[Federal Register Volume 78, Number 119 (Thursday, June 20, 2013)]
[Rules and Regulations]
[Pages 37397-37404]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-14711]



[[Page 37397]]

Vol. 78

Thursday,

No. 119

June 20, 2013

Part V





Small Business Administration





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13 CFR Part 121





Small Business Size Standards; Final Rules

Federal Register / Vol. 78 , No. 119 / Thursday, June 20, 2013 / 
Rules and Regulations

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SMALL BUSINESS ADMINISTRATION

13 CFR Part 121

RIN 3245-AG43


Small Business Size Standards: Agriculture, Forestry, Fishing and 
Hunting

AGENCY: U.S. Small Business Administration.

ACTION: Final rule.

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SUMMARY: The United States Small Business Administration (SBA) is 
increasing the small business size standards for 11 industries in North 
American Industry Classification System (NAICS) Sector 11, Agriculture, 
Forestry, Fishing and Hunting, and retaining the current standards for 
five industries and two exceptions to NAICS 115310. As part of its 
ongoing comprehensive size standards review, SBA evaluated 16 
industries and two exceptions in NAICS Sector 11 to determine whether 
the existing size standards should be retained or revised. SBA did not 
review size standards for 46 industries in NAICS Sector 11 that are 
currently set by statute at $750,000 in average annual receipts. SBA 
also did not review the 500-employee based size standard for NAICS 
113310, Logging, but will review it in the near future with other 
employee based size standards.

DATES: This rule is effective July 22, 2013.

FOR FURTHER INFORMATION CONTACT: Jorge Laboy-Bruno, Economist, Size 
Standards Division, by phone at (202) 205-6618 or by email at 
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--average 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), 7(a), and the Certified Development 
Company (CDC or 504) Loan Programs determine small business eligibility 
using either the industry based size standards or alternative net worth 
and net income based size standards. At the start of the current 
comprehensive size standards review, there were 41 different size 
levels, covering 1,141 NAICS industries and 18 sub-industry activities 
(i.e., ``exceptions'' in SBA's table of size standards). Of these, 31 
were based on average annual receipts, seven based on number of 
employees, and three based on other measures. Presently, there are a 
total of 1,031 size standards, 516 of which are based on average annual 
receipts, 499 on number of employees, 10 on megawatt hours, and six on 
average assets.
    Over the years, SBA has received comments that its size standards 
have not kept up with changes in the economy, in particular the changes 
in the Federal contracting marketplace and industry structure. The last 
comprehensive review of size standards occurred during the late 1970s 
and early 1980s. Since then, most reviews of size standards were 
limited to a few 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 since the last overall review have rendered existing size 
standards for some industries no longer supportable by current data. 
Accordingly, in 2007, SBA began a comprehensive review of its size 
standards to determine whether they are supportable by current data, 
and to revise them, where necessary.
    In addition, on September 27, 2010, the President of the United 
States signed the Small Business Jobs Act of 2010 (Jobs Act). The Jobs 
Act directs SBA to conduct a detailed review of all size standards and 
to make appropriate adjustments to reflect market conditions. 
Specifically, the Jobs Act requires SBA to conduct a detailed review of 
at least one-third of all size standards during every 18-month period 
from the date of its enactment and review all size standards not less 
frequently than once every 5 years thereafter. Reviewing existing small 
business size standards and making appropriate adjustments based on 
current data is also consistent with Executive Order 13563 on improving 
regulation and regulatory review.
    Rather than review all size standards at one time, SBA is 
considering groups of related industries on a Sector by Sector basis.
    As part of its comprehensive size standards review, SBA evaluated 
16 industries and two sub-industries (``exceptions'') in NAICS Sector 
11, Agriculture, Forestry, Fishing and Hunting, to determine whether 
the existing size standards should be retained or revised. SBA did not 
review size standards for 46 industries in NAICS Sector 11 that are 
currently set by statute at $750,000 in average annual receipts. SBA 
also did not review the 500-employee based size standard for NAICS 
113310, Logging, but will review it in the near future with other 
employee based size standards.
    On September 11, 2012, SBA published a proposed rule in the Federal 
Register (77 FR 55755) seeking public comment on its proposal to 
increase the size standards for 11 industries in that Sector and retain 
the size standards for five remaining industries and two sub-industries 
(``exceptions''). The comment period ended on November 13, 2012.
    In conjuction with the current comprehensive size standards review, 
SBA developed a ``Size Standards Methodology'' for establishing, 
reviewing, and modifying size standards, where necessary. SBA published 
the document on its Web site at www.sba.gov/size for public review and 
comment and also included it as a supporting document in the electronic 
docket of the September 11, 2012 proposed rule at www.regulations.gov.
    When evaluating an industry's size standard, SBA examines its 
characteristics (such as average firm size, startup costs, industry 
competition, and distribution of firms by size) and the level and small 
business share of Federal contract dollars in that industry. SBA also 
examines the potential impact a size standard revision might have on 
its financial assistance programs and whether a business concern under 
a revised size standard would be dominant in its industry. SBA analyzed 
the characteristics of each industry in NAICS Sector 11, mostly using a 
special tabulation obtained from the U.S. Bureau of the Census from its 
2007 County Business Patterns and the 2007 Census of Agriculture from 
the National Agricultural Statistics Service (NASS). NAICS Sector 11 is 
not covered by the Census Bureau's Economic Census. (For a more 
detailed discussion, please see 77 FR 55755). SBA also evaluated the 
level and small business share of Federal contract dollars in each of 
those industries using the data from the U.S. General Service 
Administration's Federal Procurement Data System--Next Generation 
(FPDS-NG) for fiscal years 2008 to 2010. To evaluate the impact of 
changes to size standards on its loan programs, SBA examined data on 
its own guaranteed loan programs for fiscal years 2008 to 2010.

