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110th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    110-192

======================================================================

 
 AMENDING THE SMALL BUSINESS ACT TO EXPAND AND IMPROVE THE ASSISTANCE 
PROVIDED BY SMALL BUSINESS DEVELOPMENT CENTERS TO INDIAN TRIBE MEMBERS, 
                  ALASKA NATIVES, AND NATIVE HAWAIIANS

                                _______
                                

 June 15, 2007.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

  Ms. Velazquez, from the Committee on Small Business, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 2284]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Small Business, to whom was referred the 
bill (H.R. 2284) to amend the Small Business Act to expand and 
improve the assistance provided by Small Business Development 
Centers to Indian tribe members, Alaska Natives, and Native 
Hawaiians, having considered the same, report favorably thereon 
without amendment and recommend that the bill do pass.

                                CONTENTS

                                                                   Page
   I. Purpose of the Bill and Summary.................................1
  II. Background and Need for Legislation.............................2
 III. Hearings........................................................4
  IV. Committee Consideration.........................................4
   V. Committee Votes.................................................4
  VI. Section-by-Section Analysis of H.R. 2284........................4
 VII. Congressional Budget Office Cost Estimate.......................6
VIII. Committee Estimate of Costs.....................................7
  IX. Oversight Findings..............................................7
   X. Statement of Constitutional Authority...........................7
  XI. Compliance With Public Law 104-4................................8
 XII. Congressional Accountability Act................................8
XIII. Federal Advisory Committee Statement............................8
 XIV. Statement of No Earmarks........................................8
  XV. Performance Goals and Objectives................................8
 XVI. Changes in Existing Law Made by the Bill, as Reported...........8

                         I. Purpose and Summary

    The purpose of H.R. 2284 (the Act or H.R. 2284) is to 
create jobs, to foster entrepreneurship, and to stimulate 
economic development on Indian lands. It facilitates the 
creation of new small businesses owned and managed by Indian 
tribe members, Native Alaskans, and Native Hawaiians or expands 
such existing businesses. The Act will provide needed 
management, technical, and research assistance to small 
businesses owned by Indian tribe members, Native Alaskans, and 
Native Hawaiians. It will provide them better access to 
existing counseling and technical assistance provided through 
the Small Business Development Center (SBDC) program. Tribal 
Councils will be consulted about the use of grants provided to 
an SBDC program in an eligible State by the Act to ensure that 
they have a say in the development assistance that is provided.
    To accomplish this purpose, the Act establishes a three-
year authorization for project providing grants to SBDCs for 
assisting Indian tribe members, Native Alaskans, and Native 
Hawaiian populations with their entrepreneurial needs. Any SBDC 
in a State whose Indian tribe members, Native Alaskan, and 
Native Hawaiian populations are one percent of the State's 
total population can apply for a grant from the SBA. Such 
grants must be used to provide SBDC program assistance to 
Native Americans. Grants under the Act are limited to $300,000 
and the amount authorized to be appropriated annually, in each 
of the fiscal years 2008, 2009, and 2010, is $7 million.
    Services by SBDCs are to be provided to benefit the target 
population on tribal lands and reservations, but an individual 
center need not be located on each tribal land location or 
reservation. If the target population is in more than one 
location or reservation within a State, the center should be 
situated in a location that optimizes access by all those 
serviced by the center. The Act does not limit in any way, the 
number of centers or subcenters a state program may implement. 
The Committee expects the Administrator to balance the need for 
multiple sites with the quality of assistance and counseling 
when awarding grants. Consultation with the local Tribal 
Council is required in determining those locations with the 
most need and where the best access to targeted populations and 
businesses may be attained.
    SBA is responsible for designing the grant application 
which should provide essential information, but should not be 
burdensome to applicants. At a minimum, the application should 
contain information concerning the applicant's (1) goals and 
objectives, (2) prior experience in providing entrepreneurial 
and technical assistance to small businesses, (3) the ability 
to provide training and services to Indian tribe members, 
Native Alaskans, and Native Hawaiians, and (4) the extent of 
consultation with local Tribal Councils. In addition, the 
applicant should identify the location of a proposed center, 
and the amount of funding required to accomplish its goals and 
objectives.
    Within 180 days after the enactment of the Act, the 
Administrator is required to issue final regulations, after a 
notice and comment period, that implement the requirements of 
the Act. Such regulations shall include standards for the 
educational, technical, and support services to be provided and 
for a work plan for providing assistance to the targeted 
community.

