69048 Federal Register / Vol. 70, No. 218 / Monday, November 14, 2005 / Rules and Regulations 

SMALL BUSINESS ADMINISTRATION 

13 CFR Part 121 

RIN 3245–AE81 

Small Business Size Standards; Surety 

Bond Guarantee Program 

AGENCY: Small Business Administration. 

ACTION: Interim final rule with request 

for comments. 

SUMMARY: The U.S. Small Business 

Administration (SBA) is amending the 

size eligibility criteria for its Surety 

Bond Guarantee (SBG) Program for 

construction (general or special trades) 

or service concerns performing contracts 

in the Presidentially-declared disaster 

areas resulting from the 2005 Hurricanes 

Katrina, Rita, or Wilma. This rule 

amends the SBG size standard for some 

concerns by requiring them to meet 

either the size standard for the primary 

industry in which it, together with its 

affiliates, is engaged, or the current $6 

million standard for the SBG Program, 

whichever is higher. The amended size 

standard applies only to construction 

and service concerns seeking SBAguaranteed surety bonds for contracts or 

subcontracts, public or private, that are 

performed in the Presidentially-declared 

disaster areas resulting from the 2005 

Hurricanes Katrina, Rita, or Wilma. 

Surety companies with whom SBA has 

executed a Preferred Surety Bond (PSB) 

Agreement under 13 CFR part 115 will 

be responsible for determining 

eligibility in compliance with this 

regulation. SBA surety bond personnel 

will be responsible for determining 

eligibility in compliance with this 

regulation for those surety guarantees 

that require SBA’s prior approval. SBA 

prepared this rule as an interim final 

rule because its immediate 

implementation will make available 

needed SBG Program assistance to 

otherwise eligible small businesses and 

facilitate reconstruction and recovery of 

the Gulf Coast and Florida. 

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–AE81 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: Carl 

Jordan, Office of Size Standards, (202) 

205–6618 or sizestandards@sba.gov. 

SUPPLEMENTARY INFORMATION: 

SBA’s Surety Bond Guarantee Program 

and Current Size Standards 

SBA, through its Surety Bond 

Guarantee (SBG) Program, can guarantee 

bid, performance and payment bonds 

for contracts up to $2 million for small 

contractors who otherwise cannot 

obtain surety bonds without SBA’s 

guarantee. SBA’s guarantee gives 

sureties an incentive to provide bonding 

for eligible contractors, and thereby 

strengthens a contractor’s ability to 

obtain bonding and provides greater 

access to contracting opportunities. A 

contractor applying for an SBA bond 

guarantee must qualify as a small 

business concern, in addition to meeting 

the surety company’s bonding 

qualifications. Generally, under SBA’s 

current Small Business Size 

Regulations, businesses in construction 

and service industries can qualify as 

small for the SBG Program if their 

average annual receipts, including those 

of their affiliates, for the last three fiscal 

years do not exceed $6 million (13 CFR 

121.301(d)(1) and 13 CFR 121.104(c)). 

For all other types of business concerns, 

the concern must meet the size standard 

for the primary industry in which it, 

combined with its affiliates, is engaged 

(see 13 CFR 121.201 and 

§ 121.301(d)(2)). 

What This Interim Final Rule 

Accomplishes 

This interim final rule amends the 

size standard applicable to a 

construction or service concern seeking 

an SBA-guaranteed surety bond by 

requiring the concern to meet either the 

size standard for the industry in which 

it, combined with its affiliates, is 

primarily engaged, or the $6 million 

standard, whichever is higher. The 

amended size standard applies only to 

businesses with contracts that are 

performed in the Presidentially-declared 

disaster areas resulting from the 2005 

Hurricanes Katrina, Rita, or Wilma. 

The small business size standards for 

industries in North American Industry 

Classification System (NAICS) Sector 

23, Construction, are the following: (1) 

$28.5 million in average annual receipts 

for building, heavy, and civil 

engineering construction; (2) $17 

million in average annual receipts for 

dredging; and (3) $12 million in average 

annual receipts for special trade 

contractors. Also, the existing small 

business size standards for service 

industries range from $3 million to $30 

million in average annual receipts, 

depending on the industry. This rule 

would expand the pool of businesses 

eligible for the SBG Program to include 

those that are currently excluded 

because they exceed the $6 million SBG 

size standard but are considered small 

under existing size standards for other 

purposes, such as the examples in this 

paragraph. 

