Rule2022-04843
State Small Business Credit Initiative; Demographics-Related Reporting Requirements
Primary source
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Published
March 10, 2022
Effective
March 9, 2022
Issuing agencies
Treasury Department
Abstract
The Secretary of the Treasury is issuing this interim final rule to institute the reporting requirements related to demographics of those who own or control small businesses that receive a loan, investment, other credit or equity support, or technical assistance under the State Small Business Credit Initiative under the American Rescue Plan Act of 2021.
Full Text
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<title>Federal Register, Volume 87 Issue 47 (Thursday, March 10, 2022)</title>
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[Federal Register Volume 87, Number 47 (Thursday, March 10, 2022)]
[Rules and Regulations]
[Pages 13628-13634]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-04843]
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DEPARTMENT OF THE TREASURY
31 CFR Part 35
RIN 1505-AC79
State Small Business Credit Initiative; Demographics-Related
Reporting Requirements
AGENCY: Department of the Treasury.
ACTION: Interim final rule.
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SUMMARY: The Secretary of the Treasury is issuing this interim final
rule to institute the reporting requirements related to demographics of
those who own or control small businesses that receive a loan,
investment, other credit or equity support, or technical assistance
under the State Small Business Credit Initiative under the American
Rescue Plan Act of 2021.
DATES:
Effective date: This interim final rule is effective March 9, 2022.
Comment date: Comments must be received on or before April 11,
2022.
ADDRESSES: Please submit comments electronically through the Federal
eRulemaking Portal: <a href="https://www.regulations.gov">https://www.regulations.gov</a>. Comments can be mailed
to the Office of Recovery Programs, Department of the Treasury, 1500
Pennsylvania Avenue NW, Washington, DC 20220. Because postal mail may
be subject to processing delay, it is recommended that comments be
submitted electronically. All comments should be captioned with ``SSBCI
Interim Final Rule Comments.'' Please include your name, organization
affiliation, address, email address and telephone number in your
comment. Where appropriate, a comment should include a short executive
summary. In general, comments received will be posted on <a href="https://www.regulations.gov">https://www.regulations.gov</a> without change, including any business or personal
information provided. Comments received, including attachments and
other supporting materials, will be part of the public record and
subject to public disclosure. Do not enclose any information in your
comment or supporting materials that you consider confidential or
inappropriate for public disclosure.
FOR FURTHER INFORMATION CONTACT: Jeff Stout, Director, Office of
Federal Program Finance, at (202) 622-2059 or
<a href="/cdn-cgi/l/email-protection#c3b0b0a1a0aa9caaada5acb1aea2b7aaacad83b7b1a6a2b0b6b1baeda4acb5"><span class="__cf_email__" data-cfemail="dfacacbdbcb680b6b1b9b0adb2beabb6b0b19fabadbabeacaaada6f1b8b0a9">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
I. Background
The American Rescue Plan Act of 2021 (ARPA) reauthorized and
amended the Small Business Jobs Act of 2010 (SBJA) to provide $10
billion to fund the State Small Business Credit Initiative (SSBCI) as a
response to the economic effects of the COVID-19 pandemic.\1\ SSBCI is
a federal program administered by the U.S. Department of the Treasury
(Treasury) that was created to strengthen the programs of eligible
jurisdictions that support private financing for small businesses.
Eligible jurisdictions include states, territories, Tribal governments,
and eligible municipalities. SSBCI is expected to, in conjunction with
new small business financing, create billions of dollars in lending to,
and investments in, small businesses.
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\1\ ARPA, Public Law 117-2, sec. 3301, codified at 12 U.S.C.
5701 et seq. SSBCI was originally established in Title III of the
Small Business Jobs Act of 2010.
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[[Page 13629]]
II. Summary of the Interim Final Rule
A. Authority, Scope, and Purpose
Treasury has authority under the SSBCI statute to issue a rule on
collecting demographics-related data of those who own or control small
businesses that participate in SSBCI for purposes of implementation,
compliance and reporting, and understanding program outcomes.\2\ First,
issuing this interim final rule is important for the implementation of
and compliance with the program requirements regarding allocations
related to business enterprises that are owned and controlled by
socially and economically disadvantaged individuals (SEDI-owned and
controlled businesses). ARPA provides $1.5 billion of capital funding
to be allocated based on the needs of SEDI-owned and controlled
businesses (SEDI allocation),\3\ $1.0 billion of capital funding for an
incentive program for jurisdictions that demonstrate robust support for
SEDI-owned and controlled businesses in the deployment of previously
allocated SSBCI capital funding (SEDI incentive allocation),\4\ and
$500 million for technical assistance to, in part, SEDI-owned and
controlled businesses.\5\ ARPA also states that the $1.5 billion SEDI
allocation must be expended for SEDI-owned and controlled
businesses.\6\ The $1.5 billion SEDI allocation and $1.0 billion SEDI
incentive allocation are intended to address the widespread challenges
that these businesses have faced in light of the COVID-19 pandemic.\7\
The technical assistance funding is to help, in part, SEDI-owned and
controlled businesses that are applying to receive a loan, investment,
or other credit or equity support under the SSBCI. The information
reported under this interim final rule will help Treasury determine the
extent to which SSBCI funds have been provided to SEDI-owned and
controlled businesses.
