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[Federal Register Volume 89, Number 224 (Wednesday, November 20, 2024)]
[Rules and Regulations]
[Pages 91536-91539]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-27028]

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SMALL BUSINESS ADMINISTRATION

13 CFR Part 123

RIN 3245-AI20

Disaster Assistance Loan Program Updates

AGENCY: U.S. Small Business Administration.

ACTION: Direct final rule.

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SUMMARY: This direct final rule amends the U.S. Small Business 
Administration's (SBA or Agency) regulations governing the SBA Disaster 
Loan Program by revising the definition of contiguous counties, 
clarifying the timeline for a governor's request to be delivered to an 
SBA Disaster Assistance Field Operations Center, and modernizing 
language for clarity and consistency.

DATES: 
    Effective date: This final rule is effective January 21, 2025 
without further action. If significant adverse comment is received, SBA 
will publish a timely withdrawal of the rule in the Federal Register.
    Applicability date: This rule is applicable for disasters declared 
on or after January 21, 2025.
    Comment date: Comments must be received on or before December 20, 
2024.

ADDRESSES: You may submit comments, identified by docket number SBA-
2024-0015 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

    The SBA's Disaster Loan Program provides critical assistance to 
communities after a disaster. Pursuant to Section 7(b) of the Small 
Business Act, 15 U.S.C. 636(b) (the Act), the SBA is authorized to make 
direct loans to homeowners, renters, businesses, and non-profit 
organizations that have been adversely affected by a disaster. Also 
pursuant to the Act, the SBA may declare an Agency disaster in areas 
demonstrating substantial physical or economic damage because of 
natural or other disasters.
    With natural disasters increasing in size, severity, and frequency 
across the United States and its territories, SBA is expanding the 
definition of contiguous counties, clarifying certain aspects of 
disaster declaration requests, and simplifying language to ensure 
consistency.
    SBA believes these changes are necessary to:
     Increase efficiencies in the administration and delivery 
of the disaster loan program to better achieve mission and improve 
outcomes for economic recovery,
     Recognize the unique economic circumstances of island 
chains,
     Clarify the timeline for Governor submissions of disaster 
requests, and
     Ensure consistency and clarity of language within SBA 
guidance documents.

II. Description of Regulatory Changes

    SBA is amending the language in 13 CFR 123.2 (What are disaster 
loans and disaster declarations?), 123.3 (How are disaster declarations 
made?), and 123.4 (What is a disaster area and why is it important?) to 
update the language from ``disaster victims'' to ``disaster 
survivors.'' This update will modernize the language in the CFR to 
reflect the strength of those who have survived a disaster. The change 
will also align the regulations with the terminology currently used by 
the SBA Disaster Loan Program.
    SBA is amending 13 CFR 123.2 to subdivide the paragraph into two 
separate paragraphs. This technical change separates the definition of 
disaster loans and disaster declarations into a format easier to 
comprehend.
    SBA is amending the first sentence in 13 CFR 123.3(a)(3)(i), How 
are disaster declarations made?, to replace the word U.S. possession 
with ``territory'' to

[[Page 91537]]

