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[Federal Register Volume 75, Number 193 (Wednesday, October 6, 2010)]
[Rules and Regulations]
[Pages 61597-61604]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-24855]

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SMALL BUSINESS ADMINISTRATION

13 CFR Part 121

RIN 3245-AF69

Small Business Size Standards: Retail Trade

AGENCY: U.S. Small Business Administration.

ACTION: Final rule.

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SUMMARY: The United States Small Business Administration (SBA) is 
modifying 47 small business size standards for industries in North 
American Industry Classification System (NAICS) Sector 44-45, Retail 
Trade, and retaining the current standards for the remaining industries 
in the Sector. In this final rule, SBA is increasing 46 of the size 
standards and converting the measure of size for one industry (NAICS 
441110, New Car Dealers) from annual receipts to number of employees. 
As part of its ongoing initiative to review all size standards, SBA has 
evaluated every industry in NAICS Sector 44-45 to determine whether the 
existing size standards should be retained or revised. This rule also 
modifies SBA's Small Business Size Regulations to clarify that an NAICS 
code that represents a Wholesale Trade (NAICS Sector 42) or Retail 
Trade (NAICS Sector 44-45) Industry shall not be used for the Federal 
government's procurement of supplies.

DATES: This rule is effective November 5, 2010.

FOR FURTHER INFORMATION CONTACT: Carl Jordan, Program Analyst, Office 
of Size Standards, (202) 205-6618 or [email protected].

SUPPLEMENTARY INFORMATION: 

Introduction

    To determine eligibility for Federal small business assistance 
programs, SBA establishes small business size definitions (referred to 
as size standards) for private sector industries in the United States. 
SBA's existing size standards use two primary measures of business 
size--annual receipts and number of employees. Financial assets, 
electric output and refining capacity are used as size measures for a 
few specialized industries. In addition, SBA's Small Business 
Investment Company (SBIC) and the Certified Development Company (CDC) 
Programs determine small business eligibility using either the industry 
based size standards or net worth and net income based size standards. 
Currently, SBA's size standards consist of 45 different size levels, 
covering 1,141 NAICS industries and 17 sub-industry activities. Of 
these size levels, 32 are based on average annual receipts, eight are 
based on number of employees, and five are based on other measures. In 
addition, SBA has established 11 other size standards for its financial 
and procurement programs.
    Over the years, SBA has received comments that its size standards 
have not kept up with changes in the economy and, in particular, that 
they do not reflect changes in the Federal contracting marketplace. The 
last overall review of size standards occurred during the late 1970s 
and early 1980s. Since then, most reviews of size standards have been 
limited to in-depth analyses of specific industries in response to 
requests from the public and Federal agencies. SBA also makes periodic 
inflation adjustments to its monetary based size standards. The latest 
inflation adjustment to size standards was published in the Federal 
Register on July 18, 2008 (73 FR 41237).
    SBA recognizes that changes in industry structure and the Federal 
marketplace over time have rendered existing size standards for some 
industries no longer supportable by current data. Accordingly, SBA has 
begun a comprehensive review of its size standards to determine whether 
existing size standards have supportable bases relative to the current 
data and, where necessary, to make revisions to existing size 
standards. Rather than review all size standards at one time, SBA has 
taken a more manageable approach to reviewing a group of related 
industries within an NAICS Sector. SBA expects to complete its review 
of all NAICS Sectors in two years.
    As part of its ongoing effort to review all small business size 
standards, SBA evaluated every industry in NAICS Sector 44-45, Retail 
Trade, to determine whether the existing size standards should be 
retained or revised, and published a proposed rule for public comment 
in the October 21, 2009 issue of the Federal Register (74 FR 53924) to 
increase the size standards for 47 industries in that Sector. The 
proposed rule was one of a series of proposals that will examine 
industries grouped by an NAICS Sector. SBA also published concurrently 
in the same October 21, 2009 issue of the Federal Register proposed 
rules to increase small business size standards for five industries in 
NAICS Sector 72, Accommodation and Food Services (74 FR 53913) and for 
18 industries in NAICS Sector 81, Other Services (74 FR

[[Page 61598]]

