Communicar, Inc., No. 4551 (April 17, 2003)
Docket No. SIZ-2003-01-03-03

                               
                   UNITED STATES OF AMERICA
                 SMALL BUSINESS ADMINISTRATION
                OFFICE OF HEARINGS AND APPEALS
                       WASHINGTON, D.C.
                               

                               )      
SIZE APPEAL OF:                )     Docket No. SIZ-2003-01-03- 03
                               )      
Communicar, Inc.               )     Decided:  April 17, 2003
                               )
     Appellant                 )
                               )
SBA Expanded Economic          )
 Injury Disaster (EIDL)        )
 Loan Application              )
 No. 9M4904331E                )
Office of Disaster Assistance, )
 Area I                        )
Niagara Falls, New York
                                
                                
                           APPEARANCES

                                
  Roberta C. Pike, Esq.; Christine Staiano, Esq.; Pike & Pike,
                       P.C., for Appellant

                                
                             DIGEST

                                
On  appeal  of  a  size  determination pursuant  to  an  Expanded
Economic  Injury Disaster Loan Application, this Office need  not
consider Appellant's argument that its primary industry should be
classified under a particular NAICS code, when the application of
that NAICS code would not result in a finding that Appellant  was
small.

On  appeal  of  a  size  determination pursuant  to  an  Expanded
Economic  Injury Disaster Loan Application, Appellant  failed  to
establish  that  the  Area  Office  erred  in  not  finding  that
Appellant's  primary industry was Freight Forwarders  or  Customs
Brokers  (NAICS  code 488510) or Advertising Agency  (NAICS  code
541810), when nothing in Appellant's proffer, before or after the
size  determination,  suggested  that  it  qualified  under   the
description  in  the  NAICS  Manual  (2002)  for  any  of   those
industries.

                            DECISION

                                
HOLLEMAN, Administrative Judge:


                          Jurisdiction

                                
This appeal is decided under the Small Business Act of 1958, 15
U.S.C. Section 631 et seq., and 13 C.F.R. Parts 121 and 134
(2003). [1]

                             Issues

                                
     Whether,  on appeal of a size determination pursuant  to  an
Expanded  Economic Injury Disaster Loan Application, this  Office
must  consider  Appellant's arguments that its  primary  industry
should be classified under a particular NAICS code.

     Whether,  on appeal of a size determination pursuant  to  an
Expanded  Economic  Injury Disaster Loan  Application,  Appellant
established  that  the  Area Office erred  in  not  finding  that
Appellant's  primary industry was Freight Forwarders  or  Customs
Brokers  (NAICS  code 488510) or Advertising Agency  (NAICS  code
541810).

                         I.  BACKGROUND
                                
                      A.  Proceedings Below
                                
                   1.  Application and Denial
                                
     On  November 26, 2001, Communicar, Inc. (Appellant), applied
to  the  Small Business Administration's (SBA) Office of Disaster
Assistance, Area I (Area Office), in Niagara Falls, New York, for
a  loan  under the Expanded Economic Injury Disaster Loan  (EIDL)
program.   Appellant  requested the loan  for  economic  injuries
resulting  from  the  September 11, 2001, terrorist  attacks  and
Federal  actions taken from that date to October  22,  2001.  [2]
The   Area  Office  accepted  Appellant's  loan  application  for
processing on November 27, 2001.

     The Area Office determined that Appellant's primary industry
is  Limousine  Service  (North American  Industry  Classification
System  (NAICS)  [3]  code 485320), with a  corresponding  annual
receipts  size standard of $6.25 million.  On December 12,  2001,
the  Area  Office  denied Appellant's loan application,  in  part
because Appellant's receipts exceeded that size standard.

     On  June 6, 2002, Appellant timely requested the Area Office
to  reconsider  the denial and issue a formal size determination.
[4]  Appellant's SBA Form 355 and other information submitted  to
the   Area   Office  show  it  provides  "ground  transportation"
services,  NAICS  code "485320"; that its  fiscal  year  ends  on
December 31st; and that it is affiliated with Corporate Car, Ltd.
(CCL), which also provides ground transportation services.

