Small Business Size Standards; Adoption of 2012 North American Industry Classification System for Size Standards

AGENCY:

U.S. Small Business Administration.

ACTION:

Interim final rule with request for comments.

SUMMARY:

The U.S. Small Business Administration (SBA) is amending its Small Business Size Regulations to incorporate the Office of Management and Budget's (OMB) 2012 modifications of the North American Industry Classification System (NAICS), identified as NAICS 2012, into its table of small business size standards. NAICS 2012 has created 76 new industry codes and reused 13 NAICS 2007 industry codes with additional or modified content. Those 89 new and modified industry codes in NAICS 2012 impact 199 industry codes in NAICS 2007. The large majority of the changes involve renumbering and/or redefining NAICS 2007 codes in NAICS 2012, without warranting changes to their size standards. Therefore, for those industries SBA has transferred the size standards of the NAICS 2007 industry to the NAICS 2012 industry. SBA's adoption of NAICS 2012 will result in changes to small business size standards for 41 NAICS 2007 industries and one exception. This will also result in changes to NAICS industry titles for one Subsector and eight industries.

DATES:

Effective Date: This rule is effective October 1, 2012.

Comment Date: Comments must be received on or before October 19, 2012.

ADDRESSES:

You may submit comments, identified by RIN 3245-AG47 by one of the following methods:

(1) Federal eRulemaking Portal: www.regulations.gov , following the instructions for submitting comments; or

(2) Mail/Hand Delivery/Courier: Khem R. Sharma, Ph.D., Chief, Office of Size Standards, 409 Third Street SW., Mail Code 6530, Washington, DC 20416. SBA will not accept comments submitted by email to this interim final rule.

SBA will post all comments to this interim final rule on www.regulations.gov . If you wish to submit confidential business information (CBI) as defined in the User Notice at www.regulations.gov , you must submit such information to the U.S. Small Business Administration, Khem R. Sharma, Ph.D., Chief, Office of Size Standards, 409 Third Street SW., Mail Code 6530, Washington, DC 20416, or send an email to sizestandards@sba.gov. Highlight the information that you consider to be CBI and explain why you believe SBA should hold this information as confidential. SBA will review your information and determine whether it will make the information public. Requests to redact or remove posted comments cannot be honored and the request to redact/remove posted comments will be posted as a comment. See the www.regulations.gov help section for information on how to make changes to your comments.

FOR FURTHER INFORMATION CONTACT:

Carl Jordan, Office of Size Standards, by phone at (202) 205-6618 or by email at sizestandards@sba.gov.

SUPPLEMENTARY INFORMATION:

SBA adopted NAICS 1997 industry definitions as a basis for its table of small business size standards, replacing the Standard Industrial Classification (SIC) System, effective October 1, 2000 (65 FR 30836 (May 5, 2000)). Since then, OMB has issued three modifications to NAICS. SBA incorporated OMB's first modification, NAICS 2002 (66 FR 3825 (January 16, 2001)), into its table of size standards, effective October 1, 2002 (67 FR 52597 (August 13, 2002)). SBA incorporated the second modification, NAICS 2007 (71 FR 28532 (March 16, 2006)), into its table of size standards, effective October 1, 2007 (72 FR 49639 (August 29, 2007)). OMB published its third modification, NAICS 2012, in its “Notice of NAICS 2012 Final Decisions” in the Federal Register on August 17, 2011 (76 FR 51240). SBA is adopting the latest modifications into its table of small business size standards, as explained below, effective October 1, 2012.

NAICS 2012 has created 66 new industry codes with new content either by splitting or merging some of the industries in NAICS 2007. It has also assigned new codes to 10 industries in NAICS 2007 without changing their definition and title. NAICS 2012 has reused 13 NAICS 2007 industry codes (including six with the same industry title) with additional or modified definitions. All these changes have impacted 199 industries under NAICS 2007, of which 179 are in NAICS Sector 31-33, Manufacturing. The vast majority of changes among the manufacturing industries relate to aggregation of many small, detailed industries in NAICS 2007 into fewer industries in NAICS 2012. As a result, the number of 6-digit manufacturing codes has decreased from 472 in NAICS 2007 to 364 in NAICS 2012.

