North American Industry Classification System (NAICS) Updates for 2022; Update of Statistical Policy Directive No. 8, Standard Industrial Classification of Establishments; and Elimination of Statistical Policy Directive No. 9, Standard Industrial Classification of Enterprises

AGENCY:

Office of Information and Regulatory Affairs, Office of Management and Budget, Executive Office of the President.

ACTION:

Notice of Solicitation of Comments on the Economic Classification Policy Committee's Recommendations for the 2022 Revision of the North American Industry Classification System; Update of Statistical Policy Directive No. 8, Standard Industrial Classification of Establishments; and Elimination of Statistical Policy Directive No. 9, Standard Industrial Classification of Enterprises.

SUMMARY:

The Office of Management and Budget (OMB) seeks public comment on the advisability of adopting the proposed North American Industry Classification System (NAICS) updates for 2022 recommended by its Economic Classification Policy Committee (ECPC), which comprises representatives of the Bureau of Economic Analysis, Bureau of Labor Statistics, U.S. Census Bureau, and other government agencies. The ECPC recommends an update of the industry classification system to clarify existing industry definitions and content, recognize new and emerging industries, combine industries, and correct errors and omissions. The ECPC also recommends an update of OMB Statistical Policy Directive No. 8, Standard Industrial Classification of Establishments, and to withdraw OMB Statistical Policy Directive No. 9, Standard Industrial Classification of Enterprises. In large part, this proposed series of revisions are designed to address the view of the ECPC regarding the decreasing usefulness of employing the mode of delivery (online versus in store/print) as an industry delineation criterion in the Wholesale Trade, Retail Trade, and Information sectors. In short, the internet has developed from a specialized activity to a generic method of delivery for goods and services. Therefore, the ECPC has developed recommendations that reevaluate and deemphasize the delivery method as an industry function used in NAICS classification. There are four parts in the SUPPLEMENTARY INFORMATION section below. Part I summarizes the background for the proposed revisions to NAICS 2017. Part II contains a summary of public comments regarding priorities for changes to NAICS in 2022, the ECPC recommendation to update OMB Statistical Policy Directive No. 8, Standard Industrial Classification of Establishments, and the ECPC recommendation to withdraw OMB Statistical Policy Directive No. 9, Standard Industrial Classification of Enterprises. Part III includes a list of title changes for NAICS industries that clarify, but do not change, the existing content of the industries. Part IV provides a comprehensive listing of proposed changes for national industries and their links to NAICS 2017 industries.

DATES:

To ensure consideration of comments on the adoption and implementation of the NAICS revisions detailed in this notice, please submit all comments in writing as soon as possible, but no later than 45 days from the publication date of this notice. Because of delays in the receipt of regular mail related to security screening, respondents are encouraged to send comments electronically (see ADDRESSES, below). This proposed revision to NAICS would become effective in the U.S. for publication of establishment data that refer to periods beginning on or after January 1, 2022.

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. Enter “USBC-2021-0004” (in quotes) in the search box 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-2021-0004) and the phrase “North American Industry Classification System (NAICS)—Updates for 2022” at the beginning of your comments. Please also indicate which ECPC recommendation described in the SUPPLEMENTARY INFORMATION of this notice is addressed in your comments.

Comments submitted in response to this notice may be made available to the public and subject to disclosure under the Freedom of Information Act. For this reason, please 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; however, www.regulations.gov does include the option of commenting anonymously. 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.

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 structures, industry definitions, and related documents for previous versions of NAICS United States.

Public Review Procedure: All comments and proposals received in response to this notice will be available for public inspection. OMB will publish final changes to NAICS for 2022 resulting from this notice in the Federal Register.

FOR FURTHER INFORMATION CONTACT:

For information about this request for comments, contact Kerrie Leslie, Office of Management and Budget, 9215 New Executive Office Building, 725 17th St. NW, Washington, DC 20503, telephone (202) 395-1093.

