Supporting Statement for a Request for OMB Review under T he Paperwork Reduction Act 1. IDENTIFICATION OF THE INFORMATION COLLECTION l(a) Title of the Information Collection Title: Disclosure Requirements of Known Residential Lead - Based Paint and Lead - Based Paint Hazards EPA ICR No.: 1710.0 6 OMB Control No: 2070 - 0151 1(b) Short Characterization Section 1018 of the Residential L ead

- Based Paint Hazard Reduction Act of 1992 (the Act) (42 U.S.C. 4852d) directs the Environmental Protection Agency (E PA) 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 leasing 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: (1) Disclosure of all known lead

- based paint (LBP) and LBP hazards to potential buyers and lessees b y 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 such 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; (4) Sellers must provide purchasers with a 10

- day opportunity

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

- based pa int and/or lead

- based paint hazards before the purchaser is obligated under any purchase contract; (5) This disclosure activity is required of sellers, lessors, 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 elderly , housing for the handicapped, or short

- term leases. These provisions ensure that families receive both specific information on the housing ’ s lead hist ory

and general information on lead exposure prevention. With this information, consumers can make more informed decisions concerning home purchase, lease, and maintenance to protect their families from lead hazard exposure. The affected parties and the supplemental requirements related to each are described below:2

Sellers of Pre

- 1978 Residential Housing : The rule requires that sellers of pre

- 1978 housing 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 must be signed by the seller, purchaser, and any agent(s) acting on behalf of the seller. Lessors of Pre

- 1978 Residential Hous ing : The rule requires lessors of pre

- 1978 housing to 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 by the lessor and any

agent(s) acting on behalf of the lessor. The form must then be retained by the lessor, and any

agents acting on their behalf. Agents Acting On Behalf of Sellers or Lessors : Section 1018 of the Act specifically directs EPA to require agents actin g on behalf of sellers or lessors to ensure compliance with the disclosure regulations. EPA and HUD have agreed to maintain a single I CR for these information collection activities. EPA will take the lead in preparing the necessary documentation for rene wals.
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 specifically

mandated by

section 1018 of the Act. The recordkeeping requirements cont ained 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 exposure 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 recordkeep ing 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 section 1018, and records kept pursuant to this rule may be important evidence for these parties.3

3. NON - DUPLICATION, CONSULTATIONS, AND OTHER COLLECTION CRITERIA 3(a) Non - Duplication The third party

d isclosure and recordkeeping requirements covered by this I CR are unique and are not in any

way duplicated by

another information collection activity

. 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 Federal Register notice. The public will have 60 days to provide comments. Any comments received will be given consideration when completing the supporting statement that is submitted to OMB. 3(c) Consultations Under 5 CFR 1320.8(d)(1) OMB requires agencie s to consult with potential I CR respondents and data users abo ut specific aspects of I CRs before submitting an original or renewal I CR to OMB for review and approval. In accordance with this regulation, EPA will pursue additional consultations with interested parties during the development of the renewal of this col lection. 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 t o consider a less frequent disclosure interval. 3(e) General Guidelines 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 co mpliance, EPA and HUD provide a sample form for respondents to adopt 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 sensi tive nature.4

4. THE RESPONDENTS AND T HE INFORMATION REQUESTED 4(a) Respondents/NAICS Codes The respondent universe for this I CR includes sellers, purchasers, lessors, and lessees of non - exempt residential dwellings built before 1978, or real estate ag ents 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. Categories NAI CS Codes Example s of potentially

- affected entities Real Estate Operators/ L essors 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
B S ales Transactions None Sellers and buyers of residential dwellings Private Parties
B 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 you and others in determining whether or not this action applies to certain entities. To determine whether a particular entity is affected by

this action, you should carefully examine the applicability pro visions in 40 CFR 745.100. 4(b) Information Requested (i) Data Items When engaged in the subject activity , i.e., the sale or lease of target housing, the r espondent 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, the5

r espondent 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 ACTIVITIES, COLLECTI ON 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 th erefore primarily

engaged in the following basic activities:

