[Federal Register Volume 73, Number 141 (Tuesday, July 22, 2008)]
[Rules and Regulations]
[Pages 42517-42520]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-16658]


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SMALL BUSINESS ADMINISTRATION

13 CFR Parts 121

RIN 3245-AF67


Small Business Size Standards: Fuel Oil Dealers Industries

AGENCY: U.S. Small Business Administration (SBA).

ACTION: Final rule.

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SUMMARY: This rule revises the small business size standard for the 
Heating Oil Dealers industry (North American Industry Classification 
System (NAICS) code 454311) from $11.5 million in average annual 
receipts to 50 employees, and the size standard for the Liquefied 
Petroleum Gas (Bottled Gas) Dealers industry (NAICS code 454312) from 
$6.5 million in average annual receipts (AAR) to 50 employees. These 
revised size standards stabilize the definition of the size of a small 
business in these industries based on a review of the latest available 
data on industry characteristics and other relevant information.

DATES: Effective Date: This rule is effective on August 21, 2008.

FOR FURTHER INFORMATION CONTACT: Diane Heal, Office of Size Standards, 
(202) 205-6618 or [email protected].

SUPPLEMENTARY INFORMATION: On October 31, 2007, SBA published in the 
Federal Register (72 FR 61574) a proposed change in the measure of the 
small business size standards for the Heating Oil Dealers from $11.5 
million in AAR to 50 employees, and for the Liquefied Petroleum Gas 
(LPG) (bottled gas) Dealers from $6.5 million in AAR to 50 employees. 
Based on SBA's evaluation of the public comments received to its 
October 31, 2007 proposed rule and on SBA's size standards analysis 
described in the proposed rule, SBA concludes that the proposed change 
to 50 employees is appropriate. Accordingly, this final rule adopts the 
proposed size standard of 50 employees for the heating oil and LPG 
dealers industries.

Evaluation of Comments

    In response to its proposed rule, SBA received comments from one 
individual and three advocacy groups for the affected industries.
    One commenter recommended that SBA use an annual volumetric 
delivery to measure a heating oil dealer's size instead of revenues or 
employees. The commenter believes that not applying the same standard 
for all industries could potentially fail the disparate treatment 
justification, result in equal protection clause challenges, and 
encourage employment reductions by some businesses to remain an 
eligible small business for reduced hazardous material transportation 
registration fees.
    SBA is concerned that using a volumetric delivery measure would 
require heating oil dealers to keep separate records for size 
determination purposes. Also, that type of information is not 
independently verifiable in the case of an SBA size determination. The 
only data collected by government agencies regarding heating oil 
dealers are average weekly costs obtained from a random survey by state 
energy agencies and provided to the U.S. Department of Energy. 
Businesses in other industries where SBA uses size measures other than 
receipts or employees (e.g., megawatt hours for electric utilities, 
assets for financial institutions, and barrels of refined petroleum 
products for petroleum refineries) are legally required to report these 
data using those measures to an appropriate Federal agency. The use of 
volumetric delivery measure would also fail to capture other activities 
of the business and affiliation with other businesses in determining 
size. Because of these concerns, SBA believes that number of employees 
is a better measure of size than volumetric delivery and, therefore, 
does not adopt this recommendation.
    Comments from three advocacy groups for these two industries 
supported the conversion of the size measure from average annual 
receipts to average number of employees. Two of these advocacy groups, 
however, recommended that the size standard for heating oil dealers be 
increased from the proposed 50 employees to 100 employees. They believe 
that heating oil dealers with up to 100 employees are

[[Page 42518]]

small given the labor-intensive operations of heating oil dealers and 
the need for multiple branch offices to serve their customers. However, 
these two groups did not provide any evidence or statistical data to 
support their assertion.
    The purpose of this rule is to convert the size standard to 
employees from the current measure in receipts, not increase the size 
standard. As explained in the proposed rule, the current size standard 
of $11.5 million for the heating oil dealers industry converts to 50 
employees. Furthermore, at that size, more than 90 percent of heating 
oil dealers are classified as small and they account for approximately 
53 percent of total industry sales. SBA concludes that a 50-employee 
size standard for heating oil dealers is a viable size standard and, 
therefore, declines to adopt the recommended 100-employee size 
standard. SBA will give further consideration to the heating oil and 
LPG dealers' size standards when it receives more current industry data 
from the U.S. Bureau of the Census in 2009.

