This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents.

Rules and Regulations Federal Register

51589 

Vol. 86, No. 177 

Thursday, September 16, 2021 

SMALL BUSINESS ADMINISTRATION 

13 CFR Part 134 

[Docket Number SBA–2020–0042] 

RIN 3245–AH55 

Borrower Appeals of Final SBA Loan 

Review Decisions Under the Paycheck 

Protection Program 

AGENCY: U.S. Small Business 

Administration (SBA). 

ACTION: Final rule. 

SUMMARY: This final rule adopts with 

changes portions of the previously 

issued interim final rule published in 

the Federal Register on August 27, 

2020, on Appeals of SBA Loan Review 

Decisions Under the Paycheck 

Protection Program. This final rule 

provides procedures for appeals of 

certain final SBA loan review decisions 

under the Paycheck Protection Program, 

which is a temporary SBA 7(a) loan 

program, authorized by, inter alia, the 

Coronavirus Aid, Relief, and Economic 

Security Act and the Economic Aid to 

Hard-Hit Small Businesses, Nonprofits 

and Venues Act. 

DATES: 

Effective date: This rule is effective 

September 14, 2021. 

Applicability date: This final rule 

applies to all appealable final SBA loan 

review decisions under the Paycheck 

Protection Program. The rule applies to 

all appeals filed after the effective date 

of the rule and to those appeals filed 

before the effective date for which a 

Notice and Order has not been issued. 

FOR FURTHER INFORMATION CONTACT: An 

SBA Office of Hearings and Appeals 

(OHA) Representative at 202–401–8200. 

SUPPLEMENTARY INFORMATION: 

I. Background Information 

On March 13, 2020, President Trump 

declared the ongoing Coronavirus 

Disease 2019 (COVID–19) pandemic of 

sufficient severity and magnitude to 

warrant an emergency declaration for all 

States, territories, and the District of 

Columbia. With the COVID–19 

emergency, many small businesses 

nationwide have experienced and 

continue to experience economic 

hardship as a direct result of the 

Federal, State, tribal, and local public 

health measures that have been taken to 

minimize the public’s exposure to the 

virus. These measures, some of which 

are government-mandated, have been 

implemented nationwide and include 

the closures of and restrictions on 

restaurants, bars, gyms, and other 

businesses. In addition, based on the 

advice of public health officials, other 

measures, such as keeping a safe 

distance from others or even stay-athome orders, were being and continue 

to be implemented, resulting in a 

dramatic decrease in economic activity 

as the public avoids malls, retail stores, 

and other businesses. 

On March 27, 2020, the President 

signed the Coronavirus Aid, Relief, and 

Economic Security Act (the CARES Act) 

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

assistance and health care response for 

individuals, families, and businesses 

affected by the coronavirus pandemic. 

The Small Business Administration 

(SBA) received funding and authority 

through the CARES Act to modify 

existing loan programs and establish a 

new loan program to assist small 

businesses nationwide adversely 

impacted by the COVID–19 emergency. 

Section 1102 of the CARES Act 

temporarily permitted SBA to guarantee 

100 percent of 7(a) loans under a new 

program titled the ‘‘Paycheck Protection 

Program’’ (PPP) under Section 7(a)(36) 

of the Small Business Act. Section 1106 

of the CARES Act provides for 

forgiveness of up to the full principal 

amount of qualifying loans guaranteed 

under the PPP. 

On April 2, 2020, SBA posted its first 

PPP interim final rule (85 FR 20811) 

(the First Interim Final Rule). 

Subsequently, SBA issued a number of 

other interim final rules implementing 

the PPP. On April 24, 2020, the 

President signed the Paycheck 

Protection Program and Health Care 

Enhancement Act (Pub. L. 116–139), 

which provided additional funding and 

authority for the PPP. 

On May 22, 2020, SBA and Treasury 

posted an interim final rule on Loan 

Review Procedures and Related 

Borrower and Lender Responsibilities 

(85 FR 33010) (Loan Review interim 

final rule (IFR)). The rule stated that 

SBA would be issuing a separate interim 

final rule addressing the process for 

appealing certain SBA loan review 

decisions under the PPP. On June 5, 

2020, the Paycheck Protection Program 

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

(Flexibility Act) was signed into law, 

amending the CARES Act. On June 22, 

2020, SBA and Treasury posted an 

interim final rule that in part revised the 

Loan Review IFR to incorporate the 

relevant Flexibility Act amendments, 

address revisions to the Loan 

Forgiveness Application (SBA Form 

3508), and include a new alternative 

Loan Forgiveness Application (SBA 

Form 3508EZ) (85 FR 38304) (Second 

Loan Review IFR). 

On July 4, 2020, Public Law 116–147 

extended the authority for SBA to 

guarantee PPP loans to August 8, 2020. 

On August 11, 2020, SBA and Treasury 

posted an interim final rule on Appeals 

of SBA Loan Review Decisions Under 

the Paycheck Protection Program (85 FR 

52883) (OHA Appeal IFR), inviting the 

public to submit comments on or before 

September 28, 2020. 

On October 8, 2020, SBA and 

Treasury posted an interim final rule 

which made additional revisions to the 

Loan Review IFR and Second Loan 

Review IFR (85 FR 66214) (Third Loan 

Review IFR). The Third Loan Review 

IFR provided additional guidance 

concerning the forgiveness and loan 

review processes for PPP loans of 

$50,000 or less and, for PPP loans of all 

sizes, lender responsibilities with 

respect to review of borrower 

determinations of eligible costs for 

forgiveness in excess of a borrower’s 

PPP loan amount. 

On December 27, 2020, the President 

signed the Economic Aid to Hard-Hit 

Small Businesses, Nonprofits and 

Venues Act (Economic Aid Act) (Pub. L. 

116–260), which, among other things, 

reauthorized lending under the PPP 

through March 31, 2021, authorized 

second draw PPP loans under Section 

7(a)(37) of the Small Business Act, 

modified PPP provisions relating to 

forgiveness of PPP loans, and codified 

Section 1106 of the CARES Act under 

Section 7A of the Small Business Act. 

On January 19, 2021, SBA and Treasury 

posted an interim final rule to 

consolidate prior rules related to 

forgiveness and reviews of PPP loans 

51590 Federal Register / Vol. 86, No. 177 / Thursday, September 16, 2021 / Rules and Regulations 

and incorporate changes made by the 

Economic Aid Act (86 FR 8283) (Fourth 

Loan Review IFR). 

On March 11, 2021, the American 

Rescue Plan Act of 2021 (American 

Rescue Plan Act) was enacted to, among 

other things, expand eligibility for first 

and second draw PPP loans and revise 

the exclusions from payroll costs for 

purposes of loan forgiveness. On March 

18, 2021, SBA and Treasury posted an 

interim final rule on PPP to incorporate 

the American Rescue Plan Act’s 

amendments to the PPP, as well as other 

changes (86 FR 15083). On March 30, 

2021, the PPP Extension Act of 2021 

(Pub. L. 117–6) was enacted, extending 

SBA’s PPP program authority through 

June 30, 2021. On July 30, 2021, SBA 

published an interim final rule on PPP 

establishing a direct borrower 

forgiveness process for loans of 

$150,000 or less, among other changes 

(86 FR 40921). 

As described below, this final rule 

sets forth procedures for PPP borrowers 

and Lenders on the process for a PPP 

borrower to appeal certain final SBA 

loan review decisions under the PPP to 

the SBA Office of Hearings and Appeals 

(OHA). The interim final rule 

supplemented the interim final rule on 

Loan Review Procedures and Related 

Borrower and Lender Responsibilities 

posted on SBA’s and Treasury’s 

websites on May 22, 2020 (published on 

June 1, 2020, in the Federal Register), 

as revised by the interim final rules 

posted on SBA’s and Treasury’s 

websites on June 22, 2020, October 8, 

2020, and January 19, 2021 (published 

on June 26, 2020, October 19, 2020, and 

February 5, 2021, respectively), and as 

further amended. 

