[Federal Register Volume 87, Number 160 (Friday, August 19, 2022)]
[Rules and Regulations]
[Pages 50925-50928]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-17828]



 ========================================================================
 Rules and Regulations
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains regulatory documents 
 having general applicability and legal effect, most of which are keyed 
 to and codified in the Code of Federal Regulations, which is published 
 under 50 titles pursuant to 44 U.S.C. 1510.
 
 The Code of Federal Regulations is sold by the Superintendent of Documents. 
 
 ========================================================================
 

  Federal Register / Vol. 87, No. 160 / Friday, August 19, 2022 / Rules 
and Regulations  

[[Page 50925]]



SMALL BUSINESS ADMINISTRATION

13 CFR Parts 125 and 129

RIN 3245-AH72


Small Businesses in U.S. Territories; Eligibility of the 
Commonwealth of the Northern Mariana Islands

AGENCY: U.S. Small Business Administration.

ACTION: Direct final rule.

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

SUMMARY: This direct final rule implements a provision of the National 
Defense Authorization Act (NDAA) Fiscal Year 2021 (FY 2021) by defining 
a covered territory business as a small business in the U.S. Virgin 
Islands, American Samoa, Guam, and the Commonwealth of the Northern 
Mariana Islands. Covered territory businesses would be newly qualified 
for surplus personal property distributions, and covered territory 
mentors would receive contracting incentives for mentoring 
prot[eacute]g[eacute] firms that are covered territory businesses.

DATES: This rule is effective on October 18, 2022, without further 
action, unless significant adverse comments are received by September 
19, 2022. If significant adverse comment is received, SBA will publish 
a timely withdrawal of the rule in the Federal Register.

ADDRESSES: You may submit comments, identified by RIN 3245-AH72, by any 
of the following methods:
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
     Email: Donna Fudge, Procurement Analyst, Office of Policy 
Planning and Liaison, Small Business Administration, at 
[email protected].
    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 Donna Fudge, Small Business Administration at 
[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: Donna Fudge, Procurement Analyst, 
Office of Policy Planning and Liaison, Small Business Administration, 
at [email protected], (202) 205-6363. If you are deaf, hard of 
hearing, or have a speech disability, please dial 7-1-1 to access 
telecommunications relay services.

SUPPLEMENTARY INFORMATION:

I. Background Information

    This direct final rule adds the U.S. Virgin Islands, American 
Samoa, Guam, and the Commonwealth of the Northern Mariana Islands 
(CNMI) to the list of territories from which small businesses are 
eligible for preferential treatment under two government programs: the 
surplus property program and the SBA mentor-prot[eacute]g[eacute] 
program for government contracting. These changes are required by NDAA 
FY21, Public Law 116-283.
    Section 866 of NDAA FY21 defined a ``covered territory business'' 
as a small business concern that has its principal office located in 
one of the following: (1) the U.S. Virgin Islands; (2) American Samoa; 
(3) Guam; or (4) the CNMI.
    Under the law, a covered territory business receives priority for 
surplus property transfers for four years after the enactment of NDAA 
FY21, which occurred on January 1, 2021. This direct final rule extends 
the changes that SBA made in a prior rulemaking about the surplus 
property program (Use of Federal Surplus Property for Veteran-Owned 
Small Businesses, and Small Businesses in Disaster Areas and Puerto 
Rico, 85 FR 69120, effective December 2, 2020). SBA is amending part 
129 of its regulations to add a covered territory business to the 
eligibility list for the surplus property program, through January 1, 
2025. SBA is treating covered territory businesses similarly to 
businesses located in Puerto Rico: a covered territory business would 
have its principal place of business located in its respective covered 
territory. For example, in order for a small business to be considered 
located in Guam, the small business should have a physical location in 
Guam.
    Additionally, section 866 created two new incentives for SBA's 
small business mentor-prot[eacute]g[eacute] program for mentor-
prot[eacute]g[eacute] pairs in which the prot[eacute]g[eacute] is a 
covered territory business. First, the mentor would receive positive 
consideration in its past-performance evaluations. Second, if the 
mentor incurs costs training the prot[eacute]g[eacute], the mentor is 
able to apply those costs as subcontracting expenses and count them 
toward subcontracting goals contained in the mentor's subcontracting 
plans. These incentives already exist for mentors with 
prot[eacute]g[eacute]s that are Puerto Rico businesses.

