[Senate Report 116-29]
[From the U.S. Government Publishing Office]
Calendar No. 64
116th Congress } { Report
SENATE
1st Session } { 116-29
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TO ESTABLISH A BUSINESS INCUBATORS PROGRAM WITHIN THE DEPARTMENT OF THE
INTERIOR TO PROMOTE ECONOMIC DEVELOPMENT IN INDIAN RESERVATION
COMMUNITIES, AND FOR OTHER PURPOSES
_______
April 8, 2019.--Ordered to be printed
_______
Mr. Hoeven, from the Committee on Indian Affairs,
submitted the following
R E P O R T
[To accompany S. 294]
[Including cost estimate of the Congressional Budget Office]
The Committee on Indian Affairs, to which was referred the
bill (S. 294) to establish a business incubators program within
the Department of the Interior to promote economic development
in Indian reservation communities, having considered the same,
reports favorably thereon without amendment and recommends that
the bill do pass.
PURPOSE
The bill, S. 294, would establish a business incubators
program within the Department of the Interior, Office of Indian
Energy and Economic Development to promote entrepreneurship and
economic development on Indian reservations. The bill would
require the Department of the Interior to coordinate with other
federal agencies to promote Native American business
development.
BACKGROUND
Starting a new business is challenging anywhere, but Native
American entrepreneurs must navigate a set of unique obstacles
particular to Indian country.\1\
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\1\Economic Development: Encouraging Investment in Indian Country:
Hearing Before the S. Comm. on Indian Affairs, 113th Cong. 2, 3
(written testimony of Gerald Sherman, Vice Chairman, Native CDFI
Network).
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The land tenure system is one such obstacle. Much of the
land in Indian country is held in trust.\2\ Consequently, the
Secretary of the Interior must approve activities on these
lands as part of the federal trust responsibility.\3\
Secretarial approval creates additional expense and uncertainty
for Native entrepreneurs and their potential business partners
because they must comply with leasing and related federal legal
requirements that generally do not apply outside Indian
country.\4\
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\2\See COHEN'S HANDBOOK OF FEDERAL INDIAN LAW Sec. 15.03, at 997-
999 (Nell Jessup Newton ed., 2012) (hereinafter, COHEN'S HANDBOOK)
(providing a broader discussion of the underlying principles and
development of the trust responsibility).
\3\See COHEN'S HANDBOOK, Sec. 21.02[3], at 1329-30.
\4\See id.; See also Economic Development: Encouraging Investment
in Indian Country: Hearing Before the S. Comm. on Indian Affairs, 113th
Cong. 2, 3 (written testimony of William M. Lettig, Executive Vice
President, Key Bank).
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As a remedy, Congress took action to provide tribes with
greater control to regulate the agricultural, residential, and
business leasing of tribal lands by enacting the Helping
Expedite and Advance Responsible Tribal Home Ownership Act of
2012 (HEARTH Act).\5\ Since then, 39 federally recognized
tribes have utilized this new statutory authority by
establishing their own leasing rules, which the Bureau of
Indian Affairs must vet before going into effect.\6\
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\5\See Helping Expedite and Advance Responsible Tribal Home
Ownership Act of 2012, Pub. L. No. 112-151.
\6\See HEARTH Act of 2012, available at https://www.bia.gov/bia/
ots/hearth (listing tribes).
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The status of reservation lands also complicates access to
capital, primarily because trust land cannot be alienated and
cannot be used as collateral to obtain financing.\7\ As a
result, Native entrepreneurs that intend to open businesses on
a reservation must look to other methods of raising capital to
start and grow their businesses.
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\7\See COHEN'S HANDBOOK at Sec. 21.02[3], at 1329; See also Access
to Capital and Credit in Native Communities, Native Nations Institute,
University of Arizona, Digital Version at 39 (2016), available at:
http://nni.arizona.edu/news/articles/access-capital-and-credit-native-
communities.
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Unfamiliarity with Indian Country is also a barrier.\8\
Even when an entrepreneur has a promising concept, getting it
off the ground can be difficult when investors or business
partners do not have significant experience working in
reservation communities and are unfamiliar with the challenges
associated with operating businesses in Indian Country. The
resulting uncertainty can produce less favorable terms for
Native entrepreneurs or prevent a venture from happening
altogether.\9\
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\8\See Economic Development: Encouraging Investment in Indian
Country: Hearing Before the S. Comm. on Indian Affairs, 113th Cong. 2,
2 (written testimony of William M. Lettig, Executive Vice President,
Key Bank).
\9\Access to Capital and Credit in Native Communities, supra note
5, at 39.
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Finally, location is often a challenge. Many reservations
are located in rural--often remote--areas.\10\ This fact limits
the available workforce, making it difficult for Native
entrepreneurs to attract necessary staff to operate their
businesses.\11\ And infrastructure challenges common in rural
areas make it difficult for Native entrepreneurs to get their
products to market.\12\ A lack of access to high-speed
Internet, for example, is often a roadblock to success for
businesses that must compete in 21st century markets.\13\
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\10\See Accessing Capital in Indian Country: Hearing Before the S.
