Donald Manzullo

Mr. MANZULLO

Mr. MANZULLO. Mr. Speaker, I come from northern Illinois, an area that has over 2,500 factories. I've spent about three-fourths of my time in Congress dealing with manufacturing issues and traveled the world working on different projects that have different processes, and this bill is really, really bad for people who are interested in keeping manufacturing jobs in the United States. Therefore, I rise in opposition to the rule governing the Hardrock Mining and Reclamation Act of 2007. Twenty-six amendments from both Democrats and Republicans were submitted, but only seven were approved for the House for debate for 10 minutes apiece. The bill proposes to make huge changes to an important sector of our economy, and the bill, therefore, deserves more than a little over 2 hours of debate. If the underlying bill is enacted as currently drafted, it poses an unacceptable threat to the health of our manufacturing and defense industrial base. Without agriculture, mining and manufacturing, we become a Third World Nation. U.S. mining operations provide approximately 50 percent of the metals needed by American manufacturers. Everybody in Congress, Mr. Speaker, interested in manufacturing needs to listen to this, because if this bill passes, this makes us more dependent upon China to get our minerals for manufacturing. Many of these minerals, gold, silver, copper, platinum, molybdenum, beryllium, titanium, zinc, magnesium and nickel are used in manufacturing applications from industrial motors to satellites. Thus, the core of our industrial minerals is what we're discussing today. Over the past few years, the cost of these raw materials has gone through the roof. We're putting the viability of our manufacturers in America at stake. When I chaired the Small Business Committee, I held two historic hearings on the spike in metal prices and what it means for manufacturers, both large and small. No one recommended at those hearings that we should make it more difficult, and thus more expensive, to mine in the United States. Many of the alternative sources of these minerals are also located in countries that are not close allies of us. Many of these minerals are also critical for the production of defense equipment. I'm concerned that we may find that just as America's energy security is largely dependent on the goodwill of OPEC, our national security will be largely dependent on China's goodwill as we compete for the metals and rare Earth minerals that feed our defense industrial base. Over half of the high-end magnet production that contains aluminum, nickel, and cobalt comes from China, and 100 percent of the rare Earth minerals used in magnets is found in China. The magnets are used in advanced missile guidance systems such as JDAM. I'm not aware of anybody that has claimed that the increased regulatory burden, an 8 percent gross income royalty interest in new production and a 4 percent increase on retroactive production, will help to improve the domestic supply of minerals or help lower their costs. Our manufacturing workers are the best and most productive workers in the world. They have been beset by cheap labor overseas, rising energy costs, unfair trade practices. And now this Congress, this Congress, Mr. Speaker, will make it more difficult for the American worker to keep his job in manufacturing because this Congress will make the raw materials so expensive that what will happen, the U.S. mining companies may go out of business, and then we will be totally dependent on foreign countries to keep up the mineral supply for our manufacturing base. This is an issue that if you vote ``yes'' on this rule, if you vote ``yes'' on the bill, it will destroy America's manufacturing jobs. Maybe I get too passionate when it comes to protecting America's manufacturing jobs. I've visited hundreds and hundreds of factories throughout the world to make sure that the United States is way out front in technology and innovation, and in fact, when I hear so much talk going on on the other side of the aisle about innovation, about competitiveness, then you come right back and the very feedstock for American manufacturing you want to tax out of business. Mr. Speaker, this is a bad bill for American workers. This is a bad bill for American workers. This is a bad bill for American workers because it says let's just tax the minerals you need to make things that go out the door out of business. You might as well put another tax on natural gas. In fact, the Democrats did the same thing by taking away the tax break for exploration of natural gas, which is 80 percent of the feedstocks for plastics. And so here we are again, this Congress destroying American manufacturing jobs. Vote ``no'' on the rule and ``no'' on the bill.

Mr. MANZULLO

Mr. MANZULLO. Madam Speaker, on that I demand the yeas and nays.