53941). Similarly, SBA is publishing final rules on NAICS Sector 72 and 
NAICS Sector 81 elsewhere in this issue of the Federal Register.
    In addition, SBA established its ``Size Standards Methodology'' for 
reviewing small business size standards and modifying them, where 
necessary. SBA published in the October 21, 2009 issue of the Federal 
Register (74 FR 53940) a notice of its availability, for public 
comments, on its Web site at http://www.sba.gov/contractingopportunities/officials/size/index.html. In addition, SBA 
has placed a copy of its ``Size Standards Methodology'' in the 
electronic docket of the proposed rule and is available there as well.
    In evaluating an industry's size standard, SBA examines the 
industry's characteristics (such as average firm size, startup costs, 
industry competition and distribution of firms by size), Federal 
Government contracting trends, impact on SBA financial assistance 
programs, and dominance in field of operations. SBA analyzed the 
characteristics of each industry in NAICS Sector 44-45 mostly using a 
special tabulation obtained from the U.S. Bureau of the Census from its 
2002 Economic Census (the latest available). SBA also evaluated Federal 
contracting trends using the data from the Federal Procurement Data 
System--Next Generation (FPDS-NG) for fiscal years 2006-2008. Although 
FPDS-NG contains data representing Federal procurement activity in 
Sector 44-45 and SBA reviewed it, the procurement data are not relevant 
to SBA's action in this final rule because retail trade size standards 
do not apply to Federal contracting. Rather, the 500 employee 
nonmanufacturer rule applies to the Federal government's procurement of 
goods and supplies. (13 CFR 121.406(b)). Therefore, procurement data do 
not form a basis on which to establish, evaluate or modify small 
business size standards in this Sector.
    To evaluate the impact of changes to size standards on its loan 
programs, SBA analyzed internal data on its guaranteed loan programs 
for fiscal years 2006-2008.
    SBA's ``Size Standards Methodology'' provides a detailed 
description of analyses of various industry and program factors and 
data sources and derivation of size standards using the results. In the 
proposed rule itself, SBA detailed how it applied ``Size Standards 
Methodology'' to review, and to modify where necessary, the existing 
standards for the Sector and Industries under analysis.
    SBA sought comments from the public on a number of issues about its 
``Size Standards Methodology,'' such as whether there are alternative 
methodologies that SBA should consider; whether there are alternative 
or additional factors or data sources that SBA should evaluate; whether 
SBA's approach to establishing small business size standards makes 
sense in the current economic environment; whether SBA's definitions of 
anchor size standards are appropriate in the current economy; whether 
there are gaps in SBA's methodology because of the lack of 
comprehensive data; and whether there are other facts or issues that 
SBA should consider in its methodology.
    SBA did not receive any comments on ``Size Standards Methodology.'' 
SBA continues to welcome comments from interested parties.
    In the proposed rule, based on its analyses of current industry and 
other relevant data, SBA proposed to increase 47 of the 76 size 
standards in NAICS Sector 44-45. SBA's analyses supported retaining the 
existing size standards for five industries. As noted in the proposed 
rule, SBA's analyses would support reducing size standards for the 
remaining 23 industries in the Sector. However, as the proposed rule 
pointed out, SBA believes that lowering size standards and thereby 
reducing the number of firms eligible to participate in Federal small 
business assistance programs would run counter to what the Agency is 
doing to help small businesses. Therefore, SBA proposed to retain the 
existing size standards for those 23 industries.
    SBA also proposed to revise the language in 13 CFR 121.402(b) to be 
consistent with the revised Sector headings in the table of size 
standards by deleting the last sentence and replacing it with 
``Acquisitions for supplies must be classified under the appropriate 
manufacturing NAICS code, not under a wholesale trade or retail trade 
NAICS code. A concern that submits an offer or quote for a contract or 
subcontract where the NAICS code assigned to the contract or 
subcontract is one for supplies, and furnishes a product it did not 
itself manufacture or produce, is categorized as a nonmanufacturer and 
deemed small if it has 500 or fewer employees and meets the 
requirements of 13 CFR 121.406.''

Summary of Comments

    The proposed rule sought comments from the public on SBA's proposal 
to increase 47 industry size standards in NAICS Sector 44-45, Retail 
Trade, and retain the remaining 29. SBA also requested comments on 
whether it should simplify size standards by reducing them to eight 
fixed levels. SBA received five comments, each of which is discussed 
below.
    One commenter strongly supported the proposed increases to size 
standards and requested SBA to expedite its review of another NAICS 
Sector in which the commenter's company was active. SBA intends to 
review all size standards in each NAICS Sector in a timely manner.
    Another commenter suggested that there should be only one maximum 
revenue based and one maximum employee based size standard, regardless 
of NAICS industry. While this would simplify size standards even more 
than what SBA had proposed, the Small Business Act states that ``the 
[SBA] Administrator shall ensure that the size standard varies from 
industry to industry to the extent necessary to reflect the differing 
characteristics of the various industries and consider other factors 
deemed to be relevant by the Administrator.'' (15 U.S.C. 632(a)(3)). 
The relevant data show significant differences among industries within 
each NAICS Sector, including Sector 44-45, and SBA believes that 
varying the size standard by industry not only complies with the Act, 
but it also serves the best interests of small businesses in that 
Sector. Therefore, SBA does not presently plan to reduce the number of 
receipts based size standard levels below eight.
    A commenter stated that there exist ``major economic disadvantages 
between a small business designated to have 500 employees and those 
that have 10 or less.'' Specifically, the commenter was concerned with 
the effects the various size standards have on competition for contract 
bidding. However, because small business size standards for industries 
in NAICS Sector 44-45 do not apply to Federal government contracting 
SBA's proposed standards would have little competitive implications for 
government contracting. For the Federal government's procurement of 
manufactured products the 500 employee nonmanufacturer rule applies in 
lieu of the individual standards for industries in NAICS Sector 44-45, 
Retail Trade. (13 CFR 121.406(b)). The commenter also suggested SBA 
designate a separate sub-group of truly small businesses and give them 
special preference for competing for smaller government contracts. 
While this would give truly small businesses an economic advantage over 
their larger counterparts, the Small Business Act authorizes the SBA 
Administrator to establish only one definition of small business for an 
industry.

