This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

91284 

Vol. 89, No. 223 

Tuesday, November 19, 2024 

SMALL BUSINESS ADMINISTRATION 

13 CFR Part 115 

[Agency Docket Number: SBA–2023–0009] 

RIN 3245–AI06 

Surety Bond Guarantee Program: 

Streamlining and Modernizing 

AGENCY: U.S. Small Business 

Administration. 

ACTION: Proposed rule. 

SUMMARY: The U.S. Small Business 

Administration (SBA or Agency) 

proposes to amend its regulations for 

the Surety Bond Guarantee Program to 

reduce the burden on participating 

surety companies for submission and 

retention of documents. SBA is also 

correcting conflicting provisions, as 

well as revising the obsolete preferred 

surety admissions requirements and the 

Quarterly Contract Completion Report. 

DATES: SBA must receive comments to 

this proposed rule on or before January 

21, 2025. 

ADDRESSES: Identify your comments by 

Docket No. SBA–2023–0009 or RIN 

3245–AI06 and submit them by one of 

the following methods: (1) Federal 

eRulemaking Portal: 

www.regulations.gov. Follow the 

instructions for submitting comments; 

or (2) Mail/Hand Delivery/Courier: 

Kevin Valdes, Management Analyst, 

Office of Surety Guarantees, U.S. Small 

Business Administration, 409 3rd Street 

SW, 8th Floor, Washington, DC 20416. 

SBA will post all comments to this 

proposed rule on www.regulations.gov. 

If you wish to submit confidential 

business information (CBI) as defined in 

the User Notice at www.regulations.gov, 

you must submit such information to 

U.S. Small Business Administration, 

Kevin Valdes, Management Analyst, 

Office of Surety Guarantees, U.S. Small 

Business Administration, 409 3rd Street 

SW, 8th Floor, Washington, DC 20416, 

or send an email to Kevin.Valdes@

sba.gov. Highlight the information that 

you consider to be CBI and explain why 

you believe SBA should hold this 

information as confidential. SBA will 

review your information and determine 

whether it will make the information 

public. 

FOR FURTHER INFORMATION CONTACT: 

Kevin Valdes, Management Analyst, 

Office of Surety Guarantees, U.S. Small 

Business Administration, 409 3rd Street 

SW, 8th Floor, Washington, DC 20416, 

(202) 816–0137 or Kevin.Valdes@

sba.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background 

SBA is amending several regulations 

applicable to its Surety Bond Guarantee 

(SBG) program. SBA guarantees bid, 

payment, and performance bonds for 

small and emerging contractors who 

cannot obtain surety bonds through 

regular commercial channels. SBA’s 

guarantee, authorized pursuant to part B 

of title IV of the Small Business 

Investment Act of 1958, 15 U.S.C. 694a 

et seq., gives Sureties an incentive to 

provide bonding for small businesses 

and thereby assists small businesses in 

obtaining greater access to contracting 

opportunities. SBA’s guarantee is an 

agreement between a Surety and SBA 

that SBA will assume a certain 

percentage of the Surety’s loss should a 

contractor default on the underlying 

contract. 

As part of its ongoing responsibility to 

ensure that the rules it issues align with 

surety industry practices and do not 

have an adverse economic impact on 

those affected by those rules, SBA held 

a series of listening sessions with Surety 

professionals for input about their 

experiences using the SBG program. 

Findings of the listening sessions and 

additional impact studies resulted in the 

decision to change and clarify several 

current procedures and regulations to 

improve customer experience and better 

enable modernization efforts within the 

SBG program. 

II. Prior Approval Agreement: § 115.11, 

§ 115.30(b) and (d) 

Current SBA regulation 13 CFR 

115.11 requires prospective Surety 

Partners to submit applications by mail. 

SBA proposes adding the option to 

email Surety Partner application 

packages. This change will modernize 

regulation to align with current business 

practices. 

The SBG program requires signed 

certification by Surety Partners 

participating in SBA’s Prior Approval 

program each time a bond application is 

submitted to the program. Each signed 

form certifies small business program 

eligibility, the need for program 

assistance, and the accuracy of 

applicant information. The certification 

process involves completion of the SBA 

Form 990 fields (normally 

electronically) along with download, 

signature, and re-upload of the form to 

SBA’s Capital Access Financial System 

(CAFS). In SBA’s Preferred Surety Bond 

(PSB) program, SBA Form 990 is not 

required due to delegated authority and 

a written Surety Partner participation 

agreement that blanketly certifies the 

same items as in SBA Form 990. SBA 

proposes removing the signature 

requirement in 115.30(b) for each 

application and replace with a master 

certification. 

All Prior Approval participants 

surveyed agreed that having a Surety 

Partner participation agreement for the 

Prior Approval program would greatly 

benefit program participants by 

removing SBA’s requirement to 

individually certify every application 

submission. SBA proposes changes to 

13 CFR 115.30(d) to require a new Prior 

Approval Agreement between SBA and 

the Prior Approval Surety Partner which 

will contain a master certification for all 

the applications to follow. This removes 

the need for each application to be 

individually certified. SBA estimates 

the new agreements would reduce 

application time burden on program 

participants by 557 hours, or $15,818 

according to fiscal year 2023 program 

activity. 

III. Streamline Fee Collection Process: 

§ 115.19(g), § 115.32(b) and (d), and 

§ 115.66 

Currently, SBA requires two fees to 

support surety bonds on awarded 

contracts: a fee charged to the Surety 

company under § 115.32(a), and a fee 

charged to the small business contractor 

under § 115.32(b). SBA’s SBG program 

requires that the payment of SBA 

contractor fees be submitted by small 

business applicants at the time of 

application approval. For the Prior 

Approval program, § 115.32(b) requires 

that the contractor must submit receipt 

of the payment to SBA before an 

application is given final approval, and 

§ 115.32(d) requires that for bond 

increases the Principal must submit the 


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increased fee upon notification of the 

increase in the contract or bind amount. 

For the PSB program, § 115.66 requires 

the PSB Surety remit SBA’s Premium 

share and the Principal’s guarantee fee 

with the bordereau listing the related 

Final Bond, as required in the PSB 

Agreement. 

While payments are verified via 

payment receipt, the receipt of the 

payments by SBA are not always 

successful due to a variety of issues that 

can occur during the processing of the 

payment. When contractor fee payments 

are unsuccessful, SBA must seek 

remittance of the delinquent payments 

due to SBA from the small businesses 

through surety professional participants 

in both PSB and Prior Approval 

programs. If still unsuccessful, a small 

business becomes ineligible for further 

SBA guarantees and SBA writes off the 

delinquent debt. Over the last five fiscal 

years, SBA wrote off over $100,000 in 

uncollected contractor fees. Relatedly, 

SBA surety fee payments are due to SBA 

within 60 days of a guarantee’s 

approval. Surety companies remit these 

payments directly to SBA. While 

delinquency is periodically an issue, 

SBA has not written off any surety fees 

over the last five fiscal years. 