II. Notice and Comment and Immediate 

Effective Date 

This rule revises subpart L, as added 

by the interim final rule posted on the 

websites of the SBA and the U.S. 

Department of the Treasury on August 

11, 2020 (published in the Federal 

Register on August 27, 2020), to reflect 

SBA’s responses to public comments on 

the interim final rule. The revision to 

§ 134.102, Jurisdiction of OHA, is 

adopted without change. 

This final rule adopts with changes 

portions of the previously-published 

interim final rule on Appeals of SBA 

Loan Review Decisions Under the 

Paycheck Protection Program. This rule 

revises 13 CFR part 134, subpart L, as 

added by the interim final rule, to 

reflect SBA’s responses to public 

comments on the interim final rule, as 

detailed in Part III below. This final rule 

has accordingly satisfied the 

Administrative Procedure Act’s advance 

notice-and-comment requirements. 

SBA has found that there is good 

cause to dispense with the 30-day 

delayed effective date provided in the 

Administrative Procedure Act. The 

intent of the CARES Act is to afford SBA 

the flexibility to provide relief to 

America’s small businesses 

expeditiously. This intent, along with 

the need to provide lenders and 

borrowers with certainty regarding PPP 

loan forgiveness (if any), provides good 

cause for immediate implementation of 

changes to the OHA appeal feature of 

this program. Specifically, it is critical 

to meet lenders’ and borrowers’ need for 

clarity concerning the OHA appeal 

process as rapidly as possible. 

Borrowers have been applying for loan 

forgiveness, lenders have been issuing 

loan forgiveness decisions to SBA, and 

SBA has been reviewing PPP loans in 

connection with those forgiveness 

applications and decisions. SBA 

currently has pending final SBA loan 

review decisions that are ready to be 

issued and is continuing to conduct 

loan reviews and make final SBA loan 

review decisions that will need to be 

issued. Borrowers and lenders are 

expecting these decisions to be issued in 

accordance with the statutory and 

regulatory timelines requiring SBA to 

remit the appropriate forgiveness 

amount to the lender (if any), within 90 

days of the lender issuing its decision to 

SBA, subject to any SBA review of the 

loan or the loan application. This final 

rule will allow SBA to immediately 

issue such decisions and provide 

certainty around the appeals process to 

these potential appellants without 

further delay. Because this final rule 

also provides increased accessibility to 

borrowers in response to comments 

previously received by the public, 

allowing the borrowers that receive an 

appealable final SBA loan review 

decision to immediately appeal under 

the final rule is in the best interests of 

the borrowers. 

III. Summary of Comments Received 

The comment period for the OHA 

Appeal IFR was open from August 27, 

2020, to September 28, 2020, and SBA 

received 16 comments. This section 

includes a description of the comments 

and SBA’s response. 

Two of the comments received 

proposed an extension of time to file an 

appeal to account for appellants who 

may be unfamiliar with the appeals 

process. In the interest of efficiency and 

to ensure a speedy resolution of 

disputes concerning final SBA loan 

review decisions, the 30-calendar day 

requirement will remain. To promote 

clarity and fairness, SBA will no longer 

begin counting days to file an appeal 

based on when an appellant receives 

notification from the lender that a final 

SBA loan review decision has been 

issued without actually receiving the 

final loan review decision document 

detailing the reasons for the decision. 

Instead, the clock for counting days will 

begin only after the borrower has 

received the actual final SBA loan 

review decision document. This will 

provide the borrower with 30 calendar 

days to formulate its arguments as to 

why the decision is clearly erroneous. 

See 13 CFR 134.1202(a). 

Two of the comments raised issue 

with the inability of the borrower to file 

arguments after the administrative 

record has been transmitted to OHA. 

Although OHA’s general rules of 

procedure found at 13 CFR 134.206(e) 

allows for a party to request leave to 

reply to a response, this final rule 

explicitly directs a party to seek leave to 

file a reply or supplemental pleading. 

(13 CFR 134.1208(e).) Also, an appellant 

is given 30 calendar days after the 

issuance of the Notice and Order to file 

any objections to the administrative 

record, should the appellant find the 

administrative record is incomplete. See 

13 CFR 134.1207(e). 

One comment proposed that the time 

to file an objection to the administrative 

record should be extended to 15 

calendar days. The commenter reasoned 

that a non-attorney may have difficulty 

understanding the role of the 

administrative record, what documents 

are included and excluded from the 

record, and the applicable privileges. 

Because the appellant will have 

participated in the process of providing 

documents submitted by the lender to 

SBA during the loan forgiveness process 

and the loan review process, the 

appellant should be familiar with the 

documents included in the 

administrative record, making 30 

calendar days from the issuance of the 

Notice and Order (where the 

administrative record is due 20 calendar 

days after issuance of the Notice and 

Order) a sufficient time to assert an 

objection. The Notice and Order that 

will be issued under 13 CFR 134.1206 

will provide a description of the 

documents included in the 

administrative record and will note the 

appellant’s ability to object to the 

administrative record by the due date. 

The appellant can also avail itself of 13 

CFR 134.1207, which provides more 

detail on the administrative record and 

appellant’s ability to object to the 

administrative record. Appellant will 

also have the ability to request leave to 

file a supplementary pleading after 

Federal Register / Vol. 86, No. 177 / Thursday, September 16, 2021 / Rules and Regulations 51591 

review of the SBA’s appeal response, 

should one be filed, and administrative 

record under 13 CFR 134.1208(e) and 

134.211 (Motions), which is 

incorporated into subpart L. 

One comment proposed that the SBA 

should disclose that the appellant may 

object to the administrative record at the 

time of the transmission of the 

administrative record. Such notice is 

included in 13 CFR 134.1207 and will 

be provided to the appellant in the 

Notice and Order under 13 CFR 

134.1206, which SBA deems sufficient 

notice of the ability to object to the 

administrative record. 

Two comments were received 

regarding the need for simplicity of the 

appeals process as there is a large 

number of appellants who will be filing 

their appeals without the assistance of 

an attorney. Overall, the commenters 

requested a more simplified process in 

light of the information appellant is 

required to submit to OHA at the time 

of the appeal. One commenter suggested 

that pro se litigants should disclose 

their status so that OHA will assist the 

appellant throughout the appeals 

process and construe their filings 

liberally, taking into consideration their 

non-attorney status. The rules, policies, 

and procedures of OHA are tailored to 

address and accommodate all 

appellants, regardless of whether they 

are represented by an attorney. The 

information an appellant is required to 

file with an appeal is minimal, but 

necessary for the Judge to render a 

decision based on the relevant facts and 

law. In furtherance of OHA’s 

commitment to ensure the appeals 

process is accessible to all appellants, 

OHA has reduced the information 

required to file an appeal. See 13 CFR 

134.1204. OHA will also provide 

appellants with an electronic case 

management system (https://

appeals.sba.gov) that will provide a 

simple electronic way to file, process, 

and track the appeal before OHA, 

including the automation of serving 

parties, and accessing appeal documents 

and the administrative record. 

