[Federal Register Volume 79, Number 99 (Thursday, May 22, 2014)]
[Notices]
[Pages 29626-29629]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-11914]
[[Page 29625]]
Vol. 79
Thursday,
No. 99
May 22, 2014
Part IV
Office of Management and Budget
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2012 North American Industry Classification System (NAICS)--Updates for
2017; Notices
Federal Register / Vol. 79 , No. 99 / Thursday, May 22, 2014 /
Notices
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OFFICE OF MANAGEMENT AND BUDGET
2012 North American Industry Classification System (NAICS)--
Updates for 2017
AGENCY: Executive Office of the President, Office of Management and
Budget.
ACTION: Notice of Solicitation for Proposals To Revise Portions of
NAICS for 2017.
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SUMMARY: Under the authority of the Budget and Accounting Procedures
Act of 1950 (31 U.S.C. 1104(d)) and the Paperwork Reduction Act of 1995
(44 U.S.C. 3504(e)), the Office of Management and Budget (OMB), through
its Economic Classification Policy Committee (ECPC), is soliciting
proposals from the public for changes to the structure and content of
the North American Industry Classification System (NAICS) for inclusion
in a potential 2017 revision. There are six parts in the SUPPLEMENTARY
INFORMATION section below. Part I provides background on NAICS. Part II
includes a solicitation of proposals for new and emerging industries.
Part III solicits public comments on electronic dissemination of the
potential revision of NAICS for 2017. Part IV solicits public comments
on updating the structure of the oil and gas industries in NAICS 2012.
Part V provides an update on the classification of manufacturing units
that outsource. Part VI presents notification of a method to publicize
corrections for errors and omissions that are identified in NAICS.
In soliciting comments about revising NAICS, the ECPC does not
intend to open the entire classification for substantial change in
2017. The ECPC will consider public comments and proposals for changes
or modifications that advance the goals of NAICS as outlined in Part I
of the SUPPLEMENTARY INFORMATION section below. The ECPC is also
seeking and will consider comments related to consistent classification
in an era of greater specialization and globalization.
DATES: To ensure consideration of your comments or proposals related to
the potential revision of NAICS for 2017 as detailed in this notice,
comments must be in writing and received no later than July 21, 2014.
Please be aware of delays in mail processing at Federal facilities due
to tightened security. Respondents are encouraged to send both a hard
copy and a second copy via fax or email (discussed in Addresses below).
ADDRESSES: Correspondence concerning the ECPC's intent to review and
possibly revise NAICS for 2017, comments on the business organization
clarifications, and all proposals for new industries in NAICS for 2017
should be sent to John Murphy, Chair, Economic Classification Policy
Committee, Census Bureau, Room 8K157, Washington, DC 20233-6500.
Because of delays in the receipt of regular mail related to security
screening, respondents are encouraged to also submit comments by email
to [email protected] or by fax at (301) 763-8744. Mr. Murphy
can be reached at (301) 763-5172.
Comments may also be sent via http://www.regulations.gov--a Federal
E-Government Web site that allows the public to find, review, and
submit comments on documents that agencies have published in the
Federal Register and that are open for comment. Simply type ``NAICS for
2017'' (in quotes) in the Rules, Comments, Adjudications or Supporting
Documents search box, click Search, click Comment Now!, and follow the
instructions for submitting comments.
All comments regarding this notice received via the Web site,
email, fax, hardcopy, or other means, are part of the public record as
submitted. For this reason, do not include in your comments information
of a confidential nature, such as sensitive personal information or
proprietary information. If you send an email comment, your email
address will be automatically captured and included as part of the
comment that is placed in the public docket. Please note that responses
to this public comment request containing any routine notice about the
confidentiality of the communication will be treated as public comments
that may be made available to the public notwithstanding the inclusion
of the routine notice.
Please consider including contact information and a phone number or
email address with your comments to facilitate follow-up if necessary.
