[House Report 105-208]
[From the U.S. Government Publishing Office]



105th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 1st Session                                                    105-208
_______________________________________________________________________


 
                    BANKRUPTCY JUDGESHIP ACT OF 1997

                                _______
                                

 July 28, 1997.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

_______________________________________________________________________


Mr. Gekas, from the Committee on the Judiciary, submitted the following

                              R E P O R T

                        [To accompany H.R. 1596]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on the Judiciary, to whom was referred the bill 
(H.R. 1596) to amend title 28, United States Code, to authorize 
the appointment of additional bankruptcy judges, and for other 
purposes, having considered the same, report favorably thereon 
without amendment and recommend that the bill do pass.

                          Purpose and Summary

    Bankruptcy courts are an essential element of the Federal 
Judiciary and the American economic system. Unfortunately, 
total bankruptcy filings reached an unprecedented level in 
excess of one million new cases in 1996 and are continuing to 
increase in every judicial district in the nation. Additional 
resources are now needed in certain districts if the bankruptcy 
courts are to continue to perform their vital role efficiently 
and effectively.
    H.R. 1596 is intended to provide those resources where they 
are most needed. The bill authorizes seven permanent and 11 
temporary bankruptcy judgeships in 14 Federal judicial 
districts and would extend an existing temporary judgeship in 
another district, increasing the total number of judgeships 
from 326 to 344. This responds positively to a request by the 
Judicial Conference and also reflects Congressional policy in 
favor of creating temporary as opposed to permanent judgeships 
as a means of limiting future costs wherever possible and 
appropriate.