All surety professional participants 

surveyed stated SBA’s contractor fee 

collection process is incongruent with 

surety industry practice for premium 

(industry fee) collection. Instead of 

small businesses directly paying surety 

bond companies for each individual 

premium due, surety bond companies 

typically bill premiums (fees) due to 

surety bond agencies (intermediaries) 

representing applicant businesses via 

monthly billing statements. Collection is 

directly from these agencies, net their 

commission. The agencies 

independently manage premium 

collection from applicant businesses 

and are responsible for payment to 

surety bond companies. The industry 

almost always issues bonds before 

receiving premium. 

Prior Approval survey participants all 

stated SBA’s current contractor fee 

collection requirements delay the 

bonding process since payment cannot 

be made prior to an initial intent-toapprove from SBA and the surety bond 

cannot be issued until payment is made 

by the small business. Two participants 

noted a small business can sometimes 

take days to pay SBA’s fee, which 

further delays the bonding process. 

SBA proposes streamlining fee 

collection by changing regulations to 

allow SBA merger of contractor fee 

collection procedures into the same 

process as SBA surety fee collection. 

The regulatory changes would allow 

SBA to procedurally adjust contractor 

fee collection to be with Surety Partners 

in the same format as current surety fee 

collection. Likewise, any guarantee fee 

refund owed by SBA will be remitted to 

the Surety that collected the fee from 

the Principal. The new process will be 

the same for the Prior Approval and PSB 

Sureties. 

SBA estimates the change would 

reduce application time burden on 

program participants and small 

businesses by approximately 568 hours 

per year, or roughly $14,495 in annual 

savings, on average. To estimate time 

burden, the SBA relies on a combination 

of FY2023 program data and interviews 

with program participants and small 

businesses. The change would shift 

small business contractor fee remittance 

to SBA from small businesses to Surety 

Partners, enable the industry to align 

their SBA contractor fee collection 

procedures with industry fee collection 

practices, and reduce the amount of 

uncollectible fees with small businesses. 

The proposed change is estimated to 

save each impacted small business an 

average of 5 minutes per response, or a 

total of 284 total burden hours for all 

small businesses. To quantify the value 

of time saved, the SBA relies on the 

most recently available Bureau of Labor 

Statistics (BLS) wage data and assumes 

that the representative impacted small 

business occupation would be 

‘‘miscellaneous construction and related 

workers.’’ The median wage from 2023 

for this occupation was $22.64. In 

FY2023, there were approximately 3,406 

small businesses in the program which 

brings the estimated total burden hours 

saved for small businesses per year to 

roughly 284. The total annual savings 

that the SBA estimates for small 

businesses as a result of the proposed 

changes comes to $6,430 ($23*284), on 

average. 

To quantify the value of time saved 

for program participants, the SBA relies 

on BLS wage data and assumes that the 

representative impacted occupation 

would be ‘‘insurance sales agents’’. The 

median wage from 2023 for this 

occupation was $28.40. Using the same 

program data from FY2023, the 

estimated total burden hours saved for 

program participants per year comes to 

284. The total annual savings that the 

SBA estimates for program participants 

as a result of the proposed changes 

comes to $8,066 ($28*284), on average. 

IV. Quarterly Contract Completion 

Report: § 115.22 

Currently, 13 CFR 115.22 requires 

Surety Partners to submit a quarterly 

certification report detailing all 

contracts for guaranteed bonds that were 

completed during the most recent 

quarter. The report was implemented in 

2017 with the intention of ensuring that 

fees due for increases on successfully 

completed contracts are accurately 

calculated and paid timely. At that time, 

industry commented on the proposed 

rule that the report creates an 

administrative burden on Surety 

Partners. During SBA’s recent survey, 

participants stated the industry 

typically considers contracts up to 

$250,000 complete upon the estimated 

completion date on file without 

verification. In fiscal year 2023, over 

43% of guaranteed bonds for awarded 

contracts were within this range. Surety 

Partners for the program have stated 

reporting details, such as the contract 

completion date, can require additional 

work when contracts are within this 

range. 

SBA proposes modifying the 

regulation to allow SBA to set the 

timeframe. The change will create 

greater program office agility in 

adapting completion reporting to the 

practices of the industry. It will also 

allow the program office to adjust 

internal guarantee closeout monitoring 

procedures to secure collection of 

deferred fees due at the time of contract 

completion. 

V. Surety Bonding Line: § 115.19(f)(1)(i), 

§ 115.33(b)(1) 

Currently, 13 CFR 115.33(b)(1) allows 

Sureties participating in SBA’s Prior 

Approval program to submit 

applications up to 15 days after bond 

execution under an SBA-approved 

bonding line. However, 13 CFR 

115.19(f)(1)(i) requires bonds be 

approved by SBA prior to execution. 

The two regulations conflict and must 

be reconciled to allow SBA acceptance 

of executed bonds under an SBA 

bonding line. SBA is also clarifying 

when a bonding line expires in 13 CFR 

115.33(b)(1). Currently, regulations state 

‘‘not to exceed 1 year.’’ However, SBA 

bonding lines cannot extend past the 

originated fiscal year per allocated 

funding restrictions of the program. SBA 

proposes modifying current regulatory 

language by removing the conflicting 

requirement in 13 CFR 115.19(f)(1)(i) 

and clarify its effective period in 13 CFR 

115.33(b)(1). 

VI. Revisions to Underwriting and the 

Preferred Surety Bond (PSB) Program: 

§ 115.11, § 115.60, § 115.65(b) 

SBA’s Preferred Surety Bond (PSB) 

program is for sureties that seek 

delegated authority to approve SBA 

guaranteed surety bonds. Sureties can 

be selected to participate in the PSB 

program if they meet criteria established 


ddrumheller on DSK120RN23PROD with PROPOSALS1
91286 Federal Register / Vol. 89, No. 223 / Tuesday, November 19, 2024 / Proposed Rules 

by SBA. Once approved, the surety 

enters into a PSB Agreement with SBA 

under which the surety can issue, 

monitor, and service SBA-guaranteed 

bonds without SBA’s prior approval of 

the bond guarantee. 

SBA proposes revising its admissions 

policies for PSB sureties. The 

admissions criteria for PSB sureties 

found in 13 CFR 115.60 that SBA 

proposes for revision include the 

minimum underwriting limit assigned 

by the U.S. Treasury of $6,500,000.00, 

the limit on the proportion of 

government-backed bonds to their 

overall premium income, and the 

requirement that the surety obtain 

SBA’s approval before issuing a bond 

greater than $2 million during the initial 

9 months the surety is first in the PSB 

program. 

