89 FR 245 pgs. 104229-104232 - Statistical Policy Directive No. 8 North American Industry Classification System (NAICS)—Request for Comments on Possible Revisions for 2027
Type: NOTICEVolume: 89Number: 245Pages: 104229 - 104232
Pages: 104229, 104230, 104231, 104232FR document: [FR Doc. 2024-30060 Filed 12-19-24; 8:45 am]
Agency: Management and Budget Office
Official PDF Version: PDF Version
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OFFICE OF MANAGEMENT AND BUDGET
Statistical Policy Directive No. 8 North American Industry Classification System (NAICS)-Request for Comments on Possible Revisions for 2027
AGENCY:
Office of Information and Regulatory Affairs, Office of Management and Budget, Executive Office of the President.
ACTION:
Notice of Solicitation for Proposals to Revise Portions of the NAICS for 2027.
SUMMARY:
[top] The Office of Management and Budget (OMB), on behalf of the Economic Classification Policy Committee (ECPC), announces the review of the 2022 North American Industry Classification System (NAICS) for potential revisions to be made to the
Details about these topics are available in the SUPPLEMENTARY INFORMATION section below.
DATES:
To ensure consideration of comments on this notice, they must be received no later than February 18, 2025. Because of delays in the receipt of regular mail related to security screening, respondents are encouraged to send comments electronically (see ADDRESSES , below.
ADDRESSES:
Submit comments through www.regulations.gov -a Federal E-Government website 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 "USBC-2024-0032" (in quotes) in the Comment or Submission search box, click Go, and follow the instructions for submitting comments. Comments received by the date specified above will be included as part of the official record. Please include the Docket ID (USBC-2024-0032) and the phrase "2022 North American Industry Classification System (NAICS)-Revisions for 2027 Comments" at the beginning of your comments.
Privacy Act Statement: OMB is issuing this solicitation of input on the 2027 NAICS revision pursuant to its authorities under 31 U.S.C. 1104(d) and 5 U.S.C. 3504(e). Submission of comments in response to this request is voluntary. Comments may be used to inform sound decision making on topics related to this request, including potential revisions to the NAICS. Please note that submissions received in response to this notice may be posted on www.regulations.gov or otherwise released in their entirety, including any personal information, business confidential information, or other sensitive information provided by the commenter. Do not include in your submissions any copyrighted material; information of a confidential nature, such as personal or proprietary information; or any information you would not like to be made publicly available. Comments and commenter information are maintained under the OMB Public Input System of Records, OMB/INPUT/01; the system of records notice is accessible at 88 FR 20913 ( www.federalregister.gov/documents/2023/04/07/2023-07452/privacy-act-of-1974-system-of-records ) and includes a list of routine uses associated with the collection of this information.
Electronic Availability: Federal Register notices are available electronically at www.federalregister.gov. This document is also available on the NAICS website at 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 all NAICS United States versions, and related documents.
Public Review Procedure: All comments and proposals received in response to this notice will be available for public inspection. OMB will publish all ECPC recommendations for changes to NAICS for 2027 resulting from this notice in the Federal Register for review and comment prior to final action.
For general inquiries email: Statistical_Directives@omb.eop.gov. The NAICS classification staff may be reached by email at econ.naics2027@census.gov. Please note: Communication through this email will not be included in the record for USBC-2024-0032. Comments should be submitted through https://www.federalregister.gov.
SUPPLEMENTARY INFORMATION:
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)), OMB, on behalf of the ECPC, announces the review and potential revision of the structure and content of the 2022 NAICS. OMB solicits public comment on all aspects of the NAICS, with an emphasis on new and emerging industries. However, in soliciting comments about revising NAICS, the ECPC does not intend to open the entire classification structure for substantial change in 2027. The ECPC will consider public comments and proposals for changes or modifications that are consistent with the principles guiding the development of NAICS as outlined in the "BACKGROUND" section below.