[[Page 61599]]

    An association representing new automobile dealers stated that it 
could not support SBA's proposed increase in the size standard for 
NAICS 441110, New Car Dealers, from $29 million to $30 million in 
average annual receipts and that it would be unlikely to support one 
even at $35.5 million. The association also indicated that, because of 
the high values and sale prices of new cars, a receipts based size 
standard is no longer practical or appropriate for New Car Dealers. In 
the proposed rule, SBA had considered 100 employees as an alternative 
to the proposed $30 million receipts based standard and had sought 
comments on whether an employee based size standard would be more 
appropriate for that industry. The association acknowledged that 100 
employees would cover about 80 percent of single location dealerships 
and thus would be consistent with SBA's historical objectives. However, 
it was concerned that a 100 employee standard would not cover, under 
SBA's affiliation rule, larger dealers with two or more stores. The 
association, therefore, recommended 200 employees as the more 
appropriate size standard for New Car Dealers. The association further 
noted that the U.S. Department of Transportation (DOT) has adopted 200 
employees as a size standard for car rental agencies at the Nation's 
airports under its concessionaire program. 72 FR 15614 (April 2, 2007).
    Size standards for industries in NAICS Sector 44-45 primarily apply 
to SBA's loan and other financing programs. SBA has recently broadened 
and enhanced its 7(a) Business Loan Guarantee Program making its 
financing terms more favorable for small businesses, including New Car 
Dealers. As part of that effort, SBA extended, as a pilot program, its 
7(a) Business Loan Guarantee Program to Dealer Floor Plan Financing. 
Therefore, in this final rule, SBA is adopting 200 employees as the 
size standard for NAICS 441110, New Car Dealers. This will enable more 
car dealers to participate in SBA's financing programs than under the 
proposed $30 million receipts based size standard. This is consistent 
with the Agency's ongoing efforts to assist more small businesses, 
including New Car Dealers. SBA's decision to establish a 200 employee 
standard for NAICS 441110, New Car Dealers, is consistent with DOT's 
adoption of 200 employees as a standard for its program.
    An association representing marine manufacturers commented on SBA's 
proposed size standards for NAICS 441221, Motorcycle, ATV and Personal 
Watercraft Dealers (proposed increase from $7 million to $14 million), 
NAICS 441222, Boat Dealers (proposed increase from $7 million to $14 
million) and NAICS 441210, Recreational Vehicle Dealers (proposed 
increase from $7 million to $30 million). The association expressed 
concern about the size standard for boat dealers as it affects their 
access to SBA's business and Dealer Floor Plan loans. When dealers 
cannot obtain financing it affects manufacturers and their ability to 
provide them with products. In its comment, the association stated that 
there are many similarities among the three industries cited above and 
suggested that SBA establish a common size standard for all three. Many 
vendors do not limit their sale to only one product. Rather, they carry 
and sell products that might otherwise be categorized in one of the 
other two NAICS codes. Adopting a common size standard for these three 
retail industries could be compared to SBA's having established a 
common size standard for four Information Technology industries in 
NAICS Sector 54, Professional, Scientific and Technical Services, 
because of the similarities among those industries. It is customary in 
those industries for businesses to have capabilities to provide 
multiple services. SBA concurs that these three retail industries are 
sufficiently alike and would likely be better served with a common size 
standard. Therefore, in this final rule, SBA is adopting $30 million as 
the common size standard for NAICS 441221, Motorcycle, ATV and Personal 
Watercraft Dealers, NAICS 441222, Boat Dealers, and NAICS 441210, 
Recreational Vehicle Dealers.
    SBA did not receive any comments on whether it should lower the 
size standards for the 23 industries in NAICS Sector 44-45 for which 
SBA's analyses supported reducing the existing size standards. SBA also 
did not receive any comments on five industries for which SBA's 
analyses supported retaining the existing size standards. Therefore, 
SBA is retaining the existing size standards for 28 of the 76 
Industries in NAICS Sector 44-45. SBA is also adopting the language as 
proposed to amend 13 CFR 121.402.
    All comments to the proposed rule are available for public review 
at http://www.regulations.gov.

Conclusion

    Based on its analyses of relevant industry and program data and 
public comments it received on the proposed rule, SBA has decided to 
increase 46 small business size standards and to convert the receipt 
based size standard to the employee based size standard for one 
industry as shown in the following table.

