[House Report 106-1050]
[From the U.S. Government Publishing Office]



                                                 Union Calendar No. 612
106th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                    106-1050
_______________________________________________________________________



 
                         SUMMARY OF ACTIVITIES

                               __________

                                A REPORT

                                 of the

                      COMMITTEE ON SMALL BUSINESS

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS




January 2, 2001.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed
                               __________

                    U.S. GOVERNMENT PRINTING OFFICE
89-060                     WASHINGTON : 2001

                      COMMITTEE ON SMALL BUSINESS

                     JIM TALENT, Missouri, Chairman
LARRY COMBEST, Texas                 NYDIA VELAZQUEZ, New York
JOEL HEFLEY, Colorado                JUANITA MILLENDER-McDONALD, 
DONALD MANZULLO, Illinois                California
ROSCOE BARTLETT, Maryland            DANNY DAVIS, Illinois
FRANK LoBIONDO, New York             CAROLYN McCARTHY, New York
SUE KELLY, New York                  BILL PASCRELL, Jr., New Jersey
STEVE CHABOT, Ohio                   RUBEN HINOJOSA, Texas
PHIL ENGLISH, Pennsylvania           DONNA CHRISTIAN-GREEN, Virgin 
DAVID McINTOSH, Indiana                  Islands
RICK HILL, Montana                   ROBERT BRADY, Pennsylvania
JOSEPH R. PITTS, Pennsylvania        TOM UDALL, New Mexico
JOHN E. SWEENEY, New York            DENNIS MOORE, Kansas
PAT TOOMEY, Pennsylvania             STEPHANIE TUBBS JONES, Ohio
JIM DeMINT, South Carolina           CHARLES A. GONZALEZ, Texas
EDWARD PEASE, Indiana                DAVID PHELPS, Illinois
JOHN THUNE, South Dakota             GRACE NAPOLITANO, California
MARY BONO, California                BRIAN BAIRD, Washington
                   Harry J. Katrichis, Chief Counsel
                  Michael Day, Minority Staff Director

                         STANDING SUBCOMMITTEES

                              ----------                              

                      Subcommittee on Empowerment

                JOSEPH R. PITTS, Pennsylvania, Chairman
PHIL ENGLISH, Pennsylvania           JUANITA MILLENDER-McDONALD, 
JIM DeMINT, South Carolina               California
FRANK LoBIONDO, New Jersey           DENNIS MOORE, Kansas
ED PEASE, Indiana                    STEPHANIE TUBBS JONES, Ohio
                                     TOM UDALL, New Mexico
                                 ------                                

           Subcommittee on Government Programs and Oversight

                  ROSCOE BARTLETT, Maryland, Chairman
MARY BONO, California                DANNY K. DAVIS, Illinois
PATRICK TOOMEY, Pennsylvania         RUBEN HINOJOSA, Texas
RICK HILL, Montana                   CHARLES GONZALEZ, Texas
Vacancy                              Vacancy
                                 ------                                

       Subcommittee on Regulatory Reform and Paperwork Reduction

                    SUE KELLY, New York, Chairwoman
LARRY COMBEST, Texas                 WILLIAM PASCRELL, Jr., New Jersey
DAVID McINTOSH, Indiana              ROBERT BRADY, Pennsylvania
JOHN E. SWEENEY, New York            DENNIS MOORE, Kansas
JOHN THUNE, South Dakota             Vacancy
                                 ------                                

               Subcommittee on Tax, Finance, and Exports

                    DON MANZULLO, Illinois, Chairman
STEVE J. CHABOT, Ohio                CAROLYN McCARTHY, New York
PHIL ENGLISH, Pennsylvania           RUBEN HINOJOSA, Texas
PATRICK J. TOOMEY, Pennsylvania      CHARLES GONZALEZ, Texas
Vacancy                              GRACE NAPOLITANO, California
                                 ------                                

 Subcommittee on Rural Enterprises, Business Opportunities and Special 
                        Small Business Problems

                  FRANK LoBIONDO, New Jersey, Chairman
RICK HILL, Montana                   DONNA CHRISTIAN-CHRISTENSEN, 
JIM DeMINT, South Carolina               Virgin Islands
JOHN THUNE, South Dakota             DAVID PHELPS, Illinois
JOHN E. SWEENEY, New York            TOM UDALL, New Mexico
                                     BRIAN BAIRD, Washington


                         LETTER OF TRANSMITTAL

                              ----------                              

                     U.S. House of Representatives,
                               Committee on Small Business,
                                   Washington, DC, January 2, 2001.
Hon. Jeff Trandahl,
Clerk, U.S. House of Representatives,
Washington, DC.
    Dear Mr. Trandahl: On behalf of the Committee on Small 
Business of the U.S. House of Representatives, I am pleased to 
transmit the attached Summary of Activities of the Committee on 
Small Business for the 106th Congress.
    This report is submitted in compliance with the 
requirements of Rule XI, clause 1(d), of the Rules of the House 
of Representatives with respect to the activities of the 
Committee, and in carrying out its duties as stated in the 
Rules of the House of Representatives.
    The purpose of this report is to provide a reference 
document for Members of the Committee, the Congress and the 
public which can serve as a research tool and historic 
reference outlining the Committee's legislative and oversight 
activities conducted pursuant to Rule X, clauses 1(o), 2(b) and 
(c), and 3(k), of the Rules of the House of Representatives. 
This document is intended to serve as a general reference tool 
and not as a substitute for the hearing records, reports and 
other Committee files.
            Sincerely,
                                         James M. Talent, Chairman.
                            C O N T E N T S

                              ----------                              
                                                                   Page
Chapter I--Introduction..........................................     1
    1.1 Historical Background....................................     1
    1.2 Extracts from the Rules of the House of Representatives..     2
    1.3 Number and Jurisdiction of Subcommittees.................     3
    1.4 Disposition of Legislation Referred to the Committee.....     4
Chapter II--The Small Business Administration....................     7
    2.1 SBA Programs in General..................................     7
    2.2 SBA Business Loans.......................................     7
    2.3 Disaster Assistance Loans................................     8
    2.4 Small Business Investment Companies......................     9
    2.5 The 8(a) Program.........................................     9
    2.6 Surety Bond Guarantees...................................    10
    2.7 Small Business Development Programs......................    10
    2.8 Small Business Innovation Research.......................    11
    2.9 Small Business Technology Transfer.......................    11
    2.10 Export Assistance.......................................    12
    2.11 Office of Advocacy......................................    13
Chapter III--Hearings and Meetings Held By the Committee on Small 
  Business and its Subcommittees, 106th Congress.................    15
    3.1 Full Committee...........................................    15
    3.2 Subcommittee on Empowerment..............................    16
    3.3 Subcommittee on Government Programs and Oversight........    16
    3.4 Subcommittee on Regulatory Reform and Paperwork Reduction    17
    3.5 Subcommittee on Tax, Finance, and Exports................    17
    3.6 Subcommittee on Rural Enterprises, Business 
        Opportunities, and Special Small Business Problems.......    18
Chapter IV--Publications of the Committee on Small Business and 
  its Subcommittees, 106th Congress..............................    19
    4.1 Reports..................................................    19
    4.2 Hearings Records.........................................    20
Chapter V--Summary of Legislative Activities of the Committee on 
  Small Business, 106th Congress.................................    25
    5.1 H.R. 68 the Small Business Investment Company Corrections 
        Act of 1999, Public Law 106-9............................    25
    5.2 H.R. 391 Small Business Paperwork Reduction Act 
        Amendments of 1999.......................................    28
    5.3 H.R. 413 Program for Investment in Micro-Entrepreneurs 
        Act of 1999..............................................    29
    5.4 H.R. 439, Paperwork Elimination Act of 1999..............    33
    5.5 H.R. 440, Microloan Program Technical Corrections Act of 
        1999, Public Law 106-22..................................    36
    5.6 H.R. 774 Women's Business Centers Amendments Act of 1999, 
        Public Law 106-17........................................    38
    5.7 H.R. 775, Year 2000 Readiness and Responsibility Act, 
        Public Law 106-37........................................    39
    5.8 S. 314, Small Business Year 2000 Readiness Act, Public 
        Law 106-8................................................    42
    5.9 S. 388 (H.R. 818) Disaster Mitigation Coordination Act of 
        1999, Public Law 106-24..................................    43
    5.10 S. 791 (H.R. 1497) Women's Business Center 
        Sustainability Act, Public Law 106-165...................    45
    5.11 H.R. 1568, Veterans Entrepreneurship and Small Business 
        Development Act, Public Law 106-50.......................    49
    5.12 H.R. 1882, Small Business Review Panel Technical 
        Amendments Act of 1999...................................    55
    5.13 H.R. 2392, Small Business Innovation Research Program 
        Reauthorization Act of 2000, Public Law 106-554..........    60
    5.14 H.R. 2614, The Certified Development Company Program 
        Improvement Act of 1999, Public Law 106-554..............    68
    5.15 H.R. 2615, To Amend the General Business Loan Program, 
        Public Law 106-554.......................................    72
    5.16 H.R. 2848, New Markets Initiative Act of 1999, Public 
        Law 106-554..............................................    76
    5.17 H.R. 3843, Small Business Reauthorization Act of 2000, 
        Public Law 106-554.......................................    83
    5.18 H.R. 3845, Small Business Investment Corrections Act of 
        2000, Public Law 106-554.................................    88
    5.19 H.R. 4464, BusinessLINC Act of 2000, Public Law 106-554.    93
    5.20 H.R. 4530, New Markets Venture Capital Program Act of 
        2000, Public Law 106-554.................................    95
    5.21 H.R. 4890, The Small Business Contract Equity Act of 
        2000.....................................................   103
    5.22 H.R. 4897, Equity in Contracting for Women Act of 2000, 
        Public Law 106-554.......................................   103
    5.23 H.R. 4923, Community Renewal and New Markets Act of 
        2000, Public Law 106-554.................................   109
    5.24 H.R. 4943, The Small Business Federal Acquisition 
        Simplification Act of 2000...............................   111
    5.25 H.R. 4944, Export Working Capital Improvement Act of 
        2000, Public Law 106-554.................................   115
    5.26 H.R. 4945, The Small Business Competition Preservation 
        Act of 2000, Public Law 106-554..........................   118
    5.27 H.R. 4946, The National Small Business Regulatory 
        Assistance Act of 2000...................................   122
Chapter VI--Summary of Other Legislative Activities of the 
  Committee on Small Business....................................   129
    6.1 Committee Meetings.......................................   129
        6.1.1 Organizational Meetings............................   129
        6.1.2 Oversight Agenda for the 106th Congress............   131
    6.2 Budget Views and Estimates...............................   131
        6.2.1 Fiscal Year 2000 Budget............................   135
        6.2.2 Fiscal Year 2001 Budget............................   135
Chapter VII--Summary of Oversight, Investigations, and Other 
  Activities of the Committee on Small Business..................   141
    7.1 Summary of Committee Oversight Plan and Implementation...   141
        7.1.1 Oversight of the Small Business Administration.....   141
    7.2 Summaries of the Hearings Held by the Committee on Small 
        Business.................................................   141
        7.2.1 H.R. 68, The Small Business Investment Company 
            Technical Corrections Act of 1999....................   141
        7.2.2 Review of Women's Business Centers.................   142
        7.2.3 Review of SBA's FY 2000 Budget Request.............   143
        7.2.4 Small Business Year 2000 Readiness Act.............   145
        7.2.5 The Kyoto Protocol--The Undermining of American 
            Prosperity?..........................................   146
        7.2.6 Electronic Commerce: The Benefits and Pitfalls of 
            Conducting Business Over the Internet................   147
        7.2.7 SETRA: Fair and Simple Tax Relief for Small 
            Business.............................................   148
        7.2.8 Association Health Plans: Giving Small Businesses 
            the Benefits They Need...............................   150
        7.2.9 H.R. 1568, The Veterans Entrepreneurship and Small 
            Business Development Act of 1999.....................   151
        7.2.10 Proposed Amendments to the 7(a) and 504 Loan 
            Programs.............................................   152
        7.2.11 OSHA's Draft Safety and Health Program Rule.......   154
        7.2.12 EPA's Expansion of 112(r) of the 1990 Clean Air 
            Act Amendments to Include Propane....................   156
        7.2.13 Contract Bundling and Federal Procurement Problems 
            Facing Small Businesses..............................   157
        7.2.14 Small Farm Tax Burdens, Columbia, MO..............   159
        7.2.15 Building a Stronger Agricultural Community, Joint 
            Committee Field Hearing, Kansas City, Missouri.......   160
        7.2.16 H.R. 296, Which Will Establish a Voluntary 
            Regulatory Compliance Program Administered by the 
            Existing Network of Small Business Development 
            Centers--Field Hearing, Hudson, NY...................   161
        7.2.17 Helping Agricultural Producers ``Re-Grow'' Rural 
            America..............................................   163
        7.2.18 The Proposed Changes to Part 9 of the Federal 
            Acquisition Regulation Relating to Contractor 
            Responsibility.......................................   164
        7.2.19 Proposition 65's Effect on Small Business.........   166
        7.2.20 The Department of Defense's Contract Bundling.....   167
        7.2.21 The Skilled Workforce Enhancement Act.............   169
        7.2.22 Association Health Plans--Promoting Health Care 
            Accessibility........................................   170
        7.2.23 Reauthorization of the SBA and the Fiscal Year 
            2001 Budget Request..................................   171
        7.2.24 Helping Agricultural Producers ``Re-Grow'' Rural 
            America..............................................   174
        7.2.25 Cash Versus Accrual: The Policy Implications of 
            the Growing Inability of Small Businesses to Use 
            Simple Tax Accounting................................   175
        7.2.26 Economic Accomplishments of Round II Empowerment 
            Zones, Mecca, CA.....................................   177
        7.2.27 Small Business and Online Music...................   178
        7.2.28 Regulatory Reform Initiatives and Their Impact on 
            Small Business.......................................   179
        7.2.29 Rural Health Care Services: Has Medicare Reform 
            Killed Small Business Providers?.....................   181
        7.2.30 Hearing on Improving the Office of Advocacy.......   183
    7.3 Summaries of the Hearings held by the Subcommittees on 
        Empowerment..............................................   185
        7.3.1 Barriers to Minority Entrepreneurship..............   185
        7.3.2 Small Business, Big gains: How Economic Renewal 
            Creates Safer Neighborhoods..........................   186
        7.3.3 Welfare to Work: What is Working, What is Next?....   187
        7.3.4 The Digital Divide: Bridging the Technological Gap.   189
        7.3.5 The Start-Up Success Accounts of 1999 (HR 2372)....   191
        7.3.6 Joint Hearing with the Subcommittee on Rural 
            Enterprises, Business Opportunities, and Special 
            Small Business Problems on the Aging of Agriculture: 
            Empowering Young Producers to Grow For the Future....   192
        7.3.7 Bridging the Technological Gap: Initiatives to 
            Combat the Digital Divide............................   194
        7.3.8 Digital Divide, Carson, CA.........................   195
    7.4 Summaries of the Hearings held by the Subcommittee on 
        Government...............................................   197
        7.4.1 Joint hearing with the Subcommittee on Regulatory 
            Reform and Paperwork Reduction on Small Business 
            Advocacy Review Panels...............................   197
        7.4.2 Women's Business Enterprises.......................   198
        7.4.3 Conserving Natural Resources and Examining Related 
            Emerging Technologies................................   199
        7.4.4 The Small Business Innovation Research (SBIR) 
            Program..............................................   200
        7.4.5 Electro-Magnetic Pulse (EMP)--Should this be a 
            Problem of National Concern to Businesses Small and 
            Large as well as Government?, Laurel, MD.............   201
        7.4.6 The Burden that Needless Regulations and Lack of 
            Common Sense in Enforcement of Regulations Place Upon 
            Small Businesses.....................................   202
        7.4.7 Are Federal Programs providing Effective 
            Procurement Assistance to Small Businesses?..........   203
        7.4.8 Going Public--The End of the Rainbow for Small 
            Business?............................................   204
        7.4.9 The SBA Computerized Loan Monitoring System--A 
            Progress Report......................................   205
        7.4.10 Public Law 106-50, ``Veterans Entrepreneurship and 
            Small Business Development Act of 1999''.............   206
        7.4.11 The Present and Future of E-Commerce for Small 
            Businesses in the Private Sector and with Federal 
            Government Agencies..................................   207
        7.4.12 Effectiveness of Government Programs, Ellicott 
            City, MD.............................................   208
        7.4.13 Women in Business.................................   209
        7.4.14 The Future of Small Business: What Lies Ahead.....   210
    7.5 Summaries of the Hearings held by the Subcommittee on 
        Regulatory Reform and Paperwork Reduction................   212
        7.5.1 The Impact of Federal Regulations on Small 
            Businesses in the Hudson Valley, White Plains, NY....   212
        7.5.2 The United States Postal Service's Regulations 
            Regarding Commercial Mail Receiving Agencies (CMRAs).   213
        7.5.3 Hearing to Examine Barriers and Solutions to 
            Economic Development.................................   214
        7.5.4 OSHA's Proposed Ergonomics Standard: Its Impact on 
            Small Business.......................................   216
        7.5.5 The Impact of Fuel Prices on Small Business, 
            Valhalla, NY.........................................   218
        7.5.6 The Impact of Fuel Prices on Small Business, 
            Castleton, NY........................................   220
        7.5.7 The Quality of Regulatory Analysis.................   221
        7.5.8 The National Ombudsman's 2000 Report to Congress 
            and the Regulatory Fairness Program..................   223
    7.6 Summaries of the Hearings held by the Subcommittee on 
        Rural Enterprises, Business Opportunities, and Special 
        Small Business Problems..................................   224
        7.6.1 H.R. 957, The Farm and Ranch Risk Management Act...   224
        7.6.2 Joint Hearing with the Subcommittee on Tax, 
            Finance, and Exports on What Would Repealing the 
            Death Tax Mean to Small Business?....................   225
        7.6.3 The Future of Round II Empowerment Zones...........   227
        7.6.4 The Effects of the Roadless Policy on Rural Small 
            Business and Rural Communities.......................   228
    7.7 Summaries of the Hearings held by the Subcommittee on 
        Tax, Finance, and Exports................................   230
        7.7.1 What has OPIC done for Small Business Lately?......   230
        7.7.2 Do Unilateral Economic Trade Sanctions Unfairly 
            Penalize Small Business?.............................   231
        7.7.3 Measuring Improvements in the U.S. Export 
            Assistance Network...................................   233
        7.7.4 Making the Work Opportunity Tax Credit a Success 
            For Small Business...................................   234
        7.7.5 Trade with China Helps Small Business Exporters 
            Work.................................................   235
        7.7.6 The Impact of Banning Snowmobiles Inside National 
            Parks on Small Business..............................   236
        7.7.7 Helping Small Dry Cleaners Adopt Safer 
            Technologies: Without Losing Your Shirt..............   238
        7.7.8 The Impact of the Complexity of the Tax Code on 
            Small Business: What Can be Done About It?...........   240
                                                 Union Calendar No. 612
106th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                    106-1050

======================================================================




                         SUMMARY OF ACTIVITIES

                                _______
                                

January 2, 2001.--Committed to the Committee of the Whole House on the 
             State of the Union and ordered to be printed.

                                _______
                                

Mr. Talent of Missouri, from the Committee on Small Business, submitted 
                             the following

                              R E P O R T

                         SUMMARY OF ACTIVITIES

                              CHAPTER ONE


                              INTRODUCTION

    This is the thirteenth summary report of the standing 
Committee on Small Business. The action by the House of 
Representatives in adopting House Resolution 988 on October 8, 
1974, provided that the Committee be established as a standing 
committee, and upgraded the Permanent Select Committee on Small 
Business by giving the Committee legislative jurisdiction over 
small business matters in addition to the oversight 
jurisdiction it had historically exercised.
    The adoption of the House rules in the 94th through the 
106th Congress confirmed this action and continued the process 
begun on August 12, 1941, when, by virtue of House Resolution 
294 (77th Congress, 1st session), the Select Committee on Small 
Business was created. In January 1971, the House designated the 
Select Committee as a Permanent Select Committee; and, on 
October 8, 1974, the 93rd Congress, recognizing the importance 
of the work performed on behalf of this nation's small 
businesses, provided that the Committee should thereafter be 
established as a standing committee.

1.1  Historical Background

    The history of the Select Committee on Small Business from 
its inception in 1941 during the 77th Congress through 1972, 
the end of the 92nd Congress, may be found in House Document 
93-197 (93rd Congress, 2nd session), entitled ``A History and 
Accomplishments of the Permanent Select Committee on Small 
Business.''
    The Committee is bipartisan recognition that the nation's 
small business people represent a major segment of our business 
population and our nation's economic strength. This committee, 
continuing its vital oversight responsibilities, serves as the 
advocate and voice for small business as well as the focal 
point for small business legislation.
    In recognition of the importance of the Committee, the 
House of Representatives has established the Committee's 
membership at 36 Members. The following Members were named to 
constitute the Committee in the 106th Congress:
    Republicans included:
        James M. Talent (MO), Chairman; Larry Combest (TX); 
        Joel Hefley (CO); Donald A. Manzullo (IL); Roscoe G. 
        Bartlett (MD); Frank A. LoBiondo (NJ); Sue W. Kelly 
        (NY), Vice Chairwoman; Steve Chabot (OH); Phil English 
        (PA); David M. McIntosh (IN); Rick Hill (MT); Joseph R. 
        Pitts, (PA); Michael P. Forbes (NY) (resigned July 17, 
        1999); John E. Sweeney (NY); Patrick J. Toomey (PA); 
        Jim DeMint (SC); Edward A. Pease (IN); John R. Thune 
        (SD); Mary Bono (CA).
    Democrats included:
        Nydia M. Velazquez (NY), Ranking Minority Member; 
        Norman Sisisky (VA) (resigned February 22, 1999); 
        Juanita Millender-McDonald (CA); Danny K. Davis (IL); 
        Carolyn McCarthy (NY); Bill Pascrell, Jr. (NJ); Ruben 
        Hinojosa (TX); Donna MC Christensen (VI); Robert A. 
        Brady (PA); Tom Udall (NM); Dennis Moore (KS); 
        Stephanie Tubbs Jones (OH); Charles A. Gonzalez (TX); 
        David D. Phelps (IL); Grace F. Napolitano (CA); Brian 
        Baird (WA); Janice D. Schakowsky (IL) (resigned March 
        25, 1999); Shelley Berkley (NV) (named May 25, 1999); 
        Mark Udall (CO) (named May 25, 1999).

1.2  Extracts From the Rules of the House of Representatives

                                ------                                

                                 RULE X
                       ORGANIZATION OF COMMITTEES
             Committees and Their Legislative Jurisdictions
    1. There shall be in the House the following standing committees, 
each of which shall have the jurisdiction and related functions 
assigned by this clause and clauses 2, 3, and 4. All bills, 
resolutions, and other matters relating to subjects within the 
jurisdiction of the standing committees listed in this clause shall be 
referred to those committees, in accordance with clause 2 of rule XII, 
as follows:
          * * * * * * *
(o) Committee on Small Business
(1) Assistance to and protection of small business, including financial 
            aid, regulatory flexibility, and paperwork reduction.
(2) Participation of small-business enterprises in Federal procurement 
            and Government contracts.
                   GENERAL OVERSIGHT RESPONSIBILITIES
    2. (b)(1) In order to determine whether laws and programs 
addressing subjects within the jurisdiction of a committee are being 
implemented and carried out in accordance with the intent of Congress 
and whether they should be continued, curtailed, or eliminated, each 
standing committee (other than the Committee on Appropriations) shall 
review and study on a continuing basis--
          (A) the application, administration, execution, and 
        effectiveness of laws and programs addressing subjects within 
        its jurisdiction;
          (B) the organization and operation of Federal agencies and 
        entities having responsibilities for the administration and 
        execution of laws and programs addressing subjects within its 
        jurisdiction;
          (C) any conditions or circumstances that may indicate the 
        necessity or desirability of enacting new or additional 
        legislation addressing subjects within its jurisdiction 
        (whether or not a bill or resolution has been introduced with 
        respect thereto); and
          (D) future research and forecasting on subjects within its 
        jurisdiction.
    (2) Each committee to which subparagraph (1) applies having more 
than 20 members shall establish an oversight subcommittee, or require 
its subcommittees to conduct oversight in their respective 
jurisdictions, to assist in carrying out its responsibilities under 
this clause. The establishment of an oversight subcommittee does not 
limit the responsibility of a subcommittee with legislative 
jurisdiction in carrying out its oversight responsibilities.
    (c) Each standing committee shall review and study on a continuing 
basis the impact or probable impact of tax policies affecting subjects 
within its jurisdiction as described in clauses 1 and 3.
                      SPECIAL OVERSIGHT FUNCTIONS
          * * * * * * *
    3. (k) The Committee on Small Business shall study and investigate 
on a continuing basis the problems of all types of small business.
1.3 Number and Jurisdiction of Subcommittees
    There will be five subcommittees as follows:
    --Empowerment (five Republicans and four Democrats)
    --Government Programs and Oversight (five Republicans and four 
Democrats)
    --Regulatory Reform and Paperwork Reduction (five Republicans and 
four Democrats)
    --Rural Enterprises, Business Opportunities and Special Small 
Business Problems (five Republicans and four Democrats)
    --Tax, Finance and Exports (five Republicans and four Democrats)
    During the 106th Congress, the Chairman and ranking minority member 
shall be ex officio members of all subcommittees, without vote, and the 
full committee shall have the authority to conduct oversight of all 
areas of the committee's jurisdiction.
    In addition to conducting oversight in the area of their respective 
jurisdiction, each subcommittee shall have the following jurisdiction:
                              EMPOWERMENT
    Promotion of business growth and opportunities in economically 
depressed areas.
    Oversight and investigative authority over regulations and 
licensing policies that impact small businesses located in high risk 
communities.
    General oversight of programs targeted toward urban relief.
                   GOVERNMENT PROGRAMS AND OVERSIGHT
    Small Business Act, Small Business Investment Act, and related 
legislation.
    Federal Government programs that are designed to assist business 
generally.
    Small Business Innovation and Research Program.
    Participation of small business in Federal procurement and 
Government contracts.
    Opportunities for minority and women-owned businesses, including 
the SBA's 8(a) program.
    Oversight and investigative authority generally.

               REGULATORY REFORM AND PAPERWORK REDUCTION

    Oversight and investigative authority over the regulatory 
and paperwork policies of all Federal departments and agencies.
    Regulatory Flexibility Act.
    Paperwork Reduction Act.
    Competition policy generally.

 RURAL ENTERPRISES, BUSINESS OPPORTUNITIES AND SPECIAL SMALL BUSINESS 
                                PROBLEMS

    Promotion of business growth and opportunities in rural 
areas.
    Oversight and investigative authority over agricultural 
issues that impact small businesses.
    General promotion of business opportunities.
    Oversight and investigative authority over novel issues of 
special concern to small business.

                        TAX, FINANCE AND EXPORTS

    Tax policies and its impact on small business.
    Access to capital and finance issues generally.
    Export opportunities and promotion.

1.4  Disposition of Legislation Referred to the Committee

    A total of 47 House bills and 3 Senate bills were referred 
to the Committee on Small Business during the 106th Congress. 
The Committee ordered 22 bills reported to the House, for which 
20 reports were filed. Two bills, H.R. 4890 and H.R. 4943, were 
ordered reported and referred to the Committee on Government 
Reform for further consideration. Of the 20 bills reported, 19 
passed the House, and 17 were enacted into law. Of the 26 bills 
considered by the Committee, 23 passed the House and 20 were 
enacted into law either individually or as a part of broader 
legislation. For a summary of the Committee's legislative 
activities, please refer to Chapter Five of this report.
    During the first session of the 106th Congress, the 
Committee began a program of considering specific legislative 
initiatives designed to improve Small Business Administration 
programs. These ``rifle-shot'' bills were meant to allow the 
Committee to concentrate on each program or initiative 
individually on its merits rather than as part of a large 
complex omnibus bill. They were H.R. 68, H.R. 440, H.R. 774, 
H.R. 818, H.R. 1497, H.R. 2392, H.R. 2614, H.R. 2615, H.R. 
3843, and H.R. 3845.
    These technical corrections bills, affecting the Small 
Business Investment Company, Microloan, Women's Business 
Center, Small Business Innovation and Research, Disaster Loan, 
Certified Development Company and General Business Loan 
programs were introduced, considered, and reported by the 
Committee in the first session. The House also passed most of 
this legislation by overwhelming margins before August 15, 
1999. H.R. 68, H.R. 440, H.R. 774, H.R. 818, and H.R. 1497 all 
became individual public laws. The remaining bills were later 
included in P.L. 106-554, the Consolidated Appropriations Act 
for 2001. Summaries of these bills may be found in Chapter 5 of 
this report.
    Several individual initiatives were also considered during 
the first session of the 106th Congress, including H.R. 775, 
Y2K indemnity legislation, and S. 314, a Y2K loan program. Both 
of these programs were passed in order to assist small business 
in dealing with any potential adverse affects of the year 2000 
rollover. The Committee also continued its efforts in aiding 
small business with the federal paperwork burden by passing 
H.R. 439, the Paperwork Elimination Act, which mandates that 
federal agencies began accepting, but not requiring, electronic 
submission of documents.
    In addition, Chairman Talent authored and passed a 
significant veterans' assistance bill, H.R. 1568, the Veterans 
Entrepreneurship and Small Business Development Act, which was 
enacted in August of 1999 as P.L. 106-50. The bill improved 
veterans' access to small business programs and established a 
framework for comprehensive transition assistance for 
servicemen entering civilian life. A summary of H.R. 1568 can 
be found in Chapter 5 of this report.
    In the second session the Committee dealt primary with 
efforts to assist underserved communities through the New 
Markets Venter Capital Act, H.R. 4530, and H.R. 4464, the 
BusinessLinc Act. This legislation along with H.R. 4923, the 
American Community Renewal Act, established new programs to 
assist low income communities through a combination of tax 
incentives, financing programs, faith-based drug abuse and 
education initiatives, and regulatory relief. This legislation 
was part of a bipartisan effort between Chairman Talent, 
Speaker Hastert, and President Clinton which was signed into 
law as a part of H.R. 4577, the Consolidated Appropriations Act 
for 2001. For a full summary of this legislation see Chapter 5 
of this report.
    In addition, in the second session the Committee passed and 
saw enacted several bills relating to small business and 
federal procurement. H.R. 4897, the Women's contracting Equity 
Act was authorized by Ms. Velazquez and added as part of H.R. 
4577. It will strengthen efforts to include women-owned small 
businesses in the federal process. The Committee also passed 
H.R. 4945, which required the federal agencies to begin 
collecting data on the practice of ``bundling'' contracts. This 
practice, which involves combining contracts for ease of 
administration, has resulted in significant hardship for small 
businesses unable to bid on these large consolidated offerings. 
This legislation as well was included in the Consolidated 
Appropriations Act for 2001.
                              CHAPTER TWO

                   THE SMALL BUSINESS ADMINISTRATION

    The Committee on Small Business has both legislative and 
oversight jurisdiction over the Small Business Administration 
(SBA), an independent Federal agency chartered in 1953 to 
``aid, counsel, assist and protect the interests of small 
business.''
    During the 106th Congress, the Committee conducted a series 
of legislative and oversight hearings focused on producing 
specific pieces of legislation to ``fine tune'' the Small 
Business Administration's programs following up on the 
comprehensive reauthorization bill implemented in the 104th 
Congress. These hearings resulted in passage of a number of 
significant reforms in the basic operations of the SBA. This 
legislation is described in Chapter 5 of this report.
    The major programs administered by the SBA are briefly 
described below.
2.1  SBA Programs in General
    The SBA operates through 10 Regional offices, 85 District 
and Branch offices and has a staff of approximately 3,300 
permanent employees and a varying number of temporary disaster 
employees (as many as 1,600 in 1997). It provides loans and 
loan guarantees, both for business purposes and disaster 
recovery; assistance to small business in obtaining government 
contract; and management and technical assistance through paid 
and volunteer staff. It also administers a surety bond program 
for contractors unable to obtain bonds, which are a 
prerequisite to bidding for, or performing, certain contracts. 
The SBA also serves as an advocate for all small businesses, 
conducts economic research and monitors the implementation of 
small business legislation and programs at other agencies, such 
as the Regulatory Flexibility Act and the Small Business 
Innovation Research Program. The SBA administers a portfolio of 
more than 463,000 loans for more than $35.2 billion of which 
$6.9 billion involve loans to disaster victims.
2.2  SBA Business Loans
    A major function of the SBA is to make capital available or 
small businesses at terms and conditions that are more 
favorable than they can normally secure in the private sector. 
In addition to its general business loan program the SBA also 
has specialized loan programs designed to help small businesses 
with equity, long-term asset-based, and forms of specialized 
financing.
    Most SBA financial assistance is provided in the form of 
guarantees of commercial loans. Such guarantees can be for as 
much as 80 percent of loans up to $100,000 or 75 percent of 
loans up to the statutory maximum of $750,000. (Guarantees of 
up to $1 million can be approved for certain fixed-asset 
financings that promote public policy objectives set forth in 
the Small Business Act.) The interest rates on guaranteed loans 
are negotiated between the borrower and lender subject, in most 
cases, to a maximum of 2.75 percent above the prime rate. In 
fiscal year 1996, SBA approved 45,845 7(a) guaranteed loans 
totaling $7.7 billion and 6,884 504 program loans total $2.4 
billion; in fiscal year 1997 the agency approved 45, 288 7(a) 
guaranteed loans total $9 billion and 4,131 504 program loans 
totaling $1.4 billion; in fiscal year 1998 the SBA approved 42, 
268 7(a) loans totaling $8.53 billion and 4,930 504 program 
loans totaling $1,77 billions, in fiscal year 1999 the SBA 
approved 40,477 7(a) loans totaling $9.47 billion and 5,156 504 
loans totaling $1.96 billion, and in fiscal year 2000 the SBA 
approved 40,141 7(a) loans totaling $9.54 billion and 4,455 504 
loans totaling $1.8 billion.
    Certain applicants who could not obtain commercial loans, 
even with a government guarantee, were eligible to apply for 
SBA direct loans. Between October 1, 1985 and September 30, 
1994, eligibility for this type of assistance was limited to 
qualified businesses owned by individuals with low incomes or 
located in areas of high unemployment, Vietnam-era or disabled 
veterans, the handicapped or organizations employing them, 
business certified under the minority business capital 
ownership development program and certain non-profit 
intermediary microlenders.
    Beginning on October 1, 1994, funding for direct loans was 
limited to the handicapped and intermediary microlenders as 
part of the Administration's budget request. Funds for loans to 
the handicapped were eliminated in 1996 at the Administration's 
request. The Microloan program was made permanent in 1997 and 
currently includes over 110 intermediaries. Intermediaries 
normally borrow approximately $1 million and relend it in 
amounts not to exceed $25,000. Microloan intermediaries 
received 31 loans totaling $14.5 million dollars in FY 1998. In 
fiscal year 1999 intermediaries received 65 loans for $27.2 
million.
2.3  Disaster Assistance Loans
    The SBA provides loan assistance to disaster victims, 
including homeowners, businesses and non-profit institutions. 
When a disaster strikes it is important that damaged property 
be replaced or repaired and businesses be provided with 
adequate working capital to facilitate their recovery as 
quickly as possible. SBA disaster loans serve this purpose and 
minimize disruptions to jobs, business revenues and taxes. In 
so doing, they play a vital role in restoring the economic 
health of disaster stricken communities. Often making the 
difference in the survival of businesses necessary to that 
recovery. During fiscal year 1997, 49,515 disaster loans were 
approved for $1.138 billion dollars to businesses, homeowners 
and others affected by hurricanes, tornadoes, floods and other 
disasters. During fiscal year 1998, 30,154 disaster loans were 
approved for $728.1 million. In fiscal year 1999, 29,214 
disaster loans were approved for $731 million and in fiscal 
year 2000 21,899 disaster loans were approved for $761 million.
2.4  Small Business Investment Companies
    There is a continuing need for venture capital for new and 
growing small businesses. Small businesses have historically 
been the origin for new technological developments and 
expansion. An important source of this venture capital has been 
the SBA's Small Business Investment Company (SBIC) Program.
    SBICs supply equity capital and long-term financing to 
small firms for expansion, modernization and initial equity 
financing of their operations. SBICs also often provide 
sophisticated technical and managerial advice. They are 
licensed, regulated and, in part, financed by the SBA through 
government backed debentures. An SBIC finances small firms in 
two general ways--through straight business loans or through 
venture capital equity type investments. In fiscal year 1997, 
300 SBICs, with private capital of $5.1 billion, provided their 
small clients with $2.4 billion in 2,733 financing. During 
fiscal year 1998, 319 SBICs with $6.3 billion in private 
capital provided $3.2 billion in 3,456 financing, in 1999 the 
SBIC program provided over $4.2 billion in small business 
venture capital. In fiscal year 2000 the 395 participants in 
the SBIC program had total resources of $15.4 billion and 
provided $5.46 billion in investments in 3,060 small 
businesses.
    The SBA also administered the Specialized Small Business 
Investment Company (SSBIC) Program, which was similar to the 
SBIC program SSBICs agree to make investments solely in small 
business concerns owned by socially or economically 
disadvantaged individuals. However, the SSBIC program suffered 
from heavy losses and legislation was passed in the 104th 
Congress to restructure the SSBIC program. In fiscal year 1997, 
the SSBIC program was merged into the overall SBIC program and 
all existing SSBICs became SBICs. Under the combined program 
each SBIC, regardless of its size, will be required to invest 
at least 20% of its aggregate dollar investments in ``smaller 
enterprises''--a small business with a net income of $2 million 
or less and a net worth of $6 million or less. This will enable 
SBICs to cover the SMA markets as SSBICs but from a more stable 
and financially sound basis. A reserve of debenture funding 
will also be available for smaller SBICs in lieu of the funding 
mechanism for SSBICs. In 2000 SSBICs provided $62.8 million in 
investment in smaller enterprises.

2.5  The 8(a) Program

    In addition to financial programs available to businesses 
owned by socially and economically disadvantaged individuals 
the SBA also administers a business development program for 
such concerns, the Minority Small Business and Capital 
Ownership Development program. Participants in this program are 
eligible for the preferential award of Federal contracts under 
the authority of section 8(a) of the Small Business Act, under 
which SBA acts as a ``conduit'' by channeling selected federal 
contracts to firms owned and operated by socially and 
economically disadvantaged individuals. In fiscal year 1997, 
4,733 prime contracts with a value of $3.7 billion were awarded 
to 8(a) firms. When option years on previous contracts are 
included the total amount rises to $6.3 billion. In 1998, the 
Administration released new regulations designed to expand 
eligibility in the 8(a) program to more individuals, including 
women. While this action was taken by the Administration in 
hopes of curing Constitutional questions surrounding the 8(a) 
program further legal challenges are expected. In fiscal year 
200 the 8(a) program assisted qualified businesses in obtaining 
over 25,750 contract awards and options for a total of $4.29 
billion.

2.6  Surety Bond Guarantees

    Small business contractors and subcontractors who seek 
public and private construction contracts are often required to 
furnish surety bond guaranteeing the completion of the 
contracted work. The SBA provides assistance to such 
contractors by extending guarantees of up to 90 percent to 
surety insurance companies. These guarantees enable small 
contractors to obtain bonding more easily. The SBA's bonding 
assistance is accomplished through the Prior Approval Program 
or the Preferred Surety Bond Program. Bid bonds as well as 
performance and/or payment bonds may be guaranteed on contracts 
up to $1,250,000. The SBA will pay a surety participating in 
the Prior Approval Program 90 percent of a loss incurred if: 
(1) the total amount of the contract is $100,000 or less; and 
(2) the bond was issued on behalf of a small business owned and 
controlled by socially and economically disadvantaged 
individuals. Otherwise, SBA will pay a surety in an amount not 
to exceed an administrative ceiling of 80 percent of a loss on 
bonds issued to other than disadvantaged concerns in excess of 
$100,000. Under the Preferred Surety Bond program, the SBA's 
guarantee is limited to 70 percent of the bond for all small 
businesses on contracts that do not exceed a face value of 
$1,250,000. In fiscal year 1997, 12,292 bid bond guarantees 
produced 4,021 final bond guarantees for a total contract 
amount of over $818 million. In fiscal year 1998, 10,445 bid 
bond guarantees produced 2,860 final bond guarantees, resulting 
in total bond guarantees of $531 million. In fiscal year 1999, 
9,399 bid bond guarantees were issued resulting in $  million 
in final guarantees, and in fiscal year 2000, 5,239 bid bond 
guarantees resulting in $115 million worth of final guarantees.

2.7  Small Business Development Programs

    The SBA's economic development assistance programs support 
SBA loan recipients and other small business owners and 
managers through individual counseling, management training and 
guidance materials. These programs are keyed to furthering the 
establishment, growth and success of small business. It is 
estimated that managerial deficiencies cause nine out of ten 
business failures.
    SBA programs can identify management problems, develop 
solutions and help implement and expand business plans. In 
addition to its own business development officers, SBA relies 
heavily on national organizations such as the 13,000 member 
Service Corps of Retired Executives (SCORE) to expand its 
capacity for individual counseling.
    An important component of SBA's management assistance 
capabilities is the Small Business Development Center (SBDC) 
program. The SBDC program is a cooperative effort by 
universities, the Federal government, State and local 
governments and private sector organizations to provide 
specialized management and technical assistance to small 
businesses. Originating as a pilot program at one university in 
1976, the SBDC program has expanded to include 56 operating 
SBDCs in all 50 states, Puerto Rico and the Virgin Islands. 
There are over 900 branch centers located throughout the States 
at colleges, universities, and local government offices. In 
fiscal year 1998, the SBDC program received $77.8 million in 
Federal funds; in fiscal year 1999, the SBDC program received 
$85 million in Federal funds; and in fiscal year 2000 the SBDC 
program received $88 million.

2.8  Small Business Innovation Research

    The Small Business Innovation Development Act of 1982, 
signed into law on July 22, 1982, provides for the 
establishment of Small Business Innovation Research grants 
programs at each of the Federal agencies with extramural 
research budgets in excess of 4100 million. The Act also 
requires the establishment of annual goals for small business 
research awards in all agencies with R&D budgets in excess of 
$20 million. The funding level of SBIR programs is derived from 
statutorily fixed percentages of an agency's R&D budget.
    Through the SBIR program nearly $1 billion was awarded to 
small firms in fiscal year 1997. For fiscal year 1998, SBIR 
awards from the 11 participating agencies exceeded $1 billion.
    The SBIR program is highly competitive and provides funds 
for the feasibility testing of innovative ideas with Phase I 
and Phase II funding grant levels of $100,000 and $750,000 per 
grant, respectively. Third phase SBIR encourages the 
commercialization of innovative technology using private 
follow-on funding or government contracts when appropriate. 
Roughly 40 percent of SBIR projects result in commercially 
successful products. In fiscal year 1998, Phase I proposals 
resulted in 3,022 awards for $256 million. In Phase II, 1,320 
grants were awarded for $763 million. In fiscal year 1999 there 
were 3,334 Phase I awards totaling $299 million and 1,256 Phase 
II awards for a total of $797 million. Final numbers for fiscal 
year 2000 were not available at the time of publication of this 
report. The SBA Office of Innovation, Research and Technology 
monitors the implementation of the program at each 
participating agency.

2.9  Small Business Technology Transfer

    The Small Business Technology Transfer (STTR) program was 
established by Title II of Public Law 102-564, the Small 
Business Research and Development Enhancement Act of 1992, and 
authorized for an initial three year demonstration, beginning 
in 1994. Building upon the established model of the SBIR 
program, the STTR program provides the basis for structured 
collaboration between small technology entrepreneurs and non-
profit research institutions, such as universities and 
Federally-funded Research and Development Centers (FFRDCs) to 
foster commercialization of the results of Federally-sponsored 
research. The STTR pilot program was made permanent in 1997 as 
part of the Small Business Reauthorization Act of 1997.
    The STTR program seeks to stimulate technological 
innovation and increase private sector commercialization of 
innovations derived from basic research as well as mission-
oriented advanced research and development undertaken by 
Federal agencies. The program assures that small business is 
not excluded from the extramural research and development (R&D) 
activities conducted by Federal agencies, those undertaken by 
private sector sources and often dominated by Federally-
supported institutions such as universities and FFRDCs.
    To assure a baseline of small business participation and to 
maintain stable funding for technology commercialization, like 
the SBIR program the STTR program requires a participating 
Federal agency to reserve a small percentage of its external 
R&D budget for the program. The STTR program also uses the 
highly competitive three stage process designed to identify and 
nurture only the most promising technology innovations, seeking 
to move them to full commercialization under the technical and 
entrepreneurial leadership of small business owners. Unlike the 
SBIR program, however, the STTR program requires a small 
business to collaborate with a non-profit research institution. 
In fiscal year 1997, 1,101 Phase I proposals were submitted 
resulting in 260 Phase I awards for $24 million. 165 Phase II 
proposals were submitted resulting in 89 Phase III awards for 
$44 million. In fiscal year 1998 208 Phase I awards were made 
and 108 Phase II awards for a total of over $64 million for 
small business research. In fiscal year 1999 251 Phase I awards 
were made for $24.2 million and 78 Phase II awards for $40.5 
million. Final numbers for fiscal year 2000 were unavailable at 
the time of publication of this report.

2.10  Export Assistance

    The SBA is authorized to promote the increased 
participation of small businesses in international trade. To 
offset some of the inherent disadvantages to successful small 
business participation in international trade, the SBA, the 
Department of Commerce, other government agencies and private 
associations work together to identify, inform, motivate and 
provide access to financial assistance for the small businesses 
seeking to enter into business transactions abroad. The goal of 
the SBA's program is to continue to facilitate financial 
assistance and other appropriate management and technical 
assistance to small business concerns that have the potential 
to become successful exporters.
    The SBA's export counseling and training includes one-on-
one counseling through SCORE volunteers with significant 
international trade expertise, access to university and 
counseling, assistance from professional international trade 
management consulting firms, referral to other public or 
private sector expertise, free consultation through the Export 
Legal Assistance Network (ELAN) program, which enables small 
businesses interested in starting export operations to consult 
with international trade attorneys from the Federal Bar 
Association, and access to publications on international trade 
and export marketing.
    The SBA's financial export assistance includes several loan 
programs, depending upon the purpose for which the funds are to 
be used. Exporters may obtain funds for fixed asset 
acquisitions during start-up or expansion and for general 
working capital needs through the general 7(a) loan program. 
Export Trading Companies (ETCs) can qualify for SBA's business 
loan guaranty program, provided that they are for-profit ETCs 
and have no bank equity participation.
    The Export Working Capital Program (EWCP) allows a 
guarantee on private sector loans of up to $750,000 for working 
capital. The guarantee percentage for loans is 90 percent. 
Loans made under the EWCP program generally have a 12 month 
maturity, subject to two twelve-month renewal options. The 
loans can be for single or multiple export sales and can be 
extended for pre-shipment working capital and post-shipment 
exposure coverage, although the proceeds cannot be used to 
acquire fixed assets. In fiscal year 1997, the SBA approved 400 
guaranteed loans under the EWCP, totaling $140.3 million; in 
fiscal year 1998, the agency approved 413 loans for a total of 
$158 million: and in fiscal year 1999 429 loans were approved 
for $169 million.
    Through the 7(a) program, the SBA also offers export 
assistance through guarantees of international trade loans, 
which provide long-term financing to small businesses engaged 
in international trade, as well as those businesses adversely 
affected by import competition. The SBA can guarantee loans up 
to $1.25 million. In fiscal year 1997, the SBA made 48 
international trade loans totaling $18.1 million; in fiscal 
year 1998, 18 international trade loans were approved for a 
total of $11.1 million.

2.11  Office of Advocacy

    The SBA Office of Advocacy was created in 1976, pursuant to 
Title II of Public Law 94-305, with various stated ``primary 
functions'' and other ``continuing'' duties. The law provides 
for the President to appoint a Chief Counsel of Advocacy, 
subject to the advice and consent of the Senate. The mandated 
mission of the Office of Advocacy is to represent and advance 
small business interests before the Congress and other Federal 
departments and agencies for the purpose of enhancing small 
business competitiveness.
    The eleven statutorily prescribed ``primary functions'' of 
the Office of Advocacy are: (1) examining the role of small 
business in the American economy; (2) assessing the 
effectiveness of all Federal subsidy and assistance programs 
for small business; (3) measuring the cost and impact of 
government regulations on small business and making legislative 
and non-legislative recommendations for the elimination of 
unnecessary or excessive regulations; (4) determining the 
impact of the tax structure on small business and making 
legislative and other proposals for reform of the tax system; 
(5) studying the ability of the financial markets to meet the 
credit needs of small business; (6) determining availability 
and delivery methods of financial and other assistance to 
minority enterprises; (7) evaluating the efforts of Federal 
departments and agencies, business and industry to assist 
minority enterprises; (8) recommending ways to assist the 
development and strengthening of minority and other small 
businesses; (9) recommending ways for small business to compete 
effectively and to expand, while identifying common causes for 
small business failures; (10) developing criteria to define 
small business; and (11) advising and consulting with the 
Chairman of the administrative Conference of the United States 
on the amount of fees and other expenses awarded during the 
fiscal year by the Federal government to plaintiffs who prevail 
in administrative proceedings before Federal departments and 
agencies.
    The law also prescribes a number of ``continuing'' duties 
of the Office of Advocacy, which include: (1) serving as a 
focal point for receiving complaints and suggestions regarding 
Federal agency policies and activities that affect small 
business; (2) counseling small businesses on problems in their 
relationships with the Federal government; (3) proposing 
changes in policies and activities of all Federal departments 
and agencies to better fulfill the purposes of the Small 
Business Act; (4) representing small business before other 
Federal departments and agencies whose policies and activities 
may affect small business; and (5) enlisting the cooperation of 
others in the dissemination of information about Federal 
programs that benefit small business.
    In 1980, the Regulatory Flexibility Act (Public Law 96-354) 
enlarged the responsibilities of the Office of Advocacy to 
include the monitoring of federal Departments' and agencies' 
compliance with the Act's requirements, performing regulatory 
impact analyses, and making annual reports to Congress. Also in 
1980, Public Law 96-302 required the SBA Administrator to 
establish and maintain a small business economic database to 
provide Congress and the Administration with information on the 
economic condition of the small business sector. The statute 
prescribed twelve categories of data and required an annual 
report on trends. Although none of these database functions 
were expressly delegated to the Office of Advocacy by statute, 
they have historically been assigned to the Office of Advocacy 
by the SBA Administrator.
    The Office of Advocacy also has regional advocates who 
monitor small business and regulatory activities at the State 
level and disseminate relevant information about small business 
issues. In fiscal year 1997, the Office of Advocacy had a 
budget of $3.7 million to carry out its statutory duties and 
other activities; in fiscal year 1998, its budget was $4.5 
million.
    Recent estimates from the Office of Advocacy show that, 
through its efforts in reducing unnecessary regulations, over 
$20 billion has been saved by small business.
                             CHAPTER THREE

 HEARINGS AND MEETINGS HELD BY THE COMMITTEE ON SMALL BUSINESS AND ITS 
                     SUBCOMMITTEES, 106TH CONGRESS

3.1  Full Committee

------------------------------------------------------------------------
                  Date                         Subject and location
------------------------------------------------------------------------
January 7, 1999.........................  Hearing, H.R. 68, The Small
                                           Business Investment Company
                                           Technical Corrections Act of
                                           1999; Washington, DC.
February 11, 1999.......................  Hearing, SBA's Women's
                                           Business Centers Program;
                                           Washington, DC.
February 24, 1999.......................  Hearing, The Small Business
                                           Administration's FY 2000
                                           Budget; Washington, DC.
March 10, 1999..........................  Small Business Year 2000
                                           Readiness Act; Washington,
                                           DC.
April 29, 1999..........................  Hearing, The Kyoto Protocol--
                                           The Undermining of American
                                           Prosperity; Washington, DC.
May 26, 1999............................  Hearing, Electronic Commerce:
                                           The Benefits and Pitfalls of
                                           Conducting Business over the
                                           Internet; Washington, DC.
June 9, 1999............................  Hearing, SETRA, Fair and
                                           Simple Tax Relief for Small
                                           Business; Washington, DC.
June 10, 1999...........................  Hearing, Association Health
                                           Plans: Giving Small
                                           Businesses the Benefits They
                                           Need; Washington, DC.
June 23, 1999...........................  H.R. 1568, the Veterans
                                           Entrepreneurship and Small
                                           Business Development Act of
                                           1999; Washington, DC.
June 24, 1999...........................  Hearing, Proposed Amendments
                                           to the 7(a) and 504 Loan
                                           Programs; Washington, DC.
July 22, 1999...........................  Hearing, OSHA's Draft Safety
                                           and Health Program Rule;
                                           Washington, DC.
July 29, 1999...........................  Hearing, EPA's Expansion of
                                           112r of the 1990 Clean Air
                                           Act Amendments to include
                                           Propane; Washington, DC.
August 4, 1999..........................  Hearing, Contract Bundling and
                                           Federal Procurement Problems
                                           Facing Small Businesses;
                                           Washington, DC.
August 10, 1999.........................  Field Hearing, Small Farm Tax
                                           Burdens; Columbia, Missouri.
August 24, 1999.........................  Field Hearing, Joint House and
                                           Senate Small Business
                                           Committees, Building a
                                           Stronger Agricultural
                                           Community; Kansas City, MO.
September 2, 1999.......................  Field Hearing, H.R. 296, which
                                           will establish a Voluntary
                                           Regulatory Compliance Program
                                           Administered by the Existing
                                           Network of Small Business
                                           Development Centers (SBDCs);
                                           Hudson, New York.
September 29, 1999......................  Hearing, Helping Agricultural
                                           Producers ``Re-Grow'' Rural
                                           America; Washington, DC.
October 21, 1999........................  Hearing, The Proposed Changes
                                           to Part 9 of the Federal
                                           Acquisition Regulation
                                           Relating to Contract
                                           Responsibility
                                           (``Blacklisting'');
                                           Washington, DC.
October 28, 1999........................  Hearing, Proposition 65's
                                           Effect on Small Business;
                                           Washington, DC.
November 4, 1999........................  Hearing, Department of
                                           Defense's Contract Bundling
                                           Policy; Washington, DC.
February 2, 2000........................  Hearing, The Skilled Workforce
                                           Enhancement Act; Washington,
                                           DC.
February 16, 2000.......................  Hearing, Association Health
                                           Plans--Promoting Health Care
                                           Accessibility; Washington,
                                           DC.
March 1, 2000...........................  Hearing, Reauthorization of
                                           the SBA and the Fiscal Year
                                           2001 Budget Request;
                                           Washington, DC.
March 15, 2000..........................  Hearing, Helping Agricultural
                                           Producers ``Re-Grow'' Rural
                                           America; Washington, DC.
April 5, 2000...........................  Hearing, Cash Versus Accrual:
                                           The Policy Implications of
                                           the Growing Inability of
                                           Small Businesses to Use
                                           Simple Tax Accounting;
                                           Washington, DC.
April 27, 2000..........................  Field Hearing, Economic
                                           Accomplishments of Round II
                                           Empowerment Zones;
                                           Washington, DC.
May 24, 2000............................  Hearing, Small Business and
                                           Online Music; Washington, DC.
June 7, 2000............................  Hearing, Regulatory Reform
                                           Initiatives and their Impact
                                           on Small Business;
                                           Washington, DC.
June 14, 2000...........................  Hearing, Rural Health Care
                                           Services: Has Medicare Reform
                                           Killed Small Business
                                           Providers?; Washington, DC.
June 21, 2000...........................  Hearing, on Improving the
                                           SBA's Office of Advocacy;
                                           Washington, DC.
------------------------------------------------------------------------

3.2  Subcommittee on Empowerment

------------------------------------------------------------------------
                  Date                         Subject and location
------------------------------------------------------------------------
March 23, 1999..........................  Hearing, Barriers to Minority
                                           Enterprise; Washington, DC.
May 11, 1999............................  Field Hearing, Small Business,
                                           Big Gains, How Economic
                                           Renewal Creates Safer
                                           Neighborhoods; The Nehemiah
                                           Cooperative Community Center,
                                           Washington, DC.
May 25, 1999............................  Hearing, Welfare to Work: What
                                           is Working, What is next?;
                                           Washington, DC.
July 27, 1999...........................  Hearing, The Digital Divide:
                                           Bridging the Technology Gap;
                                           Washington, DC.
November 2, 1999........................  Hearing, H.R. 2372, The Start-
                                           Up Success Accounts of 1999
                                           (SUSA); Washington, DC.
November 3, 1999........................  Joint Hearing, Subcommittee on
                                           Empowerment and Subcommittee
                                           on Rural Enterprises,
                                           Business Opportunities, and
                                           Special Small Business
                                           Problems, The Aging of
                                           Agriculture: Empowering Young
                                           Producers to Grow for the
                                           Future; Washington, DC.
March 28, 2000..........................  Hearing, Bridging the
                                           Technological Gap:
                                           Initiatives to Combat the
                                           Digital Divide; Washington,
                                           DC.
April 26, 2000..........................  Field Hearing on the Digital
                                           Divide; Mecca, California.
------------------------------------------------------------------------

3.3  Subcommittee on Government Programs and Oversight

------------------------------------------------------------------------
                  Date                         Subject and location
------------------------------------------------------------------------
March 11, 1999..........................  Joint Subcommittee Hearing,
                                           Subcommittee on Regulatory
                                           Reform and Paperwork
                                           Reduction and the
                                           Subcommittee on Government
                                           Programs and Oversight, Small
                                           Business Advocacy Review
                                           Panels; Washington, DC.
March 25, 1999..........................  Hearing, Women's Business
                                           Enterprises; Washington, DC.
April 23, 1999..........................  Hearing, Conserving Natural
                                           Resources and Examining
                                           Related Emerging
                                           Technologies; Washington, DC.
May 27, 1999............................  Hearing, The Small Business
                                           Innovation Research (SBIR)
                                           Program; Washington, DC.
June 1, 1999............................  Field Hearing, Electro-
                                           Magnetic Pulse (EMP)--Should
                                           this be a Problem of National
                                           Concern to Businesses Small
                                           and Large as well as
                                           Government?; The Johns
                                           Hopkins University, Laurel,
                                           Maryland.
July 27, 1999...........................  Hearing, The Burden that
                                           Needless Regulations and Lack
                                           of Common Sense in
                                           Enforcement of Regulations
                                           Place upon Small Businesses;
                                           Washington, DC.
August 18, 1999.........................  Field Hearing, Are Federal
                                           Programs Providing Effective
                                           Procurement Assistance to
                                           Small Businesses?; Chicago,
                                           IL.
October 14, 1999........................  Hearing, Going Public--The End
                                           of the Rainbow for a Small
                                           Business?; Washington, DC.
February 29, 2000.......................  Hearing, The SBC Computerized
                                           Loan Monitoring System--A
                                           Progress Report; Washington,
                                           DC.
March 14, 2000..........................  Joint hearing with
                                           Subcommittee on Benefits of
                                           the Veterans Affairs
                                           Committee on Public Law 105-
                                           50, ``Veterans
                                           Entrepreneurship and Small
                                           Business Development Act of
                                           1999''; Washington, DC.
April 11, 2000..........................  Hearing, The Present and
                                           Future of E-Commerce for
                                           Small Businesses in the
                                           Private Sector and with
                                           Federal Government Agencies;
                                           Washington, DC.
April 25, 2000..........................  Field Hearing on Impact of
                                           Federal and Community-Based
                                           Programs on Main Street
                                           America and Various Segments
                                           of the Small Business
                                           Community; Elliott City,
                                           Maryland.
June 8, 2000............................  Hearing, Women in Business;
                                           Washington, DC.
September 28, 2000......................  Hearing, The Future of Small
                                           Business: What Lies Ahead?;
                                           Washington, DC.
------------------------------------------------------------------------

3.4  Subcommittee on Regulatory Reform and Paperwork Reduction

------------------------------------------------------------------------
                  Date                         Subject and location
------------------------------------------------------------------------
March 11, 1999..........................  Joint Subcommittee Hearing,
                                           Subcommittee on Regulatory
                                           Reform and Paperwork .
September 1, 1999.......................  Field Hearing, The Impact of
                                           Federal Regulations on Small
                                           Business in the Hudson
                                           Valley; White Plains, New
                                           York.
October 19, 1999........................  Hearing, U.S. Postal Service's
                                           Regulations Regarding
                                           Commercial Mail Receiving
                                           Agencies (CMRAs); Washington,
                                           DC.
November 22, 1999.......................  Field hearing, Barriers and
                                           Solutions to Economic
                                           Development on Northern New
                                           Jersey; Paterson, New Jersey.
April 13, 2000..........................  Hearing, OSHA's Proposed
                                           Ergonomics Standard: Its
                                           Impact on Small Business,
                                           Washington, DC.
April 18, 2000..........................  Field Hearing, Impact of Fuel
                                           Prices on Small Business;
                                           Valhalla, New York.
April 18, 2000..........................  Field Hearing, Impact of Fuel
                                           Prices on Small Business;
                                           Castleton, New York.
June 8, 2000............................  Hearing, The Quality of
                                           Regulatory Analysis;
                                           Washington, DC.
June 15, 2000...........................  Hearing, The National
                                           Ombudsman 2000 Report to
                                           Congress and the Regulatory
                                           Fairness Program; Washington,
                                           DC.
------------------------------------------------------------------------

3.5  Subcommittee on Tax, Finance, and Exports

------------------------------------------------------------------------
                  Date                         Subject and location
------------------------------------------------------------------------
May 13, 1999............................  Hearing, What would Repealing
                                           the Death Tax Mean to Small
                                           Business?; Washington, DC.
May 18, 1999............................  Hearing, What has OPIC done
                                           for Small Business Lately?;
                                           Washington, DC.
June 24, 1999...........................  Hearing Do Unilateral Economic
                                           Trade Sanctions Unfairly
                                           Penalize Small Business?;
                                           Washington, DC.
September 9, 1999.......................  Hearing, Measuring
                                           Improvements in the U.S.
                                           Export Assistance Network;
                                           Washington, DC.
May 4, 2000.............................  Hearing, Making the Work
                                           Opportunity Tax Credit a
                                           Success for Small Business;
                                           Washington, DC.
May 16, 2000............................  Hearing, Trade with China
                                           Helps Small Business
                                           Exporters Work; Washington,
                                           DC.
July 13, 2000...........................  Hearing, The Impact of Banning
                                           Snowmobiles Inside National
                                           Parks on Small Business;
                                           Washington, DC.
July 20, 2000...........................  Hearing, Helping Small Dry
                                           Cleaners Adopt Safer
                                           Technologies: Without Losing
                                           Your Shirt; Washington, DC.
September 7, 2000.......................  Hearing, The Impact of the
                                           Complexity of the Tax Code on
                                           Small Business: What Can Be
                                           Done About It?; Washington,
                                           DC.
------------------------------------------------------------------------

3.6  Subcommittee on Rural Enterprises, Business Opportunities, and 
        Special Small Business Problems

------------------------------------------------------------------------
                  Date                         Subject and Location
------------------------------------------------------------------------
April 27, 1999..........................  Hearing, H.R. 957, The Farm
                                           and Ranch Risk Management
                                           Act. (FARRM); Washington, DC.
November 3, 1999........................  Hearing, Joint Subcommittee on
                                           Empowerment and Subcommittee
                                           on Rural Enterprises,
                                           Business Opportunities, and
                                           Special Small Business
                                           Problems, The Aging of
                                           Agriculture: Empowering Young
                                           Producers to Grow for the
                                           Future; Washington, DC.
June 7, 2000............................  Hearing, The Future of Round
                                           II Empowerment Zones;
                                           Washington, DC.
July 11, 2000...........................  Hearing, The Effects of the
                                           Roadless Policy of Rural
                                           Small Business and Rural
                                           Communities; Washington, DC.
------------------------------------------------------------------------

                              CHAPTER FOUR

PUBLICATIONS OF THE COMMITTEE ON SMALL BUSINESS AND ITS SUBCOMMITTEES, 
                             106TH CONGRESS

4.1  Reports

------------------------------------------------------------------------
           House Report Number                    Title and date
------------------------------------------------------------------------
106-1...................................  Report to accompany H.R. 68,
                                           Small Business Investment
                                           Company Technical Corrections
                                           of 1999; January 19, 1999.
106-8 (Part 1)..........................  Report to accompany H.R. 39,
                                           The Small Business Paperwork
                                           Reduction Act of 1999;
                                           February 5, 1999.
106-11 (Part 1).........................  Report to accompany H.R. 439,
                                           Paperwork Elimination Act of
                                           1999; February 8, 1999.
106-12..................................  Report to accompany H.R. 440,
                                           Microloan Program Technical
                                           Corrections Act of 1999;
                                           February 8, 1999.
106-33..................................  Report to accompany H.R. 818,
                                           A bill to amend the Small
                                           Business Act to authorize a
                                           pilot program for the
                                           implementation of disaster
                                           mitigation measures by small
                                           businesses; March 1, 1999.
106-47..................................  Report to accompany H.R. 774,
                                           Women's Business Center
                                           Amendments Act of 1999; March
                                           10, 1999.
106-184 (Part 2)........................  Report to accompany H.R. 413,
                                           Program for Investment in
                                           Microentrepreneurs Act of
                                           1999; July 2, 1999.
106-278.................................  Report to accompany H.R. 2614,
                                           Certified Development Company
                                           Program Improvements Act of
                                           1999; August 2, 1999.
106-279.................................  Report to accompany H.R. 2615,
                                           A bill to amend the Small
                                           Business Act to make
                                           improvements to the general
                                           business loan program, and
                                           for other purposes; August 2,
                                           1999.
106-365.................................  Report to accompany H.R. 1497,
                                           Women's Business Centers
                                           Sustainability Act of 1999;
                                           October 5, 1999.
106-206 (Part 1)........................  Report to accompany H.R. 1568,
                                           Veterans Entrepreneurship and
                                           Small Business Development
                                           Act of 1999; June 29, 1999.
106-520.................................  Report to accompany H.R. 3845,
                                           Small Business Investment
                                           Corrections Act of 2000;
                                           March 14, 2000.
106-522.................................  Report to accompany H.R. 3843,
                                           Small business
                                           Reauthorization Act of 1999;
                                           March 14, 2000.
106-643 (Part 1)........................  Report to accompany H.R. 1882,
                                           Small Business Review Panel
                                           Technical Amendments Act of
                                           1999; May 25, 2000.
106-706 (Part 1)........................  Report to accompany H.R. 2848,
                                           New Markets Initiative Act of
                                           1999; June 28, 2000.
106-784.................................  Report to accompany H.R. 4464,
                                           A bill to amend the Small
                                           Business Act to authorize the
                                           Administrator of the Small
                                           business Administration to
                                           make grants and to enter into
                                           cooperative agreements to
                                           encourage the expansion of
                                           business-to-business
                                           relationships and the
                                           provision of certain
                                           information; July 25, 2000.
106-785.................................  Report to accompany H.R. 4530,
                                           A bill to amend the Small
                                           Business Act to authorize the
                                           Administrator of the Small
                                           Business Administration to
                                           establish a New Market
                                           Venture Capital Program, and
                                           for other purposes; July 25,
                                           2000.
106-858.................................  Report to accompany H.R. 4945,
                                           Small Business Competition
                                           Preservation Act of 2000;
                                           September 18, 2000.
106-879.................................  Report to accompany H.R. 4897,
                                           A bill to amend the Small
                                           Business Act to provide
                                           Federal contracting
                                           assistance to small business
                                           concerns owned and controlled
                                           by women; September 21, 2000.
106-880.................................  Report to accompany H.R. 4944,
                                           Export Working Capital Loan
                                           Improvement Act of 2000;
                                           September 21, 2000.
106-881.................................  Report to accompany H.R. 4946,
                                           National Small Business
                                           Regulatory Assistance Act of
                                           2000; September 21, 2000.
------------------------------------------------------------------------

4.2  Hearing Records

------------------------------------------------------------------------
       Serial No.               Held by        Date, title, and location
------------------------------------------------------------------------
106-1..................  Full................  January 7, 1999: H.R. 68,
                                                Amending Section 20 of
                                                the Small Business Act
                                                and Make Technical
                                                Corrections in Title III
                                                of the Small Business
                                                Investment Act;
                                                Washington, DC.
106-2..................  Full................  February 11, 1999: Review
                                                of Women's Business
                                                Centers; Washington, DC.
106-3..................  Full................  February 24, 1999: The
                                                Small Business
                                                Administration's FY 2000
                                                Budget; Washington, DC.
106-4..................  Joint Regulatory      March 11, 1999: Joint
                          Government.           Subcommittee Hearing,
                                                Subcommittee on
                                                Regulatory Reform and
                                                Paperwork Reduction and
                                                the Subcommittee on
                                                Government Programs and
                                                Oversight, Small
                                                Business Advocacy Review
                                                Panels; Washington, DC.
106-5..................  Full................  March 12, 1999: Small
                                                Business Year 2000
                                                Readiness Act;
                                                Washington, DC.
106-6..................  Empowerment.........  March 23, 1999: Barriers
                                                to Minority
                                                Entrepreneurship;
                                                Washington, DC.
106-7..................  Government..........  March 25, 1999: Women's
                                                Business Enterprises;
                                                Washington, DC.
106-8..................  Government..........  April 23, 1999:
                                                Conserving Natural
                                                Resources and Examining
                                                Related Emerging
                                                Technologies;
                                                Washington, DC.
106-9..................  Rural...............  April 27, 1999: H.R. 957,
                                                the Farm and Ranch Risk
                                                Management Act. (FARRM);
                                                Washington, DC.
106-10.................  Full................  April 29, 1999: The Kyoto
                                                Protocol--The
                                                Undermining of American
                                                Prosperity; Washington,
                                                DC.
106-11.................  Empowerment.........  May 11, 1999: Field
                                                Hearing, Small Business,
                                                Big Gains, How Economic
                                                Renewal Creates Safer
                                                Neighborhoods; The
                                                Nehemiah Cooperative
                                                Community Center,
                                                Washington, DC.
106-12.................  Joint Tax Rural.....  May 13, 1999: What Would
                                                Repealing the Death Tax
                                                Mean to Small Business?;
                                                Washington, DC.
106-13.................  Tax.................  May 18, 1999: What has
                                                OPIC done for Small
                                                Business Lately?
                                                Washington, DC.
106-14.................  Empowerment.........  May 25, 1999: Welfare to
                                                Work: What is Working,
                                                What is Next?
                                                Washington, DC.
106-15.................  Full................  May 26, 1999: Electronic
                                                Commerce: The Benefits
                                                and Pitfalls of
                                                Conducting Business over
                                                the Internet;
                                                Washington, DC.
106-16.................  Government..........  May 27, 1999: The Small
                                                Business Innovation
                                                Research (SBIR) Program;
                                                Washington, DC.
106-17.................  Government..........  June 1, 1999: Field
                                                hearing, Electro-
                                                Magnetic Pulse (EMP)--
                                                Should this be a Problem
                                                of National Concern to
                                                Businesses Small and
                                                Large as well as
                                                Government?; The Johns
                                                Hopkins University,
                                                Laurel, MD.
106-18.................  Full................  June 9, 1999: SETRA, Fair
                                                and Simple Tax Relief
                                                for Small Business;
                                                Washington, DC.
106-19.................  Full................  June 10, 1999:
                                                Association Health
                                                Plans, Giving Small
                                                Business the Benefits
                                                They Need; Washington,
                                                DC.
106-20.................  Full................  June 23, 1999: H.R. 1568,
                                                the Veterans
                                                Entrepreneurship and
                                                Small Business
                                                Development Act of 1999;
                                                Washington, DC.
106-21.................  Full................  June 24, 1999: Proposed
                                                Amendments to the 7(a)
                                                and 504 Loan Programs;
                                                Washington, DC.
106-22.................  Tax.................  June 24, 1999: Do
                                                Unilateral Economic
                                                Trade Sanctions Unfairly
                                                Penalize Small Business?
                                                Washington, DC.
106-23.................  Full................  July 22, 1999: OSHA's
                                                Draft Safety and Health
                                                Program Rule;
                                                Washington, DC.
106-24.................  Government..........  July 27, 1999: The Burden
                                                that Needless
                                                Regulations and Lack of
                                                Common Sense in
                                                Enforcement of
                                                Regulations Place upon
                                                Small Business;
                                                Washington, DC.
106-25.................  Empowerment.........  July 27, 1999: The
                                                Digital Divide: Bridging
                                                the Technology Gap;
                                                Washington, DC.
106-26.................  Full................  July 29, 2999: EPA's
                                                Expansion of 112r of the
                                                1990 Clean Air Act
                                                Amendments to include
                                                Propane; Washington, DC.
106-27.................  Full................  August 4, 1999: Contract
                                                Bundling and Federal
                                                Procurement Problems
                                                Facing Small Business;
                                                Washington, DC.
106-28.................  Full................  August 10, 1999: Small
                                                Farm Tax Burdens;
                                                Columbia, MO.
106-29.................  Government..........  August 18, 1999: Are
                                                Federal Programs
                                                Providing Effective
                                                Procurement Assistance
                                                to Small Businesses?;
                                                Chicago, IL.
106-30.................  Full................  August 24, 1999: Joint
                                                House and Senate Small
                                                Business Committees
                                                hearing, Building a
                                                Stronger Agricultural
                                                Community; Kansas City,
                                                MO.
106-31.................  Regulatory..........  September 1, 1999: The
                                                Impact of Federal
                                                Regulations on Small
                                                Businesses in the Hudson
                                                Valley; White Plains,
                                                NY.
106-32.................  Full................  September 2, 1999: H.R.
                                                296, which will
                                                establish a Voluntary
                                                Regulatory Compliance
                                                Program Administered by
                                                the Existing Network of
                                                Small Business
                                                Development Centers
                                                (SBDCs); Hudson, NY.
106-33.................  Tax.................  September 9, 1999,
                                                Measuring Improvements
                                                in the U.S. Export
                                                Assistance Network;
                                                Washington, DC.
106-34.................  Full................  September 29, 1999:
                                                Helping Agriculture
                                                Producers ``Re-Grow''
                                                Rural America;
                                                Washington, DC.
106-35.................  Government..........  October 14, 1999: Going
                                                Public--The End of the
                                                Rainbow for a Small
                                                Business?; Washington,
                                                DC.
106-36.................  Regulatory..........  October 19, 1999: U.S.
                                                Postal Service's
                                                Regulations Regarding
                                                Commercial Mail
                                                Receiving Agencies
                                                (CMRAs); Washington, DC.
106-37.................  Full................  October 21, 1999: The
                                                Proposed Changes to Part
                                                9 of the Federal
                                                Acquisition Regulation
                                                Relating to Contract
                                                Responsibility
                                                (``Blacklisting'');
                                                Washington, DC.
106-38.................  Full................  October 28, 1999:
                                                Proposition 65's Effect
                                                on Small Business;
                                                Washington, DC.
106-39.................  Empowerment.........  November 2, 1999: The
                                                Start-Up Success
                                                Accounts of 1999 (SUSA),
                                                H.R. 2372; Washington,
                                                DC.
106-40.................  Joint Empowerment     November 3, 1999: Joint
                          Regulatory.           Subcommittee on
                                                Empowerment and
                                                Subcommittee on Rural
                                                Enterprises hearing,
                                                Business Opportunities,
                                                and Special Small
                                                Business Problems: The
                                                Aging of Agriculture:
                                                Empowering Young
                                                Producers to Grow for
                                                the Future; Washington,
                                                DC.
106-41.................  Full................  November 4, 1999: Full
                                                Committee Hearing on
                                                Department of Defense's
                                                Contract Bundling
                                                Policy; Washington, DC.
106-42.................  Full................  February 9, 2000: Hearing
                                                on the Skilled Workforce
                                                Enhancement Act;
                                                Washington, DC.
106-43.................  Full................  February 16, 2000:
                                                Hearing on Association
                                                Health Plans--Promoting
                                                Health Care
                                                Accessibility;
                                                Washington, DC.
106-44.................  Government..........  February 29, 2000: The
                                                SBC Computerized Loan
                                                Monitoring System--A
                                                Progress Report;
                                                Washington, DC.
106-45.................  Full................  March 1, 2000:
                                                Reauthorization of the
                                                SBA and the Fiscal Year
                                                2001 Budget Request.
                                                Washington, DC.
106-46.................  Government..........  March 14, 2000: Public
                                                Law 105-50, ``Veterans
                                                Entrepreneurship and
                                                Small Business
                                                Development Act of
                                                1999''; Washington, DC.
106-47.................  Full................  March 15, 2000: Helping
                                                Agricultural Producers
                                                ``Re-Grow'' Rural
                                                America; Washington, DC.
106-48.................  Empowerment.........  March 28, 2000: Bridging
                                                the Technological Gap:
                                                Initiatives to Combat
                                                the Digital Divide;
                                                Washington, DC.
106-49.................  Full................  April 5, 2000: Cash
                                                Versus Accrual: The
                                                Policy Implications of
                                                the Growing Inability of
                                                Small Businesses to Use
                                                Simple Tax Accounting;
                                                Washington, DC.
106-50.................  Government..........  April 11, 2000: The
                                                Present and Future of E-
                                                Commerce for Small
                                                Businesses in the
                                                Private Sector and with
                                                Federal Government
                                                Agencies; Washington,
                                                DC.
106-51.................  Regulatory..........  April 13, 2000: OSHA's
                                                Proposed Ergonomics
                                                Standard: Its Impact on
                                                Small Business;
                                                Washington, DC.
106-52.................  Regulatory..........  April 18, 2000: The
                                                Impact of Fuel Prices on
                                                Small Business;
                                                Castleton, NY.
106-53.................  Regulatory..........  April 18, 2000: The
                                                Impact of Fuel Prices on
                                                Small Business;
                                                Valhalla, NY.
106-54.................  Empowerment.........  April 25, 2000:
                                                Empowerment Subcommittee
                                                Field Hearing on the
                                                Digital Divide; Carson,
                                                CA.
106-55.................  Government..........  April 27, 2000:
                                                Effectiveness of
                                                Government; Ellicott
                                                City, MD.
106-56.................  Full................  April 26, 2000: The
                                                Future of Round II
                                                Empowerment Zones;
                                                Mecca, CA.
106-57.................  Tax.................  May 4, 2000: Making the
                                                Work Opportunity Tax
                                                Credit a Success for
                                                Small Business;
                                                Washington, DC.
106-58.................  Tax.................  May 16, 2000: Trade with
                                                China Helps Small
                                                Business Exporters Work;
                                                Washington, DC.
106-59.................  Full................  May 24, 2000: Small
                                                Business and Online
                                                Music; Washington, DC.
106-60.................  Full................  June 7, 2000: Regulatory
                                                Reform Initiatives and
                                                their Impact on Small
                                                Business; Washington,
                                                DC.
106-61.................  Rural...............  June 7, 2000: The Future
                                                of Round II Empowerment
                                                Zones; Washington, DC.
106-62.................  Government..........  June 8, 2000: Women in
                                                Business; Washington,
                                                DC.
106-63.................  Regulatory..........  June 8, 2000: The Quality
                                                of Regulatory Analysis;
                                                Washington, DC.
106-64.................  Full................  June 14, 2000: Rural
                                                Health Care Services:
                                                Has Medicare Reform
                                                Killed Small Business
                                                Providers?; Washington,
                                                DC.
106-65.................  Regulatory..........  June 15, 2000: Hearing on
                                                the National Ombudsman
                                                2000 Report to Congress
                                                and the Regulatory
                                                Fairness Program;
                                                Washington, DC.
106-66.................  Full................  June 21, 2000: Hearing on
                                                Improving the SBA's
                                                Office of Advocacy;
                                                Washington, DC.
106-67.................  Rural...............  July 11, 2000: Hearing on
                                                the Effects of the
                                                Roadless Policy of Rural
                                                Small Business and Rural
                                                Communities; Washington,
                                                DC.
106-68.................  Tax.................  July 13, 2000: The Impact
                                                of Banning Snowmobiles
                                                Inside National Parks on
                                                Small Business;
                                                Washington, DC.
106-69.................  Tax.................  July 20, 2000: Helping
                                                Small Dry Cleaners Adopt
                                                Safer Technologies:
                                                Without Losing your
                                                Shirt; Washington, DC.
106-70.................  Tax.................  September 7, 2000:
                                                Hearing, The Impact of
                                                the Complexity of the
                                                Tax Code on Small
                                                Business: What Can be
                                                Done About it?;
                                                Washington, DC.
106-71.................  Government..........  September 28, 2000:
                                                Subcommittee on
                                                Government Programs and
                                                Oversight, The Future of
                                                Small Business; What
                                                Lies Ahead?; Washington,
                                                DC.
106-72.................  Regulatory..........  November 22, 1999:
                                                Barriers and Solutions
                                                to Economic Development
                                                on Northern New Jersey,
                                                Paterson, NJ
------------------------------------------------------------------------

                              CHAPTER FIVE

 LEGISLATION ACTED ON BY THE COMMITTEE ON SMALL BUSINESS IN THE 106TH 
                                CONGRESS

5.1  H.R. 68--The Small Business Investment Company Technical 
        Corrections Act of 1999, Public Law No. 106-9

                           Legislative History
------------------------------------------------------------------------
                  Date                                Action
------------------------------------------------------------------------
H.R. 68:
January 6, 1999.........................  Referred to the House
                                           Committee on Small Business.
January 7, 1999.........................  Committee Consideration and
                                           Mark-up Session Held.
January 7, 1999.........................  Ordered to be Reported by
                                           Voice Vote.
January 19, 1999........................  Reported by the Committee on
                                           Small Business. H. Rept. 106-
                                           1.
January 19, 1999........................  Placed on the Union Calendar,
                                           Calendar No. 1.
February 2, 1999........................  Mr. Talent moved to suspend
                                           the rules and pass the bill,
                                           as amended.
February 2, 1999........................  Considered under suspension of
                                           the rules. (consideration: CR
                                           H286-288).
February 2, 1999........................  At the conclusion of debate,
                                           the Yeas and Nays were
                                           demanded and ordered.
                                           Pursuant to the provisions of
                                           clause 5, rule I, the Chair
                                           announced that further
                                           proceedings on the motion
                                           would be postponed.
February 2, 1999........................  Considered as unfinished
                                           business. (consideration: CR
                                           H293-294).
February 2, 1999........................  On motion to suspend the rules
                                           and pass the bill, as
                                           amended. Agreed to by the
                                           Yeas and Nays: (2/3
                                           required): 402-2 (Roll no.
                                           7). (text: CR H286-287).
February 2, 1999........................  Motion to reconsider laid on
                                           the table. Agreed to without
                                           objection.
February 4, 1999........................  Received in the Senate.
February 22, 1999.......................  Read twice and referred to the
                                           Committee on Small Business.
March 22, 1999..........................  Senate Committee on Small
                                           Business discharged by
                                           Unanimous Consent.
March 22, 1999..........................  Measure laid before Senate by
                                           unanimous consent.
                                           (consideration: CR S3062-
                                           3063).
March 22, 1999..........................  Senate struck all after the
                                           Enacting Clause and
                                           substituted the language of
                                           S. 364.
March 22, 1999..........................  Passed Senate in lieu of S.
                                           364 with an amendment by
                                           Unanimous Consent. (text: CR
                                           S3062-3063).
March 23, 1999..........................  Mr. Talent moved that the
                                           House suspend the rules and
                                           agree to the Senate
                                           amendment.
March 23, 1999..........................  On motion that the House
                                           suspend the rules and agree
                                           to the Senate amendment.
                                           Agreed to by voice vote.
                                           (text: CRH1490-1491).
March 23, 1999..........................  Motion to reconsider laid on
                                           the table Agreed to without
                                           objection.
March 23, 1999..........................  Message on Senate action sent
                                           to the House.
March 23, 1999..........................  Cleared for White House.
March 25, 1999..........................  Presented to President.
April 5, 1999...........................  Signed by President.
April 5, 1999...........................  Became Public Law No. 106-9.
------------------------------------------------------------------------

                          Need for Legislation

    Congress revamped the SBIC program in the 103d Congress to 
provide for a new form of leverage geared specifically towards 
equity investment in small businesses. Over the ensuring years, 
as the new program has become established, certain deficiencies 
have come to light; in addition, certain statutory provisions 
have become obsolete. Moreover, the nature of the SBIC industry 
has changed. The result is a participating securities industry 
made up primarily of smaller SBIC's. The fact that these 
smaller SBIC's are dominating the program points to shifting 
dynamics in the SBIC program. Smaller, start-up investments are 
more typical and, therefore, the demand for leverage has 
shifted to smaller individual placements.
    H.R. 68 seeks to correct these deficiencies, and remove 
provisions that may produce confusion due to changes in law and 
the character of the SBIC program. First, H.R. 68 will modify 
the SBIC program to exclude contingent obligations from the 
calculation of interest in loans made by SBICs. These 
contingent obligations include financial tools like royalties, 
warrants, conversion rights and options. Many small businesses 
use these devices to help buy down the interest rates on their 
financings. Unfortunately, current law has forced SBA and the 
SBICs to try and include these options as part of the interest 
applicable for a determination of the maximum applicable 
interest rate. These valuations have resulted in confusion and 
uncertainty for all concerned and have often resulted in the 
loss of financing opportunities for small businesses.
    Second, under H.R. 68, a provision in the Small Business 
Investment Act that reserves leverage for smaller SBICs will 
also be repealed. Changes in SBA policy regarding applications 
for leverage, statutory changes in the availability of 
commitments for SBICs, and the makeup of the industry present 
the possibility that that provision may, in fact, create 
conflicts and confusion.
    Third, H.R. 68 will increase the authorization levels for 
the participating securities segment of the SBIC program. The 
authorization levels will rise from $800 million to $1 billion 
dollars in fiscal year 1999, and from $900 million to $1.2 
billion dollars in fiscal year 2000. These increases are 
necessary to meet the rising demand for this section of the 
SBIC program.
    Fourth, H.R. 68 modifies a test for determining the 
eligibility of small businesses for SBIC financing. Current 
statutory language does not account for small businesses 
organized in pass-through tax structures such as S 
corporations, limited liability companies, and certain 
partnerships. These organizations do not pay taxes at the 
enterprise level, but instead pass through income and the 
ensuing tax liabilities to their partners and shareholders. 
Consequently, many of these small businesses face difficulties 
when the income test is applied to them, and are often declared 
ineligible for financing they should receive.
    Finally, H.R. 68 will allow the SBA greater flexibility in 
issuing trust certificates to finance the SBIC program's 
investments in small businesses. Current law allows fundings to 
be issued every six months or more frequently. This inhibits 
the ability of the SBICs and the SBA to form pools of 
certificates that are large enough to generate serious investor 
interest. Allowing more time between fundings will permit SBA 
and the industry to form larger pools for sale in the market, 
thereby increasing investor interest and improving the interest 
rates for the small businesses financed.