Complete information on the relationship between NAICS 2007 and NAICS 2012 is available on the U.S. Bureau of the Census (Census Bureau) Web site at http://www.census.gov/eos/www/naics/. The Web site provides detailed documentation on establishment and implementation of NAICS 2012, including the August 17, 2011 “Notice of NAICS 2012 Final Decisions.” The Census Bureau's Web site also provides concordances (i.e., correspondence tables) between SIC and NAICS 1997 and NAICS 2002, and between subsequent NAICS revisions.

How SBA Determined the Size Standards for NAICS 2012 Industries

On October 22, 1999, SBA published in the Federal Register (64 FR 57188) a proposed rule to incorporate NAICS 1997 into its table of small business size standards. The proposed rule put forth guidelines or rules that SBA applied to convert the size standards from the SIC System to NAICS. The guidelines were intended to minimize the impact of applying a new industry classification system on SBA's small business size standards. SBA received no negative comments to the proposed guidelines. SBA published a final rule on May 5, 2000 (corrected on September 5, 2000, 65 FR 53533) adopting the resulting table of size standards based on NAICS 1997, as proposed. SBA applied and adopted the same guidelines when it updated its table of size standards based on NAICS 2002 and NAICS 2007. In this interim final rule, SBA is, in most part, following the same guidelines in adopting NAICS 2012 for its table of size standards. Those guidelines are shown in Table 1, Guidelines (Rules) to Establish Size Standards for Industries under NAICS 2012, below.

Table 2, NAICS 2012 Codes Matched to NAICS 2007 Codes and Size Standards, matches 2012 NAICS Codes and size standards to the affected NAICS 2007 industry codes and parts and their current size standards. Table 2 includes only those NAICS 2007 industries or parts that are either reclassified into other industries or parts or assigned a new code under NAICS 2012.

Changes in Size Standards Resulting From SBA's Adoption of NAICS 2012

As shown above in Table 2, NAICS 2012 Codes Matched to NAICS 2007 Codes and Size Standards, most of the size standards for the affected NAICS 2007 industries are not impacted and therefore remain unchanged under NAICS 2012. The vast majority of the changes consist of revised industry titles or the reclassification of one or more NAICS 2007 industries or parts into other industries or parts in NAICS 2012 without impacting their size standards.

As shown in Table 2, the adoption of the NAICS 2012 modification leads to a revision to the current size standard for 42 NAICS 2007 industries or parts. SBA applied the guidelines in Table 1 to update the size standards for industries in NAICS 2007 to NAICS 2012. This resulted in increases to the size standard for 40 NAICS 2007 industries (including 36 in Manufacturing) and one exception, and a change to the size standard from average annual receipts to number of employees for one industry. Specifically, the $25.5 million size standard for Aircraft Dealers, an exception under NAICS (2007) 441229, All Other Motor Vehicle Dealers, is no longer necessary. NAICS (2012) 441228, Motorcycle, ATV, and All Other Motor Vehicle Dealers, includes aircraft dealers, for which SBA is adopting a $30 million size standard. In addition, the small business size standards for both NAICS (2007) 454311, Heating Oil Dealers, and NAICS (2007) 454312, Liquefied Petroleum Gas (Bottled Gas) Dealers, are 50 employees. However, the size standard for NAICS (2007) 454319, Other Fuel Dealers, is $7 million. Under NAICS 2012, a single NAICS industry, namely 454310, Fuel Dealers, includes all three activities, and 50 employees is therefore the appropriate size standard. In all cases, the adopted size standards were based on the correspondence between NAICS 2007 and NAICS 2012 industry definitions.

Changes in Industry Titles Resulting From SBA's Adoption of NAICS 2012

In addition to changing industry definitions and codes, NAICS 2012 has adopted several NAICS industry title changes to more clearly describe the existing content of industries. These title changes do not change the content or NAICS code of industries, but rather refine how they are described. The title changes affecting the NAICS industry titles in SBA's table of size standards are shown in Table 3, Industry Title Changes in NAICS 2012. Because the title changes do not alter NAICS industry codes or definitions, size standards are not affected. SBA adopts NAICS 2012 industry titles for its table of size standards.

