Federal Register / Vol. 85, No. 167 / Thursday, August 27, 2020 / Rules and Regulations 52883 

the States, or on the distribution of 

power and responsibilities among the 

various layers of government. Therefore, 

SBA has determined that this rule has 

no federalism implications warranting 

preparation of a federalism assessment. 

Paperwork Reduction Act, 44 U.S.C. 

Chapter 35 

SBA has determined that this rule 

will not impose new or modify existing 

recordkeeping or reporting requirements 

under the Paperwork Reduction Act. 

Regulatory Flexibility Act (RFA) 

The Regulatory Flexibility Act (RFA) 

generally requires that when an agency 

issues a proposed rule, or a final rule 

pursuant to Section 553(b) of the APA 

or another law, the agency must prepare 

a regulatory flexibility analysis that 

meets the requirements of the RFA and 

publish such analysis in the Federal 

Register. 5 U.S.C. 603, 604. Specifically, 

the RFA normally requires agencies to 

describe the impact of a rulemaking on 

small entities by providing a regulatory 

impact analysis. Such analysis must 

address the consideration of regulatory 

options that would lessen the economic 

effect of the rule on small entities. The 

RFA defines a ‘‘small entity’’ as (1) a 

proprietary firm meeting the size 

standards of the Small Business 

Administration (SBA); (2) a nonprofit 

organization that is not dominant in its 

field; or (3) a small government 

jurisdiction with a population of less 

than 50,000. 5 U.S.C. 601(3)–(6). Except 

for such small government jurisdictions, 

neither State nor local governments are 

‘‘small entities.’’ Similarly, for purposes 

of the RFA, individual persons are not 

small entities. 

The requirement to conduct a 

regulatory impact analysis does not 

apply if the head of the agency ‘‘certifies 

that the rule will not, if promulgated, 

have a significant economic impact on 

a substantial number of small entities.’’ 

5 U.S.C. 605(b). The agency must, 

however, publish the certification in the 

Federal Register at the time of 

publication of the rule, ‘‘along with a 

statement providing the factual basis for 

such certification.’’ If the agency head 

has not waived the requirements for a 

regulatory flexibility analysis in 

accordance with the RFA’s waiver 

provision, and no other RFA exception 

applies, the agency must prepare the 

regulatory flexibility analysis and 

publish it in the Federal Register at the 

time of promulgation or, if the rule is 

promulgated in response to an 

emergency that makes timely 

compliance impracticable, within 180 

days of publication of the final rule. 5 

U.S.C. 604(a), 608(b). 

Rules that are exempt from notice and 

comment are also exempt from the RFA 

requirements, including conducting a 

regulatory flexibility analysis, when 

among other things the agency for good 

cause finds that notice and public 

procedure are impracticable, 

unnecessary, or contrary to the public 

interest. SBA Office of Advocacy guide: 

How to Comply with the Regulatory 

Flexibility Act, Ch.1. p.9. Accordingly, 

SBA is not required to conduct a 

regulatory flexibility analysis. 

Jovita Carranza, 

Administrator. 

[FR Doc. 2020–18940 Filed 8–25–20; 1:00 pm] 

BILLING CODE P 

SMALL BUSINESS ADMINISTRATION 

13 CFR Part 134 

[Docket Number SBA–2020–0042] 

RIN 3245–AH55 

Appeals of SBA Loan Review 

Decisions Under the Paycheck 

Protection Program 

AGENCY: U.S. Small Business 

Administration. 

ACTION: Interim final rule. 

SUMMARY: On April 2, 2020, the U.S. 

Small Business Administration (SBA) 

posted on its website an interim final 

rule relating to the implementation of 

sections 1102 and 1106 of the 

Coronavirus Aid, Relief, and Economic 

Security Act (CARES Act or the Act) 

(published in the Federal Register on 

April 15, 2020). Section 1102 of the Act 

temporarily adds a new product, titled 

the ‘‘Paycheck Protection Program,’’ to 

the U.S. Small Business 

Administration’s (SBA’s) 7(a) Loan 

Program. Subsequently, SBA issued a 

number of interim final rules 

implementing the Paycheck Protection 

Program (PPP). This interim final rule 

supplements the interim final rule on 

Loan Review Procedures and Related 

Borrower and Lender Responsibilities 

posted on SBA’s website on May 22, 

2020 (published on June 1, 2020, in the 

Federal Register), as revised by the 

interim final rule posted on SBA’s 

website on June 22, 2020, in order to 

inform PPP borrowers and lenders of the 

process for a PPP borrower to appeal 

certain SBA loan review decisions 

under the PPP to the SBA Office of 

Hearings and Appeals, and requests 

public comment. 

DATES: 

Effective date: This rule is effective 

August 25, 2020. 

Applicability date: This interim final 

rule applies to certain loan review 

decisions made by SBA under the 

Paycheck Protection Program. 

Comment date: Comments must be 

received on or before September 28, 

2020. 

ADDRESSES: You may submit comments, 

identified by number SBA–2020–0042 

through the Federal eRulemaking Portal: 

http://www.regulations.gov. Follow the 

instructions for submitting comments. 

SBA will post all comments on 

www.regulations.gov. If you wish to 

submit confidential business 

information (CBI) as defined in the User 

Notice at www.regulations.gov, please 

send an email to ppp-ifr@sba.gov. 

Highlight the information that you 

consider to be CBI and explain why you 

believe SBA should hold this 

information as confidential. SBA will 

review the information and make the 

final determination whether it will 

publish the information. 

FOR FURTHER INFORMATION CONTACT: A 

Call Center Representative at 833–572– 

0502, or the local SBA Field Office; the 

list of offices can be found at https://

www.sba.gov/tools/localassistance/ 

districtoffices. 

SUPPLEMENTARY INFORMATION: 

I. Background Information 

On March 13, 2020, President Trump 

declared the ongoing Coronavirus 

Disease 2019 (COVID–19) pandemic of 

sufficient severity and magnitude to 

warrant an emergency declaration for all 

States, territories, and the District of 

Columbia. With the COVID–19 

emergency, many small businesses 

nationwide are experiencing economic 

hardship as a direct result of the 

Federal, State, tribal, and local public 

health measures that have been taken to 

minimize the public’s exposure to the 

virus. These measures, some of which 

are government-mandated, have been 

implemented nationwide and include 

the closures of restaurants, bars, and 

gyms. In addition, based on the advice 

of public health officials, other 

measures, such as keeping a safe 

distance from others or even stay-athome orders, are being implemented, 

resulting in a dramatic decrease in 

economic activity as the public avoids 

malls, retail stores, and other 

businesses. 

On March 27, 2020, the President 

signed the Coronavirus Aid, Relief, and 

Economic Security Act (the CARES Act) 

(Pub. L. 116–136) to provide emergency 

assistance and health care response for 

individuals, families, and businesses 

affected by the coronavirus pandemic. 

