1 **Supporting Statement for a Request for OMB Review under**

**The Paperwork Reduction Act 1**  **. IDENTIFICATION OF THE INFORMATION COLLECTION**  **1 (a)**  **Title of the Information Collection Title:**  **Residential Lead -**  **Based Paint Hazards Disclosure Requirements**  **EPA ICR No.: 1710.0 7**  **OMB Control No: 2070 -**  **0151 1(b)**  **Short Characterization** Section 1018 of the Residential Lead

- Based Paint Hazard Reduction Act of 1992 (the Act) (42 U.S.C. 4852d) (see Attachment 1) directs the Environmental Protection Agency (EPA) and the Department of Housing and Urban Development (HUD) to jointly issue regulations requiring disclosure of known lead

- based paint and/or lead

- based paint hazards by persons selling or leas ing housing constructed before the phase

- out of residential lead

- based paint use in 1978. Under that authority, EPA and HUD established the following requirements at 40 CFR 745, Subpart F and 24 CFR 35, Subpart H (see Attachments 2 and 3, respectivel y): (1) Disclosure of all known lead

- based paint (LBP) and LBP hazards to potential buyers and lessees by sellers and lessors before the selling or leasing of most housing built before 1978; (2) Disclosure includes any and all LBP and LBP hazard information su ch as LBP inspection reports, risk assessments, elevated blood lead level reports and other data; (3) Sellers and lessors must provide purchasers and lessees with a federally approved lead hazard information pamphlet 1 ; (4) Sellers must provide purchasers with a 10

- day opportunity to conduct a risk assessment or inspection for the presence of lead

- based paint and/or lead

- based paint hazards before the purchaser is obligated under any purchase contract; (5) This disclosure activity is required of sellers, les sors, and their agents; (6) Records of these disclosure activities must be retained and maintained by sellers, lessors and agents for a minimum of 3 years; and (7) Records must include signed and dated disclosure forms and a list of available records and reports (61 FR 9085, March 6, 1996). The requirements do not apply to housing that has been found to be free of lead

- based paint by a certified LBP inspector, 0

- bedroom dwellings, housing for the elderl y, and housing for the disabled , or short

- term leases

. These provisions ensure that families receive both specific information on the housing’s lead history and general information on lead exposure prevention. With this information, consumers can make more informed decisions concerning home purchase, leas e, and maintenance to protect their families from lead hazard exposure. The following is a description of the affected parties and the supplemental requirements related to each:Sellers of Pre

- 1978 Residential Housing : The rule requires that sellers of pre - 1978 housing (1) provide a lead hazard information pamphlet to contract offerors, and (2) complete and attach a disclosure form to their sales contracts. A sample form is provided in the preamble to the regulations, but only the information elements are required, each respondent can develop its own form. The form
1 This may be either the Protect Your Family From Lead in Your Home pamphlet developed by EPA, HUD, and the Consumer Product Safety Commission, or another one developed by a State and approved by the federal government.2

must be signed b y the seller, purchaser, and any agent(s) acting on behalf of the seller. Lessors of Pre

- 1978 Residential Housing : The rule requires lessors of pre

- 1978 housing to (1) provide a l ead h azard information p amphlet to lessees, and (2) complete and attach a disclosure form to their leasing contracts. Again, while a sample form is provided, each respondent is permitted to develop its own form. The form must be signed b y the lessor and any agent(s) acting on behalf of the lessor. The form must then be retained by the less or, and any

agents acting on their behalf. Agents Acting On Behalf of Sellers or Lessors : Section 1018 of the Act specificall y directs EPA to require agents acting on behalf of sellers or lessors to ensure compliance with the disclosure regulations. EP A and HUD jointly

administer and enforce the rule , and have agreed to maintain a single IC R for these information collection activities. EPA will take the lead in preparing the necessary documentation for renewals.
**2 .**  **NEED FOR AND USE OF THE COLLECTION 2(a)**  **Need/Authority for the Collection** The third party disclosure requirements that are contained in the regulations are specificall y mandated b y section 1018 of the Act. The recordkeeping requirements contained in the regulations are necessary for ensuring compliance with the provisions of the regulations. **2(b) Use/Users of the Data**  The third party disclosure requirements attempt to ensure that families receive both specific information on the housing’s lead history and general information on lead e xposure prevention. With this information, consumers may be able to make more informed decisions concerning home purchase, lease, and maintenance to protect families from lead hazard exposure. The recordkeeping requirements enable EPA and HUD, as well as tribal governments, state and local regulators and the courts, to both determine compliance and effectively enforce section 1018 and the provisions of the rule. In addition, the Act provides a private cause of action for persons harmed by violations of s ection 1018, and records kept pursuant to this rule may be important evidence for these parties.
**3 .**  **NON -** **DUPLICATION, CONSULTATIONS, AND OTHER COLLECTION CRITERIA**  **3(a) Non**  **- Duplication**  The third party disclosure and recordkeeping requirements covered b y this ICR are unique and are not in any way duplicated b y another information collection activity.3

**3(b) Public Notice Required Prior to ICR Submission to OMB**  Prior to submission to OMB, this I CR will be made available to the public for comment through a Fe deral Register notice. The public will have 60 day s to provide comments. Any comments received will be given consideration when completing the supporting statement that is submitted to OMB. **3(c) Consultations**  In addition to the public notice and comment period, OMB regulations, at 5 CFR 1320.8(d)(1), require agencies to consult with potential I CR respondents and data users about specific aspects of an ICR before the Agency

submits the I CR to OMB for review and approval. Inaccordance with this regulation, EPA will pursue additional consultations with interested parties during the development of the renewal of this collection. **3(d) Effects of Less Frequent Collection**  The third party disclosure occurs when the regulated entities are engaged in a specific transaction, i.e., the sale or lease of target housing. As such, it is not possible or appropriate to consider a less frequent disclosure interval. **3(e) General Gui**  **delines** This rulemaking is consistent with OMB’s General Guidelines for information collections under the PRA. Although no form is imposed by the regulations, to facilitate and simplify compliance, EPA and HUD provide a sample form for respondents to adop t or modify for their use. Since this form is simply a sample, it does not contain a PRA Notice, OMB number or expiration date. **3(f) Confidentiality**  This collection does not require the disclosure or retention of confidential information. The third party disclosure requirements also comply with the provisions of the Privacy Act of 1974 and OMB Circular A

