39066 Federal Register / Vol. 85, No. 126 / Tuesday, June 30, 2020 / Rules and Regulations 

1 Guidance describing how to calculate 

partnership PPP loan amounts and defining the selfemployment income of partners was posted on 

April 24, 2020 (see How to Calculate Maximum 

Loan Amounts, Question 4, at https://www.sba.gov/ 

sites/default/files/2020-06/How-to-Calculate-LoanAmounts-508_0.pdf). 

SMALL BUSINESS ADMINISTRATION 

13 CFR Part 120 

[Docket Number SBA–2020–0040] 

RIN 3245–AH54 

Business Loan Program Temporary 

Changes; Paycheck Protection 

Program—Certain Eligible Payroll 

Costs 

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. This interim final rule 

supplements the previously posted 

interim final rules by providing 

additional guidance on certain eligible 

payroll costs. 

DATES: 

Effective Date: The provisions in this 

interim final rule are effective June 26, 

2020. 

Comment Date: Comments must be 

received on or before July 30, 2020. 

ADDRESSES: You may submit comments, 

identified by number SBA–2020–0040 

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/local-assistance/ 

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 are being 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, have been implemented, 

resulting in a dramatic decrease in 

economic activity as the public avoids 

malls, retail stores, and other 

businesses. 

On March 27, 2020, the President 

signed the Coronavirus Aid, Relief, and 

Economic Security Act (the CARES Act) 

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

assistance and health care response for 

individuals, families, and businesses 

affected by the coronavirus pandemic. 

The Small Business Administration 

(SBA) received funding and authority 

through the CARES Act to modify 

existing loan programs and establish a 

new loan program to assist small 

businesses nationwide adversely 

impacted by the COVID–19 emergency. 

Section 1102 of the CARES Act 

temporarily permits SBA to guarantee 

100 percent of 7(a) loans under a new 

program titled the ‘‘Paycheck Protection 

Program.’’ Section 1106 of the CARES 

Act provides for forgiveness of up to the 

full principal amount of qualifying 

loans guaranteed under the Paycheck 

Protection Program (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 

June 5, 2020, the President signed the 

Paycheck Protection Program Flexibility 

Act of 2020 (Flexibility Act) (Pub. L. 

116–142), which changed provisions of 

the PPP relating to the maturity of PPP 

loans, the deferral of PPP loan 

payments, and the forgiveness of PPP 

loans. 

This interim final rule addresses 

payroll costs that may be included on a 

PPP loan application submitted by 

certain boat owners or operators that are 

engaged in catching fish or other forms 

of aquatic animal life (fishing boat 

owners) and that have hired one or more 

crewmembers who are regarded as 

independent contractors or otherwise 

self-employed for certain federal tax 

purposes under 26 U.S.C. 3121(b)(20) of 

the Internal Revenue Code (the Code). A 

crewmember may be described in 

Section 3121(b)(20) of the Code if the 

fishing boat on which he or she works 

has an operating crew that is normally 

made up of fewer than 10 individuals 

and the crewmember receives as 

compensation for his or her work a 

share of the boat’s catch or of the 

proceeds from the sale of the catch, in 

an amount that depends on the amount 

of the catch. Such a crewmember 

generally may not receive additional 

cash remuneration or other 

compensation for his or her services 

with respect to the fishing boat. A 

fishing boat owner must report 

compensation paid to such a 

crewmember on Box 5 of IRS Form 

1099–MISC. The First Interim Final 

Rule, posted on April 2, 2020, provided 

that because independent contractors 

have the ability to apply for a PPP loan 

on their own, they do not count for 

purposes of another applicant’s PPP 

loan calculation. 85 FR 20811, 20813 

(April 15, 2020). Because crewmembers 

described in Section 3121(b)(20) of the 

Code are treated as independent 

contractors or otherwise self-employed 

for certain federal tax purposes, fishing 

boat owners have faced uncertainty 

about whether to report payments to 

such crewmembers as a payroll cost on 

their PPP loan applications. 

On April 14, 2020, SBA, in 

consultation with Treasury, posted an 

interim final rule explaining that the 

self-employment income of the general 

active partners of a partnership could be 

reported as a payroll cost, up to 

$100,000 annualized, on a PPP loan 

application filed by or on behalf of the 

partnership.1 85 FR 21747, 21748 (April 

20, 2020). The Administrator, in 

consultation with the Secretary, has 

determined that the relationship of a 

fishing boat owner and a crewmember 

described in Section 3121(b)(20) of the 

Code is analogous to a joint venture or 

partnership. For example, the fishing 

boat owner and crewmembers each 

contribute labor or resources to a 

common commercial enterprise, and the 

owner and crewmembers share in the 

enterprise’s profits. In order to 


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Federal Register / Vol. 85, No. 126 / Tuesday, June 30, 2020 / Rules and Regulations 39067 

