[Federal Register: September 2, 1998 (Volume 63, Number 170)] [Rules and Regulations] [Page 46644-46645] From the Federal Register Online via GPO Access [wais.access.gpo.gov] [DOCID:fr02se98-8] ----------------------------------------------------------------------- SMALL BUSINESS ADMINISTRATION 13 CFR Part 123 Disaster Loan Program AGENCY: Small Business Administration. ACTION: Final rule. ----------------------------------------------------------------------- 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] BILLING CODE 8025-01-P