[Federal Register Volume 88, Number 75 (Wednesday, April 19, 2023)]
[Rules and Regulations]
[Pages 24107-24110]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-08010]
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Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
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Federal Register / Vol. 88, No. 75 / Wednesday, April 19, 2023 /
Rules and Regulations
[[Page 24107]]
SMALL BUSINESS ADMINISTRATION
13 CFR Part 123
RIN 3245-AH33
Disaster Assistance Loan Program Statutory Updates
AGENCY: U.S. Small Business Administration.
ACTION: Direct final rule.
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SUMMARY: SBA is amending the disaster assistance regulations to reflect
changes made to the Small Business Act by several recent statutes.
These changes provide two new types of disaster declaration authority
and revise eligibility for the Military Reservist Economic Injury
Disaster Loan (MREIDL) program. This direct final rule conforms the
regulations to the Act by adopting the new statutory requirements
without change.
DATES: This rule is effective June 5, 2023 without further action,
unless significant adverse comment is received by May 19, 2023. If
significant adverse comment is received, SBA will publish a timely
withdrawal of the rule in the Federal Register.
ADDRESSES: You may submit comments, identified by number SBA-2023-0001
through the Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
SBA will post all comments on www.regulations.gov. If you wish to
submit confidential business information (CBI) as defined in the User
Notice at www.regulations.gov, please send an email to Eric Wall at
[email protected] and highlight the information that you consider to be
CBI and explain why you believe SBA should hold this information as
confidential. All other comments must be submitted through the Federal
eRulemaking Portal described above. Highlight the information that you
consider to be CBI and explain why you believe SBA should hold this
information as confidential. SBA will review the information and make
the final determination whether it will publish the information.
FOR FURTHER INFORMATION CONTACT: Eric Wall, Office of Disaster Recovery
and Resilience, 409 3rd St. SW, Washington, DC 20416, (202) 205-6739.
SUPPLEMENTARY INFORMATION:
I. Background
This direct final rule implements regulatory changes required by
three recent laws amending the Small Business Act: The Disaster
Assistance for Rural Communities Act, Public Law 117-249 (December 20,
2022); the Coronavirus Aid, Relief, and Economic Security Act (CARES
Act), Public Law 116-136 (March 27, 2020); and the National Defense
Authorization Act for Fiscal Year 2020 (NDAA 2020), Public Law 116-92
(December 20, 2019). SBA has already implemented all of these statutory
changes except for the new rural declaration authority authorized by
the Disaster Assistance for Rural Communities Act, which requires SBA
to issue implementing regulations within 120 days after enactment. The
specific regulatory changes are further described below.
II. Description of Regulatory Changes
SBA is revising 13 CFR 123.3, How are disaster declarations made?,
by adding two additional ways SBA is authorized to declare disasters.
New paragraph (a)(6) describes SBA's declaration authority under the
Disaster Assistance for Rural Communities Act. 15 U.S.C. 636(b)(16).
Under this new authority, SBA is authorized to declare a disaster in a
``rural area'' upon request by the Governor of the State or the Chief
Executive of the Indian tribal government in which the rural area is
located if the following conditions are met: (1) the rural area has
received a major disaster declaration from the President under Section
401 of the Robert T. Stafford Disaster Relief and Emergency Assistance
Act (the Stafford Act) (42 U.S.C. 5170),\1\ (2) individual assistance
under section 408 of the Stafford Act was not authorized for the rural
area, and (3) any home, small business concern, private nonprofit
organization, or small agricultural cooperative in the rural area has
incurred ``significant damage.'' The Disaster Assistance for Rural
Communities Act defines ``rural area'' as any county or other political
subdivision of a State, the District of Columbia, or a territory or
possession of the United States that is designated as a rural area by
the Bureau of the Census. The Act defines ``significant damage'' as
uninsured losses of 40 percent or more of the estimated fair
replacement value or pre-disaster fair market value of the damaged
property, whichever is lower. SBA has incorporated these new statutory
definitions into new Sec. 123.3(a)(6).
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\1\ SBA notes that the Senate Report to the Disaster Assistance
for Rural Communities Act states that Congress intends that SBA's
rural disaster declaration authority is triggered solely in
situations where the President has declared a major disaster limited
to public assistance only. S. Rep. No. 117-103, Section I (May 3,
2022).
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SBA is also adding paragraph (a)(7) to describe SBA's new
declaration authority authorized by the CARES Act. 15 U.S.C.
636(b)(2)(D). Section 1110(f) of the CARES Act provides SBA the
authority to declare an economic injury disaster following a
declaration of an emergency involving Federal primary responsibility
under Section 501(b) of the Stafford Act by the President. 42 U.S.C.
