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[Senate Report 116-29]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 64
116th Congress      }                                     {     Report
                                 SENATE
 1st Session        }                                     {     116-29

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TO ESTABLISH A BUSINESS INCUBATORS PROGRAM WITHIN THE DEPARTMENT OF THE 
    INTERIOR TO PROMOTE ECONOMIC DEVELOPMENT IN INDIAN RESERVATION 
                  COMMUNITIES, AND FOR OTHER PURPOSES

                                _______
                                

                 April 8, 2019.--Ordered to be printed

                                _______
                                

           Mr. Hoeven, from the Committee on Indian Affairs, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 294]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Indian Affairs, to which was referred the 
bill (S. 294) to establish a business incubators program within 
the Department of the Interior to promote economic development 
in Indian reservation communities, having considered the same, 
reports favorably thereon without amendment and recommends that 
the bill do pass.

                                PURPOSE

    The bill, S. 294, would establish a business incubators 
program within the Department of the Interior, Office of Indian 
Energy and Economic Development to promote entrepreneurship and 
economic development on Indian reservations. The bill would 
require the Department of the Interior to coordinate with other 
federal agencies to promote Native American business 
development.

                               BACKGROUND

    Starting a new business is challenging anywhere, but Native 
American entrepreneurs must navigate a set of unique obstacles 
particular to Indian country.\1\
---------------------------------------------------------------------------
    \1\Economic Development: Encouraging Investment in Indian Country: 
Hearing Before the S. Comm. on Indian Affairs, 113th Cong. 2, 3 
(written testimony of Gerald Sherman, Vice Chairman, Native CDFI 
Network).
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    The land tenure system is one such obstacle. Much of the 
land in Indian country is held in trust.\2\ Consequently, the 
Secretary of the Interior must approve activities on these 
lands as part of the federal trust responsibility.\3\ 
Secretarial approval creates additional expense and uncertainty 
for Native entrepreneurs and their potential business partners 
because they must comply with leasing and related federal legal 
requirements that generally do not apply outside Indian 
country.\4\
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    \2\See COHEN'S HANDBOOK OF FEDERAL INDIAN LAW Sec. 15.03, at 997-
999 (Nell Jessup Newton ed., 2012) (hereinafter, COHEN'S HANDBOOK) 
(providing a broader discussion of the underlying principles and 
development of the trust responsibility).
    \3\See COHEN'S HANDBOOK, Sec. 21.02[3], at 1329-30.
    \4\See id.; See also Economic Development: Encouraging Investment 
in Indian Country: Hearing Before the S. Comm. on Indian Affairs, 113th 
Cong. 2, 3 (written testimony of William M. Lettig, Executive Vice 
President, Key Bank).
---------------------------------------------------------------------------
    As a remedy, Congress took action to provide tribes with 
greater control to regulate the agricultural, residential, and 
business leasing of tribal lands by enacting the Helping 
Expedite and Advance Responsible Tribal Home Ownership Act of 
2012 (HEARTH Act).\5\ Since then, 39 federally recognized 
tribes have utilized this new statutory authority by 
establishing their own leasing rules, which the Bureau of 
Indian Affairs must vet before going into effect.\6\
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    \5\See Helping Expedite and Advance Responsible Tribal Home 
Ownership Act of 2012, Pub. L. No. 112-151.
    \6\See HEARTH Act of 2012, available at https://www.bia.gov/bia/
ots/hearth (listing tribes).
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    The status of reservation lands also complicates access to 
capital, primarily because trust land cannot be alienated and 
cannot be used as collateral to obtain financing.\7\ As a 
result, Native entrepreneurs that intend to open businesses on 
a reservation must look to other methods of raising capital to 
start and grow their businesses.
---------------------------------------------------------------------------
    \7\See COHEN'S HANDBOOK at Sec. 21.02[3], at 1329; See also Access 
to Capital and Credit in Native Communities, Native Nations Institute, 
University of Arizona, Digital Version at 39 (2016), available at: 
http://nni.arizona.edu/news/articles/access-capital-and-credit-native-
communities.
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    Unfamiliarity with Indian Country is also a barrier.\8\ 
Even when an entrepreneur has a promising concept, getting it 
off the ground can be difficult when investors or business 
partners do not have significant experience working in 
reservation communities and are unfamiliar with the challenges 
associated with operating businesses in Indian Country. The 
resulting uncertainty can produce less favorable terms for 
Native entrepreneurs or prevent a venture from happening 
altogether.\9\
---------------------------------------------------------------------------
    \8\See Economic Development: Encouraging Investment in Indian 
Country: Hearing Before the S. Comm. on Indian Affairs, 113th Cong. 2, 
2 (written testimony of William M. Lettig, Executive Vice President, 
Key Bank).
    \9\Access to Capital and Credit in Native Communities, supra note 
5, at 39.
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    Finally, location is often a challenge. Many reservations 
are located in rural--often remote--areas.\10\ This fact limits 
the available workforce, making it difficult for Native 
entrepreneurs to attract necessary staff to operate their 
businesses.\11\ And infrastructure challenges common in rural 
areas make it difficult for Native entrepreneurs to get their 
products to market.\12\ A lack of access to high-speed 
Internet, for example, is often a roadblock to success for 
businesses that must compete in 21st century markets.\13\
---------------------------------------------------------------------------
    \10\See Accessing Capital in Indian Country: Hearing Before the S. 
Comm. on Indian Affairs, 114th Cong. 1, 2 (written testimony of 
Alejandra Y. Castillo, National Director, Minority Business Development 
Agency, U.S. Dept. of Commerce).
    \11\See id.
    \12\See id.
    \13\See U.S. Gov't Accountability Office, GAO-16-222, 
Telecommunications: Additional Coordination and Performance Measurement 
Needed for High-Speed Internet Access Programs on Tribal Lands, at 8-12 
(2016).
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    These unique obstacles vary from reservation to reservation 
and from business to business. Accordingly, it is vital that 
entrepreneurial development tools provide assistance focused 
specifically on Indian Country and tailored to each 
entrepreneur.\14\
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    \14\Native American Business Incubators Program Act: Hearing on S. 
3261 Before the S. Comm. on Indian Affairs, 114th Cong. 2, 8 (2016) 
(written testimony of Derrick Watchman, Chairman, Board of Directors, 
National Center for American Indian Enterprise Development).
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    Business incubators are uniquely equipped to do this 
because they offer a flexible suite of services intended to 
help businesses grow and thrive. They offer workspace, a 
collaborative environment, individualized yet comprehensive 
business skills training, and opportunities to build 
professional networks. By providing these focused services, 
business incubators help Native entrepreneurs develop 
businesses and create jobs in reservation communities, 
contributing greatly to overall tribal economic development.

