{"attribution":{"source":"legal.exploreworldai.com","canonical":"https://legal.exploreworldai.com/api/public/v1/judgment-text?id=us:ca3-25-2026-2026-09-18","cite_as":"NovaCopilot, legal.exploreworldai.com (https://legal.exploreworldai.com/api/public/v1/judgment-text?id=us:ca3-25-2026-2026-09-18)","license":"https://legal.exploreworldai.com/revision","version":"legal-2026-10-17","fingerprint":"ewai:us:e7344b","proof":"sha256:24f45a60346f3efc3f435ca2ed6d3fa918db8e0e059800e427abda452a1f6fb9","jurisdiction":"us","lang":"en","publisher":"NovaCopilot by ExploreWorld Legal","terms":"https://legal.exploreworldai.com/om"},"brand_source":"Source: NovaCopilot","item":{"schema_version":"1.0.0","id":"us:ca3-25-2026-2026-09-18","jurisdiction":"us","lang":"en","brand_source":"Source: NovaCopilot","brand":{"product":"NovaCopilot","platform":"ExploreWorldAI","infrastructure":"ExploreWorld Legal","infrastructure_url":"legal.exploreworldai.com","legal_entity":"Valkiv Ventures 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matter","paragraphs":["para_1","para_2","para_3","para_4","para_5","para_6","para_7","para_8","para_9","para_10","para_11","para_12","para_13","para_14","para_15","para_16","para_17","para_18","para_19","para_20","para_21","para_22","para_23","para_24","para_25","para_26","para_27","para_28","para_29","para_30","para_31","para_32","para_33","para_34","para_35","para_36","para_37","para_38","para_39","para_40","para_41","para_42","para_43","para_44","para_45","para_46","para_47","para_48","para_49","para_50","para_51","para_52","para_53","para_54","para_55","para_56","para_57","para_58","para_59","para_60","para_61","para_62","para_63","para_64","para_65","para_66","para_67","para_68","para_69","para_70","para_71","para_72","para_73","para_74","para_75","para_76","para_77","para_78","para_79","para_80","para_81","para_82","para_83","para_84","para_85","para_86","para_87","para_88","para_89","para_90","para_91","para_92","para_93","para_94","para_95","para_96","para_97","para_98","para_99","para_100","para_101","para_102","para_103","para_104","para_105","para_106","para_107","para_108","para_109","para_110","para_111","para_112","para_113","para_114","para_115","para_116","para_117","para_118","para_119","para_120","para_121","para_122","para_123","para_124","para_125","para_126","para_127","para_128","para_129","para_130","para_131","para_132","para_133","para_134","para_135","para_136","para_137","para_138","para_139","para_140","para_141","para_142","para_143","para_144","para_145","para_146","para_147","para_148","para_149","para_150","para_151","para_152","para_153","para_154","para_155","para_156","para_157","para_158","para_159","para_160","para_161","para_162","para_163","para_164","para_165","para_166","para_167","para_168","para_169","para_170","para_171","para_172","para_173","para_174","para_175","para_176","para_177","para_178","para_179","para_180","para_181","para_182","para_183","para_184","para_185","para_186","para_187","para_188","para_189","para_190","para_191","para_192","para_193","para_194","para_195","para_196","para_197","para_198","para_199","para_200","para_201","para_202","para_203","para_204","para_205","para_206","para_207","para_208","para_209","para_210","para_211","para_212","para_213","para_214","para_215","para_216","para_217","para_218","para_219","para_220","para_221","para_222","para_223","para_224","para_225","para_226","para_227","para_228","para_229","para_230","para_231","para_232","para_233","para_234","para_235","para_236","para_237","para_238","para_239","para_240","para_241","para_242","para_243","para_244","para_245","para_246","para_247","para_248","para_249","para_250","para_251","para_252","para_253","para_254","para_255","para_256","para_257","para_258","para_259","para_260","para_261","para_262","para_263","para_264","para_265","para_266","para_267","para_268","para_269","para_270","para_271","para_272","para_273","para_274","para_275","para_276","para_277","para_278","para_279","para_280","para_281","para_282","para_283","para_284","para_285","para_286","para_287","para_288","para_289","para_290","para_291","para_292","para_293","para_294","para_295","para_296","para_297","para_298","para_299","para_300","para_301","para_302","para_303","para_304","para_305","para_306","para_307","para_308","para_309","para_310","para_311","para_312","para_313","para_314","para_315","para_316","para_317","para_318","para_319","para_320","para_321","para_322","para_323","para_324","para_325","para_326","para_327","para_328","para_329","para_330","para_331","para_332","para_333","para_334","para_335","para_336","para_337","para_338","para_339","para_340","para_341","para_342","para_343","para_344","para_345","para_346","para_347","para_348","para_349","para_350","para_351","para_352","para_353","para_354","para_355","para_356","para_357","para_358","para_359","para_360","para_361","para_362","para_363","para_364","para_365","para_366","para_367"],"kind":"front_matter"}],"paragraphs":[{"text":"PRECEDENTIAL","paragraph_id":"para_1"},{"text":"UNITED