- 108. **3(g) Sensitive Questions**  This collection does not include questions of a sensitive nature.
**4 .**  **THE RESPONDENTS AND T HE INFORMATION REQUESTED**  **4( a)**  **Respondents/NAICS Codes** EPA estimates that there are 39,645,600 annual respondents

. The respondent universe for this ICR includes sellers, purchasers, lessors, and lessees of non

- exempt residential dwellings built before 1978, or real estate agents representing such parties. Respondents affected by this collection activity primarily include those businesses that fall under NAI CS code 531, Real Estate, plus private parties engaged in sale or lease transactions.4 **Categories NAICS Codes**  **Examples of potentially** **- affected entities**  Real Estate Operators/ Lessors 53111 Lessors of residential buildings and dwellings Offices of Real Estate Agents/ Property Managers 53121 53131 Real estate agents and brokers

Property managers Private Parties/Sales Transactions None Sellers and buyers of residential dwellings Private Parties/Lease Transactions None Landlords and tenants of residential dwellings This listing is not intended to be exhaustive. The North American Industrial Classification Sy stem (NAI CS) codes have been provided to assist in determining whether or not this action applies to certain entities. The applicability provisions in 40 CFR 74 5.100 clarify what entities are affected by this action

. **4(b) Information Requested**  (i) Data Items When engaged in the subject activity , i.e., the sale or lease of target housing, the respondent must maintain the following records:

- Signed, dated, and completed disclosure forms from sales and leases involving the target housing

- Known information on LBP and LBP hazards in the target housing (ii) Respondent Activities When engaged in the subject activity , i.e., the sale or lease of target housing, the respondent must perform the following activities:

- Read the regulation to learn the basic requirements

- Prepare and complete the written form

- Store, file, and maintain the information for at least three years
**5 .**  **THE INFORMATION COLLECTED --** **AGENCY ACTIVITI ES, COLLECTION**  **METHODOLOGY, AND INFORMATION MANAGEMENT 5(a)**  **Agency Activities** The primary

purpose of this information collection activity is the provision of certain information between two parties in a transaction, i.e., third party disclosure. The agencies are therefore primarily engaged in the following basic activities:5

- Public outreach to assist in the understanding of, and compliance with, the rule requirements

- The development and maintenance of an infrastructure for receiving tips and complaints regarding alleged violations of the regulations

- Compliance monitoring and enforcement of the provisions in the regulation **5(b) Collection Methodology and Management**  This is a third party

disclosure requirement that occurs on a specific occasion. There is no information collection by the agencies. Records are required to be retained by regulated parties and made available to the agencies as part of compliance monitoring and enforcement activities. **5(c) Small Entity Flexibility**  The affected population for this rule is largel y comprised of small entities, and all of the requirements have been crafted to maximize flexibility . EPA and HUD have also developed guidance and a sample form to further facilitate and assist small entities with compliance. **5(d) Collection Schedule**  The third party disclosure is transaction specific and only occurs when the regulated entities are engaged in a specific transaction, i.e., the sal e or lease of target housing.
**6. ESTIMATING THE BURDEN AND COST OF THE COLLECTION**  Burden hour and associated annual costs have been estimated for three classes of respondents identified as being affected by the lead

- based paint hazard disclosure rule for real estate transfers: 1. Property

Owners and Lessors 2. Offerors/Buye rs and Lessees/Tenants 3. Agents acting on behalf of Property Owners and Lessors, and Agents acting on behalf of Offerors/Buye rs (following prior anal ys es, it is assumed that there are no agents acting on behalf of lessees or tenants) Burden hours and costs were estimated for four activities: 1. Start
- up activity 2. Disclosure record preparation activity 3. Record

- keeping 4. Materials The burden hour and cost estimates are summarized in the attached tables and discussed below. 2 For the ICR burden anal ysis, burden hours per individual respondent for a given activity were estimated

2 The estimates of annual individual burden hours in this analysis were developed using the methods and estimates previously developed and reported in Regulatory Impact Analysis of Lead

-Based Paint Hazard Disclosure Rule for Real Estate Transfers (

1995 ) us ing updated costs, numbers of persons and numbers of transactions. Likewise, the assumptions presented in this ICR were presented in the RIA as well.6

from the total number of annual burden hours in that activity divided by the estimated total number o f respondent parties that would potentially be affected by

the disclosure rule. The unit burden estimates used in this analy sis were developed and published in the 1995 RIA of Lead

-Based Paint Hazard Disclosure Rule for Real Estate Transfers . To develop these burden estimates EPA consulted with the Massachusetts Conveyancers Association and representatives of affected parties. The Start

- up burden was based on the amount of time the association dedicated to the disclosure in their lead paint law training c lass. Disclosure burden was based on the average amount of time real estate agents and lessors spent discussing the disclosure with their clients. The estimated paperwork burden on a per- event basis and the estimated number of respondents subject to the disclosure requirements are presented in Table 6.1. An assumption was made that two offers are made per sale creating multiple disclosure events but onl y one completed transaction. Rental events are assumed to have one disclosure per rental occurring during lease signing. A complete discussion of the annual number of sale and rental events is provided in Section 6(d). **Table 6.1: Summary of Time Requirements for Appropriate Cost Components**  **a Respondent Classification**  **Time Required Total Number of Entities** 

Start

- up burden for training and preparation New real estate agents (NAI CS 53121) 1 hour 10,953 New lessors (NAICS 53111) 1 hour 10,261 Each home seller 1 hour 2,740,000