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    SBA's ``Size Standards Methodology'' provides a detailed 
description of analyses of various industry and program factors and 
data sources, and how the Agency uses the results to derive size 
standards. In the proposed rule, SBA detailed how it applied its ``Size 
Standards Methodology'' to review, and modify where necessary, the 
existing size standards for industries in NAICS Sector 11. 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 application of 
anchor size standards is 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 the proposed rule, SBA sought comments on its proposal to 
increase the size standards for 11 industries and retain the existing 
size standards for the remaining five industries and two sub-industries 
that were examined in NAICS Sector 11. Specifically, SBA requested 
comments on whether the size standards should be revised as proposed 
and whether the proposed revisions are appropriate. SBA also invited 
comments on whether its proposed eight fixed levels for receipts based 
size standards are appropriate and whether it should adopt common size 
standards for certain Industry Groups and Subsectors in NAICS Sector 
11.
    SBA's analyses supported lower size standards for four industries 
and two sub-industries in NAICS Sector 11. However, as explained in the 
proposed rule, SBA did not propose to lower them in view of the current 
economic environment because lowering size standards would reduce the 
number of firms eligible to participate in Federal small business 
assistance programs, which could adversely affect those firms that 
would no longer qualify as small, and would be counter to what the 
Federal government and SBA are doing to help small businesses and 
create jobs. Therefore, SBA proposed to retain the current size 
standards for those industries and sub-industries and requested 
comments on whether the Agency should lower them based on its analyses. 
In addition, SBA requested comments on the elimination of the Forest 
Fire Suppression and Fuel Management Services as ''exceptions'' to 
NAICS 115310, and the application of the same size standard for them as 
for the rest of the NAICS 115310.

Summary of Comments

    SBA received 13 comments from 12 respondents to the proposed rule. 
Ten of the respondents offered support for the Agency's efforts to 
update size standards in NAICS Sector 11, and two of the respondents 
commented about issues not related to the proposed rule. More 
specifically, one commenter offered support for all SBA's proposed 
changes for evaluated industries under NAICS Sector 11; two supported 
the increase in size standards for NAICS 115111, Cotton Ginning, from 
$7 million to $10 million; and five offered support to retain the two 
sub-industries, Forest Fire Suppression and Fuels Management Services, 
as ``exceptions under NAICS 115310, Support Activities for Forestry; 
they also supported retaining the current $17.5 million size standard 
for each of them even if the SBA's analyses supported lowering it. 
Additionally, one commenter, an association of dealers and 
manufacturers of agricultural equipment, suggested examining their 
industries as part of the evaluation of size standards in NAICS Sector 
11. Finally, a hunter expressed concern with the indirect impact any 
proposed changes to size standards may have on deer hunting 
regulations. All comments to the proposed rule for NAICS Sector 11 are 
available for public review at http://www.regulations.gov, using RIN 
3245-AG30 or docket number SBA-2012-0003. These comments are summarized 
in more detail below.

