[Federal Register Volume 59, Number 124 (Wednesday, June 29, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-15696]


[[Page Unknown]]

[Federal Register: June 29, 1994]


=======================================================================
-----------------------------------------------------------------------

SMALL BUSINESS ADMINISTRATION

13 CFR Part 123

 

Disaster--Waiver of Judgment Lien Restriction

AGENCY: Small Business Administration.

ACTION: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: The proposed rule applies only to disaster loan assistance and 
would enable SBA to waive, for good cause shown, the restriction in the 
Federal Debt Collection Procedures Act of 1990 prohibiting debtors on 
whose property the United States has an outstanding judgment lien from 
receiving certain assistance from the Federal government.

DATES: Comments must be submitted on or before August 29, 1994.

ADDRESSES: Comments should be submitted to Bernard Kulik, Assistant 
Administrator for Disaster Assistance, U.S. Small Business 
Administration, 409 Third Street, SW., Washington DC 20416.

FOR FURTHER INFORMATION CONTACT:
Michael E. Deegan at 202/205-6734.

SUPPLEMENTARY INFORMATION: The Federal Debt Collection Procedures Act 
of 1990 (28 U.S.C. 3201(e)) provides that a debtor who has a judgment 
lien against the debtor's property for a debt owed to the United States 
shall not be eligible to receive any grant or loan which is made, 
insured, guaranteed or financed directly or indirectly by the United 
States or to receive funds directly from the Federal government in any 
program, except funds to which the debtor is entitled as beneficiary, 
until the judgment is paid in full or otherwise satisfied. However, the 
statute permits any agency responsible for such grants or loans to 
promulgate regulations to allow for waivers of this restriction. As an 
agency authorized to provide several forms of assistance proscribed by 
this restriction, including disaster loan assistance and other types of 
direct and guaranteed loans, SBA is subject to this restriction, absent 
its exercise of the waiver authority conferred by the statute.
    SBA recognizes that the excessive demands which disasters may place 
upon the financial resources of otherwise responsible debtors may 
prevent them from meeting their financial obligations to the United 
States or may prevent debtors who have previously defaulted on their 
financial obligations but who have entered into agreements with the 
creditor agency to satisfy a judgment from continuing to comply with 
the terms of those agreements. Therefore, SBA is proposing to issue a 
regulation permitting it to waive the restriction on eligibility for 
physical and economic injury disaster assistance provided under section 
(7)(b) (1) and (2) of the Small Business Act, 15 U.S.C. 636(b) (1) and 
(2), where there exists good cause to do so.
    The proposed regulation applies to applicants for assistance who 
have outstanding judgment liens in favor of SBA or in favor of other 
agencies and identifies two nonexclusive instances in which good cause 
will ordinarily be found to exist. Both examples address circumstances 
in which a debtor's inability to fulfill his or her financial 
responsibilities has been occasioned by the disaster for which the 
assistance is sought.
    It is contemplated that a waiver will be forthcoming as part of the 
eligibility review of an application for either physical or economic 
injury disaster assistance upon a demonstration of good cause by the 
applicant. Examples of good cause include, but are not limited to: (1) 
Circumstances in which the delinquency that gave rise to the otherwise-
disqualifying judgment lien was caused by the disaster, whether the 
original debt was incurred prior to or after the commencement date of 
the disaster, and (2) circumstances in which the disaster has prevented 
the debtor from adhering to the terms of an agreement to satisfy the 
judgment, whether that agreement has been made with SBA, another 
creditor agency or any other Federal entity responsible for the lien, 
such as the Resolution Trust Corporation or the Federal Deposit 
Insurance Corporation. In the case of agreements with other agencies, 
SBA will not waive the restriction on eligibility until the appropriate 
Federal entity has certified that the debtor had been adhering 
satisfactorily to the terms of the agreement prior to the commencement 
date of the disaster.
    The proposed regulation contemplates that SBA's Assistant 
Administrator for Disaster Assistance, or his/her designee, will make 
the determination as to whether good cause for waiving the restriction 
has been demonstrated by the applicant. Although such determinations 
are subject to the provisions of Sec. 123.12 governing requests for 
reconsideration, no appeal from an adverse determination is 
contemplated.

