[Federal Register Volume 87, Number 47 (Thursday, March 10, 2022)]
[Rules and Regulations]
[Pages 13628-13634]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-04843]


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DEPARTMENT OF THE TREASURY

31 CFR Part 35

RIN 1505-AC79


State Small Business Credit Initiative; Demographics-Related 
Reporting Requirements

AGENCY: Department of the Treasury.

ACTION: Interim final rule.

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SUMMARY: The Secretary of the Treasury is issuing this interim final 
rule to institute the reporting requirements related to demographics of 
those who own or control small businesses that receive a loan, 
investment, other credit or equity support, or technical assistance 
under the State Small Business Credit Initiative under the American 
Rescue Plan Act of 2021.

DATES: 
    Effective date: This interim final rule is effective March 9, 2022.
    Comment date: Comments must be received on or before April 11, 
2022.

ADDRESSES: Please submit comments electronically through the Federal 
eRulemaking Portal: https://www.regulations.gov. Comments can be mailed 
to the Office of Recovery Programs, Department of the Treasury, 1500 
Pennsylvania Avenue NW, Washington, DC 20220. Because postal mail may 
be subject to processing delay, it is recommended that comments be 
submitted electronically. All comments should be captioned with ``SSBCI 
Interim Final Rule Comments.'' Please include your name, organization 
affiliation, address, email address and telephone number in your 
comment. Where appropriate, a comment should include a short executive 
summary. In general, comments received will be posted on https://www.regulations.gov without change, including any business or personal 
information provided. Comments received, including attachments and 
other supporting materials, will be part of the public record and 
subject to public disclosure. Do not enclose any information in your 
comment or supporting materials that you consider confidential or 
inappropriate for public disclosure.

FOR FURTHER INFORMATION CONTACT: Jeff Stout, Director, Office of 
Federal Program Finance, at (202) 622-2059 or 
<a href="/cdn-cgi/l/email-protection#c3b0b0a1a0aa9caaada5acb1aea2b7aaacad83b7b1a6a2b0b6b1baeda4acb5"><span class="__cf_email__" data-cfemail="dfacacbdbcb680b6b1b9b0adb2beabb6b0b19fabadbabeacaaada6f1b8b0a9">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION:

I. Background

    The American Rescue Plan Act of 2021 (ARPA) reauthorized and 
amended the Small Business Jobs Act of 2010 (SBJA) to provide $10 
billion to fund the State Small Business Credit Initiative (SSBCI) as a 
response to the economic effects of the COVID-19 pandemic.\1\ SSBCI is 
a federal program administered by the U.S. Department of the Treasury 
(Treasury) that was created to strengthen the programs of eligible 
jurisdictions that support private financing for small businesses. 
Eligible jurisdictions include states, territories, Tribal governments, 
and eligible municipalities. SSBCI is expected to, in conjunction with 
new small business financing, create billions of dollars in lending to, 
and investments in, small businesses.
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    \1\ ARPA, Public Law 117-2, sec. 3301, codified at 12 U.S.C. 
5701 et seq. SSBCI was originally established in Title III of the 
Small Business Jobs Act of 2010.

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[[Page 13629]]