Electronic Availability: This document is available on the Census
Bureau Web site at http://www.census.gov/naics. This site contains
previous NAICS United States Federal Register notices, ECPC Issues
Papers, ECPC Reports, the structure and industry definitions for NAICS
United States 2012, 2007, 2002, and 1997, and related documents.
Public Review Procedure: All comments and proposals received in
response to this notice will be available for public inspection at the
Census Bureau, Suitland, Maryland. Please telephone the Census Bureau
at (301) 763-5172 to make an appointment to enter the Federal Center.
OMB will publish all ECPC recommendations for changes to NAICS for 2017
resulting from this notice in the Federal Register for review and
comment prior to final action.
FOR FURTHER INFORMATION CONTACT: John Murphy, Chair, Economic
Classification Policy Committee, Census Bureau, Room 8K157, Washington,
DC 20233-6500. Mr. Murphy can be reached at (301) 763-5172, by fax at
(301) 763-8744, or by email at [email protected].
SUPPLEMENTARY INFORMATION: The SUPPLEMENTARY INFORMATION section of
this notice is divided into six parts. Part I provides background on
NAICS; Part II includes a solicitation for proposals for new and
emerging industries; Part III requests public input on electronic-only
dissemination of the potential revision of NAICS for 2017; Part IV
requests public input on updating the structure of the oil and gas
industries; Part V provides an update on the classification of units
that outsource manufacturing transformation activities; and Part VI
notifies the public of the location where corrections of identified
errors or omissions in NAICS will be publicized.
Part I. Background of NAICS
NAICS is a system for classifying establishments (individual
business locations) by type of economic activity. Its purposes are: (1)
To facilitate the collection, tabulation, presentation, and analysis of
data relating to establishments; and (2) to promote uniformity and
comparability in the presentation and analysis of statistical data
describing the North American economy. Federal statistical agencies use
NAICS to collect or publish data by industry. It is also widely used by
State agencies, trade associations, private businesses, and other
organizations.
Mexico's Instituto Nacional de Estad[iacute]stica y
Geograf[iacute]a (INEGI), Statistics Canada, and the United States
Office of Management and Budget (OMB), through its Economic
Classification Policy Committee (ECPC), collaborated on NAICS to make
the industry statistics produced by the three countries comparable.
NAICS is the first industry classification system developed in
accordance with a single principle of aggregation, the principle that
producing units that use similar production processes should be grouped
together in the classification. NAICS also reflects changes in
technology and in the growth and diversification of services in recent
decades. Industry statistics presented using NAICS 2012 are comparable,
to a large extent, with statistics compiled according to the
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latest revision of the United Nations' International Standard
Industrial Classification (ISIC, Revision 4).
For these three countries, NAICS provides a consistent framework
for the collection, tabulation, presentation, and analysis of industry
statistics used by government policy analysts, by academics and
researchers, by the business community, and by the public. Please note
that NAICS is designed and maintained solely for statistical purposes
to improve and keep current this Federal statistical standard.
Consequently, although the classification may also be used for various
nonstatistical purposes (e.g., for administrative, regulatory, or
taxation functions), the requirements of government agencies or private
users that choose to use NAICS for nonstatistical purposes play no role
in its development or revision.
The four principles that guided the initial development of NAICS
were:
(1) NAICS is erected on a production-oriented conceptual framework.
This means that producing units that use the same or similar production
processes are grouped together in NAICS.
(2) NAICS gives special attention to developing production-oriented
classifications for (a) new and emerging industries, (b) service
industries in general, and (c) industries engaged in the production of
advanced technologies.
(3) Time series continuity is maintained to the extent possible.
(4) The system strives for compatibility with the two-digit level
of the International Standard Industrial Classification of All Economic
Activities (ISIC, Rev. 3) of the United Nations.
The ECPC is committed to maintaining the principles of NAICS as it
develops further refinements. NAICS uses a hierarchical structure to
classify establishments from the broadest level to the most detailed
level using the following format:
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Sector........................ 2-digit.......... Sectors represent the
highest level of
aggregation. There
are 20 sectors in
NAICS.
