B-197937 L/M, MAR 3, 1980

B-197937 L/M: Mar 3, 1980

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MEMORANDUM ASKING SEVERAL QUESTIONS THAT HAVE ARISEN IN CONNECTION WITH YOUR REVIEW OF THE SUBJECT PROGRAM. YOUR QUESTIONS AND OUR ANSWERS FOLLOW. 1.DOES SBA HAVE THE RESPONSIBILITY TO ACTIVELY IDENTIFY. SEC. 636(B)(3) PROVIDES THAT SBA IS AUTHORIZED - "(3) TO MAKE SUCH LOANS (EITHER DIRECTLY OR IN COOPERATION WITH BANKS OR OTHER LENDING INSTITUTIONS THROUGH AGREEMENTS TO PARTICIPATE ON AN IMMEDIATE OR DEFERRED BASIS) AS THE ADMINISTRATION MAY DETERMINE TO BE NECESSARY OR APPROPRIATE TO ASSIST ANY SMALL BUSINESS CONCERN IN CONTINUING IN BUSINESS AT ITS EXISTING LOCATION. INDICATES THAT THE CONGRESSIONAL INTENT UNDERLYING ITS ENACTMENT WAS FOR THE SBA. THE PROVISION WAS ENACTED AS PART OF THE FEDERAL-AID HIGHWAY ACT OF 1968.

B-197937 L/M, MAR 3, 1980

DISPLACED BUSINESS LOAN PROGRAM OF THE SMALL BUSINESS ADMINISTRATION (SBA) (CODE 077950)

SENIOR GROUP DIRECTOR, CED - STEPHEN L. KELETI:

THIS REPLIES TO YOUR JANUARY 21, 1980, MEMORANDUM ASKING SEVERAL QUESTIONS THAT HAVE ARISEN IN CONNECTION WITH YOUR REVIEW OF THE SUBJECT PROGRAM. YOUR QUESTIONS AND OUR ANSWERS FOLLOW.

1.DOES SBA HAVE THE RESPONSIBILITY TO ACTIVELY IDENTIFY, CONTACT, AND DETERMINE WHAT ASSISTANCE IT CAN PROVIDE TO BUSINESSES BEING DISPLACED?

THE ATTACHMENT TO YOUR MEMORANDUM REFERS TO CERTAIN PROVISIONS OF LAW WHICH YOU BELIEVE SUGGEST THAT SBA SHOULD ACTIVELY SEEK THOSE BUSINESSES THAT COULD BENEFIT FROM THE DISPLACED BUSINESS LOAN (DBL) PROGRAM: SECTION 7(B)(3) OF THE SMALL BUSINESS ACT, 15 U.S.C. SEC. 636(B)(3) - CONCERNING DBLS - AND 15 U.S.C. SEC. 634A THROUGH SEC. 634G - THE PROVISIONS CONCERNING THE SBA'S OFFICE OF ADVOCACY.

