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Federal Register / Vol. 86, No. 177 / Thursday, September 16, 2021 / Rules and Regulations review of the SBAs appeal response, should one be filed, and administrative record under 13 CFR 134.1208e and 134.211 Motions, which is incorporated into subpart L.
One comment proposed that the SBA
should disclose that the appellant may object to the administrative record at the time of the transmission of the administrative record. Such notice is included in 13 CFR 134.1207 and will be provided to the appellant in the Notice and Order under 13 CFR
134.1206, which SBA deems sufficient notice of the ability to object to the administrative record.
Two comments were received regarding the need for simplicity of the appeals process as there is a large number of appellants who will be filing their appeals without the assistance of an attorney. Overall, the commenters requested a more simplified process in light of the information appellant is required to submit to OHA at the time of the appeal. One commenter suggested that pro se litigants should disclose their status so that OHA will assist the appellant throughout the appeals process and construe their filings liberally, taking into consideration their non-attorney status. The rules, policies, and procedures of OHA are tailored to address and accommodate all appellants, regardless of whether they are represented by an attorney. The information an appellant is required to file with an appeal is minimal, but necessary for the Judge to render a decision based on the relevant facts and law. In furtherance of OHAs commitment to ensure the appeals process is accessible to all appellants, OHA has reduced the information required to file an appeal. See 13 CFR
134.1204. OHA will also provide appellants with an electronic case management system https
appeals.sba.gov that will provide a simple electronic way to file, process, and track the appeal before OHA, including the automation of serving parties, and accessing appeal documents and the administrative record.
Four comments were received regarding the exhaustion of remedies requirement under 13 CFR 134.1216
that required an appellant to request review by the SBA Administrator before appealing an OHA decision to Federal district court. One comment suggested that OHA should provide language in the decision disclosing an appellants ability to request review of OHAs decision by the SBA Administrator. The commenters also argued that this exhaustion of administrative remedies requirement was in violation of the Administrative Procedures Act and
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deprives appellants of due process. A
number of commenters asserted that the Administrators review of OHAs decision is a circular review process since the commenters believed that the Administrator would issue the final SBA loan review decision. The Administrator will not be issuing the final SBA loan review decision. The decision will be made by the appropriate SBA official in accordance with published delegations of authority.
Additionally, various commenters asserted that OHAs ability to render an independent decision on a final SBA
loan review decision is in question because OHA is a subordinate office to the Administrator. Although SBA
disagrees with the assertions in those comments, SBA has determined to remove the requirement for a borrower to request a review by the SBA
Administrator before any further appeal because of the limited resources within the Office of the Administrator to render a decision on the anticipated high number of requests for review. In addition, SBA believes that it is appropriate, consistent with due process requirements, and most efficient for borrowers to be able to seek relief in Federal district court, without requiring review by the Administrator. Therefore, borrowers have the option to either 1
request reconsideration by the presiding OHA judge under 13 CFR 134.1211c and then appeal the final decision to Federal district court under 13 CFR
134.1211g; or 2 appeal a final decision directly to the appropriate Federal district court under 13 CFR
134.1211g.
In lieu of the provision requiring the borrower to request review by the Administrator and in order to vest reviewable discretion with the appropriate SBA official, SBA will add a provision giving the SBA
Administrator the option to review or reverse an initial OHA decision or a reconsidered initial OHA decision, in the Administrators sole discretion.
Although the Administrator has the discretion to review or reverse such decisions, borrowers may not request, and are not required to request, a review from the Administrator in order to exhaust administrative remedies before appealing to the appropriate Federal district court. See 13 CFR 134.1211d.
Three comments were received regarding the standard of review and burden of proof for PPP appeals. One commenter stated that OHA should remove the requirement that the appellant establish a clear error of fact or law by SBA and only require appellant to establish error. The suggestion, however, is based on the
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commenters inaccurate understanding of the administrative process, stating that OHA is reviewing a lenders decision and is not reviewing the decision of a public officer, i.e., an SBA
official. This is incorrect, as OHAs jurisdiction is limited to reviewing final SBA loan review decisions as provided for in 13 CFR 134.1201b. Further, the regulation establishing OHAs jurisdiction explicitly states that it will not accept an appeal based solely on a lenders decision. See 13 CFR
134.1201c. One commenter suggested a de novo review of the final SBA loan review decision due to the lack of guidance on the loan review process.
Another commenter voiced concern with the use of the preponderance of the evidence standard in conjunction with the requirement to establish clear error on the part of SBA. The commenter found issue with the preponderance of the evidence standard because such a standard is usually required at the initial review level, and the commenter disagreed with the use of the clear error standard in light of the lack of guidance on the loan review process. The commenters also stated the appellant will be completely deprived of the opportunity to review any evidence.
SBA has determined that it will remove the burden of proof requirement of preponderance of the evidence.
However, a decision by an SBA official is entitled to the deference afforded by the clear error standard. Therefore, it is appropriate and reasonable for OHA to assess the final SBA loan review decision using a clear error standard. An appellant will not be completely deprived of the opportunity to review the evidence. An appellant will be provided with a copy of the final SBA
loan review decision that will set forth the reasons for the decision prior to filing an appeal, and an appellant should be familiar with the documents included in the administrative record because the appellant will have participated in the process of providing documents submitted by the lender to SBA during the loan forgiveness process and the loan review process. In addition, an appellant has the opportunity to review and object to the administrative record as provided for in 13 CFR 134.1207e.
Three comments were received regarding the inability of appellants to request discovery, while allowing SBA
to request discovery. SBA has determined that an OHA decision should be based on a review of the administrative record, the appeal petition, any response, any reply or supplemental pleading, and filings related to objection to the administrative
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