Disclosure events per sale (assuming two offers per sale) Sellers 5 minutes x 2 2,740,000 Agent for sellers 5 minutes 2,740,000 x 88% = 2,411,200 Offerors ( x 2) 5 minutes 5,480,000 Agents for offerors (x 2) 5 minutes 5,480,000 x 88% = 4,822,400 Disclosure events per rental Owners/lessors 5 minutes 8,400,000 Agents for owners/lessors 5 minutes 8,400,000 x 88% = 7,392,000 Tenants/lessees 5 minutes 8,400,000 Record

- keeping time Seller 0.5 minutes 2,740,000 Agent for seller 0.5 minutes 2,740,000 x 88% = 2,411,200 Owners/lessors 0.5 minutes 8,400,000 Agent for owners/lessors 0.5 minutes 8,400,000 x 88% = 7,392,000 a assuming 88 percent of offerors, 8 8 percent of sellers, and 8 8 percent of lessors have agents7

**6(a) -**  **(b) Estimating Respondent Burden and Costs**  Start
- Up Burden The start

- up burden involves the time and cost required for individuals and agents to learn the disclosure rule’s requirements and set up procedures for meeting those requirements. EPA estimates that the paperwork burden related to learning the rule and s etting up compliance procedures is one hour. This estimate assumes real estate sales agents, sellers of rental property , and property managers only incur this start

- up burden once, when they initially enter the profession. Since the rule’s initial year h as passed, the calculation assumes each ye ar has an average number of new entrants incurring the start

- up costs in their first year. The methodology used to calculate new entrants is discussed in section 6(d). Cost of Respondents’ Time The method of estimating the cost of a respondent’s time depends on whether he or she is a paid employee acting as an agent for some other party, or is an unpaid individual acting on his or her own behalf. The cost of an employed agent’s time is the fully loaded hourl y co st, including wages, benefits, and overhead. The cost of time for an individual acting for oneself is estimated to be the value that they would place on a marginal unit of leisure or, conversel y, the net income they would receive from a marginal unit of additional work. Thus their time is valued at their after

- tax wage rate. The hourl y wage rate for the agents for sellers and offerors used in this analysis is $22. 46 per hour, which is the most recentl y reported (released May 20 12 ) annual mean hourly wage from the Bureau of Labor Statistics National Industry

- Specific Occupational Employment and Wage Estimates for NAICS 5312, offices of real estate agents and brokers. Similarly , the hourly wage rate for the agents for lessors used in this analysis is $18. 64 ( same source ) for NAI CS 5311, lessors of real estate. Non

wage benefits were estimated at 28.4 % of wages, based on benefits data specificall y for real estate agents and lessors Employer Cost for Employee Compensation

– December 20 13. An additional 17 percent of the hourl y wage rate has been added for overhead costs. This gives an estimated total hourly labor cost of $32. 66 for the agents of sellers and offerors and $ 27.10 for the agents of lessors (Table 6.2)

. The agents discussed abov e are affected b y this rule as part of their occupation. It is assumed that sellers, buyers, lessors and lessees/tenants engage in these activities on their own behalf and not as part of their occupations. Time that is not part of the person’s occupation is valued at its opportunity cost, which is value that the individual would place on his or her next best alternative activity

. Economists generall y assume that the opportunity cost marginal value of an individual’s time is best estimated by

their margin al earnings, net of taxes and social insurance deductions. This analysis uses an estimate of $ 14.56 per hour for the cost or value of time for those respondents acting on their own behalf, not as paid employees (Table 6.2)

. The current marginal federal income tax rate for most workers is either 15 percent or 25 percent, so 20 percent was chosen to represent the typical or average rate. The average employee’s FICA contribution is 6.2 percent of their wage, and their Medicare contribution is 1.45 percent according to the Office of the Chief Actuary

. As stated in the 20 13 Bureau of Labor Statistics National Current Employment Statistics , the mean hourl y earnings rate over all non

- farm occupations is $ 20.13 . This value was reduced b y 27.65 percent to $ 14. 56 to account for income tax, the employee’s share of FICA, and the Medicare tax payment.8 **Table 6.2: Economic Cost of Respondent’s Time**  **Respondent Classification Hourly Wage**  Real estate agents, NAICS 5312 $32.66 Lessors of real estate, NAI CS 5311 $27.10 Individuals acting on their own behalf $14.56 Assuming the start

- up burden is one hour as previously stated, the start

- up burden and cost per respondent is shown in Table 6.3.

**Table 6.3: Annual Start -**  **up Burden Hours and Cost for Training and Prepara**  **tion per Respondent Classification**  **Respondent Classification Burden Hours**  **Hourly Cost Total Cost**  New agents for sellers (NAI CS 53121) 1 $32.66 $32.66 New agents for owners/lessors (NAI CS 53111) 1 $27.10 $27.10 Each home seller 1 $14.56 $14.56 Disclosure Record Preparation Burden The disclosure record preparation burden involves the time and cost for performing the disclosure activities in conjunction with the sale or rental of target housing as specified b y the rule (Table 6.4) . Each instance is estimated to take five minutes for each of the parties. For each sale handled b y an agent on the seller’s side, the agent is expected to explain the rule to the seller. For each offer in each sale handled by an agent on the offeror’s side, the agent is expected to explain the rule to the offeror. Thus for each sale without an agent the anal ys is assumes a total burden of twenty minutes (five minutes on each of two sides, for two offers), and a total burden of thirty five minutes when the sale has an a gent for each offeror and for the seller (twenty minutes plus five minutes for each of three agents).9

**Table 6.4: Disclosure and Record Preparation Burden and Cost per Respondent**  **Respondent Classification**  **Minutes per**

**Sale or Rental Burden in** 

**Minutes Burden in** 

**Hours Hourly** 

**Cost Total Cost**  Sellers 5 x 2 10 0.16667 $14.56 $2.43 Agent for sellers 5 5 0.08333 $32.66 $2.72 Offerors 5 5 0.08333 $14.56 $1.21 Agents for offerors 5 5 0.08333 $32.66 $2.72 Owners/lessors 5 5 0.08333 $14.56 $1.21 Agents for owners/lessors 5 5 0.08333 $27.10 $2.26 Tenants/lessees 5 5 0.08333 $14.56 $1.21 Record

- Keeping Burden The record

- keeping burden involves the time and cost for meeting the disclosure rule’s record

keeping requirements. The record

- keeping provisions of this rule require the seller and the selling agent (or in the case of rentals, both the owners/lessors and their agents) maintain records of the signed disclosure. The record

- keeping requirement causes them to spend time in filing the specified documents . In all likelihood, some ty

pe of filing s ys tem already exists for each party. The incremental filing time that may reasonabl y be attributed to the disclosure rule itself should be very small, or approximately

0.5 minutes (0.0083 hours) per record (Table 6.5)

.

