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Mary L.
Former Democrat LA
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    Statements on Introduced Bills and Joint Resolutions

    by Former Senator Mary L. Landrieu

    Posted on 2013-02-28

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    LANDRIEU (for herself, Mr. Cochran, Mrs. Gillibrand, and Mr. Pryor): S. 415. A bill to clarify the collateral requirement for certain loans under section 7(d) of the Small Business Act, to address assistance to out-of-State small business concerns, and for other purposes; to the Committee on Small Business and Entrepreneurship.



    Ms. LANDRIEU. Mr. President, I come to the floor today to speak on an issue that is of great importance to my home State of Louisiana: Federal disaster assistance. As you know, along the Gulf Coast, we keep an eye trained on the Gulf of Mexico during hurricane season. This is following the devastating one-two punch of Hurricanes [[Page S1020]] Katrina and Rita of 2005 as well as Hurricanes Gustav and Ike in 2008. Unfortunately, our region also has had to deal with the economic and environmental damage from the Deepwater Horizon disaster in 2010 and more recently Hurricane Isaac. For this reason, as Chair of the Senate Committee on Small Business and Entrepreneurship ensuring Federal disaster programs are effective and responsive to disaster victims is one of my top priorities. While the Gulf Coast is prone to hurricanes, other parts of the country are no strangers to disaster. For example, the Midwest has tornadoes, California experiences earthquakes and wildfires, and the Northeast sees crippling snowstorms. So no part of our country is spared from disasters--disasters which can and will strike at any moment. This certainly hit home when the northeast was struck by Hurricane Sandy in October of last year. With this in mind, we must ensure that the Federal government is better prepared and has the tools necessary to respond quickly, effectively following a disaster.

    In order to give the U.S. Small Business Administration, SBA, better tools to respond after a future disaster, I am proud that to file the Small Business Disaster Reform Act of 2013. I want to thank my colleague Senator Thad Cochran for cosponsoring the bill and for helping me to make improvements. I am also appreciative that Senator Kirsten Gillibrand and Senator Mark Pryor also have cosponsored the legislation. This bill will make two important improvements to SBA's disaster assistance programs for businesses. The first provision builds off of SBA disaster reforms enacted in 2008 and ensures that SBA is responsive to the needs of small businesses seeking smaller amounts of disaster assistance. These are the businesses that are burdened the most by liens on their primary personal residential homes when they could conceivably provide sufficient business assets as collateral for the loan. The second provision in the bill also authorizes the SBA Administrator to allow out-of-state Small Business Development Centers, SBDCs, to provide assistance in to small businesses located in Presidentially-declared disaster areas. This provision removes a limitation that, for disasters such as Hurricane Katrina or Hurricane Sandy, would allow experienced SBDC counselors to come in to a disaster area while local SBDCs are being stood back up following a catastrophic disaster. Lastly, to ensure that out-of-state SBDCs are not left paying out of pocket for assisting in these disaster areas, there also is legislative language in Section 4 encouraging the SBA to ensure it reimburses SBDCs for these disaster-related expenses provided they were legitimate and there are funds available to do so.

    In particular, Section 2 of the bill that I am filing today would clarify that, for SBA disaster business loans less than $200,000 that SBA is required to utilize assets other than the primary residence if those assets are available to use as collateral towards the loan. The bill is very clear though that these assets should be of equal or greater value than the amount of the loan. Also, to ensure that this is a targeted improvement, the bill also includes additional language that this bill in no way requires SBA to reduce the amount or quality of collateral it seeks on these types of loans. I want to especially thank my former Ranking Member Olympia Snowe for working with me to improve upon previous legislation on this particular issue. The provision that I am re-introducing, as part of this disaster legislation, is a direct result of discussions with both her and other stakeholders late last year. I believe that this bill is better because of improvements that came out of these productive discussions.

    I note that this provision is similar to Section 204 of S. 2731, the Small Business Administration Disaster Recovery and Reform Act of 2009 that Senator Bill Nelson and I introduced during the 111th Congress. A similar provision also passed the House of Representatives twice that Congress. H.R. 3854, which included a modified collateral requirement under Section 801, passed the House on October 29, 2009 by a vote of 389-32. The provision also passed the House again on November 6, 2009 by a voice vote as Section 2 of H.R. 3743. During the 112th Congress, this provision passed the Senate on December 28, 2012 by a vote of 62- 32 as part of H.R. 1, the Senate-passed Disaster Relief Appropriations Act. However, it was not included in H.R. 152, the House-passed Disaster Relief Appropriations Act that subsequently was enacted into law. Despite the setback earlier this year, I remind my colleagues that this provision has a history of bipartisan Congressional support and has previously passed both chambers of Congress.

    Section 2 addresses a key issue that is serving as a roadblock to business owners interested in applying for smaller SBA disaster loans. After the multiple disasters that hit the Gulf Coast, my staff has consistently heard from business owners, discouraged from applying for SBA disaster loans. When we have inquired further on the main reasons behind this hesitation, the top concern related to SBA requiring business owners to put up their personal home as collateral for smaller SBA disaster loans for their business. This requirement is understandable for large loans between $750,000 and $2 million. However, business owners complained about this requirement being instituted for loans of $200,000 or less. I can understand their frustration. Business owners, in many cases who have just lost everything, are applying to SBA for a $150,000 loan for their business. SBA then responds by asking them to put up their $400,000 personal home as collateral when the business may have sufficient business assets available to collateralize the loan. While I also understand the need for SBA to secure the loans, make the program cost effective, and minimize risk to the taxpayer, SBA has at its disposal multiple ways to secure loans.

