EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 

# EO 12866 Review Draft: Economic Analysis of the Proposed Dust Testing and Clearance Amendments to the TSCA Lead Renovation, Repair, and Painting Program forTarget Housing and ChildOccupied Facilities

Economic and Policy Analysis Branch Economics, Exposure and Technology Division Office of Pollution Prevention and Toxics

U.S. Environmental Protection Agency

January 2010EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 

## Acknowledgment

EPA acknowledges the analytical and draft preparation support of Abt Associates Inc. of Cambridge, Massachusetts, provided under Contr act Nos. EP-W-08-10 and EP-W-05-022, in the preparation of this report.



### Notice
This is not an official guidance documen t and should not be relied upon to determine applicable regulatory requirements. This document was prepared to provide economic information for the rulemaking process, and to meet various administrative and legislative requirements. Due to the nature of the information available to EPA, the document contains various assumptions that may not reflect the regulatory determinations that an indi vidual firm would make were it to apply the rule's requirements to its specific circumstances. Persons seeking information on regulatory requirements as they apply to specific f acilities should consult 40 CFR Part 745, the preamble for the regulatory action, EPA guidance documents, and EPA’s National Lead Information Center.EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute i 

### Table of Contents

Executive Summary .............................................................................................................. ................ ES-1 Background ..................................................................................................................... ........ ES-1 Overview of the LRRP Clearance Rule .................................................................................. ES-1 Options Analyzed............................................................................................................... ..... ES-3 Number of Events............................................................................................................... ..... ES-4 Costs of the Proposed Rule ..................................................................................................... ES-6 Benefits ....................................................................................................................... ............ ES-8 Small Entity Impacts ........................................................................................................... .... ES-10

1. Introduction ................................................................................................................... ............. 1-1 1.1 Purpose of the LRRP Rule Revisions...................................................................................... 1-1 1.2 Goal of the Economic Analysis............................................................................................... 1-1 1.3 Organization of this Report .................................................................................................... . 1-3

2. Lead, Renovation, Repair, and Painting Industry Profile...................................................... 2-1 2.1 Contractors that Supply Renovation Services ......................................................................... 2-2 2.2 Child Care and Schools: Child Occupied Facilities ................................................................ 2-10 2.3 Nonresidential Commercial Prope rty Owners and Managers ................................................. 2-23 2.4 The Demand for Renovation Services..................................................................................... 2-24 2.5 Renovation Industry Market Structure.................................................................................... 2-26 2.6 Residential Property Owners & Managers.............................................................................. 2-28 2.7 Training Providers............................................................................................................. ...... 2-30 2.8 Summary Characteristics: Numbers of Structures in the Regulated Universe........................ 2-32

3. Problem Definition: Residential Lead-Based Paint Hazards and the Justification for Regulation ..................................................................................................................... .............. 3-1 3.1 Lead Contamination Problem.................................................................................................. 3-1 3.2 Regulatory Background.......................................................................................................... . 3-4 3.3 Justification for Federal Regulations of Lead Exposure during Renovation........................... 3-11 3.4 Approaches for Reducing Lead Exposure Resulting from Renovation .................................. 3-16 Appendix 3A: The Role of Elasticities in Determining the Impacts of a Rule ............................... 3-18 3A.1 Elasticities of Supply and Demand ........................................................................................ .. 3-18 3A.2 How Price Elasticity of Demand Affects the RRP Rule.......................................................... 3-23 Appendix 3B: Elasticities of Demand and Supply for Housing / Renovation Services.................. 3-25

4. Costs of the Lead, Renovation, Repair, and Painting Rule Revisions ................................... 4-1 4.1 Definitions of Options......................................................................................................... .... 4-2 4.2 Number of Events with Dust Wipe Testing or Clearance Requirements................................ 4-4 4.3 Costs of Dust Sampling and Clearance ................................................................................... 4-34 4.4 Number of Sampling Technicians Seeking Training and Certification .................................. 4-63 4.5 Sampling Technician Training Costs ...................................................................................... 4-68 4.6 Total Incremental Costs of Proposed LRRP Clearance Rule.................................................. 4-70 4.7 Alternative Baseline and Options............................................................................................ 4-7 4EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute ii 5. Benefits of the Proposed LRRP Clearance Rule...................................................................... 5-1 5.1 Overview of Proposed LRRP Clearance Rule in Terms of Benefits Estimation .................... 5-1 5.2 Residents and Occupants of Structures Regulated by the Proposed LRRP Clearance Rule... 5-5 5.3 Lead-Related Health Effects and Ecological Effects .............................................................. 5-10

