[House Report 107-211]
[From the U.S. Government Publishing Office]
107th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 107-211
======================================================================
NATIVE AMERICAN SMALL BUSINESS DEVELOPMENT ACT
_______
September 21, 2001.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Manzullo, from the Committee on Small Business, submitted the
following
R E P O R T
together with
ADDITIONAL VIEWS
[To accompany H.R. 2538]
[Including cost estimate of the Congressional Budget Office]
The Committee on Small Business, to whom was referred the
bill (H.R. 2538) to amend the Small Business Act to expand and
improve the assistance provided by Small Business Development
Centers to Indian tribe members, Native Alaskans, and Native
Hawaiians, having considered the same, report favorably thereon
without amendment and recommend that the bill do pass.
Purpose
The purpose of H.R. 2538 is to create jobs, to foster
entrepreneurship, and to stimulate the economies and foster
economic development on Indian lands. Further, the purpose of
the Act is to help in the creation of new small businesses
owned and managed by Indian tribe members, Native Alaskans, and
Native Hawaiians and to help expand such small businesses that
already exist. The Act will provide much needed management,
technical, and research assistance to small businesses owned by
Indian tribe members, Native Alaskans, and Native Hawaiians.
The Act will help to insure that Indian tribe members, Native
Alaskans, and Native Hawaiians have full access to existing
counseling and technical assistance provided through the Small
Business Development Center (SBDC) program. In providing
entrepreneurial assistance, a State receiving a grant under the
provisions of the Act is required to seek the advice of local
Tribal Councils on where small business development assistance
is needed.
Need for Legislation
Approximately 60 percent of Indian tribe members and Native
Alaskans live on or in the immediate vicinity of Indian lands
and suffer from an average unemployment rate of 45 percent.
Presently, Indian tribe members and Native Alaskans own more
than 197,000 business enterprises and generate revenues in
excess of $34 billion.
The service industry, the largest sector, accounts for 17
percent of the businesses, and 15.7 percent of the total
revenues. The second largest sector is construction which
accounts for 13.9 percent of the businesses and 15.7 percent of
the total revenues. The third largest sector, the retail
trades, accounts for 7.5 percent of the businesses and 13.4
percent of the total revenues.
The number of businesses owned by Indian tribe members and
Native Alaskans grew by 84 percent during the period from 1992
to 1997, while businesses, generally, grew by only seven
percent. During the same period, the gross receipts for Indian
tribe members and Native Alaskan business owners increased by
179 percent, in comparison with the business community, as a
whole, where the gross receipts for the same period grew only
by 40 percent.
In the past, the SBDC program with more than 1000 offices
throughout the United States has provided cost-effective
business counseling and technical assistance to small
businesses. For example, clients receiving long-term counseling
under the program in 1998 generated additional tax revenues of
$468 million, which was approximately six times the cost of the
program to the Federal government.
By using the existing infrastructure of the SBDC program,
it is anticipated that small businesses owned by Indian tribe
members, Native Alaskans, and Native Hawaiians, who receive
services under the Act, will have a higher survival rate than
the average small businesses not receiving such services.
Further, increased assistance through SBDC counseling has in
the past been able to reduce defaults under Small Business
Administration (SBA) lending programs.
The business counseling and technical assistance, provided
for under this Act, is critical on Indian land where, without
such assistance, similar services are scarce and expensive.
Past and current efforts by SBDCs to assist Native American
populations located on or along reservation lands has proven
difficult. In addition, the lack of resources makes it
difficult to raise an equal amount of matching funds to
specifically assist Native Americans.
Overview of the Act
The Act will establish a three-year pilot project providing
grants to SBDCs for assisting Indian tribe members, Native
Alaskans, and Native Hawaiian populations with their
entrepreneurial needs. The purpose, more fully explained in the
prior part of this report, is to stimulate the economies on
reservation lands through the creation and expansion of small
businesses by ensuring the target population has full access to
important business counseling and technical assistance through
the SBDC program.
Any SBDC in a State, whose Indian tribe members, Native
Alaskan, and Native Hawaiian populations are one percent of the
State's total population, can apply for a grant from the SBA.