The Small Business Administration 


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(SBA) received funding and authority 

through the CARES Act to modify 

existing loan programs and establish a 

new loan program to assist small 

businesses nationwide adversely 

impacted by the COVID–19 emergency. 

Section 1102 of the CARES Act 

temporarily permits SBA to guarantee 

100 percent of 7(a) loans under a new 

program titled the ‘‘Paycheck Protection 

Program’’ (PPP). Section 1106 of the 

CARES Act provides for forgiveness of 

up to the full principal amount of 

qualifying loans guaranteed under the 

PPP. 

On April 2, 2020, SBA posted its first 

PPP interim final rule (85 FR 20811) 

(the First Interim Final Rule). 

Subsequently, SBA issued a number of 

other interim final rules implementing 

the PPP. On April 24, 2020, the 

President signed the Paycheck 

Protection Program and Health Care 

Enhancement Act (Pub. L. 116–139), 

which provided additional funding and 

authority for the PPP. 

On May 22, 2020, SBA and Treasury 

posted an interim final rule on Loan 

Review Procedures and Related 

Borrower and Lender Responsibilities 

(85 FR 33010) (Loan Review Interim 

Final Rule (IFR)). The rule stated that 

SBA would be issuing a separate interim 

final rule addressing the process for 

appealing certain SBA loan review 

decisions under the PPP. On June 5, 

2020, the Paycheck Protection Program 

Flexibility Act of 2020 (Pub. L. 116–142) 

(Flexibility Act) was signed into law, 

amending the CARES Act. On June 22, 

2020, SBA and Treasury posted an 

interim final rule that in part revised the 

Loan Review IFR to incorporate the 

relevant Flexibility Act amendments, 

address revisions to the Loan 

Forgiveness Application (SBA Form 

3508), and include a new alternative 

Loan Forgiveness Application (SBA 

Form 3508EZ). On July 4, 2020, Public 

Law 116–147 was enacted, extending 

the authority for SBA to guarantee PPP 

loans to August 8, 2020. 

As described below, this interim final 

rule informs PPP borrowers and lenders 

of the process for a PPP borrower to 

appeal certain SBA loan review 

decisions under the PPP to the SBA 

Office of Hearings and Appeals (OHA) 

by establishing a new subpart L for 13 

CFR part 134, and requests public 

comment. 

II. Comments and Immediate Effective 

Date 

The intent of the CARES Act is that 

SBA provide relief to America’s small 

businesses expeditiously. This intent, 

along with the dramatic decrease in 

economic activity nationwide, provides 

good cause for SBA to dispense with the 

30-day delayed effective date provided 

in the Administrative Procedure Act. 

Specifically, it is critical to meet 

lenders’ and borrowers’ need for clarity 

concerning the OHA appeal process as 

rapidly as possible because SBA can 

review a PPP loan and make 

determinations as to a borrower’s 

eligibility at any time. This interim final 

rule supplements the previous 

regulation on the discrete issues related 

to SBA’s process for reviewing a 

borrower’s eligibility for a PPP loan, the 

PPP loan amount received, the use of 

the PPP loan proceeds and/or the PPP 

loan forgiveness amount claimed by the 

borrower. 

This interim final rule is effective 

without advance notice and public 

comment because section 1114 of the 

CARES Act authorizes SBA to issue 

regulations to implement title I of the 

CARES Act without regard to notice 

requirements. In addition, SBA has 

determined that there is good cause for 

dispensing with advance public notice 

and comment on the ground that it 

would be contrary to the public interest. 

Specifically, SBA has determined that 

advance notice and public comment 

would delay the ability of PPP 

borrowers to understand with certainty 

the process for appealing certain SBA 

loan review decisions under the PPP. 

This rule is being issued to allow for 

immediate implementation of the OHA 

appeal feature of this program. Although 

this interim final rule is effective 

immediately, comments are solicited 

from interested members of the public 

on all aspects of this interim final rule, 

including section III below. These 

comments must be submitted on or 

before September 28, 2020. SBA will 

consider these comments and the need 

for making any revisions as a result of 

these comments. 

III. Subpart L—Rules of Practice for 

Appeals of Certain SBA Loan Review 

Decisions Under the Paycheck 

Protection Program 

This interim final rule establishes a 

new subpart L for 13 CFR part 134, 

establishing rules of practice for appeals 

of certain SBA loan review decisions 

under the Paycheck Protection Program 

(PPP). 

Section 134.1201, Scope of rules in 

this subpart L, provides a process for 

appeal to OHA of certain SBA loan 

review decisions under the PPP and any 

other PPP matter referred to OHA by the 

Administrator. This subpart defines the 

term SBA loan review decision as an 

official written decision by SBA, after 

SBA completes a review of a PPP loan, 

that finds a borrower (1) was ineligible 

for a PPP loan; (2) was ineligible for the 

PPP loan amount received or used the 

PPP loan proceeds for unauthorized 

uses; (3) is ineligible for PPP loan 

forgiveness in the amount determined 

by the lender in its full or partial 

approval decision issued to SBA (except 

for the deduction of any Economic 

Injury Disaster Loan advance in 

accordance with section 1110(e)(6) of 

the CARES Act); and/or (4) is ineligible 

for PPP loan forgiveness in any amount 

when the lender has issued a full denial 

decision to SBA. 

For a PPP loan of any size, SBA may 

undertake a loan review at any time in 

SBA’s discretion, and this subpart L 

applies to loan review decisions made 

by SBA after SBA completes a review of 

a PPP loan as set forth in Part III.1 and 

Part III.2c. of the Loan Review IFR, as 

amended. Only final SBA loan review 

decisions (as defined in this rule) can be 

appealed to OHA; a PPP borrower 

cannot file an OHA appeal of any 

decision made by a lender concerning a 

PPP loan. A PPP borrower can request 

an SBA review of a lender decision to 

deny the borrower’s loan forgiveness 

application in full, in accordance with 

Part III.2.b. of the Loan Review IFR, as 

amended, but that request is for a 

review by SBA, not an OHA appeal. A 

borrower may exercise any other rights 

it has under applicable law against a 

PPP lender regarding a lender decision. 

In addition, this section sets forth 

other types of decisions and 

determinations that are not covered by 

this subpart L, and makes clear that 

subpart C of this part, Rules of Practice 

for Appeals From Size Determinations 

and NAICS Code Designations, is not 

applicable to appeals from SBA loan 

review decisions. Lastly, this section 

sets forth the specific provisions from 

subpart B of this part, OHA’s general 

Rules of Practice, that are applicable to 

this subpart L. Other provisions from 

subpart B of this part do not apply to 

this subpart L. Because a PPP borrower 

must begin making payments of 

principal and interest on the remaining 

balance of its PPP loan at the end of the 

loan payment deferral period or when 

SBA remits the loan forgiveness amount 

to the PPP lender (or notifies the lender 

that no loan forgiveness is allowed), an 

appeal by a PPP borrower of any SBA 

loan review decision does not extend 

the deferral period of the PPP loan. 

