Chairman Cannon and members of the Subcommittee,

My name is Michael J. Melloy. I am a Circuit Judge with the Court of Appeals for the Eighth Circuit. I am also Chair of the Judicial Conference Committee on the Administration of the Bankruptcy System (the Bankruptcy Committee) and in that capacity I appear before you today.

Thank you for the opportunity to testify to the need for additional bankruptcy judgeships. Pending bankruptcy judgeship legislation sponsored by Congressman Kingston (H.R. 1428) reflects the Judicial Conference's recent recommendation to Congress for the authorization of 36 more judgeships in 22 judicial districts.

Additional judgeships are critical to ensure that the bankruptcy courts have sufficient judicial resources to effectively and efficiently adjudicate the rights and responsibilities of parties in bankruptcy cases and proceedings. New bankruptcy judgeships have not been authorized by Congress since 1992. Since that time, case filings have increased nationally by 61 percent. In response to this increase, the Judicial Conference - as part of its process of reviewing bankruptcy judgeship needs every two years - made recommendations to Congress for additional bankruptcy judgeships in 1993, 1995, 1997, 1999, and this year.

Today I ask for your assistance in completing the process of securing authorization for the additional bankruptcy judgeships needed by the bankruptcy system. For your convenience, I have provided as Attachment A to my written testimony a chart listing the 36 bankruptcy judgeships recommended by the Judicial Conference.

Understanding the process and criteria used in evaluating requests for additional bankruptcy judgeships is important and should be, I believe, included as part of the official record for every judgeship request. I have therefore included a detailed description of the process as Attachment B to my written testimony. The attachment also provides a description of the various programs used by the judiciary to fully and efficiently utilize its existing judicial resources.

The Judicial Conference is required by statute (28 U.S.C. § 152(b)(2)) to submit recommendations to Congress for new bankruptcy judgeships. To assist the Conference in performing this responsibility, the Bankruptcy Committee biennially conducts national judgeship surveys pursuant to a policy statement adopted by the Conference in 1991.

The policy statement sets out a number of workload factors that the Committee considers in assessing a district's request for additional bankruptcy judgeships, the first of which is the weighted caseload of that district. Generally, it is expected that, in addition to other judicial duties, a bankruptcy court should have a threshold caseload of 1,500 annual case-weighted filings per judgeship to justify additional judgeship resources. Other factors the Committee considers include the nature and mix of the court's caseload; historical caseload data and filing trends; geographic, economic, and demographic factors in the district; the effectiveness of case management efforts by the court; and the availability of alternative solutions and resources for handling the court's workload.

The need for the required additional judicial officers is at a critical level.

Nationally, the volume of bankruptcy filings has increased substantially in recent years. Bankruptcy filings have risen 61 percent nationally since 1992 when new bankruptcy judgeships were last authorized. In addition, as of December 31, 2002, the average weighted filings per bankruptcy judgeship nationally was 1,744, substantially above the threshold level of 1,500 weighted filings that the Judicial Conference uses to consider additional judgeships for a district.

In addition to record case filings over the past ten years, bankruptcy courts now face cases that are more complex and time-consuming than anything previously handled. Cases such as Enron, Global Crossing, and K-Mart consume a tremendous amount of a bankruptcy court's time. Complex airline industry cases, cases involving debtor's mass tort liabilities, and cases with hundreds of subsidiary filings or adversary proceedings are overwhelming certain judges and courts.

The Bankruptcy Judgeship Act of 1992 created 35 new bankruptcy judgeships, including ten temporary bankruptcy judgeships, increasing the number of authorized bankruptcy judgeships to 326 nationally. Since enactment of that law, the temporary bankruptcy judgeships in the District of Colorado and the District of South Carolina have expired under the terms of the authorizing statute. The bankruptcy system has operated since 2000 with only 324 judgeship positions - - fewer than authorized by Congress 11 years ago.

For ten years, the judiciary has sought to secure additional bankruptcy judgeships. In response to our requests, in the 104^th Congress the House Judiciary Committee favorably reported a bankruptcy judgeship bill (H.R. 2604). And, in the 105^th Congress, the House passed stand-alone bankruptcy judgeship legislation (H.R. 1596). This bill was subsequently incorporated into the conference report on the Bankruptcy Reform Act of 1998 (H. Rept. 105-794) that failed enactment. Since 1998, Congress has continued to tie bankruptcy judgeship legislation to still-pending bankruptcy reform legislation that we respectfully suggest is unrelated to our need for additional judicial resources.