Comm. on Indian Affairs, 114th Cong. 1, 2 (written testimony of
Alejandra Y. Castillo, National Director, Minority Business Development
Agency, U.S. Dept. of Commerce).
\11\See id.
\12\See id.
\13\See U.S. Gov't Accountability Office, GAO-16-222,
Telecommunications: Additional Coordination and Performance Measurement
Needed for High-Speed Internet Access Programs on Tribal Lands, at 8-12
(2016).
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These unique obstacles vary from reservation to reservation
and from business to business. Accordingly, it is vital that
entrepreneurial development tools provide assistance focused
specifically on Indian Country and tailored to each
entrepreneur.\14\
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\14\Native American Business Incubators Program Act: Hearing on S.
3261 Before the S. Comm. on Indian Affairs, 114th Cong. 2, 8 (2016)
(written testimony of Derrick Watchman, Chairman, Board of Directors,
National Center for American Indian Enterprise Development).
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Business incubators are uniquely equipped to do this
because they offer a flexible suite of services intended to
help businesses grow and thrive. They offer workspace, a
collaborative environment, individualized yet comprehensive
business skills training, and opportunities to build
professional networks. By providing these focused services,
business incubators help Native entrepreneurs develop
businesses and create jobs in reservation communities,
contributing greatly to overall tribal economic development.
LEGISLATIVE HISTORY
116th Congress. Senators Udall, Cortez Masto, Heinrich,
Smith, and Heinrich introduced S. 294 on January 31, 2019,
which the Senate referred to the Committee. Senator Cantwell
joined as a co-sponsor of the bill on February 4, 2019. On
February 6, 2019, the Committee held a duly called business
meeting to consider, among other bills, S. 294. The Committee
ordered the bill reported favorably, without amendment.
On March 27, 2019, Representatives Haaland, Cole, Torres of
California, and Young introduced a companion bill, H.R. 1900,
in the House of Representatives, which referred it to the
Committee on Natural Resources. No further action has been
taken on the bill at this time.
115th Congress. Senators Udall, Cantwell, and Tester
introduced S. 607, a similar predecessor bill to S. 294, on
March 13, 2017. On March 29, 2017, the Committee held a duly
called business meeting to consider, among other bills, S. 607.
The Committee ordered the bill to be favorably reported,
without amendment, to the Senate. On September 26, 2017, the
Committee reported S. 607 to the full Senate. Senator Warren
joined the bill as a co-sponsor on March 6, 2018.
On March 22, 2018, Senator McConnell proposed an amendment
in the nature of a substitute, S. Amdt. 2223, to S. 607 for
Senator Hoeven. S. Amdt. 2223, which added a new ``No
Duplicative Grants'' paragraph to subsection (d) of section 4
of the bill, prohibits the Department of the Interior from
awarding grants to otherwise eligible applicants that already
receive Federal funding for the same purposes from another
source. The Senate agreed to the amendment by unanimous consent
and the bill, as amended, by voice vote.
On March 26, 2018, the House of Representatives referred S.
607 to the Committee on Natural Resources, which in turn
referred it to the Subcommittee on Indian, Insular, and Alaska
Native Affairs. The Subcommittee held a hearing on the bill on
July 24, 2018 and discharged the bill on September 27, 2018.
The House Committee considered the bill the same day and
ordered the bill reported favorably, without amendment. After
the Committee reported the bill on November 11, 2018, the full
House of Representatives took no further action on the bill.
No member of the House of Representatives introduced a
companion bill to S. 607.
114th Congress. Senators Tester, Cantwell, and Udall
introduced S. 3261, a similar predecessor bill to S. 294, on
July 14, 2016. Senator Murkowski was added as a cosponsor on
September 7, 2016. The bill was referred to the Committee on
Indian Affairs, which held a hearing on the bill on September
7, 2016. On September 21, 2016, the Committee held a duly
called business meeting to consider S. 3261, among other bills.
The Committee ordered the bill to be favorably reported without
amendment to the Senate but took no further action on the bill.
No member of the House of Representatives introduced a
companion bill to S. 294.
SUMMARY OF THE BILL
The Native American Business Incubators Program Act would
create a competitive grant program in the Office of Indian
Energy and Economic Development at the Department of the
Interior to establish and maintain business incubators that
serve Native entrepreneurs in reservation communities. The
program is intended to make substantial and sustained
investments in these business incubators to ensure Native
entrepreneurs in reservation communities have uninterrupted
access to locally tailored business development services from
entities specializing in providing services in Native
communities. Understanding that needs will be different in each
Native community, the program is also intended to be flexible
so that it can be deployed to benefit Native communities
throughout the United States.
