Tuition Assistance for Families Act

Mr. President, today, as ranking democrat on the Committee on Small Business and Entrepreneurship, I join the committee's chair, Senator Olympia Snowe, in bringing to the floor for final Senate consideration, a 3-year reauthorization bill for the Small Business Administration's programs.

These programs help small businesses with access to capital, business advice and training and Federal procurement opportunities. But before I speak more specifically about the provisions of the bill, I would like to thank Chair Snowe for working hand-in-hand with me on this, my third reauthorization of the Small Business Administration since becoming ranking member in 1997. Having worked close on two previous reauthorizations, and as a member of the Small Business and Entrepreneurship Committee for over 18 years, I can tell you that the SBA reauthorization process takes diligence and a strong attention to detail. I want to commend Senator Snowe for taking the initiative to draft legislation that makes such important and necessary changes to the SBA during this reauthorization process and for showing great leadership in her first 9 months as chair of the Committee on Small Business and Entrepreneurship.

Our bill will strengthen the SBA and dramatically improve the agency's ability to deliver services to small businesses in every State. It is based on a sound committee record. In addition to holding two hearings and three roundtables to specifically address the SBA's programs and related reauthorization issues, our committee met and spoke with numerous constituents, program directors and small business advocates. It is through this correspondence, research and input that our committee has been able to prepare a comprehensive piece of legislation that should serve the Small Business Administration and the entire small-business community well past even the next reauthorization period.

Over the past 3 years, as chairman and ranking member of this committee, I have seen this administration

reduce Government funding and transfer that money to the wealthy with tax cut after tax cut, resulting in a significant loss of revenue for essential initiatives aimed at fostering small businesses and the job creation and economic activity they bring about. While many of like to note that small businesses are the engine of economic growth and should be bolstered by our Government, this administration has given small businesses more words than action.

The need for small business programs--for access to capital, for training and counseling, for assistance in gaining access to the Federal marketplace--runs counter cyclically to the economy. When the economy is slumping, as it now is, small businesses and entrepreneurs need the SBA even more. Our committee has heard from the small-business community that demand for training and assistance and access to capital is up, yet this administration has proposed freezing funding for virtually all SBA programs for 6 years. Their proposal includes no adjustment for inflation or demand, despite the SBA's own numbers that show demand is up for its programs. The SBA's largest lending programs would have run out of money this year had the SBA not taken the drastic step of capping the size of loans. Both the problem of imminent shutdown and the SBA's solution of a cap would have been bad for struggling small businesses. But for additional funding of more than $3 billion made available by Congress, the SBA's solution would have disrupted many small businesses' access to otherwise unattainable capital. Again, the problem and its solution could have been avoided had the administration properly funded this important program.

It is in carrying out our legislative and oversight responsibilities that Chair Snowe and I raised a number of concerns regarding the SBA's reauthorization proposal and the overall management and direction of many of the agency's programs through hearings and roundtables and in letters and phone calls to the administration. And after hearing from the community and working with small business experts in the field, Senator Snowe and I came to the conclusion that many of the proposals put forth by the Small Business Administration would not help the agency's programs, but rather would ultimately hinder them.

This administration and small businesses across this Nation will find, however, that our prescription for small businesses in a flailing economy is quite different. Our reauthorization legislation embraces the initiatives that have worked for years, redirects those that have struggled, and sets the SBA and our small business sector up for continued success.

Although banks have plenty of cash to lend, many small businesses still have a problem getting access to credit. Either the terms are unreasonable, or they can not get a loan at all. For the past few years as the economy has fizzled, the Federal Reserve has reported that banks have cut back on lending to small businesses, making it harder and more expensive to get loans. And who has been there to pick up the slack? The Small Business Administration and its lending partners.

Lending is up 37 percent in the SBA's largest lending program for working capital. Lending is up 22 percent in the SBA's loan program for small businesses that are growing and need money to buy equipment and buildings. Lending is up in the SBA's microloan program, which serves those with the least access to capital through the private sector. And the SBA's venture capital programs play a significant role in this country's investment in our fastest-growing small businesses, accounting for more than 50 percent of all U.S. venture investments. Last year these loans and investments pumped about $20 billion into the economy, leveraged millions more from the private sector, fed the local tax base as the Federal Government cut back, and created or retained more than 400,000 jobs.

As the committee reviewed the SBA's programs for reauthorization, these facts figured largely into establishing the program levels. I thank our chair, Senator Snowe, for working with me to set the levels for the SBA's lending and venture capital programs at increasing levels for the next 3 years. I am particularly pleased with the increased funding levels for the microloan program.

I disagree with the administration's proposals over the past few years to cut back its investment in microloans and training assistance to micro-entrepreneurs. And I disagree with the administration's contention that these borrowers are being served through the 7(a) loan program. The small borrower in the microloan program is different than the small borrower being served through the 7(a) loan program. Both lending vehicles are important, but they are different, and one is not a substitute for the other.

And who are these borrowers being served through the microloan program? Thirty percent are African American. Eleven percent are Hispanic. Thirty-seven percent are women. And anywhere from 30 to 40 percent go to small businesses in rural areas. Banks turn these borrowers away, and yet the administration proposed cutting the microloan program by 36 percent in its most recent budget--fiscal year 2004. The SBA needs to fully fund these programs and put more resources into the office that manages the program. Four people are not enough to manage 1,400 loans and 180 grants.

Not only is the program level for microloans troublesome, but also the level for the agency's largest small business lending program, the 7(a) program. In the report that accompanies S. 1375, the committee notes that our duty as members of this committee, as well as that of the SBA itself, is not simply to maintain these programs but to monitor the demand and adjust the programs accordingly to meet the needs of small businesses. According to SBA's testimony before the committee on April 30, 2003, the agency estimates demand only by looking backwards-- what has happened in the past year. However, there are other important factors to consider: changes in loan volume, trends in the economy, and initiatives and program changes that will affect loan volume. For example, the agency often enters into memoranda of understanding with trade and ethnic associations in order to help their members who own small businesses, and recently the SBA opened its lending programs to all credit unions, which number 10,000. Both of these changes are intended to raise awareness of the SBA's services, which ultimately will affect demand. In a press release from the SBA regarding credit unions, the agency stated that delivery of SBA loans through credit unions, ``Represents a possible increase of nearly 30 percent in the overall number of institutions where entrepreneurs can seek capital for their businesses.'' That possibility, if it becomes a reality, will almost certainly increase demand for 7(a) loans. Therefore, it should be factored into the SBA's estimate of programs demand for fiscal year 2004 and beyond, and aligned in its annual appropriations requests and legislative proposals.

Aside from setting the level for each small business financial assistance program, our SBA reauthorization makes important program changes and starts some important, new initiatives. In the SBA's microloan program, we have adopted many of the provisions we passed last year as part of S. 174, which Senator Snowe and I introduced and the committee and the full Senate voted to pass by unanimous consent. I thank the Association for Enterprise Opportunity, AEO, as well as the participants of the reauthorization roundtable on April 30, 2003--Mary Mathews of Minnesota's Northeast Entrepreneur Fund, Zach Gast of AEO in Washington, D.C., Alan Corbet of Missouri's Go Connection, and Blake Brown of Maine's Coastal Enterprises--for representing the microloan industry so convincingly and educating the committee on the inextricable correlation between technical assistance, lending and successful businesses that can repay their loans. I thank them for illustrating so vividly how they serve borrowers that would not otherwise have access to capital--because their loans are not profitable enough to appeal to traditional lenders, and because the efficiencies of credit scoring work against these small borrowers, even those with repayment ability. The SBA's microloans represent their only credit option to help them achieve economic independence and become bankable in the future.

Picking up where we left off last year, and even the year before when we

made important changes to the microloan program, S. 1375 will make it possible for lenders to offer small business ``short-term'' loans. This will benefit small businesses, the lenders and the SBA because it will eliminate repeated paperwork and administrative oversight from those small businesses, such as carpenters, who need revolving loans to finance the jobs as they come in, rather than taking multiple little fixed-term loans. Rather than tying eligibility to the expertise of the entity, we have made it possible for new entities to qualify as the SBA microlending intermediaries if they have staff with this unique lending and technical assistance expertise. We have made a conforming change regarding the average smaller size of microloans, increasing it from $7,500 to $10,000, to make it consistent with similar changes enacted in December 2000.

Unlike the provisions we considered in 2000 and again last year with S. 174, this bill does not go as far to eliminate the restrictions on lenders contracting out the technical assistance or assistance before a loan is made. Instead, we raise from 25 percent to 30 percent the amount of TA funds an intermediary can contract with an outside expert and the amount of grants a lender can use to counsel prospective borrowers. The latter change does not go as far as I would like, but represents a compromise. Although there is a perception that pre-loan assistance means that TA money is used on microentrepreneurs who never get loans, in actuality the small-business owner in many cases needs help getting the loan more than assistance running the business after he or she gets the loan. Also, unlike the last two microloan bills, instead of including a provision authorizing the SBA to fund peer-to- peer mentoring among microloan lenders and TA providers, the microlenders asked the committee to increase the oversight of an existing statutory provision that requires the SBA to contract out 7 percent of its loan dollars for training of intermediaries.

Now the SBA will have to report annually on this specific provision to highlight what they have done to comply with the law. Last, S. 1375 requires the SBA to develop an improved subsidy rate model to determine the cost of microloans because the one they have used since the program's inception does not reflect the performance of the program. For example, last year, in Fiscal Year 2003, the administration's budget doubled the subsidy rate, which is the Government's cost of the program, from 6.78 percent to 13.05 percent, even though the program had not experienced any loss of Federal funds since the first loan was made in 1992. This broken method of calculating the cost of these loans is a waste of taxpayer money because Congress has to appropriate unnecessary funds to run the program.

In the 7(a) loan program, the SBA's largest loan program, which provides loans to small businesses for working capital with long terms of up to 25 years, we made permanent the reduction in the fees borrowers and lenders pay. We are testing a proposal that allows the most proficient 7(a) lenders in good standing to lend in every State. Lenders have complained that applying for lending autonomy in each of the 70 district offices and branches is administratively burdensome, both for them and for the agency staff, and that some district offices have taken advantage of the power to approve or disapprove lenders when they apply for this special lending status.

Let me be clear--while I want to avoid unnecessary paperwork and eliminate reported abuses, I do not want the lenders to take this as a signal to quit working with the district directors and district staff. It is important to have a local connection and for the SBA and the lenders to work together to maximize service to the small businesses. We need to maximize resources to reach not only as many small businesses as possible, but also those populations that most need access to affordable capital. It would be unreasonable to continue holding district directors accountable for lending goals in their areas without building in a mechanism to encourage interaction. There are concerns that allowing lenders to make loans on a nationwide basis and bypass the local SBA staff to work only with SBA staff in Washington, DC, could undermine the local infrastructure and the SBA's ability to meet the individual needs of local small businesses. For this purpose I have included a provision that directs the SBA to consider the recommendations and comments of any district directors and regional administrators when reviewing a lender for national lending authority.

To increase the value of 7(a) loans sold in the secondary market, the committee has included a provision to allow the SBA to pool and sell the guaranteed portion of loans with varied rates. Currently, the SBA has the authority to only sell those loans with identical rates. Proponents argue that this will create efficiencies in the market and strengthen the program by bringing it into line with what the private sector has been doing for years.

At Senator Snowe's request, in order to reach more under-served small businesses, we have enhanced the Low-Doc program, allowing lenders to use the simplified application from for loans up to $250,000 from $100,000, making it the same as the SBA Express program. We have also expanded the incentives for lenders to provide financing to export small businesses, and proposed letting 7(a) borrowers use a simplified size standard when determining if an applicant is a small business.