15 U.S.C. SEC. 636(B)(3) PROVIDES THAT SBA IS AUTHORIZED -

"(3) TO MAKE SUCH LOANS (EITHER DIRECTLY OR IN COOPERATION WITH BANKS OR OTHER LENDING INSTITUTIONS THROUGH AGREEMENTS TO PARTICIPATE ON AN IMMEDIATE OR DEFERRED BASIS) AS THE ADMINISTRATION MAY DETERMINE TO BE NECESSARY OR APPROPRIATE TO ASSIST ANY SMALL BUSINESS CONCERN IN CONTINUING IN BUSINESS AT ITS EXISTING LOCATION, IN REESTABLISHING ITS BUSINESS, IN PURCHASING A BUSINESS, OR IN ESTABLISHING A NEW BUSINESS, IF THE ADMINISTRATION DETERMINES THAT SUCH CONCERN HAS SUFFERED SUBSTANTIAL ECONOMIC INJURY AS THE RESULT OF ITS DISPLACEMENT BY, OR LOCATION IN, ADJACENT TO, OR NEAR, A PROGRAM OR PROJECT CONSTRUCTED BY OR WITH FUNDS PROVIDED IN WHOLE OR IN PART BY THE FEDERAL GOVERNMENT OR BY A PROGRAM OR PROJECT BY A STATE OR LOCAL GOVERNMENT OR PUBLIC SERVICE ENTITY, PROVIDING SUCH GOVERNMENT OR PUBLIC SERVICE ENTITY HAS THE AUTHORITY TO EXERCISE THE RIGHT OF EMINENT DOMAIN ON SUCH PROGRAM OR PROJECT; AND THE PURPOSE OF A LOAN MADE PURSUANT TO SUCH PROJECT OR PROGRAM MAY, IN THE DISCRETION OF THE ADMINISTRATION, INCLUDE THE PURCHASE OR CONSTRUCTION OF OTHER PREMISES WHETHER OR NOT THE BORROWER OWNED THE PREMISES OCCUPIED BY THE BUSINESS

THE LEGISLATIVE HISTORY OF 15 U.S.C. SEC. 636(B)(3), WHILE NOT EXTENSIVE, INDICATES THAT THE CONGRESSIONAL INTENT UNDERLYING ITS ENACTMENT WAS FOR THE SBA, THROUGH ITS DISASTER LOAN PROGRAM, TO MAKE AN IMPORTANT CONTRIBUTION TO THE FEDERAL HIGHWAY PROGRAM BY PROVIDING AID TO BUSINESSES DISPLACED BECAUSE OF FEDERALLY FUNDED HIGHWAY PROJECTS. SEE S. RPT. NO. 90-1340, 34 (1968). IN FACT, THE PROVISION WAS ENACTED AS PART OF THE FEDERAL-AID HIGHWAY ACT OF 1968, PUB. L. NO. 90-495, AUGUST 23, 1968.

THE SBA'S OFFICE OF ADVOCACY, ESTABLISHED BY TITLE II OF PUB. L. NO. 94-305 (JUNE 4, 1976), HAS SEVERAL STATUTORY RESPONSIBILITIES RELEVANT TO THE INSTANT DISCUSSION. THE PRIMARY RESPONSIBILITIES OF THE OFFICE ARE CONCERNED WITH STUDYING AND EVALUATING THE ACTIVITIES OF SMALL BUSINESSES VIS-A-VIS FEDERAL PROGRAMS IN THE CONTEXT OF NATIONAL ECONOMIC AND SOCIOLOGICAL CONSIDERATIONS. IN ADDITION TO THESE "PRIMARY FUNCTIONS," THE OFFICE OF ADVOCACY IS ALSO TO:

"(1) SERVE AS A FOCAL POINT FOR THE RECEIPT OF COMPLAINTS, CRITICISMS, AND SUGGESTIONS CONCERNING THE POLICIES AND ACTIVITIES OF THE ADMINISTRATION AND ANY OTHER FEDERAL AGENCY WHICH AFFECTS SMALL BUSINESS;

"(2) COUNSEL SMALL BUSINESSES ON HOW TO RESOLVE QUESTIONS AND PROBLEMS CONCERNING THE RELATIONSHIP OF THE SMALL BUSINESS TO THE FEDERAL GOVERNMENT;

"(3) DEVELOP PROPOSALS FOR CHANGES IN THE POLICIES AND ACTIVITIES OF ANY AGENCY OF THE FEDERAL GOVERNMENT WHICH WILL BETTER FULFILL THE PURPOSES OF THE SMALL BUSINESS ACT AND COMMUNICATE SUCH PROPOSALS TO THE APPROPRIATE FEDERAL AGENCIES;

"(4) REPRESENT THE VIEWS AND INTERESTS OF SMALL BUSINESSES BEFORE OTHER FEDERAL AGENCIES WHOSE POLICIES AND ACTIVITIES MAY AFFECT SMALL BUSINESS; AND