Mr. MANZULLO

Mr. MANZULLO. Mr. Chairman, I rise in reluctant opposition to the Small Business Contracting Program Improvements Act (H.R. 3867). The aims of this legislation are noble. The purpose of this bill is to make a variety of changes--some long overdue--to several of the sub-small business federal contracting goals. I commend the authors of H.R. 3867 for strengthening the procurement set-aside program for service-disabled veteran-owned small businesses in Title I. I also praise the effort to finally get the women's procurement program off the ground. During my tenure as chairman of the Small Business Committee, I was proud of my bipartisan work to pressure the SBA to implement this initiative. However, I remind my colleagues that under the new leadership of the administrator of the Small Business Administration, SBA, Steven Preston, more action has been taken in the past year to implement the women's procurement program than in the previous seven since the program was first created. The SBA is near completion of a final rule, which will pass constitutional muster, on the women's procurement program. Thus, I counsel continued patience and I hope that Title III in H.R. 3867 will not be needed. However, I am disappointed that the increase in the size in contracts available to small manufacturers awarded without competition is not significantly increased. While Section 204 of H.R. 3867 provides a long-overdue inflationary increase to the contract limitation level for other small businesses, from $3 million to $5.1 million, the size for small manufacturers is increased by just $500,000--from $5 million to $5.5 million. This small increase diminishes the value of this benefit to U.S. small manufacturers, particularly as compared to other small businesses. To keep up with inflation and provide an equivalent benefit, this contract limitation should be increased to $8.5 million for small manufacturers. This bill also unfortunately pits two sets of small businesses against each other--a minority small business development program 8(a) versus a procurement preference program that encourages small businesses to develop and hire local workers in economically-distressed areas of the country, otherwise known as Historically Underutilized Business, HUB, Zones. When I was chairman of the Small Business Committee, I never brought a bill to the House floor that helped one set of small businesses at the expense of another group of small businesses, particularly those firms that are committed to redeveloping economically-distressed areas in both urban and rural America. H.R. 3867 makes the 8(a) program more attractive while putting more hurdles in front of the HUBZone program. This is ironic because the Federal government has never met the 3 percent goal for HUBZones since its creation in 1996 but routinely meets and exceeds the 5 percent goal for minority or Small Disadvantaged Businesses, SDBs, of which 8(a) firms is a part. A key blow to the HUBZone program is contained in Section 101(b) of H.R. 3867. This provision makes the HUBZone program discretionary or optional on the part of Federal contracting officers. This will only further discourage the use of HUBZone firms by the government to fulfill its procurement needs. H.R. 3867 also requires an on-site inspection by SBA personnel of a small business to confirm HUBZone status prior to the award of their second program-related contract. Because of the limited resources at the SBA, this could delay the completion of contracts by weeks, if not months, while the HUBZone firm awaits this audit. Again, a Federal contracting official would be disinclined to use a HUBZone firm if it meant a longer time before a Federal agency would receive the good or service that was put out to bid. The non-partisan Congressional Budget Office, CBO, estimates that this provision alone would cost $62 million over the next 5 years to complete 5,000 on-site visits that would be performed each year. There are other ways to accomplish the same goal of making sure that HUBZone firms are in compliance with all the requirements of the law, including a closer review by the SBA of HUBZone applications, an expedited protest process by other small businesses, and enhanced criminal and civil penalties for false or misleading statements. Finally, H.R. 3867 prohibits HUBZone construction firms from participating in projects more than 150 miles from its headquarters location. This would put a severe competitive disadvantage to HUBZone firms located in rural areas from performing work on Federal Government construction contracts located far away. In the northern Illinois congressional district I am proud to represent, two entire mostly rural counties--Carroll and Stephenson-- are HUBZones. Also, HUBZones are located in certain urban parts of Winnebago County, mostly in the city center areas of Rockford along the Rock River that have suffered from the closure of numerous manufacturing facilities. This bill would put a further competitive disadvantage to any HUBZone firms located in the 16th District to compete for Federal business located even as close as the nearest major Federal procuring center in Illinois--Scott Air Force Base, which is about 300 miles away from Rockford and Freeport, Illinois. While claiming to correct alleged abuses and fraud in the HUBZone program, H.R. 3867 opens up the 8(a) program to potential abuse by increasing the economic disadvantage threshold test above the average rate of inflation and applying this test only once upon entry into the program. The current economic disadvantage threshold level, which has not been changed since 1988, is $250,000. I agree that this level needs to be increased to compensate for inflation. However, H.R. 3867 raises this level to $550,000 even though the rate of inflation since 1988 would produce a result of $440,000, according to the Bureau of Labor Statistics. Also, the SBA currently applies this wealth test annually to ensure that the 8(a) program truly serves economically disadvantaged small business owners. Eliminating this yearly test could potentially lead to fraud if a wealthy person seeking entry into the 8(a) program is creative in shifting around their assets. H.R. 3867 would also allow multi-millionaires to remain in the 8(a) program for 10 years once they pass the first economic disadvantage test. Most critically, H.R. 3867 does not deal with the fundamental problem in the 8(a) program cited in numerous SBA Office of Inspector General reports that 50 percent of the dollars obligated against 8(a) contracts went to a mere 1.7 percent of the 8(a) firms and over 70 percent of the eligible firms received no 8(a) contract benefit at all. Finally, H.R. 3867 also does not deal with the problem of large Alaska Native Corporations, ANCs, being able to participate in the 8(a) program and receive sole-sourced multi-million dollar contracts. Because of these and other problems, the Bush Administration has issued a statement strongly opposing H.R. 3867, which I include for the Record. Thus, I respectfully urge my colleagues to oppose this legislation in order for these problems to be fixed. Statement of Administration Policy--H.R. 3867--Small Business Contracting Program Improvements Act The Administration strongly opposes H.R. 3867, which would modify the small business procurement programs of the Small Business Administration. The Administration appreciates the intent of H.R. 3867 to improve these programs and reduce the potential for fraud and abuse. However, the Administration believes that a number of the bill's elements would be burdensome or undesirable. In addition, some provisions of the bill raise significant constitutional concerns. The Administration looks forward to working with Congress to remedy the issues identified below. The bill also eliminates the upper asset limit on economic disadvantage for continued participation in the program, essentially allowing an individual regardless of their wealth or income to continue participating in the program for a full 10 years. The bill would raise the asset-test bar for eligibility of individuals for the 8(a) program from $250,000 to $550,000, excluding equity in their home or their business. As the 8(a) program is designed to reach economically disadvantaged small business owners who have diminished credit opportunities, the Administration believes opening the program to small business owners with higher net worth will divert 8(a) contracting opportunities well beyond the original intent of the program. H.R. 3867 would place a number of burdensome requirements on the HUB Zone contracting program. The bill would prohibit rural and Native American HUB Zone firms from obtaining construction contracts more than 150 miles from their HUB Zone principal office. The bill would also require on-site evaluation of all HUB Zone firms prior to the award of their second program-related contract. This provision would create a large burden on the Small Business Administration, as these firms are widely distributed and often located in rural areas. The firms are already required to certify their status prior to award of a contract, and false certification is a felony with significant penalties. Also, the Small Business Administration currently has a protest mechanism in place to ensure the eligibility of firms for HUB Zone contracts. The Administration is supportive of sections of H.R. 3867 that punish false representation of a firm as being owned by service-disabled veterans and provisions that attempt to assist such firms in the Federal contracting process. However, the Administration is concerned about provisions that would require that certain small business preference programs take priority over other small business preference programs. H.R. 3867 would also increase dollar thresholds for setting-aside non-competitive contracts in several of these programs. Competition is a proven way of obtaining the best performance and value for the government. Accordingly, any non-competitive thresholds increase should be based on the actual rate of inflation as reflected in regulatory changes instituted by the SBA. While the Administration supports opportunities for women- owned small businesses (WOSBs) to compete for Federal contracts, it opposes the bill's constitutionally suspect creation of gender-based set-asides. In order to withstand applicable equal protection standards, determinations of under-representation that form the basis of set-asides must be carefully controlled to assure that the pool of WOSBs deemed available for the contracting opportunities in question is limited to businesses that are eligible to perform those contracts. The bill's provisions for the identification of industries in which WOSBs are under represented does not appear to satisfy that standard. Additionally, authorizing individual agencies to make determinations of under representation that will result in contract set-asides based on sex will exacerbate such constitutional concerns, since it is unlikely that such determinations will be based upon the kind of thorough statistical analysis required by the courts to justify such set-asides under applicable case law. Additionally, the bill's apparent expansion of the business categories that will be eligible for race- or ethnicity-based preferences in Federal contracting programs is subject to strict scrutiny under governing equal protection standards. Unless these provisions are supported by a sufficiently current legislative record demonstrating that they are narrowly tailored to further a compelling government interest, such provisions may be vulnerable to constitutional challenge.