Additionally, if SBA remits to the 

lender the PPP loan forgiveness amount 

set forth in the decision issued by the 

lender to SBA (except for the deduction 

of any Economic Injury Disaster Loan 

advance), the borrower may not file an 

appeal with OHA, and the borrower 


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must begin repayment of any remaining 

balance of its PPP loan. 

Section 134.1202, The appeal 

petition, provides that an appeal 

petition must include the following 

information: (1) The basis for OHA’s 

jurisdiction, including, but not limited 

to, evidence that the appeal is timely 

filed in accordance with § 134.1204; (2) 

A copy of the SBA loan review decision 

that is being appealed, or a description 

of that decision if a copy is unavailable; 

(3) A full and specific statement as to 

why the SBA loan review decision is 

alleged to be erroneous, together with 

all factual information and legal 

arguments supporting the allegations; 

(4) The relief being sought; (5) Signed 

copies of payroll tax filings actually 

reported to the Internal Revenue Service 

(IRS), and State quarterly business and 

individual employee wage reporting and 

unemployment insurance tax filings 

actually reported to the relevant state, 

for the relevant periods of time, if not 

provided with the PPP Loan Forgiveness 

Application (SBA Form 3508, SBA 

Form 3508EZ, or lender’s equivalent), or 

an explanation as to why they are not 

relevant or not available; (6) Signed 

copies of applicable federal tax returns 

actually filed with the IRS with 

appropriate schedules (e.g., IRS Form 

1040 with Schedule C/F) documenting 

income for self-employed individuals or 

partners in a partnership, if not 

provided with the PPP Borrower 

Application Form (SBA Form 2483 or 

lender’s equivalent), or an explanation 

as to why they are not relevant or not 

available; and (7) The name, address, 

telephone number, email address and 

signature of the appellant or its attorney. 

This provision is consistent with OHA’s 

general rules of practice in subpart B, 

with the addition of the requirement for 

submission of certain financial 

information. SBA has determined that 

submission by the appellant of financial 

information, or an explanation as to 

why they are not relevant or not 

available, is appropriate to support 

SBA’s efforts to assess compliance with 

the PPP requirements set forth in the 

statute, rules, and guidance. The 

appellant must serve a copy of the 

appeal petition with attachments on the 

Associate General Counsel for 

Litigation, U.S. Small Business 

Administration, 409 Third Street SW, 

Washington, DC 20416, OLITService@

sba.gov. The appellant must attach to 

the appeal petition a signed certificate 

of service meeting the requirements of 

§ 134.204(d). This section further 

provides that an appeal petition which 

does not include the above may be 

dismissed by the Judge and permits SBA 

to move for a motion for more definite 

statement or otherwise comply with the 

requirements of this section. 

Section 134.1203, Standing, provides 

that only the borrower on a loan for 

which SBA has issued a final SBA loan 

review decision has standing to appeal 

the SBA loan review decision to OHA. 

Individual owners of a borrower and 

lenders do not have standing to appeal 

an SBA loan review decision. 

Section 134.1204, Deadline for filing 

appeal petition, prescribes that an 

appeal petition must be filed within 30 

calendar days after (i) the appellant’s 

receipt of the final SBA loan review 

decision, or (ii) notification by the 

lender of the final SBA loan review 

decision, whichever is earlier. 

Section 134.1205, Dismissal, provides 

that the Judge must dismiss the appeal 

if: (1) The appeal is beyond OHA’s 

jurisdiction as set forth under 

§ 134.1201; (2) the appellant lacks 

standing to appeal under § 134.1203; or 

(3) the appeal is untimely under 

§ 134.1204, or is premature because SBA 

has not yet made a final SBA loan 

review decision. This section also 

provides that the Judge may dismiss the 

appeal if, among other things, the 

appeal does not, on its face, allege 

specific facts that if proven to be true, 

warrant reversal or remand of the SBA 

loan review decision. 

Section 134.1206, Notice and order, 

provides that upon receipt of an appeal 

challenging a final SBA loan review 

decision, OHA will assign the matter to 

either an Administrative Law Judge or 

an Administrative Judge in accordance 

with § 134.218. Unless the appeal will 

be dismissed under § 134.1205, the 

Judge will issue a notice and order 

establishing a deadline for production of 

the administrative record and specifying 

a date for the close of record. Typically, 

the administrative record will be due 20 

calendar days after issuance of the 

notice and order unless additional time 

is requested and granted, and the record 

will close 45 calendar days from the 

date of OHA’s receipt of the appeal 

unless additional time is requested and 

granted. With this timeframe, SBA seeks 

to provide a timely and judicious 

processing of the appeal petition, while 

also affording additional time if, for 

example, the volume of appeals or other 

matters require additional time for 

compilation of the administrative record 

and the close of record. 

Section 134.1207, The administrative 

record, requires that the administrative 

record shall include relevant documents 

that SBA considered in making its final 

decision or that were before SBA at the 

time of the final decision. The 

administrative record need not, 

however, contain all documents 

pertaining to the appellant. In addition, 

SBA may claim privilege as to certain 

materials. The administrative record 

must be certified and authenticated that 

it is, to the best of the signatory’s 

knowledge, complete and correct. SBA 

will file the administrative record with 

OHA and serve it on appellant. This 

section permits the appellant to object 

to the absence of any document from the 

administrative record that the appellant 

believes should have been included in 

the administrative record. An appellant 

also may object to any claim that 

documents in the administrative record 

are privileged. Such objections must be 

filed with OHA and served on SBA no 

later than 10 calendar days after 

appellant’s receipt of the administrative 

record. The Judge will rule upon such 

objections and may direct or permit that 

the administrative record be 

supplemented. 

Section 134.1208, Response to an 

appeal petition, prescribes that only 

SBA may respond to an appeal and the 

response should set forth the relevant 

facts and legal arguments to the issues 

presented on appeal. Except for good 

cause shown, a response filed after the 

close of record established by the Judge 

will not be considered. SBA must file its 

response with OHA, and serve a copy of 

the response upon the appellant and 

upon each of the persons identified in 

the certificate of service attached to the 

appellant’s appeal petition. No reply to 

a response will be permitted unless the 

Judge directs otherwise. 

Section 134.1209, Evidence beyond 

the record, discovery and oral hearings, 

provides that, generally, the Judge may 

not admit evidence beyond the written 

administrative record or permit any 

form of discovery. Discovery will be 

permitted in OHA’s appellate 

proceedings only if the Judge 

determines that SBA, upon written 

submission, has made a showing of 

good cause for discovery. An oral 

hearing will not be held on an appeal of 

an SBA loan review decision, unless, 

following the motion of a party, or at the 

Judge’s own initiative, the Judge orders 

an oral hearing upon concluding that 

there is a genuine dispute of material 

fact that cannot be resolved except by 

the taking of testimony and the 

confrontation of witnesses. SBA has 

determined that allowing an oral 

hearing under limited circumstances, 

and allowing discovery by SBA, only 

upon a showing of good cause, balances 

SBA’s potential need for discovery since 

it may not have all relevant documents 

from appellant with the efficient use of 

limited resources available. If an oral 

hearing is ordered, the proceeding shall 


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be conducted in accordance with 

§§ 134.214 and 134.222 in subpart B of 

this part as the Judge deems 

appropriate. All appeals under this 

subpart L will be decided solely on a 

review of the written administrative 

record, the appeal petition, response(s) 

filed thereto, any admitted evidence, 

and an oral hearing, if held. 