ensure the language is updated with current use and meaning. SBA is 
also eliminating the word possession in Sec.  123.2(a)(6).
    SBA is amending 13 CFR 123.3(a)(3)(iii), How are disaster 
declarations made?, to include the Chief Executive of an Indian tribal 
government as an authority that can request an SBA physical disaster 
declaration. This change clarifies what is already permitted, 
correcting the previous oversight and aligning with current practice.
    SBA is amending the regulatory language in 13 CFR 123.3(a)(5), How 
are disaster declarations made?, to ensure the language is consistent 
with the current language in 13 CFR 123.3(a)(3)(iii). This change 
grants SBA the flexibility to extend the timeframe for submitting 
declaration requests to the Field Operations Center serving the 
jurisdiction.
    SBA is amending the regulatory definition of ``contiguous 
counties'' in 13 CFR 123.4, What is a disaster area and why is it 
important?, to increase the mileage between counties geographically 
separated by a minor body of water from one mile to five miles. The 
geographic separation between counties is being extended to encompass 
those counties that are separated by minor bodies of water but that 
have physical and economic connections and commerce needs with the 
primary county. SBA reviewed disaster areas separated by water and 
determined that the current one-mile limit is too restrictive. 
Increasing the geographic separation between counties to 5 miles will 
enable disaster assistance to reach a broader area. The additional 
mileage removes the barriers created by wide rivers, such as the 
Arkansas, Colorado, Columbia, Mississippi, Missouri, Neuse, Ohio, 
Platte, Red, St. Lawrence, Susquehanna, Tennessee, and Yellowstone 
rivers. This increase also removes the barriers created by other bodies 
of water such as smaller lakes and bays.
    This rule also revises the definition of ``contiguous'' to state 
that individual islands of geographically isolated island chains are 
contiguous to each other. These islands are unique, because they are 
isolated from the mainland and other direct commerce hubs. The revised 
definition states that contiguous island chains include, but are not 
limited to, Hawai'i, the U.S. Virgin Islands, and the Commonwealth of 
the Northern Mariana Islands. Under the current regulation, these 
islands are not considered contiguous to each other because the 
separation between them is more than one mile. However, all of the 
counties within these island chains are economically reliant on each 
other for trade and commerce and all are affected by a disaster that 
impacts one particular island/county.

III. Justification for Direct Final Rule

    In general, SBA publishes a rule for public comment before issuing 
a final rule in accordance with the Administrative Procedure Act. 5 
U.S.C. 553. The Administrative Procedure Act provides an exception to 
this standard rulemaking process, however, where an agency finds good 
cause to adopt a rule without prior public participation. 5 U.S.C. 
553(b)(B). The good cause requirement is satisfied when prior public 
participation is impracticable, unnecessary, or contrary to the public 
interest. 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 will go into 
effect without further action. If the agency receives significant 
adverse comment, the agency will withdraw 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 significant 
adverse comments.

Compliance With Executive Orders 12866, 12988, 13132, 13175, 13563, 
14094 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, 13563 and 14094

    SBA is issuing this direct final rulemaking in conformance with 
Executive Orders 12866, 13563, and 14094. Executive Orders 12866 and 
13563 direct agencies to assess all costs and benefits of available 
regulatory alternatives and, if regulation is necessary, to select 
regulatory approaches that maximize net benefits (including potential 
economic, environmental, public health and safety effects, distributive 
impacts, and equity). Executive Order 13563 emphasizes the importance 
of quantifying both costs and benefits, reducing costs, harmonizing 
rules, and promoting flexibility. Executive Order 14094 reaffirms, 
supplements, and updates Executive Order 12866 and further directs 
agencies to solicit and consider input from a wide range of affected 
and interested parties through a variety of means. The Office of 
Management and Budget has determined that this rule does not constitute 
a significant regulatory action under Executive Order 12866, as amended 
by Executive Order 14094. SBA has developed this rule in a manner 
consistent with these requirements and thoroughly examined the costs 
and benefits as well as availability of regulatory alternatives 
associated with its implementation.

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, on the distribution of power and responsibilities 
between the Federal Government and Indian Tribes and no substantial 
direct compliance costs on Indian Tribal governments nor any rules with 
Tribal implications that preempts Tribal law.

Congressional Review Act

    This rule has been determined not to meet the criteria set forth in 
5 U.S.C. 804(2). SBA will submit the rule to Congress and the 
Government Accountability Office consistent with

[[Page 91538]]

the Congressional Review Act's requirements.

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) and economic injury disaster (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 continues to read as follows:

    Authority:  15 U.S.C. 632, 634(b)(6), 636(b), 636(d), 657n, and 
9009.

0
2. Revise Sec.  123.2 to read as follows:

Sec.  123.2   What are disaster loans and disaster declarations?