harmonize SBA’s interim final rule 

regarding partnerships with SBA’s 

interim final rule described above 

regarding independent contactors, the 

Administrator, in consultation with the 

Secretary, has determined that in the 

event of a conflict (i.e., a case where one 

or more partners in a partnership are 

treated as independent contractors for 

tax purposes), the rules regarding 

partnership will govern. Accordingly, as 

described below, this interim final rule 

(1) provides that a fishing boat owner 

may include compensation reported on 

Box 5 of Form 1099–MISC and paid to 

a crewmember described in Section 

3121(b)(20) as a payroll cost in its PPP 

loan application, and (2) addresses a 

fishing boat owner’s eligibility to obtain 

loan forgiveness of payroll costs paid to 

a crewmember who has obtained his or 

her own PPP loan. 

II. Comments and Immediate Effective 

Date 

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 

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 grounds that that 

it would be contrary to the public 

interest. Specifically, advance public 

notice and comment would defeat the 

purpose of this interim final rule given 

that SBA’s authority to guarantee PPP 

loans expires on June 30, 2020. These 

same reasons provide good cause for 

SBA to dispense with the 30-day 

delayed effective date provided in the 

Administrative Procedure Act (APA). 

See 5 U.S.C. 553(b)(B). Although this 

interim final rule is effective on or 

before date of filing, comments are 

solicited from interested members of the 

public on all aspects of the interim final 

rule, including Section III below. These 

comments must be submitted on or 

before July 30, 2020. The SBA will 

consider these comments and the need 

for making any revisions as a result of 

these comments. 

III. Paycheck Protection Program— 

Additional Guidance on Certain 

Eligible Payroll Costs 

Overview 

The CARES Act was enacted to 

provide immediate assistance to 

individuals, families, and organizations 

affected by the COVID–19 emergency. 

Among the provisions contained in the 

CARES Act are provisions authorizing 

SBA to temporarily guarantee loans 

under a new 7(a) loan program titled the 

‘‘Paycheck Protection Program.’’ Loans 

guaranteed under the Paycheck 

Protection Program (PPP) will be 100 

percent guaranteed by SBA, and the full 

principal amount of the loans may 

qualify for loan forgiveness. The 

purpose of this interim final rule is to 

provide additional guidance concerning 

payroll costs that may be reported in 

connection with certain PPP loan and 

loan forgiveness applications. 

1. Calculation of Payroll Costs of Certain 

Fishing Boat Owners 

May fishing boat owners include 

payroll costs in their PPP loan 

applications that are attributable to 

crewmembers described in Section 

3121(b)(20) of the Internal Revenue 

Code? 

Yes. The Administrator, in 

consultation with the Secretary, has 

determined that the relationship of a 

crewmember described in Section 

3121(b)(20) of the Internal Revenue 

Code (Code) and a fishing boat owner or 

operator (fishing boat owner) is 

analogous to a joint venture or 

partnership for purposes of the PPP. As 

a result, a fishing boat owner may 

include compensation reported on Box 

5 of IRS Form 1099–MISC and paid to 

a crewmember described in Section 

3121(b)(20) of the Code, up to $100,000 

annualized, as a payroll cost in its PPP 

loan application. The Administrator, in 

consultation with the Secretary, has 

determined that this treatment is 

appropriate to effectuate the purposes of 

the CARES Act to provide assistance to 

eligible PPP borrowers, including 

business concerns that operate as 

partnerships, affected by the COVID–19 

emergency. 

2. Calculation of Certain Payroll Costs 

Eligible for Loan Forgiveness 

May a fishing boat owner include as 

payroll costs in its application for loan 

forgiveness any compensation paid to a 

crewmember who received his or her 

own PPP loan and is seeking forgiveness 

for amounts of compensation the 

crewmember received for performing 

services described in Section 

3121(b)(20) of the Code with respect to 

that owner’s fishing boat? 

No. If a fishing boat crewmember 

obtains his or her own PPP loan and 

seeks forgiveness of that loan based in 

part on compensation from a particular 

fishing boat owner, the fishing boat 

owner cannot also obtain PPP loan 

forgiveness based on compensation paid 

to that same crewmember. This 

restriction applies only if the 

crewmember is performing services 

described in Section 3121(b)(20) of the 

Code for the particular fishing boat 

owner. The Administrator, in 

consultation with the Secretary, has 

determined that this restriction is 

necessary to prevent fishing boat owners 

and crewmembers from claiming 

forgiveness for the same payroll costs 

(for the owner’s PPP loan, the 

compensation to a specific 

crewmember; for the crewmember’s PPP 

loan, the compensation from the owner 

to that crewmember). As a result, only 

the crewmember’s PPP loan is eligible 

for forgiveness, and the owner may not 

obtain forgiveness for any payroll costs 

paid to the crewmember. The fishing 

boat owner is responsible for 

determining whether any of its 

crewmembers during the covered period 

for loan forgiveness received their own 

PPP loans. Due to the increased risk of 

duplicate payroll costs, PPP loans to 

fishing boat owners are more likely to be 

subject to an SBA loan review. 

