American Ownership and Resilience Act

Bill Number

H.R. 3248

Origin Chamber

House

Congress

119th Congress, Session 1

Policy Area

Finance and Financial Sector

Status

Introduced

Latest Action

2025-05-07: Referred to the Committee on Financial Services, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.

Last Updated

2026-06-24T08:08:03Z

AI-Generated Summary

Purpose of the Legislation

The American Ownership and Resilience Act (H.R. 3248) aims to promote employee ownership of businesses in the United States by establishing a federal facility to support investments in employee stock ownership plans (ESOPs) and worker-owned cooperatives. ESOPs are retirement plans where employees own shares in their company, and worker-owned cooperatives are businesses owned and controlled by their workers. The goal is to facilitate smooth ownership transitions (e.g., from retiring owners), build worker wealth, enhance economic resilience, and prioritize investments in critical U.S. industries like manufacturing and technology.

Key Provisions

• Establishment of the Ownership Investment Facility: The Secretary of Commerce creates a program to license and provide financial leverage (government-guaranteed loans, called debentures) to "ownership investment companies" (OICs). These OICs must invest 100% of their capital in "covered investments," with at least 50% focused on helping businesses transition to majority employee ownership via ESOPs or cooperatives.

• Licensing and Capital Requirements for OICs:
• OICs must be organized as corporations, limited liability companies, or partnerships under state law, with at least $10 million in private capital (non-government funds from investors).
• Applicants need a track record in employee ownership investments or must hire experienced advisors. A "Protege OIC" program supports newer firms with mentorship from established managers.
• Licenses are issued on a rolling basis, with the first approvals within 2 years of enactment. The program sunsets (ends new licenses) after 20 years but allows existing OICs to continue.

• Leverage and Funding Limits:
• Total annual leverage capped at $5 billion, with no more than 20% for Protege OICs.
• Per-OIC limits: Up to $500 million (or 100% of private capital) for standard OICs; $100 million for Protege OICs. Higher limits apply if OICs also operate small business investment companies.
• Leverage is subordinate (lower priority in repayment) to other debts and carries interest rates tied to U.S. Treasury yields plus fees (up to 1.38% annually) to cover government costs. A 3% upfront fee is charged to OICs.
• Exclusions from leverage calculations for investments in U.S.-headquartered firms in critical industries (e.g., research, production vital to national security), up to $75 million or 25% of private capital.

• Investment Safeguards and Requirements:
• Covered investments must result in ESOPs or cooperatives holding majority ownership; OICs cannot control the business.
• For ESOP transitions: Requires independent trustees (neutral fiduciaries) and financial advisors to ensure fair pricing and terms. Employees get voting rights on major decisions like sales.
• Prohibitions: No personal financing from employees (except selling their own shares); share counts in ESOPs cannot drop during OIC involvement; protections for proceeds in case of business sales.
• Portfolio rules: No more than 10% of OIC funds in one business without approval; loans up to 20 years maturity, with interest rates based on Small Business Administration guidelines.

• Reporting, Oversight, and Enforcement:
• OICs submit annual reports on investments, including participant demographics (race, gender, location) and financial details.
• Secretary conducts exams every 2 years (waivable), valuations semiannually, and audits annually. Violations lead to fines (up to $100/day), license revocation, cease-and-desist orders, or removal of managers.
• Conflicts of interest regulated; OICs cannot hire recent government officials involved in approvals.

• Exemptions and Tax Options:
• Exemptions from parts of the Securities Act of 1933, Trust Indenture Act of 1939, and Investment Company Act of 1940 to ease OIC operations (e.g., no limits on senior securities if government-guaranteed).
• OICs can elect regulated investment company tax status for pass-through taxation.

• Trust Certificates: Secretary can pool and guarantee OIC debentures into tradable certificates to attract investors, backed by full faith and credit of the U.S.

