Small Business Size Standards: Agriculture, Forestry, Fishing and Hunting, 37397-37404 [2013-14711]
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Vol. 78
Thursday,
No. 119
June 20, 2013
Part V
Small Business Administration
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13 CFR Part 121
Small Business Size Standards; Final Rules
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Federal Register / Vol. 78, No. 119 / Thursday, June 20, 2013 / Rules and Regulations
SMALL BUSINESS ADMINISTRATION
13 CFR Part 121
RIN 3245–AG43
Small Business Size Standards:
Agriculture, Forestry, Fishing and
Hunting
U.S. Small Business
Administration.
ACTION: Final rule.
AGENCY:
The United States Small
Business Administration (SBA) is
increasing the small business size
standards for 11 industries in North
American Industry Classification
System (NAICS) Sector 11, Agriculture,
Forestry, Fishing and Hunting, and
retaining the current standards for five
industries and two exceptions to NAICS
115310. As part of its ongoing
comprehensive size standards review,
SBA evaluated 16 industries and two
exceptions in NAICS Sector 11 to
determine whether the existing size
standards should be retained or revised.
SBA did not review size standards for
46 industries in NAICS Sector 11 that
are currently set by statute at $750,000
in average annual receipts. SBA also did
not review the 500-employee based size
standard for NAICS 113310, Logging,
but will review it in the near future with
other employee based size standards.
DATES: This rule is effective July 22,
2013.
SUMMARY:
FOR FURTHER INFORMATION CONTACT:
Jorge Laboy-Bruno, Economist, Size
Standards Division, by phone at (202)
205–6618 or by email at
sizestandards@sba.gov.
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SUPPLEMENTARY INFORMATION:
Introduction
To determine eligibility for Federal
small business assistance programs,
SBA establishes small business size
definitions (referred to as size
standards) for private sector industries
in the United States. SBA’s existing size
standards use two primary measures of
business size—average annual receipts
and number of employees. Financial
assets, electric output, and refining
capacity are used as size measures for a
few specialized industries. In addition,
SBA’s Small Business Investment
Company (SBIC), 7(a), and the Certified
Development Company (CDC or 504)
Loan Programs determine small
business eligibility using either the
industry based size standards or
alternative net worth and net income
based size standards. At the start of the
current comprehensive size standards
review, there were 41 different size
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levels, covering 1,141 NAICS industries
and 18 sub-industry activities (i.e.,
‘‘exceptions’’ in SBA’s table of size
standards). Of these, 31 were based on
average annual receipts, seven based on
number of employees, and three based
on other measures. Presently, there are
a total of 1,031 size standards, 516 of
which are based on average annual
receipts, 499 on number of employees,
10 on megawatt hours, and six on
average assets.
Over the years, SBA has received
comments that its size standards have
not kept up with changes in the
economy, in particular the changes in
the Federal contracting marketplace and
industry structure. The last
comprehensive review of size standards
occurred during the late 1970s and early
1980s. Since then, most reviews of size
standards were limited to a few specific
industries in response to requests from
the public and Federal agencies. SBA
also makes periodic inflation
adjustments to its monetary based size
standards. The latest inflation
adjustment to size standards was
published in the Federal Register on
July 18, 2008 (73 FR 41237).
SBA recognizes that changes in
industry structure and the Federal
marketplace since the last overall
review have rendered existing size
standards for some industries no longer
supportable by current data.
Accordingly, in 2007, SBA began a
comprehensive review of its size
standards to determine whether they are
supportable by current data, and to
revise them, where necessary.
In addition, on September 27, 2010,
the President of the United States signed
the Small Business Jobs Act of 2010
(Jobs Act). The Jobs Act directs SBA to
conduct a detailed review of all size
standards and to make appropriate
adjustments to reflect market
conditions. Specifically, the Jobs Act
requires SBA to conduct a detailed
review of at least one-third of all size
standards during every 18-month period
from the date of its enactment and
review all size standards not less
frequently than once every 5 years
thereafter. Reviewing existing small
business size standards and making
appropriate adjustments based on
current data is also consistent with
Executive Order 13563 on improving
regulation and regulatory review.
Rather than review all size standards
at one time, SBA is considering groups
of related industries on a Sector by
Sector basis.
As part of its comprehensive size
standards review, SBA evaluated 16
industries and two sub-industries
(‘‘exceptions’’) in NAICS Sector 11,
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Agriculture, Forestry, Fishing and
Hunting, to determine whether the
existing size standards should be
retained or revised. SBA did not review
size standards for 46 industries in
NAICS Sector 11 that are currently set
by statute at $750,000 in average annual
receipts. SBA also did not review the
500-employee based size standard for
NAICS 113310, Logging, but will review
it in the near future with other
employee based size standards.
On September 11, 2012, SBA
published a proposed rule in the
Federal Register (77 FR 55755) seeking
public comment on its proposal to
increase the size standards for 11
industries in that Sector and retain the
size standards for five remaining
industries and two sub-industries
(‘‘exceptions’’). The comment period
ended on November 13, 2012.
In conjuction with the current
comprehensive size standards review,
SBA developed a ‘‘Size Standards
Methodology’’ for establishing,
reviewing, and modifying size
standards, where necessary. SBA
published the document on its Web site
at www.sba.gov/size for public review
and comment and also included it as a
supporting document in the electronic
docket of the September 11, 2012
proposed rule at www.regulations.gov.
When evaluating an industry’s size
standard, SBA examines its
characteristics (such as average firm
size, startup costs, industry competition,
and distribution of firms by size) and
the level and small business share of
Federal contract dollars in that industry.
SBA also examines the potential impact
a size standard revision might have on
its financial assistance programs and
whether a business concern under a
revised size standard would be
dominant in its industry. SBA analyzed
the characteristics of each industry in
NAICS Sector 11, mostly using a special
tabulation obtained from the U.S.
Bureau of the Census from its 2007
County Business Patterns and the 2007
Census of Agriculture from the National
Agricultural Statistics Service (NASS).
NAICS Sector 11 is not covered by the
Census Bureau’s Economic Census. (For
a more detailed discussion, please see
77 FR 55755). SBA also evaluated the
level and small business share of
Federal contract dollars in each of those
industries using the data from the U.S.
General Service Administration’s
Federal Procurement Data System—
Next Generation (FPDS–NG) for fiscal
years 2008 to 2010. To evaluate the
impact of changes to size standards on
its loan programs, SBA examined data
on its own guaranteed loan programs for
fiscal years 2008 to 2010.
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SBA’s ‘‘Size Standards Methodology’’
provides a detailed description of
analyses of various industry and
program factors and data sources, and
how the Agency uses the results to
derive size standards. In the proposed
rule, SBA detailed how it applied its
‘‘Size Standards Methodology’’ to
review, and modify where necessary,
the existing size standards for industries
in NAICS Sector 11. SBA sought
comments from the public on a number
of issues about its ‘‘Size Standards
Methodology,’’ such as whether there
are alternative methodologies that SBA
should consider; whether there are
alternative or additional factors or data
sources that SBA should evaluate;
whether SBA’s approach to establishing
small business size standards makes
sense in the current economic
environment; whether SBA’s
application of anchor size standards is
appropriate in the current economy;
whether there are gaps in SBA’s
methodology because of the lack of
comprehensive data; and whether there
are other facts or issues that SBA should
consider.
In the proposed rule, SBA sought
comments on its proposal to increase
the size standards for 11 industries and
retain the existing size standards for the
remaining five industries and two subindustries that were examined in NAICS
Sector 11. Specifically, SBA requested
comments on whether the size
standards should be revised as proposed
and whether the proposed revisions are
appropriate. SBA also invited comments
on whether its proposed eight fixed
levels for receipts based size standards
are appropriate and whether it should
adopt common size standards for certain
Industry Groups and Subsectors in
NAICS Sector 11.
SBA’s analyses supported lower size
standards for four industries and two
sub-industries in NAICS Sector 11.
However, as explained in the proposed
rule, SBA did not propose to lower them
in view of the current economic
environment because lowering size
standards would reduce the number of
firms eligible to participate in Federal
small business assistance programs,
which could adversely affect those firms
that would no longer qualify as small,
and would be counter to what the
Federal government and SBA are doing
to help small businesses and create jobs.
Therefore, SBA proposed to retain the
current size standards for those
industries and sub-industries and
requested comments on whether the
Agency should lower them based on its
analyses. In addition, SBA requested
comments on the elimination of the
Forest Fire Suppression and Fuel
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Management Services as ’’exceptions’’
to NAICS 115310, and the application of
the same size standard for them as for
the rest of the NAICS 115310.
Summary of Comments
SBA received 13 comments from 12
respondents to the proposed rule. Ten of
the respondents offered support for the
Agency’s efforts to update size
standards in NAICS Sector 11, and two
of the respondents commented about
issues not related to the proposed rule.
More specifically, one commenter
offered support for all SBA’s proposed
changes for evaluated industries under
NAICS Sector 11; two supported the
increase in size standards for NAICS
115111, Cotton Ginning, from $7
million to $10 million; and five offered
support to retain the two sub-industries,
Forest Fire Suppression and Fuels
Management Services, as ‘‘exceptions
under NAICS 115310, Support
Activities for Forestry; they also
supported retaining the current $17.5
million size standard for each of them
even if the SBA’s analyses supported
lowering it. Additionally, one
commenter, an association of dealers
and manufacturers of agricultural
equipment, suggested examining their
industries as part of the evaluation of
size standards in NAICS Sector 11.
