida, which have successful bridge loan programs, and 
other States which would consider this type of program if there was 
better Federal-State coordination. Section 203 would allow the SBA 
Administrator to issue guidelines on an SBA-approved bridge loan 
program. After issuing these guidelines, SBA could then review State 
applications and, if necessary, guarantee bridge loans from approved 
States following a disaster. I would note that this provision was part 
of S. 3664, the Small Business Disaster Recovery Assistance 
Improvements Act of 2006 which I introduced in the 109th Congress.

  Another provision which I would like to highlight in this bill is 
Section 205. This section amends the Small Business Act to make 
aquaculture businesses eligible for SBA Economic Injury Disaster Loans. 
Currently, such businesses, including crawfish farmers, oyster farmers, 
shellfish farmers, are excluded from eligibility for these loans. In 
Louisiana, our aquaculture businesses in the southern part of the State 
were hit hard by both Hurricane Katrina and Rita. These businesses, 
many crawfish far ers or those with fish farms, were ineligible for 
U.S. Department of Agriculture, USDA, disaster assistance, but were 
also ineligible for SBA disaster loans. We also learned that similar 
problems followed Hurricanes Gustav and Ike in 2008. I believe that the 
commonsense fix in my bill will give these businesses the help they 
need to recover from future disasters.
  I am concerned about the larger problem which was raised by 
aquaculture businesses in my State being caught in limbo between USDA 
and SBA disaster programs. SBA for example provides physical and 
economic injury disaster loan assistance to businesses that are victims 
of a declared disaster. However, the Small Business Act excludes 
agricultural enterprises from eligibility. The act defines 
``agricultural enterprises'' as ``those businesses engaged in the 
production of food and fiber, ranching, and raising livestock, 
aquaculture, and all other farming and agricultural related 
industries.'' Thus, if a business is an agricultural enterprise, SBA is 
prohibited from providing disaster loan assistance. Prior to 1976, 
agricultural enterprises were covered by USDA only, and between 1976 
and 1986, several statutes allowed agricultural enterprises to be 
eligible for SBA assistance under certain conditions. As a result of a 
couple of factors though including duplication of benefits, disparity 
of service between SBA and USDA and loan shopping, Public Law. 99-272 
repealed agricultural eligibility for SBA disaster loans. Since then, 
all agricultural enterprises have been referred to USDA for disaster 
loans.
  Though USDA has several disaster programs, most are related to 
production loss of crops. The Farm Service Agency's Emergency Loan 
Program covers some agriculture related disaster losses, but operates 
under different eligibility rules from SBA. They

[[Page S11210]]

are limited to production on agriculture operations and restrict 
eligibility to ``family farm'' operations. The disparity between 
eligibility requirements for the SBA and USDA has resulted in many 
agricultural businesses being ineligible for disaster assistance at 
all. Included in that category are horse-related businesses, feedlots, 
animal breeders and sellers, nurseries, floriculture, tree farms, fish 
or shellfish business, seed producers, along with others. That is 
because, to currently be eligible for an SBA disaster loan, a primarily 
agricultural enterprise must have a separable non-agricultural 
component, which may be eligible for physical disaster loan assistance 
provided that it is a separate part of the agricultural enterprise, 
with separate income, operations, expenses, assets, etc. For economic 
injury disaster loan assistance, the Small Business Act limits 
eligibility to small businesses, small agricultural cooperatives, 
producer cooperatives, and private non-profit organizations. Therefore, 
the business must meet the eligibility requirements for a small 
business, and for purposes of EIDL eligibility, the activity of a 
business must be nonagricultural.
  To try to identify some of these gaps between USDA and SBA disaster 
assistance, Section 209 would require SBA, in consultation with USDA, 
to report to Congress within 120 days. This report would identify gaps 
in assistance and provide recommended legislative/administrative 
changes to fix these problems. For my part, I would like to get these 
agencies on the same page to ensure that businesses in need--whether 
they be small businesses or agricultural businesses--are not deprived 
of assistance if a disaster happens in their area.
  In closing, the legislation I am introducing today is an important 
first step for the Small Business Administration. That is because I am 
hopeful that, at the appropriate time, my committee can send to the 
full Senate legislation which will both reform SBA's disaster programs 
and address ongoing recovery needs across the country. With that goal 
in mind, I plan to work with my colleagues on both sides of the aisle 
in the coming months to identify their priorities on these issues.
  Mr. President, I ask unanimous consent that the text of the bill and 
letters of support be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 2731

       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 
     Administration Disaster Recovery and Reform Act of 2009''.

