Federal Register / Vol. 76, No. 12 / Wednesday, January 19, 2011 / Rules and Regulations 3017 

regulatory changes. Moreover, these 

regulatory changes do not impose 

substantial direct compliance costs on 

Indian tribal governments. Accordingly, 

the Department has determined that 

advance consultation with Tribes is not 

required for this rulemaking. In the 

future if the Department publishes 

additional directives or guidance on 

how to implement this regulation in the 

Forest Service Manual or Forest Service 

Handbook, the Department will consult 

with Tribes prior to its publication. At 

this time, the Department does not 

intend to publish additional guidance 

on how to implement this regulation. 

Energy Effects 

The Department has reviewed this 

final rule under E.O. 13211, Actions 

Concerning Regulations That 

Significantly Affect Energy Supply, 

Distribution, or Use. The Department 

has determined that this final rule does 

not constitute a significant energy action 

as defined in the E.O. 

Unfunded Mandates 

Pursuant to Title II of the Unfunded 

Mandates Reform Act of 1995 (2 U.S.C. 

1531–1538), the Department has 

assessed the effects of this final rule on 

State, local, and Tribal governments and 

the private sector. This final rule will 

not compel the expenditure of $100 

million or more by any State, local, or 

Tribal government or anyone in the 

private sector. Therefore, a statement 

under section 202 of the act is not 

required. 

Controlling Paperwork Burdens on the 

Public 

This final rule does not contain any 

recordkeeping or reporting requirements 

or other information collection 

requirements as defined in 5 CFR part 

1320 that are not already required by 

law or not already approved for use. 

Accordingly, the review provisions of 

the Paperwork Reduction Act of 1995 

(44 U.S.C. 3501 et seq.) and its 

implementing regulations at 5 CFR part 

1320 do not apply. 

Text of the Final Rule 

List of Subjects in 36 CFR Part 261 

Crime, Law enforcement, National 

forests. 

For the reasons set forth in the 

preamble, part 261 of title 36 of the 

Code of Federal Regulations is amended 

as follows: 

PART 261—PROHIBITIONS 

■ 1. The authority citation for part 261 

continues to read as follows: 

Authority: 7 U.S.C. 1011(f), 16 U.S.C. 472, 

551, 620(f), 1133(c), (d)(1), 1246(i). 

Subpart A—General Prohibitions 

■ 2. In § 261.2, add definitions for 

Indian tribe and traditional and cultural 

purpose in alphabetical order to read as 

follows: 

§ 261.2 Definitions. 

* * * * * 

Indian tribe means any Indian or 

Alaska Native tribe, band, nation, 

pueblo, village, or other community that 

is included on a list published by the 

Secretary of the Interior under section 

104 of the Federally Recognized Indian 

Tribe List Act of 1994 (25 U.S.C. 

479a–1). 

* * * * * 

Traditional and cultural purpose 

means, with respect to a definable use, 

area, or practice, that it is identified by 

an Indian tribe as traditional or cultural 

because of its long-established 

significance or ceremonial nature for the 

Indian tribe. 

* * * * * 

Subpart B—Prohibitions in Areas 

Designated by Order 

■ 3. Amend § 261.53 by adding 

paragraph (g) to read as follows: 

§ 261.53 Special closures. 

* * * * * 

(g) The privacy of tribal activities for 

traditional and cultural purposes. 

Closure to protect the privacy of tribal 

activities for traditional and cultural 

purposes must be requested by an 

Indian tribe; is subject to approval by 

the Forest Service; shall be temporary; 

and shall affect the smallest practicable 

area for the minimum period necessary 

for activities of the requesting Indian 

tribe. 

Dated: January 11, 2011. 

Jay Jensen, 

Deputy Under Secretary, NRE. 

[FR Doc. 2011–937 Filed 1–18–11; 8:45 am] 

BILLING CODE 3410–11–P 

DEPARTMENT OF VETERANS 

AFFAIRS 

38 CFR Part 74 

RIN 2900–AM78 

VA Veteran-Owned Small Business 

Verification Guidelines 

AGENCY: Department of Veterans Affairs. 

ACTION: Final rule. 

SUMMARY: This document affirms as 

final, with changes, a final rule with 

request for comments that implemented 

portions of the Veterans Benefits, Health 

Care, and Information Technology Act 

of 2006. This law requires the 

Department of Veterans Affairs (VA) to 

verify ownership and control of veteranowned small businesses, including 

service-disabled veteran-owned small 

businesses. This final rule rescinds the 

requirement that eligible owners work 

full-time in the business for which they 

have applied for acceptance in the 

Verification Program and that limits 

participants to a single business. It 

formally changes the time period for 

issuance of reconsideration decisions 

from 30 to 60 days and changes the 

distribution of profits for limited 

liability companies and employee stock 

ownership plans. 

DATES: Effective Date: This final rule is 

effective February 18, 2011. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Gail Wegner, Deputy Director, Center for 

Veterans Enterprise (00VE), Department 

of Veterans Affairs, 810 Vermont Ave., 

NW., Washington, DC 20420, phone 

(202) 303–3260 x5239. 