Finally, a hunter expressed concern
with the indirect impact any proposed
changes to size standards may have on
deer hunting regulations. All comments
to the proposed rule for NAICS Sector
11 are available for public review at
https://www.regulations.gov, using RIN
3245–AG30 or docket number SBA–
2012–0003. These comments are
summarized in more detail below.
General Support to the Proposed Rule
One commenter generally supported
the size standards review and
rulemaking process and changes to size
standards being considered by SBA.
Specifically, the commenter supported
the SBA’s proposal to simplify size
standards by basing them on eight fixed
levels, because that will provide
regulatory certainty to small business
concerns under NAICS Sector 11.
Second, he supported SBA’s proposal to
retain the current size standards for the
four industries and two sub-industries
under NAICS Sector 11 for which SBA’s
analysis could support lowering them.
Finally, the commenter expressed
unqualified support for SBA’s analysis
in this proposed rulemaking in
particular and support for SBA’s
continued efforts to assist small
businesses in general.
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NAICS 115111, Cotton Ginning
Two commenters representing
different trade associations of cotton
ginners fully supported SBA’s proposal
to increase the size standard for NAICS
115111, Cotton Ginning from $7 million
in average annual receipts to $10
million. Both recognized that the
increased size standard accounts for
changes in the structure of the industry,
such as changes in the marketplace,
increased operation costs, and
technological changes.
NAICS 115310—Forest Fire
Suppression and Fuels Management
Services, Exceptions
Five commenters fully supported the
SBA’s proposal to retain the Forest Fire
Suppression and Fuels Management
Services as ‘‘exceptions’’ under NAICS
115310, Support Activities for Forestry,
and their corresponding current size
standard of $17.5 million.
Three commenters were small
businesses that provide services in the
forest industry. These commenters
advocated for retention of the $17.5
million size standard for the two subindustries (i.e., exceptions) under
NAICS 115310. One of the three agreed
with SBA’s proposal to keep the $17.5
million size standard because it allows
for small businesses to average out good
years and bad years in revenues earned
in this support service.
A logging organization, whose
membership includes wildland
firefighting organizations, also
commented in support of SBA’s
proposal. The association added that
most of its members are small and
family owned operations who offered
their support for keeping the current
$17.5 million size standard.
SBA agrees with these commenters.
SBA considers that the numerical
results of these two sub-industries in the
proposed rule reflected the decreases in
numbers of fires and consequent
reductions in payments to contractors
during fiscal years 2008–2010 as
compared to previous years. Given the
inherent uncertainty of occurrences of
forest fires, SBA believes that
contracting officers need flexibility to
hire small businesses, especially in the
worst case scenario. In a very active fire
season, size of payments can easily
support the $17.5 million size standard
for Fire Suppression Services.
Two associations representing several
companies that primarily deal with
fuels management and fire suppression
support services to the forest industry
also urged SBA to retain its current
$17.7 million size standard for these
support services. One of these
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organizations included a large volume
of contract documents and some
statistical information to support its
advocacy for its members.
Therefore, SBA is retaining Forest
Fire Suppression and Fuels
Management Services as exceptions
under NAICS 115310 and their current
$17.5 million size standard.
Other Issues Not Related to the
Proposed Rule for NAICS Sector 11
One commenter, representing a
national association of farm and outdoor
equipment dealers and manufacturers,
expressed concern with the impact the
proposed size standards revisions might
have on its members. The members of
the association represent two industries:
NAICS 333111, Farm Machinery and
Equipment Manufacturing, and NAICS
423820, Farm and Garden Machinery
and Equipment Merchant Wholesalers.
The commenter suggested that SBA
should consider examining the size
standards for these industries as part of
the review of size standards for NAICS
Sector 11. The commenter
recommended different receipts based
size standards for various agricultural
equipment and machinery dealerships.
SBA does not accept the commenter’s
recommendations in this final rule for
three reasons. First, there is a single
100-employee size standard for all
industries in NAICS Sector 42,
Wholesale Trade, except for purposes of
Federal government procurement when
the 500-employee size standard applies
under the non-manufacturer rule (see 13
CFR 121.402(b)). Similarly, for NAICS
333111, the size standard is 500
employees. Second, the association
recommended receipts based size
standards for both NAICS industries
(NAICS 333111 and NAICS 423820).
However, SBA uses the number of
employees as the basis of size standards
for all industries in the manufacturing
and wholesale trade sectors (see SBA’s
‘‘Size Standards Methodology,’’ referred
above and in the propoposed rule).
Third, these industries are not part of
NAICS Sector 11. The first industry
(NAICS 333111) is part of NAICS sector
31–33, Manufacturing, and the second
industry (NAICS 423820) is part of
NAICS 42, Wholesale Trade. Detailed
information about definitions of
industries under NAICS can be found at
https://www.census.gov/eos/www/naics/.
As part of its ongoing comprehensive
size standards review, SBA will
evaluate these industries, along with
other other industries in those sectors,
and publish a proposed rule for
comments in the near future.
Finally, a commenter that identified
herself as a hunter expressed concern
over the possible increase in cost to
obtain deer hunting permits because of
the increases of small business size
standards in NAICS Sector 11. SBA
cannot respond to this comment
because the Agency does not establish,
modify, or clarify deer hunting
regulations. SBA’s size standards only
applies to Federal contracting and other
SBA’s programs and services targeted to
small businesses, including guaranteed
loans.
Conclusion
Based on the analyses of relevant
industry and program data and there
being no public comments against the
proposed rule, SBA has decided to
increase the small business size
standards for the 11 industries, as
proposed. These industries and their
revised size standards are shown in
Table 1, Summary of Revised Size
Standards in NAICS Sector 11, below.
TABLE 1—SUMMARY OF REVISED SIZE STANDARDS IN NAICS SECTOR 11
NAICS
code
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112112
112310
113110
113210
114111
114112
114119
114210
115111
115114
115115
..........
..........
..........
..........
..........
..........
..........
..........
..........
..........
..........
Cattle Feedlots .............................................................................................................................
Chicken Egg Production ...............................................................................................................
Timber Tract Operations ..............................................................................................................
Forest Nurseries and Gathering of Forest Products ....................................................................
Finfish Fishing ..............................................................................................................................
Shellfish Fishing ...........................................................................................................................
Other Marine Fishing ....................................................................................................................
Hunting and Trapping ...................................................................................................................
Cotton Ginning .............................................................................................................................
Postharvest Crop Activities (Except Cotton Ginning) ..................................................................
Farm Labor Contractors and Crew Leaders ................................................................................
For the reasons as stated above in this
rule and in the proposed rule, SBA is
retaining the current size standards for
the four industries and two subindustries for which analytical results
suggested the Agency could lower their
size standards. Those six size standards
are the following: NAICS 115112, Soil
Preparation, Planting, and Cultivation;
NAICS 115116, Farm Management
Services; NAICS 115210, Support
Activities for Animal Production;
NAICS 115310, Support Activities for
Forestry; and the two exceptions to
NAICS 115310, namely, Forest Fire
Protection and Fuels Management
Services. This is consistent with SBA’s
recent final rules on NAICS Sector 44–
45, Retail Trade (75 FR 61597 (October
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standard
($ million)
NAICS industry title
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6, 2010)); NAICS Sector 72,
Accommodation and Food Services (75
FR 61604 (October 6, 2010)); NAICS
Sector 81, Other Services (75 FR 61591
(October 6, 2010)); NAICS Sector 54,
Professional, Scientific and Technical
Services (77 FR 7490 (February 10,
2012)); NAICS Sector 48–49,
Transportation and Warehousing (77 FR
10943 (February 24, 2012)); NAICS
Sector 51, Information (77 FR 72702
(December 6, 2012)); NAICS Sector 53,
Real Estate and Rental and Leasing (77
FR 88747 (September 24, 2012)); NAICS
Sector 56, Administrative and Support,
Waste Management and Remediation
Services (77 FR 72691 (December 6,
2012)); NAICS 61, Educational Services
(77 FR 58739 (September 24, 2012)); and
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$2.0
$12.5
$7.0
$7.0
$4.0
$4.0
$4.0
$4.0
$7.0
$7.0
$7.0
Revised size
standard
($ million)
$7.0
$14.0
$10.0
$10.0
$19.0
$5.0
$7.0
$5.0
$10.0
$25.5
$14.0
NAICS Sector 62, Health Care and
Social Assistance (77 FR 58755
(September 24, 2012)). In each of those
final rules, SBA retained the existing
size standards for those that it could
have reduced. SBA is also retaining the
existing size standard for one industry
in NAICS Sector 11 for which the
results supported it at the current level,
namely, NAICS 115113, Crop
Harvesting, Primarily by Machine.
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Compliance With Executive Orders
12866, 13563, 12988, and 13132, the
Paperwork Reduction Act (44 U.S.C.
Ch. 35), and the Regulatory Flexibility
Act (5 U.S.C. 601–612)
Executive Order 12866
The Office of Management and Budget
(OMB) has determined that this final
rule is not a ‘‘significant regulatory
action’’ for purposes of Executive Order
12866. To help explain the need of this
rule and the rule’s potential benefits and
costs, SBA is providing below a Cost
Benefit Analysis. This is also not a
‘‘major rule’’ under the Congressional
Review Act (5 U.S.C. 801).
