[Federal Register Volume 86, Number 11 (Tuesday, January 19, 2021)]
[Proposed Rules]
[Pages 5036-5040]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-00446]
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Proposed Rules
Federal Register
________________________________________________________________________
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. 86, No. 11 / Tuesday, January 19, 2021 /
Proposed Rules
[[Page 5036]]
SMALL BUSINESS ADMINISTRATION
13 CFR Parts 109, 120, and 123
[Docket Number SBA-2020-0057]
RIN 3245-AH60
Ensuring Equal Treatment for Faith-Based Organizations in SBA's
Loan and Disaster Assistance Programs
AGENCY: U.S. Small Business Administration.
ACTION: Proposed rule.
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SUMMARY: The U.S. Small Business Administration (``SBA'' or ``Agency'')
is proposing to remove five regulatory provisions that run afoul of the
Free Exercise Clause of the First Amendment. All five provisions make
certain faith-based organizations ineligible to participate in certain
SBA business loan and disaster assistance programs because of their
religious status. Because the provisions exclude a class of potential
participants based solely on their religious status, the provisions
violate the Free Exercise Clause of the First Amendment. SBA now
proposes to remove the provisions to ensure in its business loan and
disaster assistance programs the equal treatment for faith-based
organizations that the Constitution requires.
DATES: Comments must be received on or before February 18, 2021.
ADDRESSES: You may submit comments, identified by RIN 3245-AH60, by any
of the following methods:
Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments.
Mail or Hand Delivery/Courier: Valerie Mills, Executive
Operations Officer, Office of General Counsel, U.S. Small Business
Administration, 409 Third Street SW, Washington, DC 20416.
SBA will post all comments on https://www.regulations.gov. If you
wish to submit confidential business information (``CBI''), as defined
in the User Notice at https://www.regulations.gov, please submit the
information to Valerie Mills, Executive Operations Officer, Office of
General Counsel, U.S. Small Business Administration, 409 Third Street
SW, Washington, DC 20416, or send an email to [email protected].
Highlight the information that you consider to be CBI and explain why
you believe SBA should hold this information as confidential. SBA will
review the information and make the final determination on whether it
will publish the information.
FOR FURTHER INFORMATION CONTACT: Valerie Mills, Executive Operations
Officer, Office of General Counsel, (202) 619-0539,
[email protected].
SUPPLEMENTARY INFORMATION:
I. Background Information
Consistent with its April 3, 2020, letter to Congress pursuant to
28 U.S.C. 530D (``530D letter''), SBA is proposing to remove from the
Code of Federal Regulations (``CFR'') five provisions that run afoul of
the Free Exercise Clause of the First Amendment. The provisions that
SBA proposes to remove consist of the two provisions with which SBA's
530D letter was concerned and three other, substantially similar
provisions. All five provisions make certain faith-based organizations
ineligible to participate in certain SBA business loan and disaster
assistance programs because of their religious status. Because the
provisions exclude a class of potential participants solely based on
their religious status, the provisions violate the Free Exercise Clause
of the First Amendment, as construed in Trinity Lutheran Church of
Columbia, Inc. v. Comer, 137 S. Ct. 2012 (2017), and Espinoza v.
Montana Department of Revenue, 140 S. Ct. 2246 (2020). After consulting
with the Department of Justice, in its 530D letter, SBA already has
announced its decision not to enforce, apply, or administer two of the
provisions, as well as its intention to propose amendments to conform
those provisions to the Constitution. SBA now proposes such amendments,
as well as amendments to three substantially similar provisions, to
ensure in its business loan and disaster assistance programs the equal
treatment for faith-based organizations that the Constitution requires.
A. The Subject Programs
Intermediary Lending Pilot Program (``ILP''). The Intermediary
Lending Pilot (``ILP'') program was established as a pilot program
authorized by the Small Business Jobs Act of 2010, Public Law 111-240
(2010), to provide loans of up to $1,000,000 to nonprofit
intermediaries for the purpose of providing loans to small businesses.
The program authorized SBA to select up to 20 nonprofit intermediaries
each year to receive loans of up to $1,000,000, subject to the
availability of funds. Selected ILP intermediaries, in turn, use the
funds to make loans of up to $200,000 to eligible startup, newly
established, or growing small businesses. ILP Intermediaries continue
to relend a portion of the payments received on small business loans
made under the program until they have fully repaid their loans to SBA.
