[House Report 107-2]
[From the U.S. Government Publishing Office]



107th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                      107-2

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



 
             EXTENSION OF CHAPTER 12 OF THE BANKRUPTCY CODE

                                _______
                                

 February 26, 2001.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

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

                              R E P O R T

                        [To accompany H.R. 256]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 256) to extend for 11 additional months the period 
for which chapter 12 of title 11 of the United States Code is 
reenacted, having considered the same, reports favorably 
thereon without amendment and recommends that the bill do pass.

                           TABLE OF CONTENTS

                                                                  

                                                                 Page
Purpose and Summary........................................           2
Background and Need for the Legislation....................           2
Hearings...................................................           2
Committee Consideration....................................           2
Vote of the Committee......................................           3
Committee Oversight Findings...............................           3
Performance Goals and Objectives...........................           3
New Budget Authority and Tax Expenditures..................           3
Congressional Budget Office Cost Estimate..................           4
Constitutional Authority Statement.........................           5
Section-by-Section Analysis and Discussion.................           5
Changes in Existing Law Made by the Bill, as Reported......           5
Markup Transcript..........................................           6

                          Purpose and Summary

    H.R. 256 retroactively reenacts chapter 12 of the 
Bankruptcy Code, a specialized form of bankruptcy relief for 
family farmers, effective as of July 1, 2000. In addition, the 
bill extends this temporary form of bankruptcy relief for 11 
months until June 1, 2001.

                Background and Need for the Legislation

    On January 30, 2001, Representative Nick Smith (R-Mich.) 
introduced H.R. 256, a bill to reenact and extend chapter 12 of 
title 11 of the United States Code. Chapter 12 is a specialized 
form of bankruptcy relief available only to a ``family farmer 
with regular annual income,'' \1\ a defined term.\2\ This form 
of bankruptcy relief permits eligible family farmers, under the 
supervision of a bankruptcy trustee,\3\ to reorganize their 
debts pursuant to a repayment plan.\4\ The special attributes 
of chapter 12 make it better suited to meet the particularized 
needs of family farmers in financial distress than other forms 
of bankruptcy relief, such as chapter 11 (business 
reorganization) and chapter 13 (individual reorganization).\5\
---------------------------------------------------------------------------
    \1\ 11 U.S.C. Sec. 109(f).
    \2\ 11 U.S.C. Sec. 101(19). The term encompasses ``a family farmer 
whose annual income is sufficiently stable and regular to enable such 
family farmer to make payments under a plan under chapter 12'' of the 
Bankruptcy Code. The Bankruptcy Code, in turn, defines the terms 
``farmer'' and ``farming operation''. 11 U.S.C. Sec. 101(20), (21).
    \3\ 11 U.S.C. Sec. 1202.
    \4\ 11 U.S.C. Sec. 1222.
    \5\ For example, chapter 12 is typically less complex and expensive 
than chapter 11, a form of bankruptcy relief generally utilized to 
effectuatelarge corporate reorganizations. Chapter 13, on the other 
hand, is a form of bankruptcy relief for limited to individuals with 
typically debts in lower amounts than permitted for eligibility 
purposes under chapter 12. Cf. 11 U.S.C. Sec. 109(e), 101(18).
---------------------------------------------------------------------------
    Statistically, chapter 12 is not extensively used. 
According to the most recent data released by the 
Administrative Office, only 551 family farmer bankruptcy cases 
were filed for the 12-month period ending September 30, 
2000.\6\ For the same 12-month period in 1999, 811 chapter 12 
cases were filed.\7\
---------------------------------------------------------------------------
    \6\ Administrative Office of the U.S. Courts, News Release, 
Bankruptcy Filings Decrease in Fiscal Year 2000, at 1 (Nov. 21, 2000).
    \7\ Id. at 2.
---------------------------------------------------------------------------
    Chapter 12 was enacted on a temporary 7-year basis as part 
of the Bankruptcy Judges, United States Trustees, and Family 
Farmer Bankruptcy Act of 1986 in response to the farm financial 
crisis of the early 1980's.\8\ It has been subsequently 
extended on several occasions.\9\ The most recent extension, 
however, expired on July 1, 2000.\10\
---------------------------------------------------------------------------
    \8\ Pub. L. No. 99-554, 100 Stat. 3088, 3105 (1986).
    \9\ See, e.g., Pub. L. No. 103-65, 107 Stat. 311 (1993); Pub. L. 
No. 105-277, 112 Stat. 2681, 2681-610 (1998); Pub. L. No. 106-5, 113 
Stat. 9 (1999).
    \10\ Pub. L. No. 106-70, 113 Stat. 1031 (1999).
---------------------------------------------------------------------------

                                Hearings

    No hearings were held on H.R. 256.

                        Committee Consideration

    On February 14, 2001, the committee met in open session and 
ordered favorably reported the bill H.R. 256 by a vote of 24 to 
0, a quorum being present.

                         Vote of the Committee

    1. Motion to report the bill favorably. Passed 24 to 0.

        AYES                          NAYS
Mr. Sensenbrenner
Mr. Gekas
Mr. Coble
Mr. Smith
Mr. Goodlatte
Mr. Chabot
Mr. Barr
Mr. Hutchinson
Mr. Cannon
Mr. Graham
Mr. Bachus
Mr. Hostettler
Mr. Green
Mr. Keller
Ms. Hart
Mr. Flake
Mr. Nadler
Mr. Scott
Mr. Watt
Ms. Jackson Lee
Ms. Waters
Mr. Delahunt
Ms. Baldwin
Mr. Schiff

                      Committee Oversight Findings

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

                    Performance Goals and Objectives

    The bill is intended to improve the bankruptcy system by 
streamlining case administration for family farmer bankruptcy 
cases.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of House Rule XIII is inapplicable because 
this legislation does not provide new budgetary authority or 
increased tax expenditures.

               Congressional Budget Office Cost Estimate

                                     U.S. Congress,
                               Congressional Budget Office,
                                 Washington, DC, February 26, 2001.
Hon. F. James Sensenbrenner Jr., Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 256, a bill to 
extend for 11 additional months the period for which chapter 12 
of title 11 of the United States Code is reenacted.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Lanette J. 
Walker, who can be reached at 226-2860.
            Sincerely,
                                  Dan L. Crippen, Director.

Enclosure

cc:
        Honorable John Conyers Jr.
        Ranking Member
H.R. 256--A bill to extend for 11 additional months the period for 
        which chapter 12 of title 11 of the United States Code is 
        reenacted
    H.R. 256 would extend chapter 12 of title 11 of the U.S. 
Code until June 1, 2001. Chapter 12, which was created by the 
Bankruptcy Judges, United States Trustees, and Family Farmer 
Bankruptcy Act of 1986 (Public Law 99-554), specifies 
bankruptcy procedures available only to family farmers with 
regular annual income and is intended to facilitate an 
efficient and expeditious bankruptcy process. The authorization 
for such bankruptcy proceedings expired July 1, 2000.
    CBO estimates that enacting H.R. 256 would have no 
significant budgetary impact. It would result in a small loss 
of offsetting collections to the U.S. Trustee System Fund, thus 
causing an insignificant increase in net outlays from this fund 
in 2001. In addition, CBO estimates that enacting H.R. 256 
would result in a negligible loss of offsetting receipts and 
revenues in 2001. Because H.R. 256 would affect direct spending 
and governmental receipts pay-as-you-go procedures would apply. 
The bill contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would impose no costs on state, local, or tribal governments.
    Based on information from the Executive Office of the 
United States Trustees, CBO expects that, without the temporary 
extension of chapter 12, family farmers filing for bankruptcy 
would split their filings about evenly between chapter 11 and 
chapter 13. Chapter 12 has a $200 filing fee and does not 
require the bankrupt party to pay quarterly fees to the 
government. Chapter 11, in contrast, requires an $800 filing 
fee as well as quarterly filing fees. (On average, $1,000 is 
collected per case.) Chapter 13 requires only a $130 filing 
fee.
    Bankruptcy fees are recorded in three different places in 
the budget. Portions of the fees are recorded as governmental 
receipts (revenues), as offsetting collections to the 
appropriation for the U.S. Trustee System Fund, and as 
offsetting receipts to the Administrative Office of the United 
States Courts (AOUSC). The percentage of the fees allocated 
among these accounts varies by chapter. Because only 300 to 400 
bankruptcy cases are likely to be affected by the bill, it 
would have only a small effect on the amount of fees collected 
in 2001.
    The CBO staff contact for this estimate is Lanette J. 
Walker, who can be reached at 226-2860. This estimate was 
approved by Robert A. Sunshine, Assistant Director for Budget 
Analysis.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the committee finds the authority for 
this legislation in Article I, section 8, clause 4 of the 
Constitution.

               Section-by-Section Analysis and Discussion

    Section 1. Amendments. This provision amends section 149 of 
title I of division C of the Omnibus Consolidated and Emergency 
Supplemental Appropriations Act, 1999 \12\ to provide that 
chapter 12 of title 11 of the United States Code, as in effect 
on June 30, 2000, is reenacted for the period beginning on July 
1, 2000 and ending on June 1, 2001. It also specifies that all 
cases commenced or pending under chapter 12 shall be conducted 
and determined under such chapter as if such chapter were 
continued in effect after July 1, 2000.
---------------------------------------------------------------------------
    \12\ Pub. L. No. 105-277, 112 Stat. 2681, 2681-610 (1998).
---------------------------------------------------------------------------
    Section 2. Effective date. The amendments made by section 1 
of H.R. 256 take effect on July 1, 2000.

         Changes in Existing Law Made by the Bill, as Reported

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

  SECTION 149 OF DIVISION C OF THE OMNIBUS CONSOLIDATED AND EMERGENCY 
                 SUPPLEMENTAL APPROPRIATIONS ACT, 1999

      Sec. 149. (a) Chapter 12 of title 11 of the United States 
Code, as in effect on [September 30, 1999] June 30, 2000, is 
hereby reenacted for the period beginning on [October 1, 1999] 
July 1, 2000, and ending on [July 1, 2000] June 1, 2001.
      (b) All cases commenced or pending under chapter 12 of 
title 11, United States Code, as reenacted under subsection 
(a), and all matters and proceedings in or relating to such 
cases, shall be conducted and determined under such chapter as 
if such chapter were continued in effect after [July 1, 2000] 
June 1, 2001. The substantive rights of parties in connection 
with such cases, matters, and proceedings shall continue to be 
governed under the laws applicable to such cases, matters, and 
proceedings as if such chapter were continued in effect after 
[July 1, 2000] June 1, 2001.

                           Markup Transcript



                            BUSINESS MEETING

                      WEDNESDAY, FEBRUARY 14, 2001

                  House of Representatives,
                                Committee on the Judiciary,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:03 a.m., in 
Room 2141, Rayburn House Office Building, Hon. F. James 
Sensenbrenner (chairman of the committee) presiding.
    Chairman Sensenbrenner. Pursuant to notice, I now call up 
the bill H.R. 256----
    Ms. Waters. Mr. Chairman?
    Chairman Sensenbrenner [continuing]. To extend for 11 
additional months the period for which Chapter 12 of Title XI 
of the United States Code is reenacted for purpose of markup 
and move its favorable recommendation to the House. Without 
objection, the bill will be considered as read and----
    Mr. Watt. I object, Mr. Chairman.
    Chairman Sensenbrenner. The Clerk will read.
    The Clerk. To extend the 11 additional months, the period 
for which Chapter 12 of Title XI of the United States Code is 
enacted. Be it enacted by the Senate and House of 
Representatives of the United States of America in Congress 
assembled. Section 1, Amendments. Section 149 of Title I of 
Division C of Public Law 105-277 as amended by Public Law 106-5 
and Public Law 106-70 is amended. One, by striking ``July 1, 
2000'' each place it appears and inserting ``June 1, 2001'' 
and, two, in Subsection (aa) by striking ``September 30, 1999'' 
and inserting ``June 30, 2000'' and (B) by striking ``October 
1, 1999'' and inserting ``July 1, 2000.'' Section 2 effective 
date. The amendments made by Section 1 shall take effect on 
July 1, 2000.
    Chairman Sensenbrenner. The question is on favorably 
reporting the bill.
    Mr. Watt. Mr. Chairman?
    Chairman Sensenbrenner. For what purpose does the gentleman 
from North Carolina seek----
    Mr. Watt. I move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Watt. Thank you, Mr. Chairman.
    Mr. Chairman, I sincerely hope--I know people are going to 
question me when I say this, but I sincerely hope this is not 
the way we conduct business the entire term, but, if necessary, 
it will be.
    I yield back the balance of my time.
    Chairman Sensenbrenner. The question is on favorably 
reporting the bill.
    Ms. Baldwin. Mr. Chairman?
    Chairman Sensenbrenner. The gentlewoman from Wisconsin.
    Ms. Baldwin. I move to strike the last word.
    Chairman Sensenbrenner. The gentleman is--the gentlewoman 
is recognized for 5 minutes.
    Ms. Baldwin. I won't take all that time. I want to thank 
the chairman for bringing this bill up. I was proud to co-
sponsor this with Representative Smith of Michigan and it would 
immediately restore much-needed bankruptcy protection for 
family farmers. I represent a district where this is sorely 
missed, and it needs to be reinstated and I urge a positive 
vote.
    I yield back.
    Ms. Waters. Mr. Chairman?
    Chairman Sensenbrenner. Does the gentlewoman yield back?
    For what purpose does the gentlewoman from California----
    Ms. Waters. I move to strike the last word.
    Chairman Sensenbrenner. The gentlewoman is recognized for 
5----
    Ms. Waters. I would like the record to reflect that I have 
four amendments that I would have offered to this legislation 
had the opportunity--to the bankruptcy legislation--had the 
opportunity been there for me to do it, and I would like Mr. 
Gekas to know that Mr. Watt offered to you an opportunity to 
deal with our concerns about how you have managed the bill 
today.
    Mr. Watt, in essence, said that in addition to you 
appearing not to know the bill and not responding in any real 
way to our questions and our concerns, when you said to us at 
one point that, in essence, there will be no changes to this 
bill, that even in one section where you would like to see a 
change before you would do it here in this committee, but you 
would take it to the Rules Committee. But, in essence, what you 
said to us is you can present all the amendments you want 
today, they will not be supported in any shape, form, or 
fashion, no matter how reasonable they are, no matter how much 
it could improve the bill, and you demonstrated that, again, in 