Four comments were received 

regarding the exhaustion of remedies 

requirement under 13 CFR 134.1216 

that required an appellant to request 

review by the SBA Administrator before 

appealing an OHA decision to Federal 

district court. One comment suggested 

that OHA should provide language in 

the decision disclosing an appellant’s 

ability to request review of OHA’s 

decision by the SBA Administrator. The 

commenters also argued that this 

exhaustion of administrative remedies 

requirement was in violation of the 

Administrative Procedures Act and 

deprives appellants of due process. A 

number of commenters asserted that the 

Administrator’s review of OHA’s 

decision is a circular review process 

since the commenters believed that the 

Administrator would issue the final 

SBA loan review decision. The 

Administrator will not be issuing the 

final SBA loan review decision. The 

decision will be made by the 

appropriate SBA official in accordance 

with published delegations of authority. 

Additionally, various commenters 

asserted that OHA’s ability to render an 

independent decision on a final SBA 

loan review decision is in question 

because OHA is a subordinate office to 

the Administrator. Although SBA 

disagrees with the assertions in those 

comments, SBA has determined to 

remove the requirement for a borrower 

to request a review by the SBA 

Administrator before any further appeal 

because of the limited resources within 

the Office of the Administrator to render 

a decision on the anticipated high 

number of requests for review. In 

addition, SBA believes that it is 

appropriate, consistent with due process 

requirements, and most efficient for 

borrowers to be able to seek relief in 

Federal district court, without requiring 

review by the Administrator. Therefore, 

borrowers have the option to either (1) 

request reconsideration by the presiding 

OHA judge under 13 CFR 134.1211(c) 

and then appeal the final decision to 

Federal district court under 13 CFR 

134.1211(g); or (2) appeal a final 

decision directly to the appropriate 

Federal district court under 13 CFR 

134.1211(g). 

In lieu of the provision requiring the 

borrower to request review by the 

Administrator and in order to vest 

reviewable discretion with the 

appropriate SBA official, SBA will add 

a provision giving the SBA 

Administrator the option to review or 

reverse an initial OHA decision or a 

reconsidered initial OHA decision, in 

the Administrator’s sole discretion. 

Although the Administrator has the 

discretion to review or reverse such 

decisions, borrowers may not request, 

and are not required to request, a review 

from the Administrator in order to 

exhaust administrative remedies before 

appealing to the appropriate Federal 

district court. See 13 CFR 134.1211(d). 

Three comments were received 

regarding the standard of review and 

burden of proof for PPP appeals. One 

commenter stated that OHA should 

remove the requirement that the 

appellant establish a clear error of fact 

or law by SBA and only require 

appellant to establish error. The 

suggestion, however, is based on the 

commenter’s inaccurate understanding 

of the administrative process, stating 

that OHA is reviewing a lender’s 

decision and is not reviewing the 

decision of a public officer, i.e., an SBA 

official. This is incorrect, as OHA’s 

jurisdiction is limited to reviewing final 

SBA loan review decisions as provided 

for in 13 CFR 134.1201(b). Further, the 

regulation establishing OHA’s 

jurisdiction explicitly states that it will 

not accept an appeal based solely on a 

lender’s decision. See 13 CFR 

134.1201(c). One commenter suggested 

a de novo review of the final SBA loan 

review decision due to the lack of 

guidance on the loan review process. 

Another commenter voiced concern 

with the use of the preponderance of the 

evidence standard in conjunction with 

the requirement to establish clear error 

on the part of SBA. The commenter 

found issue with the preponderance of 

the evidence standard because such a 

standard is usually required at the 

initial review level, and the commenter 

disagreed with the use of the clear error 

standard in light of the lack of guidance 

on the loan review process. The 

commenters also stated the appellant 

will be completely deprived of the 

opportunity to review any evidence. 

SBA has determined that it will 

remove the burden of proof requirement 

of preponderance of the evidence. 

However, a decision by an SBA official 

is entitled to the deference afforded by 

the clear error standard. Therefore, it is 

appropriate and reasonable for OHA to 

assess the final SBA loan review 

decision using a clear error standard. An 

appellant will not be completely 

deprived of the opportunity to review 

the evidence. An appellant will be 

provided with a copy of the final SBA 

loan review decision that will set forth 

the reasons for the decision prior to 

filing an appeal, and an appellant 

should be familiar with the documents 

included in the administrative record 

because the appellant will have 

participated in the process of providing 

documents submitted by the lender to 

SBA during the loan forgiveness process 

and the loan review process. In 

addition, an appellant has the 

opportunity to review and object to the 

administrative record as provided for in 

13 CFR 134.1207(e). 

Three comments were received 

regarding the inability of appellants to 

request discovery, while allowing SBA 

to request discovery. SBA has 

determined that an OHA decision 

should be based on a review of the 

administrative record, the appeal 

petition, any response, any reply or 

supplemental pleading, and filings 

related to objection to the administrative 

51592 Federal Register / Vol. 86, No. 177 / Thursday, September 16, 2021 / Rules and Regulations 

1 85 FR 33010 (June 1, 2020). 

2 85 FR 38304 (June 26, 2020). 

3 85 FR 66214 (October 19, 2020). 

4 86 FR 8283 (February 5, 2021). 

5See https://www.sba.gov/document/proceduralnotice-5000-20038-procedures-lender-submissionpaycheck-protection-program-loan-forgivenessdecisions-sba-sba. 

6See https://www.sba.gov/document/proceduralnotice-5000-20077-ppp-borrower-resubmissionsloan-forgiveness-applications-using-form-3508slender-notice. 

7 Interest will continue to accrue on the PPP loan 

during the deferment period. See, Interim Final 

Rule on Business Loan Program Temporary 

Changes; Paycheck Protection Program as Amended 

by Economic Aid Act (86 FR 3692, 3703, January 

14, 2021). 

8See also, Interim Final Rule on Business Loan 

Program Temporary Changes; Paycheck Protection 

Program—COVID Revenue Reduction Score, Direct 

Borrower Forgiveness Process, and Appeals 

Deferment (86 FR 40921, 40925, July 30, 2021). 

record. See 13 CFR 134.1209(c). Thus, 

neither discovery nor oral hearings will 

be permitted for appellant or SBA. See 

13 CFR 134.1209(b). 

One comment received suggested that 

OHA provide a description of the OHA 

procedural rules incorporated into 

subpart L in addition to citing to those 

rules. SBA agrees that such a change is 

minimal and promotes clarity and 

guidance. Thus, this final rule provides 

a description of each rule incorporated 

into subpart L at 13 CFR 134.1201(h). 

One comment received proposed a 

change in the rule to account for 

borrowers who may have been acquired 

by another entity between the time the 

initial PPP loan was issued and the 

filing of a PPP appeal. The rule now 

includes language to address both 

borrowers and their legal successors 

under 13 CFR 134.1203. 

Six commenters argued that SBA 

should have regulations which 

formalize the procedures for final SBA 

loan review decisions. They assert that 

the existing interim final rules are too 

broad and lacking in specifics about the 

process and have no criteria for making 

the decisions or compiling the 

administrative record. One commenter 

also requested that more information be 

provided on the loan forgiveness 

process. As to the administrative record, 

this final rule sets forth what should be 

included in the administrative record at 

13 CFR 134.1207. As to the criteria for 

making final SBA loan review decisions 

and the loan forgiveness process, SBA 

has issued various rules and guidance 

on the process for SBA loan reviews 

including, but not limited to, the Loan 

Review IFR; 1 Second Loan Review 

IFR; 2 Third Loan Review IFR; 3 Fourth 

Loan Review IFR; 4 SBA Procedural 

Notice: Procedures for Lender 

Submission of Paycheck Protection 

Program Loan Forgiveness Decisions to 

SBA and SBA Forgiveness Loan 

Reviews; 5 and SBA Procedural Notice: 

PPP Borrower Resubmissions of Loan 

Forgiveness Applications Using Form 

3508S, Lender Notice Responsibilities to 

PPP Borrowers, and Offset of 

Remittances to Lenders for Lender 

Debts.6 Additional information is 

available at https://www.sba.gov/ 

funding-programs/loans/covid-19-reliefoptions/paycheck-protection-program 

and https://home.treasury.gov/policyissues/coronavirus/assistance-for-smallbusinesses/paycheck-protectionprogram. SBA has issued sufficient 

guidance for the loan forgiveness 

process and the issuance of final SBA 

loan review decisions. SBA received a 

few other comments which 

recommended changes to the loan 

forgiveness application process. Such 

comments are not relevant to this final 

rule and need not be addressed here. 

