1

MEMORANDUM | 4 February 2010

TO Cho-Yi Kwan, EPA

FROM Monisha Khurana and Cynthia Manson, Industrial Economics, Inc. 

SUBJECT

Small Entities Screening Analysis of UST Universe by Industry Sector

(WA 3-25, Task 4)

In promulgating regulations, the Office of Underground Storage Tanks (OUST) must 

consider the effects of those regulations on small entities, as required by the Regulatory 

Flexibility Act, amended by the Small Business Regulatory Fairness Act 

(RFA/SBREFA). Under RFA/SBREFA, the regulating agency must certify whether a 

regulation has a “significant impact on a substantial number of small entities” 

(SISNOSE). Within reason, the definitions of “significant” and “substantial” are a matter 

of Agency discretion. To inform the development of regulatory revisions, however,

Industrial Economics, Incorporated (IEc) has developed a spreadsheet that calculates the 

impacts of proposed rules on small entities (including businesses and governments). The 

calculator also evaluates Federalism impacts and total impacts on Tribal governments.

The calculator uses data from the Small Business Administration (SBA) and U.S. Census

to identify governments and businesses by sector and size. We use data from E2, 

Incorporated (E2) and from a 1992 EPA study of small governments with USTs to 

estimate the number of small entities in each sector likely to have USTs.1,2 Based on a 

user-entered per-tank cost of compliance, the spreadsheet estimates the number of small 

entities that incur costs exceeding one and three percent of gross annual revenues. 

The spreadsheet also evaluates total costs to tanks on Tribal lands, and provides specific 

results for state and local government costs, including both impacts on small entities and 

a total estimate of costs addressed under Executive Order 13132, addressing potential 

federalism impacts. This memo describes an analysis using the spreadsheet, summarizes 

the data sources and outputs of the spreadsheet, and summarizes the methodology and 

results.

3

IEc’s small entity impact screening approach is intended to identify an initial estimate of 

the number of small entities that may experience significant impacts associated with the 

regulations currently under consideration. To ensure that the analysis does not overlook 

potential impacts, we incorporate several conservative (i.e., high-cost or low-revenue) 

 

1

See TO 1010, TDD# 11, Appendix B, Draft Industry and Facility Profiles, 12.18.06, and Amendment 1, December 18, 2006

2

"Economic Impact Analysis of Additional Mechanisms for Local Government Entities to Demonstrate Financial Responsibility 

for Underground Storage Tanks," December 1992

3 The spreadsheet contains an initial “Notes” sheet with detailed information about assumptions, inputs, and calculations. 

The model also includes a summary table of key outputs (Output Summary) and more detailed analysis summaries (“Inputs 

and Outputs” and “Calculations by Major Sector” pages; the model also contains specific sheets to support analysis of 

government and Tribal impacts.

INTRODUCTION AND 

BACKGROUND 

OVERVIEW AND 

RESULTS
2

assumptions that are documented in our methodology. This memorandum describes a 

spreadsheet tool that can be used to assess a range of different regulatory scenarios. The 

key features of the spreadsheet are as follows:

 The spreadsheet calculates the number of small entities (firms and governments) 

with estimated costs associated with the regulation that exceed either one percent 

or three percent to total revenues. The per-tank compliance cost currently 

programmed in the model is based on estimates from the January 26, 2010 version 

of IEc’s cost model. The parameters used to run the cost model are included in the 

spreadsheet and in Appendix 1 of this memo. The cost model output number is

currently adjusted to 2002 dollars, to be consistent with revenue data in this model 

from SBA and U.S. Census is from 2002. Based on the January 26, 2010 version 

of the cost model, this value is $309 in 2008 dollars, or $262 in 2002 dollars.4

 The spreadsheet also evaluates cost results for tanks on Tribal lands, based on 

model calculations specific to Tribal tanks. 

 The spreadsheet calculates the number of small entities with USTs that will 

experience compliance costs equal to or greater than one percent and three percent

of annual revenue. The spreadsheet also calculates the percentage of small entities 

with USTs represented by the entities meeting the thresholds.

 Using these figures, the Agency can make an initial determination of whether a 

regulation significantly affects a substantial number of small businesses or 

governments.

The remainder of this memorandum describes in more detail the specific methods, data, 

and assumptions used in calculating costs associated with small businesses, small 

government entities, and tanks on Tribal lands.

For the analysis of impacts on small business entities, we adopt a hybrid approach for 

estimating the distribution of USTs among facilities and firms. For the NAICS 447 

(Retail Motor Fuels) sector, we distribute tanks proportionately by facility across all 

facilities in the sector. For all other sectors, we distribute tanks proportionally by revenue

among a subset of facilities in the sector. We describe this approach in more detail 

below, outlining data sources and methodology. We also present the results of two 

sensitivity analyses (one that distributes tanks in all sectors proportionately by facility and 

one that distributes all tanks proportionately by revenue) in Appendix 2.

