Federal Register / Vol. 81, No. 15 / Monday, January 25, 2016 / Rules and Regulations 3949 

SMALL BUSINESS SIZE STANDARDS BY NAICS INDUSTRY—Continued 

NAICS Codes NAICS U.S. Industry title 

Size standards 

in millions of 

dollars 

Size standards 

in number of 

employees 

424720 .............. Petroleum and Petroleum Products Merchant Wholesalers (except Bulk Stations and Terminals)......................... 200 

424810 .............. Beer and Ale Merchant Wholesalers ....................................................................................... ........................ 200 

424820 .............. Wine and Distilled Alcoholic Beverage Merchant Wholesalers ............................................... ........................ 250 

424910 .............. Farm Supplies Merchant Wholesalers ..................................................................................... ........................ 200 

424920 .............. Book, Periodical, and Newspaper Merchant Wholesalers ....................................................... ........................ 200 

* * * * * * * 

424940 .............. Tobacco and Tobacco Product Merchant Wholesalers ........................................................... ........................ 250 

424950 .............. Paint, Varnish, and Supplies Merchant Wholesalers ............................................................... ........................ 150 

*******

454310 .............. Fuel Dealers ............................................................................................................................. ........................ 100 

*******

* * * * * 

Dated: January 15, 2016. 

Maria Contreras-Sweet, 

Administrator. 

[FR Doc. 2016–01411 Filed 1–22–16; 8:45 am] 

BILLING CODE 8025–01–P 

SMALL BUSINESS ADMINISTRATION 

13 CFR Part 121 

RIN 3245–AG60 

Small Business Size Standards: 

Inflation Adjustment to Monetary 

Based Size Standards 

AGENCY: U.S. Small Business 

Administration. 

ACTION: Final rule. 

SUMMARY: This rule finalizes, without 

change, the U.S. Small Business 

Administration’s (SBA or Agency) June 

12, 2014 interim final rule that adjusted 

monetary small business size standards 

(i.e., receipts, assets, net worth, and net 

income) for inflation that has occurred 

since the last inflation adjustment in 

2008. Specifically, the interim final rule 

increased by 8.73 percent all industry 

specific monetary small business size 

standards (except the $750,000 receipts 

based size standard for agricultural 

enterprises established by the Small 

Business Act). The interim final rule 

also increased by the same rate the 

tangible net worth and net income based 

alternative size standard for the Small 

Business Investment Company (SBIC) 

Program and receipts based size 

standards for Sales of Government 

Property (Other Than Manufacturing) 

and Stockpile Purchases. This final rule 

adopts those increases, without change. 

DATES: This rule is effective on January 

25, 2016. 

FOR FURTHER INFORMATION CONTACT: Carl 

Jordan, Office of Size Standards, (202) 

205–6618 or sizestandards@sba.gov. 

SUPPLEMENTARY INFORMATION: 

Inflation Adjustment 

SBA’s small business size regulations 

require that the Agency examine the 

impact of inflation on monetary size 

standards (e.g., receipts, tangible net 

worth, net income, and assets) and make 

necessary adjustments at least once 

every five years. (13 CFR 121.102(c)). 

Accordingly, on June 12, 2014, SBA 

published an interim final rule (IFR) 

that increased by 8.73 percent all 

industry specific monetary small 

business size standards (except the 

$750,000 receipts based size standard 

for agricultural enterprises established 

by the Small Business Act) (79 FR 

33647). Previous to the June 12, 2014 

interim final rule, SBA had last updated 

size standards for inflation on August 

18, 2008 (see 73 FR 41237 (July 18, 

2008)). 

In addition, the Small Business Jobs 

Act of 2010 (Jobs Act), Public Law 111– 

240, sec. 1344, Sep. 27, 2010, requires 

SBA to review all size standards every 

five years and make necessary 

adjustments to reflect current industry 

and Federal market conditions. 

In accordance with the Jobs Act, SBA 

has completed a review of all industry 

specific monetary based size standards 

using the latest industry and Federal 

contracting data available. As part of 

that review, SBA did not take into 

consideration inflation that had 

occurred since 2008. In the IFR, SBA 

provided reasons for not considering 

inflation as part of the comprehensive 

review. Specifically, SBA could not 

combine static industry data with the 

fluctuating inflation during the course 

of the review that produced a series of 

rules for different sectors at different 

times. Trying to do so would have 

resulted in different inflation factors for 

different industries, thereby making size 

standards inconsistent among 

industries. 

Summary and Discussion of Public 

Comments on the June 12, 2014 IFR 

On June 12, 2014, SBA issued an IFR 

(79 FR 33647), increasing by 8.73 

percent all industry specific monetary 

small business size standards (except 

the $750,000 receipts based size 

standard for agricultural enterprises 

established by the Small Business Act). 

The adjustment represented inflation, as 

measured by the Gross Domestic 

Product (GDP) price index, since the 

previous inflation adjustment published 

in July 2008. The 8.73 percent increase 

was applied to 492 industry specific 

size standards (487 receipts based and 

five assets based) and three program 

specific size standards, namely: (1) 

Tangible net worth and net income 

based alternative size standards for the 

SBIC Program (13 CFR 121.301(c)); (2) 

Sales of Government Property Other 

Than Manufacturing (13 CFR 121.502); 

and (3) Stockpile Purchases (13 CFR 

121.512). For the reasons SBA provided 

in the June 12, 2014 IFR, SBA did not 

increase the tangible net worth and net 

income based alternative size standards 

for SBA’s 504 and 7(a) Loan Programs 

(13 CFR 121.301(b)). Increases became 

effective July 14, 2014. 

The IFR requested comments from the 

public on SBA’s methodology of using 

the GDP price index for adjusting size 

standards and suggestions for 

alternative measures of inflation, on 

whether SBA should adjust employee 

based size standards for labor 

productivity growth and technical 

changes similar to adjusting monetary 

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3950 Federal Register / Vol. 81, No. 15 / Monday, January 25, 2016 / Rules and Regulations 

based size standards for inflation, and 

on changes to program specific size 

standards. SBA received 13 comments, 

eight of which supported the increases. 