Mr. MANZULLO

Mr. MANZULLO. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I rise in support of S. 1612. S. 1612 is legislation which significantly increases the enforcement and deterrent effects of sanctions and export control violations imposed under the International Emergency Economic Powers Act, otherwise known as IEEPA. Through this law, the President may respond to unusual and extraordinary threats originating in substantial part outside of the United States by, among other things, prohibiting transactions associated with particular entities or countries. In other words, IEEPA authorizes the President to impose economic and financial sanctions against certain foreign threats to the U.S. and our interests around the world. An example of success was the use of these tools to bring North Korea back to the bargaining table to eliminate their nuclear program. IEEPA is also vital to U.S. national security because it continues the expired Export Administration Act in full force, allowing the Department of Commerce to carry out its mission of ensuring sensitive goods and technologies do not fall into the hands of our adversaries. It is important to keep the EAA in force so violators do not escape the penalties of the law on a mere technicality. I would like to take the time to respectfully remind the administration that IEEPA brings the entire Export Administration Act into force, not just certain provisions. Mr. Speaker, this legislation would remove existing barriers to meaningful enforcement of U.S. sanctions against terrorist financers, proliferators of weapons of mass destruction, Iran, Sudan, and other threats under IEEPA. Current penalties under IEEPA do not constitute an effective deterrent to entities that violate the law by engaging in prohibited transactions. The legislation will remedy that problem by increasing civil penalties from $50,000 to $250,000 and increasing criminal penalties for willful violations to $1 million with a maximum jail sentence of 20 years. Mr. Speaker, while I strongly support this increase in penalties to willful and knowing violators, I have expressed concern that these increased penalties may be applied without taking into account unintentional, accidental, or inadvertent violations by companies that are trying to comply with the law. I have since been assured by the Departments of Treasury and Commerce that they will not abuse this new authority, and I include for the Record the letter sent to me by Under Secretary of Commerce Mancuso. Department of Commerce, Washington, DC, September 26, 2007. Hon. Donald A. Manzullo, House of Representatives, Washington, DC. Dear Representative Manzullo: Thank you for your letter of September 24, 2007, to Secretary Carlos Gutierrez expressing your concerns over S. 2000, the Export Enhancement Act of 2007 (EEA), and S. 1612, the International Emergency Economic Powers Enhancement Act, Secretary Gutierrez asked me to respond to you on his behalf. We share a concern for ensuring the vitality of American businesses--small, medium and large, while keeping the most sensitive U.S. goods and technologies out of the hands of those who would do us harm. The Department of Commerce, including the Bureau of Industry and Security (BIS), welcomes your leadership in promoting the role of America's manufacturing sector in sustaining our country's industrial innovation and global competitiveness. BIS is focused on ensuring that penalties for violations of the dual-use export control laws and regulations are appropriate. These penalties must not bear disproportionately on small businesses that may have committed a minor, inadvertent violation. With these goals in common, we can work together to protect businesses while protecting America. Passage of the EEA is an important step toward this goal, and for this reason is a high priority of the Secretary. Although you point out that S. 2000 would substantially increase penalty levels for civil and criminal violations, we believe that such levels are necessary to make these penalties a more effective deterrent to companies that would intentionally violate the law. Given the national security issues involved, such as WMD proliferation, terrorism, and military diversions, we must do all we can to make our export controls effective. Our intent is not to punish any business unfairly for minor, accidental violations. As you know, BIS has implemented a system that mitigates the penalty if certain elements are met in each case of a violation. It is through this system, as articulated in the BIS Penalty Guidelines published in the Code of Federal Regulations in July 2007 (a copy of which is enclosed for your review), that BIS ensures that the penalty assessed is commensurate with the infraction. In civil cases, the published Penalty Guidelines set forth several factors that may be considered when deciding ultimate penalty amounts to be imposed, including; 1. whether or not the respondent submitted a voluntary self-disclosure in the case; 2. whether the respondent had an export compliance program in place at the time of the violation; 3. whether the respondent has a prior conviction for export control violations; and 4. how cooperative the respondent is with the investigation by export enforcement officials. These, and other factors, are taken into consideration by BIS when imposing penalties to ensure the punishment fits the violation. Further, the Penalty Guidelines are drafted to allow BIS to take into account company size and the nature of the specific violations in a way that would warrant smaller penalty amounts. Additionally, BIS frequently conducts outreach to large and small businesses to aid in the assessment of their export compliance programs, and to address general compliance questions. These visits and outreach programs provide significant opportunities for the federal government and exporters to have a dialogue on export controls, penalties, and compliance concerns. To that end, I would like to offer to visit your Congressional District and hold roundtable discussions with business leaders and entrepreneurs. We are working to create, administer and improve an effective and flexible system of export controls that recognize the unique situations that U.S. businesses, particularly small businesses, encounter. Please do not hesitate to contact me or Bill Houston on my staff at 202- 482-6002 at anytime. I value our relationship and look forward to working together in the future. Sincerely, Mario Mancuso, Under Secretary for Industry and Security. Mr. Speaker, I have also expressed concern about the lack of understanding that most small businesses have concerning export controls and sanctions. Our sanctions and export control laws are the most complex in the world. I believe if we are truly to keep goods and services from embargoed countries, small businesses must have a better understanding of what those prohibited items are. Educated self-governance by small businesses would greatly enhance IEEPA as a deterrent, far more than some of the minimal fines that are currently imposed. Mr. Speaker, I look forward to working with the Departments of Treasury and Commerce to make certain that small businesses clearly understand the law. IEEPA is an important tool in the effort to combat terrorist financing and other illicit activity, such as the proliferation of weapons of mass destruction. I want to thank Chairman Lantos, Ranking Member Ros-Lehtinen and obviously Subcommittee Chairman Sherman for the bipartisan way they have moved this measure. They have worked with the administration to address my concerns. I support passage of this critical improvement to our economic sanctions law. Mr. Speaker, I reserve the balance of my time.