     SEC. 2. DEFINITIONS.

       In this Act--
       (1) the terms ``Administration'' and ``Administrator'' mean 
     the Small Business Administration and the Administrator 
     thereof, respectively;
       (2) the term ``approved State Bridge Loan Program'' means a 
     State Bridge Loan Program approved under section 203(b);
       (3) the term ``small business concern'' has the meaning 
     given that term under section 3 of the Small Business Act; 
     and
       (4) the term ``State'' means any State of the United 
     States, the District of Columbia, the Commonwealth of Puerto 
     Rico, the Northern Mariana Islands, the Virgin Islands, Guam, 
     American Samoa, and any territory or possession of the United 
     States.

     SEC. 3. TABLE OF CONTENTS.

       The table of contents for this Act is as follows:

Sec. 1. Short title.
Sec. 2. Definitions.
Sec. 3. Table of contents.

TITLE I--GULF COAST RECOVERY AND ASSISTANCE FOR HOMEOWNERS IMPACTED BY 
         DRYWALL MANUFACTURED IN THE PEOPLE'S REPUBLIC OF CHINA

Sec. 101. Report on the Gulf Coast Disaster Loan Refinancing Program.
Sec. 102. Extension of participation term for victims of Hurricane 
              Katrina or Hurricane Rita.
Sec. 103. Assistance for homeowners impacted by drywall manufactured in 
              the People's Republic of China.

 TITLE II--IMPROVEMENTS TO ADMINISTRATION DISASTER ASSISTANCE PROGRAMS

Sec. 201. Improvements to the Pioneer Business Recovery Program.
Sec. 202. Increased limits.
Sec. 203. State bridge loan guarantee.
Sec. 204. Modified collateral requirements.
Sec. 205. Aquaculture business disaster assistance.
Sec. 206. Regional outreach on disaster assistance programs.
Sec. 207. Duplication of benefits.
Sec. 208. Administration coordination on economic injury disaster 
              declarations.
Sec. 209. Coordination between Small Business Administration and 
              Department of Agriculture disaster programs.
Sec. 210. Technical and conforming amendment.

TITLE I--GULF COAST RECOVERY AND ASSISTANCE FOR HOMEOWNERS IMPACTED BY 
         DRYWALL MANUFACTURED IN THE PEOPLE'S REPUBLIC OF CHINA

     SEC. 101. REPORT ON THE GULF COAST DISASTER LOAN REFINANCING 
                   PROGRAM.

       Section 12086 of the Food, Conservation, and Energy Act of 
     2008 (Public Law 110-246; 122 Stat. 2184) is amended by 
     adding at the end the following:
       ``(g) Report to Congress.--
       ``(1) In general.--Not later than 30 days after the date of 
     enactment of this subsection, 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 making recommendations regarding 
     improvements to the program.
       ``(2) Contents.--The report under paragraph (1) may include 
     recommendations relating to--
       ``(A) modifying the end of the deferment date of Gulf Coast 
     disaster loans;
       ``(B) reducing interest payments on Gulf Coast disaster 
     loans, subject to the availability of appropriations;
       ``(C) extending the term of Gulf Coast disaster loans to 35 
     years; and
       ``(D) any other modification to the program determined 
     appropriate by the Administrator.''.

     SEC. 102. EXTENSION OF PARTICIPATION TERM FOR VICTIMS OF 
                   HURRICANE KATRINA OR HURRICANE RITA.

       (a) Retroactivity.--If a small business concern, while 
     participating in any program or activity under the authority 
     of paragraph (10) of section 7(j) of the Small Business Act 
     (15 U.S.C. 636(j)), was located in a parish or county 
     described in subsection (b) of this section and was affected 
     by Hurricane Katrina of 2005 or Hurricane Rita of 2005, the 
     period during which that small business concern is permitted 
     continuing participation and eligibility in that program or 
     activity shall be extended for 24 months after the date such 
     participation and eligibility would otherwise terminate.
       (b) Parishes and Counties Covered.--Subsection (a) applies 
     to any parish in the State of Louisiana, or any county in the 
     State of Mississippi or in the State of Alabama, that has 
     been designated by the Administrator as a disaster area by 
     reason of Hurricane Katrina of 2005 or Hurricane Rita of 2005 
     under disaster declaration 10176, 10177, 10178, 10179, 10180, 
     10181, 10205, or 10206.
       (c) Review and Compliance.--The Administrator shall ensure 
     that the case of every small business concern participating 
     before the date of enactment of this Act in a program or 
     activity covered by subsection (a) is reviewed and brought 
     into compliance with this section.

