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[Federal Register Volume 89, Number 245 (Friday, December 20, 2024)]
[Notices]
[Pages 104229-104232]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-30060]

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OFFICE OF MANAGEMENT AND BUDGET

Statistical Policy Directive No. 8 North American Industry 
Classification System (NAICS)--Request for Comments on Possible 
Revisions for 2027

AGENCY: Office of Information and Regulatory Affairs, Office of 
Management and Budget, Executive Office of the President.

ACTION: Notice of Solicitation for Proposals to Revise Portions of the 
NAICS for 2027.

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SUMMARY: The Office of Management and Budget (OMB), on behalf of the 
Economic Classification Policy Committee (ECPC), announces the review 
of the 2022 North American Industry Classification System (NAICS) for 
potential revisions to be made to the

[[Page 104230]]

structure and content of the NAICS for 2027 and solicits public 
comment.
    Details about these topics are available in the SUPPLEMENTARY 
INFORMATION section below.

DATES: To ensure consideration of comments on this notice, they must be 
received no later than February 18, 2025. Because of delays in the 
receipt of regular mail related to security screening, respondents are 
encouraged to send comments electronically (see ADDRESSES, below.

ADDRESSES: Submit comments through www.regulations.gov--a Federal E-
Government website that allows the public to find, review, and submit 
comments on documents that agencies have published in the Federal 
Register and that are open for comment. Simply type ``USBC-2024-0032'' 
(in quotes) in the Comment or Submission search box, click Go, and 
follow the instructions for submitting comments. Comments received by 
the date specified above will be included as part of the official 
record. Please include the Docket ID (USBC-2024-0032) and the phrase 
``2022 North American Industry Classification System (NAICS)--Revisions 
for 2027 Comments'' at the beginning of your comments.
    Privacy Act Statement: OMB is issuing this solicitation of input on 
the 2027 NAICS revision pursuant to its authorities under 31 U.S.C. 
1104(d) and 5 U.S.C. 3504(e). Submission of comments in response to 
this request is voluntary. Comments may be used to inform sound 
decision making on topics related to this request, including potential 
revisions to the NAICS. Please note that submissions received in 
response to this notice may be posted on www.regulations.gov or 
otherwise released in their entirety, including any personal 
information, business confidential information, or other sensitive 
information provided by the commenter. Do not include in your 
submissions any copyrighted material; information of a confidential 
nature, such as personal or proprietary information; or any information 
you would not like to be made publicly available. Comments and 
commenter information are maintained under the OMB Public Input System 
of Records, OMB/INPUT/01; the system of records notice is accessible at 
88 FR 20913 (www.federalregister.gov/documents/2023/04/07/2023-07452/privacy-act-of-1974-system-of-records) and includes a list of routine 
uses associated with the collection of this information.
    Electronic Availability: Federal Register notices are available 
electronically at www.federalregister.gov. This document is also 
available on the NAICS website at www.census.gov/naics. This site 
contains previous NAICS United States Federal Register notices, ECPC 
Issues Papers, ECPC Reports, the structure and industry definitions for 
all NAICS United States versions, and related documents.
    Public Review Procedure: All comments and proposals received in 
response to this notice will be available for public inspection. OMB 
will publish all ECPC recommendations for changes to NAICS for 2027 
resulting from this notice in the Federal Register for review and 
comment prior to final action.
    For general inquiries email: [email protected]. 
The NAICS classification staff may be reached by email at 
[email protected]. Please note: Communication through this 
email will not be included in the record for USBC-2024-0032. Comments 
should be submitted through https://www.federalregister.gov.

SUPPLEMENTARY INFORMATION: Under the authority of the Budget and 
Accounting Procedures Act of 1950 (31 U.S.C. 1104(d)) and the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3504(e)), OMB, on behalf of the ECPC, 
announces the review and potential revision of the structure and 
content of the 2022 NAICS. OMB solicits public comment on all aspects 
of the NAICS, with an emphasis on new and emerging industries. However, 
in soliciting comments about revising NAICS, the ECPC does not intend 
to open the entire classification structure for substantial change in 
2027. The ECPC will consider public comments and proposals for changes 
or modifications that are consistent with the principles guiding the 
development of NAICS as outlined in the ``BACKGROUND'' section below.
    This is the first Federal Register Notice requesting public comment 
in the process leading up to the potential 2027 NAICS revision. More 
information on the NAICS, including information on past revision 
processes, is available at www.census.gov/naics.

