If he's using Level 3, he would have to have his own PI-IP block. I'd be interested to hear more about IPv4 and IPv6 in the small ISP world. With 50-100 clients, a single /24 block would serve his current client base.
Or, another option is that they're doing CGNAT on all of their client traffic.
Sorry, this is incorrect -- I'm a network engineer and I've been doing exactly this for years. I advertise "Level3 IPs" to other ISPs/peers, I advertise "non-Level3 IPs" to Level3, hell, I even "re-advertise" some of my customers' PI addresses (that they advertise to me) up to Level3.
Actually, I can advertise any prefixes I want via Level3 -- even yours (assuming you had your own).
n.b.: Now, some ISPs may require an LOA (or similar) before they'll accept certain prefixes from you but that's a (easily solved) procedural issue -- not a technical issue.