5

DATA SOURCES

IEc used E

2

data developed in 2006 to estimate the number of tanks and facilities in each 

of several key sectors that use USTs.6 With the exception of hospitals (NAICS 622), 

 

4

 Because the key output of the model is number of small entities affected, the results are not affected by year dollars used, 

as long as data are internally consistent However, we note that we expect to update the model to incorporate 2007 Census 

of Manufacturers data when this data set and the accompanying SBA data set become available.

5 The user can manually toggle the scenario by using the drop-down menu on the “Calculations by Major Sector” worksheet, 

cell B2, which provides three options: original (hybrid), facility, and revenue. 

6

See TO 1010, TDD# 11, Appendix B, Draft Industry and Facility Profiles, 12.18.06, and Amendment 1, December 18, 2006

SMALL BUSINESS 

ANALYSIS
3

retail motor fuel establishments (NAICS 447) and communications and utilities (NAICS 

5171 and 2211), E

2

data on use of USTs specified only high level (e.g., 2-digit) NAICS 

sectors, such as “commercial” and “manufacturing” sectors.

SBA provides data on the number of firms, establishments and receipts by size of firm, 

categorized by 2-digit NAICS sectors.

7

SBA data allocate firms in each sector into the 

following annual revenue ranges, or “bins:”

 $0 to $99,999, 

 $100,000 to $499,999, 

 $500,000 to $999,999, 

 $1,000,000 to $4,999,999, 

 $5,000,000 to $9,999,999, 

 $10,000,000 to $49,999,999, 

 $50,000,000 to $99,999,999 and 

 $100,000,000 and above.

For 3-digit sector information (e.g., Hospitals and Retail Motor Fuel sales), IEc used U.S. 

Census data to determine the number of firms, number of establishments, and average 

revenues by firm, because SBA does not provide data for the relevant 3-digit NAICS 

codes.

The U.S. Census publishes slightly different revenue bins for reporting data. The lowestincome revenue bin includes all firms that report annual revenues under $250,000. All 

intermediate revenue bins are the same between U.S. Census and SBA. SBA’s highestincome revenue bin is over $100 million, but U.S. Census breaks the largest categories 

down into $100 to $250 million, and then over $250 million. 

SBA provides employment and revenue thresholds to define small entities in each sector 

of the economy. We summarize the size standards for the industries identified by E2in 

Exhibit 1.8

 

7

Small Business Administration, “Employer Firms, Establishments, Employment, Annual Payroll, and Receipts by Receipts 

Size of Firm and Major Industry, 2002,” as viewed at http://www.sba.gov/advo/research/data.html#us

8 The complete list of size thresholds can be found on the SBA website at 

http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf.
4

EXHIBIT 1. SMALL BUSINESS SIZE STANDARDS FOR INDUSTRIES WITH USTS

INDUSTRY OR SECTOR NAICS THRESHOLD

Gasoline stations with convenience 

stores 447110 $27 million (M)

Traditional service stations 447190 $9M

Wholesale trade 42 100 employees

Retail trade, accommodation and food 

services

44-45, 72 

(excluding 447)

Varies: $7M to $29M or 50 

employees

Wired telecommunications carriers 5171 1,500 employees

Hospitals 622 $34.5M

Manufacturing 31-33 Varies: 500 to 1,500 employees

Transportation and Warehousing 48 Varies: $7M to $34.5M or 500 to 

1,500 employees

Source: U.S. Small Business Association, “Table of Small Business Size Standards Matched to 

North American Industry Classification System Codes,” August 22, 2008, as viewed at 

http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf

METHODOLOGY : SMALL BUSINESSES (FIRMS)

Identification of Number of Small Firms and Average Revenues

The first step in our analysis identifies the number of small firms, average revenues, and 

establishments in each sector. E

2

data from 2006 estimates the number of tanks in the 

following sectors: Commercial (NAICS 42, 44-45, 72, excluding 447), Institutional 

(Hospitals only, NAICS 622), Manufacturing (NAICS 31-33), Transportation and 

Warehousing (NAICS 481, 483-486, and 48811), and Communication and Utilities

(NAICS 5171 and 2211). To fit E

2

’s sector information to SBA data, we group 

communications and utilities into the Information sector (NAICS 51). We also use the 

entire Transportation and Warehousing sector (NAICS 48), while E2breaks down the 

sector into NAICS codes 481, 483-486, and 48811 for their analysis. We use EPA’s 

Semi-Annual Report of UST Performance Measures, End of Fiscal Year 2009 Report to 

estimate the total number of tanks, and E

2

’s distribution of tanks across sectors to identify 

the percentage and total number of tanks in each sector.