                Background and Need for the Legislation

     Bankruptcy judges serve as judicial officers of the United 
States District Courts.1 By contrast with Article 
III judges, who are nominated by the President and confirmed by 
the Senate to lifetime positions, bankruptcy judges are 
selected by the regional United States Courts of Appeals and 
serve 14-year terms, with eligibility for 
reappointment.2
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    \1\ 28 U.S.C. Sec. 152(a)(1).
    \2\ Id.
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    At this time there are 326 authorized bankruptcy judgeships 
nationwide with 13 vacancies, three of which are in the process 
of being filled. The most recent increase took place when the 
Bankruptcy Judgeship Act of 1992 authorized 25 permanent and 10 
temporary judgeships.3 Reflecting Congressional 
concern regarding an appropriate distribution of these 
resources, that Act also directed the Judicial Conference, on a 
biennial basis, to assess the continuing need for bankruptcy 
judgeships and to submit any recommendations for the 
elimination of positions.
---------------------------------------------------------------------------
    \3\ Pub. L. No. 102-361, 106 Stat. 965.
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    In 1996, the Conference recommended that no authorized 
positions be eliminated but stated that the circuit judicial 
councils will continue their practice of filling vacancies only 
when essential to ensure the effective operation of the 
bankruptcy system in the district.4 Because of 
changing filing patterns, ten authorized positions are 
currently being kept vacant, maintaining flexibility while 
providing significant cost savings.
---------------------------------------------------------------------------
    \4\ 1996 Judicial Conference Rep. on the Continuing Need for 
Existing Bankruptcy Judgeship Positions, at 2.
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    At any given time, an estimated six to ten bankruptcy 
judges are temporarily serving outside of their districts in 
order to assist with heavier caseloads elsewhere. Other steps 
taken to extend existing resources include the recall of 
approximately 25 retired bankruptcy judges to serve on either a 
full-time or part-time basis, sharing judges between districts, 
cross-designation of judges to adjacent or nearby districts, 
and utilizing additional law clerks.5 These actions, 
however, together with automation and harder and longer working 
hours on the part of judges and other court personnel, appear 
to have virtually reached their limit as a means of coping with 
the rising tide of bankruptcy filings. Chief Bankruptcy Judge 
Frank W. Koger of the Western District of Missouri, President 
of the National Conference of Bankruptcy Judges, testified at 
the Commercial and Administrative Law Subcommittee hearing that 
``this request for new positions [has been] made only after the 
judiciary has taken every possible step to maximize all other 
programs to meet the needs before asking for your assistance.'' 
6
---------------------------------------------------------------------------
    \5\ Id. at 5.
    \6\ The Bankruptcy Judgeship Act of 1997: Hearing on H.R.1596 
Before the Subcomm. on Commercial and Administrative Law of the House 
Comm. on the Judiciary, 105th Cong., 1st Sess. Transcript at 17 (1997).
---------------------------------------------------------------------------
    The Judicial Conference bases its recommendations for new 
bankruptcy judgeships on a comprehensive analysis of each 
court's caseload statistics and an on-site review of its 
workload and procedures by a survey team. The weighted caseload 
is the most important factor considered in this process and is 
similar to that used for allocating district court judgeships. 
It reflects the average amount of judicial time required over 
the life of a case to handle a matter in a particular category. 
This system was developed by the Federal Judicial Center 
following a detailed quantitative study of the workloads 
carried by virtually all bankruptcy judges in active service 
between October 1988 and October 1989. It assigns a time value 
to each of 17 different categories of bankruptcy cases so that 
the sheer number of cases alone does not constitute the 
workload profile. A Chapter 7 non-business liquidation case 
with assets under $50,000, for instance, is given a weighted 
value of 5.34 minutes, while every Chapter 11 corporate 
reorganization case with assets of at least $1 million is given 
a value of 11.234 hours. The Southern District of New York has 
recently employed a protocol developed by the Federal Judicial 
Center to assign higher weighted values to the corporate 
reorganization mega-cases arising under Chapter 11, and this is 
available for use in other jurisdictions as appropriate. 
Adversary proceedings--separate lawsuits filed within 
bankruptcy cases--are also assigned case weights.
    The Judicial Conference generally requires a district to 
meet a per judge weighted caseload average of 1,500 hours as a 
threshold for considering additional judgeships. This threshold 
is exceeded in each of the districts that would receive 
additional judges under H.R.1596. The national weighted 
caseload average in 1993 was 1327 hours per judge, and the 
weighted caseloads in the 14 districts that would receive 
judgeships under the bill exceed that average by percentages 
that range from 14 percent up to 90 percent. 7 The 
weighted hours do not reflect judicial time that cannot be 
attributable to an individual case, such as court 
administration, continuing education and intradistrict travel, 
which amount to approximately 700 hours of additional work per 
judge per year. 8 In addition, the case weights are 
assigned for the year in which a case is filed, while much 
judicial work is actually performed in subsequent years, and 
they may not reflect unusual filing patterns, such as a large 
number of objections to discharge filed in a particular case.
---------------------------------------------------------------------------
    \7\ Summary of Bankruptcy Judgeship Recommendations, Bankruptcy 
Division of the Administrative Office of the United States Courts (June 
1997).
    \8\  H.R. 1596 Hearing, supra note 6, at 9.
---------------------------------------------------------------------------
    Other pertinent factors that the Judicial Conference must 
take into account in formulating its recommendations include 
the nature and mix of the court's caseload; historical caseload 
data and filing trends; geographic, economic, and demographic 
factors; the effectiveness of the court's case management 
efforts; the availability of alternative solutions and 
resources for handling the court's workload; and the impact 
that the requested additional resources would have on the 
court's per judgeship caseload.
    Bankruptcy cases soared in 1996, exceeding one million 
cases for the first time. A total of 1,178,555 cases were filed 
during the year, or 3,615 filings per judge. This was a 27.2 
per cent increase over the 926,601 filings during 1995, which 
was itself an 11.3 percent increase from the 832,829 filings in 
1994. In the six most populous states (California, Florida, 
Illinois, New York, Pennsylvania and Texas) the increase in 
total filings ranged from 21.1 per cent in New York to 33 per 
cent in Pennsylvania. No state was less than 15 per cent and 
only five states were less than 20 per cent. Filings nationwide 
in 1997 have exceeded 100,000 per month. 9
---------------------------------------------------------------------------
    \9\  Bankruptcy Statistical Information Prepared by the 
Administrative Office of the United States Courts (Revised April 1, 
1997).
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    H.R. 1596 authorizes additional judicial positions for the 
bankruptcy court system in the 14 districts where the Judicial 
Conference--to the satisfaction of this Committee--has 
demonstrated the greatest need. The five year temporary 
judgeship concept, to be utilized in 11 of the 18 new 
appointments, represents a fiscally prudent option that 
reflects the realities of current Federal budget constraints. 
It provides the supplemental resources needed to deal with 
present expanding caseloads without burdening taxpayers with 
the continual expense of permanent judgeships that may become 
unnecessary as bankruptcy filings decline.
    The Administrative Office of the United States Courts has 
estimated that the total cost associated with each new 
bankruptcy judgeship will be $768,533 for the first year and 
$595,415 each year thereafter. These figures include a 
bankruptcy judge's current annual salary of $122,912, which is 
set by statute at 92 percent of the compensation received by a 
United States District Judge.
    H.R. 1596 was introduced on May 14, 1997, by Mr. Gekas, 
Chairman of the Subcommittee on Commercial and Administrative 
Law, with the co-sponsorship of Mr. Hyde, the Chairman of the 
Judiciary Committee, Mr. Conyers, the Committee Ranking 
Minority Member, and Mr. Nadler, the Subcommittee Ranking 
Minority Member.

