Document ID: EPA-HQ-TRI-2005-0073-4996
Agency: epa
Document Type: Supporting & Related Material
Title: 
Posted Date: 2006-12-22T05:00Z

SEQ CHAPTER \h \r 1 CHAPTER SEVEN

 SMALL ENTITY IMPACT ANALYSIS

This chapter addresses the potential impacts of the final rule on small
entities.  The New Eligibility for Form A: PBT Option and Expanded
Eligibility for Form A: Non-PBT Option create net cost savings rather
than imposing costs on the regulated universe.  A Small Business
Regulatory Enforcement Fairness Act (SBREFA) analysis is typically not
required when regulatory activities result in cost savings.  However,
facilities filing those non-PBT forms that may lose their current Form A
eligibility as a result of including Section 8.8 amounts (e.g.,
catastrophic events) in the ARA threshold determinations for Form A
eligibility will experience an increase in burden and costs (see Chapter
6).

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 EPA to perform a final regulatory flexibility analysis
for the final 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. 

	For purposes of assessing the impacts of this rule on small entities,
small entity is defined as: (1) a business that is classified as a
“small business” by the Small Business Administration at 13 CFR
121.201; (2) a small governmental jurisdiction that is a government of a
city, county, town, school district or special district with a
population of less than 50,000; and (3) a small organization that is any
not-for-profit enterprise which is independently owned and operated and
is not dominant in its field.  

	The economic impact analysis conducted for today's rule indicates that
these revisions to Form R and Form A would generally result in savings
to affected entities compared to baseline requirements.  However, some
businesses that currently file one or more Form As would be required to
file Form Rs as a result of including Section 8.8 amounts (e.g.,
catastrophic events) in the ARA threshold determinations for Form A
eligibility.   While this rule will result in a cost savings for most
affected entities, these businesses would suffer a burden increase. 
Since the burden increase will be attributable to significant non
production-related wastes (i.e., unusual events) the number of
facilities experiencing this burden each year will likely remain about
the same, although the specific facilities are likely to change.

This analysis uses annual cost impact percentages to measure potential
impacts on small entities. The cost impact percentage is defined as
annual compliance costs as a percentage of annual revenues or sales.
This approach is based on the premise that the cost impact percentage is
an appropriate measure of a firm's ability to afford the costs
attributable to a regulatory change.  For purposes of determining small
entity impacts, 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 very small
fraction of a typical firm's revenue, the impacts of the regulation are
likely to be minimal.

The cost impact percentages are calculated using both first- and
subsequent-year compliance costs (which are the same in this analysis).
Under this rule, annual compliance costs are composed of report-specific
costs including Form R completion and recordkeeping that will vary
according to the total number of TRI reports a facility files. The
general methodology followed to estimate the impacts on small entities
consists of the following steps:

Estimate the number of forms and facilities that will lose eligibility
to report using Form A for at least one chemical due to the final rule;

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

(3) Develop company-level annual compliance cost estimates, based on the
number of facilities per company and the number of reports per facility;

(4) Model annual revenues of potentially affected small companies (i.e.
parent companies of Form A filers) by SIC code;

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

(6) Estimate the percentage and number 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.

Because the specific identity of each affected company is not known and
specific facilities are likely to change each year, this analysis models
the characteristics of potentially affected companies by constructing
SIC code profiles that represent current Form A filers.  Company revenue
data were obtained for commercial facilities in the SIC codes affected
by the final rule from Dun and Bradstreet’s Market Spectrum (hereafter
referred to as D&B).  Due to time constraints, it was necessary to rely
on an earlier linkage of TRI facilities to D&B facilities to identify
size and revenue information in D&B for current Form A filers.

Tables 7-1 and 7-2 present information on current Form A forms and
filers in general and current Form A forms and filers that would lose
Form A eligibility in particular.  This information is used to estimate
the regulatory cost to small parent companies affected as a percent of
annual revenues.

TABLE 7-1 

CHARACTERISTICS OF CURRENT FORM A FILERS AFFECTED BY THE FINAL RULE 

Percent Large Parent Companies	55%

Percent Small Parent Companies	45%

Avg. # of Facilities filing Form A per Small Parent Company	1.07

Avg. # of Form As per Facility Owned by a Small Parent Company	2.47

Avg. # of Form As switching to Form Rs per Affected Small Parent Company
	1.56

Incremental Reporting Burden	9.1 hrs/form

Incremental Reporting Cost	$438/form

Total Reporting Burden per Affected Small Parent Company	14 hours

Total Reporting Cost per Affected Small Parent Company	$681/parent
company

Source: RY2002 TRI data and 2004 D&B data.

Note: This analysis assumes that the characteristics of current Form A
filers required to switch to Form Rs are similar to all current Form A
filers.

As shown in Table 7-2, this rule is expected to adversely affect 19
parent companies that own 32 facilities that currently file Form A
submissions.  Of the affected parent companies, approximately 45
percent, or 9 companies, are small businesses as defined by the Small
Business Administration.  No small governments or small organizations
are expected to be affected by this action.  Each affected small parent
company is expected to expend approximately 14 hours and $681 per year
to comply with the additional reporting requirements. Note that this
small entity analysis reflects the estimated impacts to facilities
currently filing Form As.  The current utilization rate for Form A,
however, is much lower than 100 percent. If the utilization rate were to
increase in the future, the number of small affected parent companies
could be as much as twice the number estimated in this analysis,
although the per parent cost increase would be the same.



