Rule2021-19985
Borrower Appeals of Final SBA Loan Review Decisions Under the Paycheck Protection Program
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
September 16, 2021
Effective
September 14, 2021
Issuing agencies
Small Business Administration
Abstract
This final rule adopts with changes portions of the previously issued interim final rule published in the Federal Register on August 27, 2020, on Appeals of SBA Loan Review Decisions Under the Paycheck Protection Program. This final rule provides procedures for appeals of certain final SBA loan review decisions under the Paycheck Protection Program, which is a temporary SBA 7(a) loan program, authorized by, inter alia, the Coronavirus Aid, Relief, and Economic Security Act and the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act.
Full Text
<html>
<head>
<title>Federal Register, Volume 86 Issue 177 (Thursday, September 16, 2021)</title>
</head>
<body><pre>
[Federal Register Volume 86, Number 177 (Thursday, September 16, 2021)]
[Rules and Regulations]
[Pages 51589-51597]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-19985]
========================================================================
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.
========================================================================
Federal Register / Vol. 86, No. 177 / Thursday, September 16, 2021 /
Rules and Regulations
[[Page 51589]]
SMALL BUSINESS ADMINISTRATION
13 CFR Part 134
[Docket Number SBA-2020-0042]
RIN 3245-AH55
Borrower Appeals of Final SBA Loan Review Decisions Under the
Paycheck Protection Program
AGENCY: U.S. Small Business Administration (SBA).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule adopts with changes portions of the previously
issued interim final rule published in the Federal Register on August
27, 2020, on Appeals of SBA Loan Review Decisions Under the Paycheck
Protection Program. This final rule provides procedures for appeals of
certain final SBA loan review decisions under the Paycheck Protection
Program, which is a temporary SBA 7(a) loan program, authorized by,
inter alia, the Coronavirus Aid, Relief, and Economic Security Act and
the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues
Act.
DATES:
Effective date: This rule is effective September 14, 2021.
Applicability date: This final rule applies to all appealable final
SBA loan review decisions under the Paycheck Protection Program. The
rule applies to all appeals filed after the effective date of the rule
and to those appeals filed before the effective date for which a Notice
and Order has not been issued.
FOR FURTHER INFORMATION CONTACT: An SBA Office of Hearings and Appeals
(OHA) Representative at 202-401-8200.
SUPPLEMENTARY INFORMATION:
I. Background Information
On March 13, 2020, President Trump declared the ongoing Coronavirus
Disease 2019 (COVID-19) pandemic of sufficient severity and magnitude
to warrant an emergency declaration for all States, territories, and
the District of Columbia. With the COVID-19 emergency, many small
businesses nationwide have experienced and continue to experience
economic hardship as a direct result of the Federal, State, tribal, and
local public health measures that have been taken to minimize the
public's exposure to the virus. These measures, some of which are
government-mandated, have been implemented nationwide and include the
closures of and restrictions on restaurants, bars, gyms, and other
businesses. In addition, based on the advice of public health
officials, other measures, such as keeping a safe distance from others
or even stay-at-home orders, were being and continue to be implemented,
resulting in a dramatic decrease in economic activity as the public
avoids malls, retail stores, and other businesses.
On March 27, 2020, the President signed the Coronavirus Aid,
Relief, and Economic Security Act (the CARES Act) (Pub. L. 116-136) to
provide emergency assistance and health care response for individuals,
families, and businesses affected by the coronavirus pandemic. The
Small Business Administration (SBA) received funding and authority
through the CARES Act to modify existing loan programs and establish a
new loan program to assist small businesses nationwide adversely
impacted by the COVID-19 emergency. Section 1102 of the CARES Act
temporarily permitted SBA to guarantee 100 percent of 7(a) loans under
a new program titled the ``Paycheck Protection Program'' (PPP) under
Section 7(a)(36) of the Small Business Act. Section 1106 of the CARES
Act provides for forgiveness of up to the full principal amount of
qualifying loans guaranteed under the PPP.
On April 2, 2020, SBA posted its first PPP interim final rule (85
FR 20811) (the First Interim Final Rule). Subsequently, SBA issued a
number of other interim final rules implementing the PPP. On April 24,
2020, the President signed the Paycheck Protection Program and Health
Care Enhancement Act (Pub. L. 116-139), which provided additional
funding and authority for the PPP.
On May 22, 2020, SBA and Treasury posted an interim final rule on
Loan Review Procedures and Related Borrower and Lender Responsibilities
(85 FR 33010) (Loan Review interim final rule (IFR)). The rule stated
that SBA would be issuing a separate interim final rule addressing the
process for appealing certain SBA loan review decisions under the PPP.
On June 5, 2020, the Paycheck Protection Program Flexibility Act of
2020 (Pub. L. 116-142) (Flexibility Act) was signed into law, amending
the CARES Act. On June 22, 2020, SBA and Treasury posted an interim
final rule that in part revised the Loan Review IFR to incorporate the
relevant Flexibility Act amendments, address revisions to the Loan
Forgiveness Application (SBA Form 3508), and include a new alternative
Loan Forgiveness Application (SBA Form 3508EZ) (85 FR 38304) (Second
Loan Review IFR).
On July 4, 2020, Public Law 116-147 extended the authority for SBA
to guarantee PPP loans to August 8, 2020. On August 11, 2020, SBA and
Treasury posted an interim final rule on Appeals of SBA Loan Review
Decisions Under the Paycheck Protection Program (85 FR 52883) (OHA
Appeal IFR), inviting the public to submit comments on or before
September 28, 2020.
On October 8, 2020, SBA and Treasury posted an interim final rule
which made additional revisions to the Loan Review IFR and Second Loan
Review IFR (85 FR 66214) (Third Loan Review IFR). The Third Loan Review
IFR provided additional guidance concerning the forgiveness and loan
review processes for PPP loans of $50,000 or less and, for PPP loans of
all sizes, lender responsibilities with respect to review of borrower
determinations of eligible costs for forgiveness in excess of a
borrower's PPP loan amount.
On December 27, 2020, the President signed the Economic Aid to
Hard-Hit Small Businesses, Nonprofits and Venues Act (Economic Aid Act)
(Pub. L. 116-260), which, among other things, reauthorized lending
under the PPP through March 31, 2021, authorized second draw PPP loans
under Section 7(a)(37) of the Small Business Act, modified PPP
provisions relating to forgiveness of PPP loans, and codified Section
1106 of the CARES Act under Section 7A of the Small Business Act. On
January 19, 2021, SBA and Treasury posted an interim final rule to
consolidate prior rules related to forgiveness and reviews of PPP loans
[[Page 51590]]
and incorporate changes made by the Economic Aid Act (86 FR 8283)
(Fourth Loan Review IFR).
