[Congressional Record (Bound Edition), Volume 147 (2001), Part 7]
[House]
[Pages 9956-9957]
[From the U.S. Government Publishing Office, www.gpo.gov]



                  FARMER BANKRUPTCY CODE EXTENSION ACT

  Mr. SENSENBRENNER. Mr. Speaker, I move to suspend the rules and pass 
the bill (H.R. 1914) to extend for 4 additional months the period for 
which chapter 12 of title 11 of the United States Code is reenacted.
  The Clerk read as follows:

                               H.R. 1914

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

     SECTION 1. AMENDMENTS.

       Section 149 of title I of division C of Public Law 105-277, 
     as amended by Public Law 106-5, Public Law 106-70, and Public 
     Law 107-8, is amended--
       (1) by striking ``June 1, 2001'' each place it appears and 
     inserting ``October 1, 2001'', and
       (2) in subsection (a)--
       (A) by striking ``June 30, 2000'' and inserting ``May 31, 
     2001'', and
       (B) by striking ``July 1, 2000'' and inserting ``June 1, 
     2001''.

     SEC. 2. EFFECTIVE DATE.

       The amendments made by section 1 shall take effect on June 
     1, 2001.

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


                             General Leave

  Mr. SENSENBRENNER. Mr. Speaker, I ask unanimous consent that all 
Members may have 5 legislative days within which to revise and extend 
their remarks and include extraneous material on H.R. 1914, the bill 
currently under consideration.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Wisconsin?
  There was no objection.
  Mr. SENSENBRENNER. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I rise in support of H.R. 1914.
  Without question, the family farmer has always played and continues 
to play a critical role in our Nation's economic health and well-being. 
Unfortunately, bad weather, rising energy costs, volatile marketplace 
conditions, competition from large agribusinesses, and the economic 
forces experienced by any small business affect the financial stability 
of some family farmers.
  In response to the special needs of small family farmers in financial 
distress, our bankruptcy laws offer a particularized form of bankruptcy 
relief available only to these individuals and businesses. Typically 
referred to as chapter 12 of the Bankruptcy Code, this form of 
bankruptcy relief was enacted on a temporary basis as a part of the 
Bankruptcy Judges, United States Trustees and Family Farmers Bankruptcy 
Act of 1986. That has subsequently been extended on several occasions, 
most recently on February 28 of this year, and the extension expired on 
June 1.
  While statistically chapter 12 is utilized rarely; in fact, less than 
250 chapter 12 cases were filed in the 12-month period ending March 31, 
2001, its availability is crucial to family farmers. Absent chapter 12, 
family farmers would be forced to file for bankruptcy relief under the 
code's other alternatives. None of these forms of bankruptcy relief, 
however, work quite as well for farmers as chapter 12. Chapter 7, for 
example, would require a farmer to sell the farm and to pay the claims 
of the creditors. With respect to chapter 13, many farmers would simply 
be ineligible to file under that form of bankruptcy relief because of 
its debt limits. Chapter 11 is an expensive and often time-consuming 
process that does not readily accommodate the special needs of farmers.
  By virtue of H.R. 1914, chapter 12 will be reenacted retroactive to 
June 1 of this year and extended for 4 months through October 1, 2001. 
It is, however, important to note that H.R. 333, the Bankruptcy Abuse 
Prevention and Consumer Protection Act of 2001, which the House passed 
by an overwhelming majority earlier this spring and its Senate 
counterpart, which the other body also passed by a substantial margin, 
would make chapter 12 a permanent fixture of the Bankruptcy Code for 
family farmers. It is my sincere hope that in the very near future, we 
will be able to proceed to conference on pending House and Senate 
bankruptcy legislation and to present a conference report for approval 
by both Houses. In the meantime, I urge my colleagues to vote for H.R. 
1914.
  Mr. Speaker, I reserve the balance of my time.
  Ms. BALDWIN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, once again, we are here today to renew chapter 12 
bankruptcy protection for our Nation's family farmers. The bipartisan 
legislation before us today, H.R. 1914, which I am happy to cosponsor 
with the gentleman from Michigan (Mr. Smith), would allow chapter 12 
bankruptcy filings to continue through the end of this fiscal year.
  Bankruptcy often requires liquidation of real property rather than 
reorganization if debtors have significant assets. Of course, for 
family farmers, this means that their farm equipment and other assets 
often disqualify them from reorganization under chapters 11 or 13, and 
they are forced into chapter 7 liquidation. Chapter 12 is specifically 
tailored for family farmers, and it allows these family farmers to keep 
essential farm assets and reorganize their debts.
  In February, the House passed H.R. 256, also sponsored by the 
gentleman from Michigan (Mr. Smith) and myself, which retroactively 
extended chapter 12 of the Bankruptcy Code through May 31 of 2001. That 
legislation was signed by President Bush on May 11. However, the 
chapter 12 authorization has now expired once again, and this 
legislation will extend chapter 12 protection until September 30, 2001.
  The bankruptcy reform bill which has passed both Houses of Congress, 
H.R. 333, includes a permanent reauthorization of chapter 12; but since 
the current authorization has expired, our farmers need immediate 
relief. With the current year's crops in the ground, farmers need to 
know that they can reorganize and keep their farms. Our bill will 
provide the security that those family farmers who are in crisis will 
need to decide whether to stay in business for one more year.
  Mr. Speaker, I urge my colleagues to support this bill.
  Mr. Speaker, I reserve the balance of my time.
  Mr. SENSENBRENNER. Mr. Speaker, I yield 3\1/2\ minutes to the 
gentleman from Michigan (Mr. Smith), the author of the bill.
  Mr. SMITH of Michigan. Mr. Speaker, the next bill we introduce should 
be that we make this permanent. This seems to me ridiculous that we 
come before this body every 4 or 5 or 6 months to make a temporary 
increase in legislation in the bankruptcy law that is so important to 
American farmers. Let me just tell my colleagues why it is so important 
to farmers.
  Farmers, under the other provisions of the bankruptcy law which the 
two previous speakers related to, have to file either under chapter 13 
or 11 or 7; and in most cases, they are required to sell a lot of their 
machinery, which means that if they want to try to work themselves out 
of that financial situation, there is no possibility of doing it 
without machinery.
  It was just a few months ago that we were on this floor of the House 
urging our colleagues to vote for H.R. 256. This was a bill to 
retroactively bring chapter 12 to May 31. I am pleased that the bill 
was signed by the President, but also now we are with this bill that I 
urge my colleagues to support. I had

