[Federal Register Volume 60, Number 88 (Monday, May 8, 1995)]
[Rules and Regulations]
[Pages 22495-22496]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-11155]



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SMALL BUSINESS ADMINISTRATION

13 CFR Part 123


Disaster--Waiver of Judgment Lien Restriction

AGENCY: Small Business Administration.

ACTION: Final rule.

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SUMMARY: This final rule applies only to disaster loan assistance. It 
will enable SBA to waive, for good cause shown, the restriction in the 
Federal Debt Collection Procedures Act of 1990 prohibiting debtors on 
whose property the United States has an outstanding judgment lien from 
receiving disaster loan assistance from the Federal Government.

EFFECTIVE DATE: This regulation is effective on May 8, 1995.

FOR FURTHER INFORMATION CONTACT:
Bernard Kulik at 202/205-6734, Associate Administrator for Disaster 
Assistance, U.S. Small Business Administration, 409 Third Street SW., 
Washington, DC 20416.

SUPPLEMENTARY INFORMATION: The Federal Debt Collection Procedures Act 
of 1990 (28 U.S.C. 3201(e)) provides that a debtor who owns property 
which is subject to a judgment lien for a debt owed to the United 
States shall not be eligible to receive any grant or loan which is 
made, insured, guaranteed or financed directly or indirectly by the 
United States. It also provides that such debtor shall not be eligible 
to receive funds directly from the Federal Government in any program, 
except funds to which the debtor is entitled as beneficiary, until the 
judgment is paid in full or otherwise satisfied. However, the statute 
permits any agency responsible for such grants or loans to promulgate 
regulations to allow for waivers of this restriction. As an agency 
authorized to provide several forms of assistance proscribed by this 
restriction, including disaster loan assistance and other types of 
direct and guaranteed loans, SBA also has the waiver authority 
conferred by the statute.
    SBA recognizes that disaster losses may strain the financial 
resources of responsible debtors to such extent as to prevent them from 
meeting their financial obligations to the United States. Such losses 
also may prevent debtors who have been complying with agreements to 
satisfy one or more judgments in favor of the United States from 
continuing to comply with the terms of those agreements. Therefore, by 
publication in the Federal Register on June 29, 1994, 59 FR 33456, SBA 
proposed to issue a regulation permitting it to waive the restriction 
on eligibility for physical and economic injury disaster assistance 
provided under section (7)(b) (1) and (2) of the Small Business Act, 15 
U.S.C. 636(b) (1) and (2), where there exists good cause to do so.
    The proposed regulation applied to applicants for disaster 
assistance who have outstanding judgment liens in favor of SBA or in 
favor of other agencies. It identified two nonexclusive instances in 
which good cause will ordinarily be found to exist, both of them 
involving adverse circumstances occasioned by the disaster for which 
the assistance is sought.
    Waivers would be granted denying the eligibility review of an 
application for either physical or economic injury disaster assistance, 
but only upon a demonstration of good cause by the applicant. Examples 
of good cause include, but are not limited to: (1) Delinquencies 
leading to a judgment lien, which are caused by a disaster, whether the 
original debt was incurred prior to or after the disaster, and (2) 
defaults in any agreement to satisfy a judgment lien, which are caused 
by a disaster, whether the agreement has been made with SBA, another 
creditor agency, or any other Federal entity holding the lien, such as 
the Resolution Trust Corporation or the Federal Deposit Insurance 
Corporation. In the case of agreements with other agencies, SBA will 
not waive the restriction on eligibility until the appropriate Federal 
entity has certified that the debtor had made adhering satisfactorily 
to the terms of the agreement prior to the commencement date of the 
disaster.
    The proposed regulation contemplates that SBA's Associate 
Administrator for Disaster Assistance, or his/her designee, will make 
the determination as to whether good cause for waiving the restriction 
has been demonstrated by the applicant. Although such determinations 
are subject to the provisions of Sec. 123.12 governing requests for 
reconsideration, no appeal from an adverse determination is 
contemplated.
    SBA received no comments from the public in response to the June 
29, 1994, Notice of Proposed Rulemaking. Therefore, by this 
publication, SBA is finalizing the rule as proposed.

Compliance With Executive Orders 12866, 12612 and 12778; the Regulatory 
Flexibility Act, 5 U.S.C. 601 et seq.; and The Paperwork Reduction Act, 
44 U.S.C. CH 35

    SBA submitted this final rule to the Office of Management and 
Budget for purposes of Executive Order 12866. [[Page 22496]] 
    For purposes of Executive Order 12612, SBA certifies that this 
final rule would not have Federalism implications warranting the 
preparation of a Federalism assessment.
    For purposes of Executive Order 12778, SBA certifies that the final 
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 final rule will not have a significant economic effect on a 
substantial number of small entities because, even though it would 
render previously ineligible applicants eligible for disaster loan 
assistance, SBA does not expect the number of affected applicants to be 
significant.
    For purposes of the Paperwork Reduction Act, SBA certifies that 
this final rule will not impose a new recordkeeping or reporting 
requirement.

List of Subjects in 13 CFR Part 123

    Disaster, Physical disaster and economic injury loans.

    Pursuant to the authority conferred in section 5(b)(6) of the Small 
Business Act (15 U.S.C. 634(b)(6)), SBA amends Part 123, Chapter I, 
Title 13, Code of Federal Regulations, as follows:

PART 123--DISASTER--PHYSICAL DISASTER AND ECONOMIC INJURY LOANS

    1. The authority citation for part 123 is revised to read as 
follows:

    Authority: 15 U.S.C. 634(b)(6), 636(b), (c), (f).

    2. Section 123.2 is amended by adding the following text at the end 
to read as follows:


Sec. 123.2  Introduction.

    * * * Under the Federal Debt Collection Procedures Act of 1990 (28 
U.S.C. 3201(e)), a debtor who owns property which is subject to an 
outstanding judgment lien for a debt owed to the United States is not 
eligible to receive certain assistance from the Federal Government, 
including physical and economic injury disaster loans covered by this 
part. This restriction against receiving disaster loans may be waived 
by SBA's Associate Administrator for Disaster Assistance or his/her 
designee (deciding official) upon a demonstration of good cause by the 
applicant for assistance. Good cause may be demonstrated by a credible 
representation under oath, which convinces the deciding official that 
it is more likely than not that the disaster for which such assistance 
is requested caused the delinquency upon which the judgment is based, 
whether the debt was incurred before or after the commencement date for 
such disaster; or such disaster prevented the debtor from adhering to 
the terms of an agreement to satisfy the judgment lien, made with SBA 
or another agency in whose favor the judgment was entered or with any 
other Federal Government entity as may be appropriate, provided that 
such agency or entity certifies that, prior to the commencement date 
for the disaster, the debtor had been adhering satisfactorily to the 
terms of its agreement; or such other circumstances exist as may 
demonstrate good cause sufficient to waive the statutory prohibition. 
Subject to the provisions of Sec. 123.12 concerning requests for 
reconsideration, a determination of the Associate Administrator for 
Disaster Assistance or his/her designee under this section is a final, 
nonappealable decision of the SBA.

    Dated: March 14, 1995.
Philip Lader,
Administrator.
[FR Doc. 95-11155 Filed 5-5-95; 8:45 am]
BILLING CODE 8025-01-M