On March 11, 2021, the American Rescue Plan Act of 2021 (American
Rescue Plan Act) was enacted to, among other things, expand eligibility
for first and second draw PPP loans and revise the exclusions from
payroll costs for purposes of loan forgiveness. On March 18, 2021, SBA
and Treasury posted an interim final rule on PPP to incorporate the
American Rescue Plan Act's amendments to the PPP, as well as other
changes (86 FR 15083). On March 30, 2021, the PPP Extension Act of 2021
(Pub. L. 117-6) was enacted, extending SBA's PPP program authority
through June 30, 2021. On July 30, 2021, SBA published an interim final
rule on PPP establishing a direct borrower forgiveness process for
loans of $150,000 or less, among other changes (86 FR 40921).
As described below, this final rule sets forth procedures for PPP
borrowers and Lenders on the process for a PPP borrower to appeal
certain final SBA loan review decisions under the PPP to the SBA Office
of Hearings and Appeals (OHA). The interim final rule supplemented the
interim final rule on Loan Review Procedures and Related Borrower and
Lender Responsibilities posted on SBA's and Treasury's websites on May
22, 2020 (published on June 1, 2020, in the Federal Register), as
revised by the interim final rules posted on SBA's and Treasury's
websites on June 22, 2020, October 8, 2020, and January 19, 2021
(published on June 26, 2020, October 19, 2020, and February 5, 2021,
respectively), and as further amended.
II. Notice and Comment and Immediate Effective Date
This rule revises subpart L, as added by the interim final rule
posted on the websites of the SBA and the U.S. Department of the
Treasury on August 11, 2020 (published in the Federal Register on
August 27, 2020), to reflect SBA's responses to public comments on the
interim final rule. The revision to Sec. 134.102, Jurisdiction of OHA,
is adopted without change.
This final rule adopts with changes portions of the previously-
published interim final rule on Appeals of SBA Loan Review Decisions
Under the Paycheck Protection Program. This rule revises 13 CFR part
134, subpart L, as added by the interim final rule, to reflect SBA's
responses to public comments on the interim final rule, as detailed in
Part III below. This final rule has accordingly satisfied the
Administrative Procedure Act's advance notice-and-comment requirements.
SBA has found that there is good cause to dispense with the 30-day
delayed effective date provided in the Administrative Procedure Act.
The intent of the CARES Act is to afford SBA the flexibility to provide
relief to America's small businesses expeditiously. This intent, along
with the need to provide lenders and borrowers with certainty regarding
PPP loan forgiveness (if any), provides good cause for immediate
implementation of changes to the OHA appeal feature of this program.
Specifically, it is critical to meet lenders' and borrowers' need for
clarity concerning the OHA appeal process as rapidly as possible.
Borrowers have been applying for loan forgiveness, lenders have been
issuing loan forgiveness decisions to SBA, and SBA has been reviewing
PPP loans in connection with those forgiveness applications and
decisions. SBA currently has pending final SBA loan review decisions
that are ready to be issued and is continuing to conduct loan reviews
and make final SBA loan review decisions that will need to be issued.
Borrowers and lenders are expecting these decisions to be issued in
accordance with the statutory and regulatory timelines requiring SBA to
remit the appropriate forgiveness amount to the lender (if any), within
90 days of the lender issuing its decision to SBA, subject to any SBA
review of the loan or the loan application. This final rule will allow
SBA to immediately issue such decisions and provide certainty around
the appeals process to these potential appellants without further
delay. Because this final rule also provides increased accessibility to
borrowers in response to comments previously received by the public,
allowing the borrowers that receive an appealable final SBA loan review
decision to immediately appeal under the final rule is in the best
interests of the borrowers.
III. Summary of Comments Received
The comment period for the OHA Appeal IFR was open from August 27,
2020, to September 28, 2020, and SBA received 16 comments. This section
includes a description of the comments and SBA's response.
Two of the comments received proposed an extension of time to file
an appeal to account for appellants who may be unfamiliar with the
appeals process. In the interest of efficiency and to ensure a speedy
resolution of disputes concerning final SBA loan review decisions, the
30-calendar day requirement will remain. To promote clarity and
fairness, SBA will no longer begin counting days to file an appeal
based on when an appellant receives notification from the lender that a
final SBA loan review decision has been issued without actually
receiving the final loan review decision document detailing the reasons
for the decision. Instead, the clock for counting days will begin only
after the borrower has received the actual final SBA loan review
decision document. This will provide the borrower with 30 calendar days
to formulate its arguments as to why the decision is clearly erroneous.
See 13 CFR 134.1202(a).
Two of the comments raised issue with the inability of the borrower
to file arguments after the administrative record has been transmitted
to OHA. Although OHA's general rules of procedure found at 13 CFR
134.206(e) allows for a party to request leave to reply to a response,
this final rule explicitly directs a party to seek leave to file a
reply or supplemental pleading. (13 CFR 134.1208(e).) Also, an
appellant is given 30 calendar days after the issuance of the Notice
and Order to file any objections to the administrative record, should
the appellant find the administrative record is incomplete. See 13 CFR
134.1207(e).
One comment proposed that the time to file an objection to the
administrative record should be extended to 15 calendar days. The
commenter reasoned that a non-attorney may have difficulty
understanding the role of the administrative record, what documents are
included and excluded from the record, and the applicable privileges.
Because the appellant will have participated in the process of
providing documents submitted by the lender to SBA during the loan
forgiveness process and the loan review process, the appellant should
be familiar with the documents included in the administrative record,
making 30 calendar days from the issuance of the Notice and Order
(where the administrative record is due 20 calendar days after issuance
of the Notice and Order) a sufficient time to assert an objection. The
Notice and Order that will be issued under 13 CFR 134.1206 will provide
a description of the documents included in the administrative record
and will note the appellant's ability to object to the administrative
record by the due date. The appellant can also avail itself of 13 CFR
134.1207, which provides more detail on the administrative record and
appellant's ability to object to the administrative record. Appellant
will also have the ability to request leave to file a supplementary
pleading after
[[Page 51591]]
review of the SBA's appeal response, should one be filed, and
administrative record under 13 CFR 134.1208(e) and 134.211 (Motions),
which is incorporated into subpart L.
One comment proposed that the SBA should disclose that the
appellant may object to the administrative record at the time of the
transmission of the administrative record. Such notice is included in
13 CFR 134.1207 and will be provided to the appellant in the Notice and
Order under 13 CFR 134.1206, which SBA deems sufficient notice of the
ability to object to the administrative record.
Two comments were received regarding the need for simplicity of the
appeals process as there is a large number of appellants who will be
filing their appeals without the assistance of an attorney. Overall,
the commenters requested a more simplified process in light of the
information appellant is required to submit to OHA at the time of the
appeal. One commenter suggested that pro se litigants should disclose
their status so that OHA will assist the appellant throughout the
appeals process and construe their filings liberally, taking into
consideration their non-attorney status. The rules, policies, and
procedures of OHA are tailored to address and accommodate all
appellants, regardless of whether they are represented by an attorney.