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\2\ See 12 U.S.C. 5706, 5709.
\3\ 12 U.S.C. 5702(d)(2).
\4\ 12 U.S.C. 5702(e).
\5\ 12 U.S.C. 5708(e).
\6\ 12 U.S.C. 5702(d)(1).
\7\ See, e.g., Cong. Rec. H1283 (Statement of Rep. Waters) (Mar.
10, 2021) (citing ``the widespread challenges small businesses,
especially minority-owned businesses, have faced during the COVID-19
pandemic''); Cong. Rec. H1280 (Statement of Speaker Pelosi) (``The
most vulnerable among us have been the most disproportionately
affected . . . women and minority-owned businesses forced to shudder
[sic], communities of color facing rising disparities'' and
explaining ``This legislation will, among other steps, address 8 in
10 minority owned businesses on the brink of closure . . . .'').
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Second, this interim final rule is being issued to ensure
compliance with legal requirements related to nondiscrimination and
nondiscriminatory uses of federal funds, where such laws are applicable
to a participating jurisdiction and any contracted entity operating
SSBCI programs on the jurisdiction's behalf because all SSBCI funds are
considered federal financial assistance for purposes of such
requirements. These legal requirements include, but are not limited to,
Title VI of the Civil Rights Act of 1964 and Treasury's regulations at
31 CFR part 22, which require recipients of SSBCI funding to maintain
and submit racial and ethnic data of beneficiaries that receive Federal
financial assistance.\8\
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\8\ 31 CFR 22.6(b),
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Third, issuing this interim final rule is important for SSBCI
implementation and compliance because some participating jurisdictions
will partner with lenders or other financial entities that are subject
to laws that prohibit these entities from inquiring about the race,
color, religion, national origin, or sex of an applicant or any other
person in connection with a credit transaction, unless such information
is required by a regulation, order, or agreement issued by, or entered
into with, an enforcement agency or a court to monitor or enforce
compliance with federal or state statutes or regulations. For example,
under 12 CFR part 1002 (Regulation B) implementing the Equal Credit
Opportunity Act, creditors are generally prohibited from inquiring
about the race, color, religion, national origin, or sex of an
applicant or any other person in connection with a credit transaction,
unless an exception applies.\9\ One exception is for certain required
information collection ``to monitor or enforce compliance with the
[Equal Credit Opportunity] Act, [Regulation B], or other Federal or
state statutes or regulations.'' \10\ This interim final rule will
facilitate the collection of information that might not otherwise be
collected by creditors who will be SSBCI lenders. Treasury expects
that, in accordance with this interim final rule, participating
jurisdictions will contract with lenders and other financial entities
to implement SSBCI programs and collect this information. Lenders and
other financial entities participating in SSBCI must request the
demographic information described in this interim final rule, and
collect and report such information certified by authorized
representatives of participating small businesses. Although such
lenders and other financial entities must collect and report such
information, participating small businesses have the option to choose
``prefer not to respond'' or to not respond by leaving the request
blank. This interim final rule does not require verification of
responses provided by participating small businesses. Treasury believes
that requiring verification of small business-provided responses would
greatly increase the operational burden of the interim final rule.
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\9\ See 12 CFR 1002.5(b).
\10\ 12 CFR 1002.5(a)(2).
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Finally, this interim final rule is important for understanding
SSBCI program outcomes. Such information will allow Treasury to analyze
and report on the populations that SSBCI funding is benefiting.
B. Definitions and Reporting Requirements
Under this interim final rule, each jurisdiction that participates
in SSBCI must submit an annual report to Treasury that includes the
following data: Self-certified SEDI demographics-related business
status; minority-owned or controlled business status; women-owned or
controlled business status; veteran-owned or controlled business
status; and the race, ethnicity, gender, sexual orientation, Middle
Eastern or North African ancestry, and veteran status with which
principal owners identify. For each business that receives a loan,
investment, or other credit or equity support under the SSBCI, the
reported data must be based on the ownership and control of the
business immediately before the consummation of such loan, investment,
or other credit or equity support-related transaction. For each
business that receives technical assistance under the SSBCI, the
reported data must be based on the ownership and control of the
business at the time it receives such technical assistance. The self-
certified SEDI demographics-related business status variable reflects
one group of SEDI-owned and controlled businesses on which
jurisdictions may expend their portion of the $1.5 billion SEDI
allocation and their portion of technical assistance funding.\11\ Loan,
investment, or other credit or equity support-related transactions
conducted with self-certified SEDI demographics-related businesses may
also count toward earning a participating jurisdiction's portion of the
$1.0 billion SEDI incentive allocation. The definition of ``owned and
controlled,'' which is used in the definition of SEDI demographics-
related business, is based on the statutory definition of ``business
enterprise owned and controlled by
[[Page 13630]]
socially and economically disadvantaged individuals,'' which includes
prongs for three types of organizations: Private businesses, public
businesses, and mutual institutions.\12\ For example, 51 percent
ownership of a private institution is a sufficient condition to fulfill
the ownership-and-control requirement for a business to be a self-
certified SEDI demographics-related business.