SUPPLEMENTARY INFORMATION: In a final 

rule with request for comments 

published in the Federal Register on 

February 8, 2010, (75 FR 6098), we 

revised 38 CFR part 74 setting forth a 

mechanism for verifying ownership and 

control of veteran-owned small 

businesses (VOSBs), including servicedisabled veteran-owned small 

businesses (SDVOSBs). We solicited 

comments on the following new interim 

final requirements: Requiring eligible 

owners work full-time in the business 

for which they have applied for 

acceptance in the VOSB or SDVOSB 

Verification Program, changing the time 

period for issuance of reconsideration 

decisions from 30 to 60 days, and 

changing the distribution of profits for 

limited liability companies and 

employee stock ownership plans. We 

provided a 30-day comment period 

which ended on March 10, 2010. We 

received more than 100 comments on 

the interim final requirements. The 

issues raised in the comments are 

discussed below. Based upon the 

rationale set forth in this document, we 

are rescinding the interim final 

provisions that require owners to work 

full-time in the business for which they 

have applied for acceptance in the 

Verification Program and which limit 

participants to a single business. We are 

also formally changing the time period 

for issuance of reconsideration 

decisions from 30 to 60 days and 

changing the distribution of profits for 

limited liability companies (LLC) and 


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3018 Federal Register / Vol. 76, No. 12 / Wednesday, January 19, 2011 / Rules and Regulations 

employee stock ownership plans 

(ESOP). 

Comments were solicited on the 

following aspects of the rule: 

Section 74.3(d), Profits and 

Distributions 

We received several comments on the 

additional requirement that an eligible 

individual’s ability to share in the 

profits of a concern should be 

commensurate with the extent of his/her 

ownership interest in that concern and 

on the revised requirement for the 

evaluation of profits and distributions to 

determine ownership interest in ESOPs 

and LLCs. We are making a minor 

clarifying edit in § 74.3(d)(1) to change 

the word ‘‘concern’’ to ‘‘or participant’’ 

resulting in ‘‘applicant or participant’’ to 

be consistent with prior terminology in 

§ 74.3. 

1. Numerous commenters suggested 

adding text to state that the VOSB 

venture of any VOSB joint venture must 

receive 51 percent of the profits of the 

joint venture. We agree with this 

suggestion and have modified the rule 

accordingly. This change aligns VA’s 

rule with the provisions of 13 CFR part 

125 which governs, in part, the profit 

requirements of joint ventures in the 

government-wide SDVOSB program. 

The subparagraphs have been 

renumbered and this text, ‘‘[a]t least 51 

percent of the net profits earned by a 

joint venture in which the applicant or 

participant is the lead concern,’’ is 

added to § 74.3(d)(2). 

2. Numerous commenters strongly 

recommended deleting 38 CFR 

74.3(d)(4) stating that the subsection 

was ‘‘badly drafted’’ and ‘‘meaningless.’’ 

We disagree and no changes will be 

made based on these comments. This 

text reads ‘‘[a]n eligible individual’s 

ability to share in the profits of the 

concern should be commensurate with 

the extent of his/her ownership interest 

in that concern.’’ VA maintains that real 

evidence of ownership is demonstrated 

where the owner has the right to receive 

a share of profits equivalent to his/her 

ownership interest in the concern; 

otherwise, that ownership interest lacks 

materiality. For example, if an owner 

had a 51 percent ownership interest but 

was only entitled to 1 percent of the 

profits, the owner’s ownership interest 

is rendered meaningless. However, in 

the renumbered text, this language 

appears in § 74.3(d)(5). 

3. One commenter opposed the text 

that ‘‘[a]n eligible individual’s ability to 

share in the profits of the concern 

should be commensurate with the 

extent of his/her ownership interest in 

that concern,’’ saying it is not 

envisioned by the law and the 

requirement that the owner be the 

highest compensated creates an unfair 

management burden in recruiting the 

best talent. We will not make any 

changes based upon this comment. The 

commenter’s concerns are unfounded 

because this text deals solely with the 

issue of ownership of the concern and 

the rule already allows for exceptions to 

the requirement that the owner be the 

highest compensated employee. 

Currently, § 74.4(g)(3) establishes that 

‘‘[t]he highest ranking officer may elect 

to take a lower salary than a non-veteran 

only upon demonstrating that it helps 

the applicant or participant.’’ Therefore, 

if taking a lower salary is necessary for 

maintaining competitiveness, the owner 

can do so without risking verified 

status. 

4. One commenter replied ‘‘[t]his is a 

welcome change for veteran-owned 

ESOP’s. However, the language appears 

to exclude 100 percent veteran-owned 

ESOP’s; i.e., there must be some 

quantity of ‘outstanding’ non-ESOP 

stock that is owned by veterans. What 

if veterans owned only their portion of 

the ESOP stock? Could the business 

qualify as VOSB or SDVOSB in that 

event?’’ We will not make any changes 

based upon this comment because 

§ 74.3(a) addresses this matter. If 100 

percent of the stock is veteran-owned in 

an ESOP, then there is no issue, as the 

business is still owned by a veteran. 

Section 74.4(c)(1), Single Business; FullTime Control 

VA received several comments 

concerning the single business and fulltime control requirements. A few 

commenters opposed the requirement to 

have a single business participating in 

the program at one time, with the 

exception of joint-ventures. Commenters 

also opposed the requirement for the 

eligible owner to work full-time in the 

business. We agree and have reinstated 

the text of the Interim Final Rule 

published in the Federal Register on 

May 19, 2008 (73 FR 29024), that ‘‘[a]n 

applicant or participant must be 

controlled by one or more veterans or 

service-disabled veterans who possess 

requisite management capabilities. 

Owners need not work full-time but 

must show sustained and significant 

time invested in the business’’ with the 

addition of a requirement for an owner 

to submit a written statement 

demonstrating that outside employment 

activities will not have a significant 

impact on the owner’s ability to manage 

and control the applicant concern. We 

include an exception for applications 

from joint-ventures from this written 

statement requirement because joint 

ventures as defined by 38 CFR 74.1 are 

business entities created for single, 

specific business ventures for joint 

profit and not created for conducting 

business on a permanent basis. 