The information an appellant is required to file with an appeal is
minimal, but necessary for the Judge to render a decision based on the
relevant facts and law. In furtherance of OHA's commitment to ensure
the appeals process is accessible to all appellants, OHA has reduced
the information required to file an appeal. See 13 CFR 134.1204. OHA
will also provide appellants with an electronic case management system
(<a href="https://appeals.sba.gov">https://appeals.sba.gov</a>) that will provide a simple electronic way to
file, process, and track the appeal before OHA, including the
automation of serving parties, and accessing appeal documents and the
administrative record.
Four comments were received regarding the exhaustion of remedies
requirement under 13 CFR 134.1216 that required an appellant to request
review by the SBA Administrator before appealing an OHA decision to
Federal district court. One comment suggested that OHA should provide
language in the decision disclosing an appellant's ability to request
review of OHA's decision by the SBA Administrator. The commenters also
argued that this exhaustion of administrative remedies requirement was
in violation of the Administrative Procedures Act and deprives
appellants of due process. A number of commenters asserted that the
Administrator's review of OHA's decision is a circular review process
since the commenters believed that the Administrator would issue the
final SBA loan review decision. The Administrator will not be issuing
the final SBA loan review decision. The decision will be made by the
appropriate SBA official in accordance with published delegations of
authority. Additionally, various commenters asserted that OHA's ability
to render an independent decision on a final SBA loan review decision
is in question because OHA is a subordinate office to the
Administrator. Although SBA disagrees with the assertions in those
comments, SBA has determined to remove the requirement for a borrower
to request a review by the SBA Administrator before any further appeal
because of the limited resources within the Office of the Administrator
to render a decision on the anticipated high number of requests for
review. In addition, SBA believes that it is appropriate, consistent
with due process requirements, and most efficient for borrowers to be
able to seek relief in Federal district court, without requiring review
by the Administrator. Therefore, borrowers have the option to either
(1) request reconsideration by the presiding OHA judge under 13 CFR
134.1211(c) and then appeal the final decision to Federal district
court under 13 CFR 134.1211(g); or (2) appeal a final decision directly
to the appropriate Federal district court under 13 CFR 134.1211(g).
In lieu of the provision requiring the borrower to request review
by the Administrator and in order to vest reviewable discretion with
the appropriate SBA official, SBA will add a provision giving the SBA
Administrator the option to review or reverse an initial OHA decision
or a reconsidered initial OHA decision, in the Administrator's sole
discretion. Although the Administrator has the discretion to review or
reverse such decisions, borrowers may not request, and are not required
to request, a review from the Administrator in order to exhaust
administrative remedies before appealing to the appropriate Federal
district court. See 13 CFR 134.1211(d).
Three comments were received regarding the standard of review and
burden of proof for PPP appeals. One commenter stated that OHA should
remove the requirement that the appellant establish a clear error of
fact or law by SBA and only require appellant to establish error. The
suggestion, however, is based on the commenter's inaccurate
understanding of the administrative process, stating that OHA is
reviewing a lender's decision and is not reviewing the decision of a
public officer, i.e., an SBA official. This is incorrect, as OHA's
jurisdiction is limited to reviewing final SBA loan review decisions as
provided for in 13 CFR 134.1201(b). Further, the regulation
establishing OHA's jurisdiction explicitly states that it will not
accept an appeal based solely on a lender's decision. See 13 CFR
134.1201(c). One commenter suggested a de novo review of the final SBA
loan review decision due to the lack of guidance on the loan review
process. Another commenter voiced concern with the use of the
preponderance of the evidence standard in conjunction with the
requirement to establish clear error on the part of SBA. The commenter
found issue with the preponderance of the evidence standard because
such a standard is usually required at the initial review level, and
the commenter disagreed with the use of the clear error standard in
light of the lack of guidance on the loan review process. The
commenters also stated the appellant will be completely deprived of the
opportunity to review any evidence.
SBA has determined that it will remove the burden of proof
requirement of preponderance of the evidence. However, a decision by an
SBA official is entitled to the deference afforded by the clear error
standard. Therefore, it is appropriate and reasonable for OHA to assess
the final SBA loan review decision using a clear error standard. An
appellant will not be completely deprived of the opportunity to review
the evidence. An appellant will be provided with a copy of the final
SBA loan review decision that will set forth the reasons for the
decision prior to filing an appeal, and an appellant should be familiar
with the documents included in the administrative record because the
appellant will have participated in the process of providing documents
submitted by the lender to SBA during the loan forgiveness process and
the loan review process. In addition, an appellant has the opportunity
to review and object to the administrative record as provided for in 13
CFR 134.1207(e).
Three comments were received regarding the inability of appellants
to request discovery, while allowing SBA to request discovery. SBA has
determined that an OHA decision should be based on a review of the
administrative record, the appeal petition, any response, any reply or
supplemental pleading, and filings related to objection to the
administrative
[[Page 51592]]
record. See 13 CFR 134.1209(c). Thus, neither discovery nor oral
hearings will be permitted for appellant or SBA. See 13 CFR
134.1209(b).
One comment received suggested that OHA provide a description of
the OHA procedural rules incorporated into subpart L in addition to
citing to those rules. SBA agrees that such a change is minimal and
promotes clarity and guidance. Thus, this final rule provides a
description of each rule incorporated into subpart L at 13 CFR
134.1201(h).
One comment received proposed a change in the rule to account for
borrowers who may have been acquired by another entity between the time
the initial PPP loan was issued and the filing of a PPP appeal. The
rule now includes language to address both borrowers and their legal
successors under 13 CFR 134.1203.
Six commenters argued that SBA should have regulations which
formalize the procedures for final SBA loan review decisions. They
assert that the existing interim final rules are too broad and lacking
in specifics about the process and have no criteria for making the
decisions or compiling the administrative record. One commenter also
requested that more information be provided on the loan forgiveness
process. As to the administrative record, this final rule sets forth
what should be included in the administrative record at 13 CFR
134.1207. As to the criteria for making final SBA loan review decisions
and the loan forgiveness process, SBA has issued various rules and
guidance on the process for SBA loan reviews including, but not limited
to, the Loan Review IFR; \1\ Second Loan Review IFR; \2\ Third Loan
Review IFR; \3\ Fourth Loan Review IFR; \4\ SBA Procedural Notice:
Procedures for Lender Submission of Paycheck Protection Program Loan
Forgiveness Decisions to SBA and SBA Forgiveness Loan Reviews; \5\ and
SBA Procedural Notice: PPP Borrower Resubmissions of Loan Forgiveness
Applications Using Form 3508S, Lender Notice Responsibilities to PPP
Borrowers, and Offset of Remittances to Lenders for Lender Debts.\6\
Additional information is available at <a href="https://www.sba.gov/funding-programs/loans/covid-19-relief-options/paycheck-protection-program">https://www.sba.gov/funding-programs/loans/covid-19-relief-options/paycheck-protection-program</a> and
<a href="https://home.treasury.gov/policy-issues/coronavirus/assistance-for-small-businesses/paycheck-protection-program">https://home.treasury.gov/policy-issues/coronavirus/assistance-for-small-businesses/paycheck-protection-program</a>. SBA has issued sufficient
guidance for the loan forgiveness process and the issuance of final SBA
loan review decisions. SBA received a few other comments which
recommended changes to the loan forgiveness application process. Such
comments are not relevant to this final rule and need not be addressed
here.