9

IEc uses SBA employment and revenue thresholds as outlined in Exhibit 1 to define small 

entities in each sector of the economy. To ensure that we are not underestimating the 

number of small entities, we assume that all businesses within a revenue bin that contains

a specific SBA revenue threshold value are small. In other words, if the SBA small 

business size threshold for a sector is $7 million, the model assumes that all firms in the 

revenue range of $5 to $10 million are small. When SBA provides an employment 

threshold, we use total employment numbers for each revenue bin to calculate the average

number of employees per firm, and assume that all businesses within a revenue bin that 

 

9

Semi-Annual Report of UST Performance Measures, End of Fiscal Year 2009—As Of September 30, 2009. Accessed December 

17, 2009 at <http://www.epa.gov/oust/cat/ca_09_34.pdf>
5

contain the threshold value are small, similar to the sectors whose thresholds are defined 

by revenue. The number of small firms in each sector is displayed in Exhibit 2.

To estimate the number of retail motor fuel facilities, we consulted National Petroleum 

News’ annual survey and U.S. Census of Manufacturers data. To reconcile differing 

estimates of the number of retail fuel facilities (roughly 162,000 estimated by NPN, and 

110,600 estimated by the Census), and to account for roughly 37,000 tanks estimated to 

be owned by governments that were not included in the E2data but are reflected in the 

total population of 611,449 tanks (FY 2009), we developed a 1.46 adjustment factor to 

Census data to inflate the number of retail motor fuel facilities to 162,000, distributed 

proportionately across revenue ranges. 10,11 To ensure that the total number tanks and 

total number of facilities are consistent, we also revise E

2

's estimate of tanks per facility 

from 3.13 to 2.97. This approach preserves the distribution of firms by size according to 

Census data. As a result of this approach, we estimate that there are a total of 

approximately 83,900 firms and 481,000 tanks in the retail motor fuel sector.

EXHIBIT 2. NUMBER AND PERCENTAGE OF SMALL FIRMS BY NAICS CODE

INDUSTRY OR SECTOR NAICS

NUMBER OF 

SMALL FIRMS

TOTAL 

NUMBER OF 

FIRMS

PERCENTAGE 

OF FIRMS

THAT ARE 

SMALL

SMALL FIRMS 

WITH USTs

Retail Motor Fuel Sales 447 82,462 83,869 98% 82,462

Commercial 

(wholesale trade, 

retail trade, 

accommodation, and 

food services)

42, 44-45, 72 

(excluding 447) 1,434,363 1,451,645 99% 14,128

Institutional (hospitals 

only) 622 2,278 3,800 60% 2,105

Manufacturing 31-33 293,325 297,873 98% 6,725

Transportation (air, 

water, truck, transit, 

pipeline, and airport 

operations)

48 157,904 159,373 99% 5,848

Information 51 76,582 77,605 99% 3,880

Sources: Small Business Administration, “Employer Firms, Establishments, Employment, Annual Payroll, 

and Receipts by Receipts Size of Firm and Major Industry, 2002,” as viewed at 

http://www.sba.gov/advo/research/data.html#us

U.S. Census “Table 4: Receipts/Revenue Size of Firms for the United States: 2002, as viewed at: 

http://www.census.gov/prod/ec02/ec0262sssz.pdf. 

 

10 NPN Market Facts 2008. See: <http://www.npnweb.com/ME2/dirmod.asp?sid=A79131211D8846B1A33169AF72F78511&type=

gen&mod=Core+Pages&gid=CD6098BB12AF47B7AF6FFC9DF4DAE988>

11 According to the Census, the term “establishment” is defined as “a single physical location where business transactions 

take place and for which payroll and employment records are kept.” We therefore assume that an establishment is 

equivalent to one facility. The terms facility and establishment are used interchangeably in this memorandum.
6

Tank Distribution Across Revenue Bins (Except Retail Motor Fuel, NAICS 447) 

The second step in our analysis is to distribute tanks among firms within each revenue bin 

for each sector. With the exception of the retail motor fuels sector, where we assume that 

all facilities have tanks, available data do not identify specific distributions of tanks 

across facilities in key sectors or sub-sectors. In the absence of empirical data about the 

use of tanks at specific facilities, we assign tanks to facilities within broad sectors 

assuming that tanks are distributed proportionately by revenue across all facilities in the 

sector. That is, we assume that larger companies with more facilities are likely to have 

more tanks (e.g., car rental companies with multiple locations). 

To ensure that the number of small firms potentially affected is not undercounted, the 

model currently assumes that all tanks in these sectors are located at small firms, and 

distributes tanks proportionately by revenue among small firm size categories. For 

example, in a hypothetical sector in which ten firms report total revenues of $10 million, 

and 20 more firms report revenues totaling $5 million, the model assumes that two-thirds 

of the tanks in that sector are distributed among the ten firms with revenues totaling $10 

million and the remaining one-third of tanks are distributed among firms with revenues 

totaling $5 million.12 The average number of tanks per facility is estimated using E

2

data, 

and is held constant for each sector; the number of tanks per firm therefore increases with 

the average number of facilities per firm as firm size increases. Exhibit 3 provides an 

example calculation to illustrate this approach.