To improve the 504 loan program, which makes long-term loans of up to 20 years to small, growing businesses to buy equipment and buildings, we have raised the debenture size to keep peace with the rising cost of commercial real estate and equipment. We have raised the job requirement standard up from $35,000 to $50,000. This is reasonable given the increase in the Consumer Price Index since the last time the job requirement was changed in 1990. We have directed the SBA to simplify the application and documentation process of applying for and closing 504 loans, long a goal of this Committee and made a priority based on the compelling testimony of some of our witnesses during the reauthorization process. We have also created two alternatives for 504 lenders to use when establishing a loan loss reserve to cover potential losses.

I am particularly pleased that we have included S. 822, the Child Care Lending Pilot Act in the reauthorization bill. It allows small, non-profit childcare businesses access to 504 loans. I thank Senator Snowe and my colleagues for agreeing to try this for 3 years, similar to what we have done with the microloan program. And I thank the trade association of 504 lenders, the National Association of Certified Development Companies, and other 504 lenders for their endorsement of, and input on, the pilot.

The more research I have done, the more I have come to realize how vitally important it is that we give non-profit day care providers the same opportunities as for-profits to expand their businesses. Non- profit day care centers are often the only childcare suppliers available in needy areas, from the most urban to be most rural. I have taken note of states like Oregon, where 79 percent of day care providers are non-profit, Michigan, where that number jumps to 86 percent, Iowa with 77 percent, my own State of Massachusetts with 90 percent, Ohio with 62 percent, and the list goes on and on. I've learned that in State after State families are waiting for affordable day care; from more than 1,000 families on the waiting list in both Nevada and Maine to more than 30,000 on the list in Texas. These parents are waiting for quality day care they can afford, and making available affordable loans to all licensed child care providers may increase access to care and cut down those waiting lists.

I understand there is concern about the precedent of the SBA lending to non-profits. Right now it is done in only limited circumstances-- microloans, physical disaster loans and economic injury disaster loans in the areas affected by the terrorist attacks of 9/11. And I agree it should not be expanded to all industries. However, this is a very unique industry whose critically important services in many States are delivered mostly through non-profits, and the only way to increase facilities to provide the child care is to reach both for-profit and non-profit child care providers. Further, non-profits are usually the providers that care for the neediest kids. I have added provisions to the pilot program to ensure that the underwriting

standards are just as tough, if not more so, as those applied to for- profit centers. The loans must be personally guaranteed, the collateral must be owned outright by the child care provider, and it must be able to make its loan payments and cover normal operating expenses from the revenue generated from its clients. With these protections, the loans to non-profits should perform just as well as those made to for- profits, and if there is a problem, the loans should be collateralized sufficiently to cover the losses.

The bill defines a small, non-profit child care businesses as an entity organized as a 501(c)(3), but not just any organization. It must be a licensed child care provider; it must meet the size standard for a small business; and it must provide care to infants, toddlers and pre- kindergarten and care to older children after school. This makes assistance available to eligible entities that offer Head Start services. At Senator Snowe's request, the pilot is limited to seven percent of the number of loans guaranteed by the 504 program overall, which is less than the 10 percent allowed for pilots under SBA's 7(a) guaranteed business loan program. I feel that the agreed upon cap should allow for sufficient lending under the pilot to adequately test whether lending to non-profit childcare providers is effective in increasing access to affordable childcare, and whether it protects the general 504 program, which is vital to the financing of small businesses in this country.

Before I move on to discuss another important provision in the bill, I want to thank all the members of the Advisory Committee on Child Care and Small Business in Massachusetts who not only identified the need for this policy change but also developed many innovative ideas to coordinate Federal and State business services and child welfare services to expand the availability of quality, affordable child care and strengthen the businesses of child care of child care providers.

The bill also includes a comprehensive study by the GAO to track and monitor the impact of this program both on child care industry and the 504 program. Last, I want to remind my colleagues that the 504 program is funded entirely through fees and does not require appropriations. Further, when the Congressional Budget Office reviewed the reauthorization act and estimated its cost and the impact the provisions would have on the programs, CBO assessed no cost increase to the 504 program, its subsidy rate, or the agency by enacting the child care lending pilot provision.

Also included in this bill is S. 318, the Small Business Drought Relief Act. This simply reinforces in legislation something that the SBA should already be doing. You see, the SBA doesn't treat all drought victims the same. The agency only helps those small businesses whose income is tied to farming and agriculture. However, farmers and ranchers are not the only small business owners whose livelihoods are at risk when drought hits their communities. The impact can be just as devastating to the owners of rafting businesses, marinas, and bait and tackle shops. Sadly, at present these small businesses cannot get help through the SBA's disaster loan program because of something taxpayers hate about government--bureaucracy.

The SBA denies these businesses access to disaster loans because its lawyers say drought is not a sudden event and therefore it is not a disaster by definition. Despite numerous requests, written and verbal, for a copy of this legal opinion, the SBA delayed compliance for 6 months. The delay jeopardized enactment of emergency legislation during the 107th Congress, leaving small business drought victims without assistance. Contrary to the agency's position that drought is not a disaster, as of July 16, 2002, the day this legislation was introduced last year, the SBA had drought disaster declarations in effect in 36 States. That number had grown to 48 by the beginning of this year, demonstrating that the problem had gotten worse and even more small businesses were in need.

As I have said time and again, the SBA already has the authority to help all small businesses hurt by drought in declared disaster areas, but the agency will not do it. For years the agency has been applying the law unfairly, helping some and not others, and it is out of compliance with the law. The Small Business Drought Relief Act of 2003 would force the SBA to comply with existing law, restoring fairness to an unfair system, and would get help to small business drought victims that need it. I thank former Governor Jim Hodges of South Carolina, and his staffer Lane Hudson, for bringing this to the committee's attention. They served the needy small businesses of their State extremely well, and I am sorry that politics kept this common sense and much needed provision from being enacted. I thank the other 15 Governors who fought for their constituents, too. And I thank Senator Bond for working with me on this when he was the ranking member of the Committee on Small Business & Entrepreneurship, and Senator Snowe and her staff for all their help and support. While we might have had a lot of rain recently in the northeast, there are areas like Lake Mead in Arizona and Nevada where it is so dry that the water level is down and small businesses are losing business and having to make expensive changes, such as extending docks to reach the water in order to stay in business.

In this bill are also provisions to strengthen the SBA's venture capital programs--the Small Business Investment Company Debenture and Participating Securities programs, and the New Markets Venture Capital Program. We have balanced investment incentives with financial soundness issues and allowed small businesses to receive more SBIC financing than currently permissible if they also have a 504 or 7(a) loan. We have improved the arrangement for distributing payments from successful SBICs so that the SBA and the investors are treated more fairly and the taxpayer has more protection for realizing repayment on the investments. We have put in place conforming amendments to make the New Markets Venture Capital program work with the New Markets Tax Credit, as Congress intended. And we have clarified that New Markets Venture Capital companies have 2 years to raise their matching capital, as Congress intended. The committee has been troubled by the agency's interpretation of the NMVC statute, which SBA viewed as permitting the agency to choose how much time it could give conditionally approved NMVCs to raise the private-sector matching money. The SBA's chosen time frames were unreasonable and not what Congress intended.

I very much regret that the managers' amendment that we are considering today does not include a change to the New Markets Venture Capital Program which would better align allowable investments with repayment obligations. Right now the repayment and profit participation schedules are out of sync. Experts argue that this situation could force NMVCs to liquidate promising small businesses in order to raise repayment money. It would be unfortunate if this were to occur, particularly for the employees of small businesses in these high- unemployment areas who will be hard-pressed in this economy to find another job with sustainable wages and benefits. I do not have an SBA NMVC in my State, but there are about 20 States with NMVCs which would have benefited from this proposed change--Maine, New Hampshire, Vermont, Kentucky, Maryland, West Virginia, Ohio, Delaware, New Jersey, Pennsylvania, Arizona, and Washington, DC. I am sorry that we could not reach a compromise and I hope for the sake of existing NMVCs and the small businesses they assist that the experts are not right.

I thank the many experts who have advised this committee over the years on developing and implementing the new markets venture capital program. My colleagues on the committee and I are grateful for their help. It is a great service to the taxpayers and businesses and the communities that will benefit from this innovative investment. In no particular order, I thank Dr. Julia Rubin who helped us when she was at Harvard, at Brown and now at Rutgers University. I thank Saunders Miller, now himself a small business owner of Peaq Funds in Manhattan, who was a principal developer of this program and may other venture capital initiatives for the many years he worked at the SBA. I thank Don Christensen, the former head of the SBA's investment

division, where he served this nation and president Clinton extremely well. And to the many developmental venture capitalists who routinely impart their expertise and wisdom to this committee, such as Elyse Cherry of the Boston Community Venture Fund and Ray Moncrief of Kentucky Highlands.

Responding to findings by the General Accounting Office and the SBA's Office of Inspector General, this legislation includes many measures to strengthen the SBA's oversight of lenders. And we have reauthorized and clarified the law for surety bond guarantees to help small businesses get Government contracts.

While no one would deny the importance that access to capital plays in the success of small businesses, as SBA Administrator Hector Barreto and past SBA administrators have acknowledged time and again, debt is not always the answer. In the SBA's FY 2004 budget request, there is reference to information from the Ewing Marion Kauffman Foundation and Dun & Bradstreet that indicates ``80 percent of new businesses discontinue operation within 5 years because of lack of `knowledge' of key business skills.'' Despite the recognized importance of such assistance, the SBA's funding request for fiscal year 2004 and its legislative proposal to implement that request would freeze funding levels for virtually all agency programs, without even accounting for inflation, for a 6-year period. If enacted, that would severely hamstring this nation's small businesses and their ability to effectively compete and prosper in the national economy. For this reason, Senator Snowe and I took a comprehensive approach to supporting and improving the SBA's entrepreneurial development programs, while rejecting proposals put forth that would undermine their success.

Cuts to or inadequate funding of the SBA's entrepreneurial development programs are often attributed to vague and unfounded claims of duplication. Such claims mistake a common mission of training and counseling for duplication, ignoring the reality that small businesses vary greatly, are often at very different stages of development, and have many different needs. Just as it would be ineffective to only have one type of loan or venture capital financing structure for the 25 million small businesses in this country, it would be futile to water down specialized management and training programs to impose a one-size- fits-all approach.

I want to commend Chair Snowe for giving women entrepreneurs such a prominent place in the reauthorization process. Rarely do women entrepreneurs get the recognition and attention they deserve for their contributions to our economy: Eighteen million Americans would be without jobs today if it were not for these entrepreneurs who had the courage and the vision to strike out on their own. During my tenure as a member, chair, and lead Democrat of the Senate Committee on Small Business and Entrepreneurship, I have worked to increase and improve the opportunities for enterprising entrepreneurial women in a variety of ways, leading to greater earning power, financial independence and asset accumulation--and I am glad that Senator Snowe is joining me in this endeavor.

As Chair Snowe expressed when she introduced the Women's Small Business Programs Improvement Act--and when Senator Snowe and I passed the Women's Business Center's Preservation Act--protecting the extremely effective and well-established Women's Business Center network was a high priority in this reauthorization. For that reason, we make permanent the Women's Business Center Sustainability Pilot Program by creating 3-year ``renewal'' grants for those centers with sustainability grants and 4-year ``initial'' grants for new centers; increase the program's authorization levels; and direct the Office of Women's Business Ownership, OWBO, to make all Women's Business Center grants at $150K and to consult with the associations of Women's Business Centers when making improvements to the program. Other changes to the Women's Business Center Program include streamlining the data collection and the grant application and selection criteria, protecting the privacy of Women's Business Center, WBC, clients, and providing for a smooth transition from sustainability to the newly established WBC program.

