[Federal Register Volume 67, Number 48 (Tuesday, March 12, 2002)]
[Proposed Rules]
[Pages 11057-11068]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-5613]


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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 67, No. 48 / Tuesday, March 12, 2002 / 
Proposed Rules  

[[Page 11057]]


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SMALL BUSINESS ADMINISTRATION

13 CFR Parts 121, 124, and 134

RIN 3245-AE92


Small Business Size Regulations; 8(a) Business Development/Small 
Disadvantaged Business Status Determinations; Rules of Procedure 
Governing Cases Before the Office of Hearings and Appeals

AGENCY: Small Business Administration.

ACTION: Proposed rule.

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SUMMARY: The Small Business Administration (SBA) proposes to amend its 
regulations governing proceedings before the Office of Hearings and 
Appeals (OHA). The regulation's last comprehensive revisions were in 
1996, followed by additional revisions in 1998 and 2000. The SBA also 
proposes to make conforming changes to several sections of the 
regulations governing the Small Business Size Determination program and 
the 8(a) Business Development (8(a) BD) program.
    The major goals of this proposed rule are to: Improve the appeals 
process by revising and clarifying procedures, particularly those on 
filing, service, and calculating deadlines that have proven to be 
``stumbling blocks'' causing additional litigation and delays; expedite 
certain procedures; conform the regulations governing proceedings 
before OHA to other regulations and procedures developed by case law 
and prevailing practice; and make plain language revisions.

DATES: Comments must be received on or before April 11, 2002.

ADDRESSES: Address your comments to Gloria E. Blazsik, Acting Assistant 
Administrator for Hearings and Appeals, 409 Third Street, SW, Suite 
5900, Washington, DC 20416 and electronic comments to [email protected].

Electronic Access and Filing

    You may submit comments and data by sending electronic mail (e-
mail) to: [email protected]. Submit comments as Microsoft Word 97 or as ASCII 
files avoiding the use of special characters and any form of 
encryption. Identify all comments and data in electronic form with the 
title, ``Comment on Proposed Rules--Part 134.'' You may file electronic 
comments on this proposed rule online at many Federal Depository 
Libraries.

Public Review of Comments

    Whether you comment on paper or electronically, your comments, 
including name, street address, or other contact information (such as 
e-mail address, facsimile, or phone number), will be available for 
public review at this address during regular business hours (8 a.m. to 
5 p.m.), Monday through Friday, except federal holidays. You may 
request confidentiality. If you want us to consider withholding your 
contact information from public review or from disclosure under the 
Freedom of Information Act, 5 U.S.C. 552, you must state this request 
at the beginning of your comment. We will honor requests for 
confidentiality, to the extent the law allows, on a case-by-case basis. 
If you are an organization or business, or identify yourself as a 
representative or official of an organization or business, we will make 
your entire submission available for public inspection.

FOR FURTHER INFORMATION CONTACT: Michael J. Wolter, Attorney Advisor, 
Office of Hearings and Appeals, at (202) 401-1420. If you use a 
telecommunications device for the deaf (TDD), you may call the Federal 
Information Relay Service at 1-800-877-8339, 24 hours per day, 7 days 
per week. (If you have any problem using this number, call Customer 
Service at 1-800-877-0996.)

SUPPLEMENTARY INFORMATION: The SBA proposes to revise part 134, the 
rules of procedure governing cases before the Office of Hearings and 
Appeals. The SBA last comprehensively revised the regulations in 1996, 
then made additional revisions in 1998 and 2000. See 61 FR 2682 
(January 29, 1996), 63 FR 35726 (June 30, 1998), 65 FR 57541 (September 
25, 2000). These proposed revisions would improve and clarify various 
procedures to make the OHA appeals process more efficient and more 
understandable to non-lawyers. The SBA also proposes to revise those 
sections of part 121, the Small Business Size Regulations, and part 
124, the 8(a) Business Development program, relating to OHA appeals.

Highlights of this Proposed Rule

    As discussed in detail in the Section-by-Section Analysis, the 
proposed rule would make the following major revisions to OHA's 
procedures:
     establish the start date for the period for appealing an 
SBA determination to OHA as when the petitioner receives the SBA 
determination, rather than when the SBA serves it (134.202(a));
     establish the date of filing as when OHA receives the 
submission, if no later than 5:00 p.m. eastern time (Sec. 134.204(b));
     establish the date of service as when the submission is 
faxed, mailed, personally delivered to the party served, or given over 
to a delivery service (Sec. 134.204(c));
     establish that, when a party appeals an SBA determination, 
the SBA's burden is reduced to a mere response rather than an answer 
(Sec. 134.206), and change other sections (specifically, Secs. 134.101, 
134.205(b), 134.206 heading, 134.207(d), redesignated 134.211(e), and 
134.406(d)) to conform to this new distinction;
     establish the start date for the period for filing the 
answer or response as when an appeal petition is filed, rather than the 
day it is served on the respondent (Sec. 134.206(a), (b));
     delete the provision denying an absolute right to appeal a 
size determination (Sec. 134.303);
     establish the start date for the 15-day or 30-day time 
period for filing a size appeal as when the appellant receives the size 
determination, rather than when the SBA serves it (Sec. 134.304(a)); 
and
     permit reconsideration of an initial or final decision of 
the Judge, on certain grounds, unless a statute or regulation otherwise 
prohibits it (Sec. 134.227(c)).
    To clarify and simplify OHA's procedures, the proposed rule would:
     reorganize and thoroughly revise the provisions on filing, 
service, and the certificate of service for simplicity and clarity 
(Secs. 134.204 and 134.304);
     reduce the number of rules governing the date of filing 
from three to one (Sec. 134.204(b));
    To expedite and streamline OHA procedures, the part 134 proposed 
rule would:

[[Page 11058]]

     reduce from 20 to 15 days the time for respondent to file 
a motion for a more definite statement (Sec. 134.205(a));
     require a party moving to amend or supplement its 
pleadings to file and serve its proposed amendment or supplemental 
pleading with its motion (Sec. 134.207);
     permit intervention by the SBA only until 15 days after 
the close of record and intervention by other persons only until the 
close of record, rather than until final decision (Sec. 134.210);
     require a party filing a routine motion to obtain and to 
state the other parties' positions on the motion (Sec. 134.211(b));
     require that the answer or response be filed within 20 
days of an order denying a motion to dismiss (Sec. 134.211(d));
     require a party seeking an extension of time to file its 
motion at least two days before the original deadline, except for good 
cause shown (Sec. 134.211(f));
     eliminate the need to file a settlement agreement if the 
parties file a joint motion to dismiss, unless the Judge has express 
authority under statute, regulation, or SOP to review the settlement 
agreement for legality and orders the agreement to be filed 
(Sec. 134.217); and
     require, in size and NAICS code appeals, that a party 
moving to submit new evidence file and serve its proposed new evidence 
with its motion (Sec. 134.308(a)(2)).
    To conform part 134 to other SBA regulations, OHA case law, or 
prevailing practices, the proposed rule would:
     amend the list of cases over which OHA has jurisdiction to 
include appeals of certain Small Disadvantaged Business determinations, 
certain decisions relating to Women's Business Centers and Small 
Business Development Centers, certain matters involving debarments and 
suspensions, and decisions of the Appropriate Management Official in 
SBA Employee Dispute Resolution Process cases (134.102);
     clarify, when there is incomplete service or an amended 
appeal petition, that the Judge, by order, will set the deadline for 
the response or answer (134.206(c));
     clarify, in a competitive 8(a) BD contract, that an 
adversely affected entity may appeal a NAICS code (Sec. 134.302(b));
     clarify that OHA does not issue advisory opinions 
(Sec. 134.303);
     clarify that the 10-day time period for filing a NAICS 
code appeal begins anew whenever the contracting officer issues an 
amendment affecting the NAICS code (134.304(a)(3)); and
     clarify that certain 8(a) BD appeal regulations 
(Secs. 134.402, 134.406(a), (b), and 134.407(a)) do not apply to 8(a) 
BD suspension appeals, to conform with Sec. 124.305 and OHA's case law, 
such as Matter of All American Meats, Inc., SBA No. BDP-107 (1998).
    These proposed revisions are discussed in more detail in the 
Section-by-Section Analysis.
    On May 15, 2000 (65 FR 30836), the SBA replaced the Standard 
Industrial Classification (SIC) system with the North American Industry 
Classification System (NAICS) as the basis for the SBA's small business 
size standards.
    This proposed rule would revise 13 CFR part 134 to conform it to 
the NAICS and part 121 by adding the definition for NAICS code to 
Sec. 134.101 and by replacing the acronym ``SIC,'' wherever it appears 
in part 134, with the acronym ``NAICS.'' The sections affected are: 
Sec. 134.102(k); redesignated Sec. 134.201(a); Subpart C heading; 
Sec. 134.301; Sec. 134.302 (introductory text), (b); Sec. 134.304(a) 
(introductory text), (a)(3); Sec. 134.305(a)(1), (a)(3), (c); 
redesignated Sec. 134.306(b); Sec. 134.310; Sec. 134.311; and 
Sec. 134.314.