    Furthermore, SBA has repeatedly said publicly and in testimony before my committee that it will not decline a borrower for a lack of collateral. According to a July 14, 2010 correspondence between SBA and my office, the agency notes that ``SBA is an aggressive lender and its credit thresholds are well below traditional bank standards . . . SBA does not decline loans for insufficient collateral.'' SBA's current practice of making loans is based upon an individual/business demonstrating the ability to repay and income. The agency declines borrowers for an inability to repay the loan. In regards to collateral, SBA follows traditional lending practices that seek the ``best available collateral.'' Collateral is required for physical loans over $14,000 and Economic Injury Disaster Loans, EIDL, loans over $5,000. SBA takes real estate as collateral when it is available, but as I stated, the agency will not decline a loan for lack of collateral. Instead it requires borrowers to pledge what is available. However, in practice, SBA is requiring borrowers to put up a personal residence worth $300,000 or $400,000 for a business loan of $200,000 or less when there are other assets available for SBA.

    This provision does not substantively change SBA's current lending practices and it will not have a significant cost. I believe that this legislation would not trigger direct spending nor would it have a significant impact on the subsidy rate for SBA disaster loans. Currently for every $1 loaned out, it costs approximately 10 cents on the dollar. Most importantly, this bill will greatly improve the SBA disaster loan programs for businesses ahead of future disasters. If a business comes to the SBA for a loan of less than $200,000 to make immediate repairs or secure working capital, they can be assured that they will not have to put up their personal home if SBA determines that the business has other assets to go towards the loan. However, if businesses seek larger loans than $200,000 or if their business assets are not suitable collateral, then the current requirements will still apply. This ensures that very small businesses and businesses seeking smaller amounts of recovery loans are able to secure these loans without significant burdens on their personal property. For the business owners we have spoken to, this provides some badly needed clarity to one of the Federal government's primary tools for responding to disasters.

    To be clear though, while I do not want to see SBA tie up too much of a business' collateral, I also believe that if a business is willing and able to put up business assets towards its disaster loan, SBA should consider that first before attempting to bring in personal [[Page S1021]] residences. It is unreasonable for SBA to ask business owners operating in very different business environments post-disaster to jeopardize not just their business but also their home. Loans of $200,000 or less are also the loans most likely to be repaid by the business so personal homes should be collateral of last resort in instances where a business can demonstrate the ability to repay the loan and that it has other assets.

    As previously mentioned, there are also safeguards in the provision that ensures that this provision will not reduce the quality of collateral required by SBA for these disaster loans nor will it reduce the quality of the SBA's general collateral requirements. These changes will assist the SBA in cutting down on waste, fraud and abuse of these legislative reforms. In order to further assist the SBA, I believe it is important to clarify what types of business assets we understand they should review. For example, I understand that SBA's current lending practices consider the following business assets as suitable collateral: commercial real estate; machinery and equipment; business inventory; and furniture and fixtures.

    Section 3 of this bill removes an unnecessary prohibition in the Small Business Act that currently prohibits SBDCs from other states to help out in areas impacted by disasters. In particular, this provision authorizes the SBA Administrator to allow out-of-state SBDCs to provide assistance in to small businesses located in Presidentially-declared disaster areas. This is because, as you may know, SBDCs are considered to be the backbone of the SBA's Office of Entrepreneurial Development efforts, and are the largest of the agency's OED programs. SBDCs are the university based resource partners that provide counseling and training needs for more than 600,000 business clients annually. From 2007 to 2008, the counseling and technical assistance services they offered lead to the creation of 58,501 new jobs, at a cost of $3,462 per job. Additionally, they estimate that their counseling services helped to save 88,889 jobs. These centers are even more critical following natural or manmade disasters. That is because SBDCs help impacted businesses in navigating Federal disaster programs, insurance programs, and in creating new business plans following a disaster. For that reason, we must ensure that there is continuity to have SBDC counselors on the ground in disaster areas.

    For example, right after Hurricane Katrina our SBDCs in Louisiana were severely limited in what they could do because of the widespread damage to homes and facilities utilized by their counselors. On the other hand, their counterparts at the Florida SBDCs had a wealth of disaster expertise and were willing to assist but were prohibited from providing assistance to small businesses outside their geographic area. In 2012, we experienced similar challenges following Hurricane Sandy but SBDCs in Louisiana, Florida or elsewhere were prohibited from helping their counterparts in the Northeast even if they wanted to help recovery in New York or New Jersey and doing so would not impact their operations back home. For smaller scale disasters, local SBDCs will respond to disasters in their own areas. However, for large scale, catastrophic disasters, this provision could make a significant difference for impacted small businesses.

    In fact, on December 13, 2012, my committee received excellent testimony from Jim King, Chair of the Association of Small Business Development Centers, ASBDCs, and State Director of New York State Small Business Development Center. Mr. King outlined the symbiotic relationship between different SBDC state chapters and how they currently assist each other after disasters. He specifically noted that, ``I was also privileged to have the opportunity to work with the SBDC in Louisiana following Hurricane Katrina in 2005 and visited New Orleans as one of five State Directors invited to share thoughts with my counterpart there, Mary Lynn Wilkerson, to evolve a strategy for recovery. I should note that Mary Lynn has returned the favor many times over since Hurricane Sandy devastated our area, with materials, information and support, which has been greatly appreciated.'' He also later noted that ``Starting almost immediately after the disaster, staff in other states and programs began reaching out with offers of assistance and words or experiences of support . . . The experiences gained from disasters in Florida, Texas, Colorado, Louisiana and many other places reinforce the value of the SBDC network in meeting the needs of small business in times of disaster.'' I believe that these current relationships will be further strengthened by enacting this legislation. C.E. ``Tee'' Rowe, President/CEO of ASBDC noted this in his February 10, 2013 letter to my office, noting that, ``Allowing SBDCs to share resources across state lines or other boundaries for the purposes of disaster recovery is a common sense proposal, little different from utilities sharing linemen.'' At the same time, however, I encourage SBDC chapters across the country to establish more of these partnerships pre-disaster so that their SBDC counterparts can be there post-disaster. SBDC chapters that are, unfortunately, battle hardened from multiple disasters should not be the only chapters that bear fruit from these partnerships with their counterparts.