NAICS classification staff may be reached by email at econ.naics2022@census.gov. Please note: Communication through this email will not be included in the record for USBC-2021-0004. Comments should be submitted through www.regulations.gov,, as described in the ADDRESSES section above.

SUPPLEMENTARY INFORMATION:

OMB published a notification of intention to revise portions of NAICS in a February 26, 2020, Federal Register notice (85 FR 11120-11124). That notice solicited comments on the advisability of revising the NAICS 2017 structure for 2022: (1) To identify new and emerging industries, (2) to solicit comments on the NAICS treatment of Electronic Shopping in Retail Trade, (3) to solicit comments on the concept of internet Publishing and Broadcasting and the potential to eliminate the industry in NAICS 2022, (4) to solicit comments on a proposed revision to OMB's Statistical Policy Directive No. 8, Standard Industrial Classification of Establishments, (5) to solicit comments on the advisability of withdrawing OMB Statistical Policy Directive No. 9, Standard Industrial Classification of Enterprises, and (6) to make required changes for errors and omissions in NAICS 2017. The deadline for submitting comments was April 27, 2020.

After considering all proposals from the public, consulting with U.S. data users and industry groups, and undertaking extensive discussions with Statistics Canada and Mexico's Instituto Nacional de Estadística y Geografía (INEGI), the ECPC recommends that NAICS United States 2022 incorporate changes as shown in Parts III and IV of this notice.

Following a thorough process of development and discussions by the ECPC, with maximum possible public input, OMB seeks comment on the advisability of revising NAICS to incorporate the changes published in this notice. The revised NAICS would be employed in relevant data collections by all U.S. statistical agencies beginning with reference year 2022.

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 and/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 Estadística y Geografía (INEGI), Statistics Canada, and the United States Office of Management and Budget (OMB), through the 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, i.e., 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 2017 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 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.

Four principles that guide NAICS development are:

(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. 4) of the United Nations.

The ECPC is committed to maintaining the principles of NAICS during revisions. The February 26, 2020, solicitation for public comment on questions related to a potential revision of NAICS in 2022 was directly tied to the application of these four NAICS principles.

NAICS uses a hierarchical structure to classify establishments from the broadest level to the most detailed level using the following format:

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 2022 revision will be the fifth since OMB adopted NAICS in 1997. 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.

In large part, this proposed revision addresses the decreasing usefulness of employing the mode of delivery (online versus in store/print) as an industry delineation criterion in the Wholesale Trade, Retail Trade, and Information sectors. Section II.B Summary of ECPC Recommendations for Online Industries in the Wholesale Trade, Retail Trade, and Information Sectors below describes the ECPC recommendations in more detail.

II: Summary of Public Comments Regarding Priorities for Changes to NAICS in 2022; Summary of ECPC Recommendations for Online Industries in the Wholesale Trade, Retail Trade, and Information Sectors; Update of Statistical Policy Directive No. 8, Standard Industrial Classification of Establishments; and Elimination of Statistical Policy Directive No. 9, Standard Industrial Classification of Enterprises

A. Summary of Public Comments Regarding Priorities for Changes to NAICS in 2022

The February 26, 2020, Federal Register notice sought comments from the public specifically on the continued usefulness of the mode of delivery (online versus in store/print) as an industry delineation criterion in addition to comments on new and emerging industries and the proposed update of Statistical Policy Directive No. 8 and proposed elimination of Statistical Policy Directive No. 9. These focus areas were highlighted in Parts II-VII of that notice.

In response to the February 26, 2020, notice, the ECPC received 63 individual submissions. Each submission was assigned a unique docket number. These 63 submissions addressed the focus areas included in Parts II-VII of the February 26, 2020, notice and/or included comments proposing other changes to NAICS 2017.