General Support to the Proposed Rule

    One commenter generally supported the size standards review and 
rulemaking process and changes to size standards being considered by 
SBA. Specifically, the commenter supported the SBA's proposal to 
simplify size standards by basing them on eight fixed levels, because 
that will provide regulatory certainty to small business concerns under 
NAICS Sector 11. Second, he supported SBA's proposal to retain the 
current size standards for the four industries and two sub-industries 
under NAICS Sector 11 for which SBA's analysis could support lowering 
them. Finally, the commenter expressed unqualified support for SBA's 
analysis in this proposed rulemaking in particular and support for 
SBA's continued efforts to assist small businesses in general.

NAICS 115111, Cotton Ginning

    Two commenters representing different trade associations of cotton 
ginners fully supported SBA's proposal to increase the size standard 
for NAICS 115111, Cotton Ginning from $7 million in average annual 
receipts to $10 million. Both recognized that the increased size 
standard accounts for changes in the structure of the industry, such as 
changes in the marketplace, increased operation costs, and 
technological changes.

NAICS 115310--Forest Fire Suppression and Fuels Management Services, 
Exceptions

    Five commenters fully supported the SBA's proposal to retain the 
Forest Fire Suppression and Fuels Management Services as ``exceptions'' 
under NAICS 115310, Support Activities for Forestry, and their 
corresponding current size standard of $17.5 million.
    Three commenters were small businesses that provide services in the 
forest industry. These commenters advocated for retention of the $17.5 
million size standard for the two sub-industries (i.e., exceptions) 
under NAICS 115310. One of the three agreed with SBA's proposal to keep 
the $17.5 million size standard because it allows for small businesses 
to average out good years and bad years in revenues earned in this 
support service.
    A logging organization, whose membership includes wildland 
firefighting organizations, also commented in support of SBA's 
proposal. The association added that most of its members are small and 
family owned operations who offered their support for keeping the 
current $17.5 million size standard.
    SBA agrees with these commenters. SBA considers that the numerical 
results of these two sub-industries in the proposed rule reflected the 
decreases in numbers of fires and consequent reductions in payments to 
contractors during fiscal years 2008-2010 as compared to previous 
years. Given the inherent uncertainty of occurrences of forest fires, 
SBA believes that contracting officers need flexibility to hire small 
businesses, especially in the worst case scenario. In a very active 
fire season, size of payments can easily support the $17.5 million size 
standard for Fire Suppression Services.
    Two associations representing several companies that primarily deal 
with fuels management and fire suppression support services to the 
forest industry also urged SBA to retain its current $17.7 million size 
standard for these support services. One of these

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organizations included a large volume of contract documents and some 
statistical information to support its advocacy for its members.
    Therefore, SBA is retaining Forest Fire Suppression and Fuels 
Management Services as exceptions under NAICS 115310 and their current 
$17.5 million size standard.