SBA identified that 61, or 24%, of all 

currently T-listed surety companies 

have limits below SBA’s required 

threshold to participate in the PSB 

program. Some companies in the surety 

industry utilize affiliate entities to 

manage different portfolio segments, 

including the portfolio segment SBA 

assists, termed ‘‘small specialty.’’ Given 

the typical bond size need of small and 

emerging businesses, some surety bond 

companies utilize affiliates with low Tlisting limits to support small specialty 

before moving them to surety affiliates 

with higher T-listing amounts. 

The T-listing is based on a surety’s 

ability to pay losses via reserve funds 

and is not an indicator of surety 

performance. By excluding some of 

these affiliates via the T-listing limit, the 

program also potentially reduces access 

to the program for some small 

businesses. Removing the regulatory 

limit will allow greater agility for SBA 

to adjust the requirement based on 

inflation and industry practices. This 

allows the PSB program to support more 

small surety bond companies. The PSB 

agreement outlines delegated authority 

for PSB participation and can be given 

in amounts that reflect the participating 

surety’s T-listing limit. 

SBA also proposes removing: (1) the 

limit on government-backed bonds as a 

proportion of their premium income, 

and (2) the requirement that a PSB 

surety get approval before issuing a 

bond greater than $2 million during the 

initial 9 months of program 

participation. SBA could not identify a 

current benefit to the implementation of 

these requirements. PSB surety 

participation as a percent of premium 

income unduly restricts small business 

access to the SBG program. Restricting 

program participation for a surety bond 

company on this basis potentially forces 

a participating surety to deny small 

business access to strictly due to 

reaching their premium share limit. 

The 9-month delegated authority 

restriction for new Surety participants 

does not contain enough time to obtain 

a program performance assessment of 

the new participant. SBA could not 

identify rationale for the restriction. 

Additionally, the conclusion of a review 

of program performance for new PSB 

surety partners between fiscal year 2018 

and 2024 did not support the initial 9- 

month program performance period as 

an indicator of program performance 

thereafter. The language will be 

replaced with SBA maintaining the right 

to restrict participation to evaluate the 

Surety’s program performance. This 

language is in line with 13 CFR 115.18, 

pertaining to improper practices within 

the program. These proposals are 

anticipated to increase the pool of PSB 

sureties, which will expand the SBA 

surety agency base and increase bond 

opportunities for small businesses. 

Current SBA regulations 13 CFR 

115.11, 13 CFR 115.60(a)(4), and 13 CFR 

115.65(b) require all Surety partners to 

oversee its underwriting function with 

surety staff and for PSB sureties to 

underwrite using employees of the 

surety and in ‘‘the same manner and 

with the same staff’’ for SBA bonds as 

they do for their non-SBA bonds. During 

listening sessions, meetings, and other 

engagements with the surety bond 

industry, SBA found it is common 

practice in the industry to delegate bond 

writing authority to staff of an affiliated 

surety and vetted surety bond agencies. 

Agents in these agencies are vetted for 

their knowledge and performance in the 

industry in relation to their portfolio 

with the surety bond company 

delegating such authority. Agencies 

with this authority are referred to as 

‘‘Managing General Agencies’’ (MGAs) 

and ‘‘Managing General Underwriters’’ 

(MGUs). With this authority, these 

entities act on behalf of the surety by 

performing the underwriting of a bond 

application and issuing the surety bond. 

Oftentimes, MGAs and MGUs handle 

large books of business that are too 

cumbersome or time-consuming for 

surety bond companies to manage. 

Sureties have stated to SBA that 

surety bonds to small businesses who 

have trouble being approved for a bond 

fit this category of business. The Prior 

Approval program does not have staff 

restrictions on underwriting by 

participating surety bond companies. A 

comparative review of program 

performance for fiscal years 2014–2021 

by known MGAs and MGUs in the Prior 

Approval program shows that 

performance by these entities has been 

on par with the rest of the program 

during the same period. SBA will refer 

to MGAs and MGUs delegated by SBApartnered surety bond companies as 

partner-affiliated entities. SBA proposes 

to allow PSB sureties to use affiliate 

staff for underwriting and allow the use 

of partner-affiliated entities. This 

change will allow surety partners to 

write more bonds with fewer resources 

and align SBA regulation with industry 

practice. Overall, SBA expects this to 

increase the number of surety partners 

and bond opportunities for small 

businesses. 

VII. Revisions to the Quick Bond 

Agreement: § 115.30(d)(2) 

SBA’s Quick Bond agreement (Quick 

Bond) is for small contract amounts. 

The program aligns with the surety 

bond industry practice of providing 

reduced and expedient underwriting for 

surety bonds with limited scope and 

size in private industry programs 

collectively referred to as fast-track 

programs. SBA’s Quick Bond option 

removes bonding barriers for start-ups 

and other emerging small businesses by 

reducing qualification to small business 

and contract eligibility for SBA 

assistance. Currently, 13 CFR 

115.30(d)(2) outlines Quick Bond 

limitations. In surety bond industry 

listening sessions, meetings, and day-today program application review, SBA 

has found many industries (e.g., 

plumbing, HVAC, drywall, painting, 

roofing, etc.) often have contracts with 

clauses that don’t fit the program’s 

regulatory limitations. 

Additionally, SBA historically lags 

behind industry adjustments to similar 

programs outside SBA in regard to 

limits on contract size, liquidated 

damages, and job duration. During 

engagements, surety industry 

professionals have advised SBA that the 

industry supports more expansive small 

business needs within fast-track 

programs outside SBA and that not all 

emerging small business contractors are 

able to regularly maintain financial 

statements. When reviewing program 

performance, SBA found some 

industries may experience elevated risk 

of failure due to external impacts. In 

these events, applications from small 

businesses in the impacted industry 

would benefit from regular application 

underwriting even when qualifying for 

SBA’s Quick Bond application type. 

Due to Quick Bond limitations being 

part of regulation, SBA cannot readily 

adapt to economic changes and 

emerging program risks. SBA proposes 

removing the regulatory limitations for 

Quick Bond application types. This will 

enable SBA to better align the program 


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Federal Register / Vol. 89, No. 223 / Tuesday, November 19, 2024 / Proposed Rules 91287 

with industry practices and better 

support small businesses. 

VIII. Technical Corrections: § 115.11, 

§ 115.12(f), § 115.18(c), § 115.30(b) and 

(c), § 115.31(d), and § 115.35(a)(1)(iv) 

SBA proposes making several 

technical corrections to clarify and 

correct current regulations. 13 CFR 

115.11 states the T-listing limit is for 

bonds in connection with Federal 

procurement contracts. However, U.S. 