    Furthermore, I note that Section 3 of the bill has previously been passed out of committee and has been approved by the full Senate during past sessions of Congress. So this provision has a strong record of bipartisan support. During the 110th Congress, this provision was approved unanimously by the Small Business and Entrepreneurship Committee on May 7, 2007 as Section 104 of S. 163, the ``Small Business Disaster Response and Loan Improvements Act of 2007.'' S. 163 was subsequently passed by the full Senate by unanimous consent on August 3, 2007. Unfortunately, this provision was not enacted into law before the adjournment of the 110th Congress. In the 111th Congress, this provision was again approved unanimously by the Small Business and Entrepreneurship Committee on July 2, 2009 as Section 607 of S. 1229, the ``Entrepreneurial Development Act of 2009'' but was not enacted into law before the adjournment of that Congress. Lastly, during the 112th Congress, the provision received 57 strong bipartisan votes on July 12, 2012 as Section 433 of Senate Amendment 2521 to S. 2237, the ``Small Business Jobs and Tax Relief Act of 2012.'' My Republican colleagues Senators Snowe, Collins, Vitter, Scott Brown, and Heller all voted in support of the amendment. Although it was not ultimately enacted into law, the provision was subsequently included in separate pieces of legislation introduced by Senator Olympia Snowe and myself. This provision was included as Section 433 of S. 3442, the ``SUCCESS Act of 2012'' that I introduced on July 25, 2012 as well as Section 433 of S. 3572, the ``Restoring Tax and Regulatory Certainty to Small Business Act of 2012'' that Senator Snowe introduced on September 9, 2012.

    Lastly, Section 4 is a new provision that I worked with my colleague Senator Cochran to include in the legislation. This section addresses past instances where SBDCs were not sufficiently reimbursed post- disaster by the SBA for disaster-related expenses. Section 3 provides clear Congressional intent that, in authorizing the SBA to allow out- of-state SBDCs to assist in disaster areas outside their geographic location, the agency must also ensure that out-of-state SBDCs are not left paying out of pocket for assisting in these disaster areas. If the SBA approves for these SBDCs to deploy staff or resources to a disaster area, the agency must in turn ensure that it reimburses SBDCs for these expenses provided they were legitimate and there are funds available to do so. I thank Senator Cochran for bringing this to my attention on behalf of his local SBDCs, and look forward to working closely with him to enact this provision into law.

    In closing, I believe that these commonsense disaster reforms will greatly benefit businesses impacted by future disasters. First, the major proposals in this legislation are neither new nor untested. Next, this approach has already received support from the following groups from across the country: the Association of Small Business Development Centers, the International Economic Development Council, the Southwest Louisiana Economic Development Alliance, the St. Tammany Economic Development Foundation, the Northeast Louisiana Economic [[Page S1022]] Partnership, and the Bay Area Houston Economic Partnership. With that in mind, the Senate should not make the perfect the enemy of the good. If we can make these reforms today and help one business impacted by a disaster tomorrow, we will have done what our constituents sent us here to do: make good laws.

    Mr. President, I ask unanimous consent that the text of the bill and letters of support be printed in the Record.

    There being no objection, the material was ordered to be printed in the Record, as follows: S. 415 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Small Business Disaster Reform Act of 2013''.

    SEC. 2. CLARIFICATION OF COLLATERAL REQUIREMENTS.

    Section 7(d)(6) of the Small Business Act (15 U.S.C. 636(d)(6)) is amended by inserting after ``which are made under paragraph (1) of subsection (b)'' the following: ``: Provided further, That the Administrator, in obtaining the best available collateral for a loan of not more than $200,000 under paragraph (1) or (2) of subsection (b) relating to damage to or destruction of the property of, or economic injury to, a small business concern, shall not require the owner of the small business concern to use the primary residence of the owner as collateral if the Administrator determines that the owner has other assets with a value equal to or greater than the amount of the loan that could be used as collateral for the loan: Provided further, That nothing in the preceding proviso may be construed to reduce the amount of collateral required by the Administrator in connection with a loan described in the preceding proviso or to modify the standards used to evaluate the quality (rather than the type) of such collateral''.

    SEC. 3. ASSISTANCE TO OUT-OF-STATE SMALL BUSINESSES.

    Section 21(b)(3) of the Small Business Act (15 U.S.C. 648(b)(3)) is amended-- (1) by striking ``(3) At the discretion'' and inserting the following: ``(3) Assistance to out-of-state small businesses.-- ``(A) In general.--At the discretion''; and (2) by adding at the end the following: ``(B) Disaster recovery assistance.-- ``(i) In general.--At the discretion of the Administrator, the Administrator may authorize a small business development center to provide assistance, as described in subsection (c), to a small business concern located outside of the State, without regard to geographic proximity, if the small business concern is located in an area for which the President has declared a major disaster under section 401 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5170), during the period of the declaration.

    ``(ii) Continuity of services.--A small business development center that provides counselors to an area described in clause (i) shall, to the maximum extent practicable, ensure continuity of services in any State in which the small business development center otherwise provides services.

    ``(iii) Access to disaster recovery facilities.--For purposes of this subparagraph, the Administrator shall, to the maximum extent practicable, permit the personnel of a small business development center to use any site or facility designated by the Administrator for use to provide disaster recovery assistance.''.

    SEC. 4. SENSE OF CONGRESS.