All comments are available at the 

Federal Rulemaking Portal, 

www.regulations.gov. Below is a 

discussion of those comments and 

SBA’s responses. 

Comment on the Inflation Index 

A construction company commented 

in favor of increasing size standards for 

inflation. The commenter 

recommended, however, that SBA use 

the Consumer Price Index (CPI), rather 

than the GDP price index that the 

Agency used. 

SBA response: In the IFR, SBA 

reviewed various measures of inflation 

and provided an explanation why the 

Agency selected the GDP price index, 

rather than other indices such as the 

CPI, as the most appropriate measure for 

adjusting size standards. Moreover, the 

commenter did not provide a 

convincing justification as to why the 

CPI is a better measure of inflation than 

the GDP price index. For these reasons, 

SBA is not adopting the commenter’s 

recommendation in this final rule, but 

will consider it in future adjustments. 

Comment on Rounding 

While supporting increases to size 

standards for inflation and using the 

GDP price index, another commenter 

recommended that SBA round the 

results in increments of $100,000 rather 

than $500,000. It seemed ‘‘. . . arbitrary 

and too generous for some and harmful 

to others,’’ the commenter noted. The 

rounding reduced some size standards 

by $200,000—for example, $27.7 

million to $27.5 million—and this will 

have an impact on a lot of companies, 

the commenter maintained. 

SBA’s response: As in the previous 

inflation adjustments, SBA rounded the 

results to the nearest $500,000 to avoid 

having too many size standards, in light 

of public criticism that the Agency’s 

size standards are overly complicated. 

Having too many size standards, 

especially with minor differences, can 

lead to confusion and unnecessary 

complexity in their application. Among 

the 16 receipts based size standards 

adjusted for inflation, only three ($15 

million, $20.5 million, and $27.5 

million) were reduced by $200,000 due 

to rounding. This is minuscule relative 

to the adjusted size standards, which 

SBA believes would not cause much 

harm to businesses. Thus, in this final 

rule, SBA is not readjusting the size 

standards for inflation by rounding 

them to $200,000. However, SBA will 

consider applying alternative rounding 

amounts in future adjustments to size 

standards for inflation. 

Comment on the SBIC Alternative Size 

Standard 

Fully supporting size standards 

increases for inflation, one commenter 

stated that the increase to the Small 

Business Investment Company (SBIC) 

size standard allows SBICs to effectively 

deploy capital to growing small 

businesses. The commenter 

recommended that SBA allow 

automatic, formulaic updates to the size 

standards based on the GDP price index 

without prior public participation. 

Another commenter supported a 

greater increase to the tangible net 

worth and net income based alternative 

size standard that applies to the SBIC 

Program. The commenter argued that 

the increase should be greater because 

SBA has not increased the alternative 

size standard for the SBIC Program since 

the 1994 inflation adjustment. For the 

increase in the June 12, 2014 IFR SBA 

used the GDP price index, which 

resulted in an increase to the SBIC 

alternative size standard to $19.5 

million in tangible net worth and $6.5 

million in average net income after 

federal income tax, the commenter 

explained. Furthermore, the commenter 

pointed out that had SBA used the 

increase in the GDP price index since 

the 1994 adjustment, the resulting size 

standard would be $26.5 million in 

tangible net worth and $8.8 million in 

average net income after federal income 

tax. The commenter further contended 

that Producer Price Index (PPI) could be 

a better index to use for the SBIC 

Program because most of the SBIC 

investment goes to small manufacturers. 

PPI, in the commenter’s opinion, would 

raise the size standard to $31.3 million 

in tangible net worth and $10.4 million 

in average net income after federal 

income tax. Finally, the commenter 

suggested adopting $20 million in 

tangible net worth and $7.0 million in 

average net income after federal income 

tax. The commenter also raised 

concerns about the definition of 

‘‘tangible net worth.’’ Specifically, the 

commenter pointed out that for the SBIC 

Program the only intangible element 

SBA deducts from net worth to 

determine tangible net worth is 

‘‘goodwill.’’ The commenter 

recommended that the Agency should 

allow the deduction of all intangibles, 

not just goodwill, in accordance with 

U.S. generally accepted accounting 

principles (GAAP). 

SBA’s response: In any given 

measurement period, inflation may be 

insignificant or even negative. Given the 

8.73 percent rate of inflation for the 

period covered by this rule, SBA 

believes that a 5-year review for size 

standards for inflation is adequate. More 

frequent, smaller increases (or 

decreases) would lead to confusion in 

applying size standards, particularly in 

Federal contracting. Furthermore, to 

change size standards SBA must comply 

with Federal rulemaking and the 

Regulatory Flexibility Act (RFA), which 

require SBA to seek public comment on 

contemplated changes, as well as 

comply with other laws and Executive 

Orders to address the impact of 

regulatory changes on small businesses. 

If inflation is really large, SBA may 

adjust the size standards more 

frequently than the 5-year interval. 

It should be noted that the subject 

rule was an IFR, seeking public 

comments, rather than a proposed rule. 

Therefore, the revised size standards in 

the IFR were effective July 14, 2014. The 

IFR applied the 8.73 percent increase for 

inflation to all size standards across the 

board. Any significant deviation from 

that would require a separate 

rulemaking action for the SBIC Program. 

SBA can consider modifying the size 

standard for the SBIC Program in the 

future, provided that relevant data and 

program needs would support a size 

standard that is different from the one 

adopted in this rule. The ‘‘tangible net 

worth’’ measure of business size applies 

to the alternative size standards for 

SBA’s financial programs. Accordingly, 

any concerns or issues regarding the 

definition of ‘‘tangible net worth’’ are 

better addressed to SBA’s Office of 

Investment and Innovation. 