Compliance With Executive Orders 12866, 12612 and 12778; the Regulatory 
Flexibility Act, 5 U.S.C. 601 et seq.; and the Paperwork Reduction Act, 
44 U.S.C. Ch 35

    SBA submitted this proposed rule to the Office of management and 
Budget for purposes of Executive Order 12866.
    For purposes of Executive Order 12612, SBA certifies that the 
proposed rule, if promulgated as a final rule, would not have 
federalism implications warranting the preparation of a Federalism 
assessment.
    For purposes of Executive Order 12778, SBA certifies that the 
proposed rule, if promulgated as a final rule, is drafted, to the 
extent practicable, in accordance with the standards set forth in 
section 2 of that Order.
    For purposes of the Regulatory Flexibility Act, SBA certifies that 
the proposed rule, if promulgated as a final rule, would not have a 
significant economic effect on a substantial number of small entities 
because, even though the proposed rule would render previously 
ineligible applicants eligible for disaster loan assistance, SBA does 
not expect the number of affected applicants to be significant.
    For purposes of the Paperwork Reduction Act, SBA certifies that the 
proposed rule, if promulgated as a final rule, would not impose a new 
recordkeeping or reporting requirement.

List of Subjects in 13 CFR Part 123

    Disaster, Physical disaster and economic injury loans.

    Pursuant to the authority conferred in section 5(b)(6) of the Small 
Business Act (15 U.S.C. 634(b)(6)), SBA proposes to amend Part 123, 
Chapter I, Title 13, Code of Federal Regulations, as follows:

PART 123--DISASTER--PHYSICAL DISASTER AND ECONOMIC INJURY LOANS

    1. The authority citation for Part 123 would be revised to read as 
follows:

    Authority: Sections 5(b)(6), 7 (b), (c), (f) of the Small 
Business Act, 15 U.S.C. 634(b)(6), 636 (b), (c), (f); Pub. L. 102-
395, 106 Stat. 1828, 1864; Pub. L. 103-75, 107 Stat. 739; and Pub. 
L. 101-647, 104 Stat. 4933.

    2. Section 123.2 would be amended by adding the following at the 
end of the section:


Sec. 123.2  Introduction.

* * * Under the Federal Debt Collection Procedures Act of 1990 (28 
U.S.C. 3201(e)), a debtor who has an outstanding judgment lien against 
the debtor's property for a debt owed to the United States is not 
eligible to receive certain assistance from the Federal government, 
including physical and economic injury disaster loans covered by this 
part. This restriction may be waived by SBA's Assistant Administrator 
for Disaster Assistance or his/her designee (deciding official) upon a 
demonstration of good cause by the applicant for assistance. Good cause 
may be demonstrated by a credible representation which permits the 
deciding official to determine that the disaster for which such 
assistance is requested caused the delinquency upon which the judgment 
is based, whether the debt was incurred before or after the 
commencement date for such disaster; or such disaster prevented the 
debtor from adhering to the terms of an agreement to satisfy the 
judgment lien, made with SBA or another agency in whose favor the 
judgment was entered or with any other Federal government entity as may 
be appropriate, and that other agency or entity certifies with respect 
to its agreement that, prior to the commencement date for the disaster, 
the debtor had been adhering satisfactorily to the terms of that 
agreement; or such other circumstances exist as may permit that good 
cause sufficient to waive the statutory prohibition. Subject to the 
provisions of Sec. 123.12 concerning requests for reconsideration, a 
determination of the Assistant Administrator for Disaster Assistance or 
his/her designee under this regulation is a final, nonappealable 
decision of the SBA.

    Dated: May 30, 1994.
Erskine B. Bowles,
Administrator.
[FR Doc. 94-15696 Filed 6-28-94; 8:45 am]
BILLING CODE 8025-01-M