5191(b). When the President makes such a declaration, SBA will ``deem
that such an emergency affects each State or subdivision thereof
(including counties), and that each State or subdivision has sufficient
economic damage to small business concerns to qualify for assistance
under this paragraph and [SBA] shall accept applications for such
assistance immediately.'' See second proviso of paragraph following 15
U.S.C. 636(b)(2)(E). This means that after the President declares an
emergency involving Federal primary responsibility under Section 501(b)
of the Stafford Act, SBA will immediately make an economic injury
disaster declaration using this new authority. Once SBA makes this
declaration, small businesses and nonprofit organizations of any size
would be eligible to apply for economic injury disaster loans.
SBA is revising 13 CFR 123.4, What is a disaster area and why is it
important?, to provide that contiguous counties are not included in the
disaster area for rural disaster declarations. SBA is adopting this
interpretation based on clear Congressional intent, as stated in the
Senate Report to the Disaster Assistance for Rural Communities Act:
``The SBA declaration authorized under
[[Page 24108]]
paragraph 16 of section 7(b) may not be applied to contiguous
counties.'' S. Rep. No. 117-103, Section IV (May 3, 2022). When SBA
makes a rural disaster declaration, physical and economic injury
disaster loans will be available only in the declared disaster area,
not in any counties or political subdivisions that are contiguous to
the declared area.
SBA is also revising this provision to state that when SBA issues
an economic injury disaster declaration in response to a determination
of an emergency involving Federal primary responsibility by the
President, the disaster area shall include each State or subdivision
thereof (including counties) included in the President's emergency
determination. If the President determines that a nation-wide emergency
exists, then SBA will issue a nation-wide economic injury disaster
declaration.
SBA is revising several sections in 13 CFR part 123, subpart F,
Military Reservist Economic Injury Disaster Loans, to reflect changes
made by Sec. 877 of the NDAA 2020. The NDAA 2020 expanded eligibility
for Military Reservist Economic Injury Disaster Loans (MREIDLs) from
reservists called to ``active duty'' to reservists called to ``active
service.'' The term ``active service'' has the meaning given in 10
U.S.C. 101(d)(3) and includes both ``active duty'' and ``full time
National Guard duty.'' \2\ The NDAA also removed the requirement that
the reservist be serving during a ``period of military conflict'' and
replaced it with the requirement that the reservist be serving for a
period of more than 30 consecutive days.\3\
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\2\ ``Active duty'' is defined as full-time duty in the active
military service of the United States. Such term includes full-time
training duty, annual training duty, and attendance, while in the
active military service, at a school designated as a service school
by law or by the Secretary of the military department concerned. 10
U.S.C. 101(d)(1). The term ``full-time National Guard duty'' means
training or other duty, other than inactive duty, performed by a
member of the Army National Guard of the United States or the Air
National Guard of the United States in the member's status as a
member of the National Guard of a State or territory, the
Commonwealth of Puerto Rico, or the District of Columbia under
section 316, 502, 503, 504, or 505 of title 32 [32 USCS Sec. Sec.
316, 502, 503, 504, or 505] for which the member is entitled to pay
from the United States or for which the member has waived pay from
the United States. 10 U.S.C. 101(d)(5).
\3\ ``Period of military conflict'' was defined as (i) a period
of war declared by the Congress; (ii) a period of national emergency
declared by the Congress or by the President; or (iii) a period of a
contingency operation, as defined in section 101(a) of title 10,
United States Code. See Sec. 402(a) of Public Law 106-50, (August
17, 1999).
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SBA is revising 13 CFR 123.500, Definitions, paragraph (b) to
reflect the new definition of military reservist as a member of a
reserve component of the Armed Forces ordered to active service. SBA is
also revising paragraph (c) to remove the definition of ``period of
military conflict'' and replace it with the definition of ``active
service'', as provided in the NDAA 2020.
SBA is revising 13 CFR 123.501, Under what circumstances is our
business eligible to be considered for a Military Reservist Economic
Injury Disaster Loan?, to remove the words ``active duty'' and replace
them with ``active service'' in paragraph (a). SBA is also revising
paragraph (c) to remove the requirement that the essential employee be
called to active duty during a military conflict and replace it with
the requirement that the essential employee be called to active service
for a period of more than 30 consecutive days.
SBA is similarly revising 13 CFR 123.507, Under what circumstances
will SBA consider waiving the $2 million loan limit?, to remove the
requirement that the essential employee be called to active duty during
a military conflict and replace it with the requirement that the
essential employee be called to active service for a period of more
than 30 consecutive days.