SBA recognizes that inflation may not 

impact every industry or program 

equally. SBA’s small business size 

standards apply to a wide variety of 

Federal Government programs, 

including the SBIC Program, and to 

businesses engaged in multiple 

industries. Although SBICs may support 

firms in many manufacturing industries, 

it is not limited to the manufacturing 

sector. For these reasons, SBA uses a 

broad measure of inflation for the entire 

U.S. economy to determine the most 

appropriate rate of inflation by which to 

adjust all of its monetary size standards. 

In the IFR, SBA explains in detail why 

the GDP price index, rather than other 

measures such as the PPI, is the most 

appropriate measure of inflation for 

adjusting size standards. SBA’s 

decisions not to adjust the SBIC 

alternative size standard from 1994 to 

the 2008 inflation adjustment were 

dictated by SBIC’s programmatic 

considerations. Because the $20 million 

tangible net worth and $7 million net 

income size standards recommended by 

the commenter are very close to SBA’s 

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Federal Register / Vol. 81, No. 15 / Monday, January 25, 2016 / Rules and Regulations 3951 

inflation adjusted levels of $19.5 million 

tangible net worth and $6.5 million net 

income published in the IFR, SBA is not 

making any change in this final rule. 

Comments on the Dredging Size 

Standard 

SBA received six comments on the 

size standard for the Dredging and 

Cleanup Services exception under 

NAICS 237990, Other Heavy and Civil 

Engineering Construction. The June 12, 

2014 IFR increased the size standard for 

Dredging and Cleanup Services from 

$25.5 million to $27.5 million in 

average annual receipts. Four of the six 

commenters strongly supported the 

increase, while two opposed it. The four 

commenters supporting the increase 

maintained that the increase is vital to 

account for the escalating costs of labor, 

equipment, and equipment 

maintenance. They also stated that it 

will allow firms that grew because of the 

costs of inflation to remain small and 

eligible for Federal procurement 

opportunities for small businesses. 

One of the commenters supporting the 

increase to the dredging size standard 

for inflation suggested that SBA take the 

four largest costs on dredging projects 

(i.e., fuel, labor, insurance and 

equipment costs) into account to 

calculate the inflation index for the 

dredging size standard. Arguing that 

dredging costs have increased more than 

the GDP price index, the commenter 

requested that the size standard for 

dredging be raised to $30 million. 

Two dredging contractors, on the 

other hand, stated that the increase is 

unjustified, and strongly oppose it. They 

argued that the recent increase to the 

dredging size standard accounted for 

inflationary factors and was sufficiently 

substantial to offset any need for an 

adjustment for inflation. One opined 

that a reasonable amount of time should 

lapse prior to increasing the size 

standard again. Representing a large 

marine construction and dredging 

contractor, another commenter argued 

that the increase to the dredging size 

standard reduces his company’s (and 

presumably other similar businesses) 

potential bid market while enhancing 

the market power of the ‘‘big smalls,’’ 

allowing them to dominate the ‘‘small 

smalls’’ further. The commenter 

maintained that fuel prices are actually 

down while newer engines burn less 

fuel. Advances in automation, reduced 

plastic pipe prices, and improved 

engine metallurgy are a few examples of 

improved cost efficiencies a firm must 

adopt to stay competitive, the 

commenter added. 

SBA’s response: On July 18, 2012, as 

part of SBA’s comprehensive review of 

size standards under the Jobs Act, SBA 

had proposed to increase the size 

standard for the Dredging and Surface 

Cleanup Activities exception under 

NAICS 237990 from $20 million to $30 

million in average annual receipts (77 

FR 42197). SBA received several 

comments against the proposed 

increase. After reviewing comments and 

reevaluating the relevant industry data, 

the Agency adopted a $25.5 million size 

standard in the final rule (78 FR 77334 

(December 23, 2013)). In the June 12, 

2014 IFR, it was increased to $27.5 

million for inflation. Adjustments in the 

IFR are in addition to revisions that 

were part of SBA’s ongoing 

comprehensive size standards review. 

SBA’s comprehensive size standards 

review primarily focused on industry 

structure (i.e., average firm size, startup 

costs and entry barriers, industry 

concentration, and distribution of firms 

by business size) and Federal 

contracting trends. It did not consider 

the impacts of inflation on size 

standards. 

For the comprehensive review, SBA 

reviewed size standards on a Sector by 

Sector basis over a period of several 

years. Including inflation in the analysis 

would have meant applying different 

inflation rates to different sectors. 

Specifically, the amount of inflation 

adjustment would be lower for sectors 

reviewed earlier in the cycle and higher 

for those reviewed later, resulting in 

inconsistent size standards across 

sectors and industries. To avoid this, 

SBA decided to review all monetary 

based size standards for inflation 

separately at one time upon completion 

of the review of all monetary based 

industry size standards. 

In the IFR, SBA increased all 

monetary based industry size standards 

by 8.73 percent across the board for 

inflation, including those that were 

increased more substantially than the 

dredging size standard under the 

comprehensive review. SBA’s 

regulations require that the Agency 

examine the impact of inflation on size 

standards at least once every five years 

and adjust them as needed. Five years 

had passed between the current 

inflation adjustment and the previous 

adjustment issued in July 2008. A 

majority of the commenters argued that 

the increase in the dredging size 

standard is warranted given the 

increases in fuel, labor, insurance and 

equipment costs. Moreover, based on 

the Federal procurement data for fiscal 

years 2012–2014, no additional 

dredging firms would gain small 

business status under the adjusted size 

standard, suggesting that there would be 

very minimal impact, if any, on firms 

below the previous $25.5 million size 

standard. For these reasons, SBA is 

adopting $27.5 million in average 

annual receipts as the size standard for 

Dredging and Surface Cleanup 

Activities exception under NAICS 

237990, as published in the IFR. 