Business Loan Programs. SBA provides financial assistance to small
businesses under three business loan programs: its general business
loan program authorized by section 7(a) of the Small Business Act, 15
U.S.C. 636(a) (``7(a) loans''), its microloan program authorized by
section 7(m) of the Small Business Act, 15 U.S.C. 636(m)
(``microloans''), and its development company program authorized by
title V of the Small Business Investment Act, 15 U.S.C. 695-697f (``504
loans''). 7(a) loans provide financing to eligible small businesses for
general business purposes and are guaranteed loans by which SBA
guarantees a portion of a loan made by a lender. Through its
microloans, SBA makes loans to non-profit intermediaries that in turn
make short-term loans with a maximum amount of $50,000 to eligible
small businesses for general business purposes, including the purchase
of furniture, fixtures, supplies, materials, equipment, and for working
capital. SBA also makes technical assistance grants to intermediaries
for use in providing management assistance and counseling to microloan
borrowers and prospective microloan borrowers. Projects involving 504
loans require long-term, fixed-asset financing for small businesses. A
504 project has three main partners: A Third Party Lender provides 50
percent or more of the financing; a Certified Development Company (CDC)
provides up to 40 percent of the financing through a 504
[[Page 5037]]
debenture (guaranteed 100% by SBA); and an applicant (Borrower) injects
at least 10 percent of the financing.
Economic Injury Disaster Loan Program (``EIDL''). The Economic
Injury Disaster Loan (``EIDL'') program provides economic relief to
eligible small businesses and private nonprofit organizations that
experience substantial economic injury as a direct result of a declared
disaster. Substantial economic injury is such that a business concern
is unable to meet its obligations as they mature or to pay its ordinary
and necessary operating expenses. EIDL loan proceeds may be used only
for working capital necessary to carry on the business concern until
resumption of normal operations and for expenditures necessary to
alleviate the specific economic injury, but not to exceed that which
the business concern could have provided had the injury not occurred.
Military Reservist Economic Injury Disaster Loan Program
(``MREIDL''). The Military Reservist Economic Injury Disaster Loan
(``MREIDL'') program provides loan funds to eligible small businesses
to meet their ordinary and necessary operating expenses that they could
have met, but are unable to meet, because an essential employee was
called up to active service for a period of more than 30 consecutive
days in his or her role as a military reservist. The loans provide the
amount of working capital that eligible small businesses need to pay
their necessary obligations as they mature until operations return to
normal after the essential employee is released from active service.
Loans can be provided for a maximum amount of $2,000,000 and a maximum
term of 30 years.
Immediate Disaster Assistance Program (``IDAP''). The Immediate
Disaster Assistance Program (``IDAP'') is a guaranteed disaster loan
program for small businesses that have suffered physical damage or
economic injury due to a declared disaster. An IDAP loan is an interim
loan in an amount not to exceed $25,000 made by an IDAP lender to meet
the immediate business needs of an IDAP borrower while approval of
long-term financing from a disaster loan is pending with SBA.
Currently, there is no funding available for IDAP loans.
B. Religious-Status-Based Exclusions in the Subject Programs and
Conflict With Recent Supreme Court Decisions Construing the Free
Exercise Clause
Current regulatory provisions governing the ILP, Business Loan
programs, EIDL, MREIDL, and IDAP all render ineligible to participate
businesses that are ``[p]rincipally engaged in''--or businesses whose
``principal activity'' is--``teaching, instructing, counseling or
indoctrinating religion or religious beliefs, whether in a religious or
secular setting.'' 13 CFR 109.400(b)(11), 120.110(k), 123.301(g),
123.502(n), 123.702(b)(6). Notably, these exclusions of otherwise-
eligible participants are based not on any religious use of business
loan funds or disaster assistance, but rather are based on the
religious activities in which they generally engage, precluding them
from even secular uses of business loan funds and disaster assistance.
In short, they categorically disqualify otherwise-eligible faith-based
organizations from receiving business loan funds and disaster
assistance solely on account of their religious status.
In two recent decisions, the Supreme Court has made clear that such
religious-status-based exclusions from a public benefit violate the
Free Exercise Clause of the First Amendment.
In Trinity Lutheran Church of Columbia, Inc. v. Comer, 137 S. Ct.