Other Considerations: Factoryless Goods Producers

Under NAICS 2012 “Factoryless Goods Producers” (FGPs) are defined as manufacturers that outsource manufacturing transformation activities (i.e., the actual physical, chemical or mechanical transformation of inputs into new outputs) to specialized establishments, both foreign and domestic. See 76 FR 51240 (August 17, 2011). An FGP also undertakes all of the entrepreneurial steps and arranges for all required capital, labor, and material inputs required for outsourced companies to make a good. The Economic Classification Policy Committee (ECPC) studied the issue of how to categorize FGPs in NAICS and provided guidance for consistent classification of manufacturing outsourcing establishments across various Federal statistical programs. The ECPC recommended classification of establishments that bear the overall responsibility and risk for bringing together all processes necessary for the production of a good in the manufacturing sector, even if the actual transformation is 100 percent outsourced. The ECPC's full recommendation is available at http://www.bea.gov/about/pdf/ECPC_Recommendation_for_Classification_of_Outsourcing_1.pdf. OMB accepted the ECPC's recommendation that FGPs be classified in manufacturing, and therefore be included for statistical purposes in manufacturing under NAICS 2012.

Although this classification of FGPs changes the traditional definition of manufacturing for statistical purposes, SBA's current regulations for Federal government procurement will continue to apply. In other words, the NAICS 2012 definition of manufacturing includes FGPs, but it does not affect eligibility for Federal procurement programs when a concern must be small to receive available benefits and preferences as a small business. Specifically, the Small Business Act and SBA's regulations generally require that an offeror on a supply contract set aside for small businesses, including 8(a), small businesses located in Historically Underutilized Business Zones (HUBZones), service-disabled veteran-owned small businesses (SDVOSB) and woman-owned small businesses (WOSB), provide the product of a small business made in the United States. Generally, a manufacturer must perform work for at least 50 percent of the cost of manufacturing the supplies, not including the cost of materials. 15 U.S.C. 637(a)(14)(A)(ii), 644(o)(1)(B), and 13 CFR 125.6. For size purposes, there can be only one manufacturer of the end item being acquired. The manufacturer is the concern which, with its own facilities, performs the primary activities in transforming inorganic or organic substances, including the assembly of parts and components, into the end item being acquired. The end item must possess characteristics which, as a result of mechanical, chemical or human action, it did not possess before the original substances, parts or components were assembled or transformed. The end item may be finished and ready for utilization or consumption, or it may be semi-finished as a raw material to be used in further manufacturing. Firms that perform only minimal operations upon the item being procured do not qualify as manufacturers of the end item. In addition, firms that add substances, parts, or components to an existing end item to modify its performance will not be considered the end item manufacturer where those identical modifications can be performed by and are available from the manufacturer of the existing end item. 13 CFR 121.406(b)(2). Accordingly, FGPs that do not comply with these requirements will not qualify as small for Federal procurement programs. However, none of these requirements precludes an FGP from qualifying as a nonmanufacturer when it meets the requirements of 13 CFR 121.406. Under this regulatory provision, for a small business set aside supply contract (including 8(a), SDVO and WOSB, but not HUBZone), SBA can waive the requirement that an offeror supply the product of a small business made in the United States if no small business manufacturers exist.

Alternatives to Adopting NAICS 2012 That SBA Considered

SBA considered retaining the NAICS 2007 industry codes as the basis for small business size standards. That would, however, lead to inconsistency among Federal agencies that adopt NAICS 2012 for their statistical and other programs. OMB stated in its August 17, 2011 “Notice of NAICS 2012 Final decisions” that “Federal statistical establishment data published for reference years beginning on or after January 1, 2012, should be published using the 2012 NAICS United States codes.” SBA is not a statistical agency, but uses the establishment data collected from other Federal agencies, such as the Economic Census data from the Bureau of the Census for its size standards analysis. If SBA does not adopt NAICS 2012, it will not be able to analyze and evaluate small business size standards adequately and accurately because the forthcoming Economic Census data based on NAICS 2012 industries will not be compatible with NAICS 2007 industries. Without useful data, SBA cannot properly evaluate industry structure and its effect on small business size standards.

Request for Comments

SBA welcomes the public to comment on this interim final rule. If SBA adopts NAICS 2012 for its table of size standards either as outlined in this rule or with modifications, it will publish a final rule. The final rule will address any comments received and explain the basis for the Agency's final decision. If SBA receives substantive comments supporting size standards that it has not adopted in this interim final rule, and if SBA agrees with those comments, SBA will modify the size standards in its final rule accordingly.