                          LEGISLATIVE HISTORY

    116th Congress. Senators Udall, Cortez Masto, Heinrich, 
Smith, and Heinrich introduced S. 294 on January 31, 2019, 
which the Senate referred to the Committee. Senator Cantwell 
joined as a co-sponsor of the bill on February 4, 2019. On 
February 6, 2019, the Committee held a duly called business 
meeting to consider, among other bills, S. 294. The Committee 
ordered the bill reported favorably, without amendment.
    On March 27, 2019, Representatives Haaland, Cole, Torres of 
California, and Young introduced a companion bill, H.R. 1900, 
in the House of Representatives, which referred it to the 
Committee on Natural Resources. No further action has been 
taken on the bill at this time.
    115th Congress. Senators Udall, Cantwell, and Tester 
introduced S. 607, a similar predecessor bill to S. 294, on 
March 13, 2017. On March 29, 2017, the Committee held a duly 
called business meeting to consider, among other bills, S. 607. 
The Committee ordered the bill to be favorably reported, 
without amendment, to the Senate. On September 26, 2017, the 
Committee reported S. 607 to the full Senate. Senator Warren 
joined the bill as a co-sponsor on March 6, 2018.
    On March 22, 2018, Senator McConnell proposed an amendment 
in the nature of a substitute, S. Amdt. 2223, to S. 607 for 
Senator Hoeven. S. Amdt. 2223, which added a new ``No 
Duplicative Grants'' paragraph to subsection (d) of section 4 
of the bill, prohibits the Department of the Interior from 
awarding grants to otherwise eligible applicants that already 
receive Federal funding for the same purposes from another 
source. The Senate agreed to the amendment by unanimous consent 
and the bill, as amended, by voice vote.
    On March 26, 2018, the House of Representatives referred S. 
607 to the Committee on Natural Resources, which in turn 
referred it to the Subcommittee on Indian, Insular, and Alaska 
Native Affairs. The Subcommittee held a hearing on the bill on 
July 24, 2018 and discharged the bill on September 27, 2018. 
The House Committee considered the bill the same day and 
ordered the bill reported favorably, without amendment. After 
the Committee reported the bill on November 11, 2018, the full 
House of Representatives took no further action on the bill.
    No member of the House of Representatives introduced a 
companion bill to S. 607.
    114th Congress. Senators Tester, Cantwell, and Udall 
introduced S. 3261, a similar predecessor bill to S. 294, on 
July 14, 2016. Senator Murkowski was added as a cosponsor on 
September 7, 2016. The bill was referred to the Committee on 
Indian Affairs, which held a hearing on the bill on September 
7, 2016. On September 21, 2016, the Committee held a duly 
called business meeting to consider S. 3261, among other bills. 
The Committee ordered the bill to be favorably reported without 
amendment to the Senate but took no further action on the bill. 
No member of the House of Representatives introduced a 
companion bill to S. 294.

                          SUMMARY OF THE BILL

    The Native American Business Incubators Program Act would 
create a competitive grant program in the Office of Indian 
Energy and Economic Development at the Department of the 
Interior to establish and maintain business incubators that 
serve Native entrepreneurs in reservation communities. The 
program is intended to make substantial and sustained 
investments in these business incubators to ensure Native 
entrepreneurs in reservation communities have uninterrupted 
access to locally tailored business development services from 
entities specializing in providing services in Native 
communities. Understanding that needs will be different in each 
Native community, the program is also intended to be flexible 
so that it can be deployed to benefit Native communities 
throughout the United States.