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\11\ For more information on all eligible groups of businesses
on which jurisdictions may expend their SSBCI SEDI allocation funds,
please see the SSBCI Capital Program Policy Guidelines published on
Treasury's website.
\12\ See 12 U.S.C. 5701(15).
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Under this interim final rule, Treasury will also collect
information on whether the business is majority-owned or controlled by
minority individuals, females, or veterans. These data elements do not
affect the determination of SEDI-owned and controlled business status.
The SSBCI statute does not define ``owned or controlled'' for purposes
of these categories. Therefore, the definition of ``owned or
controlled'' for purposes of these terms are based both on the
definition of ``business enterprise owned and controlled by socially
and economically disadvantaged individuals'' in the SSBCI statute \13\
and also on the control prong of the definition of ``beneficial owner''
in the Financial Crimes Enforcement Network's (FinCEN) customer due
diligence (CDD) rule, which requires covered financial institutions to
establish and maintain written procedures that are reasonably designed
to identify and verify beneficial owners of legal entity customers.\14\
In choosing this approach, Treasury considered that the ``beneficial
owner'' definition under FinCEN's CDD rule is already widely in use,
and that most financial institutions are likely familiar with the
standard, because many of them are required to comply with the CDD
rule. Accordingly, a business can be a minority-owned or controlled
business, women-owned or controlled business, or veteran-owned or
controlled business (as applicable) if (1) the applicable prong under
the definition of ``owned and controlled'' explained above is met or
(2) one or more minority individuals, females, or veterans,
respectively, have the power to exercise a controlling influence over
the management, direction, or policies of the business.
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\13\ See id.
\14\ See 31 CFR 1010.230(d)(1).
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Under this interim final rule, Treasury will further collect the
race, ethnicity, gender, sexual orientation, Middle Eastern or North
African ancestry, and veteran status with which the principal owners of
all businesses that participate in SSBCI transactions that occurred in
the preceding calendar year identify. These data elements also do not
affect the determination of SEDI-owned and controlled business status.
Treasury defines the term ``principal owner'' based on the ownership
prong of the definition of beneficial ownership under FinCEN's CDD
rule. Under this interim final rule, an individual is a principal owner
if the individual directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise, owns 25 percent
or more of the equity interests of the business.
The categories of responses related to gender under this interim
final rule are female, male, non-binary, an option for ``prefer to
self-describe'' with a write-in field that allows for identification in
a different manner, ``prefer not to respond,'' and that the business
did not answer. In considering this approach, Treasury reviewed the
following information. The Census Bureau's Household Pulse Survey
includes questions on sex and gender identity. One of these questions
asks, ``What sex were you assigned at birth, on your original birth
certificate?'' with responses including male or female. Another
question asks, ``Do you currently describe yourself as male, female, or
transgender?'' with responses including male, female, transgender, or
none of these.\15\ The Department of Defense P1 survey includes a
question that asks, ``Are you . . . ?'' with responses that include
male or female.\16\ The U.S. Department of Agriculture's Farm Producer
Study includes a question that asks ``How do you currently describe
yourself?'' with responses that include male, female, transgender, and
none of these, specify (with a space to write-in). The same study also
includes a question that asks, ``Was your sex recorded as male or
female at birth?'' with responses that include male or female.\17\
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\15\ U.S. Census Bureau, Phase 3.3 Household Pulse Survey,
available at <a href="https://www2.census.gov/programs-surveys/demo/technical-documentation/hhp/Phase3-3_Questionnaire_12_01_21_English.pdf">https://www2.census.gov/programs-surveys/demo/technical-documentation/hhp/Phase3-3_Questionnaire_12_01_21_English.pdf</a>.
\16\ Department of Defense, P1 Survey, available at <a href="https://www.reginfo.gov/public/do/DownloadDocument?objectID=112827001">https://www.reginfo.gov/public/do/DownloadDocument?objectID=112827001</a>.
\17\ U.S. Department of Agriculture, 2021 Farm Producer Study,
available at <a href="https://omb.report/icr/202109-0535-001/doc/114843800">https://omb.report/icr/202109-0535-001/doc/114843800</a>.
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The Consumer Financial Protection Bureau's proposed rule for the
collection of small business data asks for information on the sex of
the principal owner with the response options of female, male, I prefer
to self-identify as (with a space to write in), and I do not wish to
provide this information.\18\ Treasury's approach is most consistent
with the Consumer Financial Protection Bureau's proposed rule for
collection of small business data in that Treasury includes response
options of female, male, an option for ``prefer to self-describe'' with
a write-in field (which is similar to the Consumer Financial Protection
Bureau proposed rule's I prefer to self-identify as (with a space to
write in)), and an option for ``prefer not to respond.'' Treasury also
includes ``non-binary'' as a response in order to provide some
consistency with other Treasury coronavirus relief programs, such as
the Emergency Rental Assistance Program, which collects data on whether
award recipients are female, male, non-binary, declined to answer, or
data not collected.\19\ As businesses may elect to not choose any of
the aforementioned responses by leaving the responses blank, Treasury
also provides jurisdictions the option to report ``the business did not
answer.''