Justification for Interim Final Rule

In general, SBA publishes a rule for public comment before issuing a final rule in accordance with the Administrative Procedure Act (APA) and SBA regulations. 5 U.S.C. 553 and 13 CFR 101.108, respectively. The APA provides an exception to this standard rulemaking process, where an agency finds good cause to adopt a rule without prior public participation. 5 U.S.C. 553(b)(B). The good cause requirement is satisfied when prior public participation is impracticable, unnecessary, or contrary to the public interest. Under such circumstances, an agency may publish an interim final rule without soliciting public comment.

To reiterate, the changes adopted in this interim rule reflect the NAICS 2012 modifications issued by OMB in August 2011. The NAICS 2012 modifications were adopted after careful consideration of the public comments OMB received in response to two Federal Register notices (published on 1/7/2009 and 5/12/2010) detailing the proposed modifications. It is neither necessary nor in the public's interest to revisit the modifications in this rule, after such an extensive comment process. In addition, as discussed further below, in compliance with OMB's direction, this rule necessarily takes effect on October 1, 2012. It would therefore be impractical to solicit public participation prior to implementing the changes outlined in this rule. We note that this rule does provide an opportunity for the public to comment on the changes. Accordingly, SBA finds that good cause exists to publish this as an interim final rule.

Justification for the October 1, 2012 Effective Date

SBA's small business size standards matched to NAICS 2012 will be effective on October 1, 2012, and will apply to all solicitations issued on or after that date, for the following reasons:

1. OMB stated in its August 17, 2011 “Notice of NAICS 2012 Final decisions” that “Federal statistical establishment data published for reference years beginning on or after January 1, 2012, should be published using the NAICS 2012 United States codes.” SBA is not a statistical agency, but it uses the establishment data collected from other Federal agencies, such as the Economic Census data from the U.S. Bureau of the Census for its size standards analysis. Similarly, other Federal program databases, such as the Federal Procurement Data System—Next Generation (FPDS-NG) and Central Contractor Registration (CCR), are based on NAICS codes from SBA's table of size standards, which is currently based on NAICS 2007. If SBA does not adopt NAICS 2012 for its table of size standards, it will result in inconsistency among various Federal databases. October 1, 2012 is the start of the new Federal Government fiscal year following OMB's adoption of NAICS 2012 effective January 1, 2012, and is consistent with SBA's adoption of previous NAICS revisions effective at the start of the next fiscal year after the OMB's effective date.

2. With the updated size standards based on NAICS 2012, Federal agencies that use NAICS and SBA's size standards could collect data on their small business programs using the latest NAICS industry definitions. Such data will be comparable and consistent with future Federal statistics that will be based on NAICS 2012 industry codes. Using comparable data enhances the credibility of program and industry analyses.

3. With the October 1, 2012 effective date, Federal agencies that use NAICS and SBA's small business size standards for their programs will have sufficient time to plan and implement the updated size standards, and assess its impact on their programs.

4. To establish, review, and revise, where necessary, small business size standards, SBA uses a special tabulation of industry data that the Agency obtains from the Census Bureau based on its quinquennial Economic Census of U.S. industries and businesses. The next tabulation that SBA will obtain from the Census Bureau will be based on the 2012 Economic Census. Because the 2012 Economic Census and special tabulation will be based on NAICS 2012 industry definitions, SBA needs to use NAICS 2012 as the basis for its table of small business size standards.

5. For the above reasons, it is important that SBA update its size standards to NAICS 2012 prior to the beginning of the next fiscal year. Issuing a proposed rule under the normal rulemaking making process would take considerably more time to implement this action.

Compliance With Executive Orders 12866, 13563, 12988, and 13132, the Paperwork Reduction Act (44 U.S.C., Ch. 35) and the Regulatory Flexibility Act (5 U.S.C. 601-612)

Executive Order 12866

OMB has determined that this interim final rule is not a “significant regulatory action” for purposes of Executive Order 12866. This interim final rule incorporates the latest revisions of the NAICS, which SBA uses to identify industries in the United States economy for purposes of establishing small business size standards. As discussed in the Supplementary Information above, the size standard of some activities would change because of the NAICS revisions. However, all businesses currently defined as small under the NAICS 2002 industries will continue to be small under the NAICS 2012 industries, as indicated. The interim final rule also affects Federal Government programs that provide a benefit for small businesses. SBA welcomes comments describing the impact on small businesses of the size standard changes resulting from this rule. In order to help explain the need of this rule and the rule's potential benefits and costs, SBA is providing a Cost Benefit Analysis in this section of the rule. This is also not a “major rule” under the Congressional Review Act, 5 U.S.C. 800.