                  Summary of Proposed and Adopted Size Standard Revisions in NAICS Sector 44-45
                                [All dollar values in the table are in millions]
----------------------------------------------------------------------------------------------------------------
                                              Current size    Proposed size
                   NAICS                        standard        standard            Adopted size standard
----------------------------------------------------------------------------------------------------------------
441110--New Car Dealers....................           $29.0           $30.0  200 employees
441210--Recreational Vehicle Dealers.......             7.0            30.0  $30.0
441221--Motorcycle, ATV, and Personal                   7.0            14.0  $30.0
 Watercraft Dealers.
441222--Boat Dealers.......................             7.0            14.0  $30.0
441229--Except, Aircraft Dealers, Retail...            10.0            25.5  $25.5
441310--Automotive Parts and Accessories                7.0            14.0  $14.0
 Stores.
441320--Tire Dealers.......................             7.0            14.0  $14.0
442110--Furniture Stores...................             7.0            19.0  $19.0
442299--All Other Home Furnishings Stores..             7.0            19.0  $19.0
443111--Household Appliance Stores.........             9.0            10.0  $10.0
443112--Radio, Television and Other                     9.0            25.5  $25.5
 Electronics Stores.
443120--Computer and Software Stores.......             9.0            25.5  $25.5
443130--Camera and Photographic Supplies                7.0            19.0  $19.0
 Stores.
444110--Home Centers.......................             7.0            35.5  $35.5
444120--Paint and Wallpaper Stores.........             7.0            25.5  $25.5
444190--Other Building Material Dealers....             7.0            19.0  $19.0
444220--Nursery and Garden Centers.........             7.0            10.0  $10.0

[[Page 61600]]

 
445110--Supermarkets and Other Grocery                 27.0            30.0  $30.0
 (except Convenience) Stores.
446110--Pharmacies and Drug Stores.........             7.0            25.5  $25.5
446120--Cosmetics, Beauty Supplies and                  7.0            25.5  $25.5
 Perfume Stores.
446130--Optical Goods Stores...............             7.0            19.0  $19.0
446191--Food (Health) Supplement Stores....             7.0            14.0  $14.0
447190--Other Gasoline Stations............             9.0            14.0  $14.0
448110--Men's Clothing Stores..............             9.0            10.0  $10.0
448120--Women's Clothing Stores............             9.0            25.5  $25.5
448130--Children's and Infants' Clothing                7.0            30.0  $30.0
 Stores.
448140--Family Clothing Stores.............             9.0            35.5  $35.5
448150--Clothing Accessories Stores........             7.0            14.0  $14.0
448190--Other Clothing Stores..............             7.0            19.0  $19.0
448210--Shoe Stores........................             9.0            25.5  $25.5
448310--Jewelry Stores.....................             7.0            14.0  $14.0
448320--Luggage and Leather Goods Stores...             7.0            25.5  $25.5
451110--Sporting Goods Stores..............             7.0            14.0  $14.0
451120--Hobby, Toy and Game Stores.........             7.0            25.5  $25.5
451130--Sewing, Needlework and Piece Goods              7.0            25.5  $25.5
 Stores.
451140--Musical Instrument and Supplies                 7.0            10.0  $10.0
 Stores.
451211--Book Stores........................             7.0            25.5  $25.5
451220--Prerecorded Tape, Compact Disc and              7.0            30.0  $30.0
 Record Stores.
452111--Department Stores (except Discount             27.0            30.0  $30.0
 Department Stores).
452990--All Other General Merchandise                  11.0            30.0  $30.0
 Stores.
453210--Office Supplies and Stationery                  7.0            30.0  $30.0
 Stores.
453910--Pet and Pet Supplies Stores........             7.0            19.0  $19.0
453930--Manufactured (Mobile) Home Dealers.            13.0            14.0  $14.0
454111--Electronic Shopping................            25.0            30.0  $30.0
454112--Electronic Auctions................            25.0            35.5  $35.5
454113--Mail Order Houses..................            25.0            35.5  $35.5
454210--Vending Machine Operators..........             7.0            10.0  $10.0
----------------------------------------------------------------------------------------------------------------

    SBA's proposed rule indicated that its analysis might justify 
proposing reductions to size standards for 23 industries in this 
Sector. However, SBA has opted not to reduce the size standards for 
these industries for the reasons given in the proposed rule and above 
in this rule. Lowering small business size standards would be 
inconsistent with its ongoing effort to promote small business 
assistance under the Recovery Act.

Compliance With Executive Orders 12866, 12988, and 13132, the Paperwork 
Reduction Act (44 U.S.C., Ch. 35) and the Regulatory Flexibility Act (5 
U.S.C. 601-612)

Executive Order 12866

    The Office of Management and Budget (OMB) has determined that this 
final rule is a ``significant'' regulatory action for purposes of 
Executive Order 12866. Accordingly, the next section contains SBA's 
Regulatory Impact Analysis. This is not a major rule, however, under 
the Congressional Review Act, 5 U.S.C. 800.