To calculate the cost of compliance for each firm with USTs, we multiply the average 

number of tanks per firm by the average cost per tank, as defined by user-inputs to the 

model (in this case, cost model inputs).13 We compare this number with the average 

receipts per firm in each revenue bin, and determine how many firms would face 

compliance costs greater than one and three percent of their total revenue. 

 

12 This approach reflects some uncertainty; to the extent that tanks are not distributed proportionately across firms within a 

sector by revenue, it is possible that this approach could underestimate or over estimate impacts on small entities. 

However, we do not have enough information about the actual distribution of tanks within sub-sectors of these industries to 

develop a more refined distribution process.

13

 Cost per tank is calculated by running the cost model with the default parameters, and dividing the total cost across the 

total universe of tanks to obtain a per tank cost. This calculator can be run with a user-specified number by changing the 

input in cell C2 on the “Inputs and Outputs” worksheet. 
7

EXHIBIT 3. TANK DISTRIBUTION IN TRANSPORTATION & WAREHOUSING (NAICS 48)

[A]

SMALL 

FIRMS

[B]

REVENUE RANGE

[C] 

FIRMS

[D] 

FACILITIES

[E] 

RECEIPTS 

($000)

[F]

PERCENT 

OF 

TOTAL 

SECTOR 

RECEIPTS

[G] 

FACILITIES 

PER FIRM

[H] 

NUMBER

OF USTS

[I] 

TANKS 

PER 

FIRM

[J] 

NUMBER 

OF 

FIRMS 

WITH 

USTS

Yes $0 to $99,999 41,605 41,623 2,081,438 0.42% 1.00 190 1.77 107

Yes $100,000 to $499,999 65,261 65,383 15,545,929 3.11% 1.00 1,420 1.77 801

Yes $500,000 to $999,999 20,143 20,380 14,176,545 2.84% 1.01 1,295 1.79 724

Yes $1,000,000 to $4,999,999 24,091 26,174 50,211,290 10.06% 1.09 4,587 1.92 2,387

Yes $5,000,000 to $9,999,999 3,696 5,290 24,352,963 4.88% 1.43 2,225 2.53 879

Yes $10,000,000 to $49,999,999 3,108 8,707 51,486,660 10.31% 2.80 4,704 4.96 949

No $50,000,000 to $99,999,999 440 2,813 18,101,927 3.63% 6.39

No $100,000,000 to + 1,029 24,773 323,265,371 64.75% 24.07

TOTALS 159,373 195,143 $499,222,123 100% 14,422 5,848

Notes and Sources: 

[A]: Based on threshold from SBA.

[B], [C], [D], [E],: Based on 2002 Census Data. Note that the terms “establishments” and “facilities” are assumed to be equivalent and are used 

interchangeably within this analysis.

[F]: Calculated as each row in [E]/∑[E].

[G]: Calculated as [D]/[C].

[H]: Calculated as [F]* total number of USTs per sector (e.g., 14,422 in NAICS 48).

[I]: Calculated as [G] * E2’s estimate of tanks per facility for each sector.

[J]: Calculated as [H]/[I].

Tank Distribution for Motor Fuel Retailers (NAICS 447)

For Retail Motor Fuel Sales (NAICS 447), we assume that all establishments (facilities) 

have USTs. Moreover, we assume that the number of USTs is constant across all 

facilities in the sector, and therefore varies directly with the number of facilities per 

firm.

14

 This approach differs from the revenue-based distribution used in other sectors in 

that we assume that even very small facilities have the same number of tanks (2.97) as 

larger facilities.

15 In reality, it is probable that some small facilities have fewer tanks and 

some larger facilities have more tanks, but our simplified distribution ensures that every 

facility has at least one tank and that costs to small facilities are not underestimated. 

 

14 According to the Census, the term “establishment” is defined as “a single physical location where business transactions 

take place and for which payroll and employment records are kept.” We therefore assume that an establishment is 

equivalent to one facility. The terms facility and establishment are used interchangeably in this memorandum.

15 Appendix 2 provides an alternative method of distributing tanks in NAICS 447 proportional to revenue as opposed to the 

number of facilities per firm. 
8

RESULTS

At a 2002 cost of $262 ($309 in 2008 dollars) per tank, the analysis concludes that no 

small entities in any sector will incur compliance costs that exceed either one or three 

percent of annual revenues (Exhibit 4). 

