1
M
E
M
O
R
A
N
D
U
M
TO:
Cody
Rice,
USEPA
FROM:
Susan
Day,
Riley
Newbert
DATE:
October
23,
2003
RE:
Small
Entity
Impacts
Associated
with
the
Form
R­
D
1.0
INTRODUCTION
The
Regulatory
Flexibility
Act
(
RFA)
of
1980
(
5
U.
S.
C.
§
601
et.
seq.)
requires
Federal
agencies
to
assess
the
effects
of
regulations
on
small
entities,
and,
in
some
instances,
to
examine
alternatives
to
the
regulations
that
may
reduce
adverse
economic
effects
on
significantly
impacted
small
entities.
The
RFA
requires
agencies
to
prepare
an
initial
and
final
regulatory
flexibility
analysis
for
each
rule
unless
the
Agency
certifies
that
the
rule
will
not
have
a
significant
economic
impact
on
a
substantial
number
of
small
entities.

Since
1980,
the
RFA
has
required
Federal
agencies
to
assess
the
economic
impacts
of
their
actions
on
small
entities,
including
businesses,
nonprofit
agencies,
and
governments.
Section
604
of
the
RFA,
as
amended
by
the
Small
Business
Regulatory
Enforcement
Fairness
Act
(
SBREFA)
of
1996,
requires
an
agency
to
perform
a
regulatory
flexibility
analysis
for
a
rule
unless
the
Agency
certifies
under
section
605(
b)
that
the
regulatory
action
will
not
have
a
significant
economic
impact
on
a
substantial
number
of
small
entities.
The
RFA
does
not
specifically
define
"
a
significant
economic
impact
on
a
substantial
number"
of
small
entities.

This
memo
summarizes
the
results
of
a
small
entity
impact
analysis
for
the
rule.
Specifically,
Section
2
provides
the
definition
of
a
small
entity
for
each
industry
group
covered
under
the
rule.
Section
3
describes
the
general
methodology
used
to
determine
if
the
rule
results
in
significant
economic
impacts
to
a
substantial
number
of
small
entities.
Section
4
summarizes
the
results
for
all
small
entities
affected
under
the
rule.
1
SBA's
size
standards
can
be
found
at:
http://
www.
sbaonline.
sba.
gov/
gopher/
Financial­
Assistance/
Size­
Standards.

2
USSBA.
Office
of
Advocacy
­
Statistics
­
Major
Industries
by
NAICS
codes:
Private
Employer
Firms,
Establishments,
Employment,
and
Annual
Payroll
by
Firm
Size
1998­
2000.
Information
from
the
Small
Business
Administration
on
the
Internet.
http://
www.
sba.
gov/
advo/
stats/
us88
 
00i.
pdf.
Downloaded
on
October
17,
2003.

2
2.0
DEFINITIONS
OF
SMALL
ENTITIES
The
RFA
utilizes
the
definition
of
"
small
business"
found
in
the
Small
Business
Act,
which
authorizes
the
Small
Business
Administration
(
SBA)
to
define
"
small
business"
by
regulation.
This
analysis
uses
the
SBA's
definition
of
a
small
business
for
each
industry.
1
SBA's
small
business
size
standards
vary
by
industry.
In
establishing
size
standards,
SBA
considers
a
number
of
economic
and
market
characteristics
that
may
allow
a
business
concern
to
exercise
dominance
in
an
industry.
Size
standards
are
based
on
criteria,
such
as
annual
receipts
or
number
of
employees,
that
represent
a
measure
of
these
characteristics.
These
standards
represent
the
largest
size
that
a
for­
profit
enterprise
(
together
with
its
affiliates)
may
be
and
still
qualify
as
a
small
business.

The
SBA
small
business
size
standards
are
expansive,
classifying
most
businesses
as
"
small."
For
example,
the
default
SBA
size
standard
for
manufacturing
industries
is
500
employees.
According
to
information
compiled
for
SBA
by
the
Bureau
of
the
Census,
301,639
of
306,303
firms
have
fewer
than
500
employees
,
at
least
98.5
percent
of
firms
would
be
classified
as
small
businesses
according
to
the
SBA
definition.
In
fact,
this
percentage
is
actually
higher,
since
for
certain
industrial
classification
codes
within
manufacturing,
the
SBA
size
standard
is
750,
1,000,
or
1,500
employees.

The
RFA
defines
"
small
governmental
jurisdictions"
as
governments
of
cities,
counties,
towns,
school
districts,
or
special
districts
with
a
population
of
less
than
50,000
people.
No
small
governmental
jurisdictions
are
expected
to
report
as
a
result
of
the
rule.

The
RFA
defines
"
small
organizations"
as
any
"
not­
for­
profit
enterprise
which
is
independently
owned
and
operated
and
is
not
dominant
in
its
field."
No
small
organizations
are
expected
to
report
as
a
result
of
the
rule.

3.0
METHODOLOGY
OVERVIEW
This
analysis
uses
annual
cost
impact
percentages
to
measure
potential
impacts
on
small
entities.
The
cost
impact
percentage
is
defined
as
annual
compliance
costs
resulting
from
the
rule
as
a
percentage
of
annual
revenues
or
sales.
For
purposes
of
determining
small
entity
impacts,
3
For
a
complete
description
of
the
derivation
of
first­
and
subsequent­
year
incremental
compliance
costs
associated
with
this
rule,
please
see
the
October
17,
2003
memorandum
"
Estimated
Burden
and
Cost
of
the
Form
R­
D".

3
comparing
annual
compliance
costs
to
annual
revenues
provides
a
reasonable
indication
of
the
magnitude
of
the
regulatory
burden
relative
to
a
commonly
available
and
objective
measure
of
a
company's
business
volume.
Where
regulatory
costs
represent
a
small
fraction
of
a
typical
firm's
revenue,
the
impacts
of
the
regulation
are
likely
to
be
minimal.

Cost
impact
percentages
are
calculated
using
both
the
first­
and
subsequent­
year
incremental
compliance
costs
for
Form
R­
D
filers.
3
Facilities
that
file
a
TRI
report
for
dioxin
and
dioxin­
like
compounds
but
do
not
have
congener
distribution
data
will
incur
only
incremental
costs
of
rule
familiarization.
Alternatively,
facilities
that
file
a
TRI
report
for
dioxin
and
dioxinlike
compounds
and
do
have
congener
distribution
data
will
incur
incremental
costs
of
rule
familiarization,
report
completion,
and
recordkeeping.

In
RY2001,
920
facilities
provided
congener
distributions
for
dioxin
and
dioxin­
like
compounds
in
section
1.4
of
Form
R;
only
these
facilities
are
expected
to
incur
incremental
costs
beyond
those
associated
with
rule
familiarization.
The
remaining
395
facilities,
out
of
the
total
1,315
facilities
that
filed
a
TRI
report
for
dioxin
and
dioxin­
like
compounds,
did
not
provide
a
congener
distribution
in
RY2001
and
are
expected
to
incur
only
rule
familiarization
costs.

The
analysis
of
small
entity
impacts
uses
the
number
of
facilities
per
company
for
small
companies
and
the
annual
revenues
for
each
of
the
small
companies.
For
each
company,
revenue
data
and
number
of
facilities
per
small
company
were
taken
from
2003
Dun
and
Bradstreet
data
for
parent
companies,
as
described
in
the
next
section.

The
general
methodology
followed
to
estimate
the
impacts
on
small
entities
consists
of
the
following
steps:

(
1)
Estimate
the
number
of
facilities
expected
to
submit
TRI
reports
for
dioxin;

(
2)
Estimate
the
number
of
small
companies
affected
(
i.
e.,
the
percentage
of
small
companies
with
at
least
one
reporting
facility);

(
3)
Develop
company­
level
annual
compliance
cost
estimates,
based
on
the
number
of
facilities
per
company
that
report
for
dioxin
and
provide
a
congener
distribution
and
the
number
of
facilities
per
company
that
report
for
dioxin
and
do
not
provide
a
congener
distribution;

(
4)
Identify
annual
revenues
of
affected
small
companies;

(
5)
Estimate
the
company­
level
impact
percentages,
defined
as
annual
incremental
4
compliance
costs
as
a
percentage
of
annual
revenues,
as
a
measure
of
regulatory
burden;

(
6)
Estimate
the
number
and
percentage
of
small
companies
with
company­
level
annual
impact
percentages
in
each
of
three
categories:
(
1)
less
than
one
percent
of
annual
revenues;
(
2)
between
one
and
three
percent
of
annual
revenues;
and
(
3)
greater
than
or
equal
to
three
percent
of
annual
revenues.