Comment on the Size Standard for 

Architectural Services 

An association representing architects 

expressed concerns that the increase in 

size standard for Architectural Services 

(NAICS 541310) from $7.0 million to 

$7.5 million will pose additional 

burdens on small architecture firms and 

does not reflect the current business 

environment in the profession. 

The association stated that the SBA’s 

February 10, 2012 final rule on Sector 

54 (Professional, Technical and 

Scientific Services) notes that ‘‘the 

Administration’s goal is to increase the 

size standard participation to 42 percent 

of each applicable industry.’’ The 

association stated that under the current 

$7 million size standard for 

architecture, over 95.5 percent of firms 

qualify as small businesses, more than 

double the goal, and raising it to $7.5 

million will increase that to 96 percent. 

The association maintained that there 

have been significant deflationary 

pressures on the cost of design and 

construction projects due to the 

economic crisis, fewer projects, and 

increased competition. There has not 

been sufficient inflation in the sector to 

justify increasing the size standard, the 

association added. The association 

further maintained that the size 

standard does not reflect the way 

architects conduct business. For 

example, an architect may have to hire 

engineers to complete building projects, 

and in some cases, similar to travel 

agencies, an architectural firm can pass 

through up to 50 percent of its fees to 

subcontractors, the association added. 

The association concluded that 

additional increase to the size standard 

will hurt small businesses by allowing 

larger firms with greater resources and 

marketing dollars to push out smaller 

firms without those resources. 

SBA’s response: To account for 

inflation that occurred since the 

previous inflation adjustment of July 

2008, in the June 12, 2014 IFR, SBA 

increased the size standard for NAICS 

541310 (Architectural Services) from $7 

million to $7.5 million in average 

annual receipts. As part of SBA’s 

comprehensive size standards review, 

on March 16, 2011, SBA had issued a 

proposed rule to increase the size 

standard for NAICS 541310 and other 

industries under NAICS Industry Group 

5413 (Architectural, Engineering, and 

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3952 Federal Register / Vol. 81, No. 15 / Monday, January 25, 2016 / Rules and Regulations 

Related Services) from $4.5 million to 

$19 million in average annual receipts 

(76 FR 14323). SBA received significant 

adverse comments to the proposed 

increase. After weighing the comments 

and reevaluating the relevant industry 

and Federal contracting data, SBA 

adopted $7 million as the size standard 

for NAICS 541310 (77 FR 7490 

(February 10, 2012)). As stated 

elsewhere in this final rule and 

explained in the IFR, for the 

comprehensive review, size standards 

were evaluated against the latest 

industry and contracting factors, but not 

against the inflation that occurred since 

the previous inflation adjustment in July 

2008. 

The association’s statement that in the 

February 10, 2012 final rule SBA noted 

that the Administration’s goal is to 

increase the size standard participation 

to 42 percent of each applicable 

industry is not correct. SBA has not 

established such a goal. For the majority 

of industries the current size standards 

include 90–95 percent of firms as small, 

and in some industries more. Thus, the 

size standard for architects including 

95–96 percent of firms as small is not 

inconsistent with most other industries. 

Moreover, although the $7.5 million size 

standard for architectural services 

includes 95–96 percent of firms, it 

includes less than 50 percent of total 

industry receipts and less than 30 

percent of Federal contracting dollars. 

SBA does not agree with the argument 

that, because architectural firms 

subcontract up to 50 percent of their 

work to other disciplines, the receipts 

based size standard does not reflect the 

industry. In response to the comments 

on the March 16, 2011 proposed rule 

that SBA should allow architectural 

firms to exclude subcontracting costs 

when calculating the receipts, SBA 

provided in the February 10, 2012 final 

rule (see page 7502) an extensive 

explanation of how the Agency 

calculates receipts and what a company 

can and cannot exclude from the 

revenue computation. 

More importantly, it should be noted 

that the business model of architectural 

firms is not comparable with that of 

travel agencies. A travel agency may 

collect the full value of a cruise, flight, 

etc., from its customers, but must remit 

most of those funds to the provider of 

the services sold. It retains only a small 

commission or fee and never has any 

rights to the balance of the funds it 

collects. Those funds do not increase 

the travel agency’s asset base and are 

not available to reduce its liabilities. On 

the other hand, receipts an architectural 

firm collects can be used to replenish 

inventory, pay employees and other 

subcontracting costs, reduce payables 

and debt, pay bonuses, and for other 

business purposes. They add to the 

business’ asset base and net worth, and 

reduce liabilities. Further, the Economic 

Census data that SBA uses in 

determining size standards include 

these various costs as part of a 

company’s gross receipts. Accordingly, 

SBA’s small business size regulations 

(13 CFR 121.104) continue to state, 

‘‘. . . subcontractor costs, 

reimbursements for purchases a 

contractor makes at a customer’s 

request, and employee-based costs such 

as payroll taxes, may not be excluded 

from receipts.’’ 

SBA also does not agree with the 

association’s argument that an 

additional increase to the size standard 

will hurt small businesses by allowing 

larger firms with greater resources to 

push out smaller firms without those 

resources. First, it did not provide any 

data or analysis to support the 

argument. Second, the data from the 

Federal Procurement Data System— 

Next Generation (FPDS–NG) do not 

suggest that the increase in the size 

standard for architectural services from 

$4.5 million to $7 million in 2012 has 

hurt firms below the prior $4.5 million 

size standard. For example, during fiscal 

years 2010–2011 (i.e., prior to the size 

standard increase), firms below $4.5 

million received about 25 percent of 

total Federal contract dollars awarded 

under NAICS 541310. Firms under $4.5 

million still accounted for 25 percent of 

total contract dollars during fiscal years 

2013–2014 (i.e., after the size standard 

increase), despite a 33 percent decline 

in total Federal dollars in that NAICS 

code as compared to fiscal years 2010– 

2011. Moreover, during fiscal years 

2013–2014 (i.e., under the $7 million 

size standard) firms below $4.5 million 

accounted for 85 percent of total dollars 

awarded to small businesses, as 

compared to only about 4 percent going 

to firms from $4.5 million to $7 million. 