Section 134.1210, Interlocutory 

appeals, provides that either party may 

file an interlocutory appeal of a Judge’s 

ruling which decides an issue of 

privilege. Interlocutory appeals will be 

decided by the Administrator or a 

designee. An interlocutory appeal must 

be filed and served no later than 20 

calendar days after issuance of the 

ruling to which the interlocutory appeal 

applies. A response to the interlocutory 

appeal must be filed 10 calendar days 

after the interlocutory appeal is served. 

The Judge may stay the proceedings 

before OHA, in whole or in part, as he 

or she deems appropriate pending 

resolution of the interlocutory appeal. 

Section 134.1211, Alternative dispute 

resolution, provides that at any time 

during the pendency of an appeal, the 

parties may submit a joint motion 

requesting that the Judge permit the use 

of alternative dispute resolution to assist 

in resolving the matter. If the motion is 

granted, the Judge will also stay the 

proceedings before OHA, in whole or in 

part, as he or she deems appropriate, 

pending the outcome of the alternative 

dispute resolution. In addition, the 

Assistant Administrator for Hearings 

and Appeals (AA/OHA) or a Judge may 

designate another Judge or attorney 

assigned to OHA to serve as a neutral in 

alternative dispute resolution 

procedures. If OHA provides the neutral 

and the mediation fails to resolve all 

issues in the case, the OHA-provided 

neutral will not be involved in the 

adjudication. 

Section 134.1212, Standard of review, 

provides that the standard of review is 

whether the SBA loan review decision 

was based on clear error of fact or law. 

The appellant has the burden of proof, 

by a preponderance of the evidence. 

Section 134.1213, Decision on appeal, 

provides that the Judge will issue his or 

her decision within 45 calendar days 

after the close of record, as practicable. 

The decision will contain findings of 

fact and conclusions of law, the reasons 

for such findings and conclusions, and 

any relief ordered. The decision will be 

served on each party. The Judge’s 

decision on the appeal is an initial 

decision. However, unless a request for 

review is filed pursuant to § 134.228(a), 

or a request for reconsideration is filed 

pursuant to paragraph (c) of § 134.1213, 

an initial decision shall become the 

final decision of SBA 30 calendar days 

after its service. This section allows for 

a request for reconsideration pursuant to 

paragraph (c) of § 134.1213 by either 

party or by the Judge on his or her own 

initiative. This section also provides for 

the right to request review by the 

Administrator pursuant to § 134.228(a), 

in which case the provisions in 

§ 134.228 will apply. If a request for 

review pursuant to § 134.228(a) is filed, 

the decision of the Administrator is a 

final decision of SBA appealable to 

federal district court. In order for a 

borrower to exhaust its administrative 

remedies and preserve its right to seek 

judicial review of an SBA final decision 

in a federal district court, a borrower 

that disputes the initial decision or 

reconsidered initial decision must file 

and serve a request for review of an 

initial decision or reconsidered initial 

decision by the Administrator pursuant 

to § 134.228(a). If the borrower does not 

request review by the Administrator 

pursuant to § 134.228(a), the borrower’s 

right to seek review in federal court is 

waived due to the borrower’s failure to 

exhaust administrative remedies. This 

section also provides that the final OHA 

decision creates precedent only for 

appeals involving the PPP. Any OHA 

decision pursuant to this subpart L 

applies only to the PPP and does not 

apply to SBA’s 7(a) Loan Program 

generally or to any interpretation or 

application of the regulations in part 

120 or part 121 of this title. SBA has 

determined that this is appropriate 

because the PPP is governed by the 

CARES Act, which adds a new 

temporary program to SBA’s 7(a) Loan 

Program, but does not apply to SBA’s 

7(a) Loan Program generally. Lastly, this 

section provides that, consistent with 

the general OHA rules of practice in 

subpart B of part 134, OHA decisions 

are normally published without 

redactions on OHA’s website. A 

decision may contain confidential 

business and financial information or 

personally identifiable information 

where that information is either 

decisionally-significant or otherwise 

necessary for a comprehensible 

decision. Where no protective order is 

in place, a party may request a redacted 

public decision by contacting OHA. 

Where a protective order is in place, the 

Judge will usually issue the unredacted 

decision under the protective order and 

a redacted version for public release. 

Section 134.1214, Effects of the 

decision, provides that OHA may affirm, 

reverse, or remand an SBA loan review 

decision. If remanded, OHA no longer 

has jurisdiction over the matter unless 

a new appeal is filed as a result of a new 

SBA loan review decision. 

Section 134.1215, Equal Access to 

Justice Act (EAJA), provides that a 

prevailing appellant is not entitled to 

recover attorney’s fees. Appeals to OHA 

from SBA loan review decisions under 

the PPP are not proceedings that are 

required to be conducted by an 

Administrative Law Judge under 

§ 134.603. 

Section 134.1216, Exhaustion of 

administrative remedies, provides that 

an appeal to OHA and request for 

review by the Administrator of a 

disputed initial decision or 

reconsidered initial decision are 

administrative remedies that must be 

exhausted before judicial review of an 

SBA loan review decision may be 

sought in a federal district court. 

Section 134.1217, Confidential 

information and protective order, 

provides that if a filing or other 

submission made pursuant to an appeal 

in this subpart L contains confidential 

business and financial information; 

personally identifiable information; 

source selection sensitive information; 

income tax returns; documents and 

information covered under § 120.1060 of 

this title; or any other exempt 

information, that information is not 

available to the public pursuant to the 

Freedom of Information Act (FOIA), 5 

U.S.C. 552. This provision is consistent 

with the general rule of practice in 

subpart B of this part. In addition, this 

section permits SBA or appellant to seek 

a protective order over any document or 

information filed pursuant to an appeal 

in this subpart L, including any 

document or information exchanged in 

discovery if permitted in accordance 

with § 134.1209. 

Compliance With Executive Orders 

12866, 12988, 13132, 13563, and 13771, 

the Paperwork Reduction Act (44 U.S.C. 

Ch. 35), and the Regulatory Flexibility 

Act (5 U.S.C. 601–612) 

Executive Orders 12866, 13563, and 

13771 

This interim final rule is 

economically significant for the 

purposes of Executive Orders 12866 and 

13563, and is considered a major rule 

under the Congressional Review Act. 

SBA, however, is proceeding under the 

emergency provision at Executive Order 

12866 Section 6(a)(3)(D) based on the 

need to move expeditiously to mitigate 

the current economic conditions arising 

from the COVID–19 emergency. This 

rule’s designation under Executive 

Order 13771 will be informed by public 

comment. 