Finally, SBA is revising Sec. Sec. 123.503, 123.504(a) and (f),
123.505, 123.506, 123.507, and 123.511 to remove the words ``active
duty'' and replace them with ``active service.'' All of the changes to
13 CFR subpart F have already been implemented; this direct final rule
merely updates the regulations to reflect current statutory
requirements.
II. Justification for Direct Final Rule
Agencies typically utilize direct final rulemakings for routine,
non-controversial regulatory actions that are unlikely to receive
adverse comments. In direct final rulemaking, an agency publishes a
final rule with a statement that the rule will go into effect unless
the agency receives significant adverse comment within a specified
period. Significant adverse comments are comments that provide strong
justifications why the rule should not be adopted or for changing the
rule. If the agency receives no significant adverse comment in response
to the direct final rule, the rule goes into effect. If the agency
receives significant adverse comment, the agency withdraws the direct
final rule and may instead issue a proposed rulemaking.
SBA has determined that the regulatory changes addressed in this
direct final rulemaking are routine, non-controversial, and not likely
to result in adverse comments. SBA is implementing changes required by
statute and, with the exception of the rural disaster declaration
authority, all of the changes are already in effect--SBA is merely
updating the regulations in order to conform to the statute. In
implementing the rural disaster declaration authority, SBA is adopting
regulations that conform to the statute and legislative history without
any extraneous interpretation. Because the changes in this rule are
prescribed by statute, SBA does not expect significant adverse
comments.
Compliance With Executive Orders 12866, 12988, 13132, 13175, the
Congressional Review Act (5 U.S.C. 801-808), Paperwork Reduction Act
(44 U.S.C., Ch. 35), and the Regulatory Flexibility Act (5 U.S.C. 601-
612)
Executive Orders 12866 and 13563
The Office of Management and Budget has determined that this rule
is not a significant regulatory action under Executive Order 12866, and
a Regulatory Impact Analysis is not required. No action is warranted
for Executive Order 13563 as the rule is not significant and no
Regulatory Impact Analysis is required.
Executive Order 12988
This action meets applicable standards set forth in sections 3(a)
and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize
litigation, eliminate ambiguity, and reduce burden. The action does not
have preemptive effect or retroactive effect.
Executive Order 13132
This rule does not have federalism implications as defined in
Executive Order 13132. It will not have substantial direct effects on
the States, on the relationship between the National Government and the
States, or on the distribution of power and responsibilities among the
various levels of government, as specified in the Executive Order. As
such it does not warrant the preparation of a Federalism Assessment.
Executive Order 13175
This rule does not have tribal implications under Executive Order
13175, Consultation and Coordination with Indian Tribal Governments,
because it does not have a substantial direct effect on one or more
Indian tribes, on the relationship between the Federal Government and
Indian tribes, or on the distribution of power and responsibilities
between the Federal Government and Indian tribes.
Congressional Review Act
Subtitle E of the Small Business Regulatory Enforcement Fairness
Act of
[[Page 24109]]
1996, also known as the Congressional Review Act or CRA, generally
provides that before a rule may take effect, the agency promulgating
the rule must submit a rule report, which includes a copy of the rule,
to each House of the Congress and to the Comptroller General of the
United States. SBA will submit a report containing this rule and other
required information to the U.S. Senate, the U.S. House of
Representatives, and the Comptroller General of the United States. A
major rule under the CRA cannot take effect until 60 days after it is
published in the Federal Register. The Office of Information and
Regulatory Affairs has determined that this rule is not a ``major
rule'' as defined by 5 U.S.C. 804(2). Therefore, this rule is not
subject to the 60-day restriction.
Paperwork Reduction Act, 44 U.S.C. Ch. 35
SBA has determined that this rule does not impose additional
reporting or recordkeeping requirements under the Paperwork Reduction
Act, 44 U.S.C., Chapter 35.
Regulatory Flexibility Act, 5 U.S.C. 601
The Regulatory Flexibility Act (RFA), 5 U.S.C. 601-612, generally
requires that when an agency issues a proposed rule, or a final rule
pursuant to section 553(b) of the APA or another law, the agency must
prepare a regulatory flexibility analysis that meets the requirements
of the RFA and publish such analysis in the Federal Register. 5 U.S.C.
603, 604.
Rules that are exempt from notice and comment are also exempt from
the RFA requirements, including conducting a regulatory flexibility
analysis, such as when--among other exceptions--the agency for good
cause finds that notice and public procedure are impracticable,
unnecessary, or contrary to the public interest. SBA Office of Advocacy
Guide: How to Comply with the Regulatory Flexibility Act, Ch. 1. p. 9.
Since this rule is exempt from notice and comment, SBA is not required
to conduct a regulatory flexibility analysis.
