[Federal Register Volume 72, Number 167 (Wednesday, August 29, 2007)]
[Proposed Rules]
[Pages 49669-49676]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-17150]


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SMALL BUSINESS ADMINISTRATION

13 CFR Part 121

RIN 3245-AF68


Small Business Size Standards; Adoption of 2007 North American 
Industry Classification System for Size Standards

AGENCY: Small Business Administration.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The U.S. Small Business Administration (SBA) proposes to amend 
its Small Business Size Regulations by incorporating the Office of 
Management and Budget's (OMB) 2007 modifications to the North American 
Industry Classification System (NAICS) in its table of small business 
size standards. These modifications are few in number and result in 
revisions to size standards for three industries and four activities 
within other industries.
    SBA believes that this proposal is routine and non-controversial, 
and the Agency anticipates no significant adverse comment. Therefore, 
SBA is publishing concurrently in this issue of the Federal Register a 
direct final rule to expedite modifying its Small

[[Page 49670]]

Business Size Regulations as described in this proposed rule. If SBA 
receives any significant adverse comment to the direct final rule, it 
will withdraw it, and consider those comments in connection with this 
proposed rule.

DATES: SBA must receive comments to this proposed rule on or before 
September 28, 2007.

ADDRESSES: You may submit comments, identified by RIN 3245-AF68, by any 
of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Mail, for paper, disk, or CD/ROM submissions: Gary M. 
Jackson, Division Chief for Size Standards, 409 Third Street, SW., Mail 
Code 6530, Washington, DC 20416.
     Hand Delivery/Courier: Gary M. Jackson, Division Chief for 
Size Standards, 409 Third Street, SW., Mail Code 6530, Washington, DC 
20416.
    SBA will post all comments on www.regulations.gov. If you wish to 
submit confidential business information (CBI) as defined in the User 
Notice at www.regulations.gov, please submit the information to Carl J. 
Jordan, Office of Size Standards, 409 Third Street, SW., Mail Code 
6530, Washington, DC 20416, or send an email to [email protected]. 
Highlight the information that you consider to be CBI and explain why 
you believe SBA should hold this information as confidential. SBA will 
review the information and make the final determination of whether it 
will publish the information or not.

FOR FURTHER INFORMATION CONTACT: Carl Jordan, Office of Size Standards, 
at (202) 205-6618 or [email protected].

SUPPLEMENTARY INFORMATION: SBA adopted the NAICS industry definitions 
as a basis for its table of small business size standards effective 
October 1, 2000, as a replacement to the discontinued Standard 
Industrial Classification (SIC) System (65 FR 30836, May 15, 2000). 
Since that time, OMB has issued two updates modifying the NAICS. SBA 
incorporated OMB's first updated modifications, termed NAICS 2002 (66 
FR 3825, January 16, 2001), in its table of size standards effective 
October 1, 2002 (67 FR 52597, August 13, 2002). OMB published its most 
recent updates, termed NAICS 2007, on May 16, 2006 (71 FR 28532). SBA 
is proposing adoption of those updated modifications in its table of 
small business size standards, as explained below.
    For complete information on the relationship between NAICS 2002 and 
NAICS 2007, please see the U.S. Bureau of the Census (Census Bureau) 
Web site at http://www.census.gov/epcd/www/naicsdoc.htm#fedreg. That 
Census Bureau Web site provides complete information on its 
establishment and implementation of NAICS 2007, including its notice of 
final action in the March 16, 2006 Federal Register. The Census Bureau 
also provides the following correspondence tables: (1) 2007 NAICS-US 
matched to 2002 NAICS-US; and (2) 2002 NAICS-US matched to 2007 NAICS-
US.

How SBA Arrived at the Size Standards for NAICS 2007 Industries

    On October 22, 1999, SBA published in the Federal Register (64 FR 
57188) a proposed rule to establish a new table of small business size 
standards based on the NAICS. SBA developed guidelines to transition 
from the SIC System to NAICS. The guidelines were intended to minimize 
the impact of a new industry classification system on SBA's small 
business size standards. Table 1, below, lists those guidelines. SBA 
received no negative comments to the guidelines specified in the 
proposed rule. Because the guidelines produced the desired results and 
received public acceptance, SBA published a final rule on May 5, 2000 
(65 FR 3825) (corrected on September 5, 2000, 65 FR 53533) establishing 
a new table of size standards based on NAICS without change from its 
proposed rule. For purposes of adopting NAICS 2007, SBA is proposing to 
apply the same guidelines in this rule.

                                 Table 1
------------------------------------------------------------------------
 If the NAICS 2007 Industry is composed  The size standard for the NAICS
                  of:                           Industry will be:
------------------------------------------------------------------------
1. One NAICS 2002 industry or part of    The same size standard as for
 one NAICS 2002 industry.                 the NAICS 2002 industry or
                                          part.
2. More than one NAICS 2002 industry;    The same size standard as for
 parts of more than one NAICS 2002        those NAICS 2002 industries or
 industry; or one or more NAICS 2002      parts of NAICS 2002
 industry and part(s) of one or more      industries.
 NAICS 2002 industry, and they all have
 the same size standard.
3. More than one NAICS 2002 industry;    The same size standard as for
 parts of more than one NAICS 2002        the NAICS 2002 industry or
 industry; or one or more NAICS 2002      NAICS 2002 industry part(s)
 industry and part(s) of one or more      that most closely matches the
 NAICS 2002 industry, and they do not     economic activity described by
 all have the same size standard.         the NAICS 2007 industry.
4. One or more parts of an NAICS 2002    The same size standard as for
 industry for which SBA has established   that specific NAICS 2002
 specific size standards (i.e., further   industry part.
 segmented).
5. One or more NAICS 2002 industries     SBA will (a) apply a size
 and/or parts of NAICS 2002 industries    standard measure (e.g., number
 that were categorized broadly under      of employees, annual receipts)
 the NAICS system as Services, Retail     typical of the NAICS Sector;
 Trade, Wholesale Trade or                and (b) apply the
 Manufacturing, but are now categorized   corresponding ``anchor'' size
 differently under NAICS.                 standard. The ``anchor'' size
                                          standards are $6.5 million
                                          (effective December 6, 2005)
                                          for Services and Retail Trade,
                                          500 employees for
                                          Manufacturing and 100
                                          employees for Wholesale Trade
                                          (except for Federal
                                          procurement programs, where
                                          the standard is 500 employees
                                          under the non-manufacturer
                                          rule).
------------------------------------------------------------------------

Additions to and Deletions From NAICS 2002 for NAICS 2007

    It is important to note the following:
    1. NAICS 2007 changes affect 59 NAICS 2002 industries.
    2. One NAICS 2002 Subsector and 12 NAICS 2002 industries were 
eliminated and their activities reclassified in other more appropriate 
or new NAICS 2007 industries as listed in Table 2:

[[Page 49671]]



                                 Table 2
------------------------------------------------------------------------
           NAICS 2002 code              NAICS 2002 industry description
------------------------------------------------------------------------
NAICS 339111.........................  Laboratory Apparatus and
                                        Furniture Manufacturing.
Subsector 516........................  Internet Publishing and
                                        Broadcasting.
NAICS 516110.........................  Internet Publishing and
                                        Broadcasting.
NAICS 517211.........................  Paging.
NAICS 517212.........................  Cellular and Other Wireless
                                        Telecommunications.
NAICS 517310.........................  Telecommunications Resellers.
NAICS 517510.........................  Cable and Other Program
                                        Distribution.
NAICS 517910.........................  Other Telecommunications.
NAICS 518111.........................  Internet Service Providers.
NAICS 518112.........................  Web Search Portals.
NAICS 525930.........................  Real Estate Investment Trusts.
NAICS 541710.........................  Research and Development in the
                                        Physical, Engineering, and Life
                                        Sciences.
NAICS 561310.........................  Employment Placement Agencies.
------------------------------------------------------------------------

    3. The following eight industries listed in Table 3 are new in 
NAICS 2007:

                                 Table 3
------------------------------------------------------------------------
           NAICS 2007 code              NAICS 2007 industry description
------------------------------------------------------------------------
NAICS 517210.........................  Wireless Telecommunications
                                        Carriers (except Satellite).
NAICS 517911.........................  Telecommunications Resellers.
NAICS 517919.........................  All Other Telecommunications.
NAICS 519130.........................  Internet Publishing and
                                        Broadcasting and Web Search
                                        Portals.
NAICS 541711.........................  Research and Development in
                                        Biotechnology.
NAICS 541712.........................  Research and Development in the
                                        Physical, Engineering, and Life
                                        Sciences (except Biotechnology).
NAICS 561311.........................  Employment Placement Agencies.
NAICS 561312.........................  Executive Search Services.
------------------------------------------------------------------------

Changes in Size Standards Resulting From SBA's Proposed Adoption of 
NAICS 2007

    Most of the industries in NAICS 2002 remain unchanged under NAICS 
2007. This proposal to adopt NAICS 2007 will change size standards for 
only three industries and four activities from parts of industries. 
Other changes in NAICS 2007 consist of revised industry descriptions or 
the reclassification of industry activities in other industries having 
the same size standard.
    Table 4 lists all of OMB's modifications to the NAICS 2002 
industries. The first three columns show the modified NAICS 2002 
industry's six-digit code, its current size standard, and its industry 
description. The last three columns show the NAICS 2007 industry (new, 
existing and revised) that incorporates the modified NAICS 2002 
industry, its industry description, and new size standard. By comparing 
the modified NAICS 2002 industry and size standard with the related 
NAICS 2007 industry and size standard, a user can identify the size 
standard SBA proposes for the applicable NAICS 2007 industries. 
Following Table 4, SBA explains the basis for the limited number of 
cases that do result in a change to the size standard.

    Table 4.--This Table Includes Only Those NAICS Codes Where Size Standards Are Affected. They Are Arranged
                            According to the Order of Their NAICS 2007 Industry Codes
----------------------------------------------------------------------------------------------------------------
                                                               2007
2002 NAICS code     Current size        2002 NAICS U.S.       NAICS     2007 NAICS U.S.    New size  standards
                     standards            description          code       description
----------------------------------------------------------------------------------------------------------------
111211.........  $0.75 million....  Potato Farming.
*111219........  $0.75 million....  Other Vegetable            111211  Potato Farming..  $0.75 million.
                                     (except Potato) and
                                     Melon Farming--sweet
                                     potato and yam
                                     farming.
*111219........  $0.75 million....  Other Vegetable            111219  Other Vegetable   $0.75 million.
                                     (except Potato) and                (except Potato)
                                     Melon Farming--except              and Melon
                                     sweet potato and yam               Farming.
                                     farming.
*111998........  $0.75 million....  All Other                  111998  All Other         $0.75 million.
                                     Miscellaneous Crop                 Miscellaneous
                                     Farming--except                    Crop Farming.
                                     algae, seaweed, and
                                     other plant
                                     aquaculture.
112519.........  $0.75 million....  Other Animal
                                     Aquaculture.
*111998........  $0.75 million....  All Other                  112519  Other             $0.75 million.
                                     Miscellaneous Crop                 Aquaculture.
                                     Farming--algae,
                                     seaweed, and other
                                     plant aquaculture.
314999.........  500 employees....  All Other
                                     Miscellaneous Textile
                                     Product Mills.

[[Page 49672]]

 
*315211........  500 employees....  Men's and Boys' Cut
                                     and Sew Apparel
                                     Contractors--embroide
                                     ry contractors.
*315212........  500 employees....  Women's, Girls' and        314999  All Other         500 employees.
                                     Infants' Cut and Sew               Miscellaneous
                                     Apparel Contractors--              Textile Product
                                     embroidery                         Mills.
                                     contractors.
*315211........  500 employees....  Men's and Boys' Cut        315211  Men's and Boys'   500 employees.
                                     and Sew Apparel                    Cut and Sew
                                     Contractors--except                Apparel
                                     embroidery                         Contractors.
                                     contractors.
*315212........  500 employees....  Women's, Girls' and        315212  Women's, Girls'   500 employees.
                                     Infants' Cut and Sew               and Infants'
                                     Apparel Contractors--              Cut and Sew
                                     except embroidery                  Apparel
                                     contractors.                       Contractors.
*326199........  500 employees....  All Other Plastics         326199  All Other         500 employees.
                                     Product                            Plastics
                                     Manufacturing--except              Product
                                     inflatable plastic                 Manufacturing.
                                     boats.
*326291........  500 employees....  Rubber Product             326291  Rubber Product    500 employees.
                                     Manufacturing for                  Manufacturing
                                     Mechanical Use--                   for Mechanical
                                     except rubber tubing               Use.
                                     for mechanical use.
*326299........  500 employees....  All Other Rubber
                                     Product
                                     Manufacturing--except
                                     inflatable rubber
                                     boats.
*326291........  500 employees....  Rubber Product             326299  All Other Rubber  500 employees.
                                     Manufacturing for                  Product
                                     Mechanical Use--                   Manufacturing.
                                     rubber tubing for
                                     mechanical use.
333298.........  500 employees....  All Other Industrial
                                     Machinery
                                     Manufacturing.
*339111........  500 employees....  Laboratory Apparatus       333298  All Other         500 employees.
                                     and Furniture                      Industrial
                                     Manufacturing--labora              Machinery
                                     tory distilling                    Manufacturing.
                                     equipment.
333415.........  750 employees....  Air-Conditioning and
                                     Warm Air Heating
                                     Equipment and
                                     Commercial and
                                     Industrial
                                     Refrigeration
                                     Equipment
                                     Manufacturing.
*339111........  500 employees....  Laboratory Apparatus       333415  Air-Conditioning  750 employees.
                                     and Furniture                      and Warm Air
                                     Manufacturing--labora              Heating
                                     tory freezers.                     Equipment and
                                                                        Commercial and
                                                                        Industrial
                                                                        Refrigeration
                                                                        Equipment
                                                                        Manufacturing.
333994.........  500 employees....  Industrial Process
                                     Furnace and Oven
                                     Manufacturing.
*339111........  500 employees....  Laboratory Apparatus       333994  Industrial        500 employees.
                                     and Furniture                      Process Furnace
                                     Manufacturing--labora              and Oven
                                     tory furnaces and                  Manufacturing.
                                     ovens.
333997.........  500 employees....  Scale and Balance
                                     (except Laboratory)
                                     Manufacturing.
*339111........  500 employees....  Laboratory Apparatus       333997  Scale and         500 employees.
                                     and Furniture                      Balance
                                     Manufacturing--labora              Manufacturing.
                                     tory scales and
                                     balances.
333999.........  500 employees....  All Other
                                     Miscellaneous General
                                     Purpose Machinery
                                     Manufacturing.
*339111........  500 employees....  Laboratory Apparatus       333999  All Other         500 employees.
                                     and Furniture                      Miscellaneous
                                     Manufacturing--labora              General Purpose
                                     tory centrifuges.                  Machinery
                                                                        Manufacturing.
*334220........  750 employees....  Radio and Television       334220  Radio and         750 employees.
                                     Broadcasting and                   Television
                                     Wireless                           Broadcasting
                                     Communications                     and Wireless
                                     Equipment                          Communications
                                     Manufacturing--except              Equipment
                                     communications signal              Manufacturing.
                                     testing and
                                     evaluation equipment.
334515.........  500 employees....  Instrument
                                     Manufacturing for
                                     Measuring and Testing
                                     Electricity and
                                     Electrical Signals.
*334220........  750 employees....  Radio and Television       334515  Instrument        500 employees.
                                     Broadcasting and                   Manufacturing
                                     Wireless                           for Measuring
                                     Communications                     and Testing
                                     Equipment                          Electricity and
                                     Manufacturing--commun              Electrical
                                     ications signal                    Signals.
                                     testing and
                                     evaluation equipment.
336612.........  500 employees....  Boat Building.
*326199........  500 employees....  All Other Plastics
                                     Product
                                     Manufacturing--inflat
                                     able plastics boats.
*326299........  500 employees....  All Other Rubber           336612  Boat Building...  500 employees.
                                     Product
                                     Manufacturing--inflat
                                     able rubber boats.
337127.........  500 employees....  Institutional
                                     Furniture
                                     Manufacturing.

[[Page 49673]]

 
*339111........  500 employees....  Laboratory Apparatus       337127  Institutional     500 employees.
                                     and Furniture                      Furniture
                                     Manufacturing--labora              Manufacturing.
                                     tory furniture (e.g.,
                                     stools, tables,
                                     benches).
339113.........  500 employees....  Surgical Appliance and
                                     Supplies
                                     Manufacturing.
*339111........  500 employees....  Laboratory Apparatus       339113  Surgical          500 employees.
                                     and Furniture                      Appliance and
                                     Manufacturing--except              Supplies
                                     laboratory furniture,              Manufacturing.
                                     scales, balances,
                                     furnaces, ovens,
                                     centrifuges,
                                     distilling equipment,
                                     and freezers.
517110.........  1500 employees...  Wired
                                     Telecommunications
                                     Carriers.
517510.........  $13.5 million....  Cable and Other
                                     Program Distribution.
*518111........  $23.0 million....  Internet Service           517110  Wired             1500 employees.
                                     Providers--broadband               Telecommunicati
                                     Internet service                   ons Carriers.
                                     providers (e.g.,
                                     cable, DSL).
517211.........  1500 employees...  Paging.
517212.........  1500 employees...  Cellular and Other         517210  Wireless          1500 employees.
                                     Wireless                           Telecommunicati
                                     Telecommunications.                ons Carriers
                                                                        (except
                                                                        Satellite).
517310.........  1500 employees...  Telecommunications         517911  Telecommunicatio  1500 employees.
                                     Resellers.                         ns Resellers.
517910.........  $13.5 million....  Other                      517919  All Other         $23.0 million.
                                     Telecommunications.                Telecommunicati
                                                                        ons.
*518111........  $23.0 million....  Internet Service
                                     Providers ISPs
                                     providing services
                                     via client-supplied
                                     telecommunications
                                     connections.
516110.........  500 employees....  Internet Publishing        519130  Internet          500 employees.
                                     and Broadcasting.                  Publishing and
                                                                        Broadcasting
                                                                        and Web Search
                                                                        Portals.
518112.........  $6.5 million.....  Web Search Portals.
519190.........  $6.5 million.....  All Other Information      519190  All Other         $6.5 million.
                                     Services.                          Information
                                                                        Services.
525990.........  $6.5 million.....  Other Financial
                                     Vehicles.
*525930........  $6.5 million.....  Real Estate Investment     525990  Other Financial   $6.5 million.
                                     Trusts--hybrid or                  Vehicles.
                                     mortgage REITs
                                     primarily in
                                     underwriting or
                                     investing in
                                     mortgages.
531110.........  $6.5 million.....  Lessors of Residential
                                     Buildings and
                                     Dwellings.
*525930........  $6.5 million.....  Real Estate Investment     531110  Lessors of        $6.5 million.
                                     Trusts--hybrid or                  Residential
                                     equity REITs                       Buildings and
                                     primarily leasing                  Dwellings.
                                     residential Buildings
                                     and Dwellings.
531120.........  $6.5 million.....  Lessors of
                                     Nonresidential
                                     Buildings (except
                                     Miniwarehouses).
*525930........  $6.5 million.....  Real Estate Investment     531120  Lessors of        $6.5 million.
                                     Trusts--hybrid or                  Nonresidential
                                     equity REITs                       Buildings
                                     primarily leasing                  (except
                                     nonresidential                     Miniwarehouses).
                                     buildings.
531130.........  $23.5 million....  Lessors of
                                     Miniwarehouses and
                                     Self-Storage Units.
*525930........  $6.5 million.....  Real Estate Investment     531130  Lessors of        $23.5 million.
                                     Trusts--hybrid or                  Miniwarehouses
                                     equity REITs                       and Self-
                                     primarily leasing                  Storage Units.
                                     miniwarehouses and
                                     self-storage units.
531190.........  $6.5 million.....  Lessors of Other Real
                                     Estate Property..
*525930........  $6.5 million.....  Real Estate Investment     531190  Lessors of Other  $6.5 million.
                                     Trusts--hybrid or                  Real Estate
                                     equity REITs                       Property.
                                     primarily leasing
                                     other real estate
                                     property.
*541612........  $6.5 million.....  Human Resources and        541612  Human Resources   $6.5 million.
                                     Executive Search                   Consulting
                                     Consulting Services--              Services.
                                     except executive
                                     search consulting
                                     services.
*541710........  500 employees....  Research and               541711  Research and      500 employees.
                                     Development in the                 Development in
                                     Physical,                          Biotechnology.
                                     Engineering, and Life
                                     Sciences--biotechnolo
                                     gy research and
                                     development.
*541710........  500 employees....  Research and               541712  Research and      500 employees.
                                     Development in the                 Development in
                                     Physical,                          the Physical,
                                     Engineering, and Life              Engineering,
                                     Sciences--except                   and Life
                                     biotechnology                      Sciences
                                     research and                       (except
                                     development.                       Biotechnology).
561310.........  $6.5 million.....  Employment Placement       561311  Employment        $6.5 million.
                                     Agencies.                          Placement
                                                                        Agencies..

[[Page 49674]]

 
*541612........  $6.5 million.....  Human Resources and        561312  Executive Search  $6.5 million.
                                     Executive Search                   Services.
                                     Consulting Services--
                                     executive search
                                     consulting services.
----------------------------------------------------------------------------------------------------------------
* Indicates that this activity within the identified NAICS 2002 code is now an activity within the related NAICS
  2007 industry.

    As shown in Table 4, the NAICS 2007 modifications lead to a 
proposed revision to the current size standard for a limited number of 
industries or activities. The basis for the revisions to seven size 
standards are discussed below:
    1. NAICS 339111, ``Laboratory Apparatus and Furniture 
Manufacturing,'' (part) laboratory freezers. NAICS 2007 eliminated 
NAICS 339111. The various activities of NAICS 339111 are reclassified 
in other NAICS 2007 codes having the same 500 employee size standard, 
except for laboratory freezer manufacturing. Laboratory freezer 
manufacturing is reclassified in NAICS 333415, ``Air-Conditioning and 
Warm Air Heating Equipment and Commercial and Industrial Refrigeration 
Equipment Manufacturing,'' having a size standard of 750 employees. SBA 
proposes to retain the 750 employee size standard for NAICS 333415 
because laboratory freezer manufacturing represents a small part of 
that industry (Rule 3).
    2. NAICS 334220, ``Radio and Television Broadcasting and Wireless 
Communications Equipment Manufacturing,'' (part) communications signal 
testing and evaluation equipment. The current size standard for NAICS 
334220 is 750 employees. The activity of ``communications signal 
testing and evaluation equipment manufacturing'' in NAICS 2007 is 
reclassified in NAICS 334515, ``Instrument Manufacturing for Measuring 
and Testing Electricity and Electrical Signals,'' having a size 
standard of 500 employees. SBA proposes to retain the 500 employee size 
standard for NAICS 334515 because ``communications signal testing and 
evaluation equipment manufacturing'' represents a small part of that 
industry (Rule 3).
    3. NAICS 518111, ``Internet Service Providers,'' (part) broadband 
Internet service providers (e.g., cable, DSL). The current size 
standard for NAICS 518111 is $23.0 million in average annual receipts. 
The activity, ``broadband Internet services providers (e.g., cable, 
DSL),'' in NAICS 2007 is reclassified in NAICS 517110, ``Wired 
Telecommunications Carriers,'' having a 1,500 employee size standard. 
SBA proposes to retain the 1,500 employee size standard for NAICS 
517110 because broadband Internet services providers represent a small 
part of that industry (Rule 3).
    4. NAICS 517510, ``Cable and Other Program Distribution.'' NAICS 
2007 eliminated NAICS 517510. The current size standard for NAICS 
517510 is $13.5 million in average annual receipts. In NAICS 2007, all 
activities of NAICS 517510 are reclassified in 517110, ``Wired 
Telecommunications Carriers,'' having a 1,500 employee size standard. 
SBA proposes to apply the 1,500 employee size standard for NAICS 517110 
because the Cable and Other Program Distribution industry is much 
smaller than the Wired Telecommunications Carriers industry (Rule 
3).
    5. NAICS 517910, ``Other Telecommunications.'' NAICS 2007 
eliminated NAICS 517910. NAICS 2007 establishes a new industry titled 
``All Other Telecommunications,'' NAICS 517919, comprising all 
activities of NAICS 517910 having a size standard of $13.5 million and 
most activities from NAICS 518111, ``Internet Service Providers 
(ISP),'' having a size standard of $23 million. As discussed in 
 3 above, the activity of ``broadband Internet services 
providers'' in NAICS 518111 is reclassified in NAICS 517110. SBA 
proposes to apply the $23 million size standard for that industry 
because ISP establishments providing services via client-supplied 
telecommunications connections represent the larger component of the 
new NAICS 517919 (Rule 3).
    6. NAICS 518112, ``Web Search Portals.'' NAICS 2007 eliminated 
NAICS 518112 and NAICS 516110, ``Internet Publishing and 
Broadcasting,'' having size standards of $6.5 million and 500 
employees, respectively. NAICS 2007 combines these two industries to 
form a new six-digit industry--NAICS 519130, ``Internet Publishing and 
Broadcasting and Web Search Portals.'' SBA proposes to apply the 500 
employee size standard for NAICS 519130 because the Internet Publishing 
and Broadcasting industry is much larger than the Web Search Portals 
industry (Rule 3).
    7. NAICS 525930, ``Real Estate Investment Trusts,'' (part) hybrid 
or equity REITs primarily leasing miniwarehouses and self-storage 
units. NAICS 2007 eliminated NAICS 525930. The various activities of 
NAICS 525930 are reclassified in NAICS 2007 codes having the same $6.5 
million size standard, except for the activity of hybrid or equity 
REITs primarily leasing miniwarehouses and self-storage units. That 
activity is reclassified in NAICS 531130, ``Lessors of Miniwarehouses 
and Self-Storage Units,'' having a $23.5 million size standard. SBA 
proposes to retain the $23.5 million size standard for NAICS 531130 
because hybrid or equity REITs primarily leasing miniwarehouses and 
self-storage units represent a small part of that industry (Rule 
3).

Alternatives to Adopting NAICS 2007 That SBA Considered

    SBA considered retaining the NAICS 2002 codes as the basis for 
small business size standards. However, SBA believes that doing so will 
lead to inconsistency among Federal agencies that adopt NAICS 2007 for 
their programs. More importantly, if SBA does not adopt NAICS 2007 it 
will not be able to analyze and evaluate small business size standards 
adequately because available Census Bureau data based on NAICS 2007 
industries will not be comparable with NAICS 2002 industry data. 
Without useful data, SBA cannot properly analyze size standards and 
their effects on businesses.
    SBA considered segmenting the modified NAICS 2002 size standard for 
cases where the size standard changes instead of applying the 
guidelines used in previous NAICS revisions. SBA believes this 
alternative is impractical because it would complicate size standards 
for minor reasons. Furthermore, the application of the guidelines for 
NAICS 2007 results in the loss of eligibility for currently-defined 
small businesses in only one minor

[[Page 49675]]

industry activity. That occurs for ``communications signal testing and 
evaluation equipment manufacturing,'' a part of NAICS 334220, ``Radio 
and Television Broadcasting and Wireless Communications Equipment 
Manufacturing.'' The size standard for that activity decreases from 750 
employees to 500 employees. A search of the Dynamic Small Business 
Search (DSBS) reveals that there are 38 small businesses out of 2,200 
small businesses registered in NAICS 334220 having more than 500 
employees. However, it is unlikely that many of these businesses, if 
any, will be affected given the limited activity of ``communications 
signal testing and evaluation equipment manufacturing.'' All other 
activities in NAICS 334220 will continue to have a size standard of 750 
employees.

Consideration of Comments

    SBA will take in account all submitted comments on this proposed 
rule and on the alternatives it considered. SBA believes that this 
proposal is routine and non-controversial. Therefore, SBA is publishing 
concurrently in this issue of the Federal Register a direct final rule 
to expedite modifying its size standards as explained in this proposed 
rule. If SBA decides to adopt NAICS 2007 as proposed, or with limited 
modifications, it will publish a final rule that addresses the comments 
and explains the basis for its final decision.

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

    OMB has determined that this proposed rule is not a ``significant'' 
regulatory action for purposes of Executive Order (E.O.) 12866. This 
proposed 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 
preamble, the size standard of a limited number of activities would 
change because of the NAICS revisions. Almost all businesses currently 
defined as small under the NAICS 2002 industries would continue to be 
small under the NAICS 2007 industries, if adopted for size standards. 
The 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.
    For purposes of E.O. 12988, SBA has determined that this rule is 
drafted, to the extent practicable, in accordance with the standards 
set forth in that order.
    For purposes of E.O. 13132, SBA has determined that this rule does 
not have any federalism implications warranting the preparation of a 
Federalism Assessment.
    For purposes of the Paperwork Reduction Act, 44 U.S.C. Ch. 35, SBA 
has determined that this rule does not impose any new reporting or 
recordkeeping requirements.
    When an agency promulgates a proposed rule, the Regulatory 
Flexibility Act (5 U.S.C. 601-612) requires the agency to prepare an 
initial regulatory flexibility analysis (IRFA) describing the potential 
economic impact of the rule on small entities and alternatives that may 
minimize that impact. Section 605 of the RFA allows an agency to 
certify a rule, in lieu of preparing an IRFA, if the rulemaking is not 
expected to have a significant economic impact on a substantial number 
of small entities. SBA has determined that this proposed rule as 
drafted, including the alternatives discussed in the supplementary 
information above, will not have a significant impact on a substantial 
number of small entities.
    OMB's NAICS 2007 modifications will result in size standards 
changes to a minimal number of activities within certain industries 
detailed above in the supplementary information, with little, if any, 
affect on small businesses. Those activities are now part of other, 
more appropriate or new NAICS codes and their industry descriptions. 
There will be no changes to the size standards for most NAICS 
industries and their economic activities. For those that would change, 
they would create a larger number of enterprises that can qualify for 
Federal government programs reserved for small businesses.
    As stated above, a search of the Dynamic Small Business Search 
(DSBS) reveals that there are 38 small businesses out of 2,200 small 
businesses registered in NAICS 334220 having more than 500 employees. 
However, it is unlikely that many of these businesses, if any, will be 
affected given the limited activity of ``communications signal testing 
and evaluation equipment manufacturing.'' All other activities in NAICS 
334220 will continue to have a size standard of 750 employees. 
Therefore, SBA believes that the impact on small businesses will be 
minimal because these activities represent relatively minor components 
of the NAICS 2002 industries.
    When SBA published a direct final rule to replace the table of 
small business size standards based on NAICS 1997 with a new one based 
on NAICS 2002, it certified that for purposes of the Regulatory 
Flexibility Act, the rule would affect a significant number of small 
businesses, but that the impact on each business would not be 
substantial. (67 FR 52597 to 52606, 62292, 67253 and 67102) SBA 
received no comments to the contrary. No changes have occurred since 
then. Adopting NAICS 2007 to replace NAICS 2002 as the basis for its 
table of size standards would have, SBA believes, an even smaller 
impact.

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 proposes to amend 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), 637(a), 644, and 
662(5); and Pub. L. 105-135, Sec. 401, et seq., 111 Stat. 2592.


Sec.  121.201  [Amended]

    2. Amend Sec.  121.201, in the table ``Small Business Size 
Standards by NAICS Industry,'' as follows:
    a. Revise the industry description of NAICS code 112519 ``Other 
Animal Aquaculture'' to read ``Other Aquaculture.''
    b. Revise the heading ``Sector 21--Mining'' to read ``Sector 21--
Mining, Quarrying, and Oil and Gas Extraction.''
    c. Revise the industry description of NAICS code 238210, 
``Electrical Contractors,'' to read ``Electrical Contractors and other 
Wiring Installation Contractors.''
    d. Revise the industry description of NAICS code 316999, ``All 
Other Leather Good Manufacturing,'' to read ``All Other Leather Good 
and Allied Product Manufacturing.''
    e. Revise the industry description of NAICS code 322221, ``Coated 
and Laminated Packaging Paper and Plastics Film Manufacturing,'' to 
read ``Coated and Laminated Packaging Paper Manufacturing.''
    f. Revise the industry description of NAICS code 326111, 
``Unsupported Plastics Bag Manufacturing,'' to read

[[Page 49676]]

``Plastics Bag and Pouch Manufacturing.''
    g. Revise the industry description of NAICS code 333997, ``Scale 
and Balance (except Laboratory) Manufacturing,'' to read ``Scale and 
Balance Manufacturing.''
    h. Remove the entry NAICS code 339111, ``Laboratory Apparatus and 
Furniture Manufacturing.''
    i. Revise the industry description of NAICS code 441221, 
``Motorcycle Dealers,'' to read ``Motorcycle, ATV, and Personal 
Watercraft Dealers.''
    j. Revise the heading ``Sectors 48--49--Transportation'' to read 
``Sectors 48--49--Transportation and Warehousing.''
    k. Revise the industry description of NAICS code 492110, 
``Couriers,'' to read ``Couriers and Express Delivery Services.''
    l. Remove the heading ``Subsector 516--Internet Publishing and 
Broadcasting'' and the entry for NAICS code 516110, ``Internet 
Publishing and Broadcasting.''
    m. Remove the entries for NAICS codes 517211, ``Paging;'' 517212, 
``Cellular and Wireless Telecommunications;'' and, 517310 
``Telecommunications Resellers'' and add in their place the following:

------------------------------------------------------------------------
 
------------------------------------------------------------------------
517210...................  Wireless                 .........      1,500
                            Telecommunications
                            Carriers (except
                            Satellite).
------------------------------------------------------------------------

    n. Remove the entries for NAICS codes 517510, ``Cable and Other 
Program Distribution,'' and 517910, ``Other Telecommunications,'' and 
add in their place the following:

------------------------------------------------------------------------
 
------------------------------------------------------------------------
517911...................  Telecommunications       .........      1,500
                            Resellers.
517919...................  All Other                    $23.5  .........
                            Telecommunications.
------------------------------------------------------------------------

    o. Revise the heading ``Subsector 518--Internet Service Providers, 
Web Search Portals, and Data Processing Services'' to read ``Subsector 
518--Data Processing, Hosting, and Related Services.''
    p. Remove the entries for NAICS codes 518111, ``Internet Service 
Providers,'' and 518112, ``Web Search Portals''.
    q. Add immediately after entry for NAICS code 519120, `` Libraries 
and Archives'' the following:

------------------------------------------------------------------------
 
------------------------------------------------------------------------
519130...................  Internet Publishing and  .........        500
                            Broadcasting and Web
                            Search Portals.
------------------------------------------------------------------------

    r. Revise the heading ``Subsector 523--Financial Investments and 
Related Activities'' to read ``Subsector 523--Securities, Commodity 
Contracts, and Other Financial Investments and Related Activities.''
    s. Revise the industry description of NAICS code 541612, ``Human 
Resources and Executive Search Consulting Services,'' to read ``Human 
Resources Consulting Services.''
    t. Remove the entry NAICS code 541710, ``Research and Development 
in the Physical, Engineering, and Life Sciences,'' and add in its place 
the following:

------------------------------------------------------------------------
 
------------------------------------------------------------------------
541711...................  Research and             .........    \11\500
                            Development in
                            Biotechnology \11\.
541712...................  Research and             .........    \11\500
                            Development in the
                            Physical, Engineering,
                            and Life Sciences
                            (except Biotechnology)
                            \11\.
Except,..................  Aircraft...............  .........      1,500
Except,..................  Aircraft Parts, and      .........      1,000
                            Auxiliary Equipment,
                            and Aircraft Engine
                            Parts.
Except,..................  Space Vehicles and       .........      1,000
                            Guided Missiles, their
                            Propulsion Units,
                            their Propulsion Units
                            Parts, and their
                            Auxiliary Equipment
                            and Parts.
------------------------------------------------------------------------

    u. Remove the entry for NAICS code 561310, ``Employment Placement 
Agencies,'' and add in its place the following:

------------------------------------------------------------------------
 
------------------------------------------------------------------------
561311...................  Employment Placement          $6.5  .........
                            Agencies.
561312...................  Executive Search               6.5  .........
                            Services.
------------------------------------------------------------------------

    v. Revise the industry description of NAICS code 561422, 
``Telemarketing Bureaus,'' to read ``Telemarketing Bureaus and Other 
Contact Centers.''
    w. Revise the industry description of NAICS code 722212, 
``Cafeterias,'' to read ``Cafeterias, Grill Buffets, and Buffets.''
    x. Revise the heading ``Sector 81--Other Services'' to read 
``Sector 81--Other Services (except Public Administration).''
    y. Amend footnote 11 by removing ``NAICS code 541710'' and adding 
in its place ``NAICS codes 541711 and 541712.''

    Dated: August 23, 2007.
Steven C. Preston,
Administrator.
 [FR Doc. E7-17150 Filed 8-28-07; 8:45 am]
BILLING CODE 8025-01-P