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Federal Register / Vol. 85, No. 167 / Thursday, August 27, 2020 / Rules and Regulations 52887 

Executive Order 12988 

SBA has drafted this rule, to the 

extent practicable, in accordance with 

the standards set forth in section 3(a) 

and 3(b)(2) of Executive Order 12988, to 

minimize litigation, eliminate 

ambiguity, and reduce burden. The rule 

has no preemptive or retroactive effect. 

Executive Order 13132 

SBA has determined that this rule 

will not have substantial direct effects 

on the States, on the relationship 

between the National Government and 

the States, or on the distribution of 

power and responsibilities among the 

various layers of government. Therefore, 

SBA has determined that this rule has 

no federalism implications warranting 

preparation of a federalism assessment. 

Paperwork Reduction Act, 44 U.S.C. 

Chapter 35 

SBA has determined that this interim 

final rule does not impose additional 

reporting or recordkeeping requirements 

under the Paperwork Reduction Act. 

Regulatory Flexibility Act (RFA) 

The Regulatory Flexibility Act 

generally requires that when an agency 

issues a proposed rule, or a final rule 

pursuant to section 553(b) of the APA or 

another law, the agency must prepare a 

regulatory flexibility analysis that meets 

the requirements of the RFA and 

publish such analysis in the Federal 

Register. 5 U.S.C. 603, 604. Specifically, 

the RFA normally requires agencies to 

describe the impact of a rulemaking on 

small entities by providing a regulatory 

impact analysis. Such analysis must 

address the consideration of regulatory 

options that would lessen the economic 

effect of the rule on small entities. The 

RFA defines a ‘‘small entity’’ as (1) a 

proprietary firm meeting the size 

standards of the Small Business 

Administration (SBA); (2) a nonprofit 

organization that is not dominant in its 

field; or (3) a small government 

jurisdiction with a population of less 

than 50,000. 5 U.S.C. 601(3)–(6). Except 

for such small government jurisdictions, 

neither State nor local governments are 

‘‘small entities.’’ Similarly, for purposes 

of the RFA, individual persons are not 

small entities. The requirement to 

conduct a regulatory impact analysis 

does not apply if the head of the agency 

‘‘certifies that the rule will not, if 

promulgated, have a significant 

economic impact on a substantial 

number of small entities.’’ 5 U.S.C. 

605(b). The agency must, however, 

publish the certification in the Federal 

Register at the time of publication of the 

rule, ‘‘along with a statement providing 

the factual basis for such certification.’’ 

If the agency head has not waived the 

requirements for a regulatory flexibility 

analysis in accordance with the RFA’s 

waiver provision, and no other RFA 

exception applies, the agency must 

prepare the regulatory flexibility 

analysis and publish it in the Federal 

Register at the time of promulgation or, 

if the rule is promulgated in response to 

an emergency that makes timely 

compliance impracticable, within 180 

days of publication of the final rule. 5 

U.S.C. 604(a), 608(b). Rules that are 

exempt from notice and comment are 

also exempt from the RFA requirements, 

including conducting a regulatory 

flexibility analysis, when among other 

things the agency for good cause finds 

that notice and public procedure are 

impracticable, unnecessary, or contrary 

to the public interest. SBA Office of 

Advocacy guide: How to Comply with 

the Regulatory Flexibility Act, Ch.1. p.9. 

Accordingly, SBA is not required to 

conduct a regulatory flexibility analysis. 

List of Subjects in 13 CFR Part 134 

Administrative practice and 

procedure, Claims, Equal access to 

justice, Lawyers, Organization and 

function (Government agencies). 

For the reasons stated in the 

preamble, the Small Business 

Administration amends 13 CFR part 134 

as set forth below: 

PART 134—RULES OF PROCEDURE 

GOVERNING CASES BEFORE THE 

OFFICE OF HEARINGS AND APPEALS 

■ 1. The authority citation for part 134 

is revised to read as follows: 

Authority: 5 U.S.C. 504; 15 U.S.C. 632, 

634(b)(6), 634(i), 637(a), 648(l), 656(i), 657t 

and 687(c); 38 U.S.C. 8127(f); E.O. 12549, 51 

FR 6370, 3 CFR, 1986 Comp., p. 189. 

Subpart J issued under 38 U.S.C. 

8127(f)(8)(B). 

Subpart K issued under 38 U.S.C. 

8127(f)(8)(A). 

Subpart L issued under 15 U.S.C. 

636(a)(36); Pub. L. 116–136; Pub. L. 116–139; 

116–142; 116–147. 

■ 2. Amend § 134.102 by: 

■ a. Removing the word ‘‘and’’ at the 

end of paragraph (u); 

■ b. Removing the period at the end of 

paragraph (v) and adding ‘‘; and’’ in its 

place; and 

■ c. Adding paragraph (w) to read as 

follows: 

§ 134.102 Jurisdiction of OHA. 

* * * * * 

(w) Appeals of certain SBA loan 

review decisions as defined in 13 CFR 

134.1201. 

■ 3. Add subpart L to read as follows: 

Subpart L—Rules of Practice for 

Appeals of Certain SBA Loan Review 

Decisions Under the Paycheck 

Protection Program 

Sec. 

134.1201 Scope of rules in this subpart L. 

134.1202 The appeal petition. 

134.1203 Standing. 

134.1204 Deadline for filing appeal 

petition. 

134.1205 Dismissal. 

134.1206 Notice and order. 

134.1207 The administrative record. 

134.1208 Response to an appeal petition. 

134.1209 Evidence beyond the record, 

discovery and oral hearings. 

134.1210 Interlocutory appeals. 

134.1211 Alternative dispute resolution 

procedures. 

134.1212 Standard of review. 

134.1213 Decision on appeal. 

134.1214 Effects of the decision. 

134.1215 Equal Access to Justice Act 

(EAJA). 

134.1216 Exhaustion of administrative 

remedies. 

134.1217 Confidential information and 

protective order. 

Authority: 15 U.S.C. 636(a)(36); Pub. L. 

116–136; Pub. L. 116–139; Pub. L. 116–142; 

Pub. L. 116–147 

§ 134.1201 Scope of the rules in this 

subpart L. 

(a) The rules of practice in this 

subpart L apply to appeals to OHA from 

certain SBA loan review decisions 

under the Paycheck Protection Program 

(PPP) as described in paragraph (b) of 

this section, and to any other PPP matter 

referred to OHA by the Administrator of 

SBA. The PPP was established as a 

temporary program under section 1102 

of the Coronavirus Aid, Relief, and 

Economic Security Act (CARES Act) 

(Pub. L. 116–136). 