Regulatory Impact Analysis

Is there a need for the regulatory action?
    SBA believes that adjustments to certain size standards in NAICS 
Sector 44-45, Retail Trade, are needed to better reflect the changes in 
economic characteristics of small businesses in those industries. SBA 
provides aid and assistance to small businesses through a variety of 
financial, procurement, business development and advocacy programs. To 
assist the intended beneficiaries of these programs effectively, SBA 
must establish distinct definitions to determine which businesses are 
deemed small businesses. The Small Business Act (15 U.S.C. 632(a)) 
delegates to the SBA's Administrator the responsibility for 
establishing small business definitions. The Act also requires that 
small business definitions vary to reflect industry differences. The 
supplementary information section of the proposed rule explained in 
detail SBA's methodology for analyzing a size standard for a particular 
industry.
What are the potential benefits and costs of this regulatory action?
    The most significant benefit to businesses obtaining small business 
status as a result of this rule is eligibility for Federal small 
business assistance programs, including SBA's financial assistance 
programs. Since NAICS codes in Sector 44-45, Retail Trade, may not be 
used for Federal government procurement programs, the size standard 
changes adopted in this final rule will not provide benefits to 
companies when they participate in these programs, and there will not 
be any additional costs to the Federal government's procurement 
programs resulting from these changes. Other Federal agencies also may 
use SBA size standards for a variety of regulatory and program 
purposes. Through the assistance of these programs, small businesses 
become more knowledgeable, stable and competitive.
    In the 46 industries (including one sub-industry) in NAICS Sector 
44-45 for which SBA is increasing size standards, SBA estimates that 
about 8,700 additional firms will obtain small business status and 
become eligible for Federal small business assistance programs. 
Similarly, in one industry, namely New Car Dealers, for which SBA is 
changing the size standard from $29 million in average annual receipts 
to 200 employees, the Agency estimates that about 5,700 additional 
businesses will gain small business eligibility for these programs. In 
the 23 industries for which SBA's analyses supported reducing the 
existing size standards, about 5,900 firms might have lost their

[[Page 61601]]

small business designation had SBA decided to reduce them. Thus, the 
net impact for the Sector as a whole is about 14,400 additional firms 
gaining and none losing small business status under this rule. SBA 
estimates that this will increase the small business share of total 
industry receipts for the Sector from 27 percent under the current size 
standards to 38 percent under the revised standards.
    The benefits of increasing size standards to a more appropriate 
level will accrue to two groups: (1) Businesses that are above the 
current size standards will benefit by gaining small business status 
under the higher size standards, thereby being able to participate in 
Federal small business assistance programs; and (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 being able to continue their participation in the 
programs.
    Nearly 72 percent of Federal contracting dollars spent in NAICS 
Sector 44-45 during fiscal years 2006-2008 was accounted for by six of 
the 47 industries for which size standards have been modified in this 
rule. If NAICS codes in Sector 44-45 could be used for Federal 
contracting, SBA estimates that additional firms gaining small business 
status in those six industries under the proposed size standards could 
obtain Federal contracts totaling up to between $80 million and $100 
million per year. This represents nearly 2.0 percent of the $4.7 
billion in average Federal contracts awarded to the Retail Trade Sector 
during fiscal years 2006-2008. The added competition for many of these 
procurements also would likely result in a lower price to the 
Government for procurements reserved for small businesses, but SBA is 
not able to quantify this benefit. However, as stated above, NAICS 
codes in this Sector may not be used for Federal Government 
procurement. SBA anticipates that the contracting amounts identified in 
this Sector will be redistributed in the future to contracts identified 
by their correct NAICS codes in NAICS Sector 31-33, Manufacturing. (13 
CFR 121.402(b)).
    Under SBA's 7(a) Guaranteed Loan Program and Certified Development 
Company (CDC) Program, SBA estimates that approximately 75 to 100 
additional loans totaling between $35 million and $50 million in new 
Federal loan guarantees could be made to these newly defined small 
businesses under the revised size standards. Because of the size of the 
loan guarantees, however, most loans are made to small businesses well 
below the size standard. SBA has also applied its CDC alternative size 
standard to its 7(a) Business Loan Program, and as a result small 
businesses have greater access to capital. Thus, increasing the size 
standards will likely result in an increase in small business 
guaranteed loans to businesses in these industries, but it would be 
impractical to try to estimate the extent of their number and the total 
amount of loans.
    The newly defined small businesses under the revised standards 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, no meaningful estimate of benefits can be projected for 
future disasters.
    To the extent these 14,400 additional firms that will become small 
under the revised size standards would like to apply for SBA loans, 
there may be some additional administrative costs to the Federal 
Government associated with SBA's guaranteed lending programs. With an 
increase in the number of businesses seeking SBA assistance, there 
could be some additional costs associated with compliance and 
verification of small business status. These additional costs are 
likely to be minimal because necessary mechanisms are already in place 
to handle these additional administrative requirements.
    The adopted size standards may have some distributional effects 
between large and small businesses, but SBA cannot quantify such 
effects, mainly because data on Federal procurement for NAICS Sector 
44-45 are not accurate due to their being misclassified. Procurements 
for supplies coded in Sector 44-45, Retail Trade, should have been 
coded in NAICS Sector 31-33, Manufacturing.
    The revisions to the existing size standards for Retail Trade 
industries that SBA is adopting in this rule are consistent with SBA's 
statutory mandate to assist small business. This regulatory action 
promotes the Administration's objectives. One of SBA's goals in support 
of the Administration's objectives is to help individual small 
businesses succeed through fair and equitable access to capital and 
credit, Government contracts, and management and technical assistance. 
Reviewing and modifying size standards, when appropriate, ensures that 
intended beneficiaries have access to small business programs designed 
to assist them.
    Executive Order 12988: For purposes of Executive Order 12988, Civil 
Justice Reform, SBA has determined that this rule is drafted, to the 
extent practicable, in accordance with the standards set forth in 
Sec. Sec.  3(a) and 3(b)(2), to minimize litigation, eliminate 
ambiguity and reduce burden.
    Executive Order 13132: For purposes of Executive Order 13132, SBA 
has determined that this rule has no federalism implications warranting 
preparation of a federalism assessment.
    Paperwork Reduction Act: For purposes of the Paperwork Reduction 
Act, 44 USC Chapter 35, SBA has determined that this final rule does 
not impose any additional reporting or recordkeeping requirements under 
the Paperwork Reduction Act.

