Associate general contractors sue to block Fed efforts to change P3 rules
The Associate General Contractors of America complaint filed December 8, 2020, to force the Small Business Administration (SBA) and the Office of Management and Budget (OMB) to revise the question sheet used to reassess whether businesses were eligible for Paycheck Protection Program (P3) loans. The construction association is also asking federal courts to restrict the use of the information generated by the questionnaire until the SBA makes it publicly available and revised.
“The administration has the right and the obligation to make sure that businesses were eligible to apply for and receive relief loans,” said Stephen E. Sandherr, chief executive of the association. “But they don’t have the right to use a secret form designed to collect unprecedented amounts of proprietary information that has little or nothing to do with the economic uncertainty that drove companies to apply for the loans. in the first place.”
the complaint, which the association filed with the United States District Court for the District of Columbia, claims that the process that produced the form, and the form itself, violates the Paperwork Reduction Act and the Administrative Procedures Act , and that federal agencies failed to meet minimum due process standards. The association is asking the court to declare that the questionnaire is arbitrary and capricious, and to declare that the ASB cannot legally use the information that the form generates to find a company ineligible for a PPP loan or to deny the request for cancellation of his business loan. .
The association noted that the CARES Act (which established the PPP program) only required loan applicants to make “good faith certification that uncertain current economic conditions make it necessary to apply for a loan.” . . “Instead of asking borrowers how they concluded they faced such uncertainty when applying for their loans, the form attempts to define a means test, an income reduction test, and a liquidity test that Congress never considered, and it focuses on subsequent events that few companies might have predicted when applying.
The two agencies also ignored the legally mandated process for developing a questionnaire. The OMB allowed the SBA to use the form in complete secrecy, instead of releasing it and providing a 60-day period for public comment. The agencies also violated the Administrative Procedure Act by arbitrarily declaring – to bypass the normal review process – that the new questionnaire had to be approved as an “urgent matter” and did not constitute a change in the scope of the collection process. prior information from the SBA.
“Using a secret form that ignores the intent of Congress and retroactively changes the criteria for a loan is not due diligence; it is illegal and must end before employers suffer irrevocable harm, ”Sandherr added.