II. Summary of the Interim Final Rule

A. Authority, Scope, and Purpose

    Treasury has authority under the SSBCI statute to issue a rule on 
collecting demographics-related data of those who own or control small 
businesses that participate in SSBCI for purposes of implementation, 
compliance and reporting, and understanding program outcomes.\2\ First, 
issuing this interim final rule is important for the implementation of 
and compliance with the program requirements regarding allocations 
related to business enterprises that are owned and controlled by 
socially and economically disadvantaged individuals (SEDI-owned and 
controlled businesses). ARPA provides $1.5 billion of capital funding 
to be allocated based on the needs of SEDI-owned and controlled 
businesses (SEDI allocation),\3\ $1.0 billion of capital funding for an 
incentive program for jurisdictions that demonstrate robust support for 
SEDI-owned and controlled businesses in the deployment of previously 
allocated SSBCI capital funding (SEDI incentive allocation),\4\ and 
$500 million for technical assistance to, in part, SEDI-owned and 
controlled businesses.\5\ ARPA also states that the $1.5 billion SEDI 
allocation must be expended for SEDI-owned and controlled 
businesses.\6\ The $1.5 billion SEDI allocation and $1.0 billion SEDI 
incentive allocation are intended to address the widespread challenges 
that these businesses have faced in light of the COVID-19 pandemic.\7\ 
The technical assistance funding is to help, in part, SEDI-owned and 
controlled businesses that are applying to receive a loan, investment, 
or other credit or equity support under the SSBCI. The information 
reported under this interim final rule will help Treasury determine the 
extent to which SSBCI funds have been provided to SEDI-owned and 
controlled businesses.
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    \2\ See 12 U.S.C. 5706, 5709.
    \3\ 12 U.S.C. 5702(d)(2).
    \4\ 12 U.S.C. 5702(e).
    \5\ 12 U.S.C. 5708(e).
    \6\ 12 U.S.C. 5702(d)(1).
    \7\ See, e.g., Cong. Rec. H1283 (Statement of Rep. Waters) (Mar. 
10, 2021) (citing ``the widespread challenges small businesses, 
especially minority-owned businesses, have faced during the COVID-19 
pandemic''); Cong. Rec. H1280 (Statement of Speaker Pelosi) (``The 
most vulnerable among us have been the most disproportionately 
affected . . . women and minority-owned businesses forced to shudder 
[sic], communities of color facing rising disparities'' and 
explaining ``This legislation will, among other steps, address 8 in 
10 minority owned businesses on the brink of closure . . . .'').
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    Second, this interim final rule is being issued to ensure 
compliance with legal requirements related to nondiscrimination and 
nondiscriminatory uses of federal funds, where such laws are applicable 
to a participating jurisdiction and any contracted entity operating 
SSBCI programs on the jurisdiction's behalf because all SSBCI funds are 
considered federal financial assistance for purposes of such 
requirements. These legal requirements include, but are not limited to, 
Title VI of the Civil Rights Act of 1964 and Treasury's regulations at 
31 CFR part 22, which require recipients of SSBCI funding to maintain 
and submit racial and ethnic data of beneficiaries that receive Federal 
financial assistance.\8\
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    \8\ 31 CFR 22.6(b),
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    Third, issuing this interim final rule is important for SSBCI 
implementation and compliance because some participating jurisdictions 
will partner with lenders or other financial entities that are subject 
to laws that prohibit these entities from inquiring about the race, 
color, religion, national origin, or sex of an applicant or any other 
person in connection with a credit transaction, unless such information 
is required by a regulation, order, or agreement issued by, or entered 
into with, an enforcement agency or a court to monitor or enforce 
compliance with federal or state statutes or regulations. For example, 
under 12 CFR part 1002 (Regulation B) implementing the Equal Credit 
Opportunity Act, creditors are generally prohibited from inquiring 
about the race, color, religion, national origin, or sex of an 
applicant or any other person in connection with a credit transaction, 
unless an exception applies.\9\ One exception is for certain required 
information collection ``to monitor or enforce compliance with the 
[Equal Credit Opportunity] Act, [Regulation B], or other Federal or 
state statutes or regulations.'' \10\ This interim final rule will 
facilitate the collection of information that might not otherwise be 
collected by creditors who will be SSBCI lenders. Treasury expects 
that, in accordance with this interim final rule, participating 
jurisdictions will contract with lenders and other financial entities 
to implement SSBCI programs and collect this information. Lenders and 
other financial entities participating in SSBCI must request the 
demographic information described in this interim final rule, and 
collect and report such information certified by authorized 
representatives of participating small businesses. Although such 
lenders and other financial entities must collect and report such 
information, participating small businesses have the option to choose 
``prefer not to respond'' or to not respond by leaving the request 
blank. This interim final rule does not require verification of 
responses provided by participating small businesses. Treasury believes 
that requiring verification of small business-provided responses would 
greatly increase the operational burden of the interim final rule.
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    \9\ See 12 CFR 1002.5(b).
    \10\ 12 CFR 1002.5(a)(2).
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    Finally, this interim final rule is important for understanding 
SSBCI program outcomes. Such information will allow Treasury to analyze 
and report on the populations that SSBCI funding is benefiting.

B. Definitions and Reporting Requirements

    Under this interim final rule, each jurisdiction that participates 
in SSBCI must submit an annual report to Treasury that includes the 
following data: Self-certified SEDI demographics-related business 
status; minority-owned or controlled business status; women-owned or 
controlled business status; veteran-owned or controlled business 
status; and the race, ethnicity, gender, sexual orientation, Middle 
Eastern or North African ancestry, and veteran status with which 
principal owners identify. For each business that receives a loan, 
investment, or other credit or equity support under the SSBCI, the 
reported data must be based on the ownership and control of the 
business immediately before the consummation of such loan, investment, 
or other credit or equity support-related transaction. For each 
business that receives technical assistance under the SSBCI, the 
reported data must be based on the ownership and control of the 
business at the time it receives such technical assistance. The self-
certified SEDI demographics-related business status variable reflects 
one group of SEDI-owned and controlled businesses on which 
jurisdictions may expend their portion of the $1.5 billion SEDI 
allocation and their portion of technical assistance funding.\11\ Loan, 
investment, or other credit or equity support-related transactions 
conducted with self-certified SEDI demographics-related businesses may 
also count toward earning a participating jurisdiction's portion of the 
$1.0 billion SEDI incentive allocation. The definition of ``owned and 
controlled,'' which is used in the definition of SEDI demographics-
related business, is based on the statutory definition of ``business 
enterprise owned and controlled by

