[Congressional Record (Bound Edition), Volume 145 (1999), Part 3]
[House]
[Pages 3930-3933]
[From the U.S. Government Publishing Office, www.gpo.gov]




 THREE-MONTH EXTENSION OF REENACTMENT OF CHAPTER 12, TITLE 11, UNITED 
                              STATES CODE

  Mr. GEKAS. Mr. Speaker, I move to suspend the rules and pass the bill 
(H.R. 808) to extend for 3 additional months the period for which 
chapter 12 of title 11 of the United States Code is reenacted, as 
amended.
  The Clerk read as follows:

                                H.R. 808

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

     SECTION 1. AMENDMENTS.

       Section 149 of title I of division C of Public Law 105-277 
     is amended--
       (1) by striking ``April 1, 1999'' each place it appears and 
     inserting ``October 1, 1999'',
       (2) in subsection (a)--
       (A) by striking ``September 30, 1998'' and inserting 
     ``March 31, 1999'', and
       (B) by striking ``October 1, 1998'' and inserting ``April 
     1, 1999'', and
       (3) by striking subsection (c).

     SEC. 2. EFFECTIVE DATE.

       The amendments made by section 1 shall take effect on April 
     1, 1999.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Pennsylvania (Mr. Gekas) and the gentlewoman from Wisconsin (Ms. 
Baldwin) each will control 20 minutes.
  The Chair recognizes the gentleman from Pennsylvania (Mr. Gekas).

[[Page 3931]]