**Table 6.5: Record -**  **Keeping Burden and Cost per Respondent**  **Respondent Classification Hours Per Record**  **Hourly Cost Total Cost**  Sellers 0.0083 $14.56 $0.12 Agents for sellers 0.0083 $32.66 $0.27 Owners/lessors 0.0083 $14.56 $0.12 Agent for owners/lessors 0.0083 $27.10 $0.22 Materials Burden The materials burden involves the cost of materials required for rule compliance. Materials costs include the l ead h azard information p amphlet s , filing materials, and copies to be made. The sellers and lessors may

choose to provide these materials themselves or to have their agents manage these materials. But for simplicity , this analysis assumes that these costs are borne by the principals, th e sellers and the lessors. It is assumed that there is one cop y of a signed acknowledgment and disclosure statement for every offer or rental contract. It is assumed that each statement will require no more than one side of a10

single sheet of paper. Fo r sales and rentals involving an agent, three sets of the contract must be generated b y the agent (one for the buye r/lessee, one for the seller/lessor and one for the agent) for a total of three copies. S ales transactions will also require a one

- page lead

- based paint inspection contingency

clause for each party. Those are not required for rentals. The following table summarizes the number of pages required for each sale or rental. This analysis assumes two offers per sale. Copy costs are assumed to be an average of $0.06 per page the standard price per page at cop y centers for black and white copies (February 2014). Not all sales transactions will involve two agents since 12 percent of sellers and offerors each are assumed to not use and agent. Of the 12 percent of sales not involving two agents, half the sales are assumed to occur with no agents and half are assumed to occur with one agent. A similar assumption was not made for rental transactions because onl y owner/lessors are assumed to use agents and all tenants are acting on their own behalf (Table 6.6). **Table 6. 6**  **: Copy ing**  **and Filing Costs a**  **Respondent Classification**  **Pages per**

**Sale or Rental**  **C opying**  **C ost at** 

**$0.06 per P**  **age Filed** 

**P ages**  **Filing C**  **ost at**

**$0.0 1**  **per S**  **heet** Sales without agents (6%) 8 $0.48 n/a Sales with 1 agent (6%) 10 $0.60 1 $0.01 Sales with 2 agents (88%) 12 $0.72 1 $0.01 Rental without agents (12%) 2 $0.12 n/a Rental with agents (88%) 4 $0.24 1 $0.01

a disclosure/acknowledgment and paint inspection contingency clause which are only kept for completed sale transactions Filing

- related material costs include the cost of storing the signed disclosure and acknowledgment statements that result from a completed transaction. Filing costs for individual buyers and sellers an d owners and renters are considered a negligible incidental expense. The filing costs are assumed to only

for agents. For filing materials, it is assumed a four drawer, 26.5
- inch deep filing cabinet can hold 26,500 sheets of paper and costs approximately $ 250 ( average price at large office supply stores, February

2014 ). This translates into a $0.00 9 cost per sheet of paper which was rounded to an even $0.01 . For each sale or rental transaction, agents are assumed to retain one sheet of paper containing a signed disclosure and acknowledgment statement (Table 6.6)

. **6(c) Estimating Agency Burden and Costs**  The primary

purpose of this information collection activity is the provision of certain information between two parties in a transaction, and constitute s a third party disclosure under the PRA. The Agency

burden and costs associated with this activity are, therefore, limited to the provision of guidance and program oversight or enforcement. As such, there is no need to estimate the related Agency burden and costs under the PRA.11

**6(d) Estimating the Respondent Universe and Total Burden and Costs**  Target Housing Sales and Rental Events The estimated number of target housing sales per year is based on an estimate of the share of owner- occupied housing units built prior to the ban of the use of lead

- based paint in residences, multiplied by

an estimate of the number of existing home sales per year. The number of target housing rental events is based on the number of households occup yi ng target rental hou sing who report having moved during a one

- ye ar period. Based on data in the 20 13 National Association of Realtor Profile of Home Buyers and Sellers , 88 percent of offerors and 8 8 percent of sellers are assumed to use agent representation. The remaining 12 percent both of offerors and sellers are assumed to conduct transactions on their own. Lessor agent specific data could not be located; therefore it is assumed the same percentage of lessors will use paid agents as sellers. The number of lessors assumed to use agent representation is 88 percent with the remaining 12 percent acting without the assistance of paid agents. As in previous analy ses, this report maintains the assumption that 100 percent of tenants/lessees are acting on their own behalf. Data on owner- occupied and rental housing, including age , are available from the American Housing Survey for the United States: 20 11 (henceforth the 2011 Housing Survey) , issued jointly by the U.S. Dept. of Housing and Urban Development and the U.S. Census Bureau in August 20 12 . An estimate of the expected number of existing home sales in 201 4 is available in the National Association of Realtors’ forecast titled U.S. Economic Outlook: October 20 13 , accessed on

- line from www.realtor.org/research/index.html. Since 1018 notification regulations are designed to provide awareness of the potential presence and hazards of lead based paint (use banned in all housing constructed in 1978 and beyond) , target housing is built prior to 1978 and meets other conditions. At the time of the 20 11 H ousing S urvey , the existing U.S. owner

- occupied housing stock consisted of 36.8 million units built prior to 1975, 7. 3 million units built from 1975 to 1979, and 3 2 .0 million units built after 1979. Calculating from those numbers (and assuming that 60 percent of the units built from 1975 to 1979 were built before 1978), an estimated 54.1 percent of owner