---------------------------------------------------------------------------
\1\ 85 FR 33010 (June 1, 2020).
\2\ 85 FR 38304 (June 26, 2020).
\3\ 85 FR 66214 (October 19, 2020).
\4\ 86 FR 8283 (February 5, 2021).
\5\ See <a href="https://www.sba.gov/document/procedural-notice-5000-20038-procedures-lender-submission-paycheck-protection-program-loan-forgiveness-decisions-sba-sba">https://www.sba.gov/document/procedural-notice-5000-20038-procedures-lender-submission-paycheck-protection-program-loan-forgiveness-decisions-sba-sba</a>.
\6\ See <a href="https://www.sba.gov/document/procedural-notice-5000-20077-ppp-borrower-resubmissions-loan-forgiveness-applications-using-form-3508s-lender-notice">https://www.sba.gov/document/procedural-notice-5000-20077-ppp-borrower-resubmissions-loan-forgiveness-applications-using-form-3508s-lender-notice</a>.
---------------------------------------------------------------------------
Five comments received stated that the requirement to repay the
loans should be held in abeyance pending appeal. SBA has determined
that, in order to avoid the potential administrative burden of having
to reverse implementation of the final SBA loan review decision,
including the refund of borrower payments by the Lender and the
processing of forgiveness payments by SBA, a timely appeal by a PPP
borrower of a final SBA loan review decision should extend the
deferment period of the PPP loan. Payment of the PPP loan will be
deferred until there is a final decision on an appeal under 13 CFR
134.1211. In addition, SBA believes that allowing for continued
deferment is in the best interest of the borrower.\7\ This decision has
been added to the regulation at 13 CFR 134.1202(d).\8\
---------------------------------------------------------------------------
\7\ Interest will continue to accrue on the PPP loan during the
deferment period. See, Interim Final Rule on Business Loan Program
Temporary Changes; Paycheck Protection Program as Amended by
Economic Aid Act (86 FR 3692, 3703, January 14, 2021).
\8\ See also, Interim Final Rule on Business Loan Program
Temporary Changes; Paycheck Protection Program--COVID Revenue
Reduction Score, Direct Borrower Forgiveness Process, and Appeals
Deferment (86 FR 40921, 40925, July 30, 2021).
---------------------------------------------------------------------------
SBA also received some comments from borrowers that sought relief
from SBA for a PPP loan application that was denied by a Lender. Such
comments are not relevant to this final rule and cannot be addressed
here. Further, the rule, at 13 CFR 134.1201(c), provides that a
borrower cannot directly file an appeal of a decision made by a lender
concerning a PPP loan to OHA.
IV. Technical Amendments
This rule makes technical amendments to ensure efficiency,
transparency, and consistency throughout the appeals process. This
includes: Removal of the deduction of any Economic Injury Disaster Loan
(EIDL) advance (located in the OHA Appeal IFR at 13 CFR 134.1201(b)(3))
to be consistent with Section 333 of the Economic Aid Act which
repealed the CARES Act provision at section 1110(e)(6) requiring SBA to
deduct the EIDL advance; explicitly stating that a borrower cannot
directly file an appeal of a decision by a lender concerning a PPP loan
to OHA (13 CFR 134.1201(c)); informing an appellant that they must
first file an appeal of the final SBA loan review decision with OHA
before appealing to Federal district court (13 CFR 134.1201(d)); and
incorporating provisions from OHA's General Rules of Practice into this
section with descriptions of those provisions (13 CFR 134.1201(h)).
This final rule makes a procedural change to require appellants to
use the OHA Case Portal to file and manage their appeals (13 CFR
134.1202(a)); this provision also establishes ``Commencement of Appeals
of Final SBA Loan Review Decisions'' to outline the process of how and
when an appeal must be filed (13 CFR 134.1202); and removes the
requirement that timeliness of the appeal could be based on a
notification by the lender of a final SBA loan review decision rather
than actual receipt of the final SBA loan review decision (13 CFR
134.1202(a)).
SBA has also simplified the information required to file an appeal
by eliminating a requirement to provide a basis for jurisdiction and
relief sought; only requiring the borrower to produce a final SBA loan
review decision (and not merely a description of a final SBA loan
review decision) and the date it was received to determine timeliness
of the appeal; removing requirements that the appellant provide tax
documents; and removing the requirement that a borrower include a
certificate of service with its appeal or any other subsequent
documents filed with OHA. (13 CFR 134.1204). This rule also requires
borrowers to provide their lender with a copy of their appeal in order
for the lender to extend the deferment period of the PPP loan until a
final decision is issued under Sec. 134.1211. (13 CFR 134.1202(b)).
This rule also specifies that lenders and individual owners of a
borrower entity do not have standing to file an appeal. (13 CFR
134.1203). The new provision, titled ``Notice and Order,'' now provides
an overview of the information that will be included within the Notice
and Order (13 CFR 134.1206). This rule provides for the deadline to
produce the Administrative Record within the ``Administrative Record''
provision (13 CFR 134.1207(a)); clarifies that SBA may, but is not
required to, respond to an appeal and, if SBA does not respond it will
not be construed against SBA (13 CFR 134.1208); provides that a
response to an appeal is due 45 calendar days from the date of
[[Page 51593]]
the Notice and Order instead of from the appeal filing date (13 CFR
134.1208(b)); removes language making final decisions precedential (13
CFR 134.1211 (b) & (e)); discloses that final decisions rendered under
this section may be published by OHA within its discretion with any
necessary redactions (13 CFR 134.1211(f)); and removes language
pertaining to protective orders, as the only parties involved in PPP
appeals are the appellant and SBA, both of which will already have
access to all documents that will not be accessible to the public; and
adds language in 13 CFR 134.1207 to provide for a non-waiver provision.
V. Borrower Appeals of Final SBA Loan Review Decisions Under the
Paycheck Protection Program
This final rule adopts with changes portions of the previously-
issued interim final rule on Appeals of SBA Loan Review Decisions Under
the Paycheck Protection Program. This final rule does not make any
changes to 13 CFR 134.102(w) regarding OHA's jurisdiction over PPP
appeals, and the current provision in the Code of Federal Regulations
will remain the same. This final rule revises the authority citation
for subpart L to incorporate 15 U.S.C. 636(a)(37) and 15 U.S.C. 636m,
which were included in the Economic Aid Act. This final rule also
revises subpart L as set forth in the prior interim final rule.