This is the first Federal Register Notice requesting public comment in the process leading up to the potential 2027 NAICS revision. More information on the NAICS, including information on past revision processes, is available at www.census.gov/naics.
I. Background
The Chief Statistician of the United States at OMB coordinates the Federal statistical system by developing and overseeing the implementation of Government-wide principles, policies, standards, and guidelines concerning the presentation and dissemination of statistical information. These coordination efforts promote the efficiency and effectiveness of the Federal statistical system. More information on the Federal statistical system, including its structure and policies that govern it, is available at www.statspolicy.gov.
One such standard for statistical data classification established by OMB is Statistical Policy Directive No. 8: North American Industry Classification System: Classification of Establishments (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. The OMB-Recognized Statistical Agencies and Units use NAICS to collect and publish data by industry, and NAICS is also widely used by State agencies, trade associations, private businesses, and other organizations.
Mexico's Instituto Nacional de Estadística y Geografía (INEGI), Statistics Canada, and the United States Office of Management and Budget, through the ECPC, collaborate on NAICS to make the industry statistics produced by the three countries comparable. NAICS is an industry classification system developed in accordance with a single principle of aggregation: 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 2022 are extensively comparable with statistics compiled according to the latest revision of the United Nations' International Standard Industrial Classification of All Economic Activities (ISIC, Revision 5). For the three North American countries, NAICS provides a consistent framework for the collection, tabulation, presentation, and analysis of industry statistics used by government policy analysts, academics and researchers, the business community, and the public.
[top] Please note that NAICS is designed and maintained solely for statistical purposes, in order to improve and keep current the statistical rigor of 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.
Four principles guide NAICS development:
(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 (see below) of the International Standard Industrial Classification of All Economic Activities (ISIC, Rev. 5) of the United Nations.
The ECPC is committed to maintaining the principles of NAICS as it develops recommendation for further refinements.
NAICS uses a hierarchical structure to classify establishments from the broadest level to the most detailed level using the following format:
| 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 96 subsectors in NAICS 2022. |
| Industry Group | 4-digit | Industry groups are more detailed than subsectors. There are 308 industry groups in NAICS 2022. |
| NAICS Industry | 5-digit | NAICS industries, in most cases, represent the lowest level of three-country comparability. There are 689 five-digit industries in NAICS 2022. |
| National Industry | 6-digit | National industries are the most detailed level and represent the national level detail. There are 1,012 national industries in NAICS United States 2022. |
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 2027 review will be the sixth since OMB adopted the NAICS as an official standard statistical classification in 1997. The ECPC recognizes the potential costs involved when adopting, implementing, and tracking the impacts of industry classification revisions in statistical programs. 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.
| NAICS version | Date published | Federal Register |
|---|---|---|
| 1997 | April 9, 1997 | 62 FR 17288. |
| 2002 | January 16, 2001 | 66 FR 3826. |
| 2007 | May 16, 2006 | 71 FR 28532. |
| 2012 | August 17, 2011 | 76 FR 51240. |
| 2017 | August 8, 2016 | 81 FR 52584. |
| 2022 | December 21, 2021 | 86 FR 72277. |
The ECPC solicits and welcomes comments across all of the NAICS sectors, and also seeks comments concerning the following items: new and emerging industries and recommended revisions for measuring elements of the bioeconomy.
II. New and Emerging Industries
NAICS is 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 2027 and soliciting proposals for these new industries.
When developing proposals for new and emerging industries, please note that there are two separate but related economic classifications in the United States. NAICS, the industry classification, is the subject of this notice, while the North American Product Classification System (NAPCS) is product classification. The NAPCS product system described below complements the NAICS industry system and provides an alternate way of classifying output.
NAICS classifies units according to their production function. NAICS industries group units undertaking similar activities using similar resources but does not necessarily group all similar products or outputs. NAPCS, on the other hand, classifies 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 as NAPCS does, rather than by creating a new industry. This cross-sector measurement level is particularly true with NAICS, which groups establishments into industries based on their primary production function. NAPCS was initiated in 1999, followed by a lengthy development and collaborative harmonizing efforts. The first NAPCS revision cycle began in 2022, concurrent with the NAICS. This cycle will continue on the same 5-year revision cycle as NAICS.
