[Federal Register Volume 62, Number 126 (Tuesday, July 1, 1997)]
[Rules and Regulations]
[Pages 35337-35338]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-17204]
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Rules and Regulations
Federal Register
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Federal Register / Vol. 62, No. 126 / Tuesday, July 1, 1997 / Rules
and Regulations
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SMALL BUSINESS ADMINISTRATION
13 CFR Part 123
Disaster Loan Program
AGENCY: Small Business Administration.
ACTION: Interim final rule.
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SUMMARY: The Small Business Administration (SBA) is amending its
disaster loan rules to ensure that when a legal business entity is
engaged in both agricultural enterprises and non-agricultural business
ventures, SBA can provide physical disaster business loans to the non-
agricultural portion which has been damaged by floods and other
catastrophes. SBA is making these changes effective immediately in
order to make such assistance available to businesses which have been
adversely affected by recent major floods.
DATES: This rule is effective July 1, 1997. Comments must be submitted
on or before July 31, 1997.
ADDRESSES: Please mail comments to Bernard Kulik, Associate
Administrator for Disaster Assistance, 409 3rd Street, SW, Washington,
DC 20416.
FOR FURTHER INFORMATION CONTACT: Bernard Kulik, Associate Administrator
for Disaster Assistance, (202) 205-6734.
SUPPLEMENTARY INFORMATION: Section 2(e) of the Small Business Act (15
USC Sec. 631(e)) (``Act'') states that the policy of the Congress is
that the Government aid and assist ``victims'' of floods and other
catastrophes. Section 2(g) of the Act provides that in its
administration of the disaster loan program pursuant to section 7(b) of
the Act, SBA shall provide, ``to the maximum extent possible'',
assistance and counseling to disaster ``victims''. In administering the
disaster loan program, SBA is precluded, by section 7(b) of the Act,
from assisting agricultural enterprises. As defined in section 18(b)(1)
of the Act, an ``agricultural enterprise'' is a business engaged in the
production of food and fiber, ranching, and raising of livestock,
aquaculture, and all other farming and agricultural related industries.
SBA previously provided physical disaster business loan assistance
only to business entities which were adversely affected by floods and
other catastrophes when the primary activity of the business entity was
non-agricultural. Thus if a person or a single business entity operated
both agricultural and non-agricultural enterprises, SBA would not
assist any part of the business entity that suffered damage if the
primary activity of the total entity was agricultural.
SBA has reconsidered the statutory language above and has re-
evaluated its position with respect to the ``primary activity rule''
which it administratively applied. The Act requires SBA to assist
``victims'' of floods and other catastrophes, without regard to the
primary activity of a total business entity. If the victim of a flood
or other catastrophe is a non-agricultural business venture, SBA should
assist that victim regardless of whether such business is a part of a
larger business entity whose primary activity is agricultural. Thus, if
the total business operation is comprised of a retail store and a
ranch, and the retail store is destroyed by a flood, SBA should offer
physical disaster assistance to the retail store even if the ranching
operation generated more revenue.
Accordingly, SBA is promulgating this interim final rule to permit
SBA to provide physical disaster business loan assistance to a non-
agricultural business venture within the total business entity if the
non-agricultural business has been damaged by a flood or other
catastrophe, regardless of the primary activity of the total business
entity. The rule also makes clear that the business entity can be a
sole proprietorship, corporation, limited liability company, or
partnership.
Compliance With Executive Orders 12612, 12778, and 12866, the
Regulatory Flexibility Act (15 U.S.C. Sec. 601, et seq.), and the
Paperwork Reduction Act (44 U.S.C. Ch. 35)
SBA certifies that this final rule is not a significant rule within
the meaning of Executive Order 12866; it is not likely to have annual
economic effect of $100 million or more, result in a major increase in
costs or prices, or have a significant adverse effect on competition or
the United States economy. SBA also certifies that this rule will not
have a significant economic impact on a substantial number of small
entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C.
Sec. 601 et seq. This rule makes eligible for physical disaster loans
only those nonagricultural businesses that are part of a business
entity that is primarily agricultural and, therefore, does not meet the
substantial number of small businesses criterion anticipated by the
Regulatory Flexibility Act.
For purposes of the Paperwork Reduction Act. 44 U.S.C. Ch 35, SBA
certifies that this final rule contains no new reporting or
recordkeeping requirements.
For purposes of Executive Order 12612, SBA certifies that this rule
has no federalism implications warranting the preparation of a
Federalism Assessment.
For purposes of Executive Order 12778, SBA certifies that this rule
is drafted, to the extent practicable, in accordance with the standards
set forth in Section 2 of that Order.
SBA is issuing this as an interim final rule and not as a proposed
rule, because the businesses covered by this rule need physical
disaster loans immediately and notice and public comment procedures are
impracticable and contrary to the public interest.
List of Subjects in 13 CFR Part 123
Disaster assistance, loan programs-business, small businesses.
For the reasons set forth above, SBA amends part 123 of title 13,
Code of Federal Regulations, as follows:
PART 123--DISASTER LOAN PROGRAM
1. The authority citation for part 123 continues to read as
follows:
Authority: 15 U.S.C. 634(b)(6), 636(b), 636(c) and 636(f); Pub.
L. 102-395, 106 Stat. 1828, 1864; and Pub. L. 103-75, 107 Stat. 739.
2. Section 123.201 is amended by revising paragraph (b) to read as
follows:
Sec. 123.201 When am I not eligible to apply for a physical disaster
business loan?
(a) * * *
(b) Sometimes a damaged business entity (whether in the form of a
corporation, limited liability company,
[[Page 35338]]
partnership, or sole proprietorship) is engaged in both agricultural
enterprise and a non-agricultural business venture. If the agricultural
enterprise part of your business entity has suffered a physical
disaster, that enterprise is not eligible for SBA physical disaster
assistance. If the non-agricultural business venture of your entity has
suffered physical disaster damage, that part of your business operation
would be eligible for SBA physical disaster assistance. If both the
agricultural enterprise part and the non-agricultural business venture
have incurred physical disaster damage, only the non-agricultural
business venture of your business entity would be eligible for SBA
physical disaster assistance.
* * * * *
Dated: June 25, 1997.
Aida Alvarez,
Administrator.
[FR Doc. 97-17204 Filed 6-30-97; 8:45 am]
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