                II. Background and Need for Legislation

    The majority of Indian tribe members and Native Alaskans 
live on or in the immediate vicinity of Indian lands and suffer 
from unemployment that is at least twice the national average. 
The most recent figures show that Indian tribe members and 
Native Alaskans own more than 201,000 business enterprises and 
generate revenues in excess of $26 billion annually. Though the 
number of businesses increased slightly (by 4%) the gross 
revenues decreased by over 10% since the previous U.S. Census 
Department Survey of Small Business Owners.\1\ On average, for 
every dollar a white-owned business earns, an Indian Tribe 
member or Native Alaskan earns a little more than half.\2\ 
These facts contribute to the overriding reality that 25% of 
Native Americans live below the poverty level and 11.2 percent 
are at least 50 percent below the poverty level, almost twice 
the national average.
---------------------------------------------------------------------------
    \1\ 2002 Economic Census; Survey of Business Owners: American 
Indian- and Alaskan Native Owned Firms Bureau of the Census--August, 
2006.
    \2\ Minorities in Business, a Demographic Review of Minority 
Business Ownership; Office of Advocacy; Small Business Administration; 
Dr. Ying Lowry; April 2007.
---------------------------------------------------------------------------
    Growth of Indian businesses has slowed significantly when 
compared to encouraging signs of a decade ago. For example, 
according to the previous Survey of Small Business Owners, 
between 1992 and 1997 businesses owned by Indian tribe members 
and Native Alaskans grew by 84 percent while businesses, 
generally, grew by only seven percent. During the same period, 
the gross receipts for Indian tribe members and Native Alaskan 
business owners increased by 179 percent, in comparison with 
the business community, as a whole, where the gross receipts 
for the same period grew only by 40 percent.\3\
---------------------------------------------------------------------------
    \3\ 1997 Economic Census; Survey of Business Owners: American 
Indian- and Alaskan Native Owned Firms; Bureau of the Census--2000.
---------------------------------------------------------------------------
    The construction industry is the largest business sector 
and accounts for about one sixth of all firms and one fifth of 
total revenues. The second largest is health and social 
assistance services which accounts for about one eighth of all 
businesses but only 5% of total revenues and finally, the third 
largest sector, the retail trades, accounts for one tenth of 
the businesses and one sixth of total revenues.\4\ The 
Committee found that these types of businesses could benefit 
from technical advice and assistance and their growth could 
spur employment in Native American communities.
---------------------------------------------------------------------------
    \4\ 2002 Economic Census; Survey of Business Owners: American 
Indian- and Alaskan Native Owned Firms; Bureau of the Census--August, 
2006 (see Table 1).
---------------------------------------------------------------------------
    The Small Business Administration's SBDC program network 
which has more than 1000 offices throughout the United States 
provides cost-effective business counseling and technical 
assistance to small businesses. For example, clients receiving 
long-term counseling under the program in 2005 generated 
additional tax revenues of $248 million, which was 
approximately three times the cost of the program to the 
Federal government. The Committee also believes this counseling 
has additional long-term benefits because advice once 
incorporated by the business continues to help it grow and 
strengthen in the future.
    By using the existing infrastructure of the SBDC program, 
it is anticipated that small businesses owned by Indian tribe 
members, Native Alaskans, and Native Hawaiians, who receive 
services under the Act, will have a higher survival rate than 
the average small businesses not receiving such services. 
Further, increased assistance through SBDC counseling has in 
the past been able to reduce defaults under Small Business 
Administration (SBA) lending programs. The Committee considered 
both these to be significant benefits.
    The business counseling and technical assistance, provided 
for under this Act, is critical on Indian land where, without 
such assistance, similar services are scarce and expensive. 
Past and current efforts by SBDCs to assist Native American 
populations located on or along reservation lands have proven 
difficult. In addition, the lack of resources makes it 
difficult to raise an equal amount of matching funds that could 
be dedicated specifically to assist Native Americans as 
required by the regular SBDC program.