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

Mr. MANZULLO

Mr. MANZULLO. Madam Speaker, the horrendous massacre that is taking place in Burma is despicable and unconscionable. Now is the time for Members of this House to condemn the military junta and support human rights by supporting my good friend, Representative Peter King's resolution on Burma. On September 27, 2007 the military junta violated the sacred traditional sanctuary of Buddhist temples in mass coordinated pre-dawn raids. More than 200 monks were arrested. What we know is that at least five monks, eight civilian protestors, and a Japanese photographer were killed by the army. But how many more were gunned down or dragged off in the middle of the night by the junta may never be known. This resolution not only calls for the immediate and unconditional release of Nobel Peace Price laureate Aung San Suu Kyi but also for a restoration of democracy and human rights that has eluded the people of Burma for so long. The Rangoon Massacre only makes our call for the return to democracy ever more urgent. Burma was once the richest country in Southeast Asia and the world's largest rice exporter. However, as a result of decades of corruption and gross mismanagement, Burma is now an economic failure. Countless Burmese are regularly victimized by human traffickers as they seek a better life outside the country. The junta's decision in August to hike fuel prices further threatened the people's livelihood. This led to the largest street demonstrations in two decades. So, instead of listening to the will of the people, the generals have only made things worse by cracking down violently. Aung San Suu Kyi is the daughter of Burma's George Washington. Ms. Suu Kyi is the living symbol of Burmese democracy, and this year she turns 62. How much longer must democracy and freedom be held hostage? President Bush, in his recent speech before the United Nations General Assembly in New York, announced plans for new U.S. sanctions against the military regime in Burma. I join the President in calling on the U.N. to act more decisively in the face of the unprecedented demonstrations taking place in that country. Now is the time for the world community to stand up for human rights and democracy. Who else will join the U.S. in raising their voice against this injustice? Singapore has issued a strong statement on behalf of the Association of Southeast Asian Nations. I commend them for this. However, more needs to be done. Burma's neighbors can make a real difference by letting the junta know that their actions will not be tolerated. China, India, and Russia must act too because the world is watching. The U.S. Congress must speak loudly and clearly. Let there be no mistake. As the senior Republican on the Asia Subcommittee of the House Foreign Affairs Committee, I strongly and wholeheartedly urge passage of this resolution today. We must stand with the people of Burma; they have waited long enough and can wait no longer.