[[Page 13630]]

socially and economically disadvantaged individuals,'' which includes 
prongs for three types of organizations: Private businesses, public 
businesses, and mutual institutions.\12\ For example, 51 percent 
ownership of a private institution is a sufficient condition to fulfill 
the ownership-and-control requirement for a business to be a self-
certified SEDI demographics-related business.
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    \11\ For more information on all eligible groups of businesses 
on which jurisdictions may expend their SSBCI SEDI allocation funds, 
please see the SSBCI Capital Program Policy Guidelines published on 
Treasury's website.
    \12\ See 12 U.S.C. 5701(15).
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    Under this interim final rule, Treasury will also collect 
information on whether the business is majority-owned or controlled by 
minority individuals, females, or veterans. These data elements do not 
affect the determination of SEDI-owned and controlled business status. 
The SSBCI statute does not define ``owned or controlled'' for purposes 
of these categories. Therefore, the definition of ``owned or 
controlled'' for purposes of these terms are based both on the 
definition of ``business enterprise owned and controlled by socially 
and economically disadvantaged individuals'' in the SSBCI statute \13\ 
and also on the control prong of the definition of ``beneficial owner'' 
in the Financial Crimes Enforcement Network's (FinCEN) customer due 
diligence (CDD) rule, which requires covered financial institutions to 
establish and maintain written procedures that are reasonably designed 
to identify and verify beneficial owners of legal entity customers.\14\ 
In choosing this approach, Treasury considered that the ``beneficial 
owner'' definition under FinCEN's CDD rule is already widely in use, 
and that most financial institutions are likely familiar with the 
standard, because many of them are required to comply with the CDD 
rule. Accordingly, a business can be a minority-owned or controlled 
business, women-owned or controlled business, or veteran-owned or 
controlled business (as applicable) if (1) the applicable prong under 
the definition of ``owned and controlled'' explained above is met or 
(2) one or more minority individuals, females, or veterans, 
respectively, have the power to exercise a controlling influence over 
the management, direction, or policies of the business.
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    \13\ See id.
    \14\ See 31 CFR 1010.230(d)(1).
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    Under this interim final rule, Treasury will further collect the 
race, ethnicity, gender, sexual orientation, Middle Eastern or North 
African ancestry, and veteran status with which the principal owners of 
all businesses that participate in SSBCI transactions that occurred in 
the preceding calendar year identify. These data elements also do not 
affect the determination of SEDI-owned and controlled business status. 
Treasury defines the term ``principal owner'' based on the ownership 
prong of the definition of beneficial ownership under FinCEN's CDD 
rule. Under this interim final rule, an individual is a principal owner 
if the individual directly or indirectly, through any contract, 
arrangement, understanding, relationship or otherwise, owns 25 percent 
or more of the equity interests of the business.
    The categories of responses related to gender under this interim 
final rule are female, male, non-binary, an option for ``prefer to 
self-describe'' with a write-in field that allows for identification in 
a different manner, ``prefer not to respond,'' and that the business 
did not answer. In considering this approach, Treasury reviewed the 
following information. The Census Bureau's Household Pulse Survey 
includes questions on sex and gender identity. One of these questions 
asks, ``What sex were you assigned at birth, on your original birth 
certificate?'' with responses including male or female. Another 
question asks, ``Do you currently describe yourself as male, female, or 
transgender?'' with responses including male, female, transgender, or 
none of these.\15\ The Department of Defense P1 survey includes a 
question that asks, ``Are you . . . ?'' with responses that include 
male or female.\16\ The U.S. Department of Agriculture's Farm Producer 
Study includes a question that asks ``How do you currently describe 
yourself?'' with responses that include male, female, transgender, and 
none of these, specify (with a space to write-in). The same study also 
includes a question that asks, ``Was your sex recorded as male or 
female at birth?'' with responses that include male or female.\17\
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    \15\ U.S. Census Bureau, Phase 3.3 Household Pulse Survey, 
available at https://www2.census.gov/programs-surveys/demo/technical-documentation/hhp/Phase3-3_Questionnaire_12_01_21_English.pdf.
    \16\ Department of Defense, P1 Survey, available at https://www.reginfo.gov/public/do/DownloadDocument?objectID=112827001.
    \17\ U.S. Department of Agriculture, 2021 Farm Producer Study, 
available at https://omb.report/icr/202109-0535-001/doc/114843800.
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    The Consumer Financial Protection Bureau's proposed rule for the 
collection of small business data asks for information on the sex of 
the principal owner with the response options of female, male, I prefer 
to self-identify as (with a space to write in), and I do not wish to 
provide this information.\18\ Treasury's approach is most consistent 
with the Consumer Financial Protection Bureau's proposed rule for 
collection of small business data in that Treasury includes response 
options of female, male, an option for ``prefer to self-describe'' with 
a write-in field (which is similar to the Consumer Financial Protection 
Bureau proposed rule's I prefer to self-identify as (with a space to 
write in)), and an option for ``prefer not to respond.'' Treasury also 
includes ``non-binary'' as a response in order to provide some 
consistency with other Treasury coronavirus relief programs, such as 
the Emergency Rental Assistance Program, which collects data on whether 
award recipients are female, male, non-binary, declined to answer, or 
data not collected.\19\ As businesses may elect to not choose any of 
the aforementioned responses by leaving the responses blank, Treasury 
also provides jurisdictions the option to report ``the business did not 
answer.''
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    \18\ Small Business Lending Data Collection Under the Equal 
Credit Opportunity Act (Regulation B), 86 FR 56356, 56582 (Oct. 8, 
2021).
    \19\ For example, see the demographics reporting guidance of the 
Emergency Rental Assistance Program, starting on page 16, available 
at https://home.treasury.gov/system/files/136/ERA-Reporting-Guidance-v2.pdf.
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    In addition, Treasury will collect data regarding the sexual 
orientation status with which principal owners identify with response 
options of gay or lesbian; bisexual; straight, that is, not gay, 
lesbian, or bisexual; something else; an option for the business to 
choose that it prefers not to respond; or that the business did not 
answer. Treasury is collecting this information related to sexual 
orientation to better understand the demographics of the principal 
owners of businesses receiving SSBCI funds. The collection of this 
information is expected to provide valuable insights on SSBCI program 
outcomes and small business ecosystems, along with the performance of 
businesses owned by individuals who identify as lesbian, gay, or 
bisexual.
    In considering this approach, Treasury reviewed the following 
information. The Census Bureau's Household Pulse Survey includes a 
question on sexual orientation that asks, ``Which of the following best 
represents how you think of yourself?'' with responses including gay or 
lesbian; straight, that is not gay or lesbian; bisexual; something 
else; or I don't know.\20\ The Department of Defense P1 Survey also 
includes a question on

