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					                        Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Rules and Regulations                                                                                              51243

     Housing Enterprise Oversight hereby                                   I 2. Revise Subpart E of part 1780 to                                       with the Federal Civil Penalties
     amends 12 CFR part 1780 as follows:                                   read as follows:                                                            Inflation Adjustment Act of 1990, as
                                                                                                                                                       amended by the Debt Collection
     PART 1780—RULES OF PRACTICE                                           Subpart E—Civil Money Penalty                                               Improvement Act of 1996 (28 U.S.C.
     AND PROCEDURE                                                         Inflation Adjustments                                                       2461 note) as follows:
     I  1. The authority citation for part 1780                            § 1780.80         Inflation adjustments.
     is revised to read as follows:                                          The maximum amount of each civil
       Authority: 12 U.S.C. 4501, 4513(b), 4517,                           money penalty within OFHEO’s
     4521, 4631–4641.                                                      jurisdiction is adjusted in accordance

                                                                                                                                                                                                      New adjusted
                    U.S. code citation                                                                                    Description                                                                  maximum
                                                                                                                                                                                                     penalty amount

     12   U.S.C.   4636(b)(1)   .................................   First Tier ...................................................................................................................            6,500
     12   U.S.C.   4636(b)(2)   .................................   Second Tier (Executive Officer or Director) ............................................................                                 11,000
     12   U.S.C.   4636(b)(2)   .................................   Second Tier (Enterprise) .........................................................................................                       32,500
     12   U.S.C.   4636(b)(3)   .................................   Third Tier (Executive Officer or Director) ................................................................                             130,000
     12   U.S.C.   4636(b)(3)   .................................   Third Tier (Enterprise) .............................................................................................                 1,275,000

     § 1780.81      Applicability.                                         HUBZone concerns; extends qualified                                         the Reauthorization Act amended
        The inflation adjustments in § 1780.80                             HUBZone areas to include military base                                      certain provisions of the Small Business
     apply to civil money penalties assessed                               closure areas for a period of five years;                                   Act, 15 U.S.C. 631 et. seq., that govern
     in accordance with the provisions of 12                               revises the definition of a ‘‘qualified                                     the HUBZone program and the
     U.S.C. 4636 for violations occurring                                  non-metropolitan county;’’ extends the                                      definition of small agricultural
     after the effective date, August 30, 2005.                            redesignation period for HUBZone areas                                      cooperative.
       Dated: August 25, 2005.
                                                                           through the release of the 2010 census                                      1. Section 151 of the Reauthorization
                                                                           data; and provides a five percent                                           Act
     Stephen A. Blumenthal,
                                                                           HUBZone evaluation price preference
     Acting Director, Office of Federal Housing                            for agricultural commodities in                                                In particular, Section 151 of the
     Enterprise Oversight.                                                                                                                             Reauthorization Act relaxed the
                                                                           international food aid procurements.
     [FR Doc. 05–17232 Filed 8–29–05; 8:45 am]                             Pursuant to the Administrative                                              statutory requirement that a HUBZone
     BILLING CODE 4220–01–U                                                Procedure Act, SBA has determined that                                      small business concern (SBC) must be
                                                                           there is good cause to issue this rule as                                   entirely owned by U.S. citizens.
                                                                           an interim rule with an immediate                                           Congress concluded that this statutory
     SMALL BUSINESS ADMINISTRATION                                         effective date. However, SBA                                                mandate precluded small business
                                                                           encourages and will consider all timely                                     owners from taking advantage of
     13 CFR Parts 121, 124, 125 and 126                                    public comments in developing the final                                     available forms of business
                                                                           rule.                                                                       organizations that limit the personal
     RIN 3245–AF31
                                                                                                                                                       liability of business owners. It also
                                                                           DATES: This interim rule is effective
     HUBZone, Government Contracting,                                                                                                                  precluded ownership by small
                                                                           August 30, 2005. Comments must be
     8(a) Business Development and Small                                                                                                               agricultural cooperatives that operate in
                                                                           received on or before October 31, 2005.
     Business Size Standard Programs                                                                                                                   rural HUBZones, and thereby deprived
                                                                           ADDRESSES: You may submit comments,                                         those communities of the economic
     AGENCY:  U.S. Small Business                                          identified by RIN #3245–AF31, by any                                        benefits of increased HUBZone
     Administration (SBA).                                                 of the following methods:                                                   contracting opportunities.
                                                                              Internet:                                       As a result, Section 151 of the
     ACTION: Interim rule with request for
                                                                           Follow the instructions for submitting                                      Reauthorization Act amended the
                                                                           comments. E-mail:                                          definition of ‘‘HUBZone SBC’’ in section
     SUMMARY: This interim rule amends                                     Fax: (202) 481–5593.                                                        3(p)(3)(A) of the Small Business Act, 15
     SBA’s HUBZone, 8(a) Business                                             Mail or Hand Deliver: Michael                                            U.S.C 632(p)(3)(A), to require that SBCs
     Development, Government Contracting                                   McHale, Associate Administrator for the                                     eligible for HUBZone certification be 51
     and Size Standard regulations to                                      HUBZone Program, 409 Third Street,                                          percent (instead of 100 percent) owned
     implement provisions of the Small                                     SW., Washington, DC, 20416.                                                 and controlled by U.S. citizens. It also
     Business Act including the                                            FOR FURTHER INFORMATION CONTACT:                                            added a new section 3(p)(3)(E) to the
     Consolidated Appropriations Act, 2005,                                Sheryl J. Swed, Office of Government                                        Small Business Act, 15 U.S.C
     specifically, Subtitle E of Division K                                Contracting, at (202) 205–6413 or by                                        632(p)(3)(E), to include as HUBZone
     entitled the Small Business                                           e-mail at:                                             SBCs small agricultural cooperatives or
     Reauthorization and Manufacturing                                     SUPPLEMENTARY INFORMATION:                                                  SBCs wholly or partially-owned by
     Assistance Act of 2004. Consistent with                                                                                                           small agricultural cooperatives
     the new statutory requirements under                                  A. Statutory Authority                                                      organized and incorporated in the
     Subtitle E, this interim rule: Amends the                                On December 8, 2004, the President                                       United States. Also in connection with
     definitions of the terms ‘‘business                                   signed into law the Consolidated                                            agricultural cooperatives, Section 151
     concern,’’ ‘‘affiliation,’’ ‘‘HUBZone                                 Appropriations Act, 2005, Public Law                                        further amended Section 3(j) of the
     small business concern’’ and ‘‘qualified                              108–447 which contained the Small                                           Small Business Act, 15 U.S.C. 632(j), to
     HUBZone small business concern;’’                                     Business Reauthorization and                                                require that small agricultural
     amends the HUBZone eligibility                                        Manufacturing Assistance Act of 2004                                        cooperatives be treated as business
     requirements for tribally-owned                                       (the Reauthorization Act). Subtitle E of                                    concerns for purposes of the Small

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     51244             Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Rules and Regulations