    It is the sense of Congress that, subject to the availability of funds, the Administrator of the Small Business Administration shall, to the extent practicable, ensure that a small business development center is appropriately reimbursed for any legitimate expenses incurred in carrying out activities under section 21(b)(3)(B) of the Small Business Act (15 U.S.C. 648(b)(3)(B)), as added by this Act.

    Association of Small Business Development Centers, Burke, VA, February 10, 2013.

    Hon. Mary Landrieu, Chair, Committee on Small Business and Entrepreneurship, U.S. Senate, Washington, DC.

    Dear Senator Landrieu: Thank you for giving the Association of Small Business Development Centers (ASBDC) the opportunity to comment on your proposed legislative amendments to the disaster assistance provisions in the Small Business Act (15 USC 631 et seq.).

    While Congress has taken a significant step in addressing the resource issues following Sandy and other disasters there are still restrictions in the SBDC assistance authority and the US Small Business Administration's loan making authority that could complicate future disaster recovery efforts. We applaud your efforts to deal with those issues.

    Under section 21(b)(3) of the Small Business Act (15 USC 648(b)(3)) SBDCs are limited in their ability to provide services across state lines. This prevents SBDCs dealing with disaster recovery, like New York and New Jersey, from being able to draw upon the resources available in our nationwide network of nearly 1,000 centers with over 4,500 business advisors. It likewise prevents states with great experience in disaster recovery assistance like Louisiana and Florida, from providing assistance to their colleagues.

    Your proposed legislation amends that SBDC geographic service restriction for the purposes of providing disaster support and assistance. Our Association wholeheartedly endorses that change. Allowing SBDCs to share resources across state lines or other boundaries for the purpose of disaster recovery is a common sense proposal, little different from utilities sharing linemen. In addition, we would like to note that this provision has been supported by the Senate Committee on Small Business and Entrepreneurship twice in previous Congresses.

    In addition, the ASBDC wishes to express its support for your proposals to amend the collateral requirements in the disaster loan program for loans under $200,000. SBDCs routinely assist small business owners with their applications for disaster loan assistance and have often faced clients with qualms about some of those requirements.

    We share a common goal of putting small business on the road to recovery after disaster strikes and getting capital flowing is a key factor in meeting that goal. To that end, ASBDC supports your efforts to ease collateral requirements and help improve the flow of disaster funds to small business applicants. We believe your proposal to limit the use of personal homes as collateral on smaller loans is consistent with the need to get capital flowing to affected businesses and ease the stress on these businesses. We also agree that this change will not undermine the underwriting standards of the disaster loan program.

    Thank you again for kind attention and continuing support of small business.

    Sincerely, C.E. ``Tee'' Rowe, President/CEO, ASBDC.

    ____ International Economic Development Council, Washington, DC, February 13, 2013.

    Hon. Mary L. Landrieu, Chair, Committee on Small Business and Entrepreneurship, U.S. Senate.

    Hon. James E. Risch, Ranking Member, Committee on Small Business and Entrepreneurship, U.S. Senate, Washington, DC.

    Dear Senator Landrieu and Senator Risch: On behalf of the International Economic Development Council (IEDC), please accept our appreciation for this opportunity to provide comments related to proposed changes to federal disaster assistance programs offered by the United States Small Business Administration (SBA). Your continuing support of these critical programs is worthy of praise and we thank you for your leadership.

    IEDC has a strong history of supporting disaster planning and recovery. Our organization, with a membership of over 4,000 dedicated professionals, responded to communities in need following the 2005 hurricane season, the BP Gulf oil spill and other disaster-related incidents by providing economic development recovery assistance. We have continued our work in this area through technical assistance projects and partnerships with federal agencies and other non- governmental organizations. Our profession is invested in helping our country prepare for and respond to disasters, much the same as you and your colleagues on the Committee on Small Business and Entrepreneurship. To this end, we support proposed changes that will allow SBA to more effectively deliver disaster recovery assistance to local businesses in need of federal aid.

    Rebuilding the local economy must be a top priority following a disaster, second only to saving lives and homes. IEDC supports the targeted changing of the current collateral requirements that state a business owner must place their home up as collateral in order to secure an SBA disaster business loan of $200,000 or less. In times of crisis, affected business owners are understandably reluctant to place their personal homes up as collateral in order to obtain a much needed loan to rebuild their business. Consequently, SBA loans put in place to help businesses rebuild following a disaster go underutilized. As lawmakers, you have a responsibility to protect the taxpayer, which is why we understand the need for posting collateral of equal or greater value to the amount of the loan. The proposed targeted change that eliminates the specific requirement of using a home as collateral to guarantee a loan of $200,000 or less, and instead allowing business assets to act as collateral, will promote greater utilization of the loans. This is an idea we can all get behind; one that will lead to greater, faster economic recovery.

    When disaster strikes, we should do everything in our power to bring the full resources of the federal government to bear in the impacted community. This includes, most especially, bringing in top experts who can immediately begin helping businesses and local economies recover. The national network of over 1,100 Small Business Development Centers (SBDC) could be an excellent resource to stricken communities. Unfortunately, current rules prevent SBDC's from assisting their counterparts in other jurisdictions. For example, those communities in the mid-Atlantic and New England impacted by Sandy are not able to benefit from the enormous [[Page S1023]] amount of knowledge and experience in storm recovery held by SBDCs in Florida and the Gulf region. Certainly, we can all agree that disasters warrant an extraordinary response and that response must include qualified expertise from all corners of the federal government.