Such grants must be used to provide SBDC program assistance to
Native Americans. Grants under the Act are limited to $300,000
and the amount authorized to be appropriated annually, in each
of the fiscal years 2002, 2003, and 2004, is $7 million.
Services by SBDCs are to be provided to benefit the target
population on tribal lands and reservations, but an individual
center need not be located on each tribal land location or
reservation. If the target population is in more than one
location or reservation within a State, the center should be
situated in a location that optimizes access by all those
serviced by the center. The Act does not limit in any way, the
number of centers or subcenters a state program may implement.
The Committee expects the Administrator to balance the need for
multiple sites with the quality of assistance and counseling
when awarding grants. Consultation with the local Tribal
Council is required in determining those locations in most need
and where the best access may be attained.
SBA is responsible for designing the grant application
which should provide essential information, but should not be
burdensome to applicants. At a minimum, the application should
contain information concerning the applicant's (1) goals and
objectives, (2) prior experience in providing entrepreneurial
and technical assistance to small businesses, (3) the ability
to provide training and services to Indian tribe members,
Native Alaskans, and Native Hawaiians, and (4) the extent of
consultation with local Tribal Councils. In addition, the
applicant should identify the location of a proposed center,
and the amount of funding required.
Within 180 days after the enactment of the Act, the
Administrator is required to issue final regulations, after a
notice and comment period, that implement the requirements of
the Act. Such regulations shall include standards for the
educational, technical, and support services to be provided and
for a work plan for providing assistance to the targeted
community.
Committee Action
hearing on h.r. 2538
On Thursday, July 19, 2001, the Subcommittee on Workforce,
Empowerment and Government Programs of the Committee on Small
Business held a hearing, commencing at 10:00 a.m., to hear
testimony with regard to H.R. 203, H.R. 2538, and H.R. 2666.
The Subcommittees received the testimony of eight witnesses.
Panel 1 included: Congressman John E. Sweeney of New York,
Congressman Robert A. Brady of Pennsylvania, and Congressman
Tom Udall of New Mexico. Panel 2 included: Mr. Thomas G.
Grumbles, CIH, Vice President, American Industrial Hygiene
Association; Mr. Donald T. Wilson, President and CEO,
Association of Small Business Development Centers; Mr. Rudolph
Cartier, Jr., Small Business Ombudsman, State of New Hampshire;
Mr. Christian Conroy, Associate State Director, Pennsylvania
Small Business Development Centers; and, Mr. Leonard Lopez, Sun
Valley Express, Navajo Reservation, Shiprock, New Mexico.
The hearing showed that some SBDCs were already providing,
on a limited basis, the services which are the subject of the
three bills. The hearing evidenced a need for expansion of the
services to other locations.
consideration of h.r. 2538
At 10:05 a.m. on August 1, 2001, the Committee on Small
Business met to consider and report four bills, that included
H.R. 2538. The bill H.R. 2538 was introduced. Chairman Manzullo
asked unanimous consent that H.R. 2538 be considered as read
and open for amendment at any point. No amendments were
offered. Chairman Manzullo then moved to pass H.R. 2538 and to
report it to the House. At 10:28 a.m., a quorum being present,
the Committee passed the bill, H.R. 2538, and ordered it
reported.
Section-by-Section Analysis
Section 1. Short title
The section establishes the short title of the bill as the
``Native American Small Business Development Act.''
Section 2. Findings and purposes
Subsection (a) states the findings of Congress that include
the fact that (1) the average unemployment rate for Indian
tribe members and Native Alaskans who live on or adjacent to
Indian lands is 45 percent, (2) Indian tribe members and Native
Alaskans own more than 197,000 businesses that generate more
than $34 billion in revenues, (3) for the period 1992-1997, the
number of businesses owned by Indian tribe members and Native
Alaskans grew by 84 percent and gross receipts grew by 179
percent, as compared with seven percent and 40 percent,
respectively, for businesses generally, (4) the SBDC program is
cost effective in that additional tax revenues generated by
businesses counseled under the program in 1998 were
approximately six times the cost of the program, (5) using the
existing SBDC infrastructure it is anticipated that those
receiving services under the Act will have a higher survival
rate than those not receiving such services, (6) business
counseling and technical assistance provided on Indian lands is
critical because such services are presently scarce and where
available are expensive, and (7) SBDC business counseling has
proven to be effective in reducing the default rate of
businesses who have received counseling and who participated in
one or more SBA loan program. The Committee believes that
because of the SBDC program's success and proven track record,
utilizing the existing SBDC network will enhance the success of
H.R. 2538.