STATES COURT OF APPEALS","paragraph_id":"para_2"},{"text":"FOR THE THIRD CIRCUIT","paragraph_id":"para_3"},{"text":"____________","paragraph_id":"para_4"},{"text":"No. 25-2026","paragraph_id":"para_5"},{"text":"____________","paragraph_id":"para_6"},{"text":"CELEBRITY OF SPRINGFIELD LLC,","paragraph_id":"para_7"},{"text":"Appellant","paragraph_id":"para_8"},{"text":"v.","paragraph_id":"para_9"},{"text":"UNITED STATES SMALL BUSINESS","paragraph_id":"para_10"},{"text":"ADMINISTRATION;","paragraph_id":"para_11"},{"text":"ADMINISTRATOR UNITED STATES SMALL BUSINESS","paragraph_id":"para_12"},{"text":"ADMINISTRATION","paragraph_id":"para_13"},{"text":"____________","paragraph_id":"para_14"},{"text":"On Appeal from the United States District Court","paragraph_id":"para_15"},{"text":"for the District of New Jersey","paragraph_id":"para_16"},{"text":"(D.C. No. 2:23-cv-01720)","paragraph_id":"para_17"},{"text":"District Judge: Honorable William J. Martini","paragraph_id":"para_18"},{"text":"____________","paragraph_id":"para_19"},{"text":"Submitted Under Third Circuit L.A.R. 34.1(a)","paragraph_id":"para_20"},{"text":"September 17, 2026","paragraph_id":"para_21"},{"text":"Before: HARDIMAN, BIBAS, and RENDELL, Circuit","paragraph_id":"para_22"},{"text":"Judges","paragraph_id":"para_23"},{"text":"(Filed: September 18, 2026)","paragraph_id":"para_24"},{"text":"2","paragraph_id":"para_25"},{"text":"____________","paragraph_id":"para_26","court_paragraph":2},{"text":"OPINION OF THE COURT","paragraph_id":"para_27"},{"text":"____________","paragraph_id":"para_28"},{"text":"HARDIMAN, Circuit Judge.","paragraph_id":"para_29"},{"text":"As part of the Coronavirus Aid, Relief, and Economic","paragraph_id":"para_30"},{"text":"Security (CARES) Act, Congress established the Paycheck","paragraph_id":"para_31"},{"text":"Protection Program (PPP or Program) to help keep small","paragraph_id":"para_32"},{"text":"businesses afloat during the COVID-19 pandemic. The","paragraph_id":"para_33"},{"text":"Program offered eligible businesses access to low interest","paragraph_id":"para_34"},{"text":"loans, some of which could be forgiven. The Small Business","paragraph_id":"para_35"},{"text":"Administration implemented the PPP and promulgated the","paragraph_id":"para_36"},{"text":"Corporate Group Rule at issue in this appeal. To help ensure","paragraph_id":"para_37"},{"text":"widespread access to PPP loans, the Corporate Group Rule","paragraph_id":"para_38"},{"text":"capped the aggregate amount entities with shared majority","paragraph_id":"para_39"},{"text":"ownership could borrow.","paragraph_id":"para_40"},{"text":"Celebrity of Springfield, LLC, a car dealership, was part","paragraph_id":"para_41"},{"text":"of a corporate group that borrowed more than permitted under","paragraph_id":"para_42"},{"text":"the Corporate Group Rule. Yet Celebrity argues that it was","paragraph_id":"para_43"},{"text":"entitled to partial forgiveness up to the capped amount. We","paragraph_id":"para_44"},{"text":"disagree. Neither the statutory nor regulatory language","paragraph_id":"para_45"},{"text":"mandates partial forgiveness, and the SBA did not abuse its","paragraph_id":"para_46"},{"text":"discretion or act arbitrarily in declining to grant partial","paragraph_id":"para_47"},{"text":"forgiveness. So we will affirm the District Court’s summary","paragraph_id":"para_48"},{"text":"judgment for the SBA.","paragraph_id":"para_49"},{"text":"I","paragraph_id":"para_50"},{"text":"The SBA was created to “aid, counsel, assist, and","paragraph_id":"para_51"},{"text":"protect, insofar as is possible, the interests of small-business","paragraph_id":"para_52"},{"text":"concerns in order to preserve free competitive enterprise.” See","paragraph_id":"para_53"},{"text":"3","paragraph_id":"para_54"},{"text":"15 U.S.C. § 631(a). To fulfill those goals, Congress delegated","paragraph_id":"para_55","court_paragraph":3},{"text":"authority to the SBA to guarantee private loans—known as","paragraph_id":"para_56"},{"text":"§ 7(a) loans—to eligible businesses. 