    Forty to sixty percent of small businesses that close as a result of a disaster do not reopen. This is an unacceptably high number. We would not accept that level of loss in homes and we cannot accept that level of loss in jobs; our communities cannot sustain such losses and duty dictates we make certain they don't have to. By enacting common sense legislation, like that which is under consideration here, and freeing the flow of capital and expertise, we are taking concrete steps to give our small businesses and local economies the greatest chance to recover.

    IEDC is your partner in the work of job creation. We thank you for your leadership in support of small business and stand ready to offer our assistance in this and future efforts.

    Sincerely, Paul L. Krutko, Chairman, International Economic Development Council and President and CEO, Ann Arbor SPARK.

    ____ St. Tammany Economic Development Foundation, Mandeville, LA, February 19, 2013.

    Hon. Mary Landrieu, Chair, Committee on Small Business and Entrepreneurship, U.S. Senate, Washington, DC.

    Dear Senator Landrieu: The St. Tammany Economic Development Foundation thanks you for the opportunity to comment on the proposed amendments to the disaster assistance provisions in the Small Business Act (15 US 631 et seq.). As we learned from Hurricanes Katrina, Rita and most recently Isaac, the sooner our small businesses are able to recover, the better it is for the region, the state and the nation.

    We fully endorse the proposed amendment to Section 1 of the bill regarding collateral on business disaster loans. If approved, no longer would small business owners have to use their primary personal residence for collateral towards SBA disaster business loans less than $200,000 if other assets are available of equal or greater value than the amount of the loan. In times of crisis, affected business owners are understandably reluctant to place their personal homes up as collateral in order to obtain a much needed loan to rebuild their business. Allowing business assets to act as collateral will promote greater utilization of the loans; leading to faster economic recovery.

    Under Section 2 of the bill, Small Business Development Centers (SBDCs) are limited in their ability to provide services across state lines. This prevents SBDCs in affected areas from being able to draw upon the resources available from their colleagues nationwide. Louisiana SBDCs have great experience in disaster recovery assistance and should not be prevented from providing assistance to their colleagues outside of Louisiana in the event of disaster. Therefore, we fully support this provision.

    We applaud your efforts to protect small businesses in the wake of disasters and thank you for continuing to be a strong advocate on their behalf. After all, small businesses are the lifeblood of our great nation.

    Sincerely, Brenda Bertus, Executive Director, St. Tammany Economic Development Foundation.

    ____ North Louisiana economic partnership, February 26, 2013.

    Hon. Mary Landrieu, Chair, Committee on Small Business and Entrepreneurship, U.S. Senate, Washington, DC.

    Dear Senator Landrieu, The North Louisiana Economic Partnership thanks you for the opportunity to comment on the proposed changes to the disaster assistance programs offered by the United States Small Business Administration. The proposed amendments to the Small Business Act (15 USC 631 et seq.) will greatly enhance federal assistance to small businesses recovering from disasters. NLEP applauds your efforts to support our small businesses which make up the backbone of the American economy.

    As a regional economic development organization promoting North Louisiana, NLEP often works with businesses impacted by natural or manmade disasters. The impact of these disasters can temporarily or permanently shut down small businesses, leaving both small business owners and their employees without a livelihood. The SBA disaster programs offer a real lifeline to these impacted businesses which have very few options available to them. The proposed amendment to Section 1 of the bill regarding collateral for business disaster loans would allow more small businesses to utilize the disaster loan programs. If approved, small business owners would no longer have to use their primary residence as collateral toward a SBA disaster business loan of less than $200,000, if other assets are available. During a widespread disaster, the primary residence of business owners may also be impacted and requiring them to use their home as collateral would create an onerous burden and/or be financially unfeasible. Eliminating this collateral requirement opens up assistance to those businesses most impacted by disaster, speeding recovery for businesses and a region's economy.

    The second proposed change to Section 2 of the Small Business Act would allow Small Business Development Centers (SBDCs) to provide technical assistance to impacted small businesses beyond the current 250 mile limitation. The Louisiana Small Business Development Centers (LSBDCs) have successfully worked with countless small businesses devastated by Hurricanes Katrina, Rita, Gustav and Ike, and most recently the BP oil spill. The experience and expertise that the LSBDC could have shared with the SBDCs in the New York and New Jersey area would have enhanced their capabilities to cope with Superstorm Sandy. In times of disaster, it is essential to collaborate and pool resources in order to speed up delivery of much needed assistance.

    For these reasons, the North Louisiana Economic Partnership fully endorses the proposed amendments to the current SBA legislation that would open up, enhance and efficiently deliver disaster assistance to small businesses.

    Sincerely, Scott Martinez President, North Louisiana Economic Partnership.

    ____ Bay Area Houston, Economic Partnership, Houston, TX, February 13, 2013.

    Hon. Mary Landrieu, Chair, Committee on Small Business and Entrepreneurship, U.S. Senate, Washington, DC.

    Dear Senator Landrieu: The Texas economy has outperformed the rest of the country not only over the long term but also during the recent recession. Our pro-business climate has been a huge contributing factor to that, and so have Texas' small businesses. From 2002-2009, small businesses of fewer than 10 employees fueled the Texas employment engine, adding nearly 800,000 new jobs. When disaster strikes the Gulf Coast, as it did with Hurricanes Katrina, Rita, Gustav, and Ike, our small businesses are hit hard. The sooner they are able to recover the better it is for the region, the state, and the nation.

    This is why I am writing to support your proposed legislative amendments to the disaster assistance provisions in the Small Business Act (15 USC 631 et seq). Section 1 of the bill addresses collateral on business disaster loans. If approved, no longer would small business owners have to use their primary personal residence for collateral towards SBA disaster business loans less than $200,000 if other assets are available of equal or greater value than the amount of the loan. This would certainly help to reduce anxiety on the part of small business owners and their families who have already experienced enough stress through damage to or total destruction of their businesses.