Subsector..................... 3-digit.......... Subsectors represent
the next, more
detailed level of
aggregation. There
are 99 subsectors in
NAICS.
Industry Group................ 4-digit.......... Industry groups are
more detailed than
subsectors. There
are 312 industry
groups in NAICS
2012.
NAICS Industry................ 5-digit.......... NAICS industries, in
most cases,
represent the lowest
level of three-
country
comparability. There
are 713 five-digit
industries in NAICS
2012.
National Industry............. 6-digit.......... National industries
are the most
detailed level, and
represent the
national level
detail. There are
1,065 national
industries in NAICS
United States 2012.
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The implementation of the first vintage of NAICS--NAICS 1997--
affected almost half of the industries that were available for use
under the 1987 Standard Industrial Classification (SIC). OMB's final
decisions for the adoption of NAICS for the United States were
published in the Federal Register on April 9, 1997 (62 FR 17288-17337).
Subsequent NAICS revisions in 2002, 2007, and 2012 were more modest.
Complete details of those revisions were published in the Federal
Register. Revisions for 2002 were published on April 20, 2000 (65 FR
21242-21282), revisions for 2007 were published on March 16, 2006 (71
FR 28532-28533), and revisions for 2012 were published on August 17,
2011 (76 FR 51240-51243).
The development of NAICS represented a significant improvement over
the previous industry classification systems used in North America. To
ensure the accuracy, timeliness, and relevance of the classification,
NAICS is reviewed every five years to determine what, if any, changes
are required. The ECPC recognizes the costs involved when implementing
industry classification revisions in statistical programs and the costs
for data users when there are disruptions in the availability of data.
The ECPC also recognizes the economic, statistical, and policy
implications that arise when the industry classification system does
not identify and account for important economic developments. Balancing
the costs of change against the potential for more accurate and
relevant economic statistics requires significant input from data
producers, data providers, and data users.
Part II. New and Emerging Industries
NAICS was developed to be a dynamic industry classification. Every
five years, the classification is reviewed to determine the need to
identify new and emerging industries. The ECPC is soliciting public
comments on the advisability of revising NAICS for new and emerging
industries in 2017 and soliciting proposals for these new industries.
When developing proposals for new and emerging industries, please
note that there are two separate economic classification initiatives
underway in the United States. NAICS, the industry classification, is
the subject of this notice, while the complementary North American
Product Classification System (NAPCS) initiative is currently in
development. The NAPCS product system described below will complement
the NAICS industry system and provide an alternate way of classifying
output.
NAICS was developed to classify units according to their production
function. NAICS results in industries that group units undertaking
similar activities using similar resources but does not necessarily
group all similar products or outputs. NAPCS is being developed to
classify the outputs of units, or in other words their products or
transactions, within a demand-based conceptual framework. For example,
the hypothetical product of a flu shot can be provided by a doctor's
office, a hospital, or a walk-in clinic. Because these three units are
classified to three different NAICS industries, data users who want
information about all flu shots provided must be able to identify the
individual products coming out of the units, which NAPCS is designed to
do. Thus, in many cases, the need for specific statistical data can be
met by aggregating product data across industries rather than by
creating a new industry. This is particularly true with NAICS, which
groups establishments into industries based on their primary production
function. Proposals for new industries in NAICS for 2017 will be
evaluated within the context of the industry classification system to
determine the most appropriate resolution. For a detailed description
of the NAPCS initiative, see the April 16, 1999, Federal Register
notice (64 FR 18984-18989) available at http://www.census.gov/napcs.