"(5) ENLIST THE COOPERATION AND ASSISTANCE OF PUBLIC AND PRIVATE AGENCIES, BUSINESSES, AND OTHER ORGANIZATIONS IN DISSEMINATING INFORMATION ABOUT THE PROGRAMS AND SERVICES PROVIDED BY THE FEDERAL GOVERNMENT WHICH ARE OF BENEFIT TO SMALL BUSINESSES, AND INFORMATION ON HOW SMALL BUSINESSES CAN PARTICIPATE IN OR MAKE USE OF SUCH PROGRAMS AND SERVICES." 15 U.S.C. SEC. 634C.

ALSO RELEVANT ARE 15 U.S.C. SEC. 631(A) AND (C) WHICH PROVIDE, IN PART, THAT SBA SHOULD:

"(A) *** AID, COUNSEL, ASSIST, AND PROTECT, INSOFAR AS IS POSSIBLE, THE INTERESTS OF SMALL-BUSINESS CONCERNS ***"

AND

"(C) *** AID *** SMALL-BUSINESS CONCERNS WHICH ARE DISPLACED AS A RESULT OF FEDERALLY AIDED CONSTRUCTION PROGRAMS."

THE LEGISLATIVE HISTORY OF 15 U.S.C. SEC. 631(C), WHICH WAS PART OF THE HOUSING ACT OF 1961, PUB. L. NO. 87-70 (JUNE 30, 1961), INDICATES THAT CONGRESS ENACTED THIS PROVISION SO THAT SBA COULD PROVIDE ASSISTANCE TO THOSE SMALL BUSINESSES "DISPLACED BY URBAN RENEWAL." SEE S. RPT. NO. 87-281, 28 (1961). WE DID NOT FIND ANY REFERENCES IN THE HISTORY OF SUBSECTION (C) INDICATING HOW ACTIVE A ROLE CONGRESS ENVISIONED FOR THE SBA IN IMPLEMENTING ITS PROVISIONS.

IN OUR VIEW NEITHER THE STATUTORY PROVISIONS QUOTED ABOVE NOR THE ATTENDANT LEGISLATIVE HISTORY CLEARLY INDICATE WHETHER CONGRESS EXPECTED SBA TO ACTIVELY SEEK BUSINESS CONCERNS THAT COULD BENEFIT FROM DBLS. THE CLOSEST LANGUAGE OF WHICH WE ARE AWARE THAT COULD BE READ TO SUGGEST SUCH A RESPONSIBILITY IS THE UNDERSCORED PORTION OF 15 U.S.C. SEC. 634C REGARDING DISSEMINATING INFORMATION. HOWEVER, IT IS REASONABLE TO READ THE PROVISION AS MERELY MAKING IT INCUMBENT UPON SBA TO PUBLICIZE ITS PROGRAMS - NOT SEEK BENEFICIARIES.

ACCORDINGLY, WE CONCLUDE THAT BECAUSE THERE IS NO CLEAR MANDATE THAT SBA ACTIVELY SEEK SUCH BUSINESSES SBA'S FAILURE TO DO SO DOES NOT CONTRAVENE ANY OF THE CITED PROVISIONS OF LAW.

2. DOES SBA HAVE ANY RESPONSIBILITY TO EVALUATE THE EFFECTIVENESS OF THE DISPLACED BUSINESS LOAN PROGRAM IN RELATION TO THE NUMBERS AND TYPES OF SMALL BUSINESSES THAT ARE NOT SERVED BY THIS PROGRAM?