LIMITATIONS AND UNCERTAINTIES

By assuming that tanks are owned by small firms, (with the exception of retail motor fuel 

establishments (NAICS 447)), we may be overstating the number of small firms owning 

tanks. Available data do not provide information on how the number or existence of tanks 

relates to the size of the business in a given industry. In certain industries such as fuel 

retailers, it is likely that all facilities have one or more USTs. In other industries such as 

hospitals, most facilities do not have any tanks, and it may be that larger hospitals are 

more likely to have tanks than smaller hospitals (rather than small hospitals, as assumed). 

In addition, while Census and SBA revenue data are presented in ranges (or bins), the 

SBA size threshold, as well as the one or three percent of revenue thresholds, typically 

fall in the middle of ranges. Because we assume that all firms in a bin earn “average” 

revenues, the relationship between this average and the revenue impact thresholds 

determines whether all the facilities in that bin are “affected” by the regulation. This 

approach is likely to under- or over-estimate the number of businesses affected. Finally, 

we assume that when the small business threshold occurs in the middle of a revenue bin, 

all firms in that category are small; this might over-estimate the number of businesses 

affected.
9

EXHIBIT 4. SUMMARY RESULTS OF CURRENT SMALL ENTITY SCREENING ANALYSIS

INDUSTRY OR 

SECTOR

SECTOR 

(NAICS)

SMALL 

ENTITIES 

(FIRMS) 

WITH USTS

SMALL 

ENTITIES 

WITH USTSCOSTS 

EXCEED 1% 

OF REVENUES

PERCENT OF 

SMALL ENTITIES 

WITH USTS 

WITH COSTS 

EXCEEDING 1% 

OF REVENUES

ENTITIES 

WITH USTSCOSTS 

EXCEED 3% 

OF 

REVENUES

PERCENT OF 

SMALL 

ENTITIES WITH 

USTS WITH 

COSTS 

EXCEEDING 3% 

OF REVENUES

Retail Motor Fuel 

Sales 447 82,462 0 0.0% 0 0.0%

Commercial 

(wholesale trade, 

retail trade, 

accommodation, 

and food services)

42, 44-45, 72 

(excluding 

447)

14,128 0 0.0% 0 0.0%

Institutional 

(hospitals only) 622 2,105 0 0.0% 0 0.0%

Manufacturing 31-33 6,725 0 0.0% 0 0.0%

Transportation (air, 

water, truck, 

transit, pipeline, 

and airport 

operations)

48 5,848 0 0.0% 0 0.0%

Information 51 3,880 0 0.0% 0 0.0%

TOTALS 115,148 0 0.0% 0 0.0%

To map SBA revenue data to E2tank estimates, we group communications and utilities 

into the Information sector (NAICS 51). We also use the entire Transportation and 

Warehousing sector (NAICS 48), while E2breaks down the sector into NAICS codes 481, 

483-486, and 48811 for their analysis. Using larger sectors could potentially be skewing 

the revenues and size of the firms in the smaller NAICS sub-divisions. 

A large number of governmental organizations use USTs. These governments include 

school districts, public utilities, local and county governments, and others. RFA/SBREFA 

requires agencies to consider the impacts on small governmental jurisdictions as well as 

small businesses; small governmental jurisdictions are defined as governments of cities, 

counties, towns, townships, villages, school districts, or special districts with a population 

of less than 50,000 people.16 In 2002, there were 87,525 local governments, including 

special districts, in the United States.17 To assess impacts to small governmental 

 

16 For the purposes of the RFA, states and tribal entities are not considered small.

<http://www.epa.gov/sbrefa/government.htm>

17 2002 Census of Governments

SMALL

GOVERNMENT AND 

FEDERALISM 

ASSESSMENT
10

jurisdictions, we evaluate compliance costs for all small governmental jurisdictions with 

tanks to determine what percentage would have expenses exceeding one or three percent 

of total revenues. 

We evaluate total costs to all non-federal governments (including both direct compliance 

costs and program implementation costs) to determine whether the regulations under 

consideration would be likely to trigger requirements under E.O. 13132 (Federalism).

Total annual state and local expenditures associated with the regulation of $25 million or 

more, and/or compliance costs that are equal to or exceed one percent of their annual 

revenues, would trigger EPA’s federalism requirements. This would require EPA to 

investigate approaches for ensuring that states have adequate discretion in implementing 

the relevant regulations. 

DATA SOURCES 

The data sources we use for our small governments analysis include the following: 

 Economic Impact Analysis of Additional Mechanisms for Local Government 

Entities to Demonstrate Financial Responsibility for Underground Storage Tanks,

December 1992 (1992 Local Government Economic Impact Analysis), and 

 2002 U.S. Census of Governments Data. 

METHODOLOGY AND RESULTS: SMALL GOVERNMENT ANALYSIS

The 1992 Local Government Economic Impact Analysis data provide information on the 

size and revenue of both general purpose (i.e. counties, municipalities, and townships)

and special district governments (i.e. school districts and other special districts), dividing 

these governments into four size categories: very large, large, medium and small. The 

analysis also provides data on the number of governments owning USTs, the number of 

total USTs owned by governments, average USTs per government, USTs per owning 

government and the annual average budget expenditures, all broken out by size 

categories. The 1992 analysis defines a “very large” government as one that serves over 

50,000 people; therefore, we consider all other entities to be small governmental 

jurisdictions, according to the RFA/SBREFA definition. 