15 U.S.C. § 636(a). Apart","paragraph_id":"para_57"},{"text":"from the vagaries of the appropriations process, § 7(a) loans","paragraph_id":"para_58"},{"text":"are subject to certain “restrictions, limitations, and provisions.”","paragraph_id":"para_59"},{"text":"Id. Within those constraints, the SBA has authority to set other","paragraph_id":"para_60"},{"text":"rules to fulfill its statutory mandate. See, e.g., id. §§ 631,","paragraph_id":"para_61"},{"text":"633(d), 634(b)(6), (7). For example, though a loan applicant","paragraph_id":"para_62"},{"text":"must be a “small business concern,” the SBA is authorized to","paragraph_id":"para_63"},{"text":"“specify detailed definitions or standards” to determine which","paragraph_id":"para_64"},{"text":"businesses qualify. 15 U.S.C. § 632(a)(2)(A).","paragraph_id":"para_65"},{"text":"In establishing the Paycheck Protection Program, the","paragraph_id":"para_66"},{"text":"CARES Act expanded the SBA’s § 7(a) loan-guaranteeing","paragraph_id":"para_67"},{"text":"authority. The Act states: “[e]xcept as otherwise provided” by","paragraph_id":"para_68"},{"text":"statute, the SBA “may guarantee [PPP] loans under the same","paragraph_id":"para_69"},{"text":"terms, conditions, and processes as a loan made [by the SBA]","paragraph_id":"para_70"},{"text":"under” § 7(a). 15 U.S.C. § 636(a)(36)(B). The SBA is","paragraph_id":"para_71"},{"text":"authorized to forgive PPP loans if the recipient used the","paragraph_id":"para_72"},{"text":"borrowed funds for certain purposes, like payroll. See 15","paragraph_id":"para_73"},{"text":"U.S.C. § 636m. And the Act directs the SBA to “issue guidance","paragraph_id":"para_74"},{"text":"and regulations” implementing the loan forgiveness authority.","paragraph_id":"para_75"},{"text":"Coronavirus Aid, Relief, and Economic Security Act, Pub. L.","paragraph_id":"para_76"},{"text":"No. 116–136 § 1106(k), 134 Stat. 281, 301 (2020) (codified at","paragraph_id":"para_77"},{"text":"15 U.S.C. § 636m(k)); see also 15 U.S.C. § 9012.","paragraph_id":"para_78"},{"text":"As noted, the focus of this appeal is the SBA’s","paragraph_id":"para_79"},{"text":"Corporate Group Rule. 85 Fed. Reg. 26324 (May 4, 2020).","paragraph_id":"para_80"},{"text":"That Rule capped, at $20 million “in the aggregate,” the","paragraph_id":"para_81"},{"text":"amount of PPP loans that businesses “majority owned, directly","paragraph_id":"para_82"},{"text":"or indirectly, by a common parent” could receive. Id. at 26325.","paragraph_id":"para_83"},{"text":"It is the borrower’s “responsibility” to comply with the cap and","paragraph_id":"para_84"},{"text":"to “withdraw or request cancellation of any pending PPP loan","paragraph_id":"para_85"},{"text":"application or approved PPP loan not in compliance with the","paragraph_id":"para_86"},{"text":"4","paragraph_id":"para_87"},{"text":"limitation set forth in this rule.” Id. “Failure by the applicant to","paragraph_id":"para_88","court_paragraph":4},{"text":"do so,” the rule warns, would “be regarded as a use of PPP","paragraph_id":"para_89"},{"text":"funds for unauthorized purposes, and the loan will not be","paragraph_id":"para_90"},{"text":"eligible for forgiveness.” Id. The SBA adopted this rule to","paragraph_id":"para_91"},{"text":"“promote the availability of PPP loans” to a larger number of","paragraph_id":"para_92"},{"text":"borrowers and strike “an appropriate balance between broad","paragraph_id":"para_93"},{"text":"availability of PPP loans and program resource constraints.”","paragraph_id":"para_94"},{"text":"Id.","paragraph_id":"para_95"},{"text":"To protect the Program’s fiscal integrity, the SBA also","paragraph_id":"para_96"},{"text":"instituted a review system for PPP borrowers seeking","paragraph_id":"para_97"},{"text":"forgiveness. See 85 Fed. Reg. 33010, 33012–13 (June 1, 2020);","paragraph_id":"para_98"},{"text":"see also 15 U.S.C. § 634(b)(6), (7), (11) (authorizing the SBA","paragraph_id":"para_99"},{"text":"to conduct investigations and ensure compliance). If the","paragraph_id":"para_100"},{"text":"agency determines that a borrower seeking forgiveness was not","paragraph_id":"para_101"},{"text":"eligible to obtain a certain loan, it would deny forgiveness “in","paragraph_id":"para_102"},{"text":"whole or in part, as appropriate.” 85 Fed. Reg. at 33012.","paragraph_id":"para_103"},{"text":"In late 2020, Congress established a “second draw”","paragraph_id":"para_104"},{"text":"program, which authorized the SBA to guarantee additional","paragraph_id":"para_105"},{"text":"PPP loans to certain businesses that had obtained them.","paragraph_id":"para_106"},{"text":"Consolidated Appropriations Act, 2021, Pub. L. No. 116-260,","paragraph_id":"para_107"},{"text":"134 Stat. 1182, 2001–06 (2020) (adding 15 U.S.C.","paragraph_id":"para_108"},{"text":"§ 636(a)(37)). Such loans are guaranteed “under the same","paragraph_id":"para_109"},{"text":"terms, conditions, and processes” as first-draw loans. 