II. Section-by-Section Analysis

13 CFR 125.1

    SBA adds a definition for ``covered territory business.'' A covered 
territory business is a small business with its principal office 
located in the U.S. Virgin Islands, American Samoa, Guam, or the CNMI.

13 CFR 125.9

    SBA adds a covered territory business to paragraph (b)(3)(ii) so 
that a mentor-prot[eacute]g[eacute] relationship with a covered 
territory business does not count toward the mentor's limit on the 
number of prot[eacute]g[eacute]s. Generally, a mentor is only allowed 
three prot[eacute]g[eacute]s at a time. A prot[eacute]g[eacute] does 
not count, however, if the prot[eacute]g[eacute] has its principal 
office located in Puerto Rico or qualifies as a covered territory 
business.
    SBA adds a covered territory business to paragraph (d)(6), which 
currently lists the special incentives for mentors with a 
prot[eacute]g[eacute] that is located in Puerto Rico. Such a mentor is 
able to receive positive consideration for the mentor's past 
performance evaluation and applying costs of training the 
prot[eacute]g[eacute] to the subcontracting goals in its subcontracting 
plan.

13 CFR Part 129

    This direct final rule revises the title of part 129 to incorporate 
the term ``covered territory businesses'' to align the title with the 
amendments being made to the part via this rule.

13 CFR 129, Subpart C

    This direct final rule changes the title of subpart C, which 
currently covers Puerto Rico businesses, to incorporate covered 
territory businesses into the list

[[Page 50926]]

of small businesses eligible to receive Federal surplus property.

13 CFR 129.301

    The direct final rule adds the definition of a covered territory 
business. Additionally, the direct final rule revises the definition of 
covered period to specify that, for a covered territory business, the 
covered period ends on January 1, 2025.
    A covered territory business will be able to obtain surplus 
property from its territory's State Agency for Surplus Property, in 
accordance with the same regulations that currently apply to Puerto 
Rico businesses.

III. Compliance With Executive Orders 12866, 12988, 13132, 13175, 
13563, the Congressional Review Act (5 U.S.C. 801-808), the Paperwork 
Reduction Act (44 U.S.C., Ch. 35), the Regulatory Flexibility Act, (5 
U.S.C. 601-612), and the Administrative Procedure Act (5 U.S.C. 553)

Executive Order 12866

    The Office of Management and Budget (OMB) has determined that this 
direct final rule is a not a significant regulatory action for the 
purposes of Executive Order 12866.

Executive Order 12988

    This direct final rule 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.

Executive Order 13132

    For the purposes of Executive Order 13132, Federalism, SBA has 
determined that this direct final rule will not have substantial, 
direct effects on the States, on the relationship between the National 
Government and the States, or on the distribution of power and 
responsibilities among the various levels of government. Therefore, for 
the purpose of Executive Order 13132, SBA has determined that this 
direct final rule has no federalism implications warranting preparation 
of a federalism assessment.

Executive Order 13175

    This direct final rule does not have tribal implications under 
Executive Order 13175, Consultation and Coordination with Indian Tribal 
Governments, because it would not have a substantial direct effect on 
one or more Indian tribes, on the relationship between the Federal 
Government and Indian tribes, or on the distribution of power and 
responsibilities between the Federal Government and Indian tribes.

Executive Order 13563

    Executive Order 13563 reaffirms the principles of Executive Order 
12866 while calling for improvements in the nation's regulatory system 
to promote predictability, to reduce uncertainty, and to use the best, 
most innovative, and least burdensome tools for achieving regulatory 
ends. The executive order directs agencies to consider regulatory 
approaches that reduce burdens and maintain flexibility and freedom of 
choice for the public where these approaches are relevant, feasible, 
and consistent with regulatory objectives. Executive Order 13563 also 
requires that regulations be based on the open exchange of information 
and perspectives among state and local officials, affected stakeholders 
in the private sector, and the public as a whole. SBA has developed 
this rule in a manner consistent with these requirements. While 
developing this rule, SBA responded to specific inquiries from 
government officials and the public regarding the implementation of the 
statutory required changes.

Congressional Review Act

    Subtitle E of the Small Business Regulatory Enforcement Fairness 
Act of 1996 (codified at 5 U.S.C. 801-808), also known as the 
Congressional Review Act or CRA, generally provides that before a rule 
may take effect, the agency promulgating the rule must submit a rule 
report, which includes a copy of the rule, to each House of the 
Congress and to the Comptroller General of the United States. SBA will 
submit a report containing this rule and other required information to 
the U.S. Senate, the U.S. House of Representatives, and the Comptroller 
General of the United States. A major rule under the CRA cannot take 
effect until 60 days after it is published in the Federal Register. 
OMB's Office of Information and Regulatory Affairs has determined that 
this rule is not a ``major rule'' as defined by 5 U.S.C. 804(2).