(b) A final SBA loan review decision 

that is appealable under this subpart L 

is an official written decision by SBA, 

after SBA completes a review of a PPP 

loan, that finds a borrower: 

(1) Was ineligible for a PPP loan; 

(2) Was ineligible for the PPP loan 

amount received or used the PPP loan 

proceeds for unauthorized uses; 

(3) Is ineligible for PPP loan 

forgiveness in the amount determined 

by the lender in its full approval or 

partial approval decision issued to SBA 

(except for the deduction of any 

Economic Injury Disaster Loan advance 

in accordance with section 1110(e)(6) of 

the CARES Act); and/or 

(4) Is ineligible for PPP loan 

forgiveness in any amount when the 

lender has issued a full denial decision 

to SBA. 

(c) A borrower cannot file an OHA 

appeal of any decision made by a lender 

concerning a PPP loan. 


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(d) Any determination by SBA’s 

Office of Inspector General concerning a 

PPP loan is not appealable to OHA. 

(e) This subpart L does not create any 

right to appeal any SBA decision on any 

7(a) loans other than PPP loans. 

(f) The Rules of Practice for Appeals 

From Size Determinations and NAICS 

Code Designations in subpart C of this 

part do not apply to appeals of SBA loan 

review decisions or to the PPP. 

(g) In addition to the subpart B of this 

part provisions specifically referenced 

in this subpart L, the following 

regulations from subpart B of this part 

also apply to this subpart L: 13 CFR 

134.207 through 134.209, 134.211, 

134.212, and 134.217 through 134.221. 

§ 134.1202 The appeal petition. 

(a) Contents. The appeal petition must 

include the following information: 

(1) The basis for OHA’s jurisdiction, 

including, but not limited to, evidence 

that the appeal is timely filed in 

accordance with § 134.1204; 

(2) A copy of the SBA loan review 

decision that is being appealed, or a 

description of that decision if a copy is 

unavailable; 

(3) A full and specific statement as to 

why the SBA loan review decision is 

alleged to be erroneous, together with 

all factual information and legal 

arguments supporting the allegations; 

(4) The relief being sought; 

(5) Signed copies of payroll tax filings 

actually filed with the Internal Revenue 

Service (IRS), and State quarterly 

business and individual employee wage 

reporting and unemployment insurance 

tax filings actually reported to the 

relevant state, for the relevant periods of 

time, if not provided with the PPP Loan 

Forgiveness Application (SBA Form 

3508, SBA Form 3508EZ, or lender’s 

equivalent), or an explanation as to why 

they are not relevant or not available; 

(6) Signed copies of applicable federal 

tax returns actually filed with the IRS 

with appropriate schedules (e.g., IRS 

Form 1040 with Schedule C/F) 

documenting income for self-employed 

individuals or partners in a partnership, 

if not provided with the PPP Borrower 

Application Form (SBA Form 2483 or 

lender’s equivalent), or an explanation 

as to why they are not relevant or not 

available; and 

(7) The name, address, telephone 

number, email address and signature of 

the appellant or its attorney. 

(b) Format. The maximum length of 

an appeal petition (not including 

attachments) is 20 pages, unless leave is 

sought by the appellant and granted by 

the Judge. A table of authorities is 

required only for petitions citing more 

than twenty cases, regulations, or 

statutes. 

(c) Service of the appeal petition. In 

addition to filing an appeal with OHA 

in accordance with § 134.204(b), the 

appellant must serve a copy of the 

appeal petition with attachments on the 

Associate General Counsel for 

Litigation, U.S. Small Business 

Administration, 409 Third Street SW, 

Washington, DC 20416, OLITService@

sba.gov. 

(d) Certificate of service. The 

appellant must attach to the appeal 

petition a signed certificate of service 

meeting the requirements of 

§ 134.204(d). 

(e) Dismissal. An appeal petition 

which does not contain all of the 

information required by paragraphs (a) 

through (d) of this section may be 

dismissed, with or without prejudice, at 

the Judge’s own initiative, or upon 

motion of SBA. 

(f) Motion for more definite statement. 

SBA may, not later than five days after 

receiving an appeal petition, move for 

an order to the appellant to provide a 

more definite appeal petition or 

otherwise comply with this section. A 

Judge may order a more definite appeal 

petition on his or her own initiative. 

(1) A motion for a more definite 

appeal petition stays SBA’s time for 

filing a response. The Judge will 

establish the time for filing and serving 

a response and will extend the close of 

the record as appropriate. 

(2) If the appellant does not comply 

with the Judge’s order to provide a more 

definite appeal petition or otherwise 

fails to comply with applicable 

regulations, the Judge may dismiss the 

petition with prejudice. 

(g) Calculation of a deadline when the 

time period is given in days. Do not 

count the day the time period begins, 

but do count the last day of the time 

period. If the last day is Saturday, 

Sunday, or a Federal holiday, the time 

period ends on the next business day. 

§ 134.1203 Standing. 

Only the borrower on a loan for which 

SBA has issued a final SBA loan review 

decision has standing to appeal the SBA 

loan review decision to OHA. 

§ 134.1204 Deadline for filing appeal 

petition. 

An appeal petition must be filed with 

OHA within 30 calendar days after the 

appellant’s receipt of the final SBA loan 

review decision, or notification by the 

lender of the final SBA loan review 

decision, whichever is earlier. 

§ 134.1205 Dismissal. 

(a) The Judge must dismiss the appeal 

if: 

(1) The appeal is beyond OHA’s 

jurisdiction as set forth under 

§ 134.1201; 

(2) The appellant lacks standing to 

appeal under § 134.1203; or 

(3) The appeal is untimely under 

§ 134.1204, or is premature because SBA 

has not yet made a final SBA loan 

review decision. 

(b) The Judge may dismiss the appeal 

in accordance with § 134.1202(e) or 

(f)(2), or if the appeal does not, on its 

face, allege specific facts that if proven 

to be true, warrant reversal or remand of 

the SBA loan review decision. 

§ 134.1206 Notice and order. 

Upon receipt of an appeal challenging 

a final SBA loan review decision, OHA 

will assign the matter to either an 

Administrative Law Judge or an 

Administrative Judge in accordance 

with § 134.218. Unless the appeal is 

dismissed under § 134.1205, the Judge 

will issue a notice and order 

establishing a deadline for production of 

the administrative record and specifying 

a date for the close of record. The notice 

and order will be served upon all 

known parties (or their attorneys). 

Typically, the administrative record will 

be due 20 calendar days after issuance 

of the notice and order unless additional 

time is requested and granted, and the 

record will close 45 calendar days from 

the date of OHA’s receipt of the appeal 

unless additional time is requested and 

granted. 

§ 134.1207 The administrative record. 

(a) Contents. The administrative 

record shall include relevant documents 

that SBA considered in making its final 

decision or that were before SBA at the 

time of the final decision. The 

administrative record need not, 

however, contain all documents 

pertaining to the appellant. In addition, 

SBA may claim privilege as to certain 

materials. The administrative record 

must be certified and authenticated that 

it is, to the best of the signatory’s 

knowledge, complete and correct. 

(b) Filing. SBA will file the 

administrative record with OHA and 

serve it on appellant. 

(c) Objection. The appellant may 

object to the absence of any document 

from the administrative record that the 

appellant believes should have been 

included in the administrative record. 

