Mr. KLEPPE. Well, it is easy for us to separate the two, because I would just stop you and say, when you say that there is no money available to them, why? You see, up to that point, the man that is producing that hog is a farmer. Now, this is not the farmer's administration. This is the Small Business Administration. Mr. SMITH. Well, it is not the Commerce Department either. Mr. SMITH. It is not the Commerce Department either. Mr. KLEPPE. No, but that is outside the question. The question here is agriculture or small business. Mr. SMITH. A locker plant is under the Department of Agriculture and the Meat Inspection Service is too. Mr. KLEPPE. The meat inspection, yes, but he is a small businessman in the true sense of the word as we interpret it and he is eligible for our services. Mr. CONTE. Well, Tom, I can't agree with you. Let me ask you about a turkey farmer or a poultry farmer. Now, EPA comes and slaps this regulation on him and tells him that he can't have runoff and can't do this or that and has to change this or that. So, he has to invest $25,000. Where is this guy going to get that kind of money if he doesn't go to Small Business? Mr. KLEPPE. There is no argument about that at all. He needs an opportunity to get it from the Government. My only point, and I hope you don't misunderstand this, is that that is an agricultural related enterprise. It is not a small business. That is the only question involved here. Now, if Congress says that is a small businessman, then all we need is some of the facilities of Agriculture to take care of all the farmers. Mr. CONTE. That is all we are trying to do here. We are just trying to tell you it is small business. We feel very strongly it is. If there ever was a small business, it is the small farmer. Those dairy farms I have in our State our family-operated dairy farmsMr. KLEPPE. No question about that. Mr. CONTE. And if there ever was a small business, it is right there. Mr. KLEPPE. If you are going to give us some more authority and some more loan programs, I would sure hope you would give us some strength to administer them, because we have been without any additional strength to administer and Mr. CONTE. Well, we will be glad to do that, because I think when Congress passed Public Law 92-500, which was the Water Pollution Control Act of 1972, the law authorized $800 million for pollution available to small businesses, which is now section 7(g) of the Small Business Act. Now, I am sure that Congress intended to include farmers in that act and that is the reason the legislation is here now, because your shop says no. Mr. KLEPPE. Well, we had determined eligibility of this question, back in 1972, and we determined that anybody that is a farmer under these ineligible categories, like price support programs and cattle producers and hog producers, et cetera, are ineligible. That has been on the books, I guess now for 3-plus years, anyway. It is a question of eligibility. Now, you are saying that you believe that they are small business people and should be eligible, because Agriculture does not make it available to them. Mr. CONTE. And the Water Pollution Act said Mr. KLEPPE. Forced them to do certain things. Mr. CONTE. Not only that, but it gave you the authority to make loans. Mr. KLEPPE. To small business people. Mr. CONTE. Exactly right. Mr. KLEPPE. But, these are not small businesses. Mr. CONTE. Well, we feel very strongly these are small businesses, more than some other people. Mr. KLEPPE. Well, that is where they don't qualify to SBA. They are not eligible, according to our SOP, and, therefore, are not eligible under the provisions that we were directed to take care of under that act. Mr. CONTE. I can't see the difference whether they are producing eggs, chickens, or turkeys or nuts or bolts or anything else. Mr. KLEPPE. Well, let me ask you this, then. Can you see the difference between agriculture and business? I can see a whale of a difference between the two. Mr. CONTE. It is just a different type of business. Mr. KLEPPE. That is right. Mr. CONTE. But they are all businesses. Mr. KLEPPE. But, in the Government, why do we have a Department of Agriculture? Why do we have a Small Business Administration? Mr. CONTE. Why do we have a Department of Commerce like the Chairman has said? The Department of Commerce helps small business. It helps a lot of them. Mr. KLEPPE. Well, do they? Mr. CONTE. Oh, yes, they've got a whole agency down there. In fact, we had them up before this committee because we felt they were infringing too much on your department. Mr. KLEPPE. Well, that has never been a problem from the eligibility standpoint. The Department of Commerce deals with business and the Department of Agriculture deals with agriculture. This, to me, is a very clear separation of terms, but apparently we don't agree on