Plain Language Revisions

    To further enhance readability of these regulations, the SBA 
proposes to make several ``plain language'' revisions. These include 
providing a simple fill-in-the-blanks sample format for certificates of 
service (Sec. 134.204(d)). SBA also has broken down some sections into 
designated paragraphs and reorganized or reworded others to aid public 
understanding.

Section-by-Section Analysis

    The following is a section-by-section analysis of each provision of 
SBA's regulations that would be affected by this proposed rule, other 
than the nomenclature change of SIC to NAICS, changes conforming to 
redesignated Sec. 134.206(b), and non-substantive improvements of 
language. OHA's current regulations and much of its case law are 
available on the Internet at www.sba.gov/oha.

Part 121

    Section 121.1009(h), on reopening size determinations, would be 
amended to conform to the revision, in proposed Sec. 121.1101, making 
appeal to OHA a matter of right, rather than a matter of OHA's 
discretion.
    Section 121.1101, on appeals of size determinations, would be 
amended to delete the provision that denies an absolute right to an OHA 
appeal from a size determination. Current Sec. 121.1101, issued in 
1996, makes an appeal of a size determination a matter of OHA's 
discretion, rather than an absolute right of a party adversely affected 
by a size determination. This provision has caused confusion on the 
issue of the exhaustion of administrative remedies, and so SBA proposes 
to revert to the pre-1996 rule. The proposed rule also would clarify, 
in the case of size determinations, that administrative remedies 
include an OHA appeal, and that judicial review may not be sought until 
after the OHA appeal has been exhausted.
    Section 121.1102, on appeals of NAICS code designations, also would 
be amended to include the clarifying language on administrative 
remedies.

Part 124

    Sections 124.206(c), 124.304(b), 124.304(e), 134.305(c), and 
124.515(i) contain the time periods (deadlines) for filing 8(a) appeals 
with OHA. Currently, these time periods begin when the SBA ``serves'' 
the determination being appealed. These service-based rules have caused 
much confusion and uncertainty in calculating the deadline for filing 
an 8(a) appeal, and no small amount of additional litigation to 
determine the date the determination has been ``served.'' The proposed 
rule would replace the service-based rules with receipt-based rules, so 
that all time periods for filing 8(a) appeals would begin when the 8(a) 
applicant or participant receives the determination being appealed.

Part 134, Subpart A

    Section 134.101, definitions, would be amended to add definitions 
for ``appeal petition'' and ``NAICS code''; to delete the definition 
for ``SIC code''; and to revise the existing definitions for ``party,'' 
``petition,'' and ``pleadings.'' Additionally, the amendments would 
clarify that the procuring activity contracting officer (CO) who issued 
a solicitation is a party to any appeal of the NAICS code; therefore, 
the OHA Judge may order the CO to file a response.
    Section 134.102, on jurisdiction, lists the types of cases in which 
OHA has authority to conduct proceedings, but omits some appeals 
mandated elsewhere. The proposed rule would add cases involving: (1) 
Certain Small Disadvantaged Business (SDB) certification and 
decertification determinations (subpart B of part 124); (2) certain 
decisions relating to Women's Business Centers and Small Business 
Development Centers (sections 21(1) and 29(h) of the Small Business

[[Page 11059]]

Act, 15 U.S.C. 648(1) and 656(i)); (3) certain matters involving 
debarments and suspensions (part 145); and (4) in SBA Employee Dispute 
Resolution Process (Employee Dispute) cases, the decision of the 
Appropriate Management Official (SBA's Standard Operating Procedure 
(SOP) 37 71 02). The proposed rule also would conform existing 
Sec. 134.102(d) with part 120, which grants OHA appeal rights not only 
to lenders, but also to other entities, such as pool assemblers, 
subject to SBA enforcement actions related to SBA loan programs.
    The proposed rule would delete the last sentence of current 
Sec. 134.103(b), to conform that regulation to proposed new 
Sec. 134.211(f), regarding motions to extend time.

Part 134, Subpart B

    Section 134.202, commencement of cases, contains the deadlines for 
commencing OHA litigation. The proposed rule would reorganize this 
section by listing separately cases that a party other than the SBA may 
commence by filing an appeal petition (Sec. 134.202(a)) and cases that 
the SBA may commence by issuing an order to show cause 
(Sec. 134.202(b), (c)).
    Proposed Sec. 134.202(a)(1) would set time limits for all cases 
commenced by appeal petition, except for debt collection cases, 
applications for fee awards, 8(a) program suspension cases, and SBA 
Employee Dispute cases, which would be contained in Sec. 134.202(a)(2)-
(a)(5), and for size and NAICS code appeals, which are contained in 
subpart C. Currently, the time for filing an appeal petition begins 
when the SBA ``serves'' the determination being appealed (service-based 
rule), except in debt collection cases, in which time starts when the 
petitioner receives the SBA's notice (receipt-based rule), and in size 
appeals, in which OHA has used a receipt-based rule since 1984.
    The service-based rule for determining the deadline for filing an 
appeal petition has caused unnecessary confusion and litigation. On the 
contrary, the receipt-based rule has had a long, successful track 
record. After careful consideration of both methods, SBA concludes the 
receipt-based rule is better and should extend to all appeals commenced 
by appeal petition.
    Proposed new Sec. 134.202(a)(5) would refer to SOP 37 71 02 
(available at www.sba.gov/library/soproom.html), which contains special 
procedures, including deadlines, governing Employee Dispute cases.
    Section 134.203, the petition, lists the general requirements for 
all appeal petitions. The proposed rule additionally would require the 
petitioner to provide its facsimile number, to facilitate service by 
facsimile; and to state when it received the determination being 
appealed, to help OHA determine timeliness.
    Proposed Sec. 134.203(a)(2) would clarify that an appeal petition 
must include a copy of the SBA determination. Proposed new 
Sec. 134.203(a)(6) would clarify that an appeal petition must include a 
certificate of service. Proposed new Sec. 134.203(a)(7) would require 
the petitioner in debt cases to state when it received the notice 
initiating the debt collection proceeding. Finally, proposed 
Sec. 134.203(b) would reference other requirements relating to 
particular types of appeal petitions located elsewhere in part 134 or 
in the applicable SBA program regulations.
    Section 134.204 contains the filing and service requirements for 
all pleadings and other submissions to OHA. The current rule has proven 
very confusing to litigants. Accordingly, the SBA proposes to 
reorganize the rule and to simplify certain procedures.
    Proposed Sec. 134.204(a) would state the acceptable methods of 
filing and service, with the proviso that the Judge may, for good 
cause, order filing or service by a particular method. These methods 
are first-class mail (including certified and registered mail), express 
mail, and priority mail; hand delivery; and facsimile. The generic term 
``delivery'' would include forms of non-mail delivery, such as: 
personal delivery by the person certifying service; or delivery by a 
messenger, courier service, or other commercial delivery service, such 
as United Parcel Service, Federal Express, or Airborne. Delivery does 
not include electronic mail.
    Proposed Sec. 134.204(b) and (b)(1), on filing, would define filing 
as receipt of pleadings and other submissions at OHA; establish the 
filing date as when OHA receives a submission, provided OHA receives it 
on or before 5:00 p.m. eastern time; and give OHA's suite, telephone, 
and facsimile numbers.
    Proposed Sec. 134.204(b)(2) would reduce from three to one the 
number of rules for determining the date an OHA submission is filed. 
Current Sec. 134.204(e) specifies the date of filing as the date of 
transmission if filed by facsimile; the date of postmark if filed by 
first-class mail; and the date of OHA's receipt if filed by express 
mail, personal delivery, or commercial delivery. Current 
Sec. 134.204(b)(2) requires filings by personal or commercial delivery 
to be made between 8:30 a.m. and 5:00 p.m. without reference to time 
zone.
    The proposed rule would set the filing date as when OHA receives a 
submission, regardless of the method used, if OHA receives it on or 
before 5:00 p.m. eastern time. Thus, proposed Sec. 134.204(b)(1) would 
change the current rules in two ways: (1) For filings by first-class 
mail, change the filing date from the postmark date to the receipt 
date; and (2) for filings by facsimile received at OHA after 5:00 p.m., 
change the filing date from that day to the next.
    Proposed Sec. 134.204(b)(3) would explain better the requirement, 
in current Sec. 134.204(c), to authenticate exhibits. Proposed 
Sec. 134.204(b)(4) would state when the Judge would not accept a copy 
of an exhibit instead of the original.
    Proposed Sec. 134.204(c), service (current Sec. 134.204(a), (e)), 
would define service; state the service requirement; state the rules 
for determining the service date; and, regarding the address for 
serving the SBA, refer to other subparts of part 134 or to other SBA 
regulations that might apply to particular types of appeals.
    As with the filing date, the current rules set the service date as 
the transmission date for service by facsimile; the postmark date for 
service by first-class mail; and the receipt date for service by 
express mail, personal delivery, or commercial delivery.
    Proposed Sec. 134.204(c)(2) would set the service date of a 
document as follows: for service by facsimile, when sent; for personal 
delivery by the person certifying service, when given to the party 
served; for commercial delivery, when given to the delivery service; 
and for service by mail, when mailed (postmarked). The proposed rule 
would treat all forms of mail consistently and retain the current 
rule's rebuttable presumption that a piece was mailed (and thus served) 
five days before its receipt, absent a postmark or other evidence of 
mailing date.
    Thus, proposed Sec. 134.204(c) would alter the current rules in two 
ways: (1) for service by Express Mail, change the service date from 
receipt date to postmark date; and (2) for service by commercial 
delivery service, change the service date from receipt date to the date 
the document is given to the delivery service.
    Proposed Sec. 134.204(d), certificate of service, would give 
greater detail and include a fill-in-the-blanks format.
    Current Sec. 134.204(e), on filing and service dates, would be 
eliminated as obsolete.
    Current Sec. 134.204(f), confidential information, would be 
redesignated as paragraph (e).