Accordingly, the regulation permits a 

veteran to maintain its primary business 

operation for general business and still 

create a joint venture for a specific 

project without losing its veteran-owned 

small business status. Therefore, in 

these circumstances, VA acknowledges 

that the veteran owner can have its 

regular business operation and a joint 

venture without affecting its ability to 

manage both at the same time. To 

maintain the requirement that owners 

must work full-time in the business 

ignores some factors that greatly affect 

today’s business climate and put an 

unnecessary burden on certain business 

owners who need to spread their time 

between several different projects or 

occupations. The additional 

requirement of a written statement 

demonstrating that the outside 

employment activities will not have a 

significant impact on the owner’s ability 

to manage and control the applicant 

concern will allow VA to ensure that the 

business seeking verification is still 

truly under the control of the veteran 

owner. In addition, VA has deleted the 

definition of ‘‘full-time’’ from § 74.1. 

Single Business Requirement Related 

Comments 

1. Numerous commenters opposed the 

text that ‘‘an eligible owner may only 

have one business participating in the 

Verification Program at one time’’ 

because they interpreted it as limiting 

joint ventures. One commenter 

explained that such arrangements are 

‘‘necessary due to the tight economy, 

procurement changes and lower 

government spending.’’ Several 

commenters supported a clarification 

for the regulation to state that eligible 

owners of businesses enrolled in the 

Verification Program may also have 

additional joint venture agreements that 

participate in the program. We will not 

make any changes based upon these 

comments because the current rule 

already permits joint ventures in 

addition to a participant’s primary 

business. 

2. Numerous commenters opposed 

participation by a single business as 

more stringent than and inconsistent 

with other Federal small business 

programs. An additional commenter 

noted that the text limiting eligible 

owners to only one business in the 

Verification Program ‘‘appears to run 

contrary to White House policy 

statements in support of small business’’ 

and ‘‘would stifle job creation and 

economic development.’’ We agree that 


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Federal Register / Vol. 76, No. 12 / Wednesday, January 19, 2011 / Rules and Regulations 3019 

restriction of only one business 

participant may have the unintended 

effect suggested by the commenters. 

Accordingly, the rule has been modified 

to allow more than one VOSB 

participant so long as the veteran can 

demonstrate the requisite requirements 

of ownership and control. 

3. Numerous commenters expressed 

that limiting eligibility to a single 

business is harmful to start-up 

businesses. We agree with the 

commenters. The rule has been 

modified to return to the original text 

that ‘‘[a]n applicant or participant must 

be controlled by one or more veterans or 

service-disabled veterans who possess 

requisite management capabilities. 

Owners need not work full-time but 

must show sustained and significant 

time invested in the business.’’ This will 

allow owners of start up businesses to 

maintain previous businesses while the 

new venture solidifies itself in the 

business world. 

4. Numerous commenters noted that 

for tax and other considerations 

establishing multiple businesses is 

beneficial. Other commenters noted that 

many businesses set up separate entities 

to manage liability by spreading risk 

among other businesses. The 

commenters requested the rule be 

changed to reflect this. We agree with 

the commenters’ suggestions, and the 

rule has been modified to return to the 

original text that ‘‘[a]n applicant or 

participant must be controlled by one or 

more veterans or service-disabled 

veterans who possess requisite 

management capabilities. Owners need 

not work full-time but must show 

sustained and significant time invested 

in the business.’’ This will allow owners 

to maintain multiple businesses in the 

database and eliminate any unnecessary 

burdens on these owners with regard to 

taxes, liability and other similar 

considerations. 

5. Numerous commenters observed 

that the text limiting participants in the 

Verification Program to one business 

has no foundation in law and that there 

is no compelling reason to limit 

participation to a single concern. The 

rule has been modified to return to the 

original text that ‘‘[a]n applicant or 

participant must be controlled by one or 

more veterans or service-disabled 

veterans who possess requisite 

management capabilities. Owners need 

not work full-time but must show 

sustained and significant time invested 

in the business.’’ The original text does 

not include the limitation to one 

business participant. Our concern in 

proposing to limit participants to one 

business in the Verification Program 

was for the integrity of the program as 

it was viewed as difficult for an owner 

to comply with the control requirements 

of § 74.4 if the veteran had multiple 

businesses. However, we realize that 

this restriction would have unintended 

effects and may be harmful to start-up 

businesses where the veteran may need 

to control an ongoing concern while 

creating and growing a start-up concern. 

6. Numerous commenters noted that 

single business participation restricts 

business growth and limits participation 

in global markets. We agree with these 

commenters. The rule has been 

modified to return to the original text 

that ‘‘[a]n applicant or participant must 

be controlled by one or more veterans or 

service-disabled veterans who possess 

requisite management capabilities. 

Owners need not work full-time but 

must show sustained and significant 

time invested in the business.’’ This 

eliminates the single business 

restriction and allows more flexibility 

for the owners to continue to grow their 

business and participate in the global 

marketplace. 

7. Several commenters expressed that 

the single business restriction is 

discriminatory in that it is based on the 

belief that a veteran lacks the capability 

and intelligence to manage more than 

one business at a time. We disagree with 

this comment as the proposed rule was 

not based on this belief. Due to other 

comments, however, the rule has been 

modified to return to the original text 

that ‘‘[a]n applicant or participant must 

be controlled by one or more veterans or 

service-disabled veterans who possess 

requisite management capabilities. 

Owners need not work full-time but 

must show sustained and significant 

time invested in the business.’’ This 

addresses the concern of the commenter 

by allowing for veteran owners to 

maintain more than one business in the 

Verification Program. Our intention was 

not to criticize the management 

capabilities of veterans. In processing 

verification applications, we have 

observed that it has been difficult for an 

applicant to demonstrate how it can 

control, as addressed in § 74.4, two or 

more businesses at the same time. 

However, we find that it was unfair, not 

discriminatory, to preclude every 

applicant from attempting to 

demonstrate that it can control more 

than one business. 