                             General Leave

  Mr. GEKAS. Mr. Speaker, I ask unanimous consent that all Members may 
have 5 legislative days within which to revise and extend their remarks 
on H.R. 808, the bill under consideration.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Pennsylvania.
  There was no objection.
  Mr. GEKAS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, the bill before us today will extend for 6 months a very 
important segment of the bankruptcy law, which is at this very moment 
undergoing gigantic reform considerations. But as to this particular 
segment, there is no dispute, no controversy, no opposition of any 
worth with respect to whether or not the current bill will see the 
light of day.
  This 6-month extension for the special segment having to do with 
farmers and agriculture enterprises in our communities is a natural 
extension borne of the first introduction of specialized, 
particularized bankruptcy for farmers dating back to 1986. Since that 
time, again with very little opposition and with full understanding of 
the need to meet the changing requirements constantly of the farm 
community, those extensions have brought us up to April 1, 1999, and we 
will need this extension in order to continue granting to farmers the 
options accorded them through the bankruptcy under chapter 12.
  The bill that we have introduced, which is also fast approaching full 
debate, the full bankruptcy legislation reform bills that we have 
comprehensively bonded together, that debate will include eventual 
inclusion of chapter 12 considerations. But in the meantime, following 
the pattern that we have seen evolving over the last year, we do not 
want to jeopardize any single farm, farmer, or entrepreneur in 
agriculture from taking full advantage, if need be, for the fresh start 
that is available to them under chapter 12.
  With that in mind, we would then urge the passage of this 6-month 
extension under the current extension, which dates back to last year, 
and this will comprise an extra promise on the part of the Congress 
that the concerns of the farmers and entrepreneurs in agriculture are 
in mind, they will be a part of the fuller debate on bankruptcy reform, 
and this chapter, chapter 12, will find full support, I am sure, in the 
eventual debates.
  Chapter 12 is a form of bankruptcy relief only available to ``family 
farmers,'' which was enacted on a temporary basis to respond to the 
particularized needs of farmers in financial distress as part of the 
Bankruptcy Judges, United States Trustees and Family Farmer Bankruptcy 
Act of 1986. It was thereafter extended in 1993 to September 30, 1998. 
Last year, it was further extended to April 1, 1999 to September 30, 
1998. Last year, it was further extended to April 1, 1999 as part of 
the Omnibus Consolidated and Emergency Supplemental Appropriations Act.
  As we know, there currently is a financial crisis in the farming 
industry as the result of weather conditions and economic turmoil in 
the international commodity markets.
  If Chapter 12 is not available, farmers will be forced to file for 
bankruptcy relief under the Bankruptcy Code's other alternatives. None 
of these forms of bankruptcy relief work quite as well for farmers as 
does Chapter 12. Chapter 7 would require the farmer to liquidate his or 
her farming operation. Many farmers would simply be ineligible to file 
under Chapter 13 because of its debt limits. Chapter 11 is an expensive 
process that does not accommodate the special needs of farmers.
  This 6-month temporary extension of Chapter 12 provides important 
protections to family farmers, during which time Congress can further 
assess these provisions. Only last month, I introduced, H.R. 833, the 
``Bankruptcy Reform Act of 1999,'' a bill that would make Chapter 12 a 
permanent form of bankruptcy relief for family farmers. In fact, 
included in the comprehensive series of hearings on bankruptcy reform 
that the Subcommittee on Commercial and Administrative Law will hold, 
beginning this week, will be a segment devoted to the consideration of 
Chapter 12 and the ways it can be improved.
  Accordingly, I urge my colleagues to vote for this bill.
  Mr. Speaker, I reserve the balance of my time.
  Ms. BALDWIN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, H.R. 808, introduced by the gentleman from Michigan (Mr. 
Smith), would extend chapter 12 of the bankruptcy code for an 
additional 6 months.
  Chapter 12 is similar to chapters 11 and 13 of the Bankruptcy Code. 
Chapter 12 is the part of the Bankruptcy Code that is tailored to meet 
the economic realities of family farming during times of severe 
economic crisis.
  With chapter 12, Congress sought to create a chapter of the 
Bankruptcy Code that provided a framework for successful family farm 
reorganizations. At the time of its first enactment, in 1986, Congress 
was unable to foresee whether chapter 12 would be needed by America's 
family farmers indefinitely. Congress extended chapter 12 twice since 
then, and it is currently set to expire on April 1, 1999, and H.R. 808 
would extend it for an additional 6 months. Chapter 12 is the safety 
net of last resort for our farmers, and we must extend it.
  The family farm is the backbone of our rural economy in Wisconsin and 
all over this Nation. Without chapter 12, if economic crisis hits a 
family farm, that family has no choice but to liquidate the land, 
equipment, crops and herd to pay off creditors, losing the farm, a 
supplier of food, and a way of life. With chapter 12 in place, a 
family's farmland and other farm-related resources cannot be seized to 
pay off debt.
  A bankruptcy judge for the Western District of Wisconsin notes that 
chapter 12 has been used in his district about 50 times over the past 
year. Obviously, chapter 12 is needed.
  Mr. Speaker, family farmers in Wisconsin have had a tough year. Our 
pork producers, like pork producers everywhere, are losing thousands of 
dollars every month. Soybean prices are at a 25-year low, and milk 
prices just dropped $6 per hundredweight in 1 month alone. This is on 
top of an archaic milk pricing system that unfairly disadvantage 
midwestern farmers. Safety nets that were in place before are now gone. 
Our farmers must have the assurance that if they are to reorganize 
their farm, to keep their farm, they can do so, and chapter 12 must be 
there for them.
  I am pleased that my amendment to extend chapter 12 for 6 months 
prevailed in committee, and I thank the gentleman from Pennsylvania for 
bringing this bill to the floor so quickly. However, I believe that we 
should permanently extend chapter 12. Individuals in this country who 
consider filing for bankruptcy under chapter 7 or 13 do not have to 
worry whether that part of the Bankruptcy Code will be in place because 
it is permanent. I believe we should do no less for our family farmers 
and make chapter 12 a permanent part of our laws. I believe farmers, 
like all of us, should be able to plan for their futures.
  I support H.R. 808 and hope it becomes law quickly, and I also look 
forward to working with the gentleman from Pennsylvania to ensure that 
chapter 12 gets permanently extended.
  Mr. Speaker, I reserve the balance of my time.

                              {time}  1300

  Mr. GEKAS. Mr. Speaker, I yield such time as he may consume to the 
gentleman from Nebraska (Mr. Bereuter).
  Mr. BEREUTER. Mr. Speaker, I thank the gentleman for yielding me this 
time.
  The gravity of the situation for family farmers nationwide makes it 
imperative that chapter 12 bankruptcy is extended 6 months. Beyond 
this, it is this Member's hope that chapter 12 bankruptcy is extended 
permanently as it is done in the Bankruptcy Reform Act of 1999, H.R. 
833. This Member is an original cosponsor of that Bankruptcy Reform Act 
introduced by the gentleman from Pennsylvania (Mr. Gekas), the 
distinguished chairman of the Subcommittee on Commercial and 
Administrative Law of the Committee on the Judiciary.
  I urge my colleagues to support this legislation.
  Mr. Speaker, this Member rises today to express his support for H.R. 
808, of which he is a co-sponsor, that extends Chapter 12 of the 
Bankruptcy Code for six additional months as

