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February 27, 1981

SGA FINANCIAL CORPORATION and Martin Zell, Plaintiffs,
UNITED STATES SMALL BUSINESS ADMINISTRATION, Vincent N. Scuro, Newark District Small Business Administration, Anschelewitz, Barr, Ansell & Bonello, Esqs., and Athlete's Choice Corp., Defendants

The opinion of the court was delivered by: SAROKIN

Plaintiff in this action, SGA Finance Corporation ("SGA"), is a New Jersey corporation which, among its other business activities, "packages" loan applications for small businesses who are seeking loans under various federal programs. Defendant, United States Small Business Administration ("SBA"), is a federal agency which administers a federal loan program for qualified small businesses. SBA's loan program is administered through its district offices. Included as a defendant is Vincent Scuro, Chief, Financing Division, SBA Newark District Office.

 Plaintiffs commenced this action in November 1979. The several counts of the complaint allege that defendants SBA and Scuro have systematically reduced to an unreasonable level the fees that plaintiffs charge loan applicants for application packaging. Plaintiffs allege that such fee reductions are in contravention of regulations promulgated by SBA. The complaint also alleges that defendant Scuro has interfered with the lawful conduct of plaintiffs' business and has maliciously conspired to prevent plaintiff from continuing in the loan packaging business. Plaintiff asserts jurisdiction under 5 U.S.C. §§ 704, 706 (1976); 28 U.S.C. § 1346(b) (1976).

 Defendants' motion for summary judgment was granted in July 1980 on the grounds that judicial review of the agency actions in question is barred by § 10(a)(2) of the Administrative Procedure Act ("APA"), 5 U.S.C. § 701(a)(2) (1976). Plaintiffs have moved for reconsideration of said determination.


 Plaintiff SGA has been in the loan packaging business since March 1976. Pursuant to 13 C.F.R. 103.13-6, *fn1" the SBA requires all agents *fn2" who assist applicants in the application process to sign an agreement ("SBA Form 159") not to charge fees for services in excess of what SBA deems to be reasonable and to refund any amounts paid in excess of this figure. *fn3" During the time that plaintiff has been engaged in the loan packaging business, a number of loan applications prepared by SBA have been processed by SBA Newark and defendant Scuro in his capacity as Chief of SBA Newark's Financing Division. The fees claimed by SGA for its packaging services were reduced by SBA in connection with at least six of these applications. Typical of the decreases was a reduction to $ 308 from a claimed fee of $ 1,250. Plaintiff alleges that the claimed fees were already well below the actual cost of the services rendered and that continuation of the pattern of reductions will make its business an economic impossibility.

 In November 1979, SBA also required that an SGA fee of $ 1250 be placed in escrow before allowing closing to proceed on a loan granted under one of the SBA's programs. Plaintiff charges that these and similar actions have seriously interfered with its working relationship with local banks. *fn4" Seven loan applications packaged by SGA are now pending before SBA Newark. Plaintiff SGA is seeking punitive and compensatory damages as well as declaratory relief as to defendants' allegedly illegal application of its own regulations. Plaintiff also seeks attorney's fees and costs.


 This action involves the interrelation of the judicial review provisions of the Administrative Procedure Act ("APA") and certain regulations promulgated by the SBA pursuant to the general authority conferred upon it by the Small Business Act of 1953 ("the Act"), 15 U.S.C. §§ 631-647, as amended (1976).

 Section 10(a) of the APA provides that a person who is "... adversely affected or aggrieved by agency action is entitled to judicial review of that action." 5 U.S.C. § 702. This general right of review is limited by § 10 "... to the extent that (1) statutes preclude judicial review; or (2) agency action is committed to agency discretion by law." 5 U.S.C. § 701(a). Agency decisions that fall within either of these two exceptions may not be reviewed even for abuse of discretion. Local 2855, AFGE v. United States, 602 F.2d 574, 580 n. 15 (3d Cir. 1979). Defendants contend that SBA decisions regarding reasonable fees for loan packaging services are "committed to agency discretion by law", and, therefore, that judicial review of such decisions is precluded by § 10(a)(2) of the APA. Plaintiffs argue to the contrary that there is no indication of a Congressional intent to remove SBA decisions respecting fees from judicial review, and that the agency cannot itself create nonreviewability through its general authority to promulgate rules and regulations. The court rejects this argument and finds that decisions as to fees have been "committed to agency discretion by law". Plaintiffs' motion for reconsideration of the court's decision granting defendant's motion for summary judgment is denied.


 The Act was intended to advance the goal of a freely competitive economy by promoting the economic viability of small businesses. Section 2(2) of the Act provides in pertinent part that the assistance programs established under the Act are intended to "... assist in the establishment, preservation, and strengthening of small businesses concerns and improve the managerial skills employed in such enterprises ..." 15 U.S.C. § 631(b). *fn5" The legislative history of the Act confirms this intent. See H.R.Rep.No.494, 83rd Cong., 1st Sess. 3, reprinted in (1953) U.S.Code Cong. & Ad.News 2020, 2022.

 In order to carry out the goals of the Act, Congress established a business loan and investment fund, 15 U.S.C. § 633(c), and an agency, SBA, 15 U.S.C. § 633(a) to oversee the administration of this fund and the other assistance programs established by the Act. *fn6" SBA is given broad general powers under the Act. See generally 15 U.S.C. §§ 634, 636, 637. Section 2(5) of the Act also gives the Administration authority to "make such rules and regulations as (it) deems necessary to carry out the authority vested in (it) by or pursuant to this chapter." 15 U.S.C. § 634(b)(6). The SBA's authority to grant requests for loans from its revolving fund is subject to certain limitations; principal among which is the requirement that the applicant demonstrate that the financial assistance that he requests is not available elsewhere to him on reasonable terms, 15 U.S.C. § 636(a)(1), and the requirement that the loan "be of such sound value or so secured as reasonably to assure repayment." 15 U.S.C. § 636(a)(7). In most cases, the value of a loan cannot exceed $ 350,000. 15 U.S.C. § 636(a)(4). As one of the conditions for the granting of a loan, § 2(13) of the Act requires loan applicants to: "(1) certify to the Administration the names of any attorneys, agents, or other persons engaged by or on behalf of ... (the applicant) for the purpose of expediting applications made to the Administration for assistance of any sort, and the fees paid or to be paid to any such persons;". 15 U.S.C. § 642. Section 2(13) also requires the applicant to furnish the names of lending institutions who have refused the loan ...

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