- 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 largely 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 sale or lease of target housing.
6. ESTIMATING THE BURDEN AND COST OF THE COLLECTION B urden 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 real6

estate transfers: 1. Property

Owners and Lessors 2. Offerors/Buyers and Lessee s/Tenants. 3. Agents acting on behalf of Property Owners and Lessors, and Agents acting on behalf of Offerors/Buyers (following prior analy ses, it is assumed that there are no agents acting on behalf of lessees or tenants) Burden hours and costs were est imated 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. The estimates of annual individual b urden hours in this analysis were developed using the methods and estimates previously developed and reported in the Regulatory Impact Analy sis (RIA) for the disclosure rule for transfers, using updated costs, numbers of persons and numbers of transactions . For the I CR burden analy sis, burden hours per individual respondent for a given activity were estimated from the total number of annual burden hours in that activity (based on total events or total persons affected as reported in the regulatory analy sis ) divided by

the estimated total number of respondent parties that would potentially be affected by

the disclosure rule. Note that this analysis uses the NAI CS code sy stem of industry classifications throughout. The analy ses done for the original I CR and for the first IC R renewal used the older SI C classification system for some or all of the data and calculations. The transition from SI C to NAI CS executed during the previous I CR renewal is not likely to have introduced any

major changes in the burden an d cost estimates, since there is no great difference between the industry definitions under NAI CS and the SI C definitions. Any changes made to NAI CS since the previous I CR renewal did not impact data used in this analysis, therefore no adjustments were required. The per

- event time requirements in the Table 6.1 are estimates as previously presented in the RIA. The number of events reported in this table is explained in more detail later in this analy sis.7

Table 6.1: Summary of Time Requirements for Approp riate 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 29,737 New lessors (NAI CS 53111) 1 hour 12,967 Each home seller 1 hour 3 ,200,000

Disclosure events per sale (assuming two offers per sale) Sellers 5 minutes x 2 3,200,000 Agent for sellers 5 minutes 3,200,000 x 87% = 2,784,000 Offerors 5 minutes x 2 3,200,000 Agents for offerors 5 minutes x 2 3,200,000 x 77% = 2,464,000 Disclosure events per rental Owners/lessors 5 minutes 7,600,000 Agents for owners/lessors 5 minutes 7,600,000 x 87% = 6,612,000 Tenants/lessees 5 minutes 7,600,000 Record

- keeping time Seller 0.5 minutes 3,200,000 Agent for seller 0.5 minutes 3,200,00 0 x 87% = 2,784,000 Owners/lessors 0.5 minutes 7,600,000 Agent for owners/lessors 0.5 minutes 7,600,000 x 87% = 6,612,000
a assuming 77 percent of offerors, 87 percent of sellers, and 87 percent of lessors have agents 6(a) - (b) Estimating Respondent Bur den 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. Based on the RIA, the time required to learn the rule and set up compliance procedures was estimated to be one hour. This analy sis 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 has passed, the calculation assumes each year 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 Resp ondents’ 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 his8

or her own behalf. The cost of an employed agent’s t ime is the fully loaded hourly

cost, 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, conversely, 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 hourly

wage rate for the agents for sellers and offerors used in this analysis is $22.35 per hour, which is the most recently reported ( released May

2009) annual mean hourly wage from the Bureau of Labor Statistics National Industry

- Specific Occupational Employment and Wage Estimates for NAI CS 5312, offices of real estate agents and brokers. Similarly , the hourly wage rate for the agents for less ors used in this analy sis is $18.17 ( same source ) for NAI CS 5311, lessors of real estate. Non