Cost Benefit Analysis
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1. Is there a need for the regulatory
action?
The revised small business size
standards for 11 industries in NAICS
Sector 11, Agriculture, Forestry, Fishing
and Hunting, reflect the changes in
economic characteristics of small
businesses and the Federal procurement
market. SBA’s mission is to aid and
assist small businesses through a variety
of financial, procurement, business
development, and advocacy programs.
To assist the intended beneficiaries of
these programs, SBA establishes distinct
definitions to determine which
businesses are deemed small. The Small
Business Act delegates to SBA’s
Administrator the responsibility for
establishing small business size
definitions (15 U.S.C. 632(a)). The Act
also requires that small business size
definitions vary to reflect industry
differences. The Jobs Act requires the
Administrator to review at least onethird of all size standards within each
18-month period from the date of its
enactment, and review all size standards
at least every five years thereafter. The
supplementary information sections of
the September 11, 2012 (77 FR 55755)
proposed rule and this final rule
explained the SBA’s methodology for
analyzing a size standard for a particular
industry.
2. What are the potential benefits and
costs of this regulatory action?
The most significant benefit to
businesses obtaining small business
status because of this rule is gaining
eligibility for Federal small business
assistance programs. These include
SBA’s financial assistance programs and
Federal procurement programs reserved
for small businesses. Federal
procurement programs provide targeted
opportunities for small businesses
under SBA’s business development
programs, such as 8(a), small businesses
located in Historically Underutilized
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Business Zones (HUBZone), womenowned small businesses (WOSB),
economically disadvantaged womenowned small businesses (EDWOSB), and
service-disabled veteran-owned small
businesses (SDVOSB). These programs
assist small businesses to become more
knowledgeable, stable, and competitive.
Other Federal agencies may also use
SBA’s size standards for a variety of
regulatory and program purposes. In the
11 industries in NAICS Sector 11 for
which SBA has increased size
standards, SBA estimates that more than
7,800 additional firms, not small under
the current size standards, will obtain
small business status and become
eligible for these programs. That is
about 17 percent of the total number of
total firms that are classified as small
under the current standards in all
industries in NAICS Sector 11 that are
covered by this final rule. SBA estimates
this will increase the small business
share of total industry receipts in those
industries from about 78.4 percent
under the current size standards to 79.1
percent under the revised size
standards.
Three groups will benefit from the
revised size standards in NAICS Sector
11 in the following ways: (1) Some
businesses that are above the current
size standards may gain small business
status under the higher size standards,
thereby enabling them to participate in
Federal small business assistance
programs; (2) growing small businesses
that are close to exceeding the current
size standards will be able to retain their
small business status under the higher
size standards, thereby enabling them to
continue their participation in the
programs; and (3) Federal agencies will
have a larger pool of small businesses
from which to draw for their small
business procurement programs.
SBA estimates that additional firms
gaining small business status in those
industries under the revised size
standards could potentially obtain
Federal contracts totaling $7 million to
$12 million annually under SBA’s small
business, 8(a), HUBZone, WOSB,
EDWOSB and SDVOSB Programs, and
other unrestricted procurements. The
added competition for many of these
procurements can also result in lower
prices to the Government for
procurements reserved for small
businesses, although SBA cannot
quantify this benefit.
Under SBA’s 7(a) and 504 Loan
Programs, based on the data for fiscal
years 2008 to 2010, SBA estimates about
32 additional loans totaling about $7
million could be made to additional
firms that could become small under the
revised standards. Under the Jobs Act,
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SBA can now guarantee substantially
larger loans than in the past. In
addition, the Jobs Act established an
alternative size standard for SBA’s 7(a)
and 504 Loan Programs for those
applicants that do not meet the size
standards for their industries. That is,
under the Jobs Act, if a firm applies for
a 7(a) or 504 loan but does not meet the
size standard for its industry, it might
still qualify if, including its affiliates, it
has a tangible net worth that does not
exceed $15 million and also has average
net income after Federal income taxes
(excluding any carry-over losses) for its
preceding two completed fiscal years
that do not exceed $5 million. Thus,
SBA finds it difficult to quantify the
actual impact of the revised size
standards on its 7(a) and 504 Loan
Programs.
Newly defined small businesses will
also benefit from SBA’s Economic Injury
Disaster Loan (EIDL) Program. Since this
program is contingent on the occurrence
and severity of one or more disasters,
SBA cannot make a meaningful estimate
of this impact.
To the extent that those 7,800 newly
defined additional small firms under the
revised size standards become active in
Federal procurement programs, the
revisions to size standards may entail
some additional administrative costs to
the Federal Government associated with
there being more bidders for Federal
small business procurement
opportunities. In addition, there will be
more firms seeking SBA’s guaranteed
loans, more firms eligible for enrollment
in the System for Award Management
(SAM) database, more firms seeking
certification for the 8(a) or HUBZone
Programs and more firms qualifying for
WOSB, EDWOSB and SDVOSB status.
Among those newly defined businesses
seeking SBA’s assistance, there could be
some additional costs associated with
compliance and verification of small
business status and protests of small
business status. However, SBA believes
these added administrative costs are
likely to be minimal because
mechanisms are already in place to
handle these requirements.
Additionally, Federal government
contracts may have higher costs under
the higher revised size standards. With
a greater number of businesses defined
as small, Federal agencies may choose
to set aside more contracts for
competition among small businesses
rather than using full and open
competition. The movement from
unrestricted to set-aside contracting
might result in competition among
fewer total bidders, although there will
be more small businesses eligible to
submit offers. In addition, higher costs
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may result when more full and open
contracts are awarded to HUBZone
businesses because of a price evaluation
preference. The additional costs
associated with fewer bidders, however,
will likely be minor since, by law,
procurements may be set aside for small
businesses or reserved for the small
business, 8(a), HUBZone, WOSB,
EDWOSB, or SDVOSB Programs only if
awards are expected to be made at fair
and reasonable prices.
The revised size standards may have
some distributional effects among large
and small businesses. Although SBA
cannot estimate with certainty the
actual outcome of the gains and losses
among small and large businesses, it can
identify several proabable impacts.
There may be a transfer of some Federal
contracts to small businesses from large
businesses. Large businesses may have
fewer Federal contract opportunities as
Federal agencies decide to set aside
more Federal contracts for small
businesses. In addition, some Federal
agencies may award more Federal
contracts to HUBZone concerns instead
of large businesses since HUBZone
concerns may be eligible for price
evaluation adjustments when they
compete on full and open bidding
opportunities. Similarly, some currently
defined small businesses may obtain
fewer Federal contracts due to the
increased competition from more
businesses defined as small under the
revised size standards. This transfer
may be offset by more Federal
procurements being set aside for all
small businesses. The number of newly
defined and expanding small businesses
that are willing and able to sell to the
Federal Government will limit the
potential transfer of contracts away from
large and small businesses under the
existing size standards. SBA cannot
estimate with precision the potential
distributional impacts of these transfers.
The revisions to the existing size
standards in NAICS Sector 11,
Agriculture, Forestry, Fishing and
Hunting, are consistent with SBA’s
statutory mandate to assist small
business. This regulatory action
promotes the Administration’s
objectives. One of SBA’s goals in
support of the Administration’s
objectives is to help individual small
businesses succeed through fair and
equitable access to capital and credit,
Government contracts, and management
and technical assistance. Reviewing and
modifying size standards, when
appropriate, ensures that intended
beneficiaries have access to small
business programs designed to assist
them.
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Executive Order 13563
A description of the need for this
regulatory action and benefits and costs
associated with this action including
possible distributional impacts that
relate to Executive Order 13563 are
included above in the Cost Benefit
Analysis.
In an effort to engage interested
parties in this regulatory action, SBA
presented its methodology (discussed
above under Supplementary
Information in the propsed rule and this
final rule) to various industry
associations and trade groups. SBA also
met with various industry groups to get
their feedback on its methodology and
other size standards issues. In addition,
SBA presented its size standards
methodology to businesses in 13 cities
in the U.S. and sought their input as
part of the Jobs Act tours. The
presentation included information on
the latest status of the comprehensive
size standards review and how
interested parties can provide SBA with
input and feedback on the size
standards review. Moreover, SBA
presented the same information to
Department of Defense (DoD)
contracting personnel at their annual
training session. It included updates on
what size standards rules SBA was
currently reviewing and plans to review
in the future. This is important because
DoD contracting provides the greatest
opportunities for and awards to small
businesses.
Furthermore, when SBA issued the
proposed rule, it notified individuals,
government procurement personnel,
and companies that had in recent years
exhibited an interest by letter, email, or
phone, in size standards for NAICS
Sector 11 so they could comment.
Additionally, SBA sent letters to the
Directors of the Offices of Small and
Disadvantaged Business Utilization
(OSDBU) at several Federal agencies
with considerable procurement
responsibilities requesting their
feedback on how the agencies use SBA’s
size standards and whether current
standards meet their programmatic
needs (both procurement and nonprocurement). SBA gave appropriate
consideration to all input, suggestions,
recommendations, and relevant
information obtained from industry
groups, individual businesses, and
Federal agencies in preparing the
proposed rule and this final rule for
NAICS Sector 11.