[[Page 11060]]

    Proposed Sec. 134.205(a), motion for a more definite statement, 
would reduce the respondent's time period for filing this motion from 
20 to 15 days, the same time period that existed before March 1, 1996. 
See 13 CFR 134.11(c) (1995). This revision would help all parties to 
clarify and join the issues in an appeal at the earliest possible time.
    Proposed Sec. 134.206, the answer, would be revised to include two 
separate procedures. If the case involves an appeal from an SBA 
determination, the respondent's pleading would be called the response, 
and proposed Sec. 134.206(b), (c), and (d) would apply. In all other 
cases (including debt collection cases and cases commenced by an order 
to show cause), the respondent's pleading would continue to be called 
the answer, and proposed Sec. 134.206(a), (c), and (d) would apply. 
Proposed Sec. 134.206(a) would refer to SOP 37 71 02 (available at 
www.sba.gov/library/soproom.html) for the deadlines that apply to 
Employee Dispute cases.
    Proposed Sec. 134.206(a), on the answer, would be revised to 
include the substance of current Sec. 134.206(a), (b), and (c); 
however, the time period (deadline) for filing the answer would run 
from the day the appeal petition is filed, rather than the day it is 
served on the respondent. In cases commenced by an order to show cause, 
the time period for filing the answer would continue to run from the 
time SBA served the order to show cause.
    Proposed Sec. 134.206(b), on the response, would conform to current 
practice by requiring OHA to inform all known parties of the date an 
appeal petition was filed. The deadline for and content of the response 
would be the same as for the answer, except that the respondent would 
not need to respond to the factual allegations in the petition and 
would not admit any allegation by failing to deny it, but must set 
forth the respondent's positions in support of the SBA determination.
    Proposed Sec. 134.206(c) would provide, in the event of incomplete 
service or an amended order to show cause or appeal petition, for the 
Judge to order the deadline for filing the answer or the response. In 
the case of incomplete service, that deadline would not be less than 45 
days after petitioner serves respondent. This provision would conform 
this section to OHA's current practice under Sec. 134.103(b).
    Current Sec. 134.206(d) and (e) would be combined into proposed 
Sec. 134.206(d), and rewritten more concisely. The scope of the 
provision for the filing of the administrative record upon a default, 
which currently applies only to 8(a) cases, would be expanded to 
include any case in which the SBA is required to file an administrative 
record.
    Current Sec. 134.207, amendments and supplemental pleadings, would 
be revised, in Sec. 134.207(a) and (b), to include the additional 
requirement that a party moving to amend or supplement its pleadings 
must file and serve its proposed amendment or supplemental pleading 
along with its motion. The proposed rule would conform these procedures 
to prevailing practices.
    Proposed Sec. 134.208, on representation before OHA, would be 
revised, in Sec. 134.208(a), to clarify that an officer of any type of 
entity except a partnership may represent that party.
    Proposed Sec. 134.210, intervention, would be revised to limit the 
time in which additional parties may intervene. Current 
Sec. 134.210(a), on intervention by the SBA, and current 
Sec. 134.210(b), on intervention by interested parties, permit 
intervention at any time until the Judge issues a final decision. The 
proposed rule would permit intervention by the SBA only until 15 days 
after close of record or until the issuance of a decision, whichever 
comes first, and intervention by other parties only until the close of 
record. Because intervention can change the entire course of a case, 
the public interest in conservation of judicial resources and 
efficient, speedy resolution of the issues mandates aligning the 
parties in a case earlier, rather than later.
    Proposed Sec. 134.210(b) also would limit the definition of 
``interested person'' to include only those individuals, business 
entities, or government agencies that have a direct stake in the 
outcome of the appeal. Thus, this proposed rule would permit only a 
small group of persons to intervene, in contrast to proposed 
Sec. 134.309(a), which would permit any person with a ``general 
interest'' in an issue raised by the appeal to respond to the appeal. 
Proposed Sec. 134.210(b) also would clarify that the Judge may grant 
leave to intervene upon such terms as he or she deems appropriate.
    Current Sec. 134.211, motions, would be revised substantively in 
three places. Proposed Sec. 134.211(b) would require the moving party, 
in most motions, to obtain and to state, in the motion itself, the 
other parties' positions on the motion. This change would eliminate ex 
parte telephone calls by OHA staff to ascertain the parties' positions 
and, for unopposed motions, the need to wait out the 20-day response 
period.
    Current Sec. 134.211(d), now entitled ``Stay,'' would be renamed 
``Motion to dismiss.'' It would explicitly allow filing of a motion to 
dismiss any time before the decision is issued. It also would require 
that the answer or response, if not already filed, be filed within 20 
days after an order denying the motion.
    Proposed new Sec. 134.211(f) would establish a special procedure 
for motions to extend time. It would require the party seeking to 
extend a filing deadline to file its motion at least two days before 
the original deadline. This proposed rule would prevent the awkward 
situation in which a motion to extend time is filed just before the 
original deadline, and the Judge is unable to rule on it until the next 
day, rendering the moving party in technical default. The proposed rule 
also would provide for a good-cause exception to the two-day time 
period.
    Proposed Sec. 134.212, summary decision, would include a new 
paragraph (e) clarifying, in a case involving an appeal petition from a 
non-8(a) SBA determination based on two or more grounds, that the SBA 
could move for a summary decision dismissing the appeal based on one or 
more grounds. If the Judge finds, as to any such ground, no genuine 
issue of material fact and that the SBA is entitled to judgment as a 
matter of law, the Judge would grant the motion and dismiss the appeal.
    Proposed Sec. 134.214, on subpoenas, would clarify that subpoenas 
are not authorized for proceedings relating to internal Agency 
determinations, such as Employee Disputes.
    Current Sec. 134.217, settlement, would be revised to simplify the 
settlement procedure. In contrast to the current requirement to submit 
the entire settlement agreement, the proposed rule would require only 
the filing of a joint motion to dismiss the appeal; however, when 
statute, SBA regulation, or SBA SOP expressly authorizes the Judge to 
review a settlement agreement for legality, the Judge may order the 
settlement agreement to be submitted.
    Current Sec. 134.226, the decision, specifies a deadline for 
rendering a decision only for debt cases. The proposed rule would add a 
sentence clarifying that applicable SBA program regulations or other 
subparts of part 134 might contain time limits for rendering decisions 
in other types of cases.
    Current Sec. 134.227, finality of decisions, would be reorganized 
with a new provision authorizing reconsideration of an initial or final 
decision of the Judge. Proposed Sec. 134.227(a), initial decisions 
(current Sec. 134.227(b)), would restate the general rule that, unless 
otherwise provided in part 134, all OHA decisions are initial 
decisions. Further, all initial decisions become final decisions 30 
days later,

[[Page 11061]]

absent either a request for review under Sec. 134.228(a) or a request 
for reconsideration under Sec. 134.227(c).
    Proposed Sec. 134.227(b), final decisions (current 
Sec. 134.227(a)), would list the types of appeal proceedings in which 
OHA's decision on the merits is SBA's final decision upon issuance. The 
list would include debt cases, 8(a) BD program appeals, size appeals, 
NAICS code appeals, and any other proceeding for which either the 
applicable program regulations or another subpart of part 134 provides 
for a final decision.
    Proposed Sec. 134.227(c), reconsideration, would be new. It would 
state a general rule that any initial or final decision of the Judge 
may be reconsidered unless a statute, the applicable program 
regulations, or part 134 specifically prohibits reconsideration. The 
proposed rule also would specify that a request for reconsideration 
must be filed with the Judge within 20 days after service of the 
decision, and must demonstrate a clear showing of an error of fact or 
law material to the decision. The proposed rule also would permit an 
OHA Judge to reconsider a decision of a Judge on his or her own 
initiative. This proposed rule would restore the Judge's authority, 
which existed between 1990 and 1996 in size cases, to reconsider a 
decision of a Judge to correct a clear error. See 13 CFR 121.1721 
(1995).
    Current Sec. 134.228(a) would be amended to clarify that a party 
could seek review by the Administrator of a Judge's initial decision, 
whether or not the decision had been reconsidered.
    Current Sec. 134.229, termination of jurisdiction, would be revised 
to state that, except where a case is being reconsidered or has been 
remanded, OHA's jurisdiction terminates on issuance of a decision 
resolving all material issues. This revision would conform this 
regulation to proposed new Sec. 134.227(c).