Mr. MANZULLO

Mr. MANZULLO. Mr. Chairman, I rise in reluctant opposition to the Small Business Investment Expansion Act of 2007, H.R. 3567. The non- partisan Congressional Budget Office, CBO, estimates that this bill will cost $102 million over the next 5 years. Thus far this year, the CBO estimates that the Democrat-controlled House Small Business Committee has authorized $5.9 billion in new spending over the next 5 years--$1.55 billion in fiscal year 2008 alone. To put this massive spending increase in perspective, the Fiscal Year 2008 Financial Services Appropriations bill, H.R. 2829, provides $582 million in total spending on the SBA in FY 08. In the past, legislation dealing with programs in the Small Business Investment Act operated under the assumption that the bill should not cost the taxpayer any new money. I am proud that the Republican-led Congress took the Small Business Investment Company, SBIC, program to ``zero-subsidy,'' funded solely by user-fees, first with the debenture program in 1996 and then the participating securities program in 2001. I regret that because of the downturn in the markets earlier this decade, the participating securities component of the SBIC program, which targeted equity investments in early stage small businesses, has become essentially insolvent and defunct since 2005. During the 109th Congress, I tried numerous ways in my capacity as chairman of the House Small Business Committee, to thread the needle to reopen the participating securities program while still keeping it at ``zero subsidy.'' However, H.R. 3567 abandons fiscal restraint by creating yet another new program to promote equity investments in early stage small businesses. First, CBO estimates that the creation of the Angel Investment Program in Title III of H.R. 3567 will cost $57 million over the next 5 years. While there is a provision that requires an angel group repay any investment it receives, the repayment comes solely out of any profit the group receives. But what if the angel group makes no money? Then the taxpayer is left holding the bag. This is a departure from the regular SBIC program where upfront fees are also charged, in addition to retaining a share of the profits, to help offset the cost of the program. The bill creates yet another new office and more bureaucracy at the Small Business Administration, SBA, to promote angel investments in early stage small firms. It also spends $1 million to create a Federal angel network to collect and maintain information on local and regional angel investors that is readily available over the Internet, e.g., www.bandofangels.com. H.R. 3567 also spends $1.5 million to create yet another grant program to increase awareness and education about angel investing, heaping potentially yet another mission upon the already stretched Small Business Development Center, SBDC, program. Earlier this year, the House passed three SBDC-related bills that created nine new programs for them to implement. Last year, I held a hearing on the Small Business Committee to listen to the leading experts on the angel movement. At the time, the committee debated similar angel legislation, H.R. 4565, offered by Democrats to what is on the floor today. All the witnesses except the one called by the Democrats testified that because of the decentralized and informality of angels, a tax credit modeled after what exists in many states is far more preferable to creating yet another office and program at the SBA to promote angel investments. This is what the leading experts in the angel movement said about the ideas contained in H.R. 4565, which is now Title III of H.R. 3567, at the May 10, 2006, Small Business Committee hearing: Dr. Ian Sobieski, founder and managing director of the Band of Angels: ``I would be wary of any kind of government interaction with angel groups because of the danger of perturbing a natural market process that is still good for it. The tax credit changes the environment in which capital decisions are being made . . . The danger in . . . data collection is the implied authority by which it is collected. If the Federal Government gets involved in collecting data (on angels) that has the imprimatur of the United States Government, that speaks with great weight.'' Susan Preston of Davis, Wright Tremaine LLP: ``. . . the vast majority of investments by angels are done by individuals, not members of angel groups. These are highly independent autonomous anonymous individuals that don't want their name in databases and aren't interested, for the most part, in joining groups.'' I simply don't understand why this Democratic-led Congress ignores the advice of angel experts to direct the SBA to provide capital to extremely wealthy individuals to support investments they probably would make anyway. I'm also surprised that this Democratic-led Congress, which routinely criticizes the SBA for its alleged incompetence, would add another yet another mission to its responsibilities. That's why I was proud to join Representative Earl Pomeroy of North Dakota in reintroducing the alternative to this government-run approach--the Access to Capital for Entrepreneurs, ACE, Act of 2007, H.R. 578--to keep decisions on angel investments at the individual and local level. Second, I also have concerns about Title II of H.R. 3567 that dramatically expands the New Markets Venture Capital, NMVC, program and opens up the Federal Government to more exposure. The CBO estimates that Title II raises the subsidy or exposure rate to 17 percent and will cost the taxpayer $11 million over the next 5 years. The mission of the NMVC is to promote venture capital investments in economically distressed communities in both urban and rural America. However, I believe the NMVC program is already a triplicate of two other programs that already exists--the regular SBIC program and the Rural Business Investment, RBIC, program at the U.S. Department of Agriculture, USDA. Of the 2,299 U.S. small businesses that received SBIC financing in fiscal year 2005, 23 percent were located in Low- and Moderate-Income (LMI) areas of the country. Those LMI-district companies received $543 million or 19 percent of the total $2.9 billion invested by SBICs in FY 2005. Also, 30 percent of SBIC investments were made in small U.S. manufacturers. For the period FY 2001 through FY 2005, SBIC investments in small manufacturing companies totaled $4.3 billion. In addition, the USDA runs the RBIC program in cooperation with the SBA to promote equity investments in rural areas. Thus, I see no need expand a program to help small businesses that are already being assisted by two other government programs. Third, I object to reinstating taxpayer funding for the surety bond program. This program is important to help small businesses, primarily small construction firms, win federal government contracts by offering a bond to guarantee that the work will be completed. To cover the costs of those guarantees, fees are paid to the SBA by both the contractor receiving the guarantee and the surety or insurance company that issues the bond for the contractor's performance. In fiscal year 2006, the SBA provided guarantees under the surety bond program for about 5,000 small businesses and collected about $7 million in fees. Section 405 of H.R. 3567 eliminates fees that are currently charged to contractors and sureties. That's why the CBO estimates Section 405 will cost the taxpayer over the next 5 years. Mr. Chairman, there is no need to do this. During my tenure as chairman of the Small Business Committee, I never heard from a small business complaining about fees charged in the surety bond program. This could develop into a problem for the Federal Government when small businesses, which have no financial stake in their surety bond and thus have nothing at risk if they default, do not complete the contract. I predict that there will be more broken contracts and uncompleted work. Section 405 also sets a precedent to do away with the ``zero'' subsidy policy in other SBA programs, such as in the 7(a) loan guarantee program. But the most egregious provision in H.R. 3567 is the revamping of small business size standards in Title V. This provision allows companies not independently-owned and operated but controlled by venture capital, VC, investors to still be considered as a small business in the eyes of the Federal Government. Title V will allow large businesses and universities that establish a VC to potentially game the system to benefit from not just various SBA technology programs but every other SBA loan and procurement assistance program. It could even complicate the Regulatory Flexibility Act, which requires Federal agencies to take into account the interests of small businesses during the development of new regulations. When I was chairman of the Small Business Committee, I was proud of the bipartisan support I received in eliminating big businesses from participating in various federal small business programs. This led the SBA to finally clamp down on this abuse and issue new regulations and policies to do away with this practice. However, I fear that many of my colleagues have not fully thought through the implications of this provision. Title V would undo all the bipartisan work done on this issue over the past five years. In particular, I spent a lot of time and effort trying to solve the specific problem of the eligibility of some small businesses with venture capital investments to participate in the Small Business Innovative Research, SBIR, program at the National Institutes of Health, NIH. The SBIR program guarantees that at least 2.5 percent of Federal research and development, R&D, dollars must go to small businesses. After the Defense Department, the NIH is the second-largest spender of R&D funding in the Federal Government. Title V tries to solve a problem that is grossly exaggerated. It is a myth that small businesses with VC investments are unable to participate in the SBIR program at NIH because of a misinterpretation of the law by the SBA. In an impartial Government Accountability Office, GAO, study that I requested, they discovered that 17 percent of NIH SBIR awards, accounting for 18 percent of the dollar value, went to small business with VC investments in fiscal year 2004. These small firms had no problem in complying with SBA guidelines. Nevertheless, I tried to proffer a compromise that would have established a 2-year pilot program to set-aside 0.5 percent of NIH R&D funding, over-and- above the 2.5 percent currently set-aside for small businesses, for these firms that receive a preponderance of their funding from VCs and do not own or control their company. Unfortunately, my compromise was rejected by NIH and by the biotech and VC industries. However, the solution contained in Title V is a dramatic overreach in the effort to solve this specific problem with NIH. The amendment offered by my good friend and colleague, Representative Steve Chabot of Ohio, is a good step forward. It prohibits any one single VC from owning a small business that wishes to benefit from a SBA program. However, I can easily envision a situation where two VCs with common ownership but with different board of directors could game the system and still be eligible for SBA programs. Because even the largest VCs have less than 500 employees, Title V--even as changed by the Chabot amendment--would open up SBA programs to large businesses and universities. In particular, I am concerned about the future of the SBIR program. It's important to remember that when the SBIR program was created 25 years ago, it was because of the frustration that federal research and development dollars went only to large businesses and universities. Even under current law, only 2.5 percent of all Federal R&D dollars is set-aside for small business. But Title V allows large universities that establish a VC to participate in the SBIR program. This provision will further decrease Federal R&D dollars going to independently owned and operated small high technology firms. Mr. Chairman, I enclose for the record the Statement of Administration Policy in opposition to this bill plus two letters from the oldest small business association in America--the National Small Business Association; a letter from the nation's only association that represents small high technology firms--the Small Business Technology Council; and a letter from the world's largest business federation--the U.S. Chamber of Commerce. I urge my colleagues to heed the recommendations of the administration and these business associations by voting against H.R. 3567. Executive Office of the President, Office of Management and Budget, Washington, DC, September 26, 2007. Statement of Administration Policy H.R. 3567--small business investment expansion act of 2007 The Administration strongly opposes House passage of H.R. 3567. The Administration strongly opposes the proposed ``Angel Investor'' program. The Administration does not support providing capital to high net worth individuals to support their investments. The best way to strengthen small business is through an economic framework that encourages investment at all levels through broad-based and reasonable tax rates and reduced regulatory impediments to the flow of capital. This approach will have a more significant impact than any targeted program. The Administration also strongly opposes the proposed change to the definition of a small business for the purposes of venture capital investment. This redefinition strips the elements of independent ownership and control that identify small business ownership under current law. Not only would this change be inequitable for actual small businesses, but it would be a step backward from our recent progress in addressing the misidentification of large firms as small businesses for Federal procurement purposes. By eliminating the concept of affiliation for venture capital operating companies, the provision would allow large businesses, not- for-profit organizations, and colleges and universities to own and control small businesses and benefit from programs designed for independent small businesses. The Administration believes that the intent of this provision is to allow for reasonable, non-controlling investment in small business. Unfortunately, the current language is overly broad, and the Administration strongly opposes this provision unless it is amended to ensure that ownership and control rests positively with the entrepreneur.