[[Page 3932]]

amended by the Judiciary Committee. Chapter 12 bankruptcy, which allows 
family farmers to reorganize their debts as compared to liquidating 
their assets, is set to expire on March 31, 1999.
  First, this Member would thank the distinguished gentleman (Mr. Nick 
Smith), from Michigan for introducing H.R. 808. In addition, this 
Member would like to express his appreciation to the distinguished 
Chairman of the Judiciary Committee from Illinois (Mr. Henry Hyde), and 
the distinguished Ranking Minority Member of the Judiciary Committee 
from Michigan (Mr. John Conyers, Jr.) for their efforts in bringing 
this measure to the House floor today.
  Chapter 12 bankruptcy has been a viable option for family farmers 
nationwide. It has allowed family farmers to reorganize their assets in 
a manner which balances the interests of creditors and the future 
success of the involved farmer. If Chapter 12 bankruptcy provisions are 
not extended for family farmers, this will have a drastic impact on an 
agricultural sector already reeling from low commodity prices. Not only 
will many family farmers have to end their operations, but also land 
values will likely plunge downward. Such a decrease in land values will 
affect both the ability of family farmers to earn a living and the 
manner in which banks, making agricultural loans, conduct their lending 
activities. This Member has received many contacts from his 
constituents regarding the extension of Chapter 12 bankruptcy because 
of the situation now being faced by our nation's farm families--
although the U.S. economy is generally healthy, it is clear that 
agricultural sector is hurting.
  Mr. Speaker, in closing, this Member would encourage your support for 
H.R. 808, the six month extension of Chapter 12 bankruptcy.
  Ms. BALDWIN. Mr. Speaker, I yield such time as he may consume to the 
gentleman from North Carolina (Mr. Etheridge).
  Mr. ETHERIDGE. Mr. Speaker, I thank the gentlewoman for yielding me 
this time. I rise today in strong support of this bill to extend for 6 
months chapter 12 bankruptcy for America's small farmers. I want to 
thank the gentlewoman from Wisconsin (Ms. Baldwin), the gentleman from 
Pennsylvania (Mr. Gekas), the gentleman from New York (Mr. Nadler) and 
the gentleman from Michigan (Mr. Smith) for their work on this 
important piece of legislation and for bringing it to the floor in this 
expedited manner.
  I have been pleased to cosponsor this legislation that we will be 
passing today and thank them for their efforts to help the hardworking 
small farmers throughout this country who are facing some of the most 
difficult times they have faced in decades. I have been saying for more 
than a year that farmers are not seeing the benefit of our Nation's 
unprecedented economic prosperity.
  While many folks are watching the Dow, small farmers are just trying 
to get through this current crisis. We should permanently extend the 
chapter 12 farmer bankruptcy provision so that small farmers have one 
less worry every morning when they get up to make sure that they 
harvest America's bounty that each of us enjoy each day. We are taking 
action today to make sure that these small farmers can still stay on 
their land and work through these hard times.
  Chapter 12 allows farmers the option to reorganize debt over 3 to 5 
years rather than having to liquidate their assets when they declare 
bankruptcy. It also encourages responsible efforts by farmers facing 
bankruptcy by requiring them to designate income not needed for farm 
operations or family costs to pay off their debt. As these payments are 
made, chapter 12 prevents foreclosure on the family farm. I think it is 
important for us to remember, we are talking about family farmers. To 
qualify, these farmers will have to have at least 50 percent of their 
gross annual income coming from farming, no less than 80 percent of 
debts resulting in farm operations, and total debts not more than $1.5 
million.
  Mr. Speaker, Congress must take action to lend a helping hand to so 
many folks whose backs are against the wall through really no fault of 
their own. They are facing tough times.
  I strongly support this noncontroversial legislation on behalf of the 
hardworking farmers of North Carolina's Second District and across 
America.
