Federal Register / Vol. 70, No. 218 / Monday, November 14, 2005 / Rules and Regulations 69045 

Federal Reserve Bank Rate Effective 

Minneapolis .................................................................................................................................................... 5.00 November 1, 2005. 

Kansas City .................................................................................................................................................... 5.00 November 1, 2005. 

Dallas ............................................................................................................................................................. 5.00 November 1, 2005. 

San Francisco ................................................................................................................................................ 5.00 November 1, 2005. 

(b) Secondary credit. The interest 

rates for secondary credit provided to 

depository institutions under 201.4(b) 

are: 

Federal Reserve Bank Rate Effective 

Boston ............................................................................................................................................................ 5.50 November 1, 2005. 

New York ....................................................................................................................................................... 5.50 November 1, 2005. 

Philadelphia .................................................................................................................................................... 5.50 November 1, 2005. 

Cleveland ....................................................................................................................................................... 5.50 November 1, 2005. 

Richmond ....................................................................................................................................................... 5.50 November 1, 2005. 

Atlanta ............................................................................................................................................................ 5.50 November 1, 2005. 

Chicago .......................................................................................................................................................... 5.50 November 1, 2005. 

St. Louis ......................................................................................................................................................... 5.50 November 2, 2005. 

Minneapolis .................................................................................................................................................... 5.50 November 1, 2005. 

Kansas City .................................................................................................................................................... 5.50 November 1, 2005. 

Dallas ............................................................................................................................................................. 5.50 November 1, 2005. 

San Francisco ................................................................................................................................................ 5.50 November 1, 2005. 

* * * * * 

By order of the Board of Governors of the 

Federal Reserve System, November 7, 2005. 

Jennifer J. Johnson, 

Secretary of the Board. 

[FR Doc. 05–22520 Filed 11–10–05; 8:45 am] 

BILLING CODE 6210–02–P 

SMALL BUSINESS ADMINISTRATION 

13 CFR Part 121 

RIN 3245–AF43 

Small Business Size Standards; Gulf 

Opportunity Pilot Loan Program 

AGENCY: Small Business Administration. 

ACTION: Interim final rule with request 

for comments. 

SUMMARY: The U.S. Small Business 

Administration (SBA) is temporarily 

amending the size eligibility criteria for 

loan assistance provided under the 

‘‘Gulf Opportunity Pilot Loan Program,’’

a one-year pilot under the 7(a) Business 

Loan Program. The pilot program makes 

available on an expedited basis 7(a) 

loans to small businesses located in, 

locating to, or relocating in disaster 

areas declared by the President as a 

result of Hurricanes Katrina and Rita 

and any contiguous parishes or 

counties. This interim final rule makes 

financial assistance under the pilot 

program available to businesses that are 

considered small for the purpose of 

SBA’s 7(a) Business Loan Program and 

businesses considered small for the 

purpose of SBA’s Certified Development 

Company Program. SBA prepared this 

rule as an interim final rule because its 

immediate implementation will 

facilitate the reconstruction and 

economic recovery of the Gulf Coast. 

DATES: Effective Date: This regulation 

becomes effective on November 14, 

2005. 

Comment Period: Comments must be 

received by SBA on or before December 

14, 2005. 

ADDRESSES: You may submit comments 

identified by RIN 3245–AF43 through 

one of the following methods: (1) 

Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments; 

(2) Fax: (202) 205–6390; or (3) Mail/ 

Hand Delivery/Courier: Gary M. 

Jackson, Assistant Administrator for 

Size Standards, 409 Third Street, SW., 

Mail Code 6530, Washington, DC 20416. 

FOR FURTHER INFORMATION CONTACT: 

Charles W. Thomas, Director, Office of 

Program Development, Office of 

Financial Assistance, (202) 205–6656 or 

charles.thomas@sba.gov. 