     Business Act. This section also states                  2. Section 152 of the Reauthorization                 3. Section 153 of the Reauthorization
     that when determining size, SBA should                  Act                                                   Act
     not include the income or employees of                                                                           Finally, in Section 153 of the
     the underlying members of the                              In Section 152 of the Reauthorization
                                                             Act, Congress provided three basic                    Reauthorization Act, Congress provided
     cooperative. Because SBA’s programs                                                                           a five percent HUBZone evaluation
     and services were created for the benefit               amendments to expand the areas that
                                                                                                                   price preference in international food
     of the small business community, SBA                    qualify as HUBZones. First, Section 152
                                                                                                                   aid procurements by the Secretary of
     interprets this section to mean that the                added new Sections 3(p)(1)(E) and
                                                                                                                   Agriculture. Congress explained that the
     members of any small agricultural                       3(p)(4)(D) to the Small Business Act, 15              previously authorized price evaluation
     cooperative applying for SBA assistance                 U.S.C. 632(p)(1)(E), 632(p)(4)(D), to                 preference regime may have made it
     must also qualify as a small business                   authorize military base closure areas                 more difficult for non-HUBZone SBCs to
     concern or small agricultural                           that have undergone final closure to be               compete in food aid tender auctions
     cooperative in order to qualify for SBA                 treated as qualified HUBZones for a                   and, in turn, may have had the
     assistance. To interpret the statute                    period of five years. Congress                        unintended effect of diminishing the
     otherwise would circumvent the                          recognized that many base closure areas               competitive supplier base. Section 153
     Agency’s mission.                                       are not located in qualified HUBZones,                therefore amended Section 31(b)(3) of
        In addition, Section 151 of the                      and therefore do not benefit from the job             the Small Business Act, 15 U.S.C.
     Reauthorization Act expanded the                        creation and economic revitalization                  657a(b)(3), to apply a five percent price
     employee residency requirement for                      potential of the HUBZone program.                     evaluation preference on the first 20
     tribally-owned HUBZone SBCs.                               Second, Section 152 revised the                    percent of U.S. Department of
     Previously, the Small Business Act did                                                                        Agriculture’s procurements of
                                                             statutory definition of ‘‘qualified non-
     not mandate that tribally-owned                                                                               commodities used for international food
                                                             metropolitan county’’ in Section
     concerns maintain a principal office in                                                                       aid export operations.
                                                             3(p)(4)(B)(ii)(II) of the Small Business
     a qualified HUBZone and hire at least                                                                            This interim rule amends Parts 121,
                                                             Act, 15 U.S.C. 632(p)(4)(B)(ii)(II). Under
     35 percent of their employees from any                                                                        124, 125 and 126 of SBA’s regulations
     HUBZone area, as is the requirement for                 the previous definition, some of the
                                                             poorest rural communities in states with              to adopt the specific statutory changes
     other HUBZone SBCs. Instead, section                                                                          provided under Subtitle E of the
     3(p)(5)(A)(i)(I)(bb) of the Small Business              high unemployment did not qualify as
                                                             a HUBZone based on unemployment                       Reauthorization Act. In accordance with
     Act, 15 U.S.C. 632(p)(5)(A)(i)(I)(bb),                                                                        the express statutory language and
     required that at least 35 percent of the                because the unemployment
                                                                                                                   declared legislative purposes of those
     tribally-owned HUBZone SBC’s                            qualification was based solely on the
                                                                                                                   changes, this interim rule amends the
     employees performing a HUBZone                          statewide unemployment average.
                                                                                                                   exceptions to SBA’s affiliation rules in
     contract must reside within an Indian                   Accordingly, Section 152 revised the                  13 CFR 121.103 and the definition of
     Reservation governed by one or more of                  definition of ‘‘qualified non-                        business concern in § 121.105; for
     the tribal government owners or an                      metropolitan county’’ to allow for a                  consistency purposes, amends
     adjoining HUBZone. Although that                        comparison of a county’s                              §§ 124.503 and 126.607 to incorporate
     requirement was originally intended to                  unemployment rate to the lower of the                 the preference for HUBZone, 8(a) and
     encourage economic development of                       statewide or the national average, in                 service disabled veterans (SDV) over
     tribes, Congress determined that, over                  determining eligibility.                              small business set-asides set forth in
     time, it had the unintended                                Third, Section 152 of the                          SBA’s SDV regulations, clarifies the
     consequence of limiting the kinds of                    Reauthorization Act expanded qualified                definition of ‘‘employee’’ for the
     contracts that tribally-owned concerns                  HUBZones by extending the                             HUBZone program in § 125.6; adds new
     could perform and of inhibiting their                   redesignation period for HUBZone areas                definitions and amends existing
     potential synergies with other business                 through the public release of the 2010                definitions in § 126.103; amends the
     organizations.                                          census data. The previous statutory                   employee residency requirement for
        To remedy the disparity this separate                definition of ‘‘redesignated area’’ in                tribally-owned HUBZone SBCs and
     employee residency requirement created                  Section 3(p)(4)(C) of the Small Business              adds the requirements for small
     for tribally-owned HUBZone SBCs (as                     Act, 15 U.S.C. 632(p)(4)(C), allowed                  agricultural cooperatives to be
     compared to other HUBZone SBCs),                                                                              considered qualified HUBZone SBCs in
                                                             those areas that no longer qualify as
     Section 151 of the Reauthorization Act                                                                        § 126.200; amends the corporate stock
                                                             HUBZones to remain in the program for
     added as an option for tribally-owned                                                                         ownership example to reflect the change
                                                             a period of three years. Congress
     concerns the same residency and                                                                               in ownership requirements in § 126.201;
                                                             determined that this three-year
     principal office requirement that applies                                                                     amends § 126.204 to include
     to other HUBZone SBCs. As amended,                      grandfather period did not provide
                                                                                                                   agricultural cooperatives; clarifies the
     Section 3(p)(5)(A)(i)(I)(aa) of the Small               sufficient time for firms to recoup a
                                                                                                                   application of requirements for SBCs
     Business Act, 15 U.S.C.                                 return on their investment in locating
                                                                                                                   applying for HUBZone status based on
     632(p)(5)(A)(i)(I)(aa), now allows                      their businesses in qualified HUBZone
                                                                                                                   a location in a qualified base closure
     tribally-owned concerns the option of                   areas, adjusting their ownership                      area in § 126.304; amends the price
     either maintaining their principal office               structure, and recruiting HUBZone                     evaluation preference for agricultural
     in a HUBZone and hiring at least 35                     residents as employees. To allow firms                commodities in § 126.613 and
     percent of their employees from any                     additional time to reap the benefits of               reorganizes and clarifies § 126.700 to
     HUBZone area, or complying with the                     their HUBZone investment, Section 152                 make it consistent with SBA’s other
     existing separate requirement that 35                   extended the redesignation period until               regulations regarding contractor
     percent of their employees performing a                 the later of the date on which the                    performance requirements.
     HUBZone contract reside within an                       Census Bureau publicly releases the first
     Indian Reservation governed by one or                   results from the 2010 decennial census                B. Section-by-Section Analysis
     more of the tribal government owners or                 or 3 years after the date on which the                  Statutory changes to the definition of
     adjoining HUBZone.                                      area ceased to qualify as a HUBZone.                  small agricultural cooperative require