15","paragraph_id":"para_110"},{"text":"U.S.C. § 636(a)(37)(B). And eligibility for forgiveness","paragraph_id":"para_111"},{"text":"operates “in the same manner” as the first round of loans. Id.","paragraph_id":"para_112"},{"text":"§ 636(a)(37)(J)(ii). The SBA then issued an interim final rule","paragraph_id":"para_113"},{"text":"establishing the key terms of the “Second Draw Program.” 86","paragraph_id":"para_114"},{"text":"Fed. Reg. 3712, 3712 (Jan. 14, 2021). The Corporate Group","paragraph_id":"para_115"},{"text":"Rule continued to apply to the Second-Draw Program. Id. at","paragraph_id":"para_116"},{"text":"3716, 3720. But given the lower statutory maximum loan","paragraph_id":"para_117"},{"text":"amount for second-draw loans ($2 million), this time the SBA","paragraph_id":"para_118"},{"text":"lowered the corporate group limit from $20 million to $4","paragraph_id":"para_119"},{"text":"5","paragraph_id":"para_120"},{"text":"million. Id. at 3716; see also 15 U.S.C. § 636(a)(37)(C).","paragraph_id":"para_121","court_paragraph":5},{"text":"II","paragraph_id":"para_122"},{"text":"Celebrity of Springfield is a New Jersey car dealership","paragraph_id":"para_123"},{"text":"owned by Thomas Maoli, who owns three other car dealerships","paragraph_id":"para_124"},{"text":"and a real estate investment firm. All five of his LLCs applied","paragraph_id":"para_125"},{"text":"for and received first-draw PPP loans. Mr. Maoli’s four car","paragraph_id":"para_126"},{"text":"dealerships also applied for and received second-draw loans,","paragraph_id":"para_127"},{"text":"which were subject to the $4 million aggregate limit. See 86","paragraph_id":"para_128"},{"text":"Fed. Reg. at 3720. But when Celebrity of Springfield sought","paragraph_id":"para_129"},{"text":"and obtained a loan of $2 million, the Celebrity Corporate","paragraph_id":"para_130"},{"text":"Group had already received more than $3 million in second-","paragraph_id":"para_131"},{"text":"draw loans. So the $2 million exceeded the $4 million cap by","paragraph_id":"para_132"},{"text":"a little more than $1 million.","paragraph_id":"para_133"},{"text":"Throughout the loan application process, Maoli","paragraph_id":"para_134"},{"text":"certified that he understood the Program’s rules. Maoli signed","paragraph_id":"para_135"},{"text":"the loan application and listed himself as “100%” owner of","paragraph_id":"para_136"},{"text":"Celebrity of Springfield. And the loan agreement that Maoli","paragraph_id":"para_137"},{"text":"signed stated that it was “subject to . . . all rules [and]","paragraph_id":"para_138"},{"text":"regulations . . . implementing, interpreting, or otherwise","paragraph_id":"para_139"},{"text":"governing” the Program. A.R. 52; see also id. (“Borrower","paragraph_id":"para_140"},{"text":"hereby agrees, acknowledges, and understands that the amount","paragraph_id":"para_141"},{"text":"of principal and accrued interest which may be forgiven shall","paragraph_id":"para_142"},{"text":"be determined in accordance with the PPP Rules.”).","paragraph_id":"para_143"},{"text":"About ten months after exceeding the cap, Celebrity of","paragraph_id":"para_144"},{"text":"Springfield sought loan forgiveness for its $2 million loan. The","paragraph_id":"para_145"},{"text":"SBA denied the application, explaining that because the loan","paragraph_id":"para_146"},{"text":"violated the Corporate Group Rule, “forgiveness in the amount","paragraph_id":"para_147"},{"text":"of $0.00 is appropriate.” App. 29–30. Celebrity filed an","paragraph_id":"para_148"},{"text":"administrative appeal, which was also denied. The SBA","paragraph_id":"para_149"},{"text":"offered two reasons for its decision: (1) the Corporate Group","paragraph_id":"para_150"},{"text":"6","paragraph_id":"para_151"},{"text":"Rule made Celebrity ineligible for the loan in the first place;","paragraph_id":"para_152","court_paragraph":6},{"text":"and (2) even if it had discretion to decide whether to forgive","paragraph_id":"para_153"},{"text":"the loan, it would not do so here.","paragraph_id":"para_154"},{"text":"Unsatisfied, Celebrity of Springfield sued the SBA in","paragraph_id":"para_155"},{"text":"federal court. While acknowledging that it had violated the","paragraph_id":"para_156"},{"text":"Corporate Group Rule, Celebrity maintained that it was","paragraph_id":"para_157"},{"text":"entitled to forgiveness of the portion of its loan that did not","paragraph_id":"para_158"},{"text":"exceed the $4 million aggregate limit. It