Significant Changes to Existing Law

This bill introduces a new program modeled on the Small Business Investment Act of 1958 (which funds general small business investments via the Small Business Administration) but shifts focus to employee ownership under the Department of Commerce. Key innovations include:

• Creating OICs as a specialized vehicle, distinct from existing investment companies, with mandatory majority-employee-ownership mandates.
• Government leverage guarantees for employee-focused transitions, not previously available at this scale.
• New safeguards like mandatory independent trustees and fairness opinions for ESOP deals, building on but expanding Internal Revenue Code rules (e.g., sections 409, 4975) and Employee Retirement Income Security Act (ERISA) fiduciary standards.
• Exemptions from securities laws tailored to OICs, potentially simplifying regulation compared to standard investment funds.
• No direct amendments to tax code, but implicit incentives via leverage and reporting on tax-advantaged ESOPs/cooperatives.

Potential Impacts

• Government Agencies: The Department of Commerce gains new administrative duties (licensing, guarantees, exams), with costs offset by fees but potential losses from defaults (estimated in annual reports to Congress). Increases federal involvement in private equity, similar to SBA's role but emphasizing worker ownership.

• Citizens: Boosts opportunities for workers to gain company shares, potentially increasing retirement savings, job stability, and income equality—especially in manufacturing or critical tech sectors. Could prevent business closures during owner successions, preserving jobs. Demographic reporting may highlight benefits for underserved groups (e.g., by race/gender).

• International Relations: Prioritizes U.S.-headquartered firms in "critical" industries (e.g., those supporting national security), potentially reducing reliance on foreign ownership and strengthening domestic supply chains. No direct foreign aid or trade impacts, but could indirectly support U.S. economic competitiveness.

Main Stakeholders Affected

• Workers and Employees: Primary beneficiaries through ESOPs and cooperatives, gaining ownership stakes and protections.
• Business Owners: Sellers transitioning to employee ownership, facilitated by financing for successions or divestitures.
• Ownership Investment Companies and Investors: Licensed entities and private capital providers, with access to government-backed leverage but strict investment rules.
• Covered Businesses: Independently owned enterprises (any size) in critical U.S. sectors, eligible for capital to support employee buyouts.
• Department of Commerce and Regulators: Oversees program; Securities and Exchange Commission provides input on exemptions.
• Pension Plans and Advisors: Involved in ESOP management, with new fiduciary requirements.

Notable Legal, Constitutional, or Political Implications

• Legal: Expands federal guarantees (full faith and credit) for private investments, raising risks of taxpayer exposure to defaults (mitigated by fees/subordination). Enforcement mirrors banking laws (e.g., subpoenas, appeals to federal courts), ensuring due process. Conflicts rules draw from SBA precedents, promoting transparency.

• Constitutional: Relies on Commerce Clause authority to regulate interstate business and spending power for guarantees/incentives. No apparent First Amendment or due process issues, as safeguards include hearings and judicial review.

• Political: Bipartisan (sponsored by Republicans and Democrats), aligns with worker empowerment and economic nationalism trends. Could spark debate on government role in equity markets vs. benefits for middle-class wealth-building. Annual congressional reports ensure oversight, potentially influencing future funding.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Moore, Blake D. [R-UT-1]

Cosponsors (12)

Rep. Trahan, Lori [D-MA-3], Rep. Johnson, Dusty [R-SD-At Large], Rep. Foster, Bill [D-IL-11], Rep. Baumgartner, Michael [R-WA-5], Rep. Houlahan, Chrissy [D-PA-6], Rep. Fitzpatrick, Brian K. [R-PA-1], Rep. Craig, Angie [D-MN-2], Rep. Vindman, Eugene Simon [D-VA-7], Rep. Case, Ed [D-HI-1], Rep. McBride, Sarah [D-DE-At Large], Rep. Mackenzie, Ryan [R-PA-7], Rep. Bynum, Janelle S. [D-OR-5]

Recent Actions

• 2025-05-07: Referred to the Committee on Financial Services, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
• 2025-05-07: Referred to the Committee on Financial Services, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
• 2025-05-07: Introduced in House
• 2025-05-07: Introduced in House

Bill Versions

• American Ownership and Resilience Act — issued 2025-05-07 — PDF (88 pages)

Related Bills

• S. 1645 (119th Congress)