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\18\ Small Business Lending Data Collection Under the Equal
Credit Opportunity Act (Regulation B), 86 FR 56356, 56582 (Oct. 8,
2021).
\19\ For example, see the demographics reporting guidance of the
Emergency Rental Assistance Program, starting on page 16, available
at <a href="https://home.treasury.gov/system/files/136/ERA-Reporting-Guidance-v2.pdf">https://home.treasury.gov/system/files/136/ERA-Reporting-Guidance-v2.pdf</a>.
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In addition, Treasury will collect data regarding the sexual
orientation status with which principal owners identify with response
options of gay or lesbian; bisexual; straight, that is, not gay,
lesbian, or bisexual; something else; an option for the business to
choose that it prefers not to respond; or that the business did not
answer. Treasury is collecting this information related to sexual
orientation to better understand the demographics of the principal
owners of businesses receiving SSBCI funds. The collection of this
information is expected to provide valuable insights on SSBCI program
outcomes and small business ecosystems, along with the performance of
businesses owned by individuals who identify as lesbian, gay, or
bisexual.
In considering this approach, Treasury reviewed the following
information. The Census Bureau's Household Pulse Survey includes a
question on sexual orientation that asks, ``Which of the following best
represents how you think of yourself?'' with responses including gay or
lesbian; straight, that is not gay or lesbian; bisexual; something
else; or I don't know.\20\ The Department of Defense P1 Survey also
includes a question on
[[Page 13631]]
sexual orientation that asks, ``How do you describe your sexual
orientation? (Select all that apply.),'' with responses including
heterosexual or straight; lesbian or gay; bisexual, pansexual, or
queer; questioning, asexual, demisexual; other; and prefer not to
answer.\21\ The U.S. Department of Agriculture's Farm Producer Study
includes a question on sexual orientation that asks, ``Which of the
following best represents how you think of yourself?'' with responses
including gay or lesbian; straight, that is, not gay or lesbian;
bisexual; none of these, specify (with a space to write in); I am not
sure yet; and I don't know what this question means.\22\ Treasury's
approach is generally consistent with these approaches, and most
consistent with the Census Bureau's Household Pulse Survey, but
Treasury's reporting does not include a response indicating that the
individual does not know their sexual orientation, in part because
responses from individual small business owners are not required by
beneficiaries to receive funding. Treasury's decision to include an
option for ``prefer not to respond'' is consistent with the Department
of Defense's P1 Survey's option of ``prefer not to answer.'' As
businesses may elect to not choose any of the aforementioned responses
by leaving the responses blank, Treasury also provides jurisdictions
the option to report ``the business did not answer.''
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\20\ U.S. Census Bureau, Phase 3.3 Household Pulse Survey,
available at <a href="https://www2.census.gov/programs-surveys/demo/technical-documentation/hhp/Phase3-3_Questionnaire_12_01_21_English.pdf">https://www2.census.gov/programs-surveys/demo/technical-documentation/hhp/Phase3-3_Questionnaire_12_01_21_English.pdf</a>.
\21\ Department of Defense, P1 Survey, available at <a href="https://www.reginfo.gov/public/do/DownloadDocument?objectID=112827001">https://www.reginfo.gov/public/do/DownloadDocument?objectID=112827001</a>.
\22\ U.S. Department of Agriculture, 2021 Farm Producer Study,
available at <a href="https://omb.report/icr/202109-0535-001/doc/114843800">https://omb.report/icr/202109-0535-001/doc/114843800</a>.
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Treasury will collect information about race and ethnicity statuses
with which principal owners identify, consistent with the Office of
Management and Budget (OMB) Standards for the Classification of Federal
Data on Race and Ethnicity, which govern how questions about race and
ethnicity should be asked on all federal collections. There are two
ethnicity categories (Hispanic or Latino; and Not Hispanic or Latino)
and five minimum race categories (American Indian or Alaska Native;
Asian; Black or African American; Native Hawaiian or Other Pacific
Islander; and White).\23\ Further disaggregation is allowable. For
example, many Census Bureau surveys, as well as the Department of
Health and Human Services' (HHS) approach for collecting data for its
population studies, offer checkboxes for selected disaggregated
categories for Asian (i.e., Asian Indian; Chinese; Filipino; Japanese;
Korean; Vietnamese; and Other Asian) as well as for Native Hawaiian or
Other Pacific Islander (i.e., Native Hawaiian; Chamorro; Samoan; and
Other Pacific Islander).\24\ The 2020 Census offered respondents the
opportunity to, under each of the minimum categories, write in
additional specifics. Both minimum categories and disaggregated
categories of race and ethnicity are used in the data collection under
the Home Mortgage Disclosure Act (HMDA).\25\ The HMDA data collection
also permits individuals to answer with ``I do not wish to provide this
information.'' \26\
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\23\ Off. of Mgmt. & Budget, Revisions to the Standards for the
Classification of Federal Data on Race and Ethnicity, 62 FR 58782,
58782-90 (Oct. 30, 1997).