I. Background

    The Chief Statistician of the United States at OMB coordinates the 
Federal statistical system by developing and overseeing the 
implementation of Government-wide principles, policies, standards, and 
guidelines concerning the presentation and dissemination of statistical 
information. These coordination efforts promote the efficiency and 
effectiveness of the Federal statistical system. More information on 
the Federal statistical system, including its structure and policies 
that govern it, is available at www.statspolicy.gov.
    One such standard for statistical data classification established 
by OMB is Statistical Policy Directive No. 8: North American Industry 
Classification System: Classification of Establishments (NAICS). NAICS 
is a system for classifying establishments (individual business 
locations) by type of economic activity. Its purposes are (1) to 
facilitate the collection, tabulation, presentation, and analysis of 
data relating to establishments; and (2) to promote uniformity and 
comparability in the presentation and analysis of statistical data 
describing the North American economy. The OMB-Recognized Statistical 
Agencies and Units use NAICS to collect and publish data by industry, 
and NAICS is also widely used by State agencies, trade associations, 
private businesses, and other organizations.
    Mexico's Instituto Nacional de Estad[iacute]stica y 
Geograf[iacute]a (INEGI), Statistics Canada, and the United States 
Office of Management and Budget, through the ECPC, collaborate on NAICS 
to make the industry statistics produced by the three countries 
comparable. NAICS is an industry classification system developed in 
accordance with a single principle of aggregation: producing units that 
use similar production processes should be grouped together in the 
classification. NAICS also reflects changes in technology and in the 
growth and diversification of services in recent decades. Industry 
statistics presented using NAICS 2022 are extensively comparable with 
statistics compiled according to the latest revision of the United 
Nations' International Standard Industrial Classification of All 
Economic Activities (ISIC, Revision 5). For the three North American 
countries, NAICS provides a consistent framework for the collection, 
tabulation, presentation, and analysis of industry statistics used by 
government policy analysts, academics and researchers, the business 
community, and the public.
    Please note that NAICS is designed and maintained solely for 
statistical purposes, in order to improve and keep current the 
statistical rigor of this Federal statistical standard. Consequently, 
although the classification may also be used for various nonstatistical 
purposes (e.g., for administrative, regulatory, or taxation functions), 
the requirements of government agencies or private users that choose to 
use NAICS for nonstatistical purposes play no role in its development 
or revision.

[[Page 104231]]

    Four principles guide NAICS development:
    (1) NAICS is erected on a production-oriented conceptual framework. 
This means that producing units that use the same or similar production 
processes are grouped together in NAICS.
    (2) NAICS gives special attention to developing production-oriented 
classifications for (a) new and emerging industries, (b) service 
industries in general, and (c) industries engaged in the production of 
advanced technologies.
    (3) Time series continuity is maintained to the extent possible.
    (4) The system strives for compatibility with the two-digit level 
(see below) of the International Standard Industrial Classification of 
All Economic Activities (ISIC, Rev. 5) of the United Nations.
    The ECPC is committed to maintaining the principles of NAICS as it 
develops recommendation for further refinements.
    NAICS uses a hierarchical structure to classify establishments from 
the broadest level to the most detailed level using the following 
format:

Sector.....................  2-digit..............  Sectors represent
                                                     the highest level
                                                     of aggregation.
                                                     There are 20
                                                     sectors in NAICS.
Subsector..................  3-digit..............  Subsectors represent
                                                     the next, more
                                                     detailed level of
                                                     aggregation. There
                                                     are 96 subsectors
                                                     in NAICS 2022.
Industry Group.............  4-digit..............  Industry groups are
                                                     more detailed than
                                                     subsectors. There
                                                     are 308 industry
                                                     groups in NAICS
                                                     2022.
NAICS Industry.............  5-digit..............  NAICS industries, in
                                                     most cases,
                                                     represent the
                                                     lowest level of
                                                     three-country
                                                     comparability.
                                                     There are 689 five-
                                                     digit industries in
                                                     NAICS 2022.
National Industry..........  6-digit..............  National industries
                                                     are the most
                                                     detailed level and
                                                     represent the
                                                     national level
                                                     detail. There are
                                                     1,012 national
                                                     industries in NAICS
                                                     United States 2022.
 