Other Issues Not Related to the Proposed Rule for NAICS Sector 11

    One commenter, representing a national association of farm and 
outdoor equipment dealers and manufacturers, expressed concern with the 
impact the proposed size standards revisions might have on its members. 
The members of the association represent two industries: NAICS 333111, 
Farm Machinery and Equipment Manufacturing, and NAICS 423820, Farm and 
Garden Machinery and Equipment Merchant Wholesalers. The commenter 
suggested that SBA should consider examining the size standards for 
these industries as part of the review of size standards for NAICS 
Sector 11. The commenter recommended different receipts based size 
standards for various agricultural equipment and machinery dealerships. 
SBA does not accept the commenter's recommendations in this final rule 
for three reasons. First, there is a single 100-employee size standard 
for all industries in NAICS Sector 42, Wholesale Trade, except for 
purposes of Federal government procurement when the 500-employee size 
standard applies under the non-manufacturer rule (see 13 CFR 
121.402(b)). Similarly, for NAICS 333111, the size standard is 500 
employees. Second, the association recommended receipts based size 
standards for both NAICS industries (NAICS 333111 and NAICS 423820). 
However, SBA uses the number of employees as the basis of size 
standards for all industries in the manufacturing and wholesale trade 
sectors (see SBA's ``Size Standards Methodology,'' referred above and 
in the propoposed rule). Third, these industries are not part of NAICS 
Sector 11. The first industry (NAICS 333111) is part of NAICS sector 
31-33, Manufacturing, and the second industry (NAICS 423820) is part of 
NAICS 42, Wholesale Trade. Detailed information about definitions of 
industries under NAICS can be found at http://www.census.gov/eos/www/naics/. As part of its ongoing comprehensive size standards review, SBA 
will evaluate these industries, along with other other industries in 
those sectors, and publish a proposed rule for comments in the near 
future.
    Finally, a commenter that identified herself as a hunter expressed 
concern over the possible increase in cost to obtain deer hunting 
permits because of the increases of small business size standards in 
NAICS Sector 11. SBA cannot respond to this comment because the Agency 
does not establish, modify, or clarify deer hunting regulations. SBA's 
size standards only applies to Federal contracting and other SBA's 
programs and services targeted to small businesses, including 
guaranteed loans.

Conclusion

    Based on the analyses of relevant industry and program data and 
there being no public comments against the proposed rule, SBA has 
decided to increase the small business size standards for the 11 
industries, as proposed. These industries and their revised size 
standards are shown in Table 1, Summary of Revised Size Standards in 
NAICS Sector 11, below.

                          Table 1--Summary of Revised Size Standards in NAICS Sector 11
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                                                                                   Current size    Revised size
         NAICS code                          NAICS industry title                  standard  ($    standard  ($
                                                                                     million)        million)
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112112.....................  Cattle Feedlots....................................            $2.0            $7.0
112310.....................  Chicken Egg Production.............................           $12.5           $14.0
113110.....................  Timber Tract Operations............................            $7.0           $10.0
113210.....................  Forest Nurseries and Gathering of Forest Products..            $7.0           $10.0
114111.....................  Finfish Fishing....................................            $4.0           $19.0
114112.....................  Shellfish Fishing..................................            $4.0            $5.0
114119.....................  Other Marine Fishing...............................            $4.0            $7.0
114210.....................  Hunting and Trapping...............................            $4.0            $5.0
115111.....................  Cotton Ginning.....................................            $7.0           $10.0
115114.....................  Postharvest Crop Activities (Except Cotton Ginning)            $7.0           $25.5
115115.....................  Farm Labor Contractors and Crew Leaders............            $7.0           $14.0
----------------------------------------------------------------------------------------------------------------

    For the reasons as stated above in this rule and in the proposed 
rule, SBA is retaining the current size standards for the four 
industries and two sub-industries for which analytical results 
suggested the Agency could lower their size standards. Those six size 
standards are the following: NAICS 115112, Soil Preparation, Planting, 
and Cultivation; NAICS 115116, Farm Management Services; NAICS 115210, 
Support Activities for Animal Production; NAICS 115310, Support 
Activities for Forestry; and the two exceptions to NAICS 115310, 
namely, Forest Fire Protection and Fuels Management Services. This is 
consistent with SBA's recent final rules on NAICS Sector 44-45, Retail 
Trade (75 FR 61597 (October 6, 2010)); NAICS Sector 72, Accommodation 
and Food Services (75 FR 61604 (October 6, 2010)); NAICS Sector 81, 
Other Services (75 FR 61591 (October 6, 2010)); NAICS Sector 54, 
Professional, Scientific and Technical Services (77 FR 7490 (February 
10, 2012)); NAICS Sector 48-49, Transportation and Warehousing (77 FR 
10943 (February 24, 2012)); NAICS Sector 51, Information (77 FR 72702 
(December 6, 2012)); NAICS Sector 53, Real Estate and Rental and 
Leasing (77 FR 88747 (September 24, 2012)); NAICS Sector 56, 
Administrative and Support, Waste Management and Remediation Services 
(77 FR 72691 (December 6, 2012)); NAICS 61, Educational Services (77 FR 
58739 (September 24, 2012)); and NAICS Sector 62, Health Care and 
Social Assistance (77 FR 58755 (September 24, 2012)). In each of those 
final rules, SBA retained the existing size standards for those that it 
could have reduced. SBA is also retaining the existing size standard 
for one industry in NAICS Sector 11 for which the results supported it 
at the current level, namely, NAICS 115113, Crop Harvesting, Primarily 
by Machine.