                             III. Hearings

    In the 110th Congress, the full Committee on Small Business 
held a hearing on May 14, 2007 to examine entrepreneurial 
development needs of all small business owners, including 
Native Americans. The hearing focused in part on challenges 
Native Americans face in today's economy and recommendations 
for improvements to federal assistance programs specifically 
targeting Native American groups. The Committee has also held a 
number of hearings over the years on this issue which has 
included the testimony of Tribal leaders, Mr. Udall, author of 
H.R. 2284, representatives from Small Business Development 
Centers and their Association. Measures substantially similar 
to H.R. 2284 have been reported favorably out of Committee four 
times and were passed by the House twice.

                      IV. Committee Consideration

    On May 14, 2007, the Committee on Small Business met in 
open session to consider H.R. 2284 and any amendments.

                           V. Committee Votes

    The Committee on Small Business ordered H.R. 2284 reported 
to the House, by a voice vote at 10:30 a.m., May 23, 2007 and 
no amendments were offered.

VI. Section-by-Section Analysis of the Native Americans Small Business 
                       Development Act--H.R. 2284

    A bill to amend the Small Business Act to expand and 
improve the assistance provided by Small Business Development 
Centers to Indian tribe members, Alaska Natives, and Native 
Hawaiians.

Section 1: Findings and purposes

    This section makes findings about the high rates of poverty 
and unemployment for Native Americans and Alaskan Natives which 
are nearly double that of the general population. Additionally, 
it finds that the SBDC program is a cost effective method of 
delivering technical assistance and that its existing 
infrastructure can provide counseling and services that may 
help small businesses owned by Native Americans, Alaska 
Natives, and Native Hawaiians to attain a higher survival rate 
than the average small business not receiving such services.
    The section also states the purposes of the legislation to 
stimulate economies and foster economic development on Indian 
lands and assist in the creation of new small businesses owned 
by Native Americans, Alaska Natives, and Native Hawaiians and 
expand existing ones. It states a further purpose that advice 
of local Tribal Councils shall be sought out and considered.

Section 2: Small Business Development Center assistance to Indian tribe 
        members, Alaska Natives, and Native Hawaiians

    This section sets up a procedure within the Small Business 
Act whereby SBDCs funded by the SBA that are in ``eligible'' 
states can apply for an additional grant to be used solely to 
provide services to assist with outreach, development, and 
enhancement on Indian lands of small business startups and 
expansions owned by Indian tribe members, Alaska Natives, and 
Native Hawaiians. It defines eligible states as those that have 
a combined population of Indian tribe members, Alaska Natives, 
and Native Hawaiians comprising at least 1 percent of the 
state's total population, as shown by the latest available 
census. The section places a cap on the program of $300,000 per 
year but no matching funds are required. The Committee intends 
to provide special help in those states that have a significant 
Native American population by adding a technical business 
assistance capability to the SBDC system within the state in 
places where Native American populations can easily access this 
assistance. The Committee believes levels of poverty within 
these communities can be reduced by providing such assistance 
in these identified communities. Because many Native Americans 
live on or adjacent to Indian lands, where economic 
opportunities are limited, the Committee expects the SBDCs to 
be located on or in close proximity to Indian lands. Although 
Native Americans who do not live on Indian lands may seek the 
assistance of these centers, the Committee believes that 
assistance should go to aid with outreach, development, and 
enhancement on Indian lands of small business startups and 
expansions owned by Indian tribe members, Native Alaskans, and 
Native Hawaiians. Native Americans located near existing 
centers or subcenters are encouraged to continue to utilize 
those existing resources.
    The section sets out that the application for the grant 
must include information regarding the applicant's goals and 
objectives for the services to be provided using the grant, 
including: (1) the capability of the applicant to provide 
training and services to a representative number of Indian 
tribe members, Alaska Natives, and Native Hawaiians; (2) the 
location of the SBDC site proposed by the applicant; (3) the 
required amount of grant funding needed to implement the 
program; and (4) the extent to which the applicant has 
consulted with local Tribal Councils. The Committee feels that 
certain basic criteria must be considered when evaluating a 
grant proposal and sets out specifically what those criteria 
are and directs that they be included in the application 
documents. The Committee feels that it is particularly 
important that local Tribal Councils actively participate from 
the outset.
    Within 180 days of enactment, the SBA must issue 
regulations pertaining to the program, including: standards 
relating to educational, technical, and support services to be 
provided by SBDCs receiving assistance; and standards relating 
to any work plan that the Administration may require a SBDC 
receiving assistance to develop. The Committee intends to have 
the SBA move forward as quickly as possible with this program. 
The Committee believes that setting standards will help ensure 
that the grants will be awarded to the most qualified SBDC 
programs and provide a mechanism by which the Administrator can 
evaluate the success of the program.
    The legislation authorizes $7,000,000 for each of fiscal 
years 2008 through 2010 for the program. The Administration can 
carry out this program only with amounts appropriated in 
advance specifically to carry it out. The Committee intends 
that any funds appropriated to support this program be in 
addition to funds allocated to SBDCs under the normal formula 
for those funds and that such funds be specifically 
appropriated for this program.