    To ensure the accuracy, timeliness, and relevance of the 
classification, NAICS is reviewed every five years to determine what, 
if any, changes are required. The 2027 review will be the sixth since 
OMB adopted the NAICS as an official standard statistical 
classification in 1997. The ECPC recognizes the potential costs 
involved when adopting, implementing, and tracking the impacts of 
industry classification revisions in statistical programs. The ECPC 
also recognizes the economic, statistical, and policy implications that 
arise when the industry classification system does not identify and 
account for important economic developments. Balancing the costs of 
change against the potential for more accurate and relevant economic 
statistics requires significant input from data producers, data 
providers, and data users.

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        NAICS version            Date published       Federal Register
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1997........................  April 9, 1997.......  62 FR 17288.
2002........................  January 16, 2001....  66 FR 3826.
2007........................  May 16, 2006........  71 FR 28532.
2012........................  August 17, 2011.....  76 FR 51240.
2017........................  August 8, 2016......  81 FR 52584.
2022........................  December 21, 2021...  86 FR 72277.
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    The ECPC solicits and welcomes comments across all of the NAICS 
sectors, and also seeks comments concerning the following items: new 
and emerging industries and recommended revisions for measuring 
elements of the bioeconomy.

II. New and Emerging Industries

    NAICS is a dynamic industry classification. Every five years, the 
classification is reviewed to determine the need to identify new and 
emerging industries. The ECPC is soliciting public comments on the 
advisability of revising NAICS for new and emerging industries in 2027 
and soliciting proposals for these new industries.
    When developing proposals for new and emerging industries, please 
note that there are two separate but related economic classifications 
in the United States. NAICS, the industry classification, is the 
subject of this notice, while the North American Product Classification 
System (NAPCS) is product classification. The NAPCS product system 
described below complements the NAICS industry system and provides an 
alternate way of classifying output.
    NAICS classifies units according to their production function. 
NAICS industries group units undertaking similar activities using 
similar resources but does not necessarily group all similar products 
or outputs. NAPCS, on the other hand, classifies the outputs of units, 
or in other words their products or transactions, within a demand-based 
conceptual framework. For example, the hypothetical product of a flu 
shot can be provided by a doctor's office, a hospital, or a walk-in 
clinic. Because these three units are classified to three different 
NAICS industries, data users who want information about all flu shots 
provided must be able to identify the individual products coming out of 
the units, which NAPCS is designed to do. Thus, in many cases, the need 
for specific statistical data can be met by aggregating product data 
across industries as NAPCS does, rather than by creating a new 
industry. This cross-sector measurement level is particularly true with 
NAICS, which groups establishments into industries based on their 
primary production function. NAPCS was initiated in 1999, followed by a 
lengthy development and collaborative harmonizing efforts. The first 
NAPCS revision cycle began in 2022, concurrent with the NAICS. This 
cycle will continue on the same 5-year revision cycle as NAICS.
    Proposals for new industries in NAICS for 2027 will be evaluated 
within the context of the industry and product classification systems 
to determine the most appropriate resolution. For a detailed 
description of the NAPCS initiative, see the April 16, 1999, Federal 
Register notice (64 FR 18984), available at www.census.gov/naics/napcs.
    Proposals for new industries will be evaluated using a variety of 
criteria. As previously mentioned, each proposal will be evaluated 
based on the application of the production function concept, its impact 
on comparability within North America and with other regions, and its 
impact on time series. For any proposals that cross three-country 
levels of agreement, negotiations with Canada and Mexico,

[[Page 104232]]