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                       Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Rules and Regulations                                        51245

     SBA to add another exception to its                     cooperative is considered a ‘‘business                first results from the 2010 decennial
     affiliation rule in § 121.103 and to                    concern’’ and that the income or                      census or three years after the date on
     modify its definition of business                       employees of any member of the                        which the area ceased to qualify as a
     concern in § 121.105.                                   cooperative is not included in the                    HUBZone.
        To make the HUBZone regulations                      calculation of size. The definition of                   With respect to the new eligibility
     consistent with SBA’s recently                          ‘‘small agricultural cooperative’’ in                 requirements for tribally-owned
     published SDV regulations, SBA is                       § 126.103 further indicates that any                  concerns under Section 3(p)(5)(A)(i)(I)
     adding paragraph (j) to § 124.503 and                   entity other than an SBC, small                       of the Small Business Act, 15 U.S.C.
     revising § 126.607 to incorporate                       cooperative or U.S. citizen may not be                632(p)(5)(A)(i)(I), SBA is amending
     contracting preferences for HUBZone,                    a member of a small agricultural                      § 126.200, which provides the eligibility
     8(a) and SDV over small business set-                   cooperative.                                          requirements for such concerns. As
     asides. This change will ensure                            SBA is also revising the definition of             amended, § 126.200 now allows tribally-
     consistent guidance throughout 13 CFR                   several existing terms in § 126.103. With             owned concerns located in qualified
     Chapter 1.                                              respect to base closure areas, SBA is                 HUBZones the option of either
        To clarify the definition of                         amending the definition of ‘‘HUBZone’’                maintaining their principal office in a
     ‘‘employee’’ as it relates to the                       in § 126.103, to include a ‘‘qualified                HUBZone and hiring at least 35 percent
     HUBZone program, SBA is adding more                     base closure area’’ as a designated                   of their employees from any HUBZone
     explicit language to § 125.6(e)(6) to                   HUBZone. In implementing the                          area, or of complying with the existing
     indicate that for purposes of the                       statutory changes regarding ownership                 separate requirement that 35 percent of
     HUBZone program, the definition of                      of HUBZone SBCs by U.S. citizens and                  their employees performing a HUBZone
     ‘‘employee’’ in § 126.103 controls.                     by small agricultural cooperatives, SBA               contract reside within an Indian
        SBA is adding several new definitions                is amending the definition of a                       Reservation governed by one or more of
     in § 126.103 to implement the statutory                 ‘‘HUBZone small business concern.’’ As                the tribal government owners or
     changes under the Reauthorization Act.                  expressly provided in the amended                     adjoining HUBZone.
     To incorporate the new statutory                        Section 3(p)(3)(A) of the Small Business                 SBA is also adding the requirements
     requirement for the treatment of military               Act, 15 U.S.C. 632(p)(3)(A), SBA is                   for small agricultural cooperatives to
     base closure areas as qualified                         amending the definition of a ‘‘HUBZone                § 126.200(c) in accordance with Section
     HUBZones, SBA is adding a definition                    SBC’’ in § 126.103, to include a SBC that             3(p)(5)(A)(i)(I) of the Small Business
     for the terms ‘‘base closure area’’ and                 is at least 51 percent owned and                      Act, 15 U.S.C. 632(p)(5)(A)(i)(I). To be a
     ‘‘qualified base closure area’’ in                      controlled by one or more U.S. citizens.              qualified HUBZone SBC, a small
     § 126.103. With respect to the term                     Likewise, as expressly provided in the                agricultural cooperative must meet the
     ‘‘base closure area,’’ the interim rule                 amended Section 3(p)(3)(E) of the Small               ownership requirements of 15 U.S.C.
     adopts the identical definition of that                 Business Act, 15 U.S.C. 632(p)(3)(E), the             632(p)(3)(E), have a principal office
     term provided in the amended Section                    interim rule amends the definition of                 located in a HUBZone and employ at
     3(p)(4)(D) of the Small Business Act, 15                ‘‘HUBZone SBC’’ to include SBCs that                  least 35% of its employees from a
     U.S.C. 632(p)(4)(D). Under that                         are small agricultural cooperatives                   HUBZone.
     definition, a ‘‘base closure area’’ means               organized or incorporated in the United                  The examples in §§ 126.200(b)(1) and
     lands within the external boundaries of                 States, wholly owned by one or more                   126.201(a) have also been amended to
     a military installation that were closed                small agricultural cooperatives or                    reflect the new requirement that SBCs
     through a privatization process under                   partially owned by one or more small                  be at least 51% owned and controlled
     specified authority. To accommodate                     agricultural cooperatives organized or                by U.S. citizens.
     the statutory five-year period in which                 incorporated in the United States,                       Section 126.204, relating to SBA’s
     a base closure area qualifies as a                      provided that all other owners are small              consideration of affiliates when
     HUBZone, the interim rule adds the                      business concerns or U.S. citizens.                   determining qualified HUBZone SBC’s,
     new term ‘‘qualified base closure area,’’                  Also in connection with § 126.103,                 has also been amended to provide an
     which limits the qualifying period of a                 SBA is amending the definition of the                 exception for agricultural cooperatives
     base closure area to five years from the                term ‘‘qualified non-metropolitan                     in accordance with Section 3(j) of the
     date of final closure of the base or five               county,’’ to incorporate the new                      Small Business Act, 15 U.S.C. 632(j).
     years from the date of signing of the                   statutory definition of the term in                   The statutory definition of agricultural
     legislation, December 8, 2004. SBA will                 Section 3(p)(4)(B)(ii)(II) of the Small               cooperative in the Small Business Act
     rely on the Department of Defense,                      Business Act, 15 U.S.C.                               provides that when determining the size
     Office of Economic Adjustment, as the                   632(p)(4)(B)(ii)(II). Consistent with that            of a cooperative, SBA may not include
     authority to determine whether a base is                definition, the interim rule revises the              the income or employees of the
     closed.                                                 definition of a ‘‘qualified non-                      cooperative members. 15 U.S.C. 632(j).
        In addition, since the amended                       metropolitan county’’ to allow a                      This means the cooperative and its
     Section 3(p)(3)(E) of the Small Business                comparison between the statewide                      members are not considered affiliated
     Act, 15 U.S.C. 632(p)(3)(E), now                        unemployment average and the national                 by virtue of their membership in the
     authorizes ownership in a HUBZone                       average in determining whether a non-                 cooperative.
     SBC by small agricultural cooperatives                  metropolitan county qualifies as a                       SBA is amending § 126.304 to
     organized or incorporated in the U.S.,                  HUBZone based on unemployment.                        describe the process for verifying the
     this interim rule adds a definition for                    SBA is also amending the definition                specific areas that are considered
     the term ‘‘small agricultural                           of ‘‘redesignated area’’ in § 126.103, in             ‘‘qualified base closure areas.’’ The
     cooperative.’’ Amended § 126.103                        accordance with the statutory                         interim rule adds a new § 126.304(d),
     adopts the existing definition of a                     amendments of the term in Section                     which explains that concerns applying
     ‘‘small agricultural cooperative’’                      3(p)(4)(C) of the Small Business Act, 15              for HUBZone status based on a location
     provided in Section 3(j) of the Small                   U.S.C. 632(p)(4)(C). Under the revised                within a qualified base closure area
     Business Act, 15 U.S.C. 632(j). That                    § 126.103, a ‘‘redesignated area’’ is                 must use SBA’s List of Qualified Base
     definition makes clear that in                          defined as the later of the date on which             Closure Areas to verify that the location
     determining size, an agricultural                       the Census Bureau publicly releases the               is within a qualified base closure area.

