3542 Federal Register / Vol. 89, No. 13 / Friday, January 19, 2024 / Rules and Regulations 

that provide relevant, accurate and timely 

information and data. 

12. Each regulated entity and the Office of 

Finance should have secure information 

systems that are supported by adequate 

contingency arrangements. 

13. Each regulated entity and the Office of 

Finance should have effective channels of 

communication to ensure that all personnel 

understand and adhere to policies and 

procedures affecting their duties and 

responsibilities. 

Monitoring Activities and Correcting 

Deficiencies 

14. Each regulated entity and the Office of 

Finance should monitor the overall 

effectiveness of its internal controls and key 

risks on an ongoing basis and ensure that 

business units and internal and external 

audit conduct periodic evaluations. 

* * * * * 

Applicable Laws, Regulations, and Policies 

16. Each regulated entity and the Office of 

Finance should comply with all applicable 

laws, regulations, and supervisory guidance 

(e.g., advisory bulletins) governing internal 

controls and information systems. 

Standard 2—Independence and Adequacy of 

Internal Audit Systems 

Audit Committee 

1. The board of directors of each regulated 

entity and the Office of Finance should have 

an audit committee that exercises proper 

oversight and adopts appropriate policies 

and procedures designed to ensure the 

independence of the internal audit function. 

The audit committee should ensure that the 

internal audit department includes personnel 

who are appropriately trained and competent 

to oversee the internal audit function. 

* * * * * 

3. The audit committee of the board of 

directors is responsible for monitoring and 

evaluating the effectiveness of the internal 

audit function of each regulated entity and 

the Office of Finance. 

* * * * * 

Internal Audit Function 

5. Each regulated entity and the Office of 

Finance should have an internal audit 

function that provides for adequate testing of 

the system of internal controls. 

6. Each regulated entity and the Office of 

Finance should have an independent and 

objective internal audit department that 

reports directly to the audit committee of the 

board of directors. 

7. The internal audit department of each 

regulated entity and the Office of Finance 

should be adequately staffed with properly 

trained and competent personnel. 

* * * * * 

Applicable Laws, Regulations, and Policies 

11. Each regulated entity and the Office of 

Finance should comply with applicable laws, 

regulations, and supervisory guidance (e.g., 

advisory bulletins) governing the 

independence and adequacy of internal audit 

systems. 

* * * * * 

Standard 8—Overall Risk Management 

Processes 

Responsibilities of the Board of Directors 

1. Regarding overall risk management 

processes, the board of directors is 

responsible for overseeing the process, 

ensuring senior management are 

appropriately trained and competent, 

ensuring processes are in place to identify, 

manage, monitor and control risk exposures 

(this function may be delegated to a board 

appointed committee), approving all major 

risk limits, and ensuring incentive 

compensation measures for senior 

management capture a full range of risks to 

the regulated entity or the Office of Finance. 

Responsibilities of the Board and Senior 

Management 

2. Regarding overall risk management 

processes, the board of directors and senior 

management should establish and sustain a 

culture that promotes effective risk 

management. This culture includes timely, 

accurate and informative risk reports, 

alignment of the overall risk profile of the 

regulated entity or the Office of Finance with 

its mission objectives, and the annual review 

of comprehensive self-assessments of 

material risks. 

Independent Risk Management Function 

3. A regulated entity or the Office of 

Finance should have an independent risk 

management function, or unit, with 

responsibility for risk measurement and risk 

monitoring, including monitoring and 

enforcement of risk limits. 

* * * * * 

Risk Measurement, Monitoring, and Control 

7. Each regulated entity and the Office of 

Finance should measure, monitor, and 

control its overall risk exposures, reviewing, 

as applicable, market, credit, liquidity, and 

operational risk exposures on both a business 

unit (or business segment) and enterprisewide basis. 

8. Each regulated entity and the Office of 

Finance should have the risk management 

systems to generate, at an appropriate 

frequency, the information needed to manage 

risk. As applicable, such systems should 

include systems for market, credit, 

operational, and liquidity risk analysis, asset 

and liability management, regulatory 

reporting, and performance measurement. 

9. Each regulated entity and the Office of 

Finance should have a comprehensive set of 

risk limits and monitoring procedures to 

ensure that risk exposures remain within 

established risk limits, and a mechanism for 

reporting violations and breaches of risk 

limits to senior management and the board of 

directors. 

10. Each regulated entity and the Office of 

Finance should ensure that it has sufficient 

controls around risk measurement models to 

ensure the completeness, accuracy, and 

timeliness of risk information. 

11. Each regulated entity and the Office of 

Finance should have adequate and welltested disaster recovery and business 

resumption plans for all major systems and 

have remote facilitates to limit the impact of 

disruptive events. 

Applicable Laws, Regulations, and Policies 

12. As applicable, each regulated entity 

and the Office of Finance should comply 

with all applicable laws, regulations, and 

supervisory guidance (e.g., advisory 

bulletins) governing the management of risk. 

* * * * * 

Standard 10—Maintenance of Adequate 

Records 

1. Each regulated entity and the Office of 

Finance should maintain financial records in 

compliance with Generally Accepted 

Accounting Principles (GAAP), FHFA 

guidelines, and applicable laws and 

regulations. 

2. Each regulated entity and the Office of 

Finance should ensure that assets are 

safeguarded and financial and operational 

information is timely and reliable. 

3. Each regulated entity and the Office of 

Finance should have a records retention 

program consistent with laws and corporate 

policies, including accounting policies, as 

well as personnel that are appropriately 

trained and competent to oversee and 

implement the records management plan. 

4. Each regulated entity and the Office of 

Finance, with oversight from its board of 

directors, should conduct a review and 

approval of the records retention program 

and records retention schedule for all types 

of records at least once every two years. 

5. Each regulated entity and the Office of 

Finance should ensure that reporting errors 

are detected and corrected in a timely 

manner. 

6. Each regulated entity and the Office of 

Finance should comply with all applicable 

laws, regulations, and supervisory guidance 

(e.g., advisory bulletins) governing the 

maintenance of adequate records. 

Sandra L. Thompson, 

Director, Federal Housing Finance Agency. 

[FR Doc. 2024–00731 Filed 1–18–24; 8:45 am] 

BILLING CODE 8070–01–P 

SMALL BUSINESS ADMINISTRATION 

13 CFR Parts 107 and 121 

RIN 3245–AH90 

Small Business Investment Company 

Investment Diversification and Growth; 

Technical Amendments and 

Clarifications 

AGENCY: U. S. Small Business 

Administration. 

ACTION: Direct final rule. 