Part 134, Subpart C

    Current Sec. 134.302, who may appeal, would be revised to permit an 
entity that is adversely affected by the NAICS code in a competitive 
8(a) BD contract to appeal that NAICS code. This proposed rule would 
conform this section to the 1998 revision to Sec. 121.1103(a), which 
permits only the Associate Administrator for 8(a) Business Development 
(AA/8(a)BD) to appeal the NAICS code for an 8(a) sole source contract. 
See 63 FR 35739.
    Current Sec. 134.303, no absolute right to an appeal from a size 
determination, would be deleted to conform to proposed Sec. 121.1101. 
In its place, proposed new Sec. 134.303, advisory opinions, would 
clarify that OHA does not issue advisory opinions, including decisions 
on issues that are or have become moot. This proposed rule would codify 
long-standing OHA case law, including Size Appeal of Lightcom 
International, Inc., SBA No. SIZ-4118 (1995).
    Current Sec. 134.304, on commencement of size and NAICS code 
appeals, sets the time period for filing size and NAICS code appeals. 
Section 134.304(a)(1), the ``15-day rule,'' applies to appeals of size 
determinations in pending procurements or sales. Section 134.304(a)(2), 
the ``30-day rule,'' applies to appeals of size determinations where 
there is no pending procurement or sale. The current rules, in effect 
since April 1, 1996 (61 FR 2687), begin both time periods when the SBA 
served its size determination. The prior rules, in effect 1984-1996, 
began both time periods when the appellant received the size 
determination. See 13 CFR 121.1705(a)(1), (a)(2) (1995).
    The proposed rules would restore the prior method of determining 
when the time periods for filing size appeal petitions begin. Thus, the 
15-day or 30-day time period would begin on the appellant's receipt, 
rather than SBA's service, of the size determination.
    Under the prior, receipt-based rules, OHA determined when the 
filing time period began (and thus whether an appeal was timely) using 
the return receipt card (Postal Service Form 3811) contained in the 
Area Office file. Under the current, service-based rules, OHA needs the 
postmark on the mailing envelope as evidence of the date of service. 
The mailing envelope, however, is not in the Area Office file; it 
either has been destroyed or is in the appellant's hands. Thus, OHA 
cannot determine when the filing time period began and, thus, whether a 
size appeal is timely, without first requiring proof of timeliness and 
then adjudicating that issue. These additional steps cause delays. To 
avoid this problem, OHA Judges consistently have used the prior, 
receipt-based method as a ``rule of convenience.'' See Size Appeal of 
Prose, Inc., SBA No. SIZ-4196 (1996); Size Appeal of DTH Management JV, 
SBA No. SIZ-4376 (1999). The proposed rule would conform the regulation 
to this long-standing practice.
    Current Sec. 134.304(a)(3), on NAICS code appeals, would be revised 
to clarify that the 10-day time period for filing an appeal begins anew 
whenever the procuring activity contracting officer issues an amendment 
affecting the NAICS code. This revision would conform the regulation to 
OHA's long-standing case law. See SIC Appeal of Madison Services, Inc., 
SBA No. SIC-4223 (1996).
    Current Sec. 134.305, the appeal petition, lists the requirements 
for appeal petitions in size and NAICS code appeals. Proposed 
Sec. 134.305(a)(4) would also require the appellant's facsimile number, 
thus facilitating service by facsimile. Proposed Sec. 134.305(d), on 
certificate of service, would contain a reference to Sec. 134.204(d), 
which describes the general requirements for certificates of service.
    Proposed Sec. 134.306, transmission of the case file and 
solicitation, would clarify that in both size and NAICS code appeals, 
the procuring activity contracting officer must send OHA a paper copy 
of the original solicitation and all amendments. This proposed rule 
would ensure that OHA receives the complete solicitation and eliminate 
the problem of incompatible electronic formats.
    Current Sec. 134.308, on new evidence, would be revised to include 
the additional requirement that a party moving to submit new evidence 
in an appeal must file and serve its proposed new evidence along with 
its motion. The proposed rule would conform the regulation to 
prevailing practices.
    Section 134.309, response to an appeal petition, would be revised 
to broaden the category of persons who may respond to an appeal and to 
conform the time limits for responses to long-standing OHA practices. 
Current Sec. 134.309(a) permits only ``interested persons,'' that is, 
those who are or could be parties, to file a response to an appeal. 
Proposed Sec. 134.309(a) would permit, besides ``interested persons,'' 
any person who has a ``general interest'' in an appeal to file a 
response. Thus, this revision would remove the regulatory barrier to 
responses from such persons; however, the Judge would have to determine 
whether a particular response is relevant before admitting it into the 
record.
    Current Sec. 134.309(b) permits a respondent to file a response 
within 10 days after service of the appeal petition, unless the Judge 
otherwise specifies. Consistent with OHA's long-standing practices, the 
proposed rule would require OHA to issue a Notice and Order informing 
the parties when OHA received the appeal, setting the close of record 
as 15 days after service of the Notice and Order, and requiring any 
responses to the appeal to be received at OHA no later than the close 
of record.
    Current Sec. 134.313, applicability of subpart B provisions, would 
be revised to state, simply, that the provisions of subpart B, OHA's 
general rules of practice, apply to size and NAICS code

[[Page 11062]]

appeals, except where inconsistent. Current Sec. 134.313 lists specific 
sections of subpart B; however, practice has shown this list to be 
incomplete and confusing. The Judge should be able to determine when a 
particular subpart B provision conflicts with the subpart C regulations 
governing size or NAICS code appeals.
    Section 134.316, the decision, would be revised to clarify that the 
Area Office's size determination remains in effect if OHA dismisses the 
appeal from it. The proposed rule would clarify that the decision in a 
NAICS code appeal may not be reconsidered.
    Current Sec. 134.317, termination of jurisdiction, would be deleted 
as unnecessary and current Sec. 134.318, return of the case file, would 
be redesignated as Sec. 134.317.

Part 134, Subpart D

    Current Sec. 134.402, appeal petition, conflicts with 
Sec. 124.305(d), which places the burden in suspension appeals on the 
SBA, not the petitioner. Revised Sec. 134.402 would clarify that it 
does not apply to suspension appeals.
    Current Sec. 134.403, on service, would be revised to delete 
Sec. 134.403(a)(3), which is unnecessary.
    Current Sec. 134.406(a) limits review to the written administrative 
record, but Sec. 124.305(c) contemplates a hearing in a suspension 
appeal. Current Sec. 134.406(b) limits review to the issue of whether 
the SBA's determination is arbitrary, capricious, or contrary to law, 
but Sec. 124.305(d) establishes the issue in suspension appeals as 
whether the SBA has produced adequate evidence to show that suspension 
is necessary to protect the Government's interest. Revised 
Sec. 134.406(a) and (b) would clarify that they do not apply to 
suspension appeals. Proposed Sec. 134.406(c) would specify that the 
administrative record also must include documents relied upon by SBA 
officials who made recommendations regarding the SBA determination and 
clarify that the administrative record submitted by SBA would be deemed 
complete unless the petitioner objects to its completeness or the Judge 
finds the record insufficiently complete, under Sec. 134.406(e), to 
permit a decision on the merits. Current Sec. 134.406(e) permits the 
Judge to order a remand to the SBA if, due to the absence of the 
reasons upon which the SBA determination was based, the administrative 
record is insufficiently complete to decide whether the SBA 
determination is arbitrary, capricious, or contrary to law. Then the 
SBA responds to the order, and the Judge decides the case. Proposed 
Sec. 134.406(e) would state that the SBA, when responding to the remand 
order, need not supplement the administrative record except to supply 
any reasons for the determination or any documents it received or 
considered in connection with any reconsideration during the remand 
period. If, however, the Judge found, from the SBA's response to the 
remand order, that the supplemented record still did not contain the 
reasons upon which the determination was based, the Judge could not 
require the SBA to further supplement the administrative record and 
thus provide the SBA another opportunity to provide the reasons upon 
which the determination was based, but must find the SBA determination 
arbitrary, capricious, or contrary to law. However, nothing in the 
rules prevents the SBA from filing, or the Judge from granting, a 
meritorious motion to dismiss on other grounds. Finally, proposed 
Sec. 134.406(e) would permit the Judge to set a reasonable period for 
remand, because the current period of 10 working days has proven to be 
unreasonable.
    Current Sec. 134.407(a) limits the admission of evidence beyond 
that in the written administrative record, but Sec. 124.305(c) 
contemplates a hearing in suspension appeals. Revised Sec. 134.407(a) 
would clarify that it does not apply to suspension appeals.
    Section 134.212 allows motions for summary decision in all cases 
under this part. Proposed Sec. 134.408(a) merely refers to the general 
provisions of Sec. 134.212. Proposed Sec. 134.408(b), summary decision 
based on fewer than all grounds, would extend the general provision for 
summary decision on fewer than all grounds (proposed Sec. 134.212(e)). 
If the SBA moves for summary decision on one or more grounds and the 
Judge finds no genuine issue of material fact as to whether the SBA 
determination meets the required standard of review and that the SBA is 
entitled to judgment as a matter of law, the Judge would grant the 
motion and dismiss the appeal.
    Current Sec. 134.408, decision on appeal, would be redesignated as 
Sec. 134.409 and revised to delete the second sentence of paragraph 
(b), which is unnecessary. Compliance With the Regulatory Flexibility 
Act (5 U.S.C. 601-612), the Paperwork Reduction Act (44 U.S.C. Ch. 35), 
and Executive Orders 12866, 12988, and 13132
    SBA has determined that this proposed rule would not have a 
significant economic impact on a substantial number of small entities 
within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601-612. 
The proposed rule would revise some of the rules of practice for SBA 
administrative proceedings to simplify those rules and to make them 
easier for the few small businesses that engage in administrative 
litigation with the SBA to understand and to use. Accordingly, the 
proposed rule is purely procedural and would not affect the operations 
of small entities.
    For purposes of the Paperwork Reduction Act (44 U.S.C. ch. 35), SBA 
certifies that this proposed rule would impose no new reporting or 
record-keeping requirements on firms. This proposed rule would make 
revisions to certain procedures for administrative litigation, and 
those revisions would not necessitate any additional reports to SBA and 
would not require the maintenance of any additional records beyond 
those that firms currently make or maintain.
    OMB has determined that this proposed rule is not a ``significant'' 
regulatory action within the meaning of Executive Order 12866. The 
proposed rule is merely procedural and, therefore, it would not have an 
annual economic effect of $100 million or more, and it would have no 
adverse effect on any sector of the economy or on State, local, or 
tribal governments or communities.
    For purposes of Executive Order 12988, SBA certifies that it has 
drafted this proposed rule, to the extent practicable, in accordance 
with the standards set forth in section 3 of that Order. This proposed 
action does not have retroactive or preemptive action.
    For purposes of Executive Order 13132, SBA certifies that this 
proposed rule would have no federalism implications warranting the 
preparation of a Federalism Assessment.