                      Section-by-Section Analysis

Section 1. Short Title
    Designates the bill as ``The Small Business Investment 
Company Technical Corrections Act of 1999''.
Section 2. SBIC Program
    (1) Paragraph (a) of section 2 modifies section 308(i)(2) 
of the Small Business Investment Act of 1958 to exclude 
contingent obligations from the calculation used to determine 
the maximum allowable interest rate in an SBIC financing. 
Contingent obligations include financial tools such as options, 
warrants, conversion rights and royalties. Because such devices 
are contingent and speculative their correct valuation has been 
a problem for small businesses, SBICs and the SBA.
    (2) Paragraph (b) changes Section 20 of the Small Business 
Act to increase the authorization levels for participating 
securities under the SBIC program. The authorizations are 
increased from $800 million to $1 billion dollars in fiscal 
year 1999, and from $900 million to $1.2 billion dollars in 
fiscal year 2000.
    (3) The first part of paragraph (c) removes subparagraph 
(13) of Section 303(g) of the Small Business Investment Act (15 
U.S.C. 683(g)). That provision reserves 50% of participating 
securities leverage for Small Business Investment Companies 
with private capital of less than $20 million until the fourth 
fiscal quarter. While the Committee continues to be interested 
that all SBICs have access to the funding needed to complete 
their investments, we also recognize that this provision is no 
longer necessary. Only 12 of the 60 SBICs in the participating 
leverage program have more than $20 million in private capital, 
and the original concern that a few large SBICs would dominate 
the program has proved unfounded. It appears that most SBIC 
equity placements are in smaller early-stage businesses, and 
consequently most participating securities SBICs are 
established as smaller funds.
    (4) The second part of paragraph (c) establishes a test for 
small businesses formed as tax ``pass-through'' entities such 
as S corporations or limited liability companies. Such 
businesses will have their small business investment 
eligibility determined by multiplying their net income by the 
combined federal and state corporate tax rate and then 
subtracting the result from their net income. That result will 
serve as the small business' estimated ``after-tax income'' for 
the purpose of determining eligibility. This removes an 
uncertainty in the statute that meant a C corporation with as 
much as $9 million in pretax income could be a small business 
but a pass-through S corporation with $6,000,001 in income was 
ineligible.
    (5) The final part of paragraph (c) changes Section 320 of 
the Small Business Investment Act to allow issuance of Small 
Business Administration-backed trust certificates not less than 
every twelve months rather than the current standard of every 
six months. SBA would retain the discretion to issue guarantees 
and trust certificates at shorter intervals if appropriate. The 
change will give SBA increased flexibility in negotiating the 
terms and costs associated with the placement of certificates, 
either by contract or public offering. This will ultimately 
benefit the small businesses seeking financing since the rates 
sought by SBICs are reflected in the rates charged to small 
businesses.

5.2  H.R. 391--Small Business Paperwork Reduction Act Amendments of 
        1999

                           Legislative History
------------------------------------------------------------------------
                  Date                                Action
------------------------------------------------------------------------
H.R. 391:
January 19, 1999........................  Referred to the Committee on
                                           Government Reform, and in
                                           addition to the Committee on
                                           Small Business, for a period
                                           to be subsequently determined
                                           by the Speaker, in each case
                                           for consideration of such
                                           provisions as fall within the
                                           jurisdiction of the committee
                                           concerned.
January 19, 1999........................  Referred to House Government
                                           Reform.
February 3, 1999........................  Committee Consideration and
                                           Mark-up Session Held.
February 3, 1999........................  Ordered to be Reported by
                                           Voice Vote.
January 19, 1999........................  Referred to House Small
                                           Business.
February 5, 1999........................  Reported by the Committee on
                                           Government Reform, H. Rept.
                                           106-8, Part I. Filed late,
                                           pursuant to previous special
                                           order.
February 5, 1999........................  House Committee on Small
                                           Business Granted an extension
                                           for further consideration
                                           ending not later than Feb. 5,
                                           1999.
February 5, 1999........................  Placed on the Union Calendar,
                                           Calendar No. 7.
February 5, 1999........................  Committee on Small Business
                                           discharged.
February 9, 1999........................  Rules Committee Resolution H.
                                           Res. 42 Reported to House.
                                           Rule provides for
                                           consideration of H.R. 391
                                           with 1 hour of general
                                           debate. Previous question
                                           shall be considered as
                                           ordered without intervening
                                           motions except motion to
                                           recommit with or without
                                           instructions. Measure will be
                                           considered read. Bill is open
                                           to amendments.
February 11, 1999.......................  Rule H. Res. 42 passed House.
February 11, 1999.......................  Considered under the
                                           provisions of rule H. Res.
                                           42.
February 11, 1999.......................  House resolved itself into the
                                           Committee of the Whole House
                                           on the state of the Union
                                           pursuant to H. Res. 42 and
                                           Rule XXIII.
February 11, 1999.......................  The Speaker designated the
                                           Honorable Jo Ann Emerson to
                                           act as Chairwoman of the
                                           Committee.
February 11, 1999.......................  H.AMDT.6 Amendment (A001)
                                           offered by Mr. McIntosh.
                                           Amendment provides that a
                                           fine may be imposed for a
                                           first time paperwork
                                           violation if such violation
                                           has the potential to cause
                                           serious harm to the public
                                           interest; and adds two
                                           representatives from the
                                           Department of Health and
                                           Human Services, including a
                                           member from the Health Care
                                           Financing Administration, to
                                           the task force on
                                           streamlining paperwork
                                           requirements for small
                                           business concerns.
February 11, 1999.......................  H.AMDT.6 On agreeing to the
                                           McIntosh amendment (A001)
                                           Agreed to by voice vote.
February 11, 1999.......................  H.AMDT.7 Amendment (A002)
                                           offered by Mr. Kucinich.
                                           Amendment sought to strike
                                           provisions which waive a fine
                                           for a first time paperwork
                                           violation and require that
                                           agencies establish a policy
                                           for eliminating, delaying, or
                                           reducing fines in appropriate
                                           circumstances.
February 11, 1999.......................  H.ADMT.7 On agreeing to the
                                           Kucinich amendment (A002)
                                           Failed by recorded vote: 210-
                                           214 (Roll No. 19).
February 11, 1999.......................  The House rose from the
                                           Committee of the Whole House
                                           on the state of the Union to
                                           report H.R. 391.
February 11, 1999.......................  The previous question was
                                           ordered pursuant to the rule.
February 11, 1999.......................  The House adopted the
                                           amendment as agreed to by the
                                           Committee of the Whole House
                                           on the state of the Union.
February 11, 1999.......................  On passage Passed by recorded
                                           vote: 274-151 (Roll No. 20).
February 11, 1999.......................  Motion to reconsider laid on
                                           the table Agreed to without
                                           objection.
February 12, 1999.......................  Received in the Senate.
February 22, 1999.......................  Read twice and referred to the
                                           Committee on Governmental
                                           Affairs.
October 19, 1999........................  Committee on Governmental
                                           Affairs. Hearings held.
------------------------------------------------------------------------

    The bill would amend chapter 35 of Title 44, United States 
Code, for the purpose of facilitating compliance with certain 
Federal paperwork requirements, to establish a task force to 
examine the feasibility of streamlining paperwork requirements 
applicable to small businesses, and for other purposes. The 
Committee did not prepare a report on this bill. Further 
information can be found in House Report 106-8, Part I, 
prepared by the Committee on Government Reform.

5.3  H.R. 423--Program for Investment in Micro-Entrepreneurs Act of 
        1999

                           Legislative History
------------------------------------------------------------------------
                  Date                                Action
------------------------------------------------------------------------
H.R. 413:
January 19, 1999........................  Referred to the House
                                           Committee on Banking and
                                           Financial Services.
February 12, 1999.......................  Referred to the Subcommittee
                                           on Financial Institutions and
                                           Consumer Credit.
May 26, 1999............................  Subcommittee on Financial
                                           Institutions and Consumers
                                           Credit Discharged.
May 26, 1999............................  Committee Hearings Held.
May 26, 1999............................  Committee Consideration and
                                           Mark-up Session Held.
May 26, 1999............................  Ordered to be Reported by
                                           Voice Vote.
June 14, 1999...........................  Reported (Amended) by the
                                           Committee on Banking and
                                           Financial Services. H. Rept.
                                           106-184, Part I.
June 14, 1999...........................  Referred sequentially to the
                                           House Committee on Small
                                           Business for a period ending
                                           not later than July 2, 1999
                                           for consideration of such
                                           provisions of the bill as
                                           fall within the jurisdiction
                                           of that committee pursuant to
                                           clause 1(o), rule X.
June 24, 1999...........................  Committee Consideration and
                                           Mark-up Session Held.
June 24, 1999...........................  Ordered to be Reported
                                           (Amended) by Voice Vote.
July 2, 1999............................  Reported (Amended) by the
                                           Committee on Small Business.
                                           H. Rept. 106-184, Part II.
July 2, 1999............................  Placed on the Union Calendar,
                                           Calendar No. 126.
------------------------------------------------------------------------

                          Need for Legislation

    One of the greatest challenges to small or micro 
entrepreneurs is access to capital. Often before they can grow 
their businesses several needs must be addressed. 
Traditionally, these needs are in the areas of training, 
education or general capacity building. The Program for 
Investment in Microentrepreneurs was created to assist 
entrepreneurs and community development through the 
establishment of a grant program.
    The passage of the PRIME Act will create an additional 
federal microenterprise assistance-related program. Currently, 
there are a number of such programs dispersed throughout 
various agencies of the federal government. The SBA conducts 
the main program, the 7(m) Microloan program, which permanently 
authorized in the Fall of 1997. Through the 7(m) program, SBA 
provides loans and grants to nonprofit microenterprise 
intermediaries which, in turn, provide small loans and 
technical assistance to microentrepreneurs. In addition to the 
technical assistance with SBA's 7(m) Microloan program provides 
in conjunction with its loans, it provides technical assistance 
even without the loan component. Through its Non-lending 
Technical Assistance Provider (``NTAP'') program, SBA can 
provide up to $125,000 in capacity building grants--like the 
PRIME Act--that are not tied to loans for the explicit purpose 
of capacity building. In addition to the 7(m) program, SBA 
administers other technical assistance and capacity building 
programs through the Small Business Development Center 
(``SBDC'') Program to provide technical assistance to current 
and prospective small business owners; and the Women's Business 
Development Program, which provides technical assistance to 
women entrepreneurs who are economically disadvantaged. 
Additional microenterprise programs are administered through 
HHS, HUD, Labor, Agriculture and Commerce.
    Because of the potential for duplication, the Committee 
worked to ensure that the PRIME program will work with existing 
federal microenterprise technical assistance and capacity 
building grant programs, especially those that already exist at 
the Small Business Administration. PRIME has the ability to 
make capacity building and technical assistance grants, just as 
the SBA Microloan program. But, in addition to the technical 
assistance and capacity building that both SBA and PRIME can 
do, the SBA 7(m) Microloan program can make loans in the area 
of entrepreneur development and loans that are tied to 
technical assistance.
    The Committee believes that PRIME can play an important 
role in supplementing the current microenterprise technical 
assistance programs administered through the SBA. This is 
especially true given the fact that PRIME's purpose is to focus 
on only technical assistance and capacity building, an area 
that has been historically under-funded. The PRIME program 
should never extend beyond the level of providing technical 
assistance and capacity building. Hearings and Committee action 
made clear that CDFI does not possess the infrastructure to 
support and administer a Microloan program, and that the PRIME 
Act is not structured in a way to create a framework to 
administer loans in a safe and sound manner.

                      Section-by-Section Analysis


Section 1. Provision of Technical Assistance to Microentrepreneurs

    Section 1 amends Title I of the ``Riegle Community 
Development and Regulatory Improvement Act of 1994'' by adding 
a new subtitle, ``Subtitle C--Microenterprise Technical 
Assistance and Capacity Building Program'' which includes the 
following sections:

Section 171. Short title

    This Section designates new Subtitle C as the ``Program for 
Investment in Microentrepreneurs Act of 1999'' (PRIME Act).

Section 172. Definitions

    This section defines terms as they apply to the PRIME Act.

Section 173. Establishment of program

    This section requires the Treasury Secretary to establish a 
microenterprise technical assistance and capacity building 
grant program which shall provide assistance from the CDFI Fund 
in the form of grants to qualified organizations.

Section 174. Uses of assistance

    This section provides that grants can be used for 
assistance to provide training, technical assistance, capacity 
building and educational assistance targeted to microenterprise 
and microenterprise development organizations that serve low 
income entrepreneurs. The Committee added language prohibiting 
the PRIME Act to be used as a loan program. The Committee 
further believes that funding for this program should be 
focused in manner that provides the maximum assistance directly 
to the microentrepreneurs and not in manner that would have 
only secondary or limited benefits for the microenterprise 
community.

Section 175. Qualified organizations

    This section defines a qualified organization as a non-
profit microenterprise development organization as one that has 
a demonstrated record of assisting disadvantaged entrepreneurs, 
an intermediary private nonprofit entity that serves 
microenterprise development organizations, or an Indian tribe 
if it can certify that a nonprofit microenterprise development 
program exists in the area.

Section 176. Allocation of assistance; subgrants

    This section provides the manner in which funding is to be 
used and defines the parameter under which organizations will 
participate in the program. The Committee added language 
ensuring that all participants of SBA's 7(m) Microloan program 
will be eligible for funding under PRIME. It is critical to 
PRIME's success, that those participants in the SBA's 7(m) 
program be included in the PRIME program. CDFI should make 
every effort to ensure that participants of SBA's 7(m) 
Microloan program are included in the PRIME program. The 7(m) 
intermediaries have the institutional experience and expertise 
to help the PRIME program hit the ground running, and allow the 
program work efficiently and effectively.

Section 177. Matching requirements

    This section provides matching requirements from sources 
other than the Federal government equal to fifty percent of 
each dollar provided by the CDFI Fund. Sources of matching 
funds may include fees, grants, gifts, funds from loan sources, 
or in the form of in-kind resources, grants, or loans to the 
organization.
    In the case of an applicant with severe economic 
constraints on sources available for matching funds, the 
Administrator may reduce or eliminate the matching requirement. 
Not more than 10% of the total funds made available under the 
Act may be excepted from the matching requirements.

Section 178. Applications for assistance

    This section requires the CDFI Fund to establish procedures 
for submission of applications for assistance.

Section 179. Recordkeeping

    This section establishes record keeping requirements for 
organizations that receive PRIME Act grants, including an 
annual report in which the organization discloses its 
activities, financial conditions, and its success in satisfying 
the terms and conditions of its assistance agreement.

Section 180. Report

    This section requires the Administrator to submit to the 
House and Senate Small Business and Banking Committees, within 
one year after CDFI has awarded and funded the first grant, and 
annually after that, the following information: (1) the number 
and locations of the organizations funded under the grant 
program; (2) the amount of each grant made to a qualified 
organization; (3) a description of the matching contributions 
provided by each qualified organization receiving a grant; (4) 
the numbers and amounts of sub-grants made by qualified 
organizations to small business concerns; (5) each grant made 
under the program, the purpose for which the grant funds were 
used.

Section 181. Authorization

    This section authorizes appropriations of $15 million for 
fiscal year 2000, $25 million for fiscal year 2001, $30 million 
for fiscal year 2002, and $35 million for fiscal year 2003.

Section 182. Implementation

    This section directs the administrator to develop 
regulations for the implementation of the program. Prior to the 
development of these regulations and before any grants are 
awarded, the Administrator is to enter into a Memorandum of 
Understanding with the Small Business Administration. This 
should include, but not be limited to such items as outreach 
and information to organizations. This agreement must be 
completed within 60 days of enactment of the legislation. The 
Committee encourages both SBA and CDFI to complete this 
agreement quickly, and the committee will closely monitor the 
progress of this agreement to ensure that this is carried out 
in an expeditious manner. Should issues arise that make 
completion of the MOU by the 60 day deadline impossible, it is 
the Committee's hope that a third party, such as the Office of 
Budget and Management, would be available to assist in 
resolving any outstanding issues.
    Prior to the issuing any proposed preliminary, interim or 
final regulations, the Administrator of the fund must provide 
the Administrator of SBA 60 days to comment and suggest changes 
to these regulations that reflect SBA's experience in the area 
of assisting micro-entrepreneurs and to ensure that the two 
programs do not duplicate services already provided by SBA.

Section 2. Administrative Expenses

    Section 2 increases the CDFI Fund's authorized 
administrative expenses from $5,550,000 to $6,100,000 to 
accommodate administration of the PRIME Act.

Section 3. Conforming Amendments

    This section makes technical and conforming amendments.

5.4  H.R. 439--Paperwork Elimination Act of 1999

                           Legislative History
------------------------------------------------------------------------
                  Date                                Action
------------------------------------------------------------------------
H.R. 439:
February 2, 1999........................  Referred to the Committee on
                                           Government Reform, and in
                                           addition to the Committee on
                                           Small Business, for a period
                                           to be subsequently determined
                                           by the Speaker, in each case
                                           for consideration of such
                                           provisions as fall within the
                                           jurisdiction of the committee
                                           concerned.
February 2, 1999........................  Referred to House Government
                                           Reform
February 3, 1999........................  Referred to the Subcommittee
                                           on National Economic Growth,
                                           Natural Resources and
                                           Regulatory Affairs.
February 2, 1999........................  Referred to House Small
                                           Business.
February 3, 1999........................  Committee Consideration and
                                           Mark-up Session Held.
February 3, 1999........................  Ordered to be Reported by
                                           Voice Vote.
February 8, 1999........................  Reported by the Committee on
                                           Small Business. H. Rept. 106-
                                           11, Part I.
February 9, 1999........................  Mrs. Kelly moved to suspend
                                           the rules and pass the bill.
February 9, 1999........................  Considered under suspension of
                                           the rules.
February 9, 1999........................  At the conclusion of debate,
                                           the Yeas and Nays were
                                           demanded and ordered.
                                           Pursuant to the provisions of
                                           clause 5, rule I, the Chair
                                           announced that further
                                           proceedings on the motion
                                           would be postponed.
February 9, 1999........................  Considered as unfinished
                                           business.
February 9, 1999........................  On motion to suspend the rules
                                           and pass the bill Agreed to
                                           by the Yeas and Nays: (2/3
                                           required): 413-0 (Roll no.
                                           13).
February 9, 1999........................  Motion to reconsider laid on
                                           the table Agreed to without
                                           objection.
February 11, 1999.......................  Received in the Senate.
February 22, 1999.......................  Read twice and referred to the
                                           Committee on Governmental
                                           Affairs.
------------------------------------------------------------------------

                          Need for Legislation

    As part of continuing efforts to enable the Federal 
government to take advantage of the Information Age, the 
Committee recognized the need to encourage and monitor the 
progress of Federal agencies in their efforts to utilize new 
``information technology'' to reduce the public cost of meeting 
the Federal government's information needs. Moreover, a 
specific need exists to allow those small businesses, 
taxpayers, and others with access to computers and modems to 
use them when dealing with the Federal government.
    Witnesses before the Small Business Committee have 
estimated that the American public expends an amount of time 
and effort equal to 510 billion dollars, or some 9 percent of 
the Gross Domestic Product in 1992, in order to meet the 
Federal government's information needs. Small businesses bear a 
disproportionate share of that cost.
    The Federal government is lagging behind the rest of the 
nation in using new technology. Individuals can now send and 
receive mail, accomplish their personal banking transactions, 
and even read a newspaper from a personal computer or phone. 
Individuals should be able to conduct much of their business 
with the government electronically as well. Legislation is 
needed to seize the opportunity which the Information Age and 
new information technologies have presented to reduce the huge 
cumulative burden of meeting the Federal government's 
information demands.
    Clearly, the need exists to promote and monitor efforts to 
minimize the burdens of Federal paperwork demands upon small 
businesses, educational and nonprofit institutions, Federal 
contractors, state and local governments, and other persons 
through the use of alternative information technologies, 
including the use of electronic submission, maintenance, or 
disclosure of information as a substitute for paper. 
Congressional oversight activities will be enhanced by 
requiring reporting on the progress of agencies and how 
regulatory burdens have been reduced.
    Congress took an important first step towards using this 
technology last year when it included in the Omnibus 
Appropriations Act of 1998 (P.L. 105-277) legislation sponsored 
by Senator Spencer Abraham which requires the development of 
procedures for the use and acceptance of electronic signatures 
by Executive agencies of the U.S. Government. This legislation 
was of particular importance to the Committee on Small Business 
because it included one provision that had been part of the 
previous versions of the Paperwork Elimination Act that the 
Committee considered in the 104th and 105th Congresses. This 
particular provision gave the authority to the Director of OMB 
to provide direction and oversee the acquisition and use of 
alternative technologies that provide for the electronic 
submission, maintenance, or disclosure of information as a 
substitute for paper. The Paperwork Elimination Act of 1999 
(H.R. 439) complements this legislation by clarifying the 
authority and responsibilities of the Director of OMB, as well 
as placing specific requirements on Federal agencies.
    The Paperwork Elimination Act of 1999 amends chapter 35, 
Title 44, United States Code, otherwise known as the Paperwork 
Reduction Act of 1995, by requiring all Federal agencies to 
provide the option of electronic submission of information, 
electronic compliance with regulations, and electronic 
disclosure of information to all who must comply with Federal 
information demands. Furthermore, Federal agencies would be 
prohibited from collecting information until they have first 
published a notice in the Federal Register detailing how the 
information may be maintained, submitted, or disclosed 
electronically. The Director of OMB would be required to 
oversee the implementation of electronic submission, 
compliance, and disclosure of information. The Director of OMB 
would also be required to monitor and report on the progress of 
Federal agencies in meeting these requirements, as well as how 
regulatory burdens on small businesses have been reduced.
    The Paperwork Elimination Act of 1999 emphasizes that 
opportunities for the public to use electronic technologies for 
data submission should be optional. The Act will in no way 
hinder the ability of small businesses and individuals without 
access to computers and modems to comply with Federal paperwork 
requirements. The Act merely requires Federal agencies to 
consider and provide the option to those who wish and are able 
to use the technology.

                      Section-by-Section Analysis


Section 1. Short Title

    This legislation is entitled the `Paperwork Elimination Act 
of 1999'.

Section 2. Promotion of Use of Electronic Technology

    The Director of the Office of Management and Budget (OMB) 
is required to promote the acquisition and use of electronic 
submission, maintenance, or disclosure of information as a 
substitute for paper as an option for entities complying with 
the regulatory information needs of Federal agencies. This 
provision is added to sec. 3504(h) of the Paperwork Reduction 
Act (44 U.S.C. 35) which outlines the Director's obligations to 
advance the use of information technology.

Section 3. Assignment of Tasks and Deadlines

    Sec. 3505(a)(3) of the Paperwork Reduction Act requires the 
Director of OMB, in consultation with the General Services 
Administration (GSA), National Institute of Standards and 
Technology (NIST), National Archives and Records Administration 
(NARA), and Office of Personnel Management (OPM), to develop 
and maintain a government-wide strategic plan for information 
resources management. This provision amends sec. 3505(a)(3) by 
inserting the requirement to include in this plan a progress 
report on the extent to which the paperwork burden on small 
businesses and individuals has been relieved as a result of the 
use of electronic submission, maintenance, or disclosure of 
information as a substitute for paper.

Section 4. Federal Agency Responsibilities

    Subsection (a) amends sec. 3506(c)(1)(B) of the Paperwork 
Reduction Act to require each Federal agency, when it is 
appropriate to provide respondents with the option of 
submitting, maintaining, or disclosing information 
electronically when complying with Federal regulations.
    Subsection (b) amends sec. 3506(c)(3)(C) of the Paperwork 
Reduction Act to require each Federal agency to certify to the 
Director of OMB each collection of information that it 
undertakes has reduced to the extent practicable the burden of 
paperwork on small businesses and individuals by allowing for 
the optional submission, maintenance, or disclosure of 
information electronically.
    Subsection (c) amends sec. 3506(c)(3)(J) of the Paperwork 
Reduction Act to require each Federal agency to certify to the 
Director of OMB that, to the extent practicable, it used 
alternative information technologies to reduce burden, improve 
data quality, and make agencies more efficient and responsive 
to the public.

Section 5. Public Information Collection Activities; Submission to 
        Director; Approval and Delegation

    This provision amends sec. 3507(a)(1)(D)(ii) of the 
Paperwork Reduction Act to prohibit Federal agencies from 
collecting information until they have first published a notice 
in the Federal Register describing how the information may, if 
appropriate, be electronically submitted, maintained, or 
disclosed by a respondent.

Section 6. Responsiveness to Congress

    This provision amends sec. 3514(a)(2) of the Paperwork 
Reduction Act to require the Director of OMB, when responding 
to Congress annually or at other times, to report on how the 
collection of information by electronic means has affected 
regulatory burdens on small businesses and other persons. This 
report must specifically include any instance in which the 
electronic maintenance, submission, or disclosure of 
information has added to the regulatory burden on small 
businesses. It should also specifically identify instances 
referring to the information required from small businesses by 
the Internal Revenue Service.

5.5  H.R. 440.--Microloan Program Technical Corrections Act of 1999, 
        Public Law No. 106-22

                           Legislative History
------------------------------------------------------------------------
                  Date                                Action
------------------------------------------------------------------------
H.R. 440:
February 2, 1999........................  Referred to the House
                                           Committee on Small Business.
February 8, 1999........................  Committee Consideration and
                                           Mark-up Session Held.
February 8, 1999........................  Ordered to be Reported by
                                           Voice Vote.
February 8, 1999........................  Reported by the Committee on
                                           Small Business. H. Rept. 106-
                                           12.
February 8, 1999........................  Placed on the Union Calendar,
                                           Calendar No. 10.
February 9, 1999........................  Mr. Talent moved to suspend
                                           the rules and pass the bill,
                                           as amended.
February 9, 1999........................  Considered under suspension of
                                           the rules. (consideration: CR
                                           H492-494)
February 9, 1999........................  At the conclusion of debate,
                                           the Yeas and Nays were
                                           demanded and ordered.
                                           Pursuant to the provisions of
                                           clause 5, rule I, the Chair
                                           announced that further
                                           proceedings on the motion
                                           would be postponed.
February 9, 1999........................  Considered as unfinished
                                           business. (consideration: CR
                                           H524-525)
February 9, 1999........................  On motion to suspend the rules
                                           and pass the bill, as amended
                                           Agreed to by the Yeas and
                                           Nays: (2/3 required): 411-4
                                           (Roll no. 12). (text: CR
                                           H492)
February 9, 1999........................  Motion to reconsider laid on
                                           the table Agreed to without
                                           objection.
February 11, 1999.......................  Received in the Senate.
February 22, 1999.......................  Read twice and referred to the
                                           Committee on Small Business.
March 25, 1999..........................  Senate Committee on Small
                                           Business discharged by
                                           Unanimous Consent.
March 25, 1999..........................  Measure laid before Senate by
                                           unanimous consent.
                                           (consideration: CR S3554-
                                           3566)
March 25, 1999..........................  Amendment SP 248 proposed by
                                           Senator Enzi for Senator
                                           Kerry.
March 25, 1999..........................  S.AMDT.248 Proposed by Senator
                                           Enzi for Senator Kerry.
March 25, 1999..........................  S.AMDT.248 Amendment SP 248
                                           agreed to in Senate by
                                           Unanimous Consent.
March 25, 1999..........................  Amendment SP 248 agreed to in
                                           Senate by Unanimous Consent.
March 25, 1999..........................  Passed Senate with an
                                           amendment by Unanimous
                                           Consent. (consideration: CR
                                           S3554-3566)
April 12, 1999..........................  Message on Senate action sent
                                           to the House.
April 12, 1999..........................  Mr. Pease moved that the House
                                           suspend the rules and agree
                                           to the Senate amendment.
April 12, 1999..........................  On motion that the House
                                           suspend the rules and agree
                                           to the Senate amendment
                                           Agreed to by voice vote.
                                           (text: CR H1817-1818)
April 12, 1999..........................  Motion to reconsider laid on
                                           the table Agreed to without
                                           objection.
April 12, 1999..........................  Cleared for White House.
April 15, 1999..........................  Presented to President.
April 27, 1999..........................  Signed by President.
April 27, 1999..........................  Became Public Law No. 106-22.
------------------------------------------------------------------------

                          Need for Legislation

    The microloan program was made permanent on December 2, 
1997 as a provision of P.L. 105-135, the Small Business 
Reauthorization Act of 1997. At that time, changes were also 
implemented to modify the loan loss reserve for microloan 
intermediaries. The loan loss reserve language in P.L. 105-135 
specified that microloan borrowers were required to maintain a 
loss reserve of 15 percent of their outstanding microloans for 
the first five years of their participation in the program. 
After that, intermediaries were to be required to maintain a 
loss reserve equal to 10 percent of their outstanding loans or 
twice their loss rate, whichever was greater.
    Unfortunately, this provision was interpreted by the SBA to 
mean an amount equal to twice an intermediary's aggregate 
losses. For example: If an intermediary had average annual 
losses of five percent over five years the SBA would not impose 
a loss reserve of ten percent (twice the annual rate) as 
intended by the Congress. They would instead impose a loss 
reserve of fifty percent (twice the aggregate annual losses 
over five years).
    This interpretation created an immense burden on microloan 
intermediaries. As a result, at the end of the 105th Congress, 
the Senate Committee on Small Business added language similar 
to H.R. 440 to H.R. 3412 to remedy the situation. 
Unfortunately, this language, as part of the larger bill, 
failed to pass the Congress before adjournment.
    Shortly thereafter, the Chairmen of the House and Senate 
Committees on Small Business, Representative James M. Talent 
and Senator Christopher Bond, and their colleagues, 
Representative Nydia Velazquez and Senator John Kerry, the 
Ranking Democratic Members of the Committees, wrote to SBA 
Administrator Aida Alvarez requesting her forbearance in 
applying the loan loss regulations. (A copy of that letter is 
attached as an Appendix).
    H.R. 440 will correct this interpretation and clearly 
establish that the loan loss reserve will be fifteen percent 
for the first five years for all intermediaries, and that 
intermediaries may apply for a reduction of the reserve to 
reflect their actual annual average loss rate, but no less than 
ten percent.
    The loan loss reserve reduction is to be based on the 
actual annual average loss rate over a five-year period. The 
Committee expects that intermediaries will request such reviews 
no more than annually, and that such reviews will not affect 
the SBA's ability to conduct further reviews for oversight and 
management purposes.
    H.R. 440 also replaces the cap on the amount of microloan 
funds that can be made available to intermediaries in any one 
State. This cap was originally imposed to ensure that microloan 
funds would not be used disproportionately in those States with 
more aggressive microloan programs. As the program has matured, 
however, this restriction has become unnecessary.

                      Section-by-Section Analysis


Section 1. Short Title

    This act may be cited as the ``Microloan Program Technical 
Corrections Act of 1999''.

Section 2. Technical Corrections

    This section eliminates the language in paragraph 
7(m)(7)(B) restricting the amount of loan funds made available 
to any single state, and replaces it with language requiring 
SBA to maintain a minimum amount ($800,000) of funding 
available each year for each State's intermediaries. This 
amount is subject to available appropriations and the approval 
of the Small Business Administration. Any funds that are 
reserved by the SBA for the purposes of this provision may be 
released at the beginning of the third fiscal quarter.
    This section also inserts language requiring SBA to not 
only select and approve intermediaries but also make sure that 
some funding is available to them.

Section 3. Loan Loss Reserves

    This section changes the loan loss reserve required to be 
established by microloan intermediaries. The loss reserve 
provides a hedge for the SBA against the failure of an 
intermediary.
    Under the new language all intermediaries will be required 
to have a 15 percent loss reserve for their first five years. 
After five year intermediaries may request a review by the SBA. 
Existing intermediaries may request a review based on the most 
recent five year period. If an intermediary's five year average 
annual loss rate is lower than 15 percent then the SBA may 
reduce the loss reserve requirement for the intermediary, but 
no lower than 10 percent. The request for a review is to be an 
annual review. However, this review is not to be interpreted to 
preclude any reviews initiated by the SBA for the purposes of 
program oversight.
5.6  H.R. 774--Women's Business Centers Amendments Act of 1999, Public 
        Law No. 106-17

                           Legislative History
------------------------------------------------------------------------
                  Date                                Action
------------------------------------------------------------------------
H.R. 774:
February 23, 1999.......................  Referred to the House
                                           Committee on Small Business.
February 25, 1999.......................  Committee Consideration and
                                           Mark-up Session Held.
February 25, 1999.......................  Ordered to be Reported by
                                           Voice Vote.
March 10, 1999..........................  Reported by the Committee on
                                           Small Business, H. Rept. 106-
                                           47.
March 10, 1999..........................  Placed on the Union Calendar,
                                           Calendar No. 29.
March 16, 1999..........................  Mrs. Kelly moved to suspend
                                           the rules and pass the bill,
                                           as amended.
March 16, 1999..........................  Considered under suspension of
                                           the rules. (consideration: CR
                                           H1276-1279)
March 16, 1999..........................  At the conclusion of debate,
                                           the Yeas and Nays were
                                           demanded and ordered.
                                           Pursuant to the provisions of
                                           clause 5, rule I, the Chair
                                           announced that further
                                           proceedings on the motion
                                           would be postponed.
March 16, 1999..........................  Considered as unfinished
                                           business. (consideration: (CR
                                           H1301-1302)
March 16, 1999..........................  On motion to suspend the rules
                                           and pass the bill, as amended
                                           Agreed to by the Yeas and
                                           Nays: (2/3 required): 385-23
                                           (Roll no. 51). (text: CR
                                           H1276)
March 16, 1999..........................  Motion to reconsider laid on
                                           the table Agreed to without
                                           objection.
March 17, 1999..........................  Received in the Senate, read
                                           twice.
March 24, 1999..........................  Passed Senate without
                                           amendment by Unanimous
                                           Consent. (consideration: CR
                                           S3299-3300)
March 24, 1999..........................  Cleared for White House.
March 25, 1999..........................  Message on Senate action sent
                                           to the House.
March 26, 1999..........................  Presented to President.
April 6, 1999...........................  Signed by President.
April 6, 1999...........................  Became Public Law No. 106-17.
------------------------------------------------------------------------

                          Need for Legislation

    The bill is a product of the information gathered at the 
hearing on the Women's Business Center Program held on February 
11, 1999. Based on information gathered at the hearing, Members 
on both sides of the aisle and the Administration agreed that a 
comprehensive study of the Women's Business Center Program is
needed.
    Therefore, the Committee chose a two-step approach to 
address the issues raised at the hearing. The first step is 
H.R. 774, which addresses the two most immediate concerns, the 
funding ratio for Women's Business Centers for their fifth year 
of funding and the authorization of appropriations. The 
majority of Federally funded centers will enter their fifth and 
final year of funding this coming July. Currently they must 
raise 2 non-federal dollars to obtain 1 Federal dollar. This 
ratio creates an immense fund raising burden for Women's 
Business Centers, which will no longer receive Federal funds 
after July 2000. Thus, H.R. 774 changes the ratio in the fifth 
year to 1 non-Federal dollar for each Federal dollar.
    The second step for the Committee entails a hearing to 
follow completion of the GAO study which is currently 
contemplated. It is hoped that the study will improve the 
Committee's understanding of where and how the program should 
grow as we consider additional legislation later this year.

                      Section-by-Section Analysis

Section 1. Short Title
    This act maybe cited as the ``Women's Business Center 
Amendments Act of 1999''.
Section 2. Conditions of Participation
    This section eliminates subparagraphs (B) and (C) of 
Section 29(c)(1) of the Small Business Act, changing the 
funding ratio in the fifth year to 1 non-Federal dollar for 
each Federal dollar so that in the third, fourth and fifth 
years the ratio is 1:1.
    This bill will be considered effective as of October 1, 
1998.
Section 3. Authorization of Appropriations
    This section increases the authorization of appropriations 
from $8 million to $11 million.
5.7  H.R. 775--Year 2000 Readiness and Responsibility Act, Public Law 
        No. 106-37

                           Legislative History
------------------------------------------------------------------------
                  Date                                Action
------------------------------------------------------------------------
H.R. 775:
February 23, 1999.......................  Referred to the Committee on
                                           the Judiciary, and in
                                           addition to the Committee on
                                           Small Business, for a period
                                           to be subsequently determined
                                           by the Speaker, in each case
                                           for consideration of such
                                           provisions as fall within the
                                           jurisdiction of the committee
                                           concerned.
February 23, 1999.......................  Referred to House Judiciary.
April 13, 1999..........................  Committee Hearings Held.
April 29, 1999..........................  Committee Consideration and
                                           Mark-up Session Held.
May 4, 1999.............................  Committee Consideration and
                                           Mark-up Session Held.
May 4, 1999.............................  Ordered to be Reported
                                           (Amended) by the Yeas and
                                           Nays: 15-14.
February 23, 1999.......................  Referred to House Small
                                           Business.
May 7, 1999.............................  Reported (Amended) by the
                                           Committee on the Judiciary.
                                           H. Rept. 106-131, Part I.
                                           Filed late, pursuant to
                                           previous special order.
May 7, 1999.............................  House Committee on Small
                                           Business Granted an extension
                                           for further consideration
                                           ending not later than May 7,
                                           1999.
May 7, 1999.............................  Committee on Small Business
                                           discharged.
May 7, 1999.............................  Referred sequentially to the
                                           House Committee on Commerce
                                           for a period ending not later
                                           than May 11, 1999 for
                                           consideration of such
                                           provisions of the introduced
                                           bill as fall within the
                                           jurisdiction of that
                                           committee pursuant to clause
                                           1(f), rule X.
May 11, 1999............................  Committee on Commerce
                                           discharged.
May 11, 1999............................  Placed on the Union Calendar,
                                           Calendar No. 72.
May 11, 1999............................  Rules Committee Resolution H.
                                           Res. 166 Reported to House.
                                           Rule provides for
                                           consideration of H.R. 775
                                           with 1 hour of general
                                           debate. Previous question
                                           shall be considered as
                                           ordered without intervening
                                           motions except motion to
                                           recommit with or without
                                           instructions. After general
                                           debate the bill shall be
                                           considered for amendment
                                           under the five-minute rule.
                                           The rule makes in order as an
                                           original bill for the purpose
                                           of amendment, the Committee
                                           on the Judiciary amendment in
                                           the nature of a substitute
                                           now printed in the bill,
                                           modified by the amendments
                                           printed in part 1 of H. Rept.
                                           106-134 accompanying the
                                           rule. Measure will be
                                           considered read. Specific
                                           amendments are in order.
                                           Makes in order only those
                                           amendments printed in part 2
                                           of H. Rept. 106-134; provides
                                           that the amendments may be
                                           offered only by a Member
                                           designated in the report,
                                           shall be considered as read,
                                           debatable for the time
                                           specified in the report, not
                                           be subject to amendment, and
                                           not be subje * * *
May 12, 1999............................  Rule H. Res. 166 passed House.
May 12, 1999............................  Considered under the
                                           provisions of rule H. Res.
                                           166, (consideration: CR H3013-
                                           3053; text of measure as
                                           reported in House: CR H3026-
                                           3030).
May 12, 1999............................  House resolved itself into the
                                           Committee of the Whole House
                                           on the state of the Union
                                           pursuant to H. Res. 166 and
                                           Rule XXIII.
May 12, 1999............................  The Speaker designated the
                                           Honorable Ray LaHood to act
                                           as Chairman of the Committee.
May 12, 1999............................  H.AMDT.80 Amendment (A001)
                                           offered by Mr. Davis (VA).
                                           Amendment changes the
                                           effective date to January 1,
                                           1999 and defines damage to
                                           mean punitive, compensatory,
                                           and restitutionary relief.
May 12, 1999............................  H.AMDT.80 On agreeing to the
                                           Davis (VA amendment (A001)
                                           Agreed to by voice vote.
May 12, 1999............................  H.AMDT.81 Amendment (A002)
                                           offered by Mr. Moran (VA).
                                           Amendment clarifies that none
                                           of the provisions of the bill
                                           shall apply to any claim
                                           based on personal injury,
                                           including any claim asserted
                                           by way of counterclaim, cross
                                           claim or third party claim;
                                           and clarifies that third
                                           party defendants brought into
                                           Y2K personal injury claims
                                           are not provided with the
                                           liability protections
                                           contained in the bill.
May 12, 1999............................  H.AMDT.81 On agreeing to the
                                           Moran (VA) amendment (A002)
                                           Agreed to by voice vote.
May 12, 1999............................  H.AMDT.82 Amendment (A003)
                                           offered by Ms. Jackson-Lee
                                           (TX). Amendment clarifies the
                                           notification provisions of
                                           the bill to provide that the
                                           particularity requirement
                                           contained in the bill does
                                           not exclude the use of
                                           layman's terms.
May 12, 1999............................  H.AMDT.82 On agreeing to the
                                           Jackson-Lee (TX) amendment
                                           (A003) Agreed to by voice
                                           vote.
May 12, 1999............................  H.AMDT.83 Amendment (A004)
                                           offered by Mr. Scott.
                                           Amendment sought to delete
                                           section 304 which caps the
                                           amount that may be awarded
                                           for punitive damages in Y2K
                                           litigation.
May 12, 1999............................  H.AMDT.84 Amendment (A005)
                                           offered by Mr. Nadler.
                                           Amendment sought to delete
                                           title IV that covers Y2K
                                           class action lawsuits.
May 12, 1999............................  H.AMDT.83 On agreeing to the
                                           Scott amendment (A004) Failed
                                           by recorded vote: 192-235
                                           (Roll no. 124).
May 12, 1999............................  H.AMDT.84 On agreeing to the
                                           Nadler amendment (A005)
                                           Failed by recorded vote: 180-
                                           244 (Roll no. 125).
May 12, 1999............................  H.AMDT.85 Amendment (A006) in
                                           the nature of a substitute
                                           offered by Mr. Conyers.
                                           Amendment in the nature of a
                                           substitute sought to delete
                                           provisions that place a cap
                                           on punitive damages; provide
                                           for a cooling off period and
                                           alternative dispute
                                           resolution procedures;
                                           prohibit frivolous class
                                           action lawsuits; and impose a
                                           duty on plaintiffs to
                                           mitigate damages.
May 12, 1999............................  H.AMDT.85 On agreeing to the
                                           Conyers amendment (A006)
                                           Failed by recorded vote: 190-
                                           236 (Roll no. 126).
May 12, 1999............................  The House rose from the
                                           Committee of the Whole House
                                           on the state of the Union to
                                           report H.R. 775.
May 12, 1999............................  The previous question was
                                           ordered pursuant to the rule.
May 12, 1999............................  The House adopted the
                                           amendment in the nature of a
                                           substitute as agreed to by
                                           the Committee of the Whole
                                           House on the state of the
                                           Union.
May 12, 1999............................  Mr. Conyers moved to recommit
                                           with instructions to
                                           Judiciary.
May 12, 1999............................  The previous question on the
                                           motion to recommit with
                                           instructions was ordered
                                           without objection.
May 12, 1999............................  On motion to recommit with
                                           instructions Failed by
                                           recorded vote: 184-246 (Roll
                                           no. 127).
May 12, 1999............................  On passage Passed by recorded
                                           vote: 236-190 (Roll no. 128).
May 12, 1999............................  Motion to reconsider laid on
                                           the table Agreed to without
                                           objection.
May 13, 1999............................  Received in the Senate. Read
                                           twice. Placed on Senate
                                           Legislative Calendar under
                                           General Orders. Calendar No.
                                           113.
June 15, 1999...........................  Measure laid before Senate by
                                           unanimous consent.
                                           (consideration: CR S6998).
June 15, 1999...........................  Senate struck all after the
                                           Enacting Clause and
                                           substituted the language of
                                           S. 96 amended.
June 15, 1999...........................  Passed Senate in lieu of S. 96
                                           with an amendment by Yea-Nay
                                           Vote. 62-37. Record Vote No:
                                           165.
June 16, 1999...........................  Senate insists on its
                                           amendment asks for a
                                           conference, appoints
                                           conferees McCain; Stevens;
                                           Burns; Gorton; Hollings;
                                           Kerry; Wyden From the
                                           Committee on Commerce,
                                           Science, and Transportation.
June 16, 1999...........................  Senate appointed conferees.
                                           Hatch; Thurmond; Leahy From
                                           the Committee on the
                                           Judiciary.
June 16, 1999...........................  Senate appointed conferees.
                                           Bennett; Dodd From the
                                           Special Committee on the Year
                                           2000 Technology Problems.
June 23, 1999...........................  Message on Senate action sent
                                           to the House.
June 24, 1999...........................  Mr. Goodlatte asked unanimous
                                           consent that the House
                                           disagree to the Senate
                                           amendment, and agree to a
                                           conference.
June 24, 1999...........................  On motion that the House
                                           disagrees to the Senate
                                           amendment, and agree to a
                                           conference Agreed to without
                                           objection.
June 24, 1999...........................  Motion to reconsider laid on
                                           the table Agreed to without
                                           objection.
June 24, 1999...........................  Mr. Conyers moved that the
                                           House instruct conferees.
June 24, 1999...........................  DEBATE--The House proceeded
                                           with 1 hour of debate on the
                                           motion to instruct the
                                           managers of the part of the
                                           House at the conference on
                                           the disagreeing votes of the
                                           two houses on the amendment
                                           of the Senate to the bill to
                                           ensure that their eventual
                                           report to the House reflects
                                           due regard for the
                                           substantive concerns of the
                                           high-technology community and
                                           the possible implications of
                                           the ``y2k'' date change on
                                           that community and on the
                                           Nation's economy; the
                                           substantive inputs of the
                                           Administration and of the
                                           bipartisan Leaderships in the
                                           Congress on the issues
                                           committed to conference; and
                                           the sense of the House that a
                                           decision not to follow this
                                           process will lead to a
                                           failure to enact legislation.
June 24, 1999...........................  On motion that the House
                                           instruct conferees Agreed to
                                           by the Yeas and Nays: 426-0
                                           (Roll no. 253).
June 24, 1999...........................  Motion to reconsider laid on
                                           the table Agreed to without
                                           objection.
June 24, 1999...........................  The Speaker appointed
                                           conferees From the Committee
                                           on the Judiciary, for
                                           consideration of the House
                                           bill and the Senate
                                           amendment, and modifications
                                           committed to conference:
                                           Hyde, Sensenbrenner,
                                           Goodlatte, Conyers, and
                                           Lofgren.
June 24, 1999...........................  The Speaker appointed
                                           conferees From the Committee
                                           on Commerce, for
                                           consideration of section 18
                                           of the Senate amendment, and
                                           modifications committed to
                                           conference: Bliley, Oxley,
                                           and Dingell.
June 24, 1999...........................  Conference held.
June 29, 1999...........................  Conferees agreed to file
                                           conference report.
June 29, 1999...........................  Conference report H. Rept. 106-
                                           212 filed. (text: CR H5066-
                                           5073).
June 30, 1999...........................  Rules Committee Resolution H.
                                           Res. 234 Reported to House.
                                           Rule provides for
                                           consideration of the
                                           conference report to H.R. 775
                                           with 1 hour of general
                                           debate. Previous question
                                           shall be considered as
                                           ordered without intervening
                                           motions. Rule waives all
                                           points of order against the
                                           conference report and against
                                           its consideration.
July 1 1999.............................  Rule H. Res. 234 passed House.
July 1, 1999............................  Mr. Goodlatte brought up
                                           conference report H. Rept.
                                           106-212 for consideration
                                           under the provisions of H.
                                           Res. 234.
July 1 1999.............................  The previous question was
                                           ordered without objection.
July 1, 1999............................  On agreeing to the conference
                                           report Agreed to by the Yeas
                                           and Nays: 404-24 (Roll no.
                                           265).
July 1, 1999............................  Motions to reconsider laid on
                                           the table Agreed to without
                                           objection.
July 1, 1999............................  Conference papers: message on
                                           House action held at the desk
                                           in Senate.
July 1, 1999............................  Conference report considered
                                           in Senate.
July 1, 1999............................  Senate agreed to conference
                                           report by Yea-Nay Vote. 81-
                                           18. Record Vote No: 196.
July 1, 1999............................  Message on Senate action sent
                                           to the House.
July 1, 1999............................  Cleared for White House.
July 16, 1999...........................  Presented to President.
July 20, 1999...........................  Signed by President.
July 20, 1999...........................  Became Public Law No. 106-37.
------------------------------------------------------------------------

    The bill establishes certain procedures for civil actions 
brought for damages relating to the failure of any device or 
system to process or otherwise deal with the transition from 
the year 1999 to the year 2000, and for other purposes. The 
Committee on Small Business did not prepare a report on this 
bill. Further information on the bill can be found in House 
Report 106-134 prepared by the Committee on the Judiciary and 
the report of the conferees, House Report 106-212.

5.8  S. 314.--Small Business Year 2000 Readiness Act, Public Law No. 
        106-8

                           Legislative History
------------------------------------------------------------------------
                  Date                                Action
------------------------------------------------------------------------
S. 314:
January 27, 1999........................  Read twice and referred to the
                                           Committee on Small Business.
February 5, 1999........................  Committee on Small Business.
                                           Ordered to be reported
                                           without amendment favorably.
February 23, 1999.......................  Committee on Small Business.
                                           Reported to Senate by Senator
                                           Bond without amendment. With
                                           written report No. 106-5.
February 23, 1999.......................  Placed on Senate Legislative
                                           Calendar under General
                                           Orders. Calendar No. 18.
March 2, 1999...........................  Measure laid before Senate by
                                           unanimous consent.
                                           (consideration: CR S2059-
                                           2069)
March 2, 1999...........................  Passed Senate without
                                           amendment by Yea-Nay Vote. 99-
                                           0. Record Vote No: 28. (text:
                                           CR S2068-2069)
March 3, 1999...........................  Received in the House.
March 3, 1999...........................  Referred to the House
                                           Committee on Small Business.
March 12, 1999..........................  Committee Hearings Held.
March 3, 1999...........................  Message on Senate action sent
                                           to the House.
March 23, 1999..........................  Mr. Talent moved to suspend
                                           the rules and pass the bill.
March 23, 1999..........................  Considered under suspension of
                                           the rules. (consideration: CR
                                           H1488-1490)
March 23, 1999..........................  On motion to suspend the rules
                                           and pass the bill Agreed to
                                           by voice vote. (text: CR
                                           H1488-1489)
March 23, 1999..........................  Motion to reconsider laid on
                                           the table Agreed to without
                                           objection.
March 23, 1999..........................  Cleared for White House.
March 25, 1999..........................  Presented to President.
April 2, 1999...........................  Signed by President.
April 2, 1999...........................  Became Public Law No. 106-8.
------------------------------------------------------------------------

    S. 314 requires the SBA to establish a limited-term loan 
program (hereinafter referred to as the `Y2K loan program') 
pursuant to which the SBA would guarantee loans made by private 
lenders to assist small businesses in correcting Y2K computer 
problems. The bill permits a financial institution originating 
loans under the Y2K loan program to process the loans in 
accordance with the requirements of any existing loan program 
established under the SBA's 7(a) business loan program in which 
such lender is eligible to participate. The Committee did not 
prepare a report on this legislation. More information can be 
found in Senate Report 106-5 prepared by the Senate Committee 
on Small Business.
5.9  S. 388 (H.R. 818)--Disaster Mitigation Coordination Act of 1999, 
        Public Law No. 106-24

                           Legislative History
------------------------------------------------------------------------
                  Date                                Action
------------------------------------------------------------------------
H.R. 818:
February 24, 1999.......................  Referred to the House
                                           Committee on Small Business.
February 25, 1999.......................  Committee Consideration and
                                           Mark-up Session Held.
February 25, 1999.......................  Ordered to be Reported by
                                           Voice Vote.
March 1, 1999...........................  Reported by the Committee on
                                           Small Business. H. Rept. 106-
                                           33.
March 1, 1999...........................  Placed on the Union Calendar,
                                           Calendar No. 18.
March 2, 1999...........................  Mr. Talent moved to suspend
                                           the rules and pass the bill.
March 2, 1999...........................  Considered under suspension of
                                           the rules.
March 2, 1999...........................  On motion to suspend the rules
                                           and pass the bill Agreed to
                                           by voice vote.
March 3, 1999...........................  Received in the Senate and
                                           read twice and referred to
                                           the Committee on Small
                                           Business.
S. 388:
February 8, 1999........................  Read twice and referred to the
                                           Committee on Small Business.
                                           (text of measure as
                                           introduced: CR S1370-1371)
March 25, 1999..........................  Senate Committee on Small
                                           Business discharged by
                                           Unanimous Consent.
March 25, 1999..........................  Passed Senate without
                                           amendment by Unanimous
                                           Consent. (consideration: CR
                                           S3566; text: CR S3566)
April 12, 1999..........................  Received in the House.
April 12, 1999..........................  Held at the desk.
April 12, 1999..........................  Message on Senate action sent
                                           to the House.
April 12, 1999..........................  Mr. Thune moved to suspend the
                                           rules and pass the bill.
April 12, 1999..........................  Considered under suspension of
                                           the rules (consideration: CR
                                           H1814-1817)
April 12, 1999..........................  On motion to suspend the rules
                                           and pass the bill Agreed to
                                           by voice vote. (text: CR
                                           H1815)
April 12, 1999..........................  Motion to reconsider laid on
                                           the table Agreed to without
                                           objection.
April 12, 1999..........................  Cleared for White House.
April 15, 1999..........................  Presented to President.
April 27, 1999..........................  Signed by President.
April 27, 1999..........................  Became Public Law No. 106-24.
------------------------------------------------------------------------

                          Need for Legislation

    Since 1953, the Small Business Administration has 
administered the disaster loan program authorized by Section 
7(b) of the Small Business Act. This program provides loans to 
help small businesses and homeowners to rebuild after natural 
disasters. In past years the loan program has spent billions of 
dollars helping small businesses recover from natural 
disasters. In fiscal year 1998, the SBA lent $728 million for 
30,154 disaster loans; in 1997 it lent $1.1 billion for 49,515 
disaster loans. The SBA's highest demand for disaster loans 
came in 1994, when it loaned over $4.1 billion due to the 
Northridge Earthquake in California.
    The cost of disaster assistance has risen over the past 
several years due to increases in construction and other costs. 
By implementing a program to help small businesses use 
techniques that would lessen damage in the event of natural 
disasters the possibility exists to save millions of dollars in 
potential losses. The Federal Emergency Management Agency 
(FEMA) currently manages ``Project Impact'' which works in 
conjunction with communities and businesses on mitigation 
policies and techniques. Passage of H.R. 818 will complement 
and further these efforts at mitigation by offering small 
businesses low interest loans for disaster mitigation.

                      Section-by-Section Analysis

Section 1. Short Title
    This act may be cited as the ``Disaster Mitigation 
Coordination Act of 1999''.
Section 2. Pilot Program
    (a) This paragraph authorizes the Administrator to 
establish a pilot program to make loans to small businesses and 
homeowners for the purpose of mitigating the effects of natural 
disasters. These loans will be made in support of a formal 
mitigation program established by the Federal Emergency 
Management Agency. These mitigation techniques will be varied 
and include a variety of activities including building 
improvements, relocation, etc.
    (b) This paragraph authorizes SBA to lend up to $15,000,000 
each year through 2004 in support of the disaster mitigation 
pilot program. These funds will come from existing Section 7(b) 
disaster loan appropriations and will be subject to 
appropriations available for that program.
    (c) This paragraph requires the Administrator of the SBA to 
report to Congress on January 31, 2003. The report will 
document the number of loans made, the areas served by the 
pilot, and the estimated savings to the government as a result 
of the program.
    S. 388 establishes a pilot program for making loans to 
small businesses for the purpose of implementing techniques and 
technologies that will mitigate the effects of natural 
disasters. The Small Business Administration (SBA) currently 
administers a disaster loan program that lends to small 
businesses and homeowners affected by natural disasters. 
Implementation of S. 388 will enable the SBA to lend to small 
businesses in disaster prone areas and help them avert and 
lessen the costs of future diaster-inflicted damages. The cost 
of disaster assistance has risen over the past several years 
due to increases in construction and other costs.
    By implementing a program to help small businesses use 
techniques that would lessen damage in the event of natural 
disasters the possibility exists to save millions of dollars in 
potential losses. The Federal Emergency Management Agency 
(FEMA) currently manages ``Project Impact'' which works in 
conjunction with communities and businesses on mitigation 
policies and techniques.

  5.10  S.791 (H.R. 1497--Women's Business Center Sustainability Act, 
        Public Law No. 106-165

                           Legislative History
------------------------------------------------------------------------
                  Date                                Action
------------------------------------------------------------------------
H.R. 1497:
April 20, 1999..........................  Referred to the House
                                           Committee on Small Business.
September 30, 1999......................  Committee Consideration and
                                           Mark-up Session Held.
September 30, 1999......................  Ordered to be Repoorted in the
                                           Nature of a Substitute
                                           (Amended) by Voice Vote.
October 5, 1999.........................  Reported (Amended) by the
                                           Committee on Small Business.
                                           H. Rept. 106-365.
October 5, 1999.........................  Placed on the Union Calendar,
                                           Calendar No. 206.
October 19, 1999........................  Mrs. Kelly moved to suspend
                                           the rules and pass the bill,
                                           as amended.
October 19, 1999........................  Considered under suspension of
                                           the rules.
October 19, 1999........................  On motion to suspend the rules
                                           and pass the bill, as amended
                                           Agreed to by voice vote.
October 19, 1999........................  Motion to reconsider laid on
                                           the table Agreed to without
                                           objection.
October 20, 1999........................  Received in the Senate and
                                           read twice and referred to
                                           the Committee on Small
                                           Business.
S. 791:
April 14, 1999..........................  Read twice and referred to the
                                           Committee on Small Business.
September 30, 1999......................  Committee on Small Business.
                                           Ordered to be reported with
                                           an amendment in the nature of
                                           a substitute favorably.
November 2, 1999........................  Committee on Small Business.
                                           Reported to Senate by Senator
                                           Bond with an amendment in the
                                           nature of a substitute. With
                                           written report No. 106-214.
November 2, 1999........................  Placed on Senate Legislative
                                           Calendar under General
                                           Orders. Calendar No. 372.
November 5, 1999........................  Measure laid before Senate by
                                           unanimous consent.
                                           (consideration: CR S14212-
                                           14218; text as reported in
                                           Senate: CR S14212-14213).
November 5, 1999........................  S.AMDT.2543 Proposed by
                                           Senator Domenici for Senator
                                           Kerry. Kerry amendment to S.
                                           791 to make an amendment with
                                           respect to the funding
                                           formulas and the selection
                                           process.
November 5, 1999........................  S.AMDT.2543 Amendment SP 2543
                                           agreed to in Senate by
                                           Unanimous Consent.
November 5, 1999........................  The committee substitute as
                                           amended agreed to by
                                           Unanimous Consent.
November 5, 1999........................  Passed Senate with an
                                           amendment by Unanimous
                                           Consent. (text: CR S14216-
                                           14218).
November 8, 1999........................  Received in the House.
November 8, 1999........................  Meassage on Senate action sent
                                           to the House.
November 8, 1999........................  Held at the desk.
November 18, 1999.......................  Mrs. Kelly asked unanimous
                                           consent to take from the
                                           Speaker's table and consider.
November 18, 1999.......................  Considered by unanimous
                                           consent. (consideration: CR
                                           H12864-12866).
November 18, 1999.......................  On passage Passed without
                                           objection. (text: CR 11/19/99
                                           H12864-12866).
November 18, 1999.......................  Motion to reconsider laid on
                                           the table Agreed to without
                                           objection.
November 18, 1999.......................  Cleared for White House.
December 1, 1999........................  Presented to President.
December 9, 1999........................  Signed by President.
December 9, 1999........................  Became Public Law No. 106-165.
------------------------------------------------------------------------

                          Need for Legislation

    The Small Business Administration's Women's Business 
Program provides five-year grants, matched by non-Federal 
dollars, to private-sector organizations to establish business-
training centers for women. Depending on the needs of the 
community being served, centers teach women the principles of 
finance, management and marketing, as well as specialized 
topics such as how to get a government contract or how to start 
a home-based business. The centers are located in rural, urban 
and suburban areas, and direct much of their training and 
counseling assistance toward socially and economically 
disadvantaged women.
    In spite of the impressive growth, according to the data 
from the 1998 Women's Economic Summit, women-owned businesses 
account for only 18 percent of all small-business gross 
receipts, and they are dramatically under-represented in the 
nation's two most lucrative markets: corporate buying and 
government contracting. Based on this data and hearing 
testimony, the Committee finds the need for the Women's 
Business Centers continues, and this is no time to diminish or 
dismantle the infrastructure we have invested in for the past 
decade.
    This legislation draws on testimony given before the 
Committee over the past year. According to testimony given by a 
member of the Association of Women's Business Centers at a 
hearing held February 11, 1999, the program is in danger of 
losing effective centers. Many centers need every penny to run 
their programs and it is increasingly difficult to raise the 
required matching funds. Losing the matching funds would 
compound the problem because they would have to raise twice as 
much money, the competition for foundation and private-sector 
dollars has become scarcer with each year that government 
funding has diminished, and they would not have any leverage to 
challenge those foundations and private corporations to give/
match.
    H.R. 1497 seeks to improve Congressional oversight of the 
Women's Business Center program and balance the need for 
developing new centers while sustaining currently funded and 
graduated sites. There are four main components to this 
balanced approach. First, the legislation increases oversight 
and review of women's business centers. SBA is directed to do 
an annual programmatic and financial examination of each center 
and then to analyze the results to determine whether the center 
is programmatically and financially viable. The Committee 
recognized a need for such an examination because a GAO study 
on the Women's Business Centers program released on September 
2, 1999, found `limitations in SBA's records and databases' for 
the years 1989 through 1998. Accordingly, if centers don't 
provide the information required, if the information is 
inadequate, or if the results are poor, the SBA can withhold 
grant extensions or grant renewals. Second, H.R. 1497 requires 
the SBA to issue the requests for proposals (RFP) for new 
centers and centers competing for sustainability grants at the 
same time in order to better manage the selection and award 
process. Third, based on the conditions described in the bill, 
the Committee intends for the selection panel to judge merit on 
how well a center provided service to its market under its 
first award and how it plans to service its market in the next 
five years. Fourth, H.R. 1497 goes a step further by requiring 
the SBA as part of the final selection process to complete a 
site visit of each center competing for a sustainability grant. 
Recognizing that site visits are expensive, this bill makes 
available the equivalent of $275,000 per year proportionate to 
appropriations to be used for site visits and other uses. 
Fourth, H.R. 1497 incrementally raises over four years the 
annual authorization levels from $12 million in FY 2000 to 
$14.5 million in fiscal year 2003. The Committee increased the 
authorization levels to ensure that there are adequate monies 
to fund 45 existing centers, an average of 8 recompeting 
centers, and an average of 10 new centers per year. This bill 
establishes very specific requirements for appropriations. 
First, of those amounts, the bill reserves a percentage of 
money each fiscal year for sustainability grants.

                      Section-by-Section Analysis


Section 1. Short Title

    The Act is entitled the ``Women's Business Centers 
Sustainability Act of 1999''.

Section 2. Private Nonprofit Organizations

    This section amends the act to clarify that all Women's 
Business Centers must be private nonprofit organizations 
(501(c) organizations) instead of private organizations.

Section 3. Increased Management Oversight and Review of Women's 
        Business Centers

    This section directs the SBA to do an annual programmatic 
and financial examination for each center and then to analyze 
the results to determine whether the center is programmatically 
and financially viable. The Committee recognized a need for 
such an examination because a GAO study on the Women's Business 
Centers program published on September 2nd found `limitations 
in SBA's records and databases' for the years 1989 through 
1998. Accordingly, if centers don't provide the information 
required, if the information is inadequate, or if the results 
are poor, the SBA can withhold grant extensions or grant 
renewals.

Section 4. Women's Business Centers Sustainability Pilot Program

    Subsection (a)(1) establishes four-year competitive grant 
program. Each grant cycle is for five fiscal years. There will 
be two separate selection rounds for the sustainability grants 
in each year of the pilot. In the first round, centers in the 
final year of their five-year grant project can compete. If 
there are funds unawarded from the first round, there will be a 
second round for graduated centers to compete. A graduated 
center is considered a center that no longer receives federal 
funds from the Women's Business Center Program, but is still 
actively providing business programs and services to its local 
market.
    Subsection (a)(2) describes five conditions for 
participation. The conditions include requiring certification 
that the applicant is a private nonprofit organization; 
maintenance of records of its past performance; and submission 
of a plan that demonstrates a center's ability to records of 
its past performance; and submission of a plan that 
demonstrates a center's ability to better meet the needs of the 
market through fundraising in the next 5 years.
    Subsection (a)(3) sets forth the conditions for reviewing 
grant applications, reporting requirements for data collection, 
and a ten-year record retention of applications.
    Subsection (a)(4) establishes the matching requirement. 
Centers must raise cash or in-kind contributions from non-
Federal sources. Consistent with the last three years of the 
initial five-year grant, centers must raise the equivalent of 
one non-Federal dollar to each Federal dollar.
    Subsection (a)(5) requires the SBA to issue all requests 
for proposals (proposals to establish new centers as well as 
proposals seeking the sustainability pilot grants) at the same 
time. This provision is intended to ensure that new centers and 
sustained centers get equal consideration during the 
application review process and that funds are appropriately 
awarded.
    Subsection (b) authorizes appropriations for the term of 
the pilot.
    Subsection (b)(1) incrementally raises over four years the 
annual appropriations from $12 million in FY2000 to $14.5 
million in fiscal year 2003. The Committee increased the 
authorization levels to ensure that there are adequate monies 
to fund 45 existing centers, an average of 8 recompeting 
centers, and an average of 10 new centers per year. New centers 
and existing centers are awarded matching grants of up to 
$150,000 per year. Recompeting centers are awarded matching 
grants of up to $125,000. The funds appropriated over the next 
four fiscal years are available until used so that if 
insufficient qualified applications are received, the program 
can carry over unawarded funds for use later in the pilot.
    Subsection (b)(2) sets aside the equivalent of $275,000 per 
year for the Office of Women's Business Ownership to use for 
selection panel costs including site visits of all final 
contenders for sustainability grants, post-award conferences 
and oversight costs.
    Subsection (b)(3) reserves specific percentages each year 
to fund centers with sustainability pilot grants. The 
subsection also sets forth exceptions for the use of unawarded 
funds. First, if the funds for the first round of 
sustainability pilot grants are not fully awarded, the money 
can be used for grants to graduated centers. Then, if reserved 
funds remain after funding sustainability grants for qualified 
graduated centers, the money can be used for new centers or to 
expand programs to better meet the needs of a market. 
Conversely, if the funds intended for new centers and 
maintenance of existing centers are not fully awarded, the 
funds can be used for sustainability grants.
    Subsection (c) section establishes the guidelines. The SBA 
must issue guidelines to implement this Act within 30 days of 
enactment.

Section 5. Effective Date

    This section establishes that this Act takes effect on 
October 1, 1999.

5.11  H.R. 1568--Veterans Entrepreneurship and Small Business 
        Development Act, Public Law No. 106-50

                           Legislative History
------------------------------------------------------------------------
                  Date                                Action
------------------------------------------------------------------------
H.R. 1568:
April 27, 1999..........................  Referred to the Committee on
                                           Small Business, and in
                                           addition to the Committee on
                                           Veterans' Affairs, for a
                                           period to be subsequently
                                           determined by the Speaker, in
                                           each case for consideration
                                           of such provisions as fall
                                           within the jurisdiction of
                                           the committee concerned.
April 27, 1999..........................  Referred to House Small
                                           Business.
June 23, 1999...........................  Committee Hearings Held.
June 23, 1999...........................  Committee Consideration and
                                           Mark-up Session Held.
June 23, 1999...........................  Ordered to be Reported
                                           (Amended) by Voice Vote.
April 27, 1999..........................  Referred to House Veterans'
                                           Affairs.
May 20, 1999............................  Referred to the Subcommittee
                                           on Benefits.
June 29, 1999...........................  Reported (Amended) by the
                                           Committee on Small Business.
                                           H. Rept. 106-206, Part I.
June 29, 1999...........................  House Committee on Veterans'
                                           Affairs Granted an extension
                                           for further consideration
                                           ending not later than June
                                           29, 1999.
June 29, 1999...........................  Committee on Veterans' Affairs
                                           discharged.
June 29, 1999...........................  Placed on the Union Calendar,
                                           Calendar No. 120.
June 29, 1999...........................  Mr. Talent moved to suspend
                                           the rules and pass the bill,
                                           as amended.
June 29, 1999...........................  Considered under suspension of
                                           the rules. (consideration CR
                                           H5016-5026)
June 29, 1999...........................  On motion to suspend the rules
                                           and pass the bill, as amended
                                           Agreed to by voice vote.
                                           (text: CR H 5016-5021)
June 29, 1999...........................  Motion to reconsider laid on
                                           the table Agreed to without
                                           objection.
June 30, 1999...........................  Received in the Senate and
                                           read twice and referred to
                                           the Committee on Small
                                           Business.
July 15, 1999...........................  Committee on Small Business.
                                           Ordered to be reported with
                                           an amendment in the nature of
                                           a substitute favorably.
August 4, 1999..........................  Committee on Small Business.
                                           Reported to Senate by Senator
                                           Bond with an amendment in the
                                           nature of a substitute. With
                                           written report No. 106-136.
August 4, 1999..........................  Placed on Senate Legislative
                                           Calendar under General
                                           Orders. Calendar No. 254.
August 5, 1999..........................  Measure laid before Senate by
                                           unanimous consent.
                                           (consideration: CR S10520-
                                           10522)
August 5, 1999..........................  Amendment SP 1617 proposed by
                                           Senator Brownback for Senator
                                           Bond.
August 5, 1999..........................  S.AMDT.1617 Proposed by
                                           Senator Brownback for Senator
                                           Bond. To make amendments with
                                           respect to the Board of
                                           Directors of the National
                                           Veterans Business Development
                                           Corporation.
August 5, 1999..........................  Amendment SP 1617 agreed to in
                                           Senate by Unanimous Consent.
August 5, 1999..........................  S.AMDT.1617 Amendment SP 1617
                                           agreed to in Senate by
                                           Unanimous Consent.
August 5, 1999..........................  The committee substitute as
                                           amended agreed to by
                                           Unanimous Consent.
August 5, 1999..........................  Passed Senate with an
                                           amendment by Unanimous
                                           Consent.
August 5, 1999..........................  Message on Senate action sent
                                           to the House.
August 5, 1999..........................  Mr. Talent asked unanimous
                                           consent that the House agree
                                           to the Senate amendment.
August 5, 1999..........................  On motion that the House agree
                                           to the Senate amendment
                                           Agreed to without objection.
                                           (text: CR H7462-7467)
August 5, 1999..........................  Motion to reconsider laid on
                                           the table Agreed to without
                                           objection.
August 5, 1999..........................  Cleared for White House.
August 11, 1999.........................  Presented to President.
August 17, 1999.........................  Signed by President.
August 17, 1999.........................  Became Public Law No. 106-50.
------------------------------------------------------------------------

                          Need for Legislation

    Over the years, the Nation has recognized the debt owed to 
citizens who serve in defense of our Constitution and the 
American ideals of free speech, personal liberty, and free 
enterprise. H.R. 1568 builds on the best examples of this 
public policy from our Nation's history. From the beginning of 
the Republic, when the Continental Congress provided land 
grants to Revolutionary War veterans, we have helped veterans 
with self-employment and self-sufficiency. 150 years later, the 
1944 Servicemen's Readjustment Act, or ``G.I. Bill of Rights of 
World War II'' provided loan guarantees for returning World War 
II, and later Korean War, veterans. In the ten years following, 
the Federal Government provided over 280,000 small business and 
farm loans to veterans to help include them in the post-war 
boom and use their talents to propel that boom.
    Unfortunately, the Nation's efforts on behalf of veterans 
have diminished drastically in the intervening 45 years. Over 
the years, the interests of veterans, particularly the service-
disabled, have fallen on infertile ground. While specifically 
included as a priority of the SBA at its creation, the Office 
of Veterans Affairs and the needs of veterans have been 
diminished systematically at the SBA. Elimination of the direct 
loan program for veterans in fiscal year 1995, at then 
Administrator Phil Lader's request, resulted in serious 
diminution of financial assistance of veterans. Total loan 
dollars dropped from $22 million dollars in loans in 1993 to 
$10.8 million in 1998. Likewise, training and counseling for 
veterans dropped from 38,775 total counseling sessions for 
veterans in 1993 to 29,821 sessions in 1998.
    While the current SBA Administrator, Aida Alvarez, has made 
efforts to halt this slide it is evident that more must be 
done. Teamwork and self-confidence are the hallmarks of our 
veterans. With that in mind, H.R. 1568 proposes to give 
veterans the goals they need to do the job. SBA's activities 
and priorities will be strengthened, but a framework must be 
established to allow veterans and small businesses share their 
knowledge and skills. By establishing the National Veterans 
Business Development Corporation, Congress will set in place a 
permanent mechanism for meeting our obligations to our service 
men and women.
    H.R. 1568 will also fulfill a long unmet need to assist our 
military reservists who are small business owners. Often these 
individuals, called to service at short notice, come back from 
fighting to protect our freedoms only to find their businesses 
in shambles. H.R. 1568 will establish loan deferrals, technical 
and managerial assistance, and loan programs for these citizen 
soldiers so that while they risk their lives they need not risk 
their livelihoods.

                      Section-by-Section Analysis


Section 1. Short Title

    Designates the bill as the ``Veterans Entrepreneurship and 
Small Business Development Act of 1999''.

Section 2. Table of Contents

                      TITLE I--GENERAL PROVISIONS


Section 101. Findings

    This section describes Congressional findings regarding the 
sacrifices and efforts of veterans and their value to the 
American economy as small business owners.

Section 102. Purpose

    Describes the purpose of the Act, to encourage the SBA and 
other agencies to implement further efforts to assist veterans, 
particularly service-disabled veterans in the formation and 
growth of small businesses.

Section 103. Definitions

    Establishes definitions of veteran owned and service-
disabled veteran owned small business concerns. The term 
``service-disabled veterans'' is based on the definition in 
Title 38 of the US Code.

                TITLE II--VETERANS BUSINESS DEVELOPMENT


Section 201. Office of Veterans Business Development

    Establishes an Office of Veterans Business Development and 
the position of Associate Administrator for Veterans Business 
Development at the Small Business Administration. This position 
will be responsible for the formulation, execution, and 
promotion of programs to provide assistance for small 
businesses owned and controlled by veterans. There are 
currently at least ten Associate Administrators at the SBA. A 
minimum of four are required by law, and the titles of only two 
are specified.

Section 202. National Veterans Business Development Corporation

    This section establishes a federally chartered corporation, 
the National Veterans Business Development Corporation, for the 
purpose of guiding and monitoring public and private sector 
initiatives to assist the Nation's veterans in their efforts to 
form and grow small businesses. The most significant single 
purpose of the corporation will be to work with the public and 
private sectors to establish an independent nationwide network 
of business assistance and information centers for veterans. 
The Corporation will be managed by a Board of Directors 
appointed in a bipartisan fashion by the President based on 
recommendations from the Congress. It will have the power to 
raise and disburse funds, establish initiatives, and award 
grants in furtherance of its goal of establishing a cohesive 
assistance and information network for veteran owned business.
    The NVBDC will also establish an advisory board on 
professional certification to work on the problems service 
members with military technical training face in transitioning 
into the private sector workforce. The board will be composed 
of representatives of professional certification organizations, 
such as the Coalition for Professional Certification and 
veterans organizations such as the American Legion. In 
addition, the Board of Directors of the NVBDC shall invite 
representatives of the Armed Services and the Department of 
Labor to participate.
    While they will have no mandate to change or enforce 
regulations, the Committee hopes that the military and private 
sector will work in a cooperative fashion to satisfy both the 
Armed Services training requirements and the public sector's 
need for standard certification and provide transitioning 
service members with an easy entrance to civilian life. To 
start the NVBDC it will have an initial authorization of $2 
million in the first year and $4 million in the second and 
third years, dropping back to $2 million in the fourth and 
final year. After the fourth year the Corporation will be self 
funded from private donations and no longer be eligible for 
federal funds.

Section 203. Advisory Committee on Veterans Affairs

    Establishes an eight member committee to provide 
independent advice and policy recommendations to the SBA, 
Congress, and the President. The committee will conduct 
hearings, collect information from federal agencies, develop, 
monitor and promote programs to aid veteran's business 
development, and issue an annual report to the Congress. The 
Committee will terminate on September 30, 2004 and its 
responsibilities will devolve onto the National Veterans 
Business Development Corporation.

                    TITLE III--TECHNICAL ASSISTANCE


Section 301. Score Program

    This section requires the Service Corps of Retired 
Executives (SCORE) and the SBA to establish a program for 
directing management and technical assistance to veteran-owned 
small business and veterans wishing to establish small business 
concerns. SCORE provides advice and technical assistance to 
small businesses free of charge through a nationwide network of 
volunteers.

Section 302. Entrepreneurial Assistance

    This section requires the Small Business Development Center 
(SBDC) system and the SBA to establish a program for outreach 
and assistance to veterans and veteran-owned small businesses. 
SBDC's provide free management and technical assistance to 
small business owners through over 900 sites located at 
colleges and universities nationwide.

Section 303. Military Reservists Technical Assistance

    Establishes a program of technical and managerial 
assistance, through the SBA, for military reservists who are 
self-employed or are small business owners and are called to 
active military duty. Requires the SBA to enhance its publicity 
of such assistance for the duration of Operation ``Allied 
Force''.

                     TITLE IV--FINANCIAL ASSISTANCE


Section 401. General Business Loans

    Includes service-disabled veterans with handicapped 
individuals in provisions requiring that loan making decisions 
shall be resolved in favor of the prospective borrower. H.R. 
1568 also clarifies that this provision applies only to 
guaranteed loans and makes no requirement that the SBA 
reinstitute the direct loan programs eliminated in the 
Administration budget submission in 1995. According to the 
Administration's testimony on June 23, 1999 such a result was 
not desired by the SBA. Therefore, an amendment was offered to 
specify and reinforce the Administration's opposition to those 
programs.

Section 402. Assistance to Active Duty Military Reservists

    Requires the SBA to establish a system for loan deferrals 
for small business owners called up for active duty. Also 
requires the SBA to make economic injury disaster loans 
available to self-employed individuals who are called to active 
duty for the National Guard and Reserves.

Section 403. Microloan Program

    Makes veterans eligible for assistance under the SBA's 
microloan program which provides small loans (under $25,000) to 
people seeking initial financing for small business start-up or 
expansion.

Section 404. Delta Loan Program

    Includes veteran owned small businesses in the eligibility 
categories for assistance under the DELTA loan program at the 
SBA.

Section 405. State Development Company Program

    Includes the formation and creation of veteran-owned small 
business in the public policy goals sought in the 504 loan 
program for construction and long-term equipment loans.

                          TITLE V--PROCUREMENT


Section 501. Subcontracting

    Requires the inclusion of small business concerns owned and 
controlled by veterans in the mandatory subcontracting clause 
in all government contracts that establishes subcontracting 
plans.

Section 502. Procurement Assistance

    This section requires the SBA to establish a three percent 
goal for contracting with small business concerns owned and 
controlled by service disabled veterans.

                       TITLE VI--REPORTS AND DATA


Section 601. Reporting Requirements

    Requires the heads of each federal agency to report to the 
Small Business Administration concerning contracting with 
veteran owned and service-disabled veteran owned small 
businesses.

Section 602. Report on Small Business and Competition

    Requires the SBA to include information on small business 
concerns owned by veterans and service disabled veterans in the 
annual report on small business participation and opportunities 
in federal procurement.

Section 603. Annual Report

    This section requires the Administrator to submit an annual 
report to Congress on the needs of veteran owned small business 
and the progress of programs designed to aid and promote 
veterans small business ownership. The Administrator shall also 
provide statistical information on veterans participation in 
SBA programs.

Section 604. Information Collection

    Requires the collection of procurement data on veterans and 
service-disabled veteran owned small businesses, and collection 
of information on the procurement practices of each federal 
agency. All such information is to be made available to any 
small business concern requesting it. The information is also 
to be distributed to federal procurement officers. Also 
requires the SBA and VA to work to establish a database on 
veteran owned small business concerns.

                  TITLE VII--MISCELLANEOUS PROVISIONS


Section 701. Administrator's Order

    Requires the administrator to strengthen and reissue the 
order implementing the provisions of P.L. 93-237 which requires 
the SBA to fully include veterans in all the programs, purposes 
and activities of the agency.

Section 702. Office of Advocacy

    Requires the Chief Counsel for Advocacy of the US Small 
Business Administration to include an evaluation of the efforts 
of the federal government to assist veteran owned small 
business concerns as one of his primary functions. The Chief 
Counsel is also required to provide statistical information on 
veterans utilizing of federal programs. Also requires the Chief 
Counsel to make recommendations to the Administrator of SBA and 
Congress on programs and efforts to assist veteran owned small 
business concerns.