                                Hearings

    The Committee's Subcommittee on Commercial and 
Administrative Law held a hearing on H.R. 1596 on June 19, 
1997. Testimony was received from five witnesses, including 
Judge David R. Thompson of the United States Court of Appeals 
for the Ninth Circuit, Chairman of the Judicial Conference 
Committee on the Administration of the Bankruptcy System; Chief 
Bankruptcy Judge Frank W. Koger of the Western District of 
Missouri, President of the National Conference of Bankruptcy 
Judges; Chief Bankruptcy Judge Tina L. Brozman of the Southern 
District of New York; Richard L. Wynne of Wynne Spiegel Itkin, 
a Los Angeles law firm, on behalf of the Los Angeles County Bar 
Association; and Michael P. Richman of the New York law office 
of Mayer, Brown and Platt, on behalf of the American Bankruptcy 
Institute.

                        Committee Consideration

    On June 19, 1997, the Subcommittee on Commercial and 
Administrative Law met in open session and ordered reported the 
bill H.R.1596, without amendment by a voice vote, a quorum 
being present. On July 16, 1997, the Committee met in open 
session and ordered reported favorably the bill H.R. 1596 
without amendment by voice vote, a quorum being present.

                      Committee Oversight Findings

    In compliance with clause 2(l)(3)(A) of rule XI of the 
Rules of the House of Representatives, the Committee reports 
that the findings and recommendations of the Committee, based 
on oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

         Committee on Government Reform and Oversight Findings

    No findings or recommendations of the Committee on 
Government Reform and Oversight were received as referred to in 
clause 2(l)(3)(D) of rule XI of the Rules of the House of 
Representatives.

               New Budget Authority and Tax Expenditures

    According to the Congressional Budget Office the bill does 
provide some new budget authority, but no new tax expenditures. 
See attached CBO letter.

               Congressional Budget Office Cost Estimate

    In compliance with clause 2(l)(3)(C) of rule XI of the 
Rules of the House of Representatives, the Committee sets 
forth, with respect to the bill, H.R. 1596, the following 
estimate and comparison prepared by the Director of the 
Congressional Budget Office under section 403 of the 
Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, July 25, 1997.
Hon. Henry J. Hyde,
Chairman, Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1596, the 
Bankruptcy Judgeship Act of 1997.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Susanne S. 
Mehlman.
            Sincerely,
                                              James L. Blum
                                   (for June E. O'Neill, Director).
    Enclosure.

H.R. 1596--Bankruptcy Judgeship Act of 1997

    Summary: H.R. 1596 would authorize 7 permanent and 11 
temporary bankruptcy judgeships in 14 federal judicial 
districts. The bill also would extend an existing temporary 
bankruptcy judgeship in another district. CBO estimates that 
enacting this bill would result in about $12 million in new 
mandatory spending over the 1998-2002 period for salaries and 
benefits of judges. In addition, CBO estimates that salaries 
and benefits for support personnel and other expenditures 
related to the judgeships would total about $21 million over 
the same period, assuming appropriation of the necessary 
amounts.
    Because enacting H.R. 1596 would affect direct spending in 
1998, pay-as-you-go procedures would apply. The bill contains 
no intergovernmental or private-sector mandates as defined in 
the Unfunded Mandates Reform Act of 1995 (UMRA) and would 
impose no costs on state, local, or tribal governments.
    Estimated Cost to the Federal Government: Based on 
information from the Administrative Office of the United States 
Courts (AOUSC) that takes into account projections for when 
vacancies would occur in each of the affected districts and the 
time it takes to nominate and confirm judges, CBO assumes that 
14 positions would be filled by the end of fiscal year 1998. We 
expect that the remaining four additional positions that would 
be authorized by the bill would be filled during the first half 
of fiscal year 1999. CBO estimates that the costs associated 
with extending the temporary judgeship in the District of 
Delaware would not be incurred until fiscal year 2001.
    CBO assumes that judges' salaries and benefits, which are 
not subject to appropriation, would average about $150,000 a 
year and that the discretionary expenditures associated with a 
judgeship would average about $220,000 a year in 1998 dollars, 
after certain initial costs. Thus, enacting H.R. 1596 would 
result in about $12 million in new mandatory spending over the 
1998-2002 period for salaries and benefits of judges. CBO 
estimates that other costs, subject to the appropriation of the 
necessary amounts, would total about $21 million over the same 
period. The estimated budgetary impact of H.R. 1596 is shown in 
the following table.

                                    [By fiscal year, in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                              1998       1999       2000       2001       2002  
----------------------------------------------------------------------------------------------------------------
Changes in direct spending:                                                                                     
    Estimated budget authority...........................          1          2          3          3          3
    Estimated outlays....................................          1          2          3          3          3
Additional spending subject to appropriation:                                                                   
    Estimated authorization level........................          1          5          5          5          5
    Estimated outlays....................................          1          5          5          5          5
----------------------------------------------------------------------------------------------------------------

    The costs of this bill fall within budget function 750 
(administration of justice).
    Pay-as-you-go considerations: The Balanced Budget and 
Emergency Deficit Control Act of 1985 specifies pay-as-you-go 
procedures for legislation affecting direct spending or 
receipts through fiscal year 1998. CBO estimates that enacting 
H.R. 1596 would increase direct spending by about $1 million in 
fiscal year 1998 for the salaries and benefits of additional 
bankruptcy judges.
    Intergovernmental and private sector impact: The bill 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no costs on State, local, or 
tribal governments.
    Estimate prepared by: Susanne S. Mehlman.
    Estimate approved by: Robert A. Sunshine, Deputy Assistant 
Director for Budget Analysis.