argued that the SBA’s","paragraph_id":"para_159"},{"text":"denial contravened its statutory and regulatory authority and","paragraph_id":"para_160"},{"text":"was arbitrary and capricious, all in violation of the","paragraph_id":"para_161"},{"text":"Administrative Procedure Act. After the parties filed cross-","paragraph_id":"para_162"},{"text":"motions, the District Court granted summary judgment to the","paragraph_id":"para_163"},{"text":"SBA. Celebrity timely appealed.","paragraph_id":"para_164"},{"text":"III1","paragraph_id":"para_165"},{"text":"Celebrity does not dispute that it violated the Corporate","paragraph_id":"para_166"},{"text":"Group Rule, which states that if a borrower fails to withdraw","paragraph_id":"para_167"},{"text":"or request cancelation of a loan in excess of the corporate group","paragraph_id":"para_168"},{"text":"limit, “the loan will not be eligible for forgiveness.” 85 Fed.","paragraph_id":"para_169"},{"text":"Reg. at 26325. Nevertheless, Celebrity contends that the SBA","paragraph_id":"para_170"},{"text":"should have forgiven its loan up to the statutory limit for two","paragraph_id":"para_171"},{"text":"1 The District Court had subject matter jurisdiction under 28","paragraph_id":"para_172"},{"text":"U.S.C. § 1331. We have jurisdiction under 28 U.S.C. § 1291.","paragraph_id":"para_173"},{"text":"We review the District Court’s summary judgment de novo,","paragraph_id":"para_174"},{"text":"applying the same standard under Rule 56(a) of the Federal","paragraph_id":"para_175"},{"text":"Rules of Civil Procedure. See Kelly v. Borough of Carlisle, 622","paragraph_id":"para_176"},{"text":"F.3d 248, 253 (3d Cir. 2010). We review the SBA’s decision","paragraph_id":"para_177"},{"text":"for whether it is “arbitrary, capricious, an abuse of discretion,","paragraph_id":"para_178"},{"text":"or otherwise not in accordance with law.” 5 U.S.C.","paragraph_id":"para_179"},{"text":"§ 706(2)(A).","paragraph_id":"para_180"},{"text":"7","paragraph_id":"para_181"},{"text":"reasons, neither of which we find persuasive.","paragraph_id":"para_182","court_paragraph":7},{"text":"A","paragraph_id":"para_183"},{"text":"Celebrity first asserts that the CARES Act or its","paragraph_id":"para_184"},{"text":"regulations require partial forgiveness. We agree with","paragraph_id":"para_185"},{"text":"Celebrity that “the CARES Act is silent as to the question of","paragraph_id":"para_186"},{"text":"partial forgiveness in the context of a group maximum having","paragraph_id":"para_187"},{"text":"been exceeded.” Celebrity Br. 12.2 So the text of the CARES","paragraph_id":"para_188"},{"text":"Act neither compels nor precludes the SBA from forgiving","paragraph_id":"para_189"},{"text":"Celebrity’s second-draw loan. Citing the CARES Act’s","paragraph_id":"para_190"},{"text":"“fundamental purpose,” Celebrity suggests that “absurd","paragraph_id":"para_191"},{"text":"results” would result from failure to forgive the portion of its","paragraph_id":"para_192"},{"text":"loan that it might have properly borrowed had it followed the","paragraph_id":"para_193"},{"text":"rules. Celebrity Br. 13–14. There are two problems with this","paragraph_id":"para_194"},{"text":"argument. First, a vague notion of statutory purpose cannot","paragraph_id":"para_195"},{"text":"conjure a requirement that the SBA forgive Celebrity’s loan","paragraph_id":"para_196"},{"text":"when, as Celebrity concedes, the CARES Act does not address","paragraph_id":"para_197"},{"text":"the circumstances this case presents. Second, we reject that it","paragraph_id":"para_198"},{"text":"would be absurd to deny loan forgiveness to a company that","paragraph_id":"para_199"},{"text":"failed to comply with the legal rules for obtaining the loan in","paragraph_id":"para_200"},{"text":"the first place.","paragraph_id":"para_201"},{"text":"Nor do the regulations that implement the CARES Act","paragraph_id":"para_202"},{"text":"mandate partial forgiveness. The Corporate Group Rule states","paragraph_id":"para_203"},{"text":"2 Celebrity correctly observes that the SBA can forgive loans","paragraph_id":"para_204"},{"text":"“in various amounts up to the principal amount.” Celebrity Br.","paragraph_id":"para_205"},{"text":"14 (citing 15 U.S.C. § 636m(d)(1)). But the SBA’s power to","paragraph_id":"para_206"},{"text":"partially forgive loans in other circumstances (like if a","paragraph_id":"para_207"},{"text":"borrower uses loaned funds for impermissible expenses) does","paragraph_id":"para_208"},{"text":"not require the SBA to grant Celebrity partial forgiveness","paragraph_id":"para_209"},{"text":"under these circumstances. See, e.g., 15 U.S.C.","paragraph_id":"para_210"},{"text":"§§ 636(a)(37)(J)(iii), 636m(b), 636m(d)(2)–(7).","paragraph_id":"para_211"},{"text":"8","paragraph_id":"para_212"},{"text":"that if a borrower fails to withdraw or request cancelation of a","paragraph_id":"para_213","court_paragraph":8},{"text":"loan in excess of the corporate group limit, “the loan will not","paragraph_id":"para_214"},{"text":"be eligible for forgiveness.” 