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Compliance With Executive Orders 12866, 13563, 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 not a ``significant regulatory action'' for purposes of 
Executive Order 12866. To help explain the need of this rule and the 
rule's potential benefits and costs, SBA is providing below a Cost 
Benefit Analysis. This is also not a ``major rule'' under the 
Congressional Review Act (5 U.S.C. 801).

Cost Benefit Analysis

1. Is there a need for the regulatory action?

    The revised small business size standards for 11 industries in 
NAICS Sector 11, Agriculture, Forestry, Fishing and Hunting, reflect 
the changes in economic characteristics of small businesses and the 
Federal procurement market. SBA's mission is to aid and assist small 
businesses through a variety of financial, procurement, business 
development, and advocacy programs. To assist the intended 
beneficiaries of these programs, SBA establishes distinct definitions 
to determine which businesses are deemed small. The Small Business Act 
delegates to SBA's Administrator the responsibility for establishing 
small business size definitions (15 U.S.C. 632(a)). The Act also 
requires that small business size definitions vary to reflect industry 
differences. The Jobs Act requires the Administrator to review at least 
one-third of all size standards within each 18-month period from the 
date of its enactment, and review all size standards at least every 
five years thereafter. The supplementary information sections of the 
September 11, 2012 (77 FR 55755) proposed rule and this final rule 
explained the SBA's methodology for analyzing a size standard for a 
particular industry.

2. What are the potential benefits and costs of this regulatory action?

    The most significant benefit to businesses obtaining small business 
status because of this rule is gaining eligibility for Federal small 
business assistance programs. These include SBA's financial assistance 
programs and Federal procurement programs reserved for small 
businesses. Federal procurement programs provide targeted opportunities 
for small businesses under SBA's business development programs, such as 
8(a), small businesses located in Historically Underutilized Business 
Zones (HUBZone), women-owned small businesses (WOSB), economically 
disadvantaged women-owned small businesses (EDWOSB), and service-
disabled veteran-owned small businesses (SDVOSB). These programs assist 
small businesses to become more knowledgeable, stable, and competitive. 
Other Federal agencies may also use SBA's size standards for a variety 
of regulatory and program purposes. In the 11 industries in NAICS 
Sector 11 for which SBA has increased size standards, SBA estimates 
that more than 7,800 additional firms, not small under the current size 
standards, will obtain small business status and become eligible for 
these programs. That is about 17 percent of the total number of total 
firms that are classified as small under the current standards in all 
industries in NAICS Sector 11 that are covered by this final rule. SBA 
estimates this will increase the small business share of total industry 
receipts in those industries from about 78.4 percent under the current 
size standards to 79.1 percent under the revised size standards.
    Three groups will benefit from the revised size standards in NAICS 
Sector 11 in the following ways: (1) Some businesses that are above the 
current size standards may gain small business status under the higher 
size standards, thereby enabling them to participate in Federal small 
business assistance programs; (2) growing small businesses that are 
close to exceeding the current size standards will be able to retain 
their small business status under the higher size standards, thereby 
enabling them to continue their participation in the programs; and (3) 
Federal agencies will have a larger pool of small businesses from which 
to draw for their small business procurement programs.
    SBA estimates that additional firms gaining small business status 
in those industries under the revised size standards could potentially 
obtain Federal contracts totaling $7 million to $12 million annually 
under SBA's small business, 8(a), HUBZone, WOSB, EDWOSB and SDVOSB 
Programs, and other unrestricted procurements. The added competition 
for many of these procurements can also result in lower prices to the 
Government for procurements reserved for small businesses, although SBA 
cannot quantify this benefit.
    Under SBA's 7(a) and 504 Loan Programs, based on the data for 
fiscal years 2008 to 2010, SBA estimates about 32 additional loans 
totaling about $7 million could be made to additional firms that could 
become small under the revised standards. Under the Jobs Act, SBA can 
now guarantee substantially larger loans than in the past. In addition, 
the Jobs Act established an alternative size standard for SBA's 7(a) 
and 504 Loan Programs for those applicants that do not meet the size 
standards for their industries. That is, under the Jobs Act, if a firm 
applies for a 7(a) or 504 loan but does not meet the size standard for 
its industry, it might still qualify if, including its affiliates, it 
has a tangible net worth that does not exceed $15 million and also has 
average net income after Federal income taxes (excluding any carry-over 
losses) for its preceding two completed fiscal years that do not exceed 
$5 million. Thus, SBA finds it difficult to quantify the actual impact 
of the revised size standards on its 7(a) and 504 Loan Programs.
    Newly defined small businesses will also benefit from SBA's 
Economic Injury Disaster Loan (EIDL) Program. Since this program is 
contingent on the occurrence and severity of one or more disasters, SBA 
cannot make a meaningful estimate of this impact.
    To the extent that those 7,800 newly defined additional small firms 
under the revised size standards become active in Federal procurement 
programs, the revisions to size standards may entail some additional 
administrative costs to the Federal Government associated with there 
being more bidders for Federal small business procurement 
opportunities. In addition, there will be more firms seeking SBA's 
guaranteed loans, more firms eligible for enrollment in the System for 
Award Management (SAM) database, more firms seeking certification for 
the 8(a) or HUBZone Programs and more firms qualifying for WOSB, EDWOSB 
and SDVOSB status. Among those newly defined businesses seeking SBA's 
assistance, there could be some additional costs associated with 
compliance and verification of small business status and protests of 
small business status. However, SBA believes these added administrative 
costs are likely to be minimal because mechanisms are already in place 
to handle these requirements.
    Additionally, Federal government contracts may have higher costs 
under the higher revised size standards. With a greater number of 
businesses defined as small, Federal agencies may choose to set aside 
more contracts for competition among small businesses rather than using 
full and open competition. The movement from unrestricted to set-aside 
contracting might result in competition among fewer total bidders, 
although there will be more small businesses eligible to submit offers. 
In addition, higher costs