List of Subjects

13 CFR Part 121

    Government procurement, government property, Grant programs--
business, Individuals with disabilities, Loan programs--business, Small 
businesses.

13 CFR Part 124

    Government procurement, Hawaiian Natives, Minority businesses, 
Reporting and recordkeeping requirements, Technical assistance, and 
Tribally owned concerns.

13 CFR Part 134

    Administrative practice and procedure, Organization and functions 
(Government agencies).
    Accordingly, for the reasons stated in the preamble, SBA proposes 
to amend parts 121, 124, and 134 of Title 13, Code of Federal 
Regulations (CFR) as follows:

[[Page 11063]]

PART 121--[AMENDED]

    1. The authority citation for part 121 continues to read as 
follows:

    Authority: 15 U.S.C. 632(a), 634(b)(6), 637(a), 644(c), and 
662(5); and Sec. 304, Pub. L. 103-403, 108 Stat. 4175, 4188.

    2. In Sec. 121.1009, revise paragraph (h) to read as follows:


Sec. 121.1009  What are the procedures for making the size 
determination?

* * * * *
    (h) Limited reopening of size determinations. In cases where the 
size determination contains clear administrative error or a clear 
mistake of fact, SBA may, in its sole discretion, reopen the size 
determination to correct the error or mistake, provided no appeal has 
been filed with OHA.
    3. Revise Sec. 121.1101 to read as follows:


Sec. 121.1101  Are formal size determinations subject to appeal?

    A formal size determination made by a Government Contracting Area 
Office or by a Disaster Area Office may be appealed to OHA. The 
procedures governing OHA appeals are set forth in part 134 of this 
chapter. The OHA appeal is an administrative remedy that must be 
exhausted before judicial review of a formal size determination may be 
sought in a court.
    4. Revise Sec. 121.1102 to read as follows:


Sec. 121.1102  Are NAICS code designations subject to appeal?

    A NAICS code designation made by a procuring activity contracting 
officer may be appealed to OHA. The procedures governing OHA appeals 
are set forth in part 134 of this chapter. The OHA appeal is an 
administrative remedy that must be exhausted before judicial review of 
a NAICS code designation may be sought in a court.

PART 124

    5. The authority citation for part 124 continues to read as 
follows:

    Authority: 15 U.S.C. 634(b)(6), 636(j), 637(a), 637(d) and Pub. 
L. 99-661, Pub. L. 100-656, sec. 1207, Pub. L. 101-37, Pub. L. 101-
574, and 42 U.S.C. 9815.
    6. In Sec. 124.206, revise paragraph (c) to read as follows:


Sec. 124.206  What appeal rights are available to an applicant that has 
been denied admission?

* * * * *
    (c) The applicant may initiate an appeal by filing a petition in 
accordance with part 134 of this title with OHA within 45 days after 
the applicant receives the Agency decision.
* * * * *
    7. Amend Sec. 124.304 as follows:
    a. Revise the second sentence of paragraph (b) and remove the last 
sentence; and
    b. Revise the last sentence of paragraph (e).
    The revisions read as follows:


Sec. 124.304  What are the procedures for early graduation and 
termination?

* * * * *
    (b) * * * The Letter of Intent to Terminate or Graduate Early will 
set forth the specific facts and reasons for SBA's findings, and will 
notify the concern that it has 30 days from the date it receives the 
letter to submit a written response to SBA explaining why the proposed 
ground(s) should not justify termination or early graduation.
* * * * *
    (e) * * * If a Participant does not appeal a Notification of Early 
Graduation or Termination within 45 days after the Participant receives 
the Notification, the decision of the AA/8(a)BD is the final agency 
decision effective on the date the appeal right expired.
* * * * *
    8. In Sec. 124.305, revise the first sentence of paragraph (c) to 
read as follows:


Sec. 124.305  What is suspension and how is a Participant suspended 
from the 8(a) BD program?

* * * * *
    (c) The applicant concern may appeal a Notice of Suspension by 
filing a petition in accordance with part 134 of this title with OHA 
within 45 days after the concern receives the Notice of Suspension 
pursuant to paragraph (b) of this section. * * *
* * * * *
    9. In Sec. 124.515, revise paragraph (i) to read as follows:


Sec. 124.515  Can a Participant change its ownership or control and 
continue to perform an 8(a) contract, and can it transfer performance 
to another firm?

* * * * *
    (i) The 8(a) contractor may appeal SBA's denial of a waiver request 
by filing a petition with OHA pursuant to part 134 of this title within 
45 days after the contractor receives the Administrator's decision.

PART 134

    10. The authority citation for part 134 is revised to read as 
follows:

    Authority: 5 U.S.C. 504; 15 U.S.C. 632, 634(b)(6), 637(a), 
648(l), 656(i), and 687(c); E.O. 12549, 51 FR 6370.

    11. Amend Sec. 134.101 as follows:
    a. Add new definitions for ``Appeal petition'' and ``NAICS code'' 
in alphabetical order;
    b. Revise the definitions for ``Party,'' ``Petition,'' and 
``Pleading'; and
    c. Remove the definition for ``SIC code.''
    The revisions and additions read as follows:


Sec. 134.101  Definitions.

* * * * *
    Appeal petition has the same meaning as petition.
* * * * *
    NAICS code means North American Industry Classification System 
code.
* * * * *
    Party means the petitioner, appellant, respondent, or intervenor, 
and the contracting officer in a NAICS code appeal.
* * * * *
    Petition (or appeal petition) means a written complaint, a written 
appeal from an SBA determination, or a written request for the 
initiation of proceedings before OHA.
    Pleading means a petition, an order to show cause commencing a 
case, an appeal petition, an answer, a response, or any amendment or 
supplement to those documents.
* * * * *
    12. Amend Sec. 134.102 as follows:
    a. Revise paragraph (d);
    b. In paragraph (k), remove the acronym ``SIC'' and replace it with 
the acronym ``NAICS''; and
    c. In paragraph (m), delete the last word ``and''; redesignate 
existing paragraph (n) as paragraph (r); and add new paragraphs (n) 
through (q).
    The revisions and additions read as follows:


Sec. 134.102  Jurisdiction of OHA.

* * * * *
    (d) The eligibility of any bank or non-bank lender to continue to 
participate in SBA loan programs under the Act and part 120 of this 
chapter, or to do so with preferred or certified status, and any other 
appeal that is specifically authorized by part 120 of this chapter;
* * * * *
    (n) Appeals from the following small disadvantaged business (SDB) 
determinations under part 124 of this chapter:
    (1) SBA's determination that an applicant firm does not qualify for 
certification, or that a certified SDB no longer qualifies for the 
program; and

[[Page 11064]]

    (2) A Private Certifier's ownership and control determination made 
on a firm's application for certification;
    (o) The suspension, termination, or non-renewal of cooperative 
agreements with Women's Business Centers and Small Business Development 
Centers under the Act and part 130 of this chapter;
    (p) Certain matters involving debarments and suspensions under part 
145 of this chapter;
    (q) The decision of the Appropriate Management Official in SBA 
Employee Dispute Resolution Process cases (Employee Disputes) under 
Standard Operating Procedure 37 71 02 (available at http://www.sba.gov); and
* * * * *


Sec. 134.103  [Amended]

    13. In Sec. 134.103, paragraph (b), remove the last sentence.
    14. Amend Sec. 134.201 as follows:
    a. Designate the first two sentences of the existing undesignated 
text as paragraph (a);
    b. Designate the last sentence of the existing undesignated text as 
paragraph (b); and
    c. In the first sentence of redesignated paragraph (a), remove the 
acronym ``SIC'' and add in its place the acronym ``NAICS.''
    15. Revise Sec. 134.202 to read as follows:


Sec. 134.202  Commencement of cases.