Section 134.1201, Scope of rules in this subpart, provides a
process for appeal to OHA of certain final SBA loan review decisions
under the PPP and any other PPP matter referred to OHA by the
Administrator. PPP loans include first draw PPP loans made under
Section 7(a)(36) of the Small Business Act and second draw PPP loans
made under Section 7(a)(37) of the Small Business Act. Subpart L
provides that an appealable final SBA loan review decision is an
official written decision by SBA, after SBA completes a review of a PPP
loan, that a borrower (1) was ineligible for a PPP loan; (2) was
ineligible for the PPP loan amount received or used the PPP loan
proceeds for unauthorized uses; (3) is ineligible for PPP loan
forgiveness in the amount determined by the lender in its full approval
or partial approval decision issued to SBA; and/or (4) is ineligible
for PPP loan forgiveness in any amount when the lender has issued a
full denial decision to SBA.
Subpart L applies to loan review decisions made by SBA after SBA
completes a review of a PPP loan as set forth in Part III.1 and Part
III.2c. of the Loan Review IFR, as amended by the Second Loan Review
IFR, Third Loan Review IFR, and Fourth Loan Review IFR and as further
amended. Subpart L further provides that any decision by a lender
concerning a PPP loan, including a borrower's PPP loan application or a
borrower's PPP loan forgiveness application, may not be appealed
directly to OHA. In addition, this section sets forth other types of
decisions and determinations that are not covered by subpart L, and
makes clear that subpart C, Rules of Practice for Appeals From Size
Determinations and NAICS Code Designations, is not applicable to
appeals from final SBA loan review decisions. This section sets forth
the specific provisions from subpart B, OHA's general Rules of
Practice, that are applicable to subpart L. Other provisions from
subpart B that are not specifically referenced in subpart L do not
apply to subpart L. As stated above, a timely appeal by a PPP borrower
of a final SBA loan review decision will extend the deferment period of
the PPP loan until a final decision is issued pursuant to Sec.
134.1211. However, if SBA remits to the lender the PPP loan forgiveness
amount set forth in the decision issued by the lender to SBA, the
borrower may not file an OHA appeal, and the borrower must begin
repayment of any remaining balance of its PPP loan. This section makes
clear that a borrower must file an appeal with OHA on a final SBA loan
review decision before appealing to the appropriate Federal district
court.
Section 134.1202, Commencement of appeals of final SBA loan review
decisions, provides that an appellant must file its appeal with OHA
within 30 calendar days of receipt of the final SBA loan review
decision and references OHA's website, where an appellant will be able
to file and manage its appeal using the OHA Case Portal. By utilizing
the OHA Case Portal, an appellant's appeal will automatically be served
upon the Associate General Counsel for Litigation at
<a href="/cdn-cgi/l/email-protection#b4fbf8fde0e7d1c6c2ddd7d1f4c7d6d59ad3dbc2"><span class="__cf_email__" data-cfemail="723d3e3b26211700041b1117320110135c151d04">[email protected]</span></a>. The section also provides specific information on
how to calculate days. In addition, this section makes clear that a
timely appeal by a PPP borrower of a final SBA loan review decision
extends the deferment period of the PPP loan until a final decision is
issued pursuant to Sec. 134.1211. This section also requires an
appellant to provide the lender with a copy of its appeal in order for
the lender to extend the deferment period of the PPP loan until a final
decision is issued pursuant to Sec. 134.1211.
Section 134.1203, Standing, provides that only the borrower on a
loan for which SBA has issued a final SBA loan review decision has
standing to appeal the final SBA loan review decision to OHA.
Individual owners of a borrower entity and lenders do not have standing
to appeal a final SBA loan review decision.
Section 134.1204, The appeal petition, provides that an appeal
petition must include the following information: (1) A copy of the
final SBA loan review decision that is being appealed and the date it
was received; (2) a full and specific statement as to why the final SBA
loan review decision is alleged to be erroneous, together with all
factual information and legal arguments supporting the allegations; and
(3) the name, address, telephone number, email address and signature of
the appellant or its attorney. This section makes clear that a Notice
of Paycheck Protection Program Forgiveness Payment does not provide a
borrower with a right to appeal to OHA. This section further provides
that an appeal petition that does not include the above may be
dismissed by the Judge and permits SBA to move for a motion for more
definite statement or otherwise comply with the requirements of this
section.
Section 134.1205, Dismissal, provides that the Judge must dismiss
the appeal if: (1) The appeal is beyond OHA's jurisdiction as set forth
under Sec. 134.1201; (2) the appeal is untimely under Sec. 134.1202;
(3) the appellant lacks standing to appeal under Sec. 134.1203; or (4)
is premature because SBA has not yet made a final SBA loan review
decision. This section also provides that the Judge may dismiss the
appeal if, among other things, the appeal does not, on its face, allege
specific facts that if proven to be true, warrant reversal or remand of
the final SBA loan review decision.
Section 134.1206, Notice and Order, provides that upon receipt of
an appeal challenging a final SBA loan review decision, OHA will assign
the matter to either an Administrative Law Judge or an Administrative
Judge in accordance with Sec. 134.218. Unless the appeal will be
dismissed under Sec. 134.1205, the Judge will issue a Notice and Order
establishing a deadline for production of the administrative record and
specifying the deadline by which SBA may respond to the appeal.
Section 134.1207, The administrative record, provides that the
administrative record is due 20 calendar days after issuance of the
Notice and Order. The administrative record shall include non-
privileged, relevant documents that SBA considered in making its
decision or that were before SBA at the time of the decision. The
administrative record need not, however, contain all
[[Page 51594]]
documents pertaining to the appellant. SBA will file the administrative
record with OHA and serve it on appellant utilizing the OHA Case
Portal. This provision states that in the event that privileged or
confidential information is disclosed in the administrative record,
such disclosure shall not operate as a waiver of any claim of privilege
or confidentiality by SBA. This section permits the appellant to object
to the absence of any document from the administrative record that the
appellant believes should have been included in the administrative
record. Generally, such objections must be filed with OHA and served on
SBA no later than 30 calendar days after issuance of the Notice and
Order utilizing the OHA Case Portal. The Judge will rule upon such
objections and may direct or permit that the administrative record be
supplemented.
Section 134.1208, Response to an appeal petition, prescribes that
only SBA, though not required, may respond to an appeal. In addition,
OHA can request SBA to respond for good cause shown by OHA. The
response should set forth the relevant facts and legal arguments to the
issues presented on appeal. If SBA elects not to respond to the appeal,
such election shall not be interpreted to be an admission or waiver of
any allegation of law or fact. Except for good cause shown, a response
filed after the close of record established by the Judge will not be
considered. If SBA elects to respond, SBA must file its response with
OHA and serve a copy of the response upon the appellant utilizing the
OHA Case Portal. No reply to a response will be permitted unless the
Judge directs otherwise.
Section 134.1209, Evidence beyond the record, discovery and oral
hearings, provides that, generally, the Judge may not admit evidence
beyond the written administrative record. Neither discovery nor oral
hearings will be permitted in appeals from final SBA loan review
decisions. All appeals under subpart L will be decided solely on a
review of the written administrative record, the appeal petition, any
response, any reply, and filings related to objection to the
administrative record.
