Appeals of SBA Loan Review — Rules and Regulations (Federal Register, Vol. 85, No. 167, August 27, 2020)

Summary

A page of the Federal Register, Vol. 85, No. 167, Thursday, August 27, 2020, p. 52883, carrying a Small Business Administration interim final rule. The summary states that on April 2, 2020 SBA posted on its website an interim final rule relating to the implementation of sections 1102 and 1106 of the CARES Act. It states that the applicability date covers certain loan review decisions made by SBA under the Paycheck Protection Program. It states that comments must be received on or before September 28, 2020.

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52883 Federal Register/Vol. 85, No. 167/Thursday, August 27, 2020/Rules and Regulations
the States, or on the distribution of
power and responsibilities among the
various layers of government. Therefore,
SBA has determined that this rule has
no federalism implications warranting
preparation of a federalism assessment.
Paperwork Reduction Act, 44 U.S.C.
Chapter 35
SBA has determined that this rule
will not impose new or modify existing
recordkeeping or reporting requirements
under the Paperwork Reduction Act.
Regulatory Flexibility Act (RFA)
The Regulatory Flexibility Act (RFA)
generally requires that when an agency
issues a proposed rule, or a final rule
pursuant to Section 553(b) of the APA
or another law, the agency must prepare
a regulatory flexibility analysis that
meets the requirements of the RFA and
publish such analysis in the Federal
Register. 5 U.S.C. 603, 604. Specifically,
the RFA normally requires agencies to
describe the impact of a rulemaking on
small entities by providing a regulatory
impact analysis. Such analysis must
address the consideration of regulatory
options that would lessen the economic
effect of the rule on small entities. The
RFA defines a ‘‘small entity’’ as (1) a
proprietary firm meeting the size
standards of the Small Business
Administration (SBA); (2) a nonprofit
organization that is not dominant in its
field; or (3) a small government
jurisdiction with a population of less
than 50,000. 5 U.S.C. 601(3)–(6). Except
for such small government jurisdictions,
neither State nor local governments are
‘‘small entities.’’ Similarly, for purposes
of the RFA, individual persons are not
small entities.
The requirement to conduct a
regulatory impact analysis does not
apply if the head of the agency ‘‘certifies
that the rule will not, if promulgated,
have a significant economic impact on
a substantial number of small entities.’’
5 U.S.C. 605(b). The agency must,
however, publish the certification in the
Federal Register at the time of
publication of the rule, ‘‘along with a
statement providing the factual basis for
such certification.’’ If the agency head
has not waived the requirements for a
regulatory flexibility analysis in
accordance with the RFA’s waiver
provision, and no other RFA exception
applies, the agency must prepare the
regulatory flexibility analysis and
publish it in the Federal Register at the
time of promulgation or, if the rule is
promulgated in response to an
emergency that makes timely
compliance impracticable, within 180
days of publication of the final rule. 5
U.S.C. 604(a), 608(b).
Rules that are exempt from notice and
comment are also exempt from the RFA
requirements, including conducting a
regulatory flexibility analysis, when
among other things the agency for good
cause finds that notice and public
procedure are impracticable,
unnecessary, or contrary to the public
interest. SBA Office of Advocacy guide:
How to Comply with the Regulatory
Flexibility Act, Ch.1. p.9. Accordingly,
SBA is not required to conduct a
regulatory flexibility analysis.
Jovita Carranza,
Administrator.
[FR Doc. 2020–18940 Filed 8–25–20; 1:00 pm]
BILLING CODE P
SMALL BUSINESS ADMINISTRATION
13 CFR Part 134
[Docket Number SBA–2020–0042]
RIN 3245–AH55
Appeals of SBA Loan Review
Decisions Under the Paycheck
Protection Program
AGENCY: U.S. Small Business
Administration.
ACTION: Interim final rule.
SUMMARY: On April 2, 2020, the U.S.
Small Business Administration (SBA)
posted on its website an interim final
rule relating to the implementation of
sections 1102 and 1106 of the
Coronavirus Aid, Relief, and Economic
Security Act (CARES Act or the Act)
(published in the Federal Register on
April 15, 2020). Section 1102 of the Act
temporarily adds a new product, titled
the ‘‘Paycheck Protection Program,’’ to
the U.S. Small Business
Administration’s (SBA’s) 7(a) Loan
Program. Subsequently, SBA issued a
number of interim final rules
implementing the Paycheck Protection
Program (PPP). This interim final rule
supplements the interim final rule on
Loan Review Procedures and Related
Borrower and Lender Responsibilities
posted on SBA’s website on May 22,
2020 (published on June 1, 2020, in the
Federal Register), as revised by the
interim final rule posted on SBA’s
website on June 22, 2020, in order to
inform PPP borrowers and lenders of the
process for a PPP borrower to appeal
certain SBA loan review decisions
under the PPP to the SBA Office of
Hearings and Appeals, and requests
public comment.
DATES:
Effective date: This rule is effective
August 25, 2020.
Applicability date: This interim final
rule applies to certain loan review
decisions made by SBA under the
Paycheck Protection Program.
Comment date: Comments must be
received on or before September 28,
2020.
ADDRESSES: You may submit comments,
identified by number SBA–2020–0042
through the Federal eRulemaking Portal:
http://www.regulations.gov. Follow the
instructions for submitting comments.
SBA will post all comments on
www.regulations.gov. If you wish to
submit confidential business
information (CBI) as defined in the User
Notice at www.regulations.gov, please
send an email to ppp-ifr@sba.gov.
Highlight the information that you
consider to be CBI and explain why you
believe SBA should hold this
information as confidential. SBA will
review the information and make the
final determination whether it will
publish the information.
FOR FURTHER INFORMATION CONTACT: A
Call Center Representative at 833–572–
0502, or the local SBA Field Office; the
list of offices can be found at https://
www.sba.gov/tools/localassistance/
districtoffices.
SUPPLEMENTARY INFORMATION:
I. Background Information
On March 13, 2020, President Trump
declared the ongoing Coronavirus
Disease 2019 (COVID–19) pandemic of
sufficient severity and magnitude to
warrant an emergency declaration for all
States, territories, and the District of
Columbia. With the COVID–19
emergency, many small businesses
nationwide are experiencing economic
hardship as a direct result of the
Federal, State, tribal, and local public
health measures that have been taken to
minimize the public’s exposure to the
virus. These measures, some of which
are government-mandated, have been
implemented nationwide and include
the closures of restaurants, bars, and
gyms. In addition, based on the advice
of public health officials, other
measures, such as keeping a safe
distance from others or even stay-at-
home orders, are being implemented,
resulting in a dramatic decrease in
economic activity as the public avoids
malls, retail stores, and other
businesses.