- occupied housing stock is target housing. The estimates from the National Association of Realtors project 5. 073 million existing hom e sales in 201 4 . Multiplying 5. 073 million by 54.1 percent gives an estimate of 2.74 million target housing sales per ye ar (Table 6.8)

. There are no available data that report directly on the number of housing rental events per year. However, the 20 11 H ousing S urvey does report on the number of renter occupied units, at the time of the survey , occupied by

households who had moved in the past year. This number can be used as a prox y to estimate the number of new rentals, with a caveat. This procedure wi ll produce an underestimate, to the degree that some of those households may have moved more than once during that one - year period. The data reported in the survey indicate that there 7.5 million units built prior to 1975 and occupied b y households who h ad moved in the ye ar prior to the survey , 1.5 million such units built from 1975 to 1979, and 4. 3 million units built after 1979. Assuming that 60% of the units dating from 1975 to 1979 are pre
- 1978, we estimate approximately 8.4 million target housing rentals existed during the ye ar preceding the survey . Thus , this anal ys is will assume 8.4 million additional target housing rentals per year, for each year over the course of this ICR renewal.12

Number of Respondents As mentioned previously, only new agent entrants and sellers are assumed to have start

- up costs as the rule’s initial year has passed. All others in the respondent universe are assumed to have already incurred the start

- up costs. The number of new entrants is based on two factors: the turnover associated with replacement of retirees and others leaving the industry and growth rate of this employ ment category over time. The estimated compound annual growth rate of agents is calculated using the number of employees for NAICS code 53121 (real est ate agents and brokers) using U.S. Census Bureau County Business Patterns survey

data over the period 1998 to 200 11 , the years for which NAICS code based data are currentl y available. The Census reports a total of 241,082 employees in that category in 199 8, and 266,503 as of 20 11 . Therefore the calculated annual geometric growth rate in emplo yees from 1998 to 20 11 is 0.81 perc ent. The Agency

currently does not have information on the employee turnover rate for NAICS industry sectors. Assuming that a typ ical worker might retire after thirty years, and if the age distribution were uniform, then the retirement rate (and thus the retirement replacement rate) would be about 3.3 percent. In a growing industry (positive geometric growth rate ), one would expect a smaller proportion retirement

- age workers than younger cohorts. On the other hand, some unknown number of workers undoubtedl y leave s the industry before retirement. For purposes of this analysis, we assume that 3.3 percent represents a reasonable estimate of the turnover rate. The 0.81 percent growth rate combined with the 3.3 percent turnover rate equals a new

- agent training rate of 4.11 percent. Applying this rate to the 266,503 NAICS code 53121 employees in 20 11 , an estimated 10,953 new agents incur start - up costs each year (Table 6.8)

. Individual sellers and lessors who act as their own agents also incur this start

- up burden, when they first encounter the disclosure rule. The anal ysis assumes that each seller is encountering the disclosure rule for the first time. This may lead to an over

- count, since individuals may sell their current home and move on multiple occasions. The owner/lessor of rental property may be more likel y to encounter the disclosure rule more than once, if the lessor h andles more than one target housing property or rents the same property more than once. Thus, to prevent possible multiple counting of start

- up costs this analy sis assumes that the owner/lessor has already encountered the rule and is therefore not a new entrant. While there may be some lessors who are first encountering this rule, there also may be some sellers who have encountered this rule previously , so that an undercount on lessors may be matched by an over- count on sellers. While this analysis does not count owner/lessors as new entrants, it does consider that the agents acting on their behalf incur this start

- up burden when they enter the profession. This portion of the start

up burden is captured through data on emplo ym ent in NAI CS code 53111 (les sors of residential buildings and property). As for real estate agents, the number of new entrants among lessors is based on two factors: the turnover associated with replacement of retirees and other departing workers, and growth rate of this employment category over time. The estimated compound annual growth rate is calculated using the number of employees for NAI CS code 53111 (lessors of residential buildings and dwellings) using U.S. Census Bureau County Business Patterns survey

data over the period 1998 to 20 11 , the years for which NAICS code based data13

are currentl y available. The Census reports a total of 276,449 employees in 1998 and 286,627 as of 20 11 . Therefore the annual geometric growth rate in employees over this period is an estimated 0.28 percent. As noted above, the Agency currently does not have information on the employee turnover rate for NAICS industry

sectors. Assuming that a typ ical worker might retire after thirty years, and if the age distribution were uniform, then the retirem ent rate (and thus the retirement replacement rate) would be about 3.3 percent. For purposes of this anal ys is, we assume that 3.3 percent represents a reasonable estimate of the turnover rate. The 0. 28 percent growth rate combined with the 3.3 percent turnover rate equals a new

- agent training rate of 3.58 percent. Applying this rate to the 286,627 NAICS code 53111 employees in 20 11 , an estimated 10,261 new lessors incur start

- up costs each ye ar (Table 6.7)

. **Table 6. 7**  **: Total**  **Annual Start -**  **up Burden Hour s and Cost for Training and Preparation**  **Respondent Classification Burden Hours**  **Hourly Cost Total Cost**  New agents for sellers (NAI CS 53121) 10,953 $32.66 $357,725 New agents for owners/lessors (NAICS 53111) 10,261 $27.10 $278,073 Each home seller 2,740,000 $14.56 $39,894,400 Total for Sales 2,750,953 $40,252,125 Total for Rentals 10,261 $278,073 **Grand Total 2,761,214**  **$40,530,198** The annual individual disclosure burden for both sales and rental agents is based on the annual number of sales and rental transactions handled by agents, the estimated amount of time required to perform each disclosure, and the total number of respondents (Table 6.8)

.14 **Table 6. 8**  **: Total**  **Disclosure and Record Preparation Burden and Cost a,b**  **Respondent Classification**  **Minutes per Sale**