Section 134.1210, Standard of review, provides that the standard of
review is whether the final SBA loan review decision was based on clear
error of fact or law. The appellant has the burden of proof.
Section 134.1211, Decision on appeal, provides that the Judge will
issue his or her decision within 45 calendar days after the close of
record, as practicable. The decision will contain findings of fact and
conclusions of law, the reasons for such findings and conclusions, and
any relief ordered. The decision will be served upon appellant and SBA
utilizing the OHA Case Portal. The Judge's decision on the appeal is an
initial decision. However, unless a request for reconsideration is
filed pursuant to paragraph (c) of Sec. 134.1211 or the Administrator,
solely within the Administrator's discretion, decides to review or
reverse the initial decision pursuant to paragraph (d) of Sec.
134.1211, an initial decision shall become the final decision of SBA 30
calendar days after its service and is thereafter appealable to the
appropriate Federal district court. This section allows for a request
for reconsideration pursuant to paragraph (c) of Sec. 134.1211 by SBA
or appellant. This section also provides the Administrator, solely
within the Administrator's discretion, with the right to review or
reverse an initial OHA decision or a reconsidered initial OHA decision
pursuant to paragraph (d) of Sec. 134.1211. Such discretionary
authority of the Administrator does not create additional rights of
appeal on the part of an appellant not otherwise specified in SBA
regulations. This section also provides that decisions rendered by OHA
under subpart L are not precedential. This section provides that final
decisions rendered under this section may be published by OHA within
its discretion with any necessary redactions of confidential business
and financial information or personally identifiable information.
Lastly, this section provides that final decisions may be appealed to
the appropriate Federal district court only.
Section 134.1212, Effects of the decision, provides that OHA may
affirm, reverse, or remand a final SBA loan review decision. If
remanded, OHA no longer has jurisdiction over the matter unless a new
appeal is filed as a result of a new final SBA loan review decision.
Section 134.1213, Equal Access to Justice Act (EAJA), provides that
a prevailing appellant is not entitled to recover attorney's fees.
Appeals to OHA from final SBA loan review decisions under the PPP are
not proceedings that are required to be conducted by an Administrative
Law Judge under Sec. 134.603.
Section 134.1214, Confidential information, provides that if a
filing or other submission made pursuant to an appeal in subpart L
contains confidential business and financial information; personally
identifiable information; source selection sensitive information;
income tax returns; documents and information covered under Sec.
120.1060; or any other exempt information, that information is not
available to the public pursuant to the Freedom of Information Act
(FOIA), 5 U.S.C. 552.
Compliance With Executive Orders 12866, 12988, 13132, and 13563, the
Congressional Review Act, 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
OMB's Office of Information and Regulatory Affairs (OIRA) has
determined that this final rule is economically significant for the
purposes of Executive Orders 12866 and 13563 SBA, however, is
proceeding under the emergency provision at Executive Order 12866
Section 6(a)(3)(D) based on the need to move expeditiously to mitigate
the current economic conditions arising from the COVID-19 emergency.
Executive Order 12988
SBA has drafted this rule, to the extent practicable, in accordance
with the standards set forth in section 3(a) and 3(b)(2) of Executive
Order 12988, to minimize litigation, eliminate ambiguity, and reduce
burden. The rule has no preemptive or retroactive effect.
Executive Order 13132
SBA has determined that this rule 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 layers of government. Therefore, SBA
has determined that this rule has no federalism implications warranting
preparation of a federalism assessment.
Paperwork Reduction Act, 44 U.S.C. Chapter 35
SBA has determined that this final rule does not impose additional
reporting or recordkeeping requirements under the Paperwork Reduction
Act.
Congressional Review Act
OIRA has also determined that this rule is a major rule under
Subtitle E of the Small Business Regulatory Enforcement Fairness Act of
1996 (also known as the Congressional Review Act or CRA), 5 U.S.C.
804(2). If a rule is deemed major, the CRA generally provides that the
rule may not take effect until at least 60 days following its
publication unless the agency for good cause finds that notice and
public procedure are impracticable, unnecessary, or contrary to the
public interest. 5 U.S.C. 808. For the reasons discussed in Section II
above, SBA finds
[[Page 51595]]
that there is good cause to dispense with the CRA effective date
requirement. The agency believes that delaying the effective date of
this final rule would be contrary to the public interest.
Regulatory Flexibility Act (RFA)
The Regulatory Flexibility Act (RFA) 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,
when among other things 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 finalizes an
interim final rule that was exempt from notice and comment and did not
require an initial regulatory flexibility analysis, SBA is likewise not
required to conduct a regulatory flexibility analysis.
List of Subjects in 13 CFR Part 134
Administrative practice and procedure, Claims, Equal access to
justice, Lawyers, Organization and function (Government agencies).
For the reasons stated in the preamble, the Small Business
Administration interim rule amending 13 CFR part 134, which was
published at 85 FR 52883 on August 27, 2020, is adopted as final with
the following changes:
PART 134--RULES OF PROCEDURE GOVERNING CASES BEFORE THE OFFICE OF
HEARINGS AND APPEALS
0
1. The authority citation for part 134 is revised to read as follows:
Authority: 5 U.S.C. 504; 15 U.S.C. 632, 634(b)(6), 634(i),
637(a), 648(l), 656(i), 657t and 687(c); 38 U.S.C. 8127(f); E.O.
12549, 51 FR 6370, 3 CFR, 1986 Comp., p. 189.
Subpart J issued under 38 U.S.C. 8127(f)(8)(B).
Subpart K issued under 38 U.S.C. 8127(f)(8)(A).
Subpart L issued under 15 U.S.C. 636(a)(36); 15 U.S.C.
636(a)(37); 15 U.S.C. 636m.
0
2. Subpart L is revised to read as follows:
Subpart L--Borrower Appeals of Final SBA Loan Review Decisions
Sec.
134.1201 Scope of the rules in this subpart.
134.1202 Commencement of appeals of final SBA loan review decisions.
134.1203 Standing.
134.1204 The appeal petition.
134.1205 Dismissal.
134.1206 Notice and Order.
134.1207 The administrative record.
134.1208 Response to an appeal petition.
134.1209 Evidence beyond the record, discovery, and oral hearings.
134.1210 Standard of review.
134.1211 Decision on appeal.
134.1212 Effects of the decision.
134.1213 Equal Access to Justice Act.
134.1214 Confidential information.
Sec. 134.1201 Scope of the rules in this subpart.
(a) The rules of practice in this subpart apply to appeals to OHA
from certain final SBA loan review decisions under the Paycheck
Protection Program (PPP) as described in paragraph (b) of this section,
and to any other PPP matter referred to OHA by the Administrator of
SBA. The PPP was established as a temporary program under section 1102
of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act)
(Pub. L. 116-136), as amended. PPP loans include first draw PPP loans
made under Section 7(a)(36) of the Small Business Act and second draw
PPP loans made under Section 7(a)(37) of the Small Business Act.