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     51246             Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Rules and Regulations

     The HUBZone map will be modified to                     of work requirements by stating that not              important HUBZone requirements. In
     reflect these areas. It also describes the              more than 50% of the cost of contract                 addition, immediate implementation of
     information concerns may submit to                      incurred for personnel may be                         the statute is in the public interest, since
     SBA if they believe the List fails to                   subcontracted to a non-qualified                      the legislative amendments expand the
     identify a particular location as a                     HUBZone SBC.                                          opportunities for HUBZone contracting.
     qualified base closure area.                               Although SBA is issuing this rule as               Specifically, the time it will take to
        SBA is making a technical correction                 an interim rule with an immediate                     afford prior public participation in this
     to § 126.503 by changing the word                       effective date, it encourages public                  rulemaking will deprive newly eligible
     ‘‘may,’’ found in subparagraph (c), to                  comments on these regulatory                          firms and economically depressed
     ‘‘will’’ in order to be consistent with the             amendments. In developing the final                   communities of the needed economic
     language of § 126.803(d). Section                       rule, SBA will consider all timely                    benefits of the HUBZone program, and
     126.503(c) cross references § 126.803,                  comments received.                                    will frustrate the ability of Federal
     therefore the language in both sections                                                                       contracting agencies to utilize the
                                                             C. Justification for Publication as an
     needs to be consistent.                                                                                       expanded program to achieve the
        SBA is amending § 126.613 to                         Interim Rule
                                                                                                                   statutory HUBZone procurement goal.
     incorporate the new statutory price                        In general, SBA publishes a proposed                  Accordingly, SBA has determined
     evaluation preference for international                 rule for public comment before issuing                that there is good cause to issue this rule
     food aid procurements provided under                    a final rule, in accordance with the                  without prior public participation. SBA
     Section 31(b)(3) of the Small Business                  Administrative Procedure Act and SBA                  does, however, encourage the public to
     Act, 15 U.S.C. 657a(b)(3). The amended                  regulations. 5 U.S.C. 553, and 13 CFR                 comment on the interim rule, especially
     § 126.613 provides a 5% price                           101.108. The Administrative Procedure                 the clarifications to § 126.700 and will
     evaluation preference on the first 20%                  Act provides an exception to this                     consider all timely comments in
     of the USDA procurements for                            standard rulemaking process when an
                                                                                                                   preparing the final rule.
     commodities used for international food                 agency finds good cause to adopt a rule
     aid export operations.                                  without prior public participation. 5                 D. Justification for Immediate Effective
        Finally, SBA is making a technical                   U.S.C 553(b)(3)(B). The good cause                    Date of Interim Rule
     correction to § 126.700 by changing the                 requirement is satisfied when prior                      The Administrative Procedure Act
     citation from § 125.6(b) to § 125.6(c) and              public participation is impracticable,                requires that ‘‘publication or service of
     further clarifying the section by                       unnecessary, or contrary to the public                a substantive rule shall be made not less
     reorganizing the paragraphs and adding                  interest. Under such circumstances, an                than 30 days before its effective date,
     more explicit language in order to be                   agency may publish an interim rule                    except * * * as otherwise provided by
     consistent with § 125.6(c) and the Small                without soliciting prior public                       the agency for good cause found and
     Business Act. As currently drafted,                     comment.
                                                                                                                   published with the rule.’’ 5 U.S.C.
     § 126.700 is a source of confusion for                     SBA has determined that there is good
                                                                                                                   553(d)(3). SBA has determined that
     many SBCs and this confusion may lead                   cause to issue this rule without prior
                                                             notice and opportunity for public                     there is good cause for an immediate
     to misapplication of SBA’s regulations
                                                             comment because it is impracticable,                  effective date of this interim rule,
     resulting in the award of subcontracts to
                                                             unnecessary, and contrary to the public               instead of observing the 30-day period
     non-qualified HUBZone concerns. It is
                                                             interest to do so under the present                   between publication and effective date.
     also inconsistent with § 125.6 and
                                                             circumstances. As discussed above,                    As discussed more fully above in the
     § 3(p)(5)(C) of the Small Business Act as
                                                             Congress amended several HUBZone                      Justification of Publication of Interim
     it incorrectly requires that for
                                                             provisions in the Small Business Act to               Rule, any delay in the effective date of
     construction contracts a qualified
                                                             expand the program’s reach over the                   this interim rule will unduly perpetuate
     HUBZone SBC must perform 50% of the
                                                             Nation’s economically distressed                      existing inconsistencies between certain
     cost of the contract and at least 15% (or
                                                             communities and to eliminate unduly                   provisions of SBA’s HUBZone
     25% depending on type of contract) of
     the cost of contract for personnel. As                  restrictive HUBZone requirements that                 regulations and sections of the Small
     currently drafted, the two percentages                  impede the achievement of the                         Business Act. It will also hinder the
     do not measure the same base, that is,                  HUBZone goals. These statutory                        accomplishment of the HUBZone goals.
     one relates to the overall cost of the                  changes became effective on December                  E. Compliance With Executive Orders
     contract and one to the cost of the                     8, 2004.                                              12866, 12988, and 13132, the
     contract incurred for personnel. This                      As a result of these recent legislative            Paperwork Reduction Act (44 U.S.C.
     discrepancy was never intended and is                   amendments, important provisions of                   Ch. 35), and the Regulatory Flexibility
     not consistent with the requirements of                 SBA’s existing HUBZone, Government                    Act (5 U.S.C. 601–602)
     the Small Business Act. To clarify this                 Contracting, 8(a) Business Development
                                                             and Size Standard regulations are now                   OMB determined that this rule
     inconsistency, this rule changes the
     current performance of work                             inconsistent with governing sections of               constitutes a ‘‘significant regulatory
     requirement for construction contracts                  the Small Business Act. It is both                    action’’ under Executive Order 12866.
     from ‘‘at least 50% of the contract’’ to                unnecessary and impracticable to                      SBA’s Regulatory Impact Analysis is set
     ‘‘at least 50% of the cost of contract                  provide advance notice and public                     forth below.
     incurred for personnel.’’ This standard                 participation in implementing the                     Regulatory Impact Analysis
     is what is referenced throughout the                    recent statutory changes because SBA is
     Small Business Act (see §§ 3(p)(5)(C),                  simply adopting the identical                         1. General Considerations
     8(a)(14)(A) and 15(o)) and in § 125.6 of                amendments mandated by the                              a. Is there a need for the regulatory
     SBA’s regulations, and the change to                    Reauthorization Act and ensuring                      action?
     one standard ensures consistency                        consistency with existing provisions of                 SBA has determined that this
     throughout SBA’s regulations. More                      the Small Business Act, and any delay                 regulatory action is necessary. SBA is
     explicit language was also added to                     in revising the inconsistent provisions               statutorily authorized to administer the
     clarify the relationship between the                    in SBA’s existing regulations will                    HUBZone program and is required to
     prime and subcontracting performance                    hamper the proper application of                      implement all statutory changes to the