Final Regulatory Flexibility Analysis

    Under the Regulatory Flexibility Act (RFA), this rule may have a 
significant impact on a substantial number of small entities in Sector 
44-45, Retail Trade. As described above, this rule may affect small 
entities seeking SBA 7(a) and 504 Guaranteed Loan Programs, SBA 
Economic Injury Disaster Loans, and other Federal small business 
programs.
    Immediately below, SBA sets forth a final regulatory flexibility 
analysis of this final rule addressing the following questions: (1) 
What is the need for and objective of the rule? (2) What is SBA's 
description and estimate of the number of small entities to which the 
rule will apply? (3) What are the projected reporting, record keeping, 
and other compliance requirements of the rule? (4) What are the 
relevant Federal rules which may duplicate, overlap or conflict with 
the rule? and (5) What alternatives will allow the Agency to accomplish 
its regulatory objectives while minimizing the impact on small 
entities?

(1) What is the need for and objective of the rule?

    Most of SBA's size standards for the Retail Trade industries have 
not been reviewed since the early 1980s, and many have not been changed 
since the 1960s, except for periodic adjustments for inflation. 
Technology, productivity growth, international competition, mergers and 
acquisitions, and updated industry definitions may have changed the 
structure of many industries. Such changes can be sufficient to support 
a revision to size standards for some industries. Based on its analysis 
of the latest data available to the Agency, SBA believes that the 
revised standards in this final rule more appropriately reflect the 
size of businesses in those industries that need Federal assistance.

[[Page 61602]]

(2) What is SBA's description and estimate of the number of small 
entities to which the rule will apply?

    In this final rule, as detailed in the regulatory impact analysis 
above, SBA estimates that approximately 14,400 additional firms will 
become small within NAICS Sector 44-45 because of increases in 46 small 
size standards and a change in one size standard from annual receipts 
to the number of employees. That represents about 3.5 percent of 
approximately 415,000 total firms in all industries in that Sector. 
This will result in an increase in the small business share of total 
industry receipts for that Sector from about 27 percent under the 
current size standards to about 38 percent under the revised size 
standards.

(3) What are the projected reporting, recordkeeping, and other 
compliance requirements of the rule and an estimate of the classes of 
small entities which will be subject to the requirements?

    A new size standard does not impose any additional reporting or 
recordkeeping requirements on small entities. However, qualifying for 
Federal procurement and a number of other programs requires that 
entities register in the Central Contractor Registration (CCR) database 
and certify at least annually that they are small in the Online 
Representations and Certifications Application (ORCA). Although NAICS 
codes from Sector 44-45, Retail Trade, do not apply to Federal 
Government procurement programs, business entities in this Sector might 
choose to participate in other Federal programs for which CCR 
registration might be required. Therefore, businesses opting to 
participate in those programs must comply with CCR and ORCA 
requirements. There are no costs associated with either CCR 
registration or ORCA certification. Revising size standards alters the 
access to SBA programs that assist small businesses, but does not 
impose a regulatory burden as they neither regulate nor control 
business behavior.