**or Rental Burden in** 

**Minutes Burden in** 

**Hours Hourly Cost**  **Total Cost** Sellers 5 x 2 27,400,000 456,667 $14.56 $6,649,067 Agent for sellers 5 x 88% 12,056,000 200,933 $32.66 $6,562,483 Offerors 5 x 2 27,400,000 456,667 $14.56 $6,649,067 Agents for offerors 5 x 2 x 88% 24,112,000 401,867 $32.66 $13,124,965 Owners/lessors 5 42,000,000 700,000 $14.56 $10,192,000 Agents for owners/lessors 5 x 88% 36,960,000 616,000 $27.10 $16,693,600 Tenants/lessees 5 42,000,000 700,000 $14.56 $10,192,000 Total for sales 1,516,133 $ 32,985,581 Total for rentals 2,016,000 $ 37,077,600 **Grand Total 3,532,133**  **$ 70,063,181 a**  Sales disclosure burden based on an estimated 2,740,000 target housing unit sales per year **b** Rentals disclosure burden based on an estimated 8,400,000 target housing unit rentals per year The annual individual record

- keeping burden for both sales and rental agents is based on the annual number of sales and rental transactions handled by agents, the estimated amount of time required, per event, to compl y with the record

- keeping requirement, and the total number of respondents (Table 6.9)

. **Table 6. 9**  **: Total**  **Record -**  **Keeping Burden and Cost Respondent Classification**  **Total Records Hours Per**  **Record Total Hours**  **Hourly Cost**  **Total Cost** Sellers 2,740,000 0.0083 22,742 $14.56 $331,124 Agents for sellers 2,411,200 0.0083 20,013 $32.66 $653,623 Owners/lessors 8,400,000 0.0083 69,720 $14.56 $1,015,123 Agent for owners/lessors 7,392,000 0.0083 61,354 $27.10 $1,662,683 Total for Sales 42,755 $ 984,747 Total for Rentals 131,074 $2,677,806 **Grand Total 173,829**  **$ 3,662,553**  The l ead h azard information p amphlet s developed by the federal government are 16 pages in length, printed front and back, folded sheet format (i.e. , four sheets of standard

- sized paper per document), at $0.54 per pamphlet. The total cost of the pamphlet is calculated using the cost per pamphlet, the total number of offers per sale of target housing (two offers/sale), and the number of sales and rentals of target housing that involve an agent (Table 6.10)

.15 **Table 6. 10**  **: Total**  **Pa mp**  **hlet Costs Transaction**  **Classification Number of Sales** 

**or Rentals Number of** 

**Pa mphlets**  **Cost Per Pamphlet Total Cost**  Sales 2,740,000 5,480,000 $0.54 $2,959,200 Rentals 8,400,000 8,400,000 $0.54 $4,536,000 **Total 13,880,000**  **$7,495,200** The total cop y and filing costs take per transaction costs and aggregate over the number of events experienced b y each category of respondent (Table 6.11). **Table 6. 11**  **: Total**  **Copy and Filing Costs**  **a Respondent**  **Classification Pages per** 

**Sale or Rental**  **Number of**

**Events Total Pages**  **Copying Cost at**  **$0.06 per Page**  **Filed Pages Filing Cost**  **at $0.01 per Sheet**  Sales without agents (6%) 8 164,400 1,315,200 $78,912 n/a Sales with 1 agent (6%) 10 164,400 1,644,000 $98,640 164,400 $1,644 Sales with 2 agents (88%) 12 2,411,200 28,934,400 $1,736,064 4,822,400 $48,224 Rental without agents (12%) 2 1,008,000 2,016,000 $120,960 n/a Rental with agents (88%) 4 7,392,000 29,568,000 $1,774,080 7,392,000 $73,920 **Total 63,477,600**  **$3,808,656 12,378,800**  **$123,788** a disclosure/acknowledgment and paint inspection contingency clause Copies are assumed to cost $0.06 per cop y. For 63.4 million pages the total copying cost will be $3.8 million. Filing costs incurred b y agents total an estimated $123,788. Table 6.12 provides a summary of material costs by

type. **Table 6. 12**  **: Materials Costs Summary Material Type**  **Sales Rentals**  Pamphlet costs $2,959,200 $4,536,000 Copy costs $1,913,616 $1,895,040 Filing costs $49,868 $73,920 Total $4,922,684 $6,504,960 **Overall Total $11,427,644** 16

Summary Burden and Costs **Table 6. 13**  **: Burden and Cost for Real Estate Sales Cost Classification**  **Burden Hours Cost**  Start
- up 2,750,953 $40,252,125 Disclosure event 1,516,133 $ 32,985,581 Record keeping 42,755 $984,747 Materials n/a $4,922,684 **Total 4,309,841**  **$79,145,137 Table 6.1**  **4 : Burden and Cost for Rentals**  **Cost Classification Burden Hours**  **Cost** Start
- up 10,261 $278,073 Disclosure event 2,016,000 $ 37,077,600 Record keeping 131,074 $2,677,806 Materials n/a $6,504,960 **Total 2,157,335**  **$46,538,439 Table 6.1**  **5 : Aggregate burden and costs for the residential lead**  **- based paint hazard disclosure ICR**  **Transaction Classification**  **Burden Hours Cost**  Sales 4,309,841 $79,145,137 Rentals 2,157,335 $46,538,439 **Total 6,467,176**  **$125,683,576** For a real estate agent or firm (NAICS 53121) to be classified as a small business, they must have less than 7 million dollars in average annual sales over the past three years based on standards set by the U.S. Small Business Administration (SBA). L essor s of real estate (NAI CS 53111) average annual sales must be less than 25.5 million dollars to meet SBA standards. According to the 20 13 National Association of Realtors Member Profile , eight in ten agents are independent contractors at their firm and the average sales volume per agent was 1.5 million dollars. Based on these data an assumption was made that onl y 20 percent of agents are not classified as a small business. Separate data was not available for lessors of real estate so the same percentage wa s applied to both NAI CS categories. Table 6.16 provided the detailed burden summary by respondent classification.17 **Table 6.1 6**  **: Respondent Burden Summary Respondent**  **Classification Number of** 