6. Estimated Impacts of the Lead, Renovation, Repair, and Painting Rule Revisions............. 6-1 6.1 Paperwork Reduction Act ....................................................................................................... 6 -1 6.2 Regulatory Flexibility Act..................................................................................................... .. 6-15 6.3 Unfunded Mandates Reform Act (UMRA)............................................................................. 6-43 6.4 Executive Order 13132 - Federalism....................................................................................... 6-45 6.5 Executive Order 13175 - Tribal Implications.......................................................................... 6-45 6.6 Protection of Children from Environmental Health Risk and Safety Risks............................ 6-46 6.7 Executive Order 13211 - En ergy Effects ................................................................................ 6-46 6.8 National Technology Transfer and Advancement Act............................................................ 6-47 6.9 Executive Order 12898 – Environmental Justice .................................................................... 6-47 Appendix 6A – Estimating average per- pupil expenditures of private schools............................... 6-50EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute ES-1 

## Executive Summary 1 This report presents an economic analysis of alte rnative regulatory options for revising the lead, 2 renovation, repair and painting (LRRP) program regul ations for target housing and child occupied 3 facilities (COFs). The proposed LRRP Clearance Rule changes the LRRP program by requiring 4 renovators to perform dust wipe testing for a subset of renovation jobs, and requiri ng them to re-clean and 5 re-test for a second subset of renovation jobs if the te sts show that lead dust levels exceed the established 6 clearance standards. 7 

### Background 8 Past use of lead-based paint has resulted in contamin ation that continues to pose human health hazards. 9 While intact lead-based paint is not likely to contri bute to such hazards, the deterioration of a structure 10 over time or acute environmental stresses, such as are commonly present during renovation activities, has 11 been found to create lead hazards. Since many buildin gs constructed before 1978 have lead-based paint, 12 it is likely that renovation activities in pre-1978 buildings will contribute to lead hazards unless 13 appropriate containment and cl ean-up practices are employed. 14 The LRRP rule for target housing and COFs was prom ulgated in 2008 (73 FR 21692) and is codified in 15 Part 745 of Title 40 of the Code of Federal Regula tions (CFR). The rule was promulgated under the 16 authority of §402(c) of the Toxic Substances Cont rol Act (TSCA). The existing LRRP regulations 17 require entities that perform renovation, repair and pa inting work for compensation in buildings covered 18 by the rule to become certified by EPA, ensure that their employees are trained as either renovators or 19 workers, and use lead-safe work practices when disturbing lead-based paint. 20 

### Overview of the LRRP Clearance Rule 21 Figure ES-1 provides a summary of the dust wipe tes ting and clearance requirements of the proposed rule, 22 and their relationship with the requirements of the 20 08 LRRP rule. The proposed LRRP Clearance Rule 23 would require dust wipe testing on uncarpeted floor s and on window sills and troughs after the following 24 types of renovations that disturb lead-based paint: removing more than 40 ft 2 of trim, molding, cabinets, 25 or other fixtures; removing or replacing of window or door frames; scraping 60 ft 2 or more of painted 26 surfaces; or using a heat gun at temperatures below 1100 degrees Fahrenheit 1 ;. Renovations using 27 machines that remove lead-based paint through high speed operation (such as power sanders or abrasive 28 blasting), or involving demolition or removal of more than 6 ft 2 of plaster walls with lead-based paint 29 through destructive means, would require firms to de monstrate – through dust wipe testing – that they 30 have met clearance standards before the renovation will be considered complete. (For interior surfaces, 31 the clearance standards are 40 μg/ft 2 on floors, 250 μg/ft 2 on interior windowsills, and 400 μg/ft 2 on 32 window troughs.) If any of the dust wipe test results exceed the interior clearance standards, the firm will 33 have to re-clean and re-test the area that failed. The proposed rule allows renovation firms to stop after 34 the second failed clearance test, regardless of the result, if the renovation firm did not agree to refinish the 35 surface that is failing clearance as part of the renovatio n contract. In such instances, the renovation firm 36 would only have to re-clean and test the surface ag ain, no matter what the second dust wipe testing result 37 is. In contrast, the economic analysis assumes that if the second dust wipe testing result fails the 38 clearance test, the renovation firm would have to re -clean the surface a second time and test the surface a 39 third time. Therefore, the economic analysis ov erestimates the cost of the clearance requirement. 40
41