(4) What are the relevant Federal rules which may duplicate, overlap or 
conflict with the rule?

    This rule overlaps with other Federal rules that use SBA's size 
standards to define a small business. Under 3(a)(2)(C) of the Small 
Business Act, 15 U.S.C. 632(a)(2)(C), Federal agencies must use SBA's 
size standards to define a small business, unless specifically 
authorized by statute. In 1995, SBA published in the Federal Register a 
list of statutory and regulatory size standards that identified the 
application of SBA's size standards as well as other size standards 
used by Federal agencies (60 FR 57988, November 24, 1995). SBA is not 
aware of any Federal rule that would duplicate or conflict with 
establishing size standards.
    However, the Small Business Act and SBA's regulations allow Federal 
agencies to 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 Regulatory 
Flexibility Act authorizes an Agency to establish an alternative small 
business definition, after consultation with the Office of Advocacy of 
the U.S. Small Business Administration (5 U.S.C. 601(3)). Thus, there 
may be instances where this rule conflicts with other rules.

(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 alternative exists to the system of numerical 
size standards. SBA considered a 100 employee size standard for NAICS 
441110, New Car Dealers, as an alternative to its historical receipts 
based size standard. Although SBA proposed an increase to the receipts 
based standard for the industry, it did ask for comments on whether it 
should adopt one based on number of employees. Based on the comments 
SBA received, in this final rule SBA has adopted 200 employees as the 
standard for this industry.

List of Subjects in 13 CFR Part 121

    Administrative practice and procedure, Government procurement, 
Government property, Grant programs--business, Individuals with 
disabilities, Loan programs--business, Reporting and recordkeeping 
requirements, Small businesses.

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

PART 121--SMALL BUSINESS SIZE REGULATIONS

Subpart A--Size Eligibility Provisions and Standards

0
1. The authority citation for 13 CFR part 121 continues to read as 
follows:

    Authority:  15 U.S.C. 632, 634(b)(6), 636(b), 637(a), 644, 
657(a), 657(f), and 662(5); and Pub. L. 105-135, Sec. 401, et seq., 
111 Stat, 2592.

0
2. Amend 121.201 in the table by revising the entries for:
0
a. Sector 42--Wholesale Trade;
0
b. Sector 44-45--Retail Trade; and
0
c. ``441110'', ``441210'', ``441221'', ``441222'', ``441229 Except'', 
``441310'', ``441320'', ``442110'', ``442299'', ``443111'', ``443112'', 
``443120'', ``443130'', ``444110'', ``444120'', ``444190'', ``444220'', 
``445110'', ``446110'', ``446120'', ``446130'', ``446191'', ``447190'', 
``448110'', ``448120'', ``448130'', ``448140'', ``448150'', ``448190'', 
``448210'', ``448310'', ``448320'', ``451110'', ``451120'', ``451130'', 
``451140'', ``451211'', ``451220'', ``452111'', ``452990'', ``453210'', 
``453910'', ``453930'', ``454111'', ``454112'', ``454113'', and 
``454210''.
    The revisions read as follows:

121.201  What size standards has SBA identified by North American 
Industry Classification System codes?

* * * * *

                                 Small Business Size Standards by NAICS Industry
----------------------------------------------------------------------------------------------------------------
                                                                                  Size standards  Size standards
               NAICS codes                       NAICS U.S. industry title        in millions of   in number of
                                                                                      dollars        employees
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
                                           Sector 42--Wholesale Trade
----------------------------------------------------------------------------------------------------------------
(These NAICS codes shall not be used to classify Government acquisitions for supplies. They also shall not be
 used by Federal Government contractors when subcontracting for the acquisition for supplies. The applicable
 manufacturing NAICS code shall be used to classify acquisitions for supplies. A Wholesale Trade or Retail Trade
 business concern submitting an offer or a quote on a supply acquisition is categorized as a nonmanufacturer and
 deemed small if it has 500 or fewer employees and meets the requirements of 13 CFR 121.406.)

[[Page 61603]]

 
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
                                           Sector 44-45--Retail Trade
----------------------------------------------------------------------------------------------------------------
(These NAICS codes shall not be used to classify Government acquisitions for supplies. They also shall not be
 used by Federal Government contractors when subcontracting for the acquisition for supplies. The applicable
 manufacturing NAICS code shall be used to classify acquisitions for supplies. A Wholesale Trade or Retail Trade
 business concern submitting an offer or a quote on a supply acquisition is categorized as a nonmanufacturer and
 deemed small if it has 500 or fewer employees and meets the requirements of 13 CFR 121.406.)
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
441110...................................  New Car Dealers......................  ..............             200
 
                                                  * * * * * * *
441210...................................  Recreational Vehicle Dealers.........           $30.0  ..............
441221...................................  Motorcycle, ATV, and Personal                    30.0  ..............
                                            Watercraft Dealers.
441222...................................  Boat Dealers.........................            30.0  ..............
441229...................................  Aircraft Dealers, Retail.............            25.5  ..............
Except,..................................
441310...................................  Automotive Parts and Accessories                 14.0  ..............
                                            Stores.
441320...................................  Tire Dealers.........................            14.0  ..............
 