    (a) A party other than the SBA may commence a case by filing a 
written petition within the following time periods:
    (1) Except as provided by paragraphs (a)(2) through (a)(5) of this 
section, no later than 45 days from the date of receipt of the SBA 
action or determination to which the petition relates;
    (2) In debt collection proceedings under part 140 of this chapter, 
no later than 15 days after receipt of a notice of indebtedness and 
intention to collect such debt by salary or administrative offset;
    (3) In applications for an award of fees pursuant to subpart E of 
this part, no later than 30 days after the decision to which it applies 
becomes final;
    (4) For 8(a) program suspension proceedings, see Sec. 124.305 of 
this chapter;
    (5) For SBA Employee Disputes, see Standard Operating Procedure 37 
71 02, available at www.sba.gov/library/soproom.html.
    (b) The SBA may commence a case by issuing to the respondent an 
appropriate written order to show cause and filing the order to show 
cause with OHA.
    (c) Cases concerning Small Business Investment Company license 
suspensions and revocations and cease and desist orders must be 
commenced with an order to show cause containing a statement of the 
matters of fact and law asserted by the SBA, the legal authority and 
jurisdiction under which a hearing is to be held, a statement that a 
hearing will be held, and the time and place for the hearing.
    16. Revise Sec. 134.203 to read as follows:


Sec. 134.203  The petition.

    (a) A petition must contain the following:
    (1) The basis of OHA's jurisdiction;
    (2) A copy of the SBA determination being appealed, if applicable, 
and date received;
    (3) A clear and concise statement of the factual basis of the case;
    (4) The relief being sought;
    (5) The name, address, telephone number, facsimile number, and 
signature of the petitioner or its attorney;
    (6) A certificate of service (see Sec. 134.204(d)); and
    (7) In a debt collection case, a statement showing when the 
petitioner received the SBA notice initiating the debt collection 
proceeding (see Sec. 140.3 of this chapter).
    (b) A petition also must contain additional information or 
documents as required by the applicable program regulations or by other 
subparts of this part 134. For SBA Employee Disputes, see Standard 
Operating Procedure 37 71 02.
    (c) A petition which does not contain all of the information 
required by paragraphs (a) and (b) of this section may be dismissed, 
with or without prejudice, at the Judge's own initiative, or upon 
motion of the respondent.
    17. Amend Sec. 134.204 as follows:
    a. Revise the heading of the section;
    b. Revise paragraphs (a) through (d); and
    c. Remove paragraph (e) and redesignate existing paragraph (f) as 
paragraph (e).
    The revisions read as follows:


Sec. 134.204  Filing and service requirements.

    (a) Methods of filing and service. Pleadings or other submissions 
must be filed and served by mail, delivery, or facsimile. Mail includes 
first class (including certified and registered), express, and priority 
mail. For good cause, the Judge may order that filing or service be 
effected by one of these methods.
    (b) Filing. Filing is the receipt of pleadings and other 
submissions at OHA.
    (1) OHA accepts filings between the hours of 8:30 a.m. and 5:00 
p.m. eastern time at the following address: Office of Hearings and 
Appeals, Small Business Administration, 409 Third Street, SW., Suite 
5900, Washington, DC 20416. OHA's telephone number is (202) 401-8203. 
The number for OHA's facsimile machine is (202) 205-7059.
    (2) The date of filing for pleadings and other submissions filed by 
mail, delivery, or facsimile is the date the filing is received at OHA. 
Any filing received at OHA after 5:00 p.m. eastern time is considered 
filed as of the next day.
    (3) Exhibits. An exhibit, whether an original or a copy, must be 
authenticated or identified to be what it purports to be.
    (4) Copies. No extra copies of pleadings or other submissions need 
be filed. If a document is offered as an exhibit, a copy of the 
document will be accepted by the Judge unless:
    (i) A genuine question is raised as to whether it is a true and 
accurate copy or
    (ii) It would be unfair, under the circumstances, to admit the copy 
instead of the original.
    (c) Service. Service is the mailing, delivery, or facsimile to all 
other parties of a copy of each pleading or other submission filed with 
OHA.
    (1) Complete copies of all pleadings and other submissions filed 
with OHA must be served upon all other parties or, if represented, 
their authorized representatives or their attorneys, at their record 
addresses.
    (2) The date of service is as follows: for facsimile, the date the 
facsimile is sent; for personal delivery by the party, its employee, or 
its attorney, the date the document is given to the party served; for 
commercial delivery, the date the document is given to the delivery 
service; for mail, the date of mailing. The date of mailing is the date 
of a U.S. Postal Service postmark or any other proof of mailing. If 
there is insufficient proof of mailing, there is a rebuttable 
presumption that the mailing was made five days before receipt.
    (3) If the SBA is a party, the SBA must be served, as required by 
the applicable program regulations or by other subparts of this part 
134. If the SBA office for service is not specified elsewhere, serve: 
Office of General Counsel, Small Business Administration, 409 Third 
Street, SW., Washington, DC 20416. For SBA Employee Disputes, see 
Standard Operating Procedure 37 71 02.
    (d) Certificate of service. A certificate of service shows how, 
when, and to whom service was made. Every pleading and other submission 
filed with OHA

[[Page 11065]]

and served on the other parties must include a certificate of service. 
The certificate should state: ``I certify that on [date], I caused the 
foregoing document to be served by [either ``placing a copy in the 
mail,'' ``sending a copy by facsimile,'' ``personally delivering a 
copy,'' or ``giving a copy to a delivery service,''] upon the 
following: [list name, address, telephone number, and facsimile number 
of each party served].'' The certificate must be signed and include the 
typed name and title of the individual serving the pleading or other 
submission.
* * * * *
    18. Revise Sec. 134.205 to read as follows:


Sec. 134.205  Motion for a more definite statement.

    (a) Procedure. No later than 15 days after service of the petition 
or order to show cause, the respondent may file and serve a motion 
requesting a more definite statement of particular allegations in the 
petition.
    (b) Stay. The filing and service of a motion for a more definite 
statement stays the time for filing and serving an answer or response. 
The Judge will establish the time for filing and serving an answer or 
response.
    19. Revise Sec. 134.206 to read as follows:


Sec. 134.206  The answer or response.

    (a)(1) Except in a case involving a petition appealing from an SBA 
determination, a respondent must file and serve an answer within 45 
days after the filing of a petition or the service of an order to show 
cause, except that in debt collection cases, answers are due within 30 
days. For SBA Employee Disputes, see Standard Operating Procedure 37 71 
02, available at www.sba.gov/library/soproom.html.
    (2) The answer must contain the following:
    (i) An admission or denial of each of the factual allegations 
contained in the petition or order to show cause, or a statement that 
the respondent denies knowledge or information sufficient to determine 
the truth of a particular allegation;
    (ii) Any affirmative defenses; and
    (iii) The name, address, telephone number, facsimile number, and 
signature of the respondent or its attorney.
    (3) Allegations in the petition or order to show cause which are 
not answered in accordance with paragraph (a)(2)(i) of this section 
will be deemed admitted unless injustice would occur.
    (b) Upon the filing of a petition appealing from an SBA 
determination, the Judge or the AA/OHA will issue an order informing 
all known parties of the date the appeal was filed. The respondent must 
file and serve a response to such a petition within 45 days after the 
filing of such a petition. The response need not admit or deny the 
allegations in the petition but shall set forth the respondent's 
positions in support of the SBA determination. The response must also 
set forth the name, address, telephone number, facsimile number, and 
signature of the respondent or its attorney.
    (c) If a petition or order to show cause is amended or if 
respondent is not properly served, the Judge will order the time to 
file an answer or response extended and will specify the date such 
answer or response is due. If respondent is not properly served with a 
petition appealing from an SBA determination, the Judge will issue an 
order directing that the petitioner serve respondent within a specified 
time and directing respondent to file and serve a response within 45 
days after petitioner timely serves respondent in accordance with the 
order.
    (d) If the respondent fails to timely file and serve an answer or 
response, that failure will constitute a default. Following such a 
default, the Judge may prohibit the respondent from participating 
further in the case. If SBA, as respondent to a petition appealing from 
an SBA determination, fails to timely file and serve its response or 
the administrative record (where required), the Judge will issue an 
order directing SBA to file and serve the administrative record by a 
specified date.
    20. Amend Sec. 134.207 to read as follows:
    a. In paragraph (a), revise the first sentence and add a new 
sentence at the end;
    b. Revise paragraph (b); and
    c. Revise paragraph (d).
    The revisions read as follows:


Sec. 134.207  Amendments and supplemental pleadings.