SUPPLEMENTARY INFORMATION: 

Gulf Opportunity Pilot Loan Program 

SBA, in cooperation with lending 

institutions, has established a Gulf 

Opportunity Pilot Loan Program (GO 

Loan Pilot or Pilot), as a pilot under the 

7(a) Business Loan Program, to expedite 

delivery of small business financing in 

the form of 7(a) loans to small 

businesses located in, locating to, or relocating in Presidentially-declared 

disaster areas resulting from Hurricanes 

Katrina and Rita and any contiguous 

parishes or counties (SBA Policy Notice 

5000–978, November 8, 2005). 

The scope and magnitude of damage 

caused by Hurricanes Katrina and Rita 

is unprecedented. SBA has determined 

that the small businesses located in 

those communities have an 

extraordinary need for moderately-sized 

loans ($150,000 or less) provided on an 

expedited basis. To respond to these 

extraordinary needs of the small 

business community, SBA developed a 

pilot program, which goes beyond the 

Agency’s traditional disaster relief 

efforts, to deliver financial assistance to 

small businesses located in, locating to, 

or relocating in the Presidentiallydeclared disaster areas resulting from 

Hurricanes Katrina and Rita and any 

contiguous parishes or counties (A list 

of eligible parishes and counties is 

located at: http://www.sba.gov/ 

disaster_recov/katrinafactsheets.html.). 

Borrowers under this pilot must meet 

the geographical requirements as well as 

the standard eligibility requirements for 

the loan. The Agency structured the GO 

Loan Pilot to provide its full 85 percent 

guaranty to more strongly encourage 

lenders to lend to businesses in the 

affected communities. The GO Loan 

pilot will be a temporary pilot program 

for use in fiscal year 2006, and will 

expire on September 30, 2006. This 

interim final rule makes the expedited 

small business financing available to 

businesses that are considered small for 

the purpose of SBA’s 7(a) Business Loan 

Program and businesses considered 

small for the purpose of SBA’s Certified 

Development Company (CDC) Program. 

69046 Federal Register / Vol. 70, No. 218 / Monday, November 14, 2005 / Rules and Regulations 

Size Standard for the 7(a) Business 

Loan Program 

The 7(a) Business Loan Program 

provides a range of short-term and longterm financial assistance to start-up 

businesses and smaller-sized small 

businesses in the operation, acquisition 

or expansion of their existing business. 

To qualify for an SBA-guaranteed loan 

under the 7(a) Business Loan Program, 

the size of a business concern, including 

its affiliates, cannot exceed the size 

standard for the primary industry in 

which it is engaged. (13 CFR 

121.301(a)). More than 90 percent of 7(a) 

borrowers are start-ups or businesses 

with 50 or fewer employees. 

Size Standard for SBA’s Certified 

Development Company Program 

SBA believes that the unprecedented 

economic needs of businesses in the 

Presidentially-declared disaster areas 

and the contiguous parishes and 

counties necessitate a more expansive 

reach of its 7(a) Business Loan Program 

lending in the Gulf Coast region. 

Therefore, SBA has decided to utilize 

the size eligibility criteria of the CDC 

Program for the GO Loan Pilot. The 

structure and objectives of the CDC 

Program target a larger segment of the 

small business community than the 7(a) 

Business Loan Program. The CDC 

Program is, among other things, a longterm financing tool for economic 

development that provides loans for 

major fixed assets, such as land and 

buildings. To be eligible for assistance 

under the CDC program, a business 

concern must meet either the size 

eligibility criteria of the 7(a) Business 

Loan Program, or have tangible net 

worth not in excess of $7 million and 

average net income after Federal income 

taxes (excluding any carry-over losses) 

for the preceding two completed fiscal 

years not in excess of $2.5 million (13 

CFR 120.301(b)). Size standards based 

on net worth and net income have been 

established to assist businesses that tend 

to be larger in size than businesses 

concerns that qualify for the 7(a) 

Business Loan Program, but still qualify 

as ‘‘small’’ for the purpose of SBA 

financing. 