this. I guess I have said everything I've got to say on this subject. Mr. CONTE. Well, how about the Defense Department? Now, they deal in keeping our military posture strong and with munitions and everything else, but they also deal in the helping of small businessmen. Mr. SMITH. With set-asides. Mr. CONTE. Sure, set-aside contracts and all. Mr. KLEPPE. Yes, but again that doesn't involve the definition between a farmer and a businessman. You see, a farmer is accustomed to dealing with county agents. They have one in every county in America, don't they? Mr. CONTE. Yes, but the county agent doesn't come up with any money. He can come up with a little advice, but that is all. Mr. KLEPPE. But now we are going to create another situation where we are going to make it more attractive or available for farmers to come to SBA to get a loan because of pollution requirements. Mr. CONTE. Tom, those guys need it more than anybody. Mr. KLEPPE. Oh, I don't question that. Mr. CONTE. If anybody needs a break, it is the dairy farmer. If we don't save them, this country is going to be in real bad shape. You know the dairy farmer gets a lease from the Government Mr. KLEPPE. You don't have any argument from me on that. I used to be on the Mr. CONTE. I mean, this guy gets up at dawn and works like a dog all day and night. He is just living by his shoestrings. Mr. KLEPPE. You don't have any problem with me on that, because I used to be on the Agriculture Committee here and as far as the wheat farmer, the dairy farmer, the corn farmer, and others, I tell you I know a little something about that part of life, but that is not the question here. Mr. CONTE. It is the question here, because if he can't get this money from a bank, and banks are very, very reluctant to loan dairy farmers any money, then you are going to drive him out and he is going to sell it to developers. That is the thing I am saying. Mr. KLEPPE. That is not the question I am posing here, insofar as my position is concerned. I've put it right out on the table here. It is one of the definition of eligibility. Do we, does the Small Business Administration qualify and make eligible loans for farmers. Mr. CONTE. In other words, what you are saying to us is you people on the other side of the table, if you see fit to change the law, then I will go along with it. Mr. KLEPPE. Oh, well Mr. CONTE. In other words, you are not opposing the idea? Mr. KLEPPE. The need I don't question, and certainly anybody can't question that, because it is a fact of life. The only thing I am talking about is the eligibility definition that we have been made responsible for defining, because some of the most difficult legal questions that we have had are related to agriculture type enterprises wanting to get an SBA loan due to unavailability at Agriculture, or because of a better term or availability of money, or whatever it is. There are questions to decide. So, I think that is a fair recitation of what our feelings are on the total impact of this problem, which I have great feeling for. The Government imposed these pollution standards upon these people. Now, these people, we say, are agriculture. We have made them ineligible over a period of years because they are agriculture and they deal with the Department of Agriculture. It isn't that they don't need it. Now, your feeling is that, by golly, they are businessmen. Well, the law that is on the books, the legislation itself, does not specifically spell it out. We have defined it in our SOP's and said that they are ineligible. Now, you are taking a different posture on this thing. But, I think you are taking it in light of the fact, I hope, that you understand what our answer on this thing is. Mr. CONTE. Listen, when I was practicing law, I saw more lawyers go down the drain when they had their case and kept talking. I am going to stop right there. I am satisfied that Mr. KLEPPE. Well, I am not satisfied that you have made your case. Mr. CONTE. I am satisfied that you have no objection with this if we go ahead with this, right? Mr. SMITH. Just get anybody in the administration out there some morning that is about 20 below zero and then try and explain to some farmer sitting on a one-legged stool with the wind whistling up his pant leg Mr. KLEPPE. I know. I have been there. Mr. SMITH. And tell him he is not eligible for these loans but that if he had a nice heated place where they processed milk, then he would be eligible. Just explain that to them. Mr. KLEPPE. Neal, I think that is an unfair statement to say he is not eligible for these loans. Mr. SMITH. Well, they are not available to him. Mr. KLEPPE. OK. You see there is a difference. Mr. SMITH. No, I agree. He is eligible, but you are not letting him have it. Mr. KLEPPE. He is not eligible as a small businessman, but he is eligible. Mr. SMITH. You bet