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ANALYSAS CORP. v. BOWLES

June 23, 1993

ANALYSAS CORP., Plaintiff,
v.
ERSKINE BOWLES,1 et al., Defendants.



The opinion of the court was delivered by: ROYCE C. LAMBERTH

 This case comes before the court on plaintiff's motion for a preliminary injunction and both parties' cross-motions for summary judgment. Upon consideration of the parties' memoranda, and for the reasons stated below, plaintiff's motion for summary judgment will be granted; defendants' motion for summary judgment will be denied. A permanent injunction will be entered; thus, plaintiff's motion for a preliminary injunction will be denied as moot.

 I. INTRODUCTION.

 Pursuant to the Small Business Act, Congress has authorized the Small Business Administration ("SBA") to determine which business enterprises are to be designated small business concerns within particular industries. SBA establishes a ceiling (typically a dollar figure representing a firm's average annual receipts ("AAR")) for defined industries each of which is referenced by a four-digit Standard Industrial Classification ("SIC") code; firms must fall below the industry's ceiling in order to qualify as small businesses for that particular SIC code. When government contracts are proffered to small businesses under the Section 8(a) program, the contracts are labeled with a given SIC code, thus authorizing all firms which have previously qualified for that code to compete. *fn2"

 If SBA determines that no size standard for a particular industry has been established, SBA regulations provide that SBA may issue a temporary size standard for that industry. 13 C.F.R. § 121.301(c). It is just such a standard that plaintiff here challenges.

 Thus, plaintiff seeks a declaratory judgment that SBA's interim final rule was contrary to law; as well as an injunction enjoining defendants from taking any action on solicitation DE-RPO5-930R22081 until it is resolicited using lawfully promulgated size standards. *fn4"

 II. ANALYSIS.5

 A. The Administrative Procedure Act Applies to SBA.

 This case requires that the court interpret and apply two regulations adopted by SBA. In the first regulation, SBA specifically adopts the requirements of the Administrative Procedure Act ("APA"):

 
SBA is governed as a matter of policy by the public participation provisions of the Administrative Procedure Act, 5 U.S.C. 553, notwithstanding the exemptions given by such section 553 for matters relating to agency management or personnel, or to public property, loans, grants, benefits, or contracts. Where, as provided by 5 U.S.C. 553, it is determined that such public participation procedures would be impracticable, unnecessary, or contrary to the public interest, a specific finding to this effect shall be published with the rules or regulations in question. Such exceptions from public participation procedures are not to be favored and will be used sparingly, as for example, in emergencies.. . .

 13 C.F.R. § 101.9 (emphasis added).

 In the second regulation, SBA delimits an example of what may constitute an "emergency:"

 
If no size standard for an industry has been established in the Part, then SBA, upon request, may issue a temporary size standard for the industry in question by publishing an interim emergency rule in the Federal Register with an opportunity for public comment in ...

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