[[Page 13631]]

sexual orientation that asks, ``How do you describe your sexual 
orientation? (Select all that apply.),'' with responses including 
heterosexual or straight; lesbian or gay; bisexual, pansexual, or 
queer; questioning, asexual, demisexual; other; and prefer not to 
answer.\21\ The U.S. Department of Agriculture's Farm Producer Study 
includes a question on sexual orientation that asks, ``Which of the 
following best represents how you think of yourself?'' with responses 
including gay or lesbian; straight, that is, not gay or lesbian; 
bisexual; none of these, specify (with a space to write in); I am not 
sure yet; and I don't know what this question means.\22\ Treasury's 
approach is generally consistent with these approaches, and most 
consistent with the Census Bureau's Household Pulse Survey, but 
Treasury's reporting does not include a response indicating that the 
individual does not know their sexual orientation, in part because 
responses from individual small business owners are not required by 
beneficiaries to receive funding. Treasury's decision to include an 
option for ``prefer not to respond'' is consistent with the Department 
of Defense's P1 Survey's option of ``prefer not to answer.'' As 
businesses may elect to not choose any of the aforementioned responses 
by leaving the responses blank, Treasury also provides jurisdictions 
the option to report ``the business did not answer.''
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    \20\ U.S. Census Bureau, Phase 3.3 Household Pulse Survey, 
available at https://www2.census.gov/programs-surveys/demo/technical-documentation/hhp/Phase3-3_Questionnaire_12_01_21_English.pdf.
    \21\ Department of Defense, P1 Survey, available at https://www.reginfo.gov/public/do/DownloadDocument?objectID=112827001.
    \22\ U.S. Department of Agriculture, 2021 Farm Producer Study, 
available at https://omb.report/icr/202109-0535-001/doc/114843800.
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    Treasury will collect information about race and ethnicity statuses 
with which principal owners identify, consistent with the Office of 
Management and Budget (OMB) Standards for the Classification of Federal 
Data on Race and Ethnicity, which govern how questions about race and 
ethnicity should be asked on all federal collections. There are two 
ethnicity categories (Hispanic or Latino; and Not Hispanic or Latino) 
and five minimum race categories (American Indian or Alaska Native; 
Asian; Black or African American; Native Hawaiian or Other Pacific 
Islander; and White).\23\ Further disaggregation is allowable. For 
example, many Census Bureau surveys, as well as the Department of 
Health and Human Services' (HHS) approach for collecting data for its 
population studies, offer checkboxes for selected disaggregated 
categories for Asian (i.e., Asian Indian; Chinese; Filipino; Japanese; 
Korean; Vietnamese; and Other Asian) as well as for Native Hawaiian or 
Other Pacific Islander (i.e., Native Hawaiian; Chamorro; Samoan; and 
Other Pacific Islander).\24\ The 2020 Census offered respondents the 
opportunity to, under each of the minimum categories, write in 
additional specifics. Both minimum categories and disaggregated 
categories of race and ethnicity are used in the data collection under 
the Home Mortgage Disclosure Act (HMDA).\25\ The HMDA data collection 
also permits individuals to answer with ``I do not wish to provide this 
information.'' \26\
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    \23\ Off. of Mgmt. & Budget, Revisions to the Standards for the 
Classification of Federal Data on Race and Ethnicity, 62 FR 58782, 
58782-90 (Oct. 30, 1997).
    \24\ See Informational Copy of the U.S. 2020 Census, U.S. Census 
Bureau, https://www2.census.gov/programs-surveys/decennial/2020/technical-documentation/questionnaires-and-instructions/questionnaires/2020-informational-questionnaire-english_DI-Q1.pdf.
    \25\ See 12 CFR part 1003, appendix B (Form and Instructions for 
Data Collection on Ethnicity, Race, and Sex).
    \26\ See id.
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    Treasury believes that collecting only the OMB minimum categories 
of race may mask the effects of SSBCI funds on businesses in 
jurisdictions with a large population of one OMB minimum category of 
race and multiple populations of categories of race, and therefore 
hinder the understanding of program outcomes in these jurisdictions. 
Thus, this interim final rule provides for the reporting of information 
consistent with the OMB data collection standard, using the five 
minimum race categories, in addition to disaggregating the Asian and 
Native Hawaiian or Other Pacific Islander categories, which is 
consistent with the approaches used by HHS and the Census Bureau's 
American Community Survey. Treasury will collect information on 
ethnicity consistent with the OMB data collection standard's minimum 
ethnicity categories. For both the race and ethnicity information 
collection, Treasury is providing a response option of ``prefer not to 
respond,'' consistent with the HMDA data collection's ``I do not wish 
to provide this information.'' As businesses may elect not to respond 
by leaving the information request blank, Treasury also provides 
jurisdictions the option to report ``the business did not answer.''
    Treasury also believes that it is important to collect information 
on those that identify as Middle Eastern or North African to understand 
whether SSBCI funds are reaching businesses principally owned by such 
individuals. Currently, people of Middle Eastern or North African 
ancestry are categorized as White under OMB data collection standards. 
Because Treasury must comply with these standards, Treasury is 
collecting information about Middle Eastern or North African ancestry 
through a separate ancestry question. Finally, this interim final rule 
requires jurisdictions to submit the required information using the 
format specified on Treasury's website.\27\
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    \27\ See 12 U.S.C. 5706(c).
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    We welcome comment on any aspect of this interim final rule.