    (a) Amendments. Upon motion, and under terms needed to avoid 
prejudice to any non-moving party, the Judge may permit the filing and 
service of amendments to pleadings. * * * The proposed amendment must 
be filed and served with the motion.
    (b) Supplemental pleadings. Upon motion, and under terms needed to 
avoid prejudice to any non-moving party, the Judge may permit the 
filing and service of a supplemental pleading setting forth relevant 
transactions or occurrences that have taken place since the filing of 
the original pleading. The proposed supplemental pleading must be filed 
and served with the motion.
* * * * *
    (d) Answer or Response. In an order permitting the filing and 
service of an amended or supplemented petition or order to show cause, 
the Judge will establish the time for filing and serving an answer or 
response.
    21. Revise Sec. 134.208 to read as follows:


Sec. 134.208  Representation in cases before OHA.

    (a) A party may represent itself, or be represented by an attorney. 
A partner may represent a partnership, and an officer may represent a 
corporation, trust, association, or other entity.
    (b) An attorney for a party who did not appear on behalf of that 
party in the party's first filing with OHA must file and serve a 
written notice of appearance.
    (c) An attorney seeking to withdraw from a case must file and serve 
a motion for the withdrawal of his or her appearance.
    22. Revise Sec. 134.210 to read as follows:


Sec. 134.210  Intervention.

    (a) By SBA. SBA may intervene as of right at any time in any case 
until 15 days after the close of record, or the issuance of a decision, 
whichever comes first.
    (b) By interested persons. Any interested person may move to 
intervene at any time until the close of record by filing and serving a 
motion to intervene containing a statement of the moving party's 
interest in the case and the necessity for intervention to protect such 
interest. An interested person is any individual, business entity, or 
governmental agency that has a direct stake in the outcome of the 
appeal. The Judge may grant leave to intervene upon such terms as he or 
she deems appropriate.
    23. Amend Sec. 134.211 as follows:
    a. Redesignate existing paragraphs (b) through (d) as paragraphs 
(c) through (e);
    b. Add a new paragraph (b);
    c. Revise redesignated paragraph (e); and
    d. Add a new paragraph (f).
    The revisions and additions read as follows:


Sec. 134.211  Motions.

* * * * *
    (b) Except when a party is filing a motion to dismiss or a motion 
for summary decision, a party must make reasonable efforts to contact 
all non-moving parties prior to filing the motion

[[Page 11066]]

to determine whether they oppose the motion, and must set forth in the 
motion all non-moving parties' positions. If the moving party is unable 
to determine a non-moving party's position, the moving party must 
describe in the motion the efforts made to contact such non-moving 
party.
* * * * *
    (e) Motion to dismiss. A respondent may file a motion to dismiss 
any time before a decision is issued. If an answer or response has not 
been filed, the motion to dismiss stays the time to answer or respond. 
If the Judge denies the motion, and an answer or response has not been 
filed, the respondent must file the answer or response within 20 days 
after the order deciding the motion.
    (f) Motion for an extension of time. Except for good cause shown, a 
motion for an extension of time must be filed at least two days before 
the original deadline.
    24. Amend Sec. 134.212 as follows:
    a. In paragraph (c), remove the words ``serve and file'' and add in 
their place the words ``file and serve';
    b. In paragraph (d), remove the words ``serving and filing'' and 
add in their place the words ``filing and serving'; and
    c. Add a new paragraph (e), to read as follows:


Sec. 134.212  Summary Decision.

* * * * *
    (e) Appeal petitions from SBA determinations (other than 8(a) 
determinations). In a case involving an appeal petition, except as 
provided in subpart D of this part, if SBA has provided multiple 
grounds for the determination being appealed, SBA may move for summary 
decision on one or more grounds. If the Judge finds that there is no 
genuine issue of material fact and the SBA is entitled to a decision in 
its favor as a matter of law as to any such ground, the Judge will 
grant the motion for summary decision and dismiss the appeal.
    25. In Sec. 134.213, paragraph (d), remove the words ``serve and 
file'' and add in their place the words ``file and serve.''
    26. Amend Sec. 134.214 as follows:
    a. In paragraph (a), add a new sentence at the end; and
    b. In paragraph (d), revise the first two sentences.
    The revisions and additions read as follows:


Sec. 134.214  Subpoenas.

    (a) * * * Subpoenas are not authorized for proceedings relating to 
internal Agency determinations, such as Employee Disputes.
* * * * *
    (d) Motion to quash. A motion to limit or quash a subpoena must be 
filed and served within 10 days after service of the subpoena, or by 
the return date of the subpoena, whichever date comes first. Any 
response to the motion must be filed and served within 10 days after 
service of the motion, unless a shorter time is specified by the Judge. 
* * *


Sec. 134.215  [Amended]

    27. In Sec. 134.215, paragraph (b), remove the words ``serve and 
file'' and add in their place the words ``file and serve.''
    28. In Sec. 134.217, revise the first sentence and add two new 
sentences after the first sentence, to read as follows:


Sec. 134.217  Settlement.

    At any time during the pendency of a case, the parties may submit a 
joint motion to dismiss the appeal if they have settled the case, and 
may file with such motion a copy of the settlement agreement. If the 
Judge has express authority, under statute, SBA regulation or SBA 
standard operating procedures, to review the contents of a settlement 
agreement for legality, the Judge may order the parties to file a copy 
of the settlement agreement. Otherwise, upon the filing of a joint 
motion to dismiss, the Judge will issue an order dismissing the case. * 
* *
    29. In Sec. 134.226, paragraph (b), add a sentence at the end to 
read as follows:


Sec. 134.226  The decision.

* * * * *
    (b) * * * Time limits for decisions in other types of cases, if 
any, are indicated either in the applicable program regulations or in 
other subparts of this part 134.
* * * * *
    30. Revise Sec. 134.227 to read as follows:


Sec. 134.227  Finality of decisions.

    (a) Initial decisions. Except as otherwise provided in paragraph 
(b) of this section, a decision by the Judge on the merits is an 
initial decision. However, unless a request for review is filed 
pursuant to Sec. 134.228(a), or a request for reconsideration is filed 
pursuant to paragraph (c) of this section, an initial decision shall 
become the final decision of the SBA 30 days after its service.
    (b) Final decisions. A decision by the Judge on the merits shall be 
a final decision in the following proceedings:
    (1) Collection of debts owed to SBA and the United States under the 
Debt Collection Act of 1982 and part 140 of this chapter;
    (2) Appeals from SBA 8(a) program determinations under the Act and 
part 124 of this chapter;
    (3) Appeals from size determinations and NAICS code designations 
under part 121 of this chapter; and
    (4) In other proceedings as provided either in the applicable 
program regulations or in other subparts of this part 134.
    (c) Reconsideration. Except as otherwise provided by statute, the 
applicable program regulations, or this part 134, an initial or final 
decision of the Judge may be reconsidered. Any party may request 
reconsideration by filing with the Judge and serving a petition for 
reconsideration within 20 days after service of the written decision, 
upon a clear showing of an error of fact or law material to the 
decision. The Judge also may reconsider a decision on his or her own 
initiative.
    31. Amend Sec. 134.228 as follows:
    a. In paragraph (b), remove the words ``serve and file with OHA'' 
and add in their place the words ``file and serve'';
    b. Revise paragraph (a).
    The revisions read as follows:


Sec. 134.228  Review of initial decisions.

    (a) Request for review. Within 30 days after the service of an 
initial decision or a reconsidered initial decision of a Judge, any 
party, or SBA's Office of General Counsel, may file and serve a request 
for review by the Administrator. A request for review must set forth 
the filing party's specific objections to the initial decision, and any 
alleged support for those objections in the record, or in case law, 
statute, regulation, or SBA policy. A party must serve its request for 
review upon all other parties and upon SBA's Office of General Counsel.
* * * * *
    32. Revise Sec. 134.229 to read as follows:


Sec. 134.229  Termination of jurisdiction.

    Except when the Judge reconsiders a decision or remands the case, 
the jurisdiction of OHA will terminate upon the issuance of a decision 
resolving all material issues of fact and law. If the Judge reconsiders 
a decision, OHA's jurisdiction terminates when the Judge issues the 
decision after reconsideration. If the Judge remands the case, the 
Judge may retain jurisdiction at his or her own discretion, and the 
remand order may include the terms and duration of the remand.
    33. Revise the heading for subpart C to read as follows:

[[Page 11067]]

Subpart C--Rules of Practice for Appeals From Size Determinations 
and NAICS Code Designations


Sec. 134.301  [Amended]

    34. In Sec. 134.301, paragraph (b), remove the acronym ``SIC'' and 
add in its place the acronym ``NAICS.''
    35. In Sec. 134.302, revise the introductory text and paragraph (b) 
to read as follows:


Sec. 134.302  Who may appeal.

    Appeals from size determinations and NAICS code designations may be 
filed with OHA by the following, as applicable:
* * * * *
    (b) Any person adversely affected by a NAICS code designation. 
However, with respect to a particular sole source 8(a) contract, only 
the AA/8(a)BD may appeal a NAICS code designation;
* * * * *
    36. Revise Sec. 134.303 to read as follows:


Sec. 134.303  Advisory opinions.

    The Office of Hearings and Appeals does not issue advisory 
opinions.
    37. In Sec. 134.304, revise the heading and paragraph (a) to read 
as follows:


Sec. 134.304  Commencement of appeals from size determinations and 
NAICS code designations.