Compliance With Executive Orders 12866, 12988, and 13132, the Paperwork 
Reduction Act (44 U.S.C. Ch. 35), and the Regulatory Flexibility Act (5 
U.S.C. 601-612)

    For purposes of Executive Order 12866, the Office of Management and 
Budget (OMB) has determined that this rule is not a significant 
regulatory action. In addition, this rule is not a major rule under the 
Congressional Review Act, 5 U.S.C. 800.
    For purposes of Executive Order 12988, SBA has determined that this 
rule is drafted, to the extent practicable, in accordance with the 
standards set forth in that Order.
    For purposes of Executive Order 13132, SBA has determined that this 
rule does not have any federalism implications warranting the 
preparation of a federalism assessment.
    For purposes of the Paperwork Reduction Act, 44 U.S.C. Ch. 35, SBA 
has determined that this rule does not impose new reporting or 
recordkeeping requirements. Although the measure of size changes from 
receipts to number of employees, business concerns must maintain 
records on employees (such as payroll records) in the course of 
business. Providing information to SBA on the number of employees would 
occur only as a result of a request for a size determination related to 
an application for small business assistance.

Final Regulatory Flexibility Analysis

    Under the Regulatory Flexibility Act, this rule may have a 
significant impact on a substantial number of small entities in the 
heating oil and LPG dealers industries. This rule may affect the 
eligibility of heating oil and LPG dealers seeking SBA 7(a) Loans, SBA 
Economic Impact Disaster Loans, reduced U.S. Department of 
Transportation's Hazardous Materials (HAZMAT) Registration Program 
fees, and assistance from other Federal small business programs.
    Immediately below, SBA sets forth a final regulatory flexibility 
analysis of this final rule addressing the following questions: (1) 
What is the reason for this action, (2) what are the objectives and 
legal basis for the rule, (3) what are SBA's description and estimate 
of the number of small entities to which the rule will apply, (4) what 
are the significant issues raised by the public in response to the 
Initial Regulatory Flexibility Analysis in the October 31, 2005 
proposed rule, (5) will this rule impose any additional reporting or 
recordkeeping requirements on small business entities, (6) what are the 
relevant Federal rules which may duplicate, overlap or conflict with 
the rule, and (7) what alternatives did SBA consider?
    1. What is the reason for this action? Significant increases and 
fluctuations in crude oil costs render a receipts-based size standard 
for the heating oil and LGP dealers industries an unsuitable measure of 
a dealer's level of business activity. Converting the existing 
receipts-based size standard to an employee-based size standard 
provides a more accurate measure of the operations of a heating oil 
dealer and LPG dealer, ensuring a more stable small business 
designation to dealers of these fuel products.
    2. What are the objectives and legal basis for the rule? The 
purpose of this rule is to convert the existing receipts-based size 
standard to an employee-based size standard to provide a more stable 
designation and accurate measure of the operations of a heating oil 
dealer and LPG dealer. Section 3(a) of the Small Business Act (15 
U.S.C. 632(a)) gives SBA the authority to establish and change size 
standards. Under the current measure, heating oil or LPG dealers are 
abruptly exceeding the size standard due to large and unpredictable 
increases in crude oil costs, even though they continue to deliver the 
same quantity of fuel products. This occurs because dealers pass 
through the increased costs to their customers in the form of higher 
prices. Therefore, dealers' receipts are considerably increased through 
outside forces.
    3. What are SBA's description and estimate of the number of small 
entities to which the rule will apply? Based on data from the SBA's 
special tabulation of the U.S. Bureau of the Census's 2002 Economic 
Census, there were 3,729 small heating oil dealers and 2,005 small LPG 
dealers under the existing size standards. Taking into account 
historical trends of residential heating oil and propane prices between 
2002 and 2007, 349 heating oil dealers and 269 LPG dealers may exceed 
the existing size standard due solely to higher receipts generated by 
higher prices. Establishing the employee-based size standard for these 
two industries will restore the small business eligibility of those 
dealers.
    4. What are the significant issues raised by the public in response 
to the Initial Regulatory Flexibility Analysis in the October 31, 2007, 
proposed rule? The public raised no significant issues in response to 
the Initial Regulatory Flexibility Analysis in the October 31, 2007, 
proposed rule. There were four commenters to the proposed rule. Three 
commenters supported the conversion of the size standard from receipts-
based to employee-based. SBA has summarized the comments above in the 
supplemental information.
    5. Will this rule impose any additional reporting or recordkeeping 
requirements on small business entities? Establishing an employee-based 
size standard for heating oil and LPG dealers does not impose any 
additional reporting, recordkeeping, or compliance requirements on 
small entities. Although the measure of size changes from receipts to 
number of employees, business concerns must maintain records on 
employees in the course of business. In response to a request for a 
size determination related to an application for small business 
assistance, small businesses must provide information on receipts or 
number of employees. This final rule does not create a new requirement 
to provide size information, only what type of information that is 
requested in reviewing a business concern's size.
    Section 212 of the Small Business Regulatory Fairness Act (Pub. L. 
104-121) requires an agency to publish one or more ``small entity 
compliance guides'' to assist small entities in complying with its 
rules. Although there are not new compliance requirements associated 
with small business size standards, there may be some small businesses 
not acquainted with small business size standards and their application 
to Federal