Section 3: State consultation with tribal organizations

    A Small Business Development Center receiving a grant must 
request the advice of tribal organizations on how best to 
provide assistance to Indian tribe members, Alaska Natives, and 
Native Hawaiians and where to locate satellite centers to 
provide such assistance. The Committee intends that the SBDC 
programs receiving grants give an active role to the local 
Tribal Councils in placing additional centers to carry out the 
programs created by this legislation. While it will be up to 
these SBDC programs to decide the number and location of 
centers to provide the new services, these decisions must be 
taken after careful consideration of the advice provided Native 
American groups that are the intended beneficiaries of this 
program.

             VII. Congressional Budget Office Cost Estimate

                                                      June 4, 2007.
Hon. Nydia M. Velazquez,
Chairwoman, Committee on Small Business,
House of Representatives, Washington, DC.
    Dear Madam Chairwoman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2284, a bill to 
amend the Small Business Act to expand and improve the 
assistance provided by Small Business Development Centers to 
Indian tribe members, Alaska Natives, and Native Hawaiians.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Susan Willie.
            Sincerely,
                                                   Peter R. Orszag.
    Enclosure.

H.R. 2284--A bill to amend the Small Business Act to expand and improve 
        the assistance provided by Small Business Development Centers 
        to Indian tribe members, Alaska Natives, and Native Hawaiians

    Summary: H.R. 2284 would authorize the appropriation of $21 
million over the period of fiscal years 2008 through 2010 to 
assist small businesses owned by Indian tribe members, Alaska 
Natives, and Native Hawaiians. Under the bill, the Small 
Business Administration would make grants to eligible Small 
Business Development Centers (SBDC) to assist those groups with 
start-up and expansion activities. Assuming appropriation of 
the specified amounts, CBO estimates that implementing H.R. 
2284 would cost $18 million over the 2008-2012 period. Enacting 
H.R. 2284 would not affect revenues or direct spending.
    H.R. 2284 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would benefit state, local, and tribal governments.
    Estimated cost to the Federal Government: For this estimate 
CBO assumes that the bill will be enacted prior to the start of 
fiscal year 2008, that the specified amounts will be 
appropriated each year, and that spending will follow 
historical patterns for similar programs. CBO estimates that 
implementing the bill would cost $18 million over the 2008-2012 
period to award grants to SBDCs to assist small business-owners 
who are members of Indian tribes, Alaska Natives, or Native 
Hawaiians.

------------------------------------------------------------------------
                                      By fiscal year, in millions of
                                                 dollars--
                                 ---------------------------------------
                                   2008    2009    2010    2011    2012
------------------------------------------------------------------------
              CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Authorization Level.............       7       7       7       0       0
Estimated Outlays...............       *       3       5       6      4
------------------------------------------------------------------------
Note.--* = less than $500,000.