We assume that local governments collectively own four percent of active tanks. This 

equates to 24,458 tanks, based on the FY 2009 universe of 611,449 tanks. We distribute 

the 24,458 tanks among all local governments, based upon the percent of tanks owned in 

1992 by local governments in each size category. 

We then determine how many small governments own tanks, using the 1992 data for 

USTs per owning government. We determine the average compliance cost per 

government, calculated by the per tank cost multiplied by the number of USTs per 

owning government in each size category.

The average annual revenues for each size of general purpose governments are calculated 

using 2002 Census Data. We add the total number of very large, large, medium and small 

governments across town/townships, municipalities and counties, and weight their total 

revenues accordingly to reflect the total number of each type of government (town, 

municipality, county) in each size category. In the United States, there are 16,504 
11

townships but revenue data are available only for 4,128 townships, so we extrapolate to 

get revenue data for all townships. We then combine these weighted averages to get a 

figure for annual revenues in 2002 dollars for general purpose governments. Detailed 

information at the special district level is not available for 2002, so we inflate the budget 

expenditures from the 1992 document into 2002 dollars.18 

To calculate how many small governments face significant compliance costs exceeding 

one or three percent of their revenues, we compare the average compliance cost per 

government with the average annual revenues to determine how many exceed either 

threshold. At a cost of $309 ($2008) per tank, no small governments are affected under

either the one percent or three percent revenue threshold (see Exhibit 5).

METHODOLOGY AND RESULTS: FEDERALISM ASSESSMENT

In addition to determining the impact on small governments, we calculate state and local 

costs to determine whether the proposed regulations would trigger an impact under 

Executive Order 13132, which addresses potential federalism impacts. We assume that 

states collectively own one percent of total tanks (6,114). This number is then multiplied 

by the per tank cost, as defined by the cost model/user-inputs to the model. Under the 

proposed regulations, each state will incur labor costs for reading the regulations and 

applying for State Program Approval (SPA). In addition, under the proposed regulations, 

facilities will be required to notify states of each tank ownership change. Processing and 

reviewing these notifications represent costs to the states, and are included in total state 

costs. 

The model calculates local government costs by summing the number of tanks in local 

governments for both general purpose and special districts in all four size categories: very 

large, large, medium and small. We then apply the per tank cost to the number of tanks 

across all local governments. Local and state costs are added together to determine if 

there will be a federalism impact. 

In this scenario, we determine that total costs to both state and local governments 

(including direct compliance costs, notification costs, and state program costs) are 

approximately $10 million in 2008 dollars; this is not considered to be a substantial 

compliance cost under federalism requirements. 

LIMITATIONS AND UNCERTAINTY 

The data used for this analysis (1992 Local Government Economic Impact Analysis data) 

use 1987 U.S. Census data. We are unable to find more recent data relating to the number 

of governments owning USTs, the average USTs per government, and USTs per owning 

governments. These numbers are likely outdated, and the current pattern of government 

ownership of USTs may be significantly different. Note, however, that because even 

very small governments earn over $1.5 million, it is not likely that any updates to the 

distribution of tanks would affect the results of the analysis. 

 

18 Typically, in a RFA/SBREFA screening assessment, revenues are used as the metric to assess economic impact measures for 

small governments. Without detailed 2002 data available, we use the budget expenditures in the 1992 document as a proxy 

for revenues. 
12

EXHIBIT 5. SMALL GOVERNMENT ANALYSIS

[A]

TYPE OF 

GOVERNMENT

[B]

SIZE OF 

GOVERNMENTC

[C]

USTS PER 

OWNING 

GOV’T

[D]

NUMBER OF 

GOV’TS 

OWNING 

TANKS

[E]

2002 EST. 

NUMBER OF 

GOV’TS

[F]

AVERAGE 

ANNUAL 

REVENUE 

(2002 $)

[G]

AVERAGE 

COST PER 

GOV’T 

($)

[H]

NUMBER OF 

GOV’TS 

EXCEEDING 

1% OF 

REVENUE

[I]

NUMBER OF 

GOV’TS

EXCEEDING 

3% OF 

REVENUE

General 

Purpose

Very Large 10.2 534 1,461

 

$316,129,836 

 

$2,676 0 0

Large 2.5 1,512 4,040

 

$35,687,794 

 

$656 0 0

Medium 1.4 1,444 7,822

 

$8,712,804 

 

$367 0 0

Small 1.1 1,048 25,644

 

$1,779,216 

 

$289 0 0

Subtotal 2.7 4,538 38,967

Special 

Purpose

Very Large 3.7 336

 

934 

 

$431,319,166 

 

$971 0 0

Large 3.6 1,902

 

5,340 

 

$52,806,696 

 

$945 0 0

Medium 1.4 2,648

 

13,602 

 

$2,533,231 

 

$367 0 0

Small 1.0 258

 

28,682 

 

$128,013 

 

$262 0 0

Subtotal 2.4 5,144 48,558

Overall Total 2.5 9,682 87,525

Notes: 

[A]: General Purpose governments include counties, municipalities and townships. Special Purpose governments include public 

school systems and special districts. 