The review of size standards in
NAICS Sector 11, Agriculture, Forestry,
Fishing and Hunting, is consistent with
Executive Order 13563, Section 6,
calling for retrospective analyses of
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existing rules. The last overall review of
size standards occurred during the late
1970s and early 1980s. Since then,
except for periodic adjustments for
monetary based size standards, most
reviews of size standards were limited
to a few specific industries in response
to requests from the public and Federal
agencies. SBA recognizes that changes
in industry structure and the Federal
marketplace since the last overall
review have rendered existing size
standards for some industries no longer
supportable by current data.
Accordingly, in 2007, SBA began a
comprehensive size standards review to
ensure that they are supportable, and to
revise them, where necessary. In
addition, the Jobs Act requires SBA to
conduct a detailed review of all size
standards and to make appropriate
adjustments to reflect market
conditions. Specifically, the Jobs Act
requires SBA to conduct a detailed
review of at least one-third of all size
standards during every 18-month period
from the date of its enactment and
review all size standards not less
frequently than once every 5 years
thereafter.
Executive Order 12988
This action meets applicable
standards set forth in Sections 3(a) and
3(b)(2) of Executive Order 12988, Civil
Justice Reform, to minimize litigation,
eliminate ambiguity, and reduce
burden. The action does not have
retroactive or preemptive effect.
Executive Order 13132
For purposes of Executive Order
13132, SBA has determined that this
final rule will not have substantial,
direct effects on the States, on the
relationship between the national
government and the States, or on the
distribution of power and
responsibilities among the various
levels of government. Therefore, SBA
has determined that this final rule has
no Federalism implications warranting
preparation of a Federalism assessment.
Paperwork Reduction Act
For purposes of the Paperwork
Reduction Act, 44 U.S.C. Ch. 35, SBA
has determined that this final rule will
not impose any new reporting or record
keeping requirements.
Final Regulatory Flexibility Analysis
Under the Regulatory Flexibility Act
(RFA), this final rule may have a
significant impact on a substantial
number of small entities in NAICS
Sector 11, Agriculture, Forestry, Fishing
and Hunting. As described above, this
final rule may affect small entities
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seeking Federal contracts, SBA’s 7(a),
504 and economic injury disaster loans,
and various small business benefits
under other Federal programs.
Immediately below, SBA sets forth a
final regulatory flexibility analysis
(RFA) of this final rule addressing the
following questions: (1) What are the
need for and objective of the rule? (2)
What are SBA’s description and
estimate of the number of small
businesses to which the rule will apply?
(3) What are the projected reporting,
record keeping, and other compliance
requirements of the rule? (4) What are
the relevant Federal rules that may
duplicate, overlap, or conflict with the
rule? and (5) What alternatives will
allow the Agency to accomplish its
regulatory objectives while minimizing
the impact on small entities?
1. What are the need for and objective
of the rule?
Changes in industry structure,
technological changes, productivity
growth, mergers and acquisitions and
updated industry definitions have
changed the structure of many
industries in NAICS Sector 11. Such
changes can be sufficient to support
revisions to current size standards for
some industries. Based on the analysis
of the latest data available, SBA believes
that the revised size standards in this
final rule more appropriately reflect the
size of businesses in those industries
that need Federal assistance.
Additionally, the Jobs Act also requires
SBA to review all size standards and
make appropriate adjustments to reflect
current data and market conditions.
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2. What are SBA’s description and
estimate of the number of small entities
to which the rule will apply?
SBA estimates that more than 7,800
additional firms will become small
because of increases in size standards in
11 industries in NAICS Sector 11. That
represents 17 percent of total firms that
are small under current size standards
in all industries covered by this final
rule. This will result in an increase in
the small business share of total
industry receipts in those industries
from 78.4 percent under the current size
standard to 79.1 percent under the
revised size standards. The revised size
standards will enable more small
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businesses to retain their small business
status for a longer period. Many firms
may have lost their eligibility and find
it difficult to compete at current size
standards with companies that are
significantly larger than they are. SBA
believes the competitive impact will be
positive for existing small businesses
and for those that exceed the size
standards but are on the very low end
of those that are not small. They might
otherwise be called or referred to as
mid-sized businesses, although SBA
only defines what is small; other entities
are other than small.
3. What are the projected reporting,
record keeping and other compliance
requirements of the rule?
Revising size standards does not
impose any additional reporting or
record keeping requirements on small
entities. However, qualifying for Federal
procurement and a number of other
programs requires that entities register
in the SAM database and certify at least
once annually that they are small.
Therefore, businesses opting to
participate in those programs must
comply with SAM requirements. There
are no costs associated with SAM
registration or certification. Revising
size standards alters the access to
Federal programs that assist small
businesses, but they neither impose a
regulatory burden nor regulate nor
control business behavior.
4. What are the relevant Federal rules
which may duplicate, overlap, or
conflict with the rule?
Under section 3(a)(2)(C) of the Small
Business Act, 15 U.S.C. 632(a)(2)(c),
Federal agencies must use SBA’s size
standards to define a small business,
unless specifically authorized by statute
to do otherwise. In 1995, SBA published
in the Federal Register a list of statutory
and regulatory size standards that
identified the application of SBA’s size
standards as well as other size standards
used by Federal agencies (60 FR 57988
(November 24, 1995)). SBA is not aware
of any Federal rule that would duplicate
or conflict with establishing size
standards.
However, the Small Business Act and
SBA’s regulations allow Federal
agencies to establish different size
standards if they believe that SBA’s size
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37403
standards are not appropriate for their
programs, with the approval of SBA’s
Administrator (13 CFR 121.903). The
Regulatory Flexibility Act authorizes an
Agency to establish an alternative small
business definition, after consultation
with the Office of Advocacy of the U.S.
Small Business Administration (5 U.S.C.
601(3)).
5. What alternatives will allow the
Agency to accomplish its regulatory
objectives while minimizing the impact
on small entities?
By law, SBA is required to develop
numerical size standards for
establishing eligibility for Federal small
business assistance programs. Other
than varying size standards by industry
and changing the size measures, no
practical alternative exists to the
existing system of numerical size
standards. The possible alternative size
standards considered for the individual
industries within NAICS Sector 11 are
discussed in the supplementary
information to the proposed rule and
this final rule.
List of Subjects in 13 CFR Part 121
Administrative practice and
procedure, Government procurement,
Government property, Grant programs—
business, Individuals with disabilities,
Loan programs—business, Reporting
and recordkeeping requirements, Small
businesses.
For the reasons set forth in the
preamble, SBA amends 13 CFR part 121
as follows:
PART 121—SMALL BUSINESS SIZE
REGULATIONS
1. The authority citation for part 121
is revised to read as follows:
■
Authority: 15 U.S.C. 632, 634(b)(6), 662,
and 694a(9).
2. In § 121.201, in the table, revise the
entries for ‘‘112112’’, ‘‘112310’’,
‘‘113110’’, ‘‘113210’’, ‘‘114111’’,
‘‘114112’’, ‘‘114119’’, ‘‘114210’’,
‘‘115111’’, ‘‘115114’’, and ‘‘115115’’ to
read as follows:
■
§ 121.201 What size standards has SBA
identified by North American Industry
Classification System codes?
*
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*
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*
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Federal Register / Vol. 78, No. 119 / Thursday, June 20, 2013 / Rules and Regulations
SMALL BUSINESS SIZE STANDARDS BY NAICS INDUSTRY
Size standards
in millions of
dollars
NAICS code
NAICS U.S. industry title
*
112112 ..............
*
*
*
*
Cattle Feedlots .................................................................................................................
*
*
112310 ..............
*
*
*
*
Chicken Egg Production ..................................................................................................
*
*
113110 ..............
113210 ..............
*
*
*
*
Timber Tract Operations ..................................................................................................
Forest Nurseries and Gathering of Forest Products .......................................................
*
*
..............
..............
..............
..............
*
*
*
*
Finfish Fishing ..................................................................................................................
Shellfish Fishing ...............................................................................................................
Other Marine Fishing .......................................................................................................
Hunting and Trapping ......................................................................................................
*
*
115111 ..............
*
*
*
*
Cotton Ginning .................................................................................................................
*
*
115114 ..............
115115 ..............
*
*
*
*
Postharvest Crop Activities (except Cotton Ginning) ......................................................
Farm Labor Contractors and Crew Leaders ....................................................................
*
114111
114112
114119
114210
*
*
*
Dated: June 13, 2013.
Karen G. Mills,
Administrator.
BILLING CODE 8025–01–P
SMALL BUSINESS ADMINISTRATION
13 CFR Part 121
RIN 3245–AG44
Small Business Size Standards:
Support Activities for Mining
U.S. Small Business
Administration.
ACTION: Final rule.
The United States Small
Business Administration (SBA) is
increasing the small business size
standards for three of the four industries
in North American Industry
Classification System (NAICS)
Subsector 213, Support Activities for
Mining, that are based on average
annual receipts. As part of its ongoing
comprehensive size standards review,
SBA evaluated the four receipts based
standards in NAICs Subsector 213 under
NAICS Sector 21, Mining, Quarrying,
and Oil and Gas Extraction, to
determine whether the current size
standards should be retained or revised.
Within NAICS Sector 21, only NAICS
Subsector 213 has receipts based size
standards. The rest of the industries in
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19:11 Jun 19, 2013
Jkt 229001
Carl
Jordan, Program Analyst, Office of Size
Standards, by phone at (202) 205–6618
or by email at sizestandards@sba.gov.
SUPPLEMENTARY INFORMATION:
FOR FURTHER INFORMATION CONTACT:
Introduction
AGENCY:
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*
that Sector have employee based size
standards which SBA will review in the
near future with other employee based
size standards.