Five comments received stated that 

the requirement to repay the loans 

should be held in abeyance pending 

appeal. SBA has determined that, in 

order to avoid the potential 

administrative burden of having to 

reverse implementation of the final SBA 

loan review decision, including the 

refund of borrower payments by the 

Lender and the processing of 

forgiveness payments by SBA, a timely 

appeal by a PPP borrower of a final SBA 

loan review decision should extend the 

deferment period of the PPP loan. 

Payment of the PPP loan will be 

deferred until there is a final decision 

on an appeal under 13 CFR 134.1211. In 

addition, SBA believes that allowing for 

continued deferment is in the best 

interest of the borrower.7 This decision 

has been added to the regulation at 13 

CFR 134.1202(d).8

SBA also received some comments 

from borrowers that sought relief from 

SBA for a PPP loan application that was 

denied by a Lender. Such comments are 

not relevant to this final rule and cannot 

be addressed here. Further, the rule, at 

13 CFR 134.1201(c), provides that a 

borrower cannot directly file an appeal 

of a decision made by a lender 

concerning a PPP loan to OHA. 

IV. Technical Amendments 

This rule makes technical 

amendments to ensure efficiency, 

transparency, and consistency 

throughout the appeals process. This 

includes: Removal of the deduction of 

any Economic Injury Disaster Loan 

(EIDL) advance (located in the OHA 

Appeal IFR at 13 CFR 134.1201(b)(3)) to 

be consistent with Section 333 of the 

Economic Aid Act which repealed the 

CARES Act provision at section 

1110(e)(6) requiring SBA to deduct the 

EIDL advance; explicitly stating that a 

borrower cannot directly file an appeal 

of a decision by a lender concerning a 

PPP loan to OHA (13 CFR 134.1201(c)); 

informing an appellant that they must 

first file an appeal of the final SBA loan 

review decision with OHA before 

appealing to Federal district court (13 

CFR 134.1201(d)); and incorporating 

provisions from OHA’s General Rules of 

Practice into this section with 

descriptions of those provisions (13 CFR 

134.1201(h)). 

This final rule makes a procedural 

change to require appellants to use the 

OHA Case Portal to file and manage 

their appeals (13 CFR 134.1202(a)); this 

provision also establishes 

‘‘Commencement of Appeals of Final 

SBA Loan Review Decisions’’ to outline 

the process of how and when an appeal 

must be filed (13 CFR 134.1202); and 

removes the requirement that timeliness 

of the appeal could be based on a 

notification by the lender of a final SBA 

loan review decision rather than actual 

receipt of the final SBA loan review 

decision (13 CFR 134.1202(a)). 

SBA has also simplified the 

information required to file an appeal by 

eliminating a requirement to provide a 

basis for jurisdiction and relief sought; 

only requiring the borrower to produce 

a final SBA loan review decision (and 

not merely a description of a final SBA 

loan review decision) and the date it 

was received to determine timeliness of 

the appeal; removing requirements that 

the appellant provide tax documents; 

and removing the requirement that a 

borrower include a certificate of service 

with its appeal or any other subsequent 

documents filed with OHA. (13 CFR 

134.1204). This rule also requires 

borrowers to provide their lender with 

a copy of their appeal in order for the 

lender to extend the deferment period of 

the PPP loan until a final decision is 

issued under § 134.1211. (13 CFR 

134.1202(b)). 

This rule also specifies that lenders 

and individual owners of a borrower 

entity do not have standing to file an 

appeal. (13 CFR 134.1203). The new 

provision, titled ‘‘Notice and Order,’’ 

now provides an overview of the 

information that will be included within 

the Notice and Order (13 CFR 134.1206). 

This rule provides for the deadline to 

produce the Administrative Record 

within the ‘‘Administrative Record’’ 

provision (13 CFR 134.1207(a)); clarifies 

that SBA may, but is not required to, 

respond to an appeal and, if SBA does 

not respond it will not be construed 

against SBA (13 CFR 134.1208); 

provides that a response to an appeal is 

due 45 calendar days from the date of 

Federal Register / Vol. 86, No. 177 / Thursday, September 16, 2021 / Rules and Regulations 51593 

the Notice and Order instead of from the 

appeal filing date (13 CFR 134.1208(b)); 

removes language making final 

decisions precedential (13 CFR 

134.1211 (b) & (e)); discloses that final 

decisions rendered under this section 

may be published by OHA within its 

discretion with any necessary 

redactions (13 CFR 134.1211(f)); and 

removes language pertaining to 

protective orders, as the only parties 

involved in PPP appeals are the 

appellant and SBA, both of which will 

already have access to all documents 

that will not be accessible to the public; 

and adds language in 13 CFR 134.1207 

to provide for a non-waiver provision. 

V. Borrower Appeals of Final SBA Loan 

Review Decisions Under the Paycheck 

Protection Program 

This final rule adopts with changes 

portions of the previously-issued 

interim final rule on Appeals of SBA 

Loan Review Decisions Under the 

Paycheck Protection Program. This final 

rule does not make any changes to 13 

CFR 134.102(w) regarding OHA’s 

jurisdiction over PPP appeals, and the 

current provision in the Code of Federal 

Regulations will remain the same. This 

final rule revises the authority citation 

for subpart L to incorporate 15 U.S.C. 

636(a)(37) and 15 U.S.C. 636m, which 

were included in the Economic Aid Act. 

This final rule also revises subpart L as 

set forth in the prior interim final rule. 

Section 134.1201, Scope of rules in 

this subpart, provides a process for 

appeal to OHA of certain final SBA loan 

review decisions under the PPP and any 

other PPP matter referred to OHA by the 

Administrator. PPP loans include first 

draw PPP loans made under Section 

7(a)(36) of the Small Business Act and 

second draw PPP loans made under 

Section 7(a)(37) of the Small Business 

Act. Subpart L provides that an 

appealable final SBA loan review 

decision is an official written decision 

by SBA, after SBA completes a review 

of a PPP loan, that a borrower (1) was 

ineligible for a PPP loan; (2) was 

ineligible for the PPP loan amount 

received or used the PPP loan proceeds 

for unauthorized uses; (3) is ineligible 

for PPP loan forgiveness in the amount 

determined by the lender in its full 

approval or partial approval decision 

issued to SBA; and/or (4) is ineligible 

for PPP loan forgiveness in any amount 

when the lender has issued a full denial 

decision to SBA. 

