[House Report 107-2]
[From the U.S. Government Publishing Office]
107th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 107-2
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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\
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\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).
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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\
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\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.
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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\
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\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).
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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.
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\12\ Pub. L. No. 105-277, 112 Stat. 2681, 2681-610 (1998).
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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.