     Appellant asserted that, as a "black-car service," an entity
unique  to New York City (NYC) and licensed by the NYC  Taxi  and
Limousine  Commission, Appellant was neither a  limousine  nor  a
taxi   service  under  NAICS  code  485320.   Appellant  receives
requests   for   luxury-car   (black-car)   transportation   from
individual  and  corporate  clients.   It  then  dispatches  each
request  to  one  of  approximately 320  (down  from  410  before
September   11,  2001)  independent  owner/operators   (black-car
operators),  who actually serve the passengers.  After  providing
the  service,  the  black-car  operator  submits  a  voucher   to
Appellant.   Appellant bills the client and pays the  independent
operator,  retaining  a  fee of 17%  or  12%  per  fare  for  the
dispatching,  bookkeeping,  and  billing  service.   Accordingly,
Appellant asserted, excluding the share of gross receipts that it
received  for,  and "passed through" to, the black-car  operators
(pass-through receipts), it was a small business that, with  CCL,
earned less than $6.5 million annually.

                     2.  Size Determination
                                
     On November 14, 2002, the Area Office issued its formal size
determination, finding Appellant other than small.  First, noting
that the SBA had revised the effective date for determining size,
it  concluded that the effective date for size determination  was
March  15,  2002. [5]  Second, it stated that it  had  considered
"classifying  [Appellant] into other industries, including  Other
Support   Activities  For  Road  Transportation   (NAICS   [code]
488490)";  however,  reasoning that "the primary  factor  is  the
service  provided to the Company's customers," it concluded  that
Appellant's  non-ownership of the cars  had  no  bearing  on  the
industry   determination.   Third,  it   considered   Appellant's
argument that only its "net receipts," which were less than  $7.5
million,  should be considered; however, it found  that  the  SBA
regulation excluding "amounts collected for another" applied only
to   travel  agents,  real  estate  agents,  advertising  agents,
conference  management service providers, freight forwarders,  or
customs  brokers.  [6]   Accordingly, after increasing  the  size
standard by 25% to $7.5 million because Appellant was located  in
a  labor  surplus  area,  [7] it found  that  Appellant  and  CCL
exceeded the size standard. [8]

                         B.  The Appeal
                                
     Appellant  received the size determination  on  December  5,
2002, and filed its appeal with this Office on January 3, 2003.

     Appellant argues that the Area Office's conclusion  that  it
was not a small business was based on clear error of fact and law
insofar  as  it  either  (1) erroneously  calculated  Appellant's
annual  receipts as in excess of the corresponding size  standard
of  $7.5  million, refusing to exclude pass-through revenues;  or
(2)  erroneously determined that Appellant's primary industry was
Limousine  Service  (NAICS  code  485320),  rather  than  Freight
Transportation  Arrangement  (NAICS  code  488510),   Advertising
Agency (NAICS code 541810), or Travel Agency (NAICS code 561510).

     As  its  primary  claim  of error, Appellant  asserts  that,
because  an independent operator, rather than Appellant, provides
transportation to the passengers, its operations are  "more  akin
to"  Freight Transportation Arrangement, Advertising  Agency,  or
Travel  Agency.  Therefore, the Area Office should have  excluded
from  its  calculations  the 83% to 88%  of  Appellant's  average
annual receipts that it collected for, and passed through to, the
independent  black-car operators.  Had the Area  Office  excluded
these  pass-through receipts, Appellant and CCL would  have  been
well within the size standards applicable to these industries.

     As  an alternate claim of error, Appellant asserts that  the
Area  Office erred in finding that, because the service  provided
to  the  company's  customers  is the  primary  consideration  in
classifying  a  concern  and  Appellant  provided  luxury  ground
transportation  to  the  passengers,  Appellant  is  a  Limousine
Service.  Rather, it argues, the service it provides to the black-
car  operators is collecting and dispatching requests for service
and  maintaining the billing system, and the black-car  operators
provide the luxury ground transportation to the passengers.

                         II.  DISCUSSION
                                
     Appellant  filed its appeal within 30 days of receiving  the
Size   Determination;  thus,  it  is  timely.   See   13   C.F.R.
Section 134.304(a)(2).

     To prevail on the merits in this size appeal, Appellant must
establish,  by  a preponderance of the evidence,  that  the  Area
Office   made  a  clear  error  of  fact  or  law  in  its   size
determination.   See Size Appeal of Rebmar, Inc.,  SBA  No.  SIZ-
4173, at 4 (1996); 13 C.F.R. Sections 134.224, 134.314.