On March 27, 2020, the President
signed the Coronavirus Aid, Relief, and
Economic Security Act (the CARES Act)
(Pub. L. 116–136) to provide emergency
assistance and health care response for
individuals, families, and businesses
affected by the coronavirus pandemic.
The Small Business Administration
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(SBA) received funding and authority
through the CARES Act to modify
existing loan programs and establish a
new loan program to assist small
businesses nationwide adversely
impacted by the COVID–19 emergency.
Section 1102 of the CARES Act
temporarily permits SBA to guarantee
100 percent of 7(a) loans under a new
program titled the ‘‘Paycheck Protection
Program’’ (PPP). Section 1106 of the
CARES Act provides for forgiveness of
up to the full principal amount of
qualifying loans guaranteed under the
PPP.
On April 2, 2020, SBA posted its first
PPP interim final rule (85 FR 20811)
(the First Interim Final Rule).
Subsequently, SBA issued a number of
other interim final rules implementing
the PPP. On April 24, 2020, the
President signed the Paycheck
Protection Program and Health Care
Enhancement Act (Pub. L. 116–139),
which provided additional funding and
authority for the PPP.
On May 22, 2020, SBA and Treasury
posted an interim final rule on Loan
Review Procedures and Related
Borrower and Lender Responsibilities
(85 FR 33010) (Loan Review Interim
Final Rule (IFR)). The rule stated that
SBA would be issuing a separate interim
final rule addressing the process for
appealing certain SBA loan review
decisions under the PPP. On June 5,
2020, the Paycheck Protection Program
Flexibility Act of 2020 (Pub. L. 116–142)
(Flexibility Act) was signed into law,
amending the CARES Act. On June 22,
2020, SBA and Treasury posted an
interim final rule that in part revised the
Loan Review IFR to incorporate the
relevant Flexibility Act amendments,
address revisions to the Loan
Forgiveness Application (SBA Form
3508), and include a new alternative
Loan Forgiveness Application (SBA
Form 3508EZ). On July 4, 2020, Public
Law 116–147 was enacted, extending
the authority for SBA to guarantee PPP
loans to August 8, 2020.
As described below, this interim final
rule informs PPP borrowers and lenders
of the process for a PPP borrower to
appeal certain SBA loan review
decisions under the PPP to the SBA
Office of Hearings and Appeals (OHA)
by establishing a new subpart L for 13
CFR part 134, and requests public
comment.
II. Comments and Immediate Effective
Date
The intent of the CARES Act is that
SBA provide relief to America’s small
businesses expeditiously. This intent,
along with the dramatic decrease in
economic activity nationwide, provides
good cause for SBA to dispense with the
30-day delayed effective date provided
in the Administrative Procedure Act.
Specifically, it is critical to meet
lenders’ and borrowers’ need for clarity
concerning the OHA appeal process as
rapidly as possible because SBA can
review a PPP loan and make
determinations as to a borrower’s
eligibility at any time. This interim final
rule supplements the previous
regulation on the discrete issues related
to SBA’s process for reviewing a
borrower’s eligibility for a PPP loan, the
PPP loan amount received, the use of
the PPP loan proceeds and/or the PPP
loan forgiveness amount claimed by the
borrower.
This interim final rule is effective
without advance notice and public
comment because section 1114 of the
CARES Act authorizes SBA to issue
regulations to implement title I of the
CARES Act without regard to notice
requirements. In addition, SBA has
determined that there is good cause for
dispensing with advance public notice
and comment on the ground that it
would be contrary to the public interest.
Specifically, SBA has determined that
advance notice and public comment
would delay the ability of PPP
borrowers to understand with certainty
the process for appealing certain SBA
loan review decisions under the PPP.
This rule is being issued to allow for
immediate implementation of the OHA
appeal feature of this program. Although
this interim final rule is effective
immediately, comments are solicited
from interested members of the public
on all aspects of this interim final rule,
including section III below. These
comments must be submitted on or
before September 28, 2020. SBA will
consider these comments and the need
for making any revisions as a result of
these comments.
III. Subpart L—Rules of Practice for
Appeals of Certain SBA Loan Review
Decisions Under the Paycheck
Protection Program
This interim final rule establishes a
new subpart L for 13 CFR part 134,
establishing rules of practice for appeals
of certain SBA loan review decisions
under the Paycheck Protection Program
(PPP).
Section 134.1201, Scope of rules in
this subpart L, provides a process for
appeal to OHA of certain SBA loan
review decisions under the PPP and any
other PPP matter referred to OHA by the
Administrator. This subpart defines the
term SBA loan review decision as an
official written decision by SBA, after
SBA completes a review of a PPP loan,
that finds a borrower (1) was ineligible
for a PPP loan; (2) was ineligible for the
PPP loan amount received or used the
PPP loan proceeds for unauthorized
uses; (3) is ineligible for PPP loan
forgiveness in the amount determined
by the lender in its full or partial
approval decision issued to SBA (except
for the deduction of any Economic
Injury Disaster Loan advance in
accordance with section 1110(e)(6) of
the CARES Act); and/or (4) is ineligible
for PPP loan forgiveness in any amount
when the lender has issued a full denial
decision to SBA.
For a PPP loan of any size, SBA may
undertake a loan review at any time in
SBA’s discretion, and this subpart L
applies to loan review decisions made
by SBA after SBA completes a review of
a PPP loan as set forth in Part III.1 and
Part III.2c. of the Loan Review IFR, as
amended. Only final SBA loan review
decisions (as defined in this rule) can be
appealed to OHA; a PPP borrower
cannot file an OHA appeal of any
decision made by a lender concerning a
PPP loan. A PPP borrower can request
an SBA review of a lender decision to
deny the borrower’s loan forgiveness
application in full, in accordance with
Part III.2.b. of the Loan Review IFR, as
amended, but that request is for a
review by SBA, not an OHA appeal. A
borrower may exercise any other rights
it has under applicable law against a
PPP lender regarding a lender decision.
In addition, this section sets forth
other types of decisions and
determinations that are not covered by
this subpart L, and makes clear that
subpart C of this part, Rules of Practice
for Appeals From Size Determinations
and NAICS Code Designations, is not
applicable to appeals from SBA loan
review decisions. Lastly, this section
sets forth the specific provisions from
subpart B of this part, OHA’s general
Rules of Practice, that are applicable to
this subpart L. Other provisions from
subpart B of this part do not apply to
this subpart L. Because a PPP borrower
must begin making payments of
principal and interest on the remaining
balance of its PPP loan at the end of the
loan payment deferral period or when
SBA remits the loan forgiveness amount
to the PPP lender (or notifies the lender
that no loan forgiveness is allowed), an
appeal by a PPP borrower of any SBA
loan review decision does not extend
the deferral period of the PPP loan.