Treasury clarified to SBA that the 

requirement is in connection with all 

bonds issued by the surety bond 

company should the company be 

Treasury listed. SBA proposes removing 

reference to Federal procurement 

contracts to align with U.S. Treasury. 

13 CFR 115.12(f) explains procedures 

for SBA-approved transfers and sales of 

files and accounts by a surety. SBA 

proposes adding language that clarifies 

sale of an entire SBA-partnered business 

operation without prior-written 

approval by SBA voids SBA’s guarantee 

and claims reimbursement agreements 

to that division unless the sale is to an 

existing SBA partner. 

13 CFR 115.18(c) references SBA form 

912. SBA’s form 994 was previously 

modified to capture the same 

information as SBA form 912 and the 

program stopped actively collecting 

SBA form 912. SBG program currently 

relies solely on SBA form 994 for the 

information previously collected on 

SBA form 912. SBA proposes replacing 

reference to SBA form 912 with 

reference to individual certification by 

applicant owners. 

13 CFR 115.30(b) and (c) refer to SBA 

staff as SBA officers. This will be 

changed to SBA staff to be consistent 

with references to employees 

throughout the rest of the regulations. 

13 CFR 115.31(d) includes an 

example calculation for determining a 

reduced guarantee percent on a contract 

over the statutory limit of the program. 

For consistency with other examples as 

guidance, this example will be removed 

from the regulations. 

13 CFR 115.35(a)(1)(iv) states a surety 

must notify SBA when it receives any 

adverse information concerning a 

Principal’s financial condition or 

possible inability to complete the 

project or pay laborers or suppliers. In 

practice, SBA verifies this information 

when submitted to SBA. Additionally, 

these conditions for notification are 

collectively defined by SBA in § 115.10 

as ‘‘imminent breach’’ when the 

conditions, unless remedied by the 

Surety, make a default under the bond 

appear to be inevitable. SBA proposes 

clarifying this requirement by stating 

the surety must notify SBA when it 

verifies any adverse information 

concerning imminent breach by the 

Principal. 

IX. Section-by-Section Analysis 

A. § 115.11 

Remove the requirement that physical 

applications be submitted and allow 

Surety Partners to email application 

packages. Remove the requirement that 

a Surety’s salaried staff must oversee its 

underwriting function. Remove 

language stating that T-listing limit for 

bonds is in connection with Federal 

procurement contracts. 

B. § 115.12(f) 

Add clarifying language that the sale 

of an entire business operation 

partnered with SBA occurs without 

prior written approval of SBA, it will 

void SBA’s guarantee and claims 

reimbursement agreements to that 

division unless the sale is to an existing 

SBA partner. 

C. § 115.18(c) 

Remove reference to SBA Form 912 

Statement of Personal History as it is no 

longer in use. 

D. § 115.19 

Add language to 13 CFR 115.19(f)(1)(i) 

to clarify that timeliness for a bonding 

line is determined by § 133(d). 

E. § 115.22 

Change time frame for contract 

completion reporting from quarterly to 

requiring the Surety to submit to SBA 

notification of successfully completed 

contracts within the time frame set by 

SBA. 

F. § 115.30 

Remove the signature requirement in 

§ 115.30(b) for each application and 

replace with a master certification. 

Change § 115.30 (d) to require a new 

Prior Approval Agreement between SBA 

and the Prior Approval Surety Partner 

which will contain a master certification 

for all the applications that follow. 

Revise § 115.30(b) and (c) by 

removing references to ‘‘authorized SBA 

officer’’ and replace with the SBA’s 

Director, Office of Surety Guarantees 

(D/SG) or their designee. 

Revise Quick Bond Agreement 

requirements in paragraph (d)(2) by 

removing the restriction that a Quick 

Bond Agreement can only be used for 

contract amounts under $500,000 at the 

time of application and remove the 

regulatory exclusions in paragraph 

(d)(ii). 

G. § 115.31 

Remove from paragraph (d) the 

example calculation for when a contract 

amount increases above the statutory 

limit. 

H. § 115.32 

Revise paragraph (b) to delete the 

requirement that the SBA’s charge to 

Principal be remitted with the 

application, and replace that with a 

requirement that the Prior Approval 

Surety is responsible to collect the 

guarantee fee from the Principal and 

remit to SBA within 60 calendar days of 

the approval of the Surety Bond 

Guarantee Agreement (SBA form 990). 

Revise paragraph (d)(1) by changing 

the cross reference in paragraph (d)(1) 

for the payment of the increased 

Principal’s guarantee fee from in 

accordance with (d)(2) to (b). Revise 

(d)(2) by deleting the provision 

requiring payment for an increase in the 

Principal’s fee from resulting from an 

increase in the contract amount. Revise 

paragraph (d)(3) by detecting that 

refunds fees from bond increases will go 

from SBA to the Principal and replace 

it with the refund will be returned to the 

Surety who collected the payment. 

I. § 115.33(b)(1) 

Revise the duration of a Bonding Line 

from 1 year to the fiscal year of 

approval. 

J. § 115.35(a)(1)(iv) 

Revise when a Surety must notify 

SBA about adverse information. Change 

the reporting threshold from when the 

Surety has adverse information 

concerning a Principal’s financial 

condition to when the Surety has 

verified imminent breach by the 

Principal. 

K. § 115.60 

Remove underwriting limitation of 

$6,500,000 in paragraph (a)(1) and 

replace with a minimum threshold set 

by SBA for the applicant Surety or an 

SBA-partnered affiliate. Delete 

paragraph (a)(3). Revise paragraph (a)(4) 

by adding employees of a Surety’s 

affiliates and SBA approved affiliated 

entities as those who are allowed to do 

underwriting on behalf of the Surety. 

Revise paragraph (b) by removing the 9- 

month trial period before a Surety can 

be admitted into the PSB program and 

replace with a time frame set by SBA. 

L. § 115.65(b) 

Revise by eliminating the restriction 

that the approval, execution, and 

administration of SBA Bonds by a PSB 

Surety must be handled by the same 

staff as the Surety’s outside activity and 


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91288 Federal Register / Vol. 89, No. 223 / Tuesday, November 19, 2024 / Proposed Rules 

replace with a cross reference to 

individuals outlined in § 115.60(a)(4). 

Section 115.60(a)(4) is also being 

revised by adding employees of a 

Surety’s affiliates and SBA approved 

affiliated entities as those who are 

allowed to do underwriting on behalf of 

the Surety. 