List of Subjects in 13 CFR Part 123
Disaster assistance, Loan mitigation, Loan programs--physical
disaster (home, business).
For the reasons set forth in the preamble, the SBA amends 13 CFR
part 123 as follows:
PART 123--DISASTER LOAN PROGRAM
0
1. The authority citation for part 123 is revised to read as follows:
Authority: 15 U.S.C. 632, 634(b)(6), 636(b), 636(d), 657n, and
9009.
0
2. Amend Sec. 123.3 by revising paragraph (a) introductory text and
adding paragraphs (a)(6) and (7) to read as follows:
Sec. 123.3 How are disaster declarations made?
(a) There are seven ways in which disaster declarations are issued
which make SBA disaster loans possible:
* * * * *
(6) SBA makes a physical disaster declaration in a rural area
(rural disaster declaration) upon request from the Governor of the
State or the Chief Executive of the Indian tribal government in which
the rural area is located. Rural area means any county or other
political subdivision of a State, the District of Columbia, or a
territory or possession of the United States that is designated as a
rural area by the Bureau of the Census. The following conditions must
be met:
(i) The President has declared a Major Disaster for the rural area,
but has not authorized individual assistance; and
(ii) Any home, small business concern, private nonprofit
organization, or small agricultural cooperative in the rural area has
incurred significant damage. Significant damage means uninsured losses
of 40 percent or more of the estimated fair replacement value or pre-
disaster fair market value of the damaged property, whichever is lower.
(7) SBA makes an economic injury disaster declaration in response
to a determination of an emergency involving Federal primary
responsibility by the President.
* * * * *
0
3. Revise Sec. 123.4 to read as follows:
Sec. 123.4 What is a disaster area and why is it important?
Each disaster declaration defines the geographical areas affected
by the disaster. Only those victims located in the declared disaster
area are eligible to apply for SBA disaster loans. When the President
declares a major disaster, the Federal Emergency Management Agency
defines the disaster area. In major disasters, economic injury disaster
loans and IDAP loans may be made for victims in contiguous counties or
other political subdivisions, provided, however that with respect to
major disasters which authorize public assistance only, SBA shall not
make economic injury disaster or IDAP loans in counties contiguous to
the disaster area. Except for rural disaster declarations (as defined
in Sec. 123.3), disaster declarations issued by SBA include contiguous
counties for both physical, economic injury and, in some cases IDAP
assistance. Rural disaster declarations do not include assistance for
contiguous counties. Contiguous counties or other political
subdivisions are those land areas which abut the land area of the
declared disaster area without geographic separation other than by a
minor body of water, not to exceed one mile between the land areas of
such counties. When SBA issues an economic injury disaster declaration
in response to a determination of an emergency involving Federal
primary responsibility by the President, the disaster area shall
include each State or subdivision thereof (including counties) included
in the President's emergency determination.
0
4. Amend Sec. 123.500 by revising paragraphs (b) and (c) to read as
follows:
Sec. 123.500 Definitions.
* * * * *
(b) Military reservist is a member of a reserve component of the
Armed Forces ordered to active service.
(c) Active service has the meaning given in 10 U.S.C. 101(d)(3):
(1) Service on active duty; or
(2) Full-time National Guard duty.
* * * * *
0
5. Amend Sec. 123.501 by revising paragraphs (a) and (c) to read as
follows:
Sec. 123.501 Under what circumstances is our business eligible to be
considered for a Military Reservist Economic Injury Disaster Loan?
* * * * *
(a) It is a small business as defined in 13 CFR part 121 when the
essential employee was called to active service,
* * * * *
(c) The essential employee has been called-up to active service for
a period of more than 30 consecutive days,
* * * * *
0
6. Amend Sec. 123.507 by revising paragraph (b) to read as follows:
Sec. 123.507 Under what circumstances will SBA consider waiving the
$2 million loan limit?
* * * * *
(b) Your small business is in imminent danger of going out of
business as a result of one or more essential employees being called up
to active service for a period of more than 30 consecutive days, and a
loan in excess of $2 million is necessary to reopen or keep open the
small business; and
* * * * *
[[Page 24110]]
Sec. 123.503, 123.504, 123.505, 123.506, 123.511 [Amended]
0
7. In addition to the amendments set forth above, in part 123, remove
the words ``active duty'' and add in their place the words ``active
service'' in the following places:
0
a. Section 123.503;
0
b. Section 123.504(a) (three places) and (f);
0
c. Section 123.505 heading and text;
0
d. Section 123.506; and
0
e. Section 123.511 (two places).
Isabella Casillas Guzman,
Administrator.
[FR Doc. 2023-08010 Filed 4-18-23; 8:45 am]
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