Section 703. Fixed Asset Small Business Loans

    Requires the Government Accounting Office to conduct a 
study of the feasibility of using the VA home ownership loan 
program as a source of fixed asset financing for veteran-owned 
small businesses.

5.12  H.R. 1882--Small Business Review Panel Technical Amendments Act 
        of 1999

                           Legislative History
------------------------------------------------------------------------
                  Date                                Action
------------------------------------------------------------------------
H.R. 1882:
May 20, 1999............................  Referred to the Committee on
                                           the Judiciary, and in
                                           addition to the Committee on
                                           Small Business, for a period
                                           to be subsequently determined
                                           by the Speaker, in each case
                                           for consideration of such
                                           provisions as fall within the
                                           jurisdiction of the committee
                                           concerned.
May 20, 1999............................  Referred to House Judiciary,
May 21, 1999............................  Referred to the Subcommittee
                                           on Commercial and
                                           Administrative Law.
May 20, 1999............................  Referred to House Small
                                           Business.
May 25, 1999............................  Committee Hearings Held.
May 25, 1999............................  Ordered to be Reported.
May 25, 2000............................  Reported by the Committee on
                                           Small Business. H. Rept. 106-
                                           643, Part I.
July 20, 2000...........................  Referred sequentially to the
                                           House Committee on Ways and
                                           Means for a period ending not
                                           later than Sept. 15, 2000 for
                                           consideration of such
                                           provisions of the bill as
                                           fall within the jurisdiction
                                           of that committee pursuant to
                                           clause 1(s), rule X.
September 15, 2000......................  House Committee on Ways and
                                           Means Granted an extension
                                           for further consideration
                                           ending not later than Sept.
                                           19, 2000.
September 19, 2000......................  House Committee on Ways and
                                           Means Granted an extension
                                           for further consideration
                                           ending not later than Sept.
                                           25, 2000.
September 25, 2000......................  House Committee on Ways and
                                           Means Granted an extension
                                           for further consideration
                                           ending not later than Sept.
                                           26, 2000.
September 26, 2000......................  House Committee on Ways and
                                           Means Granted an extension
                                           for further consideration
                                           ending not later than Sept.
                                           29, 2000.
September 29, 2000......................  House Committee on Ways and
                                           Means Granted an extension
                                           for further consideration
                                           ending not later than Oct. 6,
                                           2000.
October 6, 2000.........................  House Committee on Ways and
                                           Means Granted an extension
                                           for further consideration
                                           ending not later than Oct.
                                           13, 2000.
October 13, 2000........................  House Committee on Ways and
                                           Means Granted an extension
                                           for further consideration
                                           ending not later than Oct.
                                           20, 2000.
October 20, 2000........................  House Committee on Ways and
                                           Means Granted an extension
                                           for further consideration
                                           ending not later than Oct.
                                           25, 2000.
October 25, 2000........................  House Committee on Ways and
                                           Means Granted an extension
                                           for further consideration
                                           ending not later than Oct.
                                           26, 2000.
October 26, 2000........................  House Committee on Ways and
                                           Means Granted an extension
                                           for further consideration
                                           ending not later than Oct.
                                           27, 2000.
October 27, 2000........................  House Committee on Ways and
                                           Means Granted an extension
                                           for further consideration
                                           ending not later than Oct.
                                           28, 2000.
October 28, 2000........................  House Committee on Ways and
                                           Means Granted an extension
                                           for further consideration
                                           ending not later than Oct.
                                           29, 2000.
October 29, 2000........................  House Committee on Ways and
                                           Means Granted an extension
                                           for further consideration
                                           ending not later than Oct.
                                           30, 2000.
October 30, 2000........................  House Committee on Ways and
                                           Means Granted an extension
                                           for further consideration
                                           ending not later than Oct.
                                           31, 2000.
October 31, 2000........................  House Committee on Ways and
                                           Means Granted an extension
                                           for further consideration
                                           ending not later than Nov. 1,
                                           2000.
November 1, 2000........................  House Committee on Ways and
                                           Means Granted an extension
                                           for further consideration
                                           ending not later than Nov. 2,
                                           2000.
November 2, 2000........................  House Committee on Ways and
                                           Means Granted an extension
                                           for further considering
                                           ending not later than Nov. 3,
                                           2000.
November 3, 2000........................  House Committee on Ways and
                                           Means Granted an extension
                                           for further consideration
                                           ending not later than Nov. 4,
                                           2000.
November 4, 2000........................  House Committee on Ways and
                                           Means Granted an extension
                                           for further consideration
                                           ending not later than Nov.
                                           14, 2000.
November 14, 2000.......................  House Committee on Ways and
                                           Means Granted an extension
                                           for further consideration
                                           ending not later than Dec. 5,
                                           2000.
December 5, 2000........................  House Committee on Ways and
                                           Means Granted an extension
                                           for further consideration
                                           ending not later than Dec. 7,
                                           2000.
December 7, 2000........................  House Committee on Ways and
                                           Means Granted an extension
                                           for further consideration
                                           ending not later than Dec.
                                           15, 2000.
------------------------------------------------------------------------

                          Need for Legislation

    The development of H.R. 1882 has been a two-year effort 
spearheaded by the work of the Subcommittee on Regulatory 
Reform and Paperwork Reduction and the Subcommittee on 
Government Programs and Oversight, which have held three joint 
hearings on the Small Business Advocacy Review Panel Process. 
The Subcommittees also commissioned a General Accounting Office 
(GAO) report that examined how the panel process was being 
implemented. The oversight hearings by the Subcommittees, as 
well as the GAO report, revealed several areas in which the 
panel proceeds could be clarified and strengthened. H.R. 1882 
reflects these changes.
    The General Accounting Office interviewed a number of small 
entity representatives who had participated in the panel 
process. Based on these interviews, as well as input from the 
participating agencies, the GAO report contained several 
suggestions about how the panel process could be strengthened. 
These suggestions primarily focused on the following four 
issues: (1) adjusting the time frames in which the panels are 
conducted, (2) ensuring that there is an adequate mix of 
representatives from the small entities that could be affected 
by the rule, (3) enhancing the methods that the panels used to 
gather comments, and (4) improving the background materials 
provided by the regulatory agencies.
    Issues of panel process timing were one area that GAO 
highlighted. Several small entity representatives who had 
participated in the panel process said that they would have 
liked to have had more advance notice of panel meetings and 
telephone conference calls with the panels. Some of these 
representatives said that short advance notice had prevented 
them from participating in certain efforts. One individual, who 
had been identified as a possible small entity representative, 
said that short notice of these meetings prevented him from 
participating in the panel process at all. Most of those who 
voiced this concern said that they would have liked additional 
notice for panel meetings and telephone conference calls to 
avoid conflicts with other scheduled commitments.
    Other small entity representatives that are interviewed 
said that they felt that they were not given enough time to 
study the materials that were provided to them by the covered 
agency. Many of these small entity representatives also said 
that an additional one to two weeks would have allowed them to 
consult with others (e.g., members of their professional 
associations) before providing comments.
    One small entity representative said that requiring 
comments from the representatives shortly after they receive 
materials from the agencies prevents them from providing the 
panels with an in-depth perspective regarding the draft rule.
    To address these concerns, H.R. 1882 requires the covered 
agency to wait at least 30 days after information is provided 
to the small entity representatives before convening a review 
panel in order to provide time to review the materials that are 
provided to them and to make any necessary scheduling 
adjustments.
    Another issue raised by the GAO report was the composition 
of individuals who are chosen to be small entity 
representatives (SERs). A consensus emerged that the best mix 
of small entity representatives is one that includes both 
individual small business owners and representatives from 
associations and other regulatory consultants that represent 
the interests of small entities. The individual small business 
owners provide valuable `hands-on' insights, while association 
representatives and other regulatory consultants generally have 
more resources available to devote to examining the proposed 
rule and have, in many cases, more expertise to understand the 
often technical nature of proposed regulations. H.R. 1882 
addresses this by ensuring that the agency has the authority to 
identify both sets of individuals to participate as small 
entity representatives. Additionally, requiring the Chief 
Counsel for Advocacy to concur with each small entity 
representative chosen by the agency, as the legislation does, 
provides an added check on the selection process to help ensure 
that a good mix of SERs is identified.
    Another issue that was raised as a result of the GAO report 
was the method that the review panels use to collect advice and 
recommendations from the small entity representatives. For the 
most part, the review panels have relied on telephone 
conference calls with the SERs to gather input during the panel 
process. While most SERs said that they viewed telephone 
conference calls as an efficient way for the review panel to 
gather comments, others felt that telephone conference calls 
limited the amount of discussion that could take place between 
themselves and the panel.
    Most of these small entity representatives also expressed a 
preference for face-to-face meetings instead of telephone 
conference calls because they believed the discussions would be 
fuller and would provide greater value to the panels. When 
telephone conference calls were used, some small entity 
representatives said they found it confusing when there were 
numerous participants on the phone at once. One of these 
representatives, for example, suggested setting an agenda to 
clarify participation in the telephone conference calls. H.R. 
1882 helps to address this issue by requiring the review panel 
to accommodate requests for face-to-face oral presentations. 
This will help to ensure that the small entity representatives 
who wish to devote the time and resources to making face-to-
face presentations will have the ability to participate to the 
fullest extent. It also recognizes that conference calls are 
still probably the most efficient way to gather recommendations 
in a timely manner, and allows review panels the ability to 
continue using the current method of obtaining comments from 
the SERs.
    The final major change that H.R. 1882 makes is that it 
requires the Internal Revenue Service (IRS) to meet the 
requirements of the panel process. The addition of the IRS to 
this process reflects the many complaints that this Committee 
has received from small businesses across the nation that the 
IRS, when developing regulations, repeatedly ignores small 
businesses' unique requirements. It is also done with the 
understanding that the IRS has historically been abysmal in 
meeting the requirements of the regulatory Flexibility Act.
    By extending the SBREFA panel process to the IRS, we are 
helping small businesses deal with one of the most troublesome 
agencies they face. The IRS places one of the largest burdens 
on small businesses. The goal of H.R. 1882 is to bring the IRS 
regulation-making process into the light of day, and open it up 
to discussion. Small businesses must be allowed to participate 
in the dialogue. They must be a part of the process. Anything 
less is unfair--especially when it involves an institution like 
the IRS, which has a major impact on small business.

                      Section-by-Section Analysis


Section 1. Short Title

    Designates the bill as the `Small Business Review Panel 
Technical Amendments Act of 1999'.

Section 2. Findings and Purposes

    (a) The Congress finds the following:
    (1) A vibrant and growing small business sector is critical 
to creating jobs in a dynamic economy.
    (2) Small businesses bear a disproportionate share of 
regulatory costs and burdens.
    (3) Federal agencies must consider the impact of their 
regulations on small businesses early in the rulemaking 
process.
    (4) The Small Business Advocacy Review Panel process that 
was established by the Small Business Regulatory Enforcement 
Fairness Act of 1996 has been effective in allowing small 
businesses to participate in rules that are being developed by 
the Environmental Protection Agency and the Occupational Safety 
and Health Administration.
    (b) The purposes of this Act are the following:
    (1) To provide a forum for the effective participation of 
small businesses in the Federal regulatory process.
    (2) To clarify and strengthen the Small Business Advocacy 
Review Panel process.
    (3) To expand the number of Federal agencies that are 
required to convene Small Business Advocacy Review Panels.

Section 3. Ensuring Full Analysis of Potential Impacts on Small 
        Entities of Rules Proposed by Certain Agencies

    Section 3 rewrites section 609(b) of the Regulatory 
Flexibility Act (Chapter 6 of Title 5, United States Code), 
making several technical amendments to small business advocacy 
review panel process. First, it clarifies who has 
responsibility for choosing the small entity representatives 
(SERs). The current statute allows both the Chief Counsel for 
Advocacy and the agency to identify small entity 
representatives. This dual appointment method causes confusion 
and weakens accountability over the small entity representative 
appointment procedure. The legislation corrects this by 
specifying that it is the agency's responsibility to choose the 
small entity representatives, but requires the Chief Counsel to 
concur with each SER identified by the agency. Second, it 
clarifies that the covered agency cannot convene the review 
panel until at least 30 days after the covered agency transmits 
information about the draft proposed rule to the small entity 
representatives. This is designed to address the problem that 
small entity representatives identified of not having enough 
time to review the information that was provided to them. Under 
this change, the small entity representatives would have at 
least 30 days to review the information provided to them. This 
change would also give the agency promulgating the rule some 
flexibility in deciding when to convene its review panel, while 
at the same time not unnecessarily delaying the process. Third, 
it clarifies that a small entity representative shall have the 
opportunity to give an oral presentation to the review panel if 
the small entity representative so desires. Fourth, it changes 
the way in which the final report of the review panel is 
handled. Currently, there is no requirement that the report of 
the review panel be printed in the Federal Register. Nor is 
there any requirements as to when the report of the review 
panel should be made public as part of the rulemaking record. 
As a practical matter, not everyone can come to Washington, DC, 
to inspect a covered agency's rulemaking record. The 
legislation merely requires that the report of the review panel 
be printed in the Federal Register within 120 days. A number of 
those who have participated in the panel process have 
complained that they did not know whether their advice and 
recommendations were addressed by the covered agency because 
the panel report was not made public in a timely manner. The 
legislation corrects this situation by requiring a covered 
agency to print the report of the review panel in the Federal 
Register together with the notice of proposed rulemaking, or as 
a separate item if the notice of proposed rulemaking occurs 
more than 120 days after the report is completed.

Section 4. Definitions

    Section 4 amends section 609(d) of the Regulatory 
Flexibility Act (Chapter 6 of Title 5, United States Code) to 
include the Internal Revenue Service of the Department of the 
Treasury as one of the covered agencies that must convene small 
business advocacy review panels. Currently, the advocacy review 
panel requirements only apply to the Environmental Protection 
Agency and the Occupational Safety and Health Administration of 
the Department of Labor.
    Section 4 also defines the term ``small entity 
representative'' to mean a small entity, which is already 
defined in the Regulatory Flexibility Act, or an individual or 
organization that represents a small entity. This clarification 
was made in the legislation to underscore the fact that 
representatives from small business associations and other 
trade groups, as well as regulatory consultants, often have 
more resources and expertise available to participate in the 
panel process than do individual and small entities. There is 
no disagreement that actual small business owners bring 
experience and insights that are vital to a successful review 
panel. However, representatives of trade associations and other 
regulatory consultants who represent the interests of small 
entities can also be valuable participants that should not be 
excluded from the panel process.

Section 5. Effective Date

    This section states that the changes made by H.R. 1882 
shall take effect ninety days after the legislation is enacted.

5.13  H.R. 2392--Small Business Innovation Research Program 
        Reauthorization Act of 2000, Public Law No. 106-554

                           Legislative History
------------------------------------------------------------------------
                  Date                                Action
------------------------------------------------------------------------
H.R. 2392:
June 30, 1999...........................  Referred to the Committee on
                                           Small Business, and in
                                           addition to the Committee on
                                           Science, for a period to be
                                           subsequently determined by
                                           the Speaker, in each case for
                                           consideration of such
                                           provisions as fall within the
                                           jurisdiction of the committee
                                           concerned.
June 30, 1999...........................  Referred to House Small
                                           Business.
July 1, 1999............................  Committee Consideration and
                                           Mark-up Session Held.
July 1, 1999............................  Ordered to be Reported
                                           (Amended) by Voice Vote.
June 30, 1999...........................  Referred to House Science.
September 23, 1999......................  Reported by the Committee on
                                           Small Business. H. Rept. 106-
                                           329, Part I.
September 23, 1999......................  House Committee on Science
                                           Granted an extension for
                                           further consideration ending
                                           not later than Sept. 23,
                                           1999.
September 23, 1999......................  Committee on Science
                                           discharged.
September 23, 1999......................  Placed on the Union Calendar,
                                           Calendar No. 193.
September 27, 1999......................  Mrs. Kelly moved to suspend
                                           the rules and pass the bill,
                                           as amended.
September 27, 1999......................  Considered under suspension of
                                           the rules. (consideration: CR
                                           H8762-8767).
September 27, 1999......................  On motion to suspend the rules
                                           and pass the bill, as amended
                                           Agreed to by voice vote.
                                           (text: CR H8763).
September 27, 1999......................  Motion to reconsider laid on
                                           the table Agreed to without
                                           objection.
September 28, 1999......................  Received in the Senate and
                                           read twice and referred to
                                           the Committee on Small
                                           Business.
March 21, 2000..........................  Committee on Small Business.
                                           Ordered to be reported with
                                           an amendment in the nature of
                                           a substitute favorably.
May 10, 2000............................  Committee on Small Business.
                                           Reported to Senate by Senator
                                           Bond with an amendment in the
                                           nature of a substitute. With
                                           written report No. 106-289.
May 10, 2000............................  Placed on Senate Legislative
                                           Calendar under General
                                           Orders. Calendar No. 541.
July 19, 2000...........................  Measure laid before Senate.
                                           (consideration: CR S7285-
                                           7293; text of measure as
                                           reported in Senate: CR S7285-
                                           7287)
July 19, 2000...........................  S.AMDT.3944 Amendment SA 3944
                                           proposed by Senator Burns for
                                           Senator Bond. (consideration:
                                           CR S7291-7293) To provide a
                                           complete substitute.
July 19, 2000...........................  S.AMDT.3944 Amendment SA 3944
                                           agreed to in Senate by
                                           Unanimous Consent.
July 19, 2000...........................  The committee substitute as
                                           amended agreed to by
                                           Unanimous Consent.
July 19, 2000...........................  Passed Senate with an
                                           amendment by Unanimous
                                           Consent.
July 20, 2000...........................  Message on Senate action sent
                                           to the House.
September 25, 2000......................  House agreed to Senate
                                           amendment with an amendment
                                           pursuant to H. Res. 590.
September 26, 2000......................  Message on House action
                                           received in Senate and at
                                           desk: House amendment to
                                           Senate amendment.
October 2, 2000.........................  Senate agreed to the House
                                           amendment to the Senate
                                           amendment with an amendment
                                           (SA 4286) by Unanimous
                                           Consent. (consideration: CR
                                           S9631-9642; text as Senate
                                           agreed to House amendments CR
                                           S9631-9639).
October 2, 2000.........................  S.AMDT.4286 Amendment SA 4286
                                           proposed by Senator Kyl for
                                           Senator Bond. (consideration:
                                           CR S9639; text: CR S9639) To
                                           provide for a complete
                                           substitute.
October 2, 2000.........................  S.AMDT.4286 Amendment SA 4286
                                           agreed to in Senate by
                                           Unanimous Consent.
October 3, 2000.........................  Message on Senate action sent
                                           to the House.
October 25, 2000........................  Included in H.R. 5545.
H.R. 5545:
October 25, 2000........................  Referred to the House
                                           Committee on Small Business.
                                           (Several bills are engrossed
                                           by reference in the H.R. 2614
                                           conference report: H.Rept.
                                           106-1004. This includes H.R.
                                           5538, the Minimum Wage Act of
                                           2000; H.R. 5542, the Taxpayer
                                           Relief Act of 2000; H.R.
                                           5543, the Medicare, Medicaid,
                                           and SCHIP Benefits
                                           Improvement and Protection
                                           Act of 2000; H.R. 5544, the
                                           Pain Relief Promotion Act of
                                           2000; and H.R. 5545, the
                                           Small Business
                                           Reauthorization Act of 2000.
                                           The bill texts are included
                                           in the conference report.)
H.R. 2614:
October 26, 2000........................  Conference report H. Rept. 106-
                                           1004 filed. (text of
                                           conference report: CR 10/25/
                                           2000 H10909-11188).
October 26, 2000........................  Rules Committee Resolution H.
                                           Res. 652 Reported to House.
                                           Rule provides for
                                           consideration of the
                                           conference report to H.R.
                                           2614 with 1 hour of general
                                           debate. Previous question
                                           shall be considered as
                                           ordered without intervening
                                           motions except motion to
                                           recommit with or without
                                           instructions. Waives points
                                           of order against the
                                           conference report and against
                                           its consideration.
October 26, 2000........................  Conferees agreed to file
                                           conference report.
October 26, 2000........................  Conference papers: Senate
                                           report and manager's
                                           statement held at the desk in
                                           Senate.
October 26, 2000........................  Rule H. Res. 652 passed House.
October 26, 2000........................  Mr. Talent brought up
                                           conference report H. Rept.
                                           106-1004 for consideration
                                           under the provisions of H.
                                           Res. 652.
October 26, 2000........................  The previous question was
                                           ordered without objection.
October 26, 2000........................  On agreeing to the conference
                                           report Agreed to by the Yeas
                                           and Nays: 237-174, 1 Present
                                           (Roll no. 560).
                                           (consideration: CR H11243-
                                           11264)
October 26, 2000........................  Motions to reconsider laid on
                                           the table Agreed to without
                                           objection.
October 26, 2000........................  Motion to proceed to
                                           consideration of measure
                                           agreed to in Senate by Yea-
                                           Nay Vote. 55-40. Record Vote
                                           Number: 286. (consideration:
                                           CR S11097-11098)
October 26, 2000........................  Motion to proceed to
                                           consideration of conference
                                           report to accompany H.R. 2614
                                           agreed to by Unanimous
                                           Consent.
October 26, 2000........................  Conference report considered
                                           in Senate by motion.
                                           (consideration: CR S11098-
                                           11100, S11104, S11107-11111)
October 31, 2000........................  Motion to proceed to
                                           consideration of conference
                                           report to accompany H.R. 2614
                                           agreed to by Unanimous
                                           Consent.
October 31, 2000........................  Conference report considered
                                           in Senate by motion. (The
                                           H.R. 2614 conference report
                                           [H. Rept. 106-1004]
                                           incorporated several bills.
                                           This included H.R. 5538--
                                           Minimum Wage; H.R. 5542--
                                           Taxapyer Relief; H.R. 5543--
                                           Medicare, Medicaid, and SCHIP
                                           Benefits Improvement and
                                           Protection; H.R. 5544--Pain
                                           Relief Promotion; and H.R.
                                           5545--Small Business
                                           Reauthorization. H.R. 5661 is
                                           a subsequent Medicare,
                                           Medicaid and SCHIP Benefits
                                           Improvement and Protection
                                           bill. H.R. 5667 is a
                                           subsequent Small Business
                                           Reauthorization bill. H.R.
                                           4577, Consolidated
                                           Appropriations Act 2001,
                                           incorporates by reference the
                                           provisions of H.R. 5661, H.R.
                                           5667, and other bills. The
                                           text of these bills is
                                           printed in the H.R. 4577
                                           conference report: H. Rept.
                                           106-1033 [text of conference
                                           report: CR 12/15/2000 H12100-
                                           12439].)
H.R. 5667:
December 15, 2000.......................  Referred to the House
                                           Committee on Small Nusiness
                                           incorporating the provisions
                                           of H.R. 2392.
December 15, 2000.......................  Enacted by reference in H.R.
                                           4577 (H. Conf. Rept. 106-
                                           1033)
H.R. 4577:
December 15, 2000.......................  Conference report H. Rept. 106-
                                           1033 filed.
December 15, 2000.......................  Mr. Young (FL) brought up
                                           conference report H. Rept.
                                           106-1033 by previously agreed
                                           to special order.
December 15, 2000.......................  The previous question was
                                           ordered without objection.
December 15, 2000.......................  On agreeing to the conference
                                           reprot Agreed to by the Yeas
                                           and Nays: 292-60 (Roll no.
                                           603).
December 15, 2000.......................  Motions to reconsider laid on
                                           the table Agreed to without
                                           objection.
December 15, 2000.......................  Senate agreed to conference
                                           report by Unanimous Consent.
December 15, 2000.......................  Message on Senate action sent
                                           to the House.
December 15, 2000.......................  Cleared for White House.
December 15, 2000.......................  Presented to President.
December 21, 2000.......................  Signed by the President as
                                           Pub. L. No. 106-554 (H.R.
                                           4577, Consolidated
                                           Appropriations Act 2001,
                                           incorporates the provisions
                                           of several bills by
                                           reference. This includes H.R.
                                           5656--Labor HHS Education
                                           Appropriations; H.R. 5657--
                                           Legislative Branch
                                           Appropriations; H.R. 5658--
                                           Treasury Appropriations; H.R.
                                           5666--Miscellaneous
                                           Appropriations--except
                                           section 123 relating to the
                                           enactment of H.R. 4904; H.R.
                                           5660--Commodity Futures
                                           Modernization; H.R. 5661--
                                           Medicare, Medicaid and SCHIP
                                           Benefits Improvement and
                                           Protection; H.R. 5662--
                                           Community Renewal Tax Relief
                                           and Medical Savings Accounts;
                                           H.R. 5663--New Markets
                                           Venture Capital Program; and
                                           H.R. 5667--Small Business
                                           Reauthorization. The text of
                                           thee bills is printed in the
                                           H.R. 4577 conference report:
                                           H. Rept. 106-1033 [text of
                                           conference report: CR 12/15/
                                           2000 H12100-12439].)
------------------------------------------------------------------------

                          Need for Legislation

    The Small Business Innovation Research Program 
Reauthorization Act of 2000 (H.R. 2392) was introduced on June 
30, 1999, and referred to the House committees on Small 
Business and Science. Both Committees held hearings and the 
House Committee on Small Business reported H.R. 2392 on 
September 23, 1999 (H.Rept. 106-329). The purpose of the bill 
was to reauthorize the program and improve certain technical 
areas concerning right to data, reporting requirements. In the 
interest of moving the bill to the floor of the House of 
Representatives promptly, the Committee on Science agreed not 
to exercise its right to report the legislation, provided that 
the House Committee on Small Business agreed to add the 
selected portions of the Science Committee version of the 
legislation, as Sections 8 through 11 of the House floor text 
of H.R. 2392. H.R. 2392 passed the House without further 
amendment on September 27.
    On March 21, 2000, the Senate Committee marked-up H.R. 2392 
and on May 10, 2000, reported the bill (S.Rept. 106-289). The 
Senate Committee struck several of the sections originating 
from the House Committee on Science and added sections not in 
the House-passed legislation, including a requirement that 
Federal agencies with Small Business Innovation Research (SBIR) 
programs report their methodology for calculating their SBIR 
budgets to the Small Business Administration (SBA) and a 
program to assist states in the development of small high-
technology businesses. Negotiations then began among the 
leadership of the Senate and House Committees on Small Business 
and the House Committee on Science (hereinafter referred to as 
the three committees). The resultant compromise text contains 
all major House and Senate provisions, some of which have been 
amended to reflect a compromise position. A section-by-section 
explanation of the revised text follows. For purposes of this 
statement, the bill passed by the House of Representatives is 
referred to as the ``House version'' and the bill reported by 
the Senate Committee on Small Business is referred to as the 
``Senate version.''

                      Section-by-Section Analysis


Section 101. Short Title; Table of Contents

    The compromise text uses the Senate short title: ``Small 
Business Innovation Research Program Reauthorization Act of 
2000.'' The table of contents lists the sections in the 
compromise text.

Section 102. Findings

    The House and Senate versions of the findings are very 
similar. The compromise text uses the House version of the 
findings.

Section 103. Extension of the SBIR Program

    The House version extends the SBIR program for seven years 
through September 30, 2007. The Senate version extends the 
program for ten years through September 30, 2010. The 
compromise text extends the program for eight years through 
September 30, 2008.

Section 104. Annual Report

    The House version provides for the annual report on the 
SBIR program prepared by the SBA to be sent to the Committee on 
Science, as well as to the House and Senate Committees on Small 
Business that currently receive it. The Senate version did not 
include this section. The compromise text adopts the House 
language.

Section 105. Third Phase Assistance

    The compromise text of this technical amendment is 
identical to both the House and Senate versions.

Section 106. Report on Programs for Annual Performance Plan

    This section requires each agency that participates in the 
SBIR program to submit to Congress a performance plan 
consistent with the Government Performance and Results Act. The 
House and Senate versions have the same intent. The compromise 
text uses the House version.

Section 107. Output and Outcome Data

    Both the House and Senate versions contain sections 
enabling the collection and maintenance of information from 
awardees as is necessary to assess the SBIR program. Both the 
Senate and House versions require the SBA to maintain a public 
database at SBA containing information on awardees from all 
SBIR agencies. The Senate version adds paragraphs to the public 
database section dealing with database identification of 
businesses or subsidiaries established for the commercial 
application of SBIR products or services and the inclusion of 
information regarding mentors and mentoring networks. The House 
version further requires the SBA to establish and maintain a 
government database, which is exempt from the Freedom of 
Information Act and is to be used solely for program 
evaluation. Outside individuals must sign a non-disclosure 
agreement before gaining access to the database. The compromise 
text contains each of these provisions, with certain 
modifications and clarifications, which are addressed below.
    With respect to the public database, the compromise text 
makes clear that proprietary information, so identified by a 
small business concern, will not be included in the public 
database. With respect to the government database, the 
compromise text clarifies that the inclusion of information in 
the government database is not to be considered publication for 
purposes of patent law. The compromise text further permits the 
SBA to include in the government database any information 
received in connection with an SBIR award the SBA 
Administrator, in conjunction with the SBIR agency program 
managers, consider to be relevant and appropriate or that the 
Federal agency considers to be useful to SBIR program 
evaluation.
    With respect to small business reporting for the government 
database, the compromise text directs that when a small 
business applies for a second phase award it is required to 
update information in the government database. If an applicant 
for a second phase award receives the award, it shall update 
information in the database concerning the award at the 
termination of the award period and will be requested to 
voluntarily update the information annually for an additional 
period of five years. This reporting procedure is similar to 
current Department of Defense requirements for the reporting of 
such information. When sales or additional investment 
information is related to more than one second phase award is 
involved, the compromise text permits a small business to 
apportion the information among the awards in any way it 
chooses, provided the apportionment is noted on all awards so 
apportioned.

Section 108. National Research Council Reports

    The House version requires the four largest SBIR program 
agencies to enter into an agreement with the National Research 
Council (NRC) to conduct a comprehensive study of how the SBIR 
program has stimulated technological innovation and used small 
businesses to meet Federal research and development needs to 
make recommendations on potential improvements to the program. 
The Senate version contains no similar provision. The study was 
designed to answer questions remaining from the House 
Committees' reviews of these programs and to make sure that a 
current evaluation of the program is available when the program 
next comes up for reauthorization.
    The compromise text makes several changes to the House 
text. The compromise text adds the National Science Foundation 
to the agencies entering the agreement with the NRC and 
requires the agencies to consult with the SBA in entering such 
agreement. It also expands on the House version, which requires 
a review of the quality of SBIR research, to require a 
comparison of the value of projects conducted under SBIR with 
those funded by other Federal research and development 
expenditures. The compromise text further broadens the House 
version's review of the economic rate of return of the SBIR 
program to require an evaluation of the economic benefits of 
the SBIR program, including economic rate of return, and a 
comparison of the economic benefits of the SBIR program with 
that of other Federal research and development expenditures. 
The compromise text allows the NRC to choose an appropriate 
time-frame for such analysis that results in a fair comparison.
    The three committees believe that a comprehensive report on 
the SBIR program and its relation to other Federal research 
expenditures will be useful in program oversight and will 
provide Congress with an understanding of the effects of 
extramural Federal research and development funding provided to 
large and small businesses and universities.

Section 109. Federal Agency Expenditures for the SBIR Program

    The Senate version requires each Federal agency with an 
SBIR program to provide the SBA with a report describing its 
methodology for calculating its extramural budget for purposes 
of SBIR program set-aside and requires the Administrator of the 
SBA to include an analysis of the methodology from each agency 
in its annual report to the Congress. The House version has no 
similar provision. The compromise text follows the Senate text 
except that it specified that each agency, rather than the 
agency's comptroller, shall submit the agency's report to the 
Administrator. The three committees intend that each agency's 
methodology include an itemization of each research program 
that is excluded from the calculation of its extramural budget 
for SBIR purposes as well as a brief explanation of why the 
agency feels each excluded program meets a particular 
exemption.

Section 110. Policy Directive Modifications

    The House version includes policy directive modifications 
in Section 9 and the requirement of a second phase commercial 
plan in Section 10. The Senate version includes policy 
directive modifications in Section 6. The Senate version and 
now the compromise text require the Administrator to make 
modifications to SBA's policy directives 120 days after the 
date of enactment rather than the 30 days contained in the 
House version. The compromise text drops the House policy 
directive dealing with awards exceeding statutory dollar 
amounts and time limits because this flexibility is already 
being provided administratively. Addressed below is a 
description of the policy directive modifications contained in 
the compromise text that were not included in both the Senate 
version and the House version.
    Section 10 of the House version requires the SBA to modify 
its policy directives to require that small businesses provide 
a commercial plan with each application for a second-phase 
award. The Senate version does not contain a similar provision. 
The compromise text requires the SBA to modify its policy 
directives to require that a small businesses provide a 
``succinct commercialization plan for each second phase award 
moving towards commercialization.'' The three committees 
acknowledge that commercialization is a current element of the 
SBIR program. The statutory definition of SBIR, which is not 
amended by H.R. 2392, includes ``a second phase, to further 
develop proposals which meet particular program needs, in which 
awards shall be made based on the scientific and technical 
merit and feasibility of the proposals, as evidenced by the 
first phase, considering among other things the proposal's 
commercial potential * * *'', and lists evidence of commercial 
potential as the small business's commercialization record, 
private sector funding commitments, SBIR Phase III commitments, 
and the presence of other indicators of the commercial 
potential. The three committees do not intend that the addition 
of a commercialization plan either increase or decrease the 
emphasis an agency places on the commercialization when 
reviewing second-phase proposals. Rather, the commercialization 
plan will give SBIR agencies a means of determining the 
seriousness with which individual applicants approach 
commercialization.
    The commercialization plan, while concise, should show that 
the business has thought through both the steps it must take to 
prepare for the fruits of the SBIR award to enter the 
commercial marketplace or government procurement and the steps 
to build business expertise as needed during the SBIR second 
phase time period. The three committees intend that agencies 
take into consideration the stage of development of the product 
or process in deciding whether an appropriate commercialization 
plan has been submitted. In those instances when at the time of 
the SBIR Phase II proposal, the grantee cannot identify either 
a product or process with the potential eventually to enter 
either the commercial or the government marketplace, no 
commercialization plan is required.
    The compromise text also adds new provisions that were not 
contained in either the Senate version or the House version. 
Current law (Section 9(j)(3)(C) of the Small Business Act) 
requires that the Administrator put in place procedures to 
ensure, to the extent practicable, that an agency which intends 
to pursue research, development or production of a technology 
developed by a small business concern under an SBIR program 
enter into follow-on, non-SBIR funding agreements with the 
small business concern for such research, development, or 
production.
    The three committees are concerned that agencies sometimes 
provide these follow-on activities to large companies who are 
in incumbent positions or through contract bundling without 
written justification or without the statutorily required 
documentation of the impracticability of using the small 
business for the work. So that the SBA and the Congress can 
track the extent of this problem, the compromise text requires 
agencies to record and report each such occurrence and to 
describe in writing why it is impractical to provide the 
research project to the original SBIR company. Additionally, 
the compromise text directs the SBA to develop policy 
directives to implement the new subsection (v), Simplified 
Reporting Requirements. This subsection requires that the 
directive regarding collection of data be designed to minimize 
the burden on small businesses; to permit the updating the 
database by electronic means; and to use standardized 
procedures for the collection and reporting of data.
    Section 103(a)(2) of P.L. 102-564, which reauthorized the 
SBIR program in 1992, added language to the description of a 
third phase award which made it clear that the third phase is 
intended to be a logical conclusion of research projects 
selected through competitive procedures in phases one and two. 
The Report of the House Committee on Small Business (H. Rept. 
102-554, Pt. I) provides that the purpose of that clarification 
was to indicate the Committee's intent that an agency which 
wishes to fund an SBIR project in phase three (with non-SBIR 
monies) or enter into a follow-up procurement contract with an 
SBIR company, need not conduct another competition in order to 
satisfy the Federal Competition in Contracting Act (CICA). 
Rather, by phase three the project has survived two 
competitions and thus has already satisfied the requirements of 
CICA, set forth in section 2302(2)(E) of that Act, as they 
apply to the SBIR program. As there has been confusion among 
SBIR agencies regarding the intent of this change, the three 
committees reemphasize the intent initially set forth in H. 
Rpt. 102-554, Pt. 1, including the clarification that follow-on 
phase III procurement contracts with an SBIR company may 
include procurement of products, services, research, or any 
combination intended for use by the Federal government.

Section 111. Federal and State Technology Partnership Program

    This section establishes the FAST program from the Senate 
version, which is a competitive matching grant program to 
encourage states to assist in the development of high-
technology businesses. The House version does not contain a 
similar provision. The most significant changes from the Senate 
version in the compromise text are an extension of the maximum 
duration of awards from three years to five and the lowering of 
the matching requirement for funds assisting businesses in low 
income areas to 50 cents per federal dollar, as advocated by 
Ranking Member Velazquez of the House Small Business Committee. 
The compromise text combines the definitions found in the 
Senate version of this section and the mentoring networks 
section.

Section 112. Mentoring Networks

    The Senate version sets forth criteria for mentoring 
networks that organizations are encouraged to establish with 
matching funds from the FAST program and creates a database of 
small businesses willing to act as mentors. The compromise 
text, except for relocating the program definitions to Section 
111, is the same as the Senate text. The House version did not 
contain a similar provision.

Section 113. Simplified Reporting Requirements

    This section is not in either the House or the Senate 
versions. It requires the SBA Administrator to work with SBIR 
program agencies on standardizing SBIR reporting requirements 
with the ultimate goal of making the SBA's SBIR database more 
user friendly. This provision requires the SBA to consider the 
needs of each agency when establishing and maintaining the 
database. Additionally, it requires the SBA to take measures to 
reduce the administrative burden on SBIR program participants 
whenever possible including, for example, permitting updating 
by electronic means.

Section 114. Rural Outreach Program Extension

    This provision, which was not in either the House or the 
Senate versions, extends the life and authorization for 
appropriations for the Rural Outreach Program of the Small 
Business Administration for four additional years through 
fiscal year 2005. It is the intent of the three committees that 
this program be evaluated on the same schedule and in the same 
manner as the FAST program. Among other things, the evaluation 
should examine the extent to which the programs complement or 
duplicate each other. The evaluation should also include 
recommendations for improvements to the program, if any.

5.14  H.R. 2614  The Certified Development Company Program Improvement 
        Act of 1999, Public Law No. 106-554

                           Legislative History
------------------------------------------------------------------------
                  Date                                Action
------------------------------------------------------------------------
H.R. 2614:
July 27, 1999...........................  Referred to the House
                                           Committee on Small Business.
July 29, 1999...........................  Committee Consideration and
                                           Mark-up Session Held.
July 29, 1999...........................  Ordered to be Reported by
                                           Voice Vote.
August 2, 1999..........................  Reported by the Committee on
                                           Small Business. H. Rept. 106-
                                           278.
August 2, 1999..........................  Placed on the Union Calendar,
                                           Calendar No. 166.
August 2, 1999..........................  Mrs. Kelly moved to suspend
                                           the rules and pass the bill.
August 2, 1999..........................  Considered under suspension of
                                           the rules. (consideration: CR
                                           H6789-6792)
August 2, 1999..........................  On motion to suspend the rules
                                           and pass the bill Agreed to
                                           by voice vote. (text: CR
                                           H6789-6791)
August 2, 1999..........................  Motion to reconsider laid on
                                           the table Agreed to without
                                           objection.
August 3, 1999..........................  Received in the Senate and
                                           read twice and referred to
                                           the Committee on Small
                                           Business. 3/21/2000:
                                           Committee on Small Business.
                                           Ordered to be reported with
                                           an amendment in the nature of
                                           a substitute favorably.
May 9, 2000.............................  Committee on Small Business.
                                           Reported to Senate by Senator
                                           Bond with an amendment in the
                                           nature of a substitute. With
                                           written report No. 106-280.
May 9, 2000.............................  Placed on Senate Legislative
                                           Calendar under General
                                           Orders. Calendar No. 531.
June 14, 2000...........................  Measure laid before Senate.
                                           (consideration: CR S5154-
                                           5159; text of measure as
                                           reported in Senate: CR S5154-
                                           5155)
June 14, 2000...........................  S.AMDT.3431 Amendment SA 3431
                                           proposed by Senator Allard
                                           for Senator Bond.
                                           (consideration: CR S5156) To
                                           make an amendment with
                                           respect to timely
                                           Administration action on
                                           geographic expansion
                                           applications, use of
                                           unobigated funds, and the
                                           HUBZone program, and for
                                           other purposes.
June 14, 2000...........................  S.AMDT.3431 Amendment SA 3431
                                           agreed to in Senate by
                                           Unanimous Consent. (text CR
                                           S5156)
June 14, 2000...........................  The committee substitute as
                                           amended agreed to by
                                           Unanimous Consent.
June 14, 2000...........................  Passed Senate with an
                                           amendment by Unanimous
                                           Consent.
June 15, 2000...........................  Message on Senate action sent
                                           to the House.
June 27, 2000...........................  House agreed to Senate
                                           amendment with an amendment
                                           pursuant to H. Res. 533.
                                           (consideration: CR H5190-
                                           5194)
June 28, 2000...........................  Message on House action
                                           received in Senate and at
                                           desk: House amendment to
                                           Senate amendment.
July 25, 2000...........................  Senate disagreed to House
                                           amendment requested
                                           conference and appointed
                                           conferees. Bond, Burns and
                                           Kerry. (consideration: CR
                                           S7574-7575; text as Senate
                                           disagreed to House amendment:
                                           CR S7574-7575)
July 26, 2000...........................  Message on Senate action sent
                                           to the House.
October 11, 2000........................  Mrs. Kelly asked unanimous
                                           consent that the House insist
                                           upon its amendment to the
                                           Senate amendment, and agree
                                           to a conference.
October 11, 2000........................  On motion that the House
                                           insist upon its amendment to
                                           the Senate amendment, and
                                           agree to a conference Agreed
                                           to without objection.
                                           (consideration: CR H9796)
October 11, 2000........................  The Speaker appointed
                                           conferees: Talent, Armey, and
                                           Velazquez.
October 11, 2000........................  Motion to reconsider laid on
                                           the table Agreed to without
                                           objection.
October 26, 2000........................  Conference report H. Rept. 106-
                                           1004 filed. (text of
                                           conference report: CR 10/25/
                                           2000 H10909-11188)
October 26, 2000........................  Rules Committee Resolution H.
                                           Res. 652 Reported to House.
                                           Rule provides for
                                           consideration of the
                                           conference report to H.R.
                                           2614 with 1 hour of general
                                           debate. Previous question
                                           shall be considered as
                                           ordered without intervening
                                           motions except motion to
                                           recommit with or without
                                           instructions. Waives points
                                           of order against the
                                           conference report and against
                                           its consideration.
October 26, 2000........................  Conferees agreed to file
                                           conference report.
October 26, 2000........................  Conference papers: Senate
                                           report and manager's
                                           statement held at the desk in
                                           Senate.
October 26, 2000........................  Rule H. Res. 652 passed House.
October 26, 2000........................  Mr. Talent brought up
                                           conference report H. Rept.
                                           106-1004 for consideration
                                           under the provisions of H.
                                           Res. 652.
October 26, 2000........................  The previous question was
                                           ordered without objection.
October 26, 2000........................  On agreeing to the conference
                                           report Agreed to by the Yeas
                                           and Nays: 237-174, 1 Present
                                           (Roll no. 560).
                                           (consideration: CR H11243-
                                           11264)
October 26, 2000........................  Motions to reconsider laid on
                                           the table Agreed to without
                                           objection.
October 26, 2000........................  Moton to proceed to
                                           consideration of measure
                                           agreed to in Senate by Yea-
                                           Nay Vote. 55-40. Record Vote
                                           Number: 286. (consideration:
                                           CR S11097-11098)
October 26, 2000........................  Motion to proceed to
                                           consideration of conference
                                           report to accompany H.R. 2614
                                           agreed to by Unanimous
                                           Consent.
October 26, 2000........................  Conference report considered
                                           in Senate by motion.
                                           (consideration: CR S11098-
                                           11100, S11104, S11107-11111)
October 31, 2000........................  Motion to proceed to
                                           consideration of conference
                                           report to accompany H.R. 2614
                                           agreed to by Unanimous
                                           Consent.
October 31, 2000........................  Conference report considered
                                           in Senate by motion.
                                           (consideration: CR revisions
                                           of H.R. 5661, H.R. 5667, and
                                           other bills. The text of
                                           these bills is printed in the
                                           H.R. 4577 conference report:
                                           H. Rept. 106-1033 [text of
                                           conference report: CR 12/15/
                                           2000 H12100-12439].)) (The
                                           H.R. 2614 conference report
                                           [H. Rept. 106-1004]
                                           incorporated several bills.
                                           This included H.R. 5538--
                                           Minimum Wage; H.R. 5542--
                                           Taxpayer Relief; H.R. 5543--
                                           Medicare, Medicaid, and SCHIP
                                           Benefits Improvement and
                                           Protection; H.R. 5544--Pain
                                           Relief Promotion; and H.R.
                                           5545--Small Business
                                           Reauthorization. H.R. 5661 is
                                           a subsequent Medicare,
                                           Medicaid and SCHIP Benefits
                                           Improvement and Protection
                                           bill. H.R. 5667 is a
                                           subsequent Small Business
                                           Reauthorization bill. H.R.
                                           4577, Consolidated
                                           Appropriations Act 2001,
                                           incorporates by reference the
                                           provisions of H.R. 5661, H.R.
                                           5667, and other bills. The
                                           text of these bills is
                                           printed in the H.R. 4577
                                           conference report: H. Rept.
                                           106-1033 [text of conference
                                           report: CR 12/15/2000 H12100-
                                           12439].)
H.R. 5667:
December 15, 2000.......................  Referred to the House
                                           Committee on Small Business
                                           incorporating the provisions
                                           of H.R. 2614.
December 15, 2000.......................  Enacted by reference in H.R.
                                           4577 (H. Conf. Rept. 106-
                                           1033)
H.R. 4577:
December 15, 2000.......................  Conference report H. Rept. 106-
                                           1033 filed.
December 15, 2000.......................  Mr. Young (FL) brought up
                                           conference report H. Rept.
                                           106-1033 by previously agreed
                                           to special order.
December 15, 2000.......................  The previous question was
                                           ordered without objection.
December 15, 2000.......................  On agreeing to the conference
                                           report Agreed to by the Yeas
                                           and Nays: 292-60 (Roll no.
                                           603).
December 15, 2000.......................  Motions to reconsider laid on
                                           the table Agreed to without
                                           objection.
December 15, 2000.......................  Senate agreed to conference
                                           report by Unanimous Consent.
December 15, 2000.......................  Message on Senate action sent
                                           to the House.
December 15, 2000.......................  Cleared for White House.
December 15, 2000.......................  Presented to President.
December 21, 2000.......................  Signed by President as Pub. L.
                                           No. 106-554 (H.R. 4577,
                                           Consolidated Appropriations
                                           Act 2001, incorporates the
                                           provisions of several bills
                                           by reference. This includes
                                           H.R. 5656--Labor HHS
                                           Education Appropriations;
                                           H.R. 5657--Legislative Branch
                                           Appropriations; H.R. 5658--
                                           Treasury Appropriations; H.R.
                                           5666--Miscellaneous
                                           Appropriations--except
                                           section 123 relating to the
                                           enactment of H.R. 4904; H.R.
                                           5660--Commodity Futures
                                           Modernization; H.R. 5661--
                                           Medicare, Medicaid and SCHIP
                                           Benefits Improvement and
                                           Protection; H.R. 5662--
                                           Community Renewal Tax Relief
                                           and Medical Savings Accounts;
                                           H.R. 5663--New Markets
                                           Venture Capital Program; and
                                           H.R. 5667--Small Business
                                           Reauthorization. The text of
                                           these bills is printed in the
                                           H.R. 4577 conference report:
                                           H. Rept. 106-1033 [text of
                                           conference report: CR 12/15/
                                           2000 H12100-12439].)
------------------------------------------------------------------------

                          Need for Legislation

    It has been ten years since the Committee acted to increase 
the maximum guarantee amount in the 504 program. To keep pace 
with inflation, the maximum guarantee amount should be 
increased to approximately $1,250,000. However, the Committee 
believes that a simple increase to $1,000,000 is sufficient. 
This increase is especially needed in the 504 program because 
it is primarily a real estate based program, and the cost of 
commercial real estate has increased markedly in the last 
several years.
    The 504 program currently operates with a zero subsidy 
rate. Like other credit programs, pursuant to the Budget Act of 
1990, the 504 program is funded according to Office of 
Management and Budget calculations of the annual taxpayer 
subsidy cost of the program. This subsidy cost is calculated by 
an estimation of the net present value of one year's loans plus 
fees and recoveries from defaulted loans minus losses. Losses 
are estimated based on historical assumptions. The fees in the 
504 program cover all these costs resulting in a program that 
operates at no cost to the taxpayer. H.R. 2614 will reauthorize 
these fees.
    H.R. 2614 adds women-owned businesses to the current list 
of businesses eligible for the larger public policy oriented 
loans of up to $1,300,000. This continues the Committee's 
efforts to increase SBA's assistance to women-owned businesses. 
The Committee has noted the increasingly important role women-
owned businesses play in the economy and believes this change 
is needed to ensure the expansion of this sector of our 
economy.
    The legislation makes the Premier Certified Lender Program 
pilot and the Liquidation Pilot Program permanent. Both of 
these programs have shown the benefits of granting increased 
lending and liquidation authority to the CDCs.
    In response to SBA's plans to implement asset sales, H.R. 
2614 includes language requiring the SBA to notify CDCs prior 
to including a 504 loan in an asset sale. The committee takes 
this action in order to ensure there is adequate cooperation. 
The Committee supports the SBA's intent to move forward with 
the asset sales program, but does not wish this action to come 
at the expense of the SBA's partners.

                      Section-by-Section Analysis


Section 1. Short Title

    This Act may be cited as the ``Certified Development 
Company Program Improvements Act of 1999.''

Section 2. Maximum Debenture Size

    Maximum loan/debenture size is increased from $750,000 to 
$1,000,000 for regular debentures. Public policy loan/
debentures are increased from $1,000,000 to $1,300,000 for 
public policy debentures. This increase is commensurate with 
inflation since the current debenture levels were established.

Section 3. Women-owned Businesses

    Women-owned businesses are added to the list of concerns 
eligible for the higher debentures available for the policy 
concerns. Current policy goals include lending to low-income 
and rural areas, and loans to businesses owned by minorities.

Section 4. Fees

    Currently, the 504 program levies fees on the borrower, 
CDC, and the participating bank. The bank pays a one-time fee 
whereas the borrower and CDC pay a percentage of the 
outstanding balance annually in order to provide operational 
funding for the 504 program. Currently these fees sunset on 
October 1, 2000. This legislation would continue the fees 
though October 1, 2003.

Section 5. Premier Certified Lenders Program

    The Preferred Certified Lenders Program is granted 
permanent status. The current demonstration program terminates 
at the end of FY 2000.

Section 6. Sale of Certain Defaulted Loans

    SBA is required to give any certified lender with 
contingent liability 90 days notice prior to including a 
defaulted loan in a bulk sale of loans. No loan may be sold 
without permitting prospective purchasers to examine SBA 
records on the loan.

Section 7. Loan Liquidation

    Section 510 is added to the Small Business Investment Act 
of 1958 in order to create a program permitting CDCs to handle 
the liquidation of defaulted loans. This program replaces the 
pilot program authorized by PL 105-135, the Small Business 
Reauthorization Act of 1997. A permanent program would permit 
OMB to score savings achieved by the program when computing the 
subsidy rate for the 504 program.
    In order to participate in the liquidation program, a CDC 
must have made at least 10 loans per year for the past three 
years and have at least one employee with 2 years of 
liquidation experience or be a member of the Accredited Lenders 
Program with at least one employee with 2 years of liquidation 
experience. Both groups are required to receive training. PCLP 
participants and current participants in the pilot program 
automatically qualify.
    CDCs have the authority to litigate as necessary to 
foreclose and liquidate, but SBA could assume control of the 
litigation if the outcome might adversely affect SBA's 
management of the program or if SBA has additional legal 
remedies not available to the CDC. All Section 510 participants 
are required to submit a liquidation plan to SBA for approval, 
and SBA has 15 days to approve, deny, or express concern with 
the plan. Further SBA approval of routine liquidation 
activities is not required.
    CDCs are able to purchase indebtedness with SBA approval, 
and SBA is required to respond to such a request within 15 
days. Likewise, CDCs are required to seek SBA approval of any 
workout plan, and SBA must respond to that request within 15 
days. With SBA approval, a CDC may compromise indebtedness. 
Such approval must be granted, denied, or explained within 15 
days of receipt by SBA.

5.15  H.R. 2615--To Amend the General Business Loan Program, Public Law 
        No. 1066-554

                           Legislative History
------------------------------------------------------------------------
                  Date                                Action
------------------------------------------------------------------------
July 27, 1999...........................  Referred to the House
                                           Committee on Small Business.
July 29, 1999...........................  Committee Consideration and
                                           Mark-up Session Held.
July 29, 1999...........................  Ordered to be Reported by
                                           Voice Vote.
August 2, 1999..........................  Reported by the Committee on
                                           Small Business. H. Rept. 106-
                                           279.
August 2, 1999..........................  Placed on the Union Calendar
                                           No. 167.
August 2, 1999..........................  Mr. Talent moved to suspend
                                           the rules and pass the bill.
August 2, 1999..........................  Considered under suspension of
                                           the rules.
August 2, 1999..........................  On motion to suspend the rules
                                           and pass the bill Agreed to
                                           by voice vote.
August 2, 1999..........................  Motion to reconsider laid on
                                           the table Agreed to without
                                           objection.
August 3, 1999..........................  Received in the Senate and
                                           read twice and referred to
                                           the Committee on Small
                                           Business.
October 25, 2000........................  Included in H.R. 5545.
H.R. 5545:
October 25, 2000........................  Referred to the House
                                           Committee on Small Business.
                                           (Several bills are engrossed
                                           by reference in the H.R. 2614
                                           conference report: H. Rept.
                                           106-1004. This includes H.R.
                                           5538, the Minimum Wage Act of
                                           2000; H.R. 5542, the Taxpayer
                                           Relief Act of 2000; H.R.
                                           5543, the Medicare, Medicaid,
                                           and SCHIP Benefits
                                           Improvement and Protection
                                           Act of 2000; H.R. 5544, the
                                           Pain Relief Promotion Act of
                                           2000; and H.R. 5545, the
                                           Small Business
                                           Reauthorization Act of 2000.
                                           The bill texts are included
                                           in the conference report.)
H.R. 2614:
October 26, 2000........................  Conference report H. Rept. 106-
                                           1004 filed (text of
                                           conference report: CR 10/25/
                                           2000 H10909-11118)
October 26, 2000........................  Rules Committee Resolution H.
                                           Res. 652 Reported to House.
                                           Rule provides for
                                           consideration of the
                                           conference report to H.R.
                                           2614 with 1 hour of general
                                           debate. Previous question
                                           shall be considered as
                                           ordered without intervening
                                           motions except motion to
                                           recommit with or without
                                           instructions. Waives points
                                           of order against the
                                           conference report and against
                                           its consideration.
October 26, 2000........................  Conferees agreed to file
                                           conference report.
October 26, 2000........................  Conference papers: Senate
                                           report and manager's
                                           statement held at the desk in
                                           Senate.
October 26, 2000........................  Rule H. Res. 652 passed House.
October 26, 2000........................  Mr. Talent brought up
                                           conference report H. Rept.
                                           106-1004 for consideration
                                           under the provisions of H.
                                           Res. 652.
October 26, 2000........................  The previous question was
                                           ordered without objection.
October 26, 2000........................  On agreeing to the conference
                                           report Agreed to by the yeas
                                           and nays: 237--174, 1 Present
                                           (Roll no. 560).
                                           (consideration; CR H11243-
                                           11264)
October 26, 2000........................  Motions to reconsider laid on
                                           the table Agreed to without
                                           objection.
October 26, 2000........................  Motion to proceed to
                                           consideration of measure
                                           agreed to in Senate by Yea-
                                           Nay Vote. 55--40. Record Vote
                                           Number: 286. (consideration:
                                           CR S11097-11098)
October 26, 2000........................  Motion to proceed to
                                           consideration of conference
                                           report to accompany H.R. 2614
                                           agreed to by Unanimous
                                           Consent.
October 26, 2000........................  Conference report considered
                                           in Senate by motion.
                                           (consideration: CR S11098-
                                           11100, S11104, S11107-11111)
October 31, 2000........................  Conference report considered
                                           in Senate by motion. (The
                                           H.R. 2614 conference report
                                           [H. Rept. 106-1004]
                                           incorporated several bills.
                                           This included H.R. 5538--
                                           Minimum Wage; H.R. 5542--
                                           Taxpayer Relief; H.R. 5543--
                                           Medicare, Medicaid, and SCHIP
                                           Benefits Improvement and
                                           Protection; H.R. 5544--Pain
                                           Relief Promotion; and H.R.
                                           5545--Small Business
                                           Reauthorization. H.R. 5661 is
                                           a subsequent Medicare,
                                           Medicaid and SCHIP Benefits
                                           Improvement and Protection
                                           bill. H.R. 5667 is a
                                           subsequent Small Business
                                           Reauthorization bill. H.R.
                                           4577, Consolidated
                                           Appropriations Act 2001,
                                           incorporates by reference the
                                           provisions of H.R. 5661, H.R.
                                           5667, and other bills. The
                                           text of these bills is
                                           printed in the H.R. 4577
                                           conference report: H. Rept.
                                           106-1033 [text of conference
                                           report: CR 12/15/2000 H12100-
                                           12439].)
H.R. 5667:
December 15, 2000.......................  Referred to the House
                                           Committee on Small Business
                                           incorporating the provisions
                                           of H.R. 2615.
December 15, 2000.......................  Enacted by reference in H.R.
                                           4577 (H. Conf. Rept. 106-
                                           1033)
H.R. 4577:
December 15, 2000.......................  Conference report H. Rept. 106-
                                           1033 filed.
December 15, 2000.......................  Mr. Young (FL) brought up
                                           conference report H. Rept.
                                           106-1033 by previously agreed
                                           to special order.
December 15, 2000.......................  The previous question was
                                           ordered without objection.
December 15, 2000.......................  On agreeing to the conference
                                           report Agreed to by the Yeas
                                           and nays: 292--60 (Roll no.
                                           603).
December 15, 2000.......................  Motions to reconsider laid on
                                           the table Agreed to without
                                           objection.
December 15, 2000.......................  Senate agreed to conference
                                           report by Unanimous Consent.
December 15, 2000.......................  Message on Senate action sent
                                           to the House.
December 15, 2000.......................  Cleared for White House.
December 15, 2000.......................  Presented to President.
December 15, 2000.......................  Signed by President as Pub. L.
                                           No. 1096-554 (H.R. 4577,
                                           Consolidated Appropriations
                                           Act 2001, incorporates the
                                           provisions of several bills
                                           by reference. This includes
                                           H.R. 5656--Labor HHS
                                           Education Appropriations;
                                           H.R. 5657--Legislative Branch
                                           Appropriations; H.R. 5658--
                                           Treasury Appropriations; H.R.
                                           5666--Miscellaneous
                                           Appropriations--except
                                           section 123 relating to the
                                           enactment of H.R. 4904; H.R.
                                           5660--Commodity Futures
                                           Modernization: H.R. 5661--
                                           Medicare, Medicaid and SCHIP
                                           Benefits Improvement and
                                           Protection; H.R. 5662--
                                           Community Renewal Tax Relief
                                           and Medical Savings Accounts;
                                           H.R. 5663--New Markets
                                           Venture Capital Program; and
                                           H.R. 5667--Small Business
                                           Reauthorization. The text of
                                           these bills is printed in the
                                           H.R. 4577 conference report:
                                           H. Rept. 106-1033 [text of
                                           conference report: CR 12/15/
                                           2000 H12100-12439].)
------------------------------------------------------------------------

                          Need for Legislation

    It has been ten years since the Committee acted to increase 
the maximum guarantee amount in the 7(a) program. To keep pace 
with inflation, the maximum guarantee amount should be 
increased to approximately $1,250,000. However, the Committee 
believes that a simple increase to $1,000,000 is sufficient. 
This allows room for the few larger loans made under the 7(a) 
program while not encouraging lending that may be better served 
through other avenues. The legislation also institutes a cap 
prohibiting loans with a gross amount of $2 million.
    The 7(a) program also faces a problem regarding early 
repayment of large loans, which jeopardizes the subsidy rate. 
H.R. 2615 will remedy this problem by assessing a fee to the 
borrower for prepayment within the first 3 years of a loan with 
a term in excess of 15 years. The increase in prepayments is 
due to a variety of factors. There have been some instances of 
misuse of the program by businesses seeking bridge financing. 
There have been cases where, due to the strong economy, lenders 
have approached borrowers offering improved terms, effectively 
``skimming'' loans and avoiding the need to process credit 
analyses. This effectively removes authorization dollars from 
the program which could have been used for other loans.
    Congress has, over the past several years, been concerned 
with the availability of loans of the lower end of the 7(a) 
spectrum and has made changes in order to accommodate the 
making of such loans. As a result, since 1994, the number of 
loans made under $100,000 have increased significantly. In 1998 
alone, 53% of the 7(a) loans made were under $100,000. This 
compares with only 37% in 1994. While this figure fluctuates, 
the general trend is most definitely upward. Consistent with 
previous efforts H.R. 2615 includes a number of provisions 
designed to encourage lenders to make these loans and to 
encourage small business borrowers to seek them.
    Finally, H.R. 2615 recognizes that current 7(a) program 
rules prohibit loans for passive investment. When Congress last 
reauthorized the 504 program, it modified a similar restriction 
in order to permit the financing of projects where less than 
20% of a business space will be rented out when the small 
business borrower in question will occupy the remaining space. 
The Committee believes that it is time that we provide similar 
options to 7(a) borrowers.

                      Section-by-Section Analysis


Section 1. Levels of Participation

    Increases the guarantee percentage on loans of $150,000 or 
less to 80%. The 80% guarantee level currently extends only to 
loans of $100,000 or less. This guarantee increase is one of 
the changes proposed to encourage the availability of smaller 
loans.

Section 2. Loan Amounts

    This provision will increase the maximum guarantee amount 
to 1 million dollars. The maximum gross loan amount will be 
capped at 2 million dollars. The language would prohibit SBA 
from placing a guarantee on any loan over 2 million dollars 
regardless of the guaranteed amount. Consequently, the largest 
loan available would be a 2 million dollar loan with a 50% 
guarantee. The largest loan available at the maximum guarantee 
rate of 75% would be $1,333,333. The cap on loans over 2 
million dollars will effectively remove a number of large loans 
that have been made with only a minimal guarantee, loans which 
use up loan authority at a disproportionate rate. In 1998, 
roughly thirty loans over 2 million dollars were made.

Section 3. Interest on Defaulted Loans

    This will remove the provision that reduced SBA's liability 
for accrued interest on defaulted loans. This provision was 
added to the program in 1996 as a method of reducing the 
subsidy cost of the program. It has come to the Committee's 
attention that the expected savings have not materialized.

Section 4. Prepayment of Loans

    This provision will reduce the incentive for early 
prepayment of 7(a) loans. It will assess a fee to the borrower 
for early prepayment of any loan with a term in excess of 15 
years. Early prepayment will be defined as any prepayment 
within the first three years after disbursement. The prepayment 
fee will be determined by the date of the prepayment--5% in the 
first year, 3% in the second year, 1% in the third year. The 
fee will be based on ``excess prepayment'' which is defined as 
prepayment of more than 25% of the outstanding loan amount. In 
the event of an excess prepayment the fee would be assessed on 
the entire outstanding loan amount.

Section 5. Guarantee Fees

    This section changes the guarantee fee for loans of 
$150,000 or less to 2%. Currently, the guarantee fee of 2% is 
only for loans under $100,000. Loans over $100,000 currently 
have a guarantee fee of 3%. The section also provides for an 
incentive for lenders to make smaller loans (under $150,000) by 
allowing them to retain \1/4\ of the guarantee fee.

Section 6. Lease Terms

    Under existing 7(a) rules, loan proceeds may not be used 
for investment purposes. This includes purchase or construction 
of property to be leased to others. Currently, 7(a) loans may 
be used to construct property which will be used solely by the 
borrower.
    In 1997, Congress modified this rule for the 504 program to 
allow for projects where a small portion of a property might be 
rented out permanently, but the borrower's main focus was the 
construction of a permanent location. This provision would 
allow the same authority for 7(a) loans. Borrowers would be 
allowed to lease up to 20% of a property in which they will 
occupy the remaining 80%.

5.16 H.R. 2848--New Markets Initiative Act of 1999, Public Law No. 106-
        554

                           Legislative History
------------------------------------------------------------------------
                  Date                                Action
------------------------------------------------------------------------
H.R. 2848:
September 13, 1999......................  Referred to the Committee on
                                           Banking and Financial
                                           Services, and in addition to
                                           the Committees on Ways and
                                           Means and Small Business, for
                                           a period to be subsequently
                                           determined by the Speaker, in
                                           each case for consideration
                                           of such provisions as fall
                                           within the jurisdiction of
                                           the committee concerned.
September 13, 1999......................  Referred to House Banking and
                                           Financial Services.
September 24, 1999......................  Referred to the Subcommittee
                                           on Housing and Community
                                           Opportunity.
April 12, 2000..........................  Subcommittee on Housing and
                                           Community Opportunity
                                           Discharged.
April 13, 2000..........................  Committee Consideration and
                                           Mark-up Session Held.
April 13, 2000..........................  Ordered to be Reported
                                           (Amended) by Voice Vote.
September 13, 1999......................  Referred to House Ways and
                                           Means.
September 13, 1999......................  Referred to House Small
                                           Business.
June 28, 2000...........................  Reported (Amended) by the
                                           Committee on Banking and
                                           Financial Services. H. Rept.
                                           106-706, Part I.
June 28, 2000...........................  House Committee on Ways and
                                           Means Granted an extension
                                           for further consideration
                                           ending not later than July
                                           28, 2000.
June 28, 2000...........................  House Committee on Small
                                           Business Granted an extension
                                           for further consideration
                                           ending not later than July
                                           28, 2000.
July 28, 2000...........................  Committee on Ways and Means
                                           discharged.
July 28, 2000...........................  Committee on Small Business
                                           discharged.
July 28, 2000...........................  Placed on the Union Calendar,
                                           Calendar No. 464.
H.R. 4530:
May 24, 2000............................  Referred to the House
                                           Committee on Small Business.
May 25, 2000............................  Committee Consideration and
                                           Mark-up Session Held.
May 25, 2000............................  Ordered to be Reported by
                                           Voice Vote.
July 25, 2000...........................  Reported by the Committee on
                                           Small Business. H. Rept. 106-
                                           785.
July 25, 2000...........................  Placed on the Union Calendar,
                                           Calendar No. 452.
October 25, 2000........................  Included in H.R. 5545
H.R. 5545:
October 25, 2000........................  Referred to the House
                                           Committee on Small Business.
                                           (Several bills are engrossed
                                           by reference in the H.R. 2614
                                           conference report: H. Rept.
                                           106-1004. This includes H.R.
                                           5538, the Minimum Wage Act of
                                           2000; H.R. 5542, the Taxpayer
                                           Relief Act of 2000; H.R.
                                           5543, the Medicare, Medicaid,
                                           and SCHIP Benefits
                                           Improvement and Protection
                                           Act of 2000; H.R. 5544, the
                                           Pain Relief Promotion Act of
                                           2000; and H.R. 5545, the
                                           Small Business
                                           Reauthorization Act of 2000.
                                           The bill texts are included
                                           in the conference report.)
H.R. 2614:
October 26, 2000........................  Conference report H. Rept. 106-
                                           1004 filed. (text of
                                           conference report: CR 10/25/
                                           2000 H10909-11188).
October 26, 2000........................  Rules Committee Resolution H.
                                           Res. 652 Reported to House.
                                           Rule provides for
                                           consideration of the
                                           conference report to H.R.
                                           2614 with 1 hour of general
                                           debate. Previous question
                                           shall be considered as
                                           ordered without intervening
                                           motions except motion to
                                           recommit with or without
                                           instructions. Waives points
                                           of order against the
                                           conference report and against
                                           its consideration.
October 26, 2000........................  Conferees agreed to file
                                           conference report.
October 26, 2000........................  Conference papers: Senate
                                           report and manager's
                                           statement held at the desk in
                                           Senate.
October 26, 2000........................  Rule H. Res. 652 passed House.
October 26, 2000........................  Mr. Talent brought up
                                           conference report H. Rept.
                                           106-1004 for consideration
                                           under the provisions of H.
                                           Res. 652.
October 26, 2000........................  The previous question was
                                           ordered without objection.
October 26, 2000........................  On agreeing to the conference
                                           report Agreed to by the Yeas
                                           and Nays: 237--174, 1 Present
                                           (Roll no. 560).
                                           (consideration: CR H11243-
                                           11264)
October 26, 2000........................  Motions to reconsider laid on
                                           the table Agreed to without
                                           objection.
October 26, 2000........................  Motion to proceed to
                                           consideration of measure
                                           agreed to in Senate by Yea-
                                           Nay Vote. 55--40. Record Vote
                                           Number: 286. (consideration:
                                           CR S11097-11098)
October 26, 2000........................  Motion to proceed to
                                           consideration of conference
                                           report to accompany H.R. 2614
                                           agreed to by Unanimous
                                           Consent.
October 26, 2000........................  Conference report considered
                                           in Senate by motion.
                                           (consideration: CR S11098-
                                           11100, S11104, S11107-11111)
October 31, 2000........................  Motion to proceed to
                                           consideration of conference
                                           report to accompany H.R. 2614
                                           agreed to by Unanimous
                                           Consent.
October 31, 2000........................  Conference report considered
                                           in Senate by motion. (The
                                           H.R. 2614 conference report
                                           [H. Rept. 106-1004]
                                           incorporated several bills.
                                           This included H.R. 5538--
                                           Minimum Wage; H.R. 5542--
                                           Taxpayer Relief; H.R. 5543--
                                           Medicare, Medicaid, and SCHIP
                                           Benefits Improvement and
                                           Protection; H.R. 5544--Pain
                                           Relief Promotion; and H.R.
                                           5545--Small Business
                                           Reauthorization. H.R. 5661 is
                                           a subsequent Medicare,
                                           Medicaid and SCHIP Benefits
                                           Improvement and Protection
                                           bill. H.R. 5667 is a
                                           subsequent Small Business
                                           Reauthorization bill. H.R.
                                           4577, Consolidated
                                           Appropriations Act 2001,
                                           incorporates by reference the
                                           provisions of H.R. 5661, H.R.
                                           5667, and other bills. The
                                           text of these bills is
                                           printed in the H.R. 4577
                                           conference report: H. Rept.
                                           106-1033 [text of conference
                                           report: CR 12/15/2000 H12100-
                                           12439].)
H.R. 5667:
December 15, 2000.......................  Referred to the House
                                           Committee on Small Business.
December 15, 2000.......................  Enacted by reference in H.R.
                                           4577 (H. Rept. 106-1033)
H.R. 4577:
December 15, 2000.......................  Conference report H. Rept. 106-
                                           1033 filed.
December 15, 2000.......................  Mr. Young (FL) brought up
                                           conference report H. Rept.
                                           106-1033 by previously agreed
                                           to special order.
December 15, 2000.......................  The previous question was
                                           ordered without objection.
December 15, 2000.......................  On agreeing to the conference
                                           report Agreed to by the Yeas
                                           and Nays: 292--60 (Roll no.
                                           603).
December 15, 2000.......................  Motions to reconsider laid on
                                           the table Agreed to without
                                           objection.
December 15, 2000.......................  Senate agreed to conference
                                           report by Unanimous Consent.
December 15, 2000.......................  Message on Senate action sent
                                           to the House.
December 15, 2000.......................  Cleared for White House.
December 15, 2000.......................  Presented to President.
December 21, 2000.......................  Signed by President. (H.R.
                                           4577, Consolidated
                                           Appropriations Act 2001,
                                           incorporates the provisions
                                           of several bills by
                                           reference. This includes H.R.
                                           5656--Labor HHS Education
                                           Appropriations; H.R. 5657--
                                           Legislative Branch
                                           Appropriations; H.R. 5658--
                                           Treasury Appropriations; H.R.
                                           5666--Miscellaneous
                                           Appropriations--except
                                           section 123 relating to the
                                           enactment of H.R. 4904; H.R.
                                           5660--Commodity Futures
                                           Modernization; H.R. 5661--
                                           Medicare, Medicaid and SCHIP
                                           Benefits Improvement and
                                           Protection; H.R. 5662--
                                           Community Renewal Tax Relief
                                           and Medical Savings Accounts;
                                           H.R. 5663--New Markets
                                           Venture Capital; and H.R.
                                           5667--Small Business
                                           Reauthorization Act. The text
                                           of these bills is printed in
                                           the H.R. 4577 conference
                                           report: H. Rept. 106-1033
                                           [text of conference report:
                                           CR 12/15/2000 H12100-12439].
------------------------------------------------------------------------

                          Need for Legislation

    In an era of unprecedented economic growth and prosperity, 
there remain many economically distressed communities, both 
rural and urban, where many people have not benefited to any 
great degree from the most recent economic expansion enjoyed by 
our Nation. In these communities, levels of unemployment, 
poverty, and other indicia of social distress, remain 
stubbornly high--yet untapped market opportunities exist to 
establish and expand businesses and to develop jobs and 
community assets.
    There is bipartisan consensus in Congress that the federal 
government can and should play a role in encouraging 
investments in these communities. For several years both 
Republicans and Democrats have proposed and supported granting 
tax and regulatory relief, including capital gains tax relief 
to businesses operating within distressed areas. Many of these 
proposals were part of H.R. 815, the `American Community 
Renewal Act,' introduced by Representatives Jim Talent and J.C. 
Watts, which would have designated a number of these areas as 
`renewal communities' eligible for such benefits. The House has 
already passed the tax provisions of H.R. 815, and this 
Committee has passed provisions relating to HUD property 
disposition within these communities as part of H.R. 1776, the 
American Homeownership and Economic Opportunity Act of 2000.'
    The Administration has also proposed a series of programs, 
collectively known as the ``New Markets Initiative,'' also 
intended to foster economic development in low-income 
communities. These proposals include tax credits for businesses 
in these areas (`New Markets Tax Credits'), a small business 
component (establishing a `New Markets Venture Capital 
Program'), and the formation of a number of companies intended 
to make relatively large scale equity and credit investments in 
distressed areas--APICs. The FY 2000 VA/HUD Appropriations Act 
provided that $20 million in credit subsidy would be available 
for use by APICs for Fiscal Year 2000 if the program was 
authorized by June 30, 2000. If the program is not authorized 
by that date, the funding reverts to the Community Development 
Financial Institutions program administered by the Department 
of the Treasury.
    The APIC portion of the New Markets Initiative falls under 
the jurisdiction of this Committee. The proposal is closely 
related in concept to the Small Business Investment Companies 
(`SBIC') program currently administered by the Small Business 
Administration (SBA), except that the SBIC program is limited 
in the size of projects it can serve and that SBICs invest in 
ventures only, not real estate. Community development 
organizations maintain that the infusion of additional amounts 
on equity capital is especially vital for enabling large-scale 
investments to occur in distressed areas. Importantly, these 
investments would be economically viable as freestanding 
business entities, providing a profitable return to investors. 
However, because the costs of establishing these businesses in 
some of these distressed areas are higher relative to other 
areas due to a variety of factors (remediation of environmental 
contamination, for example), the return on investors equity is 
not as high as demanded by these investors. APICs are intended 
to lessen the cost of capital so that these large-scale 
investments would be made.
    APICs are not intended to fund or subsidize the operations 
of businesses, that are not economically viable. On the 
contrary, the goal of these entities is to encourage the 
establishment of fundamentally sound businesses in certain 
locations. Possible uses for APICs' funds include the 
establishment of a new facility, such as a call center, data 
processing ``back office,'' or factory, by a large company (or 
a small company joint venturing with a large one). In addition, 
a mid-size manufacturing company seeking to increase production 
could use APIC investments for expansion of an existing 
facility, the upgrading equipment or the hiring of new 
employees. Other uses could include expansion of the service 
area of a mid-size service company, such as a trucking company, 
building contractor, or home health care firm; development of a 
multi-tenant shopping center; or opening or expanding a large 
retail company in a new geographic area. Buyout of a company to 
be revitalized in its existing facility, acquisition of the 
property of a departing large company, and development of an 
incubator or industrial park, or investment in another fund 
that invests in businesses locating or expanding in targeted 
low-to-moderate income areas are all methods whereby an APIC 
could fulfill its public purpose investment role.
    By passing this APIC legislation, the hope and expectation 
of this Committee is that a bipartisan, comprehensive package 
of measures to help revitalize America's distressed urban and 
rural communities, which would include the best elements of the 
American Community Renewal Act and the New Markets Initiative, 
be enacted this year.

                      Section-by-Section Analysis

Section 301. Short Title
    The act may be cited as the ``America's Private Investment 
Companies Act''.
Section 302. Findings and Purpose
    Section 302 finds that: (1) people living in distressed 
areas, both urban and rural, characterized by high levels of 
joblessness, poverty, and low incomes, have not adequately 
benefited from economic expansion experienced by the Nation as 
a whole; (2) the costs of joblessness and poverty to our Nation 
are very high; and (3) there are significant untapped markets 
in our Nation, and many of these are in areas that are 
underserved by institutions that can make equity and credit 
investments.
    Purposes of this title are to: (1) license private for-
profit community development entities that will focus on making 
equity and credit investments for large-scale business 
developments that benefit low-income communities; (2) provide 
credit enhancement for those entities for use in low-income 
communities; and (3) provide a vehicle under which the economic 
and social returns on financial investments made pursuant to 
this Act may be available both to the investors in these 
entities and to the residents of the low-income communities.
Section 303. Definitions
    Defines terms used in legislation, including 
``Administrator'', ``agency'', ``APIC'', ``community 
development entity'', ``HUD'', ``license'', ``low-income 
community'', ``low-income person'', ``private equity capital'', 
``qualified active business'', ``qualified debenture'', 
``qualified low-income community investment'', and 
``Secretary''.
Section 304. Authorization
    Authorizes the Secretary of HUD to license and regulate 
America's Private Investment Companies (`APICs'). The number of 
APICs licensed at any one time would depend upon the amount of 
budget authority available to support the total credit subsidy 
provided to the APICs, subject to a first year limitation of 15 
APICs. After the initial appropriation, the Secretary is 
authorized to license and allocate credit subsidy to additional 
APICs, or, as provided, increase the credit subsidy allocated 
to an APIC as reward for high performance. Any such credit 
subsidy increase shall be provided only to an APIC that has 
been licensed for not less than two years, and pursuant to a 
competition among eligible APICs. The Secretary shall establish 
criteria for selecting among APICs eligible for a credit 
subsidy increase, which criteria shall include such factors as 
the financial soundness and performance of the APICs as 
measured by achievement of the public performance goals 
required under the Act.
    Requires that the HUD Secretary consult with the 
Administrator of the Small Business Administration and the 
Secretary of the Treasury in establishing regulations, 
requirements or procedures regarding the financial soundness 
and management of APICs. Authorizes budget authority of $36 
million in credit subsidy for Fiscal Year 2000 to guarantee an 
estimated $1 billion in debt. An additional $36 million would 
be authorized to be appropriated for each of Fiscal Years 2001-
2003, with an additional $1 million authorized for the 
administrative expenses incurred in carrying out the Act for FY 
2000-FY 2003. Requires APICs to be regulated by HUD in 
cooperation with SBA and the Department of the Treasury. The 
Secretary is authorized to impose fees and charges for the 
operation of APICs.
Section 305. Selection of APICs
    Establishes procedures for selection of APICs, sets forth 
minimum eligibility requirements, and sets forth selection 
criteria to be used by the Secretary in selecting among 
applicants for licensing as APICs. An entity applying for an 
APIC license must: (1) be a private, for-profit entity that 
qualifies as a `community development entity' as defined in the 
legislation; (2) have a minimum private equity capital of $25 
million; (3) have qualified financial management, with 
experience in direct equity investment and portfolio management 
and expertise in community development settings, as determined 
by the Secretary; (4) be structured to preclude financial 
conflict of interests between the APIC and its manager or 
investors; (5) submit an investment strategy with evaluation 
benchmarks; (6) submit a statement of public purpose goals, 
examples of which are delineated in the statute; (7) agree to 
comply with other federal requirements imposed from time to 
time (i.e., Executive Orders or OMB circulars); and (8) satisfy 
any other application criteria that the Secretary may impose by 
regulation or notice.
    The Secretary shall select eligible entities for licensing 
based on a competition. Selections shall be made on the basis 
of the extent to which the entity is expected to meet or exceed 
the selection criteria set forth in the legislation. Selection 
criteria include factors such as the APICs capacity, investment 
strategy, public purpose goals, and other criteria the 
Secretary may establish to carry out the purposes of this Act. 
To the extent practicable, in selecting APICs the Secretary 
shall strive for geographic diversity and a diversity of the 
types of APICs chosen so that both rural and urban communities 
are served by the program. Of those APICs selected in the first 
year, at least one must be devoted primarily to making 
investments on Native American lands.
Section 306. Operations of APICs
    Set forth the requirements for the operation of APICs. 
Requires that substantially all APIC investments that use 
government-guaranteed proceeds be in qualified low- to 
moderate-income (LMI) areas, and prohibits an APIC from having 
an investment in any one business that would amount to more 
then 35% of the APIC's equity capital plus the limit of 
outstanding debt allowable (the leverage limit) under Section 
306(c)(2) of this title.
    Provides that an APIC may issue debentures guaranteed by 
the Secretary pursuant to the provisions of the Act. The total 
amount of debentures that an APIC may have outstanding at any 
one time shall not exceed 200% of the equity capital of the 
APIC. An APIC may not have more than $300 million in face value 
of debentures issued at any one time. Sets forth requirements 
for repayment by APIC of debt.
    Includes an ``anti-pirating'' provision prohibiting APICs 
from using funds to make an investment that would assist 
directly in the relocation of any industrial or commercial 
plant, facility or operation from one area to another if such 
relocation would result in a significant loss of employment in 
the labor area from which the relocation occurs. Also provides 
for reuse of debenture proceeds of sale of Treasury securities 
and excludes APIC from the definition of debtor under 
bankruptcy provisions.
Section 307. Credit Enhancement by the Federal Government
    AUthorizes HUD to make commitments to guarantee the timely 
payment of all principal and interest on qualified debentures 
issued by the APICs. The qualified debentures guaranteed by HUD 
would be senior to any other debt or equity. The qualified 
debentures could be issued by APICs for up to 21 years and 
could be pooled and sold.
Section 308. APIC Requests for Guarantee Actions
    Set forth procedures for APICs to request loan guarantees 
from HUD, which shall include a description of the manner in 
which the APIC intends to use the proceeds from such debentures 
and a certification from the APIC that it is in substantial 
compliance with: (1) the terms of this Act and applicable laws; 
(2) the terms and conditions of its license; (3) requirements 
relating to the allocation and use of New Market Tax Credits. 
The APIC must also provide any other requirements established 
by the Secretary. Sets forth procedures for compliance with 
provisions of the National Environmental Policy Act of 1969 
regarding environmental reviews.
Section 309. Examination and Monitoring of APIC
    Requries that the Secretary examine and monitor the 
activities of APICs for compliance with sound financial 
management practices and for satisfaction of program goals. 
Requires the Secretary to establish annual or more frequent 
reporting requirements for APICs. Requires that each APIC have 
an independent annual audit conducted annually. The Secretary, 
in consultation with the Administrator of the SBA and the 
Secretary of the Treasury, shall establish requirements and 
standards for such audits. Not less than every two years, the 
Secretary shall examine the operations and portfolio of each 
APIC to assure compliance with sound financial management 
practices.
    Provides that in carrying out its monitoring of HUD's 
responsibilities under this Act, the Inspector General of HUD 
shall consult, as appropriate, with the Inspectors General of 
the Department of the Treasury or the Small Business 
Administration, and may enter into memoranda of understanding 
as may be necessary to carry out this function. Requires the 
Secretary to report to Congress annually regarding the 
operations, activities, financial health and achievements of 
APICs, listing each investment made by each APIC. Requires the 
General Accounting Office not later than two years after the 
date of enactment of the Act, to submit a report to Congress 
regarding the operation of the APIC program.
Section 310. Penalties
    Authorizes the Secretary to impose penalties on any APIC 
that commits an act of fraud, mismanagement or noncompliance 
with regulations. Penalties include civil monetary penalties 
not to exceed $10,000 cease-and-desist orders, suspension or 
revocation of an APIC's license for very serious infractions, 
or other penalties that the Secretary determines to be less 
burdensome than the aforementioned penalties.
Section 311. Effective Date
    Provides that the Act shall take effect six months after 
the date of enactment. Authority of the Secretary to issue 
regulations, standards, guidelines or licensing requirements, 
and the authority of any official to enter into agreements or 
memoranda of understanding regarding such issuances, shall take 
effect upon enactment of the legislation.
Section 312. Sunset
    Provides that the Secretary may not license any APIC, nor 
provide credit subsidy for any APIC, after the expiration of 
the five-year period beginning upon the date the Secretary 
awards the first APIC license. The section does not affect any 
license or credit subsidy provided for an APIC before the 
expiration of such period.