8. One commenter suggested that the 

text be revised to require that ‘‘an 

eligible owner have no more than two 

businesses in the program at one time 

and must work full-time in the 

businesses.’’ This comment is not 

accepted as, based upon the majority of 

comments received, the rule has been 

revised to eliminate the single business 

requirement and return to the original 

text that ‘‘[a]n applicant or participant 

must be controlled by one or more 

veterans or service-disabled veterans 

who possess requisite management 

capabilities. Owners need not work fulltime but must show sustained and 

significant time invested in the 

business.’’ 

9. One commenter expressed no 

opposition to the single business 

requirement, stating a belief that there is 

widespread abuse in the set-aside 

program. This commenter suggested that 

the wording is not specific to oversight 

agency responsibilities for enforcement. 

We disagree with this comment. VA has 

the responsibility for verifying the 

applicants in accordance with this rule. 

The rule will require that applicants 

submitting more than one business for 

verification must submit a written 

statement demonstrating that the 

outside employment activities will not 

have a significant impact on the owner’s 

ability to manage and control the 

applicant concern. This will assist VA 

in ensuring that applicants fully comply 

with the control requirements of § 74.4 

and avoid abuse and fraud in the setaside program referenced by the 

commenter. 

10. One commenter proposed that all 

veteran-owned businesses be eligible for 

the VOSB Verification Program. We 

disagree with this comment as the 

statute which governs the verification 

process is specific to the Department of 

Veterans Affairs and to veteran-owned 

small businesses, not all veteran-owned 

business, which would include large 

veteran-owned businesses not covered 

by the statute. 

11. One commenter offered alternative 

language, ‘‘With the exception of jointventure agreements, an eligible owner 

may have only one business 

participating in the Veterans First 

Contracting Program at one time and 

must work full-time in the business as 

defined in 38 CFR Part 74.1.’’ We 

disagree with this comment, as it could 

be misconstrued to restrict an owner 

from performing work under more than 

one set-aside award at a single time. In 

addition, the single business 

requirement has been deleted and VA 

has returned to the original text that 

‘‘[a]n applicant or participant must be 

controlled by one or more veterans or 

service-disabled veterans who possess 

requisite management capabilities. 

Owners need not work full-time but 

must show sustained and significant 

time invested in the business.’’ 

12. Several commenters suggested 

that the rule be revised to acknowledge 

that owners may operate from multiple 

locations using electronic tools to 


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3020 Federal Register / Vol. 76, No. 12 / Wednesday, January 19, 2011 / Rules and Regulations 

effectively control remote operations 

and other businesses. We agree with this 

comment. The single business and fulltime requirements were overly 

restrictive as they failed to take into 

account the ability of certain veteran 

owners in certain situations using 

modern, electronic tools, to effectively 

run one or multiple businesses without 

dedicating the amount of time 

prescribed by the full-time requirement. 

The rule has been revised to eliminate 

the single business and full-time 

requirements and return to the original 

text that ‘‘[a]n applicant or participant 

must be controlled by one or more 

veterans or service-disabled veterans 

who possess requisite management 

capabilities. Owners need not work fulltime but must show sustained and 

significant time invested in the 

business.’’ 

13. One commenter stated that certain 

professions require teaming, expressing 

the opinion that the rule prohibits such 

arrangements. We disagree with this 

comment. The current rule already 

permits joint ventures in addition to a 

participant’s primary business. 

14. One commenter noted that some 

state programs use the Verification 

Program and that limiting joint-ventures 

would be harmful to owners in those 

programs. We disagree with this 

comment, as § 74.4(c)(1) permits 

participants to enter into joint-venture 

agreements. 

15. A few commenters opposed the 

single business requirement but 

suggested that additional businesses 

must be in different business lines 

(industries). We do not agree with this 

comment. The single business 

requirement has been removed and the 

original text that ‘‘[a]n applicant or 

participant must be controlled by one or 

more veterans or service-disabled 

veterans who possess requisite 

management capabilities. Owners need 

not work full-time but must show 

sustained and significant time invested 

in the business’’ has been restored. The 

single business requirement placed an 

unfair burden on veteran owners by 

restricting them to just one business. VA 

will consider the merits of each 

application on an individual basis 

without regard for the industry in which 

a veteran’s other business may be. 

16. One commenter opposed the 

single business requirement but 

suggested that additional businesses 

‘‘must be in the same or closely related 

industries.’’ Another commenter 

suggested that multiple businesses in 

the same or similar industry should be 

considered a single entity, and cited the 

SBA 8(a) program as precedent. That 

program does not allow an owner to 

have more than one business in the 

same or similar industry. We disagree 

with this comment. The single business 

requirement placed an unfair burden on 

veteran owners by restricting them to 

just one business. Similarly, it would be 

an undue burden to limit these owners 

to just one industry. VA will consider 

the merits of each application, on an 

individual basis, without regard for the 

industry in which a veteran’s other 

business is involved. The single 

business requirement has been removed 

and the original text that ‘‘[a]n applicant 

or participant must be controlled by one 

or more veterans or service-disabled 

veterans who possess requisite 

management capabilities. Owners need 

not work full-time but must show 

sustained and significant time invested 

in the business’’ has been added back 

into § 74.4(c)(1) to allow applicants to 

potentially have more than a single 

business in the Verification Program. 

17. Some commenters opposed the 

single business requirement saying that 

‘‘[t]here is nothing illegal about owning 

more than one company’’ and ‘‘many 

successful owners have more than one 

business at a time.’’ We agree with these 

commenters. The requirement put an 

unnecessary burden on veteran small 

business owners by restricting them to 

just one business. The rule has been 

modified to eliminate the single 

business requirement and returned to 

the original text that ‘‘[a]n applicant or 

participant must be controlled by one or 

more veterans or service-disabled 

veterans who possess requisite 

management capabilities. Owners need 

not work full-time but must show 

sustained and significant time invested 

in the business.’’ 