This action is not unprecedented. 

SBA temporarily applied the CDC size 

standards to the 7(a) Business Loan 

Program from December 1992 to March 

4, 1993, but decided after public 

comment and further consideration not 

to continue them on a permanent basis 

because the alternate net worth and net 

income size standards of the CDC 

Program reflect the special purposes of 

that loan program (57 FR 62477, 

December 21, 1992 and 58 FR 12334, 

March 4, 1992). The urgent need for 

Federal financial assistance following 

Hurricanes Katrina and Rita created 

special circumstances warranting 

temporarily application the CDC size 

standards to businesses applying for 7(a) 

loans through the GO Loan Pilot. 

Size Standard for the GO Loan Pilot 

This rule amends the size eligibility 

criteria for 7(a) loans through the GO 

Loan Pilot to make those loans available 

to businesses currently considered small 

for the purpose of SBA’s 7(a) Business 

Loan Program and to businesses 

considered small for the purpose of 

SBA’s CDC program. Rather than 

modifying the definition of a small 

business, this interim final rule extends 

size eligibility for the GO Loan Pilot to 

any business concern that is already 

considered ‘‘small’’ for the purpose of 

one of SBA’s major financial assistance 

programs. 

The broader alternate size standards 

adopted for the GO Loan Pilot 

recognizes that many small business 

concerns located in the disaster areas 

(including those which may not qualify 

for the 7(a) loans under the existing 

framework) are experiencing financial 

hardship as a result of Hurricanes 

Katrina and Rita. Absent the recent 

hurricane disasters, many small 

businesses would continue to have 

adequate access to capital through 

traditional channels. With the 

destruction of large segments of the 

local infrastructure and the 

displacement of thousands of residents, 

the severe economic effects of the recent 

disasters on the Gulf Coast will extend 

over a period of many months, if not 

years. Many of these larger-sized small 

businesses have long-term viability, but 

need immediate access to capital to 

sustain or rebuild their operations 

during this critical recovery period. 

SBA believes that applying the 

alternate net worth and net income size 

standards to the GO Loan Pilot provides 

an effective mechanism for the Federal 

Government to extend crucial financial 

assistance to this segment of the small 

business community that would 

otherwise be unavailable. 

No Impact on SBA’s Government 

Contracting Programs 

SBA continues to believe that its 

current size standards for the 7(a) 

Business Loan Program and other small 

business assistance programs 

appropriately define small business 

concerns. As described above, the 

alternate net worth and net income size 

standards of the CDC Program are being 

applied on a limited basis to the 

specifically-tailored lending assistance 

program of the GO Loan Pilot. This 

interim rule does not change the size 

standards applicable to other small 

business programs, including size 

standards for Federal contracting. 

Therefore, this interim final rule will 

have no effect on existing Federal 

contracts, the pool of small businesses 

competing for Federal contracts, or the 

ability of Federal agencies to attain their 

small business contracting goals. 

Justification for Publication as an 

Interim Final Rule 

In general, SBA publishes a proposed 

rule for public comment before issuing 

a final rule in accordance with the 

Administrative Procedure Act (APA) 

and SBA regulations. (5 U.S.C. 553 and 

13 CFR 101.108). The APA provides an 

exception to the standard rulemaking 

process, however, when an agency finds 

good cause to adopt a rule without prior 

public participation. (5 U.S.C. 

553(b)(3)(B)). The good cause 

requirement is satisfied when prior 

public participation is impracticable, 

unnecessary, or contrary to the public 

interest. Under those conditions, an 

agency may publish an interim final 

rule without first soliciting public 

comment. 

In the good cause exception to 

standard rulemaking procedures, 

Congress recognized that emergencies 

(such as the need for Federal assistance 

after major disasters) might arise when 

an agency must issue a rule without 

prior public participation. On August 

29, 2005, the President declared major 

disaster areas in Louisiana, Mississippi, 

and Alabama in the aftermath of 

Hurricane Katrina. The President also 

declared major disaster areas in 

Louisiana and Texas after Hurricane 

Rita destroyed more of the Gulf Coast 

region. These natural disasters have 

severely affected businesses in the 

declared disaster areas and contiguous 

parishes and counties. Small businesses 

in those areas have demonstrated an 

extraordinary need for moderately sized 

loans ($150,000 or less). SBA designed 

the GO Loan Pilot to expedite delivery 

of financial assistance through the 7(a) 

loan program to those businesses. This 

rule would amend the size eligibility 

criteria for 7(a) loans through the GO 

Loan Pilot to make those loans available 

to businesses currently considered small 

for the purpose of SBA’s 7(a) loan 

program and to businesses considered 

small for the purpose of SBA’s CDC 

Program. Absent this rule, expedited 

financial assistance through the GO 

Loan Pilot would only be available to 

businesses considered small for the 

purpose of SBA’s 7(a) loan program. 

Immediate implementation of this rule, 

Federal Register / Vol. 70, No. 218 / Monday, November 14, 2005 / Rules and Regulations 69047 

as a component of the GO Loan Pilot, 

will expedite delivery of financial 

assistance to a greater number of 

businesses. Strengthening small 

businesses in the declared disaster areas 

by making financial assistance available 

on an expedited basis is in the best 

interest of the public because it will 

facilitate economic recovery of the Gulf 

Coast. Restoring economic stability in 

the region is essential to attracting 

residents and revitalizing communities 

that were destroyed by Hurricanes 

Katrina and Rita in 2005. Accordingly, 

SBA finds good cause to publish this 

rule as an interim final rule. The urgent 

need to expedite delivery of Federal 

financial assistance to the declared 

disaster areas makes immediate 

implementation of this rule in the 

public interest. 

Furthermore, advance solicitation of 

comments for this rulemaking would be 

impracticable and contrary to the public 

interest because it would delay delivery 

of critical financial assistance to these 

businesses by at least four to six 

months. Such delay could have serious 

adverse affects on small businesses in 

the disaster areas and the public. 

Providing financial assistance now can 

help protect some small businesses that 

might otherwise have to cease 

operations before a rule could be 

promulgated under standard notice and 

comment rulemaking procedures. 

Although SBA is publishing this rule 

as an interim final rule, the Agency 

requests interested parties to submit 

their comments on the amended size 

standard. SBA must receive the 

comments on or before December 14, 

2005. SBA may then consider these 

comments in making any necessary 

revisions to these regulations. 

Justification for Immediate Effective 

Date of Interim Final Rule 

The APA requires that ‘‘publication or 

service of a substantive rule shall be 

made not less than 30 days before its 

effective date, except * * * as 

otherwise provided by the agency for 

good cause found and published with 

the rule.’’ 5 U.S.C. 553(d)(3). SBA finds 

that good cause exists to make this final 

rule become effective on the same day 

it is published in the Federal Register. 

The purpose of the APA provision 

delaying the effective date of a rule for 

30 days after publication is to provide 

interested and affected members of the 

public sufficient time to adjust their 

behavior before the rule takes effect. In 

this case, however, the 30-day delay is 

unnecessary because this interim final 

rule would not require businesses, 

lenders or SBA to make significant 

changes to their current procedures 

when applying for, issuing, or 

guaranteeing loans. SBA will generally 

apply the policies and procedures in 

place for the Agency’s existing 

SBAExpress program (although there are 

several substantial differences between 

the two programs). Lenders 

participating in the GO Loan Pilot are 

knowledgeable about these policies and 

procedures because they must be 

authorized to make 7(a) loans through 

SBAExpress in order to participate in 

the GO Loan Pilot. In addition, SBA will 

provide OMB-approved forms for the 

GO Loan Pilot, which are modeled after 

the SBAExpress forms. 