DATES: This rule is effective July 22,
2013.
[FR Doc. 2013–14711 Filed 6–19–13; 8:45 am]
SUMMARY:
*
In an effort to eliminate possible
public confusion, SBA would like to
explain the changes made to the title of
this rule. When SBA initially
announced in the Fall 2012 Unified
Agenda of Federal Regulatory and
Deregulatory Actions, 78 FR 1636 at
1639 (January 8, 2013) (Item #390) that
it intended to propose this rule, it was
titled ‘‘Small Business Size Standards:
Mining, Quarrying, and Oil and Gas
Extraction’’ under Regulatory
Information Number (RIN) 3245–AG44.
This title was based on the one for
Sector 21 of the Small Business Size
Standards by NAICS Industry. However,
SBA later concluded that this title was
a misnomer since this rule only covers
the four revenue based size standards
under Subsector 213, Support Activities
for Mining and not the entire Sector 21.
The rest of the size standards in NAICS
Sector 21 are employee-based size
standards and will be addressed in a
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Size standards
in number of
employees
$7.0
$14.0
*
............................
$10.0
$10.0
*
............................
............................
$19.0
$5.0
$7.0
$5.0
*
............................
............................
............................
............................
$10.0
*
............................
$25.5
$14.0
*
*
............................
*
............................
............................
*
separate rule. As a result, the title of the
proposed rule was clarified to read:
‘‘Small Business Size Standards:
Support Activities for Mining.’’ 77 FR
72766 (December 6, 2012). We believed
that this title change would make it
easier for affected parties to recognize
the rule when it was published,
understand the scope of its coverage,
and also engender more public
comment and involvement.
To determine eligibility for Federal
small business assistance programs,
SBA establishes small business size
definitions (referred to as size
standards) for private sector industries
in the United States. SBA’s current size
standards use two primary measures of
business size—average annual receipts
and average number of employees.
Financial assets, electric output and
refining capacity are used as size
measures for a few specialized
industries. In addition, SBA’s Small
Business Investment Company (SBIC),
7(a), and the Certified Development
Company (CDC or 504) Loan Programs
determine small business eligibility
using either the industry based size
standards or alternative net worth and
net income based size standards. At the
start of the current comprehensive size
standards review, there were 41
different size levels, covering 1,141
NAICS industries and 18 sub-industry
activities (i.e., ‘‘exceptions’’ in SBA’s
table of size standards). Of these, 31
were based on average annual receipts,
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Agencies
[Federal Register Volume 78, Number 119 (Thursday, June 20, 2013)]
[Rules and Regulations]
[Pages 37397-37404]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-14711]
[[Page 37397]]
Vol. 78
Thursday,
No. 119
June 20, 2013
Part V
Small Business Administration
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13 CFR Part 121
Small Business Size Standards; Final Rules
Federal Register / Vol. 78 , No. 119 / Thursday, June 20, 2013 /
Rules and Regulations
[[Page 37398]]
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SMALL BUSINESS ADMINISTRATION
13 CFR Part 121
RIN 3245-AG43
Small Business Size Standards: Agriculture, Forestry, Fishing and
Hunting
AGENCY: U.S. Small Business Administration.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The United States Small Business Administration (SBA) is
increasing the small business size standards for 11 industries in North
American Industry Classification System (NAICS) Sector 11, Agriculture,
Forestry, Fishing and Hunting, and retaining the current standards for
five industries and two exceptions to NAICS 115310. As part of its
ongoing comprehensive size standards review, SBA evaluated 16
industries and two exceptions in NAICS Sector 11 to determine whether
the existing size standards should be retained or revised. SBA did not
review size standards for 46 industries in NAICS Sector 11 that are
currently set by statute at $750,000 in average annual receipts. SBA
also did not review the 500-employee based size standard for NAICS
113310, Logging, but will review it in the near future with other
employee based size standards.
DATES: This rule is effective July 22, 2013.
FOR FURTHER INFORMATION CONTACT: Jorge Laboy-Bruno, Economist, Size
Standards Division, by phone at (202) 205-6618 or by email at
sizestandards@sba.gov.
SUPPLEMENTARY INFORMATION:
Introduction
To determine eligibility for Federal small business assistance
programs, SBA establishes small business size definitions (referred to
as size standards) for private sector industries in the United States.
SBA's existing size standards use two primary measures of business
size--average annual receipts and number of employees. Financial
assets, electric output, and refining capacity are used as size
measures for a few specialized industries. In addition, SBA's Small
Business Investment Company (SBIC), 7(a), and the Certified Development
Company (CDC or 504) Loan Programs determine small business eligibility
using either the industry based size standards or alternative net worth
and net income based size standards. At the start of the current
comprehensive size standards review, there were 41 different size
levels, covering 1,141 NAICS industries and 18 sub-industry activities
(i.e., ``exceptions'' in SBA's table of size standards). Of these, 31
were based on average annual receipts, seven based on number of
employees, and three based on other measures. Presently, there are a
total of 1,031 size standards, 516 of which are based on average annual
receipts, 499 on number of employees, 10 on megawatt hours, and six on
average assets.
Over the years, SBA has received comments that its size standards
have not kept up with changes in the economy, in particular the changes
in the Federal contracting marketplace and industry structure. The last
comprehensive review of size standards occurred during the late 1970s
and early 1980s. Since then, most reviews of size standards were
limited to a few specific industries in response to requests from the
public and Federal agencies. SBA also makes periodic inflation
adjustments to its monetary based size standards. The latest inflation
adjustment to size standards was published in the Federal Register on
July 18, 2008 (73 FR 41237).
SBA recognizes that changes in industry structure and the Federal
marketplace since the last overall review have rendered existing size
standards for some industries no longer supportable by current data.
Accordingly, in 2007, SBA began a comprehensive review of its size
standards to determine whether they are supportable by current data,
and to revise them, where necessary.
In addition, on September 27, 2010, the President of the United
States signed the Small Business Jobs Act of 2010 (Jobs Act). The Jobs
Act directs SBA to conduct a detailed review of all size standards and
to make appropriate adjustments to reflect market conditions.
Specifically, the Jobs Act requires SBA to conduct a detailed review of
at least one-third of all size standards during every 18-month period
from the date of its enactment and review all size standards not less
frequently than once every 5 years thereafter. Reviewing existing small
business size standards and making appropriate adjustments based on
current data is also consistent with Executive Order 13563 on improving
regulation and regulatory review.
Rather than review all size standards at one time, SBA is
considering groups of related industries on a Sector by Sector basis.
As part of its comprehensive size standards review, SBA evaluated
16 industries and two sub-industries (``exceptions'') in NAICS Sector
11, Agriculture, Forestry, Fishing and Hunting, to determine whether
the existing size standards should be retained or revised. SBA did not
review size standards for 46 industries in NAICS Sector 11 that are
currently set by statute at $750,000 in average annual receipts. SBA
also did not review the 500-employee based size standard for NAICS
113310, Logging, but will review it in the near future with other
employee based size standards.
On September 11, 2012, SBA published a proposed rule in the Federal
Register (77 FR 55755) seeking public comment on its proposal to
increase the size standards for 11 industries in that Sector and retain
the size standards for five remaining industries and two sub-industries
(``exceptions''). The comment period ended on November 13, 2012.
In conjuction with the current comprehensive size standards review,
SBA developed a ``Size Standards Methodology'' for establishing,
reviewing, and modifying size standards, where necessary. SBA published
the document on its Web site at www.sba.gov/size for public review and
comment and also included it as a supporting document in the electronic
docket of the September 11, 2012 proposed rule at www.regulations.gov.
When evaluating an industry's size standard, SBA examines its
characteristics (such as average firm size, startup costs, industry
competition, and distribution of firms by size) and the level and small
business share of Federal contract dollars in that industry. SBA also
examines the potential impact a size standard revision might have on
its financial assistance programs and whether a business concern under
a revised size standard would be dominant in its industry. SBA analyzed
the characteristics of each industry in NAICS Sector 11, mostly using a
special tabulation obtained from the U.S. Bureau of the Census from its
2007 County Business Patterns and the 2007 Census of Agriculture from
the National Agricultural Statistics Service (NASS). NAICS Sector 11 is
not covered by the Census Bureau's Economic Census. (For a more
detailed discussion, please see 77 FR 55755). SBA also evaluated the
level and small business share of Federal contract dollars in each of
those industries using the data from the U.S. General Service
Administration's Federal Procurement Data System--Next Generation
(FPDS-NG) for fiscal years 2008 to 2010. To evaluate the impact of
changes to size standards on its loan programs, SBA examined data on
its own guaranteed loan programs for fiscal years 2008 to 2010.
[[Page 37399]]
SBA's ``Size Standards Methodology'' provides a detailed
description of analyses of various industry and program factors and
data sources, and how the Agency uses the results to derive size
standards. In the proposed rule, SBA detailed how it applied its ``Size
Standards Methodology'' to review, and modify where necessary, the
existing size standards for industries in NAICS Sector 11. SBA sought
comments from the public on a number of issues about its ``Size
Standards Methodology,'' such as whether there are alternative
methodologies that SBA should consider; whether there are alternative
or additional factors or data sources that SBA should evaluate; whether
SBA's approach to establishing small business size standards makes
sense in the current economic environment; whether SBA's application of
anchor size standards is appropriate in the current economy; whether
there are gaps in SBA's methodology because of the lack of
comprehensive data; and whether there are other facts or issues that
SBA should consider.