The amended size standards under 

this interim final rule are applicable 

until SBA determines that it is no longer 

necessary to expand the availability of 

SBG Program assistance for 

reconstruction and recovery of the 

Presidentially-declared disaster areas 

resulting from Hurricanes Katrina, Rita, 

and Wilma. This interim final rule is a 

specific response to those natural 

disasters. SBA is soliciting comments on 

how long the amended size standards 

under this interim final rule should 

apply to construction and service 

concerns performing contracts or 

subcontracts in the specified disaster 

areas. In particular, SBA is soliciting 

public comments on factors that would 

indicate that the amended size 

standards are no longer necessary and 

the appropriate Agency action after SBA 

determines that the amended size 

standards have served the intended 

purpose. 

SBA continues to believe that its 

current size standards for other small 

business assistance programs 

appropriately define small business 

concerns. As described above, the 

amended size standard for the SBG 

Program is being applied to a limited 

number of business concerns 

performing construction or certain 

service contracts in limited geographical 

areas—the Presidentially-declared 

disaster areas. 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. 

SBA has designed this rule so it will 

not adversely affect any small 

businesses. Under this rule, a 

construction or service concern must 

meet either the size standard for its 

primary industry (when combined with 

its affiliates) or the current SBA $6 

million standard, whichever is higher. 

This guarantees that concerns in service 

industries with size standards below $6 

million retain their eligibility for the 

SBG Program. Most service industries 

have a $6 million size standard, 

although some are higher, as stated 

Federal Register / Vol. 70, No. 218 / Monday, November 14, 2005 / Rules and Regulations 69049 

above. There are a small number of 

other service industries, however, such 

as NAICS 541330, Engineering Services, 

with size standards below $6 million. 

Concerns operating in industries with 

size standards below $6 million could 

suffer adverse affects if the rule required 

them only to meet the size standard for 

their primary industries, lower than the 

size standard they now must meet for 

the SBG Program. That would be 

contrary to the rule’s intent and SBA’s 

mission and goals. Under this rule, 

those concerns operating in industries 

with size standards below $6 million 

remain eligible so long as their average 

annual receipts do not exceed the 

current SBG $6 million standard. 

Under the Small Business Act, 15 

U.S.C. 633(d) (Act), SBA has a statutory 

obligation to act in the public interest by 

establishing small business size 

standards to determine eligibility as a 

small business concern for Federal 

assistance. Pursuant to the Act, SBA has 

determined that immediate 

implementation of this rule is in the 

public interest and delaying its 

application would be impracticable. 

Failure to adopt this rule could work to 

the detriment of many small businesses. 

Compliance With This Regulation 

Surety companies with whom SBA 

has executed a Preferred Surety Bond 

(PSB) Agreement under 13 CFR part 115 

will be responsible for determining 

eligibility in compliance with this 

regulation. They must determine that 

the construction or service contracts 

will be performed in the Presidentiallydeclared disaster areas resulting from 

the 2005 Hurricanes Katrina, Rita, or 

Wilma and sufficiently document that 

bonded contracts meet this eligibility 

requirement (A list of parishes and 

counties declared disaster areas by the 

President as a result of the hurricanes is 

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

disaster_recov/katrinafactsheets.html.) 

They must also determine that the 

concern seeking this SBA-guaranteed 

bonding assistance meets the applicable 

size standard for its primary industry 

(when combined with its affiliates), or 

has average annual receipts that do not 

exceed $6 million, whichever size 

standard is higher. SBA surety bond 

personnel will be responsible for 

determining eligibility in compliance 

with this regulation for those surety 

guarantees that require SBA’s prior 

approval and document their findings 

accordingly. Small businesses seeking 

such SBA assistance do not need to be 

located in the disaster areas, provided 

they perform the contracts in the 

Presidentially-declared disaster areas 

resulting from the 2005 Hurricanes 

Katrina, Rita, or Wilma. This rule 

enables these small businesses all over 

the country to assist other businesses 

and individuals that need their services. 

Reasons for Limiting the Application of 

This Amended SBG Size Standard to 

Only Contracts and Subcontracts 

Performed in Certain Areas 

In the wake of Hurricanes Katrina, 

Rita, and Wilma, public and private 

entities will spend significant amounts 

on recovery efforts for many years. 

Much of this work will be for 

construction and services. The Federal 

Government is committed to facilitating 

small business participation in the 

reconstruction and recovery efforts in 

the Gulf Coast region and Florida. 