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                       Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Rules and Regulations                                        51247

     program. The Reauthorization Act                        Federal agencies will use the program.                4. Other Considerations, Including
     amended several provisions of the Small                 Furthermore, when more Federal                        Distributional Effects, Equity
     Business Act governing the HUBZone                      agencies use the program, more                        Considerations and Uncertainty
     program. To implement these statutory                   concerns will want to take advantage of                  SBA anticipates that the distribution
     changes, SBA must amend its existing                    the contract assistance available under               of contracts among different
     HUBZone regulations. The amendments                     the program. According to available                   procurement vehicles will change. Non-
     are also necessary and appropriate to                   data, there are an estimated 220                      HUBZone concerns currently
     better serve the needs of small business                counties to be added as a result of this              participating in the Federal marketplace
     concerns (SBCs) and the statutory goals                 new legislation. In addition, over 150                will be affected economically as a result
     of the HUBZone program. There are no                    locations may be designated as                        of their ineligibility to compete for
     practical alternatives to this                          HUBZone locations as a result of                      HUBZone contracts. These costs will
     implementation of the statutory                         military base closures. As these areas                vary based on the goods and services
     changes.                                                are defined by the Department of                      provided by newly eligible HUBZone
       b. What is the baseline?                              Defense, they will be posted on the
       SBA considered several baselines in                                                                         SBCs. In some industries there may be
                                                             HUBZone Web site and map.                             very little impact, while in other
     formulating this interim rule. These
     include the existing HUBZone program                       b. Greater administrative efficiency               industries there may be a substantial
     regulations and definitions that the                    and program integrity.                                impact.
     interim rule revises; the estimated                                                                              Large Federal prime contractors may
                                                                Because the amendments in this
     universe of potential HUBZone SBCs;                                                                           experience some decrease in contract
                                                             interim rule relax some of the previous
     the existing statutory requirements; the                                                                      opportunities as Federal agencies
                                                             program requirements, the interim rule
     achievement of the three percent                                                                              increase their utilization of the
                                                             will likely streamline and improve the
     HUBZone contracting goal; and the                                                                             HUBZone program. However, these
                                                             effective administration of the HUBZone
     current procurement practices of                                                                              changes are insignificant in light of the
                                                             program. It will also enhance SBA’s
     Federal agencies.                                                                                             magnitude of Federal procurement
                                                             ability to administer the program with
       It is difficult to obtain precise                                                                           versus HUBZone procurement. The
                                                             existing resources and better focus the
     quantitative estimates of the impact                                                                          Federal government spent $277 billion
                                                             program benefits on the businesses that               on goods and services in fiscal year
     these changes might have on these                       operate in areas of low income or high
     baseline criteria. However, SBA                                                                               2003. Of this amount, $3.4 billion, or
                                                             unemployment.                                         1.23% of total procurements, was
     estimates that adoption of this interim
                                                                c. Greater contracting efficiency for              awarded to HUBZone firms. This level
     rule will increase the number of
                                                             Federal agencies.                                     is significantly lower than the $8.3
     HUBZone SBCs, increase the number of
     HUBZone procurement actions by                             SBA believes that by increasing the                billion that would have been awarded to
     Federal agencies, and result in better                  level of activity and participation in the            HUBZone firms if the 3% goal set by
     and more efficient administration of the                HUBZone program, it will increase                     Congress for the program had been
     program. Ultimately, the program would                  economic savings to the Federal                       achieved.
     move closer to meeting its statutory                    government on HUBZone awards. In                      5. Conclusion
     objectives of creating jobs and infusing                particular, an increase in the number of
                                                             eligible HUBZone concerns will provide                   Most of the benefits of this interim
     capital into distressed communities.
       c. Were there any alternatives?                       procuring agencies with a larger base of              rule will accrue to HUBZone
       There are no alternatives to                          HUBZone vendors. This will ultimately                 communities. Expanded eligibility for
     implementing the statutorily mandated                   reduce the cost of HUBZone contracts                  SBCs and designated areas and
     provisions detailed in the interim rule.                through increased competition among                   increased HUBZone contacting should
     The amendments of the Reauthorization                                                                         result in more Federal contract dollars
                                                             HUBZone SBCs.
     Act, require SBA to amend the                                                                                 going to distressed communities.
     HUBZone regulations so that they will                   3. Cost Estimates                                        Overall, SBA believes that increasing
     conform to the new statutory provisions.                                                                      the efficiency and access to the
                                                               SBA expects that as a result of this                HUBZone program to both Federal
     The regulatory amendments also                          interim rule, there will be significant
     facilitate the growth of the program to                                                                       agencies and small businesses will
                                                             increases in the number of concerns                   result in increased use of the program
     Congressionally-established levels,
                                                             participating in the HUBZone program                  and a higher probability that the
     better serve the program’s small
                                                             and in the number of HUBZone contract                 HUBZone program will meet its
     business participants, and assist in
                                                             dollars. To the extent that this                      objectives to create jobs and increase
     accommodating the procurement needs
                                                             materializes, there may be attendant                  capital investment in HUBZone
     of Federal agencies.
                                                             cost increases to the government in                   communities.
     2. Benefit Estimates                                    terms of the costs of goods and services                 SBA has determined that this interim
        The most significant benefits to                     and slightly increased administrative                 rule does not impose additional
     implementing the changes included in                    costs. However, existing provisions of                reporting or recordkeeping requirements
     this interim rule are:                                  the Federal Acquisition Regulation                    under the Paperwork Reduction Act, 44
        a. Increased benefits to both small                  concerning the determination of ‘‘fair                U.S.C., chapter 35.
     businesses and Federal agencies.                        and reasonable’’ pricing will mitigate                   This interim rule meets applicable
        SBA believes that the changes in this                any significant monetary costs to the                 standards set forth in §§ 3(a) and 3(b)(2)
     interim rule will increase the base                     government as a result of this interim                of Executive Order 12988, Civil Justice
     number of small businesses in the                       rule. SBA does not believe these                      Reform, to minimize litigation,
     HUBZone program and increase the                        changes will result in significantly                  eliminate ambiguity, and reduce
     program’s viability and utilization by                  higher costs to HUBZone SBCs because                  burden. This action does not have
     Federal agencies. These two effects are                 the amendments do not create                          retroactive or preemptive effect.
     mutually dependent in that the more                     additional burdens or restrictions on                    This interim rule will not have
     firms that are in the program, the more                 SBCs.                                                 substantial direct effects on the States,