a way that I perhaps have not seen before.
    So these concerns are concerns that you should not just 
ignore, and let me just say I could almost see it if it was 
Maxine Waters, but Mel Watt is a very cooperative man. He is 
forever reaching his hand across the aisle to have a 
relationship with you people and----
    [Laughter.]
    Ms. Waters. And to have him treated the way that he was 
treated today is just unforgivable. So I want you to know that 
you have just cut off the possibility of having one of the most 
reasonable people on this side of the aisle work with you in a 
cooperative way.
    Again, if it was Maxine Waters, I could understand, but do 
it to Mel Watt? My goodness.
    I yield to the----
    Mr. Watt. Will the gentlelady yield.
    Ms. Jackson Lee. Two of us are trying to yield. I will 
yield first to the gentleman.
    Mr. Watt. I want to thank the gentlelady for her ringing 
endorsement of my bipartisan tendencies, and just insert for 
the record I like the record to reflect that I offered only one 
of the 14 amendments that I indicated in my opening statement 
that I was planning to offer. So, clearly, I object to the 
procedure. I have 13 other amendments that I would like to have 
offered to this bill, and on the basis that I started off with, 
to try to improve the bill so that I could support it, but 
apparently that just was not to be today.
    Ms. Jackson Lee. Will the gentlelady yield?
    Mr. Watt. So I appreciate the gentlelady yielding. I yield 
back to her.
    Ms. Waters. I yield to the gentlelady.
    Ms. Jackson Lee. I thank the gentlelady.
    Let me just emphasize or support the fact that I think all 
of the Members on this side in this instance have attempted to 
start this first legislative effort out in a collaborative way; 
one, supporting the chairman's viewpoint that the jurisdiction 
of this legislation should be in the Judiciary Committee. I was 
not able to offer one, two, three, four, five, six, seven 
amendments, and my understanding was that we would work through 
this. In fact, I made commitments to stay in Washington to be 
able to do this even tomorrow. I have a great concern in the 
domestic support issues that were not able to be elaborated on 
through an amendment. We didn't get a chance to fully discuss 
the whole idea of frivolous lawsuits being brought against 
debtors, people who are trying to put their lives back 
together. Disaster relief is something that this legislation 
misses, and I thought that we were going to take the time 
today, Mr. Chairman, to work through these amendments.
    In fact, I might have been able to convince some of my 
colleagues on the other side of the aisles if they had only 
listened. So I have an ongoing objection. I will submit these 
into the record as well as offer these as we move toward the 
floor, but I hope that this is not an indication of how we will 
be working together in the future.
    I yield back to the gentlelady.
    Chairman Sensenbrenner. For what purpose does the gentleman 
from Pennsylvania seek recognition?
    Mr. Gekas. I move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
brief minutes.
    Mr. Gekas. Reasonable people are going to have to agree 
that in my position with pride of authorship and eagerness to 
see this bill passed that I tried to stand firm on the 
principles that were enunciated in this bill.
    When the occasion arose and it was not clear what an 
amendment would do, I--even though I felt that we should reject 
the amendment, I made good offices available for the purpose of 
reviewing it in the future. That is not inconsistent with 
countless bills that we have entertained over the time that we 
have shared on this committee. I will continue to do so. I feel 
very strongly we have an excellent piece of legislation.
    To the extent that the Baldwin and Schiff amendments were 
questionable and which require review on my part, I asserted 
that I would do so. Where is the umbrage taken on a position 
like that when we have been doing that forever? This is part of 
the legislative process----
    Mr. Watt. Would the gentleman yield?
    Mr. Gekas [continuing]. The author and the mover of the 