III. Regulatory Analyses

Executive Orders 12866 and 13563

    Executive Orders 12866 and 13563 direct agencies to assess costs 
and benefits of available regulatory alternatives and, if regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects, distributive impacts, and equity). Executive Order 13563 
emphasizes the importance of quantifying both costs and benefits, of 
reducing costs, of harmonizing rules, and of promoting flexibility. 
This interim final rule has been designated a ``significant regulatory 
action,'' although not economically significant, under section 3(f) of 
Executive Order 12866. As explained above, this interim final rule 
institutes reporting requirements to implement, determine compliance 
with, and understand the program outcomes of SSBCI, as reauthorized and 
amended by ARPA. As these reporting requirements focus only on data 
collection, this interim final rule is not economically significant. 
However, we welcome comments on the economic impact of this interim 
final rule. Particularly, Treasury welcomes comments and data on how 
this interim final rule may substantively affect the SSBCI program.

Executive Order 13132

    Executive Order 13132 (entitled Federalism) prohibits an agency 
from publishing any rule that has federalism implications if this 
interim final rule either imposes substantial, direct compliance costs 
on state, local, and Tribal governments, and is not required by 
statute, or preempts state law, unless the agency meets the 
consultation and funding requirements of section 6 of the Executive 
order. This interim final rule does not have federalism implications 
within the meaning of the Executive order and does not impose 
substantial, direct compliance costs on state, local,

[[Page 13632]]

and Tribal governments or preempt state law within the meaning of the 
Executive order. The compliance costs are imposed on state, local, and 
Tribal governments by the Small Business Jobs Act, as amended by ARPA. 
Notwithstanding the above, Treasury has engaged in efforts to consult 
with affected state, local, and Tribal government officials and 
associations in the process of developing this interim final rule. 
Pursuant to the requirements set forth in section 8(a) of Executive 
Order 13132, Treasury certifies that it has complied with the 
requirements of Executive Order 13132.

Paperwork Reduction Act, 44 U.S.C. Chapter 35

    The Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521) (PRA) 
states that no agency may conduct or sponsor, nor is the respondent 
required to respond to, an information collection unless it displays a 
currently valid OMB control number.
    This interim final rule will add annual reporting requirements. 
These collections will increase total annual burden by 13,050 hours: 
The requirements are expected to take 500 jurisdictions 26.10 hours to 
complete for an annual burden of 13,050 hours. Using the standard total 
compensation for accountants and auditors, the estimated cost of this 
information collection is $673,902.\28\
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    \28\ See Bureau of Labor Statistics, U.S. Department of Labor, 
Occupational Outlook Handbook, Accountants and Auditors, on the 
internet at https://www.bls.gov/oes/current/oes132011.htm. Base wage 
of $35.37/hour increased by 46 percent to account for fully loaded 
employer cost of employee compensation (benefits, etc.) for a fully 
loaded wage rate of $51.64. 13,050 multiplied by $51.64 equals 
$673,902.
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    The OMB Control Number for the SSBCI information collection is 
1505-0227. Comments concerning the collections of information should be 
directed to the Office of Recovery Programs, Department of the 
Treasury, 1500 Pennsylvania Avenue NW, Washington, DC 20220. Treasury 
welcomes comments on the compliance burdens for the information 
collection under this interim final rule.

Congressional Review Act

    The Administrator of OMB's Office of Information and Regulatory 
Affairs (OIRA) has determined that this is not a major rule for 
purposes of Subtitle E of the Small Business Regulatory Enforcement and 
Fairness Act of 1996 (also known as the Congressional Review Act or 
CRA) (5 U.S.C. 804(2) et seq.). Under the CRA, a major rule takes 
effect 60 days after the rule is published in the Federal Register. 5 
U.S.C. 801(a)(3).