\24\ See Informational Copy of the U.S. 2020 Census, U.S. Census
Bureau, <a href="https://www2.census.gov/programs-surveys/decennial/2020/technical-documentation/questionnaires-and-instructions/questionnaires/2020-informational-questionnaire-english_DI-Q1.pdf">https://www2.census.gov/programs-surveys/decennial/2020/technical-documentation/questionnaires-and-instructions/questionnaires/2020-informational-questionnaire-english_DI-Q1.pdf</a>.
\25\ See 12 CFR part 1003, appendix B (Form and Instructions for
Data Collection on Ethnicity, Race, and Sex).
\26\ See id.
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Treasury believes that collecting only the OMB minimum categories
of race may mask the effects of SSBCI funds on businesses in
jurisdictions with a large population of one OMB minimum category of
race and multiple populations of categories of race, and therefore
hinder the understanding of program outcomes in these jurisdictions.
Thus, this interim final rule provides for the reporting of information
consistent with the OMB data collection standard, using the five
minimum race categories, in addition to disaggregating the Asian and
Native Hawaiian or Other Pacific Islander categories, which is
consistent with the approaches used by HHS and the Census Bureau's
American Community Survey. Treasury will collect information on
ethnicity consistent with the OMB data collection standard's minimum
ethnicity categories. For both the race and ethnicity information
collection, Treasury is providing a response option of ``prefer not to
respond,'' consistent with the HMDA data collection's ``I do not wish
to provide this information.'' As businesses may elect not to respond
by leaving the information request blank, Treasury also provides
jurisdictions the option to report ``the business did not answer.''
Treasury also believes that it is important to collect information
on those that identify as Middle Eastern or North African to understand
whether SSBCI funds are reaching businesses principally owned by such
individuals. Currently, people of Middle Eastern or North African
ancestry are categorized as White under OMB data collection standards.
Because Treasury must comply with these standards, Treasury is
collecting information about Middle Eastern or North African ancestry
through a separate ancestry question. Finally, this interim final rule
requires jurisdictions to submit the required information using the
format specified on Treasury's website.\27\
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\27\ See 12 U.S.C. 5706(c).
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We welcome comment on any aspect of this interim final rule.
III. Regulatory Analyses
Executive Orders 12866 and 13563
Executive Orders 12866 and 13563 direct agencies to assess 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, of
reducing costs, of harmonizing rules, and of promoting flexibility.
This interim final rule has been designated a ``significant regulatory
action,'' although not economically significant, under section 3(f) of
Executive Order 12866. As explained above, this interim final rule
institutes reporting requirements to implement, determine compliance
with, and understand the program outcomes of SSBCI, as reauthorized and
amended by ARPA. As these reporting requirements focus only on data
collection, this interim final rule is not economically significant.
However, we welcome comments on the economic impact of this interim
final rule. Particularly, Treasury welcomes comments and data on how
this interim final rule may substantively affect the SSBCI program.
Executive Order 13132
Executive Order 13132 (entitled Federalism) prohibits an agency
from publishing any rule that has federalism implications if this
interim final rule either imposes substantial, direct compliance costs
on state, local, and Tribal governments, and is not required by
statute, or preempts state law, unless the agency meets the
consultation and funding requirements of section 6 of the Executive
order. This interim final rule does not have federalism implications
within the meaning of the Executive order and does not impose
substantial, direct compliance costs on state, local,
[[Page 13632]]
and Tribal governments or preempt state law within the meaning of the
Executive order. The compliance costs are imposed on state, local, and
Tribal governments by the Small Business Jobs Act, as amended by ARPA.
Notwithstanding the above, Treasury has engaged in efforts to consult
with affected state, local, and Tribal government officials and
associations in the process of developing this interim final rule.
Pursuant to the requirements set forth in section 8(a) of Executive
Order 13132, Treasury certifies that it has complied with the
requirements of Executive Order 13132.
Paperwork Reduction Act, 44 U.S.C. Chapter 35
The Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521) (PRA)
states that no agency may conduct or sponsor, nor is the respondent
required to respond to, an information collection unless it displays a
currently valid OMB control number.
This interim final rule will add annual reporting requirements.
These collections will increase total annual burden by 13,050 hours:
The requirements are expected to take 500 jurisdictions 26.10 hours to
complete for an annual burden of 13,050 hours. Using the standard total
compensation for accountants and auditors, the estimated cost of this
information collection is $673,902.\28\
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\28\ See Bureau of Labor Statistics, U.S. Department of Labor,
Occupational Outlook Handbook, Accountants and Auditors, on the
internet at <a href="https://www.bls.gov/oes/current/oes132011.htm">https://www.bls.gov/oes/current/oes132011.htm</a>. Base wage
of $35.37/hour increased by 46 percent to account for fully loaded
employer cost of employee compensation (benefits, etc.) for a fully
loaded wage rate of $51.64. 13,050 multiplied by $51.64 equals
$673,902.
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The OMB Control Number for the SSBCI information collection is
1505-0227. Comments concerning the collections of information should be
directed to the Office of Recovery Programs, Department of the
Treasury, 1500 Pennsylvania Avenue NW, Washington, DC 20220. Treasury
welcomes comments on the compliance burdens for the information
collection under this interim final rule.