**Small Businesses**  **Total**

**Number of Respondents**  **Responses**

**per Respondent**  **Burden per**

**Response (hour)**  **Total**

**Burden Total** 

**Number of Responses**  Start

- up New Real Estate Agents (NAICS 53121) 8,762 10,953 1 1 10,953 10,953 New Lessor Agents (NAICS 53111) 8,209 10,261 1 1 10,261 10,261 Seller n/a 2,740,000 1 1 2,740,000 2,740,000 Disclosure, Sales Seller n/a 2,740,000 2 0.083 456,667 5,480,000 Seller Agents 1,928,960 2,411,200 1 0.083 200,933 2,411,200 Offerors n/a 5,480,000 1 0.083 456,667 5,480,000 Offeror Agents 3,857,920 4,822,400 1 0.083 401,867 4,822,400 Disclosure, Rentals Owner/Lessor n/a 8,400,000 1 0.083 700,000 8,400,000 Owner/Lessor Agents 5,913,600 7,392,000 1 0.083 616,000 7,392,000 Tenants/Lessee n/a 8,400,000 1 0.083 700,000 8,400,000 Record Keeping Seller n/a 2,740,000 1 0.0083 22,742 Seller Agents 1,928,960 2,411,200 1 0.0083 20,013 Owner/Lessor n/a 8,400,000 1 0.0083 69,720 Owner/Lessor Agents 5,913,600 7,392,000 1 0.0083 61,354 **Total 11,700,480**  **39,645,600 6,467,176**  **45,146,814** Note: Record Keeping is only included in the total in the ‘Total Burden’ column to avoid double counting. Record keeping is performed as part of the disclosure response and is only performed when a housing unit is officially leased or sold. Records on offers not finalized are not kept. The Start

- up values for ‘Number of Small Businesses’ and “Total Number of Respondents’ are not included in the Total because New Real Estate and Lessor Agents are a subset of the various agent categories and including the values under Start

- up and Disclosure sections would result in double counting. The same Sellers are listed under Start

- up and Disclosure, Sales but should only be counted once in the ‘Total number of Respondents’ column since they are the same people. Due to the volatility

in the housing sale and rental market, EPA considered the potential impact on estimated paperwork burden and cost if the sales or rentals were 5 percent greater than or five percent less than projected in the Supporting Statement. The total burden and cost could not simply be increas ed or decreased b y five percent because not all burden and cost estimates are impacted by either sales or rentals. For example the number of new entrants for Real Estate Agents is based on growth in the18

NACI S code, not on the number of sales or leases. Als o while sale and rental trends of housing are related there is not always a one to one relationship; therefore the increases and decreases were calculated separatel y instead of together. A five percent change in housing sales results in the target housing changing b y 140,000 units, creating a range from 2.6 million housing units to 2.88 million housing units. The Supporting Statement assumed target housing sales were 2.74 million units. Total Burden in the Supporting Statement was an estimated 6,467,176 hours at a cost of $125,683,576. The five percent change would result in a change of 230,000 hours and $4.3 million dollars. The total burden would range from 6,237,176 to 6,697,176 hours and the cost from $121,383,576 to $129,983,576. These ranges were cal culated assuming no change in the rental estimate presented in the Supporting Statement. A five percent change in target housing rentals results in a change of 400,000 units, creating a range from 8.0 million units to 8.8 million units. The Supporting Statement assumed new housing rentals were 8.4 million units. Total Burden in the Supporting Statement was an estimated 6,467,176 hours at a cost of $125,683,576. The 5 percent change would result in a change of 170,000 hours and $3.4 million dollars. The to tal burden would range from 6,297,176 to 6,637,176 hours and the cost from $122,283,576 to $129,083,576. These ranges were calculated assuming no change in the sales estimate presented in the Supporting Statement. Burden and Cost by

Respondent Class Table 6.17 presents the burden and costs b y respondent class: real estate sales and rental agents; property owners and lessors; and offerors/buyers and lessees/tenants. The filing

- related materials costs are assumed to fall on agents, with the remainder of materials costs falling on sellers and owners/lessors.19 **Table 6.1 7**  **: Burden by Respondent and Class Respondent Class Activity**  **Burden Hours Hourly Cost**  **Annual Cost** Start
- up burden for NAICS 5312 10,953 $ 32.66 $ 357,725 Start
- up burden for NAICS 5311 10,261 $ 27.10 $ 278,073 Sales disclosure event burden for sellers agents 200,933 $ 32.66 $ 6,562,483 Sales disclosure event burden for offerors’ agents 401,867 $ 32.66 $ 13,124,965 Rental disclosure event burden for agents 616,000 $ 27.10 $ 16,693,600 Record keeping burden for sales agents 20,013 $ 32.66 $ 653,623 Record keeping burden for rental agents 61,354 $ 27.10 $ 1,662,683 Total burden and costs for all agents 1,321,381 $ 39,333,152 Start
- up burden for sellers 2,740,000 $ 14.56 $ 39,894,400 Sales disclosure event burden for sellers 456,667 $ 14.56 $ 6,649,067 Rental disclosure event burden for owners/lessors 700,000 $ 14.56 $ 10,192,000 Record keeping burden for sellers 22,742 $ 14.56 $ 331,124 Record keeping burden for owners/lessors 69,720 $ 14.56 $ 1,015,123 Materials costs for sellers n/a n/a $ 4,922,684 Materials costs for owners/lessors n/a n/a $ 6,504,960 Total burden and costs for sellers and owners/lessors 3,989,129 $ 69,509,357 Sales disclosure event burden for offerors 456,667 $ 14.56 $ 6,649,067 Rental disclosure event burden for tenants/lessees 700,000 $ 14.56 $ 10,192,000 Total burden and costs for offerors and tenants/lessees 1,156,667 $ 16,841,067 **Total burden and costs for all respondents**  **6,467,176 $ 125,683,576** 20