Our legislation will not only secure the future of the Women's Business Center Program, but it will connect all SBA-related women's initiatives with a unified mission, similar guidance and training. These changes were coupled with minor, yet significant, changes to the National Women's Business Council, NWBC, and the Interagency Committee on Women's Business Enterprise. Senator Snowe and I included provisions to give the NWBC cosponsorship authority, to allow more flexibility in the way the council uses funds, and to direct the council to serve as a clearinghouse for historical data. Each of these things will enable the council to become a better resource for the administration, Congress and the entire small-business community. Since its inception, the NWBC has provided Congress, the Small Business Administration, and the Interagency Committee on Women's Business Enterprise with independent advice and policy recommendations on issues facing women in business.

In recognition of the council's importance to policy making and women in business, Senator Landrieu offered and the committee adopted an amendment identical to her National Women's Business Council Independence Preservation Act of 2003, which seeks to maintain the bipartisan balance on the NWBC. The structure of the NWBC helps to maintain its independence. It has 15 members. The chair is appointed by the President and must be a prominent business woman. Six members are representatives of women's business organizations, including representatives of women's business center sites, and the remaining eight are members appointed by the SBA administrator based upon recommendations of the chair and ranking members of the Senate Small Business and Entrepreneurship Committee and the House Small Business Committee. Of these eight ``party-affiliated'' members, four come from the same political party as the President and four members who are not from the President's party; all of them must be small business owners. The bipartisan balance in the NWBC's membership helps to ensure that any policy recommendations will reflect the needs of women in business and not the political agenda of one political party over another.

Vacancies on the NWBC are supposed to be filled no later than 30 days after the position becomes open; however, in the past 2 years, the SBA has failed to meet this 30-day statutory deadline. The NWBC Chair was vacant from May 29, 2001, to May 21, 2002, a period of 11 months and 22 days. Of the party-affiliated slots reserved for the President's party, one was vacant for 3 months, two were vacant for a period of 7 months; and one was vacant for 21 months. Two of the seats reserved for members who are not from the President's party were vacant for nearly 2 years, one seat was vacant for 7 months, and the fourth seat remains vacant. At one point during the past 2 years the NWBC had a severe partisan imbalance. There were three Republican members on the NWBC and no Democratic members. The committee is concerned that these vacancies undermine the effectiveness of the NWBC, and that the lack of bipartisan balance will subject any policy positions taken by the NWBC to criticism as being motivated by partisan interests.

Senator Landrieu's amendment, which was approved unanimously by the committee, requires that vacancies in the party-affiliated slots will be filled to maintain a bipartisan balance on the NWBC. The provision also ensures accountability by requiring the administration to report to Congress on vacancies that remain unfilled for more than 30 days. The committee expects the report to cite the reasons for the vacancies, what is causing any delays in filling the positions, whether nominees were available for consideration, at what stage in the vetting process nominees are, whether there are any objections to the nominees and what those objections are, an estimate for when the vacancies will be filled, and any other relevant information relating to the vacancies.

To bolster the representation of women business owners in the Federal Government, our bill re-establishes the Interagency Committee on Women's Business Enterprise, directs the Deputy Administrator of the SBA to serve

as acting chairperson of the Interagency Committee until a chairperson is appointed, establishes a Policy Advisory Group to assist the Committee's chairperson in developing policies and programs under this act and creates three subcommittees similar to those created under the National Women's Business Council.

This bill also supports and protects the Small Business Development Center network, which has served millions of small-business owners since its inception more than 20 years ago. It should also be noted that in 2001, SBDCs helped small businesses create or retain over 80,000 jobs, generate $3.9 billion in sales and obtain $2.7 billion in financing. For every dollar spent on an SBDC, $2.09 in tax revenue was returned to the Federal Government. Numbers aside, the nationwide network of SBDCs provides important counseling services to small- business owners that are unable to afford private consulting, many of whom are women and minority clients. The SBDC program has grown to serve 1.25 million small-business owners and entrepreneurs each year, and there are nearly 1,000 centers serving every State in the Nation.

While this bill rejects the potentially detrimental changes proposed by the SBA to the SBDC network, it does address concerns expressed by the centers and small businesses. Our bill increases authorization levels to keep up with increased demand and a provision to protect the privacy of the program's clients and a provision to help the SBDCs that have been adversely affected by poor economic conditions or government downsizing. Also included is a portability provision proposed by Senator Snowe to provide supplemental assistance to State SBDC networks that have been adversely affected by a military base or industrial site closure which has lead to a loss of jobs and severe economic harm. If implemented correctly, portability has the potential to help States, reeling in the aftermath of a sudden economic change, to provide the necessary small business assistance to quell the economic injury to a particular area.

Also, included in the entrepreneurial development section of our bill is a provision to increase to $7 million annually the authorization level for the Service Corps of Retired Executives, SCORE, which has 10,500 volunteers, and technical change to allow SCORE to keep its modest staff of 14 employees. For more than 38 years, SCORE has been one of the SBA's greatest and most efficient successes. In 2002, SCORE volunteers held over 300,000 counseling sessions and put in nearly 1.4 million volunteer hours. To keep up with an our nonstop national economy, SCORE has dramatically advanced the outreach of its online services to reach clients 24 hours a day, seven days a week. Last year, for $5 million, SCORE volunteers provided small business owners an estimated $170.8 million worth of professional business advice. It is safe to say that in this down economy, SCORE is one investment that will be paying dividends for years to come.

I thank Senator Snowe for working with me to include, as introduced, the Native American Small Business Development Act, which I reintroduced earlier this year together with Senator Johnson and Senator Smith to address the SBA's growing lack of commitment to the Native American community. According to a report released by the U.S. Census Bureau, the ``three year average poverty rate for American Indians and Alaska Natives from 1998-2000 was 25.9 percent; higher than for any other race groups.'' With an unemployment rate well above the national average and household income at just three-quarters of the national average, Native American communities need a commitment from the Federal Government that we will help them, particularly during these difficult economic times. To reaffirm this commitment, the Johnson-Kerry-Smith bill provides Native Americans the resources they need to take advantage of the opportunities of entrepreneurship.

The Native American Small Business Development Act, as included in our reauthorization bill, will ensure that the SBA's programs to assist Native American communities cannot be dissolved by making the SBA's Office of Native American Affairs, ONAA, and its assistant administrator permanent. Our legislation would also create a statutory grant program, known as the Native American Development grant program, to assist Native Americans. It would also establish two pilot programs to try new means of assisting Native American communities and require Native American communities to be consulted regarding the future of the SBA programs designed to assist them. In short, this legislation will ensure that our Native American communities receive the adequate assistance they need to help start and grow small businesses.

Senator Bingaman and I have worked closely to develop a provision for inclusion in a joint managers' amendment to the reported bill, which will expand the Program for Investment in Microentrepreneurs, PRIME, with a separate $2 million authorization to provide direct, in-depth technical assistance and counseling to disadvantaged Native American small business owners. The provision will complement the Native American Business Centers created in the Native American Small Business Development Act by following the PRIME model, which provides technical assistance through microenterprise entities that have extensive experience helping the least experienced entrepreneurs in low-income communities. The rationale for amending the PRIME Act, rather than creating a separate program, is that PRIME is currently operational and simply needs additional funding so it can better address the needs of the Native American entrepreneurial community. The provision follows the existing Small Business Administration's approach and terminology for implementing the PRIME Act to enhance the possibility of economic development through entrepreneurship in Native American communities. The Bingaman provision will strengthen the three-pronged approach the Senator Johnson and I designed in the Native American Small Business Development Act to find a solution to the longterm economic handicap existing in Native American communities nationwide. There are a number of microenterprise organizations in states across the country that are willing and prepared to take on the additional challenge of assisting disadvantaged Native American entrepreneurs, and there are a number of Native American communities that are eager to take a different path to economic development. However, there are currently a limited amount of funds to allow that to happen. I commend Senator Bingaman for his attention to this matter, for his continued support of my small business legislation, and for his foresight and vision for Native Americans in New Mexico and across the country. The Native American communities across our nation will be better off with the assistance that this provision makes possible. Were it not for the persistence of Senator Bingaman, this provision would not be part of SBA's tools to help Native American entrepreneurs. I also want to thank Senator Snowe for working with Senator Bingaman and me to include this provision in the managers' amendment.

To address the growing business development needs of veterans, Senator Snowe and I reauthorized the Advisory Committee on Veterans Affairs, expanded veterans outreach grants from solely serving disabled veterans, to serving all veterans, reservists and service-disabled veterans. Further, we increase the funding for the Office of Veterans Business Development to enable that office to better deal with the demand by veterans for outreach and development services.

Included in a joint Snowe-Kerry amendment, which was unanimously approved at the Committee markup, is a reauthorization of PRIME at $15 million. SBA Administrator Hector Barreto has stated, ``The PRIME program was created to help the smallest of small businesses. These are entrepreneurs at the most basic stage of starting a business and who typically require the greatest amount of committed service and guidance. In order to succeed, they require training and technical assistance that must be accessible.''

PRIME is a powerful investment that provides critical assistance to struggling, distressed communities. It's engineered to help low-income and very low-income families, defined as those at 150 percent of the poverty line or below. A very low-income family of

four earns about $23,000 a year. The International Labor Organizations estimates that the return on investment in microenterprise development through resources like PRIME ranges from $2.06 to $2.72 for every dollar invested. Microenterprise contributes to our national economy through public tax revenues, private income increases, and reduced dependence on public assistance, such as welfare. Small Business Development Centers define a ``client'' as someone who has received two hours of training. On average, however, PRIME organizations spend 10 hours with low-income and very low-income entrepreneurs.

Many often confuse PRIME assistance with the microloan technical assistance. Unlike the microloan program's technical assistance, which is directly tied to helping microentrepreneurs obtain access to capital through microlenders, the PRIME program is designed to help microentrepreneurs who may not be credit-worthy or don't need or want loans, but do need intensive technical assistance.

Currently, there are fewer than 80 organizations with PRIME grants, yet the need for PRIME assistance is now greater than ever. While access to credit is vital for many microentrepreneurs, for low-income individuals, there is a severe gap between being credit-worthy and receiving the technical assistance needed to be successful in business. The PRIME program addresses this gap. for these reason, Senator Snowe and I reauthorized the program for three years. Our bill also moves PRIME's statutory language to the Small Business Act and includes a data collection provision.

We continue to receive reports of the detrimental effects of the Administration's policy of reduced staffing and resources for essential programs aimed at allowing small businesses to thrive. Week after week, the Federal Times reports on the decline in contracts being allocated to small businesses, small businesses losing ground in the Federal marketplace, and most recently, on the awarding of more big contracts with less oversight from Federal agencies. With agencies awarding larger, more complex and more costly contracts with fewer staff performing oversight, this nation's small businesses and its tax payers are the ones shouldering the burden when small business goals continue to be unmet. In addition to helping small businesses obtain access to procurement opportunities, these goals are meant to help the government benefit from the cost-savings and innovations small business contractors can often provide.

Significant improvements to the on-going problem of contact bundling, also called contract consolidation, are included in this bill. One provision included in this legislation that will make a significant impact on small businesses' ability to compete is the method we have adopted to address the ongoing problem of contract bundling. This language is a prime example of the effectiveness of bipartisanship, diligence and compromise. This approach incorporates language from an amendment to the Department of Defense reauthorization offered by Senator Collins and Senator Talent, language from my contract bundling bill, S. 633 and the President's initiative on contract bundling.

The first provision creates a two-tiered threshold in order to prevent unnecessary contract consolidation. Civilian agencies will be required to meet specific standards if they attempt to consolidate contracts above $2 million and $5 million. The Department of Defense is required to meet similar requirements for contracts above $5 million and $7 million. The bill also further expands the definition of contract bundling to include contract consolidation, closing a loophole in the definition that has been widely used and detrimentally affecting small businesses.