Cost Benefit Analysis

1. Is there a need for the regulatory action?

SBA believes that revising its small business size standards based on NAICS 2012 is in the best interests of small businesses. SBA's mission is to aid and assist small businesses through a variety of financial, procurement, business development, and advocacy programs. To assist the intended beneficiaries of these programs effectively, SBA establishes distinct definitions to determine which businesses are deemed small businesses. NAICS 2012 provides the latest industry definitions. The Small Business Act (The Act) delegates to SBA's Administrator the responsibility for establishing definitions for small business. The Act also requires that small business definitions vary to reflect industry differences. 15 USC 632(a). By analyzing and reviewing size standards based on the latest and most comprehensive NAICS definitions, SBA can more accurately and appropriately fulfill its mandate. If SBA does not use the latest industry definitions, size standards would not accurately reflect differences among industries. In addition, the Small Business Jobs Act of 2010 (Jobs Act) requires the Administrator to review one-third of all size standards within each 18-month period from the date of its enactment and to review all size standards at least every five years thereafter. For this, SBA needs data based on the latest NAICS industry definitions available. In this interim final rule, SBA mostly followed the same guidelines that the Agency used for adopting prior NAICS industry modifications, as spelled out under the supplemental information section, above. Size standards based on NAICS 2012 industry definitions and corresponding data will be more accurate and serve SBA's mission more effectively.

2. What are the potential benefits and costs of this regulatory action?

As stated previously, the vast majority of the changes from NAICS 2007 to NAICS 2012 consist of revision to industry titles or reclassification of one or more NAICS 2007 industries or parts into other industries or parts in NAICS 2012 without impacting their size standards. The adoption of NAICS 2012 has resulted in increases to size standards for 40 NAICS 2007 industries and one sub-industry (“exception”) and the change of size standard from average annual receipts to number of employees for one industry. The most significant benefit to businesses as a result of these changes is gaining eligibility for Federal small business assistance programs, including SBA's financial assistance programs, economic injury disaster loans, and Federal procurement opportunities intended for small businesses. Federal small business programs provide targeted opportunities for small businesses under SBA's various business development and contracting programs. These include the 8(a) Business Development program and programs benefiting small businesses located in HUBZones, WOSBs, and SDVOSBs. Other Federal agencies also may use SBA's size standards for a variety of regulatory and program purposes. These programs help small businesses become more knowledgeable, stable, and competitive. Some businesses that exceed current size standards will become small under the higher size standards resulting from the adoption of NAICS 2012. However, SBA cannot estimate with precision the number of businesses that become small because there are no data based on NAICS 2012 industry definitions. Based on the 2007 Economic Census data for the affected NAICS 2007 industries, SBA estimates that approximately 300 additional businesses would gain small business status under the revised size standards. That represents a 0.9 percent increase to the number of small businesses in the affected industries.

The benefits of adopting NAICS 2012 and the resulting revisions to size standards will accrue to three groups in the following ways: (1) Some businesses that are above their current size standards may gain small business status, thereby becoming eligible to participate in Federal small business assistance programs; (2) growing small businesses that are close to exceeding the current size standards for their NAICS 2007 industry may retain their small business status under NAICS 2012, and can continue participating in the programs; and (3) Federal agencies will have a larger pool of small businesses from which to draw for their small business procurement programs because they will be able to define more accurately the principal purposes of their procurements under NAICS 2012, as required by 12 CFR 121.402(b).

Additional firms gaining small business status under NAICS 2012 may receive more Federal contracts, but their number and value cannot be estimated because of lack of procurement data based on NAICS 2012. Added procurement competition may also result in lower prices to the Government for procurements reserved for small businesses, although SBA cannot quantify this benefit.