SBA recognizes that some 

construction or service contracts and 

subcontracts may be performed outside 

the Presidentially-declared disaster 

areas that are connected (by varying 

degrees) to reconstruction and recovery 

activities in the Gulf Coast and Florida. 

However, SBA limited the application 

of this amended SBG size standard to 

only contracts and subcontracts 

performed in Presidentially-declared 

disaster areas because the limit is an 

objective standard that sureties and SBA 

can apply in a consistent and fair 

manner. Furthermore, those contracts 

and subcontracts will have a direct 

impact on communities in the Gulf 

Coast and Florida because the 

reconstruction activities will restore the 

infrastructure and the service activities 

will serve residents of affected areas. 

SBA believes that amending the SBG 

Program’s $6 million size standard for 

construction and service concerns 

seeking SBA-guarantees will expand 

procurement opportunities for small 

businesses in the construction and 

service industries, including local small 

businesses within the Presidentiallydeclared disaster areas, while 

facilitating the reconstruction of the 

affected areas and serving victims of 

Hurricanes Katrina, Rita, and Wilma. 

Reasons for Using the Size Standard for 

the Primary Industry of the 

Construction or Service Concern as an 

Alternate Size Standard for the SBG 

Program 

This interim final rule makes the size 

eligibility criteria for the SBG Program 

more consistent with other SBA 

financial assistance programs. Both 

SBA’s 7(a) Business Loan Program and 

its Disaster Assistance EIDL Program 

determine size eligibility based on the 

primary industry in which the 

applicant, together with its affiliates, is 

engaged. Many small businesses 

affected by Hurricanes Katrina, Rita, or 

Wilma are seeking and will be seeking 

assistance through SBA’s programs and 

obtaining Federal and non-Federal 

contracts. Applying similar size 

eligibility criteria to the SBG Program 

will complement the assistance these 

other SBA programs and Federal 

contracting provide. 

The SBA’s current Small Business 

Size Regulations do permit, under 

certain circumstances, a small 

construction or service contractor with 

annual receipts greater than $6 million 

to qualify as eligible for its SBG 

Program. This occurs only when a 

construction or service concern meets 

the size standard for the NAICS code 

that best describes the principal purpose 

of the procurement (see 13 CFR 

121.402(a)) and when it is the prime 

contractor for the Federal procurement. 

Section 121.305 provides ‘‘A concern 

qualified as small for a particular 

procurement, including an 8(a) 

subcontract, is small for financial 

assistance directly and primarily 

relating to the performance of the 

particular procurement.’’ However, this 

provision only applies when the 

concern is a prime contractor with the 

Federal Government. A surety bond 

running to another obligee, other than 

the Federal Government, such as a 

private owner, another contractor, a notfor-profit entity, or non-Federal political 

subdivision, is not eligible for SBA’s 

guarantee under existing regulations 

unless the contractor meets the SBG $6 

million size standard. 

However, most SBA-guaranteed 

surety bonds are for contractors who are 

not prime contractors with the Federal 

Government. Applying the industry size 

standards to non-Federal contracts 

enables small construction and service 

concerns above $6 million in size to be 

equally as competitive for Federal 

contracts as non-Federal contracts. To 

limit access to the SGB Program to only 

concerns with average annual receipts 

that do not exceed $6 million, or to 

consider a size standard different from 

the industry size standards, would 

likely limit small business opportunities 

at a time when potential assistance is 

most needed. 

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. 

69050 Federal Register / Vol. 70, No. 218 / Monday, November 14, 2005 / Rules and Regulations 

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 disaster assistance) 

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 and in Florida 

after Hurricane Wilma. These natural 

disasters have affected U.S. businesses 

in the declared disaster areas and across 

the Nation. Implementing this rule 

immediately will support the economic 

recovery of the Gulf Coast region and 

Florida and is in the best interest of the 

public. Construction and service 

concerns affected by the disaster will be 

more able to assist in the rebuilding and 

clean-up efforts, and in delivering much 

needed services to disaster victims. This 

rule will also assist small construction 

and service concerns not affected by the 

disaster to provide disaster assistance in 

their industries. 