TABLE 7-2 

NUMBERS OF FORMS, FACILITIES, AND PARENT COMPANIES ASSOCIATED WITH
CURRENT FORM A FILERS AFFECTED BY THE FINAL RULE

	New Ineligibility for Form A: Non-PBT Chemicals Option

Number of Affected Facilitiesa	32

58

Number of Affected Forms	50

80

Number of Affected Parent Companies	19

Number of Affected Large Parent Companies	10

18

Number of Affected Small Parent Companies	9

15

Total Number of Forms Associated with Small Parent Companies	14

40

a Includes total affected facilities that file Form A (this number is
not adjusted to account for overlap with facilities that file Form Rs
eligible for Form A, as in Chapter 6)

Source: RY2002 TRI data and 2004 D&B data.

Note: This analysis assumes that the characteristics of current Form A
filers required to switch to Form Rs are similar to all current Form A
filers.

Resulting cost impact percentages are presented using average revenues
and revenue quartiles, as shown in Table 7-3 and 7-4.  Based on the
incremental cost, the number of facilities owned by each small business,
and the annual revenues of the affected small businesses, all 9 affected
small businesses are expected to experience cost impacts of less than
one percent of annual revenues.



TABLE 7-3 

SMALL ENTITY COST IMPACT PERCENTAGES FOR CURRENT FORM A FILERS UNDER THE
FINAL RULE

USING AVERAGE REVENUES

(FIRST AND SUBSEQUENT YEAR FILERS)

SIC	Average Revenue	Cost Impact Percentage

 	 	 

20	 $51,410,260 	0.002%

22	 $14,984,636 	0.005%

24	 $19,935,399 	0.004%

25	 $10,823,034 	0.007%

26	 $25,430,556 	0.003%

27	$ 8,750,000 	0.009%

28	 $19,312,136 	0.004%

29	 $31,290,558 	0.002%

30	 $15,801,997 	0.005%

31	 $ 5,233,333 	0.015%

32	 $20,258,694 	0.004%

33	 $17,957,569 	0.004%

34	 $12,484,351 	0.006%

35	 $14,493,950 	0.005%

36	 $22,360,460 	0.003%

37	 $28,045,966 	0.003%

38	 $ 7,269,825 	0.011%

39	 $18,647,261 	0.004%

5169	 $10,144,756 	0.008%

5171	 $22,449,518 	0.003%

7389	 $ 1,170,000 	0.066%

Other	 $12,994,601 	0.006%

Source: RY2002 TRI data and 2004 D&B data.

Note: This analysis assumes that the characteristics of current Form A
filers required to switch to Form Rs are similar to all current Form A 
filers.



TABLE 7-4 

SMALL ENTITY COST IMPACT PERCENTAGES FOR CURRENT FORM A FILERS UNDER THE
FINAL RULE USING REVENUE QUARTILES 

(FIRST AND SUBSEQUENT YEAR FILERS)

SIC Code	25% Quartile	50% Quartile	75% Quartile	100% Quartile

 	 	 	 	 

20	0.007%	0.002%	0.001%	0.000%

22	0.022%	0.009%	0.005%	0.002%

24	0.038%	0.013%	0.004%	0.000%

25	0.012%	0.006%	0.005%	0.005%

26	0.008%	0.003%	0.002%	0.002%

27	0.031%	0.009%	0.005%	0.005%

28	0.021%	0.010%	0.004%	0.000%

29	0.015%	0.007%	0.002%	0.000%

30	0.027%	0.009%	0.004%	0.001%

31	0.019%	0.019%	0.010%	0.010%

32	0.028%	0.009%	0.004%	0.000%

33	0.026%	0.010%	0.003%	0.001%

34	0.029%	0.012%	0.004%	0.001%

35	0.021%	0.008%	0.004%	0.001%

36	0.015%	0.005%	0.002%	0.001%

37	0.009%	0.004%	0.002%	0.001%

38	0.052%	0.029%	0.008%	0.002%

39	0.010%	0.006%	0.003%	0.002%

5169	0.031%	0.012%	0.005%	0.001%

5171	0.019%	0.010%	0.003%	0.001%

7389	0.149%	0.065%	0.052%	0.031%

Other	0.034%	0.017%	0.005%	0.001%

Source: RY2002 TRI data and 2004 D&B data.

Note: This analysis assumes that the characteristics of current Form A
filers required to switch to Form Rs are similar to all current Form A
filers.

 Size and revenue data for current Form A filers were obtained by using
frozen TRI RY2002 data and data from D&B. The TRI facilities were
assigned D&B numbers using the D&B numbers reported to TRI in 2002 as
well as a TRI/D&B linkage file provided to Abt Associates by EPA for
RY2000. The RY2000 TRI/D&B linkages provided by EPA were used when
available. Self-reported D&B numbers in TRI were used for RY2002
reporters not included in the EPA linkage file. For facilities listed in
EPA’s linkage file with no D&B number, the TRI D&B number was used
when it was possible to verify the linkage using TRI and D&B street
addresses. Facilities were excluded from this analysis if it was not
possible to link the facility to a valid D&B number.

***September 22, 2006***