Under SBA's 7(a) Loan and 504 Loan Programs, SBA will be able to guarantee more loans, although, in this case too, the number and amount cannot be estimated accurately. Based on data for fiscal years 2008 to 2010, SBA estimates that about 2 to 5 additional loans, totaling about $1.0 million to $1.3 million in Federal loan guarantees could be made to these newly defined small businesses under the revised size standards. Under the Jobs Act, SBA can now guarantee substantially larger loans than in the past. In addition, the Jobs Act established an alternative size standard for SBA's 7(a) and 504 Loan Programs for those applicants that do not meet the size standards for their industries. That is, under the Jobs Act, if a firm applies for a 7(a) or 504 loan but does not meet the size standard for its industry, it might still qualify if, including its affiliates, it has a tangible net worth that does not exceed $15 million and also has an average net income after Federal income taxes (excluding any carry-over losses) for its preceding two completed fiscal years that does not exceed $5.0 million. Thus, increasing the size standards may result in an increase in small business guaranteed loans to small businesses in these industries, but it would be impractical to try to estimate the extent of their number and the total amount loaned.

Newly defined small businesses will also benefit from SBA's Economic Injury Disaster Loan (EIDL) Program. Since this program is contingent on the occurrence and severity of a disaster, SBA cannot make a meaningful estimate of future EIDL benefit.

To the extent that newly defined small firms under NAICS 2012 could become active in Federal procurement programs, this may entail some additional administrative costs to the Federal Government associated with additional bidders for Federal small business procurement opportunities. More firms may seek SBA's guaranteed loans. More will be eligible to enroll in the CCR Dynamic Small Business Search database. Since more firms will qualify as small, more may also seek certification as 8(a) or HUBZone firms, or qualify as WOSB, SDVOSB, and/or small disadvantaged business (SDB) status. However, it is important to point out that most business entities that are already registered in CCR will not be required to update their CCR profiles. However, it will be incumbent on registrants to review their profiles to ensure that they have correct NAICS codes. CCR requires that registered companies update review and update their profiles annually, and therefore, businesses will need to pay particular attention to the changes to determine if they might affect them. They will also have to verify and update, if necessary, their Online Representations and Certification (ORCA) certifications. Among businesses in this group seeking SBA assistance, there could be some additional costs associated with compliance and verification of small business status and protests of small business status. These added costs are likely to be minimal because mechanisms are already in place to handle these administrative requirements.

The costs to the Federal Government may be higher on some Federal contracts under the higher revised size standards under NAICS 2012. With more businesses defined as small, Federal agencies might choose to set aside more contracts for competition among small businesses rather than use full and open competition. The movement from unrestricted to set-aside contracting will likely result in competition among fewer total bidders, although there will be more small businesses in the bidding pool eligible to submit offers. In addition, higher costs may result when additional full and open contracts are awarded to HUBZone businesses because of a price evaluation preference. The additional costs associated with fewer bidders, however, will likely be minor since, as a matter of law, procurements may be set aside for small businesses or reserved for the 8(a), HUBZone, WOSB, or SDVOSB Programs only if awards are expected to be made at fair and reasonable prices.

The revised size standards may have some distributional effects among large and small businesses. Although SBA cannot estimate with certainty the actual outcome of gains and losses among small and large businesses, there are several likely impacts. There may be a transfer of some Federal contracts from large businesses to small businesses. Large businesses may have fewer Federal contract opportunities as Federal agencies decide to set aside more Federal contracts for small businesses. In addition, some agencies may award more Federal contracts to HUBZone concerns instead of large businesses since HUBZone concerns may be eligible for price evaluation adjustments when they compete on full and open bidding opportunities. Similarly, currently defined small businesses may receive fewer Federal contracts due to the increased competition from more businesses defined as small under NAICS 2012. This transfer may be offset by more Federal procurements set aside for all small businesses. The number of newly defined and expanding small businesses that are willing and able to sell to the Federal Government will limit the potential transfer of contracts away from large and small businesses under the existing size standards. The SBA cannot estimate with precision the potential distributional impacts of these transfers.

SBA's adopting NAICS 2012 and revising its size standards accordingly is consistent with SBA's statutory mandate to assist small business. This regulatory action promotes the Administration's objectives. One of SBA's goals in support of the Administration's objectives is to help individual small businesses succeed through fair and equitable access to capital and credit, Government contracts, and management and technical assistance. Appropriate size standards ensure that intended beneficiaries have access to small business programs designed to assist them. The Small Business Act states that “the Administrator shall ensure that the size standard varies from industry to industry to the extent necessary to reflect the differing characteristics of the various industries.” 15 U.S.C. 632(a)(3). To do that, SBA should use the most current and relevant industry definitions. NAICS 2012 provides the most current and relevant industry definitions.