Administrative Procedure Act

    The Administrative Procedure Act (APA), 5 U.S.C. 551 et seq., 
generally requires public notice and an opportunity for comment before 
a rule becomes effective. However, the APA provides that the 
requirements of 5 U.S.C. 553 do not apply ``to the extent that there is 
involved . . . a matter relating to agency . . . grants . . . or 
contracts.'' This interim final rule is being issued for purposes of 
implementation, compliance, and understanding the outcomes of the SSBCI 
program. While SSBCI capital funds are not considered federal financial 
assistance for the purposes of 31 U.S.C. subtitle V under the SSBCI 
statute, the SSBCI program resembles other coronavirus relief programs 
that Treasury is implementing. SSBCI capital funds will be disbursed to 
eligible jurisdictions that apply in order to establish small business 
lending and investment programs. This interim final rule sets forth the 
``process necessary to maintain. . . eligibility for federal funds,'' 
id., as well as the ``method[s] by which [jurisdictions] can . . . 
qualify for federal aid,'' and other ``integral part[s] of the grant 
program,'' Center for Auto Safety v. Tiemann, 414 F. Supp. 215, 222 
(D.D.C. 1976). Eligible jurisdictions must submit the annual 
information required by this interim final rule in Treasury's 
prescribed format to remain eligible for SSBCI capital funding. 
Treasury will also use the reported data to determine whether 
jurisdictions are eligible for the SEDI incentive allocation. As a 
result, the requirements of 5 U.S.C. 553 do not apply.
    The APA also provides an exception to notice-and-comment procedures 
``when the agency for good cause finds (and incorporates the finding 
and a brief statement of reasons therefor in the rules issued) that 
notice and public procedure thereon are impracticable, unnecessary, or 
contrary to the public interest.'' 5 U.S.C. 553(b)(3)(B); see also 5 
U.S.C. 553(d)(3) (creating an exception to the requirement of a 30-day 
delay before the effective date of a rule ``for good cause found and 
published with the rule''). Even if 5 U.S.C. 553 applied, Treasury 
would have good cause under sections 553(b)(3)(B) and 553(d)(3) for not 
complying with these requirements under section 553. ARPA is a law 
responding to a historic economic and public health emergency; it is 
``extraordinary'' legislation about which ``both Congress and the 
President articulated a profound sense of `urgency.' '' Petry v. Block, 
737 F.2d 1193, 1200 (D.C. Cir. 1984). In addition, there is an urgent 
need for jurisdictions to undertake the planning necessary to implement 
their SSBCI capital programs. Developing these programs requires an 
understanding of all the program requirements, including the data 
collection and reporting requirements implemented in this interim final 
rule. These requirements are immediately effective but may change when 
the rule is finalized. Without having clarity on how the SSBCI program 
requirements will interact with existing restrictions on lenders' and 
other financial entities' availability to collect this data, 
jurisdictions may have difficulty attracting lenders and other 
financial entities to implement SSBCI programs, which could hinder 
their efforts to deploy the allocation for SEDI-owned and controlled 
businesses as Congress intended. Treasury understands that many 
jurisdictions require immediate rules on which they can rely in order 
to develop sound SSBCI programs. The statutory urgency and practical 
necessity are good cause to forego the ordinary requirements of notice-
and-comment rulemaking.

Regulatory Flexibility Analysis

    The Regulatory Flexibility Act (RFA) generally requires that when 
an agency issues a proposed rule, or a final rule pursuant to section 
553(b) of the Administrative Procedure Act or another law, the agency 
must prepare a regulatory flexibility analysis that meets the 
requirements of the RFA and publish such analysis in the Federal 
Register. 5 U.S.C. 603, 604. Rules that are exempt from notice and 
comment under the APA are also exempt from the RFA requirements, 
including the requirement to conduct a regulatory flexibility analysis. 
Since this interim final rule is exempt from the notice and comment 
requirements of the APA, Treasury is not required to conduct a 
regulatory flexibility analysis.

List of subjects in 31 CFR Part 35

    Executive compensation, Public health emergency, State and local 
governments, Tribal governments.

    For the reasons stated in the preamble, the Department of the 
Treasury amends 31 CFR part 35 as follows:

PART 35--PANDEMIC RELIEF PROGRAMS

0
1.The authority citation for part 35 is revised to read as follows:


[[Page 13633]]


    Authority:  42 U.S.C. 802(f); 42 U.S.C. 803(f); 31 U.S.C. 321; 
12 U.S.C. 5701-5710; Division N, Title V, Subtitle B, Pub. L. 116-
260, 134 Stat. 1182 (12 U.S.C. 4703a); Section 104A, Pub. L. 103-
325, 108 Stat. 2160, as amended (12 U.S.C. 4701 et seq.); Pub. L. 
117-2, 135 Stat. 4 (42 U.S.C. 802 et seq.).


0
2. Add subpart C to read as follows:

Subpart C--State Small Business Credit Initiative Small Business 
Owners Demographics Data Collection

Sec.
35.26 Authority, scope, and purpose.
35.27 Definitions.
35.28 Annual report requirements.
35.29 Format.


Sec.  35.26   Authority, scope, and purpose.

    (a) Authority and scope. This subpart is issued by the U.S. 
Department of the Treasury pursuant to Sections 3007 and 3010 of the 
Small Business Jobs Act of 2010, as amended by the American Rescue Plan 
Act of 2021 (12 U.S.C. 5706, 5709).
    (b) Purpose. The U.S. Department of the Treasury is collecting 
demographics-related data regarding those who own or control businesses 
that receive a loan, investment, other credit or equity support, or 
technical assistance under the State Small Business Credit Initiative 
for purposes of implementation, compliance, and understanding program 
outcomes.


Sec.  35.27   Definitions.

