SBA Publishes Final Rule Eliminating Long-Standing Notice and Comment Procedures

The U.S. Small Business Administration (SBA) published a final rule on August 31, 2026, rescinding its policy to utilize notice and comment procedures for certain rulemaking actions. For more than five decades, the SBA has voluntarily engaged in public notice and comment procedures whenever it made changes to SBA regulations involving loan, grant, benefit and contract programs, even though federal law does not require it to do so. That policy has officially come to an end with the issuance of SBA's final rule.

SBA's rescission of this aspect of the rulemaking process is part of the administration's broader push to streamline the regulatory process. At least two other federal agencies – the U.S. Department of Labor (DOL) and U.S. Department of Health and Human Services (HHS) – have already taken steps to revoke their standing policies of providing for notice and comment for matters that otherwise would be subject to the exemption at issue here.

Statutory Requirements for Notice and Comment

Under the Administrative Procedure Act (APA), federal agencies must comply with notice and comment procedures for most rulemaking actions, meaning that agencies must first publish a draft proposed rule and allow the public at least 30 days to submit written comments and feedback. However, the APA exempts certain types of rulemaking actions from the notice and comment procedures such as rules "relating to agency management or personnel or to public property, loans, grants, benefits, or contracts." 5 USC 553(a)(2).

SBA's History of Voluntary Notice and Comment

Beginning in 1974, the SBA voluntarily waived the APA's exemption for these rulemaking actions, which was later adopted in SBA's regulations at 13 C.F.R. Section 101.108. SBA's regulations stated that "despite [the APA's] exemptions, SBA will follow the public participation requirements of the Administrative Procedure Act, 5 U.S.C. 553, in rulemakings relating to public property, loans, grants, benefits, or contracts." 13 C.F.R. Section 101.108.

SBA's Final Rule

This final rule eliminates 13 C.F.R. Section 101.108 entirely, meaning that the SBA is no longer obligated to seek public comment on rules that fall within the APA's exemption. Though the final rule states that SBA may still seek public comment on a case-by-case basis, it is unclear whether it will actually do so. SBA justifies the rule as reflective of the agency's new policy of "acting more nimbly in response to changing circumstances" and estimates that the new rule will generate annual cost savings of $32,340 for the agency. The final rule's preamble also states that the rule was issued as part of Executive Order (EO) 14219, the administration's "Department of Government Efficiency" deregulatory initiative, under which agencies are directed to evaluate existing regulations for repeal, replacement or modification.

The final rule is effective immediately upon publication on August 31, 2026, without the usual 30-day waiting period. Notably, the final rule itself was issued without a notice and comment period under the APA's exceptions. In the preamble accompanying the final rule, SBA asserts that the rule itself is exempt notice and comment requirements because it is nonsubstantive and reflects the agency's "organization, procedure, and practice."

Impact on Small Business Programs and the 8(a) Program

With respect to SBA's small business programs – including the 8(a) Business Development Program, HUBZone, Women-Owned Small Businesses (WOSB), Service-Disabled Veteran-Owned Small Business (SDVOSB), mentor-protégé and related size standards – it is unclear how SBA will interpret related rulemaking actions and whether these programs fall with the definition of "benefits" or "contracts" under the APA exemption. These programs do not directly provide for contracts or benefits but rather define broad eligibility requirements and other parameters related to participation in SBA's programs. SBA has provided for notice and comment in its recent rulemaking related to the removal of the individual social disadvantage presumption in the 8(a) program, as well as in the pending proposed rule relating to SBA's size standard methodology.

Even without a formal notice and comment process, there are other, albeit limited, ways for interested individuals to stay apprised of future SBA rulemakings and offer feedback. Pursuant to EO 12866, the Office of Information and Regulatory Affairs (OIRA) maintains a public docket of proposed rulemakings from all agencies where the proposed action represents a "significant regulatory action." Agencies must submit these rulemaking actions to OIRA for mandatory review, and those submissions are publicly visible at a high level. Importantly, under EO 12866, interested members of the public can request a meeting with OIRA officials to discuss proposed rulemaking actions and offer feedback.

The SBA's semiannual regulatory agenda, published in the Unified Agenda of Regulatory and Deregulatory Actions, can also provide advance notice of planned rulemaking activity.

In addition, federal agencies have an obligation to consider all relevant aspects of an issue when promulgating rules, and the failure to provide for notice and comment, particularly in regulatory areas with significant impacts, could provide a basis for challenging any such regulation.

Trends in Other Agencies

SBA's final rule reflects a larger trend of agencies stripping their policies regarding public participation in rulemaking that are not grounded in the APA.

In October 1970, HHS – known at the time as the Department of Health, Education and Welfare – adopted a policy, commonly referred to as the "Richardson Waiver," voluntarily committing the department to use notice and comment procedures for rules relating to public property, loans, grants, benefits or contracts, even though the APA did not require it, and subsequently memorialized the policy in the Federal Register in 1971.¹ For the next 50 years, HHS voluntarily conducted notice and comment rulemaking for rules concerning benefits, grants and contracts.

In March 2025, HHS rescinded the Richardson Waiver as contrary to the APA and imposition of costs on the department and public that are "contrary to the efficient operation of the Department and impede the Department's flexibility to adapt quickly to legal and policy mandates."²

Smart Approaches to Marijuana v. Kennedy³ addresses judicial treatment of HHS' 2025 decision to rescind its public participation exception. Although the U.S. District Court for the District of Columbia dismissed the case for lack of Article III standing without reaching the merits, it addressed plaintiffs' argument that HHS' long-standing practice of voluntarily conducting notice and comment rulemaking reflects the importance of public participation in Medicare rulemaking. The court rejected the argument, reasoning HHS and "its past choice to do more than a statute demands does not increase what that statute actually demands."⁴

Similarly, the DOL recently eliminated its policy of voluntary notice and comment procedures for actions exempted under the APA. Beginning in 1971, DOL waived the APA's exemption for regulatory actions concerning public property, loans, grants, benefits and contracts and regularly engaged in notice and comment procedures for these actions. But in 2025, DOL issued a final rule nearly identical to SBA's, titled "Rescinding Unnecessary Notice and Comment Procedures," which eliminated the agency's voluntary notice and comment practices. DOL's final rule cited concerns of "ossification" and "self-imposed bureaucracy."

The U.S. Department of Agriculture (USDA) also rescinded its policy of voluntary notice and comment procedures in 2013, which had previously been in effect since 1971. In its final rule, titled "Revocation of Statement of Policy on Public Participation in Rule Making," USDA claimed that the voluntary notice and comment policy "delays the implementation of a program without providing a corresponding benefit." USDA solicited public comment on the proposed recission for 30 days.

Conclusion

The SBA has rescinded its long-standing policy of following voluntary notice and comment procedures for certain rulemakings, now returning to the default exemptions under the APA. The agency states that the change is intended to improve efficiency and responsiveness, reduce procedural burdens and align SBA practice with the APA. However, the recission may reduce opportunities for affected businesses and other stakeholders to participate in the development of rules concerning SBA programs, although the scope and application of the APA exemption is not clear. In any event, the agency may continue to seek public input on a case-by-case basis. The action is part of a broader trend among federal agencies of reconsidering voluntary notice and comment commitments beyond statutory requirements.

For questions about the final rule or its implications, please contact the authors.

Notes

¹ 36 Fed. Reg. 2,532 (Feb. 5, 1971)

² 90 Fed. Reg. at 11,029.

³ Smart Approaches for Marijuana v. Kennedy, No. 1:26-cv-1081 (TNM), 2026 U.S. Dist. LEXIS 114355 (D.D.C. May 22, 2026).

⁴ Id. at 42.