    Intergovernmental and private-sector impact: H.R. 2284 
contains no intergovernmental or private-sector mandates as 
defined in UMRA. By authorizing appropriations for grants to 
existing SBDCs that meet certain requirements, and by waiving 
requirements that eligible entities provide matching funds, the 
bill would benefit state, local, and tribal governments.
    Estimate prepared by: Federal costs: Susan Willie. Impact 
on state, local, and tribal governments: Elizabeth Cove. Impact 
on the private sector: Amy Petz.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                   VIII. Committee Estimate of Costs

    Clause 3(d)(2) of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison by the 
Committee of the costs that would be incurred in carrying out 
H.R. 2284. However, clause 3(d)(3)(B) of that rule provides 
that this requirement does not apply when the Committee has 
included in its report a timely submitted cost estimate of the 
bill prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act.

                         IX. Oversight Findings

    In accordance with clause (2)(b)(1) of rule X of the Rules 
of the House of Representatives, the oversight findings and 
recommendations of the Committee on Small Business with respect 
to the subject matter contained in H.R. 2284 are incorporated 
into the descriptive portions of this report.

                X. Statement of Constitutional Authority

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds the authority for 
this legislation in Article I, Section 8, clause 18, of the 
Constitution of the United States.

                  XI. Compliance With Public Law 104-4

    H.R. 2284 contains no unfunded mandates.

                 XII. Congressional Accountability Act

    H.R. 2284 does not relate to the terms and conditions of 
employment or access to public services or accommodations with 
the meaning of section 102(b)(3) of P.L. 104-1.

               XIII. Federal Advisory Committee Statement

    H.R. 2284 does not establish or authorize the establishment 
of any new advisory committees.

                     XIV. Statement of No Earmarks

    Pursuant to clause 9 of rule XXI, H.R. 2284 does not 
contain any congressional earmarks, limited tax benefits, or 
limited tariff benefits as defined in clause 9(d), 9(e), or 
9(f) of Rule XXI.

                  XV. Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee establishes the 
following performance related goals and objectives for this 
legislation: H.R. 2284 includes a number of provisions designed 
to update and to improve the Small Business Administration's 
entrepreneurial assistance programs particularly in the 
delivery of assistance to Indian tribe members, Alaska Natives 
and Native Hawaiians.

       XVI. Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (new matter is 
printed in italic and existing law in which no change is 
proposed is shown in roman):