5.17  H.R. 3843--Small Business Reauthorization Act of 2000, Public Law 
        No. 106-554

                           Legislative History
------------------------------------------------------------------------
                  Date                                Action
------------------------------------------------------------------------
H.R. 3843:
March 8, 2000...........................  Referred to the House
                                           Committee on Small Business.
March 14, 2000..........................  Reported by the Committee on
                                           Small Business. H. Rept. 106-
                                           522.
March 14, 2000..........................  Placed on the Union Calendar,
                                           Calendar No. 291.
March 14, 2000..........................  Rules Committee Resolution H.
                                           Res. 439 Reported to House.
                                           Rule provides for
                                           consideration of H.R. 3843
                                           with 1 hour of general
                                           debate. Previous question
                                           shall be considered as
                                           ordered without intervening
                                           motions except motion to
                                           recommit with or without
                                           instructions. Measure will be
                                           read by section. Bill is open
                                           to amendments. At the
                                           conclusion of consideration,
                                           H. Res. 432 is laid on the
                                           table.
March 15, 2000..........................  Rule H. Res. 439 passed House.
March 15, 2000..........................  Considered under the
                                           provisions of rule H. Res.
                                           439 (consideration: CR H1032-
                                           1039; text of measure as
                                           reported in House: CR H1038).
March 15, 2000..........................  House resolved itself into the
                                           Committee of the Whole House
                                           on the state of the Union
                                           pursuant to H. Res. 439 and
                                           Rule XXIII.
March 15, 2000..........................  The Speaker designated the
                                           Honorable Ray LaHood to act
                                           as Chairman of the Committee.
March 15, 2000..........................  H.AMDT.595 Amendment (A001)
                                           offered by Mr. Traficant.
                                           (consideration: CR H1038-
                                           1039) Amendment requires the
                                           SBA to conduct a study to
                                           determine the average time
                                           that the SBA requires to
                                           process an application for
                                           each type of loan or loan
                                           guarantee made under the
                                           Small Business Act.
March 15, 2000..........................  H.AMDT.595 On agreeing to the
                                           traficant amendment (A001)
                                           Agreed to by voice vote.
                                           (text: CR H1038)
March 15, 2000..........................  The House rose from the
                                           Committee of the Whole House
                                           on the state of the Union to
                                           report H.R. 3843.
March 15, 2000..........................  The previous question was
                                           ordered pursuant to the rule.
March 15, 2000..........................  The House adopted the
                                           amendment as agreed to by the
                                           Committee of the Whole House
                                           on the state of the Union.
March 15, 2000..........................  On passage Passed by the Yeas
                                           and Nays: 410-11 (Roll no.
                                           49).
March 15, 2000..........................  Motion to reconsider laid on
                                           the table Agreed to without
                                           objection.
March 20, 2000..........................  Received in the Senate and
                                           Read twice and referred to
                                           the Committee on Small
                                           Business.
October 25, 2000........................  Included in H.R. 5545.
H.R. 5545:
October 25, 2000........................  Referred to the House
                                           Committee on Small Business.
                                           (Several bills are engrossed
                                           by reference in the H.R. 2614
                                           conference report: H. Rept.
                                           106-1004. This includes H.R.
                                           5538, the Minimum Wage Act of
                                           2000; H.R. 5542, the Taxpayer
                                           Relief Act of 2000; H.R.
                                           5543, the Medicare, Medicaid,
                                           and SCHIP Benefits
                                           Improvement and Protection
                                           Act of 2000; H.R. 5544, the
                                           Pain Relief Promotion Act of
                                           2000; and H.R. 5545, the
                                           Small Business
                                           Reauthorization Act of 2000.
                                           The bill texts are included
                                           in the conference report.)
H.R. 2614:
October 26, 2000........................  Conference report H. Rept. 106-
                                           1004 filed. (text of
                                           conference report: CR October
                                           25, 2000 H10909-11188)
October 26, 2000........................  Rules Committee Resolution H.
                                           Res. 652 Reported to House.
                                           Rule provides for
                                           consideration of the
                                           conference report to H.R.
                                           2614 with 1 hour of general
                                           debate. Previous question
                                           shall be considered as
                                           ordered without intervening
                                           motions except motion to
                                           recommit with or without
                                           instructions. Waives points
                                           of order against the
                                           conference report and against
                                           its consideration.
October 26, 2000........................  Conferees agreed to file
                                           conference report.
October 26, 2000........................  Conference papers: Senate
                                           report and manager's
                                           statement held at the desk in
                                           Senate.
October 26, 2000........................  Rule H. Res. 652 passed House.
October 26, 2000........................  Mr. Talent brought up
                                           conference report H. Rept.
                                           106-1004 for consideration
                                           under the provisions of H.
                                           Res. 652.
October 26, 2000........................  The previous question was
                                           ordered without objection.
October 26, 2000........................  On agreeing to the conference
                                           report Agreed to by the Yeas
                                           and Nays: 237-174, 1 Present
                                           (Roll no. 560).
                                           (consideration: CR H11243-
                                           11264)
October 26, 2000........................  Motions to reconsider laid on
                                           the table Agreed to without
                                           objection.
October 26, 2000........................  Motion to proceed to
                                           consideration of measure
                                           agreed to in Senate by Yea-
                                           Nay Vote. 55-40. Record Vote
                                           Number: 286. (consideration:
                                           CR S11097-11098)
October 26, 2000........................  Motion to proceed to
                                           consideration of conference
                                           report to accompany H.R. 2614
                                           agreed to by Unanimous
                                           Consent.
October 26, 2000........................  Conference report considered
                                           in Senate by motion.
                                           (consideration: CR S11098-
                                           11100, S11104, S11107-11111)
October 31, 2000........................  Motion to proceed to
                                           consideration of conference
                                           report to accompany H.R. 2614
                                           agreed to by Unanimous
                                           Consent.
October 31, 2000........................  Conference report considered
                                           in Senate by motion. (The
                                           H.R. 2614 conference report
                                           [H. Rept. 106-1004]
                                           incorporated several bills.
                                           This included H.R. 5538--
                                           Minimum Wage; H.R. 5542--
                                           Taxpayer Relief; H.R. 5543--
                                           Medicare, Medicaid, and SCHIP
                                           Benefits Improvement and
                                           Protection; H.R. 5544--Pain
                                           Relief Promotion; and H.R.
                                           5545--Small Business
                                           Reauthorization. H.R. 5661 is
                                           a subsequent Medicare,
                                           Medicaid and SCHIP Benefits
                                           Improvement and Protection
                                           bill. H.R. 5667 is a
                                           subsequent Small Business
                                           Reauthorization bill. H.R.
                                           4577, Consolidated
                                           Appropriations Act 2001,
                                           incorporates by reference the
                                           provisions of H.R. 5661, H.R.
                                           5667, and other bills. The
                                           text of these bills is
                                           printed in the H.R. 4577
                                           conference report: H. Rept.
                                           106-1033 [text of conference
                                           report: CR October 15, 2000
                                           H12100-12439].)
H.R. 5667:
December 15, 2000.......................  Referred to the House
                                           Committee on Small Business
                                           incorporating the provisions
                                           of H.R. 3843.
December 15, 2000.......................  Enacted by reference in H.R.
                                           4577 (H. Conf. Rept. 106-
                                           1033).
H.R. 4577:
December 15, 2000.......................  Conference report H. Rept. 106-
                                           1033 filed.
December 15, 2000.......................  Mr. Young (FL) brought up
                                           conference report H. Rept.
                                           106-1033 by previously agreed
                                           to special order.
December 15, 2000.......................  The previous question was
                                           ordered without objection.
December 15, 2000.......................  On agreeing to the conference
                                           report Agreed to by the Yeas
                                           and Nays: 292-60 (Roll no.
                                           603).
December 15, 2000.......................  Motions to reconsider laid on
                                           the table Agreed to without
                                           objection.
December 15, 2000.......................  Senate agreed to conference
                                           report by Unanimous Consent.
December 15, 2000.......................  Message on Senate action sent
                                           to the House.
December 15, 2000.......................  Cleared for White House.
December 15, 2000.......................  Presented to President.
December 21, 2000.......................  Signed by President as Pub. L.
                                           No. 106-544 (H.R. 4577,
                                           Consolidated Appropriations
                                           Act 2001, incorporates the
                                           provisions of several bills
                                           by reference. This includes
                                           H.R. 5656--Labor HHS
                                           Education Appropriations;
                                           H.R. 5657--Legislative Branch
                                           Appropriations; H.R. 5658--
                                           Treasury Appropriations; H.R.
                                           5666--Miscellaneous
                                           Appropriations--except
                                           section 123 relating to the
                                           enactment of H.R. 4904; H.R.
                                           5660--Commodity Futures
                                           Modernization; H.R. 5661--
                                           Medicare, Medicaid and SCHIP
                                           Benefits Improvement and
                                           Protection; H.R. 5662--
                                           Community Renewal Tax Relief
                                           and Medical Savings Accounts;
                                           H.R. 5663--New Markets
                                           Venture Capital Program; and
                                           H.R. 5667--Small Business
                                           Reauthorization. The text of
                                           these bills is printed in the
                                           H.R. 4577 conference report:
                                           H. Rept. 106-1033 [text of
                                           conference report: CR
                                           December 15, 2000 H12100-
                                           12439].)
------------------------------------------------------------------------

                          Need for Legislation

    The Small Business Administration provides a variety of 
services for small business--financial assistance, technical 
assistance, and disaster assistance.

Financial Assistance

    The Small Business Administration provides approximately 
$11 billion in financing to small business annually. This 
financing is made available through a variety of programs.
    SBA's largest financial program is the Section 7(a) general 
business loan program. The 7(a) program offers loans to small 
businesses through local lending institutions. These loans are 
provided with an SBA guarantee of up to 80 percent and are 
limited to a maximum of $750,000. The 7(a) program has a 
subsidy rate of 1.16% for fiscal year 2000 and an appropriation 
of $107 million, permitting $9.8 billion in lending.
    The Section 504 loan program provides construction, 
renovation and capital investment financing to small businesses 
through certified development companies (CDCs). These CDCs are 
SBA licensed, local business development organizations which 
provide loans of up to $750,000 for small businesses, in 
cooperation with local banks. CDCs provide 40% of the financing 
package, while the bank provides 50%, and the small business 
provides a 10% down payment. CDC funding is obtained through 
issuance of an SBA guarantee debenture. The 504 program 
currently operates at no cost to the taxpayer but does require 
authorization.
    The microloan program provides small loans of up to $25,000 
to borrowers in low-income areas. In fiscal year 1999 the 
program provided $29 million in loans. In addition, the program 
has a technical assistance aspect that provides managerial and 
business expertise to microloan borrowers. Microloans are made 
by intermediary organizations that specialize in local business 
development. The program has a subsidy rate of 8.54%.
    The Small Business Investment Company (SBIC) program 
provides over $1.5 billion in long term and venture capital 
financing for small business annually. SBICs are venture 
capital firms that leverage private investment dollars with SBA 
guaranteed debentures or participating securities. The SBIC 
debenture program currently operates at a zero subsidy rate and 
requires no taxpayer subsidy. The participating securities 
program has a 1.8% subsidy rate.

Technical Assistance

    The SBA provides technical and managerial assistance to 
small businesses through four primary programs--Small Business 
Development Center (SBDCs), the Service Corps of Retired 
Executives (SCORE), the 7(j) technical assistance program, and 
the Women's Business Center program.
    SBDCS are located primarily at colleges and universities 
and provide assistance through 51 center sites and 
approximately 970 satellite offices. Through a formula of 
matching grants and donations SBDCs offer small businesses 
guidance on marketing, financing, start-up, and other areas. 
The program currently receives $84 million in appropriations.
    SCORE provides small business assistance on-site through 
the volunteer efforts of its members. SCORE volunteers are 
retired business men and women who offer their expertise to 
small businesses. SCORE volunteers are reimbursed for their 
travel expenses and SCORE receives funding as well as a website 
and offices in Washington, DC.
    The 7(j) program provides financing for technical 
assistance to the minority contracting community primarily 
through courses and direct assistance from management 
consultants. In addition, the program provides assistance for 
participants to attend business administration classes offered 
through several colleges and universities.
    The Women's Business Center program provides five year 
grants matched by non-federal funds to private sector 
organizations to establish business training centers for women. 
Depending on the needs of the community, centers teach women 
the principles of finance, management and marketing as well as 
specialized topics such government contracting or starting 
home-based businesses. There are currently 81 centers in 47 
states in rural, urban and suburban locations.

Disaster Assistance

    The Small Business Administration also provides disaster 
loan assistance to homeowners and small businesses nationwide. 
This program is a key component of the overall Federal recovery 
effort for communities struck by natural disasters. This 
assistance is authorized by section 7(b) of the Small Business 
Act which provides authority for reduced interest rate loans. 
Currently the interest rate fluctuate according to the 
statutory formula--a lower rate, not to exceed four percent is 
offered to applicants with no credit available elsewhere, while 
a rate of a maximum of eight percent is available for other 
borrowers.

                      Section-by-Section Analysis


Section 1. Short Title

    This Act may be cited as the ``Small Business 
Reauthorization Act of 2000''.

Section 2. Reauthorization of Small Business Programs

    This section provides the authorized appropriation levels 
for the following programs: Section 7(a) general business 
loans, Section 504 Certified Development Company loans, direct 
microloans, guaranteed microloans, microloan technical 
assistance, Defense Transition (DELTA) loans, Small Business 
Investment Company debentures, Small Business Investment 
Company participating securities, Surety Bonds guarantees, 
SCORE, disaster loans, and salaries and expenses. The following 
are the authorization levels for the financial programs:


                              [In millions]
------------------------------------------------------------------------
                                       2001         2002         2003
------------------------------------------------------------------------
7(a).............................      $14,500      $15,000      $16,000
504..............................        4,000        4,500        5,000
Microloan........................           60           80          100
Microloan TA.....................           50           70           90
Microloan gty....................          200          250          300
SBIC debentures..................        1,500        2,500        3,000
SBIC part. Securities............        2,500        3,500        4,000
Surety bonds.....................        4,000        5,000        6,000
------------------------------------------------------------------------

    This section also authorizes the Service Corps of Retired 
Executives (SCORE). SCORE will be authorized at 5, 6, and 7 
million dollars for fiscal years 2001, 2001, and 2003, 
respectively.
    Section 2 also contains provisions authorizing funding for 
salaries and expenses at the Small Business Administration. 
These authorizations are established as ``such sums as may be 
necessary''. However, separate authorizations are established 
for direct administration of the 7(a), 504 and microloan 
programs and for the operations of the Office of Investment. 
The committee intends that the funds authorized for the direct 
administration of the loan programs be used solely for 
headquarters operations and not field services. These 
operations are authorized at 14, 16 and 17 million dollars for 
fiscal years 2001, 2002, 2003, respectively.

Section 3. Additional Reauthorizations

    This section reauthorizes six programs:
    (a) Small Business Development Centers Program--Increases 
the authorization level from $95,000,000 to $125,000,000.
    (b) Drug Free Workplace--Extends authorization through 
fiscal year 2003 at $5,000,000 per year.
    (c) HUBZones--Authorizes appropriations of $10,000,000 per 
year through fiscal year 2003.
    (d) National Women's Business Council--Increases 
reauthorization to $1,000,000 per year and extends 
authorization through fiscal year 2003.
    (e) Very Small Business Concerns--Extends authorization 
through September 30, 2003.
    (f) SDB Certification--Extends authorization through 
September 30, 2003.

5.18  H.R. 3845--Small Business Investment Corrections Act of 2000, 
        Public Law 106-554

                           Legislative History
------------------------------------------------------------------------
                  Date                                Action
------------------------------------------------------------------------
H.R. 3845:
March 8, 2000...........................  Referred to the House
                                           Committee on Small Business.
March 14, 2000..........................  Reported by the Committee on
                                           Small Business. H. Rept. 106-
                                           520.
March 14, 2000..........................  Placed on the Union Calendar,
                                           Calendar No. 289.
March 14, 2000..........................  Mrs. Kelly moved to suspend
                                           the rules and pass the bill,
                                           as amended.
March 14, 2000..........................  Considered under suspension of
                                           the rules. (consideration: CR
                                           H940-942)
March 14, 2000..........................  On motion to suspend the rules
                                           and pass the bill, as amended
                                           Agreed to by voice vote.
                                           (text: CR H940-941)
March 14, 2000..........................  Motion to reconsider laid on
                                           the table Agreed to without
                                           objection.
March 20, 2000..........................  Received in the Senate and
                                           Read twice and referred to
                                           the Committee on Small
                                           Business.
October 25, 2000........................  Included in H.R. 5545.
H.R. 5545:
October 25, 2000........................  Referred to the House
                                           Committee on Small Business.
                                           (Several bills are engrossed
                                           by reference in the HR. 2614
                                           conference report: H.Rept.
                                           106-1004. This includes H.R.
                                           5538, the Minimum Wage Act of
                                           2000; H.R. 5542, the Taxpayer
                                           Relief Act of 2000; H.R.
                                           5543, the Medicare, Medicaid,
                                           and SCHIP Benefits
                                           Improvement and Protection
                                           Act of 2000; H.R. 5544, the
                                           Pain Relief Promotion Act of
                                           2000; and H.R. 5545, the
                                           Small Business
                                           Reauthorization Act of 2000.
                                           The bill texts are included
                                           in the conference report.)
 H.R. 2614:
October 26, 2000........................   Conference report H. Rept.
                                           106-1004 filed. (text of
                                           conference report: CR 10/25/
                                           2000 H10909-11188)
October 26, 2000........................  Rules Committee Resolution H.
                                           Res. 652 Reported to House.
                                           Rule provides for
                                           consideration of the
                                           conference report to H.R.
                                           2614 with 1 hour of general
                                           debate. Previous question
                                           shall be considered as
                                           ordered without intervening
                                           motions except motion to
                                           recommit with or without
                                           instructions. Waives points
                                           of order against the
                                           conference report and against
                                           its consideration.
October 26, 2000........................  Conferees agreed to file
                                           conference report.
October 26, 2000........................  Conference papers: Senate
                                           report and manager's
                                           statement held at the desk in
                                           Senate.
October 26, 2000........................  Rule H. Res. 652 passed House.
October 26, 2000........................  Mr. Talent brought up
                                           conference report H. Rept.
                                           106-1004 for consideration
                                           under the provisions of H.
                                           Res. 652.
October 26, 2000........................  The previous question was
                                           ordered without objection.
October 26, 2000........................  On agreeing to the conference
                                           report. Agreed to by the Yeas
                                           and Nays: 237-174, 1 Present
                                           (Roll no. 560).
                                           (consideration: CR H11243-
                                           11264)
October 26, 2000........................  Motions to reconsider laid on
                                           the table Agreed to without
                                           objection.
October 26, 2000........................  Motion to proceed to
                                           consideration of measure
                                           agreed to in Senate by Yea-
                                           Nay Vote. 55-40. Record Vote
                                           Number: 286. (consideration:
                                           CR S11097-11098)
October 26, 2000........................  Motion to proceed to
                                           consideration of conference
                                           report to accompany H.R. 2614
                                           agreed to by Unanimous
                                           Consent.
October 26, 2000........................  Conference report considered
                                           in Senate by motion.
                                           (consideration: CR S11098-
                                           11100, S11104, S11107-11111)
October 31, 2000........................  Motion to proceed to
                                           consideration of conference
                                           report to accompany H.R. 2614
                                           agreed to by Unanimous
                                           Consent
October 31, 2000........................  Conference report considered
                                           in Senate by motion. (The
                                           H.R. 2614 conference report
                                           [H. Rept. 106-1004]
                                           incorporated several bills.
                                           This included H.R. 5538--
                                           Minimum Wage; H.R. 5542--
                                           Taxpayer Relief; H.R. 5543--
                                           Medicare, Medicaid, and SCHIP
                                           Benefits Improvement and
                                           Protection; H.R. 5544--Pain
                                           Relief Promotion; and H.R.
                                           5545--Small Business
                                           Reauthorization. H.R. 5661 is
                                           a subsequent Medicare,
                                           Medicaid and SCHIP Benefits
                                           Improvement and Protection
                                           bill. H.R. 5667 is a
                                           subsequent Small Business
                                           Reauthorization bill. H.R.
                                           4577, Consolidated
                                           Appropriations Act 2001,
                                           incorporates by reference the
                                           provisions of H.R. 5661, H.R.
                                           5667, and other bills. The
                                           text of these bills is
                                           printed in the H.R. 4577
                                           conference report: H. Rept.
                                           106-1033 [text of conference
                                           report: CR 12/15/2000 H12100-
                                           12439].)
H.R. 5667:
December 15, 2000.......................  Referred to the House
                                           Committee on Small Business
                                           incorporating the provisions
                                           of H.R. 3845.
December 15, 2000.......................  Enacted by reference in H.R.
                                           4577 (H. Conf. Rept. 106-
                                           1033)
H.R. 4577:
December 15, 2000.......................  Conference report H. Rept. 106-
                                           1033 filed.
December 15, 2000.......................  Mr. Young (FL) brought up
                                           conference report H. Rept.
                                           106-1033 by previously agreed
                                           to special order.
December 15, 2000.......................  The previous question was
                                           ordered without objection.
December 15, 2000.......................  On agreeing to the conference
                                           report Agreed to by the Yeas
                                           and Nays: 292-60 (Roll no.
                                           603).
December 15, 2000.......................  Motions to reconsider laid on
                                           the table Agreed to without
                                           objection.
December 15, 2000.......................  Senate agreed to conference
                                           report by Unanimous Consent.
December 15, 2000.......................  Message on Senate action sent
                                           to the House.
December 15, 2000.......................  Cleared for White House.
December 15, 2000.......................  Presented to President.
December 21, 2000.......................  Signed by President. (H.R.
                                           4577, Consolidated
                                           Appropriations Act 2001,
                                           incorporates the provisions
                                           of several bills by
                                           reference. This includes H.R.
                                           5656--Labor HHS Education
                                           Appropriations; H.R. 5657--
                                           Legislative Branch
                                           Appropriations; H.R. 5658--
                                           Treasury Appropriations; H.R.
                                           5666--Miscellaneous
                                           Appropriations--except
                                           section 123 relating to the
                                           enactment of H.R. 4904; H.R.
                                           5660--Commodity Futures
                                           Modernization; H.R. 5661--
                                           Medicare, Medicaid and SCHIP
                                           Benefits Improvement and
                                           Protection; H.R. 5662--
                                           Community Renewal Tax Relief
                                           and Medical Savings Accounts;
                                           H.R. 5663--New Markets
                                           Venture Capital Program; and
                                           H.R. 5667--Small Business
                                           Reauthorization. The text of
                                           these bills is printed in the
                                           H.R. 4577 conference report:
                                           H. Rept. 106-1033 [text of
                                           conference report: CR 12/15/
                                           2000 H12100-12439].)
------------------------------------------------------------------------

                          Need for Legislation


Definition of Small Business Concern

    SBA regulations currently prohibit an SBIC from owning a 
controlling interest in the voting stock of a small business or 
otherwise exercising control of the small business.
    These regulations were put in place to ensure that SBICs 
did not become holding companies and to protect small business 
from over aggressive investment. During the life of the program 
several exceptions have been put in place recognizing the 
reality of equity investment. These include control for a 
start-up company, when a major investment is undertaken, for a 
troubled company, breach of agreement, and most recently for 
those businesses that are located in low and moderate income 
area (LMIs). Through the administering and oversight of these 
regulations the Committee believes the result has been to 
create a complicated and sometimes burdensome process for both 
SBA and SBICs.
    While the intent of the regulation was the protection of 
small business it has resulted in keeping parties to an SBIC 
investment from structuring the investment in ways that may be 
most reasonable and acceptable from both operating and market 
perspective. The Committee made these changes recognizing the 
reality of venture capital investment, however the amendment is 
not intended to foster SBICs becoming holding companies for 
operating small business concerns. In today's venture capital 
world venture funds may act as incubators of business ideas by 
creating and capitalizing small businesses to nurture 
technology in the early stages of its development. In such 
cases SBICs may need to create, capitalize and operate small 
business concerns in the early years.
    Furthermore, the Gramm-Leach-Bliley Bank Modernization 
Act--which grants banks authority to conduct venture capital 
operations without an SBIC license--does not prohibit control. 
To the contrary, it explicitly permits control during the 
investment period. The proposed amendment would make the Small 
Business Investment Act consistent with the new banking law and 
would serve as an incentive for banks to retain their SBIC 
operations--to the benefit of U.S. small businesses.

Definition of Long Term

    The term ``long-term'' as found in Section 102 of the Act 
has been interpreted to mean a period of time equal to a 
minimum of five years for all SBIC investments other than those 
made in ``Disadvantaged Businesses.'' For the latter, the 
minimum period is four years.
    This interpretation does not allow SBICs and small 
businesses to fashion investment agreements that are flexible 
enough to meet the needs of both parties in accordance with the 
dictates of the commercial marketplace.
    This interpretation has no counterpart in any other area of 
business commerce. To the contrary, Generally Accepted 
Accounting Principles (GAAP) define ``long-term'' as any period 
of time greater than one year in duration. Likewise, tax law 
defines ``long-term'' for capital gains purposes as a period 
greater than one year. The proposed amendment would make SBIC 
law consistent with GAAP and tax law and apply the same 
standard for all SBIC investments.
    The Gramm-Leach-Bliley Bank Modernization Act--which gives 
banks authority to conduct venture capital operations without 
an SBIC license--places no restrictions on the period of time 
for investments. The proposed amendment will be consistent with 
the new bank law and would serve as an important incentive for 
banks to retain their SBIC operations--to the benefit of U.S. 
small businesses seeking financing. Without the amendment, many 
banks may choose to operate all their venture capital 
operations outside the SBIC program--to the detriment of small 
businesses served by the SBIC program.

Subsidy Fees

    An additional 1 percent interest obligation was imposed on 
SBICs in 1996 in order to reduce the Small Business 
Administration's appropriated cost, as determined by the 
Administration's subsidy model, for supporting the SBIC 
program. Since then changes in the program coupled with a 
stricter examination and licensing program at SBA have 
significantly reduced the subsidy cost of both the Debenture 
and Participating Securities programs. At least part of the 1 
percent in additional interest is no longer required in the 
Debenture program to keep the subsidy rate at zero. The same 
may soon be true for the Participating Securities program as 
well. In fact, current estimates show that the 1 percent fee is 
overcharging the SBICs (and their small business clients), 
resulting in a hidden tax on the program.
    Changing the law as proposed would allow the Administration 
to adjust the additional interest and prioritized payment rates 
annually based on annual subsidy rate calculations. A similar 
approach is already in place for the SBA's 504 loan program 
which operates at no cost to the taxpayer and has consistently 
reduced its fees.

Distribution

    Under current law, SBICs may make prioritized payment 
distributions, profit distributions, and other optional 
distributions (e.g., distributions of capital on any date with 
prior SBA approval). Tax distributions, however, may only be 
made at the end of calendar year quarters.
    The practical impact of this restriction is that SBICs are 
forced to either delay otherwise permitted interim 
distributions (that would include tax distributions) to the end 
of a quarter or split their distributions into two 
distributions--tax distributions (made at the end of a quarter) 
and all other distributions (made at any time during a 
quarter).
    Postponing an entire distribution to the end of a quarter 
has negative cash flow and internal rate of return (IRR) 
implications for SBICs. Consequently, most SBICs will opt to 
split their distributions. Splitting distributions requires the 
preparation, submission, and SBA review of two sets of 
documents when one would otherwise suffice. This results in 
inefficient use of both SBA and SBIC time and resources.
    The proposed amendment is technical in nature and will have 
no substantive impact on the SBIC program. However, it will 
save time and expense for both SBA and SBICs by eliminating 
duplicative filings and inefficient use of SBA resources.

                      Section-by-Section Analysis


Section 1. Short Title

    This Act may be cited as the ``Small Business Investment 
Corrections Act of 2000''.

Section 2. Definitions

    (a) Small Business Concern
    Inserts the following language in section 103(5)(A)(i) of 
the Small Business Investment Act--``regardless of the 
allocation of control during the investment period under any 
investment agreement between the business concern and the 
entity making the investment''. This phrase clarifies that a 
venture capital investment agreement from an SBIC may cause a 
change in control of a small business, but that such a change 
will not affect the eligibility of the small business concern. 
The Committee does not intend that SBICs become holding 
companies hence the language references the period of the 
investment agreement. Further, the Committee retains the 
authority for SBIC examinations to inquire into ``illegal 
control'' by SBICs, though the committee expects such control 
to be that exercised outside an investment agreement.
    (b) Long Term
    Inserts the following paragraph in section 103 of the Small 
Business Investment Act.
    ``(17) The term long term, when used in connection with 
equity capital or loan funds invested in any small business 
concern or smaller enterprise, means any period of time not 
less than 1 year.'' The language changes the definition of a 
long term investment to harmonize it with the tax and banking 
laws.

Section 3. Subsidy Fees

    This provision amends sections 303(b) and 303(g)(2) of the 
Small Business Investment Act to allow the Administration to 
adjust the fee assessed on debentures and participating 
securities up to a maximum of one percent. The fee will be 
adjusted to keep the subsidy cost of the programs at zero or as 
close as possible to zero.

Section 4. Distributions

    This section amends section 303(g)(8) of the Small Business 
Investment Act in order to allow SBICs to make distributions at 
any time during a calendar quarter based on the maximum 
estimated tax liability.

Section 5. Conforming Amendments

    H.R. 3845 streamlines the successful Small Business 
Investment Company (SBIC) program. The SBIC program allows 
private companies with SBA approval to provide venture and 
start up financing to small businesses.
    First, the bill modifies the definition of control for SBIC 
investment in small business, eliminating a cumbersome five 
prong test and setting a clear statutory standard. H.R. 3845 
was also modify the definition of long term investment under 
the Act, changing it from five years to one year, in order to 
harmonize that definition with accepted business practice and 
the tax and banking laws. Third, the bill allows the 
Administration to adjust the subsidy fee for the SBIC program 
to maintain the subsidy rate of the program at zero. Finally, 
the bill makes a change to the distribution language in the 
Investment Act, allowing the SBICs more flexibility in making 
distributions to their investors and will simplify the 
accounting and tax procedures at SBICs.

5.19  H.R. 4464--BusinessLINC Act of 2000, Public Law No. 106-554

                           Legislative History
------------------------------------------------------------------------
                  Date                                Action
------------------------------------------------------------------------
H.R. 4464:
May 16, 2000............................  Referred to the House
                                           Committee on Small Business.
May 25, 2000............................  Committee Consideration and
                                           Mark-up Session Held.
May 25, 2000............................  Ordered to be Reported in the
                                           Nature of a Substitute
                                           (Amended) by Voice Vote.
July 25, 2000...........................  Reported (Amended) by the
                                           Committee on Small Business
                                           H. Rept. 106-784
July 25, 2000...........................  Placed on the Union Calendar,
                                           Calendar No. 451.
October 25, 2000........................  Included in H.R. 5545.
H.R. 5545:
October 25, 2000........................  Referred to the House
                                           Committee on Small Business.
                                           (Several bids are engrossed
                                           by reference in the H.R. 2614
                                           conference report: H. Rept.
                                           106-1004. This includes H.R.
                                           5538, the Minimum Wage Act of
                                           2000; H.R. 5542, the Taxpayer
                                           Relief Act of 2000; H.R.
                                           5543, the Medicare, Medicaid,
                                           and SCHIP Benefits
                                           Improvement and Protection
                                           Act of 2000; H.R. 5544, the
                                           Pain Relief Promotion Act of
                                           2000; and H.R. 5545, the
                                           Small Business
                                           Reauthorization Act of 2000.
                                           The bill texts are included
                                           in the conference report).
H.R. 2614:
October 26, 2000........................  Conference report H. Rept. 106-
                                           1004 filed. (text of
                                           conference report: CR 10/25/
                                           000 H10909-11188).
October 26, 2000........................  Rules Committee Resolution H.
                                           Res. 652 Reported to House.
                                           Rule provides for
                                           consideration of the
                                           conference report to H.R.
                                           2614 with 1 hour of general
                                           debate. Previous question
                                           shall be considered as
                                           ordered without intervening
                                           motions except motion to
                                           recommit with or without
                                           instructions. Waives points
                                           of order against the
                                           conference report and against
                                           its consideration.
October 26, 2000........................  Conferees agreed to file
                                           conference report.
October 26, 2000........................  Conference papers: Senate
                                           report and manager's
                                           statement held at the desk in
                                           Senate.
October 26, 2000........................  Rule H. Res. 652 passed House.
October 26, 2000........................  Mr. Talent brought up
                                           conference report H. Rept.
                                           106-1004 for consideration
                                           under the provisions of H.
                                           Res. 652.
October 26, 2000........................  The previous question was
                                           ordered without objection.
October 26, 2000........................  On agreeing to the conference
                                           report Agreed to by the Yeas
                                           and Nays: 237-174, 1 Present
                                           (Roll no. 560).
                                           (consideration: CR H11243-
                                           11264).
October 26, 2000........................  Motions to reconsider laid on
                                           the table Agreed to without
                                           objection.
October 26, 2000........................  Motion to proceed to
                                           consideration of measure
                                           agreed to in Senate by Yea-
                                           Nay Vote. 55-40. Record Vote
                                           Number: 286. (consideration:
                                           CR S11097-11098).
October 26, 2000........................  Motion to proceed to
                                           consideration of conference
                                           report to accompany H.R. 2614
                                           agreed to by Unanimous
                                           Consent.
October 26, 2000........................  Conference report considered
                                           in Senate by motion.
                                           (consideration: CR S11098-
                                           11100, S11104, S11107-11111).
October 31, 2000........................  Motion to proceed to
                                           consideration of conference
                                           report to accompany H.R. 2614
                                           agreed to by Unanimous
                                           Consent.
October 31, 2000........................  Conference report considered
                                           in Senate by motion. (The
                                           H.R. 2614 conference report
                                           [H. Rept. 106-1004]
                                           incorporated several bills.
                                           This included H.R. 5538--
                                           Minimum Wage; H.R. 5542--
                                           Taxpayer Relief; H.R. 5543--
                                           Medicare, Medicaid, and SCHIP
                                           Benefits Improvement and
                                           Protection; H.R. 5544--Pain
                                           Relief Promotion; and H.R.
                                           5545--Small Business
                                           Reauthorization. H.R. 5661 is
                                           a subsequent Medicare,
                                           Medicaid and SCHIP Benefits
                                           Improvement and Protection
                                           bill. H.R. 5667 is a
                                           subsequent Small Business
                                           Reauthorization bill. H.R.
                                           4577, Consolidated
                                           Appropriations Act 2001,
                                           incorporates by reference the
                                           provisions of H.R. 5661, H.R.
                                           5667, and other bills. The
                                           text of these bills is
                                           printed in the H.R. 4577
                                           conference report: H. Rept.
                                           106-1033 (text of conference
                                           report: CR 12/15/2000 H12100-
                                           12439]).
H.R. 5667:
December 15, 2000.......................  Referred to the House
                                           Committee on Small Business.
December 15, 2000.......................  Enacted by reference in H.R.
                                           4577 (H. Rept. 106-1033).
H.R. 4577:
December 15, 2000.......................  Conference report H. Rept. 106-
                                           1033 filed.
December 15, 2000.......................  Mr. Young (FL) brought up
                                           conference report H. Rept.
                                           106-1033 by previously agreed
                                           to special order.
December 15, 2000.......................  The previous question was
                                           ordered without objection.
December 15, 2000.......................  On agreeing to the conference
                                           report Agreed to by the Yeas
                                           and Nays: 292--60 (Roll no.
                                           603).
December 15, 2000.......................  Motions to reconsider laid on
                                           the table Agreed to without
                                           objection.
December 15, 2000.......................  Senate agreed to conference
                                           report by Unanimous Consent.
December 15, 2000.......................  Message on Senate action sent
                                           to the House.
December 15, 2000.......................  Cleared for White House.
December 15, 2000.......................  Presented to President.
December 21, 2000.......................  Signed by President. (H.R.
                                           4577, Consolidated
                                           Appropriations Act 2001,
                                           incorporates the provisions
                                           of several bills by
                                           reference. This includes H.R.
                                           5656--Labor HHS Education
                                           Appropriations; H.R. 5657--
                                           Legislative Branch
                                           Appropriations; H.R. 5658--
                                           Treasury Appropriations; H.R.
                                           5666--Miscellaneous
                                           Appropriations--except
                                           section 123 relating to the
                                           enactment of H.R. 4904; H.R.
                                           5660--Commodity Futures
                                           Modernization; H.R. 5661--
                                           Medicare, Medicaid and SCHIP
                                           Benefits Improvement and
                                           Protection; H.R. 5662--
                                           Community Renewal Tax Relief
                                           and Medical Savings Accounts;
                                           H.R. 5663--New Markets
                                           Venture Capital Program; and
                                           H.R. 5667--Small Business
                                           Reauthorization. The text of
                                           these bills is printed in the
                                           H.R. 4577 conference report:
                                           H. Rept. 106-1033 [text of
                                           conference report: CR 12/15/
                                           2000 H12100-12439].)
------------------------------------------------------------------------

                          Need for Legislation

    Despite the unprecedented economic prosperity we are 
experiencing in this country, there are several areas of the 
country that have still not achieved parity. These areas are 
primarily inner cities, rural areas, and Native American 
communities. BusinessLINC will enable business opportunities 
for small businesses who would otherwise have no access to 
outside larger markets. While these small businesses have 
strong potential, they are located in communities where 
corporate America would not necessarily look. BusinessLINC will 
break that barrier. When the BusinessLINC model has been 
applied in the past, small businesses have seen growth as much 
as 45 percent. With this assistance, the local community will 
be charting its own path to recovery. The ``LINC'' in 
BusinessLINC stands for ``Learning, Information, Networking, 
and Collaboration.''

                      Section-by-Section Analysis


Section 1. Short Title

    Designates the bill as the ``BusinessLINC Act of 2000.''

Section 2. Authorization

    This Section amends the Small Business Act by Adding a new 
paragraph (m), ``BusinessLINC grants and cooperative 
agreements.''
    Paragraph (1) allows the Administrator to make grants or 
enter into cooperative agreements with any coalition/
combination of private and/or public entities to (a) promote 
business-to-business relationships between large and small 
businesses and (b) to provide online information and a database 
of companies that are interested in mentor-protege programs.
    Paragraph (2) specifies that the Administrator may make 
grants as long as the coalition/combination of public and/or 
private entities provides an amount, either in kind or in cash, 
equal to the grant amount for the purposes delineated in 
paragraph (1) above.
    Paragraph (3) specifies the authorization for the program 
for fiscal years 2001 through 2003. This amount shall be 
$6,600,000 for each of the three fiscal years.

5.20  H.R. 4530--New Markets Venture Capital Program Act of 2000, 
        Public Law No. 106-554

                           Legislative History
------------------------------------------------------------------------
                  Date                                Action
------------------------------------------------------------------------
H.R. 4530:
May 24, 2000............................  Referred to the House
                                           Committee on Small Business.
May 25, 2000............................  Committee Consideration and
                                           Mark-up Session Held.
May 25, 2000............................  Ordered to be Reported by
                                           Voice Vote.
July 25, 2000...........................  Reported by the Committee on
                                           Small Business. H. Rept. 106-
                                           785.
July 25, 2000...........................  Placed on the Union Calendar,
                                           Calendar No. 452.
October 25, 2000........................  Included in H.R. 5545.
H.R. 5545:
October 25, 2000........................  Referred to the House
                                           Committee on Small Business.
                                           (Several bills are engrossed
                                           by reference in the H.R. 2614
                                           conference report: H. Rept.
                                           106-1004. This includes H.R.
                                           5538, the Minimum Wage Act of
                                           2000; H.R. 5542, the Taxpayer
                                           Relief Act of 2000; H.R.
                                           5543, the Medicare, Medicaid,
                                           and SCHIP Benefits
                                           Improvement and Protection
                                           Act of 2000; H.R. 5544, the
                                           Pain Relief Promotion Act of
                                           2000; and H.R. 5545, the
                                           Small Business
                                           Reauthorization Act of 2000.
                                           The bill texts are included
                                           in the conference report).
H.R. 2614:
October 26, 2000........................  Conference report H. Rept. 106-
                                           1004 filed. (text of
                                           conference report: CR October
                                           25, 2000 H10909-11188)
October 26, 2000........................  Rules Committee Resolution H.
                                           Res 652 Reported to House.
                                           Rule provides for
                                           consideration of the
                                           conference report to H.R.
                                           2614 with 1 hour of general
                                           debate. Previous question
                                           shall be considered as
                                           ordered without intervening
                                           motions except motion to
                                           recommit with or without
                                           instructions. Waives points
                                           of order against the
                                           conference report and against
                                           its consideration.
October 26, 2000........................  Conferees agreed to file
                                           conference report.
October 26, 2000........................  Conference papers: Senate
                                           report and manager's
                                           statement held at the desk in
                                           Senate.
October 26, 2000........................  Rule H. Res. 652 passed House.
October 26, 2000........................  Mr. Talent brought up
                                           conference report H. Rept.
                                           106-1004 for consideration
                                           under the provisions of H.
                                           Res. 652.
October 26, 2000........................  The previous question was
                                           ordered without objection.
October 26, 2000........................  On agreeing to the conference
                                           report Agreed to by the Yeas
                                           and Nays: 237-174, 1 Present
                                           (Roll no 560).
                                           (consideration: CR H11243-
                                           11264).
October 26, 2000........................  Motions to reconsider laid on
                                           the table Agreed to without
                                           objection.
October 26, 2000........................  Motion to proceed to
                                           consideration of measure
                                           agreed to in Senate by Yea-
                                           Nay Vote. 55-40. Record Vote
                                           Number: 286. (consideration:
                                           CR S11097-11098).
October 26, 2000........................  Motion to proceed to
                                           consideration of conference
                                           report to accompany H.R. 2614
                                           agreed to by Unanimous
                                           Consent.
October 26, 2000........................  Conference report considered
                                           in Senate by motion.
                                           (consideration: CR S11098-
                                           11100, S11104, S11107-11111)
October 31, 2000........................  Motion to proceed to
                                           consideration of conference
                                           report to accompany H.R. 2614
                                           agree to by Unanimous
                                           Consent.
October 31, 2000........................  Conference report considered
                                           in Senate by motion. (The
                                           H.R. 2614 conference report
                                           [H. Rept. 106-1004]
                                           incorporated several bills.
                                           This included H.R. 5538--
                                           Minimum Wage; H.R. 5542--
                                           Taxpayer Relief; H.R. 5543--
                                           Medicare, Medicaid, and SCHIP
                                           Benefits Improvement and
                                           Protection; H.R. 5344--Pain
                                           Relief Promotion; and H.R.
                                           5545--Small Business
                                           Reauthorization. H.R. 5661 is
                                           a subsequent Medicare,
                                           Medicaid and SCHIP Benefits
                                           Improvement and Protection
                                           bill. H.R. 5667 is a
                                           subsequent Small Business
                                           Reauthorization bill. H.R.
                                           4577, Consolidated
                                           Appropriations Act 2001,
                                           incorporates by reference the
                                           provisions of H.R. 5661, H.R.
                                           5667, and other bills. The
                                           text of these bills is
                                           printed in the H.R. 4577
                                           conference report: H. Rept.
                                           106-1033 [text of conference
                                           report: CR December 15, 2000
                                           H12100-12439].).
H.R. 5667:
December 15, 2000.......................  Referred to the House
                                           Committee on Small Business.
December 15, 2000.......................  Enacted by reference in H.R.
                                           4577 (H. Rept. 106-1033).
H.R. 4577:
December 15, 2000.......................  Conference report H. Rept. 106-
                                           1033 filed.
December 15, 2000.......................  Mr. Young (FL) brought up
                                           conference report H. Rept.
                                           106-1033 by previously agreed
                                           to special order.
December 15, 2000.......................  The previous question was
                                           ordered without objection.
December 15, 2000.......................  On agreeing to the conference
                                           report Agreed to by the Yeas
                                           and Nays: 292-60 (Roll no.
                                           603).
December 15, 2000:......................  Motions to reconsider laid on
                                           the table Agreed to without
                                           objection.
December 15, 2000.......................  Senate agreed to conference
                                           report by Unanimous Consent.
December 15, 2000.......................  Message on Senate action sent
                                           to the House.
December 15, 2000.......................  Cleared for White House.
December 15, 2000.......................  Presented to President.
December 21, 2000.......................  Signed by President as Pub. L.
                                           No. 106-554 (H.R. 4577,
                                           Consolidated Appropriations
                                           Act 2001, incorporates the
                                           provisions of several bills
                                           by reference. This includes
                                           H.R. 5656--Labor HHS
                                           Education Appropriations;
                                           H.R. 5657--Legislative Branch
                                           Appropriations; H.R. 5658--
                                           Treasury Appropriations; H.R.
                                           5666--Miscellaneous
                                           Appropriations--except
                                           section 123 relating to the
                                           enactment of H.R. 4904; H.R.
                                           5660--Commodity Futures
                                           Modernization; H.R. 5661--
                                           Medicare, Medicaid and SCHIP
                                           Benefits Improvement and
                                           Protection; H.R. 5662-
                                           Community Renewal Tax Relief
                                           and Medical Savings Accounts;
                                           H.R. 5663--New Markets
                                           Venture Capital Program
                                           (incorporating the provisions
                                           of H.R. 4530); and H.R. 5667--
                                           Small Business
                                           Reauthorization. The text of
                                           these bills is printed in the
                                           H.R. 4577 conference report:
                                           H. Rept. 106-1033 [text of
                                           conference report: CR
                                           December 15, 2000 H12100-
                                           12439].)
------------------------------------------------------------------------

                          Need for Legislation

    The purpose of H.R. 4530 the ``New Markets Venture Capital 
Program Act of 2000,'' is to promote economic development, 
wealth and job opportunities in low income (LI) areas by 
encouraging venture capital investments and offering technical 
assistance to small enterprises. The central goal of the 
legislation is to fulfill the unmet equity investment needs of 
small enterprises primarily located in LI areas.
    The bill creates a development venture capital program by 
amending the Small Business Investment Act to authorize the 
U.S. Small Business Administration (SBA) to enter into 
participation agreements with 10 to 20 New Markets Venture 
Capital (NMVC) companies in a public/private partnership. It 
further authorizes SBA to guarantee debentures of NMVC 
companies to enable them to make venture capital investments in 
smaller enterprises in LI areas. And it authorizes SBA to make 
grants to NMVC companies, and to other entities, for the 
purpose of providing technical assistance to smaller 
enterprises that are financed, or expected to be financed, by 
such companies.
    The Act will also enhance the ability of existing Small 
Business Investment Companies (SBICs) to invest in LI areas. It 
allows them to have access to the leverage capital authorized 
under the program, without entering into a participation 
agreement with SBA to act as an NMVC company. H.R. 4530 also 
enhances the ability of existing Specialized Small Business 
Investment Companies (SSBICs) to invest in LI areas. It allows 
them to have access to the operational assistance grant funds 
authorized under the program, also without entering into a 
participation agreement with SBA to act as an NMVC company.

                      Section-by-Section Analysis


Section 1. Short Title

    Designates the bill as the ``New Markets Venture Capital 
Program Act of 2000.''

Section 2. New Markets Venture Capital Program

    This Section amends Title III of the Small Business 
Investment Act of 1958 by adding new Sections 351 through 368 
to establish the ``New Markets Venture Capital Program.''
    H.R. 5545 will add the following new sections to the Small 
Business Investment Act:

Section 351. Definitions

    Establishes definitions for developmental venture capital, 
New Markets Venture Capital Companies, low- or moderate-income 
geographic area, operational assistance, participation 
agreement, and Specialized Small Business Investment Companies 
as used in the legislation.
    ``Developmental venture capital'' is defined as equity 
capital investment in small businesses, with a primary 
objective of fostering economic development in low income 
geographic areas. For the purposes of this Act, the Committee 
considers equity capital investments to mean stock of any class 
in a corporation, stock options, warrants, limited partnership 
interests, membership interests in a limited liability company, 
joint venture interests, or subordinated debt with equity 
features if such debt provides only for interest payments 
contingent upon earnings. Such investments must not require 
amortization. They may be guaranteed; but neither the Equity 
capital investment nor the guaranteed may be secured.
    A ``New Markets Venture Capital Company'' is defined as a 
company that has been approved by the Administration to operate 
under the New Markets Venture Capital Program, and has entered 
into a participation agreement with the Administration to make 
equity investments and provide technical assistance to small 
enterprises located in low- or moderate-income areas.
    The term ``low income geographic area'' means a census 
tract, or the equivalent county division as defined by the 
Bureau of the Census for purpose of defining poverty areas, in 
which the poverty rate is not less than 20 percent. In those 
areas in a metropolitan area 50 percent or more of the 
households must have an income equal to less than 60 percent of 
the median income for the area. In rural areas the median 
household income for a tract must not exceed 80 percent of the 
statewide median household income. This definition also 
includes any area located within a HUBZone, an Urban 
Empowerment Zone or an Urban Enterprise Community, or a Rural 
Empowerment Zone or a Rural Enterprise Community.
    The term ``low income individual'' is included for the 
purpose of allowing waivers of the low income area requirement 
for areas of significant economic disadvantage that may not 
otherwise qualify. A low income individual is defined as 
someone whose income does not exceed 80 percent of the area 
median income in metropolitan areas, or 80 percent of either 
the area or statewide median income in rural areas.
    The term ``operational assistance'' is defined as 
management, marketing, and other technical assistance that 
assists a small business concern with business development.
    ``Participation agreement'' is defined as an agreement 
between the Administration and an NMVC Company detailing the 
company's operating plan and investment criteria; and requiring 
that investments be made in smaller enterprises at least 80 
percent of which are located in low income geographic areas.
    ``Specialized Small Business Investment Company'' means any 
small business investment company that was licensed under 
section 301(d) as in effect before September 30, 1996.

Section 352. Purposes

    Describes the purposes of the Act, which are:
          (1) to promote economic development and the creation 
        of wealth and job opportunities in low- or moderate-
        income geographic areas and among individuals living in 
        such areas by encouraging developmental venture capital 
        investments in smaller enterprises primarily located in 
        such areas; and
          (2) to establish a developmental venture capital 
        program, with the mission of addressing the unmet 
        equity investment needs of small entrepreneurs located 
        in low- or moderate-income areas; to be administered by 
        the Small Business Administration; to enter into a 
        participation agreement with NMVC companies; to 
        guarantee debentures of NMVC companies to enable each 
        such company to make developmental venture capital 
        investments in smaller enterprises in low- or moderate-
        income geographic areas; and to make grants to NMVC 
        companies for the purpose of providing operational 
        assistance to smaller enterprises financed, or expected 
        to be financed, by such companies.

Section 353. Establishment

    Authorizes the SBA to establish the NMVC Program, under 
which the SBA may form New Markets Venture Capital companies by 
entering into participation agreements with firms that are 
granted final approval under the requirements set forth in 
Section 354 and formed for the purposes outlined in Section 
352.
    This Section also authorizes SBA to guarantee the 
debentures issued by the NMVC Companies as provided in Section 
355; and to make operational assistance grants to NMVC 
Companies and other entities in accordance with Section 358.

Section 354. Selection of the New Markets Venture Capital Companies

    Establishes the criteria to be followed by SBA in selecting 
the NMVC Companies. This section provides for specific 
selection criteria to be developed by the SBA--based on the 
criteria enumerated in this legislation--and designed to ensure 
that a variety of investment models are chosen and that 
appropriate public policy goals are addressed. Geographic 
dispersion must also be taken into account in the selection 
process.
    H.R. 5455 requires Program participants to satisfy the 
following application requirements:
          (1) Each NMVC must be a newly formed, for-profit 
        entity with at least $5 million of contributed capital 
        or binding capital commitments from non-Federal 
        investors, and with the primary objective of economic 
        development in low- or moderate-income geographic 
        areas.
          (2) Each NMVC's management team must be experienced 
        in some form of community development or venture 
        capital financing.
          (3) Each NMVC must concentrate its activities on 
        serving its investment areas, and submit a proposal 
        that will expand economic opportunities and address and 
        the unmet capital needs within the investment areas.
          (4) Each applicant must submit a strong proposal to 
        provide operational assistance, including the possible 
        use of outside, licensed professionals.
          (5) Each NMVC must have binding commitments (in cash 
        or in-kind) for operational assistance and overhead, 
        payable or available over a multi-year period not to 
        exceed 10 years, in an amount equal to 30% of its 
        committed and contributed capital. These commitments 
        may be from any non-SBA source and the cash portion may 
        be invested in an annuity payable semi-annually over a 
        multi-year period not to exceed 10 years.
    The Committee is well aware that it will be difficult for 
some NMVCs to raise their entire operational assistance match 
during the application stage. Those NMVCs that are unable to 
raise the required match, but have submitted a reasonable plan 
to the Administrator to meet the requirement, may be granted a 
conditional approval from the Administrator and be allowed to 
draw one dollar of federal matching funds for every dollar of 
private funds raised provided that (for the purpose of final 
approval) they raise at least 20 percent of the required 
matching funds, and have at least 20 percent of the match on 
hand when applying for additional grant funds.
    The Committee believes that it is important to give NMVCs 
the flexibility to obtain the required private operational 
assistance funds, however, from a safety and soundness 
standpoint, federal assistance funds should not be placed at 
greater risk than private assistance funds.
    This conditional approval shall be made with the 
expectation that the required capital funding commitments will 
be obtained within two years of the conditional approval.
    The bill also authorizes SBA to select firms that have 
experience with investing in enterprises located in low income 
areas to participate as NMVCs. SBA will enter into an agreement 
with each NMVC setting forth the specific terms of that firm's 
participation in the program. Each agreement will be tailored 
to the particular NMVC's operations and will be based on the 
NMVC's own proposal, submitted as part of the NMVC's 
application form. The agreement will require that investments 
be made by the NMVC in smaller enterprises, at least 80% of 
which are located in low income geographic areas.
    In order for an investment to be counted toward the 80% 
goal under H.R. 5545, the investment must be made in a small 
business concern located in an LI area. This ensures that the 
New Markets Venture Capital Company Program will focus 
investment capital where it is most needed, rather than 
duplicating existing SBA programs.

Section 359. Bank Participation

    Allows any national bank, and any member bank of the 
Federal Reserve System to invest in an NMVC company formed 
under this legislation so long as the investment would not 
exceed 5 percent of the capital and surplus of the bank.
    Banks that are not members of the federal Reserve system 
are allowed to invest in an NMVC company formed under this 
legislation so long as such investment is allowed under 
applicable State law, and so long as the investment would not 
exceed 5 percent of the capital and surplus of the bank.

Section 360. Federal Financing Bank

    Establishes that Section 318 of the Small Business 
Investment Act does not apply to any NMVC Company created under 
this legislation.

Section 361. Reporting Requirements

    Establishes reporting requirements for the NMVC Companies. 
Specifically, the NMVC companies are required to provide to SBA 
such information as the Administration requires, including: 
information related to the measurement criteria that the NMVC 
proposed in its program application; and, for each case in 
which the NMVC makes an investment or a grant to a business 
located outside of an LMI area, a report on the number and 
percentage of employees of the business who reside in an LMI 
area.

Section 362. Examinations

    Requires that each NMVC company shall be subjected to 
examinations made at the direction of the Investment Division 
of SBA. This section allows for examinations to be conducted 
with the assistance of a private sector entity that has both 
the necessary qualifications and expertise.
    It is the intent of the Committee that the oversight of the 
NMVC program be modeled after that developed for the SBIC 
program and administered by SBA's Investment Division. 
Oversight should include a close working relationship between 
SBA analysts and NMVC management teams, detailed reporting 
requirements, frequent on-site examinations to evaluate 
performance and conformance with the operating plan, and 
careful analysis of the firm's economic impact.

Section 363. Injunctions and Other Orders

    Grants SBA the power of injunction over NMVC companies and 
the authority to act as a trustee or receiver of a company if 
appointed by a court.
    This section of the legislation closely tracks the existing 
injunction provision (Section 311) of the Small Business 
Investment Act of 1958. Again, it is the Committee's intent 
that oversight of the NMVC program be modeled after that 
developed for the SBIC program and administered by SBA's 
Investment Divisions. This oversight should include a close 
working relationship between SBA analysts and NMVC management 
teams, detailed reporting requirements, frequent on-site 
examinations to evaluate performance and conformance with the 
operating plan, and careful analysis of the firm's economic 
impact.

Section 364. Additional Penalties for Noncompliance

    Grants SBA or the Attorney General the authority to file a 
cause of action against an NMVC company for non-compliance. 
Should a court find that a company violated or failed to comply 
with provisions of this legislation or other provisions of the 
Small Business Investment Act of 1958, this section grants SBA 
the authority to void the participation agreement between the 
company and the SBA.

Section 365. Unlawful Acts and Omissions; Breach of Fiduciary Duty

    Defines what is to be considered as a violation of this 
legislation, who is considered to have a fiduciary duty, and 
who is ineligible to serve as an officer, director, or employee 
of any NMVC company because of unlawful acts.
    This section of the legislation closely tracks the unlawful 
acts provision (Section 314) of the Small Business Investment 
Act of 1958. It is the Committee's intent to grant SBA the same 
authority over NMVC companies that it has over Small Business 
Investment Companies with respect to unlawful acts and the 
breach of fiduciary responsibility.

Section 366. Removal or Suspension of Directors or Officers

    Grants SBA the authority to use the procedures set forth in 
Section 313 of the Small Business Investment Act of 1958 to 
remove or suspend any director or officer of an NMVC company.

Section 367. Regulations

    Authorizes the Small Business Administration to issue such 
regulations as it deems necessary to carry out the provisions 
of the legislation.

Section 368. Authorization of Appropriations

    Authorizes appropriations for the Program for Fiscal Years 
2001 through 2006. This section authorizes such subsidy budget 
authority as necessary to guarantee $150,000,000 of debentures 
and $30,000,000 to make operational assistance grants.
    The Committee estimates that the Program will only require 
a one-time appropriation of $45 million--$15 million for loan 
guarantees and $30 million for operational assistance grants. 
This $15 million will allow SBA to back $150 million in loans 
to small business in low- or moderate-income areas.

Section 368(c). Conforming Amendment

    Makes a conforming change to the Small Business Investment 
Act of 1958 to account for the changes made by this 
legislation.

Section 368(d). Calculation of Maximum Amount of SBIC Leverage

    Allows Small Business Investment Companies (``SBICs'') to 
obtain additional access to leverage outside the statutory 
caps. The exemption of the SBICs, however, is limited only to 
investments they make in LMI areas.
    This section provides that investments made in LI areas 
will not apply against the leverage cap of the individual SBIC 
as long as the total amount invested through the program does 
not exceed 50% of the SBIC's paid-in-capital.

Section 368(e). Bankruptcy Exemption for New Markets Venture Capital 
        Companies

    Adds NMVC companies to the list of entities that may not be 
considered a debtor under a Title 11 bankruptcy proceeding.

Section 368(f). Federal Savings Associations

    Amends the ``Home Owners Loan Act'' to allow federal 
savings associations to invest in an NMVC company formed under 
this legislation so long as the investment would not exceed 5 
percent of the capital and surplus of the savings association.

5.21  H.R. 4890--The Small Business Contract Equity Act of 2000

                           Legislative History
------------------------------------------------------------------------
                  Date                                Action
------------------------------------------------------------------------
H.R. 4890:
July 19, 2000...........................  Referred to the Committee on
                                           Small Business, and in
                                           addition to the Committee on
                                           Government Reform, for a
                                           period to be subsequently
                                           determined by the Speaker, in
                                           each case for consideration
                                           of such provisions as fall
                                           within the jurisdiction of
                                           the committee concerned.
July 19, 2000...........................  Referred to House Small
                                           Business.
July 27, 2000...........................  Committee Consideration and
                                           Mark-up Session Held.
July 27, 2000...........................  Ordered to be Reported by
                                           Voice Vote.
July 19, 2000...........................  Referred to House Government
                                           Reform.
July 21, 2000...........................  Referred to the Subcommittee
                                           on Government Management,
                                           Information and Technology.
------------------------------------------------------------------------

    The Small Business Reauthorization Act of 1997 requires 
federal agencies wishing to consolidate two or more procurement 
requirements in a bundled contract to analyze whether the 
savings from the bundle will be substantial and measurable. The 
Small Business Administration developed regulations to 
implement this requirement. Despite these efforts, contract 
bundling continues unabated and it remains unclear whether the 
government actually is achieving measurable savings or other 
benefits from the bundling of contracts. For example, testimony 
before the Committee raised serious concerns whether the Marine 
Corps regional cook and chill contract for food service 
constitutes an improvement over the existing base-by-base food 
service arrangements.
    The Small Business Reauthorization Act of 1997 was a start 
but did not provide sufficient teeth to prevent procuring 
agencies from bundling contracts unwisely. The Small Business 
Contract Equity Act of 2000 is an effort to provide the Small 
Business Administration with the teeth necessary to stop 
unwarranted contract bundling. The SBA will be given the 
authority to approve the bundling analyses that the procuring 
agency must perform pursuant to the Small Business 
Reauthorization Act of 1997. If the SBA finds the study to be 
inadequate, the agency is not permitted to issue the 
solicitation until it has obtained the approval of the 
Administrator. The bill further provides that the Administrator 
may not approve any agency study for any bundled contract for 
one fiscal year if the procuring agency has not met one or more 
of the small business prime contract utilization goals set 
forth in section 15(g)(2) of the Small Business Act (20% for 
small businesses, 5% for socially and economically 
disadvantaged businesses, and 5% for women-owned businesses).

5.22  H.R. 4897--Equity in Contracting for Women Act of 2000, Public 
        Law No. 106-554

                           Legislative History
------------------------------------------------------------------------
                  Date                                Action
------------------------------------------------------------------------
H.R. 4897:
July 19, 2000...........................  Referred to the House
                                           Committee on Small Business.
July 27, 2000...........................  Committee Consideration and
                                           Mark-up Session Held.
July 27, 2000...........................  Ordered to be Reported by
                                           Voice Vote.
September 21, 2000......................  Reported by the Committee on
                                           Small Business. H. Rept. 106-
                                           879.
September 21, 2000......................  Placed on the Union Calendar,
                                           Calendar No. 530.
October 25, 2000........................  Included in H.R. 5545.
H.R. 5545:
October 25, 2000........................  Referred to the House
                                           Committee on Small Business.
                                           (Several bills are engrossed
                                           by reference in the H.R. 2614
                                           conference report: H.REPT.
                                           106-1004. This includes H.R.
                                           5538, the Minimum Wage Act of
                                           2000; H.R. 5542, the Taxpayer
                                           Relief Act of 2000; H.R.
                                           5543, the Medicare, Medicaid,
                                           and SCHIP Benefits
                                           Improvement and Protection
                                           Act of 2000: H.R. 5544, the
                                           Pain Relief Promotion Act of
                                           2000; and H.R. 5545, the
                                           Small Business
                                           Reauthorization Act of 2000.
                                           The bill texts are included
                                           in the conference report.).
H.R. 2614:
October 26, 2000........................  Conference report H. Rept. 106-
                                           1004 filed. (text of
                                           conference report: CR 10/25/
                                           2000 H10909-11188) Rules
                                           Committee Resolution H. Res.
                                           652 Reported to House. Rule
                                           provides for consideration of
                                           the conference report to H.R.
                                           2614 with 1 hour of general
                                           debate. Previous question
                                           shall be considered as
                                           ordered without intervening
                                           motions except motion to
                                           recommit with or without
                                           instructions. Waives points
                                           of order against the
                                           conference report and against
                                           its consideration.
October 26, 2000........................  Conferees agreed to file
                                           conference report.
October 26, 2000........................  Conference papers: Senate
                                           report and manager's
                                           statement held at the desk in
                                           Senate.
October 26, 2000........................  Rule H. Res. 652 passed House.
October 26, 2000........................  Mr. Talent brought up
                                           conference report H. Rept.
                                           106-1004 for consideration
                                           under the provisions of H.
                                           Res. 652.
October 26, 2000........................  The previous question was
                                           ordered without objection.
October 26, 2000........................  On agreeing to the conference
                                           report Agreed to by the Yeas
                                           and Nays: 237-174, 1 Present
                                           (Roll no. 560).
                                           (consideration: CR H11243-
                                           11264).
October 26, 2000........................  Motions to reconsider laid on
                                           the table Agreed to without
                                           objection.
October 26, 2000........................  Motion to proceed to
                                           consideration of measure
                                           agreed to in Senate by Yea-
                                           Nay Vote. 55-40. Record Vote
                                           Number: 286. (consideration:
                                           CR S11097-11098).
October 26, 2000........................  Motion to proceed to
                                           consideration of conference
                                           report to accompany H.R. 2614
                                           agreed to by Unanimous
                                           Consent.
October 26, 2000........................  Conference report considered
                                           in Senate by motion.
                                           (consideration: CR S11098-
                                           11100, S11104, S11107-11111).
October 31, 2000........................  Motion to proceed to
                                           consideration of conference
                                           report to accompany H.R. 2614
                                           agreed to by Unanimous
                                           Consent.
October 31, 2000........................  Conference report considered
                                           in Senate by motion. [The
                                           H.R. 2614 conference report
                                           (H. Rept. 106-1004]
                                           incorporated several bills.
                                           This included H.R. 5538--
                                           Minimum Wage; H.R. 5542--
                                           Taxpayer Relief; H.R. 5543--
                                           Medicare, Medicaid, and SCHIP
                                           Benefits Improvement and
                                           Protection; H.R. 5544--Pain
                                           Relief Promotion; and H.R.
                                           5545--Small Business
                                           Reauthorization. H.R. 5661 is
                                           a subsequent Medicare,
                                           Medicaid and SCHIP Benefits
                                           Improvement and Protection
                                           bill. H.R. 5667 is a
                                           subsequent Small Business
                                           Reauthorization bill. H.R.
                                           4577, Consolidated
                                           Appropriations Act 2001,
                                           incorporates by reference the
                                           provisions of H.R. 5661, H.R.
                                           5667, and other bills. The
                                           text of these bills is
                                           printed in the H.R. 4577
                                           conference report: H. Rept.
                                           106-1033 [text of conference
                                           report: CR 12/15/2000 H12100-
                                           12439].).
H.R. 5667:
December 15, 2000.......................  Referred to the House
                                           Committee on Small Business
                                           incorporating the provisions
                                           of H.R. 4897.
December 15, 2000.......................  Enacted by reference in H.R.
                                           4577 (H. Conf. Rept. 106-
                                           1033).
H.R. 4577:
December 15, 2000.......................  Conference report H. Rept. 106-
                                           1033 filed.
December 15, 2000.......................  Mr. Young (FL) brought up
                                           conference report H. Rept.
                                           106-1033 by previously agreed
                                           to special order.
December 15, 2000.......................  The previous question was
                                           ordered without objection.
December 15, 2000.......................  On agreeing to the conference
                                           report Agreed to by the Yeas
                                           and Nays: 292-60 (Roll no.
                                           603).
December 15, 2000.......................  Motions to reconsider laid on
                                           the table Agreed to without
                                           objection.
December 15, 2000.......................  Senate agreed to conference
                                           report by Unanimous Consent.
December 15, 2000.......................  Message on Senate action sent
                                           to the House.
December 15, 2000.......................  Cleared for White House.
December 15, 2000.......................  Present to President.
December 21, 2000.......................  Signed by President. (H.R.
                                           4577, Consolidated
                                           Appropriations Act 2001,
                                           incorporates the provisions
                                           of several bills by
                                           reference. This includes H.R.
                                           5656--Labor HHS Education
                                           Appropriations; H.R. 5657--
                                           Legislative Branch
                                           Appropriations; H.R. 5658--
                                           Treasury Appropriations; H.R.
                                           5666--Miscellaneous
                                           Appropriations--except
                                           section 123 relating to the
                                           enactment of H.R. 4904; H.R.
                                           5660--Commodity Futures
                                           Modernization; H.R. 5661--
                                           Medicare, Medicaid and SCHIP
                                           Benefits Improvement and
                                           Protection; H.R. 5662--
                                           Communmity Renewal Tax Relief
                                           and Medical Savings Accounts;
                                           H.R. 5663--New Markets
                                           Venture Capital Program; and
                                           H.R. 5667--Small Business
                                           Reauthorization. The text of
                                           these bills is printed in the
                                           H.R. 4577 conference report:
                                           H Rept. 106-1033 [text of
                                           conference report: CR 12/15/
                                           2000 H12100-12439].)
------------------------------------------------------------------------

                          Need for Legislation

    There are approximately nine million women-owned businesses 
according to the statistics of the United States Small Business 
Administration. Women-owned businesses employ over 27 million 
people and are a vital element in the unprecedented growth and 
productivity of the American economy. Nearly half of the 
business owned by women provide goods and services to the 
federal government according to the National Foundation for 
Women Business Owners.
    From 1997 to 1999, the number of federal government 
contracts awarded to women decreased by more than 38 percent. 
So while the private sector was increasing the use of women-
owned small businesses, the federal government utilization was 
decreasing.
    Congress recognized the valuable contribution of women-
owned businesses when it established a five percent procurement 
goal in the Federal Acquisition Streamling Act of 1994 
(`FASA'). However, data from the Federal Procurement Data 
System shows that the highest utilization of women-owned 
businesses was 2.47 percent in 1999--not even half of the 
statutory goal. The Committee finds that this simply is 
unacceptable.
    The Committee has heard testimony concerning the reasons 
for the failure of the federal government to achieve the five 
percent goal. Contract bundling, or the consolidation of 
smaller contract requirements into larger contracts, makes it 
difficult for women-owned small businesses to file responsive 
bids to bundled solicitations. The federal government also is 
increasing the use of the Federal Supply Schedule which 
increases the efficiency for purchasing commercial off-the-
shelf items. However, only 30 percent of the contractors on 
Federal Supply Schedules are small businesses and an even 
smaller amount are women-owned small businesses. Nothing in the 
Federal Supply Schedule contracting process mandates that a 
contracting officer select specific contractors for an award. 
Thus, being on the Federal Supply Schedule does not guarantee 
that the contractor will be used for the purchase of goods and 
services. The Federal Supply Schedule, while increasing the 
efficiency of government procurements for commercially 
available items, also may perpetuate the use of well-known 
firms that are not women-owned businesses.
    As the Committee has seen on numerous occasions, the drive 
for efficiency in procurement often places Congressionally-
mandated contracting goals for small businesses in general, and 
women-owned businesses in particular, in jeopardy. Current 
procurement practices enable contracting officers to reserve 
competition among small businesses for contracts in value 
between $2,500 and $100,000 if the contracting officer finds 
that there will be at least two responsible small businesses to 
bid on the contract. The Committee believes that a similar 
mechanism should be established for women-owned small 
businesses in historically underrepresented industries. This 
would help contracting officers meet the procurement goal for 
women established in FASA while still ensuring that government 
receives the benefits of competitive bidding for goods and 
services.
    The Committee believes that this action is necessary even 
though the President issued Executive Order 13,157 on May 23, 
2000 affirming the Administration's goal of increasing 
opportunities for women-owned small business. The Executive 
order provides a mechanism by which the Small Business 
Administration and the Office of Federal Procurement Policy 
within the Office of Management and Budget can monitor and 
measure compliance with the women-owned procurement goal in 
FASA. The Executive Order also would authorize the collection 
and dissemination of best practices among agencies for 
achieving the procurement goal established in FASA. However, 
the Executive order does not provide any tool by which 
contracting officers can identify and utilize women-owned small 
business. The Committee believes that the goals expressed in 
FASA and reaffirmed in the Executive Order will not be achieved 
without the use of some mandatory tool which enables 
contracting officers to identify women-owned small businesses 
and establish competition among those businesses for the 
provision of goods and services to the federal government.

                      Section-by-Section Analysis


Section 1. Short Title

    Designates the bill as the `Equity in Contracting for Women 
Act of 2000'.

Section 2. Procurement Program for Women's Small Business Concerns

    This section modifies section 8 of the Small Business Act 
by adding a new subsection (m) to establish a procurement 
program for Women's Small Business Concerns.
    Paragraph (1) gives the same definition to a ``contracting 
officer'' as provided under the Office of Federal Procurement 
Policy Act.
    Paragraph (1) also defines a `small business concern owned 
and controlled by women' as one that is at least 51 percent 
owned and controlled by women who are economically 
disadvantaged. The Committee intends that the Small Business 
Administration develop standards for the determination of 
economic disadvantage which are consistent with other Small 
Business Administration programs designed to assist 
`economically disadvantaged' small business concerns.
    Paragraph (2) authorizes federal agencies to reserve any 
contract for competition by small business concerns owned and 
controlled by women if the following criteria are satisfied: 
(a) the firm is a responsible bidder; (b) the contracting 
officer expects that two or more small business concerns owned 
and controlled by women will submit bids on the contract; (c) 
the contract is for the procurement of goods and services in an 
industry identified by the Administrator of the Small Business 
Administration as one in which small business concerns owned 
and controlled by women are historically underrepresented; (d) 
if the anticipated award amount of the contract does not exceed 
$5,000,000 for a manufacturing business or $3,000,000 for all 
other contracts; (e) if the contracting officer can anticipate 
that the award will be made at reasonable price; and (f) if the 
concern is certified as a small business concern owned and 
controlled by women.
    The Committee intends that a certification by any federal, 
state or local governmental entity should satisfy this last 
criterion as long as the certification tracks the definition of 
small business concern owned and controlled by women as used in 
this Act. However, the Committee does not intend for the 
Administrator to establish a certification program for small 
business concerns owned and controlled by women.
    In addition, the Committee expects that the contracting 
officers will accept self-certification so long as the 
documentation provided along with the response to the 
solicitation enables the contracting officer to determine that 
the bidder is a small business concern owned and controlled by 
women as used in this Act. The Committee expects that the 
Administrator will develop documentation standards that will be 
utilized by all contracting officers. For purposes of 
developing standards of documentation, the Committee does not 
expect that the Administrator should duplicate the 
documentation requirements for its 8(a) program. Nevertheless, 
the documentation should be sufficiently demanding so that a 
contracting officer can pierce the veil of various business 
enterprises to ensure that the bidder meets the definition set 
forth in this Act. Thus, the Committee expects that 
documentation would enable the contracting officer to apply 
attribution rules set forth in Title 13 of the Code of Federal 
Regulations to determine whether the bidder is a small business 
concern owned and controlled by women.
    The Committee does not intent that the contracting program 
established in this Act provide a basis for contracting 
officers to award contracts on a sole-source basis to small 
business concerns owned and controlled by women. Rather, the 
Committee intends that contracting officers utilize the 
contracting mechanism established in this Act to identify small 
business concerns owned and controlled by women in industries 
in which they are historically represented as prime contractors 
and competitively bid those contracts. Ultimately, the 
Committee expects that the process for identifying these small 
business concerns owned and controlled by women will lead to 
greater utilization of small business concerns owned and 
controlled by women throughout the federal government and not 
just in contracts designated in this Act.
    Paragraph (3) requires that the Administrator conduct a 
study in order to identify those industries in which small 
business concerns owned and controlled by women are 
underrepresented in obtaining federal contracts. The Committee 
expects the Administrator's study to focus on those industries 
in which small business concerns owned and controlled by women 
are underrepresented at the prime contractor level. The study 
shall evaluate, on an industry-by-industry basis the specific 
industries and regions of the United States that are 
underrepresented. In order for the program established in this 
Act to conform with Adarand Constructors v. Pena, 515 U.S. 200 
(1995), the Committee expects that the Administrator's study 
will mirror the `benchmarking' study performed by the 
Department of Commerce for small disadvantaged businesses.
    Pargraph 4 requires the Administrator to establish 
procedures for verifying the eligibility of businesses for the 
program established by this Act. The Committee reiterates its 
intent that the Act not be used by the Administrator to 
establish a certification program. Instead, the Committee 
expects the Administrator to develop regulations which will 
efficiently and rapidly resolve disputes over eligibility 
without unduly burdening small businesses.
    Paragraph 4 also requires the Administrator to develop 
regulations by which the Small Business Administration can 
quickly and in a cost-effective manner verify the accuracy of 
any certification, such as, but not limited to, the development 
of lists of other federal, state, and local certifications that 
it will accept.
    Paragraph 4 also authorizes, but does not mandate, the 
Administrator to provide for periodic examinations of the 
program including random program examinations in order to 
determine that respondents to solicitations are businesses 
eligible under this Act. The Committee expects that such 
examinations will not be intrusive but will be sufficient to 
determine that other governmental organizations are providing 
adequate certifications and that self-certification is not 
being abused. The Committee does not intend that these periodic 
or random examinations be transformed into an ongoing 
certification program.
    Paragraph 4 also requires government agencies, including 
those specified in the Act, to provide information and 
assistance to the Administrator in order to carry out the 
purposes of the Act.
    Paragraph (4) also makes clear that small business concerns 
will be subject to penalties beyond those set forth in the 
Small Business Act should they misrepresent their status under 
this Act.
5.23  H.R. 4923--Community Renewal and New Markets Act of 2000, Public 
        Law No. 106-554

                           Legislative History
------------------------------------------------------------------------
                  Date                                Action
------------------------------------------------------------------------
H.R. 4923:
July 24, 2000...........................  Referred to the Committee on
                                           Ways and Means, and in
                                           addition to the Committees on
                                           Banking and Financial
                                           Services, Small Business, and
                                           Commerce, for a period to be
                                           subsequently determined by
                                           the Speaker, in each case for
                                           consideration of such
                                           provisions as fall within the
                                           jurisdiction of the committee
                                           concerned.
July 24, 2000...........................  Referred to House Ways and
                                           Means
July 24, 2000...........................  Referred to House Banking and
                                           Financial Services.
July 31, 2000...........................  Referred to the Subcommittee
                                           on Housing and Community
                                           Opportunity.
July 24, 2000...........................  Referred to House Small
                                           Business.
July 24, 2000...........................  Referred to House Commerce.
July 25, 2000...........................  Mr. English moved to suspend
                                           the rules and pass the bill.
July 25, 2000...........................  Considered under suspension of
                                           the rules. (consideration: CR
                                           H6797-6841).
July 25, 2000...........................  On motion to suspend the rules
                                           and pass the bill Agreed to
                                           by the Yeas and Nays: (\2/3\
                                           required): 394-27 (Roll no.
                                           430). (text: CR H6797-6816).
July 25, 2000...........................  Motion to reconsider laid on
                                           the table Agreed to without
                                           objection.
July 26, 2000...........................  Received in the Senate.
July 27, 2000...........................  Read the first time. Placed on
                                           Senate Legislative Calendar
                                           under Read the First Time.
September 5, 2000.......................  Read the second time: Placed
                                           on Senate Legislative
                                           Calendar under General
                                           Orders. Calendar No. 780.
H.R. 5542:
October 25, 2000........................  Referred to the Committee on
                                           Ways and Means, and in
                                           addition to the Committees on
                                           Education and the Workforce,
                                           Banking and Financial
                                           Services, and the Budget, for
                                           a period to be subsequently
                                           determined by the Speaker, in
                                           each case for consideration
                                           of such provisions as fall
                                           within the jurisdiction of
                                           the committee concerned.
October 25, 2000........................  Referred to House Ways and
                                           Means.
October 25, 2000........................  Referred to House Education
                                           and the Workforce.
November 14, 2000.......................  Referred to the Subcommittee
                                           on Employer-Employee
                                           Relations. (Several bills are
                                           incorporated in the H.R. 2614
                                           conference report: H.Rept.
                                           106-1004. This includes H.R.
                                           5538, the Minimum Wage Act of
                                           2000; H.R. 5542, the Taxpayer
                                           Relief Act of 2000; H.R.
                                           5543, the Medicare, Medicaid,
                                           and SCHIP Benefits
                                           Improvement and Protection
                                           Act of 2000; H.R. 5544, the
                                           Pain Relief Promotion Act of
                                           2000; and H.R. 5545, the
                                           Small Business
                                           Reauthorization Act of 2000.
                                           The bill texts are included
                                           in the conference report.).
October 25, 2000........................  Referred to House Banking and
                                           Financial Services.
October 25, 2000........................  Referred to the Subcommittee
                                           on Financial Institutions and
                                           Consumer Credit.
October 25, 2000........................  Referred to the Subcommittee
                                           on Housing and Community
                                           Opportunity.
October 25, 2000........................  Referred to House Budget.
H.R. 5545:
October 25, 2000........................  Referred to the House
                                           Committee on Small Business.
                                           (Several bills are engrossed
                                           by reference in the H.R. 2614
                                           conference report: H. Rept.
                                           106-1004. This includes H.R.
                                           5538, the Minimum Wage Act of
                                           2000; H.R. 5542, the Taxpayer
                                           Relief Act of 2000; H.R.
                                           5543, the Medicare, Medicaid,
                                           and SCHIP Benefits
                                           Improvement and Protection
                                           Act of 2000; H.R. 5544, the
                                           Pain Relief Promotion Act of
                                           2000; and H.R. 5545, the
                                           Small Business
                                           Reauthorization Act of 2000.
                                           The bill texts are included
                                           in the conference report.)
H.R. 2614:
October 26, 2000........................  Conference report H. Rept. 106-
                                           1004 filed. (text of
                                           conference report: CR 10/25/
                                           2000 H10909-11188).
October 26, 2000........................  Rules Committee Resolution H.
                                           Res. 652 Reported to House.
                                           Rule provides for
                                           consideration of the
                                           conference report to H.R.
                                           2614 with 1 hour of general
                                           debate. Previous question
                                           shall be considered as
                                           ordered without intervening
                                           motions except motion to
                                           recommit with or without
                                           instructions. Waives points
                                           of order against the
                                           conference report and against
                                           its consideration.
October 26, 2000........................  Conferees agreed to file
                                           conference report.
October 26, 2000........................  Conference papers: Senate
                                           report and manager's
                                           statement held at the desk in
                                           Senate.
October 26, 2000........................  Rule H. Res. 652 passed House.
October 26, 2000........................  Mr. Talent brought up
                                           conference report H. Rept.
                                           106-1004 for consideration
                                           under the provisions of H.
                                           Res. 652.
October 26, 2000........................  The previous question was
                                           ordered without objection.
October 26, 2000........................  On agreeing to the conference
                                           report Agreed to by the Yeas
                                           and Nays: 237-174, 1 Present
                                           (Roll No. 560)
                                           (consideration: CR H11243-
                                           11264).
October 26, 2000........................  Motions to reconsider laid on
                                           the table Agreed to without
                                           objection.
October 26, 2000........................  Motion to proceed
                                           consideration of measure
                                           agreed to in Senate by Yea-
                                           Nay Vote 55-40. Record Vote
                                           Number: 286. (consideration:
                                           CR S11097-11098).
October 26, 2000........................  Motion to proceed to
                                           consideration of conference
                                           report to accompany H.R. 2614
                                           agreed to by Unanimous
                                           Consent.
October 26, 2000........................  Conference report considered
                                           in Senate by motion.
                                           (consideration: CR S11098-
                                           11100, S11104, S11107-11111).
October 31, 2000........................  Motion to proceed to
                                           consideration of conference
                                           report to accompany H.R. 2614
                                           agreed to by Unanimous
                                           Consent.
October 31, 2000........................  Conference report considered
                                           in Senate by motion. (The
                                           H.R. 2614 conference report
                                           [H. Rept. 106-1004]
                                           incorporated several bills.
                                           This included H.R. 5538--
                                           Minimum Wage; H.R. 5542--
                                           Taxpayer Relief; H.R. 5543--
                                           Medicare, Medicaid, and SCHIP
                                           Benefits Improvement and
                                           Protection; H.R. 5544--Pain
                                           Relief Promotion; and H.R.
                                           5545--Small Business
                                           Reauthorization. H.R. 5661 is
                                           a subsequent Medicare,
                                           Medicaid and SCHIP Benefits
                                           Improvement and Protection
                                           bill. H.R. 5667 is a
                                           subsequent Small Business
                                           Reauthorization bill. H.R.
                                           4577, Consolidated
                                           Appropriations Act 2001,
                                           incorporates by reference the
                                           provisions of H.R. 5661, H.R.
                                           5667, and other bills. The
                                           text of these bills is
                                           printed in the H.R. 4577
                                           conference report: H. Rept.
                                           106-1033 [text of conference
                                           report: CR 12/15/2000 H12100-
                                           12439].).
H.R. 5662:
December 14, 2000.......................  Referred to the House
                                           Committee on Ways and Means.
                                           (Incorporated by reference
                                           and text printed in the H.R.
                                           4577 conference report: H.
                                           Rept. 106-1033 [text of
                                           conference report: CR 12/15/
                                           2000 H12100-12439]. H.R. 4577
                                           is the Consolidated
                                           Appropriations Act 2001.).
H.R. 4577:
December 15, 2000.......................  Conference report H. Rept. 106-
                                           1033 filed.
December 15, 2000.......................  Mr. Young (FL) brought up
                                           conference report H. Rept.
                                           106-1033 by previously agreed
                                           to special order.
December 15, 2000.......................  The previous question was
                                           ordered without objection.
December 15, 2000.......................  On agreeing to the conference
                                           report Agreed to by the Yeas
                                           and Nays: 292-60 (Roll No.
                                           603).
December 15, 2000.......................  Motions to reconsider laid on
                                           the table Agreed to without
                                           objection.
December 15, 2000.......................  Senate agreed to conference
                                           report by Unanimous Consent.
December 15, 2000.......................  Message on Senate action sent
                                           to the House.
December 15, 2000.......................  Cleared for White House.
December 15, 2000.......................  Presented to President.
December 21, 2000.......................  Signed by President as Pub. L.
                                           No. 106-554 (H.R. 4577,
                                           Consolidation Appropriations
                                           Act 2001, incorporates the
                                           provisions of several bills
                                           by reference. This includes
                                           H.R. 5656--Labor HHS
                                           Education Appropriations;
                                           H.R. 5657--Legislative Branch
                                           Appropriations; H.R. 5658--
                                           Treasury Appropriations; H.R.
                                           5666--Miscellaneous
                                           Appropriations--except
                                           section 123 relating to the
                                           enactment of H.R. 4904; H.R.
                                           5660--Commodity Futures
                                           Modernization; H.R. 5661--
                                           Medicare, Medicaid and SCHIP
                                           Benefits Improvement and
                                           Protection; H.R. 5662--
                                           Community Renewal Tax Relief
                                           and Medical Savings Accounts;
                                           H.R. 5663--New Markets
                                           Venture Capital Program; and
                                           H.R. 5667--Small Business
                                           Reauthorization. The text of
                                           these bills is printed in the
                                           H.R. 4577 conference report:
                                           H. Rept. 106-1033 [text of
                                           conference report: CR 12/15/
                                           2000 H12100-12439].
------------------------------------------------------------------------

    To amend the Internal Revenue Code of 1986 to provide tax 
incentives for the renewal of distressed communities, to 
provide for 9 additional empowerment zones and increased tax 
incentives for empowerment zone development, to encourage 
investments in new markets, and for other purposes.