[[Page 37402]]

may result when more full and open contracts are awarded to HUBZone 
businesses because of a price evaluation preference. The additional 
costs associated with fewer bidders, however, will likely be minor 
since, by law, procurements may be set aside for small businesses or 
reserved for the small business, 8(a), HUBZone, WOSB, EDWOSB, or SDVOSB 
Programs only if awards are expected to be made at fair and reasonable 
prices.
    The revised size standards may have some distributional effects 
among large and small businesses. Although SBA cannot estimate with 
certainty the actual outcome of the gains and losses among small and 
large businesses, it can identify several proabable impacts. There may 
be a transfer of some Federal contracts to small businesses from large 
businesses. Large businesses may have fewer Federal contract 
opportunities as Federal agencies decide to set aside more Federal 
contracts for small businesses. In addition, some Federal agencies may 
award more Federal contracts to HUBZone concerns instead of large 
businesses since HUBZone concerns may be eligible for price evaluation 
adjustments when they compete on full and open bidding opportunities. 
Similarly, some currently defined small businesses may obtain fewer 
Federal contracts due to the increased competition from more businesses 
defined as small under the revised size standards. This transfer may be 
offset by more Federal procurements being set aside for all small 
businesses. The number of newly defined and expanding small businesses 
that are willing and able to sell to the Federal Government will limit 
the potential transfer of contracts away from large and small 
businesses under the existing size standards. SBA cannot estimate with 
precision the potential distributional impacts of these transfers.
    The revisions to the existing size standards in NAICS Sector 11, 
Agriculture, Forestry, Fishing and Hunting, 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 13563