SMALL BUSINESS ACT

           *       *       *       *       *       *       *


  Sec. 21. (a)(1) * * *

           *       *       *       *       *       *       *

          (8) Additional grant to assist indian tribe members, 
        alaska natives, and native hawaiians.--
                  (A) In general.--Any applicant in an eligible 
                State that is funded by the Administration as a 
                Small Business Development Center may apply for 
                an additional grant to be used solely to 
                provide services described in subsection (c)(3) 
                to assist with outreach, development, and 
                enhancement on Indian lands of small business 
                startups and expansions owned by Indian tribe 
                members, Alaska Natives, and Native Hawaiians.
                  (B) Eligible states.--For purposes of 
                subparagraph (A), an eligible State is a State 
                that has a combined population of Indian tribe 
                members, Alaska Natives, and Native Hawaiians 
                that comprises at least 1 percent of the 
                State's total population, as shown by the 
                latest available census.
                  (C) Grant applications.--An applicant for a 
                grant under subparagraph (A) shall submit to 
                the Administration an application that is in 
                such form as the Administration may require. 
                The application shall include information 
                regarding the applicant's goals and objectives 
                for the services to be provided using the 
                grant, including--
                          (i) the capability of the applicant 
                        to provide training and services to a 
                        representative number of Indian tribe 
                        members, Alaska Natives, and Native 
                        Hawaiians;
                          (ii) the location of the Small 
                        Business Development Center site 
                        proposed by the applicant;
                          (iii) the required amount of grant 
                        funding needed by the applicant to 
                        implement the program; and
                          (iv) the extent to which the 
                        applicant has consulted with local 
                        Tribal Councils.
                  (D) Applicability of grant requirements.--An 
                applicant for a grant under subparagraph (A) 
                shall comply with all of the requirements of 
                this section, except that the matching funds 
                requirements under paragraph (4)(A) shall not 
                apply.
                  (E) Maximum amount of grants.--No applicant 
                may receive more than $300,000 in grants under 
                this paragraph for one fiscal year.
                  (F) Regulations.--After providing notice and 
                an opportunity for comment and after consulting 
                with the Association recognized by the 
                Administration pursuant to paragraph (3)(A) 
                (but not later than 180 days after the date of 
                enactment of this paragraph), the 
                Administration shall issue final regulations to 
                carry out this paragraph, including regulations 
                that establish--
                          (i) standards relating to 
                        educational, technical, and support 
                        services to be provided by Small 
                        Business Development Centers receiving 
                        assistance under this paragraph; and
                          (ii) standards relating to any work 
                        plan that the Administration may 
                        require a Small Business Development 
                        Center receiving assistance under this 
                        paragraph to develop.
                  (G) Definitions.--In this section, the 
                following definitions apply:
                          (i) Indian lands.--The term ``Indian 
                        lands'' has the meaning given the term 
                        ``Indian country'' in section 1151 of 
                        title 18, United States Code, the 
                        meaning given the term ``Indian 
                        reservation'' in section 151.2 of title 
                        25, Code of Federal Regulations (as in 
                        effect on the date of enactment of this 
                        paragraph), and the meaning given the 
                        term ``reservation'' in section 4 of 
                        the Indian Child Welfare Act of 1978 
                        (25 U.S.C. 1903).
                          (ii) Indian tribe.--The term ``Indian 
                        tribe'' means any band, nation, or 
                        organized group or community of Indians 
                        located in the contiguous United 
                        States, and the Metlakatla Indian 
                        Community, whose members are recognized 
                        as eligible for the services provided 
                        to Indians by the Secretary of the 
                        Interior because of their status as 
                        Indians.
                          (iii) Indian tribe member.--The term 
                        ``Indian tribe member'' means a member 
                        of an Indian tribe (other than an 
                        Alaska Native).
                          (iv) Alaska Native.--The term 
                        ``Alaska Native'' has the meaning given 
                        the term ``Native'' in section 3(b) of 
                        the Alaska Native Claims Settlement Act 
                        (43 U.S.C. 1602(b)).
                          (v) Native Hawaiian.--The term 
                        ``Native Hawaiian'' means any 
                        individual who is--
                                  (I) a citizen of the United 
                                States; and
                                  (II) a descendant of the 
                                aboriginal people, who prior to 
                                1778, occupied and exercised 
                                sovereignty in the area that 
                                now constitutes the State of 
                                Hawaii.
                          (vi) Tribal organization.--The term 
                        ``tribal organization'' has the meaning 
                        given that term in section 4(l) of the 
                        Indian Self-Determination and Education 
                        Assistance Act (25 U.S.C. 450b(l)).
                  (H) Authorization of appropriations.--There 
                is authorized to be appropriated to carry out 
                this paragraph $7,000,000 for each of fiscal 
                years 2008 through 2010.
                  (I) Funding limitations.--
                          (i) Nonapplicability of certain 
                        limitations.--Funding under this 
                        paragraph shall be in addition to the 
                        dollar program limitations specified in 
                        paragraph (4).
                          (ii) Limitation on use of funds.--The 
                        Administration may carry out this 
                        paragraph only with amounts 
                        appropriated in advance specifically to 
                        carry out this paragraph.

           *       *       *       *       *       *       *

  (c)(1) * * *

           *       *       *       *       *       *       *

  (9) Advice of local tribal organizations.--A Small Business 
Development Center receiving a grant under this section shall 
request the advice of tribal organizations on how best to 
provide assistance to Indian tribe members, Alaska Natives, and 
Native Hawaiians and where to locate satellite centers to 
provide such assistance.

           *       *       *       *       *       *       *