                                                  * * * * * * *
442110...................................  Furniture Stores.....................            19.0  ..............
 
                                                  * * * * * * *
442299...................................  All Other Home Furnishings Stores....            19.0  ..............
 
                                                  * * * * * * *
443111...................................  Household Appliance Stores...........            10.0  ..............
443112...................................  Radio, Television and Other                      25.5  ..............
                                            Electronics Stores.
443120...................................  Computer and Software Stores.........            25.5  ..............
443130...................................  Camera and Photographic Supplies                 19.0  ..............
                                            Stores.
 
                                                  * * * * * * *
444110...................................  Home Centers.........................            35.5  ..............
444120...................................  Paint and Wallpaper Stores...........            25.5  ..............
 
                                                  * * * * * * *
444190...................................  Other Building Material Dealers......            19.0  ..............
 
                                                  * * * * * * *
444220...................................  Nursery and Garden Centers...........            10.0  ..............
 
                                                  * * * * * * *
445110...................................  Supermarkets and Other Grocery                   30.0  ..............
                                            (except Convenience) Stores.
 
                                                  * * * * * * *
446110...................................  Pharmacies and Drug Stores...........            25.5  ..............
446120...................................  Cosmetics, Beauty Supplies and                   25.5  ..............
                                            Perfume Stores.
446130...................................  Optical Goods Stores.................            19.0  ..............
446191...................................  Food (Health) Supplement Stores......            14.0  ..............
 
                                                  * * * * * * *
447190...................................  Other Gasoline Stations..............            14.0  ..............
 
                                                  * * * * * * *
448110...................................  Men's Clothing Stores................            10.0  ..............
448120...................................  Women's Clothing Stores..............            25.5  ..............
448130...................................  Children's and Infants' Clothing                 30.0  ..............
                                            Stores.
448140...................................  Family Clothing Stores...............            35.5  ..............
448150...................................  Clothing Accessories Stores..........            14.0  ..............
448190...................................  Other Clothing Stores................            19.0  ..............
448210...................................  Shoe Stores..........................            25.5  ..............
448310...................................  Jewelry Stores.......................            14.0  ..............
448320...................................  Luggage and Leather Goods Stores.....            25.5  ..............
 
                                                  * * * * * * *
451110...................................  Sporting Goods Stores................            14.0  ..............

[[Page 61604]]

 
451120...................................  Hobby, Toy and Game Stores...........            25.5  ..............
451130...................................  Sewing, Needlework and Piece Goods               25.5  ..............
                                            Stores.
451140...................................  Musical Instrument and Supplies                  10.0  ..............
                                            Stores.
451211...................................  Book Stores..........................            25.5  ..............
 
                                                  * * * * * * *
451220...................................  Prerecorded Tape, Compact Disc and               30.0  ..............
                                            Record Stores.
 
                                                  * * * * * * *
452111...................................  Department Stores (except Discount               30.0  ..............
                                            Department Stores).
 
                                                  * * * * * * *
452990...................................  All Other General Merchandise Stores.            30.0  ..............
 
                                                  * * * * * * *
453210...................................  Office Supplies and Stationary Stores            30.0  ..............
 
                                                  * * * * * * *
453910...................................  Pet and Pet Supplies Stores..........            19.0  ..............
 
                                                  * * * * * * *
453930...................................  Manufactured (Mobile) Home Dealers...            14.0  ..............
 
                                                  * * * * * * *
454111...................................  Electronic Shopping..................            30.0  ..............
454112...................................  Electronic Auctions..................            35.5  ..............
454113...................................  Mail Order Houses....................            35.5  ..............
454210...................................  Vending Machine Operators............            10.0  ..............
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------

0
3. In Sec.  121.402 (b), remove the last sentence and add two new 
sentences to the end of the paragraph to read as follows:

Sec.  121.402  What size standards are applicable to Federal Government 
Contracting programs?

* * * * *
    (b) * * *Acquisitions for supplies must be classified under the 
appropriate manufacturing NAICS code, not under a Wholesale Trade or 
Retail Trade NAICS code. A concern that submits an offer or quote for a 
contract or subcontract where the NAICS code assigned to the contract 
or subcontract is one for supplies, and furnishes a product it did not 
itself manufacture or produce, is categorized as a nonmanufacturer and 
deemed small if it has 500 or fewer employees and meets the 
requirements of 13 CFR 121.406.
* * * * *

    Dated: September 10, 2010.
Marie C. Johns,
Deputy Administrator.
[FR Doc. 2010-24855 Filed 10-5-10; 8:45 am]
BILLING CODE 8025-01-P
```