    Section 2 of the bill includes the provision that authorizes the Small Business Administration to allow out-of- state small business development centers to provide assistance in presidentially-declared disaster areas, which is currently not allowed. When Hurricane Ike devastated our region in September 2008, we welcomed any and all kinds of disaster relief. The northeast just experienced a similar disaster with Hurricane Sandy. Utility crews from across the nation responded quickly to each. State lines should never be used to prevent aid from reaching disaster victims. The majority of the membership of our organization is comprised of small businesses. On their behalf, we fully endorse this provision.

    Thank you for working to keep America's small businesses strong and helping them to recover from major storms that we know will strike again.

    Sincerely, Bob Mitchell, President, Bay Area Houston Economic Partnership.

    ____ SWLA Economic Development Alliance, Lake Charles, LA, February 25, 2013.

    Hon. Mary Landrieu, Chair, Committee on Small Business and Entrepreneurship, U.S. Senate, Washington, DC.

    Dear Senator Landrieu, The Southwest Louisiana Economic Development Alliance welcomes the opportunity to comment on the proposed amendments to the disaster assistance provisions in the Small Business Act (15 US 631 et seq.). As we learned from Hurricanes Rita and Ike, the sooner our small businesses are able to recover, the better it is for the region, the state and the nation.

    We fully endorse the proposed amendment to Section 1 of the bill regarding collateral on business disaster loans. If approved, no longer would small business owners have to use their primary personal residence for collateral towards SBA disaster business loans less than $200,000 if other assets are available of equal or greater value than the amount of the loan. In times of crisis, affected business owners are understandably reluctant to place their personal homes up as collateral in order to obtain a much needed loan to rebuild their business. Allowing business assets to act as collateral will promote greater utilization of the loans; leading to faster economic recovery.

    Under Section 2 of the bill, Small Business Development Centers (SBDCs) are limited in their ability to provide service across state lines. This prevents SBDCs in affected areas from being able to draw upon the resources available from their colleagues nationwide. Louisiana SBDCs have great experience in [[Page S1024]] disaster recovery assistance and should not be prevented from providing assistance to their colleagues outside of Louisiana in the event of disaster. Therefore, we fully support this provision.

    About 85% of the members of the Chamber SWLA are small businesses. We applaud your efforts to protect small businesses in the wake of disasters and thank you for continuing to be a strong advocate on their behalf.

    Sincerely, George Swift, President/CEO, SWLA Economic Development Alliance.

    ______ By Mr. ROCKEFELLER (for himself and Mr. Blumenthal): S. 418. A bill to require the Federal Trade Commission to prescribe regulations regarding the collection and use of personal information obtained by tracking the online activity of an individual, and for other purposes; to the Committee on Commerce, Science, and Transportation.

    Mr. ROCKEFELLER. Mr. President, I rise to introduce the Do-Not-Track Online Act of 2013. This bill is a critical step towards furthering consumer privacy. It empowers Americans to control their personal information online and provides them with the ability to prevent online companies from collecting and using that information for profit.

    Do-not-track is a simple concept. It allows consumers, with a simple click of the mouse, to tell every company that participates in the vast online ecosystem, ``Do not collect information about me. I care about my privacy. My personal information is not for sale. And I do not want my information used in ways I do not expect or approve.'' Under this bill, online companies would have to honor that user declaration or face penalties enforced by the Federal Trade Commission, FTC, or State Attorneys General.

    This bill is necessary because the privacy of Americans is increasingly under assault as more and more of their daily lives are conducted online. Whether it is a person at home searching for a new job or home, a parent researching her sick child's symptoms and treatments using a health application, or a teenager using her smartphone while riding the subway, online companies are collecting massive amounts of information, often without consumers' knowledge or consent. A vast array of companies that consumers have never heard of are surreptitiously collecting this information in numerous ways: third-party advertising networks place ``cookies'' on computer web- browsers to track the websites that consumers have visited; analytic and marketing companies identify individual computers by recognizing the unique configuration, or ``fingerprint,'' of web-browsers; and software applications installed on mobile devices, colloquially known as ``apps,'' collect, use, and share information about consumers' precise locations, contact lists, photographs, and other personal matters. All of this information can be combined and stored on computer servers around the world and used for a variety of purposes, ranging from website analytics to online behavioral advertising to the creation of comprehensive dossiers by data brokers that build and sell personal profiles about hundreds of millions of individual Americans.

    My bill would empower consumers, if they so choose, to stem the tide. It would give them the means to prohibit the collection of their information from the start. Consumers would be able to tell companies collecting their personal information that they want those collection practices to stop. At the same time, the bill would preserve the ability of those online companies to conduct their business and deliver the content and services that consumers have come to expect and enjoy. The bill would grant the FTC rulemaking authority to use its expertise to protect the privacy interests of consumers while addressing the legitimate needs of industry.

    The key to this bill is its simplicity. For over a decade in the Senate Commerce Committee, which I chair, we have tried to determine how online companies can provide clear and conspicuous notice to consumers about their information practices and--once this notice has been given--further determine how consumers can either opt-in or opt- out of those information collection practices. Yet today, privacy policies are still far too long, too complicated, and too full of technical legalese for any reasonable consumer to read, let alone understand. The failures of these notices are even clearer when placed on the exploding number of mobile devices on which consumers have grown to rely. My bill avoids this messy ``rabbit hole'' of policy considerations and creates an easy mechanism that gives consumers the opportunity to simply say ``no thank you'' to anyone and everyone collecting their online information. Period.