18. Some commenters expressed the 

opinion that the single business 

requirement would stifle 

entrepreneurship at a time when we 

need to create jobs and the concept is 

‘‘contrary to the American spirit and 

established precedent that owners 

sometimes need to start multiple 

businesses before one is successful.’’ We 

agree with these commenters. The single 

business requirement was removed 

because it was determined that it 

created an unnecessary burden on 

veteran-owned small businesses. The 

rule has been modified to eliminate the 

single business requirement and return 

to the original text that ‘‘[a]n applicant 

or participant must be controlled by one 

or more veterans or service-disabled 

veterans who possess requisite 

management capabilities. Owners need 

not work full-time but must show 

sustained and significant time invested 

in the business.’’ 

19. One commenter noted that the 

restriction is contrary to mentorship of 

new businesses and suggested that 

established owners join start-ups to offer 

support, funding and other assistance to 

the new owner(s). We agree with this 

comment. The single business 

requirement placed an undue burden on 

veteran owners by limiting their ability 

to participate in other businesses for 

purposes such as mentoring. Therefore, 

the rule has been modified to eliminate 

the single business requirement and 

return to the original text that ‘‘[a]n 

applicant or participant must be 

controlled by one or more veterans or 

service-disabled veterans who possess 

requisite management capabilities. 

Owners need not work full-time but 

must show sustained and significant 

time invested in the business.’’ 

20. Several commenters stated that if 

a veteran owns a small business and 

then organizes a joint venture, the 

veteran violates the second business 

rule. We disagree with these comments. 

The regulation provides that business 

owners can still form joint-ventures 

without violating the rule. In addition, 

the single business requirement has 

been removed. Therefore, no further 

change is necessary to address these 

commenters’ concerns. 

21. Several commenters noted that 

there should be no restrictions on the 

number of businesses a veteran can own 

as the drafted regulation does nothing to 

ensure the viability of VOSBs or 

SDVOSBs or curtail fraudulent VOSBs 

or SDVOSBs. We agree with these 

comments. The single business 

requirement put an undue burden on 

veteran business owners and did not 

serve to eliminate potential fraud within 

the program. Therefore, the requirement 

was removed and the section of 

regulation was restored to the original 

text that ‘‘[a]n applicant or participant 

must be controlled by one or more 

veterans or service-disabled veterans 

who possess requisite management 

capabilities. Owners need not work fulltime but must show sustained and 

significant time invested in the 

business.’’ 

22. A few commenters questioned 

what will happen to business owners 

who already have 2 or more VOSBs or 

SDVOSBs approved. They asked 

whether those businesses would be 

grandfathered into existing ownership. 

The single business requirement has 

been removed, and therefore, the 

concerns expressed by these 

commenters have been rendered moot. 

Full-Time Control Comments 

23. Numerous commenters suggested 

returning to the original text that ‘‘[a]n 


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Federal Register / Vol. 76, No. 12 / Wednesday, January 19, 2011 / Rules and Regulations 3021 

applicant or participant must be 

controlled by one or more veterans or 

service-disabled veterans who possess 

requisite management capabilities. 

Owners need not work full-time but 

must show sustained and significant 

time invested in the business.’’ We agree 

with the commenters’ suggestions. The 

full-time requirement placed an undue 

burden on veteran owners. We believe 

that a veteran owner can still maintain 

control and ownership of a business 

without meeting the full-time 

requirement. Therefore, the requirement 

has been removed and the rule has been 

modified to return to that original text. 

24. One commenter stated that the 

text assigns no value to the concepts of 

chain of command or span of control. 

We agree with the commenter. The fulltime requirement did not take into 

account the fact that some business 

owners are forced to delegate in order to 

keep up with other commitments and 

burdens. The rule has been modified to 

return to the original text that ‘‘[a]n 

applicant or participant must be 

controlled by one or more veterans or 

service-disabled veterans who possess 

requisite management capabilities. 

Owners need not work full-time but 

must show sustained and significant 

time invested in the business’’ in order 

to alleviate the commenter’s concerns. 

25. One respondent suggested that the 

rule acknowledge that new owners work 

multiple jobs to support their families 

and thus should recognize that full-time 

requirement is restrictive. The 

respondent suggested replacement text 

to read ‘‘an eligible owner may only 

have one business participating in the 

Verification Program at one time and 

must devote sufficient time to the 

business to maintain control as defined 

in § 74.1.’’ We agree with this comment, 

but it has been rendered moot as the 

rule has been revised to eliminate the 

full-time requirement and return to the 

original text that ‘‘[a]n applicant or 

participant must be controlled by one or 

more veterans or service-disabled 

veterans who possess requisite 

management capabilities. Owners need 

not work full-time but must show 

sustained and significant time invested 

in the business.’’ 

26. One commenter noted that IRS 

regulations precluded limited liability 

company members from being 

employees in their firm, and therefore, 

VA would have no way of verifying 

their working hours. This problem has 

been alleviated because the full-time 

requirement has been removed and the 

rule has been restored to its original text 

that ‘‘[a]n applicant or participant must 

be controlled by one or more veterans or 

service-disabled veterans who possess 

requisite management capabilities. 

Owners need not work full-time but 

must show sustained and significant 

time invested in the business.’’ 

27. One commenter stated that the 

full-time requirement does not take into 

account other work shifts performed by 

a veteran and recommended rewording 

to ‘‘[f]ull-time means working no less 

than 40 hours per week involved in the 

Day to Day management and/or 

Operations of the Business.’’ Several 

other commenters noted that small 

business owners do not have normal 

business hours and recommended the 

term ‘‘normal business hours for the 

industry.’’ The recommended rewording 

will not be necessary as the full-time 

requirement, as well as the stated 

definition of ‘‘full-time’’ has been 

removed and the rule has been restored 

to its original text that ‘‘[a]n applicant or 

participant must be controlled by one or 

more veterans or service-disabled 

veterans who possess requisite 

management capabilities. Owners need 

not work full-time but must show 

sustained and significant time invested 

in the business.’’ 

