DisasterPhysical Disaster and Economic Injury Loans

SMALL BUSINESS ADMINISTRATION

13 CFR Part 123

Disaster--Physical Disaster and Economic Injury Loans

AGENCY: Small Business Administration.

ACTION: Final rule.

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

SUMMARY: The Small Business Administration (SBA) is revising on an

immediate basis the commencement date for the increases in the

limitations on SBA's share of homeowner disaster assistance which were

published at 59 FR 6213 (February 10, 1994). This revision is being

undertaken on an emergency basis and is therefore published as a final

rule.

EFFECTIVE DATE: July 15, 1994.

ADDRESSES: Comments should be submitted to Bernard Kulik, Assistant

Administrator for Disaster Assistance, U.S. Small Business

Administration, 409 Third Street SW., 8th Floor, Washington, DC 20416.

FOR FURTHER INFORMATION CONTACT:

Michael E. Deegan, Office of Disaster Assistance, (202) 205-6734.

SUPPLEMENTARY INFORMATION: On February 10, 1994, SBA published a final

rule increasing the limitations on SBA's share of disaster assistance

made available to homeowners or renters for any one disaster commencing

on or after January 1, 1994. 59 Fed. Reg. 6213. The increased limits

were twice those previously available for disaster assistance to

homeowners and renters.

As SBA explained in the preamble to the final rule, the former loan

limitations had become insufficient to meet the needs of many

homeowners and renters confronted with the effects of physical

disasters. Economic inflation, together with the increase in

construction costs typically present in the aftermath of a large

catastrophe, had precipitated the need for the increased loan limits.

The increases were adopted by SBA on an emergency basis, without

notice or comment, in order to expedite their application to the

California earthquake disaster of January 1994. As adopted, the

increases were effective only for disasters commencing on or after

January 1, 1994.

Comments received subsequent to the publication of that emergency

rule have caused SBA to reconsider its selection of January 1, 1994 as

the appropriate commencement date for the application of the new loan

limits. As is sometimes the case when a new rule is adopted, the

precipitating factors (in this case, general inflation and spikes in

construction expense) have been present for a period of time either

before the need for a revision to the regulation is recognized or

before the regulation is finally adopted. In order to compensate for

this delay, SBA sometimes makes a rule effective prior to its date of

publication. By adopting an effective date of January 1,1994 for the

homeowner/renter loan limitation rule (a date six weeks prior to the

publication of the rule), SBA was extending the benefits of that rule

to victims of very recent disasters, whose loan applications had not

yet been processed by the Agency.

At that time, however, loan applications in connection with

disasters commencing as far back as October 26, 1993, the commencement

date for the California wildland fire disaster, were still being

processed. Victims of the California fire disaster were as much in need

of the increased loan limits as their counterpart victims of the

California earthquake disaster since both disasters occurred in the

same general area. In order to administer the Disaster Program in a

consistent and equitable manner, SBA has determined that the increased

loan limits it adopted on February 10, 1994 should be extended to all

disasters commencing on or after October 26, 1993.

This change is being made effective upon publication pursuant to 13

CFR 123.1(b) which authorizes emergency changes in the regulations

governing its disaster assistance program, and 5 U.S.C. 553(b)(B) which

permits publication of regulations in final form without notice or

comment when an agency finds that good cause exists for publication in

final form on an emergency basis, and that notice and comment is

impracticable, unnecessary or contrary to the public interest. In this

regard, the public interest in seeing to it that the new limitations

are immediately effective as to the California wildland fire disaster

so as to promptly assist the affected homeowners and renters makes the

utilization of notice and comment rulemaking impracticable.

Compliance With Executive Orders 12866, 12612, and 12778; Regulatory

Flexibility Act, 5 U.S.C. 601, et seq.; and the Paperwork Reduction

Act, 44 U.S.C. Ch. 35

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. SBA has made this

determination based upon the fact that for the five disasters

commencing between October 26, 1993 and December 31, 1993 (inclusive),

physical disaster loans to homeowners and renters did not exceed $38

million. Many of those borrowers will not need or be eligible for the

increased loan limits. However, even if they all needed and were

eligible for the full amount of the increases, the maximum effect of

those increases could be no more than $38 million.

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.

(Catalog of Federal Domestic Assistance Program No. 59.008, Small

Business)

List of Subjects in 13 CFR Part 123

Disaster, Physical disaster and economic injury loans.

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 as follows:

1. The authority citation for Part 123 continues 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; and Pub. L. 103-75, 107 Stat. 739.

2. Section 123.25 is amended by revising paragraph (a) to read as

follows:

Sec. 123.25 Special conditions--Home loans.

(a) Limits. SBA's share of loans approved on or after October 1,

1983, to a Homeowner (including all dependents) is limited for any one

disaster commencing on or after October 26, 1993, to the following:

1. $40,000 for repair or replacement of household and personal

effects;

(2) $200,000 for repair or replacement of a primary residence,

including repair or replacement of landscaping and/or recreational

facilities not to exceed $5,000;

(3) eligible refinancing pursuant to Sec. 123.24(f) not to exceed

the lesser of $200,000 or the physical damage to the real property

which is to be repaired;

(4) $48,000 for mitigation pursuant to Sec. 123.24(j) of this part;

(5) $488,000 for the total loan within the limitations specified in

paragraphs (a)(1) through (a)(4) of this section.

* * * * *

Dated: June 29, 1994.

Erskine B. Bowles,

Administrator.

[FR Doc. 94-17202 Filed 7-14-94; 8:45 am]

BILLING CODE 8025-01-M