85 Fed. Reg. at 26325 (emphasis","paragraph_id":"para_215"},{"text":"added). As the highlighted text indicates, it is clear that once","paragraph_id":"para_216"},{"text":"the SBA determined that Celebrity’s second-draw loan was","paragraph_id":"para_217"},{"text":"ineligible, the SBA could deny forgiveness.","paragraph_id":"para_218"},{"text":"Celebrity points to other regulations and guidance that","paragraph_id":"para_219"},{"text":"the SBA has promulgated. Among those regulations is one that","paragraph_id":"para_220"},{"text":"contains a list of Frequently Asked Questions, including: “If","paragraph_id":"para_221"},{"text":"SBA determines that a borrower is ineligible for a PPP loan,","paragraph_id":"para_222"},{"text":"can the loan be forgiven?” The response:","paragraph_id":"para_223"},{"text":"No. If SBA determines that a borrower is","paragraph_id":"para_224"},{"text":"ineligible for the PPP loan, SBA will direct the","paragraph_id":"para_225"},{"text":"lender to deny the loan forgiveness application.","paragraph_id":"para_226"},{"text":"Further, if SBA determines that the borrower is","paragraph_id":"para_227"},{"text":"ineligible for the loan amount or loan forgiveness","paragraph_id":"para_228"},{"text":"amount claimed by the borrower, SBA will","paragraph_id":"para_229"},{"text":"direct the lender to deny the loan forgiveness","paragraph_id":"para_230"},{"text":"application in whole or in part, as appropriate.","paragraph_id":"para_231"},{"text":"SBA may also seek repayment of the outstanding","paragraph_id":"para_232"},{"text":"PPP loan balance or pursue other available","paragraph_id":"para_233"},{"text":"remedies.","paragraph_id":"para_234"},{"text":"85 Fed. Reg. at 33012. Celebrity latches on to the statement","paragraph_id":"para_235"},{"text":"that “SBA will direct the lender” and says that this","paragraph_id":"para_236"},{"text":"“mandatory” language “requir[es] the SBA to grant partial","paragraph_id":"para_237"},{"text":"forgiveness in cases (such as this case) in which partial","paragraph_id":"para_238"},{"text":"forgiveness is ‘appropriate.’” Celebrity Br. 16 (emphasis","paragraph_id":"para_239"},{"text":"omitted). But recall that violation of the Corporate Group Rule","paragraph_id":"para_240"},{"text":"states that “the loan will not be eligible for forgiveness.” 85","paragraph_id":"para_241"},{"text":"Fed. Reg. at 26325. That more specific regulation carries more","paragraph_id":"para_242"},{"text":"weight than the general language Celebrity relies on and","paragraph_id":"para_243"},{"text":"9","paragraph_id":"para_244"},{"text":"suggests that it would not be “appropriate” to grant Celebrity","paragraph_id":"para_245","court_paragraph":9},{"text":"even partial loan forgiveness. See Long Island Care at Home,","paragraph_id":"para_246"},{"text":"Ltd. v. Coke, 551 U.S. 158, 170 (2007) (usually “the specific","paragraph_id":"para_247"},{"text":"governs the general” in a statutory scheme); see also Antonin","paragraph_id":"para_248"},{"text":"Scalia & Bryan A. Garner, Reading Law: The Interpretation of","paragraph_id":"para_249"},{"text":"Legal Texts 183–88 (2012). Simply put, though this FAQ","paragraph_id":"para_250"},{"text":"contemplates partial loan forgiveness in some hypothetical","paragraph_id":"para_251"},{"text":"scenarios, that does not mean the SBA had to partially forgive","paragraph_id":"para_252"},{"text":"Celebrity’s loan when it violated the Corporate Group Rule.","paragraph_id":"para_253"},{"text":"Moreover, Celebrity takes the phrase “will direct the","paragraph_id":"para_254"},{"text":"lender” out of context. The full phrase provides: “SBA will","paragraph_id":"para_255"},{"text":"direct the lender to deny the loan forgiveness application in","paragraph_id":"para_256"},{"text":"whole or in part, as appropriate.” 