Subsection (b) states the purpose of the Act which includes
assisting Indian tribe members, Native Alaskans, and Native
Hawaiians by: increasing jobs and enhancing economic
development on Indian lands; creating new small businesses and
expanding existing ones; providing management, technical, and
research assistance; seeking the advice of Tribal Councils on
where business development assistance is most needed; and,
ensuring full access under the Act to existing business
counseling and technical assistance available through the SBDC
program.
Section 3. Small Business Development Center assistance to Indian tribe
members, Native Alaskans, and Native Hawaiians
The Small Business Act is amended by adding a new
subsection providing for an additional grant program to assist
Indian tribe members, Native Alaskans, and Native Hawaiians. An
SBDC, located in an eligible State and funded by SBA, may apply
for an additional grant to be used solely for providing
services, as set forth in the Small Business Act with respect
to the SBDC program, to assist with outreach, development, and
enhancement on Indian lands of small business startups and
expansions owned by Indian tribe members, Native Alaskans, and
Native Hawaiians.
Because the majority of Native Americans live on or
adjacent to Indian lands, where economic opportunities are
limited, the Committee expects the SBDCs to be located on or in
close proximity to Indian lands. Although Native Americans who
do not live on Indian lands may seek the assistance of these
centers, the Committee believes that assistance should go to
aid with outreach, development, and enhancement on Indian lands
of small business startups and expansions owned by Indian tribe
members, Native Alaskans, and Native Hawaiians. Native
Americans located near existing centers or subcenters are
encouraged to continue to utilize those existing resources.
An eligible State is defined as a State that has a combined
population of Indian tribe members, Native Alaskans, and Native
Hawaiians that comprises at least one percent of the State's
total population, as shown by the most recent census. Each
applicant is required to complete a grant application that
shall include information as to: (1) the applicants ability to
provide training and services to a representative number of
Indian tribe members, Native Alaskans, and Native Hawaiians,
(2) the proposed location of the SBDC site, (3) the amount of
grant funds needed, and (4) the extent of prior consultation
with local Tribal Councils.
No applicant may receive more than $300,000 in any one
fiscal year, but no matching funds are required. Within 180
days after the Act is enacted, the Administrator is required to
issue final regulations with respect to the grant program
established by the Act. In promulgating the regulations, the
Administrator must provide notice of the proposed regulations
and an opportunity for public comment. In addition, the
Administrator must consult with the Association of Small
Business Development Centers. The regulation must establish
standards relating to (1) educational, technical, and support
services to be provided by SBDCs receiving grants, and (2) any
work plan that is required to be submitted by an applicant.
The Committee believes that setting standards will help
ensure that the grants will be awarded to the most qualified
State programs and provide a mechanism by which the
Administrator can evaluate the success of the program.
The section defines the following terms: ``Associate
Administrator,'' ``Indian Lands,'' ``Indian Tribe,'' ``Indian
Tribe Member,'' ``Native Alaskan,'' and ``Native Hawaiian.''
The section authorizes $7 million to be appropriated for
each of fiscal years 2002 through 2004. Funds appropriated for
the program created by the Act are in addition to funds
appropriated for the SBDC program generally and for other
particular SBDC programs. The program created under the Act may
only be funded by monies specifically appropriated for that
purpose.
Section 4. State consultation with local Tribal Councils
This section amends section 21(c) of the Small Business Act
by adding a new subsection (9) that requires that a State
receiving grants under the program created by the Act shall
request the advice of local Tribal Councils on how best to
provide assistance to Indian tribe members, Native Alaskans,
and Native Hawaiians and where to locate satellite centers to
provide such assistance.