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     51248             Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Rules and Regulations

     on the relationship between the Federal                 by SBA for other similar agricultural                 I  A. Add the terms and definitions for
     government and the States, or on the                    small business concerns. A small                      ‘‘Base closure area,’’ ‘‘Qualified base
     distribution of power and                               agricultural cooperative’s member                     closure area,’’ and ‘‘Small agricultural
     responsibilities among the various                      shareholders are not considered to be                 cooperative;’’ and
     levels of government. Therefore, for the                affiliates of the cooperative by virtue of            I B. Revise the definitions of
     purposes of Executive Order 13132,                      their membership in the cooperative.                  ‘‘HUBZone,’’ paragraph (ii) of the
     SBA determines that this rule has no                    However, a business concern or                        definition of ‘‘Qualified non-
     federalism implications warranting                      cooperative that does not qualify as                  metropolitan county,’’ ‘‘Redesignated
     preparation of a federalism assessment.                 small under this part may not be a                    area’’ and paragraphs (1), (5), (6), and (7)
       Because this rule has been issued as                  member of a small agricultural                        of the definition for ‘‘HUBZone small
     an interim final, there is no requirement               cooperative.                                          business concern (HUBZone SBC).’’
     for SBA to prepare a Regulatory                         *      *     *     *    *                                The added and revised terms read as
     Flexibility Act analysis.                                                                                     follows:
                                                             PART 124—8(a) BUSINESS                                § 126.103 What definitions are important in
     List of Subjects in 13 CFR Parts 121,
                                                             DEVELOPMENT/SMALL                                     the HUBZone Program?
     124, 125 and 126
                                                             DISADVANTAGED BUSINESS STATUS                         *      *     *      *     *
       Administrative practice and                           DETERMINATIONS                                           Base closure area means lands within
     procedure, Government procurement,
                                                             I 3a. The authority citation for part 124             the external boundaries of a military
     Small businesses.
                                                             continues to read as follows:                         installation that were closed through a
     I For the reasons set forth above, SBA                                                                        privatization process under the
     amends 13 CFR parts 121, 124, 125, and                    Authority: 15 U.S.C. 634(b)(6), 636(j),             authority of:
     126, as follows:                                        637(a), 637(d) and Pub. L. 99–661, Pub. L.               (1) The Defense Base Closure and
                                                             100–656, sec. 1207, Pub. L. 101–37, Pub. L.
                                                                                                                   Realignment Act of 1990 (part A of title
     PART 121—SMALL BUSINESS SIZE                            101–574, and 42 U.S.C. 9815.
                                                                                                                   XXIX of division B of Public Law 101–
     REGULATIONS                                             I 4. Amend § 124.503 to add a new                     510; 10 U.S.C. 2687 note);
     I  1. The authority citation for part 121               paragraph (j) as follows:                                (2) Title II of the Defense
     is revised to read as follows:                                                                                Authorization Amendments and Base
                                                             § 124.503 How does SBA accept a                       Closure and Realignment Act (Pub. L.
       Authority: 15 U.S.C. 632(a), 632(j), 632(p),          procurement for award through the 8(a) BD             100–526; 10 U.S.C. 2687 note);
     634(b)(6), 636(b), 637(a), 644(c) and 662(5);           program?                                                 (3) 10 U.S.C. 2687; or
     Sec. 304, Pub. L. 103–403, 108 Stat. 4175,              *     *     *    *     *                                 (4) Any other provision of law
     4188; Pub. L. 105–135 sec. 601 et seq., 111               (j) The contracting officer should                  authorizing or directing the Secretary of
     Stat. 2592; Pub. L. 106–24, 113 Stat. 39.               consider setting aside the requirement                Defense or the Secretary of a military
     I 2. Amend § 121.103 to add a new                       for HUBZone, 8(a) or SDVO SBC                         department to dispose of real property
     paragraph (b)(7) to read as follows:                    participation before considering to set               at the military installation for purposes
                                                             aside the requirement as a small                      relating to base closures of
     § 121.103 How does SBA determine                        business set-aside.
     affiliation?                                                                                                  redevelopment, while retaining the
                                                                                                                   authority to enter into a leaseback of all
     *      *    *     *    *                                                                                      or a portion of the property for military
                                                             PART 125—GOVERNMENT
        (b) * * *
                                                             CONTRACTING PROGRAMS                                  use.
        (7) The member shareholders of a
     small agricultural cooperative, as                                                                            *      *     *      *     *
                                                             I 4a. The authority citation for part 125                HUBZone means a historically
     defined in the Agricultural Marketing                   continues to read as follows:
     Act (12 U.S.C. 1141j), are not considered                                                                     underutilized business zone, which is
     affiliated with the cooperative by virtue                 Authority: 15 U.S.C. 634(b)(6), 637, 744,
                                                                                                                   an area located within one or more:
                                                             and 657f; 31 U.S.C. 9701, 9702.
                                                                                                                      (1) Qualified census tracts;
     of their membership in the cooperative.                                                                          (2) Qualified non-metropolitan
     *      *    *     *    *                                I 5. Revise § 125.6(e)(6) to read as                  counties;
     I 3. Revise § 121.105(a) to read as                     follows:                                                 (3) Lands within the external
     follows:                                                § 125.6 Prime contractor performance                  boundaries of an Indian reservation;
                                                             requirements (limitations on                             (4) Qualified base closure area; or
     § 121.105 How does SBA define ‘‘business                                                                         (5) Redesignated area.
     concern or concern’’                                    subcontracting).
                                                                                                                      HUBZone small business concern
        (a)(1) Except for small agricultural                 *      *    *     *    *                              (HUBZone SBC) means an SBC that is:
     cooperatives, a business concern eligible                  (e) * * *                                             (1) At least 51% owned and
                                                                (6) Personnel. Individuals who are
     for assistance from SBA as a small                                                                            controlled by 1 or more persons, each of
                                                             ‘‘employees’’ under § 121.106 of this
     business is a business entity organized                                                                       whom is a United States citizen;
                                                             chapter except for purposes of the
     for profit, with a place of business                                                                          *      *     *      *     *
                                                             HUBZone program, where the definition
     located in the United States, and which                                                                          (5) An SBC that is owned in part by
                                                             of ‘‘employee’’ is found in § 126.103 of
     operates primarily within the United                                                                          one or more Indian Tribal Governments
                                                             this chapter.
     States or which makes a significant                                                                           or in part by a corporation that is wholly
     contribution to the U.S. economy                        *      *    *     *    *                              owned by one or more Indian Tribal
     through payment of taxes or use of                                                                            Governments, if all other owners are
                                                             PART 126—HUBZONE PROGRAM
     American products, materials or labor.                                                                        either United States citizens or SBCs;
        (a)(2) A small agricultural cooperative              I 6. The authority citation of part 126 is               (6) An SBC that is wholly owned by
     is an association (corporate or                         revised to read as follows:                           a CDC or owned in part by one or more
     otherwise) acting pursuant to the                                                                             CDCs, if all other owners are either
                                                               Authority: 15 U.S.C. 632(a), 632(j), 632(p)
     provisions of the Agricultural Marketing                                                                      United States citizens or SBCs; or
                                                             and 657a.
     Act (12 U.S.C.A. 1141j) whose size does                                                                          (7) An SBC that is a small agricultural
     not exceed the size standard established                I   7. Amend § 126.103 as follows:                    cooperative organized or incorporated