Proposals for new industries will be evaluated using a variety of
criteria. As previously mentioned, each proposal will be evaluated
based on the
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application of the production function concept, its impact on
comparability within North America and with other regions, and its
impact on time series. For any proposals that cross three-country
levels of agreement, negotiations with Canada and Mexico, our partners
in NAICS, will also influence the ECPC's recommendations on those
proposals. In addition, other criteria may affect recommendations for
adoption. From a practical standpoint, industries must be of
appropriate size. At the national level, this is generally not a major
concern but there are a variety of statistical programs that produce
industry data at the regional, State, metropolitan area, or even county
or local level. Proposed industries must include a sufficient number of
establishments so that Federal agencies can publish industry data
without disclosing information about the operations of individual
firms. The ability of government agencies to classify, collect, and
publish data on the proposed basis will also be taken into account.
Proposed changes must be such that they can be applied by agencies
within their normal processing operations. Any recommendations for
change forwarded by the ECPC for consideration will also take into
account the cost of making the changes. These costs can be considerable
and the availability of funding to make changes is critical. The
budgetary environment will be considered when the ECPC makes
recommendations. As mentioned above, certain proposals may be more
adequately addressed through the identification and collection of
product data.
Proposals for new or revised industries should be consistent with
the production-oriented conceptual framework incorporated into the
principles of NAICS. When formulating proposals, please note that an
industry classification system groups the economic activities of
producing units, which means that the activities of similar producing
units cannot be separated in the industry classification system.
Proposals must be in writing and include the following information:
(a) Specific economic activities to be covered by the proposed
industry, the proposed industry's production processes, its specialized
labor skills, and any unique materials used. This detail should
demonstrate that the proposed industry will group establishments with
similar production processes that are unique and clearly separable from
the production processes of other industries.
(b) Relationship of the proposed industry to existing NAICS United
States 2012 six-digit national industries.
(c) Documentation of the size and importance of the proposed
industry in the United States.
(d) Information about the proposed industry in Canada and Mexico if
available.
Proposals will be collected, reviewed, and analyzed. As necessary,
proposals for change will be negotiated with our partners in Canada and
Mexico. When this process is complete, the OMB will publish a Federal
Register notice that contains the ECPC recommendations for additional
public comment prior to a final determination of changes to NAICS for
2017.
Part III. Electronic Dissemination of NAICS 2017
Due to increasing printing costs and the accessibility of
information on the Internet, the ECPC is considering disseminating
NAICS United States 2017 electronically on the official NAICS Web site
(http://www.census.gov/naics) and discontinuing printed publications.
The ECPC believes that this is an appropriate time to solicit public
input on the advisability of such a change.
Part IV. Updating the Structure of the Oil and Gas Industries
The ECPC is soliciting proposals for updating the structure of the
oil and gas industries in Subsector 211, Oil and Gas Extraction. Since
first defined in NAICS 1997, these industries continue to advance in
the equipment and processes employed to produce oil and gas. With these
changes, the ECPC is soliciting proposals on how the NAICS structure in
this area can better reflect these advancements. Of particular interest
are comments concerning onshore and offshore extraction, as well as
conventional and unconventional methods of extraction. Proposals for
change will be negotiated with our partners in Canada and Mexico, as
trilateral agreement extends to the 5-digit NAICS industry level in
this area of the structure.
Part V. Update on the Treatment of Manufacturing Units That Outsource
Transformation
Recent years have witnessed rapid and widespread specialization in
goods manufacturing as global competition has motivated producers to
seek more efficient production methods. This has resulted in
outsourcing manufacturing transformation activities (i.e., the actual
physical, chemical or mechanical transformation of inputs into new
outputs) to specialized establishments, both foreign and domestic.
NAICS 2007 did not provide clear guidance on classification of units
that control the entire process but subcontract out all manufacturing
transformation activities. To address this shortcoming, the ECPC
chartered a subcommittee to study the issue and provide classification
guidance that would result in consistent classification of outsourcing
establishments and comparable data for these outsourcing establishments
across various statistical programs. As a result of that research, the
ECPC recommended to OMB a classification of establishments that bear
the overall responsibility and risk for bringing together all processes
necessary for the production of a good in the manufacturing sector,
even if the actual transformation is 100 percent outsourced.