- wage benefits were estimated at 27.98% of wages, based on benefits data specifically

for real estate agents and lessors Employer Cost for Employee Compensation

– December 2009 (Bureau of Labor Statistics, data released on March 10, 2010 ). An additional 17 percent of the hourly

wage rate has been added for overhead costs. This gives an estimated total hourly labor cost of $32.40 for the agents of sellers and offe rors and $26.34 for the agents of lessors (Table 6.2)

. The agents discussed above are affected by 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 n ot 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 generally assume that the opportunity cost marginal value of an individual’s time is best estimated by their marginal earnings, net of taxes and social insurance deductions. This analysis uses an estimate of $13.47 per hour for the cost or value of time for those respondents acting on th eir 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 ty pical or average rate. The average employee’s FI CA contributi on 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 2009 Bureau of Labor Statistics National Current Employment Statistics , the mean hourly earnings rate over all non farm occupations is $18.62. This value was reduced by 27.65 percent to $13.47 to account for income tax, the employee’s share of FI CA, and the Medicare tax pay ment. Table 6.2: Economic Cost of Respondent’s Time Respondent Classification Hourly Wag e Real estate agents, NAI CS 5312 $32.40 Lessors of real estate, NAI CS 5311 $26.34 In dividuals acting on their own behalf $13.47 Assuming the start

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

- up burden and cost per respondent is shown in Tab le 6.3.9

Table 6.3: Annual Start - up Burden Hours and Cost for Training and Preparation per Respondent Classification Respondent Classification Burden Hours Hourly Cost Total Cost New agents for sellers (NAI CS 53121) 1 $32.40 $32.40 New agents for owners /lessors (NAI CS 53111) 1 $26.34 $26.34 Each home seller 1 $13.47 $13.47 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 by the rule (Table 6.4) . Each instance is estimated to take five minutes for each of the parties. For each sale handled by

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 analysis 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 agent for each offeror and for the seller (twenty minutes plus five minutes for each of three agents). Table 6.4: Disclo sure 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 .1667 $13.47 $2.25 Agent for sellers 5 x 87% 4.35 .0725 $32.40 $2.3 5 Offerors 5 x 2 10 .1667 $13.47 $2.25 Agents for offerors 5 x 2 x 77% 7.7 .1283 $32.40 $4.16 Owners/lessors 5 5 .0833 $13.47 $1.12 Agents for owners/lessors 5 x 87% 4.35 .0725 $26.34 $1.91 Tenants/lessees 5 5 .0833 $13.47 $1.12 Record

- Keeping Burde n 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/lesso rs and their agents) maintain records of the signed disclosure. The record

- keeping requirement causes them to spend time in filing the specified10

documents. In all likelihood, some ty pe of filing system already exists for each party . The incremental filin g time that may reasonably

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 $13.47 $0.11 Agents for sellers 0.0083 $32.40 $0.27 Owners/lessors 0.0083 $13.47 $0.11 Agent for owners/lessors 0.0083 $26.34 $0.22 Materials Burden The materials burden involves the cost of mate rials required for rule compliance. Materials costs include L ead Hazard Pamphlets, 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 analy sis assumes that these costs are borne by the principals, the sellers and the lessors. Itis assumed that there is one copy 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 a single sheet of paper. For sales and rentals involving an agent, three sets of the contract must be generated by

the agent (one for the buyer/lessee, one for the seller/lessor and one for the agent) for a total of three copies. In addition, sales 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 (RIA). Copy costs are assumed to be an average of $0.06 per page (Table 6.7).11 Table 6.7: Copy 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

$0.006 per S heet Sales without agents (13%) 8 $0.48 n/a Sales with 1 agent (10%) 10 $0.60 1 $0.006 Sales with 2 agents (77%) 12 $0.72 1 $0.006 Rental without agents (13%) 2 $0.12 n/a Rental with agents (87%) 4 $0.24 1 $0.006

a disclosure/acknowledgment and paint inspection contingency clause Filing

- related material costs include the cost of storing the signed disclosure and acknowledgment statements that result from a completed transaction. Filing costs fo r individual buyers and sellers and 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, 25