The Federal Government and other 

public and private entities are, and will 

be, contracting for clean-up activities, 

substantial reconstruction and other 

services in the disaster areas. However, 

some small construction and service 

concerns that had been able to obtain 

standard surety bonding before the 

disasters may now need SBA’s 

guarantee because of their deteriorating 

financial conditions. This rule will 

permit more businesses to qualify for 

SBA-guaranteed surety bonds and 

perform contracts to help rebuild and 

revitalize the Gulf Coast region and 

Florida. Strong small business 

participation, in turn, will promote 

economic recovery in the area. In the 

public interest, this interim final rule 

would increase the number of small 

business participants in these efforts. 

Accordingly, SBA finds good cause to 

publish this rule as an interim final rule 

because of the urgent need to speed 

delivery of disaster assistance to the 

affected area. Furthermore, advance 

solicitation of comments for this 

rulemaking would be impracticable and 

contrary to the public interest because it 

would delay delivery of critical 

assistance to these businesses by at least 

four to six months. Such delay could 

have serious adverse affects on small 

businesses and the public in the disaster 

area. Immediate access to SBAguaranteed surety bonds 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 to the amended size 

standard. In particular, SBA welcomes 

comments on how long the amended 

size standards under this interim final 

rule should apply to construction and 

service concerns performing contracts or 

subcontracts in the specified disaster 

areas, factors SBA should consider 

before determining that the size 

standards are no longer necessary, and 

the appropriate Agency action after SBA 

makes that determination. 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, 

sureties, or SBA to make significant 

changes to their current procedures 

when applying for, issuing, or 

guaranteeing surety bonds. Sureties and 

SBA would begin applying the new size 

eligibility criteria to businesses upon 

publication of this interim final rule. 

Furthermore, SBA does not expect to 

receive any comments from those 

stakeholders in the SBG Program or 

others opposing the immediate effective 

date of this interim final rule. SBA 

included a proposal similar to this 

interim final rule in a proposed rule 

published on March 19, 2004 (69 FR 

13129), and the Agency did not receive 

any comments opposing it. Moreover, 

SBA believes, based on its discussions 

with interested members of the public 

and the need to quickly assist hurricane 

victims, that there is a strong interest in 

immediate implementation of this rule. 

SBA is aware of many entities that will 

be assisted by the immediate adoption 

of this rule, many of those are small 

businesses directly affected by the 

natural disasters. 

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. A general discussion of the need 

for this regulatory action and its 

potential costs and benefits follows. 

1. Is There a Need for the Regulatory 

Action? 

SBA’s statutory mission is to aid and 

assist small businesses through a variety 

of financial, procurement, business 

development, and advocacy programs. 

To effectively assist the intended 

beneficiaries of these programs, SBA 

must establish distinct definitions of 

which businesses are deemed small 

businesses. The Small Business Act (15 

U.S.C. 632(a)) (Act) delegates to the SBA 

Administrator the responsibility for 

establishing small business definitions. 

The Act also requires that small 

business definitions vary to reflect 

industry differences, as necessary. 

As discussed in the above 

supplemental information section, this 

interim final rule is needed to expand 

eligibility for SBA’s SBG Program to 

construction and service contractors 

participating in the reconstruction and 

recovery efforts of the Gulf Coast and 

Florida. The amended size standard for 

the SBG Program only applies to 

contracts that are performed in the 

Presidentially-declared disaster areas 

resulting from the 2005 Hurricanes 

Katrina, Rita, or Wilma. This action will 

assist construction and service concerns 

located in the disaster areas and across 

the Nation by providing access to the 

SBG Program and expanding 

procurement opportunities for them. 

Disaster victims will also benefit as 

small businesses help to rebuild their 

communities. 

2. What Are the Potential Benefits and 

Costs of This Regulatory Action? 

At this time, SBA cannot estimate the 

number or value of contracts, Federal or 

non-Federal, that small construction 

and service concerns will undertake to 

rebuild the Gulf Coast and Florida 

Federal Register / Vol. 70, No. 218 / Monday, November 14, 2005 / Rules and Regulations 69051 

following Hurricanes Katrina, Rita, or 

Wilma. SBA cannot estimate the 

number or value of contracts that will 

require surety bonds or the number or 

value of surety bonds that SBA will 

guarantee. Nor can it estimate the 

number of small businesses affected and 

not affected by the natural disasters that 

will participate in the SBG Program 

after the publication of this rule. SBA 

does believe, however, that expanding 

eligibility for its SBG Program will 

provide the disaster victims with 

significant and timely benefits when 

and where the greatest needs exist. For 

example, disaster-affected small 

business concerns can receive SBG 

Program assistance to restart their 

businesses. Other small business 

concerns may qualify to contract for 

more and larger surety bonds with 

SBA’s guarantee. 