2012 (2017), the Court examined a state's ``policy of categorically
disqualifying churches and other religious organizations from receiving
grants under its playground resurfacing program.'' Id. at 2017. The
Court held that the policy violated the Free Exercise Clause. It
explained that ``[t]he Free Exercise Clause `protect[s] religious
observers against unequal treatment' and subjects to the strictest
scrutiny laws that target the religious for `special disabilities'
based on their `religious status.' '' Id. at 2019 (quoting Church of
Lukumi Babulu Aye, Inc. v. Hialeah, 508 U.S. 520, 533, 542 (1993)). The
Court noted that it repeatedly had applied this ``basic principle'' to
``confirm[ ] that denying a generally available benefit solely on
account of religious identity imposes a penalty on the free exercise of
religion that can be justified only by a state interest `of the highest
order.' '' Id. (quoting McDaniel v. Paty, 435 U.S. 618, 628 (1978)
(plurality opinion)). The state policy failed this stringent test. The
Court concluded that, ``[i]n the face of the clear infringement on free
exercise before us,'' the State's proffered interest--a ``policy
preference for skating as far as possible from religious establishment
concerns,'' even where the Establishment Clause did not prohibit the
funding at issue--``cannot qualify as compelling.'' Id. at 2024.
Three years later, in Espinoza v. Montana Department of Revenue,
140 S. Ct. 2246 (2020), the Court examined a state-court decision that
had applied a state constitutional provision to invalidate a tax-credit
scholarships program solely on the ground that some scholarship
recipients had sought to use their scholarships at religious schools.
The question presented was ``whether the Free Exercise Clause
precluded'' the state court ``from applying [the state constitutional]
provision to bar religious schools from the scholarship program.'' Id.
at 2254. The Court answered that question in the affirmative. The Court
began by reiterating the basic principle that ``[t]he Free Exercise
Clause . . . `protects religious observers against unequal treatment'
and against `laws that impose special disabilities on the basis of
religious status,''' id. (quoting Trinity Lutheran, 137 S. Ct. at
2019), and by noting Trinity Lutheran's `` `unremarkable' conclusion
that disqualifying otherwise eligible recipients from a public benefit
`solely because of their religious character' imposes `a penalty on the
free exercise of religion that triggers the most exacting scrutiny,' ''
id. at 2255 (quoting Trinity Lutheran, 137 S. Ct. at 2021). The Court
then observed that, as construed by the state court, the state
constitutional provision ``bars religious schools from public benefits
solely because of the religious character of the schools'' and ``also
bars parents who wish to send their children to a religious school from
those same benefits, again solely because of the religious character of
the school.'' Id. at 2255. The Court was unpersuaded by the State's
assertion that the status-based exclusion aimed to prevent religious
uses of funds. ``Status-based discrimination,'' the Court concluded,
``remains status based even if one of its goals or effects is
preventing religious organizations from putting aid to religious
uses.'' Id. at 2256. Accordingly, the Court held ``that strict scrutiny
applies under Trinity Lutheran because [the state constitutional]
provision discriminates based on religious status,'' id. at 2257, and
that, like the state policy it examined in Trinity Lutheran, the state
constitutional provision under review failed that test, id. at 2260-63.
Like the state policy that the Court declared unconstitutional in
Trinity Lutheran and the state constitutional provision that the Court
declared unconstitutional in Espinoza, the five subject provisions deny
a public benefit solely on account of religious status. Each
categorically renders ineligible to participate in an SBA business loan
or disaster assistance program all businesses that are ``[p]rincipally
engaged in''--or businesses whose ``principal activity'' is--
``teaching, instructing, counseling or indoctrinating religion or
religious beliefs, whether in a religious or secular setting.'' 13 CFR
109.400(b)(11), 120.110(k), 123.301(g),
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123.502(n), 123.702(b)(6). Notably, none of these exclusions concerns
religious uses of business loan or disaster assistance funds. Instead,
each prohibits an otherwise-eligible applicant from receiving such
funds solely on account of its religious activities, even if it uses
the funds for secular purposes. And any interest in prohibiting
religious uses of funds cannot justify such a sweeping, status-based
exclusion. As the Court held in Espinoza, ``[s]tatus-based
discrimination remains status based even if one of its goals or effects
is preventing religious organizations from putting aid to religious
uses.'' 140 S. Ct. at 2256. Moreover, SBA cannot identify any other
possible interest underlying the subject provisions, much less one that
would pass muster under the `` `strictest scrutiny,' '' id. at 2257
(quoting Trinity Lutheran, 137 S. Ct. at 2019), that the Court applies
to such religious-status-based exclusions.
In addition, the five subject regulatory provisions cannot be
justified under Locke v. Davey, 540 U.S. 712 (2004), because they are
not restrictions on religious uses of business loans or disaster
assistance. Rather, they exclude certain recipients from even secular
uses of business loans and disaster assistance based solely on their
religious status.
Therefore, the five subject provisions--13 CFR 109.400(b)(11),
120.110(k), 123.301(g), 123.502(n), and 123.702(b)(6)--are inconsistent
with the Free Exercise Clause of the First Amendment, as construed by
the Supreme Court in Trinity Lutheran and Espinoza.
C. SBA's 530D Letter and Subsequent Review of SBA Regulations
In light of the Supreme Court's decision in Trinity Lutheran, and
after consultation with the U.S. Department of Justice, SBA determined
that the religious-status-based exclusions in its Business Loan and
EIDL programs--13 CFR 120.110(k) and 123.301(g)--are unconstitutional.
In a letter submitted on April 3, 2020, pursuant to 28 U.S.C. 530D, SBA
informed Congress of its determination. SBA explained that the
provisions ``impermissibly exclude a class of potential recipients
based solely on their religious identity, just like the State policy
that was struck down in Trinity Lutheran''; that they ``categorically
exclude religious organizations simply because they are religious'';
and that ``[t]hese status-based prohibitions also cannot be justified
under Locke v. Davey, 540 U.S. 712 (2004)'' because they ``are not
limited to religious uses of business loans or economic disaster
assistance, but rather exclude certain recipients from even secular
uses based on their religious character.'' SBA notified Congress that
it would ``refrain from enforcing, applying, or administering'' the
subject provisions, and that it intended to ``propose amendments to 13
CFR 120.110 and 123.301 that will conform these provisions to the
Constitution.''
Since submitting its 530D letter, SBA has reviewed its other
regulations and identified three other substantially similar
provisions--13 CFR 109.400(b)(11), 123.502(n), and 123.702(b)(6)--that
suffer from the same constitutional defect identified in the 530D
letter. Accordingly, SBA now proposes to remove all five of the invalid
provisions to conform its regulations to the requirements of the Free
Exercise Clause.
D. President Trump's Executive Order 13798 and the Attorney General's
Memorandum on Religious Liberty
SBA's proposal not only follows from recent Supreme Court precedent
and will ensure compliance with the Constitution, but also accords with
Executive Branch policy. On May 4, 2017, President Trump issued
Executive Order 13798, Presidential Executive Order Promoting Free
Speech and Religious Liberty, 82 FR 21675 (May 9, 2017). Executive
Order 13798 states that ``Federal law protects the freedom of Americans
and their organizations to exercise religion and participate fully in
civic life without undue interference by the Federal Government'' and
further provides that the executive branch will honor and enforce those
protections. It also directed the Attorney General to ``issue guidance
interpreting religious liberty protections in Federal law.'' 82 FR at
21675. Pursuant to this instruction, the Attorney General, on October
6, 2017, issued the Memorandum for All Executive Departments and
Agencies, ``Federal Law Protections for Religious Liberty,'' 82 FR
49668 (Oct. 26, 2017) (the ``Attorney General's Memorandum on Religious
Liberty'').
Consistent with Trinity Lutheran, the Attorney General's Memorandum
on Religious Liberty emphasized that individuals and organizations do
not forfeit religious-liberty protections by receiving government
grants or otherwise interacting with Federal, state, or local
governments, and that ``government may not exclude religious
organizations as such from secular aid programs . . . when the aid is
not being used for explicitly religious activities such as worship or
proselytization.'' 82 FR at 49669.
II. Section by Section Analysis
A. Section 109.400--Eligible Small Business Concerns
SBA is proposing to amend 13 CFR 109.400 to remove paragraphs
(b)(11) and (b)(12) and redesignate the following paragraphs
accordingly. 13 CFR 109.400(b) currently enumerates a list of ``types
of businesses'' that ``are not eligible to receive a loan from an ILP
Intermediary under'' the ILP. Included in this list is 13 CFR
109.400(b)(11), ``[b]usinesses principally engaged in teaching,
instructing, counseling or indoctrinating religion or religious
beliefs, whether in a religious or secular setting[.]'' This exclusion
based on religious status violates the Free Exercise Clause of the
First Amendment to the Constitution. Therefore, SBA proposes to remove
it but leave intact the other exclusions listed in 13 CFR 109.400(b).
B. Section 120.110--What businesses are ineligible for SBA business
loans?
SBA is proposing to amend 13 CFR 120.110 to remove paragraphs (k)
and (l) and redesignate the following paragraphs accordingly. 13 CFR
120.110 currently enumerates a list of ``types of businesses'' that
``are ineligible for SBA business loans.'' Included in this list is 13
CFR 120.110(k), ``[b]usinesses principally engaged in teaching,
instructing, counseling or indoctrinating religion or religious
beliefs, whether in a religious or secular setting[.]'' This exclusion
based on religious status violates the Free Exercise Clause of the
First Amendment to the Constitution. Therefore, SBA proposes to remove
it but leave intact the other exclusions listed in 13 CFR 120.110.
C. Section 123.301--When would my business not be eligible to apply for
an Economic Injury Disaster Loan?
SBA is proposing to amend 13 CFR 123.301 to remove paragraph (g)
and redesignate the following paragraph accordingly. 13 CFR 123.301
currently enumerates a list of types of businesses that ``are not
eligible for an economic [injury] disaster loan.'' Included in this
list is 13 CFR 123.301(g), businesses that are ``[p]rincipally engaged
in teaching, instructing, counseling or indoctrinating religion or
religious beliefs, whether in a religious or secular setting[.]'' This
exclusion based on religious status violates the Free Exercise Clause
of the First Amendment to the Constitution. Therefore, SBA proposes to
remove it but leave intact the other exclusions listed in 13 CFR
123.301.
[[Page 5039]]
D. Section 123.502--Under what circumstances is your business
ineligible to be considered for a Military Reservist Economic Injury
Disaster loan?
SBA is proposing to amend 13 CFR 123.502 to remove paragraph (n)
and redesignate the following paragraph accordingly. 13 CFR 123.502
currently enumerates a list of types of businesses that are
``ineligible for a Military Reservist EIDL.'' Included in this list is
13 CFR 123.502(n), listing businesses whose ``[p]rincipal activity is
teaching, instructing, counseling or indoctrinating religion or
religious beliefs, whether in a religious or secular setting[.]'' This
exclusion based on religious status violates the Free Exercise Clause
of the First Amendment to the Constitution. Therefore, SBA proposes to
remove it but leave intact the other exclusions listed in 13 CFR
123.502.
E. Section 123.702--What are the eligibility requirements for an IDAP
loan?
SBA is proposing to amend 13 CFR 123.702 to remove paragraph (b)(6)
and redesignate the following paragraphs accordingly. 13 CFR 123.702(b)
currently enumerates a list of types of businesses that are ``not
eligible for an IDAP loan.'' Included in this list is 13 CFR
123.702(b)(6), businesses that are ``[p]rincipally engaged in teaching,
instructing, counseling or indoctrinating religion or religious
beliefs, whether in a religious or secular setting[.]'' This exclusion
based on religious status violates the Free Exercise Clause of the
First Amendment to the Constitution. Therefore, SBA proposes to remove
it but leave intact the other exclusions listed in 13 CFR 123.702(b).
III. Compliance With Executive Orders 12866, 13771, 12988, and 13132,
the Paperwork Reduction Act (44 U.S.C., Ch. 35), and the Regulatory
Flexibility Act (5 U.S.C. 601-612)
A. Executive Order 12866
Under Executive Order 12866, the Office of Information and
Regulatory Affairs (OIRA) must determine whether this regulatory action
is ``significant'' and, therefore, subject to the requirements of the
executive order and subject to review by the Office of Management and
Budget (OMB). Section 3(f) of Executive Order 12866 defines a
``significant regulatory action'' as an action likely to result in a
regulation that may (1) have an annual effect on the economy of $100
million or more or adversely affect in a material way the economy, a
sector of the economy, productivity, competition, jobs, the
environment, public health or safety, or state, local, or tribal
governments or communities (also referred to as an ``economically
significant'' regulation); (2) create a serious inconsistency or
otherwise interfere with an action taken or planned by another agency;
(3) materially alter the budgetary impacts of entitlements, grants,
user fees, or loan programs or the rights and obligations of recipients
thereof; or (4) raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles stated in
Executive Order 12866.
OIRA has determined that this proposed rule is a significant, but
not economically significant, regulatory action subject to review by
OMB under section 3(f) of Executive Order 12866.
The proposed rule removes paragraphs that excluded from SBA's loan
and disaster assistance programs types of businesses that were
``principally engaged in teaching, instructing, counseling or
indoctrinating religion or religious beliefs . . . .''
Executive Order 12866 requires assessment of available
alternatives. An alternative to the proposed rule's elimination of
invalid provisions is to take no action regarding the invalid
exclusions. This alternative is untenable as it would leave in place
provisions that are invalid under the Free Exercise Clause. The other
alternative to the proposed rule's elimination of the invalid
provisions is to create new restrictions barring religious uses of
business loans and disaster assistance. This alternative is unnecessary
under the First Amendment; \1\ would create unnecessary regulation as
current regulations already specify--in secular terms--the permissible
uses of funds; \2\ and would thus be inconsistent with the
Administration's deregulatory agenda, see Executive Order 13771,
Presidential Executive Order on Reducing Regulation and Controlling
Regulatory Costs, 82 FR 9,339 (Feb. 3, 2017).
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\1\ See Religious Restrictions on Capital Financing for
Historically Black Colleges and Universities, 43 Op. O.L.C.--**7-15
(Aug. 15, 2019) (slip op.) (analyzing a loan program substantially
similar to SBA's business loan programs and concluding that the
Establishment Clause did not require any use-of-funds restrictions);
Authority of FEMA to Provide Disaster Assistance to Seattle Hebrew
Academy, 26 Op. O.L.C. 114, 122-32 (2002) (analyzing a disaster
assistance program substantially similar to SBA's disaster
assistance programs and concluding that the Establishment Clause
permitted the provision of disaster assistance to a religious
school).
\2\ See 13 CFR 109.430, 120.120, 120.130, 120.131, 123.303,
123.508, 123.509, and 123.704.
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In accordance with Executive Order 12866, SBA has assessed the
potential costs and benefits of this regulatory action. SBA estimates
that no quantifiable effects exist from this proposed rule relative to
a baseline that represents the state of SBA's programs in the absence
of this action. Because these exclusions are not enforceable (and,
indeed, SBA has informed Congress of its determination not to enforce
13 CFR 120.110(k) and 123.301(g)), SBA expects the removal of these
exclusions to impose no additional costs or significant benefits.
In terms of benefits, SBA recognizes a nonquantifiable benefit to
religious liberty that comes from removing exclusions of faith-based
organizations, in conflict with the Free Exercise Clause. SBA also
recognizes a nonquantifiable benefit to participants in SBA's loan and
disaster assistance programs that comes from increased clarity in the
regulatory requirements that apply to faith-based organizations
operating in these programs. Benefits may also accrue from the
increased capacity of faith-based social-service providers to provide
services, both because these providers will be able to allocate
resources with less uncertainty and because more faith-based
organizations may participate. The SBA does not expect the proposed
rule to materially alter the budgetary impact of its loan programs or
the rights and obligations of recipients.
B. Executive Order 13771
This proposed rule is not expected to be an Executive Order 13771
regulatory action.
C. Executive Order 12988
This action meets applicable standards set forth in sections 3(a)
and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize
litigation, eliminate ambiguity, and reduce burden. The action does not
have retroactive or preemptive effect.
D. Executive Order 13132
This proposed rule does not have federalism implications as defined
in Executive Order 13132. It would 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 responsibilities among
the various levels of government, as specified in the Executive Order.
As such it does not warrant the preparation of a Federalism Assessment.
E. Paperwork Reduction Act, 44 U.S.C., Ch. 35
For the purpose of the Paperwork Reduction Act, 44 U.S.C. Ch. 35,
SBA has determined that this rule will not
[[Page 5040]]
impose any new reporting or record keeping requirements.
F. Regulatory Flexibility Act, 5 U.S.C. 601-612
When an agency issues a rulemaking proposal, the Regulatory
Flexibility Act (``RFA'') generally requires the agency to ``prepare
and make available for public comment an initial regulatory flexibility
analysis'' that will ``describe the impact of the proposed rule on
small entities.'' 5 U.S.C. 603(a). But the RFA allows the head of an
agency to certify a rule, in lieu of preparing an analysis, if the
proposed rulemaking is not expected to have a significant economic
impact on a substantial number of small entities. 5 U.S.C. 605(b).
The RFA defines ``small entity'' to include small businesses, small
organizations, and small governmental jurisdictions. 5 U.S.C. 601(6).
This proposed rule concerns participation in SBA's business loan and
disaster assistance programs by certain faith-based organizations. As
such, the rule relates to small organizations.
Small organizations that are the subject of this proposed rule
include entities in NAICS Code 813110--Religious Organizations.
According to the Census Bureau's Statistics of U.S. Businesses (SUSB),
in 2012, approximately 182,000 organizations in this NAICS code met the
definition for SBA's Small Business Size Standards, as updated in
2019.\3\ The number of those organizations that meet the general
requirements for eligibility to participate in SBA's business loan and
disaster assistance programs is likely much smaller.
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\3\ According to the SUSB, 183,411 establishments were under
NAICS Code 813110 in 2012, the last year for which this data set is
available. Of the total number of establishments, 181,298 have
annual receipts under $7.5 million. SBA uses a revenue standard for
determining small businesses in NAICS 813110. In the 2019 SBA Table
of Size Standards, that revenue standard was $8 million and below.
SUSB information is arranged in dollar ranges of receipt size, with
the next category ranging from above $7.5 million to $9,999,999,
which is in excess of SBA's small business standard. 660
establishments were in that category.
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Considering that the proposed rule imposes no costs while ensuring
that SBA's regulations conform with requirements of the Free Exercise
Clause, SBA estimates that the proposed rulemaking will not have a
significant economic impact on a substantial number of small entities.
SBA does not believe that the impact will be significant within any
size groupings because this proposed rule eliminates invalid provisions
in its business loan and disaster assistance programs. Accordingly, the
Administrator of the SBA hereby certifies that this rule will not, if
promulgated, have a significant economic impact on a substantial number
of small entities. SBA invites comment from members of the public who
believe there will be a significant impact on any small entities,
including small businesses.
List of Subjects
13 CFR Part 109
Loan programs--business, Reporting and recordkeeping requirements,
Small businesses.
13 CFR Part 120
Loan programs--business, Reporting and recordkeeping requirements,
Small businesses.
13 CFR Part 123
Disaster assistance, Loan programs--business, Reporting and
recordkeeping requirements, Small businesses.
Accordingly, for the reasons stated in the preamble, SBA proposes
to amend 13 CFR parts 109, 120, and 123 as follows:
PART 109--INTERMEDIATE LENDING PILOT PROGRAM
0
1. The authority citation for 13 CFR part 109 continues to read as
follows:
Authority: 15 U.S.C. 634(b)(6), (b)(7), and 636(l).
Sec. 109.400 [Amended]
0
2. Amend Sec. 109.400 by removing paragraph (b)(11) and redesignating
paragraphs (b)(13) through (23) as paragraphs (b)(11) through (21),
respectively.
PART 120--BUSINESS LOANS
0
3. The authority citation for 13 CFR part 120 continues to read as
follows:
Authority: 15 U.S.C. 634(b) (6), (b) (7), (b) (14), (h), and
note, 636(a), (h) and (m), and note, 650, 657t, and note, 657u, and
note, 687(f), 696(3) and (7), and note, and 697(a) and (e), and
note.
Sec. 120.110 [Amended]
0
4. Amend Sec. 120.110 by removing paragraph (k) and redesignating
paragraphs (m) through (s) as paragraphs (k) through (q), respectively.
PART 123--DISASTER LOAN PROGRAM
0
5. The authority citation for 13 CFR part 123 continues to read as
follows:
Authority: 15 U.S.C. 632, 634(b)(6), 636(b), 636(d), and 657n.
Sec. 123.301 [Amended]
0
6. Amend Sec. 123.301 by:
0
a. Adding the word ``or'' to the end of paragraph (f); and
0
b. Removing paragraph (g) and redesignating paragraph (h) as paragraph
(g).
Sec. 123.502 [Amended]
0
7. Amend Sec. 123.502 by:
0
a. Adding the word ``or'' to the end of paragraph (m); and
0
b. Removing paragraph (n) and redesignating paragraph (o) as paragraph
(n).
Sec. 123.702 [Amended]
0
8. Amend Sec. 123.702 by removing paragraph (b)(6) and redesignating
paragraphs (b)(7) through (25) as paragraphs (b)(6) through (24),
respectively.
Signed in Washington, DC.
Jovita Carranza,
Administrator.
[FR Doc. 2021-00446 Filed 1-14-21; 11:15 am]
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