SUMMARY: This direct final rule clarifies 

and provides technical updates to the 

Small Business Investment Company 

Investment Diversification and Growth 

final rule implemented on August 17, 

2023 (SBIC IDG Final Rule), which 

reduced barriers to program 

participation for new SBIC fund 

managers and funds investing in 

underserved communities and 


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geographies, capital intensive 

investments, and technologies critical to 

national security and economic 

development. In the SBIC IDG Final 

Rule, SBA introduced a new class of 

SBICs (‘‘Accrual’’ SBICs) to unlock more 

patient capital financing for small 

businesses through the SBIC program 

and implement changes to lower 

financial barriers to program 

participation for new fund managers. 

This direct final rule will help SBA 

implement Executive Order 13985, 

Advancing Racial Equity and Support 

for Underserved Communities Through 

the Federal Government, by reducing 

financial and administrative barriers to 

participate in the SBIC program and 

modernizing the program’s license 

offerings to align with a more 

diversified set of private funds investing 

in underserved small businesses. 

DATES: This rule is effective March 4, 

2024, without further action, unless 

significant comment is received by 

February 20, 2024. If significant adverse 

comment is received, SBA will publish 

a timely withdrawal of the rule in the 

Federal Register. 

FOR FURTHER INFORMATION CONTACT: 

Policy: Bailey G. DeVries, Associate 

Administrator of the Office of 

Investment and Innovation, Small 

Business Administration, 

oii.frontoffice@sba.gov, 202–941–6064. 

This phone number can also be reached 

by individuals who are deaf or hard of 

hearing, or who have speech 

disabilities, through the Federal 

Communications Commission’s TTYBased Telecommunications Relay 

Service teletype service at 711. 

Regulatory Comments/Federal 

Register Docket: Nathan Putnam, Office 

of Investment and Innovation, Small 

Business Administration, 

oii.frontoffice@sba.gov, 202–699–1746. 

This phone number can also be reached 

by individuals who are deaf or hard of 

hearing, or who have speech 

disabilities, through the Federal 

Communications Commission’s TTYBased Telecommunications Relay 

Service teletype service at 711. 

SUPPLEMENTARY INFORMATION: 

I. Background Information 

A. Small Business Investment Company 

Program 

The mission of the SBIC program is to 

enhance small business access to capital 

by stimulating and supplementing ‘‘the 

flow of private equity capital and longterm loan funds which small-business 

concerns need for the sound financing 

of their business operations and for their 

growth, expansion, and modernization, 

and which are not available in adequate 

supply.’’ SBA carries out this mission 

by licensing and monitoring privately 

owned and managed investment funds 

that raise capital from private investors 

and issue SBA-guaranteed Debentures to 

make private long-term equity and debt 

investments into qualifying Small 

Businesses. 

B. Notice of Rulemaking 

The following is an overview of 

changes made to 13 CFR part 107 as part 

of this Direct Final Rule to clarify and 

provide technical updates to the Small 

Business Investment Company 

Investment Diversification and Growth 

final rule (SBIC IDG Final Rule) 

implemented on August 17, 2023. 

(a) § 107.50 Definition of terms 

clarification. Clarifying the definition of 

Annual Charge, for certain investors 

clarifying the definition of Institutional 

Investor to eliminate the need for a 

‘‘dual commitment’’ relative to the 

capital commitment of such investors 

and clarifying that the definition of 

Leverage is consistent across SBIC 

Debenture types. 

(b) § 107.150 Management ownership 

diversity requirements clarification. 

Clarifying the exemption for nonprofit entities to own more than 70 

percent of the Licensee’s Regulatory 

Capital to facilitate capital raising 

efforts, particularly for funds targeting 

investments in underserved geographies 

and critical technologies. 

(c) § 107.230 Permitted sources of 

Private Capital for Licensees 

clarification. Clarifying that while SBICs 

are not restricted in the amount of 

investment capital that can be 

contributed to SBICs directly or 

indirectly from local, State or Federal 

Government entities, the extent to 

which such investment capital from 

local, State or Federal Government 

entities is eligible to qualify as 

Leverageable Capital is limited by the 

Small Business Investment Act of 1958, 

as amended (‘‘the Act’’). The capital 

contributed by such entities can be 

included in an SBIC applicant’s 

proposed formula to calculate 

management fees. 

(d) § 107.305 Evaluation of license 

applicants clarification. Clarifying that 

SBA does not require a ‘‘certified’’ track 

record as a part of the SBIC application 

process and would expect to see that a 

meaningful proportion of a prior SBIC 

fund’s institutional investor base would 

return to support an anticipated 

subsequent SBIC fund. 

(e) § 107.503 Licensee’s adoption of 

an approved valuation policy technical 

correction. Aligning the existing 

regulation with the statutory 

requirements. 

(f) § 107.585 Distributions and 

reductions in Regulatory Capital 

technical correction. Correcting the 

timeframe for payment of amounts due 

SBA by Accrual and Reinvestor 

Licensees making distributions other 

than those made solely for tax purposes. 

(g) § 107.630 Requirement for 

Licensees to file financial statements 

with SBA (Form 468) clarification. 

Clarifying that Reinvestor SBIC 

Licensees must file Annual and Interim 

(Quarterly) Form 468s within 120 

calendar days of the close of the 

calendar quarter. 

(h) § 107.650 Requirement to report 

portfolio valuations to SBA clarification. 

Clarifying that Reinvestor SBIC 

Licensees must report valuations to SBA 

within 120 calendar days of the close of 

the calendar quarter. 

(i) § 107.650 Requirement to report 

portfolio valuations to SBA technical 

correction. Aligning the existing 

regulation with the statutory 

requirements. 

(j) § 107.720 Small Businesses that 

may be ineligible for financing 

clarification. Clarifying that Reinvestor 

SBIC Licensees may provide Equity 

Capital Investments to Disadvantaged 

Businesses that are relenders or 

reinvestors, including Community 

Development Financial Institutions 

(CDFIs) and Minority Deposit 

Institutions (MDIs). In addition to 

Equity Capital Investments, Reinvestor 

SBIC Licensees may provide long-term 

debt or loan financing to CDFIs and 

MDIs. 

(k) § 107.720 Small Businesses that 

may be ineligible for financing technical 

correction. SBA is expanding the 

exception that permits holding 

companies to be established by 

Licensees to mitigate implementation 

challenges for Accrual SBIC Licensees. 

Also, SBA is updating the regulation by 

including a provision that appeared in 

a prior rulemaking permitting SBIC 

Business Development Companies 

(BDCs) to form a blocker entity to avoid 

adverse tax consequences to an investor 

that has elected to be taxed as a 

registered investment company (RIC) 

under the Internal Revenue Code (26 

U.S.C. 851(b)(2)). 

(l) § 107.740 Portfolio diversification 

(‘‘overline’’ limitation) technical 

correction. Aligning the existing 

regulation with the statutory 

requirements. 