3.1
GENERATION
OF
COMPANY
REVENUE
DATA
This
section
describes
how
revenue
and
business
size
data
(
a
D&
B
variable
denoting
small
businesses
based
on
SBA
definitions)
were
used
to
characterize
companies
in
affected
industries.
Because
each
facility
affected
by
this
rule
is
currently
filing
a
TRI
report
for
dioxin
and
dioxin­
like
compounds,
it
is
possible
to
identify
specific
parent
companies
of
facilities
that
are
expected
to
report
under
this
rulemaking
using
a
combination
of
TRI
and
D&
B
data.
Using
D&
B
data,
it
was
possible
to
identify
the
parent
companies
of
the
majority
of
facilities
affected
by
the
rule.
Specifically,
of
the
1,315
potentially
affected
facilities,
95
percent
were
linked
to
a
parent
company
in
D&
B.
Of
the
identified
parent
companies,
revenue
data
were
obtained
for
92
percent,
business
size
information
was
collected
for
99
percent,
and
both
revenue
and
size
information
were
collected
for
92
percent.
Using
this
information,
it
was
possible
to
classify
parent
companies
as
large
or
small
using
SBA
definitions.
Additionally,
for
each
parent
company
it
was
possible
to
identify
the
number
of
reporting
facilities
that
provided
a
congener
distribution
and
the
number
of
facilities
that
did
not
provide
a
congener
distribution
in
RY
2001.

Company
revenue
and
business
size
data
were
obtained
for
affected
facilities
from
Dun
and
Bradstreet's
Market
Identifiers
On­
Line
Data
Base
and
Dun's
Marketing
Services,
both
services
of
Dun
and
Bradstreet
(
D&
B).
For
over
11
million
business
locations,
D&
B
provides
a
wide
range
of
data,
including:


Number
of
employees,


Line
of
business,


Key
financial
indicators,
°
Business
size,


Parent/
headquarters.

Revenue
and
business
size
data
for
parent
companies
owning
affected
facilities
were
obtained
from
an
October
2003
version
of
Dun's
Marketing
Services,
available
through
.
Parent
company
revenues
are
expressed
in
2003
dollars.
ns
selected
D&
B
variables
and
no
financial
data
other
than
revenue.
The
revenue
and
business
size
data
used
in
this
analysis
represent
data
for
ultimate
parent
companies
that
own
one
or
more
facilities
that
filed
a
TRI
report
for
dioxin
and
4
The
ultimate
parent
is
the
uppermost
parent
or
headquarters
that
encompasses
all
directly
related
branches,
subsidiaries,
or
parents
of
a
specific
business
at
a
specific
location.
This
analysis
assumes
that
a
facility,
as
defined
under
TRI,
is
equivalent
to
a
location
as
defined
by
D&
B.
A
"
facility,"
subject
to
EPCRA
section
313
reporting
requirements,
means
all
buildings,
equipment,
structures,
and
other
stationary
items
that
are
located
on
a
single
site
or
on
contiguous
or
adjacent
sites,
and
which
are
owned
or
operated
by
the
same
person,
that
is
classified
under
an
SIC
code
covered
by
the
regulations,
has
10
or
more
employees
or
the
equivalent,
and
manufactures,
processes,
or
otherwise
uses
any
of
the
listed
toxic
chemicals
or
chemical
categories
above
the
specific
reporting
thresholds.
For
some
industries
this
may
not
correspond
exactly
to
the
definition
of
a
location
by
D&
B.

5
dioxin­
like
compounds
in
RY2001.4
Using
business
size
data
presented
in
D&
B
(
based
on
SBA
definitions),
small
parent
companies
were
identified.
The
small
entity
analysis
accounts
for
parent
companies
owning
one
or
more
affected
facilities.
The
ultimate
parent
data
obtained
includes
available
revenue
data
of
all
subsidiaries,
divisions,
and
branches
of
that
parent,
including
those
not
individually
affected
under
the
rule.
The
number
of
TRI
facilities
per
ultimate
parent,
however,
represents
the
number
of
facilities
owned
by
that
parent
company
that
filed
a
report
for
dioxin
and
dioxin­
like
compounds
in
RY2001
(
not
the
total
number
of
facilities
per
parent
company).

3.2
ESTIMATING
IMPACTS
To
evaluate
the
potential
impact
of
the
rule,
annual
compliance
costs
are
estimated
at
the
ultimate
parent
company
level
to
be
consistent
with
the
financial
data
obtained
from
D&
B.
For
purposes
of
evaluating
the
impacts
on
small
entities,
an
"
affected"
facility
is
defined
as
a
facility
that
is
expected
to
submit
a
TRI
report
for
dioxin
or
dioxin­
like
compounds.
Thus,
an
"
affected"
company
under
this
analysis
is
a
company
owning
at
least
one
"
affected"
facility.