Additionally, if SBA remits to the
lender the PPP loan forgiveness amount
set forth in the decision issued by the
lender to SBA (except for the deduction
of any Economic Injury Disaster Loan
advance), the borrower may not file an
appeal with OHA, and the borrower
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must begin repayment of any remaining
balance of its PPP loan.
Section 134.1202, The appeal
petition, provides that an appeal
petition must include the following
information: (1) The basis for OHA’s
jurisdiction, including, but not limited
to, evidence that the appeal is timely
filed in accordance with §134.1204; (2)
A copy of the SBA loan review decision
that is being appealed, or a description
of that decision if a copy is unavailable;
(3) A full and specific statement as to
why the SBA loan review decision is
alleged to be erroneous, together with
all factual information and legal
arguments supporting the allegations;
(4) The relief being sought; (5) Signed
copies of payroll tax filings actually
reported to the Internal Revenue Service
(IRS), and State quarterly business and
individual employee wage reporting and
unemployment insurance tax filings
actually reported to the relevant state,
for the relevant periods of time, if not
provided with the PPP Loan Forgiveness
Application (SBA Form 3508, SBA
Form 3508EZ, or lender’s equivalent), or
an explanation as to why they are not
relevant or not available; (6) Signed
copies of applicable federal tax returns
actually filed with the IRS with
appropriate schedules (e.g., IRS Form
1040 with Schedule C/F) documenting
income for self-employed individuals or
partners in a partnership, if not
provided with the PPP Borrower
Application Form (SBA Form 2483 or
lender’s equivalent), or an explanation
as to why they are not relevant or not
available; and (7) The name, address,
telephone number, email address and
signature of the appellant or its attorney.
This provision is consistent with OHA’s
general rules of practice in subpart B,
with the addition of the requirement for
submission of certain financial
information. SBA has determined that
submission by the appellant of financial
information, or an explanation as to
why they are not relevant or not
available, is appropriate to support
SBA’s efforts to assess compliance with
the PPP requirements set forth in the
statute, rules, and guidance. The
appellant must serve a copy of the
appeal petition with attachments on the
Associate General Counsel for
Litigation, U.S. Small Business
Administration, 409 Third Street SW,
Washington, DC 20416, OLITService@
sba.gov. The appellant must attach to
the appeal petition a signed certificate
of service meeting the requirements of
§134.204(d). This section further
provides that an appeal petition which
does not include the above may be
dismissed by the Judge and permits SBA
to move for a motion for more definite
statement or otherwise comply with the
requirements of this section.
Section 134.1203, Standing, provides
that only the borrower on a loan for
which SBA has issued a final SBA loan
review decision has standing to appeal
the SBA loan review decision to OHA.
Individual owners of a borrower and
lenders do not have standing to appeal
an SBA loan review decision.
Section 134.1204, Deadline for filing
appeal petition, prescribes that an
appeal petition must be filed within 30
calendar days after (i) the appellant’s
receipt of the final SBA loan review
decision, or (ii) notification by the
lender of the final SBA loan review
decision, whichever is earlier.
Section 134.1205, Dismissal, provides
that the Judge must dismiss the appeal
if: (1) The appeal is beyond OHA’s
jurisdiction as set forth under
§134.1201; (2) the appellant lacks
standing to appeal under §134.1203; or
(3) the appeal is untimely under
§134.1204, or is premature because SBA
has not yet made a final SBA loan
review decision. This section also
provides that the Judge may dismiss the
appeal if, among other things, the
appeal does not, on its face, allege
specific facts that if proven to be true,
warrant reversal or remand of the SBA
loan review decision.
Section 134.1206, Notice and order,
provides that upon receipt of an appeal
challenging a final SBA loan review
decision, OHA will assign the matter to
either an Administrative Law Judge or
an Administrative Judge in accordance
with §134.218. Unless the appeal will
be dismissed under §134.1205, the
Judge will issue a notice and order
establishing a deadline for production of
the administrative record and specifying
a date for the close of record. Typically,
the administrative record will be due 20
calendar days after issuance of the
notice and order unless additional time
is requested and granted, and the record
will close 45 calendar days from the
date of OHA’s receipt of the appeal
unless additional time is requested and
granted. With this timeframe, SBA seeks
to provide a timely and judicious
processing of the appeal petition, while
also affording additional time if, for
example, the volume of appeals or other
matters require additional time for
compilation of the administrative record
and the close of record.
Section 134.1207, The administrative
record, requires that the administrative
record shall include relevant documents
that SBA considered in making its final
decision or that were before SBA at the
time of the final decision. The
administrative record need not,
however, contain all documents
pertaining to the appellant. In addition,
SBA may claim privilege as to certain
materials. The administrative record
must be certified and authenticated that
it is, to the best of the signatory’s
knowledge, complete and correct. SBA
will file the administrative record with
OHA and serve it on appellant. This
section permits the appellant to object
to the absence of any document from the
administrative record that the appellant
believes should have been included in
the administrative record. An appellant
also may object to any claim that
documents in the administrative record
are privileged. Such objections must be
filed with OHA and served on SBA no
later than 10 calendar days after
appellant’s receipt of the administrative
record. The Judge will rule upon such
objections and may direct or permit that
the administrative record be
supplemented.
Section 134.1208, Response to an
appeal petition, prescribes that only
SBA may respond to an appeal and the
response should set forth the relevant
facts and legal arguments to the issues
presented on appeal. Except for good
cause shown, a response filed after the
close of record established by the Judge
will not be considered. SBA must file its
response with OHA, and serve a copy of
the response upon the appellant and
upon each of the persons identified in
the certificate of service attached to the
appellant’s appeal petition. No reply to
a response will be permitted unless the
Judge directs otherwise.