Congressional Review Act
The Administrator of OMB's Office of Information and Regulatory
Affairs (OIRA) has determined that this is not a major rule for
purposes of Subtitle E of the Small Business Regulatory Enforcement and
Fairness Act of 1996 (also known as the Congressional Review Act or
CRA) (5 U.S.C. 804(2) et seq.). Under the CRA, a major rule takes
effect 60 days after the rule is published in the Federal Register. 5
U.S.C. 801(a)(3).
Administrative Procedure Act
The Administrative Procedure Act (APA), 5 U.S.C. 551 et seq.,
generally requires public notice and an opportunity for comment before
a rule becomes effective. However, the APA provides that the
requirements of 5 U.S.C. 553 do not apply ``to the extent that there is
involved . . . a matter relating to agency . . . grants . . . or
contracts.'' This interim final rule is being issued for purposes of
implementation, compliance, and understanding the outcomes of the SSBCI
program. While SSBCI capital funds are not considered federal financial
assistance for the purposes of 31 U.S.C. subtitle V under the SSBCI
statute, the SSBCI program resembles other coronavirus relief programs
that Treasury is implementing. SSBCI capital funds will be disbursed to
eligible jurisdictions that apply in order to establish small business
lending and investment programs. This interim final rule sets forth the
``process necessary to maintain. . . eligibility for federal funds,''
id., as well as the ``method[s] by which [jurisdictions] can . . .
qualify for federal aid,'' and other ``integral part[s] of the grant
program,'' Center for Auto Safety v. Tiemann, 414 F. Supp. 215, 222
(D.D.C. 1976). Eligible jurisdictions must submit the annual
information required by this interim final rule in Treasury's
prescribed format to remain eligible for SSBCI capital funding.
Treasury will also use the reported data to determine whether
jurisdictions are eligible for the SEDI incentive allocation. As a
result, the requirements of 5 U.S.C. 553 do not apply.
The APA also provides an exception to notice-and-comment procedures
``when the agency for good cause finds (and incorporates the finding
and a brief statement of reasons therefor in the rules issued) that
notice and public procedure thereon are impracticable, unnecessary, or
contrary to the public interest.'' 5 U.S.C. 553(b)(3)(B); see also 5
U.S.C. 553(d)(3) (creating an exception to the requirement of a 30-day
delay before the effective date of a rule ``for good cause found and
published with the rule''). Even if 5 U.S.C. 553 applied, Treasury
would have good cause under sections 553(b)(3)(B) and 553(d)(3) for not
complying with these requirements under section 553. ARPA is a law
responding to a historic economic and public health emergency; it is
``extraordinary'' legislation about which ``both Congress and the
President articulated a profound sense of `urgency.' '' Petry v. Block,
737 F.2d 1193, 1200 (D.C. Cir. 1984). In addition, there is an urgent
need for jurisdictions to undertake the planning necessary to implement
their SSBCI capital programs. Developing these programs requires an
understanding of all the program requirements, including the data
collection and reporting requirements implemented in this interim final
rule. These requirements are immediately effective but may change when
the rule is finalized. Without having clarity on how the SSBCI program
requirements will interact with existing restrictions on lenders' and
other financial entities' availability to collect this data,
jurisdictions may have difficulty attracting lenders and other
financial entities to implement SSBCI programs, which could hinder
their efforts to deploy the allocation for SEDI-owned and controlled
businesses as Congress intended. Treasury understands that many
jurisdictions require immediate rules on which they can rely in order
to develop sound SSBCI programs. The statutory urgency and practical
necessity are good cause to forego the ordinary requirements of notice-
and-comment rulemaking.
Regulatory Flexibility Analysis
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 Administrative Procedure Act 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 under the APA are also exempt from the RFA requirements,
including the requirement to conduct a regulatory flexibility analysis.
Since this interim final rule is exempt from the notice and comment
requirements of the APA, Treasury is not required to conduct a
regulatory flexibility analysis.
List of subjects in 31 CFR Part 35
Executive compensation, Public health emergency, State and local
governments, Tribal governments.
For the reasons stated in the preamble, the Department of the
Treasury amends 31 CFR part 35 as follows:
PART 35--PANDEMIC RELIEF PROGRAMS
0
1.The authority citation for part 35 is revised to read as follows:
[[Page 13633]]
Authority: 42 U.S.C. 802(f); 42 U.S.C. 803(f); 31 U.S.C. 321;
12 U.S.C. 5701-5710; Division N, Title V, Subtitle B, Pub. L. 116-
260, 134 Stat. 1182 (12 U.S.C. 4703a); Section 104A, Pub. L. 103-
325, 108 Stat. 2160, as amended (12 U.S.C. 4701 et seq.); Pub. L.
117-2, 135 Stat. 4 (42 U.S.C. 802 et seq.).
0
2. Add subpart C to read as follows:
Subpart C--State Small Business Credit Initiative Small Business
Owners Demographics Data Collection
Sec.
35.26 Authority, scope, and purpose.
35.27 Definitions.
35.28 Annual report requirements.
35.29 Format.
Sec. 35.26 Authority, scope, and purpose.
(a) Authority and scope. This subpart is issued by the U.S.
Department of the Treasury pursuant to Sections 3007 and 3010 of the
Small Business Jobs Act of 2010, as amended by the American Rescue Plan
Act of 2021 (12 U.S.C. 5706, 5709).