SBA expects that this rule will lead to 

an increase in the number of SBAguaranteed bonds. Although SBA does 

not anticipate loss rates changing 

significantly after this interim final rule 

becomes effective, the Government may 

incur additional costs to honor its 

guarantee on a greater volume of (but 

stable percentage of) defaulted bonds. 

SBA must honor its guarantees to the 

sureties on defaulted bonds for the 

percentage of loss that it guaranteed. 

Guaranteed amounts vary as follows: (1) 

Under the PSB Program, 70 percent (this 

does not change); (2) under the prior 

approval program, contracts valued at 

$100,000 or less, or on behalf of a 

concern owned by a socially and 

economically disadvantaged individual, 

90 percent; and (3) for contracts in 

excess of $100,000 there is a gradually 

decreasing percentage, but the 

percentage does not fall below 80 

percent (13 CFR 115.31). For fiscal years 

2003, 2004 and 2005, SBA’s loss rates 

were 1.8 percent, 1.3 percent and 1.6 

percent, respectively. SBA expects these 

rates to remain stable even though the 

volume of SBA-guaranteed surety bonds 

is expected to increase. 

Among businesses seeking SBA’s 

assistance through the SBG Program, 

there could be additional costs for 

professional time required to complete 

applications for the surety and the SBA 

guarantee. Businesses also incur costs 

through payment of fees to participate 

in the SBG Program. Contractors pay a 

fee of $6 per $1,000 of the contract 

value, which the surety companies 

remit to SBA. (13 CFR 115.32). 

Although there have been no protests of 

a SBG Program participant’s small 

business status in the last five years, at 

least, businesses could also incur legal 

costs associated with defending 

themselves against size protests. 

Businesses may also incur legal costs 

associated with compliance. 

Both surety companies and SBA 

could incur additional administrative 

costs as a result of processing the 

increased volume of surety bond 

applications and applications for the 

SBA-guarantee. There may be additional 

administrative costs for PSB surety bond 

companies because they must document 

the contractors’ eligibility for the SBAguaranteed surety bond under the 

amended size standard. SBA 

anticipates, however, that these 

additional administrative costs will be 

minimal because surety companies and 

SBA already perform these 

administrative functions in the ordinary 

course of business. 

SBA anticipates little or no adverse 

effects on currently defined small 

businesses from the increase in the 

number of newly eligible small 

businesses. Potentially, a newly defined 

small business could obtain a contract 

that a currently defined small business 

may have received. SBA expects those 

cases to be few in number because the 

decision to award a contract is based on 

many considerations. This rule 

enhances the environment for small 

construction and service concerns to 

compete for opportunities and 

strengthens their competitiveness 

related to contracts performed in the 

Presidentially-declared disaster areas 

resulting from the 2005 Hurricanes 

Katrina, Rita, or Wilma. 

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. 

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. 

Under the Regulatory Flexibility Act 

(RFA), this rule may have a significant 

impact on a substantial number of small 

entities. Immediately below, SBA sets 

forth an initial regulatory flexibility 

analysis (IRFA) addressing the reasons 

for promulgating the rule; the objectives 

of this rule; SBA’s descriptions and 

estimate of the number of small entities 

to which the rule will apply; a 

description of potential benefits of the 

rule; the projected reporting record 

keeping and other compliance 

requirements of the rule; the relevant 

Federal rules which may duplicate, 

overlap or conflict with the rule; and 

alternatives considered by SBA. 

(1) What Is the Reason for This Action? 

As discussed in the above 

supplemental information section, this 

rule provides immediate eligibility to 

construction and service contractors for 

SBA’s SBG Program under the same 

small business size standards that apply 

to all other SBG applicants. However, 

SBA will only guarantee surety bonds 

for contracts to eligible small 

construction or service concerns that 

will be performed in the Presidentiallydeclared disaster areas resulting from 

the 2005 Hurricanes Katrina, Rita, or 

Wilma. 

Surety companies with whom SBA 

has executed a Preferred Surety Bond 

(PSB) Agreement under 13 CFR part 115 

will be responsible for determining 

eligibility in compliance with this 

regulation. SBA surety bond personnel 

will be responsible for determining 

eligibility in compliance with this 

regulation for those surety guarantees 

that require SBA’s prior approval. 

(2) What Are the Objectives and Legal 

Basis for the Rule? 