1 Under the 2008 LRRP rule at 40 CFR 745.85(a)(3)(iii), operatin g a heat gun on lead-based paint is permitted only at temperatures below 1100 degrees Fahrenheit.EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute ES-2 Figure ES-1: Summary of Required Activities for Performing Dust Wipe Testing and Clearance

1
2EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute ES-3 

### Options Analyzed 1 This economic analysis considers several regulator y options, which are described below and summarized 2 in Table ES-1 and Table ES-2. 3
1. Low Threshold Option 4

 Dust wipe testing is required for renovations that disturb more than 6 square feet of 5 lead-based paint through removing trim, molding, cabinets, or other fixtures; removal 6 or replacement of window or door frames; scraping painted surfaces; or the use of a 7 heat gun. 8

 Clearance is required for renovations th at disturb lead-based paint through: 9

- High-speed machine removal of paint larger than 6 square feet; or 10

- Plaster removal using destructive means, larger than 6 square feet. 11 12 2. Proposed Rule Threshold Option 13

 Dust wipe testing is required for renovati ons that disturb lead-based paint through: 14

- Removal of more than 40 square feet of trim, molding, cabinets, or other fixtures; 15

- Scraping more than 60 square feet of paint; 16

- Using a heat gun to remove more than 6 square feet of paint; or 17

- Removing a window frame or door frame. 18

 Clearance is required for renovations th at disturb lead-based paint through: 19

- High-speed machine removal of more than 6 square feet of paint; or 20

- Demolition or removal using destructive me ans of more than 6 square feet of 21 plaster. 22 23 3. High Threshold Option 24

 Dust wipe testing is required for renovati ons that disturb lead-based paint through: 25

- Removal of more than 80 square feet of trim, molding, cabinets, or other fixtures; 26

- Scraping more than 120 square feet of paint; 27

- Using a heat gun to remove more than 60 square feet of paint; or 28

- Disturbing paint by removing a window frame or door frame. 29

 Clearance is required for renovations th at disturb lead-based paint through: 30

- High-speed machine removal of more than 60 square feet of paint; or 31

- Demolition or removal using destructive me ans of more than 60 square feet of 32 plaster. 33 34 4. Third Party Sampling Option 35

 Applies to the same renovations and size thresholds as the proposed rule. 36

 Dust wipe testing and clearance are requi red in the same instances as the proposed 37 rule option but dust wipe sampling must be pe rformed by an independent third party. 38 39 5. Dust Wipe Testing Only Option 40

 Applies to the same renovations and size thresholds as the proposed rule. 41

 Achieving clearance is not required. 42 43 6. Clearance Only Option 44

 Applies to the same renovations and size thresholds as the proposed rule. 45

 Clearance must be achieved in all of these renovations. 46EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute ES-4 Table ES-1: Options Included in Economic Analysis
Option Size Threshold Dust Wipe Testing and Clearance Third Party Requirement

Low Threshold Option Size thresholds are lower or equal to proposed rule No

Proposed Rule Size thresholds are as proposed No

High Threshold Option Size thresholds are higher or equal to proposed rule Dust wipe testing is required for: 1. cabinet and trim events 2. scraping of paint 3. heat gun removal of paint 4. Window frame or door frame removal events
Clearance is required for: 1. high-speed machine removal of paint 2. plaster removal using destructive means No

Third Party Sampling Option Same as Proposed. Dust wipe testing and clearance are required in the same instances as proposed but dust wipe sampling must be performed by an independent third party. Yes

Dust Wipe Testing Only Option Same as Proposed. Dust wipe testing is required in instances where dust wipe testing or clearance is required under the proposed option. No

Clearance Only Option Same as Proposed. Clearance is required in instances where dust wipe testing or clearance is required under the proposed option. No

1 Table ES-2: Size Thresholds of the Options Included in Economic Analysis

Threshold (square feet) Activity Event Type Low Proposed High Trim/Molding/Cabinet Removal 6 40 80 Window / Door Frame Removal n/a n/a n/a Painting w/ Scraping 6 60 120 Dust Wipe Testing Only Painting w/ Heat Gun 6 6 60 Paint Removal w/ High-Speed Machines a 6 6 60 Both Dust Wipe Testing and Clearance Plaster Removal w/ Destructive Means 6 6 60

a Under the 2008 LRRP rule at 40 CFR 745.85(a)(3)(ii), the use of machines that rem ove lead-based paint through high speed operation such as sanding, grinding, power pl aning, needle gun, abrasive blasting, or sandblasting, is prohibited unless such machines are used with HEPA exhaust control. 2 