M. § 115.66 

Revise § 115.66 which relates to fee 

collection by PSB Sureties to mirror the 

requirements for Prior Approval 

Sureties in § 115.32. Revisions include 

deleting existing text and adding 

subsections (a), (b), and (c). Subsection 

(a) describes the Surety’s Premium. 

Subsection (b) describes the SBA charge 

to the Principal. Subsection (c) 

describes the SBA charge to the Surety. 

None of these are new charges or fees. 

X. Request for Comments 

SBA invites public comments on any 

part of the proposed rule. 

XI. Compliance the Regulatory 

Flexibility Act (5 U.S.C. 601–612), 

Executive Orders Executive Orders 

12866, 13563, and 14094, Executive 

Orders 13563, 12988, and 13132, and 

the Paperwork Reduction Act (44 

U.S.C., Ch. 35) 

Regulatory Flexibility Act 

When an agency issues a rulemaking 

proposal, the Regulatory Flexibility Act 

(RFA), as amended by the Small 

Business Regulatory Enforcement 

Fairness Act of 1996, requires the 

agency to ‘‘prepare and make available 

for public comment an initial regulatory 

flexibility analysis,’’ which shall 

‘‘describe the impact of the proposed 

rule on small entities.’’ (5 U.S.C. 603(a)). 

Section 605 of the RFA allows an 

agency to certify a rule, in lieu of 

preparing an analysis, if the proposed 

rulemaking is not expected to have a 

significant economic impact on a 

substantial number of small entities. 

This is expected to be a time saving 

rule making so it is not anticipated to 

have a significant economic impact. As 

of fiscal year end 2023, the Program had 

9,265 surety bond guarantees to 32 

active surety companies (which may or 

may not be small businesses) that would 

be impacted by this rulemaking. 

Accordingly, the Administrator of the 

SBA hereby certifies that this rule will 

not have a significant economic impact 

on a substantial number of small 

entities. SBA invites comments from 

members of the public who believe this 

rule will have a significant economic 

impact on a substantial number of small 

entities. 

Executive Orders 12866, 13563, and 

14094 

Executive Order 12866, Regulatory 

Planning and Review, as amended by 

Executive Order 14094, Modernizing 

Regulatory Review, requires agencies to 

provide a Regulatory Impact Analysis 

assessing costs and benefits and 

addressing available alternatives for any 

‘‘significant regulatory action.’’ The 

Office of Management and Budget has 

determined that this rule does not 

constitute a ‘‘significant regulatory 

action’’ as defined in Executive Order 

12866. 

Executive Order 13563, Improving 

Regulation and Regulatory Review, 

reaffirms the principles of Executive 

Order 12866 and 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. In 

addition, Executive Order 13563 

requires agencies to assess the benefits 

and costs of any regulations and address 

available alternatives to direct 

regulation. 

As described above, this proposed 

rule could affect small entities that 

participate as sureties in SBA’s Surety 

Bond Guarantee program and small 

entities seeking assistance through the 

program. SBA’s proposed rule will 

reduce time in two significant ways. 

First, All Prior Approval participants 

surveyed agreed that having a Surety 

Partner participation agreement for the 

Prior Approval program would greatly 

benefit program participants by 

removing SBA’s requirement to 

individually certify every application 

submission. SBA proposes changes to 

13 CFR 115.30(d) to require a new Prior 

Approval Agreement between SBA and 

the Prior Approval Surety Partner which 

will contain a master certification for all 

the applications to follow. This removes 

the need for each application to be 

individually certified. SBA estimates 

the new agreements would reduce 

application time burden on program 

participants by 557 hours, or $15,818 

according to fiscal year 2023 program 

activity. 

The proposed change is estimated to 

save each impacted program participant 

an average of 3 minutes per response, or 

a total of 557 total burden hours for all 

small businesses. To quantify the value 

of time saved, the SBA relies on BLS 

wage data and assumes that the 

representative impacted occupation 

would be ‘‘insurance sales agents’’. The 

median wage from 2023 for this 

occupation was $28.40. Using the 

program data from FY2023, the 

estimated total burden hours saved for 

program participants per year is 

approximately 557. The total annual 

savings that the SBA estimates for 

program participants as a result of the 

proposed changes comes to $15,818 

($28*557), on average. 

Second, SBA proposes shifting how 

small business contractor remit fees to 

SBA from the small businesses itself to 

being remitted by the Surety Partners. 

This enables the industry to align their 

SBA contractor fee collection 

procedures with industry fee collection 

practices and reduce the amount of 

uncollectible fees with small businesses. 

As explained on page 6 of this text, SBA 

estimates the change would reduce 

application time burden on program 

participants and small businesses by 

568 hours, or $14,495 according to fiscal 

year 2023 program activity. 

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. This rule does not have 

retroactive or preemptive effect. 

Executive Order 13132 

For purposes of Executive Order 

13132, SBA has determined this 

rulemaking 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. Therefore, SBA 

has determined that this proposed rule 

has no federalism implications 

warranting preparation of a federalism 

assessment. 

Paperwork Reduction Act 

For the purpose of the Paperwork 

Reduction Act, 44 U.S.C. Ch. 35, SBA 

will update the affected information 

collections and go through the typical 

Paperwork Reduction Act process. 

List of Subjects in 13 CFR Part 115 

Administrative practice and 

procedure, Bonding, Surety bonds, 

Surety, Small businesses. 

For the reasons set forth in the 

preamble, SBA proposes to amend 13 

CFR part 115 as follows: 


ddrumheller on DSK120RN23PROD with PROPOSALS1
Federal Register / Vol. 89, No. 223 / Tuesday, November 19, 2024 / Proposed Rules 91289 

PART 115—SURETY BOND 

GUARANTEE 

■ 1. The authority citation for part 115 

continues to read as follows: 

Authority: 5 U.S.C. app 3; 15 U.S.C. 636i, 

687b, 687c, 694a, and 694b note. 

■ 2. Revise § 115.11 to read as follows: 

§ 115.11 Applying to participate in the 

Surety Bond Guarantee Program. 

Sureties interested in participating as 

Prior Approval Sureties or PSB Sureties 

should apply by email or in writing to 

the D/SG at 409 3rd Street SW, 

Washington, DC 20416. OSG will 

determine the eligibility of the applicant 

considering its standards and 

procedures for underwriting, 

administration, claims and recovery. 

Each applicant must be a corporation 

listed by the U.S. Treasury as eligible to 

issue bonds. At a minimum, each 

applicant must have salaried staff that is 

employed directly (not an agent or other 

individual or entity under contract with 

the applicant) to perform all claims and 

recovery functions other than 

specialized services the costs of which 

may be reimbursable under 13 CFR 

115.16(e)(1). Final settlement authority 

for claims and recovery must be vested 

only in the applicant’s salaried claims 

staff. The applicant must continue to 

comply with SBA’s standards and 

procedures for underwriting, 

administration, claims, recovery, and 

staffing requirements while 

participating in SBA’s Surety Bond 

Guarantee Program. 