     SEC. 103. ASSISTANCE FOR HOMEOWNERS IMPACTED BY DRYWALL 
                   MANUFACTURED IN THE PEOPLE'S REPUBLIC OF CHINA.

       (a) Definitions.--In this section, the term ``defective 
     drywall'' means drywall board that the Administrator 
     determines--
       (1) was manufactured in the People's Republic of China;
       (2) was imported into the United States during the period 
     beginning on January 1, 2004, and ending on December 31, 
     2008; and
       (3) is directly responsible for substantial metal corrosion 
     or other property damage in the dwelling in which the drywall 
     is installed.
       (b) Disaster Assistance for Homeowners Impacted by 
     Defective Drywall.--
       (1) In general.--The Administrator may, upon request by a 
     Governor that has declared a disaster as a result of property 
     loss or damage as a result of defective drywall, declare a 
     disaster under section 7(b) of the Small Business Act (15 
     U.S.C. 636(b)) relating to the defective drywall.
       (2) Uses.--Assistance under a disaster declared under 
     paragraph (1) may be used only for the repair or replacement 
     of defective drywall.
       (3) Limitation.--Assistance under a disaster declared under 
     paragraph (1) may not--
       (A) provide compensation for losses or damage compensated 
     for by insurance or other sources; and
       (B) exceed more than 25 percent of the funds appropriated 
     to the Administration for disaster assistance during any 
     fiscal year.

 TITLE II--IMPROVEMENTS TO ADMINISTRATION DISASTER ASSISTANCE PROGRAMS

     SEC. 201. IMPROVEMENTS TO THE PIONEER BUSINESS RECOVERY 
                   PROGRAM.

       (a) In General.--Section 12085 of the Food, Conservation, 
     and Energy Act of 2008 (15 U.S.C. 636j) is amended--
       (1) in the section heading, by striking ``EXPEDITED 
     DISASTER ASSISTANCE LOAN PROGRAM'' and inserting ``PIONEER 
     BUSINESS RECOVERY PROGRAM'';
       (2) by striking ``expedited disaster assistance business 
     loan program'' each place it

[[Page S11211]]

     appears and inserting ``Pioneer Business Recovery Program'';
       (3) in subsection (b) by striking ``paragraph (9)'' and all 
     that follows and inserting ``section 7(b) of the Small 
     Business Act (15 U.S.C. 636(b)).''; and
       (4) in subsection (d)(3)(A), by striking ``$150,000'' and 
     inserting ``$250,000''.
       (b) Technical and Conforming Amendment.--The table of 
     contents in section 1(b) of the Food, Conservation, and 
     Energy Act of 2008 (Public Law 110-246; 122 Stat. 1651) is 
     amended by striking the item relating to section 12085 and 
     inserting the following:

``Sec. 12085. Pioneer Business Recovery Program.''.

     SEC. 202. INCREASED LIMITS.

       Section 7 of the Small Business Act (15 U.S.C. 636) is 
     amended--
       (1) in subsection (d)(6)--
       (A) by striking ``$100,000'' and inserting ``$400,000''; 
     and
       (B) by striking ``$20,000'' and inserting ``$80,000'';
       (2) by striking ``(e) [RESERVED].''; and
       (3) by striking ``(f) [RESERVED].''.

     SEC. 203. STATE BRIDGE LOAN GUARANTEE.

       (a) Authorization.--After issuing guidelines under 
     subsection (c), the Administrator may guarantee loans made 
     under an approved State Bridge Loan Program.
       (b) Approval.--
       (1) Application.--A State desiring approval of a State 
     Bridge Loan Program shall submit an application to the 
     Administrator at such time, in such manner, and accompanied 
     by such information as the Administrator may require.
       (2) Criteria.--The Administrator may approve an application 
     submitted under paragraph (1) based on such criteria as the 
     Administrator may establish under this section.
       (c) Guidelines.--
       (1) In general.--Not later than 180 days after the date of 
     enactment of this Act, the Administrator shall issue to the 
     appropriate economic development officials in each State, the 
     Committee on Small Business and Entrepreneurship of the 
     Senate, and the Committee on Small Business of the House of 
     Representatives, guidelines regarding approved State Bridge 
     Loan Programs.
       (2) Contents.--The guidelines issued under paragraph (1) 
     shall--
       (A) identify appropriate uses of funds under an approved 
     State Bridge loan Program;
       (B) set terms and conditions for loans under an approved 
     State Bridge loan Program;
       (C) address whether--
       (i) an approved State Bridge Loan Program may charge 
     administrative fees; and
       (ii) loans under an approved State Bridge Loan Program 
     shall be disbursed through local banks and other financial 
     institutions; and
       (D) establish the percentage of a loan the Administrator 
     will guarantee under an approved State Bridge Loan Program.