Section 134.1209, Evidence beyond
the record, discovery and oral hearings,
provides that, generally, the Judge may
not admit evidence beyond the written
administrative record or permit any
form of discovery. Discovery will be
permitted in OHA’s appellate
proceedings only if the Judge
determines that SBA, upon written
submission, has made a showing of
good cause for discovery. An oral
hearing will not be held on an appeal of
an SBA loan review decision, unless,
following the motion of a party, or at the
Judge’s own initiative, the Judge orders
an oral hearing upon concluding that
there is a genuine dispute of material
fact that cannot be resolved except by
the taking of testimony and the
confrontation of witnesses. SBA has
determined that allowing an oral
hearing under limited circumstances,
and allowing discovery by SBA, only
upon a showing of good cause, balances
SBA’s potential need for discovery since
it may not have all relevant documents
from appellant with the efficient use of
limited resources available. If an oral
hearing is ordered, the proceeding shall
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be conducted in accordance with
§§134.214 and 134.222 in subpart B of
this part as the Judge deems
appropriate. All appeals under this
subpart L will be decided solely on a
review of the written administrative
record, the appeal petition, response(s)
filed thereto, any admitted evidence,
and an oral hearing, if held.
Section 134.1210, Interlocutory
appeals, provides that either party may
file an interlocutory appeal of a Judge’s
ruling which decides an issue of
privilege. Interlocutory appeals will be
decided by the Administrator or a
designee. An interlocutory appeal must
be filed and served no later than 20
calendar days after issuance of the
ruling to which the interlocutory appeal
applies. A response to the interlocutory
appeal must be filed 10 calendar days
after the interlocutory appeal is served.
The Judge may stay the proceedings
before OHA, in whole or in part, as he
or she deems appropriate pending
resolution of the interlocutory appeal.
Section 134.1211, Alternative dispute
resolution, provides that at any time
during the pendency of an appeal, the
parties may submit a joint motion
requesting that the Judge permit the use
of alternative dispute resolution to assist
in resolving the matter. If the motion is
granted, the Judge will also stay the
proceedings before OHA, in whole or in
part, as he or she deems appropriate,
pending the outcome of the alternative
dispute resolution. In addition, the
Assistant Administrator for Hearings
and Appeals (AA/OHA) or a Judge may
designate another Judge or attorney
assigned to OHA to serve as a neutral in
alternative dispute resolution
procedures. If OHA provides the neutral
and the mediation fails to resolve all
issues in the case, the OHA-provided
neutral will not be involved in the
adjudication.
Section 134.1212, Standard of review,
provides that the standard of review is
whether the SBA loan review decision
was based on clear error of fact or law.
The appellant has the burden of proof,
by a preponderance of the evidence.
Section 134.1213, Decision on appeal,
provides that the Judge will issue his or
her decision within 45 calendar days
after the close of record, as practicable.
The decision will contain findings of
fact and conclusions of law, the reasons
for such findings and conclusions, and
any relief ordered. The decision will be
served on each party. The Judge’s
decision on the appeal is an initial
decision. However, unless a request for
review is filed pursuant to §134.228(a),
or a request for reconsideration is filed
pursuant to paragraph (c) of §134.1213,
an initial decision shall become the
final decision of SBA 30 calendar days
after its service. This section allows for
a request for reconsideration pursuant to
paragraph (c) of §134.1213 by either
party or by the Judge on his or her own
initiative. This section also provides for
the right to request review by the
Administrator pursuant to §134.228(a),
in which case the provisions in
§134.228 will apply. If a request for
review pursuant to §134.228(a) is filed,
the decision of the Administrator is a
final decision of SBA appealable to
federal district court. In order for a
borrower to exhaust its administrative
remedies and preserve its right to seek
judicial review of an SBA final decision
in a federal district court, a borrower
that disputes the initial decision or
reconsidered initial decision must file
and serve a request for review of an
initial decision or reconsidered initial
decision by the Administrator pursuant
to §134.228(a). If the borrower does not
request review by the Administrator
pursuant to §134.228(a), the borrower’s
right to seek review in federal court is
waived due to the borrower’s failure to
exhaust administrative remedies. This
section also provides that the final OHA
decision creates precedent only for
appeals involving the PPP. Any OHA
decision pursuant to this subpart L
applies only to the PPP and does not
apply to SBA’s 7(a) Loan Program
generally or to any interpretation or
application of the regulations in part
120 or part 121 of this title. SBA has
determined that this is appropriate
because the PPP is governed by the
CARES Act, which adds a new
temporary program to SBA’s 7(a) Loan
Program, but does not apply to SBA’s
7(a) Loan Program generally. Lastly, this
section provides that, consistent with
the general OHA rules of practice in
subpart B of part 134, OHA decisions
are normally published without
redactions on OHA’s website. A
decision may contain confidential
business and financial information or
personally identifiable information
where that information is either
decisionally-significant or otherwise
necessary for a comprehensible
decision. Where no protective order is
in place, a party may request a redacted
public decision by contacting OHA.
Where a protective order is in place, the
Judge will usually issue the unredacted
decision under the protective order and
a redacted version for public release.
Section 134.1214, Effects of the
decision, provides that OHA may affirm,
reverse, or remand an SBA loan review
decision. If remanded, OHA no longer
has jurisdiction over the matter unless
a new appeal is filed as a result of a new
SBA loan review decision.
Section 134.1215, Equal Access to
Justice Act (EAJA), provides that a
prevailing appellant is not entitled to
recover attorney’s fees. Appeals to OHA
from SBA loan review decisions under
the PPP are not proceedings that are
required to be conducted by an
Administrative Law Judge under
§134.603.
Section 134.1216, Exhaustion of
administrative remedies, provides that
an appeal to OHA and request for
review by the Administrator of a
disputed initial decision or
reconsidered initial decision are
administrative remedies that must be
exhausted before judicial review of an
SBA loan review decision may be
sought in a federal district court.
Section 134.1217, Confidential
information and protective order,
provides that if a filing or other
submission made pursuant to an appeal
in this subpart L contains confidential
business and financial information;
personally identifiable information;
source selection sensitive information;
income tax returns; documents and
information covered under §120.1060 of
this title; or any other exempt
information, that information is not
available to the public pursuant to the
Freedom of Information Act (FOIA), 5
U.S.C. 552. This provision is consistent
with the general rule of practice in
subpart B of this part. In addition, this
section permits SBA or appellant to seek
a protective order over any document or
information filed pursuant to an appeal
in this subpart L, including any
document or information exchanged in
discovery if permitted in accordance
with §134.1209.
Compliance With Executive Orders
12866, 12988, 13132, 13563, and 13771,
the Paperwork Reduction Act (44 U.S.C.
Ch. 35), and the Regulatory Flexibility
Act (5 U.S.C. 601–612)
Executive Orders 12866, 13563, and
13771
This interim final rule is
economically significant for the
purposes of Executive Orders 12866 and
13563, and is considered a major rule
under the Congressional Review Act.
SBA, however, is proceeding under the
emergency provision at Executive Order
12866 Section 6(a)(3)(D) based on the
need to move expeditiously to mitigate
the current economic conditions arising
from the COVID–19 emergency. This
rule’s designation under Executive
Order 13771 will be informed by public
comment.
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Executive Order 12988
SBA has drafted this rule, to the
extent practicable, in accordance with
the standards set forth in section 3(a)
and 3(b)(2) of Executive Order 12988, to
minimize litigation, eliminate
ambiguity, and reduce burden. The rule
has no preemptive or retroactive effect.
Executive Order 13132
SBA has determined that this rule
will not have substantial direct effects
on the States, on the relationship
between the National Government and
the States, or on the distribution of
power and responsibilities among the
various layers of government. Therefore,
SBA has determined that this rule has
no federalism implications warranting
preparation of a federalism assessment.
Paperwork Reduction Act, 44 U.S.C.
Chapter 35
SBA has determined that this interim
final rule does not impose additional
reporting or recordkeeping requirements
under the Paperwork Reduction Act.
Regulatory Flexibility Act (RFA)
The Regulatory Flexibility Act
generally requires that when an agency
issues a proposed rule, or a final rule
pursuant to section 553(b) of the APA or
another law, the agency must prepare a
regulatory flexibility analysis that meets
the requirements of the RFA and
publish such analysis in the Federal
Register. 5 U.S.C. 603, 604. Specifically,
the RFA normally requires agencies to
describe the impact of a rulemaking on
small entities by providing a regulatory
impact analysis. Such analysis must
address the consideration of regulatory
options that would lessen the economic
effect of the rule on small entities. The
RFA defines a ‘‘small entity’’ as (1) a
proprietary firm meeting the size
standards of the Small Business
Administration (SBA); (2) a nonprofit
organization that is not dominant in its
field; or (3) a small government
jurisdiction with a population of less
than 50,000. 5 U.S.C. 601(3)–(6). Except
for such small government jurisdictions,
neither State nor local governments are
‘‘small entities.’’ Similarly, for purposes
of the RFA, individual persons are not
small entities. The requirement to
conduct a regulatory impact analysis
does not apply if the head of the agency
‘‘certifies that the rule will not, if
promulgated, have a significant
economic impact on a substantial
number of small entities.’’ 5 U.S.C.
605(b). The agency must, however,
publish the certification in the Federal
Register at the time of publication of the
rule, ‘‘along with a statement providing
the factual basis for such certification.’’
If the agency head has not waived the
requirements for a regulatory flexibility
analysis in accordance with the RFA’s
waiver provision, and no other RFA
exception applies, the agency must
prepare the regulatory flexibility
analysis and publish it in the Federal
Register at the time of promulgation or,
if the rule is promulgated in response to
an emergency that makes timely
compliance impracticable, within 180
days of publication of the final rule. 5
U.S.C. 604(a), 608(b). Rules that are
exempt from notice and comment are
also exempt from the RFA requirements,
including conducting a regulatory
flexibility analysis, when among other
things the agency for good cause finds
that notice and public procedure are
impracticable, unnecessary, or contrary
to the public interest. SBA Office of
Advocacy guide: How to Comply with
the Regulatory Flexibility Act, Ch.1. p.9.
Accordingly, SBA is not required to
conduct a regulatory flexibility analysis.
List of Subjects in 13 CFR Part 134
Administrative practice and
procedure, Claims, Equal access to
justice, Lawyers, Organization and
function (Government agencies).
For the reasons stated in the
preamble, the Small Business
Administration amends 13 CFR part 134
as set forth below:
PART 134—RULES OF PROCEDURE
GOVERNING CASES BEFORE THE
OFFICE OF HEARINGS AND APPEALS
■ 1. The authority citation for part 134
is revised to read as follows:
Authority: 5 U.S.C. 504; 15 U.S.C. 632,
634(b)(6), 634(i), 637(a), 648(l), 656(i), 657t
and 687(c); 38 U.S.C. 8127(f); E.O. 12549, 51
FR 6370, 3 CFR, 1986 Comp., p. 189.
Subpart J issued under 38 U.S.C.
8127(f)(8)(B).
Subpart K issued under 38 U.S.C.
8127(f)(8)(A).
Subpart L issued under 15 U.S.C.
636(a)(36); Pub. L. 116–136; Pub. L. 116–139;
116–142; 116–147.
■ 2. Amend § 134.102 by:
■ a. Removing the word ‘‘and’’ at the
end of paragraph (u);
■ b. Removing the period at the end of
paragraph (v) and adding ‘‘; and’’ in its
place; and
■ c. Adding paragraph (w) to read as
follows:
§134.102 Jurisdiction of OHA.
* * * * *
(w) Appeals of certain SBA loan
review decisions as defined in 13 CFR
134.1201.
■ 3. Add subpart L to read as follows:
Subpart L—Rules of Practice for
Appeals of Certain SBA Loan Review
Decisions Under the Paycheck
Protection Program
Sec.
134.1201 Scope of rules in this subpart L.
134.1202 The appeal petition.
134.1203 Standing.
134.1204 Deadline for filing appeal
petition.
134.1205 Dismissal.
134.1206 Notice and order.
134.1207 The administrative record.
134.1208 Response to an appeal petition.
134.1209 Evidence beyond the record,
discovery and oral hearings.
134.1210 Interlocutory appeals.
134.1211 Alternative dispute resolution
procedures.
134.1212 Standard of review.
134.1213 Decision on appeal.
134.1214 Effects of the decision.
134.1215 Equal Access to Justice Act
(EAJA).
134.1216 Exhaustion of administrative
remedies.
134.1217 Confidential information and
protective order.
Authority: 15 U.S.C. 636(a)(36); Pub. L.
116–136; Pub. L. 116–139; Pub. L. 116–142;
Pub. L. 116–147
§134.1201 Scope of the rules in this
subpart L.
(a) The rules of practice in this
subpart L apply to appeals to OHA from
certain SBA loan review decisions
under the Paycheck Protection Program
(PPP) as described in paragraph (b) of
this section, and to any other PPP matter
referred to OHA by the Administrator of
SBA. The PPP was established as a
temporary program under section 1102
of the Coronavirus Aid, Relief, and
Economic Security Act (CARES Act)
(Pub. L. 116–136).