■ 3. Amend § 115.12 by revising 

paragraph (f) to read as follows: 

§ 115.12 General program policies and 

provisions. 

* * * * * 

(f) Transfers or sales by Surety. 

Sureties must not sell or otherwise 

transfer their files or accounts, whether 

before or after a default by the Principal 

has occurred, without the prior written 

approval of SBA. A violation of this 

provision is grounds for termination 

from participation in the program. This 

provision does not apply to the sale of 

an entire business division, subsidiary 

or operation of the Surety. If the sale of 

an entire business division partnered 

with SBA occurs without prior written 

approval of SBA, it will void SBA’s 

guarantee and claims reimbursement 

agreements to that division unless the 

sale is to an existing SBA partner. 

■ 4. Amend § 115.18 by revising 

paragraph (c) to read as follows: 

§ 115.18 Refusal to issue further 

guarantees; suspension and termination of 

PSB status. 

* * * * * 

(c) Notification requirement. The 

Prior Approval or PSB Surety must 

promptly notify SBA of the occurrence 

of any event in paragraphs (b) (1) 

through (5) of this section, or if any of 

the Persons described in paragraph (b) 

of this section does not, or ceases to, 

qualify as a Surety. SBA may require 

submission of individual certifications 

from any of these Persons. 

* * * * * 

■ 5. Amend § 115.19 by revising 

paragraphs (f)(1) and (g) to read as 

follows: 

§ 115.19 Denial of liability. 

* * * * * 

(f) * * * 

(1) Either: 

(i) The bond was Executed prior to the 

date of SBA’s guarantee, or in the case 

of a bonding line commitment under 

§ 115.33 the bonding line was not 

established in accordance with 

§ 115.33(d); or 

(ii) The bond was Executed (or 

approved, if the Surety is legally bound 

by such approval) after the work under 

the Contract had begun, unless SBA 

approves a ‘‘Surety Bond Guarantee 

Agreement Addendum’’ (SBA Form 

991) after receiving all of the following 

from the Surety: 

(A) Satisfactory evidence, including a 

certified copy of the Contract (or a 

sworn affidavit from the Principal), 

showing that the bond requirement was 

contained in the original Contract, or 

other documentation satisfactory to 

SBA, showing why a bond was not 

previously obtained and is now being 

required; 

(B) Certification by the Principal that 

all taxes and labor costs are current, and 

listing all suppliers and subcontractors, 

indicating that they are all paid to date, 

and attaching a waiver of lien from 

each; or an explanation satisfactory to 

SBA why such documentation cannot 

be produced; and 

(C) Certification by the Obligee that 

all payments due under the Contract to 

date have been made and that the job 

has been satisfactorily completed to 

date. 

* * * * * 

(g) Delinquent fees. The Surety has 

not remitted to SBA payment for the full 

amount of all guarantee fees within the 

time period required under § 115.32(b) 

and (c) for Prior Approval Sureties, or 

§ 115.66 for PSB Sureties. SBA may 

reinstate the guarantee upon showing 

that the contract is not in default and 

that a valid reason exists why a timely 

remittance or payment was not made. 

* * * * * 

■ 6. Revise § 115.22 to read as follows: 

§ 115.22 Closeout Reporting. 

The Surety must submit to SBA 

notification of successfully completed 

contracts and claims files within the 

timeframe set by SBA, and in the 

manner as prescribed by SBA. 

■ 7. Amend § 115.30 by revising 

paragraphs (b) and (c), the introductory 

text of paragraph (d), and the 

introductory text of paragraph (d)(2) to 

read as follows: 

§ 115.30 Submission of Surety’s guarantee 

application. 

* * * * * 

(b) SBA’s approval or decline of a 

guarantee application is made in writing 

by the D/SG or their designee. SBA may 

provide telephone notice before the 

Prior Approval Surety receives SBA’s 

guarantee approval form if the guarantee 

has already received approval by SBA 

staff with delegated authority. In the 

event of a conflict between the 

telephone notice and the written form, 

the written form controls. 

(c) A Prior Approval Surety may 

request reconsideration of a decline 

from the D/SG or their designee who 

made the decision. If the decision on 

reconsideration is negative, the Surety 

may appeal to an individual designated 

by the D/SG. If the decision is again 

adverse, the Surety may appeal to the D/ 

SG, who will make the final decision. 

(d) Prior Approval Agreement. To 

apply for a bond guarantee, a Prior 

Approval Surety must have an active 

Prior Approval Agreement, submit a 

Surety Bond Guarantee Agreement (SBA 

Form 990), and select one of the 

following application types: 

* * * * * 

(2) Quick Bond Agreement. Except as 

determined by SBA, a Prior Approval 

Surety may complete and submit an 

SBA Form 990 indicating a Quick Bond 

Agreement application type for each Bid 

Bond or Final Bond. This form must be 

approved by SBA prior to the Surety’s 

Execution of the bond. Eligibility 

parameters of the Quick Bond 

application type are determined by 

SBA. The guarantee fees owed in 

connection with Final Bonds must be 

paid in accordance with § 115.32. 

* * * * * 

§ 115.31 [Amended] 

■ 8. In § 115.31, amend paragraph (d) by 

removing the last sentence. 

■ 9. Amend § 115.32 by revising 

paragraphs (b) and (d) to read as 

follows: 

§ 115.32 Fees and Premiums. 

* * * * * 

(b) SBA charge to Principal. SBA does 

not charge Principals application or Bid 


ddrumheller on DSK120RN23PROD with PROPOSALS1
91290 Federal Register / Vol. 89, No. 223 / Tuesday, November 19, 2024 / Proposed Rules 

Bond guarantee fees. If SBA guarantees 

a Final Bond, the Principal must pay a 

guarantee fee equal to a certain 

percentage of the Contract amount. The 

Surety is responsible for collecting the 

Principal’s guarantee fee due on each 

guaranteed bond (other than a Bid Bond 

under 13 CFR 115.19(g)) and remitting 

payment within 60 calendar days after 

SBA’s approval of the Surety Bond 

Guarantee Agreement (SBA form 990). 

The percentage is determined by SBA 

and is published in Notices in the 

Federal Register from time to time. The 

Principal’s fee is rounded to the nearest 

dollar. See paragraph (d) of this section 

for additional requirements when the 

Contract amount changes. 

* * * * * 

(d) Contract or bond increases/ 

decreases—(1) Notification and 

approval. The Prior Approval Surety 

must notify SBA of any increases or 

decreases in the Contract or bond 

amount that aggregate 25% or $500,000 

of the original contract or bond amount, 

whichever is less, as soon as the Surety 

acquires knowledge of the change. 

Whenever the original bond amount 

increases as a result of a single change 

order of at least 25% or $500,000 of the 

original contract or bond amount, 

whichever is less, the prior written 

approval of such increase by SBA is 

required on a supplemental Prior 

Approval Agreement and is conditioned 

upon payment by the Surety of the 

increase in the Principal’s guarantee fee 

as set forth in paragraph (b) of this 

section. In notifying SBA of any 

increase or decrease in the Contract or 

bond amount, the Prior Approval Surety 

must use SBA Form 990 and select the 

application type that it used in applying 

for the original bond guarantee. 

(2) Increases; fees. The payment for 

the increase in the Principal’s guarantee 

fee is computed on the increase in the 

Contract amount. . If the increase in the 

Principal’s fee is less than $250, no 

payment is due until the total amount 

of increases in the Principal’s fee equals 

or exceeds $250. The Surety’s payment 

of the increase in the Surety’s guarantee 

fee, computed on the increase in the 

bond Premium, must be submitted to 

SBA within 60 calendar days of SBA’s 

approval of the Prior Approval 

Agreement, unless the amount of such 

increased guarantee fee is less than 

$250. When the total amount of increase 

in the guarantee fee equals or exceeds 

$250, the Surety must remit the fee 

within 60 calendar days. 

(3) Decreases; refunds. Whenever SBA 

is notified of a decrease in the Contract 

or bond amount, SBA will refund a 

proportionate amount of the Principal’s 

guarantee fee and rebate to the Surety a 

proportionate amount of SBA’s 

Premium share in the ordinary course of 

business. If the amount to be refunded 

or rebated is less than $250, such refund 

or rebate will not be made until the 

amounts to be refunded or rebated, 

respectively, aggregate at least $250. 

Upon receipt of the refund, the Surety 

must promptly pay a proportionate 

amount of its Premium to the Principal. 

■ 10. Amend § 115.33 by revising 

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

§ 115.33 Surety bonding line. 

* * * * * 

(b) * * * 

(1) The term of the bonding line, not 

to exceed the fiscal year of approval 

subject to renewal in writing; 

* * * * * 

■ 11. Amend § 115.35 by revising 

paragraph (a)(1)(iv) to read as follows: 

§ 115.35 Claims for reimbursement of 

Losses. 

(a) * * * 

(1) * * * 

(iv) The Surety has verified any 

adverse information concerning 

imminent breach by the Principal. 

* * * * * 

■ 12. Revise § 115.60 to read as follows: 

§ 115.60 Selection and admission of PSB 

Sureties. 

(a) Selection of PSB Sureties. SBA’s 

selection of PSB Sureties will be guided 

by, but not limited to, these factors: 

(1) An underwriting limitation on the 

U.S. Treasury Department list of 

acceptable sureties of at least the 

minimum threshold set by SBA for the 

applicant Surety or an SBA-partnered 

affiliate; 

(2) An agreement that the Surety will 

neither charge a bond premium in 

excess of that authorized by the 

appropriate State insurance department, 

nor impose any non-premium fee unless 

such fee is permitted by applicable State 

law and approved by SBA. 

(3) The vesting of underwriting 

authority for SBA guaranteed bonds 

only in employees of the Surety, its 

affiliates, or partner-affiliated entities 

approved by SBA; 

(4) The rating or ranking designations 

assigned to the Surety by recognized 

authority. 

(b) Admission of PSB Sureties. A 

Surety admitted to the PSB program 

must execute a PSB Agreement before 

approving SBA guaranteed bonds. No 

SBA guarantee attaches to bonds 

approved before the D/SG or designee 

has countersigned the Agreement. SBA 

may in its discretion limit participation 

of the Surety for a period set by SBA to 

allow SBA to evaluate the Surety’s 

performance. 

■ 13. Amend § 115.65 by revising 

paragraph (b) to read as follows: 

§ 115.65 General PSB procedures. 

* * * * * 

(b) Usual staff and procedures. The 

approval, Execution and administration 

by a PSB Surety of SBA guaranteed 

bonds must be handled in the same 

manner and with the same individuals 

outlined in § 115.60(a)(4). The Surety 

must request job status reports from 

Obligees in accordance with its own 

procedures. 

* * * * * 

■ 14. Revise § 115.66 to read as follows: 

§ 115.66 Fees. 

(a) Surety’s Premium. A PSB Surety 

must not charge a Principal an amount 

greater than that authorized by the 

appropriate insurance department. The 

Surety must not require the Principal to 

purchase casualty or other insurance or 

any other services from the Surety or 

any Affiliate or agent of the Surety. The 

Surety must not charge non-Premium 

fees to a Principal unless the Surety 

performs other services for the 

Principal, the additional fee is permitted 

by State law, and the Principal agrees to 

the fee. 

(b) SBA charge to Principal. SBA does 

not charge Principals application or Bid 

Bond guarantee fees. If SBA guarantees 

a Final Bond, the Principal must pay a 

guarantee fee equal to a certain 

percentage of the Contract amount. The 

Surety is responsible for collecting the 

Principal’s guarantee fee due on each 

guaranteed bond (other than a Bid 

Bond) and remitting payment within 60 

calendar days after submission to SBA. 

The percentage is determined by SBA 

and is published in Notices in the 

Federal Register from time to time. The 

Principal’s fee is rounded to the nearest 

dollar. See § 115.67 for additional 

requirements when the Contract amount 

changes. 

(c) SBA charge to Surety. SBA does 

not charge Sureties application or Bid 

Bond guarantee fees. Subject to 

§ 115.18(a)(4), the Surety must pay SBA 

a guarantee fee on each guaranteed bond 

(other than a Bid Bond) within 60 

calendar days after the bordereau 

submission of the related Final Bond. 

The fee is a certain percentage of the 

bond premium determined by SBA and 

published in Notices in the Federal 

Register from time to time. The fee is 

rounded to the nearest dollar. SBA does 

not receive any portion of a Surety’s 

non-premium charges. See § 115.67 for 


ddrumheller on DSK120RN23PROD with PROPOSALS1
Federal Register / Vol. 89, No. 223 / Tuesday, November 19, 2024 / Proposed Rules 91291 

additional requirements when the 

Contract or bond amount changes. 

Isabella Casillas Guzman, 

Administrator. 

[FR Doc. 2024–26831 Filed 11–18–24; 8:45 am] 

BILLING CODE 8026–09–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2024–2425; Project 

Identifier MCAI–2023–00967–R] 

RIN 2120–AA64 

Airworthiness Directives; Leonardo 

S.p.a. Helicopters 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Notice of proposed rulemaking 

(NPRM). 

SUMMARY: The FAA proposes to adopt a 

new airworthiness directive (AD) for all 

Leonardo S.p.a. Model A109C, A109E, 

A109S, and AW109SP helicopters. This 

proposed AD was prompted by a report 

of a quality escape on a batch of main 

rotor blades (MRBs). This proposed AD 

would require repetitively tap 

inspecting certain MRBs, replacing 

those MRBs, and prohibit installing 

those MRBs, as specified in a European 

Union Aviation Safety Agency (EASA) 

AD, which is proposed for incorporation 

by reference. The FAA is proposing this 

AD to address the unsafe condition on 

these products. 

DATES: The FAA must receive comments 

on this NPRM by January 3, 2025. 

ADDRESSES: You may send comments, 

using the procedures found in 14 CFR 

11.43 and 11.45, by any of the following 

methods: 

• Federal eRulemaking Portal: Go to 

regulations.gov. Follow the instructions 

for submitting comments. 

• Fax: (202) 493–2251. 

• Mail: U.S. Department of 

Transportation, Docket Operations, M– 

30, West Building Ground Floor, Room 

W12–140, 1200 New Jersey Avenue SE, 

Washington, DC 20590. 

• Hand Delivery: Deliver to Mail 

address above between 9 a.m. and 5 

p.m., Monday through Friday, except 

Federal holidays. 

AD Docket: You may examine the AD 

docket at regulations.gov under Docket 

No. FAA–2024–2425; or in person at 

Docket Operations between 9 a.m. and 

5 p.m., Monday through Friday, except 

Federal holidays. The AD docket 

contains this NPRM, the mandatory 

continuing airworthiness information 

(MCAI), any comments received, and 

other information. The street address for 

Docket Operations is listed above. 

Material Incorporated by Reference: 

• For EASA material identified in this 

proposed AD, contact EASA, KonradAdenauer-Ufer 3, 50668 Cologne, 

Germany; phone: +49 221 8999 000; 

email: ADs@easa.europa.eu; website: 

easa.europa.eu. You may find this 

material on the EASA website at 

ad.easa.europa.eu. 

• You may view this material at the 

FAA, Office of the Regional Counsel, 

Southwest Region, 10101 Hillwood 

Parkway, Room 6N–321, Fort Worth, TX 

76177. For information on the 

availability of this material at the FAA, 

call (817) 222–5110. It is also available 

at regulations.gov under Docket No. 

FAA–2024–2425. 

Other Related Material: For Leonardo 

material identified in this proposed AD, 

contact Leonardo S.p.A., Emanuele 

Bufano, Head of Airworthiness, Viale G. 

Agusta 520, 21017 C. Costa di Samarate 

(Va) Italy; phone: (+39) 0331–225074; 

fax: (+39) 0331–229046; or website: 

customerportal.leonardocompany.com/ 

en-US/. 

FOR FURTHER INFORMATION CONTACT: 

Frank Huynh, Aviation Safety Engineer, 

FAA, 1600 Stewart Avenue, Suite 410, 

Westbury, NY 11590; phone: (404) 983– 

5288; email: Frank.Huynh@faa.gov. 

SUPPLEMENTARY INFORMATION: 

Comments Invited 

The FAA invites you to send any 

written relevant data, views, or 

arguments about this proposal. Send 

your comments to an address listed 

under the ADDRESSES section. Include 

‘‘Docket No. FAA–2024–2425; Project 

Identifier MCAI–2023–00967–R’’ at the 

beginning of your comments. The most 

helpful comments reference a specific 

portion of the proposal, explain the 

reason for any recommended change, 

and include supporting data. The FAA 

will consider all comments received by 

the closing date and may amend this 

proposal because of those comments. 

Except for Confidential Business 

Information (CBI) as described in the 

following paragraph, and other 

information as described in 14 CFR 

11.35, the FAA will post all comments 

received, without change, to 

regulations.gov, including any personal 

information you provide. The agency 

will also post a report summarizing each 

substantive verbal contact received 

about this NPRM. 

Confidential Business Information 

CBI is commercial or financial 

information that is both customarily and 

actually treated as private by its owner. 

Under the Freedom of Information Act 

(FOIA) (5 U.S.C. 552), CBI is exempt 

from public disclosure. If your 

comments responsive to this NPRM 

contain commercial or financial 

information that is customarily treated 

as private, that you actually treat as 

private, and that is relevant or 

responsive to this NPRM, it is important 

that you clearly designate the submitted 

comments as CBI. Please mark each 

page of your submission containing CBI 

as ‘‘PROPIN.’’ The FAA will treat such 

marked submissions as confidential 

under the FOIA, and they will not be 

placed in the public docket of this 

NPRM. Submissions containing CBI 

should be sent to Frank Huynh, 

Aviation Safety Engineer, FAA, 1600 

Stewart Avenue, Suite 410, Westbury, 

NY 11590; phone: (404) 983–5288; 

email: Frank.Huynh@faa.gov. Any 

commentary that the FAA receives 

which is not specifically designated as 

CBI will be placed in the public docket 

for this rulemaking. 

Background 

EASA, which is the Technical Agent 

for the Member States of the European 

Union, has issued EASA AD 2023–0159, 

dated August 10, 2023 (EASA AD 2023– 

0159) (also referred to as the MCAI), to 

correct an unsafe condition on all 

Leonardo S.p.a. Model A109C, A109E, 

A109S, and AW109SP helicopters. The 

MCAI states that a report was received 

of a quality escape on a batch of MRBs, 

where the tip cap had been replaced by 

following a procedure and using tools 

not in accordance with Leonardo 

Technical Publications. The FAA is 

proposing this AD to prevent premature 

debonding of an MRB tip cap, which 

could lead to the loss of the MRB tip cap 

in flight, possibly resulting in loss of 

control of, and damage to, the 

helicopter, and injury to occupants. 

You may examine the MCAI in the 

AD docket at regulations.gov under 

Docket No. FAA–2024–2425. 

Material Incorporated by Reference 

Under 1 CFR Part 51 

EASA AD 2023–0159 requires 

repetitively tap inspecting certain partnumbered and serial-numbered MRBs 

for deficiency (debonding) of the tip 

cap, and depending on the results, 

replacing the MRB. For affected MRBs 

that are not replaced as a result of a tap 

inspection, EASA AD 2023–0159 

requires replacing those MRBs within a 

longer compliance time. EASA AD 

2023–0159 also prohibits installing 

those MRBs on any helicopter. 

This material is reasonably available 

because the interested parties have 


ddrumheller on DSK120RN23PROD with PROPOSALS1