     SEC. 204. MODIFIED COLLATERAL REQUIREMENTS.

       Section 7(d)(6) of the Small Business Act (15 U.S.C. 
     636(d)(6)) is amended by inserting after ``which are made 
     under paragraph (1) of subsection (b)'' the following: ``: 
     Provided further, That the Administrator shall not require 
     collateral for a loan of not more than $200,000 under 
     paragraph (1) or (2) of subsection (b) relating to damage to 
     or destruction of property of, or economic injury to, a small 
     business concern''.

     SEC. 205. AQUACULTURE BUSINESS DISASTER ASSISTANCE.

       Section 18(b)(1) of the Small Business Act (15 U.S.C. 
     647(b)(1)) is amended--
       (1) by striking ``aquaculture,''; and
       (2) by inserting before the semicolon ``, and does not 
     include aquaculture''.

     SEC. 206. REGIONAL OUTREACH ON DISASTER ASSISTANCE PROGRAMS.

       (a) Report.--In accordance with sections 7(b)(4) and 40(a) 
     of the Small Business Act (15 U.S.C. 636(b)(4) and 657l(a)) 
     and not later than 60 days after the date of enactment of 
     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 detailing--
       (1) information on the disasters, manmade or natural, most 
     likely to occur in each region of the Administration and 
     likely scenarios for each disaster in each region;
       (2) information on plans of the Administration, if any, to 
     conduct annual disaster outreach seminars, including events 
     with resource partners of the Administration, in each region 
     before periods of predictable disasters described in 
     paragraph (1);
       (3) information on plans of the Administration for 
     satisfying the requirements under section 40(a) of the Small 
     Business Act not satisfied on the date of enactment of this 
     Act; and
       (4) such additional information as determined necessary by 
     the Administrator.
       (b) Availability of Information.--The Administrator shall--
       (1) post the disaster information provided under subsection 
     (a) on the website of the Administration; and
       (2) make the information provided under subsection (a) 
     available, upon request, at each regional and district office 
     of the Administration.

     SEC. 207. DUPLICATION OF BENEFITS.

       (a) Findings.--Congress finds the following:
       (1) Section 312 of the Robert T. Stafford Disaster Relief 
     and Emergency Assistance Act (42 U.S.C. 5155) states the 
     following:
       (A) ``The President, in consultation with the head of each 
     Federal agency administering any program providing financial 
     assistance to persons, business concerns, or other emergency, 
     shall assure that no such person, business concern, or other 
     entity will receive such assistance with respect to any part 
     of such loss as to which he has received financial assistance 
     under any other program or from insurance or any other 
     source.''.
       (B) ``Receipt of partial benefits for a major disaster or 
     emergency shall not preclude provision of additional Federal 
     assistance for any part of a loss or need for which benefits 
     have not been provided.''.
       (C) A recipient of Federal assistance will be liable to the 
     United States ``to the extent that such assistance duplicates 
     benefits available to the person for the same purpose from 
     another source.''.
       (2) The Administrator should make every effort to ensure 
     that disaster recovery needs unmet by Federal and private 
     sources are not overlooked in determining duplication of 
     benefits for disaster victims.
       (b) Revised Duplication of Benefits Calculations.--The 
     Administrator may, after consultation with other relevant 
     Federal agencies, determine whether benefits are duplicated 
     after a person receiving assistance under section 7(b) of the 
     Small Business Act (15 U.S.C. 636(b)) receives other Federal 
     disaster assistance by a disaster victim.

     SEC. 208. ADMINISTRATION COORDINATION ON ECONOMIC INJURY 
                   DISASTER DECLARATIONS.