Six judicial districts have been forced to wait for additional judicial resources since 1993. The Northern District of New York, the District of New Jersey, the Eastern District of Pennsylvania, the District of Maryland, the Eastern District of Michigan, and the Southern District of Florida were included in every Judicial Conference recommendation for additional judgeships since 1993. Further, most districts included in this current recommendation of the Judicial Conference have experienced weighted case filings in excess of 1,500 since 1997.

The number of additional bankruptcy judgeships recommended by the Judicial Conference has increased with each biennial request since 1997. The Conference requested 18 judgeships in 1997, 24 judgeships in 1999, and now 36 judgeships this year. The number of requested judgeships increases with each new request because of the backlog of requested judgeships that were not authorized, coupled with escalating case filings.

The Judicial Conference is aware of the budget crisis and the importance of government frugality with taxpayers' dollars. With that key reality in mind, a Judicial Conference recommendation for authorization of additional bankruptcy judgeships is not undertaken lightly. The judicial districts included in H.R. 1428 have waited many years for additional judicial resources, under great stress and overburdened by burgeoning caseloads. We respectfully suggest that it is now time to pass bankruptcy judgeship legislation to alleviate the overcrowded dockets and assure that the bankruptcy system continues to operate in a timely, efficient, and effective manner.

We share a common interest in ensuring that the bankruptcy court system has adequate judicial resources to manage its caseload justly, speedily, and economically. An unprecedented number of cases are pending in our bankruptcy courts. Many of the 22 districts for which additional bankruptcy judgeships are sought have had overwhelming filings dating back years, in some cases to 1993, shortly after Congress last authorized additional judgeship positions. Although the judiciary has developed creative and innovative techniques to fully utilize its existing judicial resources and manage increasing caseloads - including the use of temporary bankruptcy judges, recalled bankruptcy judges, inter- and intracircuit assignments, and advanced case management techniques - the bankruptcy courts can no longer operate as effectively as the American public deserves because of the heavy weighted per judge caseloads. Our judicial resources are strained, and the cost to society of an overburdened bankruptcy system is enormous.

I therefore urge you to provide for 36 additional bankruptcy judgeships as requested by the Judicial Conference.

Thank you, once again, for your consideration of our request and your continued support to the system. I look forward to our continuing joint efforts to improve the administration of the bankruptcy system and believe that the authorization of these long-needed additional judgeships will be our most important first step.

I would be pleased to answer any questions or provide any assistance in this matter.

District 2003 Judicial Conference Recommendation

Puerto Rico 1 temporary

New York (N) 1 temporary

New York (S) 2 permanent

Delaware 4 permanent

New Jersey 1 permanent

Pennsylvania (E) 1 permanent

Pennsylvania (M) 1 temporary

Maryland 3 permanent and 1 temporary

North Carolina (E) 1 permanent

South Carolina 1 permanent

Virginia (E) 1 permanent

Mississippi (N) 1 temporary

Mississippi (S) 1 temporary

Michigan (E) 2 permanent

Tennessee (W) 2 permanent

Arkansas (E&W) 1 permanent

Nevada 2 permanent

Utah 1 permanent

Florida (M) 2 permanent

Florida (S) 2 permanent

Georgia (S) 1 permanent and 1 temporary

Georgia (N) 2 permanent

Total: 36

ATTACHMENT B

In the late 1980's, encouraged by urging from Congress, the Bankruptcy Committee requested that the Federal Judicial Center conduct a detailed, quantitative study of the bankruptcy judges' workloads and recommend a comprehensive case measurement system. A copy of the report containing the Federal Judicial Center's work, entitled "A Day in the Life: The Federal Judicial Center's 1988 - 1989 Bankruptcy Court Time Study" by Gordon Bermant, Patricia Lombard, and Elizabeth Wiggins, is enclosed for the record. Based on time records of the activities of 97% of all bankruptcy judges recorded over a 10-week time frame, staggered throughout a one-year period, the Federal Judicial Center designed a work measurement system consisting of a case weight for each of the 17 specific case types within the jurisdiction of the bankruptcy courts. These case weights categorized bankruptcy cases filed under chapters 7, 9, 11, 12, and 13 of the Bankruptcy Code and adversary proceedings, i.e., a lawsuit within a case usually initiated by filing a complaint. The cases or proceedings are generally grouped by type and by the amount of assets or scheduled debts. For example, chapter 13 cases are categorized into subgroups according to the amount of liabilities -- one subgroup applies to cases in which the liabilities are less than $50,000 and another to those with scheduled liabilities of $50,000 or more. While the chapter 13 case weights are based on liabilities, case weights for chapter 11 cases and both the business and non-business chapter 7 cases are based on assets.

Through this comprehensive work measurement system, the "weighted judicial caseload" in the United States bankruptcy courts can be determined and analyzed. Based upon the case weight assigned to each of the 17 categories of case types before the bankruptcy courts and the actual cases pending before the bankruptcy courts, a quantitative measurement of the judicial caseload can be made per district. This thorough system helps the judiciary ascertain the minimum number of bankruptcy judges needed in each district and throughout the country.