[[Page 42519]]

procurement and other Federal government programs. Therefore, SBA has 
published both its ``Small Business Size Regulations'' and its ``Guide 
to Size Standards'' to provide this assistance. Both of these are 
available on SBA's Web site at http://www.sba.gov/size by selecting on 
the right hand side of the page ``Size Regulations'' and ``Guide to 
Size Standards.''
    6. What are the relevant Federal rules that may duplicate, overlap, 
or conflict with the rule? This rule does not overlap with other 
Federal rules that use SBA's size standards to define a small business. 
Under Section 3(a)(2)(C) of the Small Business Act, 15 U.S.C. 
632(a)(2)(c), unless specifically authorized by statute, Federal 
agencies must use SBA's size standards to define a small business. The 
Federal Acquisition Regulation (FAR), Part 19, governs Federal 
procurement and the use of the various available small business 
programs. All Federal agencies must follow FAR Part 19 in their 
procurement activities, in the absence of statutory authority to do 
otherwise. In 1995, SBA published in the Federal Register a list of 
statutory and regulatory size standards that identified the application 
of SBA's size standards as well as other size standards used by Federal 
agencies (60 FR 57988-57991, dated November 24, 1995). SBA is not aware 
of any Federal rule that would duplicate or conflict with establishing 
size standards.
    Other Federal agencies also may use SBA size standards for a 
variety of regulatory and program purposes. If such a case exists where 
an SBA size standard is not appropriate, an agency may establish its 
own size standards with the approval of the SBA Administrator (see 13 
CFR 121.902-903). For purposes of a regulatory flexibility analysis, 
agencies must consult with SBA's Office of Advocacy when developing 
size standards for its programs. (13 CFR 121.903(3)).
    7. What alternatives did SBA consider? As discussed in the proposed 
rule, SBA considered using the already established 500-employee size 
standard for the manufacturing sector or the 100-employee size standard 
for the wholesale sector. In addition, two of the comments recommended 
that SBA establish a 100-employee size standard for heating oil 
dealers. SBA analyzed the heating oil dealers industry, and 500- and 
100-employee size standards would represent significant increases to 
the size standard for the heating oil dealers industry. At this time, 
industry data do not support higher standards. At 50 employees, more 
than 90 percent of heating oil dealers qualify as small and they 
obtained more than half of total industry sales.
    SBA also considered one commenter's recommended use of annual 
volumetric delivery as a measure for the size standard. Using this 
measure would require companies to keep separate records which are not 
verifiable for size determination purposes. The only data collected by 
government agencies regarding heating oil and LPG are the average 
weekly costs, which is performed using a random survey by state 
agencies which forward the data to the U.S. Department of Energy. 
Therefore, there is no reliable data measuring a firm's annual 
volumetric delivery. Also, that measure would not capture the 
activities of the business outside of heating oil and LPG deliveries or 
the size of any affiliates. For these reasons, SBA did not adopt this 
recommendation.

List of Subjects in 13 CFR part 121

    Administrative practice and procedure, Government procurement, 
Government property, Grant programs--business, Individuals with 
disabilities, Loan programs--business, Reporting and recordkeeping 
requirements, Small businesses.

0
For the reasons set forth in the preamble, SBA amends 13 CFR part 121 
as follows:

PART 121--SMALL BUSINESS SIZE REGULATIONS

0
1. The authority citation for part 121 continues to read as follows:

    Authority: 15 U.S.C. 632, 634(b)(6), 636(b), 637(a), 644, and 
662(5); and Pub. L. 105-135, Sec. 401, et seq., 111 Stat, 2592.


0
2. In Sec.  121.201, in the table ``Small Business Size Standards by 
NAICS Industry,'' under the heading ``Sector 44-45--Retail Trade,'' 
``Subsector 454--Nonstore Retailers,'' revise the entries for 454311 
and 454312 to read as follows:


Sec.  121.201  What size standards has SBA identified by North American 
Industry Classification System codes?

             Small Business Size Standards by NAICS Industry
------------------------------------------------------------------------
                                          Size standards  Size standards
   NAICS codes      NAICS U.S. industry   in millions of   in number of
                           title              dollars        employees
------------------------------------------------------------------------
 
                              * * * * * * *
                       Sector 44-45--Retail Trade
 
                              * * * * * * *
                   Subsector 454--Nonstore Retailing
 
                              * * * * * * *
454311...........  Heating Oil Dealers..  ..............              50
454312...........  Liquefied Petroleum    ..............             50
                    Gas (Bottled Gas)
                    Dealers.
 
                              * * * * * * *
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    Dated: July 15, 2008.
Jovita Carranza,
Acting Administrator.
[FR Doc. E8-16658 Filed 7-21-08; 8:45 am]
BILLING CODE 8025-01-P