- inch deep filing cabinet can hold 25,000 sheets of paper and costs approximately $140 (discount office supply

price, August, 2003). This translates into a $0.006 cost per sheet of paper. For each sale or rental transaction, agents are assumed to retain one sheet of paper containing a signed disclosure and acknowledgment statement (Table 6.7)

. 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 constitutes a third party dis closure 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 th e PRA. 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 occupy ing target rental housing who report havi ng moved during a one

- ye ar period.12

Based on data in the 2008 National Association of Realtor Profile of Home Buyers and Sellers , 77 percent of offerors and 87 percent of sellers are assumed to use agent representation. The remaining 23 percent and 13 p ercent of offerors and sellers respectively 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 ass umed to use agent representation is 87 percent with the remaining 13 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: 2007 , issued jointly by the U.S. Dept. of Housing and Urban Development and the U.S. Census Bureau in August 2008. An estimate of the expected number of existing home sales in 2010 is available in the National Association of Realtors’ forecast titled U.S. Economic Outlook: October 2009 , accessed on

- line from www.realtor.org/research/index.html. For the purposes of the 1018 notifi cation regulations, target housing is built prior to 1978 and meets other conditions. At the time of the 2007 housing survey , the existing U.S. owner

occupied housing stock consisted of 37.8 million units built prior to 1975, 7.9 million units built from 1975 to 1979, and 30.0 million units built after 1979. Calculating from those numbers (and assuming that 3/5 of the units built from 1975 to 1979 were built before 1978), an estimated 56.1 percent of owner

- occupied housing stock is target housing. The est imates from the National Association of Realtors project 5.7 million existing home sales in 2010. Multiplying 5.7 million by 56.1 percent gives an estimate of 3.2 million target housing sales per year (Table 6.8)

. There are no available data that reports directly on the number of housing rental events per year. However, the 2007 housing survey 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 proxy

to estimate the number of new rentals, with a caveat. This procedure will produce an underestimate, to the degree that some of those households may have moved more than once during that one

- ye ar period. The data reported in the survey indicate th at there 6.6 million units built prior to 1975 and occupied by

households who had moved in the year prior to the survey , 1.6 million such units built from 1975 to 1979, and 4.1 million units built after 1979. Assuming that 3/5 of the units dating from 197 5 to 1979 are pre

- 1978, we can estimate approximately 7.6 million target housing rentals existed during the year preceding the survey . Thus this analy sis will assume 7.6 million additional target housing rentals per year, for each year over the course of this I CR renewal. Number of Respondents As mentioned previously , only new entrants 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 growth rate of this employ ment category

over time.13

The estimated compound annual growth rate is calculated using the number of employees for NAI CS code 53121 (real estate agents and brokers) using U.S. Census Bureau County Business Patterns survey

data over the period 1998 to 2007, the years for which NAI CS code based data are currently

available. The Census reports a total of 241,082 employees i n that category in 1998, and 367,125 as of 2007. Therefore the annual geometric growth rate in employees from 1998 to 2007 is an estimated 4.8 percent. The Agency

currently does not have information on the employee turnover rate for NAI CS industry

secto rs. Assuming that a ty pical 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 (such as this), one would expect the proportion of retirement

- age workers would be smaller that for younger cohorts. On the other hand, some unknown number of workers undoubtedly leave s the industry

before retirement. For purposes of this analysis, we assume that 3.3 percent repr esents a reasonable estimate of the turnover rate. The 4.8 percent growth rate combined with the 3.3 percent turnover rate equals a new

agent training rate of 8.1 percent. Applying this rate to the 367,125 NAI CS code 53121 employees in 2007, an estimat ed 29,737 new agents incur start

- up costs each year (Table 6.8)

