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Federal Register / Vol. 86, No. 209 / Tuesday, November 2, 2021 / Proposed Rules
not affect the calculation of any other figures in SBAs programs. In particular, alternative size standards are not affected by this change.
B. Section 121.106
In paragraphs b1 and b3, SBA
proposes to amend the current 12month averaging period to a 24-month averaging period. Businesses that have been in existence for more than 24
months would calculate their number of employees by averaging the number of employees for each pay period for the preceding completed 24 months.
Businesses that have been in existence for fewer than 24 months would average their number of employees for each pay period during their existence.
C. Section 121.903
In paragraph a1i, SBA proposes to amend the averaging period for size standards proposed by other agencies from a 12-month period to a 24-month averaging period.

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III. Request for Comments SBA invites comments, input, or suggestions from interested parties on its proposal to change the 12-month averaging period for employee-based size standards to a 24-month averaging period.
SBA also invites comments, input, or suggestions from interested parties on its proposal to permit businesses in the Business Loan, Disaster Loan, and SBIC
programs to use either a 3-year average or a 5-year average for calculating average annual receipts for the purposes of qualifying as a small business. The comments should address the following specific issues pertaining to the SBAs proposal:
1. SBA invites input on its proposal to allow for a 3-or-5-year election indefinitely, rather than using a transition period that would end the election on a specified date.
2. SBA invites input on the effects that this proposal would have on applicants and lenders in the Business Loan Program.
3. SBA invites input on the effects that this proposal would have on SBICs.
4. SBA invites input on the effects that this proposal would have on the Disaster Loan Program.
Compliance With Executive Orders 12866, 12988, 13132, and 13563, the Congressional Review Act 5 U.S.C.
801808, the Regulatory Flexibility Act 5 U.S.C. 601612, and the Paperwork Reduction Act 44 U.S.C. Ch. 35
Executive Order 12866
The Office of Management and Budget OMB has determined that this
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proposed rule is a significant regulatory action for purposes of Executive Order 12866. Accordingly, below, SBA
provides a benefit-cost analysis of this proposed rule, including: 1 A
statement of the need for the proposed action, and 2 an evaluation of the benefits and costsboth quantitative and qualitativeof this regulatory action.
Congressional Review Act OIRA has determined that this is not a major rule under 5 U.S.C. 8042.
Subtitle E of the Small Business Regulatory Enforcement Fairness Act of 1996 codified at 5 U.S.C. 801808, also known as the Congressional Review Act or CRA, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. SBA will submit a report containing this rule and other required information to the U.S. Senate, the U.S.
House of Representatives, and the Comptroller General of the United States. A major rule under the CRA
cannot take effect until 60 days after it is published in the Federal Register.
OIRA has determined that this rule is not a major rule as defined by 5
U.S.C. 8042.
Regulatory Impact Analysis A. Benefit-Cost Analysis 1. What is the need for this regulatory action?
As stated elsewhere, the Small Business Act delegates to SBAs Administrator the responsibility for establishing small business size definitions usually referred to as size standards. First, Public Law 116283
changed the averaging period for SBAs employee-based size standards from 12
months to 24 months. Second, in 2018, Public Law 115324 modified the requirements for proposed small business size standards prescribed by an agency without separate statutory authority to issue size standards.
Specifically, Public Law 115324
changed the averaging period for receipts-based size standards for services industries from 3 years to 5
years.
The need of this proposed rule is to carry out the intent of Public Law 116
283 and Public Law 115324, and to ensure consistency in the calculation of average number of employees and average annual receipts for size standards across the Federal Government. In addition to the averaging requirements, size standards
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prescribed under section 3a2Cii of the Small Business Act must meet two other requirements: 1 Be proposed with an opportunity for public notice and comment, and 2 be approved by the Administrator. Neither Public Law 116283 nor Public Law 115324
repeals these 2 requirements, and this proposed rule satisfies these requirements.
SBAs mission is to aid and assist small businesses through a variety of financial, procurement, business development and counseling, and disaster assistance programs. This regulatory action promotes the Administrations goals and objectives and meets the SBAs statutory responsibility to implement a new law impacting size definitions for small businesses. One of SBAs goals in support of promoting the Administrations objectives is to help small businesses succeed through access to capital, Federal Government contracts and purchases, and management, technical and disaster assistance.
2. What are the potential effects of this regulatory action?
i. Potential Effects of Changing the Calculation of Employees Changing the periods for calculating average number of employees from 12
months to 24 months may enable some mid-size businesses that have just exceeded size standards to regain small business status. Similarly, it could also allow some advanced and larger small businesses about to exceed size standards to retain their small status for a longer period. However, it could also result in some advanced small businesses having the 24-months employee average that happens to be higher than the 12-month employee average, thus ejecting them out of their small business status sooner. Detailed impacts of the proposed change are discussed below.
It is difficult to determine the actual number of small and mid-size businesses that would be impacted by Public Law 116283 and this regulatory action because there is no data on businesses employment by month or by pay period. The employment data from the Economic Census special tabulation are only available once every 5 years.
Similarly, the System for Award Management SAM only records the data on the concerns average number of employees for each pay period in the preceding completed 12 calendar months, but not their employee counts for each pay period or each month. For example, the 12-month average employee data for January 2020 is an
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