Furthermore, SBA does not expect to 

receive any comments from 

stakeholders in the 7(a) loan or 

SBAExpress programs or others 

opposing the immediate effective date of 

this interim final rule. SBA believes, 

based on its discussions with state and 

local officials and interested members of 

the public, that there is a strong interest 

in immediate implementation of this 

rule because it will help small 

businesses in the disaster areas and 

facilitate economic recovery of the Gulf 

Coast region. 

Compliance With Executive Orders 

12866, 12988, and 13132, the 

Regulatory Flexibility Act (5 U.S.C. 601– 

612) and the Paperwork Reduction Act 

(44 U.S.C. Ch. 35) 

The Office of Management and Budget 

(OMB) has determined that this rule is 

a ‘‘significant regulatory action’’ under 

section 3(f) under Executive Order 

12866. The emergency nature of this 

interim final rule makes timely 

compliance with Executive Order 12866 

impracticable. SBA is currently 

assessing the potential economic 

impacts of this action. 

For purposes of Executive Order 

12988, SBA has drafted this rule, to the 

extent practicable, in accordance with 

the standards set forth in section 3 of 

that Order. 

This regulation 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 responsibility 

among the various levels of government. 

Therefore, under Executive Order 

13132, SBA determines that this rule 

does not have sufficient federalism 

implications to warrant the preparation 

of a federalism assessment. 

Pursuant to § 608 of the Regulatory 

Flexibility Act (RFA), SBA is delaying 

the preparation of a regulatory 

flexibility analysis. As discussed above, 

SBA is promulgating this rule on an 

emergency basis, making timely 

compliance with the provisions of § 603 

of the RFA impracticable. 

SBA has determined that this rule 

does not impose any new information 

collection requirements from SBA that 

require approval by OMB under the 

Paperwork Reduction Act of 1980, 44 

U.S.C. Ch. 35. SBA currently has forms 

established to determine small business 

status. However, as a separate action, 

SBA will develop new forms pertaining 

to GO Loan Pilot loans that are modeled 

after the forms currently used by SBA 

Express lenders. SBA has sought OMB’s 

approval for these forms on an 

emergency basis. 

List of Subjects in 13 CFR Part 121 

Loan programs—business, Disaster 

assistance loans, Reporting and 

recordkeeping requirements, Small 

business. 

■ For reasons set forth in the preamble, 

amend part 121 of title 13 Code of 

Federal Regulations as follows: 

PART 121—SMALL BUSINESS SIZE 

REGULATIONS 

■ 1. The authority citation for part 121 

is revised to read as follows: 

Authority: 15 U.S.C. 632, 634(b)(6), 636(b), 

637(a), 644, and 662(5); and Pub. L. 105–135, 

sec. 401 et seq., 111 Stat. 2592. 

■ 2. Amend § 121.301 by revising 

paragraph (a) to read as follows: 

§ 121.301 What size standards are 

applicable to financial assistance 

programs? 

(a)(1) For Business Loans and Disaster 

Loans (other than physical disaster 

loans), an applicant business concern, 

including its affiliates, must not exceed 

the size standard for the industry in 

which the applicant is primarily 

engaged. 

(2) For 7(a) Business Loans under the 

Gulf Opportunity Pilot Loan ‘‘GO Loan’’

Program, (applicable to business 

concerns located in, locating to, or relocating in parishes or counties that 

were declared disaster areas by the 

President as a result of the 2005 

Hurricanes Katrina or Rita, plus any 

contiguous parishes or counties), an 

applicant business concern must meet 

either the size standard under paragraph 

(a)(1) or the size standard under 

paragraph (b) of this section. 

* * * * * 

Dated: November 7, 2005. 

Hector V. Barreto, 

Administrator. 

[FR Doc. 05–22569 Filed 11–10–05; 8:45 am] 

BILLING CODE 8025–01–P