. In dividual sellers and lessors also incur this start

- up burden, when they first encounter the disclosure rule. The analysis assumes that each seller is encountering the disclosure rule fo r 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 likely

to encounter the disclosure rule more than once, if the lessor handles 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 analy sis 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 employ ment in NAI CS code 53111 (lessors 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 employ ment categor

y 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 2007, the years for which NAI CS code based data are currently available. The Census reports a total of 276,449 employees in that category in 1998, and 301,548 as of 2007. Therefore the annual geometric growth rate in employees over this period is an est imated 0.97 percent.14

As noted above, the Agency currently does not have information on the employee turnover rate for NAI CS industry sectors. Assuming that a ty pical worker might retire after thirty ye ars, and if the age distribution were uniform, then the retirement rate (and thus the retirement replacement rate) would be about 3.3 percent. For purposes of this analysis, we assume that 3.3 percent represents a reasonable estimate of the turnover rate. The 0.97 percent growth rate combined with the 3 .3 percent turnover rate equals a new

agent training rate of 4.3 percent. Applying this rate to the 301,548 NAI CS code 53111 employees in 2007, an estimated 12,967 new lessors incur start

- up costs each year (Table 6.8)

.15

Table 6. 8 : Total Annual Start - up Burden Hours and Cost for Training and Preparation Respondent Classification Burden Hours Hourly Cost Total Cost New agents for sellers (NAI CS 53121) 29,737 $32.40 $963,479 New agents for owners/lessors (NAI CS 53111) 12,967 $26.34 $341,551 Each hom e seller 3,200,000 $13.47 $43,104,000 Total for Sales 3,229,737 $44,067,479 Total for Rentals 12,967 $341,551 Grand Total 3,242,704 $44,409,030 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 ( Regulatory Impact Analysis of Lead

-Based Paint Hazard Disclosure Rule for Real Estate Transfers, 1995 ), and the total number of res pondents (Table 6.9)

.

Table 6. 9 : 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 32,000,000 533,333 $13.47 $7,183, 996 Agent for sellers 5 x 87% 13,920,000 232,000 $32.40 $7,516,800 Offerors 5 x 2 32,000,000 533,333 $13.47 $7,183,996 Agents for offerors 5 x 2 x 77% 24,640,000 410,667 $32.40 $13,305,611 Owners/lessors 5 38,000,000 633,333 $13.47 $8,530,996 Agents for owners/lessors 5 x 87% 33,060,000 551,000 $26.34 $14,513,340 Tenants/lessees 5 38,000,000 633,333 $13.47 $8,530,996 Total for sales 1,709,333 $35,190,403 Total for rentals 1,817,666 $31,575,332 Grand Total 3,526,999 $66,765,735 a Sales disclosure burden based on an estimated 3,200,000 target housing unit sales per year b Rentals disclosure burden based on an estimated 7,600,000 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 comply with the record keeping requirement ( Regulatory Impact Analysis of Lead

-Based Paint Hazard Disclosure Rule for Real Estate Transfers, 1995 ), and the total number of respondents (Table 6.10)

.16 Table 6. 10 : Total Record Keeping Burden and Cost Respondent Classification Total Records Hours Per

Record Total

Hours Hourly

Cost Total Cost Sellers 3,200,000 0.0 083 26,560 $13.47 $357,763 Agents for sellers 2,784,000 0.0083 23,107 $32.40 $748,667 Owners/lessors 7,600,000 0.0083 63,080 $13.47 $849,688 Agent for owners/lessors 6,612,000 0.0083 54,880 $26.34 $1,445,539 Total for Sales 49,667 $1,106,430 Total for Rentals 1 17 ,960 $2,295,227 Grand Total 167,627 $3,401,657 The Lead Hazard Pamphlets 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 incurred by real estate agents 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 (T able 6.11) . The number of offers per sale of target housing is based on the RIA. Table 6. 11 : Total Pamphlet Costs Transaction Classification Number of Sales or Rentals Number of