At its January 1991 session, the Judicial Conference carefully reviewed the Federal Judicial Center's Time Study and adopted the proposed case weighting system. The Judicial Conference acknowledged the Center's determination that 1,280 hours was the "average" amount of time spent by bankruptcy judges on "case related" matters, noting that this figure excludes the 660 hours per year that the average judge spends handling general office-chambers matters, addressing personnel issues, traveling to divisional locations, attending meetings and seminars, conducting general research, and other matters related to the judicial role. The Judicial Conference determined, however, that a district should have an even higher weighted judicial case load, a minimum of 1,500 annual "case related" hours per bankruptcy judge, before that district's request for an additional bankruptcy judge should be considered.

The Bankruptcy Committee's Judgeship Subcommittee thoroughly screens, reviews, analyzes, and assesses the pending requests for additional judgeships from the circuit councils, and applies the weighted case filing criteria to all requests for new judgeships. The subcommittee separates the requests into categories, identifying needs that could be met without adding a judgeship and securing short-term relief for those in the greatest distress. In short, the subcommittee tries to stabilize those situations deemed most critical while awaiting the authorization of new bankruptcy judges.

The weighted judicial caseload is not the sole determinant of whether the Judicial Conference endorses or denies a judgeship request. Other factors considered include:

1) the nature and mix of the court's caseload;

2) historical caseload data and filing trends;

3) geographic, economic, and demographic factors;

4) the effectiveness of the court's case management efforts;

5) the availability of alternative resources for handling the court's

caseload; and

6) any other relevant factors.

Resource management tools and processes currently used by the judiciary to maximize its resources include:

• Temporary positions: The Judicial Conference recommends temporary judgeship positions in those instances where the need for an additional bankruptcy judgeship is demonstrated through the on-site survey process, but it is not clear that the need will exist permanently in the district. Ten of the 35 new positions created by Congress in 1992 were temporary positions (where the first vacancy resulting from the death, resignation, or removal of a sitting judge occurring after 5 years cannot be filled). In January 2003, the Judicial Conference recommended that of the 36 additional judgeships, seven be created as temporary bankruptcy judgeships.





• Recall: The judiciary also meets its judicial resource needs through the recall by any circuit of retired bankruptcy judges to serve in a district on either a full-time or part-time basis. Currently, approximately 33 recalled bankruptcy judges are serving nationwide. The number of bankruptcy judges available for recall increases almost every year.





• Shared Positions: The judiciary turns to shared bankruptcy judgeship positions when possible to meet the resource needs of more than one district, thus avoiding the cost of an additional judgeship.





• Cross Designation: The judiciary also has the authority to designate a bankruptcy judge to serve in more than one district pursuant to 28 U.S.C. § 152(d) which permits designation of a bankruptcy judge to serve in any district adjacent to or near the district for which the judge was appointed.





• Intercircuit and Intracircuit Assignments: The judiciary uses the systems for intercircuit and intracircuit assignment of bankruptcy judges to furnish short-term solutions to the disparate judicial resource needs of districts within circuits and between circuits.





• Additional Law Clerks: The judiciary has developed several programs through which the bankruptcy judges in the busiest districts may be able to receive additional law clerk help through emergency funds provided by the circuit councils, funds for supplemental law clerks provided by the Judicial Conference, and by allowing a bankruptcy judge to hire an additional law clerk in lieu of a secretary.





• Judicial Education: Recognizing that the number of bankruptcy judgeships authorized has not kept pace with the dramatic increase in case filings, the judiciary relies on continuing judicial education provided by the Federal Judicial Center to help the incumbent judges do more with less. Ongoing improvements in case management - through publications such as Case Manual for United States Bankruptcy Judges and specialized management seminars, including those covering mega-cases and ADR processes - allow the bankruptcy judges to handle more cases than before. To enhance the management process further, the Administrative Office provides each court with an annual "case processing measures report" that reflects how that court is managing its caseload. Moreover, the caseloads are constantly analyzed and monitored through the case weight tables developed by the Federal Judicial Center.





• Other Ongoing Initiatives: The Ninth Circuit has a pilot project designed to balance the disparate bankruptcy caseloads more evenly within that circuit by transferring pretrial work in adversary proceedings to districts with lighter caseloads.





• Technology: The judiciary continues to explore other innovative and novel ways to alleviate overly burdensome caseloads through technical advancements, where judges can help other districts through "virtual courtrooms," video-conferencing, and the use of educational programs broadcast over the FJTN, a judiciary-wide satellite television network.