Learn About NAICS Codes

The North American Industry Classification System (NAICS) is a standardized framework used to classify businesses and industries in the United States, Canada, and Mexico. Developed in 1997 (and most recently updated in 2022), NAICS codes replaced the Standard Industrial Classification (SIC) system to provide a more consistent and accurate way of analyzing and comparing economic data.

In this article, we will discuss the importance of NAICS codes, how they are structured, how they relate to EPCRA Tier II reporting, and how you can find your facility's NAICS code.

NAICS codes serve a variety of purposes, including:

1. Facilitating Economic Analysis: NAICS codes allow for the collection and analysis of economic data, providing insights into the health and growth of different industries.

2. Enabling Cross-Border Comparisons: By using a standardized system across North America, NAICS codes allow for the comparison of business statistics between the United States, Canada, and Mexico.

3. Monitoring Industry Trends: Government agencies use NAICS codes to monitor industry trends and growth patterns, informing policy decisions and resource allocation.

4. Identifying Market Opportunities: Businesses can use NAICS codes to identify potential markets and competitors, guiding strategic decision-making.

Each NAICS code is a six-digit number, with each digit representing a different level of specificity. The structure is as follows:

• The first two digits represent the economic sector (e.g., 23 for Construction)

• The third digit represents the subsector (e.g., 236 for Construction of Buildings)

• The fourth digit represents the industry group (e.g., 2361 for Residential Building Construction)

• The fifth digit represents the NAICS industry (e.g., 23611 for Residential Building Construction)

• The sixth digit represents the national industry (e.g., 236115 for New Single-Family Housing Construction)

By understanding this structure, you can quickly identify the broader industry and the specific niche your facility operates in.

For facilities subject to the Emergency Planning and Community Right-to-Know Act (EPCRA), NAICS codes play a vital role in Tier II reporting. EPCRA requires facilities to report the storage and release of specific hazardous chemicals, and part of this reporting process involves providing the facility's NAICS code.

By including the NAICS code in Tier II reports, facilities help regulatory agencies understand the types of industries handling hazardous materials. This information is crucial for effective emergency planning and response, as it allows first responders to prepare for the specific hazards they may encounter at a given facility.

In some states, NAICS codes can also impact the amount of reporting fees assessed, making it even more important to ensure that your facility's code is accurate.

You can find the North American Industry Classification System (NAICS) code that applies to your business by using the NAICS search tool provided by the U.S. Census Bureau.

To use the search tool, go to the Census Bureau's NAICS main page, and click on "2022 NAICS Search" in the left-hand menu. In this field, you can either enter a keyword related to your business in the search bar or browse through the NAICS code hierarchy to find the code that best describes your business activity.