Pamphlets Cost Per

Pamphlet Total Cost
Sales 3,200,000 6,400,000 $0.54 $3 ,456,000 Rentals 7,600,000 7,600,000 $0.54 $4,104,000 Total 14,000,000 $7,560,000 The total copy

and filing costs take per transaction costs and aggregate over the number of events experienced by

each category

of respondent (Table 6.12).17 Table 6. 12 : Total Copy and Filing Costs a Respondent Classification Pages

per Sale or Rental Number of

Events Total

Pages C opying

C ost at $0.06 per P age Filed

P ages Filing

C ost at $0.006 per S heet Sales without agents (13%) 8 416,000 3,328,000 $199,680 n/a Sales with 1 agent (10%) 10 320,000 3,200,000 $192,000 640,000 $3,840 Sales with 2 agents (77%) 12 2,464,000 29,568,000 $1,774,080 4,928,000 $29,568 Rental without agents (13%) 2 988,000 1,976,000 $118,560 n/a Rental with agents (87%) 4 6,612,00 0 26,448,000 $1,586,880 13,224,000 $79,344 Total 64,520,000 $3,871,200 $112,752 a disclosure/acknowledgment and paint inspection contingency clause Copies are assumed to cost $0.06 per copy . For 64.5 million pages the total copying cost will be $ 3.87 million. Filing costs incurred by agents total an estimated $113,000. Table 6.13 provides a summary of material costs by

ty pe. Table 6.8: Materials Costs Summary Material Type Sales Rentals Pamphlet costs $3,456,000 $4,104,000 Copy costs $2,1 65,760 $1,705,440 Filing costs $33,408 $79,344 Total $5,655,168 $5,888,784 Overall Total $11,543,95218

Summary Burden and Costs

Table 6. 14 : Burden and Cost for Real Estate Sales Cost Classification Burden Hours Cost Start

- up 3,229,737 $44,067, 479 Disclosure event 1,709,333 $35,190,403 Record keeping 49,667 $1,106,430 Materials n/a $5,655,168 Total 4,988,737 $86,019,480

Table 6.1 5 : Burden and Cost for Rentals Cost Classification Burden Hours Cost Start

- up 12,967 $341,551 Disclosure event 1,817,666 $31,575,332 Record keeping 117,960 $2,295,227 Materials n/a $5,888,784 Total 1,9 48,593 $40,100,894

Table 6.1 6 : Aggregate burden and costs for the residential lead - based paint hazard disclosure ICR Transaction Classification Bu rden Hours Cost Sales 4,988,737 $86,019,480 Rentals 1,948,593 $40,100,894 Total 6, 937,330 $126,120,37419 Table 6.1 7 : Respondent Burden Summary Respondent Classification Number of Small Businesses Total Number

of Respondents Responses

per Responden t Burden

per Response (hour) Total

Burden

Start

- up New Real Estate Agents (NAI CS 53121) 19,924 29,737 1 1 29,737 New Lessor Agents (NAI CS 53111) 8,688 12,967 1 1 12,967 Seller n/a 3,200,000 1 1 3,200,000 Disclosure, Sales Seller n/a 3,200,000 2 0. 083 533,333 Seller Agents 1,865,280 2,784,000 1 0.083 232,000 Offerors n/a 3,200,000 2 0.083 533,333 Offeror Agents 1,650,880 2,464,000 2 0.083 410,667 Disclosure, Rentals Owner/Lessor n/a 7,600,000 1 0.083 633,333 Owner/Lessor Agents 4,430 ,040 6,612,000 1 0.083 551,000 Tenants/L essee n/a 7,600,000 1 0.083 633,333 Record Keeping Seller n/a 3,200,000 1 0.0083 26,560 Seller Agents 1,865,280 2,784,000 1 0.0083 23,107 Owner/Lessor n/a 7,600,000 1 0.0083 63,080 Owner/Lessor Agents 4,430,040 6,612,000 1 0.0083 54,880 For a real estate agent or firm (NAI CS 53121) to be classified as a small business, they must have less than 2 million dollars in average annual sales over the past 3 years based on standards set by

the U.S. Small Business Administration (SBA). L essors of real estate (NAI CS 53111) average annual sales must be less than 7 million dollars to meet SBA standards. According to the 2009 National Association of Realtors Member Profile , 67 percent of real estate agents ha d sales less than 2 million dollars. This percentage was applied to the appropriate categories in order to estimate the number of small business respondents. Separate data was not available for lessors of real estate so the same percentage was applied to both NAI CS categories. Table 6.17 provided the detailed burden summary by respondent classification.20

Burden and Cost by

Respondent Class Table 6.18 presents the burden and costs by 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.

Table 6.1 8 : Burden by Respondent and Class Respondent Cla ss Activity Burden Hours Hourly Cost Annual Cost Start

- up burden for NAI CS 5312 29,737 32 $963,479 Start

- up burden for NAI CS 5311 12,967 26 $341,551 Sales disclosure event burden for sellers agents 232,000 32 $7,516,800 Sales disclosure event burden fo r offerors’ agents 410,667 32 $13,305,611 Rental disclosure event burden for agents 551,000 26 $14,513,340 Record keeping burden for sales agents 23,107 32 $748,667 Record keeping burden for rental agents 54,880 26 $1,445,539 Total burden and costs for all agents 1,314,358 $38,834,987 Start

- up burden for sellers 3,200,000 13 $43,104,000 Sales disclosure event burden for sellers 533,333 13 $7,183,996 Rental disclosure event burden for owners/lessors 633,333 13 $8,530,996 Record keeping burden for s ellers 26,560 13 $357,763 Record keeping burden for owners/lessors 63,080 13 $849,688 Materials costs for sellers n/a n/a $5,655,168 Materials costs for owners/lessors n/a n/a $5,888,784 Total burden and costs for sellers and owners/lessors 4,456,306 $71,570,395 Sales disclosure event burden for offerors 533,333 13 $7,183,996 Rental disclosure event burden for tenants/lessees 633,333 13 $8,530,996 Total burden and costs for offerors and tenants/lessees 1,166,666 $15,714,992 Total burden and cost s for all respondents 6,937,330 $126,120,37421

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 o f some of those individuals (Table 6.19) . The individuals are assumed to bear their burden as individuals, but the burden on agents falls on the establishments at which they are employed. 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 those groups is divided by the number of establishments as estimated in the 2007 County Busi ness Pattern Survey (Table 6.20)

. Table 6.1 9 : Unit Burden Summary for Individuals Start - Up Burden Disclosure

Event Burden Record keeping Burden Total Burden Per

Individual Sellers 1 hour 5 minutes 0.5 minutes 65.5 minutes Offerors 5 minutes 5 minutes Owners/lessors 5 minutes 0.5 minutes 5.5 minutes Tenants/lessees 5 minutes 5 minutes

Table 6.20 : Unit burden summary for establishments

Agents for sellers and offerors NAICS 5312 Agents for owners/lessors NAICS 5311 Aggregate start up burden 29,737 hours 12,967 hours Aggregate disclosure event burden 642,667 hours 551,000 hours Aggregate record

- keeping burden 23,107 hours 54,880 hours Total aggregate burden 695,511 hours 618,847 hours Number of establishments 111,028 establishments 60,407 establishments Unit burden 6.26 hours per establishment 10.24 hours per establishment 6( e ) Reasons for the Change in Burden There is a decrease of 807,286 hours (from 7,744,616 hours to 6, 937,330 hours) in the total estimated respondent burden compared with that identified in the I CR currently approved by OMB . This decrease reflects a gradual reduction in the annual number of real estate sales and residential property

rentals inv olving target housing subject to the rule's requirements and an overall decrease in real estate sales. This change reflects an adjustment to the Agency ’s burden estimates arising from changes in the housing market.22