The ECPC applied the following general guidance when considering changes to NAICS in 2022:

(1) Because of the cost of change and the disruption of statistical data series that have already resulted from the ongoing implementation of NAICS, the ECPC will limit the scope of NAICS changes for 2022 to those that significantly improve the relevance and efficiency of the classification system;

(2) The ECPC will recommend new and emerging industries identified through the comment process that are supported by the guiding principles of NAICS; and

(3) The ECPC will make changes to account for errors and omissions as well as recommend narrative improvements to clarify the content of existing industries.

The ECPC also considered the views of its member agencies when evaluating specific proposals for changes to NAICS in 2022. The ECPC reviewed each individual proposal within the existing framework of the principles of NAICS. Additional considerations that resulted in recommendations for or against change included issues of relevance, size, and time series continuity.

The ECPC received a wide ranging and eclectic set of suggestions in response to this solicitation. Single submissions often addressed more than one issue, and many submissions addressed common issues. Of the 63 uniquely numbered submissions received in response to the Federal Register notice, most submissions responded with ideas for new or emerging industries or changes to existing industries to reflect new or emerging issues within the industries: 14 supported a new sector for remanufacturing industries, or, alternatively, new industries for remanufacturing; three requested changes for early child care and education; two requested revisions to better reflect the bioeconomy and biobased products; two requested a new industry for compost manufacturing; two supported new vegan industries; two requested a new industry for construction specifications consulting; and two requested a new industry group for farm supply retailers. Single comments requested various new industries or clarifications within existing industries, including aerial wildland firefighting, interior demolition, audio visual services, refrigerant handling and management, agents for wireless telecommunications services, background screening, restaurant breweries, rideshare services, and pharmacy benefit management. A few comments responded about the continued usefulness of mode of delivery (online versus in store/print) as an industry delineation: Three addressed the current treatment of electronic shopping in NAICS with two in favor of some kind of change and one against. The balance of the comments identified long-term declines in the size of existing industries as justification for industry combinations in the Mining, Manufacturing, Wholesale Trade, Retail Trade, Finance and Insurance, and Other Services (Except Public Administration) sectors. No comments were received on the proposed update to Statistical Policy Directive No. 8 or the elimination of Statistical Policy Directive No. 9.

Each suggestion was carefully considered. Some suggestions were recommended for adoption but modified by the ECPC to better meet the objectives of NAICS. Based on public comments, the ECPC is recommending industry definition changes to explicitly classify certain activities and more clearly match accepted industry terminology. Some suggestions were recommended to be incorporated as products rather than industries. Other suggestions for change were not suited to the production-oriented basis of NAICS or could not be implemented in statistical programs, for various reasons, and thus were not accepted. When a proposal was not accepted, it was usually because: (a) The resulting industry would have been too small in the U.S., or (b) the proposal did not meet the production-oriented criterion for forming an industry in NAICS. Detailed supporting documentation discussing the issues and rationale for reaching these recommendations is available at www.census.gov/naics,, and Section II parts B-D below describe the ECPC recommendations to address the specific focus areas from the February 26, 2020, Federal Register notice: Continued usefulness of mode of delivery (online versus in store/print) as an industry delineation, proposed update to Statistical Policy Directive No. 8, and proposed elimination to Statistical Policy Directive No. 9.

B. Summary of ECPC Recommendations for Online Industries in the Wholesale Trade, Retail Trade, and Information Sectors

The ECPC received only three comments in response to the February 26, 2020, Federal Register notice related to the continued usefulness of mode of delivery (online versus in store/print) as an industry delineation, with two generally in favor and one against. The ECPC notes that the internet has developed from a specialized activity to a generic method of delivery for goods and services. The use of the internet as a separate production function when defining industries in NAICS is problematic and requires reevaluation as internet usage has permeated the economy. With this in mind, after a technical review and consideration of the submitted comments, the ECPC recommends related changes for NAICS 2022 that apply specifically to the Wholesale Trade, Retail Trade, and Information sectors. The relevant ECPC recommendations follow by sector:

(1) Wholesale Trade

For the Wholesale Trade sector, the ECPC recommends eliminating NAICS Industry 425110, Business to Business Electronic Markets. With this change, Subsector 425 and Industry Group 4251 would be renamed to “Wholesale Trade Agents and Brokers.” Given the minimal impact of combining NAICS Industries 425110 and 425120, Wholesale Trade Agents and Brokers, the ECPC does not recommend changes to codes or titles for NAICS Industries 42512 and 425120.