An appellant also may object to any 

claim that documents in the 

administrative record are privileged. 

Such objections must be filed with OHA 

and served on SBA no later than 10 

calendar days after the appellant’s 

receipt of the administrative record. The 

Judge will rule upon such objections 


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and may direct or permit that the 

administrative record be supplemented. 

§ 134.1208 Response to an appeal petition. 

(a) Who may respond. Only SBA may 

respond to an appeal. The response 

should set forth the relevant facts and 

legal arguments to the issues presented 

on appeal. 

(b) Time limit. Except for good cause 

shown, a response filed after the close 

of record established by the Judge will 

not be considered. 

(c) Service. The SBA must file its 

response with OHA, and serve a copy of 

the response upon the appellant and 

upon each of the persons identified in 

the certificate of service attached to the 

appeal petition pursuant to 

§ 134.1202(d). 

(d) Reply to a response. No reply to 

a response will be permitted unless the 

Judge directs otherwise. 

§ 134.1209 Evidence beyond the record, 

discovery and oral hearings. 

(a) General Rule. Generally, the Judge 

may not admit evidence beyond the 

written administrative record or permit 

any form of discovery. 

(b) Discovery. Discovery will be 

permitted only if the Judge determines 

that SBA, upon written submission, has 

made a showing of good cause for 

discovery. 

(c) Oral hearings. Oral hearings will 

not be held on an appeal of an SBA loan 

review decision, unless, following the 

motion of a party, or at the Judge’s own 

initiative, the Judge orders an oral 

hearing upon concluding that there is a 

genuine dispute of material fact that 

cannot be resolved except by the taking 

of testimony and the confrontation of 

witnesses. If an oral hearing is ordered, 

the proceeding shall be conducted in 

accordance with §§ 134.214 and 134.222 

in subpart B of this part as the Judge 

deems appropriate. 

(d) The record. All appeals under this 

subpart L will be decided solely on a 

review of the written administrative 

record, the appeal petition, and 

response(s) filed thereto, any admitted 

evidence, and an oral hearing, if held. 

§ 134.1210 Interlocutory appeals. 

(a) General. Either party may file an 

interlocutory appeal of a Judge’s ruling 

which decides an issue of privilege. 

Interlocutory appeals will be decided by 

the Administrator of SBA or a designee. 

(b) Procedures. An interlocutory 

appeal must be filed and served no later 

than 20 calendar days after issuance of 

the ruling to which the interlocutory 

appeal applies. A response to the 

interlocutory appeal must be filed 10 

calendar days after the interlocutory 

appeal is served. The Judge may stay the 

proceedings before OHA, in whole or in 

part, as he or she deems appropriate 

pending resolution of the interlocutory 

appeal. 

§ 134.1211 Alternative dispute resolution. 

(a) Joint Motion. At any time during 

the pendency of an appeal, the parties 

may submit a joint motion requesting 

that the Judge permit the use of 

alternative dispute resolution to assist 

in resolving the matter. 

(b) Procedures. If the motion is 

granted, the Judge will also stay the 

proceedings before OHA, in whole or in 

part, as he or she deems appropriate, 

pending the outcome of the alternative 

dispute resolution. In addition, the AA/ 

OHA or a Judge may designate another 

Judge or attorney assigned to OHA to 

serve as a neutral in alternative dispute 

resolution procedures. If OHA provides 

the neutral and the mediation fails to 

resolve all issues in the case, the OHAprovided neutral will not be involved in 

the adjudication. 

§ 134.1212 Standard of review. 

The standard of review is whether the 

SBA loan review decision was based on 

clear error of fact or law. The appellant 

has the burden of proof, by a 

preponderance of the evidence. 

§ 134.1213 Decision on appeal. 

(a) Time limits and contents. The 

Judge will issue his or her decision 

within 45 calendar days after the close 

of record, as practicable. The decision 

will contain findings of fact and 

conclusions of law, the reasons for such 

findings and conclusions, and any relief 

ordered. The decision will be served on 

each party. 

(b) Initial decision. The Judge’s 

decision on the appeal is an initial 

decision. However, unless a request for 

review is filed pursuant to § 134.228(a), 

or a request for reconsideration is filed 

pursuant to paragraph (c) of this section, 

an initial decision shall become the 

final decision of SBA 30 calendar days 

after its service. The final OHA decision 

creates precedent only for appeals 

involving the PPP. Any OHA decision 

pursuant to this subpart L applies only 

to the PPP and does not apply to SBA’s 

7(a) Loan Program generally or to any 

interpretation or application of the 

regulations in part 120 or part 121 of 

this title. 

(c) Reconsideration. An initial 

decision of the Judge may be 

reconsidered. Either SBA or the 

appellant may request reconsideration 

by filing with the Judge and serving a 

petition for reconsideration within 10 

calendar days after service of the written 

decision. The request for 

reconsideration must clearly show an 

error of fact or law material to the 

decision. The Judge may also reconsider 

a decision on his or her own initiative 

within 20 calendar days after service of 

the written decision. 

(d) Request for review. Within 30 

calendar days after the service of an 

initial decision or a reconsidered initial 

decision of a Judge, any party, or SBA’s 

Office of General Counsel, may file and 

serve a request for review by the 

Administrator pursuant to § 134.228(a). 

In order for a borrower to exhaust its 

administrative remedies and preserve its 

right to seek judicial review of an SBA 

final decision in a federal district court, 

a borrower that disputes an initial 

decision or reconsidered initial decision 

must file and serve a request for review 

of the initial decision or reconsidered 

initial decision by the Administrator 

pursuant to § 134.228(a). If a request for 

review is filed pursuant to § 134.228(a), 

the provisions in § 134.228 will apply. 

(e) Publication. OHA decisions are 

normally published without redactions 

on OHA’s website. A decision may 

contain confidential business and 

financial information or personally 

identifiable information where that 

information is either decisionallysignificant or otherwise necessary for a 

comprehensible decision. Where no 

protective order is in place, a party may 

request a redacted public decision by 

contacting OHA. Where a protective 

order is in place, the Judge will usually 

issue the unredacted decision under the 

protective order and a redacted version 

for public release. 

§ 134.1214 Effects of the decision. 

OHA may affirm, reverse, or remand 

an SBA loan review decision. If 

remanded, OHA no longer has 

jurisdiction over the matter unless a 

new appeal is filed as a result of a new 

SBA loan review decision. 

§ 134.1215 Equal Access to Justice Act 

(EAJA), 5 U.S.C. 504. 

A prevailing appellant is not entitled 

to recover attorney’s fees. Appeals to 

OHA from SBA loan review decisions 

under the PPP are not proceedings that 

are required to be conducted by an 

Administrative Law Judge under 

§ 134.603. 

§ 134.1216 Exhaustion of administrative 

remedies. 

An appeal to OHA and request for 

review by the Administrator of a 

disputed initial decision or 

reconsidered initial decision are 

administrative remedies that must be 

exhausted before judicial review of an 


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52890 Federal Register / Vol. 85, No. 167 / Thursday, August 27, 2020 / Rules and Regulations 

SBA loan review decision may be 

sought in a federal district court. 