The second provision increases in the number of procurement center representatives, PCRs. These representatives advocate on behalf of small businesses in cases directly affecting contracting, such as the bundling or consolidation of contracts. Unfortunately, the number of PCRs has been reduced from over 200 at its peak in the late 1980s to the current level of just 47. In addition to reducing the number of traditional PCRs, the administration has also eliminated the Breakout PCRs, specially trained advocates that analyze highly technical large contracts and ``unbundle'' contracts and break out portions that are appropriate for small businesses. Their responsibilities have been rolled into that of traditional PCRs, even though the number of PCRs continued to decline. Often, the role of commercial marketing representatives, CMRs, was also incorporated into the responsibilities of traditional PCRs. CMRs are responsible for identifying opportunities and developing marketing strategies for small businesses to appeal to large prime contractors. The SBA's attempt to streamline their offices and replace trained individuals with electronic systems has resulted in the disenfranchisement of small businesses and hindered the SBA's ability to maintain a proper level of oversight over Federal contracting.

In the bill, we have increased the number of procurement center representatives to ensure that every State and every major procurement center is allocated a PCR. Meanwhile, we have also ensured that these PCRs are not burdened with responsibilities that were previously the duties of breakout PCRs and commercial marketing representatives. These two improvements will dramatically increase the efficacy and efficiency of all three positions and allow proper review of the approximately 40 percent of Federal contracts, nearly, $90 billion, that are currently not being reviewed by PCRs. This should increase small business's access to Federal contract opportunities.

The bill would also create a reporting requirement for the BusinessLINC program, which has been showing promise in creating real teaming opportunities for small businesses in the private sector. Although the administration recommended elimination of the program, the reports this committee received regarding the overwhelming success of the existing nine programs made it clear that the SBA did not have sufficient information about BusinessLINC to make an informed decision on its effectiveness. The committee's bill would ensure that the SBA offers the proper level of oversight and would foster the continued success of the program. I would like to thank Senator Snowe for working with me to find a compromise to preserve this successful program.

At the Committee's roundtable on non-credit programs and the hearing on contract bundling, the small business community reiterated the need for accountability for small business contracting at the agency level. I applaud Senator Snowe on her efforts to ensure that Federal agencies be held accountable for fully utilizing small businesses and to allow a greater amount of Congressional oversight of the implementation of agency procurement strategies. Provisions within this bill will ensure that the heads of Federal agencies identify a specific portion of their budget request that will be awarded to small businesses in their strategic plan and their annual budget submission to Congress. The bill also gives senior procurement executives and senior program managers additional authority to educate their staff regarding the importance of meeting the government-wide goals for small business utilization and allows for greater accountability in annual performance evaluations. I would like to thank the members of the Senate committee on Government Affairs for working with Senator Snowe and me on these provisions to ensure that agency officials have the authority, as well as the flexibility, to efficiently and effectively meet the goals we have placed before them.

In addition to increasing opportunities for prime contracts, this bill addresses another serious problem: Small businesses have been severely hampered by dishonest practices by some businesses that have prime contracts with the Federal Government and have received preference over other prime contractors due to their superior small business subcontracting plans. Senator Snowe and I have worked closely to address the concerns of small businesses regarding delays in payment, false reporting and the use of ``bait and switch'' tactics by prime contractors.

The bill holds prime contractors responsible for the validity of subcontracting data, requiring the CEO to certify to the accuracy of the subcontracting report under penalty of law. It also expands the penalties for falsifying data included in subcontracting reports to match the $500,000 or 10

years in prison for businesses that falsify their status as a small and disadvantaged business. If one intentionally falsifies data as a part of a subcontracting report to a Federal agency, he is defrauding the United States government and will be punished to the full extent of the law.

During the committee's reauthorization roundtables, we heard numerous accounts of subcontractors receiving late payments or partial payments from their prime contractors. Small firms do not have the luxury of waiting for their payments when they have invested time and money to provide their products and services to the prime contractor. To address this concern, the bill directs the SBA to create a three-year pilot program, which tests the feasibility of direct payment to subcontractors from the Federal agencies that are receiving the contracts and or services.

In 2000, Congress passed legislation to implement a limited competition, set-aside program for women-owned businesses, intended to assist agencies to increase contracting to these firms and help to meet the five percent government-wide goal. The original bill amended the Small Business Act in section 8(m)(4) to require the SBA Administrator to complete a study to identify industries in which women-owned businesses are under-represented and report to Congress. The original study has been completed, but has been delayed by a subsequent study of the original study's ``methodology,'' causing the program to be delayed indefinitely rather than be implemented in 2002, as it should have been. This bill expedites the implementation of the already overdue program by reassigning the responsibility of the study from the SBA to the GAO and giving the Comptroller a deadline of December 31, 2003, to report his findings to Congress.

During this time of economic downturn, we must ensure that long-term strategies of reorganization and restructuring do not have immediate negative impacts on our communities. One example of this is the economic impact on surrounding areas when a military base is closed. The loss of contracts to small businesses, jobs and resources can cripple a community's economy. To reduce the impact on these regions, this bill utilizes a contracting program, called the HUBZone program, intended to target under-served areas and maintain the profitability of the firms located within these areas. This bill will allow military installations that are closed after passage of this legislation to receive HUBZone status. Senator Snowe and I have included a further provision within the managers' amendment of S. 1375, which would limit this special classification for 5 years after the closure of the base. The intent of the immediate qualification of these areas is to allow for a smoother transition of the base to commercial use by encouraging small businesses to relocate to those facilities, through Federal contracting opportunities, and employing the workers in that area. Additional options for assistance for these areas are available through the SBA if these areas do not receive continued economic stability following the expiration of the 5-year HUBZone status.

I want to thank Chair Snowe and her able staff for all of their cooperation over the past several months. I would like to thank the members of the Senate Committees on Armed Services and Government Reform for working closely with me and my staff to ensure that this bill meets the needs of the Federal Government's diverse procurement offices as they work to ensure that the government receives the essential goods and services it requires. I also want to express my gratitude to all the members of the committee for their diligent efforts to improve this legislation and urge them and my other Senate colleagues to support the Small Business Administration 50th Anniversary Reauthorization Act of 2003.

Mr. President, I rise today to seek unanimous consent for the passage of the Small Business Administration 50th Anniversary Reauthorization Act of 2003, S. 1375, a bill to reauthorize the U.S. Small Business Administration, SBA and its programs for the next 3 years, together with a managers' amendment.

As the chair of the Committee on Small Business and Entrepreneurship, I am pleased to report that this legislation passed the Committee on July 10, 2003, by a unanimous vote. It is the product of significant contributions by the members of my committee, and I am grateful for the efforts of the committee's ranking member, Senator Kerry, to make this a truly bipartisan bill.

The challenge for today's SBA is enormous. Each year, there are 3 to 4 million new business start-ups--1 in 25 adult Americans is taking steps to start a business. And, small businesses account for approximately two-thirds of the net new jobs in our country.

We began the reauthorization process this year with a series of hearings, roundtables, and discussions to develop a bill that would improve the SBA programs that provide counseling and training for entrepreneurs--and to improve the SBA's financial assistance and Government procurement programs that enable small businesses to prosper and expand. While the particulars of this bill are extensive, let me highlight a few of its key areas.

In terms of financing programs for small businesses, I have focused extensively on improving the credit and venture capital resources that the SBA provides for small businesses. These programs are the centerpiece of the SBA's efforts to help entrepreneurs get started and assist small businesses to prosper. In fact, in just the past 3 years alone, the SBA's lending programs made it possible for small businesses to create or retain more than 1.3 million jobs.

Nevertheless, access to capital continues to rank as a primary concern for small business owners. So, we are proposing to continue the growth of the financing programs through reasonable increases in the authorization levels of the 7(a), 504 and Microloan programs. The bill also increases the amount that small businesses can borrow subject to the SBA's guarantee, so that the SBA's loan sizes realistically reflect what it costs to start and operate a small business in today's economy. Moreover, the bill addresses access to capital by helping SBA's lending partners--for instance, through the new National Preferred Lenders Pilot Program.

In the area of entrepreneurial development, we set out to ensure that the SBA's programs continue to provide the products and services essential to small businesses. Recognizing the tremendous accomplishments by women entrepreneurs, I have included the Women's Small Business Improvement Act of 2003, which I introduced earlier this year, to integrate and better leverage the spectrum of women's business programs that the SBA provides for women entrepreneurs.

A cornerstone of these improvements involves making the Women's Business Center Program a permanent program that will offer opportunities for the creation of new centers and renewal grants for existing centers on a competitive basis. By replacing the pilot Sustainability Program, which expires at the end of the current fiscal year, with a fair and balanced grant program, the bill will correct the funding constraints that have plagued the program in 2003.

In addition, the SBA's entrepreneurial development partners--the Small Business Development Centers and the Service Corps of Retired Executives--continue to provide quality training and free counseling through almost 2,000 locations. As a result, in addition to minor technical changes in these programs, the bill reauthorizes these critical programs for the next three years.

Finally, one of the most serious problems facing small businesses is their inability to participate fully in Federal contracts, on either a prime or subcontract basis. In the last 10 years, contract bundling has forced more than 50 percent of small businesses out of the Federal marketplace. The bill addresses the practice of Federal contract bundling by changing the definition of ``contract bundling'' to limit its use so that small businesses have better access to Federal contracts and a fair opportunity to compete for them.

Furthermore, the bill implements the Procurement Program for Women- owned Small Business Concerns, which will give contracting officers the tools necessary to help women-owned small businesses compete in the Federal marketplace more effectively. The bill also contains improvements to the HUBZone program, including the designation of a closed military base as a HUBZone for 5 years to reduce the serious consequences that military base closings pose for our local communities.

With this bill, I am offering a managers' amendment, which is co- sponsored by Senator Kerry, to address several issues that have risen since the

committee's markup of the bill. In working with several of my colleagues, on and off of the Small Business Committee, I believe the changes encompassed in this amendment address certain concerns and strengthen particular aspects of the bill so that it provides the greatest benefit to small businesses and entrepreneurs in this country. Let me highlight several of these changes.

First, the amendment removes section 265, which would have authorized the SBA to develop and implement an innovative 3-year pilot program in which the SBA would provide a partial guarantee on pools of securitized small business loans that are not otherwise guaranteed by the SBA.

When the President's Fiscal Year 2004 budget request was transmitted to the Congress this past February, it stated that the SBA was exploring a possible new approach to expand the opportunities of small businesses to access capital markets by facilitating the securitization of conventional small business loans that were not already guaranteed by the SBA. Increasing access to capital is a high priority of small businesses, and has been one of the Committee's priorities throughout its history. We are always seeking innovative ways to increase access to capital for small businesses, while at the same time measuring the cost and risk of loss that the Federal Government must incur to facilitate such financing. Accordingly, I recognized the potential benefits of this proposal for small businesses across the Nation.

At our roundtable on April 30, 2003, the committee examined the loan- pooling proposal in greater detail. The SBA reported that it had been exploring this type of program for some time, and thought the idea had considerable merit. The agency, however, was uncertain if it had the authority to develop and implement such a program, absent legislative authorization. After the roundtable, we consulted with the SBA and with participants in the small business financing industry to determine the program's appropriate elements.

In addition to the support the SBA expressed for the proposal in its budget request, at the committee's roundtable, and in subsequent discussions with committee staff, the SBA took other steps to help make the proposal a success. For example, the agency entered into a contract with Dun & Bradstreet and with Fair, Isaacs, Co., to create a credit- scoring model for small businesses, similar to individual consumer credit scores, to help small businesses gauge their credit quality. The scoring model will assist the pooling proposal by providing uniformity of pricing, thus reducing a primary obstacle to the securitization of non-SBA small business loans. The SBA also helped build support for the proposal by publicizing the need to take the foundational steps to build a secondary market for small business loans, rather than later trying to create such a market in one step when economic pressures called for an immediate response.