85 Fed. Reg. at 33012. The","paragraph_id":"para_257"},{"text":"qualifier “as appropriate” does a lot of work here and Celebrity","paragraph_id":"para_258"},{"text":"never explains why partial forgiveness was “appropriate,”","paragraph_id":"para_259"},{"text":"much less required, in this case. As the ALJ explained, the","paragraph_id":"para_260"},{"text":"phrase “gives SBA discretion to allow forgiveness of the","paragraph_id":"para_261"},{"text":"ineligible loan ‘as appropriate’ or suitable or compatible with","paragraph_id":"para_262"},{"text":"the CARES Act. And, that exercise of discretion is for SBA to","paragraph_id":"para_263"},{"text":"make, not the borrower.” App. 40. As discussed, the CARES","paragraph_id":"para_264"},{"text":"Act conferred broad discretion on the SBA to promulgate rules","paragraph_id":"para_265"},{"text":"and regulations for the PPP’s implementation, including the","paragraph_id":"para_266"},{"text":"Corporate Group Rule. And as explained above, there was no","paragraph_id":"para_267"},{"text":"statutory mandate in the CARES Act that required partial","paragraph_id":"para_268"},{"text":"forgiveness here.","paragraph_id":"para_269"},{"text":"Celebrity also interprets SBA Procedural Notice","paragraph_id":"para_270"},{"text":"Control No. 5000-20078 to require partial loan forgiveness.","paragraph_id":"para_271"},{"text":"Celebrity highlights this language: “[i]f the lender or SBA, as","paragraph_id":"para_272"},{"text":"applicable, determines a borrower was ineligible for any","paragraph_id":"para_273"},{"text":"portion of its loan amount, forgiveness will be denied for the","paragraph_id":"para_274"},{"text":"ineligible portion and the borrower must begin making","paragraph_id":"para_275"},{"text":"payments on the remaining loan amount.” App. 57. Although","paragraph_id":"para_276"},{"text":"10","paragraph_id":"para_277"},{"text":"that statement can be read to imply that forgiveness might be","paragraph_id":"para_278","court_paragraph":10},{"text":"granted for the eligible portion of a loan, it does not authorize","paragraph_id":"para_279"},{"text":"the rest of the loan to be forgiven. See also App. 56 (“A","paragraph_id":"para_280"},{"text":"borrower may not receive loan forgiveness for any amount that","paragraph_id":"para_281"},{"text":"exceeds the correct maximum loan amount permitted by statute","paragraph_id":"para_282"},{"text":"for that borrower.”). And other language from the Notice","paragraph_id":"para_283"},{"text":"clarifies that partial forgiveness is not required, and indeed, is","paragraph_id":"para_284"},{"text":"not allowed under these circumstances: “If SBA determines in","paragraph_id":"para_285"},{"text":"the course of its review that the borrower was ineligible for the","paragraph_id":"para_286"},{"text":"PPP loan based on the provisions of the CARES Act, SBA","paragraph_id":"para_287"},{"text":"rules or guidance available at the time of the borrower’s loan","paragraph_id":"para_288"},{"text":"application, or the terms of the borrower’s PPP loan","paragraph_id":"para_289"},{"text":"application” then “the loan will not be eligible for loan","paragraph_id":"para_290"},{"text":"forgiveness.” Id. n.2 (citing 85 Fed. Reg. 38306) (emphasis","paragraph_id":"para_291"},{"text":"added). Read as a whole, the Procedural Notice does not","paragraph_id":"para_292"},{"text":"require partial loan forgiveness under these circumstances","paragraph_id":"para_293"},{"text":"either, even assuming that it bound the SBA.","paragraph_id":"para_294"},{"text":"In sum, neither the text of the CARES Act nor its","paragraph_id":"para_295"},{"text":"corresponding regulations compelled the SBA to partially","paragraph_id":"para_296"},{"text":"forgive the loan Celebrity obtained in violation of the","paragraph_id":"para_297"},{"text":"Corporate Group Rule.","paragraph_id":"para_298"},{"text":"B","paragraph_id":"para_299"},{"text":"Celebrity next argues that if the SBA had discretion to","paragraph_id":"para_300"},{"text":"determine whether it was “appropriate” to partially forgive","paragraph_id":"para_301"},{"text":"Celebrity’s loan, it abused its discretion in denying Celebrity’s","paragraph_id":"para_302"},{"text":"request. Recall that the SBA offered two reasons for its","paragraph_id":"para_303"},{"text":"decision: (1) that the Corporate Group Rule made the loan","paragraph_id":"para_304"},{"text":"ineligible for forgiveness; and (2) even if the SBA had","paragraph_id":"para_305"},{"text":"discretion to decide whether to forgive the loan, it would not","paragraph_id":"para_306"},{"text":"do so here. The first, if true, cannot be an abuse of discretion.","paragraph_id":"para_307"},{"text":"Agencies should follow their own rules, and that is what the","paragraph_id":"para_308"},{"text":"11","paragraph_id":"para_309"},{"text":"SBA did here: the Corporate Group Rule bars forgiveness of","paragraph_id":"para_310","court_paragraph":11},{"text":"loans that exceed the cap, and the SBA rightly determined that","paragraph_id":"para_311"},{"text":"the Rule