[Federal Register Volume 63, Number 170 (Wednesday, September 2, 1998)]
[Rules and Regulations]
[Pages 46644-46645]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-23658]


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SMALL BUSINESS ADMINISTRATION

13 CFR Part 123


Disaster Loan Program

AGENCY: Small Business Administration.

ACTION: Final rule.

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SUMMARY: The Small Business Administration (SBA) adopts as a final 
rule, without change, the provisions of an interim final rule amending 
its disaster loan rules. This final rule continues 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.

DATES: This rule is effective September 2, 1998.

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 S 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

[[Page 46645]]

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 reconsidered the statutory language above and 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 promulgates this final rule to continue 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. S601, et seq.), and the 
Paperwork Reduction Act (44 U.S.C. Ch. 35)

    SBA certifies that this 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. 
S601 et seq. This rule makes eligible for physical disaster loans only 
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 standards set 
forth in Section 2 of that Order.
    An interim final rule was published in the Federal Register on July 
1, 1997 (62 FR 35337). An open comment period was provided for 
interested persons to respond to the interim final rule. Since the date 
of publication of the interim final rule, no comments were received. 
Accordingly, the interim final rule is adopted without change as final.

List of Subjects in 13 CFR Part 123

    Disaster assistance, Loan programs-business, Small businesses.

    Accordingly, the interim final rule amending 13 CFR part 123 which 
was published at 62 FR 35337 on July 1, 1997, is adopted as a final 
rule without change.

    Dated: July 8, 1998.
Aida Alvarez,
Administrator.
[FR Doc. 98-23658 Filed 9-1-98; 8:45 am]
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