                   Constitutional Authority Statement

    Pursuant to rule XI, clause 2(l)(4) of the Rules of the 
United States House of Representatives, the Committee finds the 
authority for this legislation in Article I, section 8 of the 
Constitution.

                      Section-by-Section Analysis

    Sec. 1. Short title.--Section 1 provides that this Act may 
be cited as the ``Bankruptcy Judgeship Act of 1997.''
    Sec. 2. Permanent Judgeships.--Section 2 increases the 
number of permanent bankruptcy judgeships by four in the 
central district of California and by one each in the district 
of Maryland, the district of New Jersey, and the western 
district of Tennessee.
    Sec. 3. Temporary Judgeships.--Section 3 establishes a 
temporary judgeship in the eastern district of California, the 
southern district of Florida, the district of Maryland, the 
eastern district of Michigan, the southern district of 
Mississippi, the eastern district of New York, the northern 
district of New York, the southern district of New York, and 
the eastern district of Pennsylvania, the middle district of 
Pennsylvania, and the eastern district of Virginia. Temporary 
bankruptcy judgeships are effected by leaving unfilled the 
first vacancy in the office of a bankruptcy judge due to the 
death, retirement, resignation or removal of a bankruptcy judge 
in each of the designated districts which occurs five or more 
years after a person is appointed a temporary judgeship 
position. The increased number of judges, therefore, will 
continue only until such a vacancy occurs, at which point the 
number of positions will revert to the current figure. When a 
vacancy occurs by reason of the expiration of an incumbent 
judge's term, however, that judge will be eligible for 
reappointment. A person appointed to a temporary judgeship, 
therefore, may serve a full 14-year term and be eligible for 
reappointment, just as a person appointed to a ``permanent'' 
judgeship would be.
    Sec. 4. Extension.--Section 4 extends an existing temporary 
judgeship in the district of Delaware to the first vacancy due 
to death, retirement, resignation, or removal occurring 10 
years or more after October 28, 1993. This judgeship would 
otherwise expire with the first such vacancy occurring in the 
district after October 28, 1998.
    Sec. 5. Technical Amendment.--Section 5 makes a technical 
correction to 28 U.S.C. Sec. 152(a)(1) to make clear that the 
United States Courts of Appeals appoint bankruptcy judges in 
districts located in their respective circuits.

                              Agency Views

    No agency views were received on H.R. 1596.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3 of rule XIII of the Rules of the 
House of Representatives, changes in existing law made by the 
bill, as reported, are shown as follows (existing law proposed 
to be omitted is enclosed in black brackets, new matter is 
printed in italics, existing law in which no change is proposed 
is shown in roman):

           SECTION 152 OF TITLE 28 OF THE UNITED STATES CODE

Sec. 152. Appointment of bankruptcy judges

  (a)(1) [The United States court of appeals for the circuit 
shall appoint bankruptcy judges for the judicial districts 
established in paragraph (2) in such numbers as are established 
in such paragraph.] Each bankruptcy judge to be appointed for a 
judicial district as provided in paragraph (2) shall be 
appointed by the United States court of appeals for the circuit 
in which such district is located. Such appointments shall be 
made after considering the recommendations of the Judicial 
Conference submitted pursuant to subsection (b). Each 
bankruptcy judge shall be appointed for a term of fourteen 
years, subject to the provisions of subsection (e). However, 
upon the expiration of the term, a bankruptcy judge may, with 
the approval of the judicial council of the circuit, continue 
to perform the duties of the office until the earlier of the 
date which is 180 days after the expiration of the term or the 
date of the appointment of a successor. Bankruptcy judges shall 
serve as judicial officers of the United States district court 
established under Article III of the Constitution.
  (2) The bankruptcy judges appointed pursuant to this section 
shall be appointed for the several judicial districts as 
follows:

          Districts                                               Judges
     * * * * * * *
California:
    Northern......................................................     9
    Eastern.......................................................     6
    Central......................................................[21] 25
    Southern......................................................     4
     * * * * * * *
Maryland.......................................................... [4] 5
     * * * * * * *
New Jersey........................................................ [8] 9
     * * * * * * *
Tennessee:
    Eastern.......................................................     3
    Middle........................................................     3
    Western....................................................... [4] 5
     * * * * * * *

                                
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