(b) Purpose. The U.S. Department of the Treasury is collecting
demographics-related data regarding those who own or control businesses
that receive a loan, investment, other credit or equity support, or
technical assistance under the State Small Business Credit Initiative
for purposes of implementation, compliance, and understanding program
outcomes.
Sec. 35.27 Definitions.
In this subpart:
(a) Controlling influence over a business means having the power to
control, manage, or direct the business. A person is presumed to have a
controlling influence over a business if the person is a senior
executive officer or senior manager of the business (e.g., Chief
Executive Officer, Chief Financial Officer, Chief Operating Officer),
or any other individual who regularly performs similar functions.
(b) Jurisdiction means:
(1) One of the fifty states of the United States;
(2) The District of Columbia, the Commonwealth of Puerto Rico, the
Commonwealth of Northern Mariana Islands, Guam, American Samoa, and the
United States Virgin Islands;
(3) When designated by one of the fifty states of the United
States, a political subdivision of that state that the U.S. Department
of the Treasury determines has the capacity to participate in the State
Small Business Credit Initiative;
(4) Under the circumstances described in 12 U.S.C. 5703(d), a
municipality of one of the fifty states of the United States to which
the U.S. Department of the Treasury has given a special permission
under 12 U.S.C. 5703(d); and
(5) A Tribal government or a group of Tribal governments that
jointly apply to be approved by the U.S. Department of Treasury to
participate in the State Small Business Credit Initiative as a single
participating jurisdiction.
(c) Minority individual means a natural person who identifies as
American Indian or Alaska Native; Asian; Black or African American;
Native Hawaiian or Other Pacific Islander; or Hispanic or Latino/a; or
one or more than one of these groups.
(d) Minority-owned or controlled business means a business that:
(1) If privately owned, 51 percent or more is owned by minority
individuals;
(2) If publicly owned, 51 percent or more of the stock is owned by
minority individuals;
(3) In the case of a mutual institution, a majority of the board of
directors, account holders, and the community which the institution
services is predominantly comprised of minority individuals; or
(4) One or more minority individuals have the power to exercise a
controlling influence over the business.
(e) Participating jurisdiction means a jurisdiction that has been
approved by the U.S. Department of the Treasury for participation in
the State Small Business Credit Initiative.
(f) Principal owner of a business means a natural person who
directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise, owns 25 percent or more of
the equity interests of the business. If a trust owns, directly or
indirectly, through any contract, arrangement, understanding,
relationship or otherwise, 25 percent or more of the equity interests
of the business, the trustee is a principal owner.
(g) Socially and economically disadvantaged individual (SEDI)
demographics-related business means a business owned and controlled by
individuals who have had their access to credit on reasonable terms
diminished compared to others in comparable economic circumstances, due
to their:
(1) Membership of a group that has been subjected to racial or
ethnic prejudice or cultural bias within American society;
(2) Gender;
(3) Veteran status;
(4) Limited English proficiency;
(5) Disability;
(6) Long-term residence in an environment isolated from the
mainstream of American society;
(7) Membership of a federally or state-recognized Indian Tribe;
(8) Long-term residence in a rural community;
(9) Residence in a U.S. territory;
(10) Residence in a community undergoing economic transitions
(including communities impacted by the shift towards a net-zero economy
or deindustrialization); or
(11) Membership of an underserved community.
(i) Underserved communities are populations sharing a particular
characteristic, as well as geographic communities, that have been
systematically denied a full opportunity to participate in aspects of
economic, social, and civic life, as exemplified by the list in the
definition of equity in paragraph (g)(11)(ii) of this section; and
(ii) Equity is consistent and systematic fair, just, and impartial
treatment of all individuals, including individuals who belong to
underserved communities that have been denied such treatment, such as
Black, Latino, and Indigenous and Native American persons, Asian
Americans and Pacific Islanders, and other persons of color; members of
religious minorities; lesbian, gay, bisexual, transgender, and queer
(LGBTQ+) persons; persons with disabilities; persons who live in rural
areas; and persons otherwise adversely affected by persistent poverty
or inequality.
(12) For purposes of this paragraph (g), a business is ``owned and
controlled'' by applicable individuals:
(i) If privately owned, 51 percent or more is owned by such
individuals;
(ii) If publicly owned, 51 percent more or of the stock is owned by
such individuals; and
(ii) In the case of a mutual institution, if a majority of the
board of directors, account holders, and the community which the
institution services is predominantly comprised of such individuals.
(h) Veteran-owned or controlled business means a business that:
(1) If privately owned, 51 percent or more is owned by veterans;
(2) If publicly owned, 51 percent or more of the stock is owned by
veterans;
(3) In the case of a mutual institution, a majority of the board of
directors, account holders, and the community which the institution
services is predominantly comprised of veterans; or
(4) One or more individuals who are veterans have the power to
exercise a controlling influence over the business.
(i) Women-owned or controlled business means a business that:
(1) If privately owned, 51 percent or more is owned by females;
[[Page 13634]]
(2) If publicly owned, 51 percent or more of the stock is owned by
females;
(3) In the case of a mutual institution, a majority of the board of
directors, account holders, and the community which the institution
services is predominantly comprised of females; or
(4) One or more individuals who are females have the power to
exercise a controlling influence over the business.