Based on these trends, SBA does not 

expect an increase to the size standard 

by $500,000 to cause much harm to and 

burden on firms below $4.5 million. 

Comment on the Size Standards for 

NAICS Subsector 562 

An elected official also commented on 

the interim final rule with questions on 

the rate of increase in the size standards 

for NAICS Subsector 562, Waste 

Management and Remediation Services. 

First, the commenter asked whether the 

rate of increase in the size standards for 

waste management service businesses 

reflects a similar increase in the GDP 

inflation rate and if not, what factors 

have been used to justify a larger 

increase. Second, the commenter asked, 

if there is a discrepancy, whether the 

amount of the increase comported with 

SBA’s own protocol used in other 

business increases. Third, the 

commenter asked whether there was a 

large discrepancy in size of businesses 

in this category or rates of inflation 

between regions of the country, and if 

so whether these discrepancies are 

significant enough to warrant regionspecific NAICS size rules. 

SBA’s response: The rate of increase 

that SBA applied to adjust size 

standards in NAICS Subsector 562 

reflects the same GDP price index rate 

that the Agency applied to all monetary 

based small business size standards. 

Inflation based on the GDP price index 

increased 8.73 percent from the first 

quarter of 2008 to the fourth quarter of 

2013. As in the previous inflation 

adjustments, SBA also used the GDP 

price index in the latest inflation 

adjustment, because, as explained in the 

interim final rule, for purposes of small 

business size standards it is the most 

comprehensive measure of movement in 

the general price level in the economy. 

As part of the comprehensive size 

standards review under the Jobs Act, on 

December 6, 2012, SBA published a 

final rule increasing several size 

standards in NAICS Subsector 562 (77 

FR 72691). The increases in size 

standards in NAICS Subsector 562 for 

inflation are in addition to the increases 

SBA adopted under the comprehensive 

review. 

SBA establishes small business size 

standards only on a nationwide basis. 

SBA believes it would be unmanageable 

to establish and use size standards if 

they were established on a regional 

basis. First, the data SBA uses to review 

or update size standards are generally 

limited to the national level. Second, 

size standards are used to determine 

eligibility for various Federal programs, 

including Federal Government 

contracting, and SBA loan programs. If 

the size standards were to vary by 

geographic region, it would be very 

difficult to use them. For example, it 

would be difficult to determine what 

size standards to apply when businesses 

located in one region bid for Federal 

work to be performed in another region. 

Similarly, it would be difficult to 

determine eligibility for an SBA loan 

when a firm has operations in more than 

one region. 

General Comment on Size Standards 

Increases 

Another commenter stated that 98 

percent of businesses (including nonemployer firms) are ‘‘truly small’’ 

having only 1–19 employees. The 

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commenter noted, correctly, that SBA 

leaves non-employer firms out of its 

statistics. The commenter claimed that 

the average size of SBA’s loan increased 

from $182,000 in 2008 to $547,000 in 

2013, while the share of loans under 

$100,000, which he claims generally go 

to truly small businesses, decreased 

from 24 percent to 9 percent. The 

commenter used these statistics to argue 

that the expansion of small business 

size definitions has allowed large 

corporations to qualify as small, 

resulting in significantly larger loans to 

a few, elite larger corporations. The 

commenter cited the European Union 

and Australian small business 

definitions and other definitions used 

by the U.S. Congress (e.g., 25 and 50 

employees), and stated that SBA’s size 

standards now include 99 percent of 

employer firms and 99.4 percent of all 

firms. 

SBA’s response: SBA acknowledges 

that some of its size standards could 

include as much as 97 percent to 99 

percent of firms in a given industry. 

However, it is very important to point 

out that while it may appear to be a 

large segment of an industry in terms of 

the percentage of firms, small firms in 

those industries represent only about a 

third of total industry receipts and less 

than 25 percent of Federal contracting 

dollars. 

What constitutes a small business in 

other countries does not apply and has 

no relevance to SBA’s small business 

definitions and U.S. Government 

programs that use them. Depending on 

their economic and political realities, 

other countries have their own programs 

and priorities that can be very different 

from those in the U.S. Accordingly, 

small business definitions other 

countries use for their Government 

programs can be vastly different from 

those established by SBA for U.S. 

Government programs. From time to 

time, the U.S. Congress has used 

different thresholds, sometimes below 

the SBA’s thresholds, to define small 

firms under certain laws or programs, 

but those thresholds apply only to those 

laws and programs and generally are of 

no relevance to SBA’s size standards. 

SBA establishes size standards, in 

accordance with the Small Business 

Act, for purposes of establishing 

eligibility for Federal small business 

procurement and financial assistance 

programs. The primary statutory 

definition of a small business is that the 

firm is not dominant in its field of 

operation. Accordingly, rather than 

representing the smallest size within an 

industry, SBA’s size standards generally 

designate the largest size that a business 

concern can be relative to other 

businesses in the industry and still 

qualify as small for Federal Government 

programs that provide benefits to small 

businesses. 

SBA does not agree that increases in 

average loan amounts and decreases in 

smaller loans are solely due to the 

increases in size standards for two 

reasons. First, with the passage of the 

Jobs Act in 2010, Congress increased the 

limits for SBA’s 7(a) loans from $2 

million to $5 million, for CDC/504 loans 

from $1.5 million to $5.5 million, and 

for 7(a) express loans from $300,000 to 

$1 million. Second, at the same time, 

Congress also increased the tangible net 

worth and net income limits of the 

alternative size standard from $8.5 

million and $3 million to $15 million 

and $5 million, respectively. Under the 

alternative size standard, businesses 

that are above their industry size 

standards can qualify for SBA’s loans. 