(2) Retail Trade

For the Retail Trade sector, given the increasing prevalence of omni-channel distribution and variations in reporting patterns, the ECPC recommends eliminating the store/nonstore distinction. Subsector 454, Nonstore Retailers, includes industries for electronic shopping and mail-order houses, vending machine operators, fuel dealers, and other direct selling establishments. In the proposed NAICS 2022 structure for the sector, electronic shopping, mail-order houses, and other direct selling establishments would be distributed throughout the new structure in the same way as retail stores, delineated by specialized broad product lines, such as groceries, apparel, hardware, etc. versus general merchandise. Vending machine operators would be retained as a 6-digit industry and combined with convenience retailers in a 5-digit industry for Convenience Retailers and Vending Machine Operators, included in the industry group for Grocery and Convenience Retailers, and in the subsector for Food and Beverage Retailers. Fuel dealers would be retained as 5- and 6-digit industries within the industry group for Fuel Dealers, grouped with gasoline stations at the subsector level.

(3) Information

For the Information sector, given the increasing prevalence of internet as a generic method of delivery for publishing and broadcasting, the ECPC recommends moving away from an internet-only distinction within this sector as well by eliminating NAICS Industry 519130, Internet Publishing and Broadcasting and Web Search Portals, and

(a) combining Subsector 511, Publishing Industries (except internet) with internet-only publishing to create Subsector 513, Publishing Industries, and retaining the structure of Subsector 511;

(b) combining Subsector 515, Broadcasting (except internet) with internet-only broadcasting and news syndicates, formerly in Subsector 519, to create Subsector 516, Broadcasting and Content Providers, with a 4-digit industry group for Radio and Television Broadcasting Stations, based on the production process of owning infrastructure and controlling the use of public spectrum, and a second 4-digit industry group for Media Streaming Distribution Services, Social Networks, and Other Media Networks and Content Providers; and

(c) retaining web search portals in Subsector 519, Other Information Services, retitled to Web Search Portals, Libraries, Archives, and Other Information Services.

C. Update of Statistical Policy Directive No. 8, Standard Industrial Classification of Establishments

The ECPC recommends updating the text of Statistical Policy Directive No. 8, Standard Industrial Classification of Establishments, using the language proposed in the February 26, 2020, Federal Register notice. No public comments submitted in response to the February 26, 2020, Federal Register notice offered views on this proposed update. OMB adopted NAICS as the replacement for the Standard Industrial Classification (SIC) for statistical purposes in 1997 (62 FR 17288-17337).

D. Elimination of Statistical Policy Directive No. 9, Standard Industrial Classification of Enterprises

The ECPC recommends eliminating Statistical Policy Directive No. 9, Standard Industrial Classification of Enterprises. OMB presented the Enterprise Standard Industrial Classification of Enterprises in 1974. The classification is static and has not been updated or widely adopted over the past 45 years. NAICS United States does not include a similar variant for classification of enterprises. No public comments submitted in response to the February 26, 2020, Federal Register notice offered views on this proposed elimination.

III: ECPC Recommendations for Title Changes

Based on a technical review of the titles, in response to some comments submitted describing a lack of clarity, and for consistency with the ECPC recommendations to make changes to industries to deemphasize mode of delivery (online versus in store/print) as a delineation, the ECPC recommends the following NAICS subsector, industry group, and industry title changes to more clearly describe the existing content.

NAICS 311221, Wet Corn Milling, would be changed to “Wet Corn Milling and Starch Manufacturing.”

NAICS 32531, Fertilizer Manufacturing, would be changed to “Fertilizer and Compost Manufacturing.”