    A description of the need for this regulatory action and benefits 
and costs associated with this action including possible distributional 
impacts that relate to Executive Order 13563 are included above in the 
Cost Benefit Analysis.
    In an effort to engage interested parties in this regulatory 
action, SBA presented its methodology (discussed above under 
Supplementary Information in the propsed rule and this final rule) to 
various industry associations and trade groups. SBA also met with 
various industry groups to get their feedback on its methodology and 
other size standards issues. In addition, SBA presented its size 
standards methodology to businesses in 13 cities in the U.S. and sought 
their input as part of the Jobs Act tours. The presentation included 
information on the latest status of the comprehensive size standards 
review and how interested parties can provide SBA with input and 
feedback on the size standards review. Moreover, SBA presented the same 
information to Department of Defense (DoD) contracting personnel at 
their annual training session. It included updates on what size 
standards rules SBA was currently reviewing and plans to review in the 
future. This is important because DoD contracting provides the greatest 
opportunities for and awards to small businesses.
    Furthermore, when SBA issued the proposed rule, it notified 
individuals, government procurement personnel, and companies that had 
in recent years exhibited an interest by letter, email, or phone, in 
size standards for NAICS Sector 11 so they could comment.
    Additionally, SBA sent letters to the Directors of the Offices of 
Small and Disadvantaged Business Utilization (OSDBU) at several Federal 
agencies with considerable procurement responsibilities requesting 
their feedback on how the agencies use SBA's size standards and whether 
current standards meet their programmatic needs (both procurement and 
non-procurement). SBA gave appropriate consideration to all input, 
suggestions, recommendations, and relevant information obtained from 
industry groups, individual businesses, and Federal agencies in 
preparing the proposed rule and this final rule for NAICS Sector 11.
    The review of size standards in NAICS Sector 11, Agriculture, 
Forestry, Fishing and Hunting, is consistent with Executive Order 
13563, Section 6, calling for retrospective analyses of existing rules. 
The last overall review of size standards occurred during the late 
1970s and early 1980s. Since then, except for periodic adjustments for 
monetary based size standards, most reviews of size standards were 
limited to a few specific industries in response to requests from the 
public and Federal agencies. SBA recognizes that changes in industry 
structure and the Federal marketplace since the last overall review 
have rendered existing size standards for some industries no longer 
supportable by current data. Accordingly, in 2007, SBA began a 
comprehensive size standards review to ensure that they are 
supportable, and to revise them, where necessary. In addition, the Jobs 
Act requires SBA to conduct a detailed review of all size standards and 
to make appropriate adjustments to reflect market conditions. 
Specifically, the Jobs Act requires SBA to conduct a detailed review of 
at least one-third of all size standards during every 18-month period 
from the date of its enactment and review all size standards not less 
frequently than once every 5 years thereafter.

Executive Order 12988

    This action meets applicable standards set forth in Sections 3(a) 
and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize 
litigation, eliminate ambiguity, and reduce burden. The action does not 
have retroactive or preemptive effect.

Executive Order 13132

    For purposes of Executive Order 13132, SBA has determined that this 
final rule will not have substantial, direct effects on the States, on 
the relationship between the national government and the States, or on 
the distribution of power and responsibilities among the various levels 
of government. Therefore, SBA has determined that this final rule has 
no Federalism implications warranting preparation of a Federalism 
assessment.

Paperwork Reduction Act

    For purposes of the Paperwork Reduction Act, 44 U.S.C. Ch. 35, SBA 
has determined that this final rule will not impose any new reporting 
or record keeping requirements.

Final Regulatory Flexibility Analysis

    Under the Regulatory Flexibility Act (RFA), this final rule may 
have a significant impact on a substantial number of small entities in 
NAICS Sector 11, Agriculture, Forestry, Fishing and Hunting. As 
described above, this final rule may affect small entities

[[Page 37403]]

seeking Federal contracts, SBA's 7(a), 504 and economic injury disaster 
loans, and various small business benefits under other Federal 
programs.
    Immediately below, SBA sets forth a final regulatory flexibility 
analysis (RFA) of this final rule addressing the following questions: 
(1) What are the need for and objective of the rule? (2) What are SBA's 
description and estimate of the number of small businesses to which the 
rule will apply? (3) What are the projected reporting, record keeping, 
and other compliance requirements of the rule? (4) What are the 
relevant Federal rules that may duplicate, overlap, or conflict with 
the rule? and (5) What alternatives will allow the Agency to accomplish 
its regulatory objectives while minimizing the impact on small 
entities?

1. What are the need for and objective of the rule?

    Changes in industry structure, technological changes, productivity 
growth, mergers and acquisitions and updated industry definitions have 
changed the structure of many industries in NAICS Sector 11. Such 
changes can be sufficient to support revisions to current size 
standards for some industries. Based on the analysis of the latest data 
available, SBA believes that the revised size standards in this final 
rule more appropriately reflect the size of businesses in those 
industries that need Federal assistance. Additionally, the Jobs Act 
also requires SBA to review all size standards and make appropriate 
adjustments to reflect current data and market conditions.