Subpart L applies to loan review 

decisions made by SBA after SBA 

completes a review of a PPP loan as set 

forth in Part III.1 and Part III.2c. of the 

Loan Review IFR, as amended by the 

Second Loan Review IFR, Third Loan 

Review IFR, and Fourth Loan Review 

IFR and as further amended. Subpart L 

further provides that any decision by a 

lender concerning a PPP loan, including 

a borrower’s PPP loan application or a 

borrower’s PPP loan forgiveness 

application, may not be appealed 

directly to OHA. In addition, this 

section sets forth other types of 

decisions and determinations that are 

not covered by subpart L, and makes 

clear that subpart C, Rules of Practice 

for Appeals From Size Determinations 

and NAICS Code Designations, is not 

applicable to appeals from final SBA 

loan review decisions. This section sets 

forth the specific provisions from 

subpart B, OHA’s general Rules of 

Practice, that are applicable to subpart 

L. Other provisions from subpart B that 

are not specifically referenced in 

subpart L do not apply to subpart L. As 

stated above, a timely appeal by a PPP 

borrower of a final SBA loan review 

decision will extend the deferment 

period of the PPP loan until a final 

decision is issued pursuant to 

§ 134.1211. However, if SBA remits to 

the lender the PPP loan forgiveness 

amount set forth in the decision issued 

by the lender to SBA, the borrower may 

not file an OHA appeal, and the 

borrower must begin repayment of any 

remaining balance of its PPP loan. This 

section makes clear that a borrower 

must file an appeal with OHA on a final 

SBA loan review decision before 

appealing to the appropriate Federal 

district court. 

Section 134.1202, Commencement of 

appeals of final SBA loan review 

decisions, provides that an appellant 

must file its appeal with OHA within 30 

calendar days of receipt of the final SBA 

loan review decision and references 

OHA’s website, where an appellant will 

be able to file and manage its appeal 

using the OHA Case Portal. By utilizing 

the OHA Case Portal, an appellant’s 

appeal will automatically be served 

upon the Associate General Counsel for 

Litigation at OLITService@sba.gov. The 

section also provides specific 

information on how to calculate days. In 

addition, this section makes clear that a 

timely appeal by a PPP borrower of a 

final SBA loan review decision extends 

the deferment period of the PPP loan 

until a final decision is issued pursuant 

to § 134.1211. This section also requires 

an appellant to provide the lender with 

a copy of its appeal in order for the 

lender to extend the deferment period of 

the PPP loan until a final decision is 

issued pursuant to § 134.1211. 

Section 134.1203, Standing, provides 

that only the borrower on a loan for 

which SBA has issued a final SBA loan 

review decision has standing to appeal 

the final SBA loan review decision to 

OHA. Individual owners of a borrower 

entity and lenders do not have standing 

to appeal a final SBA loan review 

decision. 

Section 134.1204, The appeal 

petition, provides that an appeal 

petition must include the following 

information: (1) A copy of the final SBA 

loan review decision that is being 

appealed and the date it was received; 

(2) a full and specific statement as to 

why the final SBA loan review decision 

is alleged to be erroneous, together with 

all factual information and legal 

arguments supporting the allegations; 

and (3) the name, address, telephone 

number, email address and signature of 

the appellant or its attorney. This 

section makes clear that a Notice of 

Paycheck Protection Program 

Forgiveness Payment does not provide a 

borrower with a right to appeal to OHA. 

This section further provides that an 

appeal petition that does not include the 

above may be dismissed by the Judge 

and permits SBA to move for a motion 

for more definite statement or otherwise 

comply with the requirements of this 

section. 

Section 134.1205, Dismissal, provides 

that the Judge must dismiss the appeal 

if: (1) The appeal is beyond OHA’s 

jurisdiction as set forth under 

§ 134.1201; (2) the appeal is untimely 

under § 134.1202; (3) the appellant lacks 

standing to appeal under § 134.1203; or 

(4) is premature because SBA has not 

yet made a final SBA loan review 

decision. This section also provides that 

the Judge may dismiss the appeal if, 

among other things, the appeal does not, 

on its face, allege specific facts that if 

proven to be true, warrant reversal or 

remand of the final SBA loan review 

decision. 

Section 134.1206, Notice and Order, 

provides that upon receipt of an appeal 

challenging a final SBA loan review 

decision, OHA will assign the matter to 

either an Administrative Law Judge or 

an Administrative Judge in accordance 

with § 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 

the deadline by which SBA may 

respond to the appeal. 

Section 134.1207, The administrative 

record, provides that the administrative 

record is due 20 calendar days after 

issuance of the Notice and Order. The 

administrative record shall include nonprivileged, relevant documents that SBA 

considered in making its decision or 

that were before SBA at the time of the 

decision. The administrative record 

need not, however, contain all 

51594 Federal Register / Vol. 86, No. 177 / Thursday, September 16, 2021 / Rules and Regulations 

documents pertaining to the appellant. 

SBA will file the administrative record 

with OHA and serve it on appellant 

utilizing the OHA Case Portal. This 

provision states that in the event that 

privileged or confidential information is 

disclosed in the administrative record, 

such disclosure shall not operate as a 

waiver of any claim of privilege or 

confidentiality by SBA. This section 

permits the appellant to object to the 

absence of any document from the 

administrative record that the appellant 

believes should have been included in 

the administrative record. Generally, 

such objections must be filed with OHA 

and served on SBA no later than 30 

calendar days after issuance of the 

Notice and Order utilizing the OHA 

Case Portal. The Judge will rule upon 

such objections and may direct or 

permit that the administrative record be 

supplemented. 

Section 134.1208, Response to an 

appeal petition, prescribes that only 

SBA, though not required, may respond 

to an appeal. In addition, OHA can 

request SBA to respond for good cause 

shown by OHA. The response should 

set forth the relevant facts and legal 

arguments to the issues presented on 

appeal. If SBA elects not to respond to 

the appeal, such election shall not be 

interpreted to be an admission or waiver 

of any allegation of law or fact. Except 

for good cause shown, a response filed 

after the close of record established by 

the Judge will not be considered. If SBA 

elects to respond, SBA must file its 

response with OHA and serve a copy of 

the response upon the appellant 

utilizing the OHA Case Portal. No reply 

to a response will be permitted unless 

the Judge directs otherwise. 

Section 134.1209, Evidence beyond 

the record, discovery and oral hearings, 

provides that, generally, the Judge may 

not admit evidence beyond the written 

administrative record. Neither discovery 

nor oral hearings will be permitted in 

appeals from final SBA loan review 

decisions. All appeals under subpart L 

will be decided solely on a review of the 

written administrative record, the 

appeal petition, any response, any reply, 

and filings related to objection to the 

administrative record. 

Section 134.1210, Standard of review, 

provides that the standard of review is 

whether the final SBA loan review 

decision was based on clear error of fact 

or law. The appellant has the burden of 

proof. 

Section 134.1211, Decision on appeal, 

provides that the Judge will issue his or 

her decision within 45 calendar days 

after the close of record, as practicable. 

The decision will contain findings of 

fact and conclusions of law, the reasons 

for such findings and conclusions, and 

any relief ordered. The decision will be 

served upon appellant and SBA 

utilizing the OHA Case Portal. The 

Judge’s decision on the appeal is an 

initial decision. However, unless a 

request for reconsideration is filed 

pursuant to paragraph (c) of § 134.1211 

or the Administrator, solely within the 

Administrator’s discretion, decides to 

review or reverse the initial decision 

pursuant to paragraph (d) of § 134.1211, 

an initial decision shall become the 

final decision of SBA 30 calendar days 

after its service and is thereafter 

appealable to the appropriate Federal 

district court. This section allows for a 

request for reconsideration pursuant to 

paragraph (c) of § 134.1211 by SBA or 

appellant. This section also provides the 

Administrator, solely within the 

Administrator’s discretion, with the 

right to review or reverse an initial OHA 

decision or a reconsidered initial OHA 

decision pursuant to paragraph (d) of 

§ 134.1211. Such discretionary authority 

of the Administrator does not create 

additional rights of appeal on the part 

of an appellant not otherwise specified 

in SBA regulations. This section also 

provides that decisions rendered by 

OHA under subpart L are not 

precedential. This section provides that 

final decisions rendered under this 

section may be published by OHA 

within its discretion with any necessary 

redactions of confidential business and 

financial information or personally 

identifiable information. Lastly, this 

section provides that final decisions 

may be appealed to the appropriate 

Federal district court only. 