The SBA is not alone in its support for a program to securitize small business loans. The Board of Governors of the Federal Reserve System, in its September 2002 Report to the Congress on the Availability of Credit to Small Businesses, stated that the securitization of small business loans could ``substantially influence the availability of credit'' to small businesses. The Federal Reserve noted that one primary benefit of a secondary market would be that small business borrowers could enjoy lower financing costs. In addition to the Federal Reserve report, other studies have shown that small businesses could benefit from an efficient secondary market for small business loans.

The Federal Reserve report noted that a primary obstacle to a wide- spread secondary market for small business loans was the lack of standardized information to evaluate small business loans for re-sale. As noted, the SBA has exercised foresight by securing the contract with Dun & Bradstreet and Fair, Isaacs to attack this problem. With the information provided by this new credit-scoring model, the securitization of non-SBA small business loans will be far more feasible.

The committee has received support for the pilot program from representatives of thousands of small businesses that believe the program could improve access to capital, and could improve the terms of loans received, for many small businesses, particularly those without significant real estate property to use as collateral. Significant support for the program has been expressed particularly by small businesses that are owned by minorities or by women. For these small businesses, which often have less real estate collateral, on average, than other small businesses, the pilot program holds great potential for creating capital resources to meet their financing needs.

Financial firms currently involved in the pooling and securitization of SBA 7(a) and 504 loans have also expressed their support for the program, and have stated their belief that it will increase small businesses' access to effective capital.

With this input from the SBA, small businesses, and financial firms in hand, and having considered many studies regarding small business credit and the effectiveness of secondary markets, we included Section 265 in S. 1375, which was approved unanimously by the committee. Section 265 authorized, but did not require, the SBA to develop the pilot program if the SBA determined that it could be practically implemented.

The rationale for this proposal is to increase effective liquidity for small businesses by improving the quality and amount of loans available to them. The pooling structure is based on similar arrangements for home mortgages, credit card loans, and car loans, which have active secondary markets. This program would allow lenders, including community banks, to benefit from the increased liquidity of small business loans and to utilize capital that is otherwise locked into existing loans, and therefore provide better terms on loans to small businesses, as well as to make more small business loans.

This proposal, as embodied in Section 265, is not a departure from the SBA's current practice of guaranteeing loans and regulating the securitization of those loans. The SBA already regulates the securitization of both guaranteed portions of loans provided to small businesses and non-guaranteed portions of the same loans. These loans are made both by Federally-regulated lenders and by lenders that are not Federally regulated. In Fiscal Year 2002, the SBA regulated the securitization of $3.4 billion in Government-guaranteed small business loans made under Section 7(a) of the Small Business Act. When the guaranteed portions of the 7(a) loans are securitized separately from the non-guaranteed portions, the SBA is guaranteeing 100 percent of the loan pools.

The new proposal presents a much more measured SBA involvement than is involved with the SBA's current financing programs. Under the pilot program, financial firms approved by the SBA would pool loans not individually guaranteed by the SBA. These pooling entities would then issue securities offering returns based upon the returns from the loans in the pool. The securities would be rated by a rating agency and sold to investors.

The pooling entity would also offer a partial ``first-loss'' guarantee to investors on the securities' returns. If the loans had insufficient returns to pay the expected returns on the securities, the pooling entity's guarantee would be the first guarantee called into performance to pay investors. The SBA would issue partial, not complete, ``second loss'' guarantees on the return from the securities, but not on individual loans within the pool. The agency's guarantees would thus be available only after the first-loss guarantees offered by the pool issuers are exhausted. In addition, the SBA will only need to provide guarantees at a much lower percentage level than is currently the case for the SBA's guarantees on individual loans. Finally, and perhaps most importantly, the cost of the SBA guarantees will be fully funded by fees paid by the loan poolers, so no Federal appropriations will be necessary.

The proposed program also requires three separate types of reports. The SBA must provide to the committee and to the Committee on Small Business of the House of Representatives a report detailing the pooling program before it is implemented, and wait 50 days after submitting the report before implementing the program. In addition, the SBA must file with the Congress, in the SBA's Budget Request and

Performance Plan, an annual report about the program's performance. Finally, the GAO is required to study the program, if implemented, and report on the program's performance, including any effects the program may have on the 504 or 7(a) programs, before calendar year 2006.

Working with Senator Pryor and with other colleagues, both on and off the committee, we endeavored to provide greater specificity in the instructions the provision gives the SBA regarding the pilot program, so as to ensure that the pooling proposal provides the greatest benefit to small businesses in need of capital while limiting risk to the Federal Government. I believe those modifications would have greatly improved the pilot program and increased its potential to provide increased access to capital on terms that are beneficial to small businesses.

Access to credit for small businesses is often a challenge, and the committee has consistently believed that encouraging more lending to small businesses that have a likelihood to succeed, grow, and create new jobs is a sound national policy. The pilot program takes advantage of the successful example of the prior securizations of SBA small business loans, and of changes in the investment community, to facilitate lending in the small business community for years to come.

However, while I continue to recognize the merits of this measure and believe that it should be included in this bill, the administration has now taken a contrary position. In the interest of expediting the passage of S. 1375 before the SBA's current authorizing legislation expires, I am reluctantly removing this provision to focus on those elements of the bill that must be enacted.

While I am disappointed to have to remove this section, it is clear that this bill must move forward as quickly as possible. I want to be clear, however, that I continue to appreciate the benefits of this pilot program, and will introduce this provision as a separate bill in the near future. With the support this proposal already has, I am confident we can implement this innovative program, and I look forward to the benefits it can provide for small businesses as we try to assist small businesses to prosper, create more jobs, and pull the economy out of its current doldrums.

The amendment also modifies the provisions of the bill relating to the New Markets Venture Capital Program and the definition of ``low- income geographic area,'' in which New Markets Venture Capital companies are to invest most of their funds. In order to coordinate the definition of ``low-income geographic area'' used in the SBA's New Markets Venture Capital Program and that used for the New Markets Tax Credit under the tax code, the managers' amendment specifies that the Small Business Act's definition will be based on median family income, rather than median household income as under current law.

This change will eliminate confusion that has resulted from the use of different definitions for two related programs. More importantly, by significantly broadening the definition of those areas in which investment is permitted under the New Markets Venture Capital program, this change will increase the flexibility that New Markets Venture Capital companies have in choosing small businesses in which to invest. As a result, we should see stronger New Markets Venture Capital companies and more small businesses being served through this venture capital program.

The third part of the managers' amendment modifies several provisions in the bill relating to government contracting opportunities for small businesses. In 1994, Congress enacted the Federal Acquisition Streamlining Act, FASA, to streamline Federal procurement processes. FASA included an amendment to the Small Business Act that created an exclusive reservation for small businesses consisting of contracts valued at more than $2,500 but not more than $100,000. And, while it had the chance to classify purchases under multiple-award schedule contracts, including Federal Supply Schedule, within this reserve at that time, the Congress expressly excluded these sales from small business set-aside rules. Accordingly, rules on small business set- asides do not apply to Federal Supply Schedule purchases, and, instead, contracting officers are required to give a ``preference'' to small businesses.

Although reports now indicate that the level of small business participation on schedule contracts is growing and is relatively higher than the share small businesses receive on non-schedule contracts, small businesses continue to report to the committee that they invest time and money to negotiate a schedule contract successfully with the General Services Administration or an executive agent managing a Government-wide Acquisition Contract, and then they never receive the benefit of an order placed against that contract. Small businesses further report that the Government relies on a limited and preferred list of larger firms to meet its requirements for goods and services.

Small businesses deserve to have a fair opportunity to compete for those orders. The Small Business Administration 50th Anniversary Reauthorization Act would protect small businesses and ensure that they continue to have access to, and the opportunity to compete for, multiple-award and schedule purchases. Specifically, the bill restricts competition of schedule orders valued between $2,500 and $100,000 for small businesses.

I know that some of my colleagues believe that by setting aside schedule orders under $100,000, thousands of small firms that supply and sell through contracts held by large firms may significantly be harmed. They also question the need for action if small businesses are successfully competing for and winning schedule orders each day. Finally, they assert that scheduled contracts are a faster, easier, more flexible way for agencies to meet their needs and any change that reduces that ease should be challenged.

In my view, if small businesses enjoy a majority share of schedule contracts--which they do--should not their participation in these contracts reflect their representation on the supply schedule? Currently, small businesses represent more than 70 percent of the companies listed on the Federal Supply Schedule, yet these small businesses are receiving just under 30 percent of the awards under the schedule.

The intent of multiple-award contacting was not to have a majority of orders awarded on a sole-source basis. Rather, it was designed to be a streamlined acquisition process to achieve competition without increasing the government's risk. Including small business helps to ensure the Federal Government is getting the best products and services at the best prices.

Nevertheless, in order to ensure the timely passage of this important reauthorization legislation, I have agreed to modify the bill's provision that would have allowed small business set-asides of awards on multiple-award contracts, to require, instead, that contracting officers review the offers of at least two small businesses when completing orders on multiple-award contacts. While I had hoped to provide stronger provisions for small businesses seeking to contract with the Federal Government, I believe this compromise will still lead to greater procurement opportunities for small enterprises.

This modification anticipates that a contracting officer will give serious consideration to small businesses seeking to provide goods and services to the Federal Government. As an example, when placing orders for supplies with contractors on the General Services Administration's Federal Supply Schedule, contracting officers should consider the information available on the GSA Advantage on-line shopping service or other catalogs and price lists of at least two small business multiple- award-schedule contractors that provide the supplies that are being purchased.

Placing orders for services, however, may be more complex at times. In these instances, contracting officers purchasing from Government- wide acquisition contacts, multi-agency contracts, or the Federal Supply Schedule should include at least two small businesses when they solicit offers. These actions will ensure that small business multiple- award contractors have a fair opportunity to be considered for orders.

To ensure the necessary steps are taken to establish clear guidance and that agencies follow these established procedures to implement this compromise, my committee will closely

monitor competition and small business participation on multiple-award contracts. Specifically, the amendment mandates the U.S. General Accounting Office, GAO, to report bi-annually to the Committees on Small Business on the number of actions and dollars awarded to small business under multiple-award contracts and help to achieve the level of competition in Federal contracting that Congress envisioned. In addition, the existing provisions in the bill require the GAO to conduct periodic reviews of small business participation in multiple- award contracts, which will help Congress to ensure these provisions are implemented appropriately.

Responding to additional concerns raised by my colleagues, the managers' amendment withdraws language that references the authority of agencies to withhold a portion of a performance-related bonus awarded to procurement officials for failure to achieve small business goals.

The committee believes measures that hold agency officials accountable for their performance will drive results. Therefore, language in the bill, as reported, would have held agency procurement officials accountable for small business goals. It directed agencies to include in the annual performance evaluation for agency procurement officials a factor that measures the success of that official in small business utilization.

It further required agencies to factor the performance of procurement officials in achieving these small business goals into any monetary rewards under consideration. In order to avoid delaying the entire bill for this provision, I have reluctantly agreed to withdraw this latter provision. Nevertheless, my committee will continue to monitor the extent to which agencies are meeting their small business goals and look for every opportunity to hold failing agencies accountable to our small business constituency.

With respect to subcontracting opportunities, once a contract that contains a small business subcontracting plan has been awarded by a Federal agency, the prime contractor is required to submit reports periodically to the Government that include information on the prime contractor's achievement of its subcontracting goals and the dollars awarded to small business subcontractors. While the U.S. General Accounting Office indicates that most contractors that the GAO reviewed make good faith efforts to comply with their subcontracting plans, small businesses report to my committee that not only do prime contractors fail to comply with subcontracting plans, but they also fail to submit complete and accurate subcontracting reports. Therefore, this managers' amendment contains a technical correction to clarify that the company president or the head of the entity must certify that data contained in subcontracting compliance evaluation reports provided to the government is accurate and complete.