    (a) SBA offers low interest, fixed rate loans to disaster 
survivors, enabling them to repair or replace property damaged or 
destroyed in declared disasters. It also offers such loans to affected 
small businesses to help them recover from economic injury caused by 
such disasters. SBA also offers interim guaranteed disaster loans, in 
participation with financial institutions, to affected small businesses 
(``IDAP loans'').
    (b) Disaster declarations are official notices recognizing that 
specific geographic areas have been damaged by floods and other acts of 
nature, riots, civil disorders, or industrial accidents such as oil 
spills. These disasters are sudden events which cause severe physical 
damage, and do not include slower physical occurrences such as 
shoreline erosion or gradual land settling. However, for purposes of 
economic injury disaster loans only, they do include droughts and below 
average water levels in the Great Lakes or on any body of water in the 
United States that supports commerce by small businesses. Sudden events 
that cause substantial economic injury may be disasters even if they do 
not cause physical damage to a survivor's property. Past examples 
include ocean conditions causing significant displacement (major ocean 
currents) or closure (toxic algae blooms) of customary fishing waters, 
as well as contamination of food or other products for human 
consumption from unforeseeable and unintended events beyond the control 
of the survivors.

0
3. Amend Sec.  123.3 by revising (a)(3)(i) and (iii), (a)(5), (a)(6) 
introductory text, and (b) to read as follows:

Sec.  123.3   How are disaster declarations made?

    (a) * * *
    (3) * * *
    (i) In any county or other smaller political subdivision of a State 
or U.S. territory, at least 25 homes or 25 businesses, or a combination 
of at least 25 homes, businesses, or other eligible institutions, each 
sustain 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; or
* * * * *
    (iii) The Governor of the State or the Chief Executive of the 
Indian Tribal government in which the disaster occurred submits a 
written request to SBA for a physical disaster declaration by SBA. This 
request should be delivered to the Disaster Assistance Field Operations 
Center serving the jurisdiction within 60 days of the date of the 
disaster.
* * * * *
    (5) SBA makes an economic injury declaration in reliance on a state 
certification that at least five small business concerns in a disaster 
area have suffered substantial economic injury as a result of the 
disaster and are in need of financial assistance not otherwise 
available on reasonable terms. The state certification must be signed 
by the Governor, must specify the county or counties or other political 
subdivision in which the disaster occurred, and should be delivered 
(with supporting documentation) to the Disaster Assistance Field 
Operations Center serving the jurisdiction within 120 days of the 
disaster occurrence. When a Governor certifies with respect to a 
drought or to below average water levels, the supporting documentation 
must include findings which show that conditions during the incident 
period meet or exceed the U.S. Drought Monitor (USDM) standard of 
``severe'' (Intensity level D-2 to D-4). The USDM may be found at 
https://droughtmonitor.unl.edu/. With respect to below average water 
levels, the supplementary information accompanying the certification 
must include findings which establish long-term average water levels 
based on recorded historical data, show that current water levels are 
below long-term average levels, and demonstrate that economic injury 
has occurred as a direct result of the low water levels. Not later than 
30 days after SBA receives a certification by a Governor, it shall 
respond in writing with its decision and its reasons.
    (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 of the United States that is designated as a rural area by 
the Bureau of the Census. The following conditions must be met:
* * * * *
    (b) SBA publishes notice of any disaster declaration in the Federal 
Register. The published notice will identify the kinds of assistance 
available, the date and nature of the disaster, and the deadline and 
location for filing loan applications. Additionally, SBA will use the 
local media to inform potential loan applicants where to obtain loan 
applications and otherwise to assist disaster survivors in applying for 
disaster loans. SBA will accept applications after the announced 
deadline only when SBA determines that the late filing resulted from 
substantial causes beyond the control of the applicant.

0
4. 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

[[Page 91539]]

disaster. Only those survivors 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 survivors 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 five miles between the land areas of 
such counties. The individual islands of geographically isolated island 
chains, including Hawai'i, the U.S. Virgin Islands, and the 
Commonwealth of the Northern Mariana Islands, are also designated as 
contiguous to each other. 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
5. Revise Sec.  123.503 to read as follows:

Sec.  123.503   When can you apply for a Military Reservist EIDL?

    Your small business can apply for a Military Reservist EIDL any 
time beginning on the date the essential employee receives notice of 
expected call-up and ending one year after the date the essential 
employee is discharged or released from active service. The Associate 
Administrator for the Office of Disaster Recovery and Resilience (AA/
ODR&R) or designee may extend the one-year limit by no more than one 
additional year after finding extraordinary or unforeseeable 
circumstances.

Isabella Casillas Guzman,
Administrator.
[FR Doc. 2024-27028 Filed 11-19-24; 8:45 am]
BILLING CODE 8026-09-P
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