### Number of Events 3 The proposed rule would affect approximately 1.6 million renovations per year. By comparison, the 4 LRRP program applies to 18.7 million renovations each year, of which 7.4 million use lead-safe work 5 practices (because they test positive for lead-based pain t, and are conducted in compliance with the rule). 2 6
Table ES-3 indicates the estimated number of renovation ev ents affected by the different options by type 7 of renovation and threshold size. In about 1.5 million renovations (96% of those affected by the proposed 8 rule), dust wipe testing would be required without a requirement to achieve clearance. The most common 9 single event activities covered by the rule are window or door frame removal, followed by trim, molding, 10

2 The number of events is estimated under a baseline scenario where the opt-out provision of the 2008 LRRP rule has been eliminated, as was proposed in October 2009 (74 FR 55506).EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute ES-5 or cabinet removal. But the most common regulated activity overall involves multiple regulated activities 1 occurring during the course of a single job (e.g., a re novation with both window frame removal and trim 2 removal). 3
4 Table ES-3: Thousands of Regulated Events by Event Type and Option a – First Year

Activity Event Type Low Threshold Proposed Threshold High Threshold Heat gun, < 1000 degrees 4 4 <1 Window/door frame removal 484 514 545 Scraping 40 2 <1 Trim, molding, cabinet removal 687 437 207 Multiple activity events b 607 572 449 Dust Wipe Testing Only

Subtotal, dust wipe testing 1,822 1,528 1,201 High speed machines 4 4 2 Plaster demolition through destructive means 21 29 31 Multiple activity events b 44 36 25 Both Dust Wipe Testing and Clearance Subtotal, clearance events 69 69 58 Total, All Event Types 1,891 1,597 1,259 Totals may not add due to rounding.

a The third party sampling option, the dust wipe testing only option, and the clearance only option impact the same total number of events as the proposed threshold option.

b Multiple event types occurring during the course of a single job (e.g., a renovation with both window frame removal and trim removal). Because the probability of multiple-activity even ts varies with the size threshold, the number of events for single-event activities is not consistent across size thresholds. 5 Figure ES-2 shows the distribution of events by event type for the proposed threshold. 6 Figure ES-2: Total First Year Events by Type - Proposed Threshold

Multiple activity events with at least one clearance event 2% of all clearance rule jobs High speed machine paint removal events only < 1% of all clearance rule jobs

Scraping events only < 1% Clearance 4% Trim, molding, cabinet

removal events only 27% Plaster demolition through destructive means events only 2% of all clearance rule jobs Multiple activity dust testing events [no clearance events] 36%

Heat gun events only < 1% Window/door frame removal events only 32%

7EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute ES-6 Renovations requiring clearance make up about 4% of th e renovations affected by the proposed rule (and 1 1% of all renovations using lead-safe work practices under the LRRP program). Multiple activity events 2 (including combinations of clearance events and dust wipe testing only events) are the most common 3 activities requiring clearance, followed by the demo lition or removal of plaster through destructive 4 means, and using machines that remove paint through high speed operations. 5 There are an estimated 1.9 million regulated events per year under the low threshold option and 1.3 6 million regulated events per year under the high thres hold option. The distribution of event types under 7 these alternate options (in terms of the relative freque ncy of different single and multiple event activities) 8 is similar to the proposed threshold option. There are an estimated 1.6 million regulated events per year 9 under the third party sampling option, the dust wipe testing only option, and the clearance only option, the 10 same as under the proposed threshold option. 11 