Executive Order 13563

A description of the need for this regulatory action and benefits and costs associated with this action including possible distributions impacts that relate to Executive Order 13563 are included above in the Cost Benefit Analysis.

To engage interested parties in this action, SBA has advised Federal agencies that it intends to adopt NAICS 2012 effective October 1, 2012, consistent with other size standard updates based on prior NAICS updates. SBA also has advised Federal agencies to continue using NAICS 2007 until SBA updates its size standards to NAICS 2012.

Executive Order 12988

This action meets applicable standards set forth in Sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden. The action does not have retroactive or preemptive effect.

Executive Order 13132

For purposes of Executive Order 13132, SBA has determined that this interim final rule will not have substantial, direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, SBA has determined that this interim final rule has no Federalism implications warranting preparation of a Federalism assessment.

Paperwork Reduction Act

For the purpose of the Paperwork Reduction Act, 44 U.S.C. Ch. 35, SBA has determined that this interim final rule would not impose any new reporting or record keeping requirements.

Regulatory Flexibility Analysis

The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires an initial and final regulatory flexibility analysis only when 5 U.S.C. 553 requires publication of a notice of proposed rulemaking. See 5 U.S.C. 603(a), 604(a). As discussed above, SBA has found good cause under 5 U.S.C. 553(b)(3)(B) to conclude that, with respect to this interim final rule, publication of a notice of proposed rulemaking is impracticable, unnecessary and not in the public's best interest. Accordingly, SBA is not required to perform an initial or final regulatory flexibility analysis for this interim final rule.

List of Subjects in 13 CFR Part 121

• Administrative practice and procedure
• Government procurement
• Government property
• Grant programs—business
• Individuals with disabilities
• Loan programs—business
• Reporting and recordkeeping requirements
• Small businesses

For the reasons set forth in the preamble, SBA amends 13 CFR part 121 as follows:

PART 121—SMALL BUSINESS SIZE REGULATIONS

1. The authority citation for Part 121 continues to read as follows:

Authority: 15 U.S.C. 632, 634(b)(6), 636(b), 662, 694a(9).

2. In § 121.201, amend the table, “Small Business Size Standards by NAICS Industry” as follows:

a. Revise the industry title of the entry Subsector 112 to read “Animal Production and Aquaculture”;

b. Remove the entry for 221119;

c. Add entries for 221114 through 221118;

d. Revise the industry title of the entry 236115 to read “New Single-Family Housing Construction (except For-Sale Builders)”;

e. Revise the industry title of the entry 236116 to read “New Multifamily Housing Construction (except For-Sale Builders)”;

f. Revise the industry title of the entry 236117 to read “New Housing For-Sale Builders.”

g. Remove the entries for 311222 and 311223;

h. Add an entry for 311224;

i. Remove the entries for 311311, 311312, 311313, 311320, 311330, and 311340,;

j. Add entries for 311313, 311314, 311340, 311351, and 311352;

k. Remove the entries for 311711 and 311712;

l. Add an entry for 311710;

m. Remove the entries for 311822 and 311823;

n. Add an entry for 311824;

o. Remove the entries for 312210. 312221, and 312229;

p. Add an entry for 312230;

q. Remove the entries for 313111, 313112, and 313113;

r. Add an entry for 313110;

s. Remove the entries for 313221 and 313222;

t. Add and entry for 313220;

u. Remove the entries for 313241, 313249, 313311, and 313312;

v. Add entries for 313240 and 313310;

w. Remove the entries for 314121, 314129, 314911, 314912, 314991, and 314992;

x. Add entries for 314120, 314910, and 314994;

y. Remove entries 315111, 315119, 315191, 315192, 315211, 315212, 315221 through 315225, 315228, 315231 through 315234, 315239, 315291, 315292, and 315999;

z. Add entries 315110, 315190, 315210, 315220, 315240, 315280, and 315990;

aa. Remove the entries for 316211, 316212, 316213, 316214, and 316219;

bb. Add an entry for 316210;

cc. Remove the entries for 316991, 316993, and 316999;

dd. Add an entry of 316998;

ee. Remove entries 322213 through 322215, 322221 through 322226, and 322231 through 322233;

ff. Add entries for 322219, 322220, and 322230;

gg. Remove the entry for 323110;

hh. Revise the industry title of the entry 323111 to read “Commercial Printing (except Screen and Books)”;