THERE IS NO SPECIFIC STATUTORY PROVISION REQUIRING SBA TO UNDERTAKE THE PARTICULAR TYPE OF EVALUATION REFERRED TO IN YOUR QUESTION. THERE ARE, HOWEVER, SEVERAL PROVISIONS WHICH SPEAK TO SBA'S RESPONSIBILITY TO STUDY THE EFFECTIVENESS OF ITS AND OTHER FEDERAL PROGRAMS AFFECTING SMALL BUSINESSES. FOR EXAMPLE, THE PRIMARY RESPONSIBILITIES OF SBA'S OFFICE OF ADVOCACY ARE TO:

"(1) EXAMINE THE ROLE OF SMALL BUSINESS IN THE AMERICAN ECONOMY AND THE CONTRIBUTION WHICH SMALL BUSINESS CAN MAKE IN IMPROVING COMPETITION, ENCOURAGING ECONOMIC AND SOCIAL MOBILITY FOR ALL CITIZENS, RESTRAINING INFLATION, SPURRING PRODUCTION, EXPANDING EMPLOYMENT OPPORTUNITIES, INCREASING PRODUCTIVITY, PROMOTING EXPORTS, STIMULATING INNOVATION AND ENTREPRENEURSHIP, AND PROVIDING AN AVENUE THROUGH WHICH NEW AND UNTESTED PRODUCTS AND SERVICES CAN BE BROUGHT TO THE MARKETPLACE;

"(2) ASSESS THE EFFECTIVENESS OF EXISTING FEDERAL SUBSIDY AND ASSISTANCE PROGRAMS FOR SMALL BUSINESS AND THE DESIRABILITY OF REDUCING THE EMPHASIS ON SUCH EXISTING PROGRAMS AND INCREASING THE EMPHASIS ON GENERAL ASSISTANCE PROGRAMS DESIGNED TO BENEFIT ALL SMALL BUSINESSES;

"(3) MEASURE THE DIRECT COSTS AND OTHER EFFECT OF GOVERNMENT REGULATION ON SMALL BUSINESSES; AND MAKE LEGISLATIVE AND NON LEGISLATIVE PROPOSALS FOR ELIMINATING EXCESSIVE OR UNNECESSARY REGULATIONS OF SMALL BUSINESSES;

"(4) DETERMINE THE IMPACT OF THE TAX STRUCTURE ON SMALL BUSINESSES AND MAKE LEGISLATIVE AND OTHER PROPOSALS FOR ALTERING THE TAX STRUCTURE TO ENABLE ALL SMALL BUSINESSES TO REALIZE THEIR POTENTIAL FOR CONTRIBUTING TO THE IMPROVEMENT OF THE NATION'S ECONOMIC WELL-BEING;

"(5) STUDY THE ABILITY OF FINANCIAL MARKETS AND INSTITUTIONS TO MEET SMALL BUSINESS CREDIT NEEDS AND DETERMINE THE IMPACT OF GOVERNMENT DEMANDS FOR CREDIT ON SMALL BUSINESSES;

"(6) DETERMINE FINANCIAL RESOURCE AVAILABILITY AND TO RECOMMEND METHODS FOR DELIVERY OF FINANCIAL ASSISTANCE TO MINORITY ENTERPRISES, INCLUDING METHODS FOR SECURING EQUITY CAPITAL, FOR GENERATING MARKETS FOR GOODS AND SERVICES, FOR PROVIDING EFFECTIVE BUSINESS EDUCATION, MORE EFFECTIVE MANAGEMENT AND TECHNICAL ASSISTANCE, AND TRAINING, AND FOR ASSISTANCE IN COMPLYING WITH FEDERAL, STATE, AND LOCAL LAW;

"(7) EVALUATE THE EFFORTS OF FEDERAL AGENCIES, BUSINESS AND INDUSTRY TO ASSIST MINORITY ENTERPRISES;

"(8) MAKE SUCH OTHER RECOMMENDATIONS AS MAY BE APPROPRIATE TO ASSIST THE DEVELOPMENT AND STRENGTHENING OF MINORITY AND OTHER SMALL BUSINESS ENTERPRISES;

"(9) RECOMMEND SPECIFIC MEASURES FOR CREATING AN ENVIRONMENT IN WHICH ALL BUSINESSES WILL HAVE THE OPPORTUNITY TO COMPETE EFFECTIVELY AND EXPAND TO THEIR FULL POTENTIAL, AND TO ASCERTAIN THE COMMON REASONS, IF ANY, FOR SMALL BUSINESS SUCCESSES AND FAILURES; AND

"(10) DETERMINE THE DESIRABILITY OF DEVELOPING A SET OF RATIONAL, OBJECTIVE CRITERIA TO BE USED TO DEFINE SMALL BUSINESS, AND TO DEVELOP SUCH CRITERIA, IF APPROPRIATE." 15 U.S.C. SEC. 634B.