§ 134.1217 Confidential Information and 

Protective Order. 

(a) If a filing or other submission 

made pursuant to an appeal in this 

subpart L contains confidential business 

and financial information; personally 

identifiable information; source 

selection sensitive information; income 

tax returns; documents and information 

covered under § 120.1060 of this title; or 

any other exempt information, that 

information is not available to the 

public pursuant to the Freedom of 

Information Act (FOIA), 5 U.S.C. 552. 

(b) SBA or appellant may seek a 

protective order over any document or 

information exchanged in discovery if 

permitted in accordance with 

§ 134.1209 and any document or 

information filed pursuant to an appeal 

in this subpart L. 

Jovita Carranza, 

Administrator. 

[FR Doc. 2020–17895 Filed 8–25–20; 11:15 am] 

BILLING CODE P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2020–0786; Project 

Identifier AD–2020–00914–R; Amendment 

39–21229; AD 2020–18–08] 

RIN 2120–AA64 

Airworthiness Directives; Robinson 

Helicopter Company 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Final rule; request for 

comments. 

SUMMARY: The FAA is superseding 

Airworthiness Directive (AD) 2019–12– 

18 for Robinson Helicopter Company 

(Robinson) Model R44 II helicopters. AD 

2019–12–18 required inspecting certain 

engine air induction hoses (hoses) and 

replacing any hose that was not 

airworthy. AD 2019–12–18 also 

prohibited the installation of certain 

hoses. This AD continues to require 

inspecting those previously affected 

hoses and amends the applicability, 

clarifies an inspection requirement, 

adds a requirement to repeat the 

inspection, and expands the installation 

prohibition. This AD was prompted by 

an additional report of separation 

between the outer and inner hose layers. 

The FAA is issuing this AD to address 

the unsafe condition on these products. 

DATES: This AD is effective August 27, 

2020. 

The FAA must receive any comments 

on this AD by October 13, 2020. 

ADDRESSES: You may send comments, 

using the procedures found in 14 CFR 

11.43 and 11.45, by any of the following 

methods: 

• Federal eRulemaking Portal: Go to 

https://www.regulations.gov. Follow the 

instructions for submitting comments. 

• Fax: 202–493–2251. 

• Mail: U.S. Department of 

Transportation, Docket Operations, M– 

30, West Building Ground Floor, Room 

W12–140, 1200 New Jersey Avenue SE, 

Washington, DC 20590. 

• Hand Delivery: U.S. Department of 

Transportation, Docket Operations, M– 

30, West Building Ground Floor, Room 

W12–140, 1200 New Jersey Avenue SE, 

Washington, DC 20590, between 9 a.m. 

and 5 p.m., Monday through Friday, 

except Federal holidays. 

For service information identified in 

this final rule, contact Robinson 

Helicopter Company, 2901 Airport 

Drive, Torrance, CA 90505; telephone 

310–539–0508; fax 310–539–5198; or at 

https://robinsonheli.com/. You may 

view this service information at the 

FAA, Office of the Regional Counsel, 

Southwest Region, 10101 Hillwood 

Pkwy, Room 6N–321, Fort Worth, TX 

76177. For information on the 

availability of this material at the FAA, 

call 817–222–5110. 

Examining the AD Docket 

You may examine the AD docket on 

the internet at https://

www.regulations.gov by searching for 

and locating Docket No. FAA–2020– 

0786; or in person at Docket Operations 

between 9 a.m. and 5 p.m., Monday 

through Friday, except Federal holidays. 

The AD docket contains this final rule, 

any comments received, and other 

information. The street address for 

Docket Operations is listed above. 

Comments will be available in the AD 

docket shortly after receipt. 

FOR FURTHER INFORMATION CONTACT: 

Roger Gretler, Aerospace Engineer, Los 

Angeles ACO Branch, Compliance & 

Airworthiness Division, FAA, 3960 

Paramount Blvd., Lakewood, CA 90712; 

phone 562–627–5251; email 

roger.gretler@faa.gov. 

SUPPLEMENTARY INFORMATION: 

Discussion 

The FAA issued AD 2019–12–18, 

Amendment 39–19673 (84 FR 32028, 

July 5, 2019) (‘‘AD 2019–12–18’’), for 

Robinson Model R44 II helicopters. AD 

2019–12–18 required, for helicopter 

serial numbers (S/Ns) 14248 through 

14268 and 14270 through 14286 and 

helicopters with a hose part number (P/ 

N) A785–31 installed after April 30, 

2018, inspecting the inside of the hose 

for separation between the outer and 

inner layers and flexing the hose in all 

directions while listening for a crinkling 

sound, which is an indication of 

separation. If there was any separation 

or a crinkling sound, AD 2019–12–18 

required replacing the hose before 

further flight. If there was no separation 

and no crinkling sound, AD 2019–12–18 

required replacing the hose within 50 

hours time-in-service (TIS). Finally, AD 

2019–12–18 prohibited installing hose 

P/N A785–31 marked with code 1Q18 

on any helicopter. 

AD 2019–12–18 resulted from 12 

reports, including an accident on April 

4, 2019, of separation between the outer 

and inner layers of the orange silicone 

hose out of a suspected population of 

100 hoses traced to a specific 

manufacturing batch marked by code 

1Q18 (1st quarter of 2018). The 

separation of the silicone layers, if not 

addressed, could result in blockage of 

air flow to the engine, engine stoppage, 

and subsequent loss of control of the 

helicopter. Accordingly, the FAA issued 

AD 2019–12–18 to address the unsafe 

condition on these products. 

Actions Since AD 2019–12–18 Was 

Issued 

Since the FAA issued AD 2019–12– 

18, an NTSB report of October 2019 

concluded from the accident aircraft’s 

orange silicone hose marked by code 

1Q18, that contamination was 

introduced during the manufacturing 

process between the silicone layers that 

prevented a satisfactory bond. 

In addition, a helicopter accident 

occurred on April 6, 2020, and 

preliminary investigation indicated that 

separation between the outer and inner 

layers of the orange silicone hose P/N 

A785–31 occurred. This hose was traced 

to the manufacturing batch marked by 

code 3Q17 (3rd quarter of 2017). 

Subsequently, the FAA determined 

that any helicopter with an improved 

black neoprene hose P/N A785–31 

installed should not be affected by this 

AD. The FAA has also determined that, 

for helicopters with an orange silicone 

hose, repeating the inspection is 

necessary. Accordingly, the FAA is 

superseding AD 2019–12–18 to amend 

the applicability from all Robinson 

Model R44 II helicopters to Model R44 

II helicopters with an orange silicone 

hose P/N A785–31 installed. This AD 

also clarifies that the hose must be 

removed to perform the inspection, adds 

a requirement to repeat the inspection, 

and expands the installation prohibition 


khammond on DSKJM1Z7X2PROD with RULES