Federal Aviation Administration Extension Act of 2008, Part II

Mr. President, I want to say a few words about the FAA's Disadvantaged Business Enterprise, DBE, Program and the Airport Concessions Disadvantaged Business Enterprise, ACDBE, Program. As we are all aware, case law over the past decade has made clear that Federal race-conscious programs are subject to strict constitutional scrutiny to ensure that programs serve a compelling governmental interest and are narrowly tailored to address that interest. Gender- conscious programs must meet heightened scrutiny to ensure that there is an exceedingly persuasive justification for the program. Still, under any reading of constitutional law, race- and gender-conscious programs are clearly permitted to remedy current discrimination and the present-day effects of past discrimination where there is a strong basis in evidence that such discrimination exists. As the Commerce Committee is aware, discrimination in business practices continues to be a serious problem. There are countless disparity studies and examinations of this topic and for that reason we have made only minor changes to the DBE and ACDBE program over time. Taken as a whole, the quantitative and qualitative evidence clearly suggests that discrimination remains a serious problem in our Nation.

I serve both as a member of the Commerce Committee and as chairman of the Senate Small Business Committee. In these roles, I have the opportunity to review enormous amounts of information about discrimination against women and minority entrepreneurs throughout our economy and across our Nation. While we have made very real progress over the time that I have been in the Senate, there is no doubt that a lot of work remains to be done. Programs such as the DBE and ACDBE programs are making an important difference by offering real opportunities to companies that otherwise might not ever get a chance to compete. These programs are critically important in airport-related industries as well as in other areas of Federal contracting.

The statistics are telling. On May 22, 2007, I held a hearing in the Small Business Committee addressing the effectiveness of SBA's programs for minority businesses. One economist who testified, Dr. Jon Wainwright, presented a number of troubling statistics to the committee. For instance, he explained that according to the most recent economic census data available, while African Americans constitute 12.7 percent of the population, they own only 5.3 percent of businesses and those businesses account for only 1 percent of business sales and receipts. Latinos are 13.4 percent of the population, but only 7 percent of businesses and 2.5 percent of business sales and receipts. Dr. Wainwright also noted that Asian and Pacific Islanders own 5 percent of businesses but earned only 3.8 percent of business sales and receipts and Native Americans constituted .9 percent of the

business population but earned only .3 percent of business sales and receipts. For women the numbers are also shocking: women constitute 50.9 percent of the population but own only 28.9 percent of businesses and receive only 10.7 percent of business sales and receipts.

Dr. Wainwright went on to explain that these disparities in business ownership and earnings exist in all 50 States and the District of Columbia and that similar outcomes had been evident in all previous versions of this same survey over the past 35 years. He also stated that he had conducted further analyses to determine whether the types of disparities he had observed were caused by discrimination or some other factor. He explained that he had conducted regression analyses to account for geography, industry, labor market status, age, and education among other factors. Even when this regression analysis was conducted, the disparities remained large, negative, and statistically significant for African Americans, Hispanics, Asian/Pacific Islander Americans, Native Americans, and women suggesting that race and gender discrimination are the cause.

Also troubling were Dr. Wainwright's comments on small business finance issues. We know that credit is the lifeblood of entrepreneurship, but it turns out that minority business owners are far more likely to be denied credit than nonminority owners. Dr. Wainwright explained that these findings held up even when regression analyses were conducted to adjust for a number of balance sheet, credit history, and other characteristics. And Dr. Wainwright found that women were also likely to face some discrimination in credit markets. Dr. Wainwright was only one witness at the May 22 hearing and there were several others whose testimony was equally compelling. The fact is that discrimination remains a very serious problem in Federal contracting markets across this country.

More recently, on September 11, 2008, our committee held another hearing on discrimination against minority- and women-owned businesses which focused on discrimination in access to capital. During the hearing we heard testimony from several witnesses about the serious barriers that minority- and women-owned businesses confront when attempting to obtain capital to start up, grow, and flourish. In the context of the FAA extension bill before us today, I want to specifically highlight the testimony of Don O'Bannon who is the current chair of the Airport Minority Advisory Council or AMAC. Mr. O'Bannon explained that, in his experience, access to capital is an enormous hurdle for minority- and women-owned businesses in airport-related industries. He gave us specific real-life examples of firms that had attempted to obtain both venture capital and more conventional debt capital and encountered extraordinary barriers due to discrimination that compromised their ability to grow and succeed.