Paperwork Reduction Act

    SBA has determined that this direct final rule does not impose 
additional reporting or recordkeeping requirements under the Paperwork 
Reduction Act, 44 U.S.C., Chapter 35.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA), 5 U.S.C. 601, requires 
administrative agencies to consider the effect of their actions on 
small entities, small nonprofit enterprises, and small local 
governments. Pursuant to the RFA, when an agency issues a rulemaking, 
the agency must prepare a regulatory flexibility analysis which 
describes the impact of the rule on small entities. However, section 
605 of the RFA allows an agency to certify a rule, in lieu of preparing 
an analysis if the rulemaking is not expected to have a significant 
economic impact on a substantial number of small entities. The RFA 
defines ``small entity'' to include ``small businesses,'' ``small 
organization,'' and ``small governmental jurisdictions.''
    This Direct Final Rule adds the U.S. Virgin Islands, American 
Samoa, Guam, and the Commonwealth of the Northern Mariana Islands 
(CNMI) to the list of territories from which small businesses are 
eligible for preferential treatment under two government programs: the 
surplus property program and the SBA mentor-prot[eacute]g[eacute] 
program for government contracting. This rule relates to small business 
concerns but would not affect ``small organizations'' or ``small 
governmental jurisdictions'' because the programs affected generally 
apply only to ``business concerns'' as defined by SBA regulations; in 
other words, to small businesses organized for profit. ``Small 
organizations'' or ``small governmental jurisdictions'' are non-profits 
or governmental entities and do not generally qualify as ``business 
concerns'' within the meaning of SBA's regulations.
    SBA identified 219 small business vendors across the covered 
territories for FY2021 that had sold to the Federal government and 
therefore would benefit from the changes to SBA's mentor-
prot[eacute]g[eacute] program. Based on the number of small business 
vendors across the covered territories affected, SBA believes that the 
rule will not have an impact on a substantial number of entities nor a 
significant economic impact.
    Accordingly, the Administrator of the SBA hereby certifies that 
this rule will not have a significant economic impact on a substantial 
number of small entities. SBA invites comments from members of the 
public who believe there will be a significant impact on any small 
entities, including small businesses.

Administrative Procedure Act--Justification for Direct Final Rule

    In general, SBA publishes a rule for public comment before issuing 
a final rule, in accordance with the Administrative Procedure Act. 5 
U.S.C. 553. The Administrative Procedure Act provides an exception to 
this standard rulemaking process, however, where an agency finds good 
cause to adopt a rule

[[Page 50927]]

without prior public participation. 5 U.S.C. 553(b)(3)(B). The good 
cause requirement is satisfied when prior public participation is 
impracticable, unnecessary, or contrary to the public interest.
    SBA is publishing this rule as a direct final rule because public 
participation is unnecessary. SBA views this as a non-controversial 
administrative action because it merely implements a change required by 
the Small Business Act, as amended by section 866 of NDAA FY21. This 
rule will be effective on the date shown in the DATES section unless 
SBA receives significant adverse comment on or before the deadline for 
comments. Significant adverse comments are comments that provide strong 
justifications why the rule should not be adopted or for changing the 
rule. SBA does not expect to receive any significant adverse comments 
because the rule simply mirrors the statutory language contained in 
section 866 of NDAA FY21, with no extraneous interpretation or other 
expanded text.
    If SBA receives significant adverse comment, SBA will publish a 
notice in the Federal Register withdrawing this rule before the 
effective date. If SBA receives no significant adverse comments, the 
rule will be effective 60 days after publication without further 
notice.

List of Subjects

13 CFR Part 125

    Government contracts, Government procurement, Reporting and 
recordkeeping requirements, Small businesses, Technical assistance.

13 CFR Part 129

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

    For the reasons stated in the preamble, SBA amends 13 CFR parts 125 
and 129 as follows:

PART 125-GOVERNMENT CONTRACTING PROGRAMS

0
1. The authority citation for part 125 continues to read as follows:

    Authority:  15 U.S.C. 632(p), (q), 634(b)(6), 637, 644, 657b, 
657(f), and 657r.