These statutory changes may be 

important factors for the purported 

changes in SBA’s lending. However, 

such changes do not necessarily mean 

that truly small businesses are getting 

fewer loans now than in 2008. In fact, 

businesses with less than 10 employees 

received a total of $12.1 billion in loans 

through SBA’s 7(a) and 504 Loan 

Programs in 2014, as compared to $10.6 

billion in 2008. That was in increase of 

more than 14 percent. 

Conclusion 

With due consideration of all public 

comments as discussed above, in this 

final rule, SBA is adopting the increases 

in all industry specific monetary size 

standards for inflation, as published in 

the IFR. SBA is also adopting the 

increases in three program specific size 

standards, namely the SBIC Program, 

Sales of Government Property (Other 

Than Manufacturing), and Stockpile 

Purchases. Similarly, SBA is also 

deleting references to the Surety Bond 

Guarantee size standards for contracts 

awarded in 2005 in the Presidentially 

declared disaster areas following 

Hurricanes Katrina, Rita, and Wilma, 

and the determination date for 

eligibility under the Agency’s Economic 

Injury Disaster Loan (EIDL) Program in 

connection with the same 2005 

hurricanes, as published in the IFR. 

Accordingly, SBA is issuing this final 

rule to adopt, without change, the 

interim final rule published on June 12, 

2014. 

Compliance With Executive Orders 

12866, 13563, 12988, and 13132, the 

Regulatory Flexibility Act (5 U.S.C. 

601–612) and the Paperwork Reduction 

Act (44 U.S.C. Ch. 35) 

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 for this 

rule and the rule’s potential benefits and 

costs, SBA provided a Cost Benefit 

Analysis in the June 14, 2014 interim 

final rule. This is also not a ‘‘major rule’’ 

under the Congressional Review Act (5 

U.S.C. 800). 

1. Is there a need for the regulatory 

action? 

SBA’s statutory mission is to aid and 

assist small businesses through various 

financial, procurement, business 

development, and advocacy programs. 

To assist the intended beneficiaries of 

these programs effectively, SBA must 

establish distinct definitions of which 

businesses are deemed small businesses. 

The Small Business Act (15 U.S.C. 

632(3)(a)) (Act) delegates to the SBA 

Administrator the responsibility for 

establishing small business definitions. 

The Act also requires that small 

business definitions vary to reflect 

industry differences. The 

supplementary information to this final 

rule explains the approach SBA follows 

when adjusting size standards for 

inflation. Based on the rise in the 

general level of prices, SBA believes 

that an inflation adjustment to size 

standards is necessary to reflect small 

businesses in industries with monetary 

size standards. 

2. What are the potential benefits and 

costs of this regulatory action? 

The most significant benefit to 

businesses of this final rule is to enable 

those that have exceeded size standards 

simply due to inflation to regain 

eligibility for Federal small business 

assistance programs. This will also help 

businesses to retain small business 

eligibility for Federal programs for a 

longer period. These programs include 

SBA’s financial assistance programs, 

economic injury disaster loans, and 

Federal procurement programs intended 

for small businesses. Federal agencies 

use SBA’s 8(a) Business Development 

Program, Historically Underutilized 

Business Zones (HUBZone), Womenowned Small Businesses (WOSB), 

Economically Disadvantaged Womenowned Small Businesses (EDWOSB), 

and Service-disabled Veteran-owned 

Small Businesses (SDVOSB) Programs 

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3954 Federal Register / Vol. 81, No. 15 / Monday, January 25, 2016 / Rules and Regulations 

to provide contracting opportunities for 

qualified small businesses. Federal 

agencies also use SBA’s size standards 

for other regulatory and program 

purposes. These programs assist small 

businesses to become more 

knowledgeable, stable, and competitive. 

SBA estimates that this rule will enable 

approximately 8,500 firms in industries 

with receipts based size standards and 

about 170 firms in industries with assets 

based size standards, currently above 

SBA’s size standards, to gain small 

business status and become eligible for 

these programs. This will increase the 

small business share of total receipts in 

industries with receipts based size 

standards from 31.2 percent to 31.8 

percent and the small business share of 

total assets in industries with assets 

based size standards from 8.8 percent to 

9.4 percent. 

Three groups will benefit from the 

revisions of size standards in this rule: 

(1) Some businesses that are above the 

current size standards may gain small 

business status under the higher, 

inflation-adjusted 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 that 

will have a larger pool of small 

businesses from which to draw for their 

small business procurement programs. 

Based on the FPDS–NG data for fiscal 

years 2012–2014, SBA estimates that 

firms gaining small business status 

under the inflation adjusted size 

standards could receive Federal 

contracts totaling $150 million to $175 

million annually under SBA’s small 

business, 8(a), SDB, HUBZone, WOSB, 

EDWOSB, and SDVOSB Programs, and 

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, but SBA cannot quantify 

this benefit. 

Based on the fiscal years 2012–2014 

data, SBA estimates about 70 additional 

loans totaling about $30 million could 

be made to these newly defined small 

businesses under SBA’s 7(a) and 504 

Loan Programs under the adjusted size 

standards. Increasing the size standards 

will likely result in more guaranteed 

loans to small businesses in these 

industries, but it is impractical to try to 

estimate the exact number and total 

amount of loans. There are two reasons 

for this: (1) Under the Jobs Act, SBA can 

now guarantee substantially larger loans 

than in the past; and (2) as described 

above, the Jobs Act established an 

alternative size standard ($15 million in 

tangible net worth and $5 million in net 

income after income taxes) for business 

concerns that do not meet the size 

standards for their industry. Therefore, 

SBA finds it difficult to quantify the 

actual impact of these inflation adjusted 

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 a disaster in the future, 

SBA cannot make a meaningful estimate 

of this impact. 

In addition, newly defined small 

businesses will also benefit through 

reduced fees, less paperwork, and fewer 

compliance requirements that are 

available to small businesses through 

the Federal Government. 