[[Page 9957]]

hoped that by the end of May the House and Senate would have agreed to 
a major bankruptcy reform package that would have included permanent 
chapter 12 protection. Unfortunately, and through no fault of this 
House, these two bodies have still not reached agreement. Further, it 
is unclear when such an agreement is going to be reached.
  In the meantime, since May 31, family farmers have been without 
chapter 12 reorganization protection, and that is what brings us here 
today. Let us not allow the situation that has taken place this last 
year and the last several months to again disrupt farmers in their 
effort to be accommodated by chapter 12, which is especially designed 
for family farmers.

                              {time}  1115

  This protection is vitally needed. American farmers continue to 
suffer drops in net farm income, and farmers are being forced into 
bankruptcy, and not having chapter 12 means greater hardship for those 
family farmers.
  Enacted, as the chairman said, in the 1986 farm crisis, chapter 12 
made significant bankruptcy relief available to a group of Americans 
that has had difficulty getting credit and managing its assets since 
the country's founding over two centuries ago.
  For example, chapter 7 was accessible to farmers to give them the so-
called ``fresh start'' promised to debtors under the Bankruptcy Code. 
However, under chapter 7, the farm, which might have been in the family 
for generations, was usually lost. Congress needed to find a way to 
ensure that creditors were protected while also ensure that the family 
farms were able to work themselves out of their current financial 
problems.
  In conclusion, let me say that family farms are in need of permanent 
chapter 12 relief. Until such relief is enacted, we have a 
responsibility to protect family farmers in the uncertainty that comes 
with the on-again off-again provision of chapter 12 protection.
  This bill provides protection to family farmers and provides enough 
time for Congress to reach agreement on permanent Chapter 12 protection 
a part of a larger reform effort.
  Before closing, I would like to thank the Chairman and Ranking Member 
of the Committee on the Judiciary, the gentleman from Wisconsin, Mr. 
Sensenbrenner, and my colleague from Michigan, Mr. Conyers, and the 
Chairman and Ranking Minority Member of the Subcommittee on Commercial 
and Administrative Law, the gentleman from Georgia, Mr. Barr, and the 
gentleman from North Carolina, Mr. Watt, for their help in bringing 
this bill to the floor today. I also want to express my thanks to the 
original co-sponsor of this bill, Ms. Baldwin, who also was a co-
sponsor of H.R. 256, and who agrees that this provision should be made 
permanent.
  Mr. Speaker, H.R. 1914 is a noncontroversial bill that deserves 
widespread support from both sides of the aisle. I urge my colleagues 
to vote yes on H.R. 1914.
  Ms. BALDWIN. Mr. Speaker, I have no further requests for time, and I 
yield back the balance of my time.
  Mr. SENSENBRENNER. Mr. Speaker, I yield 2 minutes to the gentleman 
from Georgia (Mr. Barr), the chairman of the subcommittee of 
jurisdiction.
  Mr. BARR of Georgia. Mr. Speaker, I thank the gentleman for yielding 
time to me.
  Mr. Speaker, I rise today in support of H.R. 1914. Chapter 12 of 
Title XI of the United States Code provides bankruptcy relief that is 
available exclusively for family farmers. It was developed to respond 
temporarily to the special needs of financially-distressed farmers as 
part of the Bankruptcy Judges, United States Trustees and Family Farmer 
Bankruptcy Act of 1986. Extended several times subsequently, it expired 
on June 1 of this year.
  Family farming is constantly beset by forces of nature, and should 
not have also to deal with forces that we in the Congress can 
reasonably mitigate. According to a CNN report from last October, ``The 
number of family farms and farmers in the United States are dwindling, 
and is expected to continue to do so through at least the year 2008, 
according to the United States Department of Labor, this despite the 