### Costs of the Proposed Rule 12 Dust wipe testing costs are expected to vary accord ing to the number of samples taken, which depend on 13 the number of rooms in the work area and whether or not the room is carpeted. For a typical one-room 14 renovation event, four samples would be required (w indow sill, window trough, workroom floor, and 15 adjacent room floor). For a renovation event where both the renovated room and the adjacent room are 16 carpeted, only two samples would be required (windo w sill and window trough). Each additional room 17 inside the work area will add two to three dust wipes depending on whether or not the room is carpeted 18 and whether or not there are windows in the work area. However samples are not required for more than 19 four rooms in a unit’s work area. 20 All entities that conduct renovations covered by the propo sed Clearance Rule will have to use a trained 21 dust sampling technician to take dust samples and have them tested. (A trained dust sampling technician 22 is an individual who has successfully completed a dust sampling technician course accredited by EPA or 23 an EPA-authorized State or Tribal program.) Renova tors can either hire a third-party dust sampling 24 technician or have themselves or one of their em ployees trained as a dust sampling technician. Which 25 approach they choose may depend on several factors, including the number of renovations they perform 26 each year covered by the proposed rule. 27 The average cost for a renovation firm to hire a third- party lead evaluation firm to take the dust wipe 28 samples, send them to a lab for testing, and provide a one-page report is estimated to be a fixed cost of 29 $158 and a variable cost of $26 per sample. Thus, the co st to hire a third party to take four dust samples, 30 send them to a lab for analysis, and provide a short report is estimated to be $262. Given that some 31 covered renovations take place in more than one room (so that more than four samples may be required, 32 depending on whether uncarpeted fl oors and windows are present), the average cost of the dust testing 33 requirement is nearly $300 per job if a third party dust sampling technician is used. 34 Firms performing multiple renovations a year where dust wipe testing is required can save money by 35 having the renovator or a worker trained as a dust sampli ng technician. This requires taking an eight hour 36 initial training course (and a four hour refresher c ourse every five years thereafter), at an estimated 37 annualized cost of $146 per year. For renovators th at perform multiple covered renovations per year, the 38 savings from using their own dust sampling technician are much greater than the annualized cost of the 39 dust sampling technician training. Dust testing for these samples will cost these renovators an average of 40 approximately $170 per job (including training costs), a savings of $130 per job compared to using a third 41 party dust sampling technician. The analysis assu mes that over 233,000 re novators will choose to 42 become trained as dust sampling technicians so that they can collect samples for their own renovations. 43 The proposed rule does not require them to become trained, but many renovators may find it more 44 economical to do so rather than hiring a third party to take the samples. 45EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute ES-7 The cost of dust wipe testing for a job will vary b ased on the number of surfaces that must be tested, and 1 whether the dust sampling is done in-house or by a thir d-party firm. Overall, typical costs are estimated 2 to vary from $120 to $340 per job. A typical renovator will have 3 to 38 jobs per year requiring dust wipe 3 sampling, with an average of 7 such jobs per year. 4 For clearance events (use of a high- speed paint removal machine or de molition or destructive removal of 5 over 6 sq. ft. of plaster), renovators would incur simila r dust wipe testing costs, in terms of the cost per 6 test. Re-cleaning and re-sampling are only necessary fo r a subset of events in which a surface fails the 7 first round of clearance testing. In the event of a failed clearance test, only the component(s) that failed 8 the tests must be re-cleaned. For example, if the window sill sample failed clearance but the window 9 troughs and the floors passed, the window sill must be re-cleaned but the window troughs and the floors 10 do not need to be re-cleaned. These re-cleaning co sts vary from job to job, depending on the number and 11 type of components that failed and the size of the spac e that must be cleaned. Overall, re-cleaning costs 12 are estimated to vary from $43 to up to $5,172 per job, although the costs for a typical job are expected to 13 be at the very low end of the range. (The high end of the range reflects a COF where 14 rooms are 14 renovated and where all floor, sill and trough samples fail two rounds of clearance testing and are re15 cleaned twice. This is an overestimate, since th e rule does not require a second re-cleaning or a third 16 round of testing.) 17 Table ES-4 summarizes the annualized work practice cost s by event type for the three different threshold 18 options. This table does not include training costs for renovators who choose to become trained as a dust 19 sampling technician, since the training costs are not specific to individual event types. 20
21 Table ES-4: Total Incremental Annualized Work Practice Costs by Event Type (3 percent discount rate, million 2008$)

Activity Event Type Low Threshold Proposed Threshold High Threshold Heat gun, < 1000 degrees <$1 $1 <$1 Window/door frame removal $70 $75 $79 Scraping $5 <$1 <$1 Trim, molding, cabinet removal $93 $59 $28 Multiple activity events a $99 $94 $75 Dust Wipe

Testing

Subtotal, dust wipe testing $268 $228 $182 High speed machines $1 $1 $1 Plaster demolition through destructive

means $4 $5 $6 Multiple activity events a $10 $9 $6 Dust Wipe Testing and Clearance Subtotal, clearance events $15 $14 $12 Total, All Event Types $283 $242 $195 Totals may not add due to rounding.