3. Additional Information 

SBA may provide further guidance, if 

needed, through SBA notices that will 

be posted on SBA’s website at 

www.sba.gov. Questions on the 

Paycheck Protection Program may be 

directed to the Lender Relations 

Specialist in the local SBA Field Office. 

The local SBA Field Office may be 

found at https://www.sba.gov/tools/ 

local-assistance/districtoffices. 

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. 

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. 


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39068 Federal Register / Vol. 85, No. 126 / Tuesday, June 30, 2020 / Rules and Regulations 

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 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. 2020–14128 Filed 6–26–20; 11:15 am] 

BILLING CODE 8026–03–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 71 

[Docket No. FAA–2020–0164; Airspace 

Docket No. 20–ASO–3] 

RIN 2120–AA66 

Amendment of Class D Airspace and 

Revocation of Class E Airspace; 

Bogue, NC 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Final rule. 

SUMMARY: This action amends Class D 

airspace by updating the geographic 

coordinates, and removes Class E 

airspace extending upward from 700 

feet above the surface at Bogue Field 

Marine Corps Auxiliary Field, Bogue, 

NC, at the request of the US Marine 

Corps. Class E airspace is no longer 

required, as there are no instrument 

approaches into Bogue Field MCALF. 

This action also replaces the outdated 

term Airport/Facility Directory with the 

term Chart Supplement in the legal 

description of associated Class D 

airspace. This action enhances the 

safety and management of controlled 

airspace within the national airspace 

system. 

DATES: Effective 0901 UTC, September 

10, 2020. The Director of the Federal 

Register approves this incorporation by 

reference action under Title 1 Code of 

Federal Regulations part 51, subject to 

the annual revision of FAA Order 

7400.11 and publication of conforming 

amendments. 

ADDRESSES: FAA Order 7400.11D, 

Airspace Designations and Reporting 

Points, and subsequent amendments can 

be viewed on line at http://

www.faa.gov/air_traffic/publications/. 

For further information, you can contact 

the Airspace Policy Group, Federal 

Aviation Administration, 800 

Independence Avenue SW, Washington, 

DC 20591; telephone: (202) 267–8783. 

The Order is also available for 

inspection at the National Archives and 

Records Administration (NARA). For 

information on the availability of FAA 

Order 7400.11D at NARA, email 

fedreg.legal@nara.gov or go to https://

www.archives.gov/federal-register/cfr/ 

ibr-locations.html. 

FOR FURTHER INFORMATION, CONTACT: 

John Fornito, Operations Support 

Group, Eastern Service Center, Federal 

Aviation Administration, 1701 

Columbia Avenue, College Park, GA 

30337; telephone (404) 305–6364. 

SUPPLEMENTARY INFORMATION: 

Authority for This Rulemaking 

The FAA’s authority to issue rules 

regarding aviation safety is found in 

Title 49 of the United States Code. 

Subtitle I, Section 106 describes the 

authority of the FAA Administrator. 

Subtitle VII, Aviation Programs, 

describes in more detail the scope of the 

agency’s authority. This rulemaking is 

promulgated under the authority 

described in Subtitle VII, Part A, 

Subpart I, Section 40103. Under that 

section, the FAA is charged with 

prescribing regulations to assign the use 

of airspace necessary to ensure the 

safety of aircraft and the efficient use of 

airspace. This regulation is within the 

scope of that authority as it amends 

Class D airspace and removes Class E 

airspace extending upward from 700 

feet above the surface at Bogue Field 

MCALF, Bogue, NC, due to the airspace 

no longer being necessary. 

History 

The FAA published a notice of 

proposed rulemaking in the Federal 

Register (85 FR 14809, March 16, 2020) 

for Docket No. FAA–2020–0164 to 

amend Class D airspace by updating the 

geographic coordinates, and remove 

Class E airspace extending upward from 

700 feet above the surface at Bogue 

Field Marine Corps Auxiliary Field, 

Bogue, NC as the airport has no 

instrument approaches. Therefore, the 

Class E airspace is no longer necessary. 

This action enhances the safety and 

management of controlled airspace 

within the national airspace system. 

Interested parties were invited to 

participate in this rulemaking effort by 


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