Section 3(a) of the Small Business Act 

(15 U.S.C. 632(a)) gives SBA authority to 

establish and change size standards. 

SBA is using that discretionary 

authority to provide SBG Program 

assistance to those who need it and to 

those who can help with recovery and 

reconstruction. 

SBA intends to provide immediate 

SBG Program assistance to construction 

and service contractors in the areas 

affected by Hurricanes Katrina, Rita, or 

Wilma. SBA intends also to provide 

SBG Program assistance to construction 

and service contractors not directly 

affected by the hurricanes, if their 

contracts or subcontracts are performed 

in the Presidentially-declared disaster 

areas resulting from the 2005 Hurricanes 

Katrina, Rita, or Wilma. 

(3) What Is SBA’s Description and 

Estimate of the Number of Small 

Entities To Which the Rule Will Apply? 

This rule applies to all construction 

(general and special trades) and service 

concerns that meet the amended size 

standard and perform contracts that are 

performed in the Presidentially-declared 

disaster areas resulting from the 2005 

Hurricanes Katrina, Rita, or Wilma. SBA 

is issuing this interim final rule without 

69052 Federal Register / Vol. 70, No. 218 / Monday, November 14, 2005 / Rules and Regulations 

estimating the number of small entities 

affected by this interim final rule in the 

interest of assisting disaster victims and 

providing immediate opportunities for 

small businesses to participate in the 

recovery efforts. The scope of this 

amended size standard is limited to 

contracts performed in the 

Presidentially-declared disaster areas 

resulting from the 2005 Hurricanes 

Katrina, Rita, or Wilma. It is likely that 

most construction and service concerns 

that will benefit from this rule will also 

be located in the Gulf Coast states and 

Florida. SBA welcomes comments 

describing the types and number of 

small entities that this rule will affect. 

(4) Description of Potential Benefits of 

the Rule 

The most significant benefits of this 

rule will flow to small businesses and 

victims of Hurricanes Katrina, Rita, or 

Wilma in the Gulf Coast region of the 

United States and Florida. Many small 

construction and service contractors 

were not eligible for SBG assistance 

before this rule because their annual 

receipts exceeded $6 million. Under this 

interim final rule, they are eligible if 

they (together with their affiliates) meet 

the small business size standards for 

their primary industries or the current 

SBG $6 million standard, whichever is 

higher. Small construction and service 

contractors not directly affected by the 

hurricanes, but that can provide 

assistance, are similarly eligible now if 

they (together with their affiliates) meet 

the small business size standards for 

their primary industries or the current 

SBG $6 million standard, whichever is 

higher. In the end, hurricane victims 

will benefit the most. 

SBA cannot estimate of the number or 

value of contracts, whether Federal or 

non-Federal, that they will receive. Nor 

can we estimate the number of small 

businesses affected and not affected by 

the disaster that will benefit. SBA does 

believe, however, that the increase in 

eligibility for its SBG Program will 

provide the disaster victims with 

significant and timely benefits. Disasteraffected small business concerns can 

receive SBG Program assistance to 

restart their businesses. Other small 

business concerns may qualify for more 

and larger contracts and surety bonds 

with SBA’s guarantee. 

This rule does not affect other than 

small businesses. However, entities that 

are not small businesses, such as notfor-profit entities, cities, towns, and 

other political subdivisions, can be 

beneficiaries of the reconstruction and 

services that small businesses will 

provide. 

This rule will not provide assistance 

under SBA’s 7(a) Guaranteed Loan 

Program, or any other program. This 

rule does not amend or otherwise 

modify the small business size standard 

for any other SBA programs, including 

its 7(a) Guaranteed Loan and Disaster 

Assistance EIDL Programs. However, it 

will enable businesses to obtain SBAguaranteed surety bonding that may 

work hand-in-hand with SBA’s Business 

Loan and EIDL Programs, for those that 

apply for and receive financial 

assistance under one or both of them. 

(5) Will This Rule Impose Any 

Additional Reporting or Recordkeeping 

Requirements on Small Businesses? 

This rule does not impose any new 

information collection requirements 

under the Paperwork Reduction Act of 

1980, 44 U.S.C. Ch. 35. A new size 

standard does not impose any 

additional reporting, recordkeeping or 

compliance requirements on small 

entities. Increasing size standards 

expands access to SBA programs that 

assist small businesses, but does not 

impose a regulatory burden because 

small business size standards neither 

regulate nor control business behavior. 