    (a) Appeals from size determinations and NAICS code designations 
must be commenced by filing and serving an appeal petition as follows:
    (1) If the appeal is from a size determination in a pending 
procurement or pending Government property sale, then the appeal 
petition must be filed and served within 15 days after appellant 
receives the size determination;
    (2) If appeal is from a size determination other than one in a 
pending procurement or pending Government property sale, then the 
appeal petition must be filed and served within 30 days after appellant 
receives the size determination;
    (3) If appeal is from a NAICS code designation, then the appeal 
petition must be filed and served within 10 days after the issuance of 
the initial solicitation. If the appeal relates to an amendment 
affecting the NAICS code, then the appeal petition must be filed and 
served within 10 days after the issuance of the amendment.
* * * * *
    38. Amend Sec. 134.305 as follows:
    a. In paragraphs (a)(1), (a)(3), and (c), remove the acronym 
``SIC'' wherever it appears and add in its place the acronym ``NAICS';
    b. In paragraph (a)(4), before the word ``and,'' add the words 
``facsimile number,'' ; and
    c. Revise paragraph (d) to read as follows:


Sec. 134.305  The appeal petition.

* * * * *
    (d) Certificate of service. The appellant must attach to the appeal 
petition a signed certificate of service meeting the requirements of 
Sec. 134.204(d) of this part.
* * * * *
    39. Amend Sec. 134.306 as follows:
    a. Revise the section heading;
    b. Designate as paragraph (a) the first sentence of the existing 
undesignated text;
    c. Remove the last sentence of the existing undesignated text; and
    d. Add a new paragraph (b), to read as follows:


Sec. 134.306  Transmission of the case file and solicitation.

* * * * *
    (b) Upon receipt of an appeal petition pertaining to a NAICS code 
designation, or a size determination made in connection with a 
particular procurement, the procuring agency contracting officer must 
immediately send to OHA a paper copy of both the original solicitation 
relating to that procurement and all amendments.
    40. In Sec. 134.308, revise paragraph (a)(2) to read as follows:


Sec. 134.308  Limitation on new evidence and adverse inference from 
non-submission in appeals from size determinations.

    (a) * * *
    (2) A motion is filed and served establishing good cause for the 
submission of such evidence. The offered new evidence must be filed and 
served with the motion.
* * * * *
    41. In Sec. 134.309, revise paragraph (a) and paragraph (b) to read 
as follows:


Sec. 134.309  Response to an appeal petition.

    (a) Who may respond. Any person served with an appeal petition, any 
intervenor, or any person with a general interest in an issue raised by 
the appeal may file and serve a response supporting or opposing the 
appeal. The response should present argument.
    (b) Time limits. The Judge will issue a Notice and Order informing 
the parties of the filing of the appeal petition, establishing the 
close of record as 15 days after service of the Notice and Order, and 
informing the parties that OHA must receive any responses to the appeal 
petition no later than the close of record.
* * * * *
    42. In Sec. 134.310, remove the acronym ``SIC'' and add in its 
place the acronym ``NAICS.''
    43. In Sec. 134.311, remove the acronym ``SIC'' and add in its 
place the acronym ``NAICS.''
    44. Revise Sec. 134.313 to read as follows:


Sec. 134.313  Applicability of subpart B provisions.

    Although the provisions of subpart B of this part and this subpart 
C apply to appeals from size determinations and NAICS code 
designations, the provisions of this subpart shall govern.


Sec. 134.314  [Amended]

    45. In Sec. 134.314, remove the acronym ``SIC'' and replace it with 
the acronym ``NAICS.''
    46. In Sec. 134.316, add a new sentence at the end of paragraph 
(b); and add new paragraph (d) to read as follows:


Sec. 134.316  The decision.

* * * * *
    (b) * * * Where a size appeal is dismissed, the Area Office size 
determination remains in effect.
* * * * *
    (d) Reconsideration. The decision in a NAICS code appeal may not be 
reconsidered.
    47. Remove existing Sec. 134.317, and redesignate existing 
Sec. 134.318 as Sec. 134.317 and revise it, to read as follows:


Sec. 134.317  Return of the case file.

    Upon issuance of the decision, OHA will return the case file to the 
transmitting Area Office. The remainder of the record will be retained 
by OHA.
    48. In Sec. 134.402, add two sentences at the end, to read as 
follows:


Sec. 134.402  Appeal petition.

    * * * This section does not apply to suspension appeals. For 
suspensions, see Sec. 124.305.
    49. Amend Sec. 134.403 as follows:
    a. Remove paragraph (a)(3); and
    b. In paragraph (b), remove the words ``Service should be addressed 
to'' and add in their place the word ``Serve.''
    50. Amend Sec. 134.406 as follows:
    a. Revise paragraph (a);
    b. In paragraph (b), revise the first sentence;
    c. In paragraph (c), revise the first sentence; and add two new 
sentences at the end;
    d. Revise paragraph (d); and
    e. Revise paragraph (e).
    The revisions and additions read as follows:

[[Page 11068]]

Sec. 134.406  Review of the administrative record.

    (a) Any proceeding conducted under Sec. 134.401(a) through (d) 
shall be decided solely on a review of the written administrative 
record, except as provided in Sec. 134.407 and in suspension appeals. 
For suspension appeals under Sec. 134.401(e), see Sec. 124.305(d).
    (b) Except in suspension appeals, the Administrative Law Judge's 
review is limited to determining whether the Agency's determination is 
arbitrary, capricious, or contrary to law. * * *
    (c) The administrative record must contain all documents that are 
relevant to the determination on appeal before the Administrative Law 
Judge and upon which the SBA decision-maker, and those SBA officials 
that either recommended for or against the decision, relied. * * * The 
petitioner may object to the absence of a document, previously 
submitted to, or sent by, SBA, which the petitioner believes was 
erroneously omitted from the administrative record. In the absence of 
any objection by the petitioner or a finding by the Judge pursuant to 
paragraph (e) of this section that the record is insufficiently 
complete to decide whether the determination was arbitrary, capricious, 
or contrary to law, the administrative record submitted by SBA shall be 
deemed complete.
    (d) Where the Agency files its response to the appeal petition 
after the date specified in Sec. 134.206, the Administrative Law Judge 
may decline to consider the response and base his or her decision 
solely on a review of the administrative record.
    (e) The Administrative Law Judge may remand a case to the AA/8(a)BD 
(or, in the case of a denial of a request for waiver under Sec. 124.515 
of this title, to the Administrator) for further consideration if he or 
she determines that, due to the absence in the written administrative 
record of the reasons upon which the determination was based, the 
administrative record is insufficiently complete to decide whether the 
determination is arbitrary, capricious or contrary to law. In the event 
of such a remand, the Judge will not require the SBA to supplement the 
administrative record other than to supply the reason or reasons for 
the determination and any documents submitted to, or considered by, SBA 
in connection with any reconsideration permitted by regulation that 
occurs during the remand period. After such a remand, in the event the 
Judge finds that the reasons upon which the determination is based are 
absent from any supplemented record, the Judge will find the SBA 
determination to be arbitrary, capricious, or contrary to law. The 
Administrative Law Judge may also remand a case to the AA/8(a)BD (or, 
in the case of a denial of a request for waiver under Sec. 124.515 of 
this title, to the Administrator) for further consideration where it is 
clearly apparent from the record that SBA made an erroneous factual 
finding (e.g., SBA double counted an asset of an individual claiming 
disadvantaged status) or a mistake of law (e.g., SBA applied the wrong 
regulatory provision in evaluating the case). A remand under this 
section will be for a reasonable period.


Sec. 134.407  [Amended]

    51. In Sec. 134.407, paragraph (a), remove the word ``The'' at the 
beginning and replace it with the words ``Except in suspension appeals, 
the.''


Sec. 134.408  [Redesignated as Sec.  134.409]

    52. Redesignate existing Sec. 134.408 as Sec. 134.409.
    53. Add a new Sec. 134.408 as follows:


Sec. 134.408  Summary decision.

    (a) Generally. In any appeal under this subpart D, either party may 
move or cross-move for summary decision, as provided in Sec. 134.212 of 
this chapter.
    (b) Summary decision based on fewer than all grounds. If SBA has 
provided multiple grounds for the 8(a) determination being appealed, 
SBA may move for summary decision on one or more grounds.
    (1) Non-suspension cases. Except in suspension appeals, if the 
Judge finds that there is no genuine issue of material fact as to 
whether SBA acted arbitrarily, capriciously, or contrary to law as to 
any such ground or grounds, and that the SBA is entitled to a decision 
in its favor as a matter of law, the Judge will grant the motion for 
summary decision and dismiss the appeal.
    (2) Suspension cases. In suspension appeals, if the Judge finds 
that there is no genuine issue of material fact as to whether adequate 
evidence exists that protection of the Federal Government's interest 
requires suspension, as to any such ground or grounds for the proposed 
suspension, the SBA is entitled to a decision in its favor as a matter 
of law, and the Judge will grant the motion for summary decision and 
dismiss the appeal.


Sec. 134.409  [Amended]

    54. In redesignated Sec. 134.409, paragraph (b), remove the second 
sentence.

Hector V. Barreto,
Administrator.
[FR Doc. 02-5613 Filed 3-11-02; 8:45 am]
BILLING CODE 8025-01-P