[B]: Very large governments are considered to serve more than 50,000 people. We consider large governments as those that serve 

between 10,000 and 50,000 people, medium governments as those that serve between 2,500 and 10,000 people, and small 

governments as those that serve 2,500 or fewer people. According to RFA/SBREFA, small governmental jurisdictions have 

populations under 50,000. Therefore, we consider all sizes of governments except for “very large” as small.

[C]: From 1992 Local Government Impact Analysis data

[D]: Calcuated as number of tanks (adjusted 1992 distribution in each size category to reflect FY 2009 tank numbers) / [C]

[E]: General purpose numbers from 2002 Census of Governments; Special Purpose total number of entities from 2002 Census of 

Governments, size distribution extrapolated from 1992 Local Government Impact Analysis data. 

[F]: General purpose estimates from 2002 Census of Governments; Special Purpose estimates inflated from 1992 Local Government 

Impact Analysis data.

[G]: Calculated as [C] * model estimated cost per tank ($262 in 2002$). 
13

DATA SOURCES AND METHODOLOGY

The data sources for the tribal lands analysis are the same as those used in the small 

business analysis. Based on a review of information available about the types of business 

entities on Tribal Lands, we assume that tanks on Tribal lands represent a subset of the 

rest of the universe and are distributed similarly across the same sectors.19 We distribute 

the total number of tribal tanks proportionally among the NAICS sectors. Using the E2

data for tanks per facility and facilities per firm, we determine the total firms in each 

sector in tribal lands. 

RESULTS

We run the cost model with the same parameters as the rest of the universe. The per cost 

tank is higher in tribal country, as the universe is smaller, and there are no regulations 

currently in place, so all tanks incur all costs. At a 2008 cost of $524 ($445 in 2002 

dollars) per tank, the total cost for all tanks on tribal lands is about $1.4 million. 

LIMITATIONS AND UNCERTAINTY

In order to determine the impacts on tribal entities, we assume the tank distribution across 

sectors in tribal country mirrors that of the rest of the United States. While we can 

estimate the total number of firms in tribal lands with tanks, we do not have data about 

the total number of firms.

 

19 For more detail, see Detailed Assessment of UST Universe by Tank Purpose and Design (WA 1-25, Task 6), 24 March 2009. 

Note that because Tribal ownership and operation is defined differently than other types of government ownership, we do 

not attempt to isolate or identify “government” tanks on Tribal lands.