(6) What Are the Relevant Federal Rules 

Which May Duplicate, Overlap or 

Conflict With This Rule? 

This rule affects only SBA’s SBG 

Program. This rule does not overlap 

with other Federal rules that use SBA’s 

size standards to define a small 

business. Under section 632(a)(2)(C) of 

the Small Business Act, unless 

specifically authorized by statute, 

Federal agencies must use SBA’s size 

standards to define a small business. In 

1995, SBA published in the Federal 

Register a list of statutory and 

regulatory size standards that identified 

the application of SBA’s size standards 

as well as other size standards used by 

Federal agencies (60 FR 57988–57991, 

November 24, 1995). SBA is not aware 

of any Federal rule that would duplicate 

or conflict with this rule. 

This regulation will not impact other 

Federal programs that use its size 

standards. When a Federal agency 

believes that an SBA-established size 

standard is not appropriate for its 

programs, the Small Business Act and 

SBA’s regulations allows that agency to 

develop different size standards, subject 

to the approval of the SBA 

Administrator. (13 CFR 121.902). For a 

regulatory flexibility analysis, agencies 

must consult with SBA’s Office of 

Advocacy when developing different 

size standards for their programs. 

(7) What Alternatives Did SBA 

Consider? 

One alternative to this rule would be 

to leave the SBG Program size standard 

unchanged. However, given the 

immediacy and anticipated extent of the 

need at hand, SBA believes this would 

not be in the best interests of disaster 

victims. 

Another alternative is to issue a 

proposed rule. However, as stated 

above, that process could conceivably 

take at least four to six months before 

any final action would occur. This too, 

could be harmful to small businesses 

who may be forced to cease operations 

before the final rule could be published. 

Also, delayed reconstruction efforts 

would not be in the best interests of 

disaster victims. This interim final rule 

will provide immediate assistance 

where needed and at the same time 

provide opportunity for interested 

parties to comment on the rule. 

List of Subjects in 13 CFR Part 121 

Government procurement—business, 

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 (d)(1) and adding paragraph 

(d)(3) to read as follows: 

§ 121.301 What size standards are 

applicable to financial assistance 

programs? 

* * * * * 

(d) * * * 

(1) Any construction (general or 

special trade) concern or concern 

performing a contract for services is 

small if, together with its affiliates, its 

average annual receipts do not exceed 

$6.0 million, except as provided in 

§ 121.301(d)(3). 

(2) * * * 

(3) For any contract or subcontract, 

public or private, to be performed in the 

Presidentially-declared disaster areas 

resulting from the 2005 Hurricanes 

Katrina, Rita, or Wilma, the construction 

(general or special trade) concern or 

concern performing a contract for 

services is small if it meets the size 

standard for the primary industry in 

Federal Register / Vol. 70, No. 218 / Monday, November 14, 2005 / Rules and Regulations 69053 

which it, together with its affiliates, is 

engaged, or if it meets the size standard 

set forth in paragraph (d)(1), whichever 

is higher. 

* * * * * 

Dated: November 8, 2005. 

Hector V. Barreto, 

Administrator. 

[FR Doc. 05–22570 Filed 11–10–05; 8:45 am] 

BILLING CODE 8025–01–P 

DEPARTMENT OF COMMERCE 

Economic Development Administration 

13 CFR Parts 301 and 304 

[Docket No.: 0507–29210–5294–03] 

RIN 0610–AA63 

Economic Development Administration 

Reauthorization Act of 2004 

Implementation; Regulatory Revision 

AGENCY: Economic Development 

Administration, Department of 

Commerce. 

ACTION: Final rule; delay of effective 

date of certain provisions. 

SUMMARY: On August 11, 2005, the 

Economic Development Administration 

(‘‘EDA’’) published an interim final rule 

in the Federal Register. On September 

30, 2005, EDA published a final rule in 

the Federal Register delaying the 

effective date of certain provisions of 

the interim final rule from October 1, 

2005 until November 14, 2005. The 

September 30, 2005 final rule also 

extended the deadline for submitting 

public comments on the interim final 

rule from October 11, 2005 until 

November 14, 2005. This final rule 

further delays the effective date of 

certain provisions of the interim final 

rule from November 14, 2005 until 

January 31, 2006. This delay in effective 

date is necessary to provide additional 

time for EDA to consider comments 

received concerning certain provisions 

of the interim final rule, as well for EDA 

to address matters pertaining to the 

effective implementation of the interim 

final rule. Capitalized terms used but 

not otherwise defined in this final rule 

have the meanings ascribed to them in 

the interim final rule. 