5.24  H.R. 4943--The Small Business Federal Acquisition Simplification 
        Act of 2000

                           Legislative History
------------------------------------------------------------------------
                  Date                                Action
------------------------------------------------------------------------
H.R. 4943:
July 25, 2000...........................  Referred to the Committee on
                                           Small Business, and in
                                           addition to the committee on
                                           Government Reform, for a
                                           period to be subsequently
                                           determined by the Speaker, in
                                           each case for consideration
                                           of such provisions as fall
                                           within the jurisdiction of
                                           the committee concerned.
July 25, 2000...........................  Referred to House Small
                                           Business.
July 27, 2000...........................  Committee Consideration and
                                           Mark-up Session Held.
July 27, 2000...........................  Ordered to be Reported by
                                           Voice Vote.
July 25, 2000...........................  Referred to House Government
                                           Reform.
July 31, 2000...........................  Referred to the Subcommittee
                                           on Government Management,
                                           Information and Technology.
------------------------------------------------------------------------

                          Need for Legislation

    The Committee has held a number of hearings concerning the 
inability of the Federal government to meet small business 
contracting objectives and to treat small businesses fairly in 
the procurement process. In addition, the Committee and its 
members often hear complaints from small businesses who are 
subcontractors that they are unable to obtain prompt 
reimbursement from prime contractors for goods and services 
provided directly, or indirectly through the prime contractor, 
to Federal agencies.
    The Act would encourage the use of Federal governmentwide 
commercial purchase cards, instead of the present lengthy 
paper-based process, in making small purchases up to $100,000 
from small businesses. An annual report on the use of Federal 
governmentwide commercial purchase cards would be submitted to 
the Office of Advocacy.
    The General Accounting Office is required to perform a one-
time audit of the use of Federal governmentwide commercial 
purchase cards by the ten largest procuring agencies to 
determine the number and amount of acquisitions from small 
businesses. The report is to be made to the House and Senate 
Committees on Small Business.
    The Act would improve the subcontracting process for small 
businesses by mandating that the failure to pay a subcontractor 
(absent a failure to perform on the part of the subcontractor) 
constitutes a material breach of the prime contract with the 
Federal government. Upon the determination of such a breach, 
the Federal government is authorized to make direct payment to 
the small business from amounts withheld from the prime 
contractor.
    In addition, the Act would require that prime contractors 
certify that they will obtain goods and services from 
subcontractors who are small businesses and who were used in 
preparing the bid submitted to the Federal government. Finally, 
the Act mandates that prime contractors announce on the 
Internet subcontracting opportunities contained in small 
business subcontracting plans required under 8(d) of the Small 
Business Act. Previously such opportunities were not widely 
circulated.

                      Section-by-Section Analysis


Section 1. Short Title

    Designates the bill as the ``Small Business Federal 
Acquisition Simplification Act of 2000.''

Section 2. Procurement Using Government-wide Commercial Purchase Cards

    This section amends the Small Business Act by adding a new 
subsection (p) pertaining to procurements using government-wide 
commercial purchase cards. The words ``authorized individual,'' 
``goods or services,'' and ``government-wide commercial 
purchase card'' are defined.
    Goods and services purchased by an authorized individual 
using a government-wide commercial purchase card shall be from 
a small business unless no small business concern: (1) provides 
goods or services of the same kind or a comparable nature; (2) 
can provide the goods or services within the required time 
schedule; or (3) can meet the quality standards.
    Nothing in the subsection would change or modify the 
Javits-Wagner-O'Day Act with respect to goods and services 
acquired from the blind and the several disabled. If goods or 
services available from a small business are purchased from a 
large business using a government-wide commercial purchase 
card, the transaction must be reported to the chief procurement 
official for the agency and the reasons for the purchase 
documented.
    Before purchasing goods and services of a value of $2,500 
or less with a government-wide commercial credit card the buyer 
need not obtain a plethora of price information or price 
quotations. Instead, the buyer may consider: (1) the 
competitive nature of the marketplace in which the goods or 
services are sold; (2) recent acquisition of similar goods and 
services; (3) dollar amount of the proposed acquisition; and 
(4) past experience concerning the prices of specific vendors.
    When purchasing goods and services of a value of more than 
$2,500 but less than $25,000 with a government-wide commercial 
purchase card, the buyer must obtain pricing information from 
two or more small businesses who deal in the type of goods and 
services sought. The pricing information can come from printed 
price lists or catalogs, oral or written price quotations, and 
prices obtained from the Internet. In addition to price, the 
buyer may also consider previous experience with the vendor, 
customer surveys, and other reasonable information.
    Large-value acquisitions, $25,000 to $100,000, using a 
government-wide commercial purchase card, the buyer must 
advertise the procurement, consider price quotations received, 
and solicit price quotations or offers from at least 3 small 
businesses concerns, including at least one of the following: 
(1) a small business concern owned and controlled by socially 
and economically disadvantaged individuals; (2) a small 
business concern owned and controlled by women; and (3) a small 
business concern owned and controlled by veterans. In addition, 
the buyer may consider, besides price, the competitive nature 
of the market place, the vendor's past performance, and the 
urgency of the proposed acquisition.
    Each Federal agency is required to maintain, or contribute 
to the maintenance of, a comprehensive source list of small 
business concerns that are vendors of goods and services of the 
kind the Federal agency purchases. Each list is to identify 
whether a vendor is: (1) a small business concern owned and 
controlled by socially and economically disadvantaged 
individuals; (2) a small business concern owned and controlled 
by women; or (3) a small business concern owned and controlled 
by veterans.
    Not later than 90 days after the end of each fiscal year, 
each Federal agency is required to publish a report concerning 
the use of government-wide commercial purchase cards during the 
previous year. The information reported by each Federal agency 
with respect to the use of purchase card acquisitions is to 
include the following: (1) the total dollar value of such 
acquisitions; (2) the total dollar value purchased from small 
business concerns; (3) the total dollar value purchased from 
large businesses; (4) the total dollar value purchased from 
small business concerns owned and controlled by socially and 
economically disadvantaged individuals; (5) the total dollar 
value of acquisitions from small business concerns owned and 
controlled by women; and (6) the total dollar value of 
acquisitions from small business concerns owned and controlled 
by veterans.

Section 3. Procurement Audit and Report to Congress

    The General Accounting Office is required to conduct an 
audit and make a report to Congress, not later than January 1, 
2002, concerning the purchase by the 10 largest Federal 
agencies of goods and services from small businesses using 
governmentwide commercial purchase cards.
    The report is to provide information concerning: (1) the 
total dollar amount of goods and services purchased in 
acquisitions of $100,000 or less that were acquired from small 
business concerns and from other than small business concerns; 
(2) the total dollar amount of goods and services acquired in 
acquisitions of $2,500 or less that were acquired from small 
businesses and from other than small business concerns using a 
government-wide commercial purchase card; and (3) the total 
dollar amount of goods and services acquired in acquisitions of 
$100,000 or less using, and not using, a government-wide 
commercial purchase card from small business concerns owned and 
controlled by socially and economically disadvantaged 
individuals, small business concerns owned and controlled by 
women, and small business concerns owned and controlled by 
veterans.
    The report is to evaluate the comprehensive nature and 
accuracy of the source lists of small businesses that Federal 
agencies are required by the Act to maintain. Further, the 
report is to provide information concerning the rules and 
regulations promulgated to implement the Act, and, where 
applicable, to make recommendations to minimize noncompliance 
and to increase Federal acquisitions from small businesses in 
accordance with the Act.

Section 4. Direct Payment to Subcontractors

    This subsection makes the failure of a prime contractor to 
make payment to a subcontractor that is a small business and 
that has performed as required by the subcontract a material 
breach of the contract with the Federal agency. Thirty days 
after payment is due the small business, the Federal agency may 
withhold the amount due the subcontractor from payment due the 
prime contractor and the Federal agency can make direct payment 
to the small business. Within 180 days after the passage of the 
Act the Federal Acquisition Regulation and the Defense 
Acquisition Regulation is to be amended to implement the 
provisions of this subsection.

 Section 5. Subcontracting Certification

    This subsection amends the Small Business Act to require 
that a bidder must pledge to acquire articles, equipment, 
supplies, services, or materials or obtain the performance of 
construction work from subcontractors who are small businesses 
named in the bid or proposal in the amount and quality used in 
preparing the bid or proposal unless the subcontractor is no 
longer in business or can no longer meet the quality, quantity, 
or delivery date.

Seciton 6. Internet Announcement of Certain Subcontracting 
        Opportunities

    The subsection requires the offer or bidder to pledge to 
provide information on the Internet concerning subcontracting 
opportunities under small business utilization plans required 
by section 8(d) of the Small Business Act. Not later than 10 
days after the award of a contract for which a section 8(d) 
subcontracting plan is required, the winning bidder or offeror 
is required to provide on the Internet information concerning 
the name and address of the offeror or bidder, the individual 
within the employ of the offeror or bidder who is responsible 
for administering the subcontracting program; and, a list of 
anticipated subcontracting opportunities.
    In order to ensure that small businesses have an equitable 
opportunity to complete for subcontracts, not less than 30 days 
before the award of a contract with respect to each section 
8(d) subcontracting opportunity, each bidder or offeror is 
required to provide on the Internet: (1) the name and address 
of the offeror or bidder; (2) information concerning the 
individual who is the buyer; (3) a description of the quality, 
quantity, and anticipated delivery date of the goods or 
services to be acquired; (4) the procurement procedures to be 
followed in awarding the subcontract; and, a statement that all 
responsible sources that are small business concerns may submit 
a bid, proposal, or quotation, as appropriate.

Section 7. Definition of Internet

    In the Act, the term ``Internet'' has the same meaning as 
in section 230(f)(1) of the Communications Act of 1934.

5.25  H.R. 4944--Export Working Capital Loan Improvement Act of 2000, 
        Public Law No. 106-554

                           Legislative History
------------------------------------------------------------------------
                  Date                                Action
------------------------------------------------------------------------
H.R. 4944:
July 25, 2000...........................  Referred to the House
                                           Committee on Small Business.
July 27, 2000...........................  Committee Consideration and
                                           Mark-up Session Held.
July 27, 2000...........................  Ordered to be Reported by
                                           Voice Vote.
September 21, 2000......................  Reported by the Committee on
                                           Small Business. H. Rept. 106-
                                           880.
September 21, 2000......................  Placed on the Union Calendar,
                                           Calendar No. 531.
September 26, 2000......................  Mr. Manzullo moved to suspend
                                           the rules and pass the bill.
September 26, 2000......................  Considered under suspension of
                                           the rules. (consideration: CR
                                           H8084-8086).
September 26, 2000......................  On motion to suspend the rules
                                           and pass the bill Agreed to
                                           by voice vote. (text: CR
                                           H8084).
September 26, 2000......................  Motion to reconsider laid on
                                           the table Agreed to without
                                           objection.
September 27, 2000......................  Received in the Senate and
                                           Read twice and referred to
                                           the Committee on Small
                                           Business.
October 25, 2000........................  Included in H.R. 5545.
H.R. 5545:
October 25, 2000........................  Referred to the House
                                           Committee on Small Business.
                                           (Several bills are engrossed
                                           by reference in the H.R. 2614
                                           conference report: H. Rept.
                                           106-1004. This includes H.R.
                                           5538, the Minimum Wage Act of
                                           2000; H.R. 5542, the Taxpayer
                                           Relief Act of 2000; H.R.
                                           5543, the Medicare, Medicaid,
                                           and SCHIP Benefits
                                           Improvement and Protection
                                           Act of 2000; H.R. 5544, the
                                           Pain Relief Promotion Act of
                                           2000; and H.R. 5545, the
                                           Small Business
                                           Reauthorization Act of 2000.
                                           The bill texts are included
                                           in the conference report).
H.R. 2614:
October 26, 2000........................  Conference report H. Rept. 106-
                                           1004 filed. (text of
                                           conference report: CR 10/25/
                                           2000 H10909-11188) Rules
                                           Committee Resolution H. Res.
                                           652 Reported to House. Rule
                                           provides for consideration of
                                           the conference report to H.R.
                                           2614 with 1 hour of general
                                           debate. Previous question
                                           shall be considered as
                                           ordered without intervening
                                           motions except motion to
                                           recommit with or without
                                           instructions. Waives points
                                           of order against the
                                           conference report and against
                                           its consideration.
October 26, 2000........................  Conferees agreed to file
                                           conference report.
October 26, 2000........................  Conference papers: Senate
                                           report and manager's
                                           statement held at the desk in
                                           Senate.
October 26, 2000........................  Rule H. Res. 652 passed House.
October 26, 2000........................  Mr. Talent brought up
                                           conference report H. Rept.
                                           106-1004 for consideration
                                           under the provisions of H.
                                           Res. 652.
October 26, 2000........................  The previous question was
                                           ordered without objection.
October 26, 2000........................  On agreeing to the conference
                                           report Agreed to by the Yeas
                                           and Nays: 237-174, 1 Present
                                           (Roll no. 560).
                                           (consideration: CR H11243-
                                           11264).
October 26, 2000........................  Motions to reconsider laid on
                                           the table Agreed to without
                                           objection.
October 26, 2000........................  Motions to proceed to
                                           consideration of measure
                                           agreed to in Senate by Yea-
                                           Nay Vote. 55-40. Record Vote
                                           Number: 286. (consideration:
                                           CR S11097-11098).
October 26, 2000........................  Motion to proceed to
                                           consideration of conference
                                           report to accompany H.R. 2614
                                           agreed to by Unanimous
                                           Consent.
October 26, 2000........................  Conference report considered
                                           in Senate by motion.
                                           (consideration: CR S11098-
                                           11100, S11104, S11107-11111).
October 31, 2000........................  Motion to proceed to
                                           consideration of conference
                                           report to accompany H.R. 2614
                                           agreed to by Unanimous
                                           Consent.
October 31, 2000........................  Conference report considered
                                           in Senate by motion. (The
                                           H.R. 2614 conference report
                                           [H. Rept. 106-1004]
                                           incorporated several bills.
                                           This included H.R. 5538--
                                           Minimum Wage; H.R. 5542--
                                           Taxpayer Relief; H.R. 5543--
                                           Medicare, Medicaid, and SCHIP
                                           Benefits Improvement and
                                           Protection; H.R. 5544--Pain
                                           Relief Promotion; and H.R.
                                           5545--Small Business
                                           Reauthorization. H.R. 5661 is
                                           a subsequent Medicare,
                                           Medicaid and SCHIP Benefits
                                           Improvement and Protection
                                           bill. H.R. 5667 is a
                                           subsequent Small Business
                                           Reauthorization bill. H.R.
                                           4577, Consolidated
                                           Appropriations Act 2001,
                                           incorporates by reference the
                                           provisions of H.R. 5661, H.R.
                                           5667, and other bills. The
                                           text of these bills is
                                           printed in the H.R. 4577
                                           conference report: H. Rept.
                                           106-1003 [text of conference
                                           report: CR 12/15/2000 H12100-
                                           12439].).
H.R. 5667:
December 15, 2000.......................  Referred to the House
                                           Committee on Small Business
                                           incorporating the provisions
                                           of H.R. 4944.
December 15, 2000.......................  Enacted by reference in H.R.
                                           4577 (H. Conf. Rept. 106-
                                           1033).
H.R. 4577:
December 15, 2000.......................  Conference report H. Rept. 106-
                                           1033 filed.
December 15, 2000.......................  Mr. Young (FL) brought up
                                           conference repot H. Rept. 106-
                                           1033 by previously agreed to
                                           special order.
December 15, 2000.......................  The previous question was
                                           ordered without objection.
December 15, 2000.......................  On agreeing to the conference
                                           report Agreed to by the Yeas
                                           and Nays: 292-60 (Roll no.
                                           603).
December 15, 2000.......................  Motions to reconsider laid on
                                           the table Agreed to without
                                           objection.
December 15, 2000.......................  Senate agreed to conference
                                           report by Unanimous Consent.
December 15, 2000.......................  Message on Senate action sent
                                           to the House.
December 15, 2000.......................  Cleared for White House.
December 15, 2000.......................  Presented to President.
December 21, 2000.......................  Signed by President as Pub. L.
                                           No. 106-554 (H.R. 4577,
                                           Consolidated Appropriations
                                           Act 2001, incorporates the
                                           provisions of several bills
                                           by reference. This includes
                                           H.R. 5656--Labor HHS
                                           Education Appropriations;
                                           H.R. 5657--Legislative Branch
                                           Appropriations; H.R. 5658--
                                           Treasury Appropriations; H.R.
                                           5666--Miscellaneous
                                           Appropriations--except
                                           section 123 relating to the
                                           enactment of H.R. 4904; H.R.
                                           5660--Commodity Futures
                                           Modernization; H.R. 5661--
                                           Medicare, Medicaid and SCHIP
                                           Benefits Improvement and
                                           Protection; H.R. 5662--
                                           Community Renewal Tax Relief
                                           and Medical Savings Accounts;
                                           H.R. 5663--New Markets
                                           Venture Capital Program; and
                                           H.R. 5667--Small Business
                                           Reauthorization. The text of
                                           these bills is printed in the
                                           H.R. 4577 conference report:
                                           H. Rept. 106-1033 [text of
                                           conference report: CR 12/15/
                                           2000 H12100-12439].)
------------------------------------------------------------------------

                          Need for Legislation

    According to the Department of Commerce, between 1987 and 
1997, the number of small business exporters tripled, going 
from 66,000 to 202,000. Small businesses now account for 31 
percent of total merchandise export sales spread throughout 
every industrial classification. The fastest growth among small 
business exporters has been with companies employing fewer than 
20 employees. These very small businesses represented 65 
percent of all exporting companies in 1997.
    Even though the number of small business exporters tripled, 
they form less than one percent of all small businesses in the 
United States. Among these firms, nearly two-thirds of small 
business exporters sold to just one foreign market in 1997. In 
fact, 76 percent of small business exporters sold less than 
$250,000 worth of goods abroad. In other words, these are 
``casual'' exporters. The key is to encourage more small 
businesses to enter the trade arena and to encourage ``casual'' 
small business exporters into becoming more active. Improving 
and increasing the availability of financing for export 
transactions is one way to help ease the anxiety expressed by 
many small businesses fearful of selling abroad.
    In response to this data, complaints from small business 
exporters about the lack of trade financing, and several 
hearings on the problems faced by small business exporters and 
improvements to the various small business export promotion 
programs of the federal government, Representative Donald 
Manzullo, Chairman of the Subcommittee on Tax, Finance & 
Exports of the Small Business Committee, introduced H.R. 4944, 
the Export Working Capital Loan Improvement Act of 2000.

                      Section-by-Section Analysis


Section 1. Short Title

    Designates the bill as the ``Export Working Capital 
Improvement Act of 2000''.

Section 2. Sale of Guaranteed Loans Made for Export Purposes

    This section amends Section 5(f)(1)(C) of the Small 
Business Act by exempting loans made under section 7(a)(14) of 
the aforementioned Act from the disbursement requirement. 
Section 7(a)(14) of the Small Business Act is the provision in 
law that governs the EWCP loan program. This change will allow 
EWCP loans to be sold on the secondary market prior to full 
disbursement.
    Secondary market sales of guaranteed loans are conducted 
every six months. This bill will exempt Export Working Capital 
Loans from the requirement that all 7(a) loans be disbursed to 
the borrower prior to being included in a secondary market 
sale. EWC loans are often approved, disbursed and repaid so 
quickly that they miss the window for inclusion. The change 
will allow their inclusion prior to disburse to make sure they 
can be included in the secondary market sale.

5.26  H.R. 4945--The Small Business Competition Preservation Act of 
        2000, Public Law No. 106-554

                           Legislative History
------------------------------------------------------------------------
                  Date                                Action
------------------------------------------------------------------------
H.R. 4945:
July 25, 2000...........................  Referred to the House
                                           Committee on Small Business.
July 27, 2000...........................  Committee Consideration and
                                           Mark-up Session Held.
July 27, 2000...........................  Ordered to be Reported by
                                           Voice Vote.
September 18, 2000......................  Reported by the Committee on
                                           Small Business. H. Rept. 106-
                                           858.
September 18, 2000......................  Placed on the Union Calendar,
                                           Calendar No. 514.
September 19, 2000......................  Rules Committee Resolution H.
                                           Res. 582 Reported to House.
                                           Rule provides for
                                           consideration of H.R. 4945
                                           with 1 hour of general
                                           debate. Previous question
                                           shall be considered as
                                           ordered without intervening
                                           motions except motion to
                                           recommit with or without
                                           instructions. Measure will be
                                           considered read. Bill is open
                                           to amendments.
September 20, 2000......................  Rule H. Res. 582 passed House.
September 20, 2000......................  Considered under the
                                           provisions of rule H. Res.
                                           582. (consideration: CR H7876-
                                           7885)
September 20, 2000......................  House resolved itself into the
                                           Committee of the Whole House
                                           on the state of the Union
                                           pursuant to H. Res. 582 and
                                           Rule XXIII.
September 20, 2000......................  The Speaker designated the
                                           Honorable John Cooksey to act
                                           as Chairman of the Committee.
September 20, 2000......................  The House rose from the
                                           Committee of the Whole House
                                           on the state of the Union to
                                           report H.R. 4945.
September 20, 2000......................  The previous question was
                                           ordered pursuant to the rule.
September 20, 2000......................  On passage Passed by the Yeas
                                           and Nays: 422-0 (Roll no.
                                           482). (text: CR H7884)
September 20, 2000......................  Motion to reconsider laid on
                                           the table Agreed to without
                                           objection.
September 21, 2000......................  Received in the Senate and
                                           Read twice and referred to
                                           the Committee on Small
                                           Business.
October 25, 2000........................  Included in H.R. 5545
H.R. 5545
October 25, 2000........................  Referred to the House
                                           Committee on Small Business.
                                           (Several bills are engrossed
                                           by reference in the H.R. 2614
                                           conference report: H. Rept.
                                           106-1004. This includes H.R.
                                           5538, the Minimum Wage Act of
                                           2000; H.R. 5542, the Taxpayer
                                           Relief Act of 2000; H.R.
                                           5543, the Medicare, Medicaid,
                                           and SCHIP Benefits
                                           Improvement and Protection
                                           Act of 2000; H.R. 5544, the
                                           Pain Relief Promotion Act of
                                           2000; and H.R. 5545, the
                                           Small Business
                                           Reauthorization Act of 2000.
                                           The bill texts are included
                                           in the conference report.)
H.R. 2614
October 26, 2000........................  Conference report H. Rept. 106-
                                           1004 filed. (text of
                                           conference report: CR 10/25/
                                           2000 H10909-11188)
October 26, 2000........................  Rules Committee Resolution H.
                                           Res. 652 Reported to House.
                                           Rule provides for
                                           consideration of the
                                           conference report to H.R.
                                           2614 with 1 hour of general
                                           debate. Previous question
                                           shall be considered as
                                           ordered without intervening
                                           motions except motion to
                                           recommit with or without
                                           instructions. Waives points
                                           of order against the
                                           conference report and against
                                           its consideration.
October 26, 2000........................  Conferees agreed to file
                                           conference report.
October 26, 2000........................  Conference papers: Senate
                                           report and manager's
                                           statement held at the desk in
                                           Senate.
October 26, 2000........................  Rule H. Res. 652 passed House.
October 26, 2000........................  Mr. Talent brought up
                                           conference report H. Rept.
                                           106-1004 for consideration
                                           under the provisions of H.
                                           Res. 652.
October 26, 2000........................  The previous question was
                                           ordered without objection.
October 26, 2000........................  On agreeing to the conference
                                           report Agreed to by the Yeas
                                           and Nays: 237-174, 1 Present
                                           (Roll no. 560).
                                           (consideration: CR H11243-
                                           11264)
October 26, 2000........................  Motions to reconsider laid on
                                           the table Agreed to without
                                           objection.
October 26, 2000........................  Motion to proceed to
                                           consideration of measure
                                           agreed to in Senate by Yea-
                                           Nay Vote. 55-40. Record Vote
                                           Number: 286. (consideration:
                                           CR S11097-11098)
October 26, 2000........................  Motion to proceed to
                                           consideration of conference
                                           report to accompany H.R. 2614
                                           agreed to by Unanimous
                                           Consent.
October 26, 2000........................  Conference report considered
                                           in Senate by motion.
                                           (consideration: CR S11098-
                                           11100, S11104, S11107-11111)
October 31, 2000........................  Motion to proceed to
                                           consideration of conference
                                           report to accompany H.R. 2614
                                           agreed to by Unanimous
                                           Consent.
October 31, 2000........................  Conference report considered
                                           in Senate by motion. (The
                                           H.R. 2614 conference report
                                           [H. Rept. 106-1004]
                                           incorporated several bills.
                                           This included H.R. 5538--
                                           Minimum Wage; H.R. 5542--
                                           Taxpayer Relief; H.R. 5543--
                                           Medicare, Medicaid, and SCHIP
                                           Benefits Improvement and
                                           Protection; H.R. 5544--Pain
                                           Relief Promotion; and H.R.
                                           5545--Small Business
                                           Reauthorization. H.R. 5661 is
                                           a subsequent Medicare,
                                           Medicaid and SCHIP Benefits
                                           Improvement and Protection
                                           bill. H.R. 5667 is a
                                           subsequent Small Business
                                           Reauthorization bill. H.R.
                                           4577, Consolidated
                                           Appropriations Act 2001,
                                           incorporates by reference the
                                           provisions of H.R. 5661, H.R.
                                           5667, and other bills. The
                                           text of these bills is
                                           printed in the H.R. 4577
                                           conference report: H. Rept.
                                           106-1033 [text of conference
                                           report: CR 12/15/2000 H12100-
                                           12439].)
H.R. 5667
December 15, 2000.......................  Referred to the House
                                           Committee on Small Business
                                           incorporating the provisions
                                           of H.R. 4945.
December 15, 2000.......................  Enacted by reference in H.R.
                                           4577 (H. Conf. Rept. 106-
                                           1033)
H.R. 4577
December 15, 2000.......................  Conference report H. Rept. 106-
                                           1033 filed.
December 15, 2000.......................  Mr. Young (FL) brought up
                                           conference report H. Rept.
                                           106-1033 by previously agreed
                                           to special order.
December 15, 2000.......................  The previous question was
                                           ordered without objection.
December 15, 2000.......................  On agreeing to the conference
                                           report Agreed to by the Yeas
                                           and Nays: 292-60 (Roll no.
                                           603).
December 15, 2000.......................  Motions to reconsider laid on
                                           the table Agreed to without
                                           objection.
December 15, 2000.......................  Senate agreed to conference
                                           report by Unanimous Consent.
December 15, 2000.......................  Message on Senate action sent
                                           to the House.
December 15, 2000.......................  Cleared for White House.
December 15, 2000.......................  Presented to President.
December 21, 2000.......................  Signed by President as Pub. L.
                                           No. 106-554 (H.R. 4577,
                                           Consolidated Appropriations
                                           Act 2001, incorporates the
                                           provisions of several bills
                                           reference. This includes H.R.
                                           5656--Labor HHS Education
                                           Appropriations; H.R. 5657--
                                           Legislative Branch
                                           Appropriations; H.R. 5658--
                                           Treasury Appropriations; H.R.
                                           5666--Miscellaneous
                                           Appropriations--except
                                           section 123 relating to the
                                           enactment of H.R. 4904; H.R.
                                           5660--Commodity Futures
                                           Modernization; H.R. 5661--
                                           Medicare, Medicaid and SCHIP
                                           Benefits Improvement and
                                           Protection; H.R. 5662--
                                           Community Renewal Tax Relief
                                           and Medical Savings Accounts;
                                           H.R. 5663--New Markets
                                           Venture Capital Program; and
                                           H.R. 5667--Small Business
                                           Reauthorization. The text of
                                           these bills is printed in the
                                           H.R. 4577 conference report:
                                           H. Rept. 106-1033 [text of
                                           conference report: CR 12/15/
                                           2000 H12100-12439].)
------------------------------------------------------------------------

                          Need for Legislation

    Contract bundling is one of the most important issues 
facing small business today. The federal government spends 
nearly 200 billion dollars a year procuring goods and services. 
Although Congress has made it a goal for federal agencies to 
spend at least 20 percent of their procurement dollars with 
small businesses, the federal government has not met that 
objective. Federal government procurement policies apparently 
place a greater premium on efficiency and the reduction of 
workload for contracting officers than the goals of a diverse, 
competitive industrial base. The ultimate losers will be the 
American taxpayer who will face the long-term prospect of 
procuring lower quality goods and services at higher prices.
    Bundling of contracts is performed by all federal agencies 
but one agency, the Department of Defense, stands out as the 
agency with the most adverse impact on small business 
participation as prime contractors. To the extent that the 
Department actually achieves substantial cost savings or 
significant improvements in the quality of goods and services 
procured, bundling is at least defensible. However, the 
Committee has examined a number of contracts and has not found 
supportable justifications for these contracts.
    For example, the Department of Defense issued a contract 
for the provision of telecommunication services to the three 
largest long-distance carriers in the United States who would 
provide, on a competitively-bid task order arrangement, 
interstate interexchange (long-distance) circuits for the 
transmission of voice and data between various Department 
installations. Ostensibly, the limitation on the number of 
firms eligible to bid was necessitated by security concerns. 
However, an examination of the task order requests reveals that 
the need for security was not an issue in many of the task 
orders. Thus, the Department, at substantial expense to the 
taxpayers (competition under the prior system was significantly 
greater resulting in substantially lower prices for 
telecommunication services), bundled a contract without any 
clear need to do so.
    The Committee has also examined the consolidation of Marine 
Corps mess hall services. The Department of the Navy currently 
provides messhall services on a base-by-base contract. Many 
current providers are small businesses. Despite evidence that 
demonstrates improvements in quality of both the food and the 
service, the Department of Navy decided to consolidate these 
messhall contracts into two large regions utilizing central 
kitchen preparation techniques known as ``cook and chill.'' The 
Department of Navy has not been able to justify that the 
contract will save money or provide higher quality meals to 
Marine Corps personnel.
    Numerous other examples of bundling exist at the Department 
of Defense and other government agencies. At a Committee 
hearing on the Department of Defense's bundling policies, the 
Principal Deputy Under Secretary for Acquisition, Mr. David 
Oliver, promised that he would commission a study of the 
effects of bundling on small business. Some months later, Mr. 
Oliver admitted that the Department lacked the data needed to 
conduct an appropriate study of bundling.
    The absence of data on bundling also affects the 
Administrator's ability to implement the Small Business 
Reauthorization Act of 1997. That legislation required federal 
agencies not to bundle contracts unless the procuring agency 
could demonstrate that the bundle would result in measurably 
substantial benefits, such as cost savings, quality 
improvements, reduction in acquisition cycle times, or better 
terms and conditions. The procuring agency then must identify 
those benefits to be derived from contract bundling and that 
the anticipated benefits of the proposed bundled contract 
justify the use of bundling. Should the Administrator of the 
Small Business Administration disagree with the conclusions of 
the procuring agency, the Administrator is entitled to file an 
appeal contesting the procuring agency's bundle to the head of 
the agency. The Administrator has never won such an appeal.

                      Section-by-Section Analysis


Section 1. Short Title

    Designates the bill as the ``Small Business Competition 
Preservation Act of 2000.''

Section 2. Database, Analysis, and Annual Report with Respect to 
        Bundled Contracts

    This section amends section 15 of the Small Business Act by 
adding a new subsection (p) to establish the requirements for 
maintenance of a contract bundling database, analysis of 
bundled contracts, and reporting requirements to the House and 
Senate Small Business Committees.
    Paragraph (1) defines the term bundled contract. In the 
Small Business Reauthorization Act of 1997, the term ``bundled 
contract'' was defined as a contract that consolidated existing 
contract requirements. This definition is adopted by H.R. 4945.
    Paragraph (2) mandates that the Administrator establish a 
database no later than 180 days after the effective date of the 
statute. The database will contain information on each bundled 
contract awarded by a federal agency as defined in paragraph 
(1) and the number of small businesses that used to provide 
services as prime contractors but are no longer doing so as a 
result of the bundled contract. The Committee expects that the 
Administrator will receive data from its Procurement Center 
Representatives as well as the Directors of the Office of Small 
and Disadvantaged Business Utilization. Furthermore, the 
Committee expects that the Administrator will construct this 
database with already existing funds and does not believe that 
a separate authorization or appropriation is needed to maintain 
this database because maintenance of the database constitutes a 
vital adjunct to the Administrator's responsibilities under 
subsection (a) of section 15.
    Paragraph (3) requires that the Administrator analyze 
bundled contracts that are recompeted as bundles when their 
initial terms expire. The Committee expects that the 
Administrator will use the database of bundled contracts 
established in paragraph (2) to determine which contracts need 
to be analyzed pursuant to this paragraph. However, if a 
recompeted bundle somehow is not included in the database 
established pursuant to paragraph (2), the Committee expects 
that the Administrator will undertake the analysis mandated by 
this paragraph.
    For each contract recompeted as a bundled contract, the 
Administrator will be required to calculate the amount of 
savings and benefits from the bundled contract. The 
Administrator also will be required to estimate whether the 
savings and benefits will continue and whether such savings and 
benefits would be greater if the contract was divided into 
separate solicitations more suitable for award to small 
businesses. The Committee expects that the Administrator will 
utilize this analysis in pursuing any appeal of a bundling 
contract as set forth in subsection (a) of section 15.
    Paragraph (4) requires the Administrator to file an annual 
report on contract bundling with the House and Senate Small 
Business Committees. The report is required to contain data on 
the number of small businesses displaced as prime contractors 
as a result of contract bundling sorted by industrial 
classification. The Committee expects that the report will 
utilize the new North American Industrial Classification rather 
than the old Standard Industrial Classification.
    The report also shall contain a description of the bundling 
activity for each federal agency during the preceding fiscal 
year including the number of contracts bundled, the total 
dollar value of the bundled contracts, the justification for 
each bundled contract, the cost savings realized by the 
contract, the Administrator's estimate of whether the savings 
will continue for any recompeted bundled contract, the extent 
to which the bundled contract complied with agency's 
subcontracting plan, the total dollar value awarded to small 
business subcontractors, the total dollar value previously 
awarded to small business prime contractors prior to the 
bundling of the contract, the impact that bundling has on the 
ability of small business to compete as prime contractors, and 
the effect that has on the industry.

5.27  H.R. 4946--The National Small Business Regulatory Assistance Act 
        of 2000

                           Legislative History
------------------------------------------------------------------------
                  Date                                Action
------------------------------------------------------------------------
H.R. 4946:
July 25, 2000...........................  Referred to the House
                                           Committee on Small Business.
July 27, 2000...........................  Committee Consideration and
                                           Mark-up Session Held.
July 27, 2000...........................  Ordered to be Reported
                                           (Amended) by Voice Vote.
September 21, 2000......................  Reported (Amended) by the
                                           Committee on Small Business.
                                           H. Rept. 106-881.
September 21, 2000......................  Placed on the Union Calendar,
                                           Calendar No. 532.
September 26, 2000......................  Mr. Sweeney moved to suspend
                                           the rules and pass the bill,
                                           as amended.
September 26, 2000......................  Considered under suspension of
                                           the rules. (consideration: CR
                                           H8081-8084).
September 26, 2000......................  On motion to suspend the rules
                                           and pass the bill, as amended
                                           Agreed to by voice vote.
                                           (text: CR H8081-8083).
September 26, 2000......................  Motion to reconsider laid on
                                           the table Agreed to without
                                           objection.
September 27, 2000......................  Received in the Senate and
                                           Read twice and referred to
                                           the Committee on Small
                                           Business.
------------------------------------------------------------------------

                          Need for Legislation

    During the past twenty years, the Federal Register--the 
compendium of federal regulatory initiatives and changes--
ballooned from 42,000 pages to a record 73,879 pages in 1999. 
This crush of federal dictates is particularly troubling to 
small businesses who find it increasingly difficult to meet 
these burgeoning regulatory requirements while at the same time 
trying to successfully operate their businesses in an expanding 
competitive global environment. Often, small business owners do 
not learn about their failure to comply with a regulation or 
that a new regulatory requirement has been imposed until an 
inspector or auditor walks through the door.
    The result is neither beneficial to the small business 
owner nor the federal government. Federal regulations exist to 
achieve some statutory objective; noncompliance hinders the 
reaching of these statutory goals. Small business owners 
certainly would be more interested in complying with federal 
regulations than paying penalties and fines. However, the 
amount of information including regulations and concomitant 
guidance, simply overwhelms small business owners.
    In 1996, Congress took action in an effort to alleviate 
this problem. The Small Business Regulatory Enforcement 
Fairness Act provided that federal agencies are required to 
produce plain-English compliance guides for any regulation that 
would have a significant economic impact on a substantial 
number of small businesses. Of course, if small business owners 
do not know about the regulatory changes, the existence of such 
compliance guides does little to assist them. Some mechanism 
must exist to make small businesses more aware of their 
regulatory obligations.
    Even more important than making small businesses aware of 
the regulations is providing them with assistance needed to 
understand and comply with the regulations. A regulation may 
only take up ten or eleven pages of text, but the explanation 
for what those ten or eleven pages mean may encompass as much 
as three hundred pages of dense, triple-columned, single-spaced 
pages in the Federal Register. Most small business owners do 
not have the time to go through this dense prolixity. And even 
if they did, they would not understand it unless they were 
knowledgeable in the field. The Committee believes that greater 
assistance must be provided to small business owners in helping 
them comply with complex regulatory issuances. Otherwise, a 
divide could develop between those businesses, usually large, 
with the resources to comply and those, usually small, without 
such resources. The small businesses will be at risk for 
penalties, fines, and audits while large businesses will not. A 
regulatory compliance assistance program operated through the 
small business development centers could provide substantial 
assistance in ensuring such a divide does not occur.
    The Small Business Administration oversees a number of 
mechanisms for delivering advice to small business owners. One 
of the most effective is the Small Business Development Center 
program. Operated in conjunction with colleges and 
universities, the small business development centers assist 
small businesses in solving problems concerning the operations, 
manufacturing, engineering, technology, exchange and 
development, personnel administration, marketing, sales, 
merchandising, finance, accounting, and business strategy 
development. The small business development centers utilize the 
resources and the expertise of colleges and universities. In 
addition, the small business development centers, like the 
Agricultural Extension Service, also provide a focal point for 
information retrieval, coordination of federal and state 
government services, and referral to experts. Historically, the 
small business development centers have focused on financial, 
management, and marketing activities of small businesses.
    The Committee believes that small business development 
centers can provide an effective mechanism for dispensing 
regulatory compliance information and advice. However, 
regulatory compliance, unlike many of the other activities 
undertaken by the small business development centers, has 
significant legal consequences. Therefore, the Committee 
believes that a pilot program to examine how the regulatory 
compliance assistance will operate in selected small business 
development centers is a preferred strategy to simply 
authorizing all small business development centers to provide 
regulatory compliance assistance.

                      Section-by-Section Analysis


Section 1. Short Title

    Designates the bill as the ``National Small Business 
Regulatory Assistance Act of 2000.''

Section 2. Purpose

    This section expresses the purpose of the legislation--to 
establish a pilot project within certain Small Business 
Development Centers to provide and coordinate regulatory 
compliance assistance to small businesses.

Section 3. Small Business Regulatory Assistance Pilot Program

    This section establishes the pilot program by creating a 
new Section 34 of the Small Business Act.
    Section 34(a)(1) defines the term ``Association'' to be the 
association established pursuant to Section 21 of the Small 
Business Act which represents the majority of small business 
development centers. That organization is the Association of 
Small Business Development Centers.
    Section 34(a)(2) defines the term ``Participating Small 
Business Development Center'' as a small business development 
center selected to participate in the pilot program established 
under this section.
    Section 34(a)(3) defines the term ``Regulatory Compliance 
Assistance'' as assistance provided by a participating small 
business development center to a small business concerning 
compliance with federal regulations.
    Section 34(a)(4) defines the term ``Small Business 
Development Center'' means a small business development center 
described in section 21 of the Small Business Act.
    Section 34(a)(5) defines the term ``State'' to include all 
fifty states and the District of Columbia, the Virgin Islands, 
and Guam.
    Section 34(b) authorizes the Administrator of the Small 
Business Administration to establish a pilot program for 
selected small business development centers to provide small 
businesses with regulatory compliance assistance.
    Section 34(c)(1) authorizes the Administrator to enter into 
arrangements with the small business development centers 
selected under this section for the provision of regulatory 
compliance assistance. The participating small business 
development centers are required to provide access to 
information and resources on regulatory compliance, including 
contact information for federal and state compliance and 
technical assistance similar to those established under section 
507 of the Clean Air Act Amendments of 1990. Numerous other 
federal and state agencies have non-punitive compliance 
assistance programs and the Committee expects that the 
participating small business development centers will maintain 
all necessary contact information with those federal and state 
agencies.
    Section 34(c)(1) also requires that the selected small 
business development centers establish various training and 
educational activities. The Committee expects that selected 
centers will utilize their contacts with federal and state 
agencies to obtain compliance pamphlets, videos, books, and any 
compliance guides issued pursuant to the Small Business 
Regulatory Enforcement Fairness Act. In addition, the Committee 
expects that participating centers will hold lectures and 
seminars on regulatory compliance including updates on 
compliance based on regulatory changes.
    Section 34(c)(1) also mandates that the selected small 
business development centers provide confidential counseling on 
a one-on-one basis at no charge to small businesses seeking 
regulatory compliance assistance. The Committee recognizes that 
compliance with regulations inculcates legal rights and 
responsibilities of small business owners. Therefore, section 
34(c) prohibits any regulatory compliance counseling that would 
be considered the practice of law in the jurisdiction in which 
the small business development center is located or in which 
such counseling is conducted.
    Section 34(c)(1) also requires the provision of technical 
assistance. Such counseling may include the arrangement of 
meetings with technical experts known to the participating 
small business development centers as long as such counseling 
again is done on a one-on-one basis at no charge to the small 
business. For example, the participating small business 
development center may arrange a meeting with a professor of 
engineering to discuss the best way that the particular small 
business might be able to comply with regulations promulgated 
pursuant to the Clean Water Act.
    Section 34(c)(2) requires each participating center to file 
a quarterly report with the Association of Small Business 
Development Centers. The report shall provide a summary of the 
compliance assistance provided under the pilot program. The 
report also must contain any data and information obtained by 
the participating small business development center from a 
federal agency concerning compliance which the federal agency 
intends to be disseminated to small business concerns.
    Section 34(c)(2) requires that reports be filed with the 
Association in an electronic format. The Committee expects the 
Administrator to promulgate regulations, which will provide for 
a consistent format of the report. The Committee believes that 
such consistency is necessary for the accurate compilation of 
data and proper assessment of the effectiveness of the pilot 
program.
    Section 34(c)(2) also permits, but does not require, 
participating small business development centers to make 
interim reports if such reports are necessary or useful. For 
example, a participating small business development center may 
receive inconsistent compliance information from a federal 
agency. By alerting the Association prior to the issuance of 
the quarterly report, the federal agency may be able to issue a 
clarification that may eliminate confusion, save compliance 
costs, and improve small business compliance.
    One of the critical concerns to small businesses is that 
discussions of compliance assistance could be revealed to 
federal agencies which would lead to fines and penalties. The 
Committee recognizes this and prohibits the disclosure of the 
names or addresses of any concern receiving compliance 
assistance under this pilot program unless the Administrator is 
ordered to make such disclosure pursuant to a court order or 
civil or criminal enforcement action commenced by a federal or 
state agency. The Committee expects that participating small 
business development centers will only respond to formal agency 
requests such as civil investigative demands, subpoenas, and 
the like. The Committee does not expect that the participating 
small business development centers will accede to simple verbal 
requests from federal or state agencies.
    Section 34(d) requires the Administrator and the 
Association to enter into a contract for the Association to act 
as repository of data and information submitted by the 
participating small business development centers. The Committee 
believes that a central repository is necessary in order to 
determine whether federal agencies are providing consistent 
compliance information on a national basis.
    Section 34(d) also requires that the Association transmit 
an annual report to the President, the Small Business and 
Agriculture Regulatory Enforcement Ombudsman, and the House and 
Senate Small Business Committees. The report will contain: (a) 
data on the types of information provided by the participating 
small business development centers; (b) the number of small 
businesses that contacted the participating small business 
development centers; (c) the number of small businesses 
assisted by participating small business development centers; 
(d) information on the outreach activities of the participating 
small business development centers; (e) information regarding 
each case known to the Association in which participating small 
business development centers provided conflicting advice 
regarding compliance with federal regulation to one or more 
small businesses; (f) and any recommendations for improving the 
regulatory environment of small businesses. The Committee 
believes that this information is necessary to properly 
evaluate the utility of the pilot program. More importantly, 
the report will reveal whether similarly situated small 
businesses are receiving consistent regulatory compliance 
assistance.
    Section 34(d) also requires the Association to provide a 
report three years after the establishment of the pilot program 
evaluating the effectiveness of the program. The report also 
should contain any suggested modifications to the pilot 
program. Finally, the Association should provide its opinion 
concerning whether the program should be continued and expanded 
to include more small business development centers. It is the 
expectation of the Committee that the pilot program will be 
sufficiently successful to expand the program to other small 
business development centers.
    Section 34(e) requires the Administrator to select two 
participating centers from each of the Small Business 
Administration's ten federal regions as those regions exist on 
the date of enactment of this Act. The Administrator shall 
consult with the Association and give the Association's 
recommendations substantial weight. The Administrator is 
prohibited from selecting two small business development 
centers from the same state. The Committee expects that the 
selected development centers will be open to serve any small 
business located in that state.

Section 4. Promulgation of Regulations

    Section 4 authorizes the Administrator to promulgate 
regulations to implement that this pilot program no later than 
180 days after the enactment of the Act. Such regulations only 
shall be promulgated after the public has been given an 
opportunity for notice and comment. The Committee believes that 
the Administrator can and should accomplish the issuance of 
regulations within the deadline set by statute. The Committee 
considers this Act to be some other law for purposes of section 
603 of Title 5 of the United States Code.
                              CHAPTER SIX

   SUMMARY OF OTHER LEGISLATIVE ACTIVITIES OF THE COMMITTEE ON SMALL 
                                BUSINESS

6.1  Committee Meetings
            6.1.1  organizational meeting
    On January 6, 1999, the Committee on Small Business held an 
organization meeting. The purpose of this meeting was three-
fold: (1) to consider and adopt the Committee rules for the 
106th Congress, (2) to consider and adopt the Committee's 
oversight plan for the 106th Congress, and (3) to approve the 
subcommittee assignments for Members of the Committee. The 
Committee accomplished these three tasks in record time (less 
than 20 minutes) with little discussion. Both the Committee 
rules and oversight plan were adopted, without amendment, by 
voice vote.
    The text of the Committee's oversight plan follows:
       6.1.2  OVERSIGHT PLAN FOR THE COMMITTEE ON SMALL BUSINESS
                             106TH CONGRESS
                     U.S. HOUSE OF REPRESENTATIVES
                 CONGRESSMAN JAMES M. TALENT, CHAIRMAN
    Rule X, clause 2(d)(1), of the Rules of the House requires each 
standing Committee to adopt an oversight plan for the two-year period 
of the Congress and to submit the plan to the Committees on Government 
Reform and Oversight and House oversight not later than February 15 of 
the first session of the Congress.
    The oversight plan of the Committee on Small Business includes 
areas in which the Committee expects to conduct oversight activity 
during the 106th Congress. However, this plan does not preclude 
oversight or investigation of additional matters as the need arises.
             OVERSIGHT OF THE SMALL BUSINESS ADMINISTRATION
    The Committee will conduct hearings on all the major programs of 
the Small Business Administration to determine their effectiveness and 
possible options for improvements.
         FINANCIAL AND MANAGEMENT/TECHNICAL ASSISTANCE PROGRAMS
    The Committee will conduct hearings on the effectiveness and 
efficiency of the SBA's major programs. Particular emphasis will be 
placed on improving the economic efficiency of these programs. A number 
of the SBA's key programs will be the subject of oversight hearings by 
the Committee. These include:
           7(a) General Business Loan Programs (Spring, 1999)
          Certified Development Company Program (Spring, 1999)
                      SBIC Program (Winter, 1999)
                    Microloan Program (Winter, 1999)
                          SBDC (Spring, 1999)
                      Disaster Loan (Winter, 1999)
                                ADVOCACY
    The Office of Advocacy was created to provide small business with 
an effective voice inside the Federal government. The Committee will 
conduct hearings on how to strengthen this voice and make sure that the 
Office of Advocacy continues to effectively represent the interests of 
small business. (summer, 1999)
                   TECHNOLOGY AND RESEARCH ASSISTANCE
                   Small Business Innovation Research
    The Small Business Innovation Research (SBIR) program aids small 
businesses in obtaining federal research and development funding for 
new technologies. (Summer, 1999)
                   Small Business Technology Transfer
    Committee oversight will focus on the program's success at helping 
small business access technologies developed at federal laboratories 
and put that knowledge to work.
                          FEDERAL PROCUREMENT
    The Committee will examine needed changes in federal procurement. 
The Committee will investigate the implementation of recent legislation 
dealing with ``bundling'' and the effect it is having on small 
businesses involved in government contracting. (Ongoing)
                  GOVERNMENT & NON-PROFIT COMPETITION
    The Committee will examine the extent to which non-profit 
organizations and the federal government itself compete with small 
business. Our focus will include activities in both the private sector 
and government procurement. (Winter, 2000)
                         REGULATORY FLEXIBILITY
    The Committee will continue its oversight of agency implementation 
of the Regulatory Flexibility Act, as amended by the Small Business 
Regulatory Enforcement Fairness Act. (Ongoing)
                                 SBREFA
    The Committee will be conducting oversight hearings on agency 
implementation of the Small Business Regulatory Enforcement Fairness 
Act (SBREFA), which was enacted during the second session of the 104th 
Congress. (Ongoing)
                          PAPERWORK REDUCTION
    The Committee will continue its oversight of agency implementation 
of the Paperwork Reduction Act, as amended. (Ongoing)
                         GOVERNMENT REGULATION
    The Committee will continue to examine the regulatory activities of 
various federal agencies and assess the impact of regulations on the 
small business community. (Ongoing)
                                TAXATION
    The Committee will continue to conduct oversight hearings into ways 
to reduce the tax burden on small business. These hearings will include 
not only the fiscal but the paperwork burden of the federal tax system 
and federal enforcement efforts. (Ongoing)
                     ELECTRIC UTILITY DEREGULATION
    The Committee will conduct oversight hearings on the potential 
effects of electric utility deregulation on small business. (Summer, 
1999)
                 GOVERNMENT PERFORMANCE AND RESULTS ACT
    The Committee will continue consultations with the SBA regarding 
the preparation and implementation of strategic plans and performance 
plans as required under the Government Performance and Results Act. 
(Ongoing)
                              EMPOWERMENT
    The Committee will conduct oversight hearings over regulations and 
licensing policies that impact small businesses located in high risk 
communities. The Committee will also examine the promotion of business 
growth and opportunities in economically depressed areas, and will 
examine programs targeted towards relief for low income communities. 
(Ongoing)

6.2 Budget Views and Estimates

    Pursuant to Section 301(c) of the Congressional Budget Act 
of 1974, the Committee prepared and submitted to the Committee 
on the Budget its views and estimates on the fiscal year 2000 
and 2001 budgets with respect to matters under the Committee's 
jurisdiction.
            6.2.1 fiscal year 2000 budget
    The President's proposed budget for FY 2000 requested an 
increase of $41 million dollars over FY 1999, for a total 
request of $761 million dollars. It also requested contingency 
emergency appropriations in the amount of $233 million. These 
contingency amounts would be for anticipated disaster loan 
spending. On February 25, 1999, the Committee on Small Business 
met to approve views and estimates for the Small Business 
Administration for submission to the Committee on the Budget.
    While the Committee believed that many of the provisions of 
the budget were reasonable, it could not agree with all of the 
spending proposed in the FY 2000 budget submission. The views 
and estimates divided the Small Business Administration into 
five areas; (1) Financial Program, (2) Assistance Programs, (3) 
Disaster Assistance, (4) Salaries and Expenses, and (5) Office 
of Inspector General.

                   SMALL BUSINESS FINANCIAL PROGRAMS

                                Summary

    The FY 2000 SBA proposed budget for small business 
financial assistance discussed building a twenty-first century 
financial management organization and providing assistance for 
small business. The President's Budget requested a total of 
$200,118,000 in subsidy budget authority for financial 
programs.

                               7(a) LOANS

    This is the SBA's leading loan guarantee program. The 
Administration proposal for appropriations for this program was 
based on an estimated program demand of $10.5 billion in loans, 
requiring $155 million in budget authority. The Committee 
believed that request to be adequate. Recent SBA estimates for 
demand for 7(a) had proved accurate. However, industry 
estimates place demand at a level of $11 billion dollars.
    The Committee was more concerned over reports from the GAO 
that SBA subsidy cost estimates were inflated. This has the 
potential to lead to overcharging of small business borrowers, 
and reduced subsidy costs would allow the Congress greater 
flexibility in budgeting.

                               504 LOANS

    Thanks to legislation passed in the 104th Congress, the 504 
program has a zero subsidy rate; which means that the program 
requires no appropriations. This was accomplished through heavy 
fees that were placed on borrowers and lenders--fees needed to 
offset a severe subsidy rate.
    The Administration believed that the Section 504 loan 
program would not require appropriations for FY 2000, and would 
also be able to lower fees to the program's borrowers. However, 
larger improvements were yet to appear in the program's 
liquidation performance, the largest single factor in the 
subsidy rate equation. The Committee also had concerns that 
subsidy estimate problems exist in the 504 as well as the 7(a) 
program.
    The Committee agreed that no appropriation would be needed 
for this program but was concerned with the apparent 
uncertainty in the subsidy rates.

               SMALL BUSINESS INVESTMENT COMPANY PROGRAM

    The SBA proposed a significantly increased program level 
for the SBIC program, but also projected a decrease in 
appropriations due to revisions in the subsidy rate. The 
Committee supported the requested budget amount.
    The Administration anticipated a demand for $1.5 billion in 
participating securities leverage at a subsidy cost of $25.8 
million. They also anticipated $800 million in demand for 
debenture leverage at no cost due to a zero subsidy rate. This 
rate was based in large part on the absence of default on any 
SBIC debenture since 1992.

                           MICROLOAN PROGRAM

    The SBA requested a 100% increase in funding for the 
microloan program for FY 2000. The SBA believed that program 
demand would increase by an overwhelming amount. This increase 
reflected the Administration's desire to expand this program 
into all sectors of the country. However, the Committee was 
troubled by the SBA's simultaneous support for the PRIME/CDFI 
microloan proposed for the Treasury Department. If the 
microloan program at SBA was, in fact, highly effective at 
assisting entrepreneurs in underserved areas, why was PRIME/
CDFI necessary? If the SBA program was not effective then why 
was such a dramatic increase requested? The Committee believed 
this estimate might have been valid, but not in light of the 
conflicting and duplicative PRIME/CDFI program.
    The Committee also continued to urge greater efforts by the 
SBA to make the guaranteed microloan program a viable option; 
current regulations appear to have been drafted in a fashion 
that discourages participation.

                     TECHNICAL ASSISTANCE PROGRAMS

                                Summary

    The FY 2000 SBA budget submission proposed some significant 
increases in spending on its non-credit business assistance 
programs. While these programs represent well-intentioned 
efforts to aid small business, there is an increased tendency 
to fragment rather than consolidate these efforts. In addition, 
areas of proven value appeared to be targeted for cuts to 
support other initiatives that might have been redundant.

                     MICROLOAN TECHNICAL ASSISTANCE

    The microloan program requested $32 million in technical 
assistance funds. These funds represent a hidden subsidy cost 
to the microloan program. While the reported subsidy rate of 
this program was relatively low, there was evidence that the 
technical assistance grants to the microlenders were, in fact, 
going to support operational expenses of the lenders rather 
than counseling. The Committee reserved judgment on the need 
for this additional funding. The Committee was particularly 
concerned that the need for this funding was duplicative of 
funding proposed in the PRIME/CDFI program, and vice versa.

                  BUSINESS INFORMATION CENTERS/USEACs

    The SBA proposed level funding for these programs. However, 
the agency failed to explain whether it intended to co-locate 
any of these centers with existing Small Business Development 
Centers. In fact, there are instances in several cities where 
these centers are located in separate sites within blocks of 
each other, rather than in a single central location. The 
Committee tentatively supported these projects but would like 
the SBA to provide more substantial information.

               SMALL BUSINESS DEVELOPMENT CENTERS (SBDCs)

    The SBA proposed a significant (nearly 25%) cut in funding 
for the SBDC program. This proposal was unacceptable. The SBA 
proposed stripping a quarter of the funding from this program 
and asked the SBDCs to institute fees instead. SBDCs are 
currently statutorily prohibited from charging fees. Fees are 
allowed in other programs; but if the statutory prohibition was 
lifted and the draconian cuts implemented, SBDCs would become 
the only program forced to charge fees.

                         ONE STOP CAPITAL SHOPS

    The SBA FY 2000 budget proposed a significant (210%) 
increase in funding for this program, from $3.1 million to $10 
million. The SBA proposed to open the shops in each of the 
newly declared Empowerment Zones. The Committee noted that 
information regarding the use, services and merits of One Stop 
Capital Shops is limited. The Committee was also concerned that 
the efforts of this program and Business Information Centers 
was duplicating efforts best left to other more established 
programs.

                  NEW MARKET VENTURE CAPITAL COMPANIES

    The Administration proposed $15 million in subsidy budget 
authority to support $100 million in lending from these NMVCCs. 
The Administration's FY 2000 budget also proposed $30 million 
in grant money for New Markets Venture Capital Companies. These 
NMVCCs would make SBIC loans in Low & Moderate Income areas. 
This meant the Administration planned to spend $45 million in 
order to make $100 million in loans in LMI areas.
    The Committee found this unjustified, particularly in light 
of the fact that regular SBICs did $660 million in lending to 
LMI areas in the previous year without this program. While the 
Committee supported the goal of increasing lending in LMI 
areas, it could not support the inordinately high cost of this 
proposal.

                          DISASTER ASSISTANCE

    The President's FY 2000 SBA budget submission asked for 
authority for $934 million in disaster loans, representing the 
ten-year average of disaster loan needs. However, the budget 
requested only $39.4 million in budget authority. The 
Administration requested that the remaining $158 million in 
appropriations be allocated on an emergency off-budget basis. 
The SBA based this request on the fact that disaster loan funds 
were frequently provided through supplemental appropriations. 
This explanation was only partially correct.
    Disaster loans have been supplemented with emergency funds 
over the years. This has come in response to situations of 
extreme need, to what SBA has called ``mega-disasters,'' like 
the Northridge, CA Earthquake. In addition, Congress has often 
segregated funds to be used on a contingency basis, often 
representing carryover from previous appropriations.
    The Committee disagreed with the SBA's plan to place nearly 
80% of the anticipated appropriations off-budget. While the 
Committee agreed that all of the requested ten-year average 
might not be needed it is ``budget-busting'' at its worst to 
place 80% of the anticipated loans off-budget.
    The budget also placed a large portion of the required 
administrative costs off-budget. $934 million in loans would 
require approximately $116 million in loan administration 
funds. The SBA also anticipated approximately $45 million in 
general S&E costs from disaster loans for a total of $161 
million in administrative costs. The Committee noted that the 
SBA has requested $86 million (more than 50%) of these funds on 
budget. The Committee believed that release and use of 
administrative funds should track the loan demand. 
Consequently, if SBA saw fit to request only 20% of the loan 
funds then they would need only 20% of the administrative 
funds.

                         SALARIES AND EXPENSES

    For FY 2000 the SBA requested an increase in non-disaster 
staffing and expenses. In the previous two years full-time 
equivalents have grown from the FY 1997 actual of 2,915 to an 
FY 1999 estimate of 3,133. This was an eight percent increase.
    With more functions being outsourced, privatized and 
automated it was difficult to comprehend the need for staffing 
increases. SBA's staffing efforts needed rethinking. If SBA was 
truly to become a cutting edge financial services agency with 
high-tech facilities it should have required fewer employees 
due to increased productivity.
    The FY 1999 proposal showed an increase of 16 net FTEs over 
FY 1998. The FY 2000 budget showed that there was in fact a 154 
FTE increase. In the FY 2000 budget the number of FTEs would 
rise again by 42 FTES.
    In addition, the number of positions at the agency had 
risen 97 positions beyond what was requested in the FY 1999 
budget. How were they justified as part of the FY 2000 base 
request when they were not part of the FY 1999 increase 
request. The Committee understood that there was a hiring 
freeze at the SBA; its continuation was encouraged until those 
hiring discrepancies were explained.
    The Committee also noted that the SBA requested an 
additional $5 million for retraining and relocating employees 
and buying out employees. However, no detail was forthcoming on 
the nature of this retraining, or the destination of the 
relocated employees.

                      OFFICE OF INSPECTOR GENERAL

    The Committee generally supported the proposed increase for 
the Office of Inspector General. The Committee agreed that 
further vigilance was required not only for the loan programs 
but also for the myriad grant-based assistance programs which 
require more scrutiny due to their less easily quantifiable 
parameters. The Committee also believed that funding was 
required for the Inspector General's efforts at stemming fraud 
in the disaster loan program.

                               Conclusion

    The SBA continues to provide important services to the 
small business community. However, SBA's FY 2000 budget was, 
unfortunately, lacking in consistency. There was an increase in 
new unjustified programs at the expense of proven, popular 
programs. $233 million of reasonable disaster spending was 
masked by budget gimmicks. Meanwhile, federal employment was 
increased without accounting for performance or effectiveness. 
Streamlining and productivity enhancing technology appeared to 
be used to support bureaucratic growth.
    Minority views were also submitted.
            6.2.2  fiscal year 2001 budget
    The President's proposed budget for FY 2001 requested 
$1.062 billion for the Small Business Administration, an 
increase of $336 million over FY 2000. On February 16, 2000 the 
Committee on Small Business met to consider and approve views 
and estimates on the fiscal year 2001 budget for the Small 
Business Administration. These views and estimates were then 
submitted to the Committee on the Budget.
    While the Committee believed that many of the provisions of 
the budget were reasonable, it could not agree with all of the 
spending proposed in the FY 2001 budget proposal. The views and 
estimates divided the Small Business Administration into five 
areas; (1) Financial Programs, (2) Assistance Programs, (3) 
Disaster Assistance, (4) Salaries and Expenses, and (5) Office 
of Inspector General.

                   SMALL BUSINESS FINANCIAL PROGRAMS

                                Summary

    The FY 2001 SBA proposed budget for small business 
financial assistance discussed building a twenty-first century 
financial management organization and providing assistance for 
small business. The President's Budget requested a total of 
$332.25 million in subsidy budget authority for financial 
programs, an increase of $65.45 million over FY2000 levels.

                               7(a) LOANS

    This is the SBA's leading loan guarantee program. The 
Administration proposal for appropriations for this program was 
based on an estimated program demand of $11.5 billion in loans, 
requiring $142.6 million in budget authority. The Committee 
believed this request was adequate. Recent SBA estimates of 
demand for 7(a) have proved accurate.

                               504 LOANS

    The Administration believed that the Section 504 loan 
program would not require appropriations for FY 2001, and would 
be able to continue to lower fees to the program's borrowers. 
Improvements have appeared in the program's liquidation 
performance, the largest single factor in the subsidy rate 
equation and a source of significant concern to the Committee.
    The Committee agreed that no appropriation would be needed 
for this program but was concerned that a report on recoveries 
within the program has not yet been completed.

               SMALL BUSINESS INVESTMENT COMPANY PROGRAM

    The Administration proposed an increased program level for 
both parts of the SBIC program. The Administration requested a 
$1.9 million increase in subsidy budget authority for the 
participating securities program. This would increase subsidy 
budget authority from $24.3 million to $26.2 million and 
increase the program level to $2 billion. The Committee 
supported the requested budget amount of $26.2 million.
    The Administration also requested an increase in subsidy 
budget authority for the debenture program. In FY 2000 the 
debenture program operated at a zero subsidy rate and required 
no appropriations and provided up to $800 million dollars in 
leverage. The FY 2001 request would be $500 million in 
debenture leverage, an amount higher than the estimated FY2000 
demand of $450 million. However, the request came with an 
increased cost in subsidy budget of $3.9 million because the 
subsidy rate has increased to 0.78%. SBA informed the Committee 
that this estimate was in error. Consequently, the request for 
subsidy budget authority was inflated. While the Committee 
supported the requested program level it had concerns over the 
change in subsidy costs. The Committee reserved judgment on the 
need for appropriations absent a full accounting.

                           MICROLOAN PROGRAM

    The SBA requested a more than 100% increase in funding for 
the microloan program for FY 2001. The program level would 
increase from $29 million to $60 million, and subsidy budget 
authority would increase from $2.5 million to $5.3 million.
    The Committee expressed its desire that a portion of the 
requested increase be channeled to the guaranteed microloan 
program. SBA had continuously frustrated this program through 
lack of effort and regulations drafted in a fashion to 
discourage participation. That program offers an opportunity to 
expand the program at a reduced subsidy rate through 
established local lenders. This would not only provide a 
reduced cost to the taxpayer, but would provide microloan 
clients with exposure to traditional lending outlets.

                          ASSISTANCE PROGRAMS

                                Summary

    The FY 2001 SBA budget submission proposed significant 
increases in spending on its non-credit business assistance 
programs. While these programs represent well-intentioned 
efforts to aid small business, there is a tendency to fragment 
rather than consolidate these efforts. The SBA proposed or 
increased several new, unauthorized programs at a cost of 
millions. The Committee had concerns over how these funds would 
be spent.

                          DRUG-FREE WORKPLACE

    The Administration requested no funding for this program. 
Further, it listed the program, fully authorized in Section 
27(g) of the Small Business Act, as a Congressional Initiative. 
This, in spite of the fact that the Public Law authorizing this 
program passed the House of Representatives and Senate with 
overwhelming support and was enthusiastically signed by the 
President.
    The Committee objected to this budget position which 
ignored concrete and significant efforts to improve the small 
business climate and workplace conditions.

                     MICROLOAN TECHNICAL ASSISTANCE

    The Administration requested $45 million in technical 
assistance funds for the Microloan program. The Committee 
reserved judgment on the need for this additional funding. The 
Committee was particularly concerned that the need for this 
funding was duplicative of funding proposed in the PRIME/CDFI 
program, and vice versa.

                           ADVOCACY DATABASE

    The Administration proposed $1.5 million for the Office 
Advocacy to support research and economic analysis. The 
Committee supported this proposal.

                        WOMEN'S BUSINESS COUNCIL

    The Administration proposed increasing funding for the 
Women's Business Council from $400,000 to $1 million. The 
Committee supported the work of the Council but believed this 
request required further justification.

                        WOMENS BUSINESS CENTERS

    The Administration proposed increasing funding of this 
program to $12 million. The Committee supported this proposal 
and the excellent work performed by the centers.

                  BUSINESS INFORMATION CENTERS/USEACs

    The Administration proposed increased funding for these 
programs. BICs would increase from $500,000 to $700,000. USEACs 
would increase from $3.1 million to $3.5 million. However, the 
agency still failed to explain whether it intends to co-locate 
any of these centers with existing Small Business Development 
Centers.
    The Committee supported the BIC and USEAC projects but 
requested SBA to provide more substantial information on the 
activities of these sites and improve performance.

               SMALL BUSINESS DEVELOPMENT CENTERS (SBDCs)

    The Administration proposed $85 million in funding for the 
SBDC program. This proposal was a vast improvement over 
previous requests. The Administration also proposed $3 million 
to establish Native American SBDCs. The Committee supported 
that request.

                                HUBZONES

    The Administration requested increased funding for this 
program from $3 million to $5 million. The Committee believed 
that, rather than pursuing staffing and funding increases, the 
SBA could better serve HUBZones businesses by implementing a 
simplified, on-line application process and outreach through 
established programs. Such an approach, combined with auditing 
support, would enable the program to reach far more small 
businesses than the 800 reached to date. This approach should 
be promoted in the final regulations for full implementation of 
this program.

                         ONE STOP CAPITAL SHOPS

    The SBA FY2001 budget proposed a significant (210%) 
increase in funding for this program, from $3.1 million to $10 
million. The Committee notes that information regarding the 
use, services and merits of One Stop Capital Shops is limited. 
SBA reported that OSCS counseled 53,000 people last year and 
yet this resulted in only 530 loans. One percent was not an 
impressive return for a program designed to provide access to 
capital.

                               E-COMMERCE

    The Administration requested $5 million to fund a new, 
unauthorized, program designed to teach small business about 
doing business over the Internet. While the Committee 
appreciated the SBA's belated interest in this area it was 
reluctant to fund a program of this cost without significant 
information regarding its application and availability.

                             BUSINESS-LINC

    This was another unauthorized program. The Administration 
proposed increasing this program from an initial $1.5 million 
to $6.6 million. The Committee received no information 
regarding the operation and organization of this program and, 
therefore, opposed any increased funding.

                             SBIR PHASE III

    The Administration proposed $15 million in unauthorized 
grants for Phase III SBIR participants. The Committee made 
clear that the original intent of the SBIR program was to 
provide grants for ONLY the first two phases of SBIR 
participation. At that point the participant is expected to 
have developed outside sources of financing and support for 
Phase III. The Committee strongly opposed this proposal.

                  NEW MARKET VENTURE CAPITAL COMPANIES

    The Administration proposed $21 million in subsidy budget 
authority to support $150 million in lending by these NMVCCs. 
The Administration's FY 2001 budget also proposed $30 million 
in technical assistance grant funding for New Markets Venture 
Capital Companies. These NMVCCs will make SBIC loans in Low & 
Moderate Income areas. This meant the Administration planned to 
spend $51 million in order to make $150 million in loans in LMI 
areas.
    The Committee found this questionable, particularly in 
light of the fact that regular SBICs made $800 million in 
investments in LMI areas in the previous year--without this 
program. The Committee doubted that the SBA could implement 
this program quickly enough to justify any further 
appropriations.

                          DISASTER ASSISTANCE

    The President's FY 2001 SBA budget submission asked for 
authority for $871 million in disaster loans, representing the 
ten-year average of disaster loan needs. The budget requested 
$142.1 million in subsidy budget authority to support these 
loans.
    The budget also requested administrative costs of $154 
million. The SBA anticipated that $30 million in general S&E 
costs would derive from disaster loan administrative costs. The 
Committee believed that release and use of these administrative 
funds should track loan demand. Consequently, if SBA uses only 
20% of the loan funds then they should need only 20% of the 
administrative funds transferred to general S&E.
    The Committee supported this request and is pleased that 
the Administration ceased manipulating disaster loan funding 
requests in order to shelter increases in other programs.

                         SALARIES AND EXPENSES

    For FY 2001 the Administration requested an increase in SBA 
non-disaster staffing and expenses. In FY1997-FY1999 full-time 
equivalents grew from the FY 1997 actual of 2,915 to an FY 1999 
estimate of 3,133. That was an eight percent increase.
    The FY 2000 budget submission showed an increase of 54 FTEs 
over FY 1998, with a request for a further 42 FTEs. In FY2001 
there was no mention of FTEs in the budget submission. Why was 
that information missing?
    The number of positions at the agency apparently dropped 
from 3,123 in FY1999 to 2,977 for the FY2000 estimate. For 
FY2001 the Administration requested 86 new SBA positions. The 
resulting positions number would still be 63 ``slots'' below 
FY1999. However, without the FTE count it is difficult to judge 
actual employment. 20 of these positions would serve the new 
NMI program.
    The Committee noted that the Administration requested an 
additional $4 million for retraining and relocating employees 
and buying out employees. However, no details were forthcoming 
regarding the nature of this retraining, or the destination of 
the relocated employees. This is the second year that was 
proposed with no explanation of the retraining required.

                      OFFICE OF INSPECTOR GENERAL

    The Committee generally supported the proposed increase for 
the Office of Inspector General to $14.1 million. The Committee 
agreed that further vigilance will be required not only for the 
loan programs but also for the myriad grant-based assistance 
programs. The Committee suggested that additional funding be 
allocated evenly between audit and investigative uses.

                               Conclusion

    The SBA continues to provide important services to the 
small business community. However, SBA's FY 2001 budget is, 
unfortunately, lacking in consistency. There is an increase in 
new unjustified programs at the expense of proven, useful 
programs. The unfortunate result is a budget document that is 
more of a wishlist than a serious or significant planning 
document.
    Minority views were also submitted.
                             CHAPTER SEVEN

   SUMMARY OF OVERSIGHT, INVESTIGATIONS AND OTHER ACTIVITIES OF THE 
           COMMITTEE ON SMALL BUSINESS AND ITS SUBCOMMITTEES

7.1  Summary of Committee Oversight Plan and Implementation
    Pursuant to rule X, clause 2(d)(1), of the Rules of the 
House of Representatives, the Committee on Small Business 
adopted, on January 6, 1999, an oversight agenda for the 106th 
Congress. (For a discussion of the Committee's consideration of 
the oversight agenda refer to section 6.1.1 of this report.) 
The House rule also requires that each Committee summarizes its 
activities undertaken in furtherance of the oversight agenda as 
well as any additional oversight actions taken by the 
Committee.
    In the following portions of Chapter Seven, the provisions 
of the oversight agenda are addressed in the hearing summaries 
of the Committee and its subcommittees. A summary of each 
hearing conducted by the full Committee appears in section 7.2 
of this report and summaries of each subcommittee hearing 
appear in sections 7.3 through 7.7 of this report. An overview 
of the Committee's legislative activities appears in Chapter 
Five of this report.
       7.1.1 OVERSIGHT OF THE U.S. SMALL BUSINESS ADMINISTRATION
                             106TH CONGRESS
                     U.S. HOUSE OF REPRESENTATIVES
                       JAMES M. TALENT, CHAIRMAN
             OVERSIGHT OF THE SMALL BUSINESS ADMINISTRATION
    The Committee conducted hearings on all the major programs of the 
Small Business Administration to determine their effectiveness and 
possible options for improvements.
         FINANCIAL AND MANAGEMENT/TECHNICAL ASSISTANCE PROGRAMS
    The Committee conducted hearings on the effectiveness and 
efficiency of the SBA's major programs. Particular emphasis will be 
placed on improving the economic efficiency of these programs. A number 
of the SBA's key programs were the subject of oversight hearings by the 
Committee. These included:
                  7(a) General Business Loan Programs
                 Certified Development Company Program
                              SBIC Program
                           Microloan Program
                                  SBDC
                         Disaster Loan Program
                                ADVOCACY
    The Office of Advocacy was created to provide small business with 
an effective voice inside the Federal Government. The Committee will 
conduct hearings on how to strengthen this voice and make sure that the 
Office of Advocacy continues to effectively represent the interests of 
small business.
                   TECHNOLOGY AND RESEARCH ASSISTANCE
                   Small Business Innovation Research
    The Small Business Innovation Research (SBIR) program aids small 
businesses in obtaining federal research and development funding for 
new technologies.
                   Small Business Technology Transfer
    Committee oversight focused on the program's success at helping 
small business access technologies developed at federal laboratories 
and put that knowledge to work.
                          FEDERAL PROCUREMENT
    The Committee examined needed changes in federal procurement. The 
Committee investigated the implementation of recent legislation dealing 
with ``bundling'' and the effect it is having on small businesses 
involved in government contracting.
                  GOVERNMENT & NON-PROFIT COMPETITION
    The Committee examined the extent to which non-profit organizations 
and the Federal Government itself competes with small business. Our 
focus included activities in both the private sector and government 
procurement.
                         REGULATORY FLEXIBILITY
    The Committee continued its oversight of agency compliance with the 
Regulatory Flexibility Act, as amended by the Small Business Regulatory 
Enforcement Fairness Act.
                                 SBREFA
    The Committee conducted oversight hearings on agency implementation 
of the Small Business Regulatory Enforcement Fairness Act (SBREFA), 
which was enacted during the second session of the 104th Congress.
                          PAPERWORK REDUCTION
    The Committee continued its oversight of agency implementation of 
the Paperwork Reduction Act, as amended.
                         GOVERNMENT REGULATION
    The Committee continued to examine the regulatory activities of 
various federal agencies and assess the impact of regulations on the 
small business community.
                                TAXATION
    The Committee continued to conduct oversight hearings into ways to 
reduce the tax burden on small business. These hearings included not 
only the fiscal but also the paperwork burden of the federal tax system 
and federal enforcement efforts.
                     ELECTRIC UTILITY DEREGULATION
    The Committee conducted oversight hearings on the potential effects 
of electric utility deregulation on small business.
                 GOVERNMENT PERFORMANCE AND RESULTS ACT
    The Committee continued consultations with the SBA regarding the 
preparation and implementation of strategic plans and performance plans 
as required by the Government Performance and Results Act.
                              EMPOWERMENT
    The Committee conducted oversight hearings on regulations and 
licensing policies that impact small businesses located in high-risk 
communities. The Committee also examined the promotion of business 
growth and opportunities in economically depressed areas, and examined 
programs targeted towards relief for low-income communities.

7.2  Summaries of the Hearings Held by the Full Committee on Small 
        Business

            7.2.1  h.r. 68, the small business investment company 
                    technical corrections act of 1999

                               Background

    The purpose of H.R. 68 is to make certain amendments to 
Title III of the Small Business Investment Act of 1958 and 
amend Section 20 of the Small Business Act. The technical 
corrections proposed by H.R. 68 would improve the flexibility 
of the SBIC program and allow program by small businesses.
    Congress revamped the SBIC program in the 103d Congress to 
provide for a new form of leverage geared specifically towards 
equity investment in small businesses. Over the ensuring years, 
as the new program has become established, certain deficiencies 
have come to light; in addition, certain statutory provisions 
have become obsolete. H.R. 68 will modify the SBIC program to 
exclude contingent obligations from the calculation of interest 
in loans made by SBICs; repeal provisions in the Small Business 
Investment Act that reserves leverage for smaller SBICs; 
increase the authorization levels for the participating 
securities segment of the SBIC program; modify a test for 
determining the eligibility of small businesses for SBIC 
financing; and allow the SBA greater flexibility in issuing 
trust certificates to finance the SBIC program's investments in 
small businesses.

                                Summary

    On Thursday, January 7, 1999, the Committee on Small 
Business held a brief hearing to consider the provisions of 
H.R. 68. Testifying at the hearing was Mr. Lee Mercer, 
President of the National Association of Small Business 
Investment Companies. Mr. Mercer reiterated his testimony from 
the 105th Congress regarding the beneficial effects that H.R. 
68 would have on the SBIC program. He recognized the 
improvements in management that occurred in the program over 
recent years and strongly recommended the corrections contained 
in H.R. 68. Mr. Mercer explained the five provisions and the 
effect they would have in detail. The hearing was in essence a 
reprise of the hearing held the previous year to discuss the 
provisions of H.R. 3412.
    Mr. Hinojosa asked questions concerning the establishment 
of the cost of money for the SBIC program through the secondary 
market. Mr. Mercer explained that the cost was variable and 
fluctuated in correspondence with changes in the 10-year 
Treasury rate and the varying spread requirements of 
institutional investors. Ms. Napolitano also asked Mr. Mercer 
about the various examples of the effect and impact of the SBIC 
program.
    For further information on this hearing, refer to Committee 
publication 106-1.
            7.2.2  review of women's business centers

                               Background

    The Committee met on February 11, 1999 to discuss the 
administration of the SBA's Women's Business Centers Program 
and what obstacles it faces. Women's Business Centers provide 
courses, workshops, mentor services and access to financing 
designed for women building businesses. These centers often 
target-low-income women.