fact that the country's agricultural exports are expected to grow as 
developing nations improve their economies and their personal 
incomes.''
  Mr. Speaker, H.R. 1914 reenacts chapter 12 of Title XI retroactive to 
June 1, 2001, and extends it for 4 months to October 1 of this year. I 
urge my colleagues to vote for H.R. 1914.
  Mr. BEREUTER. Mr. Speaker, this Member rises today to express his 
support for H.R. 1914, which retroactively extends chapter 12 
bankruptcy for family farms and ranches to September 30, 2001. Chapter 
12 bankruptcy expired on May 31, 2001. This legislation, which this 
Member agreed to cosponsor on June 5, 2001, is very important to the 
nation's agriculture sector.
  This Member would express his appreciation to the distinguished 
gentleman from Michigan [Mr. Smith] for introducing H.R. 1914. In 
addition, this Member would like to express his appreciation to the 
distinguished gentleman from Wisconsin [Mr. Sensenbrenner], the 
Chairman of the Judiciary Committee, for his efforts in getting this 
measure to the House Floor for consideration.
  This extension of chapter 12 bankruptcy is supported by this Member 
as it allows family farmers to reorganize their debts as compared to 
liquidating their assets. The use of the chapter 12 bankruptcy 
provision has been an important and necessary option for family farmers 
throughout the nation. It has allowed family farmers to reorganize 
their assets in a manner which balances the interests of creditors and 
the future success of the involved farmer.
  If chapter 12 bankruptcy provisions are not extended for family 
farmers, it will be another very painful blow to an agricultural sector 
already reeling from low commodity prices. Not only will many family 
farmers have no viable option other than to end their operations, but 
it will also cause land values to likely plunge. Such a decrease in 
value of farmland will negatively affect the ability of family farmers 
to earn a living. In addition, the resulting decrease in farmland value 
will impact the manner in which banks conduct their agricultural 
lending activities. Furthermore, this Member has received many contacts 
from his constituents supporting the extension of chapter 12 bankruptcy 
because of the situation now being faced by our nation's farm 
families--it is clear that the agricultural sector is hurting.
  In closing, this Member urges his colleagues to support H.R. 1914.
  Mr. GILMAN. Mr. Speaker, I rise in strong support of H.R. 1914, the 
Family Farmer Bankruptcy Relief Extension. This legislation will extend 
bankruptcy protection for family farmers by allowing them to reorganize 
their debt rather than forcing them to liquidate their assets.
  This bill will help family farmers in my own congressional district 
in the ``Black Dirt'' region of Orange County, New York. Growers in 
this region have experienced severe and disastrous weather conditions 
four of the past five growing seasons, leading to a severe reduction of 
total farms, causing devastation not only for those businesses 
dependent upon the onion and vegetable $100-million industry in New 
York, but for the Valley's families and agricultural community.
  Under this bill, chapter 12 of title 11 of the United States Code 
will be extended for another 4 months from the current expansion date 
of June 1, 2001.
  I urge all of my colleagues to support this family farm friendly 
bill.
  Mr. SENSENBRENNER. Mr. Speaker, I have no further requests for time, 
and I yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Sununu). The question is on the motion 
offered by the gentleman from Wisconsin (Mr. Sensenbrenner) that the 
House suspend the rules and pass the bill, H.R. 1914.
  The question was taken.
  The SPEAKER pro tempore. In the opinion of the Chair, two-thirds of 
those present have voted in the affirmative.
  Mr. SENSENBRENNER. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX and the 
Chair's prior announcement, further proceedings on this motion will be 
postponed.

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