       Not later than 180 days after the date of enactment of 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 
     providing--
       (1) information on economic injury disaster declarations 
     under section 7(b)(2) of the Small Business Act (15 U.S.C. 
     636(b)(2)) made by the Administrator during the 10-year 
     period ending on the date of enactment of this Act based on a 
     natural disaster declaration by the Secretary of Agriculture;
       (2) information on economic injury disaster declarations 
     under section 7(b)(2) of the Small Business Act (15 U.S.C. 
     636(b)(2)) made by the Administrator during the 10-year 
     period ending on the date of enactment of this Act based on a 
     fishery resource disaster declaration from the Secretary of 
     Commerce;
       (3) information on whether the disaster response plan of 
     the Administration under section 40 of the Small Business Act 
     (15 U.S.C. 657l) adequately addresses coordination with the 
     Secretary of Agriculture and the Secretary of Commerce on 
     economic injury disaster assistance under section 7(b)(2) of 
     the Small Business Act (15 U.S.C. 636(b)(2));
       (4) recommended legislative changes, if any, for improving 
     agency coordination on economic injury disaster declarations 
     under section 7(b)(2) of the Small Business Act (15 U.S.C. 
     636(b)(2)); and
       (5) such additional information as determined necessary by 
     the Administrator.

     SEC. 209. COORDINATION BETWEEN SMALL BUSINESS ADMINISTRATION 
                   AND DEPARTMENT OF AGRICULTURE DISASTER 
                   PROGRAMS.

       (a) Definitions.--In this section--
       (1) the term ``agricultural small business concern'' means 
     a small business concern that is an agricultural enterprise, 
     as defined in section 18(b)(1) of the Small Business Act (15 
     U.S.C. 647(b)(1)), as amended by this Act; and
       (2) the term ``rural small business concern'' means a small 
     business concern located in a rural area, as that term is 
     defined in section 1393(a)(2) of the Internal Revenue Code of 
     1986.
       (b) Report.--Not later than 120 days after the date of 
     enactment of this Act, the Administrator, in consultation 
     with the Secretary of Agriculture, 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 detailing--
       (1) information on disaster assistance programs of the 
     Administration for rural small business concerns and 
     agricultural small business concerns;
       (2) information on industries or small business concerns 
     excluded from programs described in paragraph (1);
       (3) information on disaster assistance programs of the 
     Department of Agriculture to rural small business concerns 
     and agricultural small business concerns;
       (4) information on industries or small business concerns 
     excluded from programs described in paragraph (3);
       (5) information on disaster assistance programs of the 
     Administration that are duplicative of disaster assistance 
     programs of the Department of Agriculture;
       (6) information on coordination between the two agencies on 
     implementation of disaster assistance provisions of the Food, 
     Conservation, and Energy Act of 2008 (Public Law 110-246; 122 
     Stat. 1651), and the amendments made by that Act;
       (7) recommended legislative or administrative changes, if 
     any, for improving coordination of disaster assistance 
     programs, in particular relating to removing gaps in 
     eligibility for disaster assistance programs by rural small 
     business concerns and agricultural small business concerns; 
     and

[[Page S11212]]

       (8) such additional information as determined necessary by 
     the Administrator.

     SEC. 210. TECHNICAL AND CONFORMING AMENDMENT.

       Section 7(b) of the Small Business Act (15 U.S.C. 636(b)) 
     is amended in the matter following paragraph (9), by striking 
     ``section 312(a) of the Disaster Relief and Emergency 
     Assistance Act'' and inserting ``section 312(a) of the Robert 
     T. Stafford Disaster Relief and Emergency Assistance Act (42 
     U.S.C. 5155(a))''.
                                  ____