                                Summary

    The witnesses at this hearing included: Lori Smith, founder 
and chairman of the board of the Oklahoma Women's Business 
Center, also representing the Association of Women's Business 
Centers; Linda Wharton, Small Business Owner and Client, 
Philadelphia Women's Business Development Center; and Betsy 
Myers, Associate Deputy Administrator, Office of 
Entrepreneurial Development of the Small Business Association.
    Ms. Smith spoke of her worries regarding the sustainability 
of the Women's Business Centers program. She believes the 
program was instrumental in her own success as a small business 
owner, and she does not want to see the program phased out. She 
stated that in order to sustain the growth of women business 
owners, Congress must maintain and sustain the infrastructure 
of women's business centers nationwide; incorporate flexibility 
into the program by allowing Women's Business Centers to re-
compete for funding, strengthen the association between the 
Women's Business Centers; support the expansion of the program 
but not at the expense of the program's successes; reconsider 
the match requirement, especially in the fifth year for an 
initial grant; and increase the authorization for the Women's 
Business Centers to $12 million.
    Ms. Wharton spoke of the help she received from her local 
Women's Business Center. She stated that this program was 
instrumental in her ability to launch HerSport, the company she 
owns with two women partners. She stated that the needs of men 
and women differ when starting a business, and that the Women's 
Business Centers program provides essential help in leveling 
the playing field.
    Ms. Myers testified that the Women's Business Centers 
program is essential. She stated that they are certainly 
filling a need in communities across America, and that the 
Small Business Administration should do everything possible to 
sustain the program.
    For further information on this hearing, refer to Committee 
publication 106-2.
            7.2.3  review of sba's fy 2000 budget request

                               Background

    The Small Business Administration provides a variety of 
services for small businesses--financial assistance, technical 
assistance, and disaster assistance.

                          Financial Assistance

    The Small Business Administration provides approximately 
$11 billion in financing to small businesses annually. This 
financing is made available through a variety of programs.
    SBA's largest financial program is the Section 7(a) general 
business loan program. The 7(a) program offers loans to small 
businesses through local lending institutions. These loans are 
provided with an SBA guarantee of up to 80 percent and are 
limited to a maximum of $750,000. The 7(a) program has a 
subsidy rate of 1.16% for fiscal year 2000 and an appropriation 
of $107 million, permitting $9.8 billion in lending.
    The Section 504 loan program provides construction, 
renovation and capital investment financing to small businesses 
through certified development companies (CDCs). These CDCs are 
SBA licensed, local business development organizations which 
provide loans of up to $750,000 for small businesses, in 
cooperation with local banks.
    The Microloan program provides small loans of up to $25,000 
to borrowers in low-income areas. In fiscal year 1999 the 
program provided $29 million in loans. In addition, the program 
has a technical assistance aspect that provides managerial and 
business expertise to microloan borrowers. Microloans are made 
by intermediary organizations that specialize in local business 
development.
    The Small Business Investment Company (SBIC) program 
provides over $1.5 billion in long term and venture capital 
financing for small businesses annually. SBICs are venture 
capital firms that leverage private investment dollars with SBA 
guaranteed debentures or participating securities. The SBIC 
debenture program currently operates at a zero subsidy rate and 
requires no taxpayer subsidy. The participating securities 
program has a 1.8 percent subsidy rate.

                          Technical Assistance

    The SBA provides technical and managerial assistance to 
small businesses through four primary programs--
    Small Businesses Development Centers (SBDCs) are located 
primarily at colleges and universities and provide assistance 
through 51 center sites and approximately 970 satellite offices 
and offer small businesses guidance on marketing, financing, 
start-up, and other areas.
    The Service Corps of Retired Executives (SCORE) which 
provides small business assistance on-site through the 
volunteer efforts of its members. SCORE volunteers are retired 
businessmen and women who offer their expertise to small 
businesses.
    The 7(j) technical assistance program provides financing 
for technical assistance to the minority contracting community 
primarily through courses and direct assistance from management 
consultants and assistance for participants to attend business 
administration classes offered through several colleges and 
universities.
    The Women's Business Center program provides business 
training centers for women and teach women the principles of 
finance, management and marketing as well as specialized topics 
such as government contracting or starting home-based 
businesses. There are currently 81 centers in 47 states in 
rural, urban and suburban locations.

                           Disaster Assistance

    The Small Business Administration also provides disaster 
loan assistance to homeowners and small businesses nationwide. 
This program is a key component of the overall Federal recovery 
effort for communities struck by natural disasters. This 
assistance is authorized by section 7(b) of the Small Business 
Act which provides authority for reduced interest rate loans. 
Currently the interest rates fluctuate according to the 
statutory formula--a lower rate, not to exceed four percent is 
offered to applicants with no credit available elsewhere, while 
a rate of a maximum of eight percent is available for other 
borrowers.

                                Summary

    On February 24, 1999 at 10:00 a.m., the Committee on Small 
Business convened a hearing to discuss the Administration's 
budget submission for fiscal year 2000, their legislative 
proposals, and the reauthorization of the SBA's programs. The 
Committee received testimony from one witness: Hon. Aida 
Alvarez, Administrator of the Small Business Administration.
    Ms. Alvarez's testimony outlined the Administration's 
request, and concentrated on the Administration's ``New Markets 
Initiative''. She was joined in some of her responses by Mr. 
Greg Walter, Deputy Chief Financial Officer of the SBA, and Mr. 
John Gray, Associate Administrator for Investment.
    During the hearing Chairman Talent questioned Administrator 
Alvarez on the lack of funding for the Veterans Business 
Outreach program. The Chairman also raised questions about an 
apparent rise in the request for administrative expenses in the 
budget submission.
    Ranking Member Velazquez questioned the Administrator on 
the New Markets Initiative. Representatives Kelly and Forbes 
questioned the Administration's proposal to mandate that Small 
Business Development Centers charge fees. Mr. Forbes expressed 
concern that the Administration's proposal would effectively 
reduce funding for SBDCs by 25%, and those commensurate cuts 
were not being imposed on other programs.
    Representative Pascrell questioned the Administrator on the 
efforts to improve lending to African-American and Latino-
American small businesses and expressed concern over the drop 
in lending to those groups.
    Representative Udall questioned the Administrator regarding 
assistance for Native American communities.
    Representatives Tubbs-Jones and Schakowsky questioned the 
Administrator on efforts to increase lending in low-income 
communities.
    Representative Forbes closed the hearing with questions 
about the Administration's proposal to take disaster assistance 
funding off budget.
    For further information on this hearing, refer to Committee 
publication 106-3.
            7.2.4  the small business year 2000 readiness act

                               Background

    The full Committee on Small Business met to review the 
Small Business Year 2000 Readiness Act (S. 314), which passed 
the Senate on March 2, 1999 and became Public Law 106-8 on 
April 5, 1999.
    The bill requires the Small Business Administration to 
establish a limited-term loan program whereby the agency 
guarantees the principal amount of a loan made by a private 
lender to assist small businesses in correcting Y2K computer 
problems. The program's start-up phase would be expedited by 
making each lender that currently participates in the SBA's 
7(a) business loan program eligible to participate in the Y2K 
loan program.

                                Summary

    One panel testified at the hearing: Ms. Jeanne Sclater, 
Deputy Associate Deputy Administrator, Office of Capital 
Access, Small Business Administration (SBA); Mr. David 
Schaefer, Vice President, Armfield, Harrison & Thomas, Inc.; 
Mr. Todd McCracken, President, National Small Business United; 
and Mr. Harris Miller, President, Information Technology 
Association of America.
    Ms. Sclater testified that the proposed loan program would 
authorize SBA to guarantee loans outside its normal credit 
criteria, thus broadening the band of potentially eligible 
small businesses. While she agreed that the concept of targeted 
funding to small businesses to meet the Y2K threat is a 
laudatory objective, she mentioned concerns about how some of 
the bill's provisions could adversely impact SBA's ability to 
meet borrowers' needs under the regular 7(a) business loan 
program could hurt small businesses by mandating a balloon 
payment loan structure.
    Mr. Schaefer testified about the impact the Y2K problem is 
having on his small business and he included some anecdotal 
evidence from other businesses. As a property and casualty 
insurance agent, he also provided insight on the awareness and 
preparedness of his clients.
    Mr. McCracken testified about National Small Business 
United (NSBU) data that although the computer revolution has 
taken hold within the small business community, thirty-eight 
percent had not yet begun to address the Y2K issue. Smaller 
companies with fewer than 20 employees are even less likely to 
be addressing the Y2K problem.
    Mr. Miller testified that because the bill provides much 
needed assistance to small businesses, and, through the very 
existence of such a program, serves a powerful channel of 
awareness and outreach to the small business community, the 
Small Business Year 2000 Readiness Act, in combination with 
other Y2K legislation, will further the maximum correction of 
systems in the less than 300 days remaining before the 
rollover.
    For further information on this hearing, refer to Committee 
publication 106-5.
            7.2.5  the effect of the kyoto protocol on american small 
                    business

                               Background

    Countries completed negotiations on the Kyoto Protocol to 
the United Nations Framework Convention on Climate Change on 
December 11, 1997, committing industrialized nations to 
specified, legally binding ``greenhouse gas'' emission targets. 
The United States agreed to reduce greenhouse asses to 7% below 
the 1990 levels during the 2008 to 2012 commitment period. On 
November 12, 1998, U.S. United Nations Ambassador Peter 
Burleigh signed the Kyoto Protocol. The Administration has yet 
to submit the treaty to the U.S. Senate for ratification.
    The Administration indicated that absent developing 
countries (i.e., Mexico, China and Brazil), commitment to 
reduce greenhouse gases, it will not submit the protocol to the 
Senate. Last November, at the latest conference of the parties 
in Buenos Aires, Argentina, most developing countries declined 
to accept binding emission reduction goals.
    Ratification of the Kyoto Protocol will immediately impact 
energy intensive small businesses such as bakeries, dry 
cleaners, auto repair shops, small manufacturers, and, 
ironically, recycling businesses. The Kyoto Protocol will force 
small businesses to operate much smaller, less useful vehicles, 
and to pay higher gas taxes and utility bills.
    If the Senate ratifies the Kyoto Protocol, the 
Administration plans to domestically enforce the Protocol 
through a credit system. Companies will sell greenhouses gas 
emissions on an open market. Firms that achieve greater than 
national reductions may sell to non-compliant businesses--
allowing U.S. firms to profit for moving their operations to 
developing countries, i.e., Mexico, that reject binding 
reductions. It is more disastrous for small entities and start-
up firms that exponentially use more energy than 1990 levels.

                                Summary

    The Committee examined the Kyoto Protocol to the United 
Nations Framework Convention on Climate Change. The Clinton 
Administration signed the Protocol in November 1998, but has 
not submitted it to the Senate for ratification. The hearing 
focused primarily on the Protocol's economic impacts on 
American small businesses. Specifically, the hearing questioned 
the ability to successfully implement the Protocol absent 
developing country (i.e., China and India) participation. The 
hearing challenged previous assertions by Dr. Janet Yellen, 
Chair for the President's Council of Economic Advisers, that 
while domestic reduction in greenhouse gases would 
significantly impact the U.S. economy, the United States could 
purchase credits in an international market that would permit 
it to comply with its Protocol obligations without a negative 
impact on the U.S. economy. In addition to Dr. Yellen, Mr. 
Robert Reinstein, President, Reinstein & Associates 
International, Inc. provided testimony.
    For further information on this hearing, refer to Committee 
publication 106-10.
            7.2.6  electronic commerce: the benefits and pitfalls of 
                    conducting business over the internet

                               Background

    On May 26, 1999, the Committee met to discuss the benefits 
and pitfalls of Electronic Commerce. According to projections 
by IDC, by 2000, 46 million American consumers will be buying 
on-line, each spending an average of $350. Yet, E-marketer 
reported that fewer than 2 percent of the 7 million U.S. small 
businesses with fewer than 100 employees conduct on-line 
transactions. Furthermore, the problems of Internet tax and 
increased Federal regulation of the Internet are barriers to 
electronic commerce.

                                Summary

    A diverse panel of witnesses provided the Committee Members 
with valuable insight into this timely issue: Mr. Daniel O. 
Hill, Deputy Assistant Administrator for Technology, Small 
Business Administration (SBA); Mr. Harris Miller, President, 
Information Technology Association of America; Professor Andrew 
B. Whinston, Director, Center for Research in Electronic 
Commerce, University of Texas at Austin; Mr. Alan Anderson, 
Senior Vice President, American Institute of Certified Public 
Accountants; and Mr. Brian Hanson, Founder & Owner, Hanson 
Bros. Fresh Seafood, Portland, ME.
    Mr. Hill testified about ways the SBA is working to 
encourage small business involvement in electronic commerce, 
both as users and as developers and innovators of the 
technology.
    Mr. Miller argued that even with a successful web site, the 
benefits of e-commerce are not inevitable. E-commerce must be 
supported with sound public policy. Mr. Miller argued four 
challenges could harm small business access to e-commerce, 
including: increased federal Internet regulation; limited small 
business access to high speed telecommunications; lack of 
digital trust and security; and e-commerce taxation.
    Mr. Whinston testified about barriers to small business on-
line success and said the government should conduct more 
research to better understand how businesses on the Internet 
will operate. Then, small businesses may draw upon that pool of 
information to be effective competitors in the Internet world.
    Mr. Anderson testified about online security and how the 
American Institute of Certified Public Accountants created CPA 
Web Trust, a seal that verifies to consumers that the 
organization conducted an audit of a business' integrity, the 
web-site's transaction integrity, and the web-site's protection 
of on-line privacy.
    Mr. Hanson testified that many small businesses face 
serious obstacles. He successfully incorporated e-commerce into 
his business and estimates his on-line sales will reach 20-30% 
of his annual sales this year. However, while researching his 
company's Internet potential he found several small business 
errors that keep many small businesses from functioning 
effectively in the ``e-world.''
    Mr. Hanson also argued that poorly designed web sites, lack 
of traffic and exposure to the site, and a lack of 
functionality all must be rectified to succeed on the Internet. 
Small businesses often lack the technical skills, large capital 
for equipment and advertising, and the time necessary to manage 
their sites. Mr. Hanson said that without addressing these 
concerns, his on-line venture would not have succeeded as well.
    For further information on this hearing, refer to Committee 
publication 106-15.
            7.2.7  setra: fair and simple tax relief for small business

                               Background

    Introduced by Chairman Talent, H.R. 2087, the Small 
Employer Tax Relief Act of 1999 (SETRA) would provide fair and 
simple tax relief for small business. For SETRA purposes, the 
category ``small business'' generally includes C corporations, 
S corporations, partnerships, limited liability companies, and 
sole proprietorships averaging five million dollars 
($5,000,000) or less in annual gross receipts for the three 
preceding years.
    First, the bill would increase the deduction for the health 
insurance costs of self-employed individuals to 100 percent 
immediately. Current law allows the self-employed to deduct 60 
percent in 1999; 70% in 2002; and 100% in 2003. SETRA also 
would clarify that an individual can lose his or her self-
employed health insurance deduction only if he or she actually 
participates in another plan.
    Second, the bill would increase the meal and entertainment 
expenses for small business taxpayers from 50 percent to 80 
percent. The bill would extend to small businesses a tax law 
change provided in the Taxpayer Relief Act of 1997 for workers 
with federally mandated periods of rest. The provision 
increases the meal deduction incrementally by 5 percent to 80 
percent by the year 2009. In 1986, all businesses could deduct 
100 percent of business and travel meals as ordinary and 
necessary business expenses. Congress lowered the deduction to 
80 percent in 1987 and to 50 percent in 1994.
    Third, the bill would increase expenses for small business. 
Current law allows taxpayers to expense the cost of tangible, 
depreciable personal property purchased for use in the active 
conduct of a trade or business up to $19,000 in 1999; $20,000 
in 2000; $24,000 in 2001 and 2002; and $25,000 in 2003. SETRA 
would increase expensing for small businesses to $35,000 
immediately.
    Fourth, the bill would lower the top individual tax rate on 
small business from 39.6 percent to 34 percent. The lower tax 
rate would apply to the net income of a small business 
attributable to the active conduct of a trade or business (up 
to $5,000,000) and currently taxable above 34 percent.
    Fifth, the bill would repeal the Federal Unemployment 
surtax of 0.2 percent under current law. Specifically, the bill 
amends Section 3301 of the Internal Revenue Code to provide a 
Federal unemployment excise tax of 6.0 percent instead of 6.2 
percent. Congress added the 0.2% surtax temporarily in 1976 to 
repay government loans from the federal unemployment trust 
funds. While Congress fully repaid the loans in 1987, it 
continues to extend the temporary surtax.
    Finally, the bill would clarify that small business 
taxpayers with average annual gross receipts of $5,000,000 or 
less for the three preceding years can use the cash method of 
accounting without limitation, even if they use merchandise or 
inventory.

                                Summary

    James Wordsworth on behalf of the National Restaurant 
Association; Frank Joseph on behalf of the National Association 
for the Self-employed; Eric Wallace on behalf of the Associated 
Builders and Contractors; Terry Neece on behalf of the National 
Association of Women Business Owners; Brian Reardon of the 
National Federation of Independent Business; Martin Regalia of 
the Chamber of Commerce of the United States; and Dorothy 
Coleman of the National Association of Manufacturers provided 
testimony at the hearing.
    Among other findings, the testimony at the hearing 
established that:
     Accelerating the 100 percent health insurance 
deduction for the self-employed immediately would make health 
care more accessible and affordable for at least 5 million 
self-employed Americans, children and dependents.
     Reductions in the business meal expense deduction 
resulted in a disproportionate tax increase on the restaurant 
and entertainment industries and on business meal users--the 
majority of which are self-employed or small business 
customers;
     Expensing limits are too low. Increased expensing 
lowers the cost of capital and would help small business 
taxpayers update business equipment and keep pace with rapidly 
changing technologies;
     Recent increases in the top individual tax rate to 
39.6 percent affect two-thirds of all small businesses--forcing 
them to pay a higher tax rate than the top 34 percent tax rate 
Fortune 500 companies pay.
     Repealing the FUTA 0.2 percent surtax would reduce 
payroll taxes on small business taxpayers without affecting 
Social Security.
     Legislative history indicates Congress intended 
certain small entities to use the cash method of accounting 
without limitation. In contrast, an Internal Revenue Service 
(IRS) audit guide and recent IRS audit activities demonstrate a 
broad effort to force small businesses to change from the cash 
method to the accrual method of accounting.
    For further information on this hearing, refer to Committee 
publication 106-18.
            7.2.8  association health plans: giving small businesses 
                    the benefits they need

                               Background

    On June 10, 1999, the Committee on Small Business held a 
hearing to consider how Association Health Plans will assist 
various segments of the small business population to get health 
insurance. There are currently 43 million Americans without 
health insurance and over 60 percent have one thing in common: 
they, or a family member, are employed by a small business. A 
recent study by the CONSAD Research Corporation, estimated that 
as many as eight million uninsured would gain access to health 
coverage through AHPs.
    Historically, health insurance has been too expensive for 
the average small business owner to purchase. Thus many of 
those employed by small businesses are left without access to 
affordable health care options. AHPs allow small employers to 
join together through their trade associations to offer 
affordable and quality health insurance to their employees. 
AHPs ensure that small businesses are afforded the same 
economies of scale, purchasing clout, and administrative 
efficiency as large employers, when purchasing health 
insurance. Chairman Jim Talent (R-MO) and Rep. Cal Dooley (D-
CA) introduced the Access and Choice for Entrepreneurs Act 
(ACE), H.R. 1496, which would give small business owners the 
opportunity to offer employees the most basic patient 
protection, access to health care, through AHPs.

                                Summary

    The hearing consisted of one panel: Ms. Terry Neese, CEO 
and Founder, Terry Neese Personnel Services, and Corporate and 
Public Policy Advisor, National Association of Women Business 
Owners (NAWBO); Ms. Mary Nell Lehnhard, Senior Vice President, 
Policy and Representation, BlueCross BlueShield Association; 
Mr. Jesse Coleman, Vice President and Owner, Coleman's Hamilton 
Supply Company; Ms. Patricia Gagne, Vice President, Claims 
Technologies, Inc.; Mr. Joseph E. Rossman, Vice President, 
Employee Benefits Operations, Associated Builders and 
Contractors, Inc.; Mr. John B. Nicholson, Proprietor, Company 
Flowers.
    Ms. Neese testified that AHPs are especially important to 
women business owners, as they are the fastest growing segment 
of small business owners. She noted that while 82 percent of 
all women business owners offer health coverage, only 25 
percent of women-owned small businesses are able to offer 
coverage and; the smaller the business the less likely it is to 
offer health benefits.
    Ms. Mary Nell Lehnhard testified about Blue Cross Blue 
Shield's concern that AHPs would not provide comprehensive 
coverage since they are exempt from covering state-mandated 
benefits. She also expressed concern that plans the Department 
of Labor does not have the resources necessary to regulate 
AHPs.
    Mr. Coleman testified that in his industry where he must 
compete with large companies for employees, providing health 
care is crucial in attracting and retaining good employees. He 
told of his own experience as a small business owner trying to 
self-insure and being unable to find affordable rates. Mr. 
Coleman said that being able to participate in an ERISA plan 
would help level the playing field.
    Ms. Gagne testified that the Boys and Girls Clubs Workers 
Association had to cease coverage in certain areas because of 
rising health care costs that their members could not afford. 
She noted that compliance costs, carrier fees, and insurance 
company profit margins led B&GCWA to self-insure in order to 
offer affordable benefits to their members. Additionally, 
B&GCWA was able to provide coverage that was portable across 
state lines, which benefited many of their members who moved to 
start clubs in other areas. Ms. Gagne testified that AHPs build 
on current ERISA framework to allow small businesses to access 
affordable health care options.
    Mr. Rossman testified that ABC's Insurance Trust provides a 
crucial service to its small business members by negotiating 
cost and coverage options on their behalf. He mentioned that 
due to state reforms, ABC is being forced to increase rates, 
reduce benefits, or stop coverage altogether in certain areas. 
He said that AHP legislation would help ABC continue to serve 
their members by providing affordable, quality health care.
    Mr. Nicholson testified that his HMO recently stopped 
covering him and his employees because they no longer wanted to 
provide service to groups with less than ten people. He noted 
that he would like to be able to look to his trade association 
for guidance on this matter and that AHP legislation would give 
him that resource.
    For further information on this hearing, refer to Committee 
publication 106-19.
            7.2.9  h.r. 1568, the veterans entrepreneurship and small 
                    business development act of 1999

                               Background

    In July 1998, Small Business Administration Administrator 
Aida Alvarez established the SBA Veterans' Affairs Task Force 
for Entrepreneurship. The Task Force included representatives 
from the major veterans service organizations and veterans 
advocacy groups, veteran-owned businesses, SBA management board 
members, and SBA resource partners. H.R. 1568, the Veterans 
Entrepreneurship and Small Business Development Act of 1999 
implements the Task Force's ``high priority'' recommendations 
which the SBA failed to implement.
    First, the bill makes veterans eligible for funds under the 
microloan program which enables veterans to access capital 
markets currently available to other business owners possessing 
the capability to operate successful business concerns.
    Second, the bill amends the Small Business Development Act 
to require the Secretary of Veterans' Affairs, the 
Administrator of the Small Business Administration, and the 
small business development center associations to train all 
veterans, including disabled veterans, in business training and 
management assistance, procurement opportunities, and other 
business areas.
    Third, the bill creates the National Veterans Business 
Development Corporation. This Corporation will coordinate 
private and public resources from Federal organizations to 
establish and maintain a network of information and assistance 
centers for use by veterans and the public.
    Finally, the bill equates veteran-owned small business 
competitive opportunities to those provided to small business 
concerns owned and controlled by socially and economically 
disadvantaged individuals, including procurement contract 
opportunities.

                                Summary

    In July 1998, Small Business Administration Administrator 
Aida Alvarez established the SBA Veterans' Affairs Task Force 
for Entrepreneurship. The Task Force examined SBA's efforts to 
assist veteran entrepreneurs. The SBA, however, failed to 
implement the Task Force's recommendations. H.R. 1568, the 
Veterans Entrepreneurship and Small Business Development Act of 
1999 implements the Task Force's ``high priority'' 
recommendations. Betsy Myers, SBA representative; Anthony 
Baskerville, Disabled American Veterans; Valerie Callaway, a 
disabled veteran; John K. Lopez, Association for Service 
Disabled Veterans; Emil W. Naschinski, The American Legion; 
William Elmore, Data Forces Associates; Charles Foster, SBC 
Telecommunications; and Steve White & Co.; provided testimony.
    For further information on this hearing, refer to Committee 
publication 106-20.
            7.2.10  proposed amendments to the 7(a) and 504 loan 
                    programs

                               Background

    On June 24, 1999, the Committee on Small Business met to 
discuss proposed changes to the 7(a) and 504 loan programs, the 
major lending programs supported by the Small Business 
Administration.

                       The 7(a) Program Proposals

    Increase the maximum guarantee amount of a 7(a) loan to $1 
million from the current limit of $750,000 in order to keep 
pace with inflation, and institute a cap prohibiting loans with 
a gross amount in excess of $2 million.
    Remove a provision that reduced SBA's liability for accrued 
interest on defaulted loans since the provision's intended 
savings failed to materialize.
    Three changes designed to encourage the making of smaller 
loans. The 80 percent guarantee rate will be expanded from 
loans under $100,000 to loans under $150,000. Likewise, the two 
percent guarantee fee will now apply to loans up to $150,000, 
which represents a significant savings for these small 
borrowers. Finally, for small loans, a provision allowing 
lenders to retain one quarter of the guarantee fee on loans 
under $150,000 as an incentive to make these loans.
    The last proposal modifies an SBA regulatory restriction 
which prohibit loans for passive investment, and permits the 
financing of projects where no more than 20% of a business 
location will be rented out provided the small business 
borrower in question occupies the remaining space.

                         504 Program Proposals

    It has been ten years since any increase in the maximum 
guarantee amount in the 504 program. To keep pace with 
inflation, the maximum guarantee amount should be increased to 
approximately $1,250,000. The Committee proposes a simple 
increase to $1,000,000.
    The 504 program currently operates with a zero subsidy 
rate. The Committee proposed reauthorizing these fees.
    The Committee also proposed adding women-owned businesses 
to the current list of businesses eligible for the larger 
public policy oriented loans of up to $1,300,000; and making 
the Premier Certified Lender pilot program and the Liquidation 
Pilot Program permanent.

                                Summary

    On June 24, 1999, at 9:30 a.m., the Committee on Small 
Business convened a hearing to discuss legislative proposals 
for the 7(a) and 504 programs. The Committee received testimony 
from four witnesses Mr. Fred Hochberg, Deputy Administrator of 
the Small Business Administration; Mr. Anthony Wilkinson, 
President of the National Association of Government Guaranteed 
Lenders; Ms. Donna Faulk, Vice President for Mortgage Backed 
Securities of Prudential Securities; and Mr. John Geigel of the 
Wisconsin Development Finance Corporation representing the 
National Association of Development Companies.
    Mr. Hochberg's testimony generally supported both the 7(a) 
and 504 provisions in the legislative proposal which later 
became H.R. 2615 and H.R. 2614. He expressed the 
Administration's opposition to the proposed 7(a) subsidy floor 
provision which was removed from the final version. However, 
the Committee believes this provision merits further 
examination. Mr. Hochberg also expressed reservations regarding 
increasing the guarantee amount; however, he stated that those 
concerns were based on the draft of the bill without any 
provisions to encourage smaller loans. Such provisions were 
later added.
    He expressed the SBA's support for reauthorizing the fees 
which support the 504 program, making the Pilot Liquidation 
Program permanent and making the Premier Certified Lender 
Program permanent as well. Mr. Hochberg expressed the SBA's 
concerns over the language regarding the treatment of 504 loans 
in the SBA's planned asset sales. These concerns were later 
addressed by the Committee and changes were incorporated into 
H.R. 2614.
    Mr. Wilkinson testified in support of the 7(a) provisions 
proposed. He stated that the 7(a) lenders were particularly 
supportive of some form of prepayment penalty in order to add 
stability to the program. He stated that recent prepayments 
raised significant concern over the effect to the program as a 
whole. He also expressed support for the provisions raising the 
guarantee amounts, saying that such an increase was needed to 
provide some growth due to inflation. Mr. Wilkinson stated that 
he did not believe that the increases in average loan size were 
significant, and he noted that they fluctuated regularly.
    Ms. Faulk testified in support of the prepayment penalty 
provision. She testified that the commercial investors who 
purchase pools of SBA guaranteed loans have faced problems due 
to prepayments. Early prepayments require that loans be 
stripped from pools, with a corresponding loss in income. This 
results in a loss of investor confidence and interest in SBA 
backed pools and a loss in credit availability for small 
businesses.
    Mr. Geigel's testimony concerned the provisions affecting 
the 504 program. He expressed the Certified Development Company 
industry's strong support of the legislative language, which 
became the body of H.R. 2614. In particular, he supported the 
language providing qualified development companies with the 
ability to liquidate defaulted loans with minimal SBA 
oversight. He expressed the 504 industry's belief that the 
lenders, who had intimate knowledge of the loans, were in a 
superior position to either liquidate or restructure loans. In 
addition, he expressed strong support of the provisions 
increasing the maximum loan/debenture size and the inclusion of 
women-owned businesses as a group eligible under the public 
policy lending provisions of the 504 program.
    For further information on this hearing, refer to Committee 
publication 106-21.
            7.2.11  osha's safety and health program rule

                               Background

    On Thursday, July 22, 1999, the Committee on Small Business 
held a hearing to examine the Occupational Safety and Health 
Administration (OSHA) Draft Safety and Health Program Rule. 
OSHA officials have publicly stated that the Draft Rule is the 
most important element of OSHA's regulatory agenda. In its 
current form, the Draft Rule would require all private-sector 
businesses (aside from those in the agriculture and 
construction industry) to implement a safety and health 
program--meeting certain enumerated requirements such as 
``management leadership.'' ``employee participation,'' and 
``hazard assessment.'' Proponents of the Draft Rule contend 
that it takes a preventative approach to worker accidents and 
provides flexibility in implementation. Opponents of the rule 
contend that the terms of the rule are so vague as to preclude 
honest businesses from knowing how to comply. Moreover, 
opponents claim, mandatory safety programs imposed at the state 
level have failed.
    Concurrent with the Draft Rule, OSHA also released a 
Preliminary Initial Regulator Flexibility Act (``PIRFA'') 
analyzing the costs and benefits of the measure. This PIRFA 
served as the basis upon which small entities provided feedback 
during the Small Business Regulatory Flexibility Act (SBREFA) 
panel review process. The Small Business Administration's 
Office of Advocacy commissioned an independent contractor, 
Policy Planning & Evaluation, Inc., to produce an independent 
analysis of the methodology and rigor of the PIRFA. This rule 
was docketed in the formal rulemaking process.
    The hearing was convened in order to explore the merits of 
the Draft Rule and the rigor of OSHA's underlying cost-benefit 
analysis.

                                Summary

    The hearing comprised three panels. The Honorable Charles 
N. Jeffress, Assistant Secretary of Labor for Occupational 
Safety and Health, constituted the first panel. Mr. Jasbinder 
Singh, President of Policy Planning & Evaluation, Inc., and Dr. 
Henry Beale, Principal Economist of Macroeconomic Applications, 
Inc., composed the second panel. Mr. Baruch Fellner, a partner 
at Gibson Dunn & Crutcher, and Mr. Larry Halprin, a Partner at 
Keller and Heckman, composed the third panel.
    Secretary Jeffress cited the results of various voluntary 
safety and health programs adopted in private industry as 
providing probative evidence of the likely effectiveness of 
safety and health standards mandated by the Draft Rule. 
Chairman Talent contended that the success of such voluntary 
programs did not provide strong evidence that a mandatory 
program would work given the results. Chairman Talent cited a 
recent study by a senior OSHA economist which concluded that 
mandatory safety and health programs are no more effective than 
voluntary programs. Chairman Talent and Representative Kelly 
also asserted that the terms of the draft rule were so vague as 
to invite arbitrary enforcement.
    Mr. Singh contended that the cost-benefit analysis used by 
OSHA in its PIRFA accompanying the Draft Rule was 
methodologically flawed. Mr. Singh claimed that, in reviewing 
the PIRFA, it was apparent that OSHA overstated the benefits 
and underestimated the costs of the Draft Rule. Dr. Beale 
claimed that, although the PIRFA was poorly drafted, OSHA 
possessed sufficient underlying analysis and data to support 
the rule.
    Misters Halprin and Fellner both criticized the vague terms 
of the Draft Rule, contending that they invited arbitrary ex 
poste enforcement and precluded honest businesses from 
effectively discerning their compliance obligations. Misters 
Fellner and Halprin also derided the Draft Rule as a violation 
of OSHA's statutory authority. Moreover, both asserted that the 
``record keeping exemption'' and ``grandfather clause'' touted 
by OSHA as affording regulatory relief to small business were 
specious and deficient.
    For further information on this hearing, refer to Committee 
publication 106-23.
            7.2.12  epa's expansion of 112(r) of the 1990 clean air act 
                    amendments to include propane

                               Background

    In December 1984, storage tank in Bhopal, India 
accidentally released a toxic chemical into the atmosphere 
killing over 3,000, and injuring more than 200,000, 
individuals. In response, Congress amended the Clean Air Act to 
require the EPA to promulgate a ``list of 100 substances which 
in the case of an accidental release, are known to cause or may 
reasonably be anticipated to cause death, injury, or serious 
adverse effects to human health or the environment.'' Congress 
required the EPA to include 16 toxic chemicals on the list. In 
January 1993, the Bush Administration EPA proposed to expand 
the law to include propane within section 112(r). However, 
propane is not toxic.
    The EPA regulation, as originally drafted, would have 
covered any business that stored more than 10,000 pounds or 
2,300 gallons--including the average family farmer, greenhouse, 
or restaurant using propane as well as small propane 
distributors and dealers. Notwithstanding propane's regulation 
by OSHA, DOT, and every state and local fire department, EPA 
would have required these businesses, at minimum, to develop a 
``worst-case'' scenario impact of a propane explosion and a 
plan for dealing with that scenario, and to bring equipment and 
personnel up to EPA standards for executing such a plan. 
Furthermore, it would have given propane users the perverse 
incentive to do one of two things: switch to an environmentally 
unfriendly fuel, like fuel oil, or store less than the 
threshold 10,000 pounds on site, which would have required more 
frequent deliveries of propane and therefore more 
transportation of flammable fuels on the highways.
    As a result of these obvious problems with the regulation, 
and following six years of extreme Congressional pressure, the 
EPA finally raised the threshold for the application of its 
regulations from 10,000 pounds to 67,000 pounds, thus exempting 
most small business end users. The EPA could have avoided this 
problem in the first instance if it took the Small Business 
Regulatory Enforcement Fairness Act of 1996 (SBREFA) seriously.

                                Summary

    The Full Committee questioned the Environmental Protection 
Agency's expansion of section 112(r) of the 1990 Clean Air Act 
Amendments to include propane. According to EPA, the 1990 Clean 
Air Act Amendments allowed it to require propane dealers to 
comply with regulations corresponding to section 112(r). 
However, the United States District Court for the District of 
Columbia enjoined the EPA's enforcement. Furthermore, Congress 
enacted legislation that expressly exempted propane from 
section 112(r). Chairman Talent questioned the EPA's failure to 
obtain input from small businesses.
    Congressman Roy Blunt (R-MO); Mr. James Makris, Director, 
Chemical Emergency Preparedness and Prevention Office, U.S. 
Environmental Protection Agency; Mr. and Mrs. John and Mary 
Densmore, Geldbach Petroleum; and Mr. Paul Lindsey, All Star 
Gas, provided testimony.
    For further information on this hearing, refer to Committee 
publication 106-26.
            7.2.13  hearing on contract bundling and federal 
                    procurement problems facing small businesses

                               Background

    On August 4, 1999 the Committee on Small Business held a 
hearing to address the impact of contract bundling on small 
businesses. The purpose of the hearing was to examine whether 
contract bundling prevented small businesses from obtaining 
prime contracts from the federal government.
    Contract bundling is the consolidation of two or more 
procurement requirements into one contract. The consolidation 
of procurement requirements can result in contract 
solicitations that are so complex and large that small 
businesses do not have the resources to be considered 
responsive to the solicitation. Even if contracting officers 
consider the small business responsive, the size of the 
solicitation is likely to result in a determination that the 
small business bidders do not have the technical and financial 
resources to meet the conditions of the contract. For example, 
if the federal government requires that an office supply 
contractor be able to deliver office supplies anywhere in the 
United States within 24 hours, small businesses with only a few 
selected outlets probably would be considered a non-responsible 
contractor and therefore would not win the contract.
    The use of contract bundling has increased substantially 
during the past eight years as the federal government tries to 
emulate the volume-discount practices in normal commercial 
contracting. However, the federal government is not a 
commercial enterprise and the procurement process is used to 
accomplish social and economic goals such as participation by 
small businesses that commercial enterprises can ignore. In 
1997, Congress passed the Small Business Reauthorization Act 
which require procuring agencies to demonstrate that contract 
bundling will result in measurable substantial benefits and 
enables the Small Business Administration to contest the 
procuring agency's conclusion.

                                Summary

    The first panel consisted of Honorable Deidre Lee, 
Administrator of the Office of Federal Procurement Policy; Dr. 
Richard Hayes, Associate Deputy Administrator, United States 
Small Business Administration; and Robert Neal, Director, 
Office of Small and Disadvantaged Business Utilization, Office 
of the Under Secretary for Acquisition and Technology, 
Department of Defense.
    Ms. Lee testified that the government is interested in 
obtaining the best value for the federal government and, within 
this requirement, trying a variety of tools to increase small 
business participation. Ms. Lee also testified that the Office 
of Federal Procurement Policy was working with federal agencies 
to finalize rules to implement the Small Business 
Reauthorization Act of 1997.
    Dr. Hayes noted that the federal government was ahead of 
its goal for small business utilization despite efforts at 
streamlining that might lead to utilization of large businesses 
for the purchase of goods and services. Dr. Hayes further noted 
that the Small Business Administration worked with federal 
agencies to develop alternative strategies that will increase 
utilization of small businesses in the federal procurement 
process. Finally, Dr. Hayes noted that the Small Business 
Administration was working on finalizing regulations to 
implement the contract bundling provisions of the Small 
Business Reauthorization Act of 1997.
    Mr. Neal testified contract bundling has occurred, at least 
in part, due to contraction of the federal acquisition 
workforce. Mr. Neal then discussed initiatives put in place by 
the Defense Department to increase the opportunity for small 
businesses through joint venturing and teaming of interested 
small businesses. Mr. Neal also noted that the Defense 
Department was promoting the utilization of small business 
subcontractors by its prime contractors.
    The second panel consisted of Mr. Terry Head, President, 
Household Goods Forwarder Association; Mr. James Smith, Owner, 
United Janitorial Services, Inc.; Phyllis Hill Slater, 
President of Hill Slater, Inc. on behalf of the National 
Association of Women Business Owners; Cathy S. Ritter, 
President, Constellation Design Group on behalf of the American 
Consulting Engineers Council; and Dan Moore, President of 
Moore's Cafeteria Services, Inc.
    Mr. Head testified that the Defense Department procurement 
policy has resulted in severe reductions of the number of firms 
that provide moving and storage services to military bases. Mr. 
Head then noted that the reduction in the number of movers has 
resulted in an increase in the cost of each move of military 
personnel without any increase in the quality of service 
provided to the military personnel.
    Mr. Smith testified that bundling of contracts reduce the 
number of janitorial contracts awarded to 8(a) contractors. Mr. 
Smith went on to note that the trend for contract bundling will 
hurt many small and disadvantaged businesses and the 
communities that rely on those businesses.
    Ms. Hill Slater noted that women-owned businesses have 
problems with obtaining federal contracts and getting work as 
subcontractors on federal projects even though the women-owned 
businesses are qualified. Ms. Hill Slater then noted that 
bundling simply erects another barrier that women-owned 
businesses will have to overcome in their effort to obtain a 
fair share of federal government procurement dollars.
    Ms. Ritter noted that many small businesses would not have 
the resources to provide services for indefinite quantity 
contracts in excess of five million dollars ($5,000,000), which 
is becoming the norm in federal government solicitations for 
architect and engineering services. According to Ms. Ritter, 
the situation is exacerbated by including diverse engineering 
services in the same contract because small architecture and 
engineering firms do not have the resources to handle multiple 
disciplines.
    Mr. Moore testified that mess hall services for the United 
States Marine Corps improved dramatically after the Defense 
Department privatized that service. Mr. Moore went on to note 
that this improvement is in jeopardy because the Marine Corps 
intends to regionalize food preparation through the use of 
central kitchens and eliminate small businesses from bidding on 
these contracts.
    For further information on this hearing, refer to Committee 
publication 106-27.

                     7.2.14  small farm tax burdens

                               Background

    Chairman Talent, joined by Representative Kenny C. Hulshof 
(R-MO) of the Committee on Ways and Means, held a field hearing 
in Columbia, Missouri to explore the tax burdens on farmers and 
ranchers.
    Increasing tax burdens hinder the present and future 
viability of American farmers and ranchers--the overwhelming 
number of which are small businesses. Of the 2 million farms in 
America, 94 percent are small farms. In addition, families own 
and operate approximately 98 percent of the nation's farms and 
ranches. Estate and gift (death) taxes as high as 55 percent 
drain capital from--and too often force the sale of part or all 
of--farm and ranch operations.
    The nature of farming and ranching intensifies the burden 
of high taxes. Farming and ranching is capital intensive. In 
addition, farmers and ranchers hold their assets for long 
periods of time. According to the United States Department of 
Agriculture (USDA), agricultural assets total $1,140 billion 
with real estate accounting for 79 percent of the assets. On 
average, farmers and ranchers hold real estate for 30 years 
with farmland increasing in value 5 to 6 times over that 
period. Consequently, inflation has increased the value of 
farmland and equipment dramatically.
    Farming and ranching is cyclical in nature. The income of 
farmers and ranchers can change dramatically due to 
circumstances beyond their control. Weather disasters, 
downturns in overseas markets, and the price volatility 
inherent in commodity markets can lead to wild fluctuations in 
farm income from one year to the next. A bill sponsored by 
Representative Hulshof, the Farm and Ranch Risk Management 
(FARRM) Act (H.R. 957), would allow farmers and ranchers to 
make tax-deductible contributions of up to 20 percent of their 
annual income into a FARRM Account (for distribution within 5 
years). FARRM Account income would be taxed as ordinary income.

                                Summary

    David Blakemore of B&B Cotton Company; Ronald, McNeall, 
President of the Missouri Corn Growers Association; Dale 
Ludwig, Executive Director of the Missouri Soybean Association; 
Richard Erisman on behalf of the Missouri Farm Bureau; John 
Cauthon, President Elect of the Missouri Cattlemen's 
Association; Rick Rehmeier on behalf of the Missouri Pork 
Producers Association; and Rich Palmer, President of the 
Missouri Dairy Association; provided testimony at the hearing.
    The witnesses testified that they are in crisis. In 
addition, they stated that the average age of the nation's 
producers is over 55. The transfer of many farms and ranches to 
younger generations, therefore, is fast approaching. Yet, the 
witnesses revealed that fathers and mothers cannot in good 
conscience advise their children to stay on the family farm.
    Today, 70 percent of family-owned businesses fail to make 
it to a second generation, and 87 percent fail to make it to a 
third generation. Eliminating death and capital gains taxes 
would reduce the heavy tax burden on farmers and ranchers 
directly, and would make successful transfers of small, family-
held farms and ranches to future generations more feasible. In 
particular, death tax repeal is the single most fundamental act 
Congress can take to protect the long-term viability of 
families in agriculture.
    Coupled with agricultural assistance and reform, the FARRM 
Act is an exciting new tool that could help American farmers 
and ranchers through a second year of crisis. Low crop yields, 
low commodity prices, natural disasters, persistent trade 
barriers, government regulation, and burdensome tax policies 
are hurting agriculture severely.
    Finally, agriculture is a business. American taxpayers in 
agriculture deserve the same ability to deduct 100 percent of 
their health insurance costs immediately as large companies. 
Commonly, a spouse must work outside of the family farm to 
obtain the benefit of health insurance coverage because of the 
high, out-of-pocket cost of health insurance for the self-
employed.
    For further information on this hearing, refer to Committee 
publication 106-28. For related hearings, refer to Committee 
publications 106-30, 106-34, and 106-40.
            7.2.15   ``building a stronger agricultural community''

                               Background

    On August 24, 1999, the Committee on Small Business of the 
United States Senate and the Small Business Committee of the 
United States of Representatives held a joint field hearing in 
Kansas City, Missouri to explore issues critical to the 
agricultural community in Missouri and across rural America.
    The hearing was organized as a roundtable discussion and 
explored the tax, regulatory, and trade policies affecting 
farmers and ranchers. Substantially declining commodity prices 
and tightening trade markets are hurting family farms and 
ranches, and heighten the need for emergency relief and for 
tax, regulatory, and trade reforms. Legislative initiatives 
discussed included H.R. 2743, the Farm and Ranch Emergency 
Assistance Act, and H.R. 2488, the Taxpayer Refund and Relief 
Act of 1999.

                                Summary

    Participants included: Julie Baker, Legislative Director 
and Membership Coordinator, Missouri Farm Union, Shelbina, 
Missouri; Gina Bowman-Morrill, Director of Government 
Relations, Farmland Industries, Inc., Kansas City, Missouri; 
Dan Cassidy, Director of National Legislative Programs, 
Missouri Farm Bureau, Jefferson City, Missouri; David Drennan, 
Executive Director, Missouri Dairy Association Chesterfield, 
Missouri, David Durham, Producer, Missouri Soybean 
Merchandising Council, Jefferson City, Missouri; Terry Ecker, 
Farmer, and Member, Missouri Farm Bureau, Jefferson City, 
Missouri; Richard Fordyce Farmer, and Member, Missouri Farm 
Bureau, Jefferson City, Missouri; Ben Griffith, General 
Manager, Central Co-op, Pleasant Hill, Missouri; Jim Guest, 
President, Missouri Pork Producers Association, Columbia, 
Missouri; Dale Ludwig, Executive Director and Chief Executive 
Officer, Missouri Soybean Association and Merchandising 
Council, Jefferson City, Missouri; Ronald McNeall, President, 
Missouri Corn Growers Association, Jefferson City, Missouri; Ed 
Nierman, Treasurer and Member of the Board, Missouri Dairy 
Association, Concordia, Missouri; Don Nikodim, Executive 
Director, Missouri Pork Producers Association, Columbia, 
Missouri; Wes Shoemeyer, President, Missouri National Farmers 
Organization, Clarence, Missouri; Don Shriver, Executive Vice 
President, Dairy Farmers of America, Inc., Kansas City, 
Missouri; Sam Stone, Vice President, Government and Member 
Relations, Dairy Farms of America, Kansas City, Missouri; Jay 
Truitt, Executive Vice President, Missouri Cattlemen's 
Association, Columbia, Missouri; Tom Waters, Chairman, Missouri 
Levee and Drainage District Association, Orick, Missouri; Bob 
Wollenman, Representative, St. Joseph Area Chamber of Commerce, 
St. Joseph, Missouri; Abner Womack, Executive Director, Food 
Agricultural Policy Research Institute, Columbia, Maryland; and 
Robert Young, Co-Director, Food Agriculture Policy Research 
Institute, Columbia, Missouri.
    The witnesses discussed repealing the death tax; 
accelerating the 100% health insurance deduction for the self-
employed; reducing capital gains taxes; indexing capital assets 
for inflation; increasing Section 179 expensing; the effects of 
increasing consolidation of farming operations; providing 
investment tax incentives for farmer-owned new general 
cooperatives, including value-added production; Farm, Fish and 
Ranch Risk Management (FFARM) Accounts; crop insurance reform; 
commodity prices fluctuations, and models; impact of accession 
of China into the World Trade Organization (WTO); the 
Regulatory Flexibility Act; the United States Department of 
Agriculture (USDA) Federal Milk Market Order proposal; effects 
of Environmental Protection Agency (EPA) water quality and 
waste management regulations on small business farmers; and 
certain trade barriers and restrictions.
    For further information on this hearing, refer to Committee 
publication 106-30.
            7.2.16  hearing on h.r. 296--the national small business 
                    regulatory assistance act

                               Background

    On September 2, 1999, the Subcommittee on Regulatory Reform 
and Paperwork Reduction held a field hearing at Columbia Green 
Community College in Hudson, NY to address H.R. 296--the 
National Small Business Regulatory Assistance Act. The purpose 
of the hearing was to determine whether Small Business 
Development Centers should obtain funding from regulatory 
agencies and provide regulatory counseling to small businesses.
    Regulatory compliance remains one of the most challenging 
tasks for small businesses. Since 1980, the federal 
government's yearly compendium of rules and regulations--the 
Federal Register--has increased from approximately 42,000 pages 
to almost 74,000 pages. The complexity of the regulations has 
increased as well. Small businesses often learn about the 
failure to comply with a regulation when an inspector walks 
through the door. This places small businesses owners in the 
position of reacting after the fact rather than complying 
before a problem arises.
    Small Business Development Centers are operated by various 
colleges and universities with oversight by the United States 
Small Business Administration. The Small Business Development 
Centers currently provide an array of small business counseling 
advice. H.R. 296, introduced by Congressman Sweeney, would 
authorize the Small Business Development Centers to establish a 
system of voluntary regulatory compliance assistance. The Small 
Business Development Centers would form partnerships to work 
with various federal agencies to make non-punitive compliance 
assistance accessible to small business owners.

                                Summary

    Individuals providing testimony were Mr. Henry F. Zwack, 
County Executive; Mr. Art DeCoursey, Small Business Liaison, 
Occupational Safety and Health Administration, United States 
Department of Labor, Mr. Jim King, State Director for the New 
York State Small Business Development Centers; Mr. David 
Bradley, Acting Director, New York State Office of Regulatory 
Reform; Eric Ooms, Chairperson, Columbia County Farm Bureau 
Dairy Committee; and Lars Andersen, Owner, Anderson 
International Marketing.
    Mr. Zwack testified that government over-regulation was a 
hindrance to economic development in Rensselaer County. Mr. 
Zwack then noted that regulations often set forth the 
mechanisms for regulatory compliance in great detail. Voluntary 
regulatory compliance assistance would alleviate this problem 
according to Mr. Zwack. Finally, Mr. Zwack suggested that any 
voluntary program operated through the Small Business 
Development Centers also provide a link with state and local 
governmental organizations that are providing regulatory 
compliance assistance. Mr. DeCoursey testified about the 
changing culture at the Occupational Safety and Health 
Administration (``OSHA''). Mr. DeCoursey noted that OSHA 
appointed a small business liaison. Mr. DeCoursey also 
mentioned that OSHA has written a new compliance guide in plain 
English, developed a small business web page, and created an 
ongoing dialogue with the United States Small Business 
Administration. Mr. DeCoursey stated that OSHA was seeking to 
fund a pilot project in which 10 OSHA employees would be based 
in various Small Business Development Centers around the 
country.
    Mr. King testified that Small Business Development Centers 
are already helping 35,000 New York small business owners every 
year. Mr. King noted that three of the most significant 
regulatory agencies, EPA, OSHA, and the IRS, were beginning to 
focus on compliance by smaller businesses. Mr. King noted that 
small business owners were members of the community and did not 
want to injure their workers or create environmental hazards. 
However, Mr. King noted that fear often prevents the small 
business owner from obtaining compliance assistance. Mr. King 
noted that H.R. 296 would allay the fear and provide an avenue 
for small business owners to obtain the type of compliance 
assistance they need.
    Mr. Bradley testified that he is responsible for uncovering 
unnecessary New York state regulations that inhibit economic 
growth. In addition, he testified that his office maintains 
data on permits that may be required for opening a business in 
New York. Mr. Bradley testified that H.R. 296 is needed because 
a beauty salon operator is an expert in cutting hair not in 
environmental regulations or tax law.
    Mr. Ooms testified that farmers are also subject to 
regulation. He noted that fruit growers have to comply with 
immigration regulations. As a dairy farmer, he had to comply 
with clean water regulations concerning concentrated animal 
feedlot operations. Mr. Ooms believes that H.R. 296 would prove 
useful to farmers and others in agribusinesses.
    Mr. Andersen testified that his business has received 
substantial and valuable assistance from Small Business 
Development Centers. Mr. Andersen noted that one substantial 
fine from OSHA could put him out of business. Thus, Mr. 
Andersen opined that any assistance, such as that provided for 
in H.R. 296, would be useful to many small business owners 
whose expertise is running a business not complying with 
complex, and often obscure, government regulations.
    For further information on this hearing, refer to Committee 
publication 106-32.
            7.2.17  ``helping agricultural producers ``re-grow' rural 
                    america''

                               Background

    Farmers and ranchers feed and clothe America and much of 
the world. On average each and every American farmer and 
rancher feeds and clothes himself and 126 other people. These 
agricultural producers work hard in providing the United States 
with the most affordable, most abundant, and safest food supply 
in the world.
    Yet, record high disasters and record low commodity prices 
are hurting farmers and ranchers. Current world demand for 
American agricultural products is down. For example, 
historically the southeastern region of Missouri, due to the 
availability of river transportation to the world market, has 
enjoyed, at worst, a neutral basis (difference between cash 
price and futures price), and often a positive basis on corn 
during August. In August 1999, corn producers in southeast 
Missouri faced cash, farm-gate prices as much as $0.50 below 
futures prices. The Federal government must help producers 
through the tough times with both near term assistance and 
future opportunities, including lifting trade barriers, 
expanding export markets for U.S. farm products, and developing 
new and innovative producer-owned marketing systems. Exploring 
how agricultural producers can develop new, innovative, 
vertically-integrated marketing systems for their products is 
essential. By ensuring America's agricultural system remains 
viable and profitable, Congress can help ``re-grow'' rural 
America for generations to come.

                                Summary

    Witnesses at the hearing included: Charles E. Kruse, 
President of the Missouri Farm Bureau Federation; Dale Ludwig, 
Executive Director of the Missouri Soybean Association; Bruce 
Stockman, Executive Director of the Minnesota Corn Growers 
Associaton; Jeff Ward, Director of Producer Education for the 
National Pork Producers Council; Virgil Flanigan, University of 
Missouri-Rolla, Director of the Center for Environmental 
Science and Technology; Nickolas G. Kalaitzandonakes, 
University of Missouri-Columbia, Agricultural Economics 
Department; Rodney Christianson, CEO of the South Dakota 
Soybean Processors; and Dayton Watkins, Rural Business-
Cooperative Services Administrator for the United States 
Department of Agriculture, Rural Development/Cooperative 
Development testified at the hearing.
    The hearing explored the opportunities and the needs of 
agricultural producers in developing value-added enterprises. 
Producers, family farmers, and educators specializing in value-
added processing testified on the future of agriculture and the 
benefits of value-added production. Agricultural producers--
America's original small business owners--must reach up the 
agricultural marketing chain and capture some of the profits 
generated by processing their raw commodities. To do so, 
producer need access to technical and business assistance.
    Witnesses stressed that producers are facing the second 
year of the worst farm crisis in recent memory. As a result 
they are looking at creative and entrepreneurial opportunities 
for the future, and they expressed frustration at the inability 
of producers to pool together their resources and share ideas 
about value-added ventures. Witnesses, therefore, unanimously 
recommended the creation of ``one-stop-shops'' to provide 
business, marketing, engineering, and legal expertise to 
producers in developing value-added processing and products.
    At the conclusion of the hearing, producers stated they are 
hopeful that Congress and federal agencies will collaborate 
with producers to establish value-added projects benefiting 
producer-owned groups. They highighted a variety of value-added 
products currently being produced through existing producer-
owned value-added endeavors, including ethanol plants, 
processing pork for pet toys, and processing soybeans into 
high-grade vegetable oils.
    For further information on this hearing, refer to Committee 
publication 106-3.
            7.2.18  proposed changes to part 9 of the federal 
                    acquisition regulation relating to contractor 
                    responsibility

                               Background

    On October 21, 1999, the Committee on Small Business held a 
hearing to address the proposed changes to Part 9 of the 
Federal Acquisition Regulations (``FAR''). The purpose of the 
hearing was to examine the impact that the change might have on 
opportunities small businesses have to obtain federal 
government contracts.
    On July 9, 1999, the agencies with primary jurisdiction for 
drafting regulations governing federal procurement published a 
proposed rule in the Federal Register that would ``clarify'' 
the existing standards for contractor responsibility 
determinations. In particular, the proposed rule would amend 
section 9.104-1(d) of the FAR which currently requires that a 
contracting officer, before awarding a contract, determines 
that the prospective contractor has integrity and business 
ethics. The proposed rule seeks to clarify this requirement by 
authorizing the contracting officer to make a determination of 
negligence. This would be accomplished if the contracting 
officer uncovered persuasive evidence that the bidder had a 
lack of compliance with the tax laws or was in substantial non-
compliance with labor laws, employment laws, environmental 
laws, antitrust laws, or consumer protection laws.

                                Summary

    The first panel of witnesses included the Honorable Tom 
Davis, III (R-VA), Honorable Deidre Lee, Administrator of the 
Office of Federal Procurement Policy, James Ballentine, Acting 
Deputy Associate Administrator for Government Contracting and 
Minority Enterprise Development, and Ms. Eleanor Spector, 
Director, Defense Procurement, Department of Defense.
    Representative Davis testified that the proposed rule was 
ill-conceived because it was vague and permitted contracting 
officers to eliminate potential contractors from obtaining a 
particular contract based on mere allegations. Representative 
Davis also noted the substantial number of allegations and 
violations lodged against the federal government by the 
Environmental Protection Agency, the Occupational Safety Health 
Administration, and the Federal Labor Relations Authority. 
Representative Davis summed up his testimony by noting that he 
agrees with the principle that the government should only do 
business with responsible contractors but that the proposed 
rule could have severe unintended consequences of excluding 
many small contractors from participating in the federal 
government market for information technology products.
    Administrator Lee noted that the proposal was drafted to 
clarify existing guidelines for contracting officers. It was 
not designed to implement any changes in current government 
procurement law. Nor was it designed to adversely affect the 
ability of small businesses to participate in the government 
contracting arena, since the Administration is committed to 
vigorous competition provided by small businesses. 
Administrator Lee concluded that the proposed rule is a work in 
progress. He is looking forward to comments from interested 
entities, including small businesses, and he is willing to work 
with the Committee members to craft a sound rule.
    Director Spector's testimony described responsibility 
determinations for lack of integrity and business ethics by 
contracting officers in the Defense Department. He explained 
that these are based on fraud or other criminal violations that 
relate to the honesty of the prospective contractor. Director 
Spector then noted that, except in rare circumstances, the 
Defense Department does not conduct complete investigations of 
a contractor's responsibility and when it does, the 
investigation is substantially broader than simply the 
contractor's integrity and business ethics. Director Spector 
noted that Defense Department contracting officers would need 
the assistance of other agencies in determining whether 
persuasive evidence existed of non-compliance with the laws 
listed in the proposed rule.
    Deputy Associate Administrator Ballentine explained how the 
Certificate of Competency works as an appeal process for small 
businesses who have had adverse responsibility determinations 
made by contracting officers. Deputy Associate Administrator 
Ballentine also noted that the Small Business Administration's 
Certificate of Competency program only has received 16 appeals 
related to integrity and business ethics in the past three 
fiscal years.
    The second panel included Harry Alford, President of the 
National Black Chamber of Commerce, William Kovacic and Steven 
Schooner, Professors of Law at George Washington University Law 
School, and Phyllis Hill Slater, Owner of Hill Slater, Inc. and 
testifying on behalf of the National Association of Women 
Business Owners (``NAWBO'').
    Professors Schooner and Kovacic both noted that the 
proposed rule does not represent a clarification of existing 
law but instead represents a substantial change in federal 
procurement policy. They also noted that the vague standards in 
the proposed rule could lead to what amounts to a ``de facto'' 
debarment by the ad hoc determinations of contracting officers 
without appropriate due protections for debarment, a thesis 
fully supported by Mr. Alford. Mr. Alford also noted that the 
proposed rule could be used as a pretext by contracting 
officers to reward those in the ``old boy'' network of 
government contracting. Ms. Hill Slater echoed Mr. Alford's 
sentiment and also noted that the proposed rule, rather than 
ensuring that federal agencies meet the goal of 5 percent 
participation by women-owned businesses, will simply impose 
greater costs on women-owned businesses as they may have to 
spend more time and resources fighting adverse responsibility 
determinations. None of the witnesses objected to the aim of 
the government only dealing with law-abiding enterprises but 
all concluded that the potential adverse consequences on small 
business outweighed any tangible benefits.
    For further information on this hearing, refer to Committee 
publication number 106-37.
            7.2.19  proposition 65's effect on small businesses

                               Background

    In 1986, California passed Prop. 65 generally requires 
warnings for environmental, consumer and occupational exposure 
to particular chemicals the State of California has determined 
may cause cancer or reproductive toxicity. If a manufacturer, 
either in State or out-of-state, fails to display the requisite 
warnings, Prop. 65 empowers private attorneys to enforce the 
statute in place of the California Attorney General.
    In 1960, Congress passed the Federal Hazardous Substances 
Act (FHSA) to provide for nationally uniform consumer product 
labeling requirements. In passing the FHSA, Congress recognized 
that uniform labeling benefits the public. For example, 
``[s]uch a labeling program would facilitate the education of 
the public in the cautionary use of these products. 
Informative, uniform labeling would enable physicians to 
administer antidotes immediately rather than waste precious 
time in determining the active ingredients of the products.'' 
Absent federal legislation, Congress feared states would enact 
their own labeling statutes ``leading to a multiplicity of 
requirements and creating unnecessary confusion in labeling, to 
the detriment of the public.''
    To facilitate the national uniform labeling requirements, 
Congress expressly provided that the FHSA preempts State 
cautionary labeling requirements. Congress empowered the 
Consumer Product Safety Commission to enforce the statute, 
including its preemption clause. The CPSC could use this 
authority to work with California to ensure that lawsuits are 
not used to force settlements out of small businesses from 
around the country who have not violated the law.

                                Summary

    The Committee on Small Business addressed California Prop. 
65's effect on small businesses. In 1986, California passed 
Prop. 65--the Safe Drinking Water and Toxic Enforcement Act of 
1986--that requires in-state and out-of-state manufacturers to 
label products that contain products known to the state of 
California known to cause cancer or reproductive toxicity. If a 
manufacturer fails to label the product, private lawyers can 
enforce the statute against it. This statute, however, appears 
to conflict with the Federal Hazardous Substances Act (FHSA) 
passed by Congress in 1960 that requires nationally uniform 
cautionary labeling for consumer products. California courts, 
however, determined that Prop. 65 does not constitute 
cautionary labeling. Marianne LaMura, Chemcoat Labs, Inc.; 
Robert Klein, Lemnar, Inc.; Mark Golden, Golden Artists Colors; 
Frank Strauss, Activa Products, Inc.; Sandra Skommesa, Ellis 
Paint Company; Ann Brown, Chairwoman of the Consumer Product 
Safety Commission; Ed Weil, Esq., Deputy Attorney General of 
the State of California; Shawn Khorrami, Attorney; Jeffrey 
Margulies, Attorney; discussed how the Federal government and 
California can harmonize the two statutes to eliminate abusive 
lawsuits.
    For further information on this hearing, refer to Committee 
publication 106-38.
            7.2.20  the department of defense's contract bundling 
                    policy

                               Background

    On November 4, 1999, the Committee on Small Business held a 
hearing to address the contract bundling policy of the 
Department of Defense. The purpose of the hearing was to 
examine how this bundling policy adversely affected the ability 
of small businesses to win their fair share of prime contracts 
from the Department of Defense.
    Contract bundling involves the consolidation of two or more 
previously separate procurement requirements into one contract. 
Federal agencies that utilize contract bundling claim that they 
receive higher quality goods and services delivered in a more 
efficient manner. The largest practitioner of contract bundling 
also is the largest procurer of goods and services in the 
federal government--the Department of Defense. If the Defense 
Department does not obtain higher quality goods and services 
from contract bundling or reap significant cost savings, then 
the purposes of contract bundling are not met. Small businesses 
are hurt because they no longer are prime contractors. In the 
long-run costs to the taxpayers may go up because of lessened 
competition in the defense industrial base.

                                Summary

    The first panel consisted of the Honorable David R. Oliver, 
the Principal Deputy Undersecretary for Acquisition, 
Technology, and Logistics at the Department of Defense. Mr. 
Oliver testified that the primary objective of the Department's 
acquisition policy was to enhance its war-fighting 
capabilities. Bundling allows the Department to do that by 
reallocating military personnel away from non-core functions 
(oversight of the procurement of goods and services) to their 
core function--fighting wars. Contract bundling enables the 
Department of Defense to take advantage of economies of size 
and scope; in essence, getting the best value at a lower cost. 
Mr. Oliver also addressed specific contracts and explained that 
certain contracts required bundling because of the size of the 
good or service being procured. Finally, Mr. Oliver promised 
the Committee to undertake a sound statistical analysis of 
contract bundling and its effect on small businesses.
    The second panel consisted of Mr. Paul Murphy, President of 
Eagle Eye Publishers, Inc., Fairfax, VA; Mr. Craig Brooks, 
President of Electra International Telecommunications, 
Bethesda, MD; Ms. Josephine Ursini, Counsel to the Society of 
Travel Agents in Government, Virginia Beach, VA; and Maurice 
Allain, President and CEO of Phoenix Scientific Corp., Warner 
Robins, GA.
    Mr. Murphy testified about the study of contract bundling 
he was performing under contract to the Office of Advocacy of 
the United States Small Business Administration. Mr. Murphy 
determined that one proposed bundled contract, the Flexible 
Acquisition and Sustainment Tool (``FAST''), a bundled Air 
Force contract, could lead to the displacement of numerous 
small businesses as prime contractors. The database modeling 
done by Mr. Murphy could be utilized in examining the impact of 
other bundled contracts on the potential displacement of small 
businesses as prime contractors for the Department of Defense.
    Mr. Brooks testified about the bundling of 
telecommunications services and the impact that it has had on 
his business. Mr. Brooks noted that multiple competing 
contractors, including many small telecommunications companies, 
were displaced from bidding by new requirements that the 
Defense Department imposed on the provision of point-to-point 
long-distance telecommunication services. This displacement 
occurred due to a bundled contract that provided no better 
service at far higher prices than that provided by small 
businesses.
    Ms. Ursini testified about the bundling of personal 
(leisure and holiday travel) with business travel services for 
military and civilian Defense Department personnel. Ms. Ursini 
noted that this bundling requirement excluded many small travel 
agencies from participating in the provision of travel services 
to the government. Ms. Ursini also noted that the Defense 
Department considers the amount of travel purchased through a 
travel agency as revenue going to the travel agency for 
purposes of calculating whether the Department is meeting its 
small business procurement goals. However, Ms. Ursini pointed 
out that the travel agencies are merely conduits for that money 
and should not be considered in calculating whether the 
Department has met its small business objectives.
    Mr. Allain testified about the impact of the new proposed 
Flexible Acquisition and Sustainment tool or FAST that the 
Department of the Air Force was preparing for use at the Warner 
Robins AFB and which would be used to oversee maintenance of 
planes, weapons systems, and communications at Warner Robins 
and two other air bases. Mr. Allain noted that no small 
business could hope to bid on such a project. He further noted 
that there are numerous small businesses who are currently 
prime contractors that would be displaced if the FAST contract 
was adopted.
    For further information on this hearing, refer to Committee 
publication 106-41.
            7.2.21  examining the need for the skilled workforce 
                    enhancement act

                               Background

    Despite growing economic prosperity, and in part because of 
it, employers in various trade industries face an increasing 
shortage of skilled workers. According to the results of a 
study conducted in 1999 by the National Association of 
Counties, seventy-five percent of the largest counties in 
America report they face a shortage of skilled workers. Eighty-
five percent stated the shortage increased over the last five 
years, and ninety-seven percent characterize the shortage as 
serious to very serious. Officials cited manufacturing and 
construction as the sectors of the U.S. economy most heavily 
affected by the shortage of skilled workers.
    Introduced by Chairman Talent, H.R. 1824 entitled the 
Skilled Workforce Enhancement Act (SWEA) would provide small 
employers with a tax credit to offset the costs of training 
employees in highly skilled small business trades. 
Specifically, the bill provides small employers (defined for 
purposes of the bill as employers with 250 employees or less) 
with a $15,000 annual tax credit per trainee. To insure 
training is effective, eligible employers must provide an 
employee with 2,000 hours of on-the-job training and necessary 
classroom training each year (for up to four years) in exchange 
for the tax credit.
    The bill enumerates the ``highly skilled trades'' to 
include: metalworking, roofing, masonry, heating, ventilating, 
air conditioning, refrigeration (HVACR), plumbing, and 
electrical contracting. Originally limited to precision 
machinists, die makers, and tool and die designers, the 
expanded bill includes other trades for which highly skilled 
workers are in short, even shrinking, supply.

                                Summary

    The Honorable Mike DeWine, United States Senate; William G. 
Bachman, St. Louis, Missouri, on behalf of the National Tooling 
and Machining Association; Thomas Bettcher, on behalf of the 
Air-Conditioning and Refrigeration Institute; Chris Leto, on 
behalf of the American Foundrymen's Society; John Gooding, on 
behalf of the National Roofing Contractors Association; Thomas 
W. Holdsworth, Director of Communications and Public Affairs, 
Skills-USA-VICA; Patrick Murphy, on behalf of the Mechanical-
Electrical-Sheet Metal Alliance; and Randall G. Pence, on 
behalf of the National Concrete Masonry Association; testified 
at the hearing.
    The witnesses testified on the shortage of skilled workers; 
its effects on small business, the aging population of workers, 
the high costs small employers incur in training highly skilled 
workers, and the benefits of the proposed changes to SWEA.
    For further information on this hearing, refer to Committee 
publication 106-42.
            7.2.22  association health plans--promoting health care 
                    accessibility

                               Background

    The Committee met on February 16, 2000 to explore ways in 
which Congress can work to expand access to employer-based 
health insurance so it better serves small business owners and 
employees, and their dependents. Specifically, the Committee 
considered how Association Health Plans (AHPs) are part of the 
solution that will meet the health care needs of the small 
business community, which represents over 60 percent of the 44 
million uninsured individuals in the United States. The Members 
discussed the need for Congress to focus not only on managed 
care reform, but also on access provisions, in order to help 
make the nation's healthcare system more accessible and 
affordable to those who work for or own a small business. The 
hearing was a continuation of a dialogue on the same topic, 
which began on June 10, 1999. For information on the first 
hearing, refer to Committee publication 106-19.

                                Summary

    The one panel hearing consisted of: Dr. Paul Wilson, 
Executive Director, North American Equipment Dealers 
Association (NAEDA) Group Insurance Trust; Mr. James R. 
Baumgardner, Acting Deputy Assistant Director for Health 
Policy, Congressional Budget Office; Mary Nell Lehnhard, Senior 
Vice-President, Blue Cross and Blue Shield Association; Dr. 
Mark Joensen, Vice-President and Director of Health Care 
Analysis, CONSAD Research Corporation; Ms. Arlene Kaplan, CEO & 
Founder, Heart-to-Home; and Mr. Richard Gallo, Owner, The 
Office Outlet.
    Mr. Wilson testified that AHP legislation is necessary in 
order to allow existing association health plans to continue to 
provide affordable coverage to their members and to allow other 
associations the opportunity to begin providing this crucial 
benefit. He explained that NAEDA's AHP, established in 1949, 
was going to be dropped by its carrier, UniCare, for groups 
under 50. He added that he had contacted over 50 insurance 
carriers, but none wanted association business.
    Mr. Baumgardner testified about the findings reported in a 
CBO paper entitled ``Increasing Small Firm Health Insurance 
Through Association Health Plans and HealthMarts.'' The CBO 
found that AHP and HealthMart legislation would result in only 
330,000 previously uninsured people getting coverage.
    Ms. Lehnhard testified that AHP legislation would not 
result in a significant increase in small business owners and 
employees with health coverage. She added that other problems, 
including increased risk for state-regulated insurance pools, 
would follow the enactment of AHP legislation.
    Mr. Joensen testified on the result of a study, conducted 
by the CONSAD Research Corporation, which showed AHPs would 
result in an increase of 4.5 million newly insured individuals. 
He added that significant savings resulting from administrative 
efficiencies and economies of scale will help lower the cost of 
coverage for those participating in an AHP.
    Ms. Kaplan testified that, as a former member of the 
Hospital Workers Union in New York, she enjoyed comprehensive 
health benefits and that, now, as a small business owner, she 
wishes her trade association, National Association of Women 
Business Owners could help her provide quality benefits to her 
employees. She pointed out that the Union and NAWBO exist as 
member-service organizations and that AHP legislation would 
allow trade associations to provide health benefits to their 
members in the way unions are allowed to under current law.
    Mr. Gallo told the Members about his personel experience as 
a small business owner who is unable to offer health insurance 
to his employees due to high costs estimated at $40,000 
annually. He and his wife do not have insurance. He hopes that 
AHPs will allow his small business to one day offer 
comprehensive benefit packages similar to those large companies 
are permitted to offer under ERISA.
    For further information on this hearing, refer to Committee 
publication 106-43.
            7.2.23  the small business administration's fy 2001 budget 
                    request

                               Background

    The Small Business Administration provides a variety of 
services for small businesses--financial assistance, technical 
assistance, and disaster assistance.

                          Financial Assistance

    The Small Business Administration provides approximately 
$11 billion in financing to small businesses annually. This 
financing is made available through a variety of programs.
    SBA's largest financial program is the Section 7(a) general 
business loan program. The 7(a) program offers loans to small 
businesses through local lending institutions. These loans are 
provided with an SBA guarantee of up to 80 percent and are 
limited to a maximum of $750,000. The 7(a) program has a 
subsidy rate of 1.16% for fiscal year 2000 and an appropriation 
of $107 million, permitting $9.8 billion in lending.
    The Section 504-loan program provides construction, 
renovation and capital investment financing to small businesses 
through certified development companies (CDCs). These CDCs are 
SBA licensed, local business development organizations, which 
provide loans of up to $750,000 for small businesses, in 
cooperation with local banks.
    The Microloan program provides small loans of up to $25,000 
to borrowers in low-income areas. In fiscal year 1999 the 
program provided $29 million in loans. In addition, the program 
has a technical assistance aspect that provides managerial and 
business expertise to microloan borrowers. Microloans are made 
by intermediary oganizations that specialize in local business 
development.
    The Small Business Investment Company (SBIC) program 
provides over $1.5 billion in long term and venture capital 
financing for small businesses annually. SBICs are venture 
capital firms that leverage private investment dollars with SBA 
guaranteed debentures or participating securities. The SBIC 
debenture program currently operates at a zero subsidy rate and 
requires no taxpayer subsidy. The participating securities 
program has a 1.8% subsidy rate.

                          Technical Assistance

    The SBA provides technical and managerial assistance to 
small businesses through four primary programs:
    Small Business Development Centers (SBDCs) are located 
primarily at colleges and universities and provide assistance 
through 51 center sites and approximately 970 satellite offices 
and offer small businesses guidance on marketing, financing, 
start-up, and other areas.
    The Service Corps of Retired Executives (SCORE) which 
provides small business assistance on-site through the 
volunteer efforts of its members. SCORE voltuneers are retired 
businessmen and women who offer their expertise to small 
businesses.
    The 7(j) technical assistance program provides financing 
for technical assistance to the minority contracting community 
primarily through courses and direct assistance from management 
consultants and assistance for participants to attend business 
administration classes offered through several colleges and 
universities.
    The Women's Business Center program provides business 
training centers for women and teaches women the principles of 
finance, management and marketing as well as specialized topics 
such as government contracting or starting home-based 
businesses. There are currently 81 centers in 47 states in 
rural, urban and suburban locations.

                          Disaster Assistance

    The Small Business Administration also provides disaster 
loan assistance to homeowners and small businesses nationwide. 
This program is a key component of the overall Federal recovery 
effort for communities struck by natural disasters. This 
assistance is authorized by section 79(b) of the Small Business 
Act which provides authority for reduced interest rate loans. 
Currently the interest rates fluctuate according to the 
statutory formula--a lower rate, not to exceed four percent is 
offered to applicants with no credit available elsewhere, while 
a rate of a maximum of eight percent is available for other 
borrowers.

                                Summary

    On March 1, 2000 at 10:00 a.m., the Committee on Small 
Business convened a hearing to discuss the Administration's 
budget submission for fiscal year 2001, their legislative 
proposals, and the reauthorization of the SBA's programs. The 
Committee received testimony from five witnesses: Hon Aida 
Alvarez, Administrator of the Small Business Administration; 
Mr. Anthony Wilkinson, President of the National Association of 
Government Guaranteed Lenders; Mr. Lee Mercer, President of the 
National Association of Small Business Investment Companies; 
Mr. Woody McCutchen, Executive Director of the Association of 
Small Business Development Centers; Ms. Caroline Hayashi, 
representing the Association for Enterprise Opportunity; and 
Mr. John Geigel, Vice President for Government Relations of the 
National Association of Development Companies.
    Ms. Alvarez's testimony supported the Administration's 
request, and concentrated on the Administration's ``New Markets 
Initiative''.
    Mr. Wilkinson testified in support of the proposed 2001 
budget. He also expressed his organization's support for 
increase authorization levels for fiscal years 2001, 2002, and 
2003. He suggested authorization levels of 14.5, 15 and 16 
billion dollars for fiscal years 2001, 2002 and 2003 
respectively.
    Mr. Mercer testified in support of the Administration's 
budget request for the SBIC program and recommended 
participating securities program levels of 2.5, 3.25, and 4 
billion dollars for fiscal years 2001, 2002, 2003 respectively. 
He also recommended debenture program levels of 1, 1.5, and 2 
billion dollars for fiscal years 2001, 2002, and 2003, 
respectively.
    Mr. Geigel generally supported the SBA budget for 2001. On 
behalf of NADCO he suggested 504 program authorizations of 
3.75, 4.5, and 5 billion dollars for fiscal years 2001, 2002, 
and 2003, respectively.
    Mr. McCutchen discussed the needs of the Small Business 
Development Center (SBDC) program and expressed support for the 
Administration's request for fiscal year 2001. However, he 
asked that the committee consider reauthorizing the SBDC 
program at $100 million per year.
    During the hearing Chairman Talent questioned Administrator 
Alvarez on the proliferation of unauthorized programs at the 
SBA. In particular, he questioned the requests for $6.6 million 
for the Business Linc program and $5 million for the e-commerce 
initiative. The Chairman expressed doubts on the efficiency of 
operating technical assistance programs at so many levels 
versus a consolidation of effort and services. He was 
particularly concerned that the Administrator could not provide 
the Committee with a clear explanation of purpose and operation 
of the Business Linc program or the e-commerce initiative.
    Ranking Member Velazquez questioned the Administrator on 
the status of the procurement center representatives (PCRs) at 
the SBA's Office of Government Contracting. PCRs are SBA 
employees stationed at major procurement centers in order to 
assist in identifying and advertising procurement opportunities 
for small business. Ms. Velazquez questioned why the SBA had 
failed to assign PCRs to several major procurement centers and 
had not requested any funding for PCR staffing in the 2001 
budget. Ms. Velazquez was concerned that, for example, there 
were no PCRs stationed in Virginia, a state with a large 
percentage of federal procurement activity.
    Representative Pascrell questioned the Administrator on the 
efforts to implement the HUBZone program. Mr. Pascrell was 
concerned that SBA had drafted the regulations in an overly 
restrictive fashion which had caused anomalies in the program's 
application. Of particular concern were instances where small 
businesses were not being considered eligible for the HUBZone 
program because they were literally across the street from the 
designated HUBZone. Mr. Pascrell expressed his belief that 
these businesses, which hired significantly from the HUBZone 
communities, were being denied opportunities to participate 
even though they were fulfilling the goal of the program--
employment in low income areas.
    For further information on this hearing, refer to Committee 
publication 106-45.
            7.2.24  helping agricultural producers ``re-grow'' rural 
                    america: providing the tools

                               Background

    In September 1999, the Committee held a hearing (106-34) 
entitled ``Helping Agricultural Producers `Re-Grow' Rural 
America.'' The hearing explored the opportunities and the needs 
of agricultural producers in developing value-added 
enterprises. In particular, witnesses addressed the current 
crisis in the agricultural community, what could be done to 
lift rural America out of recession, and how agriculture could 
prepare itself to weather any future down turn in prices and 
production conditions. Witnesses stressed the desire of 
producers to become vertically intergrated--capturing more of 
the consumer dollar by adding value to their commodities--and 
recommended ``one-stop-shops'' to provide business, marketing, 
engineering, and legal expertise to producers in developing 
value-added processing and products.
    In response and working closely with the agricultural 
community, Chairman Jim Talent (R-MO) and Representative John 
Thune (R-SD) introduced legislation (H.R. 3513 and H.R. 3996), 
entitled the ``Value-added Agriculture Development Act for 
American Agriculture'' (VADAA). The legislation would create 
`Agriculture Innovation Centers' to provide producers with the 
business, marketing, engineering, and legal assistance they 
need to develop value-added agriculture.

                                Summary

    Panelists included: Charles E. Kruse, President, Missouri 
Farm Bureau Federation, Jefferson City, Missouri; J. Gary 
McDavid, Attorney at Law, Chair, Legal, Tax & Accounting 
Subcommittee on Tax Legislation, National Council of Farmer 
cooperatives; Rick Vallery, Executive Director, South Dakota 
Wheat, Inc.; Brooks Hurst, Vice-President, Missouri Soybean 
Association; John Haverhals, Former President, South Dakota 
Cattlemen's Association; and Gerald Tumbleson, Past-President, 
Minnesota Corn Growers' Association; testified at the hearing.
    Witnesses praised the Talent-Thune VADAA legislation, and 
recommended additional solutions to compliment the bill and to 
provide producers with a broad-based value-added package. 
Specifically, the hearing explored a 50 percent tax credit for 
producers for value-added production to provide them with 
access to cutting edge processing and manufacturing 
technologies and help them implement these technologies in 
their own plants to manufacture high value products. Chairman 
Talent and Representative Thune were developing and later 
introduced legislation (H.R. 4497) which would provide a 50 
percent investment tax credit to producers for value-added 
production. Noting this is the third year of the worst farm 
crisis in recent memory, the witnesses discussed the severe 
down turns in prices and production conditions leaving 
agriculture in a rural recession.
    For further information on this hearing, refer to Committee 
publication 106-47.
            7.2.25  cash versus accrual: the policy implications of the 
                    growing inability of small businesses to use simple 
                    tax accounting

                               Background

    The United States Department of the Treasury (Treasury) and 
the Internal Revenue Service (IRS) increasingly are litigating 
against and auditing small builders, contractors, and service 
providers for using the cash method of accounting. While this 
seems cost ineffective and unreasonable, it forces small 
business taxpayers who regularly and consistently use the cash 
method of accounting for years (even decades) to pay unfair 
assessments of back taxes, interest and penalties.
    In addition, the Ticket to Work and work Incentives 
Improvement Act of 1999 (H.R. 1180), signed into law on 
December 17, 1999 (Public Law 106-170), included a revenue 
provision in the Clinton Administration FY 2000 budget. The 
provision repeals the installment method of accounting for 
asset sales by accrual basis taxpayers (except sales of farming 
property, timeshares or residential lots). This change is 
blocking the sale of small and closely-held businesses, and is 
devaluing them between 5 and 20 percent (8.2 percent on 
average).
    In both the cash method controversy and the recent repeal 
of the installment method of accounting, the Treasury 
Department takes the position that the mathematically precise 
matching of income and expenses from an accounting perspective 
supersedes all other tax policy considerations--including tax 
simplification and burden. Congress specifically intended to 
allow some distortion of income and expenses under the cash and 
the installment methods of accounting.
    Introduced by Chairman Jim Talent (R-MO), H.R. 2273 would 
provide that small business taxpayers with average annual gross 
receipts of $5,000,000 or less, are permitted to use the cash 
method of accounting without limitation. Introduced by 
Representative Wally Herger (R-CA), H.R. 3594 would restore the 
installment method of accounting for accrual basis taxpayers.
    Issue guidance regarding the rules related to the cash, 
accrual, and installment methods of accounting. Linking the 
threshold issue of which taxpayers are required to use the 
accrual method of accounting to the recent installment change, 
the Treasury stated in part that: ``Part of this planned 
guidance generally will allow a qualified taxpayer with average 
annual gross receipts of $1 million or less to use the cash 
method, and thus, the installment method.''
    The hearing explored the policy and regulatory 
implications--and likely effects on small businesses--of 
Treasury's anticipated guidance.