(b) A final SBA loan review decision
that is appealable under this subpart L
is an official written decision by SBA,
after SBA completes a review of a PPP
loan, that finds a borrower:
(1) Was ineligible for a PPP loan;
(2) Was ineligible for the PPP loan
amount received or used the PPP loan
proceeds for unauthorized uses;
(3) Is ineligible for PPP loan
forgiveness in the amount determined
by the lender in its full approval or
partial approval decision issued to SBA
(except for the deduction of any
Economic Injury Disaster Loan advance
in accordance with section 1110(e)(6) of
the CARES Act); and/or
(4) Is ineligible for PPP loan
forgiveness in any amount when the
lender has issued a full denial decision
to SBA.
(c) A borrower cannot file an OHA
appeal of any decision made by a lender
concerning a PPP loan.
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(d) Any determination by SBA’s
Office of Inspector General concerning a
PPP loan is not appealable to OHA.
(e) This subpart L does not create any
right to appeal any SBA decision on any
7(a) loans other than PPP loans.
(f) The Rules of Practice for Appeals
From Size Determinations and NAICS
Code Designations in subpart C of this
part do not apply to appeals of SBA loan
review decisions or to the PPP.
(g) In addition to the subpart B of this
part provisions specifically referenced
in this subpart L, the following
regulations from subpart B of this part
also apply to this subpart L: 13 CFR
134.207 through 134.209, 134.211,
134.212, and 134.217 through 134.221.
§134.1202 The appeal petition.
(a) Contents. The appeal petition must
include the following information:
(1) The basis for OHA’s jurisdiction,
including, but not limited to, evidence
that the appeal is timely filed in
accordance with §134.1204;
(2) A copy of the SBA loan review
decision that is being appealed, or a
description of that decision if a copy is
unavailable;
(3) A full and specific statement as to
why the SBA loan review decision is
alleged to be erroneous, together with
all factual information and legal
arguments supporting the allegations;
(4) The relief being sought;
(5) Signed copies of payroll tax filings
actually filed with the Internal Revenue
Service (IRS), and State quarterly
business and individual employee wage
reporting and unemployment insurance
tax filings actually reported to the
relevant state, for the relevant periods of
time, if not provided with the PPP Loan
Forgiveness Application (SBA Form
3508, SBA Form 3508EZ, or lender’s
equivalent), or an explanation as to why
they are not relevant or not available;
(6) Signed copies of applicable federal
tax returns actually filed with the IRS
with appropriate schedules (e.g., IRS
Form 1040 with Schedule C/F)
documenting income for self-employed
individuals or partners in a partnership,
if not provided with the PPP Borrower
Application Form (SBA Form 2483 or
lender’s equivalent), or an explanation
as to why they are not relevant or not
available; and
(7) The name, address, telephone
number, email address and signature of
the appellant or its attorney.
(b) Format. The maximum length of
an appeal petition (not including
attachments) is 20 pages, unless leave is
sought by the appellant and granted by
the Judge. A table of authorities is
required only for petitions citing more
than twenty cases, regulations, or
statutes.
(c) Service of the appeal petition. In
addition to filing an appeal with OHA
in accordance with §134.204(b), the
appellant must serve a copy of the
appeal petition with attachments on the
Associate General Counsel for
Litigation, U.S. Small Business
Administration, 409 Third Street SW,
Washington, DC 20416, OLITService@
sba.gov.
(d) Certificate of service. The
appellant must attach to the appeal
petition a signed certificate of service
meeting the requirements of
§134.204(d).
(e) Dismissal. An appeal petition
which does not contain all of the
information required by paragraphs (a)
through (d) of this section may be
dismissed, with or without prejudice, at
the Judge’s own initiative, or upon
motion of SBA.
(f) Motion for more definite statement.
SBA may, not later than five days after
receiving an appeal petition, move for
an order to the appellant to provide a
more definite appeal petition or
otherwise comply with this section. A
Judge may order a more definite appeal
petition on his or her own initiative.
(1) A motion for a more definite
appeal petition stays SBA’s time for
filing a response. The Judge will
establish the time for filing and serving
a response and will extend the close of
the record as appropriate.
(2) If the appellant does not comply
with the Judge’s order to provide a more
definite appeal petition or otherwise
fails to comply with applicable
regulations, the Judge may dismiss the
petition with prejudice.
(g) Calculation of a deadline when the
time period is given in days. Do not
count the day the time period begins,
but do count the last day of the time
period. If the last day is Saturday,
Sunday, or a Federal holiday, the time
period ends on the next business day.
§134.1203 Standing.
Only the borrower on a loan for which
SBA has issued a final SBA loan review
decision has standing to appeal the SBA
loan review decision to OHA.
§134.1204 Deadline for filing appeal
petition.
An appeal petition must be filed with
OHA within 30 calendar days after the
appellant’s receipt of the final SBA loan
review decision, or notification by the
lender of the final SBA loan review
decision, whichever is earlier.
§134.1205 Dismissal.
(a) The Judge must dismiss the appeal
if:
(1) The appeal is beyond OHA’s
jurisdiction as set forth under
§134.1201;
(2) The appellant lacks standing to
appeal under §134.1203; or
(3) The appeal is untimely under
§134.1204, or is premature because SBA
has not yet made a final SBA loan
review decision.
(b) The Judge may dismiss the appeal
in accordance with §134.1202(e) or
(f)(2), or if the appeal does not, on its
face, allege specific facts that if proven
to be true, warrant reversal or remand of
the SBA loan review decision.
§134.1206 Notice and order.
Upon receipt of an appeal challenging
a final SBA loan review decision, OHA
will assign the matter to either an
Administrative Law Judge or an
Administrative Judge in accordance
with §134.218. Unless the appeal is
dismissed under §134.1205, the Judge
will issue a notice and order
establishing a deadline for production of
the administrative record and specifying
a date for the close of record. The notice
and order will be served upon all
known parties (or their attorneys).
Typically, the administrative record will
be due 20 calendar days after issuance
of the notice and order unless additional
time is requested and granted, and the
record will close 45 calendar days from
the date of OHA’s receipt of the appeal
unless additional time is requested and
granted.
§134.1207 The administrative record.
(a) Contents. The administrative
record shall include relevant documents
that SBA considered in making its final
decision or that were before SBA at the
time of the final decision. The
administrative record need not,
however, contain all documents
pertaining to the appellant. In addition,
SBA may claim privilege as to certain
materials. The administrative record
must be certified and authenticated that
it is, to the best of the signatory’s
knowledge, complete and correct.
(b) Filing. SBA will file the
administrative record with OHA and
serve it on appellant.
(c) Objection. The appellant may
object to the absence of any document
from the administrative record that the
appellant believes should have been
included in the administrative record.
An appellant also may object to any
claim that documents in the
administrative record are privileged.