Section 134.1212, Effects of the 

decision, provides that OHA may affirm, 

reverse, or remand a final SBA loan 

review decision. If remanded, OHA no 

longer has jurisdiction over the matter 

unless a new appeal is filed as a result 

of a new final SBA loan review 

decision. 

Section 134.1213, Equal Access to 

Justice Act (EAJA), provides that a 

prevailing appellant is not entitled to 

recover attorney’s fees. Appeals to OHA 

from final SBA loan review decisions 

under the PPP are not proceedings that 

are required to be conducted by an 

Administrative Law Judge under 

§ 134.603. 

Section 134.1214, Confidential 

information, provides that if a filing or 

other submission made pursuant to an 

appeal in subpart L contains 

confidential business and financial 

information; personally identifiable 

information; source selection sensitive 

information; income tax returns; 

documents and information covered 

under § 120.1060; or any other exempt 

information, that information is not 

available to the public pursuant to the 

Freedom of Information Act (FOIA), 5 

U.S.C. 552. 

Compliance With Executive Orders 

12866, 12988, 13132, and 13563, the 

Congressional Review Act, Paperwork 

Reduction Act (44 U.S.C. Ch. 35), and 

the Regulatory Flexibility Act (5 U.S.C. 

601–612) 

Executive Orders 12866 and 13563 

OMB’s Office of Information and 

Regulatory Affairs (OIRA) has 

determined that this final rule is 

economically significant for the 

purposes of Executive Orders 12866 and 

13563 SBA, however, is proceeding 

under the emergency provision at 

Executive Order 12866 Section 

6(a)(3)(D) based on the need to move 

expeditiously to mitigate the current 

economic conditions arising from the 

COVID–19 emergency. 

Executive Order 12988 

SBA has drafted this rule, to the 

extent practicable, in accordance with 

the standards set forth in section 3(a) 

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

minimize litigation, eliminate 

ambiguity, and reduce burden. The rule 

has no preemptive or retroactive effect. 

Executive Order 13132 

SBA has determined that this rule 

will not have substantial direct effects 

on the States, on the relationship 

between the National Government and 

the States, or on the distribution of 

power and responsibilities among the 

various layers of government. Therefore, 

SBA has determined that this rule has 

no federalism implications warranting 

preparation of a federalism assessment. 

Paperwork Reduction Act, 44 U.S.C. 

Chapter 35 

SBA has determined that this final 

rule does not impose additional 

reporting or recordkeeping requirements 

under the Paperwork Reduction Act. 

Congressional Review Act 

OIRA has also determined that this 

rule is a major rule under Subtitle E of 

the Small Business Regulatory 

Enforcement Fairness Act of 1996 (also 

known as the Congressional Review Act 

or CRA), 5 U.S.C. 804(2). If a rule is 

deemed major, the CRA generally 

provides that the rule may not take 

effect until at least 60 days following its 

publication unless the agency for good 

cause finds that notice and public 

procedure are impracticable, 

unnecessary, or contrary to the public 

interest. 5 U.S.C. 808. For the reasons 

discussed in Section II above, SBA finds 

Federal Register / Vol. 86, No. 177 / Thursday, September 16, 2021 / Rules and Regulations 51595 

that there is good cause to dispense with 

the CRA effective date requirement. The 

agency believes that delaying the 

effective date of this final rule would be 

contrary to the public interest. 

Regulatory Flexibility Act (RFA) 

The Regulatory Flexibility Act (RFA) 

generally requires that when an agency 

issues a proposed rule, or a final rule 

pursuant to section 553(b) of the APA or 

another law, the agency must prepare a 

regulatory flexibility analysis that meets 

the requirements of the RFA and 

publish such analysis in the Federal 

Register. 5 U.S.C. 603, 604. Rules that 

are exempt from notice and comment 

are also exempt from the RFA 

requirements, including conducting a 

regulatory flexibility analysis, when 

among other things the agency for good 

cause finds that notice and public 

procedure are impracticable, 

unnecessary, or contrary to the public 

interest. SBA Office of Advocacy guide: 

How to Comply with the Regulatory 

Flexibility Act, Ch. 1. p. 9. Since this 

rule finalizes an interim final rule that 

was exempt from notice and comment 

and did not require an initial regulatory 

flexibility analysis, SBA is likewise not 

required to conduct a regulatory 

flexibility analysis. 

List of Subjects in 13 CFR Part 134 

Administrative practice and 

procedure, Claims, Equal access to 

justice, Lawyers, Organization and 

function (Government agencies). 

For the reasons stated in the 

preamble, the Small Business 

Administration interim rule amending 

13 CFR part 134, which was published 

at 85 FR 52883 on August 27, 2020, is 

adopted as final with the following 

changes: 

PART 134—RULES OF PROCEDURE 

GOVERNING CASES BEFORE THE 

OFFICE OF HEARINGS AND APPEALS 

■ 1. The authority citation for part 134 

is revised to read as follows: 

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

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

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

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

Subpart J issued under 38 U.S.C. 

8127(f)(8)(B). 

Subpart K issued under 38 U.S.C. 

8127(f)(8)(A). 

Subpart L issued under 15 U.S.C. 

636(a)(36); 15 U.S.C. 636(a)(37); 15 U.S.C. 

636m. 

■ 2. Subpart L is revised to read as 

follows: 

Subpart L—Borrower Appeals of Final 

SBA Loan Review Decisions 

Sec. 

134.1201 Scope of the rules in this subpart. 

134.1202 Commencement of appeals of 

final SBA loan review decisions. 

134.1203 Standing. 

134.1204 The appeal petition. 

134.1205 Dismissal. 

134.1206 Notice and Order. 

134.1207 The administrative record. 

134.1208 Response to an appeal petition. 

134.1209 Evidence beyond the record, 

discovery, and oral hearings. 

134.1210 Standard of review. 

134.1211 Decision on appeal. 

134.1212 Effects of the decision. 

134.1213 Equal Access to Justice Act. 

134.1214 Confidential information. 

§ 134.1201 Scope of the rules in this 

subpart. 

(a) The rules of practice in this 

subpart apply to appeals to OHA from 

certain final SBA loan review decisions 

under the Paycheck Protection Program 

(PPP) as described in paragraph (b) of 

this section, and to any other PPP matter 

referred to OHA by the Administrator of 

SBA. The PPP was established as a 

temporary program under section 1102 

of the Coronavirus Aid, Relief, and 

Economic Security Act (CARES Act) 

(Pub. L. 116–136), as amended. PPP 

loans include first draw PPP loans made 

under Section 7(a)(36) of the Small 

Business Act and second draw PPP 

loans made under Section 7(a)(37) of the 

Small Business Act. 

(b) A final SBA loan review decision 

that is appealable under this subpart is 

an official written decision by SBA, 

after SBA completes a review of a PPP 

loan, that finds a borrower: 

(1) Was ineligible for a PPP loan; 

(2) Was ineligible for the PPP loan 

amount received or used the PPP loan 

proceeds for unauthorized uses; 

(3) Is ineligible for PPP loan 

forgiveness in the amount determined 

by the lender in its full approval or 

partial approval decision issued to SBA; 

and/or 

(4) Is ineligible for PPP loan 

forgiveness in any amount when the 

lender has issued a full denial decision 

to SBA. 

(c) A borrower cannot directly file an 

appeal of a decision made by a lender 

concerning a PPP loan with OHA. 