                                Summary

    Joseph M. Mikrut, Tax Legislative Counsel, United States 
Department of the Treasury, Washington, DC; Shane Mieras, 
Project Manager, Mid-Ceiling and Drywall, Rockford, Michigan; 
David E. Wulkopf, CPA, Treasurer, Beckner Painting Midwest, 
Inc., St. Louis, Missouri; Roger Harris, President, Padgett 
Business Services, Athens, Georgia; Pamela F. Olson, Chair-
Elect, Section of Taxation, American Bar Association; John S. 
Satagaj, Managing Partner, London and Satagaj, Washington, DC; 
and Abraham L. Schneier, McKevitt & Schneier, Washington, DC; 
testified at the hearing.
    In summary, the testimony at the hearing revealed that 
Treasury's policy position on the cash and installment methods 
of accounting, and the IRS' corresponding legal and audit 
positions, are flawed and are hurting small businesses and 
taxpayers. Allowing small businesses to use the cash method of 
accounting without limitation would yield substantial tax 
simplification and fairness. Therefore, witnesses believe that 
Congress should pass legislation such as H.R. 2273 to remedy 
recent Treasury and IRS policy changes on the ability of small 
entities to use the cash method of accounting. Similarly, the 
hearing disclosed there is no justifiable policy or enforcement 
rationale for reversing decades of established law on the 
ability of taxpayers to use the installment method of 
accounting. Witnesses urged Treasury to support H.R. 3594 to 
immediately restore the installment method of accounting for 
all taxpayers.
    For further information on this hearing, refer to Committee 
publication 106-49.
            7.2.26  economic accomplishments of round ii empowerment 
                    zones

                               Background

    On April 26, 2000, the Committee on Small Business met in 
Mecca, CA to discuss the development and progress that has been 
made in the Desert Communities Empowerment Zone and in Round II 
Empowerment Zones in general.
    In 1993, the Empowerment Zone/Empowerment Communities (EZ/
EC) program was enacted, providing Federal grants to 
economically distressed rural and urban communities over a 10-
year period. In what is now referred to as Round I of the 
program, 104 EZ/ECs were created and each urban and each rural 
zone received $100 million and $40 million respectively in 
flexible Social Services Block Grant funds, over a ten-year 
period. Additionally, qualifying EZ employers were entitled to 
a 20 percent tax credit on the first $15,000 of wages paid to 
certain qualified Zone employees.
    The Taxpayer Relief Act of 1997 authorized a second round 
of EZ designations, known as Round II EZs. Designated in 1999, 
Round II Zones are unable to benefit from the wage tax credit 
like the Round I EZs. Additionally many EZs have not received 
the funding promised to them and thus find it difficult to 
carry out their economic plans for community revitalization.

                                Summary

    Panel I consisted of Celeste Cantu, State Director (CA) of 
Rural Development, U.S. Department of Agriculture; Roy Wilson, 
Riverside County (CA) Supervisor; and Mark Benitez, Chairman of 
the Desert Community Rural Empowerment Zone.
    Ms. Cantu testified that the Desert Communities Empowerment 
Zone (DCEZ) has made substantial progress since its 
designation. The DCEZ has: appointed a Board of Directors and 
elected officers, incorporated a community-based nonprofit 
corporation, adopted a two-year, $4 million budget, established 
501(C)(3) tax status, established banking and financial 
services, developed a Sponsorship Agreement for the use of DCEZ 
funds, and executed a Memorandum of Agreement with the USDA. 
She acknowledged that the lack of full funding for the Round II 
EZs are forcing them to scale back efforts set forth in their 
strategic plans and secure non-EZ resources.
    Mr. Wilson testified that direct government funding of 
Empowerment Zones is critical for them to carry out their 
intended purpose. He added that the extension of the Work 
Opportunity Tax Credit to Round II EZs would be very helpful in 
encouraging employment of EZ residents.
    Mr. Benitez testified that full funding for Round II EZs is 
necessary for the DCEZ, which is in need of infrastructure 
development such as water systems. He also added that matching 
and start-up funds for business development is also crucial to 
the strategic plan. For instance, Allied Digital 
Communications, maker of CD-rom disks is hoping to relocate to 
the DCEZ, creating approximately 130 new jobs.
    Panel II was comprised of Mike Bracken, Director, Coachella 
Valley Economic Partnership; Harley Knox, Developer, Harley 
Knox and Associates; Larry Chank, CEO, JPH Enterprises, Inc.; 
and Harold Joseph, Executive Director of the Coachella Valley 
Enterprise Zone Authority.
    Mr. Bracken testified that he has had numerous inquiries 
from Fortune 500 companies about relocating to the DCEZ area to 
set up distribution centers, which would create lots of new 
jobs. He noted that full funding for Round II EZs and the 
hiring tax credit would make the area look even more attractive 
to these businesses.
    Mr. Knox testified that in his work with small 
manufacturing companies who need low-cost, long term financing 
for manufacturing facilities and equipment, find Empowerment 
Zones appealing areas for expansion due to the tax exempt 
Industrial Development Bonds and hiring tax credits. Mr. Knox 
encourages full funding for Round II EZs so that companies have 
incentive to move into those areas, bringing with them the 
opportunity for economic prosperity.
    Mr. Chank testified that funding is necessary to entice 
businesses to relocate to the Cochella-Thermal area. He noted 
that many companies are often reluctant to be the first to move 
into an area that thus need the extra incentive provided by the 
tax benefits of EZs.
    Mr. Joseph spoke about the successes of the Coachella 
Valley Enterprise Zone in attracting new business. He 
attributed this cycle of business relocation, expansion, and 
job creation to the financial incentives mandated by the state 
of California, including credits against state income tax, 
hiring tax credits, credits for new machinery and parts, 
nontaxable investments.
    For further information on this hearing, refer to Committee 
publication 106-56.
            7.27  small business and online music

                               Background

    On May 24, 2000, the Committee held a hearing to examine 
the new market possibilities for small music labels and 
entrepreneurs created by the Internet. According to Forrester 
Research, the market for donwloadable music is projected to 
expand from virtually nothing in 1999 to over $1.1 billion in 
2003. However, different witnesses were not in agreement over 
the future of the new market. Several entities and artists are 
currently suing a poplar file-sharing program, Napster, that 
creates a network allowing users to swap possibly illegal 
downloaded music files.

                                Summary

    The hearing consisted of one panel of witnesses: Mr. Ric 
Dube, Senior Editor/Analyst, Webnoize, Cambridge, MA; Mr. Tom 
Silverman, Founder and CEO, Tommy Boy Records, New York, NY; 
Mr. Peter Harter, Vice-President, Global Public Policy & 
Standards, EMusic.com, Redwood City, CA; and Chuck D. Founder, 
Rapstation.com.
    Mr. Dube testified that although currently on-line music 
sales only account for about 1 percent of CD sales, he 
anticipates as Internet capabilities become more commonplace, 
digital music will garner a larger percentage of the market. He 
said that current on-line companies, such as Napster, are 
valuable because they investigate the commercial demand for 
Internet services.
    Mr. Silverman testified on behalf of the Recording Industry 
Association of America (RIAA). Although his label, Tommy Boy 
Records is smaller and independent from the four major music 
labels that dominate the industry, he said he shares their view 
that file swapping programs, like Napster, are a conduit for 
piracy.
    Mr. Harter represents EMusic.com and testified how the 
company's business model sells on-line music content while 
still respecting the intellectual property rights of artists by 
paying the royalties on each transaction. He said that because 
the music industry is a ``$100 billion industry trapped inside 
a $40 billion straitjacket,'' digital music can fill the gap of 
the demand not satisfied by the four major labels.
    Chuck D of the rap-group Public Enemy and founder of 
Rapstation.com testified he thinks file swapping and online 
opportunities create a new market that circumvents the current 
power of music distribution, which he believes has been held 
for too long by a small number of people. The existing 
industry, according to Chuck D, stifles the flow of creative 
works into the marketplace: ``I'm looking forward to the day 
when there are 1 million labels and 1 million artists on the 
Internet.''
    For further information on this hearing, refer to Committee 
publication No. 106-59.
            7.2.28  regulatory reform initiatives and their impact on 
                    small business

                               Background

    On June 7, 2000, the Committee on Small Business held a 
hearing to address efforts to reforming the regulatory process. 
The hearing addressed efforts by the Clinton Administration to 
reduce regulatory burdens on small business with a special 
focus on the activities taken since 1995.
    In 1993, President Clinton initiated the National 
Performance Review in an effort to reinvent how government 
operates. One aspect of that reinvention process was the 
issuance of Executive Order 12,866 which was designed to ensure 
that the federal agencies properly assessed their regulatory 
initiatives and only issued those regulations that achieved 
statutory objective in the most cost-effective manner. Two and 
a half years later, President Clinton issued another directive 
that all federal agencies perform a page-by-page analysis of 
the Code of Federal Regulations for purposes of eliminating 
unnecessary and duplicative federal regulations. At the White 
House Conference on Small Business in 1995, President Clinton 
announced that the federal government dramatically reduced the 
size of the Code of Federal Regulations. More recently, 
President Clinton directed federal agencies to issue their 
regulations in plain English. The hearing was the first in a 
series to be held by the Committee examining amendments to the 
Paperwork Reduction Act (which is to be reauthorized in 2001) 
that might reduce the cumulative regulatory impact of 
recordkeeping and reporting requirements on small business.

                                Summary

    The first panel consisted of the Honorable John T. Spotila, 
Administrator of the Office of Information and Regulatory 
Affairs, Office of Management and Budget. Mr. Spotila 
recognized that regulatory burdens can impose substantial 
burdens on small business and the Office of Information and 
Regulatory Affairs is sensitive to that issue. According to Mr. 
Spotila, it regularly reviews regulations to see whether the 
burdens on small businesses can be reduced and tries to reduce 
the cumulative impact of regulation on small businesses. Mr. 
Spotila recognized that the job of reducing regulatory burdens 
on small business is an ongoing process and more needs to be 
done. Mr. Spotila stated that Office of Information and 
Regulatory Affairs stands ready to work with the Small Business 
Committee in finding solutions to reduce even further the 
impact of recordkeeping and reporting requirements on small 
business.
    The second panel consisted of Congressman James Coyne 
(Ret.), President of the National Air Transportation 
Association; Alexandria, VA; Mr. Duncan Thomas, President and 
Chief Executive Officer of Q-Markets, Inc., Richmond, VA on 
behalf of the National Association of Convenience Stores; and 
Mr. Kenneth O. Selzer, Owner of Kenneth O. Selzer Construction 
Co., Cedar Rapids, IA on behalf of the National Association of 
Home Builders.
    Congressman Coyne first noted that the members of his 
association are generally small, provide critical aviation 
services from medical rescue flights to maintenance, and are 
subject to regulation by numerous federal agencies--the most 
significant being the Federal Aviation Administration. 
Congressman Coyne noted that there seems to be a trend among 
all federal agencies, but especially the Federal Aviation 
Administration, to substitute regulations with informal 
guidance that is binding on neither the agency nor members of 
his industry. This imbues the inspectors with substantial 
discretion that may be exercised arbitrarily, thereby 
significantly increasing the regulatory burdens on the small 
business community. This occurs without the agency undertaking 
the proper analysis of those impacts as would be required had 
the agency undertaken rulemaking pursuant to the Administrative 
Procedure Act.
    Mr. Thomas owns a number of convenience stores in inner 
city Richmond, VA. Instead of focusing on improving the 
operation of his stores and expanding his business, Mr. Thomas 
must devote substantial management resources to reviewing over 
250 pages of instructions for the completion of numerous forms 
associated with the retailing of petroleum products. By his 
estimates, regulatory burdens, through formal regulations or 
through informal guidance, have increased by 25% since 
President Clinton called for the elimination of unnecessary 
regulations in 1995.
    Mr. Selzer noted that homebuilders are among the most 
regulated enterprises in the United States. They must contend 
with a plethora of federal regulations including tax rules, 
occupational safety and health guidelines, and wetland 
requirements. In addition, they also must comply with various 
state rules and must comply with local zoning codes. Mr. Selzer 
noted that the combination of these regulatory efforts drive up 
the cost of housing. Of particular note were the constant 
modifications to the forms associated with obtaining a permit 
to construct in a wetland. Mr. Selzer noted that the definition 
continues to shift but the definition is not set out in any 
rules but in guidance for the completion of a permit to 
construct in a wetland. This enables EPA to continually modify 
its interpretation without going through the analysis that 
would be attendant to rulemaking such as those mandated by 
Executive order 12,866 and the Regulatory Flexibility Act.
    For further information on this hearing, refer to Committee 
publication 106-60.
            7.2.29  rural health care services; has medicare reform 
                    killed small business providers?

                               Background


                    The Balanced Budget Act of 1997

    The 1997 Balanced Budget Act (BBA '97) made a number of 
significant changes to Medicare service delivery, particularly 
for services provided by ancillary providers. Ancillary 
providers are companies that offer a variety of health care 
services outside of those provided at skilled nursing 
facilities (SNFs), physician's offices or hospitals: Visiting 
Nurses; Home I.V. care; Oxygen services; Portable EKG; Portable 
X-rays; etc. These providers are especially necessary in rural 
areas where hospitals and medical centers are few and far 
between and SNFs and physician's offices do not have equipment.
    Under BBA '97 reimbursement for the transportation for many 
ancillary providers was eliminated. The purpose was to 
eliminate waste, fraud, and abuse. At the same time, the Health 
Care Financing Administration (HCFA) decided to eliminate 
coverage for a number of previously covered medical services, 
primarily services offered by ancillary providers. The result 
has been devastating for the small businesses who make up the 
bulk of the ancillary care providers. There is little home 
health care service, or ancillary care service available now in 
rural areas. Providers of services like in-home I.V., oxygen, 
EKG, and visiting nurses are out of business or restrict their 
service to urban and suburban areas.

              Prospective Payment and Consolidated Billing

    As part of BBA '97 the new concepts of ``consolidated 
billing'' and ``prospective payment'' were introduced. These 
essentially establish SNFs and Hospitals and large providers as 
gatekeepers. Services are provided to gatekeepers who submit 
consolidated bills to HCFA and then pay their providers. The 
idea is to use the services of the private sector to reduce 
fraud and over-billing. Prospective payment (PPS) went into 
effect in 1998 for Medicare B and required all ancillary 
providers to submit their bills to the nursing or other care 
facility. HCFA is currently working with a consultant to figure 
out exactly how to implement consolidated billing.
    As HCFA requires reimbursement, the providers pass the cost 
on to the small business suppliers, demanding unrealistic 
discounts or delayed reimbursement. Under PPS, SNFs are 
demanding large discounts from their ancillary providers and 
often delaying payment. This is especially true when the SNF is 
in bankruptcy. Many ancillary providers are concerned that 
consolidated billing, which covers Medicare A, will only 
exacerbate this problem.
    This hearing provided a forum for a variety of ancillary 
health care providers to discuss the problems occurring in 
their industries and possible solutions.

                                Summary

    The hearing convened at 10 a.m., June 14, 2000. The first 
witness was Ms. Kathy Buto, Deputy Director of Health Plans and 
Services at HCFA. Ms. Buto testified concerning the various 
initiatives HCFA has started to improve health service in rural 
areas. Ms. Buto was followed by Mr. Zach Evans, President of 
Mobile Medical Services, a portable EKG provider. Mr. Evans 
testified about the continuing inability of providers, like 
himself, to serve rural areas. He testified specifically about 
the numbers of towns and counties in Missouri that no longer 
receive ancillary services due to BBA '97.
    The third witness was Ms. Karen Woods, Executive Director 
of the Hospice Association of America. Ms. Woods testified 
about the continuing difficulties faced by the hospice 
organizations under BBA '97. She specifically cited information 
concerning the loss of service to a large number of rural 
patients who rely on hospice care for assistance in coping with 
chronic, fatal illness. She was followed by Mr. Norm Goldhecht, 
vice-president of Diagnostic Health Systems, a portable x-ray 
provider. Mr. Goldhecht testified about the inability of his 
business to continue service to rural and even suburban areas. 
He testified about the failure of nursing facilities or 
physicians to provide care for the niche his company fills, and 
the resultant disruption in care for rural Medicare recipients.
    The final witness was Mr. William A. Dombi, Vice President 
of the National Association for Home Care. Mr. Dombi discussed 
the details of the extensive additional costs of providing 
health care in rural areas. In particular, he discussed how 
home health agencies have been unable to meet the needs of 
patients in rural areas because of definitional problems. He 
cited examples of disparities in the reimbursement system that 
fail to take into account the vast differences in distances 
covered by home health agencies in each state.
    After the testimony of the witnesses the Members asked a 
number of questions. Chairman Talent raised a concern about the 
treatment of branch offices under the Medicare reimbursement 
for home health care. The Chairman also questioned the wisdom 
of a single set reimbursement for ancillary services regardless 
of the distances covered by the provider. Finally, he discussed 
the possibility of creating a voucher system for small 
businesses to ease transition into the PPS system.
    Ms. Velazquez questioned HCFA's apparent inequity in the 
treatment of rural areas and also raised the issue of HCFA 
compliance with the Regulatory Flexibility Act, in light of the 
obvious disparate effect on small business.
    Ms. McCarthy and Ms. Christian-Christensen both questioned 
HCFA's treatment of small providers seeking reorganization and 
also expressed concern over the failure of HCFA to show 
flexibility in dealing with the hospice industry.
    For further information on this hearing, refer to Committee 
publication 106-64.
            7.2.30  hearing on improving the office of advocacy

                               Background

    On June 21, 2000, the Committee on Small Business held a 
hearing on improving the operations of the Office of Advocacy. 
The purpose of the hearing was to examine ways to increase the 
independence and power of the Office of Advocacy.
    The Office of Advocacy, headed by a Chief Counsel appointed 
by the President and confirmed by the United States Senate, was 
created in 1976 to represent the interests of small business in 
the federal regulatory process. In 1980, the Office's portfolio 
was increased to include monitoring agency compliance with the 
Regulatory Flexibility Act--a statute requiring that agencies 
assess the impact of their proposed and final rules and, if 
they are significant, examine alternatives that will be less 
burdensome. That Act also authorized the Chief Counsel to file 
an amicus brief in court addressing an agency's noncompliance 
with the Regulatory Flexibility Act during the rulemaking 
process. The Office's power was increased again in 1996 by the 
Small Business Regulatory Enforcement Fairness Act. That Act 
required the Chief Counsel to obtain the views of industry on 
significant proposed rules issued by EPA and OSHA and then 
transmit them to those agencies prior to publication of the 
proposal in the Federal Register.
    Some concern exists that the Office of Advocacy is not 
sufficiently independent from the President and the 
Administrator of the SBA. One possible solution would be to 
have a separate line item for salaries and expenses of the 
office of Advocacy. Another is the creation of a three-member 
commission along the lines of the Federal Trade Commission that 
would operate outside the authority of the Executive Branch of 
government.

                                Summary

    The hearing consisted of one panel: the Honorable Jere W. 
Glover, Chief Counsel for Advocacy, Office of Advocacy in the 
United States Small Business Administration; Mr. Todd 
McCracken, President of National Small Business United, 
Washington, DC; Karen Kerrigan, President of the Small Business 
Survival Committee, Washington, DC; Daniel R. Mastromarco, 
Esq., President of The Argus Group, Alexandria, VA; Mr. Jim 
Morrison, Senior Policy Advisory for the National Association 
for the Self-Employed; and Keith Cole, Partner, Swidler, 
Berlin, Shereff Freedman.
    Mr. Glover testified that he has exercised his independence 
from the President on a frequent basis. In addition, he noted 
that he has been able to persuade the Administration to take 
positions that are beneficial to small businesses on a number 
of occasions. Mr. Glover also testified that the decision in 
American Trucking Association v. EPA does not undercut his 
authority with respect to oversight of agency compliance with 
the Regulatory Flexibility Act. Nevertheless, Mr. Glover 
objected to the creation of a Small Business Advocacy 
Commission. Mr. Glover concluded his testimony by rejecting the 
notion that the Office of Advocacy or a Commission should write 
government-wide regulations on implementing the Regulatory 
Flexibility Act.
    Mr. Mastromarco, as a former Assistant Chief Counsel in the 
Office of Advocacy, noted that the Chief Counsel could never be 
truly independent. The Chief Counsel serves at the pleasure of 
the President and can be fired by the President. True 
independence will not happen until the Chief Counsel is severed 
from the jurisdiction of the Administrator and the 
Administration, budget requests are filed directly with 
Congress (as occurs with independent regulatory agencies), 
removing the Office of Advocacy from the location of the United 
States Small Business Administration, and appointing a Chief 
Counsel or commissioners in an Advocacy Commission for a set 
term.
    Ms. Kerrigan noted that the Office of Advocacy appears to 
focus its energy more on being reactive, i.e., what happens 
after an agency issues a proposed rule. Yet, because of its 
position within the Administration, Ms. Kerrigan noted that it 
cannot aggressively take positions on legislation that might 
contradict those of the President. Ms. Kerrigan supported 
initiatives to make the Office of Advocacy more independent but 
noted that her organization was still studying the costs and 
benefits of transferring the functions to an independent 
commission.
    Mr. McCracken testified that an effective Chief Counsel 
working inside the Administration may be beneficial for small 
business. However, that benefit must not be sacrificed at the 
cost of the Chief Counsel's independence. Mr. McCracken noted 
that the scales may be tipping too far away from independence. 
Mr. McCracken and his organization support a Senate effort to 
provide the Office with a separate line item in the President's 
budget. He raised some concerns about the tradeoffs associated 
with creating an Advocacy Commission outside of the Executive 
Branch. He stated that his organization would have to consider 
this issue in more depth.
    Mr. Morrison concurred with Mr. McCracken in supporting the 
need for a truly independent office of advocacy within the 
Administration. His organization also supported the Senate's 
effort to create a separate line item in the budget for the 
office. Mr. Morrison also testified that the Office of Advocacy 
had to be given the authority to write government-wide guidance 
in order to overcome the decision in American Trucking 
Association v. EPA.+
    Mr. Cole noted that the Office of Advocacy must carefully 
select which regulatory battles it fights to its full ability. 
While resource constraints certainly play a role, Mr. Cole 
noted that conflict with the Administration could lessen the 
Chief Counsel's influence within the Administration. The Chief 
Counsel is part of the President's team and, if the Chief 
Counsel goes too far off that path, the Chief Counsel could 
find itself marginalized in debates within the Administration. 
Mr. Cole notes that the Commission represents an excellent 
mechanism for ensuring the true independence of the Office of 
Advocacy.

7.3  Summaries of the Hearings Held by the Subcommittee on Empowerment

            7.3.1  barriers to minority entrepreneurship

                               Background

    The Committee held a hearing on March 23, 1999 examining 
the fact that economic opportunities are minimal to minorities. 
This lack of opportunity stems from the fact that there is a 
disproportionate amount of taxes and regulations placed on 
small businesses. This hearing also focused on the streamlining 
of zones, business codes, and other regulations necessary for 
small businesses to survive--and further, necessary for the 
revitalization of America's most economically strapped 
communities.
    The hearing was found to be necessary because of the still-
pressing issues facing minority-owned and operated small 
businesses. There are more than 2 million minority-owned 
businesses in the United States. Even so, companies owned and 
operated by minorities are faced with bigger challenges than 
other companies, and the hearing was held to investigate this 
specific discrepancy.

                                Summary

    The witnesses for this hearing included Stella Horton, 
Director of Entrepreneurship at EDTEC; Yvonne Simpson, Vice 
President of the Small Business Services for the Greenville, SC 
Chamber of Commerce; Shelia Brooks, President and CEO of SRB 
Productions, Inc.; William Mellor, President and General 
Counsel for the Institute for Justice; and Hector Ricketts, 
President and CEO of Queens Van Plan.
    Dr. Horton stated that her belief is that with proper 
education and opportunities, youth can benefit from 
entrepreneurial skills, and eventually aid in the economic 
development of their cities and towns. Dr. Horton described 
EDTEC's ``new youth entrepreneur'' program, one which provides 
opportunities for youth to have hands-on entrepreneurial 
experiences, as well as entrepreneurial teaching in the 
classroom. Dr. Horton emphasized that beginning with youth is 
important; for learning entrepreneurial skills as an adult is 
too late in the process. The skills learned, such as: setting 
goals, thinking logically and sequentially, and the importance 
of academic education, lead to a productive youth with high 
potential in society. Dr. Horton asked that the committee 
continue to move forward in its investigation of minority 
entrepreneurship by developing legislation promoting 
entrepreneurship training, support schools in adopting 
entrepreneurial education programs, and oversee the development 
of outreach programs to minorities.
    Ms. Simpson's testimony described her home of Greenville 
County, NC. Ms. Simpson explained that even though there has 
been an almost 98 percent increase in the number of Black-owned 
businesses in Greenville County, NC, the sales and receipts of 
black-owned businesses has increased by only 30 percent. Ms. 
Simpson said this discrepancy is unnecessary and urged the 
committee to continue to delve into this issue, and to insure a 
more level playing field for minority entrepreneurs through tax 
incentives.
    Ms. Brooks, national board member of the National 
Association of Women Business Owners (NAWBO), spoke about 
specific obstacles which face minority entrepreneurs, in 
particular, women business owners of color. Ms. Brooks 
explained that women-owned and operated businesses, while vital 
to the economy, are faced with increasingly difficult 
obstacles, specifically in the arena of accessing capital. Ms. 
Brooks explained the ``Master Plan,'' a comprehensive plan 
commended by U.S. Small Business Administration's Aida Alvarez. 
Ms. Brooks stressed the importance and effectiveness of this 
plan, and that it should be implemented in order to alleviate 
problems incurred by minority entrepreneurs.
    Mr. Mellor testified that the spirit of America is embodied 
in entrepreneurial endeavors, and that minorities are missing 
out on the realization of the American Dream. People who want 
to earn a living for themselves and their families are faced 
with countless obstacles. These factors disobey the aims of our 
Founding Fathers, he explained. Mr. Mellor concluded that the 
creation of jobs should be of highest priority to the nation.
    Mr. Ricketts, the President and CEO of Queens Van Plan, 
Inc., a commuter van service authorized by the State of New 
York and the New York City Taxi and Limousine Commission, also 
testified. Mr. Ricketts spoke of his difficulties dealing with 
the bureaucracy associated with any kind of change he wants to 
make in his business. He stated the endless processes he had to 
go through to expand or change his business. Mr. Ricketts 
recommended that the committee, and the government as a whole, 
set the pace in eliminating government-imposed barriers to 
entrepreneurs. Mr. Ricketts requested that regulations be based 
on safety issues and not on the fact that a minority seeks to 
compete and compete successfully.
    For further information on this hearing, refer to Committee 
publication 106-6.
            7.3.2  small business, big gains: how economic renewal 
                    creates safer neighborhoods

                               Background

    The Subcommittee on Empowerment held a hearing on May 11, 
1999 concerning economic renewal. Specifically, the committee 
wished to examine how economic renewal helps to create safer 
neighborhoods in our nation's cities. Although communities with 
little economic growth, high crime rates and high unemployment 
rates often deter business owners from settling in certain 
areas, these communities offer distinct business advantages. 
These usually include: locations near public transportation; 
high population density, leading to substantive purchasing 
power; and a vast, untapped labor pool. When business 
flourishes in an area, the crime rate tends to fall, and the 
previous hardships felt by a community are eased. Therefore, 
business success will lead to economic renewal for America's 
struggling communities. The committee sought to further this 
search into the correlation between a community's success and 
the growth of small businesses.

                                Summary

    Robert L. Moore, President of the Development Corporation 
of Columbia Heights; Todd Mosley, Executive Director of Thumbs 
Up Youth Enterprises; Curtis Watkins, Director of the East 
Capitol Center for Change; Albert R. Hopkins, Jr., President 
and CEO of the Anacostia Economic Development Corporation; and 
Celina Trevino Rosales, Executive Director of the Latino 
Economic Development Corporation all testified at the hearing.
    Mr. Moore focused on the evolution of the Columbia Heights 
area. He stated that the area, once a profitable commercial 
center, had fallen victim to a massive relocation of city 
residents to rural outlying areas of Virginia and Maryland in 
the early 1960's. In addition, the community experienced 
rioting and damage due to the assassination of Martin Luther 
King, Jr. in 1968. These factors contributed to the decision by 
the federal government to buy and later level the 62-acre area. 
Though they were hoping for new commercial development, the 
area remained clear, and crime and drugs took over the 
neighborhood. Mr. Moore stated that, if businesses would open 
in the area, it would help to create jobs and thus decrease 
crime and violence.
    Mr. Mosley spoke of his proposed tax credit to businesses 
as one way to help youth in impoverished areas. His idea is to 
give a 100-percent tax credit to local employers to hire local 
teenagers for part-time apprenticeships. This proposal would 
broaden the tax base by placing money into the hands of youth 
in the form of wages, and by providing that the same amount of 
money to businesses in the form of a tax credit. Mr. Mosley 
stated that this would be the way to help a community become 
profitable and successful again.
    Mr. Watkins spoke of his East Capitol Center for Change, a 
non-profit organization serving youth and adult residents of 
the 577 unit East Capitol Public Housing Development. Through 
his work with this center, Mr. Watkins has seen that it is 
important to expose young people to business development skills 
from a young age, give tax incentives to community businesses 
as well as associations and corporations who develop programs 
for youths.
    Mr. Hopkins, Jr. testified that he has seen a significant 
change in the mindset of residents in the Anacostia/far 
Southeast area since the Good Hope Marketplace was opened in 
December of 1997. He used this as a concrete example to show 
that business renewal creates renewal on a broader scale for an 
entire community. Ms. Trevino Rosales stated that the community 
of Mount Pleasant has also enjoyed a surge of confidence and 
economic revitalization due to recent store openings and 
construction.
    For further information on this hearing, refer to Committee 
publication 106-11.
            7.3.3  welfare to work: what is working, what is next?

                               Background

    On May 25, 1999, the Subcommittee on Empowerment met to 
discuss various strategies geared to facilitate the transition 
from welfare to gainful employment. The Subcommittee examined 
the accomplishments of several welfare-to-work programs and the 
lessons learned during this welfare reform transitional period. 
The Subcommittee heard input from the witnesses regarding the 
steps that should be taken to ensure the long-term success of 
welfare reform initiatives and what strategies are successful 
in moving people from dependency on public assistance, to 
gainful employment and ultimately self-sufficiency.
    A study conducted by the Economic and Social Research 
Institute surveyed 500 small businesses and found that small 
employers are seeking reliable, motivated workers with positive 
attitudes, and are less concerned with the limited education 
and job training of many welfare recipients. Additionally, 62% 
of the employers surveyed had hired someone who was on welfare 
and, of this percentage, 94% were willing to hire a welfare 
recipient again. These findings suggest that since there is no 
shortage of employers to hire welfare recipients, perhaps 
welfare-to-work-programs are part of the solution to 
facilitating the job search for welfare recipients. These 
programs provide training that will help welfare recipients 
portray themselves as successful candidates to prospective 
employers.
    The past few years have been a transitional period for 
welfare reform, following the passage of the Personal 
Responsibility and Work Opportunity Reconciliation Act, in 
1996. This law established the Temporary Assistance for Needy 
Families (TANF) program which mandates that after two years of 
receiving welfare assistance, recipients must have a job or be 
participating in some type of work activity or job training. 
This welfare-to-work initiative ensures that welfare recipients 
have the opportunity to make a long-term life improvement, by 
sustaining a job, in hopes that eventually they will become 
independent of government assistance. This is especially 
important since participation in the TANF program limits the 
receipt of welfare benefits, in most cases, to no more than 60 
months in one's lifetime.

                                Summary

    The hearing consisted of one panel: Mr. Charles A. Ballard, 
Founder and CEO, Institute for Responsible Fatherhood and 
Family Revitalization; Mr. Robert F. Powelson, President, 
Chester County (PA) Chamber of Commerce and Industry; Mr. Peter 
Cove, Founder, America Works; Mr. Eric Yergan, Owner, The 
Yergan Agency.
    Mr. Ballard testified that his program since its inception 
in September 1998, has placed over 230 fathers and mothers in 
full-time jobs. He also noted that they have a 72 percent 
retention rate.
    Mr. Powelson testified about his program which pairs 
welfare recipients seeking job training, or entering jobs, with 
a mentor in the business community. Mentors serve in a number 
of capacities from helping create or fine tune resumes to 
discussing daycare options. He added that this mentoring 
relationship helps increase the rate of job retention and that 
several other counties in Pennsylvania have expressed interest 
in creating similar programs.
    Mr. Cove testified about his program, America Works, 
operates in seven cities and in 15 years, has placed over 
20,000 welfare recipients in jobs. He added that the government 
should not pay for the process for welfare-to-work programs, 
rather they should pay for the results. He believes the 
Department of Labor should only pay a welfare-to-work program 
when a participant has worked for more than six months.
    Mr. Yergan testified about his experience in hiring a 
welfare recipient from Mr. Cove's program to work in his 
insurance agency. He told the panel that he was most impressed 
with Anna Rodriguez, a single mother of three, who was on 
welfare for more than five years, finding her very competent 
and eager to learn. He noted that she progressed quickly in her 
job, passing classes and tests required to obtain her real 
estate license. Mr. Yergan added that being able to speak with 
an America Works counselor when there is a problem with a 
participant in the beginning stages of employment, is 
invaluable in creating a strong working relationship.
    For further information on this hearing, refer to Committee 
publication 106-14.
            7.3.4  the digital divide: bridging the technology gap

                               Background

    The Subcommittee on Empowerment met on July 27, 1999, to 
discuss the Digital Divide, its impact on disadvantaged groups, 
and initiatives to close the gap. The Digital Divide refers to 
the recent trend or demographic differences in the groups that 
are taking full advantage of innovative technology such as 
personal computers and the Internet. A study released in July, 
1999 by the U.S. Department of Commerce, National 
Telecommunications and Information Administration, entitled 
``Falling Through the Net: Defining the Digital Divide,'' finds 
evidence of a distinct dichotomy between those who avail 
themselves of electronic resources and those who do not. The 
study examines the prevalence of telephones, personal 
computers, and Internet access in households nationwide using 
data from the Census Bureau. The analysis showed that although 
connectivity in America has increased, access trends seem to be 
affected by factors such as race, socioeconomic status, 
geographic region, and education. The study showed that 
minorities, low income families, single parent families, and 
those living in rural areas have less access to the 
technological tools of the Information Age.
    The lack of computer proficiency and Internet access by 
members of disadvantaged groups hinders their employment 
prospects. The ability to successfully compete for the 
increasing number of entry level, high tech jobs, requiring a 
computer background, is decreased for those without access to 
technology. Even an initial job search, is facilitated by the 
electronic job banks found on the Internet. Further, the 
Internet benefits entrepreneurs seeking to start or grow a 
small business, by serving as a research tool to probe new 
products, processes, and technologies. Universal access to 
electronic technology will also help improve the labor pool, 
creating well-prepared, technologically adept employees.
    As computer and Internet technology are rapidly being 
integrated into the classroom, students lacking access to 
electronic resources at home, school, the library, or another 
community center, may lag behind peers in their ability to 
embrace and utilize these technologies. This is further 
complicated by the lack of teachers possessing the skills 
necessary to successfully integrate technology in the 
classroom. Online classrooms are yet another educational 
benefit of the Internet, allowing people to conveniently 
enhance their education and even work toward post-secondary 
degrees. In fact, the NTIA study found that minorities, when 
using the Internet at home, are taking courses or conducting 
school research online at rates higher than the national 
average.

                                Summary

    Panel I consisted of: Honorable Larry Irving, Assistance 
Secretary for Communications and Information, National 
Telecommunications and Information Administration (NTIA), U.S. 
Department of Commerce; Ms. Maureen Lewis, General Counsel, 
Alliance for Public Technology; Mr. Harris Miller, President, 
Information Technology Association of America.
    Mr. Irving testified on the findings of the U.S. Department 
of Commerce's 1999 report ``Falling Through the Net: Defining 
the Digital Divide.'' He noted that while Americans are have 
advanced with respect to connectivity, there exists a disparity 
in this progress on the basis of income, education, race, and 
geographic location.
    Ms. Lewis testified that the Alliance for Public Technology 
(APT) thinks one way to combat the Digital Divide is for the 
FCC to eliminate certain rules that inhibit large telephone 
companies from deploying broadband infrastructure. She also 
suggested that the FCC should forge partnerships with community 
organizations that can pool their demand for telecommunications 
services and service providers. She added that education, 
training, and recognition of the economic incentive existing in 
information technology, are important steps toward bridging the 
gap.
    Mr. Miller testified that the Information Technology 
Association of America prefers to use the term ``digital 
opportunity'' rather than digital divide since there is an 
expected doubling of e-commerce expected in the next six 
months, and that suggests opportunity, both in terms of 
empowerment and economic performance. He noted that in time 
market forces would level rate of access to technology since 
typical technology cycles take 20 years and the World Wide Web 
is only six years old. He added that the ITAA has been working 
with the industry groups and the White House on incentives to 
attract minorities, low-income women, and those with 
disabilities to IT jobs.
    Panel II consisted of: Mr. B. Keith Fulton, Director, 
Technology Programs and Policy; Mr. Tim Robinson, Legislative 
attorney; Ameritech Corporation; Jack Krumholtz, Director, 
Federal Government Affairs, Microsoft Corporation; Mr. Thomas 
Coleman, President and CEO, Technical Career Institute, Inc.
    Mr. Fulton testified about the partnerships the Urban 
League has with IT companies such as Bell Atlantic, EDS, 
Microsoft, and Ameritech, to build 115 technology education and 
access centers, ``digital campuses'' around the country. He 
added that programs like e-rate have been beneficial in getting 
Internet access into schools and libraries.
    Mr. Robinson testified that Ameritech wants to work with 
the FCC to rethink restrictive interpretation of 
telecommunications law that prevents companies from 
transferring information efficiently. He encouraged support of 
H.R. 2420 and H.R. 1686, which would remove some of these 
barriers. He added that the retail buying power of the inner 
cities, where many minorities live, amounts to over $100 
billion per year and that by providing the tools and IT 
resources an underserved market can be tapped.
    Mr. Krumholtz testified about steps Microsoft is taking to 
work toward its vision of a computer and connectivity in every 
household. He described programs from Libraries Online, 
operating in public libraries across the country and targeting 
everyone from school children to senior citizens, to Working 
Connections, a partnership with American Association of 
Community Colleges to provide education and workforce training 
in disadvantage in distressed communities.
    Mr. Coleman testified that his program, Technical Career 
Institute, trains economically and socially disadvantaged 
individuals for technology jobs. He added that TCI has 
incorporated components targeting women and at-risk high school 
students in the New York City public school system.
    For further information on this hearing, refer to Committee 
publication 106-25.
            7.3.5  h.r. 2373, the start-up success accounts act of 1999

                               Background

    On November 2, 1999, The Empowerment Subcommittee met to 
discuss H.R. 2373, the Start-Up Success accounts act of 1999. 
Introduced by Subcommittee member Jim DeMint (R-SC) and full 
Committee Member Brian Baird (D-WA), the bill allows start-up, 
small enterprises to save their money in tax deferred savings 
accounts, giving new small businesses a tool to manage their 
income and avoid the excessive tax burden. The term ``start-
up,'' for purposes of
this bill, is defined as a business in its' first five years of 
existence. A small business owner may put up to 20% of his 
taxable annual income, up to $200,000, into a SUSA. One may 
draw from the account five years from the date of deposit, so 
the account can remain active for up to ten years, but one can 
make tax free contributions to the account for five years 
(while their business is still a ``start-up'').
    Small business owners are often counseled to reinvest their 
profit into the business, thereby avoiding taxation on the 
business' profits. H.R. 2373 would allow new small businesses 
an alternative opportunity to use a tax deferred saving account 
for profits. These savings accrued at a time when business is 
profitable, could help many small businesses withstand slow 
periods or periods of increased competition.

                                Summary

    The hearing consisted of one panel: Ms. Karen Kerrigan, 
Chairman, Small Business Survival Committee; Mr. Erik R. Pages, 
Policy Director, National Commission on Entrepreneurship, and 
Mr. Pepper Horton, CPA.
    Ms. Kerrigan testified that the SUSA Act of 1999 addresses 
a major problem facing many small businesses, lack of access to 
capital. She noted that in 1995, delegates from the White House 
Conference on Small Business ranked this issue a top priority 
and that 15 out of its 60 recommendations related to access to 
capital.
    Mr. Pages spoke about the challenges of getting funding for 
start-ups. He noted that start-ups with projected expenses of 
under $50,000 can usually get needed funding through small-
scale investors, often family members, and credit cards. He 
described the toughest group of start-ups to find funding for 
is the $50,000-$2 million bracket, since venture capitalists 
usually come through for the big dollar prospects, leaving the 
medium sized businesses with the most problems accessing funds. 
Mr. Pages testified that the SUSA Act would be a useful tool 
for start-ups to grow using their own hard-earned money.
    Mr. Horton testified that the SUSA Act would be an 
effective tool in helping small business owners manage their 
cash flows and avoid tax-motivated spending. He said that 
currently, the tax code contains few incentives to help small 
businesses get off the ground and that the SUSA Act is a step 
in the right direction.
    For further information on this hearing, refer to Committee 
publication 106-39.
            7.3.6  the aging of agriculture: empowering young farmers 
                    to grow for the future

                               Background

    On November 3, 1999, the Subcommittee on Empowerment and 
the Subcommittee Rural Enterprises, Business Opportunities and 
Special Small Business Problems met in a joint hearing to 
discuss an issue that is of great concern in the agricultural 
community--the lack of young people entering production 
agriculture. According to the most recent Census of 
Agriculture, the average age of American farmers is 54.3 years; 
and there seems to be a shortage of young people waiting to 
succeed our aging farmers as they prepare for retirement. This 
shortage means that many seasoned farmers, with decades of 
farming experience, have fewer people to pass their legacy on 
to and benefit from their accumulated years of agriculture 
experience. Older farmers who are looking toward retirement 
often find their children are not interested in taking over the 
family farm, or if they are interested, they are discouraged by 
the difficulties inherent in the transfer of a farm from one 
generation to the next. The estate tax, lack of access to 
capital, long hours of work with marginal return on investment, 
regulatory barriers, and reduced access to the global market 
are some factors that dissuade aspiring young producers from 
entering the field of agriculture.

                                Summary

    Panel I consisted of: Dr. D. Scott Brown, Program Director, 
Food and Agriculture Policy Research Institute (FAPRI); Mr. 
John Young, Farmer, Groffton, NH; Mr. Lynn Cornwell, Vice 
President, National Cattleman's Beef Association; Mr. Terry 
Ecker, Farmer, Elmo, Missouri; Mr. Steve Gross, Farmer, 
Manchester, Pennsylvania; Mr. Bruce Cobb, Farmer, Bridgeton, 
New Jersey; and Mr. Baron Johnson, Farmer, Inman, South 
Carolina.
    Dr. Brown testified on the state of U.S. agriculture. He 
reported that many commodities' prices are falling due to 
changing supply and demand for the commodities. He expects the 
2000 farm income to decline about 15 percent over the previous 
year.
    Mr. Young, a fourth-generation apple farmer, whose family's 
orchard used to cover 600 acres is now reduced to 57, testified 
that problems including financing, labor shortage, tax 
complexities, and paperwork burden are contributing to the 
demise of the family farm. He also mentioned the growing 
necessity of an ``off-farm'' income to sustain the family.
    Mr. Cornwell spoke about three factors that inhibit 
prospective young farmers and ranchers from entering the 
profession: the lack of return on investment, the estate tax, 
and regulatory burdens.
    Mr. Ecker testified about the factors he, as a young 
farmer, must consider as he contemplates taking over his 
family's farm. These include the cost of land and the lack of 
availability of affordable land for expansion, risk management 
and problems with the Federal crop insurance program, and the 
lack of helpful tax incentives for producers.
    Mr. Gross cited the estate tax, lack of federal and state 
assistance programs, health insurance costs, and competition 
with foreign producers as barriers to young people entering 
production agriculture.
    Mr. Cobb testified about several ways to make agriculture 
an attractive business venture for aspiring young producers: 
increase access to capital for start-up costs, eliminate the 
estate tax, eliminate reduction in Social Security wages that 
discourage older Americans from working on farms, make INS 
regulation fair and clear.
    Mr. Johnson spoke about the difficulty of making arming a 
profitable endeavor, citing the increased cost of land and 
equipment and the lack of low-interest loans available to young 
farmers.
    The second panel consisted of Mr. Gary Smith, Executive 
Director, Chester County Development Council; Mr. John Baker, 
Beginning Farm Center at Iowa State University; and Ms. Susan 
Offutt, Administrator, Economic Research Service, U.S. 
Department of Agriculture.
    Mr. Smith spoke about the Next Generation Farm Loan 
Program, a low-interest loan program operated by the state of 
Pennsylvania. He testified that permitting Farm Service Agency 
guarantees on aggie bonds and exempting aggie bonds from the 
volume cap on industrial development bonds would help make 
financing available to young farmers.
    Mr. Baker spoke about the programs of the Beginning Farm 
Center which include seminars on how to plan an estate and make 
a business succession plan, geared toward retiring farmers, and 
programs to help young farmers organize their operation so it 
has greater potential to be a successful business. Mr. Baker 
suggested that the USDA provide matching funds to state 
organizations such as his.
    Ms. Offutt testified that the method of census data 
collection, in which only the primary owner's age is counted, 
may be partially responsible for the increase in the average 
age of farmers, since the farm may actually be operated by a 
much younger farmer whose age is not recorded. She added that 
over the last five years, FSA has provided over $2.5 billion in 
loans to over 34,000 beginning farmers and ranchers.
    For further information on this hearing, refer to Committee 
publication 106-40.
            7.3.7  bridging the technological gap: initiatives to 
                    combat the digital divide

                               Background

    On March 28, 2000, the Empowerment Subcommittee met to 
discuss the various strategies geared toward bridging the 
technological gap created by the Digital Divide. Specifically, 
the Subcommittee examined initiatives that have been successful 
in ensuring that everyone is able to access the technological 
advances that are driving our information age. This hearing 
furthered the Subcommittee's discussion of this matter and 
charted the progress that has been made since our first hearing 
on the digital divide last July. For information on the first 
hearing on the Digital Divide, refer to Committee publication 
105-25.

                                Summary

    This one panel hearing consisted of: Dale Mitchell, 
Executive Director, Delaware Valley Grantmakers; Leslie A. 
Steen, president, Community Preservation and Development 
Corporation; Scott Mills, Executive Vice President and Chief 
Operating Officer, BET.com, LLC; Darrien Dash, CEO, DME 
Interactive Holdings, Inc.; Harris N. Miller, President, 
Information Technology Association of America; Katherine 
Bushkin, Senior Vice President and Chief Communications 
Officer, America Online, Inc.
    The Mr. Mitchell testified that sometimes the most 
effective solutions must come from those closest to the 
problem. He spoke about the funding that his association's 
members have given to community programs, which seek to shrink 
the Digital Divide. For instance, the Free Library of 
Pennsylvania's Bits and Bytes Project, funded by the William 
Penn foundation, sponsors computer clubs and classes. The CIGNA 
Corporation funds computer learning centers in Philadelphia and 
Hartford, CT. The Pennsylvania Humanities Council, with funding 
from the Howard Heinz Endowment, sponsors technology centers at 
10 community sites.
    Ms. Steen testified that the ``Community Preservation and 
Development Corporation (CPDC) has been actively bridging the 
Digital Divide for over four years in seven low income 
communities in Washington, DC. She illustrated this with the 
example of the Edgewood Terrace community, which was comprised 
of 884 HUD subsidized apartments. The residents of Edgewood 
Terrace needed jobs and the CPDC knew that information 
technology was going to foster many new employment 
opportunities, so they set up technology-based job training 
programs. Ms. Steen described Edgewood Terrace as an electronic 
village using technology as a community building tool. The CPDC 
now has partnerships with local universities and corporations 
to promote higher education goals and employment.
    Mr. Mills testified that Bet.com, as a company serving the 
on-line needs of the African American population, has developed 
several strategies to combat the Digital Divide. The company 
plans to offer a free Internet Service Provider (ISP) for those 
who have a computer and a Personal Computer (PC)/ISP package 
for those who don't. Mr. Mills noted that cost is only one 
factor contributing to the Digital Divide and that the lack of 
appealing content and target marketing to the African American 
community also must be addressed.
    Mr. Dash testified that his company, the first publicly 
traded African American Internet Company, seeks to enhance the 
perception in the African American and other minority 
communities that the Internet has a value for them. He added 
that he is Chairman of District 5 for Technology Committee in 
Harlem, which promotes the Internet to young children through 
both public and private partnerships.
    Mr. Miller testified that the absence of minorities in the 
IT field is due in part to lack of education and training in 
this area. The ITAA is working to filter a more diverse cross-
section Americans into the IT community. He noted that the 
Digital Divide can be seen as a ``digital opportunity'' and 
that the challenge to attract underrepresented groups to the IT 
field can be met through outreach, education, and internships.
    Mr. Bushkin testified that America OnLine is committed to 
ensuring that everyone has the chance to be part of the digital 
economy. She referred to a Department of Commerce study that 
reported that in two years, about 60 percent of jobs will 
require high tech skills. She mentioned several factors that 
would help bridge the digital divide: (1) availability of 
hardware, software and affordable connectivity, (2) appropriate 
skills training, (3) Internet content useful to traditionally 
underserved communities, and (4) public awareness programs to 
educate people on how the Internet is valuable in their lives.
    For further information on this heraing, refer to Committee 
publication 106-48.
            7.3.8  the digital divide

                               Background

    On April 25, 2000, the Subcommittee on Empowerment met in 
the Carson City Council Chambers, Carson City Hall, 701 East 
Carson Street, Carson, CA to discuss the digital divide formed 
in low-income communities when they lack adequate resources to 
participate in the Internet and electronic commerce. Ms. Bono 
presided over the field hearing located in Ranking Member 
Millender-McDonald's district.
    A study released by the Commerce Department's National 
Telecommunication and Information Administration found evidence 
of a widening digital divide. Data from the studies show 
significant differences between those groups with access to the 
basic components of e-commerce, personal computers, telephones 
and Internet service providers.
    The Subcommittee looked at mostly non-governmental 
proposals to increase access to technology coupled with proper 
instruction to enhance the possibility that those who are 
currently not computer and Internet proficient will come to 
embrace these resources.

                                Summary

    The hearing consisted of two panels. On the first panel, 
three witnesses provided testimony: Francisco Mora, Co-Author, 
``On-line Content for Low-Income & Underserved Americans;'' 
Warren Ashley, Director, Distance Learning, California State 
University; and Jack Sutton, Executive Officer, UCLA Outreach 
Steering Committee, Office of the President.
    Mr. Mora shared information from his study supporting that 
less than 1 percent of the information important to underserved 
areas, such as local jobs, local housing, limited literacy 
content, multilingual content and cultural content, is 
available on the Internet. Because his study is the first of 
its kind, he recommended more research in the phenomenon. He 
also recommended invested in a nationwide network of community 
technology centers as hubs to help residents produce and use 
relevant content.
    Mr. Ashley testified about the six-degree programs and five 
certificate programs that can be completed without ever 
physically attending California State University. He said that 
when people feel they need the Internet to do business and stay 
in touch with their friends they will get the equipment, access 
and any help they need to use this technology.
    Mr. Sutton testified on behalf of the UCLA Outreach 
Steering Committee, an organization that works with fifth-eight 
high schools and feeder schools in designated outreach programs 
as a result of California Proposition 409 and the regent's 
action on Affirmative Action. He provided his experiences with 
how electronic infrastructure, computers, data communication 
and other new media enable a strong economy.
    Four witnesses testified on the second panel: Lynnejoy 
Rogers, Director, Brown Business Center, Urban League; Sam 
Covington, Director, Information Vortex, Inc.; John Bryant, 
Founder and CEO, Operation Hope, Inc.; Perry Parks, Vice-
President, Government and Public Relations, Media One.
    Ms. Rogers testified that as corporations become more 
global in focus, they will become less supportive of urban 
issues and as businesses use more automation for production, 
the role of the human is bound to diminish as did the role of 
the horse in the agricultural age. She said that as 
technological advancement increases, people who have been 
historically disenfranchised from the economic process which 
develops ownership and wealth, will continue to drift towards 
an existence mirroring the survival of the fittest.
    Mr. Covington testified that the digital divide really is 
only a reflection of the other divides that exist in the 
economy. He said that competition is stymied in areas such as 
education or business preventing African-Americans from 
success. He said that society needs to halt these monopolistic 
practices in order to allow everyone equal opportunity to 
succeed.
    Mr. Bryant testified about the Inner City Cyber Cafe, an 
organization sponsored by Operation Hope designed to literally 
bridge the technological and prospective gaps separating inner 
city and mainstream communities. It provides the local 
community with a comfortable, relaxed and positive atmosphere 
in which to meet to conduct e-commerce related business and 
research, to hold one on one business meetings, and to unleash 
the enormous power of the Internet and world wide web.
    Mr. Parks testified that as competition begins to take 
hold, prices for Internet access lowers and more access will be 
made available to the people in low-income communities. He also 
stated that the technological infrastructure is in place to 
bridge the digital divide.
    For further information on this hearing, refer to Committee 
publication 106-54.

7.4  Summaries of the Hearings Held by the Subcommittee on Government 
        Programs and Oversight

            7.4.1  joint hearing with the Subcommittee on regulatory 
                    reform and paperwork reduction on small business 
                    advocacy review panels

                               Background

    On March 11, 1999, the Subcommittee on Regulatory Reform 
and Paperwork Reduction and the Subcommittee on Government 
Programs and Oversight of the Committee on Small Business held 
a hearing on small business advocacy review panels created by 
the Small Business Regulatory Enforcement Fairness Act of 1966 
(SBREFA). This hearing was in many respects a continuation of 
joint hearings the two subcommittees held in April 1997 and 
March 1998 in which was addressed the need for common sense in 
rulemaking and the unfair financial burdens borne by small 
businesses all over this Nation as a result of unscientific, 
impractical and unnecessary regulations
    These same hearings also examined the implementation and 
performance by the Environmental Protection Agency (EPA) and 
the Occupational Safety and Health Administration (OSHA) of the 
panel process added by SBREFA. The panel process requires these 
two agencies--EPA and OSHA--to consider and to respond fairly 
to the advice and recommendations of small businesses 
concerning the impact upon small businesses of proposed 
regulations. In a study done for Committees of both the House 
and the Senate, the General Accounting Office concluded that: 
``Agency officials and small entity representatives generally 
agreed that the panel process is worthwhile, providing valuable 
insight and opportunities for participation in the rulemaking 
process.'' The hearing considered adding the Internal Revenue 
Service as one of the agencies, in addition to OSHA and EPA, 
covered by the panel process.

                                Summary

    The hearing was comprised of a single panel, which 
included: Keith Cole, Partner, Swindler Berlin Shereff 
Friedman; Katherine Gekker. Owner, Huffman Press; Jack 
Waggener, Resource Consultants/Dames and Moore; and James 
Morrison, Senior Policy Advisor, Association for the Self-
Employed. The view was expressed that the Internal Revenue 
Service (IRS) should be added as an agency that must convene a 
panel. The panel process was considered an achievement by 
Congress in providing a voice to small businesses in expressing 
concerns with respect to proposed regulation that could 
adversely impact the small business community and the nation as 
a whole. However, it is necessary that participants have 
sufficient information concerning the intent of a rulemaking in 
order to effectively comment on the proposed rule.
    Better economic analyses and environmental assessments were 
attributed to the panel process which was said to overall have 
a positive impact on the rulemaking where panels were convened. 
Through the panel process have caused rulemaking to take on a 
more rational and fair approach, more work needs to be done to 
make the process even better. Though it was hoped that the IRS 
would look at the panel process in a favorable light, this has 
not been the case and the IRS has opposed being included in the 
process. A draft bill was considered that would have added the 
IRS to the panel process.
    For further information on this hearing, refer to Committee 
publication 106-4.
            7.4.2  women's business enterprises

                               Background

    On October 8, 1997, the subcommittee on Government Programs 
and Oversight held a hearing to showcase Women's Business 
enterprises on a national level and to examine issues of 
concern to women entrepreneur--such as the availability of 
capital. This was the first hearing in almost a decade devoted 
to women in business.
    This second hearing, held on March 25, 1999, was a 
continuing commitment to spotlight the vital nature of women's 
business enterprises to the economy of this nation as a whole 
and to the communities in which we live. The hearing provided, 
as did the last one, a forum for learning how the private 
sector is succeeding or failing to meet the needs of women in 
business and to focus attention on any existing deficiencies.
    The hearing provided an opportunity for women business 
owners to express their views on the effectiveness of federal 
government programs designed to help small business owners and 
those who aspire to go into business for themselves. Lastly, 
this hearing provided a vantage point for identifying problems 
that women business owners encounter as the result of over-
regulation and burdensome government paperwork. the hearing 
posed the question: Is the federal government a friend or foe?

                                Summary

    The hearing was comprised of two panels. The first panel 
included the Hon. Sue Kelly, a Representative from the State of 
New York and the Hon. Jennifer Dunn, a Representative from the 
State of Washington. The second panel included Terry Neese, 
CEO, Terry Neese Personnel Services, Inc.; Georgette Mosbacher, 
President, Georgette Mosbacher Enterprises, Inc.; Paula Miller-
Lester, Chairman/Publisher/Editor, Minorities and Women in 
Business; Barbara Hayward, Hayward International, Inc.; and 
Colleen Anderson, Executive Vice President, Wells Fargo Bank 
San Francisco.
    Major problems facing women in business were cited as the 
need to: (1) simplify and make the tax code more fair, (2) make 
sure that women have access to capital, (3) eliminate the bias 
that women in business often face, (4) improve the ability of 
women to receive Federal procurement contracts, and (5) 
continue to reduce paperwork and burdensome regulatory 
requirements.Three areas of tax relief for small businesses 
were cited as immediate concerns: i.e. elimination of the death 
tax, reduction in capital gains and increased deductibility of 
health insurance for small, self-employed business people.
    The National Association of Women Business Owners, NAWBO, 
expressed concern about issues surrounding government 
contracting and certification. Too little capital and too much 
Federal regulation was cited by one witness as the biggest road 
blocks to real success for women in business. As to the growth 
of women business enterprises, a witness stated that it is 
estimated that by the year 2000, women will own 40 to 50 
percent of all U.S. businesses. One witness financed the start-
up of a business using a retirement fund and credit cards and 
found bankers reluctant to lend to new businesses. However, an 
executive of a large national bank testified that the bank had 
established a $10 billion, ten-year women's loan fund and that 
on the third anniversary of the fund's existence over $3.7 
billion had been lent to women-owned businesses.
    For further information on this hearing, refer to committee 
publication 106-7.
            7.4.3  conserving natural resources and examining related 
                    emerging technologies

                               Background

    The hearing held on April 23, 1999, highlighted the growing 
need to conserve natural resources. This is because of the 
limited nature of these resources and the consequences of 
depending heavily, as in the case of oil imports, upon foreign 
suppliers. The hearing also explored some of the new 
technologies and inventions that businesses, both large and 
small, are using to improve the well-being of individuals and 
the planet by conserving resources and preserving and 
protecting the environment. Technology and invention have been 
the keystones in making the United States the world leader it 
is.
    A further focus of the hearing was the role of government, 
and Federal regulations and paperwork in helping or inhibiting 
scientific invention and technology. This hearing provided an 
opportunity to evaluate whether the Federal government was a 
friend or foe when it comes to research, invention, 
technological change, and the introduction of new goods and 
services designed to preserve our environment.

                                Summary

    The hearing was comprised of one panel, and the witnesses 
included: Dr. Albert Bartlett, Professor Emeritus, University 
of Colorado; Dr. Harvey Forest, Advisor to the President, 
Solarex Corporation; Mr. Robert P. Purcell, Director, Advanced 
Technology Vehicles, General Motors Corporation; Mr. Edward 
Clerico, President, Applied Water Management, Inc.; and 
Mr.Douglas Durante, Executive Director, Clean Fuels Development 
Coalition. It was projected that the world has consumed 75% of 
the discovered and undiscovered petroleum that was ever in the 
ground, which has left only 25% of this important resource. It 
was advocated that steps be taken to tell the American people 
the true state of the present oil production in the United 
States and the world.
    As a means of conserving petroleum, it was pointed out that 
Germany and Japan have policies to encourage the use of solar 
energy. It was testified that the United States was in a race 
with foreign competitors to keep solar technology in the United 
States where it was developed. Another impact of diminishing 
petroleum reserves was that automobile manufacturing companies 
in the future could not depend on the internal combustion 
engine, but had to consider a number of alternatives. Research 
was on-going in advanced vehicle technologies including 
electric, hybrid, and fuel cell.
    Turning to another area of conservation, our heavily 
subsidized waste water and water systems were created in a 
manner that has caused secondary impacts that have negated many 
of the environmental benefits. It was proposed for the future 
that more attention be given to planning for indirect use 
rather than proceeding haphazardly. Again in the field of 
energy conservation, it was pointed out that a number of 
alternatives to petroleum-based fuels existed, e.g., alcohol, 
ethanol, and methanol, natural gas, propane, and electricity, 
but that further development in these technologies would be 
accelerated by a more forward-looking and consistent national 
energy policy.
    For further information on this hearing, refer to Committee 
publication 106-8.
            7.4.4  the small business innovation research (sbir) 
                    program

                               Background

    On May 27, 1999, the Subcommittee on Government Programs 
and Over-sight held a hearing that examined the performance of 
the Small Business Innovation Research (SBIR) program which was 
established in 1982 and was reauthorized in 1992 to extend 
through the end of fiscal year 2000. The SBIR program fosters 
innovative research and development by small businesses and 
strengthens the country's technology base. The program has been 
credited with creating new jobs, increasing productivity and 
economic growth and helping combat inflation and stimulating 
exports. Small high-tech companies, as a group, have shown an 
ability unequaled by large businesses to produce new products, 
processes and technologies. The program has found widespread 
support among members of both parties. The hearing provided 
program oversight and a basis for legislation reauthorizing the 
program. The hearing examined recommendations for legislative 
and administrative changes offered as a part of the hearing 
record.

                                Summary

    The hearing was comprised of two panels, the first panel 
included: Mr. Al Behar, President and CEO, Personal Improvement 
Computer Systems, Inc.; Dr. Jacqueline Haynes, Vice President/
Owner, Intelligent Automation, Inc.; Dr. Arvid Larson, Co-
Chairman, AAES R&D Task Force. The members of the panel were of 
the view that the SBIR program was a success and should be 
continued. It was reported that efforts were being made to 
streamline the application process and modernize the review 
process. As evidence of the innovative nature of the program, 
one company had received nine patents and had a further patent 
pending as a result of its participation in the program. One 
witness viewed the program as an engine of growth, contributing 
to increasing the company's business. Another witness had been 
at the first hearing that authorized the program and was of the 
view that the program was far more of a success than initially 
envisioned.
    The second panel included: Mr. Chris W. Busch, Ronan, 
Montana and Mr. Daniel Hill, Assistant Administrator, Office of 
Technology, Small Business Administration (SBA). It was pointed 
out that rural areas have a special need for technology-based 
businesses fostered by the SBIR program. One witness cited a 
Harvard University study, which found that SBIR awardees grew 
significantly faster--whether measured by sales or by 
employment--than a matched set of firms over a 10-year period. 
The Administration expressed the view that the SBIR program is 
working and achieving its congressionally assigned objectives.
    For further information on this hearing, refer to Committee 
publication 106-16.
            7.4.5  electro-magnetic pulse (emp)--should this be a 
                    problem of national concern to businesses small and 
                    large as well as government?

                               Background

    On June 1, 1999, the Subcommittee on Government Programs 
and Oversight held a field hearing at the Applied Physics 
Laboratory, Johns Hopkins University that examined the 
potential damage to our economy and national security of 
Electro-Magnetic pulse (EMP). To date, the EMP threat has been 
ignored by government and was not well publicized. Concerns 
about the proliferation of nuclear weapons, and the possession 
of such weapons by rogue nations, make the discussion of 
problems associated with EMP and the magnitude of those 
problems a most timely topic. Previously, few Congressional 
hearings had been devoted to this topic.

                                Summary

    The hearing was comprised of one panel that included: 
Ronald J. Wilsie, Program Manager, Strategic Systems, Applied 
Physics laboratory, Johns Hopkins University; Gordon K. Soper, 
Group Vice President, Defense Group, Inc.; Lowell Wood, Senior 
Staff Member, Lawrence Livermore National Laboratory; Col. 
Richard W. Skinner, Principal Director, Command, Control, 
Communications, Intelligence, Surveillance, Reconnaissance, and 
Space, Office of the Assistant Secretary, Department of 
Defense. The EMP threat resulting from an nuclear weapon 
explosion was characterized as unique because: (1) its peak 
field amplitude and rise rate are high and, (2) the area 
covered by an EMP signal can be immense. The U.S. military 
systems and infrastructure have been designed and built to 
survive and operate effectively in an EMP environment. However, 
the effects upon the civilian infrastructure could be 
extensive.
    The view was expressed that EMP was not being considered in 
the ongoing infrastructure protection program and that, except 
for hearings such as this one, the federal government was 
devoting relatively little attention to this problem. It was 
stated that EMP-generated high-altitude nuclear explosions have 
riveted the attention of the military nuclear technical 
community for thirty-five years, ever since the first 
comparatively modest one very unexpectedly and abruptly turned 
off the light over an extensive area in the mid-Pacific. It was 
reported that the President's Commission on Critical 
Infrastructure Protection found that an EMP event would 
potentially devastate portions of the national infrastructure.
    Robert D. Walpole, National Intelligence Officer for 
Strategic and Nuclear programs, Central Intelligence Agency, 
submitted a statement for the record which may be found in the 
appendix of the hearing. A videotape of the hearing may be 
obtained from the Library of Congress.
    For further information on this hearing, refer to Committee 
publication 106-17.
            7.4.6  the burden that needless regulations and lack of 
                    common sense in enforcement of regulations place 
                    upon small businesses

                               Background

    This hearing provided a national forum for small businesses 
to express their views on whether present federal regulatory 
programs are stimulating or deterring job growth and economic 
development. The hearing also explored the issue of whether 
Federal and State regulatory agencies in the enforcement of 
regulations have lost sight of the need to be fair and to use 
common sense. Is there a double standard applied in the 
enforcement of regulations when the violation is caused by 
government itself?
    In the course of the hearing, the Subcommittee viewed and 
took testimony concerning the lower step on the East front of 
the Capitol which is in violation of code requirements. The 
reason for pointing out the code violation with respect to the 
Capitol step was not to have the step replaced at great 
expense, but for the purpose of bringing reason and fairness to 
the regulatory process.

                                Summary

    The hearing consisted of one panel that included: Jay 
Gullo, Mayor, New Windsor, Maryland; Michael T. Rose, National 
Association of Home Builders; Kenneth Boehm, Chairman, National 
Legal and Policy Center; and Alan Hantman, AIA, Architect of 
the Capitol. One witness testified that he was required a 
substantial expense to rip out and rebuild a wheelchair ramp 
that was found to be a fraction of an inch too short. Another 
witness was of the view that burdensome regulations and 
excessive enforcement policies were barriers to affordable 
housing. It was brought to the attention of the Subcommittee 
that private enforcement groups were receiving federal funding 
from HUD to bring actions against builders.
    Instances were cited of regulatory abuses by federal 
agencies that violated the principles of fairness and common 
sense as well as the clear intent of Congress. The loss of the 
apple industry and employment from apple growing in Western 
Maryland was attributed to the arbitrary activities on the part 
of the Legal Services Corporation. A view of the Capitol 
revealed that the bottom step on the East front was two inches 
higher than the other steps. There was testimony that no 
specific building codes have been applied to congressional 
construction projects in light of the effort to comply with 
national standards. However, the Congressional Accountability 
Act requires Congress to comply with OSHA.
    For further information on this hearing, refer to Committee 
publication 106-24.
            7.4.7  are federal programs providing effective procurement 
                    assistance to small businesses?

                               Background

    The hearing was held on August 18, 1999 at the Urban 
League, 4510 South Michigan Avenue, Chicago, Illinois. The 
hearing examined the performance of the Small Business 
Administration (SBA) in administering procurement and other 
programs designed to assist persons to start a small business 
and to grow an established small business. A number of 
important issues were raised. Have SBA's and similar programs 
succeeded in achieving their stated objectives? Have these 
programs benefited the communities in which the small 
businesses are located and in which the employees live? Have 
private sector efforts proved more successful than government 
sponsored programs?
    The hearing also provided oversight of SBA's 
entrepreneurial programs and a forum for recommendations 
offered for improving SBA's performance in aiding small 
businesses that want to enter the Federal procurement arena and 
to take advantage of new domestic and export business 
opportunities.

                                Summary

    The hearing was comprised of two panels, the first of which 
included: Ms. Ruth Sandoval, Deputy Director, Minority Business 
Development Agency, Department of Commerce; Mr. Ted Cowen, 
Director, Region V, SCORE; Ms. Hedy Ratner, Co-President, 
Women's Business Development Center; and, Mr. Richard Hayes, 
Associate Deputy Administrator, SBA. The second panel was 
comprised of the following: Ms. Charlotte Harrison-Smith, 
President and CEO, Millennium Data Systems; Mr. Obie Wordlaw, 
CEO, Jero Medical Equipment & Supplies; Mr. Paul Lumpkin, 
President, Plexus Scientific Corporation; and, Mr. Sam Johnson, 
President, Best Metal Fabricators.
    There was a discussion of the Phoenix System operated by 
the Department of Commerce which provides minority businesses 
an opportunity to register on the system and to automatically 
receive contract opportunities. SCORE stated that the Chicago 
chapter held two procurement workshops a year and that these 
workshops included SBA, the city of Chicago the State of 
Illinois, and GSA. The problems presented by contract bundling 
in excluding small businesses in Federal procurements was 
pointed out. The SBA discussed the PRO-NET Internet System 
which allows Federal buyers to identify small businesses, but 
does not, as does the Phoenix System, match buyers and sellers 
or provide small businesses with procurement opportunities.
    The view was expressed that the 8(a) contracting program 
did not provide procurement opportunities for many businesses 
that were certified 8(a) small businesses. The 8(a) and HUBzone 
programs were not reaching a large percentage of those small 
businesses eligible for these programs, and as a result these 
programs were not providing the procurement opportunities and 
businesses development intended. It was pointed out that the 
area in which the hearing was held contained visual proof that 
many of the programs intended to bring about positive changes 
had failed to achieve their intended results.
    For further information on this hearing, refer to Committee 
publication 106-29.
            7.4.8  going public--the end of the rainbow for small 
                    business?

                               Background

    The purpose of the hearing was to provide information to 
small businesses about ``going public''--the process of selling 
the securities of a corporation on a stock exchange. For many 
small businesses, or a company that has begun as a small 
business, ``going public'' can be the end of the rainbow--the 
culmination of years of hard work and substantial monetary 
reward for the business owners. A number of factors need to be 
considered by businesses considering whether to ``go public.'' 
The hearing provided some of the answers to those questions. In 
addition, both public and private assistance is available to 
businesses considering ``going public'' and the hearing 
provided a public forum for identifying sources of information 
and assistance.

                                Summary

    The hearing consisted of one panel which included Brian 
Lane, Director, Division of Corporate Finance, U.S. Securities 
and Exchange Commission (SEC); John T. Wall, President, and 
Chief Operating Officer, NASDAQ-AMEX International, National 
Association of Securities Dealers, Inc.; Michael T. Moe, CFA, 
Director of Global Growth and Stock Research, Merrill Lynch; 
Keith D. Ellison, Interim Director, Wharton Small Business 
Development Center; and, Mark Dankberg, President and Chief 
Executive Officer, VIASAT, Inc. It was noted that the SEC has a 
regulation called the Seed Capital Rule, Rule 504, that permits 
entrepreneurs to raise up to one million dollars free from 
Federal registration. However, state registration requirements 
would have to be satisfied and Federal anti-fraud rules would 
apply.
    The strength of U.S. financial markets was testified to by 
the fact that since 1989, Nasdaq alone has brought over 4,200 
new companies into the public markets and has raised over $154 
billion in capital to support new businesses. In addition, U.S. 
equity capital markets experienced dramatic growth during the 
1990s and have gone from $3.1 trillion in 1990 to nearly $13 
trillion in 1999. Technology has been the leader of the new 
economy. Since 1990, there have been over 5,000 initial public 
offerings (IPOs) that have raised $329 billion. One witness 
testified that the characteristics that investors are looking 
for in an IPO is ``high earnings growth'' and ``performance 
against expectations.'' Another witness testified that ``a 
successful IPO means different things to different people.'' 
Lastly, it was testified ``that public and private resources 
available to entrepreneurs, combined with hard work, 
dedication, and at least a little bit of luck, offers real 
opportunities to live the American dream, starting a business 
and taking it public.''
    For further information on this hearing, refer to Committee 
publication 106-35.
            7.4.9  the sba computerized loan monitoring system--a 
                    progress report

                               Background

    On February 29, 2000, a hearing was held to determine the 
progress the Small Business Administration (SBA) was making in 
developing its 7(a) loan monitoring system. Section 233 of the 
Small Business Reauthorization Act of 1997 (Public Law 105-135) 
requires that SBA complete eight mandated planning actions 
before the agency obligates or expends any funds for the 
development and implementation of the proposed new, automated 
7(a) loan monitoring system. The proposed new automated loan 
monitoring system for the 7(a) loan program was the subject of 
a prior hearing of this Subcommittee held on July 16, 1998.
    This hearing focused on the progress SBA has made, since 
the July 16, 1998 hearing, in performing and completing the 
planning needed to serve as the basis for funding the 
development and implementation of the 7(a) loan program 
computerized loan monitoring system including the eight 
planning steps required by the Act. The hearing addressed the 
issues: (1) whether any planning was completed as of the 
hearing, (2) the management decisions made as a result of that 
planning, (3) the planning remaining to be completed, and (4) 
the management decisions remaining to be made.

                                Summary

    The hearing was comprised of one panel, which included: Mr. 
Fred P. Hochberg, Deputy Administrator, SBA; Mr. Anthony R. 
Wilkinson, President and CEO, The National Association of 
Guaranteed Lenders, Inc.; and, Mr. Joel C. Willemssen, 
Director, Civil Agencies Information Systems, Accounting and 
Information Management Division, U.S. General Accounting 
Agency. The need for a loan monitoring system was underscored 
by the fact that the SBA loan portfolio grew over a ten year 
period from $17.5 billion in 1990 to over $50 billion. However, 
SBA's computer systems have not fully evolved with the growth 
in the loan portfolio and are unable to meet the challenges and 
the way SBA's loan products are now structured.
    In 1999, 75% of all 7(a) loans were processed under the PLP 
program or other limited review procedures, evidencing the 
important change in SBA's role from that of a loan approver to 
that of a lender regulator. SBA need timely and complete 
information to fulfill its new role, while not creating a 
reporting burden on either the borrower or the lender. 
Nevertheless, SBA had not completed any of the eight planning 
actions mandated by the Reauthorization Act, but had made 
substantial progress. There was agreement among the witnesses 
that planning actions needed to be taken to meet the statutory 
requirements.
    For further information on this hearing, refer to Committee 
publication 106-44.
            7.4.10  public law 106-50, ``veterans entrepreneurship and 
                    small business development act of 1999''

                               Background

    On March 14, 2000, the Subcommittee on Government Programs 
and Oversight of the Committee on Small Business and the 
Subcommittee on Benefits of the Committee on Veterans Affairs 
held a joint hearing. The joint hearing examined the 
implementation of Public Law 106-50, the ``Veterans 
Entrepreneurship and Small Business Development Act of 1999,'' 
signed into law by the President on August 17, 1999. The law 
requires that specific technical, financial and procurement 
assistance be provided to veterans. The Department of Veterans 
Affairs, the Small Business Administration (SBA), the 
Association of Small Business Development Centers and the 
Service Corps of Retired Executives (SCORE) are the principal 
entities mandated by law to provide this assistance. The 
hearing provided oversight as to the progress that had been 
made in implementing the provisions of the law.
    SBA is required by statute to provide special consideration 
to veterans. In the past, many veterans have expressed concern 
that SBA and other Federal agencies were ignoring the financial 
and entrepreneurial needs of veterans who own small businesses. 
The hearing provided a forum for evaluating present performance 
and for recommendations for improving the future delivery of 
entrepreneurial and other services to veterans.

                                Summary

    The hearing was comprised of two panels, the first of which 
included: Emile Naschinski, Assistant Director, The American 
Legion; Rick Weidman, Director, Government Relations, Vietnam 
Veterans of America; Geoffrey Hopkins, Member, Paralyzed 
Veterans of America; Anthony Baskerville, Deputy National 
Services Director, Disabled Veterans of America; and, Joseph 
Forney Founder/Coordinator, Disabled Veteran Business 
Enterprise Business Network. There was consensus that little 
had been done at SBA to assist veterans and that veterans were 
not a high priority at SBA. Continual monitoring of SBA was 
necessary to see that P.L. 106-50 was followed and implemented.
    Funding was necessary to get the National Veterans Business 
Development Corporation up and running. The ability of veterans 
to become small business owners is important to the nation as a 
whole since small businesses are at the core of the American 
dream. It was underscored that the unemployment rate for 
paralyzed veterans was 80% and that small business ownership 
was vital. Business programs for veterans is not new since the 
first GI bill passed by Congress in 1944, the Department of 
Veterans Affairs, then the Veterans Administration, was given 
the authority to guarantee loans made to eligible veterans.
    The second panel consisted of: Woodrow C. McCutchen, 
Executive Director, Association of Small Business Development 
Centers; W. Kenneth Yancey, Executive Director, National SCORE 
Office; Darryl Dennis, Associate Deputy Administrator, SBA. It 
was noted that veterans should be given an opportunity to fully 
participate in the free enterprise system that their service 
has preserved. Military training and discipline give veterans 
important tools for starting small businesses. SCORE provides 
no-cost assistance to separating military personnel through 
Transition Assistance Programs on more than 15 military bases 
across the country. Implementation of the law was delayed and a 
great deal of progress needed to me made to implement the 
provisions of the law.
    For further information on this hearing, refer to Committee 
publication 106-46.
            7.4.11  the present and future of e-commerce for small 
                    businesses in the private sector and with federal 
                    government agencies

                               Background

    This hearing, held April 11, 2000, discussed the present 
progress and future potential of e-commerce and its impact on 
doing business in the private and public sectors. The dollar 
volume of business being conducted by means of e-commerce is 
increasing at an unprecedented rate. An article in the Wall 
Street Journal of Wednesday, April 5th, quoted a source that 
estimated the volume of online sales as increasing by 53 
percent this year to $23 billion, after doubling the previous 
year to $15 billion. The same article quoted a trade 
association that estimated that there were 30,000 or more web 
sites on the Internet selling merchandise to consumers.
    The passage of the Federal Acquisition Streamlining Act of 
1994 provided an impetus to Federal agencies to use the 
Internet as the preferred method of procurement. There are few, 
if any, major Federal agencies that do not acquire a large 
dollar volume of goods and services through e-commerce 
transactions. The hearing examined both the commercial and 
Federal use of e-commerce technologies such as the creation of 
electronic shopping malls, in the transition to largely 
paperless transactions. The hearing also looked at the training 
and acquisition assistance that small businesses need or are 
receiving to compete in e-commerce both in the commercial and 
Federal sectors. Lastly, the hearing provided some answers to 
the questions: Where are we going in e-commerce? What are the 
implications of doing business in the private and public 
sectors?

                                Summary

    The hearing was comprised of two panels. The first panel 
was made up of The Honorable Deidre A. Lee, Administrator for 
Federal Procurement Policy, Office of Management and Budget. 
The second panel was comprised of the following: Mr. Max E. 
Summers, State Director, Small Business Development Centers; 
Ms. Claudia Knott, Director, Joint Electronic Program Office, 
Department of Defense (DOD), Mr. Major Clark, Assistant 
Advocate, Office of Advocacy, Small Business Administration; 
and Mr. Tony Bansal, President and CEO, Digital Commerce 
Corporation. The Federal government is working on creating a 
single, government-wide point of entry for electronic commerce 
and for accessing business opportunities. The Administration's 
strategic plan calls for reliance wherever possible, and cost-
effectiveness on commercial products and services.
    It was reported that a majority of small businesses have 
not learned to use the Internet effectively to sell goods and 
services by means of e-commerce. Small business will need a 
support structure to help them keep pace with the technological 
changes in business practices. DOD has created a program office 
for accelerating the application of electronic business 
practices and associated information technologies. DOD has 
created a central processing registry which permits small 
businesses to list their products and services. The information 
is available to all 800 contracting offices in DOD.
    The view was expressed that Congress passed the Federal 
Streamlining Act in response to the criticism that the Federal 
procurement system was inefficient, too bureaucratic, and too 
costly. PRO-NET was created by the Office of Advocacy to 
provide information on-line about small businesses' services 
and products as well as data concerning their ability to 
perform. If the laws passed by Congress require that Federal 
agencies use the e-commerce for procurement, it follows that 
vendors in the private sector be prepared to sell 
electronically. However, it is necessary to provide assistance 
to small businesses to compete in the new arena of electronic 
procurement.
    For more information on this hearing, refer to Committee 
publication 106-50.
            7.4.12  effectiveness of government programs

                               Background

    This hearing, held April 25, 2000, was one in a series of 
hearings begun in April 1997 to determine the impact of Federal 
and community-based programs on Main Street America and various 
segments of the small business community. One of the goals of 
these hearings was to learn how small business owners have 
succeeded and continue to grow--whether by reliance solely upon 
the private sector or with assistance by Federal, State and 
local programs.
    Another purpose of these hearings was to obtain views as to 
the causes of the present economic prosperity and to ask, and 
hopefully provide answers, to a number of related questions. 
How can the present economic conditions be sustained? Has the 
prosperity touched every segment of the small business 
community or are there segments of the small business community 
that need assistance? If so, what kind of assistance? Small 
businesses have been leading the economy both in innovation and 
job creation. What is needed to maintain this record well into 
the 21st century?