ii. Remove the entries for 323112, 323114, 323115, 323116, 323118, 323119, 323121, and 323122;

jj. Add an entry for 323120;

kk. Remove entries for 325131, 325132, 325181, 325182, 325188, 325191, and 325192;

ll. Add entries for 325130, 325180, and 235194;

mm. Remove the entries for 325221 and 325222;

nn. Add an entry for 325220;

oo. Remove the entry 326192;

pp. Revise the entry for 326199;

qq. Remove the entries 327111 through 327113 and 327121 through 327125;

rr. Add entries for 327110 and 327120;

ss. Remove the entries for 331111 and 331112;

tt. Add an entry for 331110;

uu. Remove the entries for 331311 and 331312;

vv. Add an entry for 331313;

ww. Remove entries 331316, 331319, 331411, 331419, and 331421 through 331423;

xx. Add entries for 331318, 331410, and 331420;

yy. Remove the entries for 331521 and 331522;

zz. Add an entry for 331523;

aaa. Remove the entries for 331525 and 331528;

bbb. Add an entry for 331529;

ccc. Remove the entries for 332115 and 332116;

ddd. Add an entry for 332117;

eee. Remove the entries for 332211, 322212, 332213, and 332214;

fff. Add entries for 332215 and 332216;

ggg. Remove the entries for 332611 and 332612;

hhh. Add an entry for 332613;

iii. Revise the industry title of the entry 332994 to read “Small Arms, Ordnance, and Ordnance Accessories Manufacturing”;

jjj. Remove the entries for 332995, 332997, and 33299;

kkk. Revise the entry for 332999;

lll. Remove entries for 333210, 333220, 333291 through 333295, and 333298;

mmm. Add entries for 333241 through 333244 and 333249;

nnn. Remove the entries for 333311, 333312, 333313, 333315, 333319, 333411, and 333412;

ooo. Add entries for 333316, 333318, and 333413;

ppp. Remove the entries for 333512, 333513, 333516, and 333518;

qqq. Add entries for 333517 and 333519;

rrr. Remove the entries for 334113 and 334119;

sss. Add an entry for 334118;

ttt. Remove the entries for 334411, 334414, and 334415;

uuu. Revise the industry title of the entry for 334416 to read “Capacitor, Resistor, Coil, Transformer, and Other Inductor Manufacturing”;

vvv. Remove the entries for 334518, 334611, and 334612;

www. Revise the industry title of the entry for 334613 to read “Blank Magnetic and Optical Recording Media Manufacturing”;

xxx. Add an entry for 334614;

yyy. Remove the entries 335211 and 335212;

zzz. Add an entry for 335210;

aaaa. Remove the entries for 336311, 336312, 336321, and 336322;

bbbb. Add entries for 336310 and 336320;

cccc. Remove the entries for 336391 and 336399;

dddd. Add an entry for 336390;

eeee. Remove the entry for 337129;

ffff. Remove the entries for 339911, 339912, 339913, and 339914;

gggg. Add an entry for 339910;

hhhh. Remove the entries for 339931, 339932, 339941, 339942, 339943, and 339944;

iiii. Add entries for 339930 and 339940;

jjjj. Revise the industry title of the entry for 423620 to read “Household Appliances, Electric Housewares, and Consumer Electronics Merchant Wholesalers”;

kkkk. Remove the entries for 441221 and 441229;

llll. Add an entry for 441228;

mmmm. Remove the entries for 443111, 443112, 443120, and 443130;

nnnn. Add entries for 443141 and 443142;

oooo. Remove the entry for 451220;

pppp. Remove the entries for 454311, 454312, and 454319;

qqqq. Add an entry for 454310;

rrrr. Revise the industry title of the entry for 541850 to read “Outdoor Advertising”;

ssss. Revise the industry title of the entry for 623110 to read “Nursing Care Facilities (Skilled Nursing Facilities)”;

tttt. Revise the industry title of the entry for 623210 to read “Residential Intellectual and Development Disability Facilities”;

uuuu. Revise the industry title of the entry for 623312 to read “Assisted Living Facilities for the Elderly”;

vvvv. Remove the entries for 722110, 722211, 722212, and 722213;

wwww. Add entries for 722511 and 722513 through 722515; and

xxxx. Revise footnote 1 at the end of the table to read as follows:

The additions and revisions read as follows: