[Federal Register Volume 72, Number 167 (Wednesday, August 29, 2007)]
[Rules and Regulations]
[Pages 49639-49646]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-17151]



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  Federal Register / Vol. 72, No. 167 / Wednesday, August 29, 2007 / 
Rules and Regulations  

[[Page 49639]]



SMALL BUSINESS ADMINISTRATION

13 CFR Part 121

RIN 3245-AF66


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

AGENCY: Small Business Administration.

ACTION: Direct final rule.

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

SUMMARY: The U.S. Small Business Administration (SBA) is amending its 
Small Business Size Regulations by incorporating the Office of 
Management and Budget's (OMB) 2007 modifications of 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 rule is routine and non-controversial, and 
the Agency anticipates no significant adverse comment. If SBA receives 
a significant adverse comment, it will withdraw the rule. SBA is 
publishing concurrently in this issue of the Federal Register a 
proposed rule to achieve the same result, that is, to modify its Small 
Business Size Regulations as contemplated in this direct final rule.

DATES: This rule is effective October 1, 2007, without further action, 
unless SBA receives a significant adverse comment by September 28, 
2007. If SBA receives any significant adverse comments, the Agency will 
publish a timely withdrawal of this rule in the Federal Register.

ADDRESSES: You may submit comments, identified by RIN: 3245-AF66, 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 e-mail 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 adopting 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 applying the 
same guidelines in this direct final 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.

[[Page 49640]]

 
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:

                                 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 Adoption of NAICS 2007

    Most of the industries in NAICS 2002 remain unchanged under NAICS 
2007. This direct final rule adopting 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 is adopting 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.

[[Page 49641]]



                                                     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......     111211  Potato Farming.  $0.75 million.
111219*..........  $0.75 million........  Other Vegetable
                                           (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
                                           Melon Farming--                  Potato) and
                                           except sweet potato              Melon Farming.
                                           and yam 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             112519  Other            $0.75 million.
                                           Aquaculture.                     Aquaculture.
111998*..........  $0.75 million........  All Other
                                           Miscellaneous Crop
                                           Farming--algae,
                                           seaweed, and other
                                           plant aquaculture.
314999...........  500 employees........  All Other                314999  All Other        500 employees.
                                           Miscellaneous                    Miscellaneous
                                           Textile Product                  Textile
                                           Mills.                           Product Mills.
315211*..........  500 employees........  Men's and Boys' Cut
                                           and Sew Apparel
                                           Contractors--embroi
                                           dery contractors.
315212*..........  500 employees........  Women's, Girls' and
                                           Infants' Cut and
                                           Sew Apparel
                                           Contractors--embroi
                                           dery 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                 and Infants'
                                           Sew Apparel                      Cut and Sew
                                           Contractors--except              Apparel
                                           embroidery                       Contractors.
                                           contractors.
326199*..........  500 employees........  All Other Plastics       326199  All Other        500 employees.
                                           Product                          Plastics
                                           Manufacturing--exce              Product
                                           pt inflatable                    Manufacturing.
                                           plastics boats.
326291*..........  500 employees........  Rubber Product           326291  Rubber Product   500 employees.
                                           Manufacturing for                Manufacturing
                                           Mechanical Use--                 for Mechanical
                                           except rubber                    Use.
                                           tubing for
                                           mechanical use.
326299*..........  500 employees........  All Other Rubber         326299  All Other        500 employees.
                                           Product                          Rubber Product
                                           Manufacturing--exce              Manufacturing.
                                           pt inflatable
                                           rubber boats.
326291*..........  500 employees........  Rubber Product
                                           Manufacturing for
                                           Mechanical Use--
                                           rubber tubing for
                                           mechanical use.
333298...........  500 employees........  All Other Industrial     333298  All Other        500 employees.
                                           Machinery                        Industrial
                                           Manufacturing.                   Machinery
                                                                            Manufacturing.
339111*..........  500 employees........  Laboratory Apparatus
                                           and Furniture
                                           Manufacturing--labo
                                           ratory distilling
                                           equipment.
333415...........  750 employees........  Air-Conditioning and     333415  Air-             750 employees.
                                           Warm Air Heating                 Conditioning
                                           Equipment and                    and Warm Air
                                           Commercial and                   Heating
                                           Industrial                       Equipment and
                                           Refrigeration                    Commercial and
                                           Equipment                        Industrial
                                           Manufacturing.                   Refrigeration
                                                                            Equipment
                                                                            Manufacturing.
339111*..........  500 employees........  Laboratory Apparatus
                                           and Furniture
                                           Manufacturing--labo
                                           ratory freezers.
333994...........  500 employees........  Industrial Process       333994  Industrial       500 employees.
                                           Furnace and Oven                 Process
                                           Manufacturing.                   Furnace and
                                                                            Oven
                                                                            Manufacturing.
339111*..........  500 employees........  Laboratory Apparatus
                                           and Furniture
                                           Manufacturing--labo
                                           ratory furnaces and
                                           ovens.
333997...........  500 employees........  Scale and Balance        333997  Scale and        500 employees.
                                           (except Laboratory)              Balance
                                           Manufacturing.                   Manufacturing.
339111*..........  500 employees........  Laboratory Apparatus
                                           and Furniture
                                           Manufacturing--labo
                                           ratory scales and
                                           balances.
333999...........  500 employees........  All Other                333999  All Other        500 employees.
                                           Miscellaneous                    Miscellaneous
                                           General Purpose                  General
                                           Machinery                        Purpose
                                           Manufacturing.                   Machinery
                                                                            Manufacturing.
339111*..........  500 employees........  Laboratory Apparatus
                                           and Furniture
                                           Manufacturing--labo
                                           ratory centrifuges.
334220*..........  750 employees........  Radio and Television     334220  Radio and        750 employees.
                                           Broadcasting and                 Television
                                           Wireless                         Broadcasting
                                           Communications                   and Wireless
                                           Equipment                        Communications
                                           Manufacturing--exce              Equipment
                                           pt communications                Manufacturing.
                                           signal testing and
                                           evaluation
                                           equipment.
334515...........  500 employees........  Instrument               334515  Instrument       500 employees.
                                           Manufacturing for                Manufacturing
                                           Measuring and                    for Measuring
                                           Testing Electricity              and Testing
                                           and Electrical                   Electricity
                                           Signals.                         and Electrical
                                                                            Signals.

[[Page 49642]]

 
334220*..........  750 employees........  Radio and Television
                                           Broadcasting and
                                           Wireless
                                           Communications
                                           Equipment
                                           Manufacturing--comm
                                           unications signal
                                           testing and
                                           evaluation
                                           equipment.
336612...........  500 employees........  Boat Building.......     336612  Boat Building..  500 employees.
326199*..........  500 employees........  All Other Plastics
                                           Product
                                           Manufacturing--infl
                                           atable plastics
                                           boats.
326299*..........  500 employees........  All Other Rubber
                                           Product
                                           Manufacturing--infl
                                           atable rubber boats.
337127...........  500 employees........  Institutional            337127  Institutional    500 employees.
                                           Furniture                        Furniture
                                           Manufacturing.                   Manufacturing.
339111*..........  500 employees........  Laboratory Apparatus
                                           and Furniture
                                           Manufacturing--labo
                                           ratory furniture
                                           (e.g., stools,
                                           tables, benches).
339113...........  500 employees........  Surgical Appliance       339113  Surgical         500 employees.
                                           and Supplies                     Appliance and
                                           Manufacturing.                   Supplies
                                                                            Manufacturing.
339111*..........  500 employees........  Laboratory Apparatus
                                           and Furniture
                                           Manufacturing--exce
                                           pt laboratory
                                           furniture, scales,
                                           balances, furnaces,
                                           ovens, centrifuges,
                                           distilling
                                           equipment, and
                                           freezers.
517110...........  1500 employees.......  Wired                    517110  Wired            1,500 employees.
                                           Telecommunications               Telecommunicat
                                           Carriers.                        ions Carriers.
517510...........  $13.5 million........  Cable and Other
                                           Program
                                           Distribution..
518111*..........  $23.0 million........  Internet Service
                                           Providers--broadban
                                           d Internet service
                                           providers (e.g.,
                                           cable, DSL).
517211...........  1500 employees.......  Paging..............     517210  Wireless         1,500 employees.
                                                                            Telecommunicat
                                                                            ions Carriers
                                                                            (except
                                                                            Satellite).
517212...........  1500 employees.......  Cellular and Other
                                           Wireless
                                           Telecommunications..
517310...........  1500 employees.......  Telecommunications       517911  Telecommunicati  1,500 employees.
                                           Resellers.                       ons Resellers.
517910...........  $13.5 million........  Other                    517919  All Other        $23.0 million.
                                           Telecommunications.              Telecommunicat
                                                                            ions.
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                519190  All Other        $6.5 million.
                                           Information                      Information
                                           Services.                        Services.
525990...........  $6.5 million.........  Other Financial          525990  Other Financial  $6.5 million.
                                           Vehicles.                        Vehicles.
525930*..........  $6.5 million.........  Real Estate
                                           Investment Trusts--
                                           hybrid or mortgage
                                           REITs primarily in
                                           underwriting or
                                           investing in
                                           mortgages..
531110...........  $6.5 million.........  Lessors of               531110  Lessors of       $6.5 million.
                                           Residential                      Residential
                                           Buildings and                    Buildings and
                                           Dwellings.                       Dwellings.
525930*..........  $6.5 million.........  Real Estate
                                           Investment Trusts--
                                           hybrid or equity
                                           REITs primarily
                                           leasing residential
                                           Buildings and
                                           Dwellings.
531120...........  $6.5 million.........  Lessors of               531120  Lessors of       $6.5 million.
                                           Nonresidential                   Nonresidential
                                           Buildings (except                Buildings
                                           Miniwarehouses).                 (except
                                                                            Miniwarehouses
                                                                            ).
525930*..........  $6.5 million.........  Real Estate
                                           Investment Trusts--
                                           hybrid or equity
                                           REITs primarily
                                           leasing
                                           nonresidential
                                           buildings.
531130...........  $23.5 million........  Lessors of               531130  Lessors of       $23.5 million.
                                           Miniwarehouses and               Miniwarehouses
                                           Self-Storage Units.              and Self-
                                                                            Storage Units.
525930*..........  $6.5 million.........  Real Estate
                                           Investment Trusts--
                                           hybrid or equity
                                           REITs primarily
                                           leasing
                                           miniwarehouses and
                                           self-storage units.
531190...........  $6.5 million.........  Lessors of Other         531190  Lessors of       $6.5 million.
                                           Real Estate                      Other Real
                                           Property.                        Estate
                                                                            Property.

[[Page 49643]]

 
525930*..........  $6.5 million.........  Real Estate
                                           Investment Trusts--
                                           hybrid or equity
                                           REITs 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--
                                           biotechnology
                                           research and
                                           development.
541710*..........  500 employees........  Research and             541712  Research and     500 employees.
                                           Development in the               Development in
                                           Physical,                        the Physical,
                                           Engineering, and                 Engineering,
                                           Life Sciences--                  and Life
                                           except                           Sciences
                                           biotechnology                    (except
                                           research and                     Biotechnology).
                                           development.
561310...........  $6.5 million.........  Employment Placement     561311  Employment       $6.5 million.
                                           Agencies.                        Placement
                                                                            Agencies.
541612*..........  $6.5 million.........  Human Resources and      561312  Executive        $6.5 million.
                                           Executive Search                 Search
                                           Consulting                       Services.
                                           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 
revision in 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 
is adopting 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 is adopting 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 is adopting 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 is adopting 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 is 
adopting 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 is adopting 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

[[Page 49644]]

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 is adopting 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).

Justification for October 1, 2007 Effective Date

    If adopted in final form, SBA's table of small business size 
standards matched to NAICS 2007 will be effective on and will apply to 
all solicitations issued on or after October 1, 2007, because:
    1. Federal Government recordkeeping and statistics would be more 
consistent and more comparable with other data for analyzing small 
business activity. October 1, 2007 is the start of the first Federal 
Government fiscal year after the NAICS 2007 January 1, 2007 effective 
date.
    2. SBA and other users of size standards could collect data on 
their small business programs using the more recent NAICS format and 
can compare those data with future Federal statistics that will be 
based on NAICS 2007 industry classifications. The availability of such 
comparable data would ensure the credibility of analyses comparing 
program and industry data.
    3. Federal agencies that use NAICS and SBA's small business size 
standards for their programs, as most of them do, will need time to 
implement the new size standards and to develop training tools 
necessary to do so. SBA believes that publishing this direct final rule 
now provides sufficient time for agencies to determine its impact on 
their programs and to convert and update their databases and tracking 
systems for implementation by the beginning of FY 2008.
    4. To evaluate and establish small business size standards, SBA 
uses data that the U.S. Bureau of the Census (Census Bureau) compiles 
for the Agency from its quinquennial Economic Census of U. S. industry 
and businesses. SBA acquires this special compilation from the Census 
Bureau every five years, after each Economic Census. To evaluate and 
establish meaningful small business size standards, SBA requires the 
same data and on the same basis as the Census Bureau collects them. 
Because the next compilation that SBA will obtain from the Census 
Bureau will be based on NAICS 2007, SBA needs to use NAICS 2007 as the 
basis for its table of small business size standards.

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 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

    This is a direct final rule, but SBA will consider comments. SBA 
believes that this rule is routine and non-controversial, and SBA 
anticipates no significant adverse comments to this action. If SBA 
receives significant any adverse comments, it will withdraw this direct 
final rule. SBA is publishing concurrently in this issue of the Federal 
Register a proposed rule to modify its Small Business Size Regulations 
as contemplated in this direct final rule. If SBA does receive 
significant adverse comments, it will consider the comment(s) before 
making a final decision. 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 direct final rule is not a 
``significant'' regulatory action for purposes of Executive Order 
(E.O.) 12866. This direct 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 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 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 direct final rule as drafted, including 
the alternatives discussed in the supplementary information above,

[[Page 49645]]

would 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 NAICS 
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.

0
For the reasons set forth in the preamble, SBA amends 13 CFR part 121 
as follows:

PART 121--SMALL BUSINESS SIZE REGULATIONS

0
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]

0
2. Amend Sec.  121.201, in the table ``Small Business Size Standards by 
NAICS Industry,'' as follows:
0
a. Revise the industry description of NAICS code 112519 ``Other Animal 
Aquaculture'' to read ``Other Aquaculture.''
0
b. Revise the heading ``Sector 21--Mining'' to read ``Sector 21--
Mining, Quarrying, and Oil and Gas Extraction.''
0
c. Revise the industry description of NAICS code 238210, ``Electrical 
Contractors,'' to read ``Electrical Contractors and other Wiring 
Installation Contractors.''
0
d. Revise the industry description of NAICS code 316999, ``All Other 
Leather Good Manufacturing,'' to read ``All Other Leather Good and 
Allied Product Manufacturing.''
0
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.''
0
f. Revise the industry description of NAICS code 326111, ``Unsupported 
Plastics Bag Manufacturing,'' to read ``Plastics Bag and Pouch 
Manufacturing.''
0
g. Revise the industry description of NAICS code 333997, ``Scale and 
Balance (except Laboratory) Manufacturing,'' to read ``Scale and 
Balance Manufacturing.''
0
h. Remove the entry NAICS code 339111, ``Laboratory Apparatus and 
Furniture Manufacturing.''
0
i. Revise the industry description of NAICS code 441221, ``Motorcycle 
Dealers,'' to read ``Motorcycle, ATV, and Personal Watercraft 
Dealers.''
0
j. Revise the heading ``Sectors 48-49--Transportation'' to read 
``Sectors 48-49--Transportation and Warehousing.''
0
k. Revise the industry description of NAICS code 492110, ``Couriers,'' 
to read ``Couriers and Express Delivery Services.''
0
l. Remove the heading ``Subsector 516--Internet Publishing and 
Broadcasting'' and the entry for NAICS code 516110, ``Internet 
Publishing and Broadcasting.''
0
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
                       Telecommunication
                       s Carriers
                       (except
                       Satellite).
------------------------------------------------------------------------

0
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  ..............
                       Telecommunication
                       s.
------------------------------------------------------------------------

0
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.''
0
p. Remove the entries for NAICS codes 518111, ``Internet Service 
Providers,'' and 518112, ``Web Search Portals.''
0
q. Add immediately after entry for NAICS code 519120, `` Libraries and 
Archives'' the following:

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


[[Page 49646]]

0
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.''
0
s. Revise the industry description of NAICS code 541612, ``Human 
Resources and Executive Search Consulting Services,'' to read ``Human 
Resources Consulting Services.''
0
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).\1
                       1\
Except,.............  Aircraft..........  ..............           1,500
Except,.............  Aircraft Parts,     ..............           1,000
                       and 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.
------------------------------------------------------------------------

0
u. Remove the entry for NAICS code 561310, ``Employment Placement 
Agencies,'' and add in its place the following:

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

0
v. Revise the industry description of NAICS code 561422, 
``Telemarketing Bureaus,'' to read ``Telemarketing Bureaus and Other 
Contact Centers.''
0
w. Revise the industry description of NAICS code 722212, 
``Cafeterias,'' to read ``Cafeterias, Grill Buffets, and Buffets.''
0
x. Revise the heading ``Sector 81--Other Services'' to read ``Sector 
81--Other Services (except Public Administration).''
0
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. E7-17151 Filed 8-28-07; 8:45 am]
BILLING CODE 8025-01-P