In the proposed rule, SBA sought comments on its proposal to
increase the size standards for 11 industries and retain the existing
size standards for the remaining five industries and two sub-industries
that were examined in NAICS Sector 11. Specifically, SBA requested
comments on whether the size standards should be revised as proposed
and whether the proposed revisions are appropriate. SBA also invited
comments on whether its proposed eight fixed levels for receipts based
size standards are appropriate and whether it should adopt common size
standards for certain Industry Groups and Subsectors in NAICS Sector
11.
SBA's analyses supported lower size standards for four industries
and two sub-industries in NAICS Sector 11. However, as explained in the
proposed rule, SBA did not propose to lower them in view of the current
economic environment because lowering size standards would reduce the
number of firms eligible to participate in Federal small business
assistance programs, which could adversely affect those firms that
would no longer qualify as small, and would be counter to what the
Federal government and SBA are doing to help small businesses and
create jobs. Therefore, SBA proposed to retain the current size
standards for those industries and sub-industries and requested
comments on whether the Agency should lower them based on its analyses.
In addition, SBA requested comments on the elimination of the Forest
Fire Suppression and Fuel Management Services as ''exceptions'' to
NAICS 115310, and the application of the same size standard for them as
for the rest of the NAICS 115310.
Summary of Comments
SBA received 13 comments from 12 respondents to the proposed rule.
Ten of the respondents offered support for the Agency's efforts to
update size standards in NAICS Sector 11, and two of the respondents
commented about issues not related to the proposed rule. More
specifically, one commenter offered support for all SBA's proposed
changes for evaluated industries under NAICS Sector 11; two supported
the increase in size standards for NAICS 115111, Cotton Ginning, from
$7 million to $10 million; and five offered support to retain the two
sub-industries, Forest Fire Suppression and Fuels Management Services,
as ``exceptions under NAICS 115310, Support Activities for Forestry;
they also supported retaining the current $17.5 million size standard
for each of them even if the SBA's analyses supported lowering it.
Additionally, one commenter, an association of dealers and
manufacturers of agricultural equipment, suggested examining their
industries as part of the evaluation of size standards in NAICS Sector
11. Finally, a hunter expressed concern with the indirect impact any
proposed changes to size standards may have on deer hunting
regulations. All comments to the proposed rule for NAICS Sector 11 are
available for public review at https://www.regulations.gov, using RIN
3245-AG30 or docket number SBA-2012-0003. These comments are summarized
in more detail below.
General Support to the Proposed Rule
One commenter generally supported the size standards review and
rulemaking process and changes to size standards being considered by
SBA. Specifically, the commenter supported the SBA's proposal to
simplify size standards by basing them on eight fixed levels, because
that will provide regulatory certainty to small business concerns under
NAICS Sector 11. Second, he supported SBA's proposal to retain the
current size standards for the four industries and two sub-industries
under NAICS Sector 11 for which SBA's analysis could support lowering
them. Finally, the commenter expressed unqualified support for SBA's
analysis in this proposed rulemaking in particular and support for
SBA's continued efforts to assist small businesses in general.
NAICS 115111, Cotton Ginning
Two commenters representing different trade associations of cotton
ginners fully supported SBA's proposal to increase the size standard
for NAICS 115111, Cotton Ginning from $7 million in average annual
receipts to $10 million. Both recognized that the increased size
standard accounts for changes in the structure of the industry, such as
changes in the marketplace, increased operation costs, and
technological changes.
NAICS 115310--Forest Fire Suppression and Fuels Management Services,
Exceptions
Five commenters fully supported the SBA's proposal to retain the
Forest Fire Suppression and Fuels Management Services as ``exceptions''
under NAICS 115310, Support Activities for Forestry, and their
corresponding current size standard of $17.5 million.
Three commenters were small businesses that provide services in the
forest industry. These commenters advocated for retention of the $17.5
million size standard for the two sub-industries (i.e., exceptions)
under NAICS 115310. One of the three agreed with SBA's proposal to keep
the $17.5 million size standard because it allows for small businesses
to average out good years and bad years in revenues earned in this
support service.
A logging organization, whose membership includes wildland
firefighting organizations, also commented in support of SBA's
proposal. The association added that most of its members are small and
family owned operations who offered their support for keeping the
current $17.5 million size standard.
SBA agrees with these commenters. SBA considers that the numerical
results of these two sub-industries in the proposed rule reflected the
decreases in numbers of fires and consequent reductions in payments to
contractors during fiscal years 2008-2010 as compared to previous
years. Given the inherent uncertainty of occurrences of forest fires,
SBA believes that contracting officers need flexibility to hire small
businesses, especially in the worst case scenario. In a very active
fire season, size of payments can easily support the $17.5 million size
standard for Fire Suppression Services.
Two associations representing several companies that primarily deal
with fuels management and fire suppression support services to the
forest industry also urged SBA to retain its current $17.7 million size
standard for these support services. One of these
[[Page 37400]]
organizations included a large volume of contract documents and some
statistical information to support its advocacy for its members.
Therefore, SBA is retaining Forest Fire Suppression and Fuels
Management Services as exceptions under NAICS 115310 and their current
$17.5 million size standard.
Other Issues Not Related to the Proposed Rule for NAICS Sector 11
One commenter, representing a national association of farm and
outdoor equipment dealers and manufacturers, expressed concern with the
impact the proposed size standards revisions might have on its members.
The members of the association represent two industries: NAICS 333111,
Farm Machinery and Equipment Manufacturing, and NAICS 423820, Farm and
Garden Machinery and Equipment Merchant Wholesalers. The commenter
suggested that SBA should consider examining the size standards for
these industries as part of the review of size standards for NAICS
Sector 11. The commenter recommended different receipts based size
standards for various agricultural equipment and machinery dealerships.
SBA does not accept the commenter's recommendations in this final rule
for three reasons. First, there is a single 100-employee size standard
for all industries in NAICS Sector 42, Wholesale Trade, except for
purposes of Federal government procurement when the 500-employee size
standard applies under the non-manufacturer rule (see 13 CFR
121.402(b)). Similarly, for NAICS 333111, the size standard is 500
employees. Second, the association recommended receipts based size
standards for both NAICS industries (NAICS 333111 and NAICS 423820).
However, SBA uses the number of employees as the basis of size
standards for all industries in the manufacturing and wholesale trade
sectors (see SBA's ``Size Standards Methodology,'' referred above and
in the propoposed rule). Third, these industries are not part of NAICS
Sector 11. The first industry (NAICS 333111) is part of NAICS sector
31-33, Manufacturing, and the second industry (NAICS 423820) is part of
NAICS 42, Wholesale Trade. Detailed information about definitions of
industries under NAICS can be found at https://www.census.gov/eos/www/naics/. As part of its ongoing comprehensive size standards review, SBA
will evaluate these industries, along with other other industries in
those sectors, and publish a proposed rule for comments in the near
future.
Finally, a commenter that identified herself as a hunter expressed
concern over the possible increase in cost to obtain deer hunting
permits because of the increases of small business size standards in
NAICS Sector 11. SBA cannot respond to this comment because the Agency
does not establish, modify, or clarify deer hunting regulations. SBA's
size standards only applies to Federal contracting and other SBA's
programs and services targeted to small businesses, including
guaranteed loans.
Conclusion
Based on the analyses of relevant industry and program data and
there being no public comments against the proposed rule, SBA has
decided to increase the small business size standards for the 11
industries, as proposed. These industries and their revised size
standards are shown in Table 1, Summary of Revised Size Standards in
NAICS Sector 11, below.
Table 1--Summary of Revised Size Standards in NAICS Sector 11
----------------------------------------------------------------------------------------------------------------
Current size Revised size
NAICS code NAICS industry title standard ($ standard ($
million) million)
----------------------------------------------------------------------------------------------------------------
112112..................... Cattle Feedlots.................................... $2.0 $7.0
112310..................... Chicken Egg Production............................. $12.5 $14.0
113110..................... Timber Tract Operations............................ $7.0 $10.0
113210..................... Forest Nurseries and Gathering of Forest Products.. $7.0 $10.0
114111..................... Finfish Fishing.................................... $4.0 $19.0
114112..................... Shellfish Fishing.................................. $4.0 $5.0
114119..................... Other Marine Fishing............................... $4.0 $7.0
114210..................... Hunting and Trapping............................... $4.0 $5.0
115111..................... Cotton Ginning..................................... $7.0 $10.0
115114..................... Postharvest Crop Activities (Except Cotton Ginning) $7.0 $25.5
115115..................... Farm Labor Contractors and Crew Leaders............ $7.0 $14.0
----------------------------------------------------------------------------------------------------------------
For the reasons as stated above in this rule and in the proposed
rule, SBA is retaining the current size standards for the four
industries and two sub-industries for which analytical results
suggested the Agency could lower their size standards. Those six size
standards are the following: NAICS 115112, Soil Preparation, Planting,
and Cultivation; NAICS 115116, Farm Management Services; NAICS 115210,
Support Activities for Animal Production; NAICS 115310, Support
Activities for Forestry; and the two exceptions to NAICS 115310,
namely, Forest Fire Protection and Fuels Management Services. This is
consistent with SBA's recent final rules on NAICS Sector 44-45, Retail
Trade (75 FR 61597 (October 6, 2010)); NAICS Sector 72, Accommodation
and Food Services (75 FR 61604 (October 6, 2010)); NAICS Sector 81,
Other Services (75 FR 61591 (October 6, 2010)); NAICS Sector 54,
Professional, Scientific and Technical Services (77 FR 7490 (February
10, 2012)); NAICS Sector 48-49, Transportation and Warehousing (77 FR
10943 (February 24, 2012)); NAICS Sector 51, Information (77 FR 72702
(December 6, 2012)); NAICS Sector 53, Real Estate and Rental and
Leasing (77 FR 88747 (September 24, 2012)); NAICS Sector 56,
Administrative and Support, Waste Management and Remediation Services
(77 FR 72691 (December 6, 2012)); NAICS 61, Educational Services (77 FR
58739 (September 24, 2012)); and NAICS Sector 62, Health Care and
Social Assistance (77 FR 58755 (September 24, 2012)). In each of those
final rules, SBA retained the existing size standards for those that it
could have reduced. SBA is also retaining the existing size standard
for one industry in NAICS Sector 11 for which the results supported it
at the current level, namely, NAICS 115113, Crop Harvesting, Primarily
by Machine.