28. One commenter offered that he 

‘‘strongly support(s) the government’s 

efforts to ensure: (1) That veteran-owned 

small businesses are actually owned by 

veterans, and; (2) that the veteran owner 

must be actively involved in day-to-day 

operation of the firm.’’ By removing the 

full-time requirement, but adding the 

additional requirement of a written 

statement demonstrating that the 

outside employment activities will not 

have a significant impact on the owner’s 

ability to manage and control the 

applicant concern, VA will be able to 

ensure that the business seeking 

verification is still truly under the 

control of the veteran owner. 

29. Several commenters noted that the 

full-time requirement is discriminatory 

because it hinders organizations who do 

not operate between 9 a.m. and 5 p.m. 

Commenters also stated that the fulltime requirement hinders a veteran’s 

ability to attend to medical needs such 

as post traumatic stress disorder 

sessions. We agree with this comment. 

The full-time requirement has been 

removed and the rule has been restored 

to its original text that ‘‘[a]n applicant or 

participant must be controlled by one or 

more veterans or service-disabled 

veterans who possess requisite 

management capabilities. Owners need 

not work full-time but must show 

sustained and significant time invested 

in the business.’’ This should alleviate 

any unnecessary burdens placed on 

veteran owners by the full-time 

requirement. 

30. One commenter stated that the 

provision would preclude home-based 

businesses and prevent active duty 

service members from starting their 

business prior to leaving for active 

military service. We agree with this 

comment. The full-time requirement 

placed an undue burden on veteran 

small business owners. By removing the 

requirement and restoring the rule to its 

original text that ‘‘[a]n applicant or 

participant must be controlled by one or 

more veterans or service-disabled 

veterans who possess requisite 

management capabilities. Owners need 

not work full-time but must show 

sustained and significant time invested 

in the business,’’ the concerns of the 

commenter have been addressed. 

31. One commenter noted that VA 

failed to consider the impact of the fulltime rule in the context of multiple 

business entities. The commenter 

pointed out that many veterans buy 

stock or shares as investments in other 

veteran-owned businesses thereby 

making them owners in those entities. 

The regulation seems to prohibit such 

stock ownership in more than one 

verified business. The commenter also 

noted that the full-time requirement is 

contrary to the intent of 38 U.S.C. 

8127(l) which defines small business 

concern owned and controlled by 

veterans as ‘‘not less than 51 percent of 

which is owned by one or more 

veterans’’ and ‘‘the management and 

daily business operations of which are 

controlled by one or more veterans.’’ 

The commenter noted that Congress’ 

intent was that control of an eligible 

VOSB be shared with two or more 

veterans each contributing part of the 

time and effort necessary to manage and 

operate the business. We agree with 

these comments. The full-time 

requirement, coupled with the single 

business requirement placed an undue 

burden on veteran business owners who 

may have part ownership in several 

legitimate VOSBs or SDVOSBs. By 

removing the requirements and 

restoring the rule to its original text that 

‘‘[a]n applicant or participant must be 

controlled by one or more veterans or 

service-disabled veterans who possess 

requisite management capabilities. 

Owners need not work full-time but 

must show sustained and significant 

time invested in the business,’’ these 

concerns have been addressed. 

32. One commenter suggested that the 

regulation be amended to state ‘‘that 

when full-time work is not required due 

to lack of government business, then the 

owner/manager is not required to 

participate in the business full-time.’’ 

The full-time requirement has been 

removed and the rule restored to its 


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3022 Federal Register / Vol. 76, No. 12 / Wednesday, January 19, 2011 / Rules and Regulations 

original text that ‘‘[a]n applicant or 

participant must be controlled by one or 

more veterans or service-disabled 

veterans who possess requisite 

management capabilities. Owners need 

not work full-time but must show 

sustained and significant time invested 

in the business.’’ Therefore, the 

suggested amendment is unnecessary. 

Section 74.13(b), Can an applicant ask 

CVE to reconsider its initial decision to 

deny an application? 

VA sought comments on the merits of 

establishing a 60-day period for the 

Director, Center for Veterans Enterprise 

to issue a written decision on a request 

for reconsideration. We did not receive 

any comments within the scope of the 

request. Therefore, we have made no 

change to this rule. 

A number of additional comments 

were received which were beyond the 

scope of the request for comments, and, 

therefore, we will not make any changes 

based on those comments. 

Regulatory Flexibility Act 

This final rule would generally be 

small business neutral as it applies only 

to applying for verified status in the 

VetBiz.gov Vendor Information Pages 

(VIP) database. The overall impact of the 

final rule will be of benefit to small 

businesses owned by veterans or 

service-disabled veterans. VA estimates 

the cost to an individual business to be 

less than $100.00 for 70–75 percent of 

the businesses seeking verification, and 

the average cost to the entire population 

of veterans seeking to become verified is 

less than $325.00 on average. A related 

rule describes the effect that verified 

businesses will have in the 

Department’s acquisition regulation. 

This impact is discussed in the 

proposed rule modifying the VA 

Acquisition Regulation which was 

published in the Federal Register at 73 

FR 49141 on August 20, 2008. On this 

basis, the Secretary hereby certifies that 

the adoption of this final rule will not 

have a significant economic impact on 

a substantial number of small entities as 

they are defined in the Regulatory 

Flexibility Act, 5 U.S.C. 601–612. 

Therefore, under 5 U.S.C. 605(b), this 

regulation is exempt from the initial and 

final regulatory flexibility analysis 

requirements of sections 603 and 604. 