(m) § 107.855 Interest rate ceiling and 

limitations on fees charged to Small 

Businesses (‘‘Cost of Money’’) technical 

correction. Correcting regulations that 

misstate in 13 CFR 107.855(h)(2) the 

‘‘Cost of Money ceiling’’ reference 

within § 107.855. 


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3544 Federal Register / Vol. 89, No. 13 / Friday, January 19, 2024 / Rules and Regulations 

(n) § 107.1120 General eligibility 

requirements for Leverage technical 

correction. Correcting regulations that 

erroneously state in 13 CFR 107.1120(d) 

that SBIC Licensees are limited to $150 

million in outstanding Leverage. 

(o) § 107.1130 Leverage fees and 

Annual Charges clarification. Clarifying 

that Annual Charges on Debentures are 

based on the principal amount of 

Debentures. 

(p) § 107.1150 Maximum amount of 

Leverage clarification. Clarifying a 

statement from the preamble of the SBIC 

IDG Final Rule regarding the how SBA 

determines the Leverage available to 

Accrual SBICs and Reinvestor SBICs 

and how the Agency safely manages the 

risk of an outsized interest balance 

accruing. 

(q) § 107.1850 Watchlist technical 

correction. Correcting regulations that 

misstate the formula used to calculate 

the Leverage Coverage Ratio. 

(r) § 121.103(b) How does SBA 

determine affiliation? clarification. 

Clarifying that SBA does not consider 

the underlying fund of a Reinvestor 

SBIC to be the affiliate of a small 

business in which such underlying fund 

has made an equity investment. 

II. Section by Section Analysis 

A. Section 107.50 Definition of Terms 

SBA seeks to clarify the definition of 

Institutional Investor to be consistent 

with rules implemented in the SBIC IDG 

Final Rule to provide regulatory 

flexibility for fund-of-fund investors 

that are required to be managed by SEC 

regulated Registered Investment 

Advisors. SBA considers the 

commitments of such fund-of-fund 

investors to not be of questionable 

collectability if the conditions set forth 

in the revised paragraph (1)(x) of the 

Institutional Investor definition are met, 

generally eliminating the requirement 

that a ‘‘dual commitment’’ be obtained 

relative to such investor’s capital 

commitment. 

SBA seeks to correct the definition of 

Annual Charge and correct text added to 

the definition of Leverage that could 

inadvertently lead to Annual Charges 

being charged on Accrual Debenture 

principal and accrued interest. 

Consistent with existing practices for 

Standard Debentures, the Annual 

Charge on Accrual Debentures is 

charged on Accrual Debenture principal 

only. 

B. Section 107.150 Management 

Ownership Diversity Requirements 

This regulation identifies the SBIC 

ownership diversity requirements under 

section 302(c) of the Act. That section 

requires SBIC ownership be 

‘‘sufficiently diversified from and 

unaffiliated with the ownership of the 

licensee in a manner that ensures 

independence and objectivity in the 

financial management and oversight of 

the investments and operations of the 

licensee.’’ As an exception to the 

diversity ownership requirement under 

§ 107.150(b)(1), SBA allows an investor 

that is a traditional investment company 

to own and control more than 70 

percent of the Licensee’s Regulatory 

Capital. Such SBICs are essentially 

drop-down funds for that traditional 

investment company and are structured 

exclusively to pool capital from more 

than one source for the purpose of 

investing and generating profits. In the 

SBIC Investment Diversification and 

Growth rulemaking, SBA proposed also 

including non-profit entities to own 

more than 70 percent of the Licensee’s 

Regulatory Capital to facilitate capital 

raising efforts, particularly for funds 

targeting investments in underserved 

geographies and critical technologies. In 

the final rulemaking, SBA clarified such 

non-profit entities could own and 

control a Licensee; however, did 

include the proposed reforms, which 

were supported in public comments, for 

such non-profit entities to own more 

than 70 percent of the Licensee’s 

Regulatory Capital. SBA is clarifying in 

this rulemaking that such non-profit 

entities can own more than 70 percent 

of the Licensee’s Regulatory Capital as 

originally stated in the proposed 

rulemaking. 

C. Section 107.230 Permitted Sources 

of Private Capital for Licensees 

SBA seeks to clarify that while SBICs 

are not restricted in the amount of 

investment capital that can be 

contributed to SBICs directly or 

indirectly from local, State or Federal 

Government entities, the extent to 

which such investment capital from 

local, State or Federal Government 

entities is eligible to qualify as 

Leverageable Capital is limited by the 

Small Business Investment Act of 1958, 

as amended (‘‘the Act’’). The capital 

contributed by such entities can be 

included in an SBIC applicant’s 

proposed formula to calculate 

management fees. 

D. Section 107.305 Evaluation of 

License Applicants 

SBA seeks to clarify that a 

management team must have 

demonstrated investment acumen to 

apply for an SBIC license, as defined in 

§ 107.305(b). SBA looks at a mosaic of 

factors when determining eligibility for 

an SBIC license and can rely upon thirdparty data sources and reference checks 

in conjunction with the initial license 

application to verify management team 

eligibility. For clarity, SBA is adding 

that while a track record is required to 

apply for an SBIC license, a certified 

track record is not required and is 

clarifying that SBA would expect to see 

that a meaningful proportion, in terms 

of the number of institutional investors, 

of a prior SBIC fund’s investor base 

would return to support an anticipated 

subsequent SBIC fund. 

E. Section 107.503 Licensee’s 

Adoption of an Approved Valuation 

Policy 

SBA is correcting current regulations, 

which erroneously state in 13 CFR 

107.503(d)(4) that SBIC Licensees must 

report material adverse changes within 

45 days following the close of the 

quarter. The statutory requirement is 

within 30 days following the close of 

the quarter. 

F. Section 107.585 Distributions and 

Reductions in Regulatory Capital 

SBA is correcting the timeframe set 

forth in § 107.585(c), for both the 

mandatory payment of Annual Charges 

and accrued interest and the mandatory 

payment of the ‘‘SBA share’’ by Accrual 

and Reinvestor Licensees making 

distributions other than those made 

solely for tax purposes. Under the SBIC 

IDG Final Rule such Licensees are 

required to make mandatory payments 

on annual charges and accrued interest 

and the calculated SBA share of 

Leverage in connection with each 

distribution to private investors, other 

than a distribution approved in writing 

and in advance by SBA as solely for tax 

purposes. The SBIC IDG Final Rule 

provided inconsistent guidance as to the 

timing of such payments due to SBA. In 

order to reduce its risk, SBA corrects the 

regulation to require that each such 

payment to SBA be made on or before 

the date of the corresponding non-tax 

distribution to private investors. 