Unit Burden Hours The burden of the disclosure rule affects six groups. Four of those groups consist of the individuals involved in sale and rental transactions, and two groups are agents acting on behalf of some of those individuals (Table 6.18) . The individuals are assumed to bear their burden as individuals, but the burden on agents falls on the establishments at which they are employed or associated with as an in dependent contractor . Those establishments are in NAI CS code 53121 (offices of real estate agents and brokers) and NAI CS code 53111 (lessors of residential buildings and dwellings). To determine the burden on those establishments, the total burden on tho se groups is divided by the number of establishments as estimated in the 2007 County Business Pattern Survey (Table 6.19)

. **Table 6.1 8**  **: Unit Burden Summary for Individuals Start** **- Up**  **Burden Disclosure** 

**Event Burden Recordkeeping** 

**Burden Total Burden Per** 

**Individual** Sellers 1 hour 10 minutes 0.5 minutes 70.5 minutes Offerors 5 minutes 5 minutes Owners/lessors 5 minutes 0.5 minutes 5.5 minutes Tenants/lessees 5 minutes 5 minutes

**Table 6.19 : Unit Burden Summary**  **f or Establishments**  **Agents for sellers and offerors NAICS 5312**  **Agents for owners/lessors NAICS 5311**  Aggregate start up burden 10,953 hours 10,261 hours Aggregate disclosure event burden 602,800 hours 616,000 hours Aggregate record

- keeping burden 20,013 hours 61,354 hours Total aggregate burden 633,766 hours 687,615 hours Number of establishments 85,607 establishments 60,477 establishments Unit burden 7.40 hours per establishment 11.37 hours per establishment **6( e** **) Reasons for the Change in Burden**  There is a decrease of 470,154 hours (from 6,937,330 hours to 6,467,176 hours) in the total estimated respondent burden compared with that identified in the I CR currently approved b y OMB
. This decrease reflects a gradual reduction in the annual number of real estate sales involving target housing subject to the rule's requirements and an overall decrease in real estate sales. There has also been a notable decrease in the overall growth of the real estate agent profession which reduces the number of new entrants who have start up burden and cost related to this ICR activity . While the number of property rentals increased over the past year, fewer parties are involved in those transactions so the increases in the rental market were not enough to offset the decrease in the sales market in terms of burden and cost related to this I CR. This change reflects an **adjustment** to the Agency ’s burden21

estimates arising from changes in the housing market. **6( f**  **) Burden Statement**  The annual public burden for this collection of information, which is approved under OMB Control No. 2070

- 0151 , is estimated to average about 0.14 hours per response. Burden is defined in 5 CFR 1320.3(b). An agency may not conduct or sponsor, and a person is not required to respond to , a collection of information unless it displays a current and valid OMB control number. The OMB control numbers for EPA’s regulations in title 40 of the CFR, after appearing in the Federal Register, are listed in 40 CFR part 9 and included on the related coll ection instrument or form, if applicable. The Agency

has established a public docket for this I CR under Docket ID No. EPA
- HQ
- OPPT
2013
- 081 1 , which is available for online viewing at www.regulations.gov, or in

- person viewing at the Pollution Prevention and Toxics Docket in the EPA Docket Center (EPA/DC). The EPA/DC Public Reading Room is located in the EPA West Building, Room 3334, 1301 Constitution Ave., N.W., Washington, DC. The EPA/DC Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday thro ugh Friday , excluding legal holiday s. The telephone number for the EPA/DC Public Reading Room is (202) 566

- 1744, and the telephone number for the Pollution Prevention and Toxics Docket is (202) 566
- 0280. You may submit comments regarding the Agency's nee d for this information, the accuracy of the provided burden estimates and any suggested methods for minimizing respondent burden, including the use of automated collection techniques. Submit your comments, referencing Docket ID No. EPA

- HQ
OPPT
- 20 13
- 0811 and OMB Control No. 2070

- 0151, to (1) EPA online using www.regulations.gov (our preferred method), or b y mail to: Pollution Prevention and Toxics Docket, Environmental Protection Agency Docket Center (EPA/DC), Mailcode: 28221T, 1200 Pennsylvania Ave., N.W., Washington, DC 20460, and (2) OMB b y mail to: Office of Information and Regulatory Affairs, Office of Management and Budget (OMB), Attention: Desk Officer for EPA, 725 17th Street, N.W., Washington, DC 20503.22 **ATTACHMENTS TO THE SUPPORTING STATEMENT** Att achments to the supporting statement are available in the public docket established for this I CR under docket identification number EPA
- HQ
- OPPT
- 2010
- 0801 . These attachments are available for online viewing at www.regulations.gov or otherwise accessed as described in section 6(f) of the supporting statement. **Attachment 1: 42 USC 4852d**  **- Section 1018 of the**  **Residential Lead -**  **Based Paint Hazard**

**Reduction Act of 1992** . Also available at online at the US House of Representatives’ US Code website **Attachment 2: 40 CFR part 745, Subpart F**  **- Disclosure of Known Lead Based Paint and/or** 

**Lead Based Paint Hazards Upon Sale or Lease of Residential Property**  . Also available online at the National Archives and Records Administration’s Electronic CFR Website **Attachment 3: 24 CFR part 35, Subpart H**  **- Project** **- Based Assistance**  . Also available online

at the National Archives and Records Administration’s Electronic CFR Website **Attachment 4**  **: Seller's Disclosure of Information on Lead**  **- Base**  **d Paint and/or Lead -**  **Based**

**Paint Hazards (Sample Form).** Also available at online at http://www2.epa.gov/lead/sellers

- disclosure

- information

- lead

- based

- paint

- andor

lead

- based

- paint

- hazards **Attachment 5**  **: Lessor**  **'s Disclosure of Information on Lead -**  **Based Paint and/or Lead -**  **Based**

**Paint Hazards (Sample Form).** Also available at online at http://www2.epa.gov/lead/lessors

- disclosure

- information

- lead

- based

- paint

- andor

lead

- based

- paint

- hazards **Attachment 6**  **: Lead Hazard Infor**  **mation P am** **phlet -**  **"P rotect Your Family f**  **rom Lead In Your Home" (EPA747**  **- K** **- 99**  **- 001)**  **.** Also available at online at http://www2.epa.gov/lead/protect

- your- family

- lead

- your- home