our partners in NAICS, will also influence the ECPC's recommendations 
on those proposals.
    In addition, other criteria may affect recommendations for 
adoption. From a practical standpoint, industries must be of 
appropriate size. At the national level, this is generally not a major 
concern, but there are a variety of statistical programs that produce 
industry data at the regional, State, metropolitan area, or even county 
or local level. A proposed industry must include a sufficient number of 
establishments so that Federal agencies can publish industry data 
without disclosing information about the operations of individual 
firms.
    The ability of government agencies to classify, collect, and 
publish data on the proposed basis will also be taken into account. 
Proposed changes must be such that they can be applied by agencies 
within their normal processing operations. Any recommendations for 
change by the ECPC for consideration will also take into account the 
cost of making the changes. These costs can be considerable and the 
availability of funding to make changes is critical. The budgetary 
environment will be considered when the ECPC makes recommendations. As 
mentioned above, certain proposals may be more adequately addressed 
through the identification and collection of product data.
    Proposals for new or revised industries should be consistent with 
the production-oriented conceptual framework incorporated into the 
principles of NAICS. When formulating proposals, please note that an 
industry classification system groups the economic activities of 
producing units, which means that the activities of similar producing 
units cannot be separated in the industry classification system.
    Proposals must include the following information:
    (1) Specific economic activities to be covered by the proposed 
industry, the proposed industry's production processes, its specialized 
labor skills, and any unique equipment and materials used. This detail 
should demonstrate that the proposed industry will group establishments 
with similar production processes that are unique and clearly separable 
from the production processes of other industries.
    (2) Relationship of the proposed industry to existing NAICS United 
States 2022 six-digit national industries and whether the proposed 
industry would impact trilateral NAICS levels (as specified by ``T'' 
superscripts in the 2022 NAICS structure).
    (3) Documentation of the size and recent and projected growth of 
the proposed industry in the United States.
    (4) Information about the size and importance of the proposed 
industry in Canada and Mexico, if available.
    Proposals will be collected, reviewed, and analyzed by the ECPC. As 
necessary, proposals for change will be negotiated with our partners in 
Canada and Mexico. When this process is complete, OMB will publish a 
Federal Register notice that contains the ECPC recommendations for 
revisions for additional public comment prior to a final OMB 
determination of any changes to NAICS for 2027.

III. Improve Measures of Emerging/Innovative Industrial Activity, 
Including the Bioeconomy

    Consistent with Executive Order 14081, Advancing Biotechnology and 
Biomanufacturing Innovation for a Sustainable, Safe, and Secure 
American Bioeconomy, the Interagency Technical Working Group on 
Developing, Recommending and Assessing Current Industry and Product 
Classifications for the Emerging Bioeconomy submitted a report to OMB 
with recommendations for revisions to NAICS for advancing measurement 
in this area.\1\ In this report, the Working Group stated that there 
has been sustained growth and diversification in biotechnology, 
biomanufacturing, and the related use of biological resources to 
supplement, and in some industries, replace more traditional production 
methods. The report also discussed several challenges with measuring 
this part of the economy, and included recommendations for revisions to 
both the NAICS and NAPCS. As mentioned above, especially in this area, 
some proposals may be more adequately addressed through the 
identification and collection of product versus industry data.
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    \1\ Interagency Tech. Working Grp. on Developing, Recommending 
and Assessing Current Indus. & Product Classifications for the 
Emerging Bioeconomy, Measuring the Bioeconomy: Recommended Revisions 
to the NAICS and NAPCS (Sept. 12, 2023), available at www.usda.gov/sites/default/files/documents/OCE-Measuring-the-Bioeconomy.pdf.
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    The ECPC is soliciting public comments regarding the 
recommendations included in the report, to support development of 
related final ECPC recommendations to OMB. In particular, ECPC is 
interested in the following issues: What impact might these potential 
changes to the NAICS have on existing industry measurements, for 
example economic output and employment, continuity of time series 
measures? What methodologies should compilers of Federal economic data 
apply to differentiate bioeconomic processes from current production 
processes to enable measurement? What potential bioeconomy measurement 
strategies might be considered other than revisions to and inclusion in 
the NAICS?

IV. Errors and Omissions in NAICS

    No significant errors or omissions have been identified in NAICS 
2022. Any errors or omissions that are identified in NAICS in the 
future will be corrected and posted on the official NAICS website at 
www.census.gov/naics.

V. Timing for the 2027 NAICS Revision Process

    Following this public comment period, the ECPC will review the 
comments and develop any proposed revisions for the 2027 NAICS. Then 
OMB will publish ECPC's proposed revisions for public comment in a 
subsequent Federal Register Notice. The ECPC will then review the 
comments and develop final recommendations to the Chief Statistician of 
the United States at OMB on the proposed revisions for the 2027 NAICS. 
OMB will consider the final recommendations from the ECPC and will 
publish the updated classification for 2027 NAICS in calendar year 
2026. The NAICS 2027 will be available on the Census Bureau website in 
January 2027.

Karin A. Orvis,
Chief Statistician of the United States.
[FR Doc. 2024-30060 Filed 12-19-24; 8:45 am]
BILLING CODE P
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