Proposals for new industries in NAICS for 2027 will be evaluated within the context of the industry and product classification systems 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), available at www.census.gov/naics/napcs .
[top] Proposals for new industries will be evaluated using a variety of criteria. As previously mentioned, each proposal will be evaluated based on the 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,
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. A proposed industry 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 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 include the following information:
(1) Specific economic activities to be covered by the proposed industry, the proposed industry's production processes, its specialized labor skills, and any unique equipment and 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.
(2) Relationship of the proposed industry to existing NAICS United States 2022 six-digit national industries and whether the proposed industry would impact trilateral NAICS levels (as specified by "T" superscripts in the 2022 NAICS structure).
(3) Documentation of the size and recent and projected growth of the proposed industry in the United States.
(4) Information about the size and importance of the proposed industry in Canada and Mexico, if available.
Proposals will be collected, reviewed, and analyzed by the ECPC. As necessary, proposals for change will be negotiated with our partners in Canada and Mexico. When this process is complete, OMB will publish a Federal Register notice that contains the ECPC recommendations for revisions for additional public comment prior to a final OMB determination of any changes to NAICS for 2027.
III. Improve Measures of Emerging/Innovative Industrial Activity, Including the Bioeconomy
Consistent with Executive Order 14081, Advancing Biotechnology and Biomanufacturing Innovation for a Sustainable, Safe, and Secure American Bioeconomy, the Interagency Technical Working Group on Developing, Recommending and Assessing Current Industry and Product Classifications for the Emerging Bioeconomy submitted a report to OMB with recommendations for revisions to NAICS for advancing measurement in this area. 1 In this report, the Working Group stated that there has been sustained growth and diversification in biotechnology, biomanufacturing, and the related use of biological resources to supplement, and in some industries, replace more traditional production methods. The report also discussed several challenges with measuring this part of the economy, and included recommendations for revisions to both the NAICS and NAPCS. As mentioned above, especially in this area, some proposals may be more adequately addressed through the identification and collection of product versus industry data.
Footnotes:
1 ?Interagency Tech. Working Grp. on Developing, Recommending and Assessing Current Indus. & Product Classifications for the Emerging Bioeconomy, Measuring the Bioeconomy: Recommended Revisions to the NAICS and NAPCS (Sept. 12, 2023), available at www.usda.gov/sites/default/files/documents/OCE-Measuring-the-Bioeconomy.pdf.
The ECPC is soliciting public comments regarding the recommendations included in the report, to support development of related final ECPC recommendations to OMB. In particular, ECPC is interested in the following issues: What impact might these potential changes to the NAICS have on existing industry measurements, for example economic output and employment, continuity of time series measures? What methodologies should compilers of Federal economic data apply to differentiate bioeconomic processes from current production processes to enable measurement? What potential bioeconomy measurement strategies might be considered other than revisions to and inclusion in the NAICS?
IV. Errors and Omissions in NAICS
No significant errors or omissions have been identified in NAICS 2022. Any errors or omissions that are identified in NAICS in the future will be corrected and posted on the official NAICS website at www.census.gov/naics.
V. Timing for the 2027 NAICS Revision Process
Following this public comment period, the ECPC will review the comments and develop any proposed revisions for the 2027 NAICS. Then OMB will publish ECPC's proposed revisions for public comment in a subsequent Federal Register Notice. The ECPC will then review the comments and develop final recommendations to the Chief Statistician of the United States at OMB on the proposed revisions for the 2027 NAICS. OMB will consider the final recommendations from the ECPC and will publish the updated classification for 2027 NAICS in calendar year 2026. The NAICS 2027 will be available on the Census Bureau website in January 2027.
Karin A. Orvis,
Chief Statistician of the United States.
[FR Doc. 2024-30060 Filed 12-19-24; 8:45 am]
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