[Federal Register Volume 71, Number 230 (Thursday, November 30, 2006)]
[Rules and Regulations]
[Page 69183]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-20268]



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  Federal Register / Vol. 71, No. 230 / Thursday, November 30, 2006 / 
Rules and Regulations  

[[Page 69183]]



SMALL BUSINESS ADMINISTRATION

13 CFR Parts 121 and 126

RIN 3245-AE76, 3245-AE66


Small Business Size Regulations, HUBZone Program; Correction

AGENCY: U.S. Small Business Administration.

ACTION: Correcting amendments.

-----------------------------------------------------------------------

SUMMARY: The U.S. Small Business Administration (SBA) is correcting 
amendments to regulations governing SBA's Small Business Innovation 
Research (SBIR) Program and its Historically Underutilized Business 
Zone (HUBZone) Program. These regulations addressed Employee Stock 
Ownership Plans, or ESOPs, but incorrectly referred to the ESOP as an 
Employee Stock Option Plan.

EFFECTIVE DATE: These corrections are effective on November 30, 2006.

FOR FURTHER INFORMATION CONTACT: Carl Jordan, Office of Size Standards, 
(202) 205-6618 or by e-mail at[email protected]; Michael P. 
McHale, Associate Administrator for the HUBZone Program, (202) 205-8885 
or by e-mail, at [email protected].

SUPPLEMENTARY INFORMATION: The SBA published a final rule in the 
December 3, 2004 Federal Register (69 FR 70180) that amended the 
regulations governing size for the SBIR program. In the preamble to the 
regulation, SBA stated that it received comments supporting ownership 
and control of SBIR concerns by Employee Stock Ownership Plans, or 
ESOPs, for investment and employee incentive purposes. In the final 
rule, however, SBA inadvertently referred to the ESOP as an Employee 
Stock Option Plan. An ESOP is a retirement plan in which the small 
business contributes its stock to the plan for the benefit of the 
company's employees. Hence, SBA's regulations provide that it will 
consider each stock trustee and plan member to be an owner of an SBIR 
concern, since with an ESOP all employees that are part of the plan own 
the stock in the company. In comparison, an employee stock option plan 
is merely a right given to an employee to buy the company's stock at a 
set price within a certain period of time. To avoid confusion on this 
issue, SBA is correcting this error.
    SBA published in the May 24, 2004 Federal Register (69 FR 29411) a 
final rule that amended the regulations governing the HUBZone Program. 
In the final rule, SBA inadvertently referred to an ESOP as an Employee 
Stock Option Plan. Again, SBA meant to state that an ESOP is an 
Employee Stock Ownership Plan. Therefore, SBA is correcting this 
regulation as well.

List of Subjects

13 CFR Part 121

    Administrative practice and procedure, Government procurement, 
Government property, Grant programs--business, Loan programs--business, 
Reporting and recordkeeping requirements, Small businesses.

13 CFR Part 126

    Administrative practice and procedure, Government procurement, 
Reporting and recordkeeping requirements, Small businesses.


0
Accordingly, 13 CFR parts 121 and 126 are corrected by making the 
following correcting amendments:

PART 121--SMALL BUSINESS SIZE REGULATIONS

0
1. The authority citation for part 121 continues 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.


0
2. Amend Sec.  121.702 by revising paragraph (a)(2) to read as follows:


Sec.  121.702  What size standards are applicable to the SBIR program?

* * * * *
    (a) * * *
    (2) If an Employee Stock Ownership Plan owns all or part of the 
concern, SBA considers each stock trustee and plan member to be an 
owner.
* * * * *

PART 126--HUBZONE PROGRAM

0
3. The authority citation for part 126 continues to read as follows:

    Authority: 15 U.S.C. 632(a), 632(j), 632(p) and 657a.


0
4. Amend Sec.  126.201 by revising the second sentence of the 
introductory text to read as follows:


Sec.  126.201  Who does SBA consider to own a HUBZone SBC?

    * * * If an Employee Stock Ownership Plan owns all or part of the 
concern, SBA considers each stock trustee and plan member to be an 
owner. * * *
* * * * *

    Dated: November 17, 2006.
Anthony Martoccia,
Associate Deputy Administrator, Government Contracting and Business 
Development.
 [FR Doc. E6-20268 Filed 11-29-06; 8:45 am]
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