Also, in view of the alignment of the 

‘‘overline’’ formula of § 107.740 with the 

formula set forth in section 306 of the 

Act, SBA seeks to eliminate from 

§ 107.585 two references to the former 

regulatory formula. Those references 

concern an ‘‘add back’’ of approved 

reductions of Regulatory Capital to the 

regulatory formula previously contained 

within § 107.740. Given that § 107.740 

has now been aligned with the statutory 

overline formula, as to which such ‘‘add 

backs’’ are not applicable, the references 

within § 107.585 to such ‘‘add backs’’ 

are no longer relevant. 


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G. Section 107.630 Requirement for 

Licensees To File Financial Statements 

With SBA (Form 468) 

SBA seeks to clarify that Reinvestor 

SBICs are required to file Annual Form 

468 within 120 calendar days of the end 

of your fiscal year and Interim Form 468 

within 120 calendar days of the 

respective quarter. 

H. Section 107.650 Requirement To 

Report Portfolio Valuations to SBA 

Consistent with the clarification in 13 

CFR 107.630, SBA similarly clarifies 

that Reinvestor SBICs must report 

valuations to SBA within 120 days of 

the end of the fiscal year and within 120 

days following the close of other 

reporting periods. 

In addition, SBA aligns the regulatory 

requirement for Licensees to report 

material adverse changes in valuations 

with the statutory requirement. 

I. Section 107.720 Small Businesses 

That May Be Ineligible for Financing 

This regulation identifies small 

businesses that may be ineligible for 

financing by SBICs. Current 13 CFR 

107.720(a)(2)(i) provides an exception to 

the limitation on investments in 

relenders or reinvestors in order to 

permit Reinvestor SBICs to provide 

Equity Capital Investments to 

underserved Small Business reinvestors 

(except banks, savings and loans not 

insured by agencies of the Federal 

Government, and agricultural credit 

companies). As part of this rulemaking, 

SBA is seeking to clarify its intent 

relative to § 107.720(a)(2)(i) by noting 

that Reinvestor SBIC Licensees may 

provide Equity Capital Investments to 

Disadvantaged Businesses that are 

relenders or reinvestors, including 

Community Development Financial 

Institutions (CDFIs) and Minority 

Deposit Institutions (MDIs). In addition 

to Equity Capital Investments, 

Reinvestor SBIC Licensees may provide 

long-term debt or loan financing to 

CDFIs and MDIs. SBA notes that such 

CDFIs and MDIs are excepted from the 

requirement to solely make investments 

or loans to eligible businesses pursuant 

to the requirements set forth in 

§ 107.720(a)(2)(i). 

Current regulations provide for two 

exceptions that allow an SBIC to 

structure an investment utilizing a 

passive small business as a passthrough. The first exception, identified 

in § 107.720(b)(2), permits an 

investment utilizing up to two passive 

entities, as long as substantially all of 

the financing proceeds are passed 

through to one or more active 

‘‘subsidiary companies,’’ each of which 

is an eligible small business. The second 

exception, identified in § 107.720(b)(3), 

allows a partnership SBIC to form and 

finance a passive, blocker entity that in 

turn provides financing to an active, 

unincorporated small business. 

Currently, this structure is permitted 

only if a direct financing of the 

unincorporated small business would 

cause at least one of the SBIC’s investors 

to incur Unrelated Business Taxable 

Income (UBTI) under section 511 of the 

Internal Revenue Code, which may arise 

from an activity engaged in by a taxexempt organization that is not related 

to the tax-exempt purpose of that 

organization. 

SBA is clarifying that the exception 

set forth in 13 CFR 107.720(b)(2) 

permits an SBIC to structure an 

investment utilizing additional passive 

small businesses as a pass through, 

provided that (i) all financing proceeds 

are passed through to one or more active 

‘‘subsidiary companies,’’ each of which 

is an eligible small business, (ii) SBA 

has adequate information to review 

information appropriate to each passive 

small business pursuant to 13 CFR 

107.720(b)(4), and (iii) SBA is able to 

maintain enforcement rights against 

each of the small businesses financed 

pursuant to 13 CFR 107.720(b)(2), 

including the active Small Business. 

Further, SBA is clarifying that 13 CFR 

107.720(b)(3) allows the formation of a 

blocker entity, in the case of an SBIC 

that either is a BDC licensed under the 

Investment Company Act of 1940 or is 

owned by a parent BDC, to avoid 

adverse tax consequences to an investor 

that has elected to be taxed as a 

registered investment company under 

the Internal Revenue Code (26 U.S.C. 

851(b)(2)). SBA believes that these 

changes will provide SBICs with 

additional flexibility investments to 

eligible Small Businesses and increase 

the flow of private capital within the 

SBIC program. 

J. Section 107.740 Portfolio 

Diversification (‘‘Overline’’ Limit) 

SBA seeks to align the ‘‘overline’’ 

formula contained within § 107.740 

with overline formula that is set forth in 

section 306 of the Act. Section 306 

contains an aggregate limitation on the 

concentration of a Licensee’s combined 

capital (Private Capital + guaranteed 

Leverage), precluding a Licensee from 

investing combined capital in excess of 

a threshold determined under the 

statutory formula. Previously, SBA 

regulations contained an overline 

limitation that was similar to the 

statutory requirement though different 

in important respects, thus subjecting 

Licensees to an additional overline 

requirement and potentially resulting in 

confusion in various circumstances. By 

aligning the regulation with the statute, 

SBA now effectively simplifies overline 

management and the burden of tracking 

the overline requirement under two 

separate formulae. 

K. Section 107.855 Interest Rate 

Ceiling and Limitations on Fees Charged 

to Small Businesses (‘‘Cost of Money’’) 

SBA seeks to correct a misstated 

reference by correcting 107.855(h)(2) to 

read as follows: ‘‘Discount the cash 

flows back to the first disbursement date 

using the Cost of Money ceiling from 

paragraph (c) of this section as the 

discount rate.’’ 

L. Section 107.1120 General Eligibility 

Requirements for Leverage 

SBA seeks to correct current 

regulations, which erroneously state in 

13 CFR 107.1120(d) that SBIC Licensees 

are limited to $150 million in 

outstanding Leverage. This provision 

does not reflect a change in the statutory 

outstanding Leverage maximum which 

is $175 million for an individual 

Licensee and $350 million in aggregate 

for SBIC Licensees that are under 

Common Control. Also, SBA has 

inserted language referring to the 

maximum Leverage allowed under the 

Act to ensure that any statutory changes 

are reflected in the regulations. 

M. Section 107.1130 Leverage Fees 

and Annual Charge 

SBA seeks to clarify the current 

regulations which are ambiguous as to 

the basis for which Annual Charges are 

calculated on outstanding Debentures. 

SBA clarifies the regulation by adding 

the word ‘‘principal’’ in front of 

‘‘amount’’ in 13 CFR 107.1130(d)(1). 

N. Section 107.1150 Maximum 

Amount of Leverage 

SBA seeks to further clarify a 

statement from the preamble of the SBIC 

IDG Final Rule regarding how SBA 

determines the Leverage available to 

Accrual SBICs and Reinvestor SBICs. In 

the rule, SBA stated that ‘‘In order to 

determine the maximum amount of 

leverage that Accrual SBICs and 

Reinvestor SBICs may have outstanding, 

SBA will aggregate the total principal 

leverage plus ten years of accrued 

interest on such principal to determine 

the total Accrual Debentures that the 

Accrual SBIC may issue based on the 

statutory limitation.’’ SBA seeks to 

clarify that this aggregation is based on 

an estimate of potential interest which 

could accrue based on prevailing 

interest rates at the time of licensing. 

Furthermore, SBA seeks to clarify how 


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the Agency safely manages the risk of an 

outsized interest balance accruing by 

requiring Accrual Debentures to include 

a provision which requires the prompt 

payment of any interest that has accrued 

in excess of the limitation of SBA 

Leverage available at the end of each 

quarter. This clarification refers to the 

fact that SBA is performing a forecasting 

exercise in conjunction with other 

considerations during the Licensing 

process to ultimately make a 

determination on the Total Intended 

Leverage Commitment SBA will 

conditionally approve as part of the 

Green Light approval. It should be noted 

that all Total Intended Leverage 

Commitments and Leverage issued are 

bound by the statutory maxima 

applicable to Individual Licensees and 

Licensees under Common Control. (SBA 

may issue a subsequent Leverage 

Commitment which permits the 

Licensee to exceed the sum otherwise 

available under section 303(b)(2), up to 

an amount equal to the lesser of (a) 33 

percent of the Licensee’s Private Capital, 

and (b) the Licensee’s Energy Saving 

Qualified Investment cost basis, subject 

to the limitations expressed in section 

303 of the SBIC Act and its 

implementing regulations.) 

O. Section 107.1850 Watchlist 

SBA seeks to correct current 

regulations, which erroneously present 

in 13 CFR 107.1859 the formula used to 

calculate a metric that was among those 

included in the formal Licensee 

‘‘Watchlist’’ process implemented by 

the SBIC IDG Final Rule to formalize 

monitoring practices that have existed 

in SBIC Program Standard Operating 

Procedures for several years. Among the 

‘‘Watchlist triggers’’ described in 

paragraph 13 CFR 107.1850(a) was the 

Leverage Coverage Ratio (LCR). SBA 

now corrects clause 13 CFR 

107.1850(a)(6) which presents the 

formula used to calculate LCR, which 

was misstated in the SBIC IDG Final 

Rule. 

P. Section 121.103 How does SBA 

determine affiliation? 

With the SBIC IDG Final Rule, SBA 

established within § 107.720(a)(2) a new 

type of SBIC, known as a Reinvestor 

SBIC, licensed to issue Accrual 

Debentures and approved by SBA to 

provide ‘‘Equity Capital Investments to 

underserved Small Business reinvestors 

(except banks, savings and loans not 

insured by agencies of the Federal 

Government, and agricultural credit 

companies) that make direct financings’’ 

to certain qualifying Small Businesses. 

With the advent of Reinvestor SBICs, 

questions have arisen concerning the 

applicability of SBA affiliation rules to 

the relationship between such 

underserved Small Business reinvestors 

and the qualifying Small Businesses in 

which they invest. Although 13 CFR 

121.103(b)(1), in current form, provides 

clarity as to the lack of regulatory 

affiliation between licensed SBICs and 

the Small Businesses to which they 

provide Financing, the SBIC IDG Final 

Rule failed to answer the related 

question of whether a Small Business 

reinvestor is affiliated with the 

qualifying Small Business in which it 

reinvests. SBA now modifies clause 13 

CFR 121.103(b)(1) to respond to this 

question and resolve that no affiliation 

results from this relationship. 

III. Compliance With Executive Orders 

12866, 12988, 13132, 13563, and 13175, 

the Paperwork Reduction Act (44 

U.S.C., Ch. 35), and the Regulatory 

Flexibility Act (5 U.S.C. 601–612)) 

A. Executive Order 12866 

The Office of Management and Budget 

has determined that this rule is not a 

‘‘significant regulatory action’’ under 

Executive Order 12866. 

B. Executive Order 12988 

This action meets applicable 

standards set forth in sections 3(a) and 

3(b)(2) of Executive Order 12988, Civil 

Justice Reform, to minimize litigation, 

eliminate ambiguity, and reduce 

burden. The action does not have 

preemptive effect or retroactive effect. 

C. Executive Order 13132 

This rule does not have federalism 

implications as defined in Executive 

Order 13132. It 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 

levels of government, as specified in the 

Executive order. As such it does not 

warrant the preparation of a federalism 

assessment. 

D. Executive Order 13175 

This rule does not have tribal 

implications under Executive Order 

13175, Consultation and Coordination 

with Indian Tribal Governments, 

because it would not have a substantial 

direct effect on one or more Indian 

tribes, on the relationship between the 

Federal Government and Indian tribes, 

or on the distribution of power and 

responsibilities between the Federal 

Government and Indian tribes. 

E. Executive Order 13563 

Executive Order 13563, Improving 

Regulation and Regulatory Review 

(January 18, 2011), requires agencies to 

adopt regulations through a process that 

involves public participation, and to the 

extent feasible, base regulations on the 

open exchange of information and 

perspectives from affected stakeholders 

and the public as a whole. SBA has 

developed this rule in a manner 

consistent with these requirements, and 

the public will have the opportunity to 

provide comments prior to the effective 

date of this direct final rule. 

F. Congressional Review Act, 5 U.S.C. 

801–808 

The Office of Management and Budget 

has determined that this is not a major 

rule under 5 U.S.C. 804(2). 

G. Paperwork Reduction Act, 44 U.S.C., 

Ch. 35 

SBA has determined that this rule 

would not impose new reporting or 

recordkeeping requirements under the 

Paperwork Reduction Act. 

H. Regulatory Flexibility Act, 5 U.S.C. 

601–612 

The Regulatory Flexibility Act (RFA), 

5 U.S.C. 601, requires administrative 

agencies to consider the effect of their 

actions on small businesses, small 

organizations, and small governmental 

jurisdictions. According to the 

Regulatory Flexibility Act (RFA), 5 

U.S.C. 601, when an agency issues a 

rulemaking, it must prepare a regulatory 

flexibility analysis to address the impact 

of the rule on small entities. However, 

section 605 of the RFA allows an agency 

to certify a rule, in lieu of preparing an 

analysis, if the rulemaking is not 

expected to have a significant economic 

impact on a substantial number of small 

entities. 

This rule likely will not impact a 

substantial number of small entities. 

This rulemaking is intended to update 

and clarify comments received in 

connection with prior SBA rules, and 

accordingly will affect only a limited 

population of existing and potential 

SBIC Licensees. Importantly, this rule 

does not directly impact small 

businesses receiving investments, nor 

any investors or small banks 

participating in the SBIC Licensee. This 

rulemaking regulates the relevant SBIC 

Licensees. The courts have held that the 

RFA does not require a regulatory 

flexibility analysis for entities not 

directly regulated by the agency’s 

proposed rulemaking. Thus, SBA is not 

required to conduct a regulatory 

flexibility analysis on potential 

downstream benefits or costs to those 

entities. 

Further, this rulemaking also does not 

have a significant economic impact on 


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those small entities directly regulated 

under this rulemaking. SBA expects the 

changes in this proposed rule to 

increase program participation, access 

to capital, and diversity of investment 

strategies. The rule does not impose any 

significant new compliance 

requirements to SBIC program 

participants. 

Based on the foregoing, the 

Administrator of the SBA hereby 

certifies that this rulemaking will not 

have a significant economic impact on 

a substantial number of small entities. 

Justification for Direct Final Rule— 

Administrative Procedure Act 

In general, SBA publishes a rule for 

public comment before issuing a final 

rule, in accordance with the 

Administrative Procedure Act. 5 U.S.C. 

553. The Administrative Procedure Act 

provides an exception to this standard 

rulemaking process, however, when an 

agency finds good cause to adopt a rule 

without prior public participation. 5 

U.S.C. 553(b)(3)(B). The good cause 

requirement is satisfied when prior 

public participation is impracticable, 

unnecessary, or contrary to the public 

interest. 

SBA is publishing this rule as a direct 

final rule because public participation is 

unnecessary. SBA views this as a noncontroversial administrative action 

because all technical corrections and 

updates are consistent with public 

comments received throughout the SBIC 

IDG Final Rule rulemaking process. This 

rule will be effective on the date shown 

in the DATES section unless SBA 

receives significant adverse comment on 

or before the deadline for comments. 

Significant adverse comments are 

comments that provide strong 

justifications why the rule should not be 

adopted or for changing the rule. SBA 

does not expect to receive any 

significant adverse comments because 

these technical corrections and updates 

are consistent with broad stakeholder 

comments received during the prior 

SBIC IDG Final Rule rulemaking 

process. 

If SBA receives significant adverse 

comment, SBA will publish a notice in 

the Federal Register withdrawing this 

rule before the effective date. If SBA 

receives no significant adverse 

comments, the rule will be effective 45 

days after publication without further 

notice. 

List of Subjects 

13 CFR Part 107 

Investment companies, Loan 

programs—business, Reporting and 

recordkeeping requirements, Small 

businesses. 

13 CFR Part 121 

Investment companies, Loan 

programs—business, Reporting and 

recordkeeping requirements, Small 

businesses. 

Accordingly, for the reasons stated in 

the preamble, SBA is implementing 

regulations to amend 13 CFR parts 107 

and 121 as follows: 

PART 107—SMALL BUSINESS 

INVESTMENT COMPANIES 

■ 1. The authority citation for part 107 

continues to read as follows: 

Authority: 15 U.S.C. 662, 681–687, 687b– 

h, 687k–m. 

■ 2. Amend § 107.50 by revising the 

definitions of Annual Charge, paragraph 

(1)(x) of Institutional Investor, and 

Leverage to read as follows: 

§ 107.50 Definition of terms. 

* * * * * 

Annual Charge means: 

Annual Charge means an annual fee 

on the principal amount of outstanding 

Debentures which is payable to SBA by 

Licensees, subject to the terms and 

conditions set forth in §§ 107.585 and 

107.1130(d). 

* * * * * 

Institutional Investor means: 

(1) * * * 

(x) An entity managed by an SEC 

regulated Registered Investment Adviser 

in good standing, provided the 

Licensee’s limited partnership 

agreement (or other governing 

agreement) contains sufficient 

provisions to ensure collectability. 

* * * * * 

Leverage means: 

Leverage means financial assistance 

provided to a Licensee by SBA, either 

through the purchase or guaranty of a 

Licensee’s Debentures, and any other 

SBA financial assistance evidenced by a 

security of the Licensee. 

* * * * * 

■ 3. Amend § 107.150 by revising 

paragraph (b)(2) to read as follows: 

* * * * * 

(b) * * * 

(2) Exception. An investor that is a 

traditional investment company, as 

determined by SBA, may own and 

control more than 70 percent of your 

Regulatory Capital and your 

Leverageable Capital. For purposes of 

this section, a traditional investment 

company must be a non-profit entity, or 

a professionally managed firm organized 

exclusively to pool capital from more 

than one source for the purpose of 

investing in businesses that are 

expected to generate substantial returns 

to the firm’s investors. In determining 

whether a firm is a traditional 

investment company for purposes of 

this section, SBA will also consider: 

* * * * * 

■ 4. Amend § 107.230 by: 

■ a. Adding a heading to paragraph (e); 

and 

■ b. Adding paragraph (f). 

The revisions read as follows: 

§ 107.230 Permitted sources of Private 

Capital for Licensees. 

* * * * * 

(e) Borrowed funds exclusion. * * * 

(f) Public sector contributions. The 

Act limits the extent to which funds 

invested directly or indirectly by local, 

State or Federal Government entities are 

eligible to qualify as Leverageable 

Capital. However, SBICs are not 

restricted from accepting funds invested 

directly or indirectly from local, State or 

Federal Government entities. The funds 

contributed by such entities may be 

included in an SBIC applicant’s 

proposed formula to calculate 

management fees. 

■ 5. Amend § 107.305 by adding a 

sentence at the end of paragraph (b) and 

revising (e)(1)(iii) to read as follows: 

§ 107.305 Evaluation of license applicants. 

* * * * * 

(b) * * * While a track record is 

required to apply for an SBIC license, a 

‘‘certified’’ track record is not required. 

* * * * * 

(e) * * * 

(1) * * * 

(iii) Consistent limited partnership 

(LP)-general partnership (GP) dynamics. 

No new limited partner will represent 

≥33 percent of the Private Capital of the 

licensee upon reaching final close at 

target fund size or hard cap. SBA would 

expect to see that a meaningful 

proportion of a prior SBIC fund’s 

institutional investor base would return 

to support an anticipated subsequent 

SBIC fund. The most recent limited 

partnership agreement (LPA) of the 

active Licensee and all side letters will 

have no substantive changes for the 

applicant fund. 

* * * * * 

■ 6. Amend 107.503 by revising 

paragraph (d)(4) to read as follows: 

§ 107.503 Permitted sources of Private 

Capital for Licensees. 

* * * * * 

(d) * * * 

(4) You must report material adverse 

changes in valuations at least quarterly, 


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within 30 days following the close of 

the quarter. 

* * * * * 

■ 7. Amend § 107.585 by: 

■ a. In paragraph (b), removing the 

fourth sentence; 

■ b. Revising the introductory text of 

paragraph (c), paragraph (c)(1), 

paragraph (c)(2) introductory text, and 

paragraph (c)(2)(i); and 

■ c. In paragraph (c)(4) removing the 

fifth sentence. 

The revisions read as follows: 

§ 107.585 Distributions and reductions in 

Regulatory Capital. 

* * * * * 

(c) Accrual SBICs and Reinvestor 

SBICs. If you are an Accrual SBIC or 

Reinvestor SBIC, unless you receive 

prior written approval from SBA to 

make a distribution solely to cover tax 

liabilities, you may only distribute as 

follows: 

(1) Payment of Annual Charges and 

accrued interest. Prior to any non-tax 

distribution, you must pay any Annual 

Charges owed to SBA and all accrued 

interest on your outstanding Leverage. 

(2) Calculate SBA’s share of 

distribution. Prior to any non-tax 

distribution, you must make payments 

to SBA on a pro rata basis with any 

distributions based on your SBA Total 

Intended Leverage Commitment relative 

to your Total Private Capital 

Commitments, inclusive of Qualified 

Non-Private Funds, determined within 

12 months of Licensure calculated as 

follows: SBA’s Share = Total 

Distributions × [Total Intended Leverage 

Commitment/(Total Intended Leverage 

Commitment + Total Private Capital 

Commitments)] where: 

(i) Total Distributions means any prior 

tax distributions plus the total amount 

of distributions, whether profit or return 

of capital, you intend to make after 

paying all accrued interest and Annual 

Charges; 

* * * * * 

■ 8. Amend § 107.630 by adding a 

sentence at the end of paragraphs (a) 

introductory text and (b) to read as 

follows: 

§ 107.630 Requirement for Licensees to 

file financial statements with SBA (Form 

468). 

(a) * * * Reinvestor SBICs must file 

Annual Form 468 within 120 calendar 

days of the end of your fiscal year. 

* * * * * 

(b) * * * Reinvestor SBICs must file 

such reports within 120 calendar days 

of the end of the reporting period. 

* * * * * 

■ 9. Revise § 107.650 to read as follows: 

§ 107.650 Requirement to report portfolio 

valuations to SBA. 

You must determine the value of your 

Loans and Investments in accordance 

with § 107.503. You must report such 

valuations to SBA within 90 calendar 

days of the end of the fiscal year in the 

case of annual valuations, and if you are 

a Leveraged Licensee within 45 calendar 

days following the close of other 

reporting periods. Reinvestor SBICs 

must report valuations to SBA within 

120 calendar days of the end of the 

fiscal year in the case of annual 

valuations, and within 120 calendar 

days following the close of other 

reporting periods. You must report 

material adverse changes in valuations 

at least quarterly, within 30 days 

following the close of the quarter. 

■ 10. Amend § 107.720 by: 

■ a. Adding two sentences at the end of 

paragraph (a)(2)(i); 

■ b. Revising the first sentence of 

paragraph (b)(2) introductory text; 

■ c. Revising the fourth sentence of 

paragraph (b)(3) introductory text; and 

■ d. Revising paragraph (b)(4)(iii). 

The additions and revisions read as 

follows: 

§ 107.720 Small Businesses that may be 

ineligible for financing. 

(a) * * * 

(2) * * * 

(i) * * *A Reinvestor SBIC may make 

Equity Capital Investments to 

Disadvantaged Businesses that are 

relenders or reinvestors, including 

Community Development Financial 

Institutions (CDFIs) and Minority 

Deposit Institutions (MDIs), and any 

such investments in CDFIs or MDIs 

pursuant to this section are not subject 

to the requirement that such CDFIs or 

MDIs make direct financings solely to 

Small Businesses. In addition to Equity 

Capital Investments, Reinvestor SBIC 

Licensees may provide long-term debt 

or loan financing to CDFIs and MDIs. 

* * * * * 

(b) * * * 

(2) Exception for pass-through of 

proceeds to subsidiary. You may 

provide Financing directly to passive 

businesses, including passive 

businesses that you have formed, if it is 

a Small Business and it passes 

substantially all the proceeds through to 

(or uses substantially all the proceeds to 

acquire) one or more subsidiary 

companies, each of which is an eligible 

Small Business that is not passive. 

* * * 

(3) * * * You may form such blocker 

entities only if a direct Financing to 

such Small Businesses would cause any 

of your investors to incur ‘‘unrelated 

business taxable income’’ under section 

511 of the Internal Revenue Code (26 

U.S.C. 511) or to incur ‘‘effectively 

connected income’’ to foreign investors 

under sections 871 and 882 of the 

Internal Revenue Code (26 U.S.C. 871 

and 882) or (for an investor that has 

elected to be taxed as a regulated 

investment company) receive or be 

deemed to receive gross income that 

does not qualify under section 851(b)(2) 

of the Internal Revenue Code (26 U.S.C. 

851(b)(2)). * * * 

(4) * * * 

(iii) For the purposes of this part 107, 

each passive and non-passive business 

included in the Financing is a Portfolio 

Concern and subject to the provisions 

set forth in the Act. The terms of the 

financing must also provide SBA with 

access to Portfolio Concern information 

in compliance with this part 107, 

including without limitation §§ 107.600 

and 107.620. 

* * * * * 

■ 11. Revise § 107.740 to read as 

follows: 

§ 107.740 Portfolio diversification 

(‘‘Overline’’ limitation). 

If you are a Leveraged Licensee, the 

aggregate amount of financings you may 

provide and commitments you may 

issue to a Small Business and its 

affiliates may not, without SBA’s prior 

written approval, exceed 10 percent of 

the sum of: 

(a) Your Private Capital; and 

(b) The total amount of Leverage 

principal (excluding any interest which 

may become due or accrue at any point 

following the issuance of Leverage) 

projected to be issued in the business 

plan that was approved by SBA at the 

time you were licensed. 

■ 12. Amend § 107.855 by revising 

paragraph (h)(2) to read as follows: 

§ 107.855 Interest rate ceiling and 

limitations on fees charged to Small 

Businesses (‘‘Cost of Money’’). 

* * * * * 

(h) * * * 

(2) Discount the cash flows back to 

the first disbursement date using the 

Cost of Money ceiling from paragraph 

(c) of this section as the discount rate. 

* * * * * 

■ 13. Amend § 107.1120 by revising 

paragraph (d) to read as follows: 

§ 107.1120 General eligibility requirements 

for Leverage. 