  Mr. GEKAS. Mr. Speaker, I yield such time as he may consume to the 
gentleman from Michigan (Mr. Smith). This gentleman, the House should 
recognize, is a leader in the effort to preserve the options for 
farmers and agriculture entrepreneurs that are lodged in this extension 
and in the full bankruptcy debate which is yet to come.
  Mr. SMITH of Michigan. Mr. Speaker, I thank the gentleman for 
yielding me this time. I certainly want to associate myself with the 
remarks of the gentlewoman from Wisconsin (Ms. Baldwin) as well as the 
gentleman from Pennsylvania (Mr. Gekas) and the gentleman from North 
Carolina (Mr. Etheridge).
  Mr. Speaker, agriculture is in a serious situation right now. Times 
are tough in farm country. While the rest of the economy is booming, 
American farmers and ranchers have not been invited to the party. 
Commodity prices, as the gentlewoman from Wisconsin indicated, are at 
record lows, export markets are shriveling up, and no relief is 
expected any time soon. While the farm credit system is currently 
sound, there are some producers who just will not be able to make ends 
meet in the short term. Some bankruptcy filings are inevitable.
  In my district, a hog producer, a pork farmer, called me last week. 
He is the fourth generation on that farm. He is as smart as most any 
entrepreneur of small business. Yet because of prices, even with his 
efforts to lay off workers and to expand his working week to 55 or 60 
hours, it still looks like that family farm may not make it.
  Chapter 12 of the title 11 bankruptcy code is only available to 
family farmers. Last October, Congress temporarily extended chapter 12 
for 6 months. My bill was passed out of this Chamber. Now we are 
looking at another extension because chapter 12 now is set to expire 
March 31, 1999. H.R. 808 will temporarily extend chapter 12 for another 
6 months so that this critical option for America's family farmers does 
not expire.
  Chapter 12 allows family farmers the option to reorganize debt rather 
than having to liquidate when declaring bankruptcy. The logic is that a 
farmer, like anybody else that needs particular tools to survive and 
make it back from a tough financial situation, needs the allowance to 
keep those tools. In this case, chapter 12 allows a farmer to continue 
to have some of those tools of production in order to keep farming and 
reorganizing. I think it is important that we note, to be eligible 
producers must be a family farm. That is characterized under current 
law by a debt not to exceed $1.5 million, not less than 80 percent of 
the debt related to agricultural activity, and they must have over 50 
percent of their individual gross income from agriculture and their 
farming operation.
  I am pleased that the chairman and this body is taking action on this 
legislation today. With less than a month to go before expiration, time 
is very short. I encourage as strongly as I might the other Chamber to 
move ahead on this legislation and get it to the President. I realize 
that many of us would prefer to see chapter 12 extended for a longer 
period of time or even made permanent. I trust that as the general 
bankruptcy reform debate is debated, a permanent fix for chapter 12 can 
be accomplished. In the interim, this legislation is needed to assure 
producers that this risk management tool is available to them.
  Again, I thank both sides of the aisle and the chairman for moving 
ahead.
  Mr. NADLER. Mr. Speaker, today we consider legislation to give family 
farmers an insulting 6 additional months of protection under chapter 12 
of the Bankruptcy Code. While I seriously doubt anyone will vote 
against this bill, it is shameful, that we are being asked to play 
games with the future of family farms in America as we are witnessing 
the worst farm crisis since the birth of chapter 12 more than a decade 
ago.
  No one disagrees that chapter 12 should be made permanent. No one. 
Bipartisan legislation has been introduced in the Other Body, by 
Senators Grassley  and Daschle, and in the House by our colleagues 
Representatives David Minge and Nick Smith. Those bills also increase 
the eligibility threshold from the current $1.5 million in aggregate 
debt to $3 million, and give certain tax debts non-priority status if 
the debtor completes the plan. The

