82_FR_14481 82 FR 14428 - Small Business Investment Companies: Passive Business Expansion and Technical Clarifications

82 FR 14428 - Small Business Investment Companies: Passive Business Expansion and Technical Clarifications

SMALL BUSINESS ADMINISTRATION

Federal Register Volume 82, Issue 53 (March 21, 2017)

Page Range14428-14429
FR Document2017-05533

On December 28, 2016, the Small Business Administration (SBA) published a final rule to expand permitted investments in passive businesses and provide further clarification with regard to investments in such businesses for the Small Business Investment Company (SBIC) Program, with an effective date of January 27, 2017. On January 26, 2017, SBA published a delay of effective date until March 21, 2017 and re-opened the rule for additional public comment in response to the memorandum dated January 20, 2017 from the Assistant to the President and Chief of Staff, entitled ``Regulatory Freeze Pending Review.'' SBA requires additional time to consider this final rule and determine whether any further changes are required; therefore, the effective date for this final rule is delayed until May 20, 2017. Any changes to the final rule based on this redetermination will be published in the Federal Register.

Federal Register, Volume 82 Issue 53 (Tuesday, March 21, 2017) 
[Federal Register Volume 82, Number 53 (Tuesday, March 21, 2017)]
[Rules and Regulations]
[Pages 14428-14429]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-05533]


=======================================================================
-----------------------------------------------------------------------

SMALL BUSINESS ADMINISTRATION

13 CFR Part 107

RIN 3245-AG67


Small Business Investment Companies: Passive Business Expansion 
and Technical Clarifications

AGENCY: U.S. Small Business Administration.

ACTION: Final rule; delay of effective date.

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

SUMMARY: On December 28, 2016, the Small Business Administration (SBA) 
published a final rule to expand permitted investments in passive 
businesses and provide further clarification with regard to investments 
in such businesses for the Small Business Investment Company (SBIC) 
Program, with an effective date of January 27, 2017. On January 26, 
2017, SBA published a delay of effective date until March 21, 2017 and 
re-opened the rule for additional public comment in response to the 
memorandum dated January 20, 2017 from the Assistant to the President 
and Chief of Staff, entitled ``Regulatory Freeze Pending Review.'' SBA 
requires additional time to consider this final rule and determine 
whether any further changes are required; therefore, the effective date 
for this final rule is delayed until May 20, 2017. Any changes to the 
final rule based on this redetermination will be published in the 
Federal Register.

DATES: As of March 21, 2017, the effective date of the SBA final rule 
published December 28, 2016 (81 FR 95419), and delayed January 26, 2017 
(82 FR 8499), is further delayed until May 20, 2017.

FOR FURTHER INFORMATION CONTACT: Theresa Jamerson, Office of Investment 
and Innovation, (202) 205-7563 or [email protected].

SUPPLEMENTARY INFORMATION: The U.S. Small Business Administration (SBA) 
Final Rule: Small Business Investment Companies: Passive Business 
Expansion and Technical Clarifications, 81 FR 95419 (December 28, 
2016), had an effective date of January 27, 2017. The January effective 
date was delayed to March 21, 2017, and the comment period was reopened 
until February 19, 2017. 82 FR 8499 (Jan. 26, 2017). This new delay of 
effective date will provide 60 additional days for SBA to further 
analyze questions of fact, law, and policy related to this rulemaking, 
in accordance with OMB Memorandum #M-17-16, Implementation of 
Regulatory Freeze (Jan. 24, 2017). SBA will use the supplemental time 
to assess the additional comments it received through February 19, 
2017, and will further consider the rule's impact on the SBIC program 
and program participants. SBA will also use the supplemental time to 
make necessary determinations regarding the effects of the final rule 
on the examining and liquidation functions of the SBA's Office of 
Investment and Innovation.
    SBA is considering revising the regulations for the Small Business 
Investment Company (SBIC) program to expand permitted investments in 
passive businesses and provide further clarification with regard to 
investments in such businesses. SBICs are generally prohibited from 
investing in passive businesses under the Small Business Investment Act 
of 1958, as amended (Act). SBIC program regulations provide for two 
exceptions that allow an SBIC to structure an investment utilizing a 
passive small business as a pass-through. The first exception provides 
conditions under which an SBIC may structure an investment through up 
to two levels of passive entities to make an investment in a non-
passive business that is a subsidiary of the passive business directly 
financed by the SBIC. The second exception, prior to this final rule, 
enabled a partnership SBIC, with SBA's prior approval, to provide 
financing to a small business through a passive, wholly-owned C 
corporation (commonly known as a blocker corporation), but only if a 
direct financing would cause the SBIC's investors to incur Unrelated 
Business Taxable Income (UBTI). This final rule clarifies several 
aspects of the first

[[Page 14429]]

exception and in the second exception eliminates the prior approval 
requirement and expands the purposes for which a blocker corporation 
may be formed. The final rule also adds new reporting and other 
requirements for passive investments to help protect SBA's financial 
interests and ensure adequate oversight and makes minor technical 
amendments. Finally, this rule makes a conforming change to the 
regulations regarding the amount of leverage available to SBICs under 
common control. This change is necessary for consistency with the 
Consolidated Appropriations Act, 2016, which increased the maximum 
amount of such leverage to $350 million from $225 million.