Mr. MANZULLO

Mr. MANZULLO. Mr. Speaker, point of order.

Mr. MANZULLO. Who was controlling the clock that puts up the word ``final''?

Mr. MANZULLO. The computer is doing it?

Mr. MANZULLO

Mr. MANZULLO. Mr. Speaker, we are hearing this argument, let's just fix it in conference. Well, the last patent reform bill that passed, H.R. 1561, passed the House on March 3 of 2004. The Senate Judiciary Committee passed their bill, but it never saw action before the full Senate. The bill that the House passed never made it to conference, but it became law because someone stuffed it into the giant multi-thousand page omnibus consolidated appropriations bill which became law. And besides that, we are Members of Congress. For us to stand up here and say, well, this is too confusing for us to understand, excuse me; that's what we're paid for. And if we have to take a considerable period of our time to study and learn patent law, that's our job. If we don't do that, we are failing in our obligation to the people that we represent. So, what happened last time was good for making sausage. You stuffed the House-passed bill which never passed the Senate, never made it into conference, into a giant omnibus bill, but that's not how you make legislation. Now, look what's going on here. We were told that we had to file by 5 p.m. on Wednesday afternoon any amendments to this bill. I went to the Rules Committee at 3 p.m. yesterday, where we met on the bill. At 2:43 p.m., the first manager's amendment was filed, 18 pages long. While we were still discussing the first manager's amendment, the second manager's amendment got filed at 3:50 p.m. At 5:30 in the afternoon, the general public found out what was in it. I just found out in an analysis done on the second manager's amendment that this would be crippling to the small inventor. It would be horrifying to the patent holders in this country, that it would favor overseas patent holders as opposed to the American inventor. All I asked for in that Rules Committee was for an extra hour of debate, just 2 hours of debate on one of the most important topics this place has ever had, and we were denied that. And people turn on C-SPAN. They see us. We'll take a half an hour to debate a post office, an hour to debate two post offices, the naming of the post offices, but 1 hour, just 1 hour to debate one of the most important issues that has ever come before this Congress in 50 years, 50 years. That's just fairness. Just fairness is all we're asking for. I feel like asking for a motion to adjourn, but I'm not going to. That would not be fair to the Members that have other things to do. But to tell the American people the Members of Congress really don't need to know the details, that we'll take care of the details for you, that's an abandonment of our obligation here. We come here with the obligation to learn every issue on which we vote. We may not know all the nuances, we may not know all the details, but nobody's going to tell us that this is too confusing for you to understand, because that's not what the American people send us here for. And so I would just urge you, urge the folks, that there is no way possible in the limited amount of time that we can discuss this bill. Let me show you what this does. This is Caterpillar, this is RIM. It puts two companies against each other. RIM has a lot of American parts. The bill should be written to accommodate both, to accommodate the American inventions in both of these manufactured products. Vote ``no'' on the rule.

Mr. MANZULLO

Mr. MANZULLO. Mr. Chairman, if we had to patent the way Congress is considering this bill, no one would claim to be its inventor. This is a disgrace. One of the most important bills to come before this Nation in 60 years concerning manufacturing and patentability of articles and processes is so limited that the Democrats have given just 4 minutes of their 30 to two people on the other side. They owe them an apology. They owe them at least another hour of debate. The American people deserve a lot more debate than that. An amendment was filed at 2:46 yesterday before the Rules Committee, the manager's amendment. One of the groups that contacted us representing pharmacies and labor unions and Caterpillar and all kinds of manufacturing organizations got a hold of it, finally had to analyze it overnight because of the complexity of the issues, and said, my gosh, this could destroy the system of patent law and protection of patent holders in this country. What we are asking for is the opportunity to be able to explain it. Members of Congress should not be placed in the position of choosing between innovation. Let me give you an example. Caterpillar is on one side, in Peoria, Illinois, Phil Hare's district. Hundreds of thousands of suppliers across the country, including the Midwest. Research in Motion, the maker of the BlackBerry, is on the other side of the issue, in favor of it. But inside of the BlackBerry is this motherboard. It is magnesium. It is made by Chicago White Metals. They have the finest processes for magnesium hot-chamber diecasting, a company that is the only diecasting company in the country that is rated ISO 14001 for its higher environmental standards. You have to get on the inside of these machines to understand the importance of this law. You have to be able to take every single word that is added at the last minute and be able to study it to see the impact upon American innovation. That is what this debate is about. It is simply asking for more time. The first thing we learn as Members of Congress is do no harm. Why should we place ourselves in the position of choosing winners and losers in something as important as patent law, with the excuse that we have to harmonize and we have to adopt Asian and European standards of patent law? What is wrong with the American system? We are the innovators, we are the ones with the great minds. It is our system that is placed, in effect, in the entire world, all the products and the processes and the ideas that have made us free. I would therefore ask the Members, even if you lean towards this bill, to vote against it as a matter of free speech principle. The American people are entitled to more debate, because they need to know more about this bill.

Mr. MANZULLO. Mr. Chairman, while I was in the Rules Committee yesterday, the gentleman from California said with regard to the types of damages and the standard for damages that could be used that the judge would have the discretion to determine that. Well, taking a look at the manager's amendment. That discretion has been taken away, and now there is a presumption in favor of the most onerous provision dealing with damages, and that really would impact the small inventor. Let's take a look at what would happen with the majority's view on patent damage reform. The Wright brothers' airplane, here is the patent, I have got a picture of it right here. The flying machine, if it had been patented today, or, no, if the rules that the majority is suggesting now were in effect at the time that the Wright brothers got their patent, the amount that they recovered would have been limited to the fractional value of the surface controls alone, that's it, even though everything else went on what was called an airplane, but the thing never flew. That's what this does to innovation. If you want to get something for your trim tab and your ailerons and whatever else they put on an aircraft, that's fine. But this is an example, nobody else in the entire debate has given one example except me. This is the only opportunity that the people opposed to this bill have had to talk about the actual impact of the law upon a factual situation.

Mr. MANZULLO. I yield 20 seconds to the gentleman from California.

Mr. MANZULLO. But under your manager's amendment, the judge would have to say that that does not apply.

Mr. MANZULLO. Mr. Chairman, what is interesting about the amendment from the gentlewoman from Texas is the fact that she wants to have a study, and I agree with it, of patent damage awards from at least 1990 to the present case. So this is very interesting because here we are about to do this massive change in law and no one has done the study. But now we are going to do the study after we have this massive change in law. I'll tell you, this train just turned around with the caboose going forward. That is why this bill has to be ditched.

Mr. MANZULLO

Mr. MANZULLO. Madam Speaker, I rise today in opposition to H.R. 3221, New Direction for Energy Independence, National Security, and Consumer Protection Act, and H.R. 2776, Renewable Energy and Energy Conservation Tax Act. I am extremely saddened that these bills, which according to the Democrat Majority were meant to ``achieve energy independence, strengthen national security, grow our economy and create jobs, lower energy prices, and begin to address global warming,'' will in fact result in less domestic natural gas and oil production, higher taxes that are passed to consumers, and wasteful spending on duplicative government programs. The northern Illinois Congressional district I am honored to represent has a significant manufacturing base. There are over 2,500 industries in the 16th District of Illinois. Because of this, I devote a considerable amount of my time working on manufacturing issues. I am a member of the Council on Competitiveness, a co-chair of the Manufacturing Caucus, and Chairman of the Republican Policy Committee Task Force on Manufacturing. As previous Chairman of the House Committee on Small Business, I held countless hearings on competitiveness. I travel this country and overseas studying machine tools, manufacturing efficiencies, global supply chains, manufacturing financing, intellectual property rights protection, export controls, and other important issues. I've also lectured extensively on America's need to be globally competitive. However, the devastating effect of the rising cost of natural gas to America's manufacturers, especially chemical, plastics, and advanced composites producers, is dramatic. Composite, chemical, and plastic manufacturers are more dependent on affordable and stable natural gas prices because they use natural gas as a base ``feed stock.'' Soaring natural gas prices have challenged their competitiveness. In 2004 alone, increases in natural gas prices forced the closure of scores of chemical companies and cost roughly 100,000 high-paying jobs. In 2005, Congress passed an energy bill that resulted in an increase of an additional 18 percent capacity in domestic natural gas production. We are now contemplating legislation that will reduce incentives for domestic production and, if past is prologue, will likely lead to a decrease domestic output and an increase dependence on imports from foreign sources. According to the non-partisan Congressional Research Service (CRS), a similar tax on oil and natural gas producers lead to a decrease in domestic oil production by as much as 1.26 million barrels between 1980 and 1986 and may have led to roughly 13 percent more in imported natural gas and oil over the same time period. We cannot afford to travel down this path again. The Department of Energy projects that the United States will use 28 percent more oil and 19 percent more natural gas in 2030 than was used in 2005. To meet this rising demand and wean ourselves from foreign oil and natural gas, we must reduce regulatory burdens, invest in additional refining capacity, allow environmentally sound exploration, and support the development of alternative fuels. Unfortunately, the energy bills under consideration today do none of these things. Instead, H.R. 2776 targets this vital sector of our economy with a $15.3 billion tax increase over ten years. It also decreases the competitiveness of U.S. firms in global markets by adding a $3.6 billion tax increase on international oil and gas production income. Finally, it terminates a Lower Manhattan development program that will allow New York to spend $2 billion in federal income taxes that were withheld on New York City and State employees for any transportation infrastructure project they see fit. I'm not quite certain why this provision is found in an energy bill. To make matters worse, H.R. 3221 spends $18.7 billion over five years on many programs that have little or nothing to do with energy independence or reducing the rising cost of energy in America. H.R. 3221 contains extraneous provisions such as new antipoverty programs, a program that authorizes $1 billion for clean energy and efficient technologies in other countries, the creation of a brand new agency, and, my personal favorite, a section that will allow individuals to sue the federal government for damages caused by global warming. Unfortunately, I may have just described some of the less harmful provisions found in this bill because they only waste taxpayer's money. When the bill attempts to address domestic energy production, it does this by slowing the oil shale and tar sands commercial leasing program, abrogating contracts that will force an extra $5.5 billion for gas and oil exploration in the Gulf of Mexico, and prohibiting access to 4.2 trillion cubic feet of natural gas found in the Roan Plateau in Colorado. These additional restrictions on domestic production will lead to a shortage of supply and drive the cost of energy up so that every home and every business will have to pay far more than they are currently paying now. Between 1999 and 2003, the United States experienced nothing less than what many considered to be the demise of American manufacturing. Our manufacturing base is recovering significantly since those days due largely to increases in productivity. But manufacturers face new and severe threats to the viability of their businesses in the United States. They face unfair foreign competition from foreign countries that do not honor their trade agreements and unfairly manipulate their currency. They face rapidly rising costs of health care. They face the largest regulatory burdens in the world. They face staggering increases in their energy costs. Please do not provide another incentive to move U.S. manufacturing overseas by raising their energy bill. I urge my colleagues to join the National Association of Manufacturers (NAM) by opposing H.R. 3221, New Direction for Energy Independence, National Security, and Consumer Protection Act and H.R. 2776, Renewable Energy and Energy Conservation Tax Act, to show your support for America's manufacturers.

Mr. MANZULLO

Mr. MANZULLO. May I ask how much time is remaining?