[[Page 37401]]
Compliance With Executive Orders 12866, 13563, 12988, and 13132, the
Paperwork Reduction Act (44 U.S.C. Ch. 35), and the Regulatory
Flexibility Act (5 U.S.C. 601-612)
Executive Order 12866
The Office of Management and Budget (OMB) has determined that this
final rule is not a ``significant regulatory action'' for purposes of
Executive Order 12866. To help explain the need of this rule and the
rule's potential benefits and costs, SBA is providing below a Cost
Benefit Analysis. This is also not a ``major rule'' under the
Congressional Review Act (5 U.S.C. 801).
Cost Benefit Analysis
1. Is there a need for the regulatory action?
The revised small business size standards for 11 industries in
NAICS Sector 11, Agriculture, Forestry, Fishing and Hunting, reflect
the changes in economic characteristics of small businesses and the
Federal procurement market. SBA's mission is to aid and assist small
businesses through a variety of financial, procurement, business
development, and advocacy programs. To assist the intended
beneficiaries of these programs, SBA establishes distinct definitions
to determine which businesses are deemed small. The Small Business Act
delegates to SBA's Administrator the responsibility for establishing
small business size definitions (15 U.S.C. 632(a)). The Act also
requires that small business size definitions vary to reflect industry
differences. The Jobs Act requires the Administrator to review at least
one-third of all size standards within each 18-month period from the
date of its enactment, and review all size standards at least every
five years thereafter. The supplementary information sections of the
September 11, 2012 (77 FR 55755) proposed rule and this final rule
explained the SBA's methodology for analyzing a size standard for a
particular industry.
2. What are the potential benefits and costs of this regulatory action?
The most significant benefit to businesses obtaining small business
status because of this rule is gaining eligibility for Federal small
business assistance programs. These include SBA's financial assistance
programs and Federal procurement programs reserved for small
businesses. Federal procurement programs provide targeted opportunities
for small businesses under SBA's business development programs, such as
8(a), small businesses located in Historically Underutilized Business
Zones (HUBZone), women-owned small businesses (WOSB), economically
disadvantaged women-owned small businesses (EDWOSB), and service-
disabled veteran-owned small businesses (SDVOSB). These programs assist
small businesses to become more knowledgeable, stable, and competitive.
Other Federal agencies may also use SBA's size standards for a variety
of regulatory and program purposes. In the 11 industries in NAICS
Sector 11 for which SBA has increased size standards, SBA estimates
that more than 7,800 additional firms, not small under the current size
standards, will obtain small business status and become eligible for
these programs. That is about 17 percent of the total number of total
firms that are classified as small under the current standards in all
industries in NAICS Sector 11 that are covered by this final rule. SBA
estimates this will increase the small business share of total industry
receipts in those industries from about 78.4 percent under the current
size standards to 79.1 percent under the revised size standards.
Three groups will benefit from the revised size standards in NAICS
Sector 11 in the following ways: (1) Some businesses that are above the
current size standards may gain small business status under the higher
size standards, thereby enabling them to participate in Federal small
business assistance programs; (2) growing small businesses that are
close to exceeding the current size standards will be able to retain
their small business status under the higher size standards, thereby
enabling them to continue their participation in the programs; and (3)
Federal agencies will have a larger pool of small businesses from which
to draw for their small business procurement programs.
SBA estimates that additional firms gaining small business status
in those industries under the revised size standards could potentially
obtain Federal contracts totaling $7 million to $12 million annually
under SBA's small business, 8(a), HUBZone, WOSB, EDWOSB and SDVOSB
Programs, and other unrestricted procurements. The added competition
for many of these procurements can also result in lower prices to the
Government for procurements reserved for small businesses, although SBA
cannot quantify this benefit.
Under SBA's 7(a) and 504 Loan Programs, based on the data for
fiscal years 2008 to 2010, SBA estimates about 32 additional loans
totaling about $7 million could be made to additional firms that could
become small under the revised standards. Under the Jobs Act, SBA can
now guarantee substantially larger loans than in the past. In addition,
the Jobs Act established an alternative size standard for SBA's 7(a)
and 504 Loan Programs for those applicants that do not meet the size
standards for their industries. That is, under the Jobs Act, if a firm
applies for a 7(a) or 504 loan but does not meet the size standard for
its industry, it might still qualify if, including its affiliates, it
has a tangible net worth that does not exceed $15 million and also has
average net income after Federal income taxes (excluding any carry-over
losses) for its preceding two completed fiscal years that do not exceed
$5 million. Thus, SBA finds it difficult to quantify the actual impact
of the revised size standards on its 7(a) and 504 Loan Programs.
Newly defined small businesses will also benefit from SBA's
Economic Injury Disaster Loan (EIDL) Program. Since this program is
contingent on the occurrence and severity of one or more disasters, SBA
cannot make a meaningful estimate of this impact.
To the extent that those 7,800 newly defined additional small firms
under the revised size standards become active in Federal procurement
programs, the revisions to size standards may entail some additional
administrative costs to the Federal Government associated with there
being more bidders for Federal small business procurement
opportunities. In addition, there will be more firms seeking SBA's
guaranteed loans, more firms eligible for enrollment in the System for
Award Management (SAM) database, more firms seeking certification for
the 8(a) or HUBZone Programs and more firms qualifying for WOSB, EDWOSB
and SDVOSB status. Among those newly defined businesses seeking SBA's
assistance, there could be some additional costs associated with
compliance and verification of small business status and protests of
small business status. However, SBA believes these added administrative
costs are likely to be minimal because mechanisms are already in place
to handle these requirements.
Additionally, Federal government contracts may have higher costs
under the higher revised size standards. With a greater number of
businesses defined as small, Federal agencies may choose to set aside
more contracts for competition among small businesses rather than using
full and open competition. The movement from unrestricted to set-aside
contracting might result in competition among fewer total bidders,
although there will be more small businesses eligible to submit offers.
In addition, higher costs
[[Page 37402]]
may result when more full and open contracts are awarded to HUBZone
businesses because of a price evaluation preference. The additional
costs associated with fewer bidders, however, will likely be minor
since, by law, procurements may be set aside for small businesses or
reserved for the small business, 8(a), HUBZone, WOSB, EDWOSB, or SDVOSB
Programs only if awards are expected to be made at fair and reasonable
prices.
The revised size standards may have some distributional effects
among large and small businesses. Although SBA cannot estimate with
certainty the actual outcome of the gains and losses among small and
large businesses, it can identify several proabable impacts. There may
be a transfer of some Federal contracts to small businesses from large
businesses. Large businesses may have fewer Federal contract
opportunities as Federal agencies decide to set aside more Federal
contracts for small businesses. In addition, some Federal agencies may
award more Federal contracts to HUBZone concerns instead of large
businesses since HUBZone concerns may be eligible for price evaluation
adjustments when they compete on full and open bidding opportunities.
Similarly, some currently defined small businesses may obtain fewer
Federal contracts due to the increased competition from more businesses
defined as small under the revised size standards. This transfer may be
offset by more Federal procurements being set aside for all small
businesses. The number of newly defined and expanding small businesses
that are willing and able to sell to the Federal Government will limit
the potential transfer of contracts away from large and small
businesses under the existing size standards. SBA cannot estimate with
precision the potential distributional impacts of these transfers.
The revisions to the existing size standards in NAICS Sector 11,
Agriculture, Forestry, Fishing and Hunting, are consistent with SBA's
statutory mandate to assist small business. This regulatory action
promotes the Administration's objectives. One of SBA's goals in support
of the Administration's objectives is to help individual small
businesses succeed through fair and equitable access to capital and
credit, Government contracts, and management and technical assistance.
Reviewing and modifying size standards, when appropriate, ensures that
intended beneficiaries have access to small business programs designed
to assist them.
Executive Order 13563
A description of the need for this regulatory action and benefits
and costs associated with this action including possible distributional
impacts that relate to Executive Order 13563 are included above in the
Cost Benefit Analysis.