a Multiple event types occurring during the course of a single job (e.g., a renovation with both window frame removal and trim removal). 22 Table ES-5 shows the total costs (including both work practice costs and training costs) for all six 23 options. Costs are higher in the first year to refl ect the renovators who choose to become trained as dust 24 sampling technicians in order to take their own dust wipe samples. 25EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute ES-8 Table ES-5: Total Incremental Costs of Proposed LRRP Clearance Rule (millions 2008$) Annualized Total Option Year 1 Year 2 3% 7% Low Threshold $435 $321 $312 $336 Proposed Threshold $393 $279 $272 $293 High Threshold $343 $229 $224 $242 Third Party Sampling $451 $449 $431 $459 Dust Wipe Testing Only $388 $274 $268 $288 Clearance Only $492 $377 $367 $394
1 

### Benefits 2 A great deal of information on the numerous adverse h ealth effects of lead is available from decades of 3 medical observation and scientific research. Inhaled or ingested lead is distributed throughout the body 4 and is toxic to many organ systems. As a result, its toxicity manifests itself in the form of impacts on 5 several organ systems. A reduction in lead exposure resulting from the rule would lead to a reduction in 6 these adverse health effects and the costs of treati ng them. Young children (from birth through age five) 7 are particularly sensitive to lead, which impairs a child’s neuropsychological development (frequently 8 measured by IQ change). 9 These cognitive and behavioral effects, discussed above , are strongly related to future productivity and 10 expected earnings. The estimated value of an IQ poi nt is approximately $13,000, which represents the 11 present value of a loss in expected lifetime earnings due to a one point IQ drop. This estimated value of 12 an IQ point is limited to reduced income, and does not include other potential impacts such as additional 13 education costs for special and remedial education, and medical costs to treat very high levels of lead. 14 Investigating associations between lead exposure and behavior, mood, and social conduct of children has 15 been an emerging area of research. Early studies indicat ed linkages between lower-level lead toxicity and 16 behavioral problems (e.g., aggression, attentional problems, and hyperactivity) in children. Blood-lead 17 and tooth-lead levels have been associated with be havioral features of atten tion-deficit hyperactivity 18 disorder (ADHD), including distractibility, poor organiza tion, lack of persistence in completing tasks, and 19 daydreaming, in various cohorts of children with a wide range of lead exposures. The relationship 20 between lead exposure and delinquent and criminal behavior also has been addressed in several 21 investigations. Studies linking attention deficits, aggressive and disruptive be haviors, and poor self22 regulation with lead have raised the prospect that early exposure may result in an increased likelihood of 23 engaging in antisocial behaviors in later life. Elevat ed lead levels have been associated with several 24 measures of behavioral distur bance and delinquent behavior. 25 Epidemiologic studies have consistently demonstrated associations between lead exposure and enhanced 26 risk of deleterious cardiovascular outcomes, including increased blood pressure and increased 27 hypertension. 28 Both epidemiologic and toxicologic studies have shown th at environmentally relevant levels of lead affect 29 many different organ systems. Neurotoxic effects in children and cardiovascular effects in adults are 30 among those best substantiated as occurring at blood- lead concentrations as low as 5 to 10 ug/dL (or 31 possibly lower); and these categories of effects are curre ntly of greatest public health concern. Other 32 newly demonstrated immune and renal system eff ects among general population groups are also emerging 33 as low-level lead exposure effects of potential public health concern. It appears that some of these 34 effects, particularly changes in the levels of certain blood enzymes and in aspects of children's 35EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute ES-9 neurobehavioral development, may occur at blood-le ad levels so low as to be essentially without a 1 threshold. 2 The proposed LRRP Clearance Rule would require dust wipe testing after many of the renovation, repair, 3 and painting (RRP) activities regulated under the 2008 LRRP rule, and would require clearance after a 4 smaller subset of RRP activities. The clearance re quirements of the proposed LRRP Clearance Rule are 5 expected to result in lower exposures to dust lead by reducing the amount of dust lead left behind after 6 RRP activities. Two types of benefits are expected to be realized from the proposed dust wipe testing 7 requirements. The first type is the direct benefits of the information to the owners and occupants, which 8 includes the value of the information on dust lead le vels remaining in the renovation work area. For 9 building owners and occupants, this information is likely to improve their understanding and awareness of 10 dust lead hazards. It will also greatly improve their ability to make further risk management decisions. 11 This information is particularly critical where dust lead levels approach or exceed the regulatory hazard 12 standards. The second benefit expected to be rea lized from the proposed dust wipe testing requirements 13 stems from changed behavior on the part of renovation fi rms. EPA believes that dust wipe testing results 14 will also provide valuable feedback to renova tion firms on how well they are cleaning up after 15 renovations. It is likely that the specific dust lead levels contained in dust wipe testing results will 16 increase renovation firm cleaning efficiency. Renovation fi rms will be incentivized to lower the dust lead 17 levels remaining after renova tion jobs, even if the levels are at or near the regulatory standards. Because 18 proper cleanup plays such a vital role in the minimi zation of dust lead hazards created by renovations, 19 providing information on dust lead levels remaining after renovations to buildin g owners and occupants 20 will serve as an incentive for firms to perform pos t-renovation cleaning efficiently and thoroughly, 21 reducing the amount of dust lead left behind after RRP. 22 The proposed rule will protect children and adults residing in target housing and attending a COF from 23 exposure to lead dust from renovations in a variety of situations. It will result in fewer homes being 24 purchased with pre-existing lead hazards. It is common for home owners to perform activities that disturb 25 paint before selling a house. The proposed rule d ecreases the likelihood of lead hazards being present 26 when new occupants move into the home. And the pr oposed rule will also benefit individuals visiting a 27 friend, relative, or caregiver’s hou se where a renovation has been performed. 28 The number of individuals residing in target housing and attending COFs with renovations affected under 29 the different options is shown in Table ES-6. The proposed rule would protect 8.4 million such 30 individuals per year, including 809,000 children under the age of 6 and 96,000 pregnant women. (This is 31 important because the transplacental transfer of l ead in humans is well documented, and infants are 32 generally born with a lead body burden reflecting th at of the mother.) The estimates are limited to 33 residents in target housing and children attendi ng COFs, and do not include other groups such as 34 individuals who move into housin g after a renovation has been performed, or who visit a friend or 35 relative’s house. 36
37EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute ES-10 Table ES-6: Thousands of Occupants Per Year Protected Under Different Options