TRIBAL LANDS COST
14

APPENDIX 1

EXHIBIT A-1. PARAMETERS USED TO RUN COST MODEL

RESULTS_USER_INPUTS

REGULATION

ID

OPTION

ID

CHOICE

ID OPTION_NAME SELECTIONS SELECTION TYPE

1 1 1 Walkthrough inspections by 

owner or operator

1 months between 

inspections

2 1 1 Overfill functionality 

testing

12 months between tests

3 1 1 Spill bucket tightness 

testing

12 months between tests

4 1 1 Integrity testing for 

interstitial areas

12 months between tests

5 1 1 Spill bucket tightness test 

after repair

1 1 for yes; 0 for no

5 2 1 Overfill functionality test 

after repair

1 1 for yes; 0 for no

5 3 1 Interstitial integrity test 

after repair

1 1 for yes; 0 for no

6 1 1 Eliminate flow restrictors 

for all new tanks

1 1 for yes; 0 for no

6 2 1 Replacement of existing 

ball floats

0 1 for yes; 0 for no

7 1 1 Functionality test - ATG 12 months between tests

7 2 1 Functionality test -

Sticking

12 months between tests

7 3 1 Functionality test -

interstitial monitoring

12 months between tests

7 4 1 Functionality test - vapor 

monitoring

12 months between tests

7 5 1 Functionality test -

groundwater monitoring

12 months between tests

7 6 1 Functionality test - line 

leak detection

12 months between tests

9 1 1 Add SIR/CITLDS to 

regulations with 

restrictions

1 1 for yes; 0 for no

11 1 1 Deferrals removed for 

emergency generator tanks

1 1 for yes; 0 for no

11 2 1 Deferrals removed for 

airport hydrants

0 1 for yes; 0 for no

11 3 1 Deferrals removed for 

field-constructed USTs

0 1 for yes; 0 for no

11 4 1 Deferrals removed for 

wastewater treatment 

tanks

0 1 for yes; 0 for no
15

RESULTS_USER_INPUTS

REGULATION

ID

OPTION

ID

CHOICE

ID OPTION_NAME SELECTIONS SELECTION TYPE

12 1 2 Notification of ownership 

changes

1 1 for yes; 0 for no

13 1 1 Replacement of

irrepairable lined tanks

1 1 for yes; 0 for no

14 1 1 Response to interstitial 

monitoring alarms on tanks 

and pipes

1 1 for yes; 0 for no

16 1 1 Operator training 1 1 for yes; 0 for no

17 1 1 Secondary containment -

new & replaced tanks

1 1 for yes; 0 for no

17 2 1 Threshold for pipe 

replacement rather than 

repair

0.5 piping replacement 

threshold

17 3 1 Under-dispenser containers 

for all new dispensers

1 1 if applies to all underdispenser containers; 0 

otherwise

17 3 2 Under-dispenser containers 

for all new motor fuel 

dispensers only

0 1 if only applies to motor 

fuel under-dispenser 

containers; 0 otherwise
16

APPENDIX 2

SENSITIVITY ANALYSES

Our primary analysis assesses impacts to small businesses in non-NAICS 447 sectors by 

distributing all USTs in each sector across small businesses, proportional to revenue. For 

NAICS 447, however, we assume all facilities own USTs, and therefore distribute tanks 

by the number of facilities per firm. In this Appendix, we present two alternative 

scenarios: distribution of tanks in all sectors by firm revenue, and distribution of tanks in 

all sectors by number of facilities. 

DISTRIBUTION BY REVENUE 

This sensitivity analysis presents the results of distributing tanks by revenue across all 

sectors, including NAICS 447. Using this methodology, this analysis concludes that no

firms in any sector face compliance costs exceeding one or three percent of annual 

revenues. 

INDUSTRY OR 

SECTOR NAICS

SMALL 

FIRMS WITH 

USTS

ENTITIES WITH 

USTS- COSTS 

EXCEED 1% OF 

REVENUES

PERCENT OF 

SMALL 

ENTITIES 

WITH USTS 

WITH COSTS 

EXCEEDING 

1% OF 

REVENUES

ENTITIES 

WITH USTSCOSTS 

EXCEED 3% 

OF 

REVENUES

PERCENT OF 

SMALL 

ENTITIES 

WITH USTS 

WITH COSTS 

EXCEEDING 

3% OF 

REVENUES

Retail Motor Fuel 

Sales 447 82,462 0 0.0% 0 0.0%

Commercial 

(wholesale trade, 

retail trade, 

accommodation, 

and food services)

42, 44-45, 

72 

(excluding 

447)

14,128 0 0.0% 0 0.0%

Institutional 

(hospitals only) 622 2,105 0 0.0% 0 0.0%

Manufacturing 31-33 6,725 0 0.0% 0 0.0%

Transportation (air, 

water, truck, 

transit, pipeline, 

and airport 

operations)

48 5,848 0 0.0% 0 0.0%

Information 51 3,880 0 0.0% 0 0.0%

TOTALS 115,148 0 0.0% 0 0.0%
17

DISTRIBUTION BY FACILITY

This sensitivity analysis presents the results of distributing tanks by number of facilities 

across all sectors. Using this methodology, this analysis concludes that no firms in any 

sector face compliance costs exceeding one or three percent of annual revenues. 

INDUSTRY OR 

SECTOR NAICS

SMALL 

FIRMS WITH 

USTS

ENTITIES 

WITH USTSCOSTS 

EXCEED 1% 

OF REVENUES

PERCENT OF 

SMALL 

ENTITIES 

WITH USTS 

WITH COSTS 

EXCEEDING 

1% OF 

REVENUES S

ENTITIES 

WITH USTSCOSTS 

EXCEED 3% 

OF REVENUES

PERCENT OF 

SMALL 

ENTITIES 

WITH USTS 

WITH COSTS 

EXCEEDING 

3% OF 

REVENUES

Retail Motor Fuel 

Sales 447 82,462 0 0.0% 0 0.0%

Commercial 

(wholesale trade, 

retail trade, 

accommodation, 

and food services)

42, 44-45, 72 

(excluding 

447)

14,128 0 0.0% 0 0.0%

Institutional 

(hospitals only) 622 2,105 0 0.0% 0 0.0%

Manufacturing 31-33 6,725 0 0.0% 0 0.0%

Transportation (air, 

water, truck, 

transit, pipeline, 

and airport 

operations)

48

5,848 0 0.0% 0 0.0%

Information 51 3,880 0 0.0% 0 0.0%

TOTALS 115,148 0 0.0% 0 0.0%