U.S. Congress,
Congressional Budget Office,
Washington, DC, August 14, 2001.
Hon. Donald Manzullo,
Chairman, Committee on Small Business,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 2538, the Native
American Small Business Development Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Ken Johnson.
Sincerely,
Dan L. Crippen, Director.
Enclosure.
congressional budget office cost estimate
H.R. 2538--Native American Small Business Development Act
Summary: H.R. 2538 would authorize the Small Business
Administration (SBA) to issue grants to small business
development centers (SBDCs) for new programs that assist Native
Americans who are starting or expanding small businesses on
tribal lands. SBDCs are jointly funded by the private sector,
schools, and federal, state, and local governments to provide
management assistance to current and prospective small business
owners.
H.R. 2538 would authorize the appropriation of $7 million a
year during the 2002-2004 period to fund the new program. Based
on the SBA's historical spending patterns, CBO estimates that
implementing the bill would cost $20 million over the 2002-2006
period, assuming the appropriation of the necessary amounts.
The bill would not affect direct spending or receipts;
therefore, pay-as-you-go procedures would not apply.
H.R. 2538 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
The bill would benefit tribally owned small businesses to the
extent that they receive services from SBDCs. The bill would
impose no significant costs on state or local governments.
Estimated cost to the Federal Government: The estimated
budgetary impact of H.R. 2538 is shown in the following table.
The costs of this legislation fall within budget function 370
(commerce and housing credit).
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
--------------------------------------------
2002 2003 2004 2005 2006
----------------------------------------------------------------------------------------------------------------
CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Authorization Level................................................ 7 7 7 0 0
Estimated Outlays.................................................. 5 6 7 2 (\1\)
----------------------------------------------------------------------------------------------------------------
\1\ =Less than $500,000.
Pay as you go considerations: None.
Intergovernmental and private-sector impact: H.R. 2538
contains no intergovernmental or private-sector mandates as
defined in UMRA. The bill would benefit tribally owned small
businesses to the extent that they receive services from SBDCs.
The bill would impose no significant costs on state or local
governments.
Estimate prepared by: Federal costs: Ken Johnson; impact on
State, local, and tribal governments: Susan Sieg Tompkins;
impact on the private sector: Cecil McPherson.
Estimate approved by: Peter H. Fontaine, Deputy Assistant
Director for Budget Analysis.
Committee Estimate of Costs
Pursuant to the Congressional Budget Act of 1974, the
Committee estimates that the amendments to the Small Business
Act contained in H.R. 2538 will increase appropriations by no
more than $7 million annually over the next three fiscal years,
i.e., 2002 through 2004. Furthermore, pursuant to clause
3(d)(2)(A) of rule XIII of the Rules of the House of
Representatives, the Committee estimates that implementation of
the H.R. 2538 will not significantly increase the
administrative costs. This concurs with the estimate of the
Congressional Budget Office.
Oversight Findings
In accordance with clause 4(c)(2) of rule X of the Rules of
the House of Representatives, the Committee states that no
oversight findings or recommendations have been made by the
Committee on Government Reform with respect to the subject
matter contained in H.R. 2538.
In accordance with clause 2(b)(1) of rule X of the Rules of
the House of Representatives, the oversight findings and
recommendations of the Committee on Small Business with respect
to the subject matter contained in H.R. 2538 are contained in
the descriptive portions of this report.
Statement of Constitutional Authority
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds the authority for
this legislation in Article I, Section 8, Clause 18 of the
Constitution of the United States.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (new matter is
printed in italic and existing law in which no change is
proposed is shown in roman):
SECTION 21 OF THE SMALL BUSINESS ACT
Sec. 21. (a)(1) * * *
* * * * * * *
(7) Additional grant to assist indian tribe members,
native alaskans, and native hawaiians.--
(A) In general.--Any applicant in an eligible
State that is funded by the Administration as a
Small Business Development Center may apply for
an additional grant to be used solely to
provide services described in subsection (c)(3)
to assist with outreach, development, and
enhancement on Indian lands of small business
startups and expansions owned by Indian tribe
members, Native Alaskans, and Native Hawaiians.