15 U.S.C. SEC. 637(C) STATES:

"(C) THE ADMINISTRATION SHALL FROM TIME TO TIME MAKE STUDIES OF MATTERS MATERIALLY AFFECTING THE COMPETITIVE STRENGTH OF SMALL BUSINESS, AND OF THE EFFECT ON SMALL BUSINESS OF FEDERAL LAWS, PROGRAMS, AND REGULATIONS, AND SHALL MAKE RECOMMENDATIONS TO THE APPROPRIATE FEDERAL AGENCY OR AGENCIES FOR THE ADJUSTMENT OF SUCH PROGRAMS AND REGULATIONS TO THE NEEDS OF SMALL BUSINESS."

SEE ALSO THE PROVISIONS OF 15 U.S.C. SEC. 639 REGARDING SBA'S REPORTS TO THE CONGRESS CONCERNING ITS ACTIVITES.

IN LIGHT OF THE ABOVE, WE CONCLUDE THAT SBA, WHILE NOT REQUIRED TO MAKE A STUDY OF THE TYPE ALLUDED TO IN YOUR QUESTION, CERTAINLY HAS THE REQUISITE AUTHORITY TO UNDERTAKE SUCH EVALUATIONS IF IT SO DESIRES.

3. CAN SBA OR HUD PROVIDE ASSISTANCE TO BUSINESSES DISPLACED BY PRIVATE DEVELOPERS WHO, WITH FEDERAL ASSISTANCE AND FUNDS, UNDERTAKE URBAN RENEWAL PROJECTS?

ELIGIBILITY FOR DISPLACEMENT ASSISTANCE FROM HUD IS GOVERNED BY THE UNIFORM RELOCATION ASSISTANCE AND REAL PROPERTY ACQUISITION POLICIES ACT, 42 U.S.C. SECS. 4601 ET. SEQ. THAT ACT DEFINES "DISPLACED PERSON" IN RELATION TO ACQUISITIONS OR PROPOSED ACQUISITIONS OF PROPERTY "FOR A PROGRAM OR PROJECT UNDERTAKEN BY A FEDERAL AGENCY, OR WITH FEDERAL FINANCIAL ASSISTANCE ***." 42 U.S.C. SEC. 4601(6). THIS LANGUAGE, STANDING ALONE, WOULD APPEAR BROAD ENOUGH TO COVER PROPERTY ACQUISITIONS BY A NON-GOVERNMENTAL RECIPIENT OF FEDERAL ASSISTANCE. HOWEVER, THOSE PROVISIONS OF THE RELOCATION ASSISTANCE ACT WHICH ACTUALLY CONFER BENEFITS LIMIT APPLICATION OF SUCH BENEFITS TO SITUATIONS IN WHICH ACQUISITIONS WERE UNDERTAKEN BY A FEDERAL OR STATE AGENCY. SEE, E.G., 42 U.S.C. SECS. 4622(A), 4627, 4628. THEREFORE, CONSTRUING THE RELOCATION ASSISTANCE ACT AS A WHOLE, MOST COURTS HAVE HELD THAT IT DOES NOT APPLY TO ACQUISITIONS BY NON-GOVERNMENTAL PARTIES EVEN IF THE ACQUISITIONS ARE FEDERALLY FUNDED. SEE CONWAY V. HARRIS, 586 F.2D 1137 (7TH CIR. 1978) (DEALING WITH THE HUD "SECTION 8 PROGRAM"); MOORER V. DEPARTMENT OF HUD, 561 F.2D 175 (8TH CIR. 1977) ("PROJECT REHAB"); PARLANE SPORTSWEAR CO., INC. V. WEINBERGER, 513 F.2D 835 (1ST CIR.), CERT. DENIED, 423 U.S. 925 (1975) (HEW GRANT TO A UNIVERSITY); DAWSON V. DEPARTMENT OF HUD, 428 F. SUPP. 328 (N.D. GA. 1976), AFF'D, 592 F.2D 1292 (5TH CIR. 1979) ("PROJECT REHAB").