                                    Small Business Administration,


                                  Office of the Administrator,

                                 Washington, DC, October 28, 2009.
     Hon. Mary Landrieu,
     Chairwoman, Committee on Small Business & Entrepreneurship, 
         U.S. Senate, Washington, DC.
       Dear Madam Chairwoman: Thank you for your letter requesting 
     that the U.S. Small Business Administration (SBA) review its 
     existing authority under the Stafford Act to provide disaster 
     assistance to affected businesses and homeowners impacted by 
     the use of allegedly defective drywall. Having toured New 
     Orleans earlier this year, I share your concern for the 
     victims of Hurricane Katrina.
       The Stafford Act is the general statutory authority for 
     most Federal disaster response activities as they pertain to 
     Federal Emergency Management Authority (FEMA) programs. When, 
     pursuant to the Stafford Act, the President declares a Major 
     Disaster or emergency and authorizes Federal assistance, 
     including individual assistance, SBA is authorized to make 
     physical disaster loans and economic injury disaster loans to 
     disaster victims. In addition, SBA has the authority under 
     the Small Business Act (Act) to issue disaster declarations 
     and to make physical and economic injury disaster loans to 
     disaster victims in SBA-declared disasters. Under the Act, a 
     ``disaster'' is generally defined as a sudden event which 
     causes severe damage. Product defects do not fall within the 
     statutory definition for a ``disaster.'' Thus, SBA has never 
     based a disaster declaration on defective products. While we 
     are sympathetic to these victims, the installation of 
     defective drywall likewise would not fall within this 
     statutory definition and could not serve as the basis for an 
     SBA disaster declaration.
       In response to the specific issues raised in your letter, 
     SBA does have the authority to disburse additional funds to 
     existing disaster borrowers for disaster-related damage that 
     is discovered within a reasonable time after original loan 
     approval and before repairs are complete. However, if the 
     repair, replacement or rehabilitation of the disaster-damaged 
     property has been completed, SBA does not increase an 
     existing loan.
       You also asked whether SBA may issue a disaster declaration 
     based on a request from a Governor. After SBA receives a 
     request from a Governor that satisfies the statutory and 
     regulatory requirements, SBA can issue a physical or economic 
     injury disaster declaration and make low interest loans to 
     cover uninsured losses. As noted above, however, the 
     installation of defective drywall would not qualify as a 
     disaster under the SBA's statutory definition.
       Thank you again for your continued support of the SBA 
     disaster loan program and the small business community. A 
     similar response is being sent to your colleagues, Senators 
     Nelson, Warner, and Webb.
           With warmest regards,
     Karen G. Mills.
                                  ____



                                                  U.S. Senate,

                                    Washington, DC, July 28, 2009.
     Hon. Karen G. Mills,
     Administrator, U.S. Small Business Administration, 
         Washington, DC.
       Dear Administrator Mills: As we write to you, the Consumer 
     Product Safety Commission (CPSC) and the Environmental 
     Protection Agency (EPA), in coordination with other Federal 
     and State agencies, are conducting a comprehensive 
     investigation into the health and safety impacts of Chinese-
     made drywall on American consumers. The U.S. Small Business 
     Administration (SBA) has an important role in disaster 
     response and recovery efforts--helping both homeowners and 
     businesses impacted by manmade and natural disasters. We 
     believe that, at the appropriate time, your agency may be of 
     assistance to homeowners impacted by this toxic product.
       Since 2006, more than 550 million pounds of drywall have 
     been imported to the United States from China. In the last 18 
     months, countless homeowners across the country have reported 
     serious metal corrosion, noxious fumes and health concerns. 
     Reported symptoms have included bloody noses, headaches, 
     insomnia and skin irritation. Preliminary testing has 
     confirmed that imported defective drywall is the problem, but 
     these tests have not been able to pinpoint the specific 
     problem substance within the drywall. More comprehensive 
     results are expected from CPSC and EPA in August/September. 
     In total, the CPSC has received 608 incident reports from 21 
     states and the District of Columbia, demonstrating that this 
     poses a threat to homeowners across the country.
       With this in mind, we respectfully request that the SBA 
     review its existing authority under the Stafford Act and 
     respond no later than August 28, 2009 on the following:
       Whether SBA may disburse additional funds on SBA Real 
     Property Disaster Loans from previous disaster or emergency 
     declarations (such as Hurricanes Katrina and Rita in 2005, 
     the 2004 Florida Hurricanes, the 2008 Midwest floods, or 
     other emergency/disaster declarations).
       Also outline if the SBA can waive the two year time limit 
     for requesting an increase in loan limits since extraordinary 
     and unforeseeable circumstances may apply in this situation;
       Whether SBA--following a written request from a Governor 
     that has declared a disaster or emergency--may make a 
     physical disaster declaration if homes, businesses or a 
     combination of the two, have sustained uninsured losses; and
       Whether SBA may make an economic injury declaration if it 
     is demonstrated that at least five small businesses in a 
     disaster area have suffered economic injury as a result of 
     the disaster or emergency and are in need of financial help 
     not otherwise available.
       In closing, families in our states are, in many cases, 
     watching their dream homes turn into nightmares. As the 
     Federal government determines the full size and scope of this 
     disaster, we believe it is important to marshal all 
     appropriate Federal resources that may assist these families. 
     We therefore thank you for your consideration of this 
     important request.
           Sincerely,
     Mary L. Landrieu,
       U.S. Senator.
     Bill Nelson,
       U.S. Senator.
     Mark R. Warner,
       U.S. Senator.
     Jim Webb,
       U.S. Senator.
                                 ______