(b) A final SBA loan review decision that is appealable under this
subpart is an official written decision by SBA, after SBA completes a
review of a PPP loan, that finds a borrower:
(1) Was ineligible for a PPP loan;
(2) Was ineligible for the PPP loan amount received or used the PPP
loan proceeds for unauthorized uses;
(3) Is ineligible for PPP loan forgiveness in the amount determined
by the lender in its full approval or partial approval decision issued
to SBA; and/or
(4) Is ineligible for PPP loan forgiveness in any amount when the
lender has issued a full denial decision to SBA.
(c) A borrower cannot directly file an appeal of a decision made by
a lender concerning a PPP loan with OHA.
(d) An appeal to OHA is an administrative remedy that must be
exhausted before judicial review of a final SBA loan review decision
may be sought in a Federal district court.
(e) Any determination by SBA's Office of Inspector General
concerning a PPP loan is not appealable to OHA.
(f) This subpart does not create any right to appeal any SBA
decision on any 7(a) loans (see part 120 of this chapter) other than
PPP loans.
(g) The Rules of Practice for Appeals From Size Determinations and
NAICS Code Designations in subpart C of this part do not apply to
appeals of final SBA loan review decisions or to the PPP.
(h) In addition to the provisions in subpart B of this part
specifically referenced in this subpart, the following regulations from
subpart B of this part also apply to this subpart: Sec. Sec. 134.207
(Amendments and supplemental pleadings); 134.208 (Representation in
cases before OHA); 134.209 (Requirement of signature); 134.211
(Motions); 134.212 (Summary judgment); 134.217 (Settlement); 134.218
(Judges); 134.219 (Sanctions); and 134.220 (Prohibition on ex parte
communications). Other provisions from subpart B of this part that are
not specifically referenced in this subpart do not apply to this
subpart.
Sec. 134.1202 Commencement of appeals of final SBA loan review
decisions.
(a) An appeal petition must be filed with OHA within 30 calendar
days after the appellant's receipt of the final SBA loan review
decision. To file and manage an appeal of a final SBA loan review
decision with OHA, refer to the OHA Case Portal at <a href="https://appeals.sba.gov">https://appeals.sba.gov</a>. An appellant is required to use the OHA Case Portal to
file and manage their appeal.
(b) Appellant must provide their lender with a copy of the timely
appeal petition upon filing in order for the lender to extend the
deferment period of the PPP loan until a final decision is issued under
Sec. 134.1211.
(c)(1) Do not count the day the time period begins, but do count
the last day of the time period.
(2) If the last day is Saturday, Sunday, or a Federal holiday, the
time period ends on the next business day.
Example: On a Thursday, a borrower receives a final SBA loan review
decision. The time period begins on Thursday, so the first day to count
is Friday. Because the 30th calendar day after receipt of the decision
is a Saturday, the appeal deadline extends to the next business day,
which is Monday.
(3)(i) A Judge may modify any time period or deadline, except:
(A) The time period governing commencement of a case (i.e., when
the appeal petition may be filed); and
(B) A time period established by statute.
(ii) A party may move for an extension of time pursuant to Sec.
134.211.
(d) A timely appeal by a PPP borrower of a final SBA loan review
decision
[[Page 51596]]
extends the deferment period of the PPP loan until a final decision is
issued under Sec. 134.1211.
Sec. 134.1203 Standing.
Only the borrower on a loan, or its legal successor in interest,
for which SBA has issued a final SBA loan review decision that makes a
finding in Sec. 134.1201(b)(1) through (4) has standing to appeal the
final SBA loan review decision to OHA. Lenders and individual owners of
a borrower entity do not have standing to appeal a final SBA loan
review decision.
Sec. 134.1204 The appeal petition.
(a) Content. The appeal petition must include the following
information:
(1) A copy of the final SBA loan review decision that is being
appealed and the date it was received by the borrower. A Notice of
Paycheck Protection Program Forgiveness Payment does not provide a
borrower with a right to appeal to OHA.
(2) A full and specific statement as to why the final SBA loan
review decision is alleged to be erroneous, together with all factual
information and legal arguments supporting the allegations. There is no
required format for an appeal petition. However, the appeal petition
must meet the following requirements:
(i) The maximum length of an appeal petition (not including
attachments) is 20 pages. A table of authorities is required only for
petitions citing more than twenty cases, regulations, or statutes.
(ii) Clearly label any exhibits and attachments.
(3) The name, address, telephone number, email address, and
signature of the appellant or its attorney.
(b) Dismissal. An appeal petition that does not contain all of the
information required by paragraph (a) of this section may be dismissed,
with or without prejudice, at the Judge's own initiative, or upon
motion of SBA.
(c) Motion for more definite statement. (1) SBA may, no later than
five calendar days after receiving a Notice and Order on an appeal
petition, move for an order to the appellant to provide a more definite
appeal petition or otherwise comply with this section. A Judge may
order a more definite appeal petition on his or her own initiative.
(2) A motion for a more definite appeal petition stays SBA's time
for filing a response. The Judge will establish the time for filing and
serving a response and will extend the close of the record as
appropriate.
(3) If the appellant does not comply with the Judge's order to
provide a more definite appeal petition or otherwise fails to comply
with applicable regulations in this subpart, the Judge may dismiss the
petition with prejudice.
Sec. 134.1205 Dismissal.
(a) The Judge must dismiss the appeal if:
(1) The appeal is beyond OHA's jurisdiction as set forth under
Sec. 134.1201;
(2) The appeal is untimely under Sec. 134.1202;
(3) The appellant lacks standing to appeal under Sec. 134.1203; or
(4) The appeal is premature because SBA has not yet made a final
SBA loan review decision.
(b) The Judge may dismiss the appeal in accordance with Sec.
134.1204(b) or (c)(3), or if the appeal does not, on its face, allege
specific facts that if proven to be true, warrant reversal or remand of
the final SBA loan review decision.
Sec. 134.1206 Notice and Order.
Upon receipt of an appeal challenging a final SBA loan review
decision, OHA will assign the matter to either an Administrative Law
Judge or an Administrative Judge in accordance with Sec. 134.218.
Unless the appeal is dismissed under Sec. 134.1205, the Judge will
issue a Notice and Order, utilizing the OHA Case Portal, establishing a
deadline for production of the administrative record and specifying a
date by which SBA may respond to the appeal.
Sec. 134.1207 The administrative record.
(a) Time limits. The administrative record will be due 20 calendar
days after issuance of the Notice and Order unless additional time is
requested and granted.
(b) Contents. The administrative record shall include non-
privileged, relevant documents that SBA considered in making its final
loan review decision or that were before SBA at the time of the final
loan review decision. The administrative record need not, however,
contain all documents pertaining to the appellant.
(c) Non-waiver. In the event that privileged or confidential
information is disclosed in the administrative record, such disclosure
shall not operate as a waiver of any claim of privilege or
confidentiality by SBA.