In addition, under current language in the bill, a contracting officer must first consider ``all reasonable issues regarding the subcontractor's performance, or lack of performance, before making a determination that the prime contractor failed in its responsibility to timely pay a small business subcontractor.'' Some of my colleagues, however, have raised concerns that this language limits the contracting officer's discretion to issues regarding only the performance of the subcontractor, and that other issues that might legitimately cause non- payment, such as disputes over off-sets, could not be considered. That was never the intent of the bill reported by the committee.

In light of these concerns, the managers' amendment modifies the language to ensure that a contracting officer can consider ``all reasonable issues regarding the circumstances surrounding the failure to make timely payment to a small business subcontractor'' before making a determination to make a direct payment to the subcontractor under a pilot program to test direct payments to small business contractors.

The committee also recognizes the economic ramifications that military base closures can have on our local communities and economies. We believe the SBA's Historically Underutilized Business Zone, HUBZone, program can harness the strength and the creativity of the small business sector by providing these firms with incentives to relocate to areas suffering from the effects of a military base closure. Therefore, we included language in the bill to designate base closure areas as HUBZones, and the managers' amendment clarifies that such designation will apply to military bases closed after the date of enactment for a period of 5 years in order to attract small businesses to areas affected by base closure where there are customers and a skilled workforce. The committee believes that new business and new jobs created through HUBZone small businesses means new life for areas affected by base closure.

Lastly, our colleague from New Mexico, Senator Bingaman, has requested an adjustment to the Program for Investment in Microentrepreneurs, PRIME, which the bill reauthorizes for 3 years. To accommodate this request, the managers' amendment authorizes $2 million under the PRIME program to be spent to provide grants to intermediaries to assist disadvantaged Native American entrepreneurs. This modification enhances the bill's provisions that encourage Native American-owned businesses and new Native American entrepreneurs.

Mr. President, I will close by noting that this is one of the most expansive SBA reauthorization bills in the 50-year history of the agency. The SBA estimates that reauthorizing the agency will result in 3.3 million jobs over the next 5 years, with the SBA and its programs predicted to support over 1 million jobs over that same period through prime contracts and subcontracts.

This bill is based on the deliberative, methodical, and systematic approach that this committee has taken to review the spectrum of SBA programs, building on those that are working and fixing those that are not. How can we do anything less for the economic engine of our economy--small business--which holds the greatest hope for this country's recovery from the current economic doldrums?

I urge my colleagues to support this important legislation.

(At the request of Mr. Daschle, the following statement was ordered to be printed in the Record.)

I thank the Senator for her generous comments, and I appreciate her work on the Committee. She added an excellent amendment to the bill to ensure that the National Women's Business Council maintains a bipartisan balance. I thank her for supporting this bill.

I am also a strong supporter of the HUBZone program. Today there are more than 8,300 HUBZone small businesses that helped to create more than 30,000 jobs in the last 2 years. In our reauthorization bill, the committee has made some minor changes to strengthen the program. One of these changes would ensure that communities affected by military base closures would receive temporary HUBZone eligibility, preventing a significant economic downturn. The bill also allows HUBZone companies to receive up to 15 percent investment from outside organizations, allowing them to raise capital, expand their business and create even more jobs.

I thank the Senator for bringing this to my attention. I am happy to work with the Senator on this issue. I thank the Senator from Louisiana for her support of this legislation.

I agree with the Senator that attracting new air service and retaining current service to small communities is a critical economic issue. I am also familiar with the GAO report to which he refers, since Senator Wyden and I were two of the three Senate requesters of that report, together with our colleague on the Aviation Subcommittee, Senator Rockefeller.

I share the Senator's view that it is critical to explore, support and promote alternative approaches for meeting the transportation needs of small and rural communities. This includes ensuring that Federal agencies take the appropriate action to provide financial assistance to small business franchisees interested in helping communities improve transportation services.

As chair of the Small Business Committee, I am concerned by any interpretation of the Small Business Act that unnecessarily inhibits access to SBA programs and services by eligible small businesses. This interpretation not only affects the ability of small businesses to receive financial assistance under the 7(a) loan program but also to bid on Federal contracts set aside for small businesses. As the economy struggles to recover, it is critical that we get back to business--an investment in small business is an investment in jobs.

As we work with our colleagues on the House Small Business Committee to reauthorize the SBA's programs and services, we will carefully consider provisions to address this issue and work with the SBA to find an agreeable solution.

Mr. President, I rise to introduce legislation to authorize the distribution of judgment funds to eligible tribal members of the Gila River Indian Community in Arizona. Identical legislation unanimously passed the Senate last year, but was not able to be considered by the House of Representatives prior to the adjournment of the 107th Congress.

The Gila River Indian Community Judgment Fund Distribution Act resolves two half-century old claims by the Gila River tribe against the United States for failure to meet Federal obligations to protect the community's use of water from the Gila River and Salt River in Arizona. The original complaint was filed before the Indian Claims Commission on August 8, 1951. In 1982, the United States Court of Claims confirmed liability of the United States to the community, and recently the settlement of these two claims was determined to be 7 million.

So much time has passed that the Indian Claims Commission formerly in charge of fund distributions no longer exists. However, a debt does not disappear. The judgment award has since been transferred from the Indian Claims Commission to a trust account on behalf of the community, managed by the Office of Trust Management at the Department of the Interior.

This judgment award was certified by the Treasury Department on October 6, 1999 for the final portion of the litigation to the two remaining dockets of the Gila River Indian Community. Since that time, the community has been working with the BIA in an attempt to finalize a use and distribution plan to submit to Congress for approval. As outlined in its plan, the community has decided to distribute the judgment award equally to eligible tribal members.

The purpose of this legislation is to comply with Federal regulations which requires congressional approval for distribution of judgment funds to tribal members. The terms of the legislation reflect an agreement by all parties for a distribution plan for final approval by the Congress. As part of this legislation, the BIA is also seeking to resolve remaining expert assistance loans by the Gila River Indian Community, the Oglala Sioux Tribe, and the Seminole Tribe of Florida, as originally authorized by the Indian Claims Commission.

Members of the Gila River Indian Community have waited half a century for final resolution of all their legal claims regarding this matter. After considerable delay, it is only fair to resolve this matter and provide compensation as soon as possible. I hope that my colleagues will act quickly to move this legislation through the process.

Mr. President, I am pleased to introduce legislation to continue Federal support for the U.S. Institute for Environmental Conflict Resolution. This legislation is identical to legislation which passed the Senate unanimously in September of last year.

The Congress enacted legislation to establish the U.S. Institute for Environmental Conflict Resolution in 1998, with the purpose of offering an alternative to litigation for parties in dispute over environmental conflicts. As we know, many environmental conflicts often result in lengthy and costly court proceedings and may take years to resolve. In cases involving Federal Government agencies, the costs for court proceeding are usually paid for by taxpayers. While litigation is still a recourse to resolve disputes, the Congress recognized the need for alternatives, such as mediation and facilitated collaboration, to address the rising number of environmental conflicts that have clogged Federal courts, executive agencies, and the Congress.

The Institute was placed at the Morris K. Udall Foundation in recognition of former Representative Morris K. Udall from Arizona and his exceptional environmental record, as well as his unusual ability to build a consensus amoung fractious and even hostile interests. The Institute was established as an experiment with the idea that hidden within fractured environmental debates lay the seeds for many agreements, an approach applied by Mo Udall with unsurpassed ability.

The success of the Institute is far greater than we could have imagined. The Institute began operations in 1999 and has already provided assistance to parties in more than 100 environmental conflicts across 30 states.

Agencies from the Environmental Protection Agency, the Departments of Interior and Agriculture, the U.S. Navy, the Army Corps of Engineers, the Federal Highway Administration, the Federal Energy Regulatory Commission, and others have all called upon the Institute for assistance. Even the Federal courts are referring cases to the Institute for mediation, including such high profile cases as the management of endangered salmon throughout the Columbia River Basin in the Northwest.

The Institution also assisted in facilitating interagency temawork for the Everglades Task Force which oversees the South Everglades Restoration Project. The U.S. Forest Service requested assistance to bring ranchers and environmental advocates in the southwest to work on grazing and environmental compliance issues. Even members of Congress have sought the Institute's assistance to review implementation of the Nation's fundamental environmental law, the National Environmental Policy Act, to assess how it can be improved using collaborative processes.

The Institute accomplishes its work by maintaining a national roster of 180 environmental mediators and facilitators located in 39 states. We believe that mediators should be involved in the geographic area of the dispute whenever possible and that system is working.

The demand on the Institute's assistance had been much greater than anticipated. At the time the Institute was created, we did not anticipate the magnitude of the role it would serve to the Federal Government. The Institute has served as a mediator between agencies and as an advisor to agency dispute resolution efforts involving overlapping or competing jurisdictions and mandates, developing long- term solutions, training personnel in consensus-building efforts, and designing international systems for preventing or resolving disputes.

Unfortunately, experience has also taught us that most Federal agencies are limited from participating because of inadequate funds to pay for mediation services. This legislation will authorize a participation fund to be used to support meaningful participation of parties to Federal environmental disputes. The participation fund will provide matching funds to stakeholders who cannot otherwise afford mediation fees or costs of providing technical assistance.

In addition to creating this new participation fund, this legislation simply extends the authorization for the Institute for an additional five years with a modest increase in its operation budget. The proposed increase is in response to the overwhelming demand on the Institute's services, an investment that will ultimately benefit taxpayers by preventing costly litigation.

I hope that we can consider this legislation expeditiously to ensure continuing support for the valuable services of the U.S. Institute for Environmental Conflict Resolution to our Nation.

Mr. President, I am reintroducing legislation today to authorize the Secretary of the Interior to conduct a special resource study of sites associated with the life of Cesar Estrada Chavez. Chavez is one of the most revered public servants in our history for his leadership in helping organize migrant farm workers, and for providing inspiration to those most oppressed in our society. He is an exemplary American hero. It is important that we honor his struggle and do what we can to preserve certain sites located in Arizona, California and other States that are significant to his life.

Cesar Chavez, a fellow Arizonan born in Yuma, was the son of migrant farm workers. He no doubt loved qualities of life associated with his family's Hispanic heritage, but he will be remembered for the sincerity of his American patriotism. He fought to help Americans transcend distinctions of experience, and share equally in the rights and responsibilities of freedom. He made America a bigger and better nation.

While Chavez and his family migrated across the southwest looking for farm work, he evolved into a defender to worker's rights. He founded the National Farm Workers Association in 1962, which latter became the United Farm Workers of America. Essentially, he gave a voice to those that had no voice. In his words: ``We cannot seek achievement for ourselves and forget about progress and prosperity for our community. . .our ambitions must be broad enough to include the aspirations and needs of others, for their sakes and for our own.''

I introduced this legislation last October and received an overwhelming positive response, not only from my constituents in Arizona, but from Americans all across the nation. Similar legislation was introduced by Congresswoman Hilda Solis, D-CA, in September 2001. The bill specifically authorizes the Secretary of the Interior to determine whether any of the sites meet the criteria for being listed on the National Register of Historic Landmarks. The study would be conducted within three years. The goal of this legislation is to establish a foundation for a future bill that will designate land for these sites to become historic landmarks.

Cesar Chavez was a humble man of deep conviction who understood what it meant to serve and sacrifice for others. He was a true American hero who

embodied the values of justice and freedom this nation holds dear. Honoring the places of his life will enable his legacy to inspire and serve as an example for our future leaders.

I ask unanimous consent that the text of the bill and a letter of support from the Cesar E. Chavez Foundation be printed in the Record.

Mr. President, today I am proposing bipartisan legislation to provide the basis for reform of the administration and management of the assets and funds held by the United States in trust for federally recognized Indian tribes and individual Indians. I am pleased that my two colleagues from South Dakota, Senators Daschle and Johnson, are once again joining me in this effort.