Executive Order 12866 

Executive Order 12866 directs 

agencies to assess all costs and benefits 

of available regulatory alternatives and, 

when regulation is necessary, to select 

regulatory approaches that maximize 

net benefits (including potential 

economic, environmental, public health 

and safety, and other advantages; 

distributive impacts; and equity). The 

Executive Order classifies a ‘‘significant 

regulatory action,’’ requiring review by 

the Office of Management and Budget 

(OMB) unless OMB waives such review, 

as any regulatory action that is likely to 

result in a rule that may: (1) Have an 

annual effect on the economy of $100 

million or more or adversely affect in a 

material way the economy, a sector of 

the economy, productivity, competition, 

jobs, the environment, public health or 

safety, or State, local, or tribal 

governments or communities; (2) create 

a serious inconsistency or otherwise 

interfere with an action taken or 

planned by another agency; (3) 

materially alter the budgetary impact of 

entitlements, grants, user fees, or loan 

programs or the rights and obligations of 

recipients thereof; or (4) raise novel 

legal or policy issues arising out of legal 

mandates, the President’s priorities, or 

the principles set forth in the Executive 

Order. 

The economic, interagency, 

budgetary, legal, and policy 

implications of this rule have been 

examined and it has been determined to 

be a significant regulatory action under 

the Executive Order. 

Unfunded Mandates 

The Unfunded Mandates Reform Act 

of 1995 requires, at 2 U.S.C. 1532, that 

agencies prepare an assessment of 

anticipated costs and benefits before 

issuing any rule that may result in the 

expenditure by State, local, and tribal 

governments, in the aggregate, or by the 

private sector, of $100 million or more 

(adjusted annually for inflation) in any 

given year. This rule would have no 

such effect on State, local, and tribal 

governments, or on the private sector. 

Paperwork Reduction Act 

This final rule contains provisions 

that constitute collections of 

information under the Paperwork 

Reduction Act (44 U.S.C. 3501–3521). 

OMB has approved these collections 

and has assigned control number 2900– 

0675. VA displays this control number 

under the applicable sections of the 

regulations in this final rule. OMB 

assigns control numbers to collections 

of information it approves. VA may not 

conduct or sponsor, and a person is not 

required to respond to, a collection of 

information unless it displays a 

currently valid OMB control number. 

Catalog of Federal Domestic Assistance 

This final rule affects the verification 

guidelines of veteran-owned small 

businesses, for which there is no Catalog 

of Federal Domestic Assistance program 

number. 

Signing Authority 

The Secretary of Veterans Affairs, or 

designee, approved this document and 

authorized the undersigned to sign and 

submit the document to the Office of the 

Federal Register for publication 

electronically as an official document of 

the Department of Veterans Affairs. John 

R. Gingrich, Chief of Staff, Department 

of Veterans Affairs, approved this 

document on November 16, 2010, for 

publication. 

List of Subjects in 38 CFR Part 74 

Administrative practice and 

procedures, Privacy, Reporting and 

recordkeeping requirements, Small 

business, Veteran, Veteran-owned small 

business, Verification. 

Dated: January 13, 2011. 

Robert C. McFetridge, 

Director, Regulations Policy and 

Management. 

Accordingly, VA amends 38 CFR part 

74 as follows: 

PART 74—VETERANS SMALL 

BUSINESS REGULATIONS 

■ 1. The authority citation for part 74 

continues to read as follows: 

Authority: 38 U.S.C. 501, 513, unless 

otherwise noted. 

§ 74.1 [Amended] 

■ 2. Amend § 74.1 by removing the 

definition of ‘‘Full-time’’. 

■ 3. Amend § 74.3 by revising 

paragraphs (d)(1), (2), (3) and (4) and by 

adding paragraph (d)(5) to read as 

follows: 

§ 74.3 Who does the Center for Veterans 

Enterprise (CVE) consider to own a Veteranowned small business? 

* * * * * 

(d) * * * 

(1) At least 51 percent of the annual 

distribution of profits paid to the 

owners of a corporate, partnership, or 

LLC applicant or participant; 

(2) At least 51 percent of the net 

profits earned by a joint venture in 

which the applicant or participant is the 

lead concern; 

(3) 100 percent of the value of each 

share of stock owned by them in the 

event that the stock is sold; and 

(4) At least 51 percent of the retained 

earnings of the concern and 100 percent 

of the unencumbered value of each 

share of stock owned in the event of 

dissolution of the corporation, 

partnership, or LLC. 

(5) An eligible individual’s ability to 

share in the profits of the concern 


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Federal Register / Vol. 76, No. 12 / Wednesday, January 19, 2011 / Rules and Regulations 3023 

should be commensurate with the 

extent of his/her ownership interest in 

that concern. 

* * * * * 

■ 4. Amend § 74.4 by revising paragraph 

(c)(1) to read as follows: 

§ 74.4 Who does CVE consider to control 

a veteran-owned small business? 

* * * * * 

(c)(1) An applicant or participant 

must be controlled by one or more 

veterans or service-disabled veterans 

who possess requisite management 

capabilities. Owners need not work fulltime but must show sustained and 

significant time invested in the 

business. An owner engaged in 

employment or management outside the 

applicant concern must submit a written 

statement supplemental to the 

application which demonstrates that 

such activities will not have a 

significant impact on the owner’s ability 

to manage and control the applicant 

concern. Applications from jointventures are exempt from the 

requirement to submit a supplemental 

written statement. 

* * * * * 

[FR Doc. 2011–983 Filed 1–18–11; 8:45 am] 

BILLING CODE 8320–01–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 52 

[EPA–R03–OAR–2008–0780; FRL–9251–8] 

Approval and Promulgation of Air 

Quality Implementation Plans; Virginia; 

Amendments to Existing Regulation 

Provisions Concerning Case-by-Case 

Reasonably Available Control 

Technology 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Final rule. 