Option Activity Performed Children Under Age 6 Pregnant Women Other Individuals Age

6 and Older Total Dust Wipe Testing 855 103 7,930 8,888 Clearance 27 2 158 187 Low Threshold

Total 882 105 8,088 9,075 Dust Wipe Testing 782 94 7,294 8,170 Clearance 27 2 158 187 Proposed Threshold

Total 809 96 7,451 8,356 Dust Wipe Testing 682 81 6,377 7,140 Clearance 24 2 130 156 High Threshold Total 706 83 6,507 7,296 Dust Wipe Testing 782 94 7,294 8,170 Clearance 27 2 158 187 Third Party Sampling Total 809 96 7,451 8,356 Dust Wipe Testing Only Dust Wipe Testing 809 96 7,451 8,356 Clearance Only Clearance 809 96 7,451 8,356 1 

### Small Entity Impacts 2 The Regulatory Flexibility Act (RFA) of 1980, amen ded by the Small Business Regulatory Enforcement 3 Fairness Act (SBREFA) of 1996, requires regulators to assess the effects of regulations on small entities 4 including businesses, nonprofit organizations, and govern ments. The vast majority of entities in the 5 industries affected by the proposed rule are small. 6 Two factors are evaluated in analyzing the rule’s im pacts on small entities, (1) the number of firms that 7 would experience the impact, and (2) the size of the impact. Average a nnual compliance costs as a 8 percentage of average annual revenues are used to asse ss the potential average impact of the rule on small 9 businesses and small governments. This ratio is a goo d measure of entities’ ability to afford the costs 10 attributable to a regulatory requirement, because comparing compliance costs to revenues provides a 11 reasonable indication of the magnitude of the regulat ory burden relative to a commonly available measure 12 of economic activity. Where regulatory costs represent a small fraction of a typical entity’s revenues, the 13 financial impacts of the regulation on such entities ma y be considered as not significant. For non-profit 14 organizations, impacts are measured by comparing rule costs to the organization’s annual expenditures. 15 When expenditure data were not available, however, revenue information was used as a proxy for 16 expenditures. It is appropriate to calculate the impact ratios using annualized costs, because these costs 17 are more representative of the continuing co sts entities face to comply with the rule. 18 Table ES-7 presents the total number of small governme nts, non-profit organizations, and small for-profit 19 businesses, and the average cost-to-revenue ratios for each category. It is estimated that a total of 20 approximately 203,000 small entities would be affected by the progra m, including nearly 203,000 small 21 businesses with average impacts of 0.5 percent, about 200 small non-profits with average impacts of 0.1 22 percent, and over 100 small governments with average im pacts of 0.004 percent. All of the small entity 23 impact calculations assume that the sm all entities absorb all of the rule’s costs, and that none of the costs 24 are passed through to their customers. 25
26EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute ES-11 Table ES-7: Aggregate Small Entity Impacts of the Proposed Rule