(B) Eligible states.--For purposes of
subparagraph (A), an eligible State is a State
that has a combined population of Indian tribe
members, Native Alaskans, and Native Hawaiians
that comprises at least 1 percent of the
State's total population, as shown by the
latest available census.
(C) Grant applications.--An applicant for a
grant under subparagraph (A) shall submit to
the Associate Administrator an application that
is in such form as the Associate Administrator
may require. The application shall include
information regarding the applicant's goals and
objectives for the services to be provided
using the grant, including--
(i) the capability of the applicant
to provide training and services to a
representative number of Indian tribe
members, Native Alaskans, and Native
Hawaiians;
(ii) the location of the Small
Business Development Center site
proposed by the applicant;
(iii) the required amount of grant
funding needed by the applicant to
implement the program; and
(iv) the extent to which the
applicant has consulted with local
Tribal Councils.
(D) Applicability of grant requirements.--An
applicant for a grant under subparagraph (A)
shall comply with all of the requirements of
this section, except that the matching funds
requirements of paragraph (4)(A) shall not
apply.
(E) Maximum amount of grants.--No applicant
may receive more than $300,000 in grants under
this paragraph in a fiscal year.
(F) Regulations.--After providing notice and
an opportunity for comment and after consulting
with the Association recognized by the
Administration pursuant to paragraph (3)(A)
(but not later than 180 days after the date of
enactment of this paragraph), the Administrator
shall issue final regulations to carry out this
paragraph, including regulations that
establish--
(i) standards relating to
educational, technical, and support
services to be provided by Small
Business Development Centers receiving
assistance under this paragraph; and
(ii) standards relating to any work
plan that the Associate Administrator
may require a Small Business
Development Center receiving assistance
under this paragraph to develop.
(G) Definitions.--In this paragraph, the
following definitions apply:
(i) Associate administrator.--The
term ``Associate Administrator'' means
the Associate Administrator for Small
Business Development Centers.
(ii) Indian lands.--The term ``Indian
lands'' has the meaning given the term
``Indian country'' in section 1151 of
title 18, United States Code, the
meaning given the term ``Indian
reservation'' in section 151.2 of title
25, Code of Federal Regulations (as in
effect on the date of enactment of this
paragraph), and the meaning given the
term ``reservation'' in section 4 of
the Indian Child Welfare Act of 1978
(25 U.S.C. 1903).
(iii) Indian tribe.--The term
``Indian tribe'' has the meaning given
such term in section 8(a)(13).
(iv) Indian tribe member.--The term
``Indian tribe member'' means a member
of an Indian tribe (other than a Native
Alaskan).
(v) Native alaskan.--The term
``Native Alaskan'' has the meaning
given the term ``Native'' in section
3(b) of the Alaska Native Claims
Settlement Act (43 U.S.C. 1602(b)).
(vi) Native hawaiian.--The term
``Native Hawaiian'' means any
individual who is a descendant of the
aboriginal people, who prior to 1778,
occupied and exercised sovereignty in
the area that now constitutes the State
of Hawaii.
(H) Authorization of appropriations.--There
is authorized to be appropriated to carry out
this paragraph $7,000,000 for each of fiscal
years 2002 through 2004.
(I) Funding limitations.--
(i) Nonapplicability of certain
limitations.--Funding under this
paragraph shall be in addition to the
dollar program limitations specified in
paragraph (4).
(ii) Limitation on use of funds.--The
Administration may carry out this
paragraph only with amounts
appropriated in advance specifically to
carry out this paragraph.
* * * * * * *
(c)(1) * * *
* * * * * * *
(9) Advice of local tribal councils.--A State
receiving grants under this section shall request the
advice of local Tribal Councils on how best to provide
assistance to Indian tribe members, Native Alaskans,
and Native Hawaiians and where to locate satellite
centers to provide such assistance.
* * * * * * *
ADDITIONAL VIEWS
Democrats strongly support providing assistance for the
development of small businesses on Native American lands. Under
H.R. 2538, the U.S. Small Business Administration's Small
Business Development Center (SBDC) Program can and will create
more jobs, foster more entrepreneurship, and stimulate economic
development on Native American lands. New small businesses
located on reservation lands will grow and existing ones will
continue to expand.