THE SUPREME COURT RECOGNIZED THESE LOWER COURT HOLDINGS IN ALEXANDER V. U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, 441 U.S. 39, 48 AT 9, BUT DID NOT PASS UPON THE ISSUE.

GIVEN THIS BACKGROUND, IT IS CLEAR THAT HUD COULD NOT MAKE PAYMENT UNDER THE RELOCATION ASSISTANCE ACT TO BUSINESSES DISPLACED BY PRIVATE DEVELOPERS EVEN IF THE DEVELOPERS WERE PARTICIPATING IN A FEDERALLY FUNDED URBAN RENEWAL PROJECT.

ELIGIBILITY TO PARTICIPATE IN THE SBA'S DISPLACED BUSINESS LOAN PROGRAM UNDER 15 U.S.C. SEC. 636(B)(3) IS GOVERNED BY SOMEWHAT DIFFERENT STANDARDS THAN THE RELOCATION ACT. THE SBA STATUTE REQUIRES THAT THE SUBSTANTIAL ECONOMIC INJURY SUFFERED BY A BUSINESS ARISE IN CONNECTION WITH -

"*** A PROGRAM OR PROJECT CONSTRUCTED BY OR WITH FUNDS PROVIDED IN WHOLE OR IN PART BY THE FEDERAL GOVERNMENT OR BY A PROGRAM OR PROJECT BY A STATE OR LOCAL GOVERNMENT OR PUBLIC SERVICE ENTITY, PROVIDING SUCH GOVERNMENT OR PUBLIC SERVICE HAS THE AUTHORITY TO EXERCISE THE RIGHT OF EMINENT DOMAIN ON SUCH PROGRAM OR PROJECT ***."

THE UNDERSCORED LANGUAGE, WHICH GOVERNS INJURIES RELATING TO FEDERAL PROGRAMS, MERELY REQUIRES THAT THE PROJECT OR PROGRAMS BE FEDERALLY FUNDED. THUS, IT APPEARS THAT AN URBAN RENEWAL PROJECT BEING CONSTRUCTED BY A PRIME FIRM WITH FEDERAL FUNDS WOULD QUALIFY UNDER THIS LANGUAGE. NOTE THAT THE LANGUAGE QUOTED ABOVE IS SIMILAR TO THE LANGUAGE OF THE RELOCATION ASSISTANCE ACT, DISCUSSED PREVIOUSLY, DEFINING "DISPLACED PERSON." UNLIKE THE RELOCATION ASSISTANCE ACT, HOWEVER, THE SBA STATUTE DOES NOT CONTAIN ANY OTHER PROVISIONS THAT WOULD RESTRICT THE APPARENT SCOPE OF 15 U.S.C. SEC. 636(B)(3).