(d) An appeal to OHA is an 

administrative remedy that must be 

exhausted before judicial review of a 

final SBA loan review decision may be 

sought in a Federal district court. 

(e) Any determination by SBA’s Office 

of Inspector General concerning a PPP 

loan is not appealable to OHA. 

(f) This subpart does not create any 

right to appeal any SBA decision on any 

7(a) loans (see part 120 of this chapter) 

other than PPP loans. 

(g) The Rules of Practice for Appeals 

From Size Determinations and NAICS 

Code Designations in subpart C of this 

part do not apply to appeals of final 

SBA loan review decisions or to the 

PPP. 

(h) In addition to the provisions in 

subpart B of this part specifically 

referenced in this subpart, the following 

regulations from subpart B of this part 

also apply to this subpart: §§ 134.207 

(Amendments and supplemental 

pleadings); 134.208 (Representation in 

cases before OHA); 134.209 

(Requirement of signature); 134.211 

(Motions); 134.212 (Summary 

judgment); 134.217 (Settlement); 

134.218 (Judges); 134.219 (Sanctions); 

and 134.220 (Prohibition on ex parte 

communications). Other provisions 

from subpart B of this part that are not 

specifically referenced in this subpart 

do not apply to this subpart. 

§ 134.1202 Commencement of appeals of 

final SBA loan review decisions. 

(a) An appeal petition must be filed 

with OHA within 30 calendar days after 

the appellant’s receipt of the final SBA 

loan review decision. To file and 

manage an appeal of a final SBA loan 

review decision with OHA, refer to the 

OHA Case Portal at https://

appeals.sba.gov. An appellant is 

required to use the OHA Case Portal to 

file and manage their appeal. 

(b) Appellant must provide their 

lender with a copy of the timely appeal 

petition upon filing in order for the 

lender to extend the deferment period of 

the PPP loan until a final decision is 

issued under § 134.1211. 

(c)(1) Do not count the day the time 

period begins, but do count the last day 

of the time period. 

(2) If the last day is Saturday, Sunday, 

or a Federal holiday, the time period 

ends on the next business day. 

Example: On a Thursday, a borrower 

receives a final SBA loan review 

decision. The time period begins on 

Thursday, so the first day to count is 

Friday. Because the 30th calendar day 

after receipt of the decision is a 

Saturday, the appeal deadline extends 

to the next business day, which is 

Monday. 

(3)(i) A Judge may modify any time 

period or deadline, except: 

(A) The time period governing 

commencement of a case (i.e., when the 

appeal petition may be filed); and 

(B) A time period established by 

statute. 

(ii) A party may move for an 

extension of time pursuant to § 134.211. 

(d) A timely appeal by a PPP borrower 

of a final SBA loan review decision 

51596 Federal Register / Vol. 86, No. 177 / Thursday, September 16, 2021 / Rules and Regulations 

extends the deferment period of the PPP 

loan until a final decision is issued 

under § 134.1211. 

§ 134.1203 Standing. 

Only the borrower on a loan, or its 

legal successor in interest, for which 

SBA has issued a final SBA loan review 

decision that makes a finding in 

§ 134.1201(b)(1) through (4) has 

standing to appeal the final SBA loan 

review decision to OHA. Lenders and 

individual owners of a borrower entity 

do not have standing to appeal a final 

SBA loan review decision. 

§ 134.1204 The appeal petition. 

(a) Content. The appeal petition must 

include the following information: 

(1) A copy of the final SBA loan 

review decision that is being appealed 

and the date it was received by the 

borrower. A Notice of Paycheck 

Protection Program Forgiveness 

Payment does not provide a borrower 

with a right to appeal to OHA. 

(2) A full and specific statement as to 

why the final SBA loan review decision 

is alleged to be erroneous, together with 

all factual information and legal 

arguments supporting the allegations. 

There is no required format for an 

appeal petition. However, the appeal 

petition must meet the following 

requirements: 

(i) The maximum length of an appeal 

petition (not including attachments) is 

20 pages. A table of authorities is 

required only for petitions citing more 

than twenty cases, regulations, or 

statutes. 

(ii) Clearly label any exhibits and 

attachments. 

(3) The name, address, telephone 

number, email address, and signature of 

the appellant or its attorney. 

(b) Dismissal. An appeal petition that 

does not contain all of the information 

required by paragraph (a) of this section 

may be dismissed, with or without 

prejudice, at the Judge’s own initiative, 

or upon motion of SBA. 

(c) Motion for more definite 

statement. (1) SBA may, no later than 

five calendar days after receiving a 

Notice and Order on an appeal petition, 

move for an order to the appellant to 

provide a more definite appeal petition 

or otherwise comply with this section. 

A Judge may order a more definite 

appeal petition on his or her own 

initiative. 

(2) A motion for a more definite 

appeal petition stays SBA’s time for 

filing a response. The Judge will 

establish the time for filing and serving 

a response and will extend the close of 

the record as appropriate. 

(3) If the appellant does not comply 

with the Judge’s order to provide a more 

definite appeal petition or otherwise 

fails to comply with applicable 

regulations in this subpart, the Judge 

may dismiss the petition with prejudice. 

§ 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 appeal is untimely under 

§ 134.1202; 

(3) The appellant lacks standing to 

appeal under § 134.1203; or 

(4) The appeal is premature because 

SBA has not yet made a final SBA loan 

review decision. 

(b) The Judge may dismiss the appeal 

in accordance with § 134.1204(b) or 

(c)(3), or if the appeal does not, on its 

face, allege specific facts that if proven 

to be true, warrant reversal or remand of 

the final SBA loan review decision. 

§ 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, utilizing 

the OHA Case Portal, establishing a 

deadline for production of the 

administrative record and specifying a 

date by which SBA may respond to the 

appeal. 

§ 134.1207 The administrative record. 

(a) Time limits. The administrative 

record will be due 20 calendar days 

after issuance of the Notice and Order 

unless additional time is requested and 

granted. 

(b) Contents. The administrative 

record shall include non-privileged, 

relevant documents that SBA 

considered in making its final loan 

review decision or that were before SBA 

at the time of the final loan review 

decision. The administrative record 

need not, however, contain all 

documents pertaining to the appellant. 

(c) Non-waiver. In the event that 

privileged or confidential information is 

disclosed in the administrative record, 

such disclosure shall not operate as a 

waiver of any claim of privilege or 

confidentiality by SBA. 

(d) Filing. SBA will file the 

administrative record with OHA and 

serve it on appellant utilizing the OHA 

Case Portal. 

(e) Objections. (1) Any objection to 

the administrative record must be filed 

with OHA and served on SBA no later 

than 30 calendar days after the issuance 

of the Notice and Order, utilizing the 

OHA Case Portal. If additional time to 

file the administrative record was 

requested and granted by a Judge, 

appellant will have 10 calendar days 

from the date SBA is required to file the 

administrative record under the judge’s 

order granting an extension in which to 

file an objection to the administrative 

record. 

(2) The appellant may object to the 

absence of any document from the 

administrative record that the appellant 

believes should have been included in 

the administrative record. 

(3) The Judge will rule upon such 

objections and may direct or permit that 

the administrative record be 

supplemented. 

§ 134.1208 Response to an appeal petition. 

(a) Who may respond. SBA may 

respond to an appeal as determined in 

its discretion, but SBA is not required 

to respond. If SBA elects not to respond, 

such election shall not be interpreted as 

an admission or waiver of any allegation 

of law or fact. In addition, after review 

of the appeal petition, OHA may request 

SBA to respond for good cause shown 

by OHA. Only SBA may respond. If 

filed, the response should set forth the 

relevant facts and legal arguments to the 

issues presented on appeal. 