The
analysis
of
small
entity
impacts
uses
the
number
of
facilities
per
company
for
small
companies
and
the
annual
revenue
for
each
small
company.
Business
size
information
was
available
for
455
of
the
458
identified
parent
companies
(
99
percent).
These
data
were
used
to
estimate
the
percentage
of
parent
companies
that
are
classified
as
"
small"­
approximately
19
percent.
This
percentage
was
applied
to
the
total
number
of
affected
parent
companies
(
481)
to
estimate
the
total
number
of
small
companies
(
92)
with
facilities
expected
to
be
affected
by
the
rule.

As
indicated
above,
revenue
and
size
data
were
available
for
92
percent
of
identified
parent
companies.

actual
TRI
RY2001
data
were
used
to
define
the
affected
facilities,
and,
subsequently,
their
ultimate
parents,
it
was
possible
to
determine
the
number
of
facilities
within
6
each
ultimate
parent
that
did
and
did
NOT
report
a
congener
distribution
for
dioxin
and
dioxinlike
compounds.
This
distinction
allows
for
the
generation
of
company­
specific
compliance
costs
by
accounting
for
facilities
that
incur
only
rule
familiarization
versus
those
that
incur
rule
familiarization,
report
completion
and
recordkeeping
costs.

4.0
RESULTS
The
estimated
impacts
to
small
companies
under
Options
1,
2,
and
3
are
presented
in
Tables
1,
2,
and
3
below.
All
small
companies
have
impacts
less
than
one
percent
of
annual
revenues.
First
year
impacts
for
small
companies
have
a
maximum
value
of
0.23
percent,
0.25
percent
and
0.16
percent
for
Options
1,
2,
and
3
respectively.
First
year
average
impacts
for
small
companies
are
0.01
percent,
0.01
percent,
and
0.006
percent
for
Options
1,
2,
and
3
respectively.
Similarly,
subsequent
year
impacts
for
small
companies
have
a
maximum
value
of
0.12
percent,
0.15
percent,
and
0.06
percent
for
Options
1,
2,
and
3
respectively.
Subsequent
year
average
impacts
for
small
companies
are
0.004
percent,
0.005
percent,
and
0.002
percent
for
Options
1,
2,
and
3
respectively.

TABLE
1
SUMMARY
OF
IMPACTS
ON
SMALL
ENTITIES
OPTION
1
Estimated
Number
of
Affected
Entities
Estimated
Number
of
Affected
Small
Entities
Estimated
Number
of
Small
Entities
with
Impacts
of
3
Percent
or
Greater
Estimated
Number
of
Small
Entities
with
Impacts
Between
1
and
3
Percent
Estimated
Number
of
Small
Entities
with
Impacts
Less
than
1
Percent
First
Year
481
92
0
0
92
%
of
Small
Entities
0
0
100
Subsequent
Years
481
92
0
0
92
%
of
Small
Entities
0
0
100
7
TABLE
2
SUMMARY
OF
IMPACTS
ON
SMALL
ENTITIES
OPTION
2
Estimated
Number
of
Affected
Entities
Estimated
Number
of
Affected
Small
Entities
Estimated
Number
of
Small
Entities
with
Impacts
of
3
Percent
or
Greater
Estimated
Number
of
Small
Entities
with
Impacts
Between
1
and
3
Percent
Estimated
Number
of
Small
Entities
with
Impacts
Less
than
1
Percent
First
Year
481
92
0
0
92
%
of
Small
Entities
0
0
100
Subsequent
Years
481
92
0
0
92
%
of
Small
Entities
0
0
100
8
TABLE
3
SUMMARY
OF
IMPACTS
ON
SMALL
ENTITIES
OPTION
3
Estimated
Number
of
Affected
Entities
Estimated
Number
of
Affected
Small
Entities
Estimated
Number
of
Small
Entities
with
Impacts
of
3
Percent
or
Greater
Estimated
Number
of
Small
Entities
with
Impacts
Between
1
and
3
Percent
Estimated
Number
of
Small
Entities
with
Impacts
Less
than
1
Percent
First
Year
481
92
0
0
92
%
of
Small
Entities
0
0
100
Subsequent
Years
481
92
0
0
92
%
of
Small
Entities
0
0
100