In an effort to engage interested parties in this regulatory
action, SBA presented its methodology (discussed above under
Supplementary Information in the propsed rule and this final rule) to
various industry associations and trade groups. SBA also met with
various industry groups to get their feedback on its methodology and
other size standards issues. In addition, SBA presented its size
standards methodology to businesses in 13 cities in the U.S. and sought
their input as part of the Jobs Act tours. The presentation included
information on the latest status of the comprehensive size standards
review and how interested parties can provide SBA with input and
feedback on the size standards review. Moreover, SBA presented the same
information to Department of Defense (DoD) contracting personnel at
their annual training session. It included updates on what size
standards rules SBA was currently reviewing and plans to review in the
future. This is important because DoD contracting provides the greatest
opportunities for and awards to small businesses.
Furthermore, when SBA issued the proposed rule, it notified
individuals, government procurement personnel, and companies that had
in recent years exhibited an interest by letter, email, or phone, in
size standards for NAICS Sector 11 so they could comment.
Additionally, SBA sent letters to the Directors of the Offices of
Small and Disadvantaged Business Utilization (OSDBU) at several Federal
agencies with considerable procurement responsibilities requesting
their feedback on how the agencies use SBA's size standards and whether
current standards meet their programmatic needs (both procurement and
non-procurement). SBA gave appropriate consideration to all input,
suggestions, recommendations, and relevant information obtained from
industry groups, individual businesses, and Federal agencies in
preparing the proposed rule and this final rule for NAICS Sector 11.
The review of size standards in NAICS Sector 11, Agriculture,
Forestry, Fishing and Hunting, is consistent with Executive Order
13563, Section 6, calling for retrospective analyses of existing rules.
The last overall review of size standards occurred during the late
1970s and early 1980s. Since then, except for periodic adjustments for
monetary based size standards, most reviews of size standards were
limited to a few specific industries in response to requests from the
public and Federal agencies. SBA recognizes that changes in industry
structure and the Federal marketplace since the last overall review
have rendered existing size standards for some industries no longer
supportable by current data. Accordingly, in 2007, SBA began a
comprehensive size standards review to ensure that they are
supportable, and to revise them, where necessary. In addition, the Jobs
Act requires SBA to conduct a detailed review of all size standards and
to make appropriate adjustments to reflect market conditions.
Specifically, the Jobs Act requires SBA to conduct a detailed review of
at least one-third of all size standards during every 18-month period
from the date of its enactment and review all size standards not less
frequently than once every 5 years thereafter.
Executive Order 12988
This action meets applicable standards set forth in Sections 3(a)
and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize
litigation, eliminate ambiguity, and reduce burden. The action does not
have retroactive or preemptive effect.
Executive Order 13132
For purposes of Executive Order 13132, SBA has determined that this
final rule will not have substantial, direct effects on the States, on
the relationship between the national government and the States, or on
the distribution of power and responsibilities among the various levels
of government. Therefore, SBA has determined that this final rule has
no Federalism implications warranting preparation of a Federalism
assessment.
Paperwork Reduction Act
For purposes of the Paperwork Reduction Act, 44 U.S.C. Ch. 35, SBA
has determined that this final rule will not impose any new reporting
or record keeping requirements.
Final Regulatory Flexibility Analysis
Under the Regulatory Flexibility Act (RFA), this final rule may
have a significant impact on a substantial number of small entities in
NAICS Sector 11, Agriculture, Forestry, Fishing and Hunting. As
described above, this final rule may affect small entities
[[Page 37403]]
seeking Federal contracts, SBA's 7(a), 504 and economic injury disaster
loans, and various small business benefits under other Federal
programs.
Immediately below, SBA sets forth a final regulatory flexibility
analysis (RFA) of this final rule addressing the following questions:
(1) What are the need for and objective of the rule? (2) What are SBA's
description and estimate of the number of small businesses to which the
rule will apply? (3) What are the projected reporting, record keeping,
and other compliance requirements of the rule? (4) What are the
relevant Federal rules that may duplicate, overlap, or conflict with
the rule? and (5) What alternatives will allow the Agency to accomplish
its regulatory objectives while minimizing the impact on small
entities?
1. What are the need for and objective of the rule?
Changes in industry structure, technological changes, productivity
growth, mergers and acquisitions and updated industry definitions have
changed the structure of many industries in NAICS Sector 11. Such
changes can be sufficient to support revisions to current size
standards for some industries. Based on the analysis of the latest data
available, SBA believes that the revised size standards in this final
rule more appropriately reflect the size of businesses in those
industries that need Federal assistance. Additionally, the Jobs Act
also requires SBA to review all size standards and make appropriate
adjustments to reflect current data and market conditions.
2. What are SBA's description and estimate of the number of small
entities to which the rule will apply?
SBA estimates that more than 7,800 additional firms will become
small because of increases in size standards in 11 industries in NAICS
Sector 11. That represents 17 percent of total firms that are small
under current size standards in all industries covered by this final
rule. This will result in an increase in the small business share of
total industry receipts in those industries from 78.4 percent under the
current size standard to 79.1 percent under the revised size standards.
The revised size standards will enable more small businesses to retain
their small business status for a longer period. Many firms may have
lost their eligibility and find it difficult to compete at current size
standards with companies that are significantly larger than they are.
SBA believes the competitive impact will be positive for existing small
businesses and for those that exceed the size standards but are on the
very low end of those that are not small. They might otherwise be
called or referred to as mid-sized businesses, although SBA only
defines what is small; other entities are other than small.
3. What are the projected reporting, record keeping and other
compliance requirements of the rule?
Revising size standards does not impose any additional reporting or
record keeping requirements on small entities. However, qualifying for
Federal procurement and a number of other programs requires that
entities register in the SAM database and certify at least once
annually that they are small. Therefore, businesses opting to
participate in those programs must comply with SAM requirements. There
are no costs associated with SAM registration or certification.
Revising size standards alters the access to Federal programs that
assist small businesses, but they neither impose a regulatory burden
nor regulate nor control business behavior.
4. What are the relevant Federal rules which may duplicate, overlap, or
conflict with the rule?
Under section 3(a)(2)(C) of the Small Business Act, 15 U.S.C.
632(a)(2)(c), Federal agencies must use SBA's size standards to define
a small business, unless specifically authorized by statute to do
otherwise. In 1995, SBA published in the Federal Register a list of
statutory and regulatory size standards that identified the application
of SBA's size standards as well as other size standards used by Federal
agencies (60 FR 57988 (November 24, 1995)). SBA is not aware of any
Federal rule that would duplicate or conflict with establishing size
standards.
However, the Small Business Act and SBA's regulations allow Federal
agencies to establish different size standards if they believe that
SBA's size standards are not appropriate for their programs, with the
approval of SBA's Administrator (13 CFR 121.903). The Regulatory
Flexibility Act authorizes an Agency to establish an alternative small
business definition, after consultation with the Office of Advocacy of
the U.S. Small Business Administration (5 U.S.C. 601(3)).
5. What alternatives will allow the Agency to accomplish its regulatory
objectives while minimizing the impact on small entities?
By law, SBA is required to develop numerical size standards for
establishing eligibility for Federal small business assistance
programs. Other than varying size standards by industry and changing
the size measures, no practical alternative exists to the existing
system of numerical size standards. The possible alternative size
standards considered for the individual industries within NAICS Sector
11 are discussed in the supplementary information to the proposed rule
and this final rule.
List of Subjects in 13 CFR Part 121
Administrative practice and procedure, Government procurement,
Government property, Grant programs--business, Individuals with
disabilities, Loan programs--business, Reporting and recordkeeping
requirements, Small businesses.
For the reasons set forth in the preamble, SBA amends 13 CFR part
121 as follows:
PART 121--SMALL BUSINESS SIZE REGULATIONS
0
1. The authority citation for part 121 is revised to read as follows:
Authority: 15 U.S.C. 632, 634(b)(6), 662, and 694a(9).
0
2. In Sec. 121.201, in the table, revise the entries for ``112112'',
``112310'', ``113110'', ``113210'', ``114111'', ``114112'', ``114119'',
``114210'', ``115111'', ``115114'', and ``115115'' to read as follows:
Sec. 121.201 What size standards has SBA identified by North American
Industry Classification System codes?
* * * * *
[[Page 37404]]
Small Business Size Standards by Naics Industry
----------------------------------------------------------------------------------------------------------------
Size standards Size standards
NAICS code NAICS U.S. industry title in millions of in number of
dollars employees
----------------------------------------------------------------------------------------------------------------
* * * * * * *
112112.......................... Cattle Feedlots........................... $7.0 ................
* * * * * * *
112310.......................... Chicken Egg Production.................... $14.0 ................
* * * * * * *
113110.......................... Timber Tract Operations................... $10.0 ................
113210.......................... Forest Nurseries and Gathering of Forest $10.0 ................
Products.
* * * * * * *
114111.......................... Finfish Fishing........................... $19.0 ................
114112.......................... Shellfish Fishing......................... $5.0 ................
114119.......................... Other Marine Fishing...................... $7.0 ................
114210.......................... Hunting and Trapping...................... $5.0 ................
* * * * * * *
115111.......................... Cotton Ginning............................ $10.0 ................
* * * * * * *
115114.......................... Postharvest Crop Activities (except Cotton $25.5 ................
Ginning).
115115.......................... Farm Labor Contractors and Crew Leaders... $14.0 ................
* * * * * * *
----------------------------------------------------------------------------------------------------------------
Dated: June 13, 2013.
Karen G. Mills,
Administrator.
[FR Doc. 2013-14711 Filed 6-19-13; 8:45 am]
BILLING CODE 8025-01-P