[Senate Report 115-163]
[From the U.S. Government Publishing Office]



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                                                      Calendar No. 229
115th Congress     }                        {                Report
                                 SENATE
 1st Session       }                        {                  115-163
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TO ESTABLISH A BUSINESS INCUBATORS PROGRAM WITHIN THE DEPARTMENT OF THE 
    INTERIOR TO PROMOTE ECONOMIC DEVELOPMENT IN INDIAN RESERVATION 
                              COMMUNITIES

                                _______
                                

               September 26, 2017.--Ordered to be printed

                                _______
                                

    Mr. Hoeven, from the Committee on Indian Affairs, submitted the 
                               following

                              R E P O R T

                         [To accompany S. 607]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Indian Affairs, to which was referred the 
bill (S. 607) to establish a business incubators program within 
the Department of the Interior to promote economic development 
in Indian reservation communities, having considered the same, 
reports favorably thereon without amendment and recommends that 
the bill do pass.

                                PURPOSE

    The bill, S. 607, would establish a business incubators 
program within the Department of the Interior, Office of Indian 
Energy and Economic Development to promote entrepreneurship and 
economic development on Indian reservation. The bill would 
require the Department of the Interior to coordinate with other 
federal agencies to promote Native American business 
development.

                               BACKGROUND

    Starting a new business is challenging anywhere, but Native 
American entrepreneurs must navigate a set of unique obstacles 
particular to Indian country.\1\
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    \1\Economic Development: Encouraging Investment in Indian Country: 
Hearing Before the S. Comm. on Indian Affairs, 113th Cong. 2, 3 
(written testimony of Gerald Sherman, Vice Chairman, Native CDFI 
Network).
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    The land tenure system is one such obstacle. Much of the 
land in Indian country is held in trust.\2\ Consequently, the 
Secretary of the Interior must approve activities on these 
lands as part of the trust responsibility.\3\ Secretarial 
approval creates additional expense and uncertainty for Native 
entrepreneurs and their potential business partners because 
they must comply with leasing and related federal legal 
requirements that generally do not apply outside Indian 
country.\4\
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    \2\See COHEN'S HANDBOOK OF FEDERAL INDIAN LAW Sec. 15.03, at 997-
999 (Nell Jessup Newton ed., 2012) (hereinafter, COHEN'S HANDBOOK) 
(providing a broader discussion of the underlying principles and 
development of the trust responsibility).
    \3\See COHEN'S HANDBOOK, Sec. 21.02[3], at 1329-30.
    \4\See id.; See also Economic Development: Encouraging Investment 
in Indian Country: Hearing Before the S. Comm. on Indian Affairs, 113th 
Cong. 2, 3 (written testimony of William M. Lettig, Executive Vice 
President, Key Bank).
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    As a remedy, Congress took action to provide tribes with 
greater control to regulate the agricultural, residential, and 
business leasing of tribal lands.\5\ Since enactment, 26 of the 
567 federally recognized tribes have utilized this new 
statutory authority by establishing their own leasing rules, 
which the Bureau of Indian Affairs must vet before going into 
effect.\6\
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    \5\See Helping Expedite and Advance Responsible Tribal Home 
Ownership Act of 2012, Pub. L. No. 112-151.
    \6\See HEARTH Act of 2012, available at https://www.bia.gov/bia/
ots/hearth (listing tribes).
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    The status of reservation lands also complicates access to 
capital, primarily because trust land cannot be alienated and 
cannot be used as collateral to obtain financing.\7\ As a 
result, Native entrepreneurs that intend to open businesses on 
a reservation must look to other methods of raising capital to 
start and grow their businesses.
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    \7\See COHEN'S HANDBOOK at Sec. 21.02[3], at 1329; See also Access 
to Capital and Credit in Native Communities, Native Nations Institute, 
University of Arizona, Digital Version at 39 (2016), available at: 
http://nni.arizona.edu/news/articles/access-capital-and-credit-native-
communities.
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    Unfamiliarity with Indian country is also a challenge.\8\ 
Even when an entrepreneur has a promising concept, getting it 
off the ground can be difficult when investors or business 
partners do not have significant experience working in 
reservation communities and are unfamiliar with the challenges 
associated with operating in Indian country. The resulting 
uncertainty can produce less favorable terms for Native 
entrepreneurs or prevent a venture from happening 
altogether.\9\
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    \8\See Economic Development: Encouraging Investment in Indian 
Country: Hearing Before the S. Comm. on Indian Affairs, 113th Cong. 2, 
2 (written testimony of William M. Lettig, Executive Vice President, 
Key Bank).
    \9\Access to Capital and Credit in Native Communities, supra note 
5, at 39.
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    Finally, location is often a challenge. Many reservations 
are located in rural--if not remote--areas.\10\ This fact 
limits the available workforce, making it difficult for Native 
entrepreneurs to attract necessary staff to operate their 
businesses.\11\ And infrastructure challenges common in rural 
areas make it difficult for Native entrepreneurs to get their 
products to market.\12\ A lack of access to high-speed 
internet, for example, is often a roadblock to success for 
businesses that must compete in 21st century markets.\13\
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    \10\See Accessing Capital in Indian Country: Hearing Before the S. 
Comm. on Indian Affairs, 114th Cong. 1, 2 (written testimony of 
Alejandra Y. Castillo, National Director, Minority Business Development 
Agency, U.S. Dept. of Commerce).
    \11\See id.
    \12\See id.
    \13\See U.S. Gov't Accountability Office, GAO-16-222, 
Telecommunications: Additional Coordination and Performance Measurement 
Needed for High-Speed Internet Access Programs on Tribal Lands, at 8-12 
(2016).
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    These unique challenges vary from reservation to 
reservation and from business to business. Accordingly, it is 
vital that entrepreneurial development tools provide assistance 
focused specifically on Indian country and tailored to each 
entrepreneur.\14\
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    \14\Native American Business Incubators Program Act: Hearing on S. 
3261 Before the S. Comm. on Indian Affairs, 114th Cong. 2, 8 (2016) 
(written testimony of Derrick Watchman, Chairman Board of Directors, 
National Center for American Indian Enterprise Development).
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    Business incubators are uniquely equipped to do this 
because they offer a flexible suite of services intended to 
help businesses grow and thrive. They offer workspace, a 
collaborative environment, individualized yet comprehensive 
business skills training, and opportunities to build 
professional networks. By providing these focused services, 
business incubators help Native entrepreneurs develop 
businesses and create jobs in reservation communities, 
contributing greatly to overall tribal economic development.

                          LEGISLATIVE HISTORY

    114th Congress. Senators Tester, Cantwell, and Udall 
introduced the Native American Business Incubators Program Act 
(S. 3261) on July 14, 2016. Senator Murkowski was added as a 
cosponsor on September 7, 2016. The bill was referred to the 
Committee on Indian Affairs, which held a hearing on the bill 
on September 7, 2016. On September 21, 2016, the Committee held 
a duly called business meeting to consider S. 3261, among other 
bills. The Committee ordered the bill to be favorably reported 
without amendment to the Senate. No further action was taken on 
the bill. No companion bill was introduced in the House of 
Representatives.
    115th Congress. Senators Udall, Cantwell, and Tester 
introduced S. 607, the Native American Business Incubators Act, 
on March 13, 2017. On March 29, 2017, the Committee held a duly 
called business meeting to consider, among other bills, S. 607. 
The Committee ordered the bill to be favorably reported without 
amendment to the Senate. To date, no companion bill has been 
introduced in the House of Representatives.

                          SUMMARY OF THE BILL

    The Native American Business Incubators Program Act would 
create a competitive grant program in the Office of Indian 
Energy and Economic Development at the Department of the 
Interior to establish and maintain business incubators that 
serve Native entrepreneurs in reservation communities. The 
program is intended to make substantial and sustained 
investments in these business incubators to ensure Native 
entrepreneurs in reservation communities have uninterrupted 
access to locally tailored business development services from 
entities specializing in providing services in Native 
communities. Understanding that needs will be different in each 
Native community, the program is also intended to be flexible 
so that it can be deployed to benefit Native communities 
throughout the United States.

                      SECTION-BY-SECTION ANALYSIS

Section 1--Short title

    This section states that the bill may be cited as the 
``Native American Business Incubators Program Act''.

Section 2--Findings

    This section states Congress finds that there are unique 
challenges associated with establishing a business in Indian 
country and business incubators are business development tools 
that are well-suited to helping Native American entrepreneurs 
establish and operate businesses in or near reservation 
communities. This section further states that Congress finds 
that business incubators that assist Native entrepreneurs will 
promote tribal economic development.

Section 3--Definitions

    This section sets forth the definitions of ``Business 
Incubator'', ``Eligible Applicant'', ``Indian Tribe'', 
``Institution of Higher Education'', ``Native American; 
Native'', ``Native Business'', ``Native Entrepreneur'', 
``Program'', ``Reservation'', ``Secretary'', and ``Tribal 
College or University''.