Such objections must be filed with OHA
and served on SBA no later than 10
calendar days after the appellant’s
receipt of the administrative record. The
Judge will rule upon such objections
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and may direct or permit that the
administrative record be supplemented.
§134.1208 Response to an appeal petition.
(a) Who may respond. Only SBA may
respond to an appeal. The response
should set forth the relevant facts and
legal arguments to the issues presented
on appeal.
(b) Time limit. Except for good cause
shown, a response filed after the close
of record established by the Judge will
not be considered.
(c) Service. The SBA must file its
response with OHA, and serve a copy of
the response upon the appellant and
upon each of the persons identified in
the certificate of service attached to the
appeal petition pursuant to
§134.1202(d).
(d) Reply to a response. No reply to
a response will be permitted unless the
Judge directs otherwise.
§134.1209 Evidence beyond the record,
discovery and oral hearings.
(a) General Rule. Generally, the Judge
may not admit evidence beyond the
written administrative record or permit
any form of discovery.
(b) Discovery. Discovery will be
permitted only if the Judge determines
that SBA, upon written submission, has
made a showing of good cause for
discovery.
(c) Oral hearings. Oral hearings will
not be held on an appeal of an SBA loan
review decision, unless, following the
motion of a party, or at the Judge’s own
initiative, the Judge orders an oral
hearing upon concluding that there is a
genuine dispute of material fact that
cannot be resolved except by the taking
of testimony and the confrontation of
witnesses. If an oral hearing is ordered,
the proceeding shall be conducted in
accordance with §§134.214 and 134.222
in subpart B of this part as the Judge
deems appropriate.
(d) The record. All appeals under this
subpart L will be decided solely on a
review of the written administrative
record, the appeal petition, and
response(s) filed thereto, any admitted
evidence, and an oral hearing, if held.
§134.1210 Interlocutory appeals.
(a) General. Either party may file an
interlocutory appeal of a Judge’s ruling
which decides an issue of privilege.
Interlocutory appeals will be decided by
the Administrator of SBA or a designee.
(b) Procedures. An interlocutory
appeal must be filed and served no later
than 20 calendar days after issuance of
the ruling to which the interlocutory
appeal applies. A response to the
interlocutory appeal must be filed 10
calendar days after the interlocutory
appeal is served. The Judge may stay the
proceedings before OHA, in whole or in
part, as he or she deems appropriate
pending resolution of the interlocutory
appeal.
§134.1211 Alternative dispute resolution.
(a) Joint Motion. At any time during
the pendency of an appeal, the parties
may submit a joint motion requesting
that the Judge permit the use of
alternative dispute resolution to assist
in resolving the matter.
(b) Procedures. If the motion is
granted, the Judge will also stay the
proceedings before OHA, in whole or in
part, as he or she deems appropriate,
pending the outcome of the alternative
dispute resolution. In addition, the AA/
OHA or a Judge may designate another
Judge or attorney assigned to OHA to
serve as a neutral in alternative dispute
resolution procedures. If OHA provides
the neutral and the mediation fails to
resolve all issues in the case, the OHA-
provided neutral will not be involved in
the adjudication.
§134.1212 Standard of review.
The standard of review is whether the
SBA loan review decision was based on
clear error of fact or law. The appellant
has the burden of proof, by a
preponderance of the evidence.
§134.1213 Decision on appeal.
(a) Time limits and contents. The
Judge will issue his or her decision
within 45 calendar days after the close
of record, as practicable. The decision
will contain findings of fact and
conclusions of law, the reasons for such
findings and conclusions, and any relief
ordered. The decision will be served on
each party.
(b) Initial decision. The Judge’s
decision on the appeal is an initial
decision. However, unless a request for
review is filed pursuant to §134.228(a),
or a request for reconsideration is filed
pursuant to paragraph (c) of this section,
an initial decision shall become the
final decision of SBA 30 calendar days
after its service. The final OHA decision
creates precedent only for appeals
involving the PPP. Any OHA decision
pursuant to this subpart L applies only
to the PPP and does not apply to SBA’s
7(a) Loan Program generally or to any
interpretation or application of the
regulations in part 120 or part 121 of
this title.
(c) Reconsideration. An initial
decision of the Judge may be
reconsidered. Either SBA or the
appellant may request reconsideration
by filing with the Judge and serving a
petition for reconsideration within 10
calendar days after service of the written
decision. The request for
reconsideration must clearly show an
error of fact or law material to the
decision. The Judge may also reconsider
a decision on his or her own initiative
within 20 calendar days after service of
the written decision.
(d) Request for review. Within 30
calendar days after the service of an
initial decision or a reconsidered initial
decision of a Judge, any party, or SBA’s
Office of General Counsel, may file and
serve a request for review by the
Administrator pursuant to §134.228(a).
In order for a borrower to exhaust its
administrative remedies and preserve its
right to seek judicial review of an SBA
final decision in a federal district court,
a borrower that disputes an initial
decision or reconsidered initial decision
must file and serve a request for review
of the initial decision or reconsidered
initial decision by the Administrator
pursuant to §134.228(a). If a request for
review is filed pursuant to §134.228(a),
the provisions in §134.228 will apply.
(e) Publication. OHA decisions are
normally published without redactions
on OHA’s website. A decision may
contain confidential business and
financial information or personally
identifiable information where that
information is either decisionally-
significant or otherwise necessary for a
comprehensible decision. Where no
protective order is in place, a party may
request a redacted public decision by
contacting OHA. Where a protective
order is in place, the Judge will usually
issue the unredacted decision under the
protective order and a redacted version
for public release.
§134.1214 Effects of the decision.
OHA may affirm, reverse, or remand
an SBA loan review decision. If
remanded, OHA no longer has
jurisdiction over the matter unless a
new appeal is filed as a result of a new
SBA loan review decision.
§134.1215 Equal Access to Justice Act
(EAJA), 5 U.S.C. 504.
A prevailing appellant is not entitled
to recover attorney’s fees. Appeals to
OHA from SBA loan review decisions
under the PPP are not proceedings that
are required to be conducted by an
Administrative Law Judge under
§134.603.
§134.1216 Exhaustion of administrative
remedies.
An appeal to OHA and request for
review by the Administrator of a
disputed initial decision or
reconsidered initial decision are
administrative remedies that must be
exhausted before judicial review of an
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SBA loan review decision may be
sought in a federal district court.
§134.1217 Confidential Information and
Protective Order.