Sec. 35.28 Annual report requirements.
By March 31 of each year beginning March 31, 2023, and ending with
the report to be submitted on March 31, 2028, each participating
jurisdiction shall submit to the U.S. Department of the Treasury an
annual report that includes, with respect to the previous calendar
year, the following data for each business that receives a loan,
investment, other credit or equity support, or technical assistance as
part of the State Small Business Credit Initiative. For each business
that receives a loan, investment, or other credit or equity support
under the State Small Business Credit Initiative, the reported data
shall be based on the ownership and control of the business immediately
before the consummation of such loan, investment, or other credit or
equity support-related transaction. For each business that receives
technical assistance under the State Small Business Credit Initiative,
the reported data shall be based on the ownership and control of the
business at the time it receives such technical assistance.
(a) Self-certified SEDI demographics-related business status. (1)
Indicate which one or more of the following categories apply: Self-
certified due to membership of a group that has been subjected to
racial or ethnic prejudice or cultural bias within American society;
self-certified due to gender; self-certified due to veteran status;
self-certified due to limited English proficiency; self-certified due
to disability; self-certified due to long-term residence in an
environment isolated from the mainstream of American society; self-
certified due to membership of a federally or state-recognized Indian
Tribe; self-certified due to long-term residence in a rural community;
self-certified due to residence in a U.S. territory; self-certified due
to residence in a community undergoing economic transitions (including
communities impacted by the shift towards a net-zero economy or
deindustrialization); self-certified due to membership of an
``underserved community'' as defined in Sec. 35.27(g)(11)(i); none of
the preceding categories are applicable; prefer not to respond; or the
business did not answer.
(2) The participating jurisdiction must permit each business to
identify all of the categories that apply in the definition of SEDI
demographics-related business, and the participating jurisdiction must
report to Treasury all categories identified by the business.
(b) Minority-owned or controlled business status. Indicate whether
the business is a minority-owned or controlled business. The
participating jurisdiction must indicate yes; no; prefer not to
respond; or that the business did not answer.
(c) Women-owned or controlled business status. Indicate whether the
business is a women-owned or controlled business. The participating
jurisdiction must indicate yes; no; prefer not to respond; or that the
business did not answer.
(d) Veteran-owned or controlled business status. Indicate whether
the business is a veteran-owned or controlled business. The
participating jurisdiction must indicate yes; no; prefer not to
respond; or that the business did not answer.
(e) Race of principal owners. (1) For each principal owner of the
business, indicate which one or more of the following race categories
(including the Office of Management and Budget's minimum categories and
the relevant disaggregated categories) with which the principal owner
identifies: American Indian or Alaska Native; Asian; Asian
disaggregated categories: Indian, Chinese, Filipino, Japanese, Korean,
Vietnamese, Asian (Other); Black or African American; Native Hawaiian
or Other Pacific Islander; Native Hawaiian or Other Pacific Islander
disaggregated categories: Guamanian or Chamorro, Native Hawaiian,
Samoan, Pacific Islander (Other); White; prefer not to respond; or that
the business did not answer.
(2) The participating jurisdiction must permit each business to
identify all of the Office of Management and Budget's minimum
categories and disaggregated categories in paragraph (e)(1) of this
section with which each principal owner of the business identifies, and
the participating jurisdiction must report to Treasury all categories
identified by the business.
(f) Ethnicity of principal owners. For each principal owner of the
business, indicate which of the following ethnicity categories the
principal owner identifies with: Hispanic or Latino/a; not Hispanic or
Latino/a; prefer not to respond; or that the business did not answer.
(g) Middle Eastern or North African Ancestry of principal owners.
For each principal owner of the business, indicate which of the
following ancestry categories the principal owner identifies with:
Middle Eastern or North African; not Middle Eastern or North African;
prefer not to respond; or that the business did not answer.
(h) Gender of principal owners. For each principal owner of the
business, indicate which of the following gender categories the
principal owner identifies with: Female; male; nonbinary; prefer to
self-describe, prefer not to respond; or that the business did not
answer. If the ``prefer to self-describe'' option is chosen, the
participating jurisdiction must provide an option for the business to
write in the gender and must report what the business writes in.
(i) Sexual orientation of principal owners. For each principal
owner of the business, indicate which of the following sexual
orientation categories the principal owner identifies with: Gay or
lesbian; bisexual; straight, that is, not gay, lesbian, or bisexual;
something else; prefer not to respond; or that the business did not
answer.
(j) Veteran status of principal owners. For each principal owner of
the business, indicate which of the following categories the principal
owner identifies with: Veteran; non-veteran; prefer not to respond; or
that the business did not answer.
Sec. 35.29 Format.
Participating jurisdictions must submit the information required
under Sec. 35.28 using the formats specified from time to time on the
U.S. Department of the Treasury's website.
Jacob Leibenluft,
Chief Recovery Officer.
[FR Doc. 2022-04843 Filed 3-9-22; 8:45 am]
BILLING CODE P
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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.