To the extent that those nearly 8,700 

additional small firms could become 

active in Federal procurement programs, 

the adjusted size standards in this final 

rule may entail some additional 

administrative costs to the Government 

as a result of more businesses being 

eligible for Federal small business 

programs. For example, there will be 

more firms seeking SBA’s guaranteed 

loans, more firms eligible for enrollment 

in the System of Award Management 

(SAM) database, and more firms seeking 

certification as 8(a) or HUBZone firms 

or qualifying for small business, WOSB, 

EDWOSB, SDVOSB, and SDB status. 

Among those newly defined small 

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 that these added 

administrative costs will be minimal 

because mechanisms are already in 

place to handle these requirements. 

In some cases, Federal Government 

contracts may have higher costs. 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 small 

business set-aside contracting might 

result in competition among fewer total 

bidders, although there will be more 

small businesses eligible to submit 

offers. However, the additional costs 

associated with fewer bidders are 

expected to be minor since, by law, 

procurements may be set aside for small 

businesses, or set aside for competition 

among 8(a), HUBZone, WOSB, 

EDWOSB, or SDVOSB Program 

participants only if awards are expected 

to be made at fair and reasonable prices. 

In addition, there may be higher costs 

when more full and open contracts are 

awarded to HUBZone businesses that 

receive price evaluation preferences. 

The size standards adjustments in this 

final rule 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 probable 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 contracts for small businesses. In 

addition, some Federal contracts may be 

awarded to HUBZone concerns instead 

of large businesses since these firms 

may be eligible for a price evaluation 

preference for contracts when they 

compete on a full and open basis. 

Similarly, some businesses defined as 

small under the current size standards 

may obtain fewer Federal contracts due 

to the increased competition from more 

businesses defined as small under the 

proposed size standards. This transfer 

may be offset by a greater number of 

Federal procurements 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 from large 

and currently defined small businesses. 

SBA cannot estimate the potential 

distributional impacts of these transfers 

with any degree of precision. 

The revisions to the current monetary 

based industry size standards for 481 

industries and 11 ‘‘exceptions’’ and to 

the monetary based size standards for 

other specific programs 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, including periodic inflation 

adjustments, ensure 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 

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Federal Register / Vol. 81, No. 15 / Monday, January 25, 2016 / Rules and Regulations 3955 

associated with this action including 

possible distributions impacts that 

relate to Executive Order 13563 is 

included above in the Cost Benefit 

Analysis under Executive Order 12866. 

In an effort to engage interested 

parties in this action, SBA gave 

appropriate consideration to all input, 

suggestions, recommendations, and 

relevant information obtained from 

industry groups, individual businesses, 

and Federal agencies in preparing this 

final rule. 

The review of size standards in 

industries and financial assistance 

programs covered in this final rule is 

consistent with Executive Order 13563, 

Section 6, calling for retrospective 

analyses of existing rules. The last 

inflationary adjustment of monetary 

based size standards occurred in July 

2008. 

In addition to the inflationary 

adjustment of monetary based size 

standards published in the June 12, 

2014 interim final rule, as part of the 

comprehensive size standards review, 

SBA reviewed all the receipts and assets 

based industry size standards and made 

necessary adjustments to ensure that 

they reflect current industry and market 

conditions. 

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 the purpose 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 

recordkeeping requirements. 

Final Regulatory Flexibility Analysis 

Under the Regulatory Flexibility Act 

(RFA), this rule may have a significant 

impact on a substantial number of small 

businesses in the industries covered by 

the rule. As described above, this rule 

may affect small businesses seeking 

Federal contracts, loans under SBA’s 

7(a), 504 and Economic Injury Disaster 

Loan Programs, and assistance under 

other Federal small business programs. 

Immediately below, SBA sets forth a 

final regulatory flexibility analysis 

(FRFA) of this 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, 

recordkeeping, 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 businesses? 

1. What are the need for and objective 

of the rule? 

As discussed in the supplemental 

information, the revision to the 

monetary based size standards for 

inflation more appropriately defines 

small businesses. This final rule restores 

small business eligibility in real terms to 

businesses that have grown above the 

size standard due to inflation rather 

than due to increased business activity. 

A review of the latest inflation indexes 

indicates that inflation has increased 

sufficiently to warrant an increase to the 

current monetary based size standards. 

Section 3(a) of the Small Business Act 

(15 U.S.C. 632(3)(a)) gives SBA the 

authority to establish and change size 

standards. Within its administrative 

discretion, SBA implemented a policy 

in its regulations to review the effect of 

inflation on size standards at least once 

every five years (13 CFR 121.102(c)) and 

make any changes as appropriate. As 

discussed in the supplementary 

information, inflation has increased at a 

sufficient level since the time of the 

2008 final rule to warrant a further 

adjustment to size standards at this 

time. 

2. What are SBA’s description and 

estimate of the number of small 

businesses to which the rule will apply? 

SBA estimates that about 8,500 

additional firms will become small 

because of increased receipts based size 

standards of 476 industries and 11 

‘‘exceptions.’’ That represents 0.2 

percent of total firms that are small 

under current monetary based size 

standards. This will result in an 

increase in the small business share of 

total industry receipts in those 

industries from 31.2 percent under the 

current size standards to 31.8 percent 

under the inflation-adjusted size 

standards. Due to the adjustment of 

assets based size standards in five 

industries, about 170 additional firms 

will gain small business status in those 

industries. This will increase the small 

business share of total assets in those 

industries from 8.8 percent to 9.4 

percent. The size standards adopted in 

this final rule will enable businesses 

that have exceeded the size standards 

for their industries to regain small 

business status. It will also help 

currently 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; entities that are not small are 

‘‘other than small.’’ 

3. What are the projected reporting, 

recordkeeping and other compliance 

requirements of the rule? 

The inflation adjustment to size 

standards imposes no additional 

reporting or recordkeeping requirements 

on small businesses. However, 

qualifying for Federal procurement and 

a number of other programs requires 

that businesses register in the SAM 

database and certify in SAM that they 

are small at least once annually. 