Last year, we introduced a similar bill to serve as a legislative vehicle in the event a consensus agreement could be reached during an extensive dialogue between a designated tribal task force and the U.S. Department of Interior on administrative and legislative reforms to federal management of trust funds and assets. Unfortunately, the dialogue resulted in a stalemate. While we received many favorable comments to move forward with this legislation, and conducted a full committee hearing to consider it, a sufficient consensus did not exist to approve the legislation prior to the adjournment of the 107th session.

We are reintroducing this legislation again because we believe it is important to continue to offer a legislative remedy to the management problems plaguing the Interior Department and instill a meaningful role for Indian tribes in the process. Indian trust funds management continues to be mired in controversy and systemic mismanagement. Native American beneficiaries

continue to be denied a full reconciliation of money rightfully belonging to them.

The history of Indian trust funds management is long, exhaustive and fraught with controversy. It is a problem inherited by successive Administrations yet only limited progress has been made. The major structural changes called for in the 1994 American Indian Trust Fund Management Reform Act have not been accomplished. Two Special Trustees have resigned in frustration and high-level government officials have twice been held in civil contempt by the U.S. District Court in Washington, D.C. for breach of fiduciary duties.

No one is more frustrated about the lack of resolution to these long- standing problems than the Native American beneficiaries. However, recent reorganization plans submitted to the Court by the Interior Department earlier this month have only raised more controversy and concern among Indian tribes and beneficiaries as to the extent the Department will fully account for lost and mismanaged trust accounts. Significant questions have also been raised as to the impact of these proposed plans on long-standing Federal policies of self-determination and the function of the Bureau of Indian Affairs.

I cannot speak as to the merits of the Department's recent plans. The fact is, many in the Congress were not notified of the Department's intended actions nor has there been an opportunity to evaluate these plans through the respective legislative committees of jurisdiction. I have sought a commitment from the incoming Chairman of the Senate Committee on Indian Affairs, Senator Ben Nighthorse Campbell, to hold hearings as soon as possible on recent Department proposals that will restructure trust funds management as well as to consider legislative proposals such as the one we're proposing today.

The purpose of this legislation we are introducing is simple. It focuses on two primary changes to the 1994 American Indian Trust Fund Management Reform Act, the underlying law governing Indian trust funds management. First, it creates a single line-of-authority in the Interior Department by establishing a Deputy Secretary for Trust Management and Reform; and second, the bill strengthens provisions for Indian tribes and beneficiaries to directly manage or co-manage with the Interior secretary trust funds and assets, based on successful self-determination policies.

A fundamental objective of this legislation is to raise the profile of Indian trust funds management within the Interior Department and provide a statutory basis for Indian tribes to assume a greater management role in future management of their trust funds and trust assets. The structure of this legislation is similar to the bill introduced last year, but it is modified to reflect comments received from Indian tribes.

The legislation affirms the fiduciary standards to be applied to the management of Indian trust funds and assets. The Office of Special Trustee is abolished and replaced with the Office of Trust Reform under the direction of a new Deputy Secretary. The existing Advisory Committee to the Special Trustee is replaced with a Task Force composed of representatives of the tribes and the Department who will work with the new Deputy Secretary to develop appropriate standards and further necessary changes.

Senator Daschle, Senator Johnson and I introduce this legislation as a demonstration of our continuing commitment to seek a real and meaningful trust reform solution that provides an active role for tribal participation and consultation. We hope this legislation will prompt the necessary dialogue to ensure reform to Indian trust funds and trust assets management in a way that increases accountability of the Interior Department and respects the fact that the tribes must be involved as active participants without the threat of termination of the trust responsibility.

I ask unanimous consent that the text of the bill be printed in the Record.

Mr. President, today I join Senators Boxer, Chafee, and others to introduce The Toxic Clean Up and Polluter Pays Renewal Act for. For more than 20 years, the polluter pays principle has been a cornerstone of environmental policy. The Superfund toxic waste cleanup program, based on that principle, has made it possible to clean up hundreds of toxic waste dumps across the country, and has led to better management of industrial pollution and waste.

The polluter pays principle is now under attack. Last year, the Bush administration announced that it would not seek reauthorization of the taxes levied on oil and chemical companies that go into the Superfund trust fund, which is used to pay for cleanup of toxic waste sites.

The Superfund program established three ways to pay for the cost of cleanups: 1) the company or individual responsible for creating the site pays for its cleanup; 2) the Environmental Protection Agency performs the cleanups and recoups the costs from the responsible party or parties; and 3) for those ``orphan'' sites where no responsible party can be found, or the party is insolvent or no longer in business, the cleanup is paid for out of the trust fund.

The Superfund trust fund was created primarily with revenue from a corporate environmental income tax and excise taxes on petroleum and certain chemicals. The trust fund received about $1.5 billion per year before the legislative authority to collect the taxes expired at the end of 1995. The trust fund is expected to run out of money in 2004, having dwindled from a high of $3.8 billion in 1996 to $28 million this year.

There are 1,234 sites on the EPA national priority list of toxic waste sites that need to be cleaned up. One in four Americans live within 4 miles of a Superfund site. These sites contain hazardous pollutants like arsenic, cyanide, and agent orange. Last year, EPA Administrator Christine Whitman told Congress that 75 sites on the national priority list would be cleaned up in 2001 and 65 sites would be cleaned up in 2002. The Bush administration then revised its plan, requiring that only 47 site cleanups be completed in 2001 and 42 in 2002. For 2003, the Bush administration has proposed to further decrease cleanups. On October 25, 2002, the EPA Inspector General found that the Bush administration has cut funding at 55 Superfund sites in 25 states for which regional officials had requested cleanup. For Fiscal Year 2002, EPA regional officials requested $510 million to clean up waste sites. In response, EPA headquarters obligated only $280 million, resulting in a shortfall of $229 million, or 45 percent.

The program is insufficiently funded to allow sites that are already scheduled to be cleaned up to move forward. This results in increased risks to human health and the environment and increased cleanup costs in the long term. Reinstating the Superfund fee would restore a source of funding to the program at a time when the backlog of sites requires more resources if the program is to be successful. The Bush administration is the first administration since Superfund was enacted in 1980 to oppose reinstating this tax on polluters--a policy that either halts cleanup efforts or shifts the cost to rank-and-file taxpayers. Either result is unacceptable.

The administration's plan to cut the Superfund program would seriously compromise the health of our communities and amount to an enormous windfall for the oil and chemical industries. Funding is the key to cleaning up these sites and protecting communities from harm. The ``polluter pays'' principle has worked well over the last two decades, and the financial burden should not be shifted from polluters to average taxpayers. The administration should change course and find ways to restore the ``polluter pays'' principle to the program and aggressively fund cleanups at contaminated sites.

Mr. President, today I am joining with Senators John McCain and Tim Johnson in reintroducing legislation that will focus attention on the need to address and correct the longstanding problem of mismanagement of the assets and funds held by the United States in trust for federally-recognized Indian tribes and individual American Indians.

This is a problem that has festered for far too long outside the spotlight of public recognition. And it is a problem that is undermining urgently needed efforts to improve the quality of life in Indian Country.

Indian Country has faced many challenges over the years. Few, however, have been more important, or more vexing, than that of restoring integrity to trust fund management.

For over a hundred years, the Department of Interior has managed a trust fund funded with the proceeds of leasing of oil, gas, land and mineral rights for the benefit of Indian people. Today, the trust fund may owe as much as $10 billion to as many as 500,000 Indians.

To provide some perspective, the 16 tribes of the Great Plains in South Dakota, North Dakota and Nebraska comprise 10 million acres of trust lands representing over one-third of the tribal trust assets. Many enrolled members of the nine South Dakota tribes have individual trust accounts.

How these trust funds have been and will be managed is being litigated in Cobell v. Norton, and the resolution of this lawsuit will have far-reaching implications throughout Indian Country. It is foolhardly not to evaluate potential solutions in the context of this lawsuit.

There is clear consensus in Indian Country that the current administration of the trust fund is a failure. The daunting question has always been how to reform it.

In November 2001, the Secretary of the Interior unveiled her controversial plan to reorganize the Bureau of Indian Affairs, BIA, and segregate the oversight and accounting of trust-related assets in a new Bureau of Indian Trust Asset Management, BITAM. In testimony before the U.S. District Court, the Secretary acknowledged that, ``We undoubtedly do have some missing data, and we are all going to have to find a way to deal with the fact that some information no longer exists.''

The Secretary's controversial reorganization proposal, a hasty effort to avoid being held in contempt of court, was presented with minimal consultation with the tribes or individual Indian account holders, not to mention Congress.

In South Dakota, tribal leaders communicated to Tim Johnson and me their concern that the Secretary's solution appeared to be a fait accompli, conceived without meaningful participation of the stakeholders most directly affected by it. They felt strongly that this proposal should not be implemented without further consultation with the tribes. Meanwhile, the Secretary of the Interior and the Assistant Secretary on Indian Affairs, despite their reorganization plan, were both subsequently found in contempt of court.

In the early months of 2002, in the face of Administration assurances that its reorganization plan was not set in stone, the Interior Department requested that $200 million from the BIA and $100 million from the Office of the Special Trustee, be reprogrammed to ``a single organization that will report to the Secretary through an Assistant Secretary, Indian Trust.'' This contradiction set off red flags in Congress, and a clear and direct message was sent to Secretary Norton by Senators Inouye, Campbell, Byrd, Johnson and others that no action should be taken to implement her proposed reorganization plan administratively. Notwithstanding this clear signal, just this last December, while most members of Congress were out of town and with very little fanfare, the Secretary submitted yet another smaller request to reprogram BIA funds for trust fund reform activities.

Given these developments, Senators McCain, Johnson and I feel that Congress should be more assertive in forcing discussion of what role Congress might play in ensuring that tribes and individual Indian account holders have a voice on shaping trust reform policy. It is our hope that this bill will promote more constructive dialogue among the Congress, the Interior Department and Indian Country on this problem and lead to a true consensus solution.

With that goal in mind, the bill was received by representatives of the Great Plains tribes last Congress at a recent meeting in Rapid City. And earlier today, the Great Plains Tribal Chairman's Association urged me to re-introduce this legislation in the new Congress.

Mike Jandreau, Chairman of the Lower Brule Sioux Tribe and member of the Secretary's Trust Reform Task Force, has been an effective advocate and champion of trust reform, not only for his tribe, but also for all Indian people. He and Flandreau-Santee Sioux Tribal Chairman and Great Plains Tribal Chairman's Association President Tom Ranfranz led a very impressive and productive working sessions with tribal leaders from South Dakota, North Dakota and Nebraska. Mike and Tom have also worked with tribal leaders from Montana and Wyoming to raise awareness of the stakes of this issue and build support for the bill that regrettably died at the end of the 107th Congress due to Administration opposition.

I commend the willingness of these participating Great Plains and Rocky Mountain regional tribal leaders to be part of a public process that will hopefully will not stop until Indian Country feels comfortable with a final product they create. The McCain-Johnson- Daschle bill is intended to contribute to this result.

At this point, I would like to remind my colleagues some initial observations on this proposal that were raised in the last Congress by participating South Dakota treaty tribes and tribes of the Great Plains and Rocky Mountain regions that are still relevant in the 108th Congress. These comments demonstrate how thoughtfully Indian leaders are approaching the trust problem, and I fully expect that their suggestions will be considered and incorporated as the bill moves through the committee process.