                                Summary

    The hearing was comprised of two panels. The first panel 
included: Honorable Jere Glover, Chief Counsel, Office of 
Advocacy; Mr. John C. Howard, Executive Director, Economic 
Development Commission, Washington County; Mr. Richard Story, 
Executive Director, Economic Development Authority, Howard 
County; and, Mr. John T. Lyburn, Jr., Director, Department of 
Economic Development, Carroll County. It was pointed out that 
if we expect to sustain the present economic prosperity there 
is a need to continue to create new small businesses and to 
provide an economic climate in which new ideas can come to 
fruition. The Congress and the Federal government should 
nurture and visibly support procurement opportunities for small 
businesses.
    In order to continue to fuel the present prosperity small 
businesses need to use trained workers and Federal resources to 
complement state training programs. A supporting element has 
been the Small Business Development Centers that have provided 
free business counseling to aspiring entrepreneurs and have 
provided advice to established small businesses. A danger was 
seen in the competitive disadvantage small, hometown banks and 
local enterprises were facing vis-a-vis large regional and 
national banks that offered related services, e.g., insurance 
and securities.
    The second panel was comprised of: Mr. Randall Nixon, 
Nixon's Farm; Mr. John Schulze, Vice President, Pizza Hut of 
Maryland; Mr. Ken Williams, CEO and Director, Howard County 
Chamber of Commerce. Some favorable comments were made about 
the Small Business Administration's loan guarantee program. 
However, there was dissatisfaction with the expense as well as 
the regulatory requirements. There was further dissatisfaction 
with the increasing regulatory burden that the Federal 
government places on small businesses without consideration of 
the monetary consequences. The view was offered that what small 
businesses need is access to information, a modern business 
registration system, low interest loans, and financial 
assistance.
    For further information on this hearing, refer to Committee 
publication number 106-55.
            7.4.13  women in business

                               Background

    On October 8, 1997 and March 25, 1999, the Subcommittee on 
Government Programs and Oversight held hearings to showcase 
Women's Business Enterprises on a national level and to examine 
issues of concern to women entrepreneurs such as the 
availability of capital. This hearing, held June 8, 2000, was a 
continuing commitment to spotlight the vital nature of women's 
business enterprises to the economy of this nation as a whole 
and to the communities in which we live. This hearing provided, 
as did the previous ones, a forum for learning how the private 
sector is succeeding or failing to meet the needs of women in 
business and to focus attention on those deficiencies that may 
exist.
    The hearing, also, provided an opportunity for women 
business owners to express their views as to the effectiveness 
of federal government programs designed to help small business 
owners and those who aspire to go into business for themselves. 
Lastly, this hearing provided a vantage point for identifying 
problems that women business owners encounter as the result of 
over-regulation and burdensome government paperwork.

                                Summary

    The hearing was comprised of a single panel, which 
included: Laura Henderson, President and CEO, Prospect 
Associates, and member, National Women's Business Counsel; 
Suzane Ward Parker, President and CEO, Ward Global Enterprises, 
and board member, National Black Chamber of Commerce; Linda 
Keenan, Director, Association Marketing, Lucent Technologies; 
Terry Neese, President and CEO, Terry Neese Personnel Services, 
Inc., and Cofounder, Grassroots Impact, Inc; Diane Wirth, 
President, The Solution Works, Inc., and Board secretary, 
Women's Business Institute; and, Glen Mayer, Corporate 
Supplier, Diversity Coordination, United Parcel Service.
    Emphasis was placed on the value of the National Women's 
Business Counsel as an effective advisor to Congress and the 
President, and as catalyst for making the American dream come 
true for women. It was projected that by 2005 women owned 
businesses would increase 77 percent and generate close to $4 
trillion in revenue. It was pointed out that large businesses 
can be successful mentors of women owned small businesses and 
that they can be successful working partners.
    Two problems facing women owned small businesses was the 
death tax which it was advocated should be repealed and the 
change in requirements with regard to cash versus accrual 
accounting for tax purposes. Access to resources, such as 
obtaining a needed license, was cited as an impediment to women 
starting and owning their own business. The recent growth in 
women owned small businesses indicated a potential for 
continued impressive growth in the future.
    For further information on this hearing, refer to Committee 
publication number 106-62.
            7.4.14  the future of small business: what lies ahead

                               Background

    On September 28, 2000, the Subcommittee on Government 
Programs and Oversight held a hearing to review those issues of 
vital concern to the small business community and main street 
America. It is small businesses that are the engine driving the 
present economic prosperity by spurring the creation of new 
enterprises, by producing new job opportunities, and by being 
leaders in technology and innovation. This hearing provided an 
opportunity to learn of those issues of most concern and those 
that will affect the future of small business in the United 
States.
    Another purpose of the hearing was to obtain 
recommendations about how best to promote and sustain an 
enterprise-friendly economy that rewards those who start and 
grow small businesses. Suggestions were invited with respect to 
legislation to assist small businesses. Also, views were sought 
with respect to burdens created by Federal regulations and 
paperwork--together with suggestions for improvements.
    A number of questions were asked. How can the present 
economic conditions be sustained? Has the prosperity touched 
every segment of the small business community or are there 
segments of the small business community that need assistance? 
If so, what kind of assistance? Should the assistance come from 
the private or public sectors? How effective are the private 
solutions and government programs in addressing these needs? It 
was hoped that the hearing would help to answer these and other 
questions, e.g.,--What is needed to maintain this record well 
into the 21st century?

                                Summary

    The hearing was comprised of a single panel which included: 
James Blann, Senior Vice-President, American Express Company; 
John Hexter, Chairman, National Small Business United; Woodrow 
McCutchen, Executive Director, Association of Small Business 
Development Centers; Giovanni Coratolo, Director of the Small 
Business Council, U.S. Chamber of Commerce; Ken Yancey, 
Executive Director, Service Core of Retired Executives; and, 
Anthony Raimondo, Chairman and CEO, Behlen Manufacturing 
Company. Small businesses employ about one half the nations 
work force and have been the source of a majority of the new 
jobs. It was reported that small businesses were having a 
difficult time finding a sufficient number of skilled employees 
and the lack of such employees was deterring growth. Too often 
job-seekers lack basic written and verbal communication skills. 
The installment sales tax provision was cited as substantial 
barrier to small businesses who wanted to expand through 
acquisitions.
    The need for a quality work force and for work force 
development was underscored as well as the need for small 
business owners to solve the succession problem. The present 
tax structure inhibits turning over a small business to ones 
children. The Nation should have a tax policy that permits 
small businesses to reinvest in their own enterprises rather 
than the growth of government. The present Federal tax code was 
cited as the single most important impediment to continued 
economic growth. It was also noted that the expansion of small 
businesses is hampered by needless burdensome regulations 
promulgated by Federal agencies. The proposed ergonomic 
regulation proposed by the Department of Labor was cited as an 
example of a regulation that would adversely effect small 
businesses. Access to capital still continues to be a problem 
for small businesses outside the telecommunications sector.
    For further information on this hearing, refer to Committee 
publication number 106-71.
7.5  Summaries of the Hearings Held by the Subcommittee on Regulatory 
        Reform and Paperwork Reduction
7.5.1  the impact of federal regulations on small businesses in the 
        hudson valley

                               Background

    On September 1, 1999, the Subcommittee on Regulatory Reform 
and Paperwork Reduction held a field hearing at the Westchester 
County Association, White Plains, NY to consider the problems 
of federal regulations and the burdens they impose on small 
businesses in the Hudson Valley. Specifically, the hearing was 
held to determine the scope of the regulatory impediments to 
small business growth in the Hudson Valley and potential 
solutions to the problem.
    Small businesses are a key element of economic growth in 
America. Nevertheless, small businesses with between 20 and 499 
employees have regulatory costs averaging about $5,000 per 
employee. The regulatory climate is not necessarily conducive 
to fostering small business growth.

                                Summary

    The first panel consisted of Mr. Vincent Tamagna, County 
Legislator, Putnam County, NY; Mr. Lawrence Dwyer, President, 
Westchester County Association; and Mr. Philip Scarano, 
Westfair Communications. Mr. Tamagna testified that small 
businesses require regional training resources to make small 
businesses aware of regulatory requirements and available 
assistance programs. Mr. Tamagna then noted that the Hudson 
Valley requires high speed Internet access to enhance the 
viability of the Valley as a business location. Finally, Mr. 
Tamagna noted that the elimination of redundant paperwork and 
creating greater flexibility for the Occupational Safety and 
Health Administration would be helpful to small businesses. Mr. 
Dwyer testified that there was a need to reduce excessive 
regulation through the imposition of cost-benefit criteria, 
periodic review of all regulations, and reduction in the 
regulations imposed by the Occupational Safety and Health 
Administration. Mr. Scarano testified about restrictions on 
advertising in non-profit publications.
    The second panel consisted of Mr. David Feldman, President, 
Feldman Dry Cleaning; Mr. Scott Wexler, Executive Director, 
Empire State Restaurant and Tavern Association; Dr. Stephen 
Pomeroy, President, Schatz Bearing Corp.; and Mr. George 
Russel, President and CEO, HQ Global Workplaces. Mr. Feldman 
testified that he still faces substantial costs in complying 
with regulations promulgated by the Occupational Safety and 
Health Administration and the Environmental Protection Agency. 
Mr. Wexler testified about the restaurant industry's concern 
over reports about dioxin in food. Mr. Wexler also expressed 
reservations about potential regulations from the Occupational 
Safety and Health Administration concerning ergonomics and 
indoor air quality. Dr. Pomeroy testified concerning the 
problems associated with potential legal liability of small 
businesses who have made de minimis contributions to hazardous 
waste sites. Dr. Pomeroy noted that the litigation surrounding 
legal liability imposes substantial costs on small businesses 
without resulting in a speedier clean up of the hazardous waste 
site. Mr. Russell testified about the proposed changes by the 
United States Postal Service to the handling of first-class 
delivered to commercial mail receiving agencies. Mr. Russell 
testified that these regulations would discriminate against 
commercial mail receiving agencies to the benefit of the Postal 
Service and create substantial costs for many small business 
owners that utilize commercial mail receiving agencies.
    For further information on this hearing, refer to Committee 
publication 106-31.
            7.5.2  the united states postal service's regulations 
                    regarding commercial mail receiving agencies 
                    (cmras)

                               Background

    The Subcommittee on Regulatory Reform and Paperwork 
Reduction investigated how recent United States Postal Service 
(USPS) regulations on commercial mail receiving agencies 
(CMRAs) impact small and home-based business private mail box 
(PMB) subscribers and CMRA franchisees. Because USPS is a 
``quasi-governmental'' agency, the Subcommittee also 
investigated whether USPS uses its regulatory powers to reduce 
competitors' market advantage in non-monopolistic markets and 
how its exemption from the Administrative Procedure Act and 
Regulatory Flexibility Act allows it to create regulations 
without administrative procedure. Furthermore, because the 
regulations reformed the privacy safeguards in the existing 
regulations, Members showed concern for boxholders that use 
CMRA boxes for safety and privacy.

                                Summary

    The hearing consisted of two panels of witnesses. The first 
panel consisted of Mr. Anthony Crawford, Inspector, Mid-
Atlantic Division, United States Postal Service accompanied by 
Mr. Mike Spates, Manager, Delivery, United States Postal 
Service; Ms. Rachel Heskin, Communications Director, Mail Boxes 
Etc.; Ms. Sandi Taylor, Strategic Technologies; and Ms. Juley 
Fulcher, Public Policy Director, National Coalition Against 
Domestic Violence.
    Mr. Crawford and Mr. Spates testified that USPS issued the 
final rule to deter mail fraud and identity theft within the 
CMRA industry and to improve the safety and security of the 
mail. However, USPS admitted it acted without conducting 
analyses on the extent of the problem or the effectiveness or 
costs of the solution.
    Ms. Heskin testified that MBE, the largest CMRA franchise, 
although initially opposed to the initial rulemaking, favored 
an agreement it negotiated between USPS and several CMRA 
franchises.
    Ms. Taylor testified on behalf of her home-based business 
that because of safety, privacy and service, receives mail at a 
Mail Boxes Etc. since 1988. She said the onerous nature of the 
regulations would cripple her business. Due to the nature of 
her business, her address, phone and fax number are essential 
to her operation because a large amount of her business comes 
from word of mouth. For instance, when regulators changed her 
area code, her revenue declined by 30%. Furthermore, she spends 
about $10,000 a year advertising in trade magazines. She also 
testified that she has a computer database of over 50,000 names 
of people she has worked with over the years and does not have 
time to update this database, much less notify every person 
about her address change. Most of these people will probably 
think she closed her business when they receive their letters, 
``Returned as Addressed.''
    Ms. Fulcher testified on behalf of the National Coalition 
Against Domestic Violence that the regulations jeopardize the 
privacy and safety of domestic violence victims. Because CMRAs 
protect the identity of their boxholders and USPS, prior to the 
regulation, could not divulge private information, people 
concerned with safety and privacy use CMRAs for mail receiving. 
Furthermore, both victims and shelters use private mail boxes 
solely for the confidentiality and safety a CMRA provides.
    The second panel consisted of Mr. James Morrison, Senior 
Policy Advisor, National Association for the Self Employed 
(NASE); Mr. Michael Mansfield, Assistant District Attorney, 
Queens, NY, Chief of Economic Crimes Bureau; Mr. Rick Merritt, 
Executive Director, Postal Watch Incorporated; Mr. Edward L. 
Hudgins, Director of Regulatory Studies, CATO Institute.
    Mr. Morrison testified on behalf of the NASE membership 
that use CMRAs. He said USPS worked arbitrarily to create 
regulations detrimental to home-based businesses. In changing 
the rule to include the ``#'' sign instead of just ``PMB,'' 
USPS's rationale for the rule changed from improving the 
security of the mail to eliminating ``misleading'' addresses. 
If that is a major concern for USPS, it should clean up all 
``misleading'' addresses and no single out an industry 
predominantly made up of small businesses. Furthermore, Mr. 
Morrison testified that USPSs should subject itself to the 
Regulatory Flexibility Act in instances where its rules impact 
small business.
    Mr. Mansfield endorsed the regulation. His office 
investigates the type of fraud and identity theft cases USPS 
claimed it hoped to deter. He provided anecdotal evidence of 
the types of crimes the regulations hoped to address.
    Mr. Merritt testified on behalf of Postal Watch, a 
grassroots USPS watchdog. He published a CATO report to address 
the costs of compliance with the USPS regulations. He testified 
about what compliance with the rule means for the average small 
business CMRA or PMB.
    Mr. Hudgins previously published a book on the 
privatization of USPS. He testified abut USPS's financial need 
to expand its operations outside its monopoly on first class 
mail. In this instance, USPS used its regulatory power to 
influence a competing market.
            7.5.3  hearing to examine barriers and solutions to 
                    economic development

                               Background

    On November 22, 1999, the Committee on Small Business 
Subcommittee on Regulatory Reform and Paperwork Reduction held 
a field hearing in the Paterson Museum, 2 Market Street, 
Paterson, New Jersey to examine barriers and solutions to 
economic development in northern New Jersey. Held in 
Subcommittee Ranking Member Bill Pascrell's Congressional 
District, the hearing investigated government programs to 
assist the revitalization of areas like Paterson--that 
historically were at the nexus of industrialization and 
manufacturing during the Industrial Revolution. Witnesses 
specifically testified about the Historically Under-Utilized 
Business Zone (HUBZone) program and Foreign Trade Zone program.

                                Summary

    The hearing consisted of two panels. Mr. Francisco Marrero, 
District Director, New Jersey District Office, U.S. Small 
Business Administration; Mr. Dennis Puccinelli, Acting 
Executive Secretary, Department of Commerce FTZ Board; Ms. 
Deborah Hoffman, Executive Director, Paterson Economic 
Development Corporation; Mr. Charles Miller, Associate 
Director, Greater Paterson Chamber of Commerce; and Mr. Daniel 
Jara, President/CEO, Statewide Hispanic Chamber of New Jersey 
testified on the first panel.
    Mr. Marrero testified abut the SBA's efforts in New Jersey 
to assist the economic development of small businesses. He said 
maintaining high quality customer service, improving small 
business access to capital through lending programs, increasing 
the level of participation in government procurement and 
encouraging economic development of socially and economically 
disadvantaged businesses are ways the SBA became a recognized 
leader in stimulating economic growth and development in New 
Jersey.
    Mr. Puccinelli testified about the Foreign Trade Zone 
program and how it encourages domestic activity by affording 
special Customs advantages to offset duty advantages available 
in overseas plants.
    Ms. Hoffman testified on behalf of the Paterson Economic 
Development Corporation, which assists companies to relocate 
and expand in the City of Paterson. Because of the city's need 
for future employment opportunities, Ms. Hoffman said she 
believes the HUBZone and Foreign Trade Zone programs are 
catalysts to maintain an aggressive stance in identifying 
incentives for business relocation into Paterson.
    Mr. Miller testified on behalf of the Greater Paterson 
Chamber of Commerce and supported the efforts of the HUBZone 
and Foreign Trade Zone programs. Specifically, Mr. Miller said 
the Foreign Trade Zone program evens the playing field between 
U.S. businesses and foreign competitors, enables companies to 
lower costs and raise profits, entices the development and 
growth of international trade, and spurs state and local 
economic development to create jobs.
    Mr. Jara testified on behalf of the New Jersey Hispanic 
Chamber of Commerce. He said new changes within the 
Administration are opening more borders for trade with Mexico 
and Latin America and enabling Latino companies to become 
involved in federal procurement opportunities.
    The second panel consisted of Mr. Ron Gross, Vision 2020 
President; Mr. Philip Russo, Time Zero/PPI Corporation; Mr. 
George Waitts, President, Crown Roll Leaf, Inc.; and Ms. 
Deborah Dotoli, President, Geneva Metal Products Company.
    Mr. Gross testified about how foreign the Foreign Trade 
Zone program is a prime economic vehicle to spur the Passaic 
County economy by providing jobs and revenue and will afford 
occupants with certain federal tax and tariff benefits.
    Mr. Russo testified about how his business' competition 
against larger government contractors forced it out of the 
government procurement market. He said the HUBZone program 
would create certain areas that enable his company--that moved 
to Paterson 12 years ago--to become more competitive with other 
businesses in government contracting.
    Mr. Waitts testified on behalf of Crown Roll Leaf Inc., a 
company that prospered in Paterson since 1971. He said that 
although he realized a global market was forming, instead of 
starting a foreign operation, the company decided to stay in 
the United States. Because 17\1/2\ percent of his company's $13 
million in intentional business goes towards taxes and duty 
fees, the playing field is not level. He also said foreign 
trade zones would be helpful in maintaining a more level 
playing field to allow businesses to grow, expand or jump into 
the global market.
    For further information on this hearing, refer to Committee 
publication 106-72.
            7.5.4  osha's proposed ergonomics standard: its impact on 
                    small business

                               Background

    On April 13, 2000, the Subcommittee on Regulatory Reform 
and Paperwork Reduction of the Committee on Small Business held 
a hearing to address the impact on small business of the 
Occupational Safety and Health Administration's (OSHA) proposed 
ergonomics standard. The purpose of the hearing was to examine 
whether small businesses could understand the proposed standard 
and cost-effectively comply, or whether a new proposed standard 
was needed that small businesses could efficiently implement.
    On November 23, 1999, OSHA published a proposed standard 
for reducing ergonomic hazards and concomitant musculo-skeletal 
disorders (MSDs) in the workplace. The proposed standard places 
employees into three generic categories: (a) employees engaged 
in manufacturing; (b) employees involved in manual handling; 
and (c) all other employees who are referred to as ``general 
industry'' employees. The proposed standard applies to all 
three types of workers. However, employers are required to 
treat these categories of employees differently with respect to 
the implementation of an ergonomics program. Employers who have 
employees engaged in manufacturing or manual handling jobs must 
install a management leadership program to prevent MSDs, 
educate employees on the hazards of MSDs, and establish a 
reporting system for employees to utilize when they get a MSD. 
Employers with employees in general industry jobs need to 
institute these three elements only if an employee incurs a 
covered MSD. For all types of jobs, a covered MSD is one 
incurred because of bio-mechanical stresses that represent a 
core element of the employee's job. Once an employee incurs a 
covered MSD, the employer is required to assess the causes of 
the condition, fix the job (and all similarly situated jobs) so 
the condition does not recur, and provide worker restriction 
protection (by either transferring the employee to a different 
job or allow the employee to rest at home with 90% pay) until 
the employee's condition permits returning to the job or six 
months which ever comes first. In lieu of this complex program, 
employers may conduct ``quick fixes'' which entail the 
provision of engineering or other controls that immediately 
eliminate the hazard giving rise to the MSD.

                                Summary

    The first panel consisted of the Honorable Charles N. 
Jeffress, the Assistant Secretary of Labor in charge of OSHA. 
Mr. Jeffress testified that the proposal was necessary to 
reduce and eliminate the debilitating effects of MSDs. Mr. 
Jeffress also noted that the proposed standard could be easily 
implemented by small business without expending substantial 
resources or hiring outside consultants and experts. Mr. 
Jeffress expected that OSHA would undertake a substantial small 
business outreach effort to assist them in complying with the 
standard.
    The second panel consisted of small business 
representatives: Laura O'Shaughnessy, Corporate Secretary for 
Revere Copper Products on behalf of the National Association of 
Manufacturers; Mr. Charles Kremp, III, President/CEO of Kremp 
Florists on behalf of the Society of American Florists; Mr. 
Edward Saxon, President Conco Systems, Inc. on behalf of 
National Small Business United; Mr. Leonard Russ, Bayberry Care 
Center Administrator on behalf of the American Health Care 
Association; and Mr. Brian Landon, Owner of Landon's Car Wash & 
Laundry on behalf of the National Federation of Independent 
Business.
    Ms. O'Shaughnessy testified that Revere Copper Products 
already has an excellent safety program protecting its workers 
and that ergonomics is an infant industry in which consultants 
may provide poor advice to unsophisticated small business 
owners. In addition, she stated that some of the proposed fixes 
that might be required would be unduly costly given the capital 
expense of modifying very large manufacturing equipment.
    Mr. Kremp testified that the proposed standard is not easy 
to understand, that it is hard to find replacement workers for 
skilled artisans, and that the implementation of engineering 
controls may be difficult or impossible in those instances in 
which the business owner is a lessee and does not have legal 
control over the workspace.
    Mr. Russ testified about the difficulty of installing 
mechanical lifts for long-term care facilities, the apparent 
conflict between the OSHA proposed standard and Health Care 
Financing Administration regulations concerning patient care, 
and the inability of his business to pass the costs of 
compliance on to customers given that rates for patient care 
are set by the government.
    Mr. Saxon testified that small business owners do not have 
the legal resources necessary to contest what might be numerous 
invalid claims under the proposed standard given his experience 
with worker compensation claims.
    Mr. Landon reiterated the concerns of Mr. Kremp and Ms. 
O`Shaughnessy concerning the difficulty in understanding the 
proposed standard and noted that OSHA could tell him whether 
his business was manufacturing and thus immediately covered by 
the proposed standard or general industry in which case he 
would delay implementation until a covered MSD occurs.
    The third panels consisted of: Jennifer Woodbury, Esq., 
McDermott, Will & Emery, Ms. Jacqueline Nowell, Director of the 
Occupational Safety and Health Office, United Food and 
Commercial Workers Int'l Union; Frank Mirer, Ph.D., Director, 
Health and Safety Dept., UAW Int'l Union; Lawrence P. Halprin, 
Esq., Keller & Heckman; and John P. Cheffer, CSP, PE, on behalf 
of the American Society of Safety Engineers.
    Ms. Woodbury noted that although written in plain English 
the rule left much unclear including such standards as what 
constitutes a ``material reduction'' in MSDs.
    Ms. Nowell testified that the proposed standard was 
absolutely necessary because of the debilitating effects on 
employees and that the standard, as had been done by businesses 
working closely with UFCW, could be cost-effectively 
implemented.
    Dr. Mirer echoed those sentiments and noted that UAW has 
negotiated a substantial number of agreements with small 
businesses that allocate employees for ergonomic hazard 
analysis and control.
    Mr. Halprin noted that the proposed rule was based on poor 
science, did not provide an adequate mechanism for solving 
problems associated with MSDs, was overly broad, and he stated 
that OSHA should first try additional pilot programs like those 
utilized in the meatpacking industry.
    Mr. Cheffer concurred with sentiments of Ms. Woodbury 
concerning lack of clarity, noted that most small businesses 
would have to hire expensive consultants to implement the 
proposed standard, and that a middle ground standard providing 
more specific guidance would be a better approach.
    For further information on this hearing, refer to Committee 
publication 106-51.
            7.5.5  the impact of fuel prices on small business, 
                    valhalla, ny

                               Background

    The Subcommittee on Regulatory Reform and Paperwork 
Reduction met in Valhalla, NY to discuss the impact of the 
price hike on fuel on small businesses. U.S. production of oil 
has dropped by nearly 20 percent since the last oil crisis in 
the country. During this time, the country's reliance on 
foreign oil has increased from 37 percent to nearly 57 percent 
today. This has had a profound effect on districts in New York.

                                Summary

    The witnesses for the hearing included: Robert W. Gee, 
Assistant Secretary for Fossil Energy, U.S. Department of 
Energy; Ms. Debra Martinez, Chairwoman and Executive Director, 
New York State Consumer Protection Board; Mr. William Flynn, 
Vice President, New York State Energy Research & Development 
Authority; Mr. Todd Spencer, Owner-Operator, Independent 
Drivers Association; Mr. Stanley Morse, Chapter President, 
American Society of Travel Agents; and Mr. Joe Fanelli, Owner, 
Joe's Body Shop.
    Mr. Gee testified that he was aware of the difficulties 
encountered by small businesses as a result of the rising costs 
of fuel. He stated that the goal of the U.S. Department of 
Energy was to lessen the market's volatility. Part of this 
solution includes diversifying the international sources of oil 
supply. He also stated that the Administration has made more 
SBA loans available for heating oil distributors. Mr. Gee 
additionally noted that he supports President Clinton's call to 
establish a regional reserve in the northeast. Mr. Gee noted 
that Congress should extend the Energy Policy and Conservation 
Act to ensure organic authority for strategic petroleum 
reserves. For long term aid, Mr. Gee highlighted the important 
role of technology in the quest for oil alternatives.
    Ms. Martinez spoke of the many hardships endured by small 
businesses in New York State. She stated that Governor George 
E. Pataki had worked to protect consumers and small businesses 
in New York by securing the release of essential funding for 
the Home Energy Assistance Program (HEAP). This will assist the 
state's low income families.
    Mr. Flynn stated that New York relies on heating oil more 
than any other state in the nation for meeting its heating 
needs. New York uses 20 percent of the total U.S. distillate 
demand, and the state is the largest consumer of heating oil 
and kerosene in the nation. 43 percent of New York State's 
households use oil for space heating, which is over 2.9 million 
households. He restated the productive efforts of Governor 
Pataki, although he believes more still needs to be done.
    Mr. Spencer spoke on behalf of small business truckers. He 
stated that the rising cost of diesel fuel and the inability of 
small business truckers to pass on those costs to customers 
causes financial distress. He testified that most truckers are 
having difficulty to simply break even. He warned that if 
something wasn't done soon, the country will be in crisis.
    Mr. Morse testified on behalf of both airline consumers and 
travel agents. He spoke about how both travel agents and 
consumers are negatively affected by the rising prices of fuel 
due to the airlines themselves. Because airlines do not post 
their fuel surcharges with their fares, consumers feel as 
though they have been `tricked' by their travel agents when 
their total price changes at the end of the transaction. Thus, 
both the airline consumers and the travel agents are affected 
by this rise in fuel prices.
    Mr. Fanelli testified about his small gas station. He 
stated that the rise in fuel prices is especially difficult on 
small gas station owners. This is because it is easier for the 
big gas stations to keep their prices down for a longer period 
of time. Mr. Fanelli said that because he only has two gas 
pumps at his station, he needs to keep making a profit, so he 
has to raise the price.
    For further information on this hearing, refer to Committee 
publication 106-52.
            7.5.6  the impact of fuel prices on small business, 
                    castleton, ny

                               Background

    The Subcommittee on Regulatory Reform and Paperwork 
Reduction met in Castleton, NY to discuss the impact of the 
price hike on fuel on small businesses. The price hike of fuel 
has resulted in significant problems for small business, 
especially in New York State.

                                Summary

    The witnesses for the hearing included: Mr. Robert W. Gee, 
Assistant Secretary for Fossil Energy, U.S. Department of 
Energy; Mr. Tim Hulbert, President & CEO, Rensselaer County 
Chamber of Commerce; and Mr. Dan O'Connell, Center Director, 
Small Business Administration on the first panel. The second 
panel consisted of: Ms. Dantaida DeGuzman, Owner, Pioneer 
Fuels, Inc; Mr. Marshal Stevens, Assistant Manager, Warren 
County Airport; Mr. Tom LeGrand, Owner, LeGrand Construction; 
Mr. Jim Czub, National Corn Growers Association; and Mr. James 
Buhrmaster, Empire State Petroleum Association, Inc.
    Mr. Gee began the testimony portion of the hearing. Mr. Gee 
stated that he realizes the Department does not focus on the 
impacts of fuel supply problems on specific business sectors, 
small businesses in particular. He outlined the major actions 
the Administration was taking in hopes to alleviate the 
situation for small businesses. For the immediate future, Mr. 
Gee stated that the diversification of the international 
sources of oil supply will greatly impact the prices of oil. 
Also, Mr. Gee noted that the Administration will focus on 
greater diplomacy efforts in order to attain their goals. Mr. 
Gee stated that the country must focus on domestic policy in 
regards to oil, as will. He testified that the United States 
should focus on helping low-income persons through further 
funding of the Low Income Home Energy Assistance Program and 
through SBA loans. Mr. Gee explained that authorizing a 
regional heating oil reserve in the Northeast as well as 
extending the Energy Policy and Conservation Act would help the 
problem.
    Mr. Hulbert described how every single business is affected 
by a price hike in fuel. Because every business receives goods 
and services through road travel, increases in prices 
eventually affect every part of running and maintaining a 
business.
    Mr. O'Connell explained the January cold snap in the 
northeast, and the additional problems it caused on the fuel 
prices. When there is a cold snap, the natural gas companies 
requires big businesses and federal buildings to convert to a 
different type of fuel source or they will suffer a penalty. 
The demand caused by these customers ultimately increased the 
price of oil by 50 to 60 cents per gallon. Mr. O'Connell sated 
that the cold snap also caused the river to freeze, which 
lengthened the travel time for oil barges, thus increasing the 
cost of transportation. Mr. O'Connell stated that the main way 
to combat this is through the strategic oil reserves.
    The first witness from the second panel of the hearing was 
Ms. DeGuzman. She spoke of her own small fuel business in New 
York, and how the prices of fuel were affecting her so badly, 
that it was not even a profitable business for herself and her 
husband. She has another job with the State, and she and her 
husband are able to live off of that. Unfortunately, Mr. 
DeGuzman has not felt in control of her business this past 
year, because of the fuel price hike.
    Mr. Stevens testified on behalf of the aviation industry. 
He stated that because every single aspect of aviation relies 
on fuel, it is impossible for the aviation industry not to be 
affected by rising fuel prices. He also stated that there are 
industries and businesses that one does not always think about 
in concordance with the aviation industry, but that are equally 
affected by rising fuel prices. For instances, the fixed based 
operators of the aviation industry, are most affected. These 
are the businesses which service the airplanes, provide the air 
charter and the flight instruction services to the customers.
    Mr. LeGrand testified that his budget for fuel throughout a 
year was five percent of the gross cost. However, that was 
going to increase to between nine and 10 percent this year, 
amounting to a monetary difference of between 12 and $18,000. 
He stated that this cost increase is not something he can pass 
on to his customers, so, as a small business, he must absorb 
that loss.
    Mr. Czub testified that the fuel price increase will raise 
his costs an additional $12,000 this year. He stated that his 
main concern is the prices of next year, and he urged the 
government to help agriculture secure new and untraditional 
markets. Additionally, Mr. Czub explained that incentives to 
produce value-added products will help farmers transition and 
gain more of the commodity value.
    Mr. Buhrmaster explained that there were three main reasons 
to the oil trouble in New York during the winter. These 
included: the low inventories as a result of the OPEC nations; 
the `backwardization' of the industry, where prices in future 
months were less than in the current month; and the 
interruptible situation, as explained in Mr. O'Connell's 
testimony.
    For further information on this hearing, refer to Committee 
publication 106-53.
            7.5.7  the quality of regulatory analysis

                               Background

    On June 8, 2000, the Subcommittee on Regulatory Reform and 
Paperwork Reduction held a hearing to address the quality of 
regulatory analyses prepared by federal agencies in compliance 
with various federal statutes and executive orders. The purpose 
of the hearing was to assess the content of and reason for the 
inadequacies and what steps, if any, Congress needed to take to 
improve agency analyses.
    Congress enacted the Administrative Procedure Act in 1946 
with the expectation that agencies would undertake rational 
rulemaking. Rational rulemaking presumes that the agency would 
ascertain the scope of the problem to be addressed, design 
potential solutions to the problem, seek public comment on 
those solutions, and craft a final rule to address relevant 
statutory criteria. By its nature, rational rulemaking requires 
the use of various analytical techniques, such as cost-benefit 
or cost-effective analyses, to assess various regulatory 
alternatives. Subsequent to the enactment of the Administrative 
Procedure Act, Congress imposed additional analytical 
requirements including examination of the environmental and 
small business impacts. These statutory analytical mandates 
have been supplemented from time to time by Presidential 
executive orders.
    Despite these efforts, Congress has not been satisfied with 
the regulatory analyses generated by federal agencies in recent 
years. A number of reforms have been suggested to improve the 
regulatory output of federal agencies, including the 
establishment of an office within the General Accounting 
Office, to provide Congress with an unbiased assessment of the 
regulatory analyses currently required by statute and executive 
order.

                                Summary

    The panelists were Mr. Robert W. Hahn, Director, AEI-
Brookings Joint Center on Regulatory Studies; Mr. Robert P. 
Murphy, General Counsel, General Accounting Office; Mr. David 
S. Addington, Senior Vice President, American Trucking 
Association; Mr. Sal Ricciardi, President, Purity Wholesale 
Grocers, Inc. on behalf of the Pharmaceutical Distributors 
Association; and Ms. Kathleen Wallman, President and CEO of 
Wallman Strategic Consulting, LLC.
    Mr. Hahn first testified that compliance with regulations 
has an approximately $200 billion impact on the American 
economy. Mr. Hahn then noted that this drag on the economy can 
be alleviated by improving the quality of regulations. 
Improving the quality of regulations requires an improvement in 
the quality of regulatory analyses. And Mr. Hahn noted that 
federal agency regulatory analyses, particularly benefit-cost 
analyses, were simply inadequate to support a rational 
decision-making process. Mr. Hahn finally noted that regulatory 
impact analyses do not summarize their results in any standard 
systematic method.
    Mr. Murphy testified that the General Accounting Office has 
examined a number of analyses developed in support of various 
agency rulemakings. The General Accounting Office found that 
many of the analyses did not incorporate the best practices set 
forth by the Office of Management and Budget for conducting 
regulatory impact analyses. Mr. Murphy also noted that agency 
explanations of statutory exemptions from analytical 
requirements, such as certification pursuant to the Regulatory 
Flexibility Act or good cause to forgo notice and comment under 
the Administrative Procedure Act. Mr. Murphy suggested 
additional Congressional oversight might correct some of these 
problems but also believed that additional guidance on unclear 
statutory requirements is necessary.
    Mr. Addington testified about the failure of the Department 
of Transportation to perform satisfactory risk assessments and 
cost-benefit analyses. Mr. Addington also noted that the 
Department failed to comply with the statutory requirements set 
forth in the Regulatory Flexibility Act. Mr. Addington 
concluded that the Department would have issued a substantially 
different rule had it complied with these analytical 
requirements.
    Mr. Ricciardi testified that the Food and Drug 
Administration had failed to properly assess the impact of a 
regulatory change on the wholesale pharmaceutical industry. Mr. 
Ricciardi noted that the Food and Drug Administration 
underestimated the economic impact of the proposal for purposes 
of complying with a Presidential executive order. Mr. Ricciardi 
also testified that the Food and Drug Administration did not 
comply with the provisions of the Regulatory Flexibility Act by 
failing to comprehend the adverse impact of the proposal on the 
four thousand small businesses that perform wholesale 
pharmaceutical sales.
    Ms. Wallman first noted that the Federal Communications 
Commission, unlike other agencies, is not subject to analytical 
requirements imposed by the President. Ms. Wallman then 
testified that the Federal Communications Commission's 
implementation of the Regulatory Flexibility Act, especially 
with respect to small rural telephone companies, could be 
improved. In particular, Ms. Wallman testified that the Federal 
Communications Commission might require more resources strictly 
dedicated to compliance with the Regulatory Flexibility Act. 
Finally, Ms. Wallman suggested that Federal Communications 
Commission establish a standing advisory committee of small 
rural telephone companies upon which the Commission staff could 
rely for advice on the impact of a proposed regulation.
    For further information on this hearing, refer to Committee 
publication 106-63.
            7.5.8  the national ombudsman's 2000 report to congress and 
                    the regulatory fairness program

                               Background

    On June 15, 2000, the Subcommittee on Regulatory Reform and 
Paperwork Reduction held a hearing to review the United States 
Small Business Administration's Small Business and Agriculture 
Regulatory Enforcement Ombudsman report for the Year 2000. The 
purpose of the hearing was to allow the Ombudsman to highlight 
activities undertaken in the past year and make recommendations 
to strengthen the office and the program.
    In 1996, Congress enacted the Small Business Regulatory 
Enforcement Fairness Act (``SBREFA''). Among other things, 
SBREFA established a Small Business and Agriculture Regulatory 
Enforcement Ombudsman within the Small Business Administration. 
Ten regional fairness boards, consisting of small business 
owners, also were created by SBREFA. The Ombudsman is charged 
with gathering and recording comments from small businesses in 
order to form an evaluation of each agency's enforcement 
performance. The regional fairness boards provide small 
business owners a convenient forum through which they can make 
known their problems with federal agency enforcement 
activities. The Ombudsman is required to compile these comments 
into an annual report and provide an annual evaluation of the 
customer satisfaction rating of different agencies and their 
regional or local offices.

                                Summary

    The first panel consisted of Ms. Gail McDonald, the 
National Ombudsman for Small Business and Regulatory 
Enforcement, United States Small Business Administration. 
Accompanying Ms. McDonald were Hatem H. El-Gabri, Senior 
Counsel to the Ombudsman and John T. Greiner, Director of 
Regulatory Review. Ms. McDonald noted that the Year 2000 report 
reveals that the tide is beginning to turn, i.e., federal 
regulatory agencies are becoming more sensitive to the needs of 
small business owners. Ms. McDonald, however, noted that more 
work must be done including encouraging increased small 
business feedback; promoting of greater agency accountability; 
developing more small business-agency communication; and 
fostering creative partnerships between small business and 
Federal regulatory agencies.
    The second panel consisted of Ann Parker Maust, President, 
Research Dimensions; Giovanni Coratolo, Director of Small 
Business Policy, United States Chamber of Commerce; John 
Hexter, President, Hexter & Associates, Inc., on behalf of 
National Small Business United; and Scott Lara, Director, 
Government Affairs, Home Care Association of America. Ms. Maust 
testified that a strong national infrastructure was needed to 
ensure the success of the Ombudsman and Fairness Boards. Ms. 
Maust noted that this not only entailed the efforts of the 
Ombudsman but also the cooperation and assistance of other 
Small Business Administration personnel including the 
Administrator. Mr. Coratolo testified that the Ombudsman 
program has resulted only in marginal changes to federal agency 
compliance activities. In order to improve the effectiveness of 
the program, Mr. Coratolo testified that the ombudsman function 
should be transferred to the Office of Advocacy and both 
offices should receive a budgetary increase. Mr. Hexter 
believes that Congress must increase the resources of the 
Ombudsman and grant the Ombudsman greater authority to respond 
to enforcement complaints filed by small businesses. Mr. Lara 
testified that the fairness boards offered home health care 
providers the opportunity to voice their concerns about the 
enforcement actions of the Health Care Financing 
Administration. In particular, Mr. Lara noted that home health 
care providers complained about the Outcome and Assessment 
Information Set and the 50-50 payment method.
    For further information on this hearing, refer to Committee 
publication 106-65.

7.6  Summaries of the Hearings Held by the Subcommittee on Rural 
        Enterprises, Business Opportunites, and Special Small Business 
        Problems

            7.6.1  h.r. 957, the farm and ranch risk management act

                               Background

    America's farmers are overwhelmingly small businesses. Of 
the more than 2 million farms in this country, 94 percent are 
`small' and 98 percent are `family' farms. Recently, farmers 
nationwide have been forced to endure severe financial 
hardships caused by flooding, drought, and low commodity prices 
in world markets. These small farmers are suffering an economic 
crisis and are struggling to make ends meet. Compounding this 
serious problem, farmers experience a higher degree of price 
and income fluctuations than any other sector of our economy. 
They need the opportunity and the tools to manage the unique 
and often severe risks associated with farming and ranching 
more efficiently.
    Introduced by Representatives Kenny Hulshof (R-MO) and 
Karen Thurman (D-FL), the bipartisan bill H.R. 957, entitled 
the Farm and Ranch Risk Management Act, would allow eligible 
farmers to contribute part of their taxable income into tax-
deferred FARRM Accounts. Contributions may remain in the 
account tax-free for a maximum of five years and are taxable as 
ordinary income upon withdrawal. The FARRM Accounts would 
encourage farmers and ranchers to save up to 20 percent of 
their income annually during good years to help supplement 
their income during bad years.

                                Summary

    The Honorable Kenny Hulshof (R-MO), United States House of 
Representatives; Wayne Nelson, President, Communicating for 
Agriculture; Ed Bergamo, Farmer, Vineland, New Jersey; Marlene 
Brown, Director, Women's Committee, Iowa Farm Bureau 
Federation, West Des Moines, Iowa; and Stephen Appel, 
President, Washington State Farm Bureau, Olympia, Washington; 
testified at the hearing.
    Representative Hulshof, raised on a family farm, stressed 
the importance of agriculture as the cornerstone of our economy 
and of the world's food supply. Due to weather conditions, 
commodity price swings, and changes in markets abroad, farmers 
and the rural communities that depend on these farmers, face 
adverse economic consequences that FARRM Accounts would 
improve. For example, in the three years period to the current 
downturn, farmers and ranchers in the state of Missouri were 
profitable. Had FARRM Accounts been inplace in 1994, those 
feeling the economic pinch of the farm crisis today could have 
access in 1999 to the equivalent of 60 percent of a prifitable 
year's income.
    Similarly, the farm witnesses expressed unanimous support 
for H.R. 957 as an effective and promising risk management tool 
for farmers and ranchers. Intense commodity fluctuations, 
market fluctuations, distribution and supply costs, and 
increased volatility, plague today's farmers, including dairy, 
fruit, and vegetable farmers.
    For further information on this hearing, refer to Committee 
publication 106-9.
            7.6.2  what would repealing the death tax mean for small 
                    business?

                               Background

    On May 13, 1999, a joint hearing was held between the 
Subcommittee on Tax, Finance, and Exports, and the Subcommittee 
on Rural Enterprises, Business Opportunities, and Special Small 
Business Problems of the impact of the estate or ``death'' tax 
farms, ranches, and small businesses. The purpose of the 
hearing was to learn of the devastation impact of the death tax 
on the longevity of small, family-owned businesses.

                                Summary

    The Hearing consisted of two panels. The first panel 
allowed the co-authors of the main death tax repeal bill of the 
106th Congress (the Death Tax Elimination Act--H.R. 8) to 
testify about the rationale for their legislation. The 
Subcommittees then heard from an academic expert and several 
diverse small business witnesses about both the theoretical and 
the real-life impact of the death tax on small business owners.
    The first panel consisted of two witnesses--Representatives 
Jennifer Dunn (R-WA) and John Tanner (D-TN), both who serve on 
the House Ways and Means Committee. On February 25, 1999, both 
introduced the Death Tax Elimination Act (H.R. 8), which would 
gradually eliminate the death tax by five percent each year 
over the period of the next 10 years, eventually bringing it 
down to zero by 2009. By the time of the Subcommittee hearing, 
H.R. 8 had gained 180 bipartisan cosponsors. Eventually, over a 
majority of the House of Representatives, including two-thirds 
of the Members of the Small Business Committee, formally 
endorsed the legislation.
    The second panel included six witnesses beginning with Dr. 
Aldona Robbins, an academic expert from the Institute for 
Policy Innovation (IPI). To put the hearing in perspective, Dr. 
Robbins summarized for the subcommittee a study she recently 
completed for IPI on how the estate tax negatively affects the 
economy.
    The next set of witnesses told real-life stories that 
verified the statics and the analyses of Dr. Robbins. Jay 
Platt, a rancher from Saint Johns, Arizona, and Roger Ruske, a 
nursey owner from Millville, New Jersey, testified about the 
impact of the death tax on agriculture.
    Kevin O Sdhea, Chief Financial Officer of Shamrock Electric 
in Elk Grove, Illinois and Arlene Kaplan, owner and operator of 
three small home health companies in Long Island, added a non-
agricultural small business perspective. Both spoke of the 
personal dimension of the death tax issue on their families.
    Finally, Stephen Breitstone brought a unique perspective to 
the hearing as an estate planning attorney from Mineola, Long 
Island, New York. Mr. Breitsone believes that even if the death 
tax is repealed, he is resourceful enough to find other lines 
of work. He argued that the public policy priority should be 
enhancing small business development and growth.
    Thus, all the witnesses concluded that the estate or 
``death'' tax places a huge burden on any small business owner 
wishing to pass down the company to his or her children. 
Several testified about the emotional pain the death tax 
inflicts on families, causing them to make heart-wrenching 
decisions about the future. Complying with the death tax takes 
away from investments that could be used to expand a small 
business or hire more employees. In addition, the death tax 
poses a potential harmful impact on the environment and Rural 
communities if larger farms and ranches are broken up into 
smaller ``ranchettes'' in order for their heirs to pay their 
obligations to the government. Finally, even estate planning 
lawyers do not relish their job. Most would rather engage in 
other legal pursuits because of the heavy toll the death tax 
places on many local small business owners and their families.
    It was the opinion of all the witnesses that, at a minimum, 
the death tax exemption should be dramatically raised. Most 
agreed that the death tax should be repealed, preferably 
immediately or as part of a gradual phase-out.
    For further information about this hearing, refer to 
Committee publication 106-12.
            7.6.3  the future of round ii empowerment zones

                               Background

    The Subcommittee on Rural Enterprises, Business 
Opportunities, and Special Small Business Problems met to 
discuss the future of Round II Empowerment Zones. In 1993, the 
Empowerment Zone/Empowerment Communities (EZ/EC) program was 
enacted, providing Federal grants to economically distressed 
rural and urban communities over a 10-year period. In what is 
now referred to as Round I of the program, 104 EZ/ECs were 
created and each urban and each rural zone received $100 
million and $40 million respectively in flexible Social 
Services Block Grant funds, over a ten-year period. 
Additionally, qualifying EZ employers were entitled to a 20 
percent tax credit on the first $15,000 of wages paid to 
certain qualified Zone employees.
    The Taxpayer Relief Act of 1997 authorized a second round 
of EZ designations, known as Round II EZs. Designated in 1999, 
Round II Zones are unable to benefit from the wage tax credit 
like the Round I EZs. Additionally many EZs have not received 
the funding promised to them and thus find it difficult to 
carry out their economic plans for community revitalization.

                                Summary

    Panel one consisted of the Honorable Mary Bono (R-CA) and 
the Honorable Mike Capuano (D-MA).
    Ms. Bono testified about the problems experienced by the 
Desert Communities, a designated rural EZ located in Mecca, CA, 
due to the government's unfulfilled funding obligation. She 
highlighted H.R. 4463, legislation she introduced to provide 
title 20 funding to the Round II EZs and to extend to them the 
hiring tax credit.
    Mr. Capuano noted that Boston, like many other Round II 
EZs, has only received one third of the funds promised. He 
testified that implementation of the EZs' economic renewal 
plans depends largely on the funds that were promised to them. 
He pointed out that it seems unfair to move on to Round III EZs 
when the funding for Round II is incomplete.
    Panel II consisted of Maria Matthews, Deputy Administrator 
for Rural Development, Office of Community Development, U.S. 
Department of Agriculture; Gerard Valazquez, Executive 
Director, Cumberland County Empowerment Zone; Reverend James 
Dunkins, Vice Chairman, Cumberland County Empowerment Zone. 
[Reverend James Dunkins, Vice Chairman, Cumberland County 
Empowerment Zone.]
    Ms. Matthews testified that despite the fact that Round II 
EZs have not received full funding, the rural EZs have managed 
to successfully leverage the funds they did get and combine 
them with other resources in order to have an impact on the 
community.
    Mr. Valezquez testified that the lack of funding for EZs 
leads to deficits in the education, training, and 
transportation of residents and thus slows the employment 
process. He added that the progress of his EZ, once 
flourishing, has slowed, as people are disappointed that the 
resources promised to them have not been delivered.
    Rev. Dunkins testified that his community's empowerment 
zone works to provide stability in an area plagued by high 
crime, low employment, and welfare dependency. He said that EZs 
are weakened by the lack of funding because residents become 
discouraged and less supportive of programs.
    For further information about this hearing, refer to 
Committee publication 106-61.
            7.6.4  hearing on the effects of the roadless policy on 
                    rural small business and rural communities

                               Background

    On July 11, 2000, the Subcommittee on Rural Enterprises, 
Business Opportunities and Special Small Business Problems held 
a hearing to address the impact on small businesses and small 
rural communities of the Clinton Administration's roadless 
policy for the National Forests. The purpose of the hearing was 
to determine whether the United States Forest Service 
adequately considered the economic impact that its policies 
will have on those businesses and communities that rely on the 
National Forests for their economic well-being.
    Since their inception in 1897, the National Forests have 
been managed for a variety of uses including wilderness 
protection, timber production, mineral extraction, and outdoor 
recreation. In 1960, Congress codified this multiple use 
principle in the Multiple Use Sustained Yield Act. The forests 
are managed for these multiple uses according to forest 
management plans developed by the United States Forest Service 
pursuant to the National Forest Management Act.
    The United States Forest Service has proposed a number of 
modifications to its policies for managing the forests that, 
when implemented in each of the forest management plans, will 
reduce the amount of acres that would be eligible for the 
construction of roads. By doing so, the Forest Service reduces 
the ability to use these roadless areas for any thing other 
than wilderness protection despite the mandate from Congress to 
manage the National Forests for multiple uses.

                                Summary

    The first panel consisted of the Honorable Charles Rawls, 
the General Counsel of the United States Department of 
Agriculture. He was accompanied by James R. Furnish, the Deputy 
Chief of the United States Forest Service. Mr. Rawls testified 
that the Service was in compliance with the Regulatory 
Flexibility Act because the Service had prepared a regulatory 
flexibility analysis in which it concluded that the proposal 
would not have a significant economic impact on a substantial 
number of small entities since no small entities are directly 
regulated by the proposals. Mr. Rawls went on to testify that 
the Service was open to comments on the impact of the proposal 
on small entities.
    The second panel consisted of Ms. Adena Cook on behalf of 
the Blue Ribbon Coalition; Laura Skaer, Esq., Executive 
Director of the Northwest Mining Association; and Mr. Frank 
Gladics, President of the Independent Forest Products 
Association. Ms. Cook testified that the proposal would inhibit 
both on-road and off-road recreational vehicle use in the 
forests. In turn, this would directly affect the numerous small 
entities, such as campgrounds, motels, restaurants, and dealers 
that rely on vehicular recreation in the national forests. Ms. 
Skaer testified that the proposal would dramatically reduce the 
ability of thousands of small businesses to extract hardrock 
minerals from the forests. Furthermore, it would limit the 
ability of these businesses to find new minerals in the 
forests. Mr. Gladics testified that the National Forests are 
critical to supply of timber for small businesses. The 
proposals would dramatically reduce the amount of timber 
harvested and could lead to the shutdown of many small mills in 
rural communities throughout the Intermountain west. All three 
concurred that the proposal would have a dramatic and adverse 
impact on small entities, especially small businesses.
    The third panel consisted of Ms. Cheryl Larson on behalf of 
the L.T. Logging; Mr. Stephen Steed, Owner of Utah Forest 
Products; Mr. Bruce Vincent on behalf of Communities for a 
Great Northwest; Dr. Carl Fiedler, Associate Professor of 
Silviculture and Forest Ecology at the University of Montana; 
and Dr. Charles Keegan, Director of the Forest Industry and 
Manufacturing Research at the University of Montana.
    Ms. Larson testified concerning the reduction in economic 
value that will be derived from the forests and how that will 
hurt companies like L.T. Logging, which will be forced to 
reduce employment. Ms. Larson than noted that these reductions 
hurt the ability of small governments, such as those in Eureka, 
to finance improvements to the school systems. Mr. Steed 
testified that his company relies on the access to nearby 
National Forests for his lumber. The inability to obtain lumber 
from the National Forests will hinder his ability to provide 
good paying jobs in remote rural areas such as Escalante. Mr. 
Vincent testified how the town of Libby was working with its 
business community to develop a ski resort in order to rely 
less forestry and mining. However, Mr. Vincent noted that the 
community's effort was stymied by the development of the 
roadless policy and potential subsequent implementation in 
forest management plans. Mr. Vincent summed up his testimony by 
noting that the town leaders in Libby were trying to do exactly 
what the government wanted--develop a less intrusive means of 
extracting the economic benefits from the National Forests. Dr. 
Fiedler testified about the current state of the health of the 
National Forests in Montana and noted that the increase in the 
roadless areas could make it more difficult to manage the 
forests properly. Dr. Keegan noted that the proposal will have 
a significant economic impact on a wide variety of businesses 
and communities.
    For further information on this hearing, please see 
committee publication 106-67.

7.7  Summaries of Hearings Held by the Subcommittee on Tax, Finance, 
        and Exports

            7.7.1  what has opic done for small business lately?

                               Background

    On May 18, 1999, the Subcommittee on Tax, Finance, and 
Exports held a hearing examining the impact of the Overseas 
Private Investment Corporation (OPIC) on small business. OPIC 
provides political risk insurance, in addition to project 
finance, for U.S. investments overseas in developing nations 
and emerging economies. OPIC needed to be re-authorized by 
September 30, 1999. Thus, the hearing provided an opportunity 
to review OPIC's programs for small business and encourage 
support for the Export Enhancement Act of 1999 (HR 1993), which 
would reauthorize OPIC for another four years.

                                Summary

    The hearing consisted of one panel of six witnesses, 
including George Munoz, President and Chief Executive Officer 
of OPIC; four small businesses that directly used OPIC 
programs; and one small business supplier that indirectly 
benefited from OPIC programs.
    Mr. Munoz outlined the history and performance of OPIC. He 
than explained what OPIC plans to do to encourage more smell 
businesses to use OPIC's programs. Mr. Munoz announced that 
OPIC declared 1999 as the ``Year of Small Business.'' This 
program included 12 initiatives to promote small business 
utilization of OPIC, including a special small business phone 
hotline and web page link; a streamlined application process; 
and a reduction in the standard loan size from $2 million to 
$250,000.
    The next witness was Jane Dauffenbach, President of 
Aquarius Systems, which manufacturers aquatic weed harvesters, 
located in North Prairie, Wisconsin. She testified how foreign 
governments constantly try to undermine her small company's 
export prospects, even to the point of competing against free 
donations of similar equipment. With an OPIC insurance 
guarantee, she was able to win export opportunities in Africa 
and Asia.
    Vikram ``Raj'' Rajadhuaksah, Chairman of DLZ of Columbus, 
Ohio testified about his experience with OPIC in receiving a 
loan for various small hydroelectric energy projects in India. 
While none of these projects would have happened without OPIC, 
he encouraged the Subcommittee to press for further reforms in 
OPIC to help make it more user-friendly to small business 
exporters.
    William Silverman of the First Republic Corporation of New 
York, which owns a shellfish company that is an international 
distributor of shrimp, spoke about the environmental export 
opportunities to Ecuadorian shrimp farms that were created 
through OPIC programs. The endeavor produced a solution to a 
pollution problem (Taura Syndrome) affecting aquaculture around 
the world.
    Peter Bowe, President of Ellicott International of 
Baltimore, Maryland, which manufacturers dredging equipment, 
testified about how OPIC intervention was able to help his 
company solve a problem affecting an investment in Egypt. In 
Mr. Bowe's opinion, no private sector insurer could have 
accomplished the same result.
    Finally, Bill Herbert, Sales Manager of Johnson March 
Systems of Warminster, Pennsylvania, which manufacturers custom 
engineered products for electric power and petrochemical 
plants, presented a small business supplier perspective. 
Because their main customer, the Fuller Corporation, was able 
to win export opportunities because of OPIC and the Export-
Import Bank, sales and employment grew at their company despite 
a significant downturn in the U.S. market.
    In conclusion, the hearing determined that OIC helps small 
business, both directly and indirectly. There is still room for 
improvement, but the hearing reaffirmed the need to retain OPIC 
as one tool in our government's trade arsenal.
    For further information about this hearing, refer to 
Committee publication 106-13.
            7.7.2  do unilateral economic trade sanctions unfairly 
                    penalize small business?

                               Background

    On June 24, 1999, the Subcommittee on Tax, Finance, and 
Exports held a hearing to learn whether unilateral economic 
trade sanctions imposed for foreign policy reasons bear a 
disproportionate negative impact on small business exporters. 
Most economic studies conclude that economic sanctions pose 
some cost on the U.S. economy. The purpose of this hearing was 
to determine if small businesses are unfairly penalized--not 
intentionally but by practical effect--by unilateral economic 
trade sanctions and to educate Members about the Enhancement of 
Trade, Security, and Human Rights through Sanctions Reform Act 
(H.R. 1244).

                                Summary

    The hearing included two panels--first, a panel of Members 
of Congress and second, a panel of private sector experts on 
the topic of sanctions.
    The main sponsors of H.R. 1244 were invited to testify 
before the Subcommittee Unfortunately, at the last minute, the 
main Democrat author of the bill, Representative Cal Dooley, 
had a change of plans. His written statement, however, is part 
of the record. Representative Phil Crane--the Chairman of the 
Trade Subcommittee of the Ways and Means Committee, and the 
other Republican author of H.R. 1244--spoke before the 
committee. Both Members agreed that H.R. 1244 was needed to 
bring about responsible reform to the sanctions decision making 
process so that the U.S. government could weigh in advance the 
cost of possible sanctions to our economy against the 
probability of success of the sanctions. Chairman Crane also 
brought to the Subcommittee's attention a similar hearing held 
before his panel where Peter Bowe, president of Ellicott 
Machine Corporation, a small dredging company in Baltimore, 
Maryland, testified how his firm lost $10 million in sales over 
the last few years because of various sanctions imposed on five 
countries.
    The second panel began with an academic perspective 
presented by Professor Gary Clyde Hufbauer with the Institute 
for International Economics (IIE). He presented the conclusions 
of his study on the economic and foreign policy impact of 
sanctions. He found that sanctions have been declining in 
effectiveness over the past three decades and imposes a larger 
cost to the economy--about $15 to $19 billion per year--than 
originally thought. Dr. Hufbauer found that small businesses 
are hit particularly hard by sanctions. Sanctions hurt large 
firms and cost them money, but they can shift production or 
make up the losses in other areas. For small firms, which may 
be doing business with one or two products in a handful of 
countries, sanctions could be their death knell.
    The next two witnesses provided case studies about the 
negative impact of sanctions on small business exporters. 
First, Steen Ledger, president of ROTEC Industries, located in 
Elmhurst, Illinois, testified about what happened to his 100-
employee, family-run business when the Export-Import Bank of 
the United States (Ex-Im) declined to support their efforts to 
win contracts associated with the Three Gorges Dam project in 
China. The Clinton Administration sanctioned China for vague 
environmental reasons associated with this project.
    ROTEC hoped to supply $130 million worth of concrete 
placing equipment to China. Because of Ex-Im's decision, they 
were only able to sell $31 million of their product, $13 
million of which had to be subcontracted to South Korea. In 
addition, prior to Ex-Im's negative decision, ROTEC was the 
only manufacturer of this specialized equipment. Because of 
this sanction, a Japanese-French consortium copies ROTEC's 
concepts on paper and is now a new, vigorous competitor 
worldwide. thus, not only did Ex-Im's decision lose $112 
million in immediate export sales for ROTEC but it also 
jeopardized their long-term viability by creating another 
foreign competitor. And, construction at the Three Gorges Dam 
site is proceeding according to schedule, using products and 
services from all over the world except the United States.
    Second, Varghese George, president of the Westex Group in 
Washington, DC, testified that sanctions cost his company, 
which was responsible for over $80 million in exports over the 
last 16 years, about $25 million in sales over the past few 
years. Mr. George felt mislead by the U.S. government, which 
promised to help him win export deals in emerging markets like 
India, only to have the rug pulled from underneath him when 
sanctions were imposed.
    In conclusion, the hearing found that small business 
exporters bear a disproportionate cost of the impact of 
unilateral economic trade sanctions. At the same time, these 
sanctions have been less and less successful over the years in 
changing the behavior of the offending foreign government. 
thus, all the hearing participants encouraged support for the 
enhancement of Trade, Security, and Human Rights through 
Sanctions reform Act (H.R. 1244) to allow more input from the 
business community so that decision makers in both the 
Executive and Legislative Branches can make better foreign 
economic policy.
    For further information about this hearing, refer to 
Committee publication 106-22.
            7.7.3  measuring improvements in the u.s. export assistance 
                    center network

                               Background

    On September 9, 1999, the Subcommittee held a hearing 
examining the role of U.S. Export Assistance Centers (USEACs) 
in helping small business exporters find trade opportunities 
overseas. USEACs were created in 1994 in response to a 
Congressional mandate to bring greater cohesion to the delivery 
of export promotion services among the 19 federal agencies that 
have some jurisdiction in this area. In 1996, the Subcommittee 
held its first oversight hearing on this topic and discovered 
that while there was a vast improvement in the delivery of 
export promotion services, there was still a need for further 
internal reforms (Hearing Report No. 104-90). The purpose of 
this second oversight hearing was to determine if the USEACs 
followed through on its promises to adopt the reforms suggested 
by the Subcommittee in 1996 and see if there are areas in need 
of further reform.

                                Summary

    The hearing was comprised of one panel of four government 
witnesses including Benjamin Nelson of the General Accounting 
Office (GAO); Johnnie Frazier, Inspector General (IG) of the 
Department of Commerce; Awilda Marquez, Director-General of the 
U.S. & Foreign Commercial Service (US&FCS); Joseph Sachs, of 
the Small Business Administration (SBA) and Director of the 
USEAC in Long Beach, California.
    Benjamin Nelson testified that the USEACs have made 
remarkable improvements since 1996, particularly in the area of 
coordination of the activities of the three agencies (US&FCS, 
the Export-Import Bank of the United States (Ex-Im), and SBA) 
that are part of the USEAC network. However, the GAO identified 
one area for improvement--helping non-export ready small 
businesses become exporters. Mr. Nelson commended the SBA's 
Export-Trade Assistance Partnership (E-TAP) program as one 
solution to educate and assist more small businesses about 
exporting.
    Johnnie Frazier provided the Subcommittee with an informal 
``report card'' to grade the effectiveness of USEACs. On 
balance, Mr. Frazier gave them a solid ``B'' because USEACs are 
continuing to demonstrate their ability and potential to better 
meet the needs of U.S. exporters. While there are still areas 
in need of improvement, U.S. exporters are being better served 
through the USEAC program than through the previously existing 
programs.
    Director-General Awilda Marquez described for the 
Subcommittee all of the many reforms the US&FCS undertook to 
further improve the delivery of export promotion services to 
small businesses. As evidence of their success, she cited 
internal statistics showing that in addition to almost doubling 
the number of their clients since 1997, going from 44,000 to 
81,000, the dollar value of the exports helped by USEAC action 
more than quadrupled, going from $1 billion to $4.5 billion.
    Finally, Joseph Sachs of the SBA detailed for the 
Subcommittee the E-TAP program. This program is designed to 
serve previously ignored small business owners who know little 
or nothing about exporting. E-TAP is a trade educational 
program that operates in almost half of the 19 USEACs.
    In conclusion, the hearing demonstrated the effectiveness 
of good legislative oversight. USEACs are now better able to 
serve small business exporters than they were in 1996 because 
of these reviews. The recommendations of the GAO and IG audits 
were also incorporated into the Export Enhancement Act of 1999 
(H.R. 1993), which reauthorized the programs of the 
International Trade Administration (ITA), including the USEAC 
network.
    For further information about this hearing, refer to 
Committee publication 106-33.
            7.7.4  making the work opportunity tax credit a success for 
                    small business

                               Background

    On May 4, 2000, the Subcommittee on Tax, Finance, and 
Exports held a hearing on the subject of the Work Opportunity 
Tax Credit (WOTC). The WOTC offers employers a tax credit for 
hiring hard-to-place employees, mostly former welfare 
recipients. The purpose of this hearing was to examine why more 
small businesses do not take advantage of this tax credit and 
to explore various solutions to help make this tax credit user-
friendly for small business.

                                Summary

    The hearing was comprised of two panels. The first panel 
allowed the main cosponsors of legislation to make the WOTC a 
permanent tax credit--Representatives Jerry Weller (R-IL) and 
Charles Rangel (D-NY)--to discuss the need and rationale for 
this bill. On June 9, 1999, Representatives Rangel, Weller, and 
Amo Houghton introduced the Work Opportunity Tax Credit Reform 
and Improvement Act (H.R. 2101), which would make the WOTC 
permanent. By the time of the Subcommittee hearing, H.R. 2101 
had gained 37 bipartisan cosponsors. Unfortunately, due to 
other pressing legislative matters, Representative Rangel was 
unable to personally testify before the Subcommittee but he 
submitted his remarks for the record.
    The second panel was comprised of four witnesses beginning 
with Roger Littlejohn, who is the coordinator for the WOTC 
program in the State of Tennessee. He provided a unique 
perspective of what he does as a state official to lower the 
fear factor among small business owners about participating in 
the WOTC program. Mr. Littlejohn also called for making the 
WOTC permanent because periodic breaks in legislative authority 
creates enormous paperwork backlogs for states.
    Rodney Carroll, as Chief Operating Officer for the Welfare 
to Work Partnership, spoke about his role as a motivator to 
encourage more small businesses to participate in the WOTC and 
the difficulties he encounters by having the WOTC program lapse 
every few years.
    Ron English, owner of 10 Burger King restaurants in 
Abilene, Texas and Fred Kramer, of the Marriott hotel chain, 
gave an on-the-ground perspective of how the WOTC actually 
works in practice. They also called for passage of H.R. 2101 
because periodic disruptions in the WOTC program disadvantages 
former welfare recipients they would like to hire.
    It was the opinion of all the witnesses that the WOTC 
program should become permanent. While in the question and 
answer period there was some discussion about some of the 
specifics of H.R. 2101 (most particularly, there was concern 
expressed about extending this tax credit to employer 
contributions to Social Security--the FICA tax--of non-
profits), the overall consensus of the hearing was to encourage 
greater use of the WOTC by small businesses and in support of 
the goals and aims of HR 2101.
    For further information about this hearing, refer to 
Committee publication 106-57.
            7.7.5  trade with china helps small business exporters work

                               Background

    On May 16, 2000, the Subcommittee on Tax, Finance, and 
Exports held a hearing to determine whether or not trade with 
China, and, more specifically, the recently negotiated U.S.-
China World Trade Organization (WTO) Access Agreement, benefits 
small business exporters. The purpose of the hearing was to 
demonstrate the value of granting China Permanent Normal Trade 
Relations (PNTR) for small business exporters.

                                Summary

    The hearing was comprised of two panels. On the first panel 
was the Chairman of the Trade Subcommittee of the House Ways 
and Means Committee, Representative Phil Crane of Illinois, and 
the Administrator of the Small Business Administration (SBA), 
Aida Alvarez, to talk about the broad outline of the benefits 
of the U.S.-China WTO Agreement for small business exporters. 
At the time of the hearing, the finalized House version of the 
PNTR legislation had not been introduced yet (H.R. 4444) but 
the general framework of the bill was open for discussion.
    The second panel was comprised of five small business 
exporters who have experience in doing business with customers 
in China. Sharon DeDoncker of Aqua-Aerobic Systems in Rockford, 
Illinois (a manufacturer of wastewater treatment equipment with 
135 employees) was the first to testify. She said that passage 
of PNTR for China would increase her company's sales to China 
by 20 percent per year.
    James Olson of Olson Technologies in Allentown, 
Pennsylvania (a manufacturer of large valves to water treatment 
plants with 47 employees represented by the United Steelworkers 
of America) believes that PNTR with China would increase 
production at Olson Technologies between 25 percent to 150 
percent over the next 20 to 25 years, which would mean new 
hires of union workers in Allentown.
    Jeffrey Gabbour of Prestige Enterprise International in 
Cincinnati, Ohio (the export arm of Robbins, Inc., which 
manufactures quality residential/commercial hardwood floors, 
with 14 employees) said even though exports to China makes up 
less than one percent of their overall business, this agreement 
wipes away many trade restrictions, which will help them win 
more sales opportunities in China.
    Keith Parker of Summit Environmental Corporation in 
Longview, Texas (an environmental services company specializing 
in fire extinguisher equipment with eight employees) has tried 
but failed to export to China. PNTR for China would be good for 
his small business because the agreement ensures better 
protection of their patented goods.
    Finally, Robert ``Bob'' Phelps, owner-operator of Phelps 
Farms in Rockton, Illinois (a 2,300-acre family farm which 
raises corn, soybeans, wheat, and cattle) provided an 
agricultural perspective. While he does not directly export, 
the vast majority of his grain and oilseed products enter the 
international marketplace. Mr. Phelps said that if PNTR for 
China can generate a modest five cent increase in the price of 
a bushel of corn and a 10 cent increase in the price of a 
bushel of soybeans, it would pay for one year of his daughter's 
college education.
    It was the opinion of all the witnesses that the U.S.-China 
WTO Accession Agreement was good for small business exporters 
and that Members of Congress should support PNTR for China 
(H.R. 4444).
    For further information about this hearing, refer to 
Committee publication 106-58.
            7.7.6  the impact of banning snowmobiles inside national 
                    parks on small business

                               Background

    On July 13, 2000, the Subcommittee on Tax, Finance, and 
Exports held a hearing to examine the impact on small business 
of a Department of Interior proposal to ban snowmobiles inside 
most of our national parks. The purpose of the hearing was to 
demonstrate the negative impact of this new policy on small 
business and on the tax base of local communities surrounding 
national parks, which depend on winter tourism.

                                Summary

    The hearing was comprised of two panels. The first 
witnesses were three bipartisan Members of Congress--
Representatives Bart Stupak (D-MI), Collin Peterson (D-MN), and 
Senator Craig Thomas (R-WY). Representative Stupak spoke of the 
need to resolve this issue with the input of snowmobilers on 
the local level with each individual park superintendent. Rep. 
Peterson focused his remarks of the negative impact this ban 
would have on businesses through- out his rural Minnesota 
district, whose economy has improved in recent years thanks, in 
part, to increased snowmobile manufacturing. Finally, Senator 
Thomas testified as to the devastating impact this snowmobile 
ban would have on the ``gateway'' communities surrounding 
national parks, of which Yellowstone is the most important for 
his home state of Wyoming.
    The second panel consisted of an advocate for the national 
parks, a local economic development expert, and three small 
business witnesses. Kevin Collins of the National Parks 
Conservation Association led off with a vigorous defense of the 
effort to significantly reduce snowmobiling in most national 
parks. Mr. Collins stated that the protection of the national 
parks should be the top priority because he believes 
snowmobiles are extraordinarily polluting and noisy machines. 
Second, he believes the alleged negative impact of this new 
policy on small businesses is outlandishly exaggerated. He 
cited a petition signed by 150 businesses and residents in West 
Yellowstone, Montana in support of phasing-out snowmobiles in 
Yellowstone National Park. Mr. Collins also cited a recent 
economic study concluding that a snowmobile ban would only 
cause $5 million negative impact on West Yellowstone, which, in 
his view, was inconsequential. In the opinion of Mr. Collings, 
banning snowmobiling on just 700 miles of road nationwide (out 
of approximately 130,000 miles) will not create winter ghost 
towns around the country.
    Dr. James Abbott of Vermillion, South Dakota presented a 
broader rural economic development perspective to the 
Subcommittee. While Vermillion is not near a major national 
park, tourism is the second most important industry in South 
Dakota. Many people traveling to snowmobile in other national 
parks stop in South Dakota on their way to their final 
destination, spending an average of $281 per day (as opposed to 
summer travelers who spend $144 per day). In addition, 
Vermillion is home to a snowmobile manufacturing facility owned 
by Polaris, employing 153 workers (including 55 students from 
the University of South Dakota) and contributing $32 million 
directly to the local economy ($52 million indirectly). This 
represents 10 percent of the commercial tax base of Vermillion. 
Dr. Abbott is concerned about this snowmobile ban because 
generally factories in rural areas are the first to be phased 
out in any economic downturn.
    The final three witnesses were small business owners who 
would be directly impacted by a snowmobile ban. Clyde Seely, 
who owns or is the principal of seven small businesses 
employing 220 people in West Yellowstone, Montana, testified 
that a ban on snowmobiles in Yellowstone would result in a loss 
of winter tourism revenue for his businesses of between 60 to 
70 percent. He specifically discussed why he believes the 
snowcoach alternative promoted by the National Park Service and 
Mr. Collins is not a viable alternative to snowmobiles.
    Bob Stein, owner of the Alger Falls Motel in Munising, 
Michigan, testified how this snowmobile ban, as applied to 
Pictured rocks National Lakeshore, would break up his family by 
undermining the plans of his daughter and son-in-law to 
purchase his motel when he retires. Closing just ten miles of 
the Miners Castle trail is enough to eliminate the rational to 
visit Picture Rocks in the wintertime, thus leading to a 
decline of at least 30 percent of Mr. Stein's winter business.
    Finally, John Lyon, owner of J & J Sports in Sycamore, 
Illinois spoke of the indirect impact this proposed snowmobile 
ban would have on recreational equipment dealers like himself. 
Snowmobiles account for one-third of his annual revenue and a 
snowmobile ban in national parks would cut directly into the 
bottom line of his seven-person store.
    In the question and answer period, the other witnesses on 
the second panel effectively rebutted the main arguments of Mr. 
Collins. First, Mr. Seely pointed out that only seven West 
Yellowstone businesses signed the overly vague petition cited 
by Mr. Collins. All this petition said was that a healthy park 
creates a healthy economy. It was silent on the snowmobile 
issue. Most of the rest of the 150 signatories were West 
Yellowstone residents, not small business owners, some who 
signed twice. He also mentioned that two other surveys 
conducted by the West Yellowstone Chamber of Commerce found 
that 90 percent of the local respondents favored snowmobiling 
in Yellowstone. Second, Mr. Seely cited a more comprehensive 
economic impact study recently completed by the State of 
Wyoming. This study documented that a snowmobile ban in 
national parks would have a $130 to $150 million negative 
impact on the five county area surrounding Yellowstone, not the 
$5 million figure cited by Mr. Collins. Third, Mr. Seely 
discussed the recent advances in snowmobile technology (quieter 
and more fuel-efficient four-stroke models that burn gasoline, 
instead of oil) that will be in fully in place in this rental 
fleet over the next two winters.
    In conclusion, the hearing ended on a positive note with 
Chairman Manzullo encouraging all interested in this debate to 
keep an open mind on this issue. Instead of an outright ban on 
snowmobiles in national parks, the Chairman suggested that 
further restrictions on their use should be considered in order 
to protect the environment and the interests of small business.
    For further information about this hearing, refer to 
Committee publication 106-68.
            7.7.7  helping dry cleaners adopt safer technologies: 
                    without losing your shirt!

                               Background

    On July 20, 2000, the Subcommittee on Tax, Finance, and 
Exports held a hearing on the subject Dry cleaning Tax Credit 
Act (HR 1303), which would provide a 20 percent tax credit for 
those businesses that purchase environmentally-friendly dry 
cleaning equipment. The purpose of this hearing was to see if 
this legislation would benefit the 35,000 small dry cleaning 
establishments and the small manufacturers of environmentally-
friendly dry cleaning equipment.

                                Summary

    The hearing was comprised of two panels. The first panel 
allowed the two main bipartisan authors of the legislation, 
Representatives Dave Camp (R-MI) and David Price (D-NC) to 
discuss the need and rationale for H.R. 1303. Both spoke of the 
need to address the concerns of small dry cleaners who wish to 
transition to this new technology but because of the cost they 
cannot afford these new machines. The purpose of H.R. 1303 is 
to partially offset the high cost of liquid carbon dioxide 
machines, which range in price from $100,000 to $150,000 (most 
dry cleaners own machines use the hazardous percloroethelyne 
(perc) chemical, which cost between $50,000 to $70,000).
    The Members also made it quite clear that H.R. 1303 does 
not favor one non-hazardous dry cleaning technology over 
another--H.R. 1303 applies to both liquid carbon dioxide and 
wet cleaning machines, which cost about $35,000 (however, wet 
cleaning machines cannot be used in every dry cleaning 
application). H.R. 1303 could also apply to even newer 
technologies such as silicone and Rinex (a glycol-ether 
compound) provided that overwhelming scientific evidence shows 
these technologies are non-toxic and environmentally-friendly.
    The second panel consisted of five private sector 
witnesses. The first two witnesses were small dry cleaners. Tom 
Ustanik of Lansing, Illinois, provided a unique perspective of 
one of the very few dry cleaners in the nation who purchased 
and uses a liquid carbon dioxide machine in his business. He 
testified about the many benefits of this machine, both in 
terms of the environment and in creating better working 
conditions for his employees. Mr. Ustanik supports H.R. 1303 
because he would like to speed up the purchase of more liquid 
carbon dioxide machines to replace the remaining dry cleaning 
machines in his shop that use perc.
    Gordon Shaw of La Jolla, California testified as a former 
dry cleaner who got out of the business because of the 
Superfund liability fears of perc. He would like to get back 
into the business but will only do so if his facilities use 
liquid carbon dioxide machines. H.R. 1303 would provide a great 
incentive for him to start anew and purchase this new dry 
cleaning technology.
    The next witness represented the national association of 
dry cleaners, wet cleaners, and launderers. William Fisher, 
Chief Executive Officer of the International Fabricare 
Institute (IFI) of Silver Spring, Maryland, believes that H.R. 
1303 is more likely to damage than help existing small dry 
cleaners. He argued that liquid carbon dioxide machines are too 
expensive, up to $800,000 when combined with a franchise 
agreement, which he contends is well-beyond the reach of most 
dry cleaners in his association. He suggested changes to the 
bill to make it more acceptable to the members of his 
association.
    The fourth witness was Dr. Joseph DeSimone of Raleigh, 
North Carolina who successfully commercialized liquid carbon 
dioxide technology for dry cleaning applications. He talked 
about the process by which he successfully commercialized this 
technology. However, because there are no large businesses that 
can license this technology from his laboratory (unlike when 
Dupont licensed his carbon dioxide technology to make teflon), 
H.R. 1303 is needed, Dr. DeSimone urged, in order to encourage 
the spread of this technology to small dry cleaners.
    The final witness provided the Subcommittee with an expert 
opinion on the need for dry cleaners to transition from perc to 
other environmental-friendly technology. Dr. Henry Cole, 
representing the environmental group, Clean Water Action, spoke 
to the dangers of perc and the need to phase-out its use. In 
Dr. Cole's opinion, H.R. 1303 deserves support because it will 
help dry cleaners switch from perc, which are highly toxic, to 
liquid carbon dioxide and wet-cleaning machines. H.R. 1303 
provides substantial long-term environmental, health and 
economic benefits to the nation at a fraction of the cost of a 
hazardous waste clean up.
    For further information about this hearing, refer to 
Committee publications 106-69.
            7.7.8  the impact of the complexity of the tax code on 
                    small business: what can be done about it?

                               Background

    On September 7, 2000, the Subcommittee on Tax, Finance, and 
Exports held a hearing on the impact of the complexity of the 
tax code on small business. The purpose of the hearing was to 
determine if small businesses have particularly high tax 
compliance costs and discuss what can be done to alleviate this 
burden.

                                Summary

    The hearing was comprised of two panels. The first panel 
allowed two Members of Congress to discus competing versions of 
comprehensive tax reform. Representative John Sununu of New 
Hampshire articulated the reasons why a flat tax (H.R. 1040) 
would benefit small business owners. Representative Billy 
Tauzin of Louisiana, the author of H.R. 2001, spoke of the need 
to totally revamp the tax code by replacing it with a national 
sales tax. Both set the stage for the Subcommittee by 
documenting that the current tax code is massively complex and 
that their ideas would help small businesses the best.
    The second panel allowed Val Oveson, the National Taxpayer 
Advocate at the Internal Revenue Service (IRS) of the U.S. 
Department of the Treasury and five private sector experts on 
the issue of the complexity of the tax code to discuss this 
problem and offer suggestions for reform. First, Martin 
Davidoff, a tax consultant from Dayton, New Jersey representing 
the National Federation of Independent Business (NFIB) spoke 
about two specific tax problems facing small business owners: 
the constant change of phase-outs of certain tax credits or 
deductions based on income and the complexity of the meals and 
entertainment expense deduction. Mr. Davidoff reminded the 
Subcommittee that a 100 percent deduction for meals and 
entertainment expenses was rated the second most important 
issue at the 1995 White House Conference on Small Business.
    Second, Mr. Oveson testified about his work as the National 
Taxpayer Advocate and addressed some specific tax areas in need 
of reform and simpliciation to benefit small business. The top 
areas he talked about before the Subcommittee included:
    (1) reform how the IRS administers its penalties 
(specifically), he called for repealing the ``failure to pay'' 
penalty);
    (2) reform and simplify capitalization and depreciation 
schedules (specifically, allow Section 179 expense deduction 
for all capital assets purchased); and
    (3) reform and simplify the independent contractor 
definition.
    Pamela Olson of the American Bar Association (ABA) 
addressed the Subcommittee next to discuss her work along with 
the American Institute of Certified Public Accountants (AICPA) 
and the Tax Executives Institute (TEI) on their tax 
simplification proposals. The recommendations she highlighted 
to the Subcommittee included:
    (a) Allow small businesses with gross receipts of less than 
$5 million per year to use the cash method of accounting (as 
opposed to the accrual method);
    (2) Simplify rules governing pension plans (specifically, 
minimum distribution rules and ``top heavy'' rules);
    (3) Reform the definition of an independent contractor;
    (4) Simplify rules limiting the ability of taxpayers to 
deduct losses; and
    (5) Simplify international tax rules because more and more 
small businesses are becoming exporters.
    David Lifson of AICPA identified for the Subcommittee 
several key elements necessary to create a simpler tax system, 
most important of which is to consider simplification at all 
stages of the legislative and regulatory process. In addition, 
he referred Subcommittee Members to the list of harmonized tax 
simplification proposals submitted to Congress last February by 
the AICPA, ABA, and TEI.
    Scott Moody, an economist with the Tax Foundation, provided 
a more academic perspective to the hearing. In his opinion, a 
good tax system should be as simple as possible; not be 
retroactive; be neutral in regards to economic activities; and 
be stable. According to the Tax Foundation, our current code 
falls far short of these goals, with the frequent changes to 
the tax code and the increase in the number of words and forms. 
Plus, the tax compliance burden falls disproportionately on 
small businesses. In 1996, small companies with less than $1 
million in assets spent at least 27 times more on compliance as 
a percent of assets than larger U.S. corporations with assets 
of $10 billion or more.
    Finally, Todd McCracken, President of National Small 
Business United, testified in favor of the Fair Tax (H.R. 
2525), which is a competing national sales tax plan introduced 
by Representative John Linder of Georgia. The benefits of the 
Fair Tax, in Mr. McCracken's opinion, for small business 
include increasing savings, eliminating the payroll tax; 
removing the hidden tax on exports; and repealing the self-
employment tax.
    In the question and answer period, all witnesses agreed 
(despite having different views on the solution to this 
problem) that at a minimum Members of Congress should resist 
the temptation to change the tax laws even for the best of 
reasons, because it, in the words of Mr. Oveson, 
``geometrically complicates the tax code.''
    For further information about this hearing, refer to the 
Committee publication 106-70.
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