Total Number of Small Entities Affected (thousands) Average Impacts, All Small Entities Small Governments 0.1 0.004% N on-Profit Organizations 0.2 0.1% Small For-Profit Businesses 202.7 0.5% Total 203 0.5% 1 The cost of the proposed rule to a typical small en tity is estimated to average $1,200 per year, but will 2 vary depending on the number of renovation, repair, a nd painting events undertaken by a small entity in 3 the industry sector involved. As shown in Table ES-8, the average cost impact ranges from about 0.004 4 percent to 1.1 percent of revenues, depending on the industry sector. 5

6

7 Table ES-9 provides additional information on poten tial impacts on small residential construction 8 establishments. Some of the small entities subject to the rule have employees while others are non9 employers. The non-employers typically perform fewe r jobs than firms with employees, and thus have 10 lower work practice compliance costs. However, th ey also have lower average revenues than entities 11 with employees, so their impacts (measured as costs divided by revenues) can be higher. Impact 12 estimates for non-employers should be interpreted w ith caution, as some non-employers may have issues 13 related to understatement of income, which would tend to exaggerate the average impact ratio for this 14 class of small entities. As shown in Table ES-9, there are 151,000 non-employer renovation contractors 15 estimated to be affected by the removal of the opt-ou t provision. The average cost to these contractors is 16 estimated to be $700 each. This represents 0.7% to 2.6% of reported revenu es, depending on the industry 17
sector. 18
19 Table ES-8: Typical-Year Number of Small Entities with RRP Events (Proposed Option) Description Entity Type Number of Small Entities (thousands) Average Cost-Impact Ratio

Residential remodelers Business 68.4 0.5% Finish carpentry contractors Business 48.6 0.8% Tile and terrazzo contractors Business 6.9 0.7% Plumbing and HVAC contractors Business 23.4 0.4% Painting and wall covering contractors Business 27.0 1.1% Electrical contractors Business 16.6 0.5% Drywall and insulation contractors Business 11.4 0.5% Public School Districts Government 0.1 0.004% Private Schools Non-Profit 0.1 0.08% Daycare Centers Non-Profit 0.1 0.2% Non-Residential Landlords Business 0.1 0.4% Non-Residential Contractors (working in public or commercial building COFs) Business 0.3 0.4% Total 203 0.5%EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute ES-12 1 Table ES-9: Cost-to-Revenue Ratios: Small Residential Construction Establishments (Proposed Option)

Category NAICS Industry Description Number of Small Entities (thousands) Avg. CostImpact Ratio 236118 Residential remodelers 48 1.9% 238350 Finish carpentry contractors 41 2.1% 238340 Tile and terrazzo contractors 6 1.7% 238220 Plumbing and HVAC contractors 13 1.1% 238320 Painting and wall covering contractors 23 2.6% 238210 Electrical contractors 10 1.6% 238310 Drywall and insulation contractors 10 0.7% Non-Employers

Total, Small Construction Establishments 151 1.7% 236118 Residential remodelers 20 0.3% 238350 Finish carpentry contractors 8 0.4% 238340 Tile and terrazzo contractors 1 0.4% 238220 Plumbing and HVAC contractors 10 0.3% 238320 Painting and wall covering contractors 4 0.6% 238210 Electrical contractors 6 0.4% 238310 Drywall and insulation contractors 2 0.4% Employers

Total, Small Construction Establishments 52 0.4% 236118 Residential remodelers 68 0.5% 238350 Finish carpentry contractors 49 0.8% 238340 Tile and terrazzo contractors 7 0.7% 238220 Plumbing and HVAC contractors 23 0.4% 238320 Painting and wall covering contractors 27 1.1% 238210 Electrical contractors 17 0.5% 238310 Drywall and insulation contractors 11 0.5% Employers and Non-Employers Combined

Total, Small Construction Establishments 202 0.5%EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 1-1 

## 1. Introduction 1 This report presents an economic analysis of alte rnative regulatory options for revising the lead, 2 renovation, repair and painting (LRRP) program regul ations for target housing and child occupied 3 facilities (COFs). The LRRP rule for target housing and COFs was promulgated in 2008 (73 FR 21692) 4 and is codified in Part 745 of Title 40 of the C ode of Federal Regulations (CFR). The rule was 5 promulgated under the authority of §402(c) of the To xic Substances Control Act (TSCA). Section IV of 6 TSCA was established by the Residential Lead-Based Paint Hazard Reduction Ac t of 1992, also known 7 as Title X of the Housing and Community Devel opment Act of 1992, Public Law 