The following issues are of great importance to the Great Plains Tribal Chairman's Association:

1. Providing the Deputy Secretary with sufficient authority to ensure that reform of the administration of trust assets is permanent. They do not believe the bill at present gives the Deputy Secretary the full and unified authority needed;

2. Including cultural resources as a trust asset for management purposes;

3. Incorporating the Office of Surface Mining and Bureau of Reclamation and other related agencies within the Department of the Interior and the Federal government under the purview of the Deputy Secretary;

4. Assuring that the legislation not infringe on tribal sovereignty by interfering with tribal involvement in the management of individual trust assets or tribal assets, or both;

5. Maintaining the Bureau of Indian Affairs' role as an advocate for tribe;

6. Maintaining current levels of Bureau of Indian Affairs employment;

7. Applying Indian employment preference to all positions created by the legislation;

8. Providing in law that Bureau of Indian Affairs funds not be used to fund the Deputy Secretary appointed by the legislation;

9. Stressing the importance of appropriating adequate funding to allow reform to succeed;

10. Reflecting in the legislative history that much of the funding needed for real trust reform be allocated at the local agency and regional levels of the Bureau of Indian Affairs; and

11. Placing more tribal representatives, including tribal resource managers, from various Bureau of Indian Affairs regions on the advisory board to the Office of Trust Reform.

The issues of trust reform and reorganization within the Bureau of Indian Affairs are nothing new to us here on Capitol Hill, or in Indian Country. Collectively, we have endured many efforts, some will intentioned and some

clearly not, to fix, reform, adjust, improve, streamline, downsize, and even terminate the Bureau of Indian Affairs and its trust activities.

These efforts have been pursued under both Republican and Democratic administrations. Unfortunately, they have rarely included meaningful involvement from tribal leadership, or recognized the Federal Government's treaty obligation to tribes.

I would be remiss if I did not commend this Administration for taking the time to travel to Indian Country to discuss this problem. Their interest in promoting dialogue with tribal leaders was welcome and appreciated. At the same time, however, talk must be supported by action if the trust management problem is to be successfully resolved.

The recent unveiling last month of the Department of the Interior's attempt to implement a trust reorganization plan without full tribal or congressional consultation in response to the Cobell v. Norton case was appalling and an egregious act by the federal government to Indian stakeholders. One tribal task force member described Interior's latest deceptive actions as ``a sham.'' That sentiment is widespread in Indian Country and exacerbates an underlying frustration and disappointment that is both understandable and disconcerting.

I share this frustration and disappointment. And I am concerned that the progress made jointly last year could be wasted away by a rising tide of disillusionment and mounting sense of betrayal.

The message I have heard from tribal leaders is clear. What is needed to achieve true reform are clear trust standards, one clear line of authority for trust management and the resources necessary to achieve meaningful reform, respect for self-determination, and meaningful consultation.

Meaningful consultation and acceptance of tribal status is the critical starting point if we hope to find a workable solution to the very real problem of trust management. The bill Senators McCain, Johnson and I are introducing today reflects this conviction.

There is no more important challenge facing the tribes and their representatives in Congress than that of restoring accountability and efficiency to trust management. And nowhere do the principles of self- determination and tribal sovereignty come more into play than in the management and distribution of trust funds and assets.

I am disappointed that this problem was not solved to the satisfaction of tribal leaders in the last Congress. Yet, that fight is not over, and my commitment to my South Dakota tribal constituents and Indian Country on this important issue has not diminished.

Last week, the Senate Democratic leadership introduced its priority bills for the 108th Congress. I am proud that trust reform is included as part of our civil rights legislation.

An effective long-term solution to the trust problem must be based on government-to-government dialogue. The McCain/Johnson/Daschle bill will not only provide the catalyst for meaningful tribal involvement in the search for solutions, it can also form the basis for true trust reform. I look forward to participating with tribal leaders, Administration officials and my congressional colleagues in pursuit of this essential objective.

Mr. President, today I am joining with Senators John McCain and Tim Johnson in reintroducing legislation that will focus attention on the need to address and correct the longstanding problem of mismanagement of the assets and funds held by the United States in trust for federally-recognized Indian tribes and individual American Indians.

This is a problem that has festered for far too long outside the spotlight of public recognition. And it is a problem that is undermining urgently needed efforts to improve the quality of life in Indian Country.

Indian Country has faced many challenges over the years. Few, however, have been more important, or more vexing, than that of restoring integrity to trust fund management.

For over a hundred years, the Department of Interior has managed a trust fund funded with the proceeds of leasing of oil, gas, land and mineral rights for the benefit of Indian people. Today, the trust fund may owe as much as $10 billion to as many as 500,000 Indians.

To provide some perspective, the 16 tribes of the Great Plains in South Dakota, North Dakota and Nebraska comprise 10 million acres of trust lands representing over one-third of the tribal trust assets. Many enrolled members of the nine South Dakota tribes have individual trust accounts.

How these trust funds have been and will be managed is being litigated in Cobell v. Norton, and the resolution of this lawsuit will have far-reaching implications throughout Indian Country. It is foolhardly not to evaluate potential solutions in the context of this lawsuit.

There is clear consensus in Indian Country that the current administration of the trust fund is a failure. The daunting question has always been how to reform it.

In November 2001, the Secretary of the Interior unveiled her controversial plan to reorganize the Bureau of Indian Affairs, BIA, and segregate the oversight and accounting of trust-related assets in a new Bureau of Indian Trust Asset Management, BITAM. In testimony before the U.S. District Court, the Secretary acknowledged that, ``We undoubtedly do have some missing data, and we are all going to have to find a way to deal with the fact that some information no longer exists.''

The Secretary's controversial reorganization proposal, a hasty effort to avoid being held in contempt of court, was presented with minimal consultation with the tribes or individual Indian account holders, not to mention Congress.

In South Dakota, tribal leaders communicated to Tim Johnson and me their concern that the Secretary's solution appeared to be a fait accompli, conceived without meaningful participation of the stakeholders most directly affected by it. They felt strongly that this proposal should not be implemented without further consultation with the tribes. Meanwhile, the Secretary of the Interior and the Assistant Secretary on Indian Affairs, despite their reorganization plan, were both subsequently found in contempt of court.

In the early months of 2002, in the face of Administration assurances that its reorganization plan was not set in stone, the Interior Department requested that $200 million from the BIA and $100 million from the Office of the Special Trustee, be reprogrammed to ``a single organization that will report to the Secretary through an Assistant Secretary, Indian Trust.'' This contradiction set off red flags in Congress, and a clear and direct message was sent to Secretary Norton by Senators Inouye, Campbell, Byrd, Johnson and others that no action should be taken to implement her proposed reorganization plan administratively. Notwithstanding this clear signal, just this last December, while most members of Congress were out of town and with very little fanfare, the Secretary submitted yet another smaller request to reprogram BIA funds for trust fund reform activities.

Given these developments, Senators McCain, Johnson and I feel that Congress should be more assertive in forcing discussion of what role Congress might play in ensuring that tribes and individual Indian account holders have a voice on shaping trust reform policy. It is our hope that this bill will promote more constructive dialogue among the Congress, the Interior Department and Indian Country on this problem and lead to a true consensus solution.

With that goal in mind, the bill was received by representatives of the Great Plains tribes last Congress at a recent meeting in Rapid City. And earlier today, the Great Plains Tribal Chairman's Association urged me to re-introduce this legislation in the new Congress.

Mike Jandreau, Chairman of the Lower Brule Sioux Tribe and member of the Secretary's Trust Reform Task Force, has been an effective advocate and champion of trust reform, not only for his tribe, but also for all Indian people. He and Flandreau-Santee Sioux Tribal Chairman and Great Plains Tribal Chairman's Association President Tom Ranfranz led a very impressive and productive working sessions with tribal leaders from South Dakota, North Dakota and Nebraska. Mike and Tom have also worked with tribal leaders from Montana and Wyoming to raise awareness of the stakes of this issue and build support for the bill that regrettably died at the end of the 107th Congress due to Administration opposition.

I commend the willingness of these participating Great Plains and Rocky Mountain regional tribal leaders to be part of a public process that will hopefully will not stop until Indian Country feels comfortable with a final product they create. The McCain-Johnson- Daschle bill is intended to contribute to this result.

At this point, I would like to remind my colleagues some initial observations on this proposal that were raised in the last Congress by participating South Dakota treaty tribes and tribes of the Great Plains and Rocky Mountain regions that are still relevant in the 108th Congress. These comments demonstrate how thoughtfully Indian leaders are approaching the trust problem, and I fully expect that their suggestions will be considered and incorporated as the bill moves through the committee process.

The following issues are of great importance to the Great Plains Tribal Chairman's Association:

1. Providing the Deputy Secretary with sufficient authority to ensure that reform of the administration of trust assets is permanent. They do not believe the bill at present gives the Deputy Secretary the full and unified authority needed;

2. Including cultural resources as a trust asset for management purposes;

3. Incorporating the Office of Surface Mining and Bureau of Reclamation and other related agencies within the Department of the Interior and the Federal government under the purview of the Deputy Secretary;

4. Assuring that the legislation not infringe on tribal sovereignty by interfering with tribal involvement in the management of individual trust assets or tribal assets, or both;

5. Maintaining the Bureau of Indian Affairs' role as an advocate for tribe;

6. Maintaining current levels of Bureau of Indian Affairs employment;

7. Applying Indian employment preference to all positions created by the legislation;

8. Providing in law that Bureau of Indian Affairs funds not be used to fund the Deputy Secretary appointed by the legislation;

9. Stressing the importance of appropriating adequate funding to allow reform to succeed;

10. Reflecting in the legislative history that much of the funding needed for real trust reform be allocated at the local agency and regional levels of the Bureau of Indian Affairs; and

11. Placing more tribal representatives, including tribal resource managers, from various Bureau of Indian Affairs regions on the advisory board to the Office of Trust Reform.

The issues of trust reform and reorganization within the Bureau of Indian Affairs are nothing new to us here on Capitol Hill, or in Indian Country. Collectively, we have endured many efforts, some will intentioned and some

clearly not, to fix, reform, adjust, improve, streamline, downsize, and even terminate the Bureau of Indian Affairs and its trust activities.

These efforts have been pursued under both Republican and Democratic administrations. Unfortunately, they have rarely included meaningful involvement from tribal leadership, or recognized the Federal Government's treaty obligation to tribes.

I would be remiss if I did not commend this Administration for taking the time to travel to Indian Country to discuss this problem. Their interest in promoting dialogue with tribal leaders was welcome and appreciated. At the same time, however, talk must be supported by action if the trust management problem is to be successfully resolved.

The recent unveiling last month of the Department of the Interior's attempt to implement a trust reorganization plan without full tribal or congressional consultation in response to the Cobell v. Norton case was appalling and an egregious act by the federal government to Indian stakeholders. One tribal task force member described Interior's latest deceptive actions as ``a sham.'' That sentiment is widespread in Indian Country and exacerbates an underlying frustration and disappointment that is both understandable and disconcerting.

I share this frustration and disappointment. And I am concerned that the progress made jointly last year could be wasted away by a rising tide of disillusionment and mounting sense of betrayal.

The message I have heard from tribal leaders is clear. What is needed to achieve true reform are clear trust standards, one clear line of authority for trust management and the resources necessary to achieve meaningful reform, respect for self-determination, and meaningful consultation.

Meaningful consultation and acceptance of tribal status is the critical starting point if we hope to find a workable solution to the very real problem of trust management. The bill Senators McCain, Johnson and I are introducing today reflects this conviction.

There is no more important challenge facing the tribes and their representatives in Congress than that of restoring accountability and efficiency to trust management. And nowhere do the principles of self- determination and tribal sovereignty come more into play than in the management and distribution of trust funds and assets.

I am disappointed that this problem was not solved to the satisfaction of tribal leaders in the last Congress. Yet, that fight is not over, and my commitment to my South Dakota tribal constituents and Indian Country on this important issue has not diminished.

Last week, the Senate Democratic leadership introduced its priority bills for the 108th Congress. I am proud that trust reform is included as part of our civil rights legislation.

An effective long-term solution to the trust problem must be based on government-to-government dialogue. The McCain/Johnson/Daschle bill will not only provide the catalyst for meaningful tribal involvement in the search for solutions, it can also form the basis for true trust reform. I look forward to participating with tribal leaders, Administration officials and my congressional colleagues in pursuit of this essential objective.