0
2. Amend Sec.  125.1 by adding a definition for ``Covered territory 
business'' in alphabetical order to read as follows:


Sec.  125.1   What definitions are important to SBA's Government 
Contracting Programs?

* * * * *
    Covered territory business means a small business concern that has 
its principal office located in one of the following:
    (1) The United States Virgin Islands;
    (2) American Samoa;
    (3) Guam; or
    (4) The Commonwealth of the Northern Mariana Islands.
* * * * *

0
3. Amend Sec.  125.9 by revising the second sentence in paragraph 
(b)(3)(ii) and revising paragraph (d)(6) introductory text to read as 
follows:


Sec.  125.9   What are the rules governing SBA's small business mentor-
prot[eacute]g[eacute] program?

* * * * *
    (b) * * *
    (3) * * *
    (ii) * * * However, the first two mentor-prot[eacute]g[eacute] 
relationships approved by SBA between a specific mentor and a covered 
territory business, or a specific mentor and a small business that has 
its principal office located in the Commonwealth of Puerto Rico, do not 
count against the limit of three proteges that a mentor can have at one 
time.
* * * * *
    (d) * * *
    (6) A mentor that provides a subcontract to its 
prot[eacute]g[eacute] that is a covered territory business, or that has 
its principal office located in the Commonwealth of Puerto Rico, may:
* * * * *

PART 129--CONTRACTS FOR SMALL BUSINESSES LOCATED IN DISASTER AREAS, 
AND SURPLUS PERSONAL PROPERTY FOR SMALL BUSINESSES LOCATED IN 
DISASTER AREAS, PUERTO RICO, AND COVERED TERRITORY BUSINESSES.

0
4. The authority citation for part 129 continues to read as follows:

    Authority:  15 U.S.C. 636(j)(13)(F)(ii), (iii), and 644(f).


0
5. Revise the heading for part 129 to read as set forth above.

0
6. Revise the heading for subpart C to read as follows:

Subpart C--Surplus Personal Property for Small Businesses Located 
in Puerto Rico and for Covered Territory Businesses

0
7. Amend Sec.  129.300 by revising the definition of ``Covered period'' 
and by adding a definition for ``Covered territory business'' in 
alphabetical order to read as follows:


Sec.  129.300   What definitions are important in this subpart?

    Covered period means:
    (1) In the case of a Puerto Rico business, the period beginning on 
August 13, 2018 and ending on the date which the Oversight Board 
established under section 101 of the Puerto Rico Oversight, Management, 
and Economic Stability Act (48 U.S.C. 2121) terminates. 15 U.S.C. 
636(j)(13)(F)(iii); or
    (2) In the case of a Covered territory business, the period 
beginning on January 1, 2021, the period ending on January 1, 2025. 15 
U.S.C. 636(j)(13)(f)(iii).
    Covered territory business means a small business concern that has 
its principal office located in one of the following:
    (1) The United States Virgin Islands;
    (2) American Samoa;
    (3) Guam; or
    (4) The Commonwealth of the Northern Mariana Islands.
* * * * *

0
8. Amend Sec.  129.301 by revising the section heading and paragraphs 
(a), (b)(1), and (c)(1) introductory text and by redesignating 
paragraph (f) as paragraph (e).
    The revisions read as follows:


Sec.  129.301   How does a covered territory business or small business 
concern located in Puerto Rico obtain Federal surplus personal 
property?

    (a) General. Pursuant to 15 U.S.C. 636(j)(13)(F)(iii), eligible 
covered territory businesses may receive surplus Federal Government 
property from their territory State Agency for Surplus Property (SASP), 
and eligible small business concerns located in Puerto Rico may receive 
such property from the Puerto Rico SASP. The procedures set forth in 41 
CFR part 102-37 and this section will be used to transfer surplus 
personal property to eligible small business concerns. The property 
which may be transferred to the territory SASP or the Puerto Rico SASP 
for further transfer to eligible small business concerns includes all 
personal property which has become available for donation pursuant to 
41 CFR 102-37.30.
    (b) * * *
    (1) Be a covered territory business or be located in Puerto Rico;
* * * * *
    (c) * * *
    (1) Eligible concerns may acquire surplus Federal personal property 
from their territory SASP or, for a Puerto Rico concern, the Puerto 
Rico SASP,

[[Page 50928]]

provided the concern represents and agrees in writing:
* * * * *

Isabella Casillas Guzman,
Administrator.
[FR Doc. 2022-17828 Filed 8-18-22; 8:45 am]
BILLING CODE 8026-09-P