OMB recognized that, from a conceptual standpoint, at the most
aggregate level, goods producers arrange for and bring together all of
the factors of production necessary to produce a good. Goods producers
accept the entrepreneurial risk of producing and bringing goods to
market. When individual steps in the complete process are outsourced,
an establishment should remain classified in the manufacturing sector.
Accordingly, OMB accepted the ECPC recommendation that factoryless
goods producers (FGPs) be classified in manufacturing.
Implementing the guidance to classify establishments that outsource
manufacturing transformation in the manufacturing sector of NAICS will
potentially affect multiple agencies and programs within those
agencies. Variations in classification from differing interpretations
prior to OMB's guidance will result in differing impacts.
It is important to both statistical agencies and other data users
to be able to distinguish between definitional and economic changes so
that they can create continuous time series and accurately analyze data
changes over time. The inclusion of revenues from FGP activities in
manufacturing will effectively change the traditional definition of
manufacturing, and is expected to affect statistical estimates at the
national, State and regional levels. This includes statistical outputs
such as the value of shipments for manufacturing industries, value of
sales for wholesale trade industries, product data, material costs and
other expenses, price indexes, labor and multifactor productivity
series, and the national accounts. The ability to consistently identify
establishments as FGPs and the
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potential impact on various programs are currently being evaluated.
The following paragraphs present a partial list of the statistics
that are subject to change based on this decision.
Bureau of Labor Statistics (BLS)
Quarterly Census of Employment and Wages (QCEW), Current Employment
Statistics (CES), Job Openings and Labor Turnover Survey (JOLTS),
Producer Price Index Program (PPI), Major Sector Productivity, Industry
Productivity, Occupational Employment Statistics (OES), and other BLS
programs that produce estimates using the NAICS classification system.
Bureau of Economic Analysis (BEA)
Industry Accounts (including Input-Output tables), International
Area, National Income and Product Accounts, Regional Accounts, and
other BEA programs that produce estimates using the NAICS
classification system.
Census Bureau
Industry statistics from the Economic Census; Annual and Monthly
Wholesale Trade Surveys; the Annual Survey of Manufacturers; Monthly
Manufacturers' Inventories, Shipments, and Orders (M3); Manufacturing
and Energy Consumption Survey (MECS); County Business Patterns (CBP);
Quarterly Survey of Plant Capacity Utilization (QPC); Annual Capital
Expenditures Survey (ACES); Business R&D and Innovation Survey (BRDIS);
Business Expense Survey (BES); Quarterly Financial Report (QFR); and
other series that are published using NAICS.
The level of impact will vary across programs and agencies based on
the intensity of outsourcing.
The decision to classify FGPs in manufacturing was included in the
NAICS United States 2012 Manual. OMB understood the considerable cost
and lead-time required to implement this decision consistently across
statistical programs using statistically sound methods. Thus,
statistical programs were allowed to delay implementation while
studying and analyzing the issue. If FGP identification and data
collection are determined to be feasible, statistical programs are
expected to implement this change for data reference year 2017.
While research is continuing, the ECPC is soliciting additional
public comments on the advisability of classifying FGPs in the
manufacturing sector of NAICS. A more complete discussion of the
recommendation is available at: http://www.census.gov/eos/www/naics/fr2010/ECPC_Recommendation_for_Classification_of_Outsourcing.pdf.
To the extent possible, comments should address the conceptual
conclusions presented in the recommendation referenced above. While the
final impact of this recommendation is not yet known, the scope of
program and data changes, including breaks in time series, must be
weighed against the value of more comparable statistics related to this
phenomenon. The ECPC is also soliciting public comments on the balance
between change and comparability.
Part VI. Changes to Account for Errors and Omissions in NAICS
No significant errors or omissions have been identified in NAICS
2012. Any errors or omissions that are identified in NAICS in the
future will be corrected and posted on the official NAICS Web site at
http://www.census.gov/naics.
Howard A. Shelanski,
Administrator, Office of Information and Regulatory Affairs.
[FR Doc. 2014-11914 Filed 5-21-14; 8:45 am]
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