    In this subpart:
    (a) Controlling influence over a business means having the power to 
control, manage, or direct the business. A person is presumed to have a 
controlling influence over a business if the person is a senior 
executive officer or senior manager of the business (e.g., Chief 
Executive Officer, Chief Financial Officer, Chief Operating Officer), 
or any other individual who regularly performs similar functions.
    (b) Jurisdiction means:
    (1) One of the fifty states of the United States;
    (2) The District of Columbia, the Commonwealth of Puerto Rico, the 
Commonwealth of Northern Mariana Islands, Guam, American Samoa, and the 
United States Virgin Islands;
    (3) When designated by one of the fifty states of the United 
States, a political subdivision of that state that the U.S. Department 
of the Treasury determines has the capacity to participate in the State 
Small Business Credit Initiative;
    (4) Under the circumstances described in 12 U.S.C. 5703(d), a 
municipality of one of the fifty states of the United States to which 
the U.S. Department of the Treasury has given a special permission 
under 12 U.S.C. 5703(d); and
    (5) A Tribal government or a group of Tribal governments that 
jointly apply to be approved by the U.S. Department of Treasury to 
participate in the State Small Business Credit Initiative as a single 
participating jurisdiction.
    (c) Minority individual means a natural person who identifies as 
American Indian or Alaska Native; Asian; Black or African American; 
Native Hawaiian or Other Pacific Islander; or Hispanic or Latino/a; or 
one or more than one of these groups.
    (d) Minority-owned or controlled business means a business that:
    (1) If privately owned, 51 percent or more is owned by minority 
individuals;
    (2) If publicly owned, 51 percent or more of the stock is owned by 
minority individuals;
    (3) In the case of a mutual institution, a majority of the board of 
directors, account holders, and the community which the institution 
services is predominantly comprised of minority individuals; or
    (4) One or more minority individuals have the power to exercise a 
controlling influence over the business.
    (e) Participating jurisdiction means a jurisdiction that has been 
approved by the U.S. Department of the Treasury for participation in 
the State Small Business Credit Initiative.
    (f) Principal owner of a business means a natural person who 
directly or indirectly, through any contract, arrangement, 
understanding, relationship or otherwise, owns 25 percent or more of 
the equity interests of the business. If a trust owns, directly or 
indirectly, through any contract, arrangement, understanding, 
relationship or otherwise, 25 percent or more of the equity interests 
of the business, the trustee is a principal owner.
    (g) Socially and economically disadvantaged individual (SEDI) 
demographics-related business means a business owned and controlled by 
individuals who have had their access to credit on reasonable terms 
diminished compared to others in comparable economic circumstances, due 
to their:
    (1) Membership of a group that has been subjected to racial or 
ethnic prejudice or cultural bias within American society;
    (2) Gender;
    (3) Veteran status;
    (4) Limited English proficiency;
    (5) Disability;
    (6) Long-term residence in an environment isolated from the 
mainstream of American society;
    (7) Membership of a federally or state-recognized Indian Tribe;
    (8) Long-term residence in a rural community;
    (9) Residence in a U.S. territory;
    (10) Residence in a community undergoing economic transitions 
(including communities impacted by the shift towards a net-zero economy 
or deindustrialization); or
    (11) Membership of an underserved community.
    (i) Underserved communities are populations sharing a particular 
characteristic, as well as geographic communities, that have been 
systematically denied a full opportunity to participate in aspects of 
economic, social, and civic life, as exemplified by the list in the 
definition of equity in paragraph (g)(11)(ii) of this section; and
    (ii) Equity is consistent and systematic fair, just, and impartial 
treatment of all individuals, including individuals who belong to 
underserved communities that have been denied such treatment, such as 
Black, Latino, and Indigenous and Native American persons, Asian 
Americans and Pacific Islanders, and other persons of color; members of 
religious minorities; lesbian, gay, bisexual, transgender, and queer 
(LGBTQ+) persons; persons with disabilities; persons who live in rural 
areas; and persons otherwise adversely affected by persistent poverty 
or inequality.
    (12) For purposes of this paragraph (g), a business is ``owned and 
controlled'' by applicable individuals:
    (i) If privately owned, 51 percent or more is owned by such 
individuals;
    (ii) If publicly owned, 51 percent more or of the stock is owned by 
such individuals; and
    (ii) In the case of a mutual institution, if a majority of the 
board of directors, account holders, and the community which the 
institution services is predominantly comprised of such individuals.
    (h) Veteran-owned or controlled business means a business that:
    (1) If privately owned, 51 percent or more is owned by veterans;
    (2) If publicly owned, 51 percent or more of the stock is owned by 
veterans;
    (3) In the case of a mutual institution, a majority of the board of 
directors, account holders, and the community which the institution 
services is predominantly comprised of veterans; or
    (4) One or more individuals who are veterans have the power to 
exercise a controlling influence over the business.
    (i) Women-owned or controlled business means a business that:
    (1) If privately owned, 51 percent or more is owned by females;

[[Page 13634]]

    (2) If publicly owned, 51 percent or more of the stock is owned by 
females;
    (3) In the case of a mutual institution, a majority of the board of 
directors, account holders, and the community which the institution 
services is predominantly comprised of females; or
    (4) One or more individuals who are females have the power to 
exercise a controlling influence over the business.