    Dated: March 10, 2017.
A. Joseph Shepard,
Associate Administrator, Office of Investment and Innovation.
[FR Doc. 2017-05533 Filed 3-20-17; 8:45 am]
BILLING CODE 8025-01-P

14428 Federal Register / Vol. 82, No. 53 / Tuesday, March 21, 2017 / Rules and Regulations approved by the Director of the Federal would be impracticable, unnecessary 95419), and delayed January 26, 2017 Register as of September 30, 2017. and contrary to the public interest. DOE (82 FR 8499), is further delayed until FOR FURTHER INFORMATION CONTACT: is temporarily postponing the effective May 20, 2017. Nicolas Baker, U.S. Department of date of this regulation pursuant to the FOR FURTHER INFORMATION CONTACT: Energy, Office of Energy Efficiency and previously-noted need for review by the Theresa Jamerson, Office of Investment Renewable Energy, Federal Energy Secretary. The January 10, 2018, and Innovation, (202) 205–7563 or sbic@ Management Program, Mailstop EE–5F, compliance date is unaffected by this sba.gov. 1000 Independence Avenue SW., action. As a result, seeking public SUPPLEMENTARY INFORMATION: The U.S. Washington, DC 20585, (202) 586–8215, comment on this delay is unnecessary Small Business Administration (SBA) email: nicolas.baker@ee.doe.gov. and contrary to the public interest. It is Final Rule: Small Business Investment Kavita Vaidyanathan, U.S. also impracticable given the timing of Companies: Passive Business Expansion Department of Energy, Office of the the Secretary’s confirmation and the and Technical Clarifications, 81 FR General Counsel, Forrestal Building, March 21 effective date established by 95419 (December 28, 2016), had an GC–33, 1000 Independence Avenue the prior temporary postponement. For effective date of January 27, 2017. The SW., Washington, DC 20585, (202) 586– these same reasons DOE finds good January effective date was delayed to 0669, email: kavita.vaidyanathan@ cause to waive the 30-day delay in March 21, 2017, and the comment hq.doe.gov. effective date provided for in 5 U.S.C. period was reopened until February 19, SUPPLEMENTARY INFORMATION: On 553(d). 2017. 82 FR 8499 (Jan. 26, 2017). This February 6, 2017, the United States Issued in Washington, DC, on March 15, new delay of effective date will provide Department of Energy (‘‘DOE’’) 2017. 60 additional days for SBA to further temporarily postponed the effective date John T. Lucas, analyze questions of fact, law, and of its final rule amending the baseline Acting General Counsel. policy related to this rulemaking, in Federal building standards published in [FR Doc. 2017–05485 Filed 3–20–17; 8:45 am] accordance with OMB Memorandum the Federal Register on January 10, BILLING CODE 6450–01–P #M–17–16, Implementation of 2017. See 82 FR 9343. The January 31st Regulatory Freeze (Jan. 24, 2017). SBA rule temporarily postponed the effective will use the supplemental time to assess date of the final rule by 60 days, starting SMALL BUSINESS ADMINISTRATION the additional comments it received from January 20, 2017. The temporary through February 19, 2017, and will 60-day delay in effective date was 13 CFR Part 107 further consider the rule’s impact on the necessary to give the newly appointed SBIC program and program participants. Secretary of Energy (Secretary) the RIN 3245–AG67 SBA will also use the supplemental opportunity for further review and time to make necessary determinations Small Business Investment consideration of new regulations. regarding the effects of the final rule on Companies: Passive Business However, the Secretary was not the examining and liquidation functions Expansion and Technical Clarifications confirmed and did not begin work in his of the SBA’s Office of Investment and position until March 3, 2017. As a AGENCY: U.S. Small Business Innovation. result, the Secretary was unable to Administration. SBA is considering revising the accomplish the review and ACTION: Final rule; delay of effective regulations for the Small Business consideration during the original date. Investment Company (SBIC) program to postponement of the effective date of expand permitted investments in the regulation establishing the baseline SUMMARY: On December 28, 2016, the passive businesses and provide further Federal building standards. Therefore, Small Business Administration (SBA) clarification with regard to investments DOE hereby further temporarily published a final rule to expand in such businesses. SBICs are generally postpones the effective date of that permitted investments in passive prohibited from investing in passive baseline Federal building standards businesses and provide further businesses under the Small Business regulation to allow the Secretary the clarification with regard to investments Investment Act of 1958, as amended opportunity to accomplish this task. The in such businesses for the Small (Act). SBIC program regulations provide effective date of this regulation is Business Investment Company (SBIC) for two exceptions that allow an SBIC to postponed until September 30, 2017. Program, with an effective date of structure an investment utilizing a This will not change the statutory January 27, 2017. On January 26, 2017, passive small business as a pass- compliance date, which will remain on SBA published a delay of effective date through. The first exception provides January 10, 2018. until March 21, 2017 and re-opened the conditions under which an SBIC may To the extent that 5 U.S.C. 553 applies rule for additional public comment in structure an investment through up to to this action, it is exempt from notice response to the memorandum dated two levels of passive entities to make an and comment because it constitutes a January 20, 2017 from the Assistant to investment in a non-passive business rule of procedure under 5 U.S.C. the President and Chief of Staff, entitled that is a subsidiary of the passive 553(b)(A). Alternatively, DOE’s ‘‘Regulatory Freeze Pending Review.’’ business directly financed by the SBIC. implementation of this action without SBA requires additional time to The second exception, prior to this final opportunity for public comment, consider this final rule and determine rule, enabled a partnership SBIC, with effective immediately upon publication whether any further changes are SBA’s prior approval, to provide in the Federal Register, is based on the required; therefore, the effective date for financing to a small business through a pmangrum on DSK4SPTVN1PROD with RULES good cause exceptions in 5 U.S.C. this final rule is delayed until May 20, passive, wholly-owned C corporation 553(b)(B) and 553(d)(3). Pursuant to 5 2017. Any changes to the final rule (commonly known as a blocker U.S.C. 553(b)(B), DOE has determined based on this redetermination will be corporation), but only if a direct that good cause exists to forego the published in the Federal Register. financing would cause the SBIC’s requirement to provide prior notice and DATES: As of March 21, 2017, the investors to incur Unrelated Business an opportunity for public comment effective date of the SBA final rule Taxable Income (UBTI). This final rule thereon for this rule as such procedures published December 28, 2016 (81 FR clarifies several aspects of the first VerDate Sep<11>2014 13:46 Mar 20, 2017 Jkt 241001 PO 00000 Frm 00010 Fmt 4700 Sfmt 4700 E:\FR\FM\21MRR1.SGM 21MRR1