applied. See, e.g., United States v. Nixon, 418 U.S.","paragraph_id":"para_312"},{"text":"683, 695 (1974) (“So long as this regulation remains in force","paragraph_id":"para_313"},{"text":"the Executive Branch is bound by it, and indeed the United","paragraph_id":"para_314"},{"text":"States as the sovereign composed of the three branches is","paragraph_id":"para_315"},{"text":"bound to respect and to enforce it.”); Leslie v. Att’y Gen., 611","paragraph_id":"para_316"},{"text":"F.3d 171, 175 (3d Cir. 2010) (reciting “the long-settled","paragraph_id":"para_317"},{"text":"principle that rules promulgated by a federal agency that","paragraph_id":"para_318"},{"text":"regulate the rights and interests of others are controlling upon","paragraph_id":"para_319"},{"text":"the agency”). In following its own rules, the SBA did not abuse","paragraph_id":"para_320"},{"text":"its discretion.","paragraph_id":"para_321"},{"text":"The SBA’s explanation for why, even if it had","paragraph_id":"para_322"},{"text":"discretion, it was appropriate to deny Celebrity’s forgiveness","paragraph_id":"para_323"},{"text":"application was reasonable too. Celebrity’s error was not","paragraph_id":"para_324"},{"text":"minor: it borrowed over $1 million beyond the $4 million cap","paragraph_id":"para_325"},{"text":"and then applied for forgiveness of the entire $2 million loan.","paragraph_id":"para_326"},{"text":"Celebrity’s only explanation was that it was not “aware” and","paragraph_id":"para_327"},{"text":"simply “lost track” of the corporate group’s loan. App. 40. The","paragraph_id":"para_328"},{"text":"SBA, with reason, found it “concerning” that Celebrity, asking","paragraph_id":"para_329"},{"text":"for “millions” in aid “from the public trust, would not inform","paragraph_id":"para_330"},{"text":"itself of all requirements for eligibility” and seemingly could","paragraph_id":"para_331"},{"text":"“not responsibly keep track of the amounts of loans” it had","paragraph_id":"para_332"},{"text":"received. App. 41. Celebrity Corporate Group had already","paragraph_id":"para_333"},{"text":"“received 4 First Draw loans and 3 Second Draw loans” and","paragraph_id":"para_334"},{"text":"for each loan “it had to certify on the PPP loan application that","paragraph_id":"para_335"},{"text":"it met the eligibility requirement.” Id. So, the ALJ concluded,","paragraph_id":"para_336"},{"text":"the notion that Celebrity did not know about the Corporate","paragraph_id":"para_337"},{"text":"Group Rule suggested, at best, “an incredible lack of","paragraph_id":"para_338"},{"text":"responsibility and good faith.” and at worst “that it may have","paragraph_id":"para_339"},{"text":"falsely certified to the contrary.” Id. And the claim that","paragraph_id":"para_340"},{"text":"Celebrity had “lost track,” the ALJ further concluded,","paragraph_id":"para_341"},{"text":"12","paragraph_id":"para_342"},{"text":"“suggest[ed] a high degree of negligence, carelessness, and","paragraph_id":"para_343","court_paragraph":12},{"text":"lack of responsibility in record-keeping.” Id. Celebrity denies","paragraph_id":"para_344"},{"text":"acting in bad faith, but even accepting Celebrity’s denial, the","paragraph_id":"para_345"},{"text":"fact remains that it could not keep track of its own loans and","paragraph_id":"para_346"},{"text":"follow the rules. Given these explanations, the SBA’s decision","paragraph_id":"para_347"},{"text":"to deny forgiveness was “within a zone of reasonableness.”","paragraph_id":"para_348"},{"text":"FCC v. Prometheus Radio Project, 592 U.S. 414, 423 (2021).","paragraph_id":"para_349"},{"text":"We hold that even if the SBA had discretion over","paragraph_id":"para_350"},{"text":"Celebrity’s application, it did not abuse that discretion or act","paragraph_id":"para_351"},{"text":"arbitrarily in denying Celebrity’s request to forgive a loan it","paragraph_id":"para_352"},{"text":"had obtained in violation of the SBA’s rules.","paragraph_id":"para_353"},{"text":"***","paragraph_id":"para_354"},{"text":"For the reasons stated, we will affirm the District","paragraph_id":"para_355"},{"text":"Court’s summary judgment.","paragraph_id":"para_356"},{"text":"Thomas A. Gentile","paragraph_id":"para_357"},{"text":"WILSON ELSER","paragraph_id":"para_358"},{"text":"Counsel for Appellant","paragraph_id":"para_359"},{"text":"John F. Basiak, Jr.","paragraph_id":"para_360"},{"text":"Matthew J. Mailloux","paragraph_id":"para_361"},{"text":"OFFICE OF THE U.S. ATTORNEY","paragraph_id":"para_362"},{"text":"FOR THE DISTRICT OF NEW JERSEY","paragraph_id":"para_363"},{"text":"Adam C. 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