Of course, there are many other sources of information about discrimination in contracting. Literally hundreds of disparity studies have been conducted around the country that contain compelling statistical data about discrimination in the public and private marketplaces related to airport-related contracting. Just a few of the studies that have been conducted recently and include airport-related data were put into the record by Mr. O'Bannon during our recent hearing. These include: ``Race, Sex and Business Enterprise: Evidence from Denver, CO,'' NERA Economic Consulting, May 5, 2006; ``Dallas/Fort Worth International Airport Board Disparity Study Final Report,'' MGT of America, October 17, 2000; ``The City of Phoenix, Minority-, Women- Owned and Small Business Enterprise Program Update Study: Final Report,'' MGT of America, April 21, 2005; ``Race, Sex and Business Enterprise: Evidence from the State of Maryland,'' NERA Economic Consulting, March 8, 2006; ``Final Report: Broward County Small Disadvantaged Business Enterprise (SDBE) Disparity Study,'' MGT of America, Inc., April 3, 2001; and ``Final Report for Development and Revision of Small, Minority and Women Business Enterprise Program, Nashville International Airport, (BNA),'' Griffin and Strong, PC, September 19, 2007. There are hundreds of additional studies, including many relevant studies that cover entities other than airports but that analyze the same industries and enterprise populations that do airport- related work.

But the statistics can only tell part of the story. Overlooked aspects of disparity studies are the sections that address anecdotal evidence. These are the accounts that individual business people give about the challenges they confront in doing business. When you read these studies, it quickly becomes clear that discrimination remains a problem at literally every stage of the business process. It is harder for women and minority entrepreneurs to start companies. They often are denied credit even when they have the same creditworthiness of male, nonminority entrepreneurs. And because of past discrimination, minority entrepreneurs often do not have access to family wealth. As one African-American contractor reported in a study about discrimination in the state of Massachusetts:

Now I go to the bank--again I've been in business for 28

years, I've been very successful at times--I go to the bank

and say ``Okay. I need a $250,000 line of credit.'' I walk

out of there with $50,000. A [White] gentleman that used to

work with me was a former partner of mine, left, went to the

same bank, and walked away with $1.2 million. Okay? Now he

walked away because his house is not mortgaged. So he has

equity that they can touch to go back if he doesn't make

payments. They are looking at me and saying, ``He's already

leveraged himself. He doesn't have anything that I can

touch.'' So they don't want to give me any money. And not

that the fact of my business--my business is very solid. It's

just they won't give it to me because I started with nothing

and I've taken everything I've had and put it into the

businesses. They still think I'm worth nothing. That's . . .

discrimination . . . which is where minorities and women who

start from scratch and build their businesses up, that's

where we get hurt. That's where it comes back to backfire,

because we don't have that same leverage that somebody who

either inherited a business or had family that gave them land

or some sort of inheritance that they got some money.

That is from ``Race, Sex and Business Enterprise: Evidence from the Commonwealth of Massachusetts,'' Volume 1, NERA Economic Consulting, at 218-219.

Even once minorities and women manage to start up a business they face serious discrimination in every stage of the contracting process. Sometimes that discrimination comes in the form of explicit gender or racial harassment. In a study dealing with the State of Texas, one Hispanic-American woman business owner related the following story:

Some [of my male colleagues] do not want to work with a

woman. They feel they are wasting their time. [On one

occasion] a guy took me to check on a project, and when he

got out of his truck, he wanted me to touch him. I said,

``Come on, let's get back to work.'' I had to be very strong

with him. There are not many women builders in the

residential construction industry either.

That is from ``Update of the State of Texas Disparity Study,'' Mason Tillman Associates, Ltd., January 2007, at 9-8.

Another Hispanic-American woman contractor in Texas explained that sometimes the discrimination is not so direct, but it is still unmistakable. She stated:

As a young woman, there have been several occasions where I

was told that if I really wanted an award, there were other

ways I could get it. This was not said directly to me, it was

implied [by] a White male [manager] at a [State] university.

That is from ``Update of the State of Texas Disparity Study,'' Mason Tillman Associates, Ltd., January 2007, at 9-8.

Sometimes the harassment rises to the level of threats of violence against a business owner or their property. In the NERA Commonwealth of Massachusetts study, one African-American businessman even gave an account of a threat to blow up his truck.

That is from ``Race, Sex and Business Enterprise: Evidence from the Commonwealth of Massachusetts, Volume 1,'' NERA Economic Consulting, at 219.

Even when discrimination does not involve explicit harassment or threats, it still poses barriers to minority and women business owners. Unfortunately, the ``old boy network'' continues to be a problem in many industries. An analysis of the experiences of business owners in a study of contracting by the airport in Nashville, TN, demonstrates that discrimination not only hurts minority- and women-owned businesses, but it can also drive up the price of doing business:

[One business owner] said his firm has tried to get in on

airport work and, in one instance, partnered with a much more

experienced firm to get into one particular area of

construction only to find that ``a couple of firms had a lock

on it''. According to [this firm], it is hard to get jobs

because people tend to use the same companies. [The business

owner] said he believes that subcontractors tell ``their''

bidders where to come in with their numbers and they tell

them where they can make up the difference on the project and

how to pursue change orders. By the end of a project, his

competitors have been paid more than his original estimate,

which was rejected for being too high.

That is from ``Final Report for Development and Revision of Small, Minority and Women Business Enterprise Program, Nashville International Airport,'' BNA, Griffin and Strong, PC, September 19, 2007, at 163.

Another business owner in Nashville was explicit about the informal networks that impose barriers on minority businesses and the need for programs like the DBE and ACDBE program to address these impediments. The study stated:

According to [one business owner], the airport made a

mistake in disbanding SMWBE requirements because there are

still a lot of ``good old boys'' playing golf and the like.

Having a diversity manager helps ``level the playing field''

and provides ``checks and balances''.

That is from ``Final Report for Development and Revision of Small, Minority and Women Business Enterprise Program, Nashville International Airport,'' BNA, Griffin and Strong, PC, September 19, 2007, at 164.

Another point that these studies make clear is that discrimination against business owners is something that is experienced by all minority groups and women. It is not limited to only some groups. One study summarized its analysis of anecdotal evidence as follows:

Nineteen percent of the respondents indicated that they had

experienced discrimination because of race, ethnicity, or

gender on one or more occasions (three percent very often, 10

percent sometimes, and six percent seldom). Forty percent

reported they had not experienced discrimination. The fact

that 19 percent of respondents reported experiencing

discrimination on at least an occasional basis suggests that

discrimination is not confined to isolated incidents. The 19

percent that experienced discrimination account for 63

surveyed respondents categorized as follows: 22 African

Americans, 17 Hispanic Americans, 16 non-minority females,

two Asian Americans, two non-minority males, and one Native

American. Three people reported discriminatory incidents but

did not indicate their demographic background.

That is from ``Final Report: Broward County Small Disadvantaged Business Enterprise (SDBE) Disparity Study,'' MGT of America, Inc., April 3, 2001, at 6-30.

These examples I have given are but a few from the voluminous body of research about race and gender discrimination in business. The evidence is troubling and should cause all of us to redouble our efforts to ensure that we do everything we can to eliminate the barriers confronted by women and minority business owners. The DBE and ACDBE program are indispensable tools in this effort.

Mr. Speaker, I want to add a few words about the Disadvantaged Business Enterprise (DBE) and the Airport Concessions Disadvantaged Business Enterprise (ACDBE) Programs. These programs are critically important tools in our Nation's ongoing efforts to eliminate discrimination against minority and women owned businesses. Sadly, the evidence makes clear that race and sex discrimination are still realities for many of the business owners who are working hard to support their families, grow their businesses and contribute to our national economy.

Many disparity studies detailing discrimination against minority and women business owners have been released in every region of the country. While each study is a little bit different, taken together, these studies illustrate that discrimination impacts business owners in every minority group including African-Americans, Hispanic-Americans, Asian Americans and Native Americans. The studies also show discrimination against women of every racial group. While hundreds of such studies have been conducted, I will mention just six of the many airport-related studies that have been produced, including: Dallas/Fort Worth International Airport Board Disparity Study Final Report, MGT of America, October 17, 2000; Final Report: Broward County Small Disadvantaged Business Enterprise (SDBE) Disparity Study, MGT of America, Inc., April 3, 2001; The City of Phoenix, Minority-Women-Owned and Small Business Enterprise Program Update Study: Final Report, MGT of America, April 21, 2005; Race, Sex and Business Enterprise: Evidence from the State of Maryland, NERA Economic Consulting, March 8, 2006; Race, Sex and Business Enterprise: Evidence from Denver, CO, NERA Economic Consulting, May 5, 2006; and Final Report for Development and Revision of Small, Minority and Women Business Enterprise Program, Nashville International Airport, (BNA), Griffin and Strong, PC, September 19, 2007. Let me be clear, these six studies represent a fraction of the airport-related studies that have been conducted--and yet even this small cross-section demonstrates the national scope of the problem and the breadth of its impact. These studies are too long to insert in the record in their entirety under House rules. However, I would

note that these studies were submitted to the record on September 11, 2008 in a hearing before the U.S. Senate Committee on Small Business and Entrepreneurship.

Disparity studies provide us with both statistical and anecdotal evidence. In other words, these studies illustrate both the broad-based statistical impact of discrimination and the personal accounts of discrimination by those who suffer its effects. It is the combination of these two types of data that helps us see how discrimination works and the problems it causes. The anecdotal accounts of discrimination provided in these studies demonstrate the various different ways that discrimination happens. Sometimes, discrimination is caused by prime contractors that simply refuse to work with businesses that are not part of established business networks--the old boy network, if you will. Other times, discrimination occurs in the bid process through bid shopping, uneven and untimely notice, and intentionally deceitful practices by prime contractors that approach DBEs and ACDBEs and ask them to prepare elaborate quotes and bids with no intention of actually using their services.

In other situations, the discrimination happens in access to capital. Just last week on September 11, 2008, the Chair of the Airport Minority Advisory Council, Don O'Bannon, provided testimony before the Senate Small Business Committee outlining the severe difficulty that minority and women owned businesses confront when attempting to obtain working capital. This is not all. Different forms of discrimination reach into every aspect of the efforts by minority and women businesses to participate in airport-related business. There has been discrimination by suppliers, by government officials, by trade associations and in all of the more informal networks through which businesses obtain work. Of course, in the private sector where many of these businesses must obtain the lion's share of their work, there are rarely programs like the DBE and ACDBE programs and, as a result, discrimination has an even larger impact.

The bottom line is this: The DBE and ACDBE programs are still vital to leveling the playing field for minority and women entrepreneurs in airport-related industries. I look forward to working with my colleagues to maintain and strengthen these programs to ensure that we continue the critical work of leveling the playing field to ensure that all American businesses have a fair chance to participate in the airport-related business opportunities.

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 6984) to amend title 49, United States Code, to extend authorizations for the airport improvement program, to amend the Internal Revenue Code of 1986 to extend the funding and expenditure authority of the Airport and Airway Trust Fund, and for other purposes.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and to include extraneous material on H.R. 6984.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I rise today in support of H.R. 6984, the Federal Aviation Administration Extension Act, Part II. I want to thank Chairman Oberstar for bringing this legislation to the floor today, as well as Chairman Rangel and Ranking Members Mica and Petri.

The Aviation Trust Fund was created to fund the development and improvement of our airport and airway system, make critical investments to the air traffic control facilities, and to ensure the safety of the flying public.

The trust fund provides revenue for the airport improvement program, which provides grants for construction and safety projects at airports; the facilities and equipment account, which funds technical improvements to the air traffic control system; and a research, engineering and development account. The fund also partially pays for the salaries, expenses, and operations of the FAA.

This trust fund is currently operating under a short-term extension that expires on September 30, 2008. In

order to continue to provide essential safety and capacity improvement funds to our airports, we must pass this extension.

While the House passed H.R. 2881, the FAA Reauthorization Act of 2007, which is a long-term authorization for the FAA programs, the Senate has yet to pass its version of the bill. Until H.R. 2881 becomes law, it is important that we extend the FAA's programs on a short-term basis.

To ensure continued FAA operations, H.R. 6984 would extend not only the aviation taxes and expenditure authority, but also the AIP contract authority until March 30, 2009.

Specifically, H.R. 6984 provides $1.95 billion in AIP funding for airports, which is based on the level of AIP funding we authorized in H.R. 2881 for fiscal year 2009, and is consistent with the fiscal year 2009 congressional budget resolution. These additional funds will allow airports to proceed with necessary safety and capacity enhancement projects.

Mr. Speaker, aviation is too important to our Nation's economy, contributing $1.2 trillion in output and approximately 11.4 million U.S. jobs, to allow the taxes or funding for critical aviation programs to expire.

While our economy has slowed and economic factors have created difficult times for the airlines and their passengers, Congress can provide some stability to the aviation system by passing this extension this week. I urge my colleagues to support the bill.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I have no further requests for speakers, and so I yield back the balance of my time and urge passage of this legislation.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, in September 2007, the House considered and passed the FAA Reauthorization Act of 2007, H.R. 2881, which reauthorizes the FAA for the next 4 years.

Unfortunately, however, the Senate has not come to any agreement on its bill and so we are here today considering a fifth extension. H.R. 6984 would extend the taxes, programs, and funding of the Federal Aviation Administration through March of 2009.

This bill extends FAA funding and contract authority for 6 months, funds the airport improvement program at $1.95 billion through March of next year, extends the war risk insurance program, extends the small community air service development program, and extends application of the rule for measuring highway miles to determine eligibility for essential air service subsidies.

The bill will ensure that our national aviation system continues to operate until a full FAA reauthorization can be enacted by the next Congress. As I have indicated many times since the passage of the House FAA reauthorization bill just over a year ago, we need to pass a long- term bill so we can meet the growing demands placed on our Nation's infrastructure. Modernizing our antiquated air traffic control system and repairing our crumbling infrastructure needs to be one of our top priorities when Congress reconvenes in 2009. In that connection, I would observe recent statistics which indicate that our friends in China are spending some 9 percent of their GNP on infrastructure. We here in the United States are spending about 2.5 percent, most of that on maintenance, and we are falling behind even in that regard. In 20 years, who is going to be better prepared to conduct a modern economy, somebody who is spending 9 percent of their GNP building first-class infrastructure, or someone who is barely maintaining what they already have?

We need to step up to bat. This bill will do us good in the aviation sector, but we have a big job ahead of us in infrastructure generally as a Nation.

Clearly, there is much work to be done. This 6-month extension gives us time to revisit the FAA reauthorization bill early in the 111th Congress. I urge our colleagues in the other body to take up a comprehensive FAA reauthorization package as early as possible in the next year.

I support this extension as the best alternative to keep the FAA and the national airspace system running safely until the 111th Congress can take up and pass a bipartisan, bicameral bill that the President can sign. We should all commit to quickly passing a 4-year bill as quickly as possible next year.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I rise in strong support of H.R. 6984, the ``Federal Aviation Administration Extension Act of 2008, Part II''.

The previous long-term Federal Aviation Administration (``FAA'') reauthorization act, the Vision 100--Century of Aviation Reauthorization Act (P.L. 108-176) expired on September 30, 2007. On September 20, 2007, the House passed H.R. 2881, the ``FAA Reauthorization Act of 2007'', to reauthorize FAA programs for fiscal years 2008 through 2011.

Unfortunately, the Senate has been unable to complete action on a long-term FAA reauthorization bill. As a result, Congress has passed a series of short-term FAA extension acts. The current authority for aviation programs and taxes expires next week, on September 30.

H.R. 6984 provides a 6-month extension of aviation programs and taxes, through March 31, 2009.

H.R. 6984 provides $1.95 billion in contract authority for the Airport Improvement Program (``AIP''). The $1.95 billion provided for the first six months of fiscal year 2009 will enable airports to move forward with important safety and capacity projects, and is sufficient to meet all Letter of Intent (``LOI'') commitments. When annualized, this level of AIP funding equals $3.9 billion, consistent with both the House and Senate FAA reauthorization bills, and the fiscal year 2009 Concurrent Budget Resolution.

The bill also authorizes appropriations for FAA Operations, Facilities and Equipment (``F&E''), and Research, Engineering, and Development (``RE&D'') programs.

In addition, H.R. 6984 extends the aviation excise taxes through March 31, 2009. These taxes are necessary to support the Airport and Airway Trust Fund, which in recent years has provided about 80 percent of the FAA's budget. With an uncommitted cash balance of just $1.4 billion estimated as of the end of fiscal year 2008, any lapse in the aviation taxes could put the solvency of the Trust Fund at risk.

In addition to extending the aviation taxes, H.R. 6984 extends the FAA's authority to make expenditures from the Airport and Airway Trust Fund, through March 31, 2009.

To allow aviation programs to continue under the same terms and conditions as were in effect during the previous authorization period, H.R. 6984 also extends several other provisions of Vision 100.

I thank Chairman Rangel, Chairman of the Committee on Ways and Means, for his assistance in ensuring the continued operation of aviation programs. I also thank my Committee colleagues, Ranking Member Mica, Subcommittee Chairman Costello, and Subcommittee Ranking Member Petri, for working with me on this critical legislation.

I strongly urge my colleagues to join me in supporting H.R. 6984.