Shortly after the founding of SFWA in 1965, its first secretary-treasurer, Lloyd Biggle, Jr., proposed that the organization periodically select and publish the year’s best stories. This notion evolved into the elaborate balloting process, an annual awards banquet, and a series of Nebula anthologies.
Throughout every calendar year, members of SFWA read and recommend novels and stories for the Nebula Awards. The editor of the Nebula Awards Report collects the recommendations and publishes them in the SFWA Forum and on the SFWA members’ private web page. At the end of the year, the NAR editor tallies the endorsements, draws up a preliminary ballot containing ten or more recommendations, and sends it all to active SFWA members. Under the current rules, each work enjoys a one-year eligibility period from its date of publication in the United States. If a work fails to receive ten recommendations during the one-year interval, it is dropped from further Nebula consideration.
The NAR editor processes the results of the preliminary ballot and then compiles a final ballot listing the five most popular novels, novellas, novelettes, and short stories. For purposes of the award, a novel is determined to be 40,000 words or more; a novella is 17,500 to 39,999 words; a novelette is 7,500 to 17,499 words, and a short story is 7,499 words or fewer. Additionally, each year SFWA impanels a member jury, which is empowered to supplement the five nominees with a sixth choice in cases where it feels a worthy title was neglected by the membership at large. Thus, the appearance of more than five finalists in a category reflects two distinct processes: jury discretion and ties.
A complete set of Nebula rules can be found at nebulas.sfwa.org/about-the-nebulas/nebula-rules.