Sec.  35.28   Annual report requirements.

    By March 31 of each year beginning March 31, 2023, and ending with 
the report to be submitted on March 31, 2028, each participating 
jurisdiction shall submit to the U.S. Department of the Treasury an 
annual report that includes, with respect to the previous calendar 
year, the following data for each business that receives a loan, 
investment, other credit or equity support, or technical assistance as 
part of the State Small Business Credit Initiative. For each business 
that receives a loan, investment, or other credit or equity support 
under the State Small Business Credit Initiative, the reported data 
shall be based on the ownership and control of the business immediately 
before the consummation of such loan, investment, or other credit or 
equity support-related transaction. For each business that receives 
technical assistance under the State Small Business Credit Initiative, 
the reported data shall be based on the ownership and control of the 
business at the time it receives such technical assistance.
    (a) Self-certified SEDI demographics-related business status. (1) 
Indicate which one or more of the following categories apply: Self-
certified due to membership of a group that has been subjected to 
racial or ethnic prejudice or cultural bias within American society; 
self-certified due to gender; self-certified due to veteran status; 
self-certified due to limited English proficiency; self-certified due 
to disability; self-certified due to long-term residence in an 
environment isolated from the mainstream of American society; self-
certified due to membership of a federally or state-recognized Indian 
Tribe; self-certified due to long-term residence in a rural community; 
self-certified due to residence in a U.S. territory; self-certified due 
to residence in a community undergoing economic transitions (including 
communities impacted by the shift towards a net-zero economy or 
deindustrialization); self-certified due to membership of an 
``underserved community'' as defined in Sec.  35.27(g)(11)(i); none of 
the preceding categories are applicable; prefer not to respond; or the 
business did not answer.
    (2) The participating jurisdiction must permit each business to 
identify all of the categories that apply in the definition of SEDI 
demographics-related business, and the participating jurisdiction must 
report to Treasury all categories identified by the business.
    (b) Minority-owned or controlled business status. Indicate whether 
the business is a minority-owned or controlled business. The 
participating jurisdiction must indicate yes; no; prefer not to 
respond; or that the business did not answer.
    (c) Women-owned or controlled business status. Indicate whether the 
business is a women-owned or controlled business. The participating 
jurisdiction must indicate yes; no; prefer not to respond; or that the 
business did not answer.
    (d) Veteran-owned or controlled business status. Indicate whether 
the business is a veteran-owned or controlled business. The 
participating jurisdiction must indicate yes; no; prefer not to 
respond; or that the business did not answer.
    (e) Race of principal owners. (1) For each principal owner of the 
business, indicate which one or more of the following race categories 
(including the Office of Management and Budget's minimum categories and 
the relevant disaggregated categories) with which the principal owner 
identifies: American Indian or Alaska Native; Asian; Asian 
disaggregated categories: Indian, Chinese, Filipino, Japanese, Korean, 
Vietnamese, Asian (Other); Black or African American; Native Hawaiian 
or Other Pacific Islander; Native Hawaiian or Other Pacific Islander 
disaggregated categories: Guamanian or Chamorro, Native Hawaiian, 
Samoan, Pacific Islander (Other); White; prefer not to respond; or that 
the business did not answer.
    (2) The participating jurisdiction must permit each business to 
identify all of the Office of Management and Budget's minimum 
categories and disaggregated categories in paragraph (e)(1) of this 
section with which each principal owner of the business identifies, and 
the participating jurisdiction must report to Treasury all categories 
identified by the business.
    (f) Ethnicity of principal owners. For each principal owner of the 
business, indicate which of the following ethnicity categories the 
principal owner identifies with: Hispanic or Latino/a; not Hispanic or 
Latino/a; prefer not to respond; or that the business did not answer.
    (g) Middle Eastern or North African Ancestry of principal owners. 
For each principal owner of the business, indicate which of the 
following ancestry categories the principal owner identifies with: 
Middle Eastern or North African; not Middle Eastern or North African; 
prefer not to respond; or that the business did not answer.
    (h) Gender of principal owners. For each principal owner of the 
business, indicate which of the following gender categories the 
principal owner identifies with: Female; male; nonbinary; prefer to 
self-describe, prefer not to respond; or that the business did not 
answer. If the ``prefer to self-describe'' option is chosen, the 
participating jurisdiction must provide an option for the business to 
write in the gender and must report what the business writes in.
    (i) Sexual orientation of principal owners. For each principal 
owner of the business, indicate which of the following sexual 
orientation categories the principal owner identifies with: Gay or 
lesbian; bisexual; straight, that is, not gay, lesbian, or bisexual; 
something else; prefer not to respond; or that the business did not 
answer.
    (j) Veteran status of principal owners. For each principal owner of 
the business, indicate which of the following categories the principal 
owner identifies with: Veteran; non-veteran; prefer not to respond; or 
that the business did not answer.


Sec.  35.29   Format.

    Participating jurisdictions must submit the information required 
under Sec.  35.28 using the formats specified from time to time on the 
U.S. Department of the Treasury's website.

Jacob Leibenluft,
Chief Recovery Officer.
[FR Doc. 2022-04843 Filed 3-9-22; 8:45 am]
BILLING CODE P


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