     SBA's  size standards define whether a business  entity  is
small.   See  13 C.F.R. Section 121.101(a).  For disaster  loans
(other  than  physical  disaster loans),  the  applicant  cannot
exceed the size standard for the industry in which the applicant
combined  with  its  affiliates is  primarily  engaged  and  the
applicant   alone   is  primarily  engaged.    See   13   C.F.R.
Section  121.301(a).   In determining the  primary  industry  in
which   the  applicant  or  the  applicant  combined  with   its
affiliates  is  engaged,  SBA  considers  the  distribution   of
receipts,  employees,  and  costs of doing  business  among  the
different  industries in which business operations occurred  for
the  most recently completed fiscal year.  SBA may also consider
other  factors,  such as the distribution of  patents,  contract
awards, and assets.  See 13 C.F.R. Section 121.107. [9]

     The  regulations further require the Area Office to  average
the  concern's  annual  receipts over its  last  three  completed
fiscal  years.  See 13 C.F.R. Section 121.104(b).  On  March  15,
2002,  Appellant's last completed fiscal year had ended  December
31,  2001; therefore, the correct period of measurement  is  from
1999  to  2001.   "Receipts" means "total income" plus  "cost  of
goods  sold," as these terms are defined or reported  on  Federal
income tax returns.  See 13 C.F.R. Section 121.104(a)(1).

     In  calculating receipts, the SBA excludes funds received in
trust  for  an  unaffiliated third party, including  bookings  or
sales  subject  to commission, by certain enumerated  industries.
See  13 C.F.R. Sections 121.104(a)(1), 121.201 n.10. [10]   These
enumerated industries include Freight Forwarder or Customs Broker
(NAICS  code 488510), Advertising Agent (NAICS code 541810),  and
Travel  Agent (NAICS code 561510).  See id.  They do not  include
other  industries under Freight Transportation Arrangement (NAICS
code  488510),  [11] Limousine Service (NAICS  code  485320),  or
Other  Support  Activities  for Road Transportation  (NAICS  code
488490).

      A.  Abandonment of Issue Regarding NAICS Code 488490
                                
     First,  the  Administrative Judge finds that  Appellant  has
abandoned any possible issue regarding the Area Office's  finding
that   Appellant's  primary  industry  was  not   Other   Support
Activities for Road Transportation (NAICS code 488490). [12]  See
Size  Appeal of Apex Group, Inc., SBA No. SIZ-4300, at  4  (1998)
(by  not  raising  them  on  appeal,  appellant  abandons  issues
considered   by   the   Area  Office).   See   also   13   C.F.R.
Section 134.314. [13]

             B.  Exclusion of Pass-Through Receipts
                                
     Second, the Administrative Judge rejects Appellant's primary
argument  that,  even  if  its primary industry  is  not  Freight
Forwarder or Customs Broker, Advertising Agent, or Travel  Agent,
but  rather  Limousine  Service,  the  Area  Office  should  have
excluded  from  its  calculations of Appellant's  average  annual
receipts the 83% to 88% of receipts that Appellant collected for,
and passed through to, the independent black-car operators.

     Pass-through receipts may not be excluded from  a  concern's
size  unless its primary industry is one for which the SBA's size
regulations authorize such exclusion.  See Size Appeal of  Feola,
Inc.,  dba  F+A  Architects,  SBA  No.  SIZ-4528,  at  4  (2003).
Accordingly,  the Area Office correctly found that it  could  not
exclude  receipts  Appellant held for  another  if  Appellant  is
correctly classified as a Limousine Service (NAICS code 485320).

                C.  Appellant's Primary Industry
                                
     In  the  alternative, Appellant claims that the Area  Office
erred  in  concluding that it is a Limousine Service (NAICS  code
485320).    The  NAICS  Manual  (2002)  provides  the   following
description for NAICS code 485320:

     This   industry   comprises  establishments   primarily
     engaged  in providing an array of specialty and  luxury
     passenger  transportation  services  via  limousine  or
     luxury  sedans  generally on a  reserved  basis.  These
     establishments do not operate over regular  routes  and
     on regular schedules.
     
NAICS Manual 626 (2002).

     Though  Appellant  argues it provides its  services  to  the
black-car  operators,  rather than to  the  passengers,  such  an
argument might be constructed as to virtually any industry.  [14]
For   example,   one  might  argue  that  a  health   maintenance
organization  serves  its networked providers,  rather  than  its
patients,  by  handling  referrals,  bookkeeping,  and  billings.
Regardless,  Appellant has failed to establish that  its  primary
industry  more  appropriately lies under another NAICS  code  and
that, had the Area Office so found, Appellant and CCL would  have
been found small under the applicable size standard.