(b) Time limit. If an SBA response is 

filed, it must be filed within 45 calendar 

days after issuance of the Notice and 

Order. 

(c) Close of record. The record will 

close 45 calendar days from the 

issuance of the Notice and Order, unless 

the Judge decides otherwise. Generally, 

filings after the close of record will not 

be considered. 

(d) Service. If a response is filed, the 

SBA must file its response with OHA, 

and serve a copy of the response upon 

the appellant or its attorney, as 

applicable by utilizing the OHA Case 

Portal. 

(e) Reply to response. Generally, a 

reply to a response is not permitted 

unless the Judge directs otherwise. See 

§ 134.206(e). However, upon motion 

(see § 134.211), and under terms needed 

to avoid prejudice to any non-moving 

party, the Judge may permit the filing 

and service of a supplemental pleading 

after review of SBA’s response and/or 

the administrative record. The proposed 

supplemental pleading must be filed 

and served with the motion utilizing the 

OHA Case Portal. 

§ 134.1209 Evidence beyond the record, 

discovery, and oral hearings. 

(a) Generally, the Judge may not admit 

evidence beyond the administrative 

record. 

Federal Register / Vol. 86, No. 177 / Thursday, September 16, 2021 / Rules and Regulations 51597 

(b) Neither discovery nor oral 

hearings will be permitted in appeals 

from final SBA loan review decisions. 

(c) All appeals under this subpart will 

be decided solely on a review of the 

administrative record, the appeal 

petition, any response, any reply or 

supplemental pleading, and filings 

related to objection to the administrative 

record. 

§ 134.1210 Standard of review. 

The standard of review is whether the 

final SBA loan review decision was 

based on clear error of fact or law. The 

appellant has the burden of proof. 

§ 134.1211 Decision on appeal. 

(a) Time limits and contents. The 

Judge will issue his or her decision 

within 45 calendar days after the close 

of record, as practicable. The decision 

will contain findings of fact and 

conclusions of law, the reasons for such 

findings and conclusions, and any relief 

ordered. The decision will be served 

upon appellant and SBA utilizing the 

OHA Case Portal. 

(b) Initial decision. The Judge’s 

decision on the appeal is an initial 

decision. However, unless a request for 

reconsideration is filed pursuant to 

paragraph (c) of this section or the SBA 

Administrator, solely within the 

Administrator’s discretion, decides to 

review or reverse the initial decision 

pursuant to paragraph (d) of this 

section, an initial decision shall become 

the final decision of SBA 30 calendar 

days after its service. The discretionary 

authority of the Administrator does not 

create any additional rights of appeal on 

the part of an appellant not otherwise 

specified in SBA regulations in this 

chapter. Any decision pursuant to this 

subpart applies only to the PPP and 

does not apply to SBA’s 7(a) Loan 

Program generally or to any 

interpretation or application of the 

regulations in part 120 or 121 of this 

chapter. 

(c) Reconsideration. An initial 

decision of the Judge may be 

reconsidered. If a request for 

reconsideration is filed and the SBA 

Administrator does not exercise 

discretion to review or reverse the 

initial decision under paragraph (d) of 

this section, OHA will decide the 

request for reconsideration and OHA’s 

decision on the request for 

reconsideration is a reconsidered initial 

OHA decision. 

(1) Either SBA or appellant may 

request reconsideration by filing with 

the Judge and serving a petition for 

reconsideration within 10 calendar days 

after service of the Judge’s decision. The 

request for reconsideration must clearly 

show an error of fact or law material to 

the decision. SBA does not have to have 

filed a response to the borrower’s appeal 

petition to request reconsideration of 

the initial decision of the Judge. 

(2) The Judge may also reconsider a 

decision on his or her own initiative 

within 20 calendar days after service of 

the Judge’s decision. 

(3) A reconsidered initial OHA 

decision becomes the final decision of 

SBA 30 calendar days after its service 

unless the SBA Administrator, solely 

within the Administrator’s discretion, 

decides to review or reverse the 

reconsidered initial OHA decision 

under paragraph (d) of this section. The 

discretionary authority of the 

Administrator does not create any 

additional rights of appeal on the part 

of an appellant not otherwise specified 

in SBA regulations in this chapter. 

(d) Administrator review. Within 30 

calendar days after the service of an 

initial OHA decision or a reconsidered 

initial OHA decision of a Judge, the SBA 

Administrator, solely within the 

Administrator’s discretion, may elect to 

review and/or reverse an initial OHA 

decision or a reconsidered initial OHA 

decision. In the event that the 

Administrator elects to review and/or 

reverse an initial OHA decision and a 

timely request for reconsideration of a 

Judge’s initial decision is also filed by 

an appellant pursuant to paragraph (c) 

of this section, the Administrator will 

consider such request for 

reconsideration. The Administrator’s 

decision will become the final decision 

of the SBA upon issuance. 

(e) Precedent. Neither initial nor final 

decisions rendered by OHA under this 

subpart are precedential. 

(f) Publication. Final decisions are 

normally published without redactions 

on OHA’s website. PPP decisions will 

likely contain confidential business and 

financial information and/or personally 

identifiable information. Therefore, 

OHA, within its full discretion, may 

publish final decisions issued under 

this section with any necessary 

redactions. 

(g) Appeal to Federal district court. 

Final decisions may be appealed to the 

appropriate Federal district court only. 

§ 134.1212 Effects of the decision. 

OHA may affirm, reverse, or remand 

a final SBA loan review decision. If 

remanded, OHA no longer has 

jurisdiction over the matter unless a 

new appeal is filed as a result of a new 

final SBA loan review decision. 

§ 134.1213 Equal Access to Justice Act. 

A prevailing appellant is not entitled 

to recover attorney’s fees. Appeals to 

OHA from final SBA loan review 

decisions under the PPP are not 

proceedings that are required to be 

conducted by an Administrative Law 

Judge under § 134.603. 

§ 134.1214 Confidential information. 

If a filing or other submission made 

pursuant to an appeal in this subpart 

contains confidential business and 

financial information; personally 

identifiable information; source 

selection sensitive information; income 

tax returns; documents and information 

covered under § 120.1060 of this 

chapter; or any other exempt 

information, that information is not 

available to the public pursuant to the 

Freedom of Information Act (FOIA), 5 

U.S.C. 552. 

Isabella Casillas Guzman, 

Administrator. 

[FR Doc. 2021–19985 Filed 9–14–21; 11:15 am] 

BILLING CODE 8026–03–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2021–0701; Project 

Identifier MCAI–2021–00365–T; Amendment 

39–21704; AD 2021–18–03] 

RIN 2120–AA64 

Airworthiness Directives; Yabora ̃

Indu ́stria Aerona ́utica S.A. (Type 

Certificate Previously Held by Embraer 

S.A.) Airplanes 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Final rule; request for 

comments. 

SUMMARY: The FAA is superseding 

Airworthiness Directive (AD) 2020–26– 

02, which applied to certain Yabora ̃

Indu ́ stria Aerona ́utica S.A. (type 

certificate previously held by Embraer 

S.A.) Model ERJ 190–400 airplanes. AD 

2020–26–02 required amending the 

existing airplane flight manual (AFM) to 

incorporate a new limitation and revise 

certain normal procedures. This AD 

retains those requirements and also 

requires upgrading the electronic engine 

control (EEC) software, as specified in 

an Ageˆncia Nacional de Aviac ̧a ̃o Civil 

(ANAC) AD, which is incorporated by 

reference. This AD was prompted by a 

report of an in-flight shutdown (IFSD) 

due in part to failure in the low-pressure 

compressor (LPC) rotor 1 during 

operation in high altitude at high thrust 

settings, and by the development of 

updated EEC software, which would