2. What are SBA's description and estimate of the number of small 
entities to which the rule will apply?

    SBA estimates that more than 7,800 additional firms will become 
small because of increases in size standards in 11 industries in NAICS 
Sector 11. That represents 17 percent of total firms that are small 
under current size standards in all industries covered by this final 
rule. This will result in an increase in the small business share of 
total industry receipts in those industries from 78.4 percent under the 
current size standard to 79.1 percent under the revised size standards. 
The revised size standards will enable more small businesses to retain 
their small business status for a longer period. Many firms may have 
lost their eligibility and find it difficult to compete at current size 
standards with companies that are significantly larger than they are. 
SBA believes the competitive impact will be positive for existing small 
businesses and for those that exceed the size standards but are on the 
very low end of those that are not small. They might otherwise be 
called or referred to as mid-sized businesses, although SBA only 
defines what is small; other entities are other than small.

3. What are the projected reporting, record keeping and other 
compliance requirements of the rule?

    Revising size standards does not impose any additional reporting or 
record keeping requirements on small entities. However, qualifying for 
Federal procurement and a number of other programs requires that 
entities register in the SAM database and certify at least once 
annually that they are small. Therefore, businesses opting to 
participate in those programs must comply with SAM requirements. There 
are no costs associated with SAM registration or certification. 
Revising size standards alters the access to Federal programs that 
assist small businesses, but they neither impose a regulatory burden 
nor regulate nor control business behavior.

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

    Under section 3(a)(2)(C) of the Small Business Act, 15 U.S.C. 
632(a)(2)(c), Federal agencies must use SBA's size standards to define 
a small business, unless specifically authorized by statute to do 
otherwise. In 1995, SBA published in the Federal Register a list of 
statutory and regulatory size standards that 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 establish 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)).

5. What alternatives will allow the Agency to accomplish its regulatory 
objectives while minimizing the impact on small entities?

    By law, SBA is required to develop numerical size standards for 
establishing eligibility for Federal small business assistance 
programs. Other than varying size standards by industry and changing 
the size measures, no practical alternative exists to the existing 
system of numerical size standards. The possible alternative size 
standards considered for the individual industries within NAICS Sector 
11 are discussed in the supplementary information to the proposed rule 
and this final rule.

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

PART 121--SMALL BUSINESS SIZE REGULATIONS

0
1. The authority citation for part 121 is revised to read as follows:

    Authority: 15 U.S.C. 632, 634(b)(6), 662, and 694a(9).



0
2. In Sec.  121.201, in the table, revise the entries for ``112112'', 
``112310'', ``113110'', ``113210'', ``114111'', ``114112'', ``114119'', 
``114210'', ``115111'', ``115114'', and ``115115'' to read as follows:


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

* * * * *

[[Page 37404]]



                                 Small Business Size Standards by Naics Industry
----------------------------------------------------------------------------------------------------------------
                                                                               Size standards    Size standards
           NAICS code                      NAICS U.S. industry title           in millions of     in number of
                                                                                   dollars          employees
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
112112..........................  Cattle Feedlots...........................              $7.0  ................
 
                                                  * * * * * * *
112310..........................  Chicken Egg Production....................             $14.0  ................
 
                                                  * * * * * * *
113110..........................  Timber Tract Operations...................             $10.0  ................
113210..........................  Forest Nurseries and Gathering of Forest               $10.0  ................
                                   Products.
 
                                                  * * * * * * *
114111..........................  Finfish Fishing...........................             $19.0  ................
114112..........................  Shellfish Fishing.........................              $5.0  ................
114119..........................  Other Marine Fishing......................              $7.0  ................
114210..........................  Hunting and Trapping......................              $5.0  ................
 
                                                  * * * * * * *
115111..........................  Cotton Ginning............................             $10.0  ................
 
                                                  * * * * * * *
115114..........................  Postharvest Crop Activities (except Cotton             $25.5  ................
                                   Ginning).
115115..........................  Farm Labor Contractors and Crew Leaders...             $14.0  ................
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------


    Dated: June 13, 2013.
Karen G. Mills,
Administrator.
[FR Doc. 2013-14711 Filed 6-19-13; 8:45 am]
BILLING CODE 8025-01-P