Mr. MANZULLO. Mr. Speaker, I rise today in opposition of H.R. 1908. Mr. Michaud and I just came from the Rules Committee a few minutes ago, which is in the process of preparing the rule under which the bill would be brought to the floor tomorrow. And we showed up at the hearing, which was set for 3:00, found out that an 18-page manager's amendment had been filed at 2:47, and during the course of our testimony before the Rules Committee, another manager's amendment consisting of 18 pages was filed at 3:50 p.m. So the Rules Committee was taking a look at still further amendments to a bill, not even knowing what the final form of the bill would be at the time we were there to testify either in favor of it or against it. Anytime you have a bill that presents a fundamental change in law, it should be a consensus bill; and there's a reason for that. Why hurt anybody on something so basic and so important as a patent bill? Why can't you protect the holders of patents, both large and small, the universities that have a stake in it, the labor unions whose people are employed by manufacturers who hold patents? Everybody really has the same stake here, and the stake is to have the United States be pre- eminent in research and engineering and to use the patent system as a means to further research and development and manufacturing in this country. But this bill that's being presented has a very interesting split of people in favor and people against, and that's what's disconcerting about the entire bill. In fact, the last patent bill that was passed and signed into law never even made its way to the Senate. We passed it here in the House, and it was tacked on to an omnibus appropriations bill. The Senate never even read it or considered it. It got tucked into a massive multi-, hundred-page bill. It's a good thing that we had come up with a good bill by the time it passed here. And now we are hearing proponents of this bill say, just a second, we didn't use the subcommittee process to refine it, and we didn't use the committee process to refine it. This is a work in action that we continue to work on it as we go. And that's how we end up with bad law, when Members of Congress do not really have the opportunity to examine and to know what they're voting on. And I don't know anything as complicated as patent law. I've been here several terms; so has Mr. Rohrabacher. I look at patent laws through the eyes of a piece of machinery. I've spent my life in Congress involved in manufacturing. I have one of the most industrialized congressional districts in the country. One out of four people is directly employed in manufacturing. And I spend time on the floors, I've visited hundreds of factories in the United States, Europe, China, given speeches all over. I go to forums that deal with manufacturing processes and try to keep up on the latest in manufacturing so I can share those, not only with my constituents, but with my colleagues who are in Congress, on a bipartisan basis. In fact, we formed the Manufacturing Caucus for the purpose of making sure that the latest in manufacturing techniques is shared with Members so as to strengthen our manufacturing base to make us more competitive in this world. But this bill's opposed by the National Association of Manufacturers. Those are large and small manufacturers, the little guys and the big guys. And the reason they're concerned is that the manufacturers are the ones that make things, make things with their hands. They make the exotic machines, and they're very much concerned about international piracy already going on and the fact that this will actually, this bill will actually lend itself to that. And I met this morning with people from the pharmaceutical industry, the biotech industry, the food industry, people concerned that processes involved in food preparations would be protected. And it was the most incredible group of people that I've ever seen come together on an issue in opposition. And one of the reasons that they're so opposed, and I'm just going to speak on one of those, it's on the damage issue, because there are so many other issues that are extremely important. We just found out that the administration now opposes H.R. 1908 because, again, it limits the courts' discretion in determining the damages for infringement. Now, that's the damage issue. And I'm glad they came out with that, and that's important. And let's explain why. H.R. 1908 will reduce the value of U.S. patents because patent holders will no longer be able to receive the fair market value of their patent when infringed upon. It mandates this apportionment of damages be the pre-eminent factor and exclusion of all the other market factors considered in infringement cases. Current law, the law that's used today, states that juries should consider 15 factors, many of which are based on market forces and competitive pricing which allow the patent holder to receive the market value of the invention that was infringed upon. And that's always been the standard of damages. What is the value? They'll take a look at its incorporation into the device. What value does it add to it? What price would the holder of the completed product have paid for this? It has been established over a period of years of long series of judicial decisions, and it's not the legislature abandoning our role in this issue, but it's allowing the courts' working their way through technology changes to say these are the factors that we should take a look at. The change of law requires a judge to determine the economic value of the invention by subtracting the value of prior art. That means subtracting the value of other existing components in the invention. And this complex economic analysis is not something we want to leave the district court judges. Even Judge Michael, chief judge of the U.S. Court of Appeals for the Federal Circuit, agrees. But what's dangerous about this provision is that the bill allows a new set of damages, a new standard when it's never been tested. It's nothing more than a theory.

Mr. MANZULLO. The purpose was to diminish the value of the patent holder whose patent had been infringed upon. That's the problem.

Mr. MANZULLO. Will the gentleman yield?

Mr. MANZULLO. Which means that you manufacture, then you worry about the legals. You manufacture and sell; then you worry about the legals, whether or not you have infringed upon somebody's patent. And what this bill will do is this will encourage infringing because it greatly limits the damages to which the inventor would be entitled.

Mr. MANZULLO. Will the gentleman yield?

Mr. MANZULLO. I appreciate that. We were with a company called QUALCOMM today, 11,000 employees. They are opposed to the bill. It's just an interesting mix. And it appears that a lot of the people in favor of the bill have been some of the biggest infringers, and that is why some have called this the ``Infringers' Bill of Rights.'' I don't know if I would go that far.

Mr. MANZULLO. But I would like to just bring up one thing. The proponents of the bill are saying this is tort reform. And how could this be tort reform when the National Association of Manufacturers are on the other side, oppose it? It is not really tort reform. It is an all-out assault upon awarding reasonable damages to the inventor. That is done in two ways. One is through extreme limitation of damages, and the second is finding a way to lengthen the process of litigation. Now, another portion of this bill says, well, you shouldn't be able to shop for venue. And in America it has always been the tradition that you can bring a suit in any area, any county, any State where damage has occurred, and with a widely distributed product, you should be able to bring a lawsuit really wherever you want. And now, of course, the proposed reform says, well, you can't bring it in certain areas unless you have a certain nexus. Here's the problem: If you bring this in Chicago, the little guy, it's 5 years. If you bring it in Washington, D.C.'s ``rocket docket,'' it's called, you get it there in 1 year. Well, who is to gain by taking litigation and lengthening the time of it? It's the big guys versus the small guys. And if there had been a problem in these rocket dockets, and there are three or four across the country where you can move something fast, but if there had been a problem such as in Madison County, Illinois, which has been known for abuse of class action lawsuits, we would know it. But the judges in these rocket dockets willingly take the case because they have become experts on patent law. People trust their judgment, and they have come down in favor of the inventor as many times as they have come down opposed to the inventor. Thank you for your leadership.