                      SECTION-BY-SECTION ANALYSIS

Section 1--Short title

    This section states that the bill may be cited as the 
``Native American Business Incubators Program Act''.

Section 2--Findings

    This section states Congress finds that there are unique 
challenges associated with establishing a business in Indian 
country and business incubators are business development tools 
that are well-suited to helping Native American entrepreneurs 
establish and operate businesses in or near reservation 
communities. This section further states that Congress finds 
that business incubators that assist Native entrepreneurs will 
promote tribal economic development.

Section 3--Definitions

    This section sets forth the definitions of ``Business 
Incubator'', ``Eligible Applicant'', ``Indian Tribe'', 
``Institution of Higher Education'', ``Native American; 
Native'', ``Native Business'', ``Native Entrepreneur'', 
``Program'', ``Reservation'', ``Secretary'', and ``Tribal 
College or University''.

Section 4--Establishment of program

    This section establishes a competitive grant program in the 
Office of Indian Energy and Economic Development at the 
Department of the Interior to establish and maintain business 
incubators that serve Native entrepreneurs and reservation 
communities.
    This section also defines who is eligible to apply for a 
grant. Eligible applicants include tribes, institutions of 
higher education (including TCUs), and non-profit 
organizations.
    This section describes application and program 
requirements. An eligible applicant must submit an application 
that includes a 3-year plan, information demonstrating the 
applicant's effectiveness and experience, and a site 
description. Eligible applicants must also meet minimum 
requirements that include providing: culturally tailored 
services; a competitive process for selecting participants; a 
physical workspace; business skills training and education; 
mentorship opportunities; and access to professional networks.
    This section provides application evaluation considerations 
and establishes that priority will be given to business 
incubators sited in or near the reservation community the 
applicant intends to serve.
    This section prohibits the Department from awarding grants 
to otherwise eligible applicants that already receive Federal 
funding for the same purposes from another source.
    This section contains oversight provisions that apply to 
the agency and grant recipients. It requires the Department to 
submit a report to Congress within two years of awarding the 
first round of grants under the program. The report must 
include information on the performance and effectiveness of the 
program grantees, and the Committee expects the Department to 
include a discussion of compliance with the ``No Duplicative 
Grants'' provision contained in Section (4)(d)(5).

Section 5--Regulations

    This section requires the Secretary to promulgate 
regulations implementing the program within one hundred eighty 
days of enactment.

Section 6--Schools to business incubator pipeline

    This section requires the Secretary to facilitate 
relationships between grant recipients and educational 
institutions serving Native American communities.

Section 7--Agency partnerships

    This section requires the Secretary to coordinate with 
other agencies that have business development programs to 
ensure grant recipients have information and materials 
necessary to inform incubator participants about available 
federal programs and assist them when applying.

Section 8--Authorizations of appropriations

    This section authorizes $5,000,000 to be appropriated for 
each of fiscal years 2018 through 2023, and such sums as may be 
necessary thereafter.

                   COST AND BUDGETARY CONSIDERATIONS

    S. 294 would authorize the appropriation of $5 million a 
year over the 2020-2024 period for the Bureau of Indian Affairs 
to make grants to other organizations that would provide 
business incubation services to Native American entrepreneurs 
and businesses including physical workplaces, business skills 
training, and access to networks of potential investors. Grants 
would be awarded for three-year periods and could be renewed 
for an additional three years.
    CBO assumes S. 294 will be enacted in fiscal year 2019 and 
that the authorized amounts will be appropriated for each 
fiscal year. Estimated outlays are based on historical spending 
patterns for similar programs.
    CBO estimates that implementing the bill would cost $18 
million over the 2020-2024 period. The costs of the legislation 
fall within budget function 450 (community and regional 
development).
    As shown in Table 1, CBO estimates that implementing the 
bill would cost $18 million over the 2020-2024 period. The 
costs of the legislation fall within budget function 450 
(community and regional development).

                 TABLE 1.--ESTIMATED INCREASES IN SPENDING SUBJECT TO APPROPRIATION UNDER S. 294
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                                                        By fiscal year, millions of dollars--
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                                        2019       2020       2021       2022       2023       2024    2019-2024
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Authorization......................          0          5          5          5          5          5         25
Estimated Outlays..................          0          1          3          4          5          5         18
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                        EXECUTIVE COMMUNICATIONS

    The Committee has received no communications from the 
Executive Branch regarding S. 294.

               REGULATORY AND PAPERWORK IMPACT STATEMENT

    Paragraph 11(b) of rule XXVI of the Standing Rules of the 
Senate requires each report accompanying a bill to evaluate the 
regulatory and paperwork impact that would be incurred in 
carrying out the bill. The Committee believes that S. 294 will 
have a minimal impact on regulatory or paperwork requirements.

                        CHANGES IN EXISTING LAW

    In compliance with the Standing Rules of the Senate and the 
Committee Rules, subsection 12 of rule XXVI of the Standing 
Rules of the Senate is waived. In the opinion of the Committee, 
it is necessary to dispense with subsection 12 of rule XXVI of 
the Standing Rules of the Senate in order to expedite the 
business of the Senate.

                                  [all]
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