[[Page 3933]]

first two provisions were recommendations of the National Bankruptcy 
Review Commission, and all three have been endorsed in a joint 
statement by the Commercial Law League of American, the National 
Bankruptcy Conference and the National College of Bankruptcy.
  In fact, the sponsor of this legislation introduced a measure earlier 
in this Congress which would have extended chapter 12 by 6 months past 
the sunset date, rather than merely by the 3 months in this bill. He 
then introduced a bill granting only an additional 3 months. Evidently 
this more modest effort has found favor with the Republican leadership. 
It attracted the cosponsorship of the Chairman of the Subcommittee on 
Commercial and Administrative Law and was given a fast track.
  The Gentlewoman from Wisconsin attempted to make chapter 12 permanent 
in Committee and was stopped by a procedural technicality. She then 
attempted a 2-year extension which was cut back to the 6 months we are 
considering today. As my colleagues know, the procedure being used 
today prevents us from even considering amendments to provide more 
time.
  We had a similar experience in the last Congress, when the Gentleman 
from Michigan and I introduced H.R. 4697, which would have extended 
chapter 12 until September 30, 2000. This was short of our common goal 
of making chapter 12 permanent, but in view of the fact that the 
leadership of this House had allowed chapter 12 to sunset during a farm 
crisis, we felt it was a justifiable compromise. Unfortunately, the 
bill which ultimately was brought to the floor by the Republican 
leadership, H.R. 4831, and which ultimately passed the House and was 
enacted into law as part of the Omnibus Appropriations Act, extended 
chapter 12 only until the end of March 1999.
  So for all you family farmers in crisis, the Republican leadership of 
the Congress wishes you a happy April Fools Day.
  Why are we stringing family farmers along during a crisis? What 
policy justification could there be when there is bipartisan agreement 
in both houses that we give them permanent protection and provide other 
beneficial changes to protect America's family farms? Are the policy 
objections to doing so? If so, I have yet to hear one.
  No, Mr. Speaker, this charade, which threatens family farms across 
the country, cannot possibly be justified on policy grounds. It 
certainly creates the unseemly appearance that family farmers are being 
cynically held hostage to a larger, more controversial bill which would 
undermine the existing legal protections for families and small 
businesses in financial crisis. ``You want to be protected? Help us 
strip protections from other families across the country.'' That 
certainly appears to be the message being sent today.
  And who would be benefited by that larger legislation? Many of the 
same big banks who are trying to foreclose on America's small farms. Is 
that what we want? A nation owned by nothing but big banks and 
industrial farming operations?
  Mr. Speaker, I fear that if we continue to proceed in this manner, 
people will lose their farms and members from farming communities will 
be afraid to vote their consciences on the larger bill. Let's call an 
end to this political game. Let's free America's family farmers and 
give them the protection we all agree they deserve.
  Ms. JACKSON-LEE of Texas. Mr. Speaker, I rise in support of H.R. 808, 
authorizing the extension of chapter 12 of title 11 of the United 
States Code for an additional 6 months.
  Chapter 12 provides necessary protections for family farmers with 
regular annual income. Farming is a way of life not only in the 
heartland but also in the Southwest, Midwest and Southern regions of 
America. We must save America's farms! Chapter 12 is temporary 
legislation--we need permanent legislation--we need a bankruptcy bill 
that takes into account the financial crisis of farmers.
  It is imperative that we pass permanent legislation that will 
adequately protect families with annual farm income. This extension of 
Chapter 12 is insufficient! Farmers need permanent legislation that 
will provide adequate and legal protection under the shield of 
bankruptcy. Now is neither the time to play partisan politics with 
bankruptcy nor America's farmers!
  We should offer permanent legislation that will ensure the viability 
of agriculture and the family farmer. Now is not the time to play 
partisan politics with bankruptcy legislation--in an attempt to garner 
support for a draconian bankruptcy reform bill.
  Chapter 12 was enacted on a temporary basis in 1986, then extended in 
1993 for an additional 5 years--today we offer an additional 6 months 
of relief--Chapter 12 should be available to farmers on a permanent 
basis!
  If we are serious about bankruptcy legislation--let us work together 
to provide a system that will safeguard the interest of the debtor, the 
debtor's family obligations and creditors. If we are serious about 
bankruptcy legislation--let us work together to pass legislation that 
will provide protection for everyone, especially individuals with 
special circumstances like farmers. There is no legitimate rationale 
for enacting permanent bankruptcy legislation to assist family farmers.
  We must press forward and work together to find the best way to 
accomplish these goals for the benefit of all of the parties involved 
in the bankruptcy process. Congress must come together in the spirit of 
bipartisanship to enact bankruptcy reform to protect everyone.
  Ms. BALDWIN. Mr. Speaker, I have no further requests for time, and I 
yield back the balance of my time.
  Mr. GEKAS. Mr. Speaker, I have no further requests for time, and I 
yield back the balance of my time.
  The SPEAKER pro tempore (Mr. LaTourette). The question is on the 
motion offered by the gentleman from Pennsylvania (Mr. Gekas) that the 
House suspend the rules and pass the bill, H.R. 808, as amended.
  The question was taken.
  Mr. SMITH of Michigan. Mr. Speaker, on that I demand the yeas and 
nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX and the 
Chair's prior announcement, further proceedings on this motion will be 
postponed until tomorrow.

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