LIKEWISE, WE FIND NOTHING IN THE LEGISLATIVE HISTORY WHICH REQUIRES A MORE NARROW CONSTRUCTION OF 15 U.S.C. SEC. 636(B)(3). THE AUTHORIZATION FOR DISPLACED BUSINESS LOANS WAS FIRST ENACTED BY SECTION 305(A) OF THE HOUSING ACT OF 1961, PUB. L. NO. 87-70, 75 STAT. 149, 167 (JUNE 30, 1961), AND APPLIED ORIGINALLY TO "A FEDERALLY AIDED URBAN RENEWAL OR HIGHWAY CONSTRUCTION PROGRAM OR BY ANY OTHER CONSTRUCTION CONDUCTED BY OR WITH FUNDS PROVIDED BY THE FEDERAL GOVERNMENT ***." THE COMMENTS ON THIS PROVISION WERE SPARSE, BUT DO NOT SUPPORT ANY REQUIREMENT IN TERMS OF PROGRAMS OR PROJECTS COVERED BEYOND THE PRESENCE OF FEDERAL FUNDS. SEE H.R. REP. NO. 602, 87 CONG., 1ST SESS., AT 146-147 (1961) (CONFERENCE REPORT ON THE BILL - S. 1922 - ENACTED AS THE HOUSING ACT OF 1961); 107 CONG. REC. 9917-18 (1961) (DEBATE ON THE SENATE AMENDMENT) (FN1). THE PRESENT VERSION OF 15 U.S.C. SEC. 636(B)(3) REFLECTS AN AMENDMENT BY SECTION 402 OF PUB. L. NO. 95-89, 91 STAT. 553, 559 (AUGUST 4, 1977), WHICH EXTENDED ELIGIBILITY TO INJURIES CAUSED BY PROGRAMS OR PROJECTS OF STATE OR LOCAL GOVERNMENTS OR PUBLIC SERVICE ENTITIES TO WHICH THE RIGHT OF EMINENT DOMAIN APPLIES. THE HOUSE SMALL BUSINESS COMMITTEE'S REPORT ON THIS LEGISLATION STATED IN PART:

"THE SMALL BUSINESS ADMINISTRATION IS SPECIFICALLY AUTHORIZED UNDER SECTION 7(B)(3) TO MAKE LOANS TO SMALL BUSINESS CONCERNS TO ASSIST THEM IN CONTINUING IN BUSINESS AT EXISTING LOCATION, IN REESTABLISHING A BUSINESS, IN PURCHASING A BUSINESS, OR IN ESTABLISHING A NEW BUSINESS IF THE CONCERN HAS SUFFERED SUBSTANTIAL ECONOMIC INJURY AS THE RESULT OF ITS DISPLACEMENT BY OR LOCATION IN OR PROXIMITY TO, A PROJECT OR PROGRAM CONSTRUCTED BY OR WITH FEDERAL FUNDS ***.

"SMALL BUSINESSES SUSTAIN JUST AS MUCH FINANCIAL INJURY WHEN THEY ARE DISPLACED BY A PROJECT OR PROGRAM BY A STATE OR LOCAL GOVERNMENT OR PUBLIC SERVICE ENTITY AND NEED FEDERAL LOAN ASSISTANCE TO ASSIST IN THEIR RECOVERY." H.R. REP. NO. 95-1, AT 12 (1977).

THIS STATEMENT PARAPHRASES THE EXISTING STATUTORY LANGUAGE CONCERNING ELIGIBILITY BASED ON FEDERAL PROGRAMS. IT ALSO MAKES CLEAR THAT INJURY BASED ON THE ACTIVITIES OF STATE OR LOCAL GOVERNMENTS OR PUBLIC SERVICE ENTITIES IS AN ENTIRELY SEPARATE CATEGORY OF ELIGIBILITY.

BASED ON THE FOREGOING, WE BELIEVE THAT A BUSINESS SUFFERING THE REQUISITE INJURY BASED ON THE ACTIVITIES OF A PRIVATE FIRM USING FEDERAL FUNDS WOULD BE ELIGIBLE FOR A DISPLACED BUSINESS LOAN.

FN1 DURING SENATE FLOOR CONSIDERATION SEVERAL REFERENCES WERE MADE TO BUSINESSES BEING AFFECTED BY "GOVERNMENT ACTION." HOWEVER, THERE IS NO SUGGESTION THAT THIS TERM WAS USED IN THE SENSE OF DIRECT GOVERNMENT CONSTRUCTION, AS OPPOSED TO GOVERNMENT ACTION BY FUNDING A PROJECT

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