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     in the United States, wholly owned by                   § 126.200 What requirements must a                       (4) Employees. At least 35% of the
     one or more small agricultural                          concern meet to receive SBA certification             cooperative’s employees must reside in
     cooperatives organized or incorporated                  as a qualified HUBZone SBC?                           a HUBZone. When determining the
     in the United States or owned in part by                   (a) * * *                                          percentage of employees that reside in
     one or more small agricultural                             (3) Other Requirements. The concern                a HUBZone, if the percentage results in
     cooperatives organized or incorporated                  must either:                                          a fraction, round up to the nearest
     in the United States, provided that all                    (i) Maintain a principal office located            whole number.
     other owners are small business                         in a HUBZone and ensure that at least                    (5) Contract Performance. The
     concerns or United States citizens.                     35% of its employees reside in a                      concern must represent, as provided in
                                                             HUBZone as provided in paragraph                      the application, that it will ‘‘attempt to
     *       *    *     *    *
                                                             (b)(4) of this section; or                            maintain’’ (see § 126.103) having 35% of
        Qualified base closure area means a                     (ii) Certify that when performing a
     base closure area for a period of 5 years                                                                     its employees reside in a HUBZone
                                                             HUBZone contract, at least 35% of its                 during the performance of any
     either from December 8, 2004, or from                   employees engaged in performing that
     the date of final base closure, whichever                                                                     HUBZone contract it receives.
                                                             contract will reside within any Indian                   (d) Subcontracting. The concern must
     is later.                                               reservation governed by one or more of                represent, as provided in the
     *       *    *     *    *                               the Indian Tribal Government owners,                  application, that it will ensure that it
        Qualified non-metropolitan county                    or reside within any HUBZone                          will comply with certain contract
     *       *    *     *    *                               adjoining such Indian reservation. A                  performance requirements in
        (ii) The unemployment rate is not less               HUBZone and Indian reservation are                    connection with contracts awarded to it
     than 140 percent of the average                         adjoining when the two areas are next                 as a qualified HUBZone SBC, as set
     unemployment rate for the United                        to and in contact with each other; and                forth in § 126.700.
     States or for the State in which such                      (iii) The concern will ‘‘attempt to                *      *    *     *     *
     county is located, whichever is less,                   maintain’’ (see § 126.103) that
                                                                                                                   I 9. Amend § 126.201 by revising the
     based on the most recent data available                 applicable employment percentage
                                                             stated above during the performance of                example following paragraph (a) to read
     from the Secretary of Labor.                                                                                  as follows:
                                                             any HUBZone contract it receives.
     *       *    *     *    *                                  (b) * * *                                          § 126.201 Who does SBA consider to own
        Redesignated area means any census                      (1) * * *                                          a HUBZone SBC?
     tract or any non-metropolitan county                       (i) The concern must be at least 51%
     that ceases to be a qualified HUBZone,                                                                        *      *    *     *     *
                                                             unconditionally and directly owned and                   (a) * * *
     except that such census tracts or non-                  controlled by persons who are United                     Example: U.S. citizens own all of the
     metropolitan counties may be                            States citizens;                                      stock of a corporation. A corporate
     ‘‘redesignated areas’’ only until the later                Example: A concern that is a                       officer, a non-U.S. citizen, owns no
     of:                                                     partnership owned 50% by an                           stock in the corporation but owns
        (1) The date on which the Census                     individual who is a United States                     options to purchase stock in the
     Bureau publicly releases the first results              citizen and 50% by someone who is not,                corporation. SBA will consider the
     from the 2010 decennial census; or                      is not an eligible concern because it is              options exercised and the individual to
        (2) Three years after the date on                    not at least 51% owned by United States               be an owner. Therefore, if that corporate
     which the census tract or non-                          citizens.                                             officer has options to purchase 50% or
     metropolitan county ceased to be so                     *       *     *     *    *                            more of the corporate stock, pursuant to
     qualified. The date on which the census                    (c) Concerns owned by small                        § 126.200, the corporation would not be
     tract or non-metropolitan county ceases                 agricultural cooperatives. (1)                        eligible to be a qualified HUBZone SBC
     to be qualified is the date that the                    Ownership. (i) A small agricultural                   because it is not at least 51% owned and
     official government data, which affects                 cooperative organized or incorporated                 controlled by persons who are U.S.
     the eligibility of the HUBZone, is                      in the United States;                                 citizens.
     released to the public.                                    (ii) A small business concern wholly               *      *    *     *     *
     *       *    *     *    *                               owned by one or more small agricultural
                                                                                                                   I 10. Revise § 126.204 to read as
        Small agricultural cooperative means                 cooperatives organized or incorporated
     an association (corporate or otherwise),                in the United States; or
     comprised exclusively of other small                       (iii) A small business concern owned               § 126.204 May a qualified HUBZone SBC
     agricultural cooperatives, small business               in part by one or more small agricultural             have affiliates?
     concerns, or U.S. citizens, pursuant to                 cooperatives organized or incorporated                  A concern may have affiliates
     the provisions of the Agricultural                      in the United States, provided that all               provided that the aggregate size of the
     Marketing Act, 12 U.S.C. 1141j, whose                   other owners are small business                       concern and all of its affiliates is small
     size does not exceed the applicable size                concerns or United States citizens.                   as defined in part 121 of this title,
     standard pursuant to part 121 of this                      (2) Size. The small agricultural                   except as otherwise provided for small
     chapter. In determining such size, an                   cooperative must meet the size standard               agricultural cooperatives in § 126.103.
     agricultural cooperative is treated as a                corresponding to its primary industry                 I 11. Amend § 126.304 to redesignate
     ‘‘business concern’’ and its member                     classification as defined in part 121 of              the current paragraph (c) as paragraph
     shareholders are not considered                         this chapter. However, in determining                 (d), and to add a new paragraph (c) to
     affiliated with the cooperative by virtue               such size, an agricultural cooperative is             read as follows:
     of their membership in the cooperative.                 treated as a ‘‘business concern’’ and its
                                                             member shareholders are not considered                § 126.304   What must a concern submit to
     *       *    *     *    *                               affiliated with the cooperative by virtue             SBA?
     I 8. Amend § 126.200 to revise                          of their membership in the cooperative.               *     *    *     *     *
     paragraphs (a)(3) and (b)(1)(i), and to                    (3) Principal office. The cooperative’s              (c) Concerns applying for HUBZone
     add paragraphs (c) and (d) to read as                   principal office must be located in a                 status based on a location within a
     follows:                                                HUBZone.                                              qualified base closure area must use