legislation standing firm on his legislation, but yielding to 
further modification of it as the time rolls on. That does not 
quash the minority. It was up for a vote each time, and the 
majority voted with me to stand firm for the time being on all 
of these provisions and then modify when we can.
    Ms. Jackson Lee. Would the gentleman yield?
    Mr. Gekas. I apologize to no one for the strength of my 
efforts to preserve the sanctity of this bill.
    Ms. Jackson Lee. Would the gentleman yield?
    Mr. Watt. Would the gentleman yield?
    Chairman Sensenbrenner. Does the gentleman yield or yield 
back?
    Ms. Jackson Lee. Would the gentleman yield?
    Mr. Gekas. I would like to yield back so I can get out of 
here, but I will yield.
    Ms. Jackson Lee. Would the gentleman yield?
    Mr. Gekas. I yield back.
    Chairman Sensenbrenner. Okay. The question is on the motion 
to report the bill H.R. 256 favorably.
    Mr. Nadler. Mr. Chairman?
    Chairman Sensenbrenner. All those in favor will say aye.
    Opposed, no.
    The ayes appear to have it.
    Mr. Watt. Mr. Chairman, I ask for a recorded vote.
    Chairman Sensenbrenner. A recorded vote will be ordered. 
Those in favor of reporting the bill favorably will as your 
names are called answer aye; those opposed, no. And the Clerk 
will call the roll.
    The Clerk. Mr. Hyde?
    [No response.]
    The Clerk. Mr. Gekas?
    Mr. Gekas. Aye.
    The Clerk. Mr. Gekas, aye.
    Mr. Coble?
    Mr. Coble. Aye.
    The Clerk. Mr. Coble, aye.
    Mr. Smith?
    Mr. Smith. Aye.
    The Clerk. Mr. Smith, aye.
    Mr. Gallegly?
    [No response.]
    The Clerk. Mr. Goodlatte?
    Mr. Goodlatte. Aye.
    The Clerk. Mr. Goodlatte, aye.
    Mr. Chabot?
    Mr. Chabot. Aye.
    The Clerk. Mr. Chabot, aye.
    Mr. Barr?
    Mr. Barr. Aye.
    The Clerk. Mr. Barr, aye.
    Mr. Jenkins?
    [No response.]
    The Clerk. Mr. Hutchinson?
    Mr. Hutchinson. Aye.
    The Clerk. Mr. Hutchinson, aye.
    Mr. Cannon?
    Mr. Cannon. Aye.
    The Clerk. Mr. Cannon, aye.
    Mr. Graham?
    Mr. Graham. Aye.
    The Clerk. Mr. Graham, aye.
    Mr. Bachus?
    Mr. Bachus. Aye.
    The Clerk. Mr. Bachus, aye.
    Mr. Scarborough?
    Mr. Scarborough.
    [No response.]
    The Clerk. Mr. Hostettler?
    Mr. Hostettler. Aye.
    The Clerk. Mr. Hostettler, aye.
    Mr. Green?
    Mr. Green. Aye.
    The Clerk. Mr. Green, aye.
    Mr. Keller?
    Mr. Keller. Aye.
    The Clerk. Mr. Keller, aye.
    Mr. Issa?
    [No response.]
    The Clerk. Ms. Hart?
    Ms. Hart. Aye.
    The Clerk. Ms. Hart, aye.
    Mr. Flake?
    Mr. Flake. Aye.
    The Clerk. Mr. Flake, aye.
    Mr. Conyers?
    [No response.]
    The Clerk. Mr. Frank?
    [No response.]
    The Clerk. Mr. Berman?
    [No response.]
    The Clerk. Mr. Boucher?
    [No response.]
    The Clerk. Mr. Nadler?
    Mr. Nadler. Aye.
    The Clerk. Mr. Nadler, aye.
    Mr. Scott?
    Mr. Scott. Aye.
    The Clerk. Mr. Scott, aye.
    Mr. Watt?
    Mr. Watt. Aye.
    The Clerk. Mr. Watt, aye.
    Ms. Lofgren?
    [No response.]
    The Clerk. Ms. Jackson Lee?
    Ms. Jackson Lee. Aye.
    The Clerk. Ms. Jackson Lee, aye.
    Ms. Waters?
    Ms. Waters. Aye.
    The Clerk. Ms. Waters, aye.
    Mr. Meehan?
    [No response.]
    The Clerk. Mr. Delahunt?
    Mr. Delahunt. Aye.
    The Clerk. Mr. Delahunt, aye.
    Mr. Wexler?
    [No response.]
    The Clerk. Ms. Baldwin?
    Ms. Baldwin. Aye.
    The Clerk. Ms. Baldwin, aye.
    Mr. Weiner?
    [No response.]
    The Clerk. Mr. Schiff?
    Mr. Schiff. Aye.
    The Clerk. Mr. Schiff, aye.
    Mr. Chairman?
    Chairman Sensenbrenner. Aye.
    The Clerk. Mr. Chairman, aye.
    Chairman Sensenbrenner. Are there additional Members in the 
room who wish to either record their vote or change their vote? 
If not, the Clerk will report.
    The Clerk. Mr. Chairman, there are 24 ayes and zero nays.
    Chairman Sensenbrenner. And the motion is agreed to.
    Mr. Nadler. Mr. Chairman?
    Chairman Sensenbrenner. All Members will be given 2 days as 
provided by House Rules in which to submit additional 
dissenting supplemental or minority rules.

                                  
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