6( f ) Burden Statement The total annual burden for this I CR is estimated to be 6, 937,330 hours and involves approximately

39.2 million annual responses , or an average of about 0.18 hours per response

. These responses correspond to the various information activities related to an estimated 3 ,200,000 annual target housing sales and an estimated 7,600,000 annual target housing rentals. Each of the estimated 3,2 0 0,000 target housing sales per year is assumed to involve one seller and two offerors

. In 8 7 percent of the sale s an agent represents the seller and in 77 percent of sales an agent represent s the offeror s (see section 6(d) above) . Therefore there is an average of 5. 41 respondents per housing unit sale or a total of 17,312 ,000 respondents. Similarly , e ach of the estimated 7,6 00,000 targ et housing rentals per year is assumed to involve one lessor and one lessee, with the less or represented by an agent in 8 7 percent of the cases (see section 6(d) above). Therefore there is an average of 2.8 7 respondents per housing unit rental or a total o f 21, 812 ,000 respondents. Overall, there will be an estimated 39 , 124 ,000 respondents per year . The burden associated with the vast majority of these activities is estimated to be 5 minutes or less. For new sellers, lessors, and agents, the b urden associated with one

- time rule familiarization activities is estimated to be 1 hour per event. The burden associated both with disclosures and related acknowledgements by sellers, lessors, offerors, their respective agents, and tenants is estimated to be about 5 minutes per event. The burden associated with related recordkeeping activities by sellers, lessors, and their agents is estimated to be less than 1 minute per event. Although these paperwork requirements also apply to the Federal government, the PRA does not require EPA and HUD to estimate the potential burden or costs associated with the paperwork activities performed by Federal agencies. Under the PRA, “burden” means the total time, effort, or financial resources expended by persons to gene rate, maintain, retain, disclose, or provide informat ion to or for a Federal agency

. For this collection it includes the time needed to review instructions; develop, acquire, install, and utilize technology

and sy stems for the purposes of collecting, vali dating, and verifying information, processing and maintaining information, and disclosing and providing information; adjust the existing ways to comply with any previously

applicable instructions and requirements; train personnel to be able to respond to a collection of information; search data sources; complete and review the collection of information; and transmit or otherwise disclose the information. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of inform ation unless it display s a currently 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 col lection instrument or form, if applicable. The OMB control numbers for HUD regulations appear with the regulations. The Agency

has established a public docket for this I CR under Docket ID No. EPA

- HQ

OPPT

- 2010

- 0801 , which is available for online viewin g at www.regulations.gov, or in person23

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., NW., Washington, DC. Th e EPA/DC Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday , excluding legal holidays. 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 need for this information, the accuracy of the provided burden estimates and any suggested methods for minimizing respondent burden, including the use of automated collection techniq

ues. Submit your comments, referencing Docket ID No. EPA

- HQ

- OPPT

- 2010

- 0801 and OMB Control No. 2070

- 0151, to (1) EPA online using www.regulations.gov (our preferred method), or by

mail to: Document Control Office (DCO), Office of Pollut ion Prevention and Toxics (OPPT), Environmental Protection Agency , Mail Code: 740 4 T, 1200 Pennsylvania Ave., NW, Washington, D.C. 20460, and (2) OMB by mail to: Office of Information and Regulatory Affairs, Office of Management and Budget (OMB), Attention : Desk Officer for EPA, 725 17th Street, NW, Washington, DC 20503.24 ATTACHMENTS TO THE SUPPORTING STATEMENT Attachments to the supporting statement are available in the public docket established for this IC R 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 P aint

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 Atta chment 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 : Record of Consultations with Potential ICR Respondents Attachment 5: Display Related to OMB Control #2070 - 0151

- Li stings of Related

Regulations in 40 CFR 9.1