    Let me also say a few words about what this bill does not do. My bill would not ``break the Internet,'' as I am sure we will hear from opponents. The truth is that my bill makes every necessary accommodation for online companies to continue providing content and services to consumers. For instance, websites and applications would still be able collect data to deliver the content and functionality that consumers have requested, perform internal analytics, improve performance, and prevent fraud. My bill would also allow online companies to collect and maintain consumer information when it has been voluntarily provided by the consumer. They could also collect data that is truly anonymous. Finally, consumers could allow companies they trust to collect and use their information by giving specific consent that overrides a general do-not-track preference. But, when consumers say that they do not want to be tracked, online companies would no longer be allowed to ignore this request and collect and use this information for any extraneous purpose. Moreover, these companies would be obligated to immediately destroy or anonymize the information once it is no longer needed to provide the service requested.

    I think it is worth noting that since 2010, the FTC has called for a do-not-track solution. The commission has stated that any effective do- not-track system should be simple, easy to use, and persistent, and that, if implemented, it should prevent the collection of consumers' online data. The private sector has also taken notice and similarly recognized the utility of do-not-track for its users. Nearly every popular web browser now allows consumers to affirmatively declare a do- not-track preference to websites. The problem is that online companies have no legal obligation to honor this request and, in fact, many have gone so far as to outright refuse to do so. In February 2012, industry leaders stood at the White House and publicly declared their commitment to honor do-not-track requests from web browsers. Yet since that time, industry has failed to live up to those commitments. The online advertising industry has articulated huge exemptions to its pledge to limit the collection of information--exceptions that undermine the very self-regulatory programs the industry has promoted as effective. This industry has emphasized consumer choice yet has made statements publicly refusing to honor new do-not-track browser features. My bill would put an end to this gamesmanship and nonsense.

    My bill is only part of the ongoing discussion on consumer privacy in Congress. It is simple, yet powerful. It allows consumers, if they choose, and I should emphasize that many will not make such a choice, to stop the mind-boggling number of online companies that are collecting vast amounts of their information. It gives consumers an easy-to-use tool that will implement their choices effectively in a complex, rapidly-changing online world. It prohibits those lurking in the cyber-shadows from profiting off of the personal, private information of ordinary Americans. I look forward to working with my colleagues on this and other privacy legislative efforts in the Commerce Committee and on the Senate floor.

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

    There being no objection, the text of the bill was ordered to be printed in the Record, as follows: S. 418 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Do-Not-Track Online Act of 2013''.

    SEC. 2. REGULATIONS RELATING TO ``DO-NOT-TRACK'' MECHANISMS.

    (a) In General.--Not later than 1 year after the date of the enactment of this Act, [[Page S1025]] the Federal Trade Commission shall promulgate-- (1) regulations that establish standards for the implementation of a mechanism by which an individual can simply and easily indicate whether the individual prefers to have personal information collected by providers of online services, including by providers of mobile applications and services; and (2) rules that prohibit, except as provided in subsection (b), such providers from collecting personal information on individuals who have expressed, via a mechanism that meets the standards promulgated under paragraph (1), a preference not to have such information collected.

    (b) Exception.--The rules promulgated under paragraph (2) of subsection (a) shall allow for the collection and use of personal information on an individual described in such paragraph, notwithstanding the expressed preference of the individual via a mechanism that meets the standards promulgated under paragraph (1) of such subsection, to the extent-- (1) necessary to provide a service requested by the individual, including with respect to such service, basic functionality and effectiveness, so long as such information is anonymized or deleted upon the provision of such service; or (2) the individual-- (A) receives clear, conspicuous, and accurate notice on the collection and use of such information; and (B) affirmatively consents to such collection and use.

    (c) Factors.--In promulgating standards and rules under subsection (a), the Federal Trade Commission shall consider and take into account the following: (1) The appropriate scope of such standards and rules, including the conduct to which such rules shall apply and the persons required to comply with such rules.

    (2) The technical feasibility and costs of-- (A) implementing mechanisms that would meet such standards; and (B) complying with such rules.

    (3) Mechanisms that-- (A) have been developed or used before the date of the enactment of this Act; and (B) are for individuals to indicate simply and easily whether the individuals prefer to have personal information collected by providers of online services, including by providers of mobile applications and services.

    (4) How mechanisms that meet such standards should be publicized and offered to individuals.

    (5) Whether and how information can be collected and used on an anonymous basis so that the information-- (A) cannot be reasonably linked or identified with a person or device, both on its own and in combination with other information; and (B) does not qualify as personal information subject to the rules promulgated under subsection (a)(2).

    (6) The standards under which personal information may be collected and used, subject to the anonymization or deletion requirements of subsection (b)(1)-- (A) to fulfill the basic functionality and effectiveness of an online service, including a mobile application or service; (B) to provide the content or services requested by individuals who have otherwise expressed, via a mechanism that meets the standards promulgated under subsection (a)(1), a preference not to have personal information collected; and (C) for such other purposes as the Commission determines substantially facilitates the functionality and effectiveness of the online service, or mobile application or service, in a manner that does not undermine an individual's preference, expressed via such mechanism, not to collect such information.

    (d) Rulemaking.--The Federal Trade Commission shall promulgate the standards and rules required by subsection (a) in accordance with section 553 of title 5, United States Code.

    SEC. 3. ENFORCEMENT OF ``DO-NOT-TRACK'' MECHANISMS.

    (a) Enforcement by Federal Trade Commission.-- (1) Unfair or deceptive acts or practices.--A violation of a rule promulgated under section 2(a)(2) shall be treated as an unfair and deceptive act or practice in violation of a regulation under section 18(a)(1)(B) of the Federal Trade Commission Act (15 U.S.C. 57a(a)(1)(B)) regarding unfair or deceptive acts or practices.

    (2) Powers of commission.-- (A) In general.--Except as provided in subparagraph (C), the Federal Trade Commission shall enforce this Act in the same manner, by the same means, and with the same jurisdiction, powers, and duties as though all applicable terms and provisions of the Federal Trade Commission Act (15 U.S.C. 41 et seq.) were incorporated into and made a part of this Act.