(d) Filing. SBA will file the administrative record with OHA and
serve it on appellant utilizing the OHA Case Portal.
(e) Objections. (1) Any objection to the administrative record must
be filed with OHA and served on SBA no later than 30 calendar days
after the issuance of the Notice and Order, utilizing the OHA Case
Portal. If additional time to file the administrative record was
requested and granted by a Judge, appellant will have 10 calendar days
from the date SBA is required to file the administrative record under
the judge's order granting an extension in which to file an objection
to the administrative record.
(2) The appellant may object to the absence of any document from
the administrative record that the appellant believes should have been
included in the administrative record.
(3) The Judge will rule upon such objections and may direct or
permit that the administrative record be supplemented.
Sec. 134.1208 Response to an appeal petition.
(a) Who may respond. SBA may respond to an appeal as determined in
its discretion, but SBA is not required to respond. If SBA elects not
to respond, such election shall not be interpreted as an admission or
waiver of any allegation of law or fact. In addition, after review of
the appeal petition, OHA may request SBA to respond for good cause
shown by OHA. Only SBA may respond. If filed, the response should set
forth the relevant facts and legal arguments to the issues presented on
appeal.
(b) Time limit. If an SBA response is filed, it must be filed
within 45 calendar days after issuance of the Notice and Order.
(c) Close of record. The record will close 45 calendar days from
the issuance of the Notice and Order, unless the Judge decides
otherwise. Generally, filings after the close of record will not be
considered.
(d) Service. If a response is filed, the SBA must file its response
with OHA, and serve a copy of the response upon the appellant or its
attorney, as applicable by utilizing the OHA Case Portal.
(e) Reply to response. Generally, a reply to a response is not
permitted unless the Judge directs otherwise. See Sec. 134.206(e).
However, upon motion (see Sec. 134.211), and under terms needed to
avoid prejudice to any non-moving party, the Judge may permit the
filing and service of a supplemental pleading after review of SBA's
response and/or the administrative record. The proposed supplemental
pleading must be filed and served with the motion utilizing the OHA
Case Portal.
Sec. 134.1209 Evidence beyond the record, discovery, and oral
hearings.
(a) Generally, the Judge may not admit evidence beyond the
administrative record.
[[Page 51597]]
(b) Neither discovery nor oral hearings will be permitted in
appeals from final SBA loan review decisions.
(c) All appeals under this subpart will be decided solely on a
review of the administrative record, the appeal petition, any response,
any reply or supplemental pleading, and filings related to objection to
the administrative record.
Sec. 134.1210 Standard of review.
The standard of review is whether the final SBA loan review
decision was based on clear error of fact or law. The appellant has the
burden of proof.
Sec. 134.1211 Decision on appeal.
(a) Time limits and contents. The Judge will issue his or her
decision within 45 calendar days after the close of record, as
practicable. The decision will contain findings of fact and conclusions
of law, the reasons for such findings and conclusions, and any relief
ordered. The decision will be served upon appellant and SBA utilizing
the OHA Case Portal.
(b) Initial decision. The Judge's decision on the appeal is an
initial decision. However, unless a request for reconsideration is
filed pursuant to paragraph (c) of this section or the SBA
Administrator, solely within the Administrator's discretion, decides to
review or reverse the initial decision pursuant to paragraph (d) of
this section, an initial decision shall become the final decision of
SBA 30 calendar days after its service. The discretionary authority of
the Administrator does not create any additional rights of appeal on
the part of an appellant not otherwise specified in SBA regulations in
this chapter. Any decision pursuant to this subpart applies only to the
PPP and does not apply to SBA's 7(a) Loan Program generally or to any
interpretation or application of the regulations in part 120 or 121 of
this chapter.
(c) Reconsideration. An initial decision of the Judge may be
reconsidered. If a request for reconsideration is filed and the SBA
Administrator does not exercise discretion to review or reverse the
initial decision under paragraph (d) of this section, OHA will decide
the request for reconsideration and OHA's decision on the request for
reconsideration is a reconsidered initial OHA decision.
(1) Either SBA or appellant may request reconsideration by filing
with the Judge and serving a petition for reconsideration within 10
calendar days after service of the Judge's decision. The request for
reconsideration must clearly show an error of fact or law material to
the decision. SBA does not have to have filed a response to the
borrower's appeal petition to request reconsideration of the initial
decision of the Judge.
(2) The Judge may also reconsider a decision on his or her own
initiative within 20 calendar days after service of the Judge's
decision.
(3) A reconsidered initial OHA decision becomes the final decision
of SBA 30 calendar days after its service unless the SBA Administrator,
solely within the Administrator's discretion, decides to review or
reverse the reconsidered initial OHA decision under paragraph (d) of
this section. The discretionary authority of the Administrator does not
create any additional rights of appeal on the part of an appellant not
otherwise specified in SBA regulations in this chapter.
(d) Administrator review. Within 30 calendar days after the service
of an initial OHA decision or a reconsidered initial OHA decision of a
Judge, the SBA Administrator, solely within the Administrator's
discretion, may elect to review and/or reverse an initial OHA decision
or a reconsidered initial OHA decision. In the event that the
Administrator elects to review and/or reverse an initial OHA decision
and a timely request for reconsideration of a Judge's initial decision
is also filed by an appellant pursuant to paragraph (c) of this
section, the Administrator will consider such request for
reconsideration. The Administrator's decision will become the final
decision of the SBA upon issuance.
(e) Precedent. Neither initial nor final decisions rendered by OHA
under this subpart are precedential.
(f) Publication. Final decisions are normally published without
redactions on OHA's website. PPP decisions will likely contain
confidential business and financial information and/or personally
identifiable information. Therefore, OHA, within its full discretion,
may publish final decisions issued under this section with any
necessary redactions.
(g) Appeal to Federal district court. Final decisions may be
appealed to the appropriate Federal district court only.
Sec. 134.1212 Effects of the decision.
OHA may affirm, reverse, or remand a final SBA loan review
decision. If remanded, OHA no longer has jurisdiction over the matter
unless a new appeal is filed as a result of a new final SBA loan review
decision.
Sec. 134.1213 Equal Access to Justice Act.
A prevailing appellant is not entitled to recover attorney's fees.
Appeals to OHA from final SBA loan review decisions under the PPP are
not proceedings that are required to be conducted by an Administrative
Law Judge under Sec. 134.603.
Sec. 134.1214 Confidential information.
If a filing or other submission made pursuant to an appeal in this
subpart contains confidential business and financial information;
personally identifiable information; source selection sensitive
information; income tax returns; documents and information covered
under Sec. 120.1060 of this chapter; or any other exempt information,
that information is not available to the public pursuant to the Freedom
of Information Act (FOIA), 5 U.S.C. 552.
Isabella Casillas Guzman,
Administrator.
[FR Doc. 2021-19985 Filed 9-14-21; 11:15 am]
BILLING CODE 8026-03-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on September 16, 2021.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.