DATES: The effective date of the 

following provisions of the interim final 

rule is delayed from November 14, 2005 

until January 31, 2006: (i) Section 

304.2(c)(2), pertaining to membership of 

a District Organization’s governing 

body; and (ii) Section 301.4, as the 

provisions of this section relate to 

Investment Rates for EDA Planning 

Investments. 

FOR FURTHER INFORMATION CONTACT: 

Hina Shaikh, Attorney Advisor, Office 

of Chief Counsel, Economic 

Development Administration, 

Department of Commerce, Room 7005, 

1401 Constitution Avenue, NW., 

Washington DC 20230; telephone: (202) 

482–4687. 

SUPPLEMENTARY INFORMATION: EDA 

published an interim final rule in the 

Federal Register (70 FR 47002) on 

August 11, 2005. The interim final rule 

reflects the amendments made to EDA’s 

authorizing statute, the Public Works 

and Economic Development Act of 1965 

(42 U.S.C. 3121 et seq.) (‘‘PWEDA’’), by 

the Economic Development 

Reauthorization Act of 2004 (Pub. L. 

108–373). In addition to tracking the 

statutory amendments to PWEDA, the 

interim final rule reflects EDA’s current 

practices and policies in administering 

its economic development programs 

that have evolved since the 

promulgation of EDA’s former 

regulations. The interim final rule also 

provides for a public comment period. 

On September 30, 2005, EDA 

published a final rule in the Federal 

Register (70 FR 57124) delaying the 

effective date of certain provisions in 

the interim final rule from October 1, 

2005 until November 14, 2005. The 

September 30, 2005 final rule also 

extended the deadline for submitting 

public comments on the interim final 

rule from October 11, 2005 until 

November 14, 2005. All other provisions 

of the interim final rule became effective 

on October 1, 2005. 

This final rule delays the effective 

date of the provisions specified in the 

DATES section pertaining to EDA’s 

Planning Investment Rates and District 

Organizations from November 14, 2005 

until January 31, 2006. This delay in 

effective date is necessary to provide 

additional time for EDA to consider 

comments received concerning certain 

provisions of the interim final rule, as 

well for EDA to address matters 

pertaining to the effective 

implementation of the interim final rule. 

Classification 

Prior notice and opportunity for 

public comment are not required for 

rules concerning public property, loans, 

grants, benefits, and contracts (5 U.S.C. 

553(a)(2)). Because prior notice and an 

opportunity for public comment are not 

required pursuant to 5 U.S.C. 553 or any 

other law, the analytical requirements of 

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

601 et seq.) are inapplicable. Therefore, 

a regulatory flexibility analysis has not 

been prepared. 

Executive Order No. 12866 

It has been determined that this final 

rule is not significant for purposes of 

Executive Order 12866. 

Congressional Review Act 

This final rule is not ‘‘major’’ under 

the Congressional Review Act (5 U.S.C. 

801 et seq.). 

Executive Order No. 13132 

Executive Order 13132 requires 

agencies to develop an accountable 

process to ensure ‘‘meaningful and 

timely input by State and local officials 

in the development of regulatory 

policies that have federalism 

implications.’’ ‘‘Policies that have 

federalism implications’’ is defined in 

Executive Order 13132 to include 

regulations that 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.’’ It has 

been determined that this final rule does 

not contain policies that have 

federalism implications. 

Dated: November 7, 2005. 

Benjamin Erulkar, 

Chief Counsel, Economic Development 

Administration. 

[FR Doc. 05–22546 Filed 11–10–05; 8:45 am] 

BILLING CODE 3510–24–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 25 

[Docket No. NM335; Special Conditions No. 

25–307–SC] 

Special Conditions: Cessna Model 650 

Airplanes; High-Intensity Radiated 

Fields (HIRF) 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Final special conditions; request 

for comments. 

SUMMARY: These special conditions are 

issued for Cessna Model 650 airplanes 

modified by Elliott Aviation Technical 

Product Development, Inc. These 

modified airplanes will have a novel or 

unusual design feature when compared 

to the state of technology envisioned in 

the airworthiness standards for 

transport category airplanes. The 

modification incorporates the 

installation of electronic flight display 

systems manufactured by Universal