H.R. 2538 will establish a three-year pilot project
providing grants to State SBDC Programs, which can then
establish Native American SBDCs to assist Indian Tribe Members,
Native Alaskan, and Native Hawaiian populations, with their
small business development needs. Under the new section
21(a)(7)(C)(i), established under Section 3 of the Act, State
SBDC Programs with the largest population of Indian Tribe
Members, Native Alaskans, and Native Hawaiians, will receive
priority when awarding grants. In addition, the one-percent
population requirement, can be either one percent of any of the
three populations, or any combination thereof.
The grants must be used to establish one or more Native
American SBDCs, on or near Native American lands. H.R. 2538
does not limit, in any way, the number of centers or subcenters
a state program may propose to implement. We expect the
Administrator to balance the need of multiple sites with
quality assistance and counseling when awarding grants. This is
where consultation with the local Tribal Councils will be
essential in maximizing the benefits resulting from the
program.
H.R. 2538 provides that each State SBDC Program ``receiving
grants shall request the advice of local Tribal Councils on how
best to provide assistance to Indian Tribe Members, Native
Alaskans, and Native Hawaiians and where to locate satellite
centers to provide such assistance.'' However, the report
language fails to emphasize the important role these groups
will play as advisors to the SBDC Program. The cooperative
nature of the relationship between the State SBDC Program and
the Native American population should be a priority and is
essential to the success of the program.
Not only will Indian Tribe Members, Native Alaskans, and
Native Hawaiians have access to counseling and technical
assistance provided through the pilot program, they will be an
integral part in developing that assistance. Other Federal
assistance programs have fallen short either because the
infrastructure of the delivery system did not exist, or the
targeted population had little, if any, involvement in
developing the type of assistance to be provided. We believe
that a significant factor in developing a successful Federal
assistance program for a targeted population, is participation
by that population.
In addition, State SBDC Programs are required to complete a
grant application that shall include information on the extent
of prior consultation with local Tribal Councils. We believe
that this requirement is necessary to ensure that the State
SBDC Programs seek the recommendations and suggestions of the
targeted populations. We also believe that Section 4 of the Act
requires these recommendations and suggestions to be given
substantial weight in the Administrator's decisionmaking when
awarding grants. We cannot stress enough the importance of the
participation by Indian Tribe Members, Native Alaskan, and
Native Hawaiian populations, in successfully fulfilling these
requirements.
It is also important to emphasize the role the Association
for Small Business Development Centers will play in
promulgating the regulations required under H.R. 2538. The U.S.
Small Business Administration must consult with the Association
of Small Business Development Centers in establishing standards
relating to (1) educational, technical, and support services to
be provided by SBDCs receiving grant monies, and (2) any work
plan that is required to be submitted by an applicant. Setting
standards will help ensure that grants will be awarded to the
most qualified state programs and provide a mechanism by which
the Administrator can evaluate the success of the program. In
addition, we believe the Administrator must give the
Association's recommendations substantial weight.
Lastly, we believe that fees must not be charged in
conjunction with this pilot project. Although the SBDCs are
permitted to charge fees under limited circumstances, one-on-
one counseling is provided free of charge. Current and past
Administrations have attempted to implement a fee-for-service
structure for SBDC services that are, and have been,
historically free. Implementing such a structure would not only
be detrimental to the pilot program, but to the entire SBDC
Program. Democrats have consistently opposed such a move and
will continue to oppose future attempts.
Although initial efforts to assist Native American
populations has proven successful, barriers limiting further
expansion and development still exist. Difficulties arise
because of minimal resources and provisions requiring State
SBDC Programs to match their Federal dollars with private
funds. In the past, SBDCs have found it difficult to raise
matching funds for targeted ventures.
However, we believe that under this pilot program, the
Native American SBDCs can provide an effective mechanism for
providing counseling and management assistance to small
business owners on Native American lands. Utilizing the
existing SBDC network can, and will, ensure the success of this
pilot program. Therefore, we support this pilot program and the
entrepreneurial assistance it will provide.
Nydia M. Velazquez.