Federal Register / Vol. 75, No. 193 / Wednesday, October 6, 2010 / Rules and Regulations 61597 

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 

812922 ..... One-Hour Photo Finishing ................................................................................................................. $14.0 ........................

812930 ..... Parking Lots and Garages ................................................................................................................ 35.5 ........................

* * * * * * * 

813211 ..... Grantmaking Foundations ................................................................................................................. 30.0 ........................

813212 ..... Voluntary Health Organizations ......................................................................................................... 25.5 ........................

813219 ..... Other Grant Making and Giving Services ......................................................................................... 35.5 ........................

813311 ..... Human Rights Organizations ............................................................................................................ 25.5 ........................

813312 ..... Environment, Conservation and Wildlife Organizations .................................................................... 14.0 ........................

* * * * * * * 

813920 ..... Professional Organizations ................................................................................................................ 14.0 ........................

* * * * * * * 

Dated: September 10, 2010. 

Marie C. Johns, 

Deputy Administrator. 

[FR Doc. 2010–24860 Filed 10–5–10; 8:45 am] 

BILLING CODE 8025–01–P 

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. 

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 

sizestandards@sba.gov. 

SUPPLEMENTARY INFORMATION: 

Introduction 

To determine eligibility for Federal 

small business assistance programs, 

SBA establishes small business size 

definitions (referred to as size 

standards) for private sector industries 

in the United States. SBA’s existing size 

standards use two primary measures of 

business size—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 

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61598 Federal Register / Vol. 75, No. 193 / Wednesday, October 6, 2010 / Rules and Regulations 

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. 

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Federal Register / Vol. 75, No. 193 / Wednesday, October 6, 2010 / Rules and Regulations 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] 

NAICS Current size 

standard 

Proposed size 

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 Watercraft Dealers ................................................. 7.0 14.0 $30.0 

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 Stores ............................................................... 7.0 14.0 $14.0 

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 Electronics Stores ....................................................... 9.0 25.5 $25.5 

443120—Computer and Software Stores ................................................................................ 9.0 25.5 $25.5 

443130—Camera and Photographic Supplies Stores ............................................................. 7.0 19.0 $19.0 

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 

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SUMMARY OF PROPOSED AND ADOPTED SIZE STANDARD REVISIONS IN NAICS SECTOR 44–45—Continued 

[All dollar values in the table are in millions] 

NAICS Current size 

standard 

Proposed size 

standard 

Adopted size 

standard 

445110—Supermarkets and Other Grocery (except Convenience) Stores ............................. 27.0 30.0 $30.0 

446110—Pharmacies and Drug Stores .................................................................................... 7.0 25.5 $25.5 

446120—Cosmetics, Beauty Supplies and Perfume Stores .................................................... 7.0 25.5 $25.5 

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 Stores .................................................................... 7.0 30.0 $30.0 

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 Stores ......................................................... 7.0 25.5 $25.5 

451140—Musical Instrument and Supplies Stores .................................................................. 7.0 10.0 $10.0 

451211—Book Stores ............................................................................................................... 7.0 25.5 $25.5 

451220—Prerecorded Tape, Compact Disc and Record Stores ............................................. 7.0 30.0 $30.0 

452111—Department Stores (except Discount Department Stores) ....................................... 27.0 30.0 $30.0 

452990—All Other General Merchandise Stores ..................................................................... 11.0 30.0 $30.0

453210—Office Supplies and Stationery Stores ...................................................................... 7.0 30.0 $30.0 

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 

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Federal Register / Vol. 75, No. 193 / Wednesday, October 6, 2010 / Rules and Regulations 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 §§ 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. 

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61602 Federal Register / Vol. 75, No. 193 / Wednesday, October 6, 2010 / Rules and Regulations 

(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. 

■ 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 

■ 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. 

■ 2. Amend 121.201 in the table by 

revising the entries for: 

■ a. Sector 42—Wholesale Trade; 

■ b. Sector 44–45—Retail Trade; and 

■ 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

NAICS codes NAICS U.S. industry title 

Size standards 

in millions of 

dollars 

Size standards 

in number of 

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.) 

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Federal Register / Vol. 75, No. 193 / Wednesday, October 6, 2010 / Rules and Regulations 61603 

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 

*******

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 Watercraft Dealers ........................................................... 30.0 ........................

441222 ................... Boat Dealers ....................................................................................................................... 30.0 ........................

441229 ...................

Except, ...................

Aircraft Dealers, Retail ........................................................................................................ 25.5 ........................

441310 ................... Automotive Parts and Accessories Stores .......................................................................... 14.0 ........................

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 Electronics Stores ................................................................. 25.5 ........................

443120 ................... Computer and Software Stores .......................................................................................... 25.5 ........................

443130 ................... Camera and Photographic Supplies Stores ....................................................................... 19.0 ........................

*******

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 (except Convenience) Stores ....................................... 30.0 ........................

*******

446110 ................... Pharmacies and Drug Stores .............................................................................................. 25.5 ........................

446120 ................... Cosmetics, Beauty Supplies and Perfume Stores .............................................................. 25.5 ........................

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 Stores .............................................................................. 30.0 ........................

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 ........................

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61604 Federal Register / Vol. 75, No. 193 / Wednesday, October 6, 2010 / Rules and Regulations 

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 

451120 ................... Hobby, Toy and Game Stores ............................................................................................ 25.5 ........................

451130 ................... Sewing, Needlework and Piece Goods Stores ................................................................... 25.5 ........................

451140 ................... Musical Instrument and Supplies Stores ............................................................................ 10.0 ........................

451211 ................... Book Stores ......................................................................................................................... 25.5 ........................

* * * * * * * 

451220 ................... Prerecorded Tape, Compact Disc and Record Stores ....................................................... 30.0 ........................

* * * * * * * 

452111 ................... Department Stores (except Discount Department Stores) ................................................. 30.0 ........................

* * * * * * * 

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 ........................

* * * * * * * 

■ 3. In § 121.402 (b), remove the last 

sentence and add two new sentences to 

the end of the paragraph to read as 

follows: 

§ 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 

SMALL BUSINESS ADMINISTRATION 

13 CFR Part 121 

RIN: 3245–AF71 

Small Business Size Standards; 

Accommodation and Food Services 

Industries 

AGENCY: Small Business Administration 

(SBA). 

ACTION: Final rule. 

SUMMARY: The United States Small 

Business Administration (SBA) is 

increasing small business size standards 

for five industries in North American 

Industry Classification System (NAICS) 

Sector 72, Accommodation and Food 

Services—namely NAICS 721110, 

Hotels and Motels, from $7.0 million to 

$30 million; NAICS 721120, Casino 

Hotels, from $7.0 million to $30 million; 

NAICS 722211, Limited Service 

Restaurants, from $7.0 million to $10 

million; NAICS 722212, Cafeterias, from 

$7.0 million to $25.5 million; and 

NAICS 722310, Food Service 

Contractors, from $20.5 million to $35.5 

million. As part of its ongoing initiative 

to review all size standards, SBA has 

evaluated every industry in Sector 72 to 

determine whether the existing size 

standards should be retained or revised. 

DATES: This rule is effective November 

5, 2010. 

FOR FURTHER INFORMATION CONTACT: Carl 

Jordan, Program Analyst, Office of Size 

Standards, (202) 205–6618 or 

sizestandards@sba.gov. 

SUPPLEMENTARY INFORMATION: 

Introduction 

To determine eligibility for Federal 

small business assistance programs, 

SBA establishes small business size 

definitions (referred to as size 

standards) for private sector industries 

in the United States. SBA’s existing size 

standards use two primary measures of 

business size—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 

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