    (B) Privileges and immunities.--Except as provided in subparagraph (C), any person who violates this Act shall be subject to the penalties and entitled to the privileges and immunities provided in the Federal Trade Commission Act (15 U.S.C. 41 et seq.).

    (C) Nonprofit organizations.--The Federal Trade Commission shall enforce this Act with respect to an organization that is not organized to carry on business for its own profit or that of its members as if such organization were a person over which the Commission has authority pursuant to section 5(a)(2) of the Federal Trade Commission Act (15 U.S.C. 45(a)(2)).

    (b) Enforcement by States.-- (1) In general.--In any case in which the attorney general of a State has reason to believe that an interest of the residents of the State has been or is threatened or adversely affected by the engagement of any person subject to a rule promulgated under section 2(a)(2) in a practice that violates the rule, the attorney general of the State may, as parens patriae, bring a civil action on behalf of the residents of the State in an appropriate district court of the United States-- (A) to enjoin further violation of such rule by such person; (B) to compel compliance with such rule; (C) to obtain damages, restitution, or other compensation on behalf of such residents; (D) to obtain such other relief as the court considers appropriate; or (E) to obtain civil penalties in the amount determined under paragraph (2).

    (2) Civil penalties.-- (A) Calculation.--Subject to subparagraph (B), for purposes of imposing a civil penalty under paragraph (1)(E) with respect to a person that violates a rule promulgated under section 2(a)(2), the amount determined under this paragraph is the amount calculated by multiplying the number of days that the person is not in compliance with the rule by an amount not greater than $16,000.

    (B) Maximum total liability.--The total amount of civil penalties that may be imposed with respect to a person that violates a rule promulgated under section 2(a)(2) shall not exceed $15,000,000 for all civil actions brought against such person under paragraph (1) for such violation.

    (C) Adjustment for inflation.--Beginning on the date on which the Bureau of Labor Statistics first publishes the Consumer Price Index after the date that is 1 year after the date of the enactment of this Act, and annually thereafter, the amounts specified in subparagraphs (A) and (B) shall be increased by the percentage increase in the Consumer Price Index published on that date from the Consumer Price Index published the previous year.

    (3) Rights of federal trade commission.-- (A) Notice to federal trade commission.-- (i) In general.--Except as provided in clause (iii), the attorney general of a State shall notify the Federal Trade Commission in writing that the attorney general intends to bring a civil action under paragraph (1) before initiating the civil action.

    (ii) Contents.--The notification required by clause (i) with respect to a civil action shall include a copy of the complaint to be filed to initiate the civil action.

    (iii) Exception.--If it is not feasible for the attorney general of a State to provide the notification required by clause (i) before initiating a civil action under paragraph (1), the attorney general shall notify the Federal Trade Commission immediately upon instituting the civil action.

    (B) Intervention by federal trade commission.--The Federal Trade Commission may-- (i) intervene in any civil action brought by the attorney general of a State under paragraph (1); and (ii) upon intervening-- (I) be heard on all matters arising in the civil action; and (II) file petitions for appeal of a decision in the civil action.

    (4) Investigatory powers.--Nothing in this subsection may be construed to prevent the attorney general of a State from exercising the powers conferred on the attorney general by the laws of the State to conduct investigations, to administer oaths or affirmations, or to compel the attendance of witnesses or the production of documentary or other evidence.

    (5) Preemptive action by federal trade commission.--If the Federal Trade Commission institutes a civil action or an administrative action with respect to a violation of a rule promulgated under section 2(a)(2), the attorney general of a State may not, during the pendency of such action, bring a civil action under paragraph (1) against any defendant named in the complaint of the Commission for the violation with respect to which the Commission instituted such action.

    (6) Venue; service of process.-- (A) Venue.--Any action brought under paragraph (1) may be brought in-- (i) the district court of the United States that meets applicable requirements relating to venue under section 1391 of title 28, United States Code; or (ii) another court of competent jurisdiction.

    (B) Service of process.--In an action brought under paragraph (1), process may be served in any district in which the defendant-- (i) is an inhabitant; or (ii) may be found.

    (7) Actions by other state officials.-- (A) In general.--In addition to civil actions brought by attorneys general under paragraph (1), any other officer of a State who is authorized by the State to do so may bring a civil action under paragraph (1), subject to the same requirements and limitations that apply under this subsection to civil actions brought by attorneys general.

    (B) Savings provision.--Nothing in this subsection may be construed to prohibit an authorized official of a State from initiating or continuing any proceeding in a court of the State for a violation of any civil or criminal law of the State.

    [[Page S1026]] SEC. 4. BIENNIAL REVIEW AND ASSESSMENT.

    Not later than 2 years after the effective date of the regulations initially promulgated under section 2, the Federal Trade Commission shall-- (1) review the implementation of this Act; (2) assess the effectiveness of such regulations, including how such regulations define or interpret the term ``personal information'' as such term is used in section 2; (3) assess the effect of such regulations on online commerce; and (4) submit to Congress a report on the results of the review and assessments required by this section.

    ______ By Mrs. FEINSTEIN (for herself, Mr. Leahy, Mrs. Boxer, Mr. Brown, Ms. Cantwell, Mr. Cardin, Mr. Durbin, Mr. Franken, Mr. Harkin, Mr. Johnson of South Dakota, Ms. Klobuchar, Mrs. Murray, Mr. Rockefeller, Mr. Sanders, Mr. Udall of New Mexico, Mr. Whitehouse, and Mr. Wyden): S. 419. A bill to limit the use of cluster munitions; to the Committee on Foreign Relations.

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