SECTION-BY-SECTION ANALYSIS
Section 1--Short title
This section states that the bill may be cited as the
``Native American Business Incubators Program Act''.
Section 2--Findings
This section states Congress finds that there are unique
challenges associated with establishing a business in Indian
country and business incubators are business development tools
that are well-suited to helping Native American entrepreneurs
establish and operate businesses in or near reservation
communities. This section further states that Congress finds
that business incubators that assist Native entrepreneurs will
promote tribal economic development.
Section 3--Definitions
This section sets forth the definitions of ``Business
Incubator'', ``Eligible Applicant'', ``Indian Tribe'',
``Institution of Higher Education'', ``Native American;
Native'', ``Native Business'', ``Native Entrepreneur'',
``Program'', ``Reservation'', ``Secretary'', and ``Tribal
College or University''.
Section 4--Establishment of program
This section establishes a competitive grant program in the
Office of Indian Energy and Economic Development at the
Department of the Interior to establish and maintain business
incubators that serve Native entrepreneurs and reservation
communities.
This section also defines who is eligible to apply for a
grant. Eligible applicants include tribes, institutions of
higher education (including TCUs), and non-profit
organizations.
This section describes application and program
requirements. An eligible applicant must submit an application
that includes a 3-year plan, information demonstrating the
applicant's effectiveness and experience, and a site
description. Eligible applicants must also meet minimum
requirements that include providing: culturally tailored
services; a competitive process for selecting participants; a
physical workspace; business skills training and education;
mentorship opportunities; and access to professional networks.
This section provides application evaluation considerations
and establishes that priority will be given to business
incubators sited in or near the reservation community the
applicant intends to serve.
This section prohibits the Department from awarding grants
to otherwise eligible applicants that already receive Federal
funding for the same purposes from another source.
This section contains oversight provisions that apply to
the agency and grant recipients. It requires the Department to
submit a report to Congress within two years of awarding the
first round of grants under the program. The report must
include information on the performance and effectiveness of the
program grantees, and the Committee expects the Department to
include a discussion of compliance with the ``No Duplicative
Grants'' provision contained in Section (4)(d)(5).
Section 5--Regulations
This section requires the Secretary to promulgate
regulations implementing the program within one hundred eighty
days of enactment.
Section 6--Schools to business incubator pipeline
This section requires the Secretary to facilitate
relationships between grant recipients and educational
institutions serving Native American communities.
Section 7--Agency partnerships
This section requires the Secretary to coordinate with
other agencies that have business development programs to
ensure grant recipients have information and materials
necessary to inform incubator participants about available
federal programs and assist them when applying.
Section 8--Authorizations of appropriations
This section authorizes $5,000,000 to be appropriated for
each of fiscal years 2018 through 2023, and such sums as may be
necessary thereafter.
COST AND BUDGETARY CONSIDERATIONS
S. 294 would authorize the appropriation of $5 million a
year over the 2020-2024 period for the Bureau of Indian Affairs
to make grants to other organizations that would provide
business incubation services to Native American entrepreneurs
and businesses including physical workplaces, business skills
training, and access to networks of potential investors. Grants
would be awarded for three-year periods and could be renewed
for an additional three years.
CBO assumes S. 294 will be enacted in fiscal year 2019 and
that the authorized amounts will be appropriated for each
fiscal year. Estimated outlays are based on historical spending
patterns for similar programs.
CBO estimates that implementing the bill would cost $18
million over the 2020-2024 period. The costs of the legislation
fall within budget function 450 (community and regional
development).
As shown in Table 1, CBO estimates that implementing the
bill would cost $18 million over the 2020-2024 period. The
costs of the legislation fall within budget function 450
(community and regional development).
TABLE 1.--ESTIMATED INCREASES IN SPENDING SUBJECT TO APPROPRIATION UNDER S. 294
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By fiscal year, millions of dollars--
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2019 2020 2021 2022 2023 2024 2019-2024
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Authorization...................... 0 5 5 5 5 5 25
Estimated Outlays.................. 0 1 3 4 5 5 18
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EXECUTIVE COMMUNICATIONS
The Committee has received no communications from the
Executive Branch regarding S. 294.
REGULATORY AND PAPERWORK IMPACT STATEMENT
Paragraph 11(b) of rule XXVI of the Standing Rules of the
Senate requires each report accompanying a bill to evaluate the
regulatory and paperwork impact that would be incurred in
carrying out the bill. The Committee believes that S. 294 will
have a minimal impact on regulatory or paperwork requirements.
CHANGES IN EXISTING LAW
In compliance with the Standing Rules of the Senate and the
Committee Rules, subsection 12 of rule XXVI of the Standing
Rules of the Senate is waived. In the opinion of the Committee,
it is necessary to dispense with subsection 12 of rule XXVI of
the Standing Rules of the Senate in order to expedite the
business of the Senate.
[all]