Section 4--Establishment of Program

    This section establishes a competitive grant program in the 
Office of Indian Energy and Economic Development at the 
Department of the Interior to establish and maintain business 
incubators that serve Native entrepreneurs and reservation 
communities.
    This section also defines who is eligible to apply for a 
grant. Eligible applicants include tribes, institutions of 
higher education (including TCUs), and non-profit 
organizations.
    This section describes application and program 
requirements. An eligible applicant must submit an application 
that includes a 3-year plan, information demonstrating the 
applicant's effectiveness and experience, and a site 
description. Eligible applicants must also meet minimum 
requirements that include providing: culturally tailored 
services; a competitive process for selecting participants; a 
physical workspace; business skills training and education; 
mentorship opportunities; and access to professional networks.
    This section provides application evaluation considerations 
and establishes that priority will be given to business 
incubators sited in or near the reservation community the 
applicant intends to serve.
    This section contains oversight provisions that apply to 
the agency and grant recipients.

Section 5--Regulations

    This section requires the Secretary to promulgate 
regulations implementing the program within one hundred eighty 
days of enactment.

Section 6--Schools to business incubator pipeline

    This section requires the Secretary to facilitate 
relationships between grant recipients and educational 
institutions serving Native American communities.

Section 7--Agency partnerships

    This Section requires the Secretary to coordinate with 
other agencies that have business development programs to 
ensure grant recipients have information and materials 
necessary to inform incubator participants about available 
federal programs and assist them when applying.

Section 8--Authorizations of appropriations

    This section authorizes $5,000,000 to be appropriated for 
each of fiscal years 2018 through 2023, and such sums as may be 
necessary thereafter.

                   COST AND BUDGETARY CONSIDERATIONS

S. 607--Native American Business Incubators Program Act

    Summary: S. 607 would authorize the Bureau of Indian 
Affairs (BIA) to award grants to eligible public and private 
organizations for the purpose of providing physical workspaces 
and other resources to Native American entrepreneurs and 
businesses. The bill would authorize the appropriation of $5 
million annually over the 2018-2023 period.
    CBO estimates that implementing S. 607 would cost $18 
million over the 2018-2022 period, assuming appropriation of 
the authorized amounts. Enacting the bill would not affect 
direct spending or revenues; therefore, pay-as-you-go 
procedures do not apply.
    CBO estimates that enacting the legislation would not 
increase net direct spending or on-budget deficits in any of 
the four consecutive 10-year periods beginning in 2028. S. 607 
contains no intergovernmental or private-sector mandates as 
defined in the Unfunded Mandates Reform Act (UMRA) and would 
benefit tribal governments.
    Estimated cost to the Federal Government:

----------------------------------------------------------------------------------------------------------------
                                                                   By fiscal year, in millions of dollars--
                                                            ----------------------------------------------------
                                                              2017   2018   2019   2020   2021   2022  2017-2022
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                                 INCREASES IN SPENDING SUBJECT TO APPROPRIATION
 
Authorization Level........................................      0      5      5      5      5      5        25
Estimated Outlays..........................................      0      1      3      4      5      5        18
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    S. 607 would authorize the appropriation of $5 million 
annually over the 2018-2022 period and whatever sums are 
necessary in years after 2023, to fund a grant program to aid 
development of Native American businesses. The program would be 
managed by BIA and would include providing physical workplaces, 
business skills training, and access to networks of potential 
investors, among other services. All grants would be awarded 
for three-year periods and could be renewed for additional 
three-year terms. CBO estimates that implementing the program 
would cost $18 million over the 2018-2022 period.
    CBO estimates that enacting the legislation would not 
increase net direct spending or on-budget deficits in any of 
the four consecutive 10-year periods beginning in 2028.
    S. 607 contains no intergovernmental or private-sector 
mandates as defined in UMRA. Tribal governments would benefit 
from grants established in the bill to support the growth of 
Native American businesses and Native American entrepreneurs. 
Any costs to tribal governments would result from complying 
with conditions of assistance.
    The CBO staff contact for this estimate is Robert Reese. 
The estimate was approved by H. Samuel Papenfuss, Deputy 
Assistant Director for Budget Analysis.

                        EXECUTIVE COMMUNICATIONS

    The Committee has received no communications from the 
Executive Branch regarding S. 607.

               REGULATORY AND PAPERWORK IMPACT STATEMENT

    Paragraph 11(b) of rule XXVI of the Standing Rules of the 
Senate requires each report accompanying a bill to evaluate the 
regulatory and paperwork impact that would be incurred in 
carrying out the bill. The Committee believes that S. 607 will 
have a minimal impact on regulatory or paperwork requirements.

                 CHANGES IN EXISTING LAW (CORDON RULE)

    In compliance with subsection 12 of rule XXVI of the 
Standing Rules of the Senate, the Committee finds that the 
enactment of S. 607 will not make any changes to existing law.

                                  [all]