     Appellant  claims its industry is more accurately classified
as  Freight  Transportation Arrangement, Advertising  Agency,  or
Travel  Agency.  The Administrative Judge notes, at  the  outset,
that  he need not consider Appellant's arguments regarding either
(1)  those  industries under Freight Transportation  Arrangement,
for  which  exclusion of pass-through receipts is not  permitted;
[15]  or  (2) Travel Agencies (NAICS code 561510), for which  the
$3.75  million  size  standard is less than  the  "net  receipts"
Appellant claims for itself and CCL combined. [16]  Had the  Area
Office considered them and found that one was Appellant's primary
industry,  it  nevertheless  would have  been  required  to  find
Appellant  not a small business.  Thus, even if the  Area  Office
erred in finding that none was Appellant's primary industry, such
error  was  harmless.   See Size Appeal  of  Regent  Mfg.,  Inc.,
SBA No. SIZ-4533, at 7 n.7 (2003).

     Therefore,  the only remaining issue is whether  Appellant's
primary  industry qualifies under Freight Forwarders and  Customs
Brokers or Advertising Agency.

 1.  Freight Forwarders and Customs Brokers (NAICS code 488510)
                                
     The  NAICS  Manual (2002) provides the following description
for NAICS code 488510:

     This   industry   comprises  establishments   primarily
     engaged  in arranging transportation of freight between
     shippers and carriers. These establishments are usually
     known as freight forwarders, marine shipping agents, or
     customs  brokers  and offer a combination  of  services
     spanning transportation modes.
     
NAICS Manual 640 (2002).

     Nothing  in Appellant's proffer, either before or after  the
size  determination,  suggests that it  qualifies  as  a  Freight
Forwarder or Customs Broker.  At the risk of stating the obvious,
the   black-car  operators  transport  passengers,  not  freight.
Rather   than  offering  "a  combination  of  services   spanning
transportation  modes,"  Appellant  offers  only   one   service,
passenger   transport,  via  one  transportation   mode,   luxury
automobile.   Thus, Appellant has failed to show  that  the  Area
Office erred in not finding that its primary industry was Freight
Forwarders and Customs Brokers (NAICS code 488510).

           2.  Advertising Agency (NAICS code 541810)
                                
     The  NAICS  Manual (2002) provides the following description
for NAICS code 541810:

     This   industry   comprises  establishments   primarily
     engaged  in creating advertising campaigns and  placing
     such advertising in periodicals, newspapers, radio  and
     television,  or other media.  These establishments  are
     organized  to  provide a full range of services  (i.e.,
     through   in-house   capabilities  or  subcontracting),
     including    advice,    creative   services,    account
     management,  production of advertising material,  media
     planning, and buying (i.e., placing advertising).
     
NAICS Manual 746 (2002).

     As  discussed above, Appellant's proffer, before  and  after
the  size  determination, fails to show that it qualifies  as  an
Advertising  Agency.  Though Appellant never said so,  one  might
readily  surmise that it might incidentally create an advertising
campaign   or   at  least  place  "advertising  in   periodicals,
newspapers, radio and television, or other media."  Even if  that
were  so, its advertising would be on its own behalf, not of  its
customers  as is customary with an Advertising Agency.   Further,
Appellant's  proffer suggests any such advertising  would  be  at
best   ancillary   to  its  primary  activity   of   dispatching,
bookkeeping,  and billing.  Thus, Appellant has  failed  to  show
that  the  Area  Office  erred in not finding  that  its  primary
industry was Advertising Agency (NAICS code 541810).

     Therefore,  Appellant  has failed  to  show  that  the  Area
Office's   explicit  conclusion-that  its  primary  industry   is
Limousine  Service (NAICS code 485320)-rested upon a clear  error
of fact or law.

                        III.  CONCLUSION
                                
     For  the  above reasons, the Administrative Judge  concludes
that Appellant has failed to establish, by a preponderance of the
evidence, that the size determination was based on clear error of
fact  or  law.  Therefore, the Administrative Judge  AFFIRMS  the
size determination and DENIES the appeal.

     This   is   the   final  decision  of  the  Small   Business
Administration.  See 13 C.F.R. Section 134.316(b).
                                