Therefore, newly eligible small 

businesses opting to participate in those 

programs must comply with SAM 

requirements. Businesses whose status 

changes in SAM from other than small 

to small must update their SAM profiles 

and complete the ‘‘representations and 

certifications’’ sections of SAM. 

However, there are no costs associated 

with SAM registration or certification. 

Changing size standards alters access to 

SBA’s programs that assist small 

businesses, but does not impose a 

regulatory burden because they neither 

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(3)(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 

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3956 Federal Register / Vol. 81, No. 15 / Monday, January 25, 2016 / Rules and Regulations 

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 develop 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 

SBA’s regulations (13 CFR 121.903(c)) 

authorize an agency to establish an 

alternative small business definition for 

the sole purpose of performing a 

regulatory flexibility analysis pursuant 

to the Regulatory Flexibility Act (5 

U.S.C. 601(3)), after consultation with 

the Office of Advocacy of the U.S. Small 

Business Administration. 

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 

systems of numerical size standards. 

SBA’s only other consideration was 

whether to adopt the size standards 

presented in the interim final rule with 

no further increase for the inflation. 

However, SBA believes that the 

inflation that has occurred since the 

publication of the June 12, 2014 interim 

final rule is not sufficient to warrant an 

additional increase at this time. 

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. 

PART 121—SMALL BUSINESS SIZE 

REGULATIONS 

■ For the reasons set forth in the 

preamble, the interim rule amending 13 

CFR part 121, which was published at 

79 FR 33647 on June 12, 2014, is 

adopted as a final rule without change. 

Dated: January 12, 2016. 

Maria Contreras-Sweet, 

Administrator. 

[FR Doc. 2016–01410 Filed 1–22–16; 8:45 am] 

BILLING CODE 8025–01–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Food and Drug Administration 

21 CFR Parts 1, 11, 16, 106, 110, 114, 

117, 120, 123, 129, 179, and 211 

[Docket No. FDA–2011–N–0920] 

RIN 0910–AG36 

Current Good Manufacturing Practice, 

Hazard Analysis, and Risk-Based 

Preventive Controls for Human Food; 

Correction 

AGENCY: Food and Drug Administration, 

HHS. 

ACTION: Final rule; correction. 

SUMMARY: The Food and Drug 

Administration (FDA or we) is 

correcting a final rule that published in 

the Federal Register of September 17, 

2015. That final rule amended our 

regulation for current good 

manufacturing practice in 

manufacturing, packing, or holding 

human food to modernize it, and to add 

requirements for domestic and foreign 

facilities that are required to register 

under the Federal Food, Drug, and 

Cosmetic Act (the FD&C Act) to 

establish and implement hazard 

analysis and risk-based preventive 

controls for human food. That final rule 

also revised certain definitions in our 

current regulation for registration of 

food facilities to clarify the scope of the 

exemption from registration 

requirements provided by the FD&C Act 

for ‘‘farms.’’ The final rule published 

with some editorial and inadvertent 

errors. This document corrects those 

errors. 

DATES: Effective: January 26, 2016. 

FOR FURTHER INFORMATION CONTACT: 

Jenny Scott, Center for Food Safety and 

Applied Nutrition (HFS–300), Food and 

Drug Administration, 5100 Paint Branch 

Pkwy., College Park, MD 20740, 240– 

402–2166. 

SUPPLEMENTARY INFORMATION: In the 

Federal Register of Thursday, 

September 17, 2015 (80 FR 55908), FDA 

published the final rule ‘‘Current Good 

Manufacturing Practice, Hazard 

Analysis, and Risk-Based Preventive 

Controls for Human Food’’ with some 

editorial and inadvertent errors. This 

action is being taken to correct 

inadvertent errors in the preamble and 

codified. 

In FR Doc. 2015–21920, appearing on 

page 55908 in the Federal Register of 

Thursday, September 17, 2015, the 

following corrections are made: 

1. On page 55908, in the first column, 

the headings section of the document, 

under the line containing ‘‘[Docket No. 

FDA–2011–N–0920],’’ is corrected by 

adding ‘‘RIN 0910–AG36’’. 

2. On page 55938, in the second 

column, in the first paragraph under 

‘‘VII. Comments on Proposed General 

Revisions to Current Part 110 (Final Part 

117),’’ ‘‘revising provisions directed to 

preventing contamination of food and 

food-contact substances’’ is corrected to 

read ‘‘revising provisions directed to 

preventing contamination of food and 

food-contact surfaces.’’ 

■ 3. On page 56151, beginning in the 

second column, revise § 117.8 to read as 

follows: 

‘‘§ 117.8 Applicability of subpart B of this 

part to the off-farm packing and holding of 

raw agricultural commodities. 

Except as provided by § 117.5(k)(1), 

subpart B of this part applies to the offfarm packaging, packing, and holding of 

raw agricultural commodities. 

Compliance with this requirement for 

raw agricultural commodities that are 

produce as defined in part 112 of this 

chapter may be achieved by complying 

with subpart B of this part or with the 

applicable requirements for packing and 

holding in part 112 of this chapter.’’ 

§ 117.405 [Corrected] 

■ 4. On page 56164, in the first column, 

in § 117.405 Requirements to establish 

and implement a supply chain program, 

paragraph (c) introductory text is 

corrected to read as follows: 

‘‘(c) When a supply-chain-applied 

control is applied by an entity other 

than the receiving facility’s supplier 

(e.g., when a non-supplier applies 

controls to certain produce (i.e., 

produce covered by part 112 of this 

chapter), because growing, harvesting, 

and packing activities are under 

different management), the receiving 

facility must:’’ 

Dated: January 14, 2016. 

Leslie Kux, 

Associate Commissioner for Policy. 

[FR Doc. 2016–01092 Filed 1–22–16; 8:45 am] 

BILLING CODE 4164–01–P 

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