he is. Mr. KLEPPE. And then you come up with your unavailability and you are right on that score, Mr. Chairman. I can't argue with you on that. Mr. SMITH. Well, just one more question. If we were, in one of our bills here, to include section 1 of H.R. 5982 and if it became law, then that would make it clear, wouldn't it, that these producers of foods should be included and shall be included and made eligible for these pollution control loans? Mr. KLEPPE. May I refer to counsel here in answering your question? Mr. AUSTIN. Mr. Chairman, I would rather not attempt to answer that question here. Mr. SMITH. Well, we want to make sure that whatever we write, in view of the fact that we thought it was clear before and yet you haven't made the loans, we want to make sure that whatever we do write does make it clear. Mr. AUSTIN. We have proven capable of making mistakes in drafting rather recently and Mr. SMITH. Well, I want your interpretation before you make another mistake. Mr. AUSTIN. We are concerned that the section 1 amendment, where you add the words "from private sources" would add some additional ambiguity. In addition to accomplishing what you intend to accomplish, we are concerned that it would raise some further ambiguities. So, if you would permit, we would like to get together with your staff and see if we can get it right the first time. Mr. KLEPPE. We understand your question. Mr. SMITH. Well, you can do that. We want to have language that will make it crystal clear, and we will consider it in the committee, although I don't know what the committee will do, but we want to have language that makes it crystal clear that a dairy farmer, a pig farmer, or whatever he may produce, shall have available to him pollution control loans the same as other people as long as some other agency is not making available-and not just has a law-loans on the same kind of basis. Mr. KLEPPE. I understand what you are saying. May I ask you how far are you thinking that you would want to spread this? You mentioned two examples. You said dairy farmers and pig producers. Mr. SMITH. I don't think there is any exclusion. Mr. KLEPPE. No limitation? Mr. SMITH. No limitation. Mr. KLEPPE. Anybody that is a farmer in any category? Mr. SMITH. That is right. Mr. CONTE. Whether it be turkeys or chickens or— Mr. KLEPPE. No matter what he produces? Mr. SMITH. If he doesn't have the money available to him by FmHA or some other Government agency and I mean actually made available on the same kind of terms as others- Mr. KLEPPE. Then, he should be made eligible under the Small Business Administration? Mr. SMITH. And he should have the money made available as readily as anybody else. Mr. CONTE. We want to go whole hog on this one. Mr. KLEPPE. Boy, you are tough. Mr. SMITH. One more question. Assuming H.R. 78 is determined to be advisable, do you have any suggestions for amendments to it? You can answer that later for the record. Mr. KLEPPE. Mr. Chairman, would you let us be in contact with your staff? Mr. SMITH. Yes, you can answer that for the record. How many water pollution loans have you authorized? Mr. KLEPPE. Gee, I don't have that. Can I also answer that for the record? Mr. SMITH. Yes, you can answer that for the record. [The information requested follows:] During the current fiscal year, SBA has made 17 loans for a total of $6.9 million. Mr. CONTE. Just to make sure we've got the record clear, all this that you are going to be providing the committee will be strictly for drafting purposes and will not have to be cleared through OMB? Mr. KLEPPE. No, you are requesting some assistance and guidance in regard to a specific question. I think we understand that. Mr. CONTE. Because if it goes to OMB, we will never see the light of day. Mr. KLEPPE. We have no problem with that. We understand that. Mr. SMITH. Unless there are further questions, the committee will recess until Mr. KLEPPE. Mr. Chairman, is it fair for the record of this subcommittee for us to apologize over an oversight and a mistake that was made in a correspondence that transpired here in the last day or two? Mr. SMITH. Yes, maybe we ought to cover that. I didn't know about it until last night. Mr. KLEPPE. I found out about it today. I only want to say for the record that we blew it. We just plainly made two bad mistakes. One is that the intent of the interest rate covered here was not to provide for 3-percent loans and, No. 2, was that the intent was not to furnish you a copy of the correspondence, because you were instrumental in that other amendment. So, I just want to publicly say that we just blew it. And if an apology is in order, then we would like to apologize and hope not to repeat this in the future. Mr. SMITH. Well, it is unfortunate, because it cannot be fully remedied at this point. Mr. KLEPPE. It cannot be ? 55-623 O 7524 |