(a) If a filing or other submission
made pursuant to an appeal in this
subpart L contains confidential business
and financial information; personally
identifiable information; source
selection sensitive information; income
tax returns; documents and information
covered under §120.1060 of this title; or
any other exempt information, that
information is not available to the
public pursuant to the Freedom of
Information Act (FOIA), 5 U.S.C. 552.
(b) SBA or appellant may seek a
protective order over any document or
information exchanged in discovery if
permitted in accordance with
§134.1209 and any document or
information filed pursuant to an appeal
in this subpart L.
Jovita Carranza,
Administrator.
[FR Doc. 2020–17895 Filed 8–25–20; 11:15 am]
BILLING CODE P
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 39
[Docket No. FAA–2020–0786; Project
Identifier AD–2020–00914–R; Amendment
39–21229; AD 2020–18–08]
RIN 2120–AA64
Airworthiness Directives; Robinson
Helicopter Company
AGENCY: Federal Aviation
Administration (FAA), DOT.
ACTION: Final rule; request for
comments.
SUMMARY: The FAA is superseding
Airworthiness Directive (AD) 2019–12–
18 for Robinson Helicopter Company
(Robinson) Model R44 II helicopters. AD
2019–12–18 required inspecting certain
engine air induction hoses (hoses) and
replacing any hose that was not
airworthy. AD 2019–12–18 also
prohibited the installation of certain
hoses. This AD continues to require
inspecting those previously affected
hoses and amends the applicability,
clarifies an inspection requirement,
adds a requirement to repeat the
inspection, and expands the installation
prohibition. This AD was prompted by
an additional report of separation
between the outer and inner hose layers.
The FAA is issuing this AD to address
the unsafe condition on these products.
DATES: This AD is effective August 27,
2020.
The FAA must receive any comments
on this AD by October 13, 2020.
ADDRESSES: You may send comments,
using the procedures found in 14 CFR
11.43 and 11.45, by any of the following
methods:
• Federal eRulemaking Portal: Go to
https://www.regulations.gov. Follow the
instructions for submitting comments.
• Fax: 202–493–2251.
• Mail: U.S. Department of
Transportation, Docket Operations, M–
30, West Building Ground Floor, Room
W12–140, 1200 New Jersey Avenue SE,
Washington, DC 20590.
• Hand Delivery: U.S. Department of
Transportation, Docket Operations, M–
30, West Building Ground Floor, Room
W12–140, 1200 New Jersey Avenue SE,
Washington, DC 20590, between 9 a.m.
and 5 p.m., Monday through Friday,
except Federal holidays.
For service information identified in
this final rule, contact Robinson
Helicopter Company, 2901 Airport
Drive, Torrance, CA 90505; telephone
310–539–0508; fax 310–539–5198; or at
https://robinsonheli.com/. You may
view this service information at the
FAA, Office of the Regional Counsel,
Southwest Region, 10101 Hillwood
Pkwy, Room 6N–321, Fort Worth, TX
76177. For information on the
availability of this material at the FAA,
call 817–222–5110.
Examining the AD Docket
You may examine the AD docket on
the internet at https://
www.regulations.gov by searching for
and locating Docket No. FAA–2020–
0786; or in person at Docket Operations
between 9 a.m. and 5 p.m., Monday
through Friday, except Federal holidays.
The AD docket contains this final rule,
any comments received, and other
information. The street address for
Docket Operations is listed above.
Comments will be available in the AD
docket shortly after receipt.
FOR FURTHER INFORMATION CONTACT:
Roger Gretler, Aerospace Engineer, Los
Angeles ACO Branch, Compliance &
Airworthiness Division, FAA, 3960
Paramount Blvd., Lakewood, CA 90712;
phone 562–627–5251; email
roger.gretler@faa.gov.
SUPPLEMENTARY INFORMATION:
Discussion
The FAA issued AD 2019–12–18,
Amendment 39–19673 (84 FR 32028,
July 5, 2019) (‘‘AD 2019–12–18’’), for
Robinson Model R44 II helicopters. AD
2019–12–18 required, for helicopter
serial numbers (S/Ns) 14248 through
14268 and 14270 through 14286 and
helicopters with a hose part number (P/
N) A785–31 installed after April 30,
2018, inspecting the inside of the hose
for separation between the outer and
inner layers and flexing the hose in all
directions while listening for a crinkling
sound, which is an indication of
separation. If there was any separation
or a crinkling sound, AD 2019–12–18
required replacing the hose before
further flight. If there was no separation
and no crinkling sound, AD 2019–12–18
required replacing the hose within 50
hours time-in-service (TIS). Finally, AD
2019–12–18 prohibited installing hose
P/N A785–31 marked with code 1Q18
on any helicopter.
AD 2019–12–18 resulted from 12
reports, including an accident on April
4, 2019, of separation between the outer
and inner layers of the orange silicone
hose out of a suspected population of
100 hoses traced to a specific
manufacturing batch marked by code
1Q18 (1st quarter of 2018). The
separation of the silicone layers, if not
addressed, could result in blockage of
air flow to the engine, engine stoppage,
and subsequent loss of control of the
helicopter. Accordingly, the FAA issued
AD 2019–12–18 to address the unsafe
condition on these products.
Actions Since AD 2019–12–18 Was
Issued
Since the FAA issued AD 2019–12–
18, an NTSB report of October 2019
concluded from the accident aircraft’s
orange silicone hose marked by code
1Q18, that contamination was
introduced during the manufacturing
process between the silicone layers that
prevented a satisfactory bond.
In addition, a helicopter accident
occurred on April 6, 2020, and
preliminary investigation indicated that
separation between the outer and inner
layers of the orange silicone hose P/N
A785–31 occurred. This hose was traced
to the manufacturing batch marked by
code 3Q17 (3rd quarter of 2017).
Subsequently, the FAA determined
that any helicopter with an improved
black neoprene hose P/N A785–31
installed should not be affected by this
AD. The FAA has also determined that,
for helicopters with an orange silicone
hose, repeating the inspection is
necessary. Accordingly, the FAA is
superseding AD 2019–12–18 to amend
the applicability from all Robinson
Model R44 II helicopters to Model R44
II helicopters with an orange silicone
hose P/N A785–31 installed. This AD
also clarifies that the hose must be
removed to perform the inspection, adds
a requirement to repeat the inspection,
and expands the installation prohibition
VerDate Sep<11>2014 16:18 Aug 26, 2020 Jkt 250001 PO 00000 Frm 00010 Fmt 4700 Sfmt 4700 E:\FR\FM\27AUR1.SGM 27AUR1
khammond on DSKJM1Z7X2PROD with RULES

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