SUMMARY: EPA is approving a State 

Implementation Plan (SIP) revision 

submitted by the Commonwealth of 

Virginia. This SIP revision consists of 

amendments to the Commonwealth’s 

existing regulations in order to clarify 

and recodify provisions covering caseby-case reasonably available control 

technology (RACT), as well as to add the 

1997 8-hour ozone national ambient air 

quality standard (NAAQS) RACT 

requirements to the Commonwealth’s 

regulations. This action is being taken 

under the Clean Air Act (CAA). 

DATES: Effective Date: This final rule is 

effective on February 18, 2011. 

ADDRESSES: EPA has established a 

docket for this action under Docket ID 

Number EPA–R03–OAR–2008–0780. All 

documents in the docket are listed in 

the http://www.regulations.gov Web 

site. Although listed in the electronic 

docket, some information is not publicly 

available, i.e., confidential business 

information (CBI) or other information 

whose disclosure is restricted by statute. 

Certain other material, such as 

copyrighted material, is not placed on 

the Internet and will be publicly 

available only in hard copy form. 

Publicly available docket materials are 

available either electronically through 

http://www.regulations.gov or in hard 

copy for public inspection during 

normal business hours at the Air 

Protection Division, U.S. Environmental 

Protection Agency, Region III, 1650 

Arch Street, Philadelphia, Pennsylvania 

19103. Copies of the State submittal are 

available at the Virginia Department of 

Environmental Quality, 629 East Main 

Street, Richmond, Virginia 23219. 

FOR FURTHER INFORMATION CONTACT: 

Gregory Becoat, (215) 814–2036, or by 

e-mail at becoat.gregory@epa.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background 

On November 3, 2009 (74 FR 56754), 

EPA published a notice of proposed 

rulemaking (NPR) for the 

Commonwealth of Virginia. The formal 

SIP revision was submitted by the 

Commonwealth of Virginia on 

September 8, 2008. The NPR proposed 

approval of the Virginia SIP revision 

that clarifies and recodifies provisions 

covering case-by-case RACT, as well as 

added the 1997 8-hour ozone standard 

RACT requirements to the 

Commonwealth’s regulations. EPA 

received no comments on the proposal 

to approve Virginia’s SIP revision. 

However, regulation 9VAC5–40–7420F. 

and G. incorrectly cross-referenced the 

Commonwealth’s Volatile Organic 

Compounds (VOC) regulations at 

9VAC5–40–7390, instead of its nitrogen 

oxides regulation at 9VAC5–40–7410. 

On September 27, 2010, Virginia 

submitted a correction to the regulation 

(Article 51 of 9VAC5–40, Existing 

Stationary Sources) that contains the 

requirements for making case-by-case 

RACT determinations. The SIP revision 

corrected the two typographic errors in 

order to correctly cross-reference 

regulation 9VAC5–40–7420F. and G. to 

the nitrogen oxides regulation at 

9VAC5–40–7410. 

II. Summary of SIP Revision 

The Commonwealth’s SIP revision 

consists of the following changes: 

1. Addition of 9VAC5 Chapter 40, 

Article 51—Emission Standards for 

Stationary Sources Subject to Case-byCase RACT Determinations, in order to 

separate the RACT specific 

requirements from the general process 

requirements of Article 4 of 9VAC5 

Chapter 40. 

2. Administrative wording changes to 

regulations 9VAC5–40–250A. and 

9VAC5–40–250B. 

3. Deletion of definition of 

‘‘Reasonably available control 

technology’’ in 9VAC5–40–250C. and 

addition of the other definitions in 

9VAC5–40–250C. to 9VAC5–40–7380 in 

Article 51 of 9VAC5 Chapter 40. 

4. Addition of the following 

definitions to regulation 9VAC5–40– 

7380C.—Terms defined: ‘‘Presumptive 

RACT,’’ ‘‘Theoretical potential to emit’’ 

and ‘‘Tpy.’’ 

5. All the definitions in regulation 

9VAC5–40–311B.3—Terms defined, are 

deleted and added to 9VAC5–40–7380C. 

in Article 51 of 9VAC5 Chapter 40. 

6. Repealed regulations 9VAC5–40– 

300—Standard for volatile organic 

compounds, 9VAC5–40–310—Standard 

for nitrogen oxides, and 9VAC5–40– 

311—Reasonably available control 

technology guidelines for stationary 

sources of nitrogen oxides, in Article 4 

of 9VAC5 Chapter 40 are replaced with 

9VAC5–40–7390—Standard for volatile 

organic compounds (one-hour 

standard), 9VAC5–40–7410—Standard 

for nitrogen oxides (one-hour ozone 

standard), and 9VAC5–40–7430— 

Presumptive reasonably available 

control technology guidelines for 

stationary sources of nitrogen oxides, 

respectively, in Article 51 of 9VAC5 

Chapter 40. 

7. Addition of the 1997 8-hour ozone 

standard requirements for RACT in 

regulations 9VAC5–40–7400—Standard 

for volatile organic compounds (eighthour ozone standard) and 9VAC5–40– 

7420—Standard for nitrogen oxides 

(eight-hour ozone standard). 

III. General Information Pertaining to 

SIP Submittals From the 

Commonwealth of Virginia 

In 1995, Virginia adopted legislation 

that provides, subject to certain 

conditions, for an environmental 

assessment (audit) ‘‘privilege’’ for 

voluntary compliance evaluations 

performed by a regulated entity. The 

legislation further addresses the relative 

burden of proof for parties either 

asserting the privilege or seeking 

disclosure of documents for which the 

privilege is claimed. Virginia’s 

legislation also provides, subject to 

certain conditions, for a penalty waiver 

for violations of environmental laws 

when a regulated entity discovers such 

violations pursuant to a voluntary 


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