[Federal Register Volume 60, Number 113 (Tuesday, June 13, 1995)]
[Proposed Rules]
[Pages 31121-31122]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-14372]



 ========================================================================
 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
 ========================================================================
 

  Federal Register / Vol. 60, No. 113 / Tuesday, June 13, 1995 / 
Proposed Rules  

[[Page 31121]]

SMALL BUSINESS ADMINISTRATION

13 CFR Part 123


Disaster--Physical Disaster and Economic Injury Loans

AGENCY: Small Business Administration.

ACTION: Proposed rule.

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SUMMARY: The Small Business Administration (SBA) is proposing to amend 
its regulations governing both physical and economic injury disaster 
assistance to make clear that businesses primarily engaged in 
agriculture are not eligible for such assistance and that such 
assistance may not be used to further the alleviation of physical or 
economic injury to property associated with agricultural enterprise 
caused by a disaster.

DATES: SBA will accept public comments on this proposal through July 
13, 1995.

ADDRESSES: Comments should be submitted to Bernard Kulik, Associate 
Administrator for Disaster Assistance, Small Business Administration, 
409 Third Street, SW., 6th Floor, Washington, DC 20416.

FOR FURTHER INFORMATION CONTACT:
Bernard Kulik, Office of Disaster Assistance, (202) 205-6734.

SUPPLEMENTARY INFORMATION: In 1986 section 7(b) of the Small Business 
Act (Act) (15 U.S.C. 636(b)) was amended to provide that physical and 
economic injury disaster loan assistance provided by the Small Business 
Administration (SBA) under that section should not be available to 
agricultural enterprises. The term agricultural enterprise is defined 
elsewhere in the Act to mean a business engaged in the production of 
food and fiber, ranching, and raising of livestock, aquaculture, and 
all other farming and agricultural related industries. See section 
18(b)(1) of the Act, 15 U.S.C. 647(b)(1). SBA has historically 
interpreted this provision in a manner that contemplates that this 
definition is intended to cover small businesses primarily engaged in 
the prescribed activities. This position is consistent with SBA's size 
standards related definition of a small business for purpose of 
eligibility for disaster assistance. (See 13 CFR 121.802). However, the 
word ``primarily'' is absent from the present regulatory definition of 
agricultural enterprise in the SBA regulations governing disaster 
assistance. (See 13 CFR 123.17). This proposed rule, if adopted, would 
conform the definition of agricultural enterprise with existing policy 
and with regulations governing size standards by requiring that a 
concern be primarily engaged in the prescribed activities in order to 
be construed as an agricultural enterprise.
    The effect of this change would be to make clear that a small 
business which is engaged in multiple activities, including those 
relevant to agricultural enterprise would be ineligible for disaster 
assistance under section 7(b) of the Act if its primary activity as 
judged under the criteria imposed by 13 CFR 123, et seq., is 
agricultural enterprise. If its primary activity as judged under this 
standard is an eligible activity and is not agricultural activity, a 
business would be eligible for disaster assistance.
    This proposed regulation, if adopted, would also amend 13 CFR 
Secs. 123.3 and 123.41 to make clear that it is SBA's position that the 
proceeds of disaster assistance made to eligible small businesses may 
not be used in conjunction with repair or replacement or alleviation of 
economic injury relevant to real or personal property used in the 
production of food and fiber, ranching and raising of livestock, 
aquaculture and all other farming and agricultural related industries. 
This change would literally prohibit proceeds of SBA disaster 
assistance made to otherwise eligible businesses from being used for 
purposes associated with agricultural enterprise with which it might be 
secondarily engaged. Thus a business eligible for disaster assistance 
which is primarily engaged in eligible activity and secondarily engaged 
in agricultural enterprise would be prohibited under this regulation, 
if adopted, from using the proceeds of such assistance for purposes 
relevant to the agricultural enterprise.

Compliance With Executive Orders 12612, 12778, and 12866, the 
Regulatory Flexibility Act and the Paperwork Reduction Act

    For purposes of Executive Order 12866, SBA certifies that this rule 
will not have an annual economic effect in excess of $100 million, 
result in a major increase in costs for individuals or governments, or 
have a significant adverse effect on competition and, therefore, would 
not constitute a major or significant rule.
    For purposes of Executive Order 12612, SBA certifies that this rule 
will not have 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.
    For purposes of the Regulatory Flexibility Act, SBA certifies that 
this rule will not have a significant economic effect on a substantial 
number of small entities for the same reason that it is not a major or 
significant rule.
    For purposes of the Paperwork Reduction Act, SBA certifies that 
this rule will not impose a new recordkeeping or reporting requirement.

(Catalogue of Federal Domestic Assistance Programs, Nos. 59.002, 
59.008)

Lists of Subjects in 13 CFR Part 123

    Disaster assistance, Loan programs--business, Small businesses.

    For the reasons set out above, pursuant to sections 5(b)(6), 
7(b)(1), and 7(c)(6) of the Small Business Act, Title 13, Part 123 of 
the Code of Federal Regulations, is amended to read as follows:
    1. The authority citation for Part 123 would continue to read as 
follows:

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

    2. Section 123.17 would be amended by inserting the term 
``primarily'' before the term ``engaged'' in the first sentence.
    3. Section 123.3 would be amended by adding a new paragraph (b)(8) 
in the definition of ``eligible physical loss'' to read as follows:


Sec. 123.3  Definitions.

* * * * * [[Page 31122]] 
    Eligible Physical Loss:
* * * * *
    (b) ***
    (8) If the property damaged is property used in the production of 
food and fiber, ranching and raising livestock, aquaculture and all 
other farming and agricultural related industries.
* * * * *
    4. Section 123.41 would be amended by adding the following sentence 
at the end of paragraph (g)(1) to read as follows:


Sec. 123.41  General provisions.

* * * * *
    (g) Use of Proceeds. (1) *** Proceeds of loans under this subpart 
shall not be used for the purpose of alleviating economic injury or 
providing working capital in conjunction with real or personal property 
used in the production of food and fiber, ranching and raising 
livestock, aquaculture and all other farming and agricultural related 
industries.
* * * * *
    Dated: May 2, 1995.
Philip Lader,
Administrator.
[FR Doc. 95-14372 Filed 6-12-95; 8:45 am]
BILLING CODE 8025-01-M