                                
                                
                                
                                CHRISTOPHER HOLLEMAN
                                Administrative Judge


_________________________

     1   The  Small Business Administration (SBA) has revised  its
regulations  governing  the  small  business  size  determination
program  and  appeal procedures.  67 Fed. Reg.  47244  (July  18,
2002) (Final Rule).  Because the size determination, which is the
subject  of this appeal, was issued after the effective  date  of
this rule (September 16, 2002), the amended regulations apply  to
this  appeal.  See Final Rule at 47244.  The amended  regulations
are available in codified form through this Office's home page at
www.sba.gov/oha.

     2   See  13  C.F.R. Parts 121, 123, Subpart G; 66 Fed.  Reg.
48154  (Sept. 18, 2001) (SBA Declaration of Disaster  #3364);  66
Fed. Reg. 50702 (Oct. 4, 2001) (Amendment #1).
     3   Effective October 1, 2002, the SBA's size standards  are
based  on the classification system published in Executive Office
of the President, Office of Management and Budget, North American
Industry  Classification System Manual (2002) [hereinafter  NAICS
Manual  (2002)].  See 67 Fed. Reg. 52597, 52598 (Aug.  13,  2002)
(direct final rule).
     4   The Area Office accepted the request for reconsideration
on October 2, 2002.
     5  See 13 C.F.R. Section 121.302(c).
     6  See 13 C.F.R. Section 121.104(a)(1).
     7  See 13 C.F.R. Section 121.301(e).
     8   The Area Office also noted that Appellant owned 100%  of
Glendale Leasing, Inc. (GLI), as to which Appellant had failed to
submit any financial information.  The Area Office stated that no
additional  information would be required because  it  would  not
change the result.  See infra note.
     9   The  Area  Office also did not explicitly determine  the
primary  industry in which Appellant combined with its affiliates
is  engaged.  Though failure to address this and the size of  GLI
alone, see supra note, might necessitate a remand, the resolution
on  appeal  of  the  Appellant's primary industry  renders  those
issues moot.
     10   Effective May 5, 2003, the SBA revised Section  121.201
to  permit  exclusion of pass-through receipts for Tour Operators
(NAICS  code  561520).   See 68 Fed. Reg. 16405  (Apr.  4,  2003)
(final  rule).   Though  this  rule does  not  state  what  event
determines  applicability,  nothing  suggests  that  it  has  any
bearing  on this decision issued before the effective date.   See
id. at 16405 ("Dates").
     11   Appellant  refers throughout to "Freight Transportation
Arrangement  (NAICS 488510)."  However, of the  industries  under
NAICS  code  488510, only Freight Forwarders and Customs  Brokers
are  designated  for exclusion of pass-through  receipts;  Marine
Shipping Agents, Non-Vessel Owning Common Carriers, and Household
Goods     Forwarders    are    not.     Compare     13     C.F.R.
Section  121.104(a)(1) with 13 C.F.R. Section  121.201  n.10  and
with NAICS Manual 640 (2002).
     12   The  Area  Office stated that it considered classifying
Appellant   into  other  industries,  including   Other   Support
Activities  for Road Transportation.  The record does  not  state
whether   the  "other  industries"  included  those  claimed   by
Appellant  on appeal; nor does it evince that Appellant  claimed,
before the size determination, that it qualified under them.
     13  For similar reasons, this Office will not consider a new
issue  raised  for the first time on appeal unless  necessary  to
prevent  manifest  injustice to a party  not  at  fault  for  the
omission.  See Size Appeal of Sabreliner Corporation, SBA No. SIZ-
3478,  at  10  (1991).  As discussed supra note,  the  record  is
silent  as to the industries Appellant now claims on appeal.   In
the interests of judicial economy and a prompt resolution of this
case, however, the Administrative Judge will consider Appellant's
claims  as  if  they  were made to the Area Office,  rather  than
remand the case to complete the record.
     14    Appellant's  assertion  the  drivers  are  independent
contractors does not change the analysis here.  This  Office  has
rejected  the  argument  that  a firm  may  exclude  the  amounts
collected from independent contractors from its receipts,  unless
the contractors fall into one of the enumerated categories of  13
C.F.R.  Section  121.104(a)(1).  Size Appeal of Donez  Home  Team
Real Estate, SBA No. SIZ-3753, at 6-8 (1993).
     15  See supra note 1 and accompanying text.
     16  See 13 C.F.R. Sections 121.201, 121.301(e).



                                              Posted: April, 2003