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     51250             Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 / Rules and Regulations

     SBA’s List of Qualified Base Closure                    § 126.613 How does a price evaluation                 HUBZone SBCs cannot meet the
     Areas (located at                   preference affect the bid of a qualified              requirement. Where a waiver is granted,
     hubzone) to verify that the location is                 HUBZone SBC in full and open                          the qualified HUBZone SBC prime
     within a qualified base closure area. If                                                                      contractor must still meet the
     a concern disagrees with the failure of                 *      *    *    *     *                              performance of work requirements set
     SBA’s List of Qualified Base Closure                       (c) For purchases by the Secretary of
                                                                                                                   forth in § 125.6(c) of this chapter.
     Areas to include a particular area as a                 Agriculture of agricultural commodities
                                                             for export operations through                           Dated: June 17, 2005.
     qualified base closure area, then the
     concern must submit relevant                            international food aid programs                       Hector V. Barreto,
     documentation from the Department of                    administered by the Farm Service                      Administrator.
     Defense, Office of Economic                             Agency, the price evaluation preference               [FR Doc. 05–17206 Filed 8–29–05; 8:45 am]
     Adjustment, or the military department                  shall be 5% on the first portion of a
                                                                                                                   BILLING CODE 8025–01–P
     responsible for closing that installation.              contract to be awarded that is not
                                                             greater than 20% of the total volume
     *     *    *     *     *                                being procured for each commodity in
     I 12. Revise § 126.306 as follows:                      a single IFB.
                                                                                                                   DEPARTMENT OF TRANSPORTATION
     § 126.306 How will SBA process this                     *      *    *    *     *
     certification?                                          I 16. Revise § 126.700 to read as                     Federal Aviation Administration
       (a) The AA/HUB or designee is                         follows:
     authorized to approve or decline                        § 126.700 What are the performance of
                                                                                                                   14 CFR Part 71
     certifications. * * * The decision of the               work requirements for HUBZone contracts?
     AA/HUB or designee is the final agency                    (a) A prime contractor receiving an                 [Docket No. FAA–2005–21704; Airspace
     decision.                                               award as a qualified HUBZone SBC                      Docket No. 05–ACE–20]
     I 13. Revise § 126.503(c) as follows:                   must meet the performance of work
                                                             requirements set forth in § 125.6(c) of               Modification of Class E Airspace;
     § 126.503 What happens if SBA is unable                                                                       Newton, KS
     to verify a qualified HUBZone SBC’s
                                                             this chapter.
     eligibility or determines that the concern is             (b) In addition to the requirements set
                                                             forth in § 125.6(c), one or more qualified            AGENCY:Federal Aviation
     no longer eligible for the program?
                                                             HUBZone SBCs must spend at least                      Administration (FAA), DOT.
     *     *     *     *     *
                                                             50% of the cost of the contract incurred              ACTION:  Direct final rule; confirmation of
       (c) Decertifying Pursuant to a Protest.
                                                             for personnel on its own employees or                 effective date.
     SBA will decertify a qualified HUBZone
                                                             employees of other qualified HUBZone
     SBC and remove its name from the List
                                                             SBCs.                                                 SUMMARY: This document confirms the
     without first proposing it for                            (1) A qualified HUBZone SBC prime
     decertification if the AA/HUB upholds                                                                         effective date of the direct final rule
                                                             contractor receiving a HUBZone
     a protest pursuant to § 126.803 and the                 contract for general construction may                 which revises Class E airspace at
     AA/HUB’s decision is not overturned                     meet this requirement itself by                       Newton, KS.
     pursuant to § 126.805.                                  expending at least 50% of the cost of the             EFFECTIVE DATE:    0901 UTC, October 27,
     I 14. Revise § 126.607(b) and (c) to read               contract incurred for personnel on its                2005.
     as follows:                                             employees or it may subcontract at least
                                                             35% of the cost of the contract                       FOR FURTHER INFORMATION CONTACT:
     § 126.607 When must a contracting officer                                                                     Brenda Mumper, Air Traffic Division,
     set aside a requirement for qualified                   performance incurred for personnel to
                                                             one or more qualified HUBZone SBCs.                   Airspace Branch, ACE–520A, DOT
     HUBZone SBCs?
                                                             A qualified HUBZone SBC prime                         Regional Headquarters Building, Federal
     *      *      *    *     *                                                                                    Aviation Administration, 901 Locust,
                                                             contractor may not, however,
        (b) If the contracting officer                                                                             Kansas City, MO 64106; telephone:
                                                             subcontract more than 50% of the cost
     determines that § 126.605 does not                                                                            (816) 329–2524.
                                                             of the contract incurred for personnel to
     apply, the contracting officer shall set
                                                             non-qualified HUBZone SBCs.                           SUPPLEMENTARY INFORMATION:      The FAA
     aside the requirement for HUBZone, 8(a)                   (2) A qualified HUBZone SBC prime
     or SDVO SBC contracting before setting                                                                        published this direct final rule with a
                                                             contractor receiving a HUBZone
     aside the requirement as a small                                                                              request for comments in the Federal
                                                             contract for specialty construction may
     business set-aside.                                                                                           Register on July 21, 2005 (70 FR 41949).
                                                             meet this requirement itself by
        (c) If the contracting officer decides to            expending at least 50% of the cost of the             The FAA uses the direct final
     set aside the requirement for                           contract incurred for personnel on its                rulemaking procedure for a non-
     competition restricted to qualified                     employees or it may subcontract at least              controversial rule where the FAA
     HUBZone SBCs, the contracting officer                   25% of the cost of the contract                       believes that there will be no adverse
     must:                                                   performance incurred for personnel to                 public comment. This direct final rule
        (1) Have a reasonable expectation                    one or more qualified HUBZone SBCs.                   advised the public that no adverse
     after reviewing SBA’s list of qualified                 A qualified HUBZone SBC prime                         comments were anticipated, and that
     HUBZone SBCs that at least two                          contractor may not, however,                          unless a written adverse comment, or a
     responsible qualified HUBZone SBCs                      subcontract more than 50% of the cost                 written notice of intent to submit such
     will submit offers; and                                 of the contract incurred for personnel to             an adverse comment, were received
        (2) Determine that award can be made                 non-qualified HUBZone SBCs.                           within the comment period, the
     at fair market price.                                     (c) A contracting officer may waive                 regulation would become effective on
     I 15. Amend § 126.613 to redesignate                    the 50% requirement set forth in                      October 27, 2005. No adverse comments
     the current paragraph (c) as paragraph                  paragraph (b) of this section for a                   were received, and thus this notice
     (d), and to add a new paragraph (c) to                  particular procurement after                          confirms that this direct final rule will
     read as follows:                                        determining that at least two qualified               become effective on that date.

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