NAICS 325992, Photographic Film, Paper, Plate, and Chemical Manufacturing, would be changed to “Photographic Film, Paper, Plate, Chemical, and Copy Toner Manufacturing.”

NAICS 42494, Tobacco and Tobacco Product Merchant Wholesalers, would be changed to “Tobacco Product and Electronic Cigarette Merchant Wholesalers.”

NAICS 424940, Tobacco and Tobacco Product Merchant Wholesalers, would be changed to “Tobacco Product and Electronic Cigarette Merchant Wholesalers.”

NAICS Subsector 425, Wholesale Electronic Markets and Agents and Brokers, would be changed to “Wholesale Trade Agents and Brokers.”

NAICS Industry Group 4251, Wholesale Electronic Markets and Agents and Brokers, would be changed to “Wholesale Trade Agents and Brokers.”

NAICS 44412, Paint and Wallpaper Stores, would be changed to “Paint and Wallpaper Retailers.”

NAICS 444120, Paint and Wallpaper Stores, would be changed to “Paint and Wallpaper Retailers.”

NAICS 44511, Supermarkets and Other Grocery (except Convenience) Stores, would be changed to “Supermarkets and Other Grocery Retailers (except Convenience Retailers).”

NAICS 445110, Supermarkets and Other Grocery (except Convenience) Stores, would be changed to “Supermarkets and Other Grocery Retailers (except Convenience Retailers).”

NAICS 44523, Fruit and Vegetable Markets, would be changed to “Fruit and Vegetable Retailers.”

NAICS 445230, Fruit and Vegetable Markets, would be changed to “Fruit and Vegetable Retailers.”

NAICS 44529, Other Specialty Food Stores, would be changed to “Other Specialty Food Retailers.”

NAICS 445291, Baked Goods Stores, would be changed to “Baked Goods Retailers.”

NAICS 445292, Confectionery and Nut Stores, would be changed to “Confectionery and Nut Retailers.”

NAICS 48531, Taxi Service, would be changed to “Taxi and Ridesharing Services.”

NAICS 485310, Taxi Service, would be changed to “Taxi and Ridesharing Services.”

NAICS Subsector 518, Data Processing, Hosting, and Related Services, would be changed to “Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services.”

NAICS Industry Group 5182, Data Processing, Hosting, and Related Services, would be changed to “Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services.”

NAICS 51821, Data Processing, Hosting, and Related Services, would be changed to “Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services.”

NAICS 518210, Data Processing, Hosting, and Related Services, would be changed to “Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services.”

NAICS 524292, Third Party Administration of Insurance and Pension Funds, would be changed to “Pharmacy Benefit Management and Other Third Party Administration of Insurance and Pension Funds.”

NAICS 54138, Testing Laboratories, would be changed to “Testing Laboratories and Services.”

NAICS 541380, Testing Laboratories, would be changed to “Testing Laboratories and Services.”

NAICS 54185, Outdoor Advertising, would be changed to “Indoor and Outdoor Display Advertising.”

NAICS 541850, Outdoor Advertising, would be changed to “Indoor and Outdoor Display Advertising.”

NAICS 561611, Investigation Services, would be changed to “Investigation and Personal Background Check Services.”

NAICS Industry Group 6244, Child Day Care Services, would be changed to “Child Care Services.”

NAICS 62441, Child Day Care Services, would be changed to “Child Care Services.”

NAICS 624410, Child Day Care Services, would be changed to “Child Care Services.”

IV: ECPC Recommendations for 2022 Changes to NAICS United States 2017

Part IV presents the ECPC recommendations for content revisions to NAICS United States for 2022. Table 1 lists, in NAICS United States 2017 order, the disposition of all industries that the ECPC recommends for change and their resulting relationship to NAICS United States 2022 proposed industries. Table 2 presents the ECPC recommended NAICS 2022 industries in proposed NAICS United States 2022 order, cross-walked to their NAICS United States 2017 content.