* * * * * 

(d) For any Leverage draw that would 

cause you and any other Licensees 

under Common Control to have 

aggregate outstanding Leverage in 

excess of the amount permitted under 

Section 303(b)(2)(A)(ii) of the Act, 


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Federal Register / Vol. 89, No. 13 / Friday, January 19, 2024 / Rules and Regulations 3549 

which, as of June 21, 2018, is 

$175,000,000, certify that none of the 

Licensees has a condition of Capital 

Impairment. See also § 107.1150(b). 

* * * * * 

■ 14. Amend § 107.1130 by revising 

paragraph (d)(1) introductory text to 

read as follows: 

§ 107.1130 Leverage fees and Annual 

Charge. 

* * * * * 

(d) * * * 

(1) Debentures. You must pay to SBA 

an Annual Charge, not to exceed 1.38 

percent per annum, on the outstanding 

principal amount of your Debentures, 

payable under the same terms and 

conditions as the interest on the 

Debentures. For Leverage issued 

pursuant to Leverage commitments 

approved on or after October 1, 2023, 

the Annual Charge, established and 

published, shall not be less than 0.10 

percent per annum, subject to the 

following provisions: 

* * * * * 

■ 15. Amend § 107.1850 by revising 

paragraph (a)(6) to read as follows: 

§ 107.1850 Watchlist. 

* * * * * 

(a) * * * 

(6) Your leverage coverage ratio (LCR) 

falls below 1.25, where LCR is 

calculated as ((Total Assets¥Liabilities 

excluding SBA Leverage¥Other Assets) 

+ Unfunded Private Commitments)/ 

Outstanding Leverage, or a Capital 

Impairment Percentage approaching 

your threshold set forth in § 107.1830. 

* * * * * 

PART 121—SMALL BUSINESS SIZE 

REGULATIONS 

■ 16. The authority citation for part 121 

continues to read as follows: 

Authority: 15 U.S.C. 632, 634(b)(6), 

636(a)(36), 662, and 694a(9); Pub. L. 116–136, 

Section 1114. 

■ 17. Amend § 121.103 by revising 

paragraph (b)(1) to read as follows: 

§ 121.103 How does SBA determine 

affiliation? 

* * * * * 

(b) * * * 

(1) Business concerns owned in whole 

or substantial part either by investment 

companies licensed, or by development 

companies qualifying, under the Small 

Business Investment Act of 1958, as 

amended, or by investment companies 

to which a Reinvestor SBIC (within the 

meaning of 13 CFR 107.720(a)(2)) has 

provided a meaningful percentage of 

Equity Capital are not considered 

affiliates of such investment companies 

or development companies. 

* * * * * 

Isabella Casillas Guzman, 

Administrator. 

[FR Doc. 2024–00559 Filed 1–18–24; 8:45 am] 

BILLING CODE 8026–09–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 97 

[Docket No. 31526; Amdt. No. 4095] 

Standard Instrument Approach 

Procedures, and Takeoff Minimums 

and Obstacle Departure Procedures; 

Miscellaneous Amendments 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Final rule. 

SUMMARY: This rule establishes, amends, 

suspends, or removes Standard 

Instrument Approach Procedures 

(SIAPS) and associated Takeoff 

Minimums and Obstacle Departure 

procedures (ODPs) for operations at 

certain airports. These regulatory 

actions are needed because of the 

adoption of new or revised criteria, or 

because of changes occurring in the 

National Airspace System, such as the 

commissioning of new navigational 

facilities, adding new obstacles, or 

changing air traffic requirements. These 

changes are designed to provide safe 

and efficient use of the navigable 

airspace and to promote safe flight 

operations under instrument flight rules 

at the affected airports. 

DATES: This rule is effective January 19, 

2024. The compliance date for each 

SIAP, associated Takeoff Minimums, 

and ODP is specified in the amendatory 

provisions. 

The incorporation by reference of 

certain publications listed in the 

regulations is approved by the Director 

of the Federal Register as of January 19, 

2024. 

ADDRESSES: Availability of matters 

incorporated by reference in the 

amendment is as follows: 

For Examination 

1. U.S. Department of Transportation, 

Docket Ops-M30. 1200 New Jersey 

Avenue SE, West Bldg., Ground Floor, 

Washington, DC 20590–0001. 

2. The FAA Air Traffic Organization 

Service Area in which the affected 

airport is located; 

3. The office of Aeronautical 

Information Services, 6500 South 

MacArthur Blvd., Oklahoma City, OK 

73169 or, 

4. The National Archives and Records 

Administration (NARA). For 

information on the availability of this 

material at NARA, visit 

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

ibr-locations or email fr.inspection@

nara.gov. 

Availability 

All SIAPs and Takeoff Minimums and 

ODPs are available online free of charge. 

Visit the National Flight Data Center at 

nfdc.faa.gov to register. Additionally, 

individual SIAP and Takeoff Minimums 

and ODP copies may be obtained from 

the FAA Air Traffic Organization 

Service Area in which the affected 

airport is located. 

FOR FURTHER INFORMATION CONTACT: 

Thomas J. Nichols, Flight Procedures 

and Airspace Group, Flight 

Technologies and Procedures Division, 

Flight Standards Service, Federal 

Aviation Administration. Mailing 

Address: FAA Mike Monroney 

Aeronautical Center, Flight Procedures 

and Airspace Group, 6500 South 

MacArthur Blvd., STB Annex, Bldg. 26, 

Room 217, Oklahoma City, OK 73099. 

Telephone (405) 954–1139. 

SUPPLEMENTARY INFORMATION: This rule 

amends 14 CFR part 97 by establishing, 

amending, suspending, or removes 

SIAPS, Takeoff Minimums and/or 

ODPS. The complete regulatory 

description of each SIAP and its 

associated Takeoff Minimums or ODP 

for an identified airport is listed on FAA 

form documents which are incorporated 

by reference in this amendment under 5 

U.S.C. 552(a), 1 CFR part 51, and 14 

CFR 97.20. The applicable FAA Forms 

8260–3, 8260–4, 8260–5, 8260–15A, 

8260–15B, when required by an entry 

on 8260–15A, and 8260–15C. 

The large number of SIAPs, Takeoff 

Minimums and ODPs, their complex 

nature, and the need for a special format 

make publication in the Federal 

Register expensive and impractical. 

Further, pilots do not use the regulatory 

text of the SIAPs, Takeoff Minimums or 

ODPs, but instead refer to their graphic 

depiction on charts printed by 

publishers or aeronautical materials. 

Thus, the advantages of incorporation 

by reference are realized and 

publication of the complete description 

of each SIAP, Takeoff Minimums and 

ODP listed on FAA form documents is 

unnecessary. This amendment provides 

the affected CFR sections and specifies 

the types of SIAPS, Takeoff Minimums 

and ODPs with their applicable effective 

dates. This amendment also identifies 


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