Federal Register / Vol. 82, No. 53 / Tuesday, March 21, 2017 / Rules and Regulations 14429 exception and in the second exception person delivery is: 600 Independence (3) Numbers (202) 267–3720 or eliminates the prior approval Avenue SW., Room 2W100, alternate (202) 267–1293 for filing by requirement and expands the purposes Washington, DC 20591. The new facsimile. for which a blocker corporation may be address for ODRA filings by U.S. Mail * * * * * formed. The final rule also adds new is: 800 Independence Avenue SW., ■ 4. In § 17.59, revise paragraph (b) to reporting and other requirements for Washington, DC 20591 [Attention: read as follows: passive investments to help protect AGC–70, Wilbur Wright Bldg., Room SBA’s financial interests and ensure 2W100]. § 17.59 Filing a Pre-dispute. adequate oversight and makes minor * * * * * List of Subjects in 14 CFR Part 17 technical amendments. Finally, this rule (b) Pre-disputes shall be filed with the makes a conforming change to the Administrative practice and ODRA, AGC–70, Federal Aviation regulations regarding the amount of procedure, Authority delegations Administration, telephone (202) 267– leverage available to SBICs under (Government agencies), Government 3290 as follows: common control. This change is contracts. (1) 600 Independence Avenue SW., necessary for consistency with the Room 2W100, Washington, DC 20591 The Amendment Consolidated Appropriations Act, 2016, for filing by hand delivery, courier or which increased the maximum amount For the reasons discussed in the other form of in-person delivery; of such leverage to $350 million from preamble, 14 CFR part 17 is amended as (2) 800 Independence Avenue SW., $225 million. follows: Washington, DC 20591 [Attention: Dated: March 10, 2017. AGC–70, Wilbur Wright Bldg., Room PART 17—PROCEDURES FOR 2W100] for filing by U.S. Mail; or A. Joseph Shepard, PROTESTS AND CONTRACT (3) Numbers (202) 267–3720 or Associate Administrator, Office of Investment DISPUTES and Innovation. alternate (202) 267–1293 for filing by [FR Doc. 2017–05533 Filed 3–20–17; 8:45 am] facsimile. ■ 1. The authority citation for part 17 BILLING CODE 8025–01–P continues to read as follows: * * * * * Authority: 5 U.S.C. 570–581, 49 U.S.C. Issued in Washington, DC, on March 13, 106(f)(2), 40110, 40111, 40112, 46102, 46014, 2017. DEPARTMENT OF TRANSPORTATION 46105, 46109, and 46110. Anthony N. Palladino, Director and Administrative Judge, Office of Federal Aviation Administration ■ 2. In § 17.15, revise paragraph (b) to Dispute Resolution for Acquisition. read as follows: [FR Doc. 2017–05517 Filed 3–20–17; 8:45 am] 14 CFR Part 17 § 17.15 Filing a protest. BILLING CODE 4910–13–P [Docket No. FAA–2017–0075] * * * * * (b) Protests shall be filed with the Office Relocation ODRA, AGC–70, Federal Aviation DEPARTMENT OF TRANSPORTATION AGENCY: Federal Aviation Administration, telephone (202) 267– Federal Aviation Administration Administration (FAA), DOT. 3290 as follows: ACTION: Final rule. (1) 600 Independence Avenue SW., 14 CFR Part 39 Room 2W100, Washington, DC 20591 SUMMARY: On November 1, 2016, the for filing by hand delivery, courier or [Docket No. FAA–2017–0129; Directorate FAA Office of Dispute Resolution for other form of in-person delivery; Identifier 2017–NM–020–AD; Amendment Acquisition (ODRA), which is now part (2) 800 Independence Avenue SW., 39–18825; AD 2017–06–01] of the FAA Office of Adjudication, Washington, DC 20591 [Attention: RIN 2120–AA64 relocated to a new address different AGC–70, Wilbur Wright Bldg., Room from the one listed in its Procedural 2W100] for filing by U.S. Mail; or Airworthiness Directives; The Boeing Regulations. This rule updates the (3) Numbers (202) 267–3720 or Company Airplanes address for ODRA filings by hand alternate (202) 267–1293 for filing by delivery, courier or other form of in- facsimile. AGENCY: Federal Aviation person delivery and the address for * * * * * Administration (FAA), DOT. ODRA filings by U.S. Mail. The ACTION: Final rule; request for ■ 3. In § 17.27, revise paragraph (b) to telephone and facsimile numbers are comments. unchanged. read as follows: § 17.27 Filing a contract dispute. SUMMARY: We are superseding DATES: This rule is effective March 21, Airworthiness Directive (AD) 2017–03– 2017. * * * * * 04, which applied to all The Boeing FOR FURTHER INFORMATION CONTACT: (b) Contract Disputes shall be filed Company Model 737–500 series Marie A. Collins, Administrative Judge with the ODRA, AGC–70, Federal airplanes. AD 2017–03–04 required and Dispute Resolution Officer, FAA Aviation Administration, telephone inspections to detect cracks in the Office of Dispute Resolution for (202) 267–3290 as follows: fuselage skin panels, permanent repairs Acquisition, AGC–70, 600 (1) 600 Independence Avenue SW., of time-limited repairs, skin panel pmangrum on DSK4SPTVN1PROD with RULES Independence Avenue SW., Room Room 2W100, Washington, DC 20591 replacement, and related investigative 2W100, Washington, DC 20591, for filing by hand delivery, courier or and corrective actions if necessary. This telephone number (202) 267–3290, other form of in-person delivery; AD reduces the applicability of AD facsimile (202) 267–3720. (2) 800 Independence Avenue SW., 2017–03–04. This AD was prompted by SUPPLEMENTARY INFORMATION: The new Washington, DC 20591 [Attention: a determination that airplanes were address for ODRA filings by hand AGC–70, Wilbur Wright Bldg., Room inadvertently included in the delivery, courier or other form of in- 2W100] for filing by U.S. Mail; or applicability of AD 2017–03–04. We are VerDate Sep<11>2014 13:46 Mar 20, 2017 Jkt 241001 PO 00000 Frm 00011 Fmt 4700 Sfmt 4700 E:\FR\FM\21MRR1.SGM 21MRR1


Document Created: 2017-03-21 01:09:49
Document Modified: 2017-03-21 01:09:49
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionRules and Regulations
ActionFinal rule; delay of effective date.
DatesAs of March 21, 2017, the effective date of the SBA final rule published December 28, 2016 (81 FR 95419), and delayed January 26, 2017 (82 FR 8499), is further delayed until May 20, 2017.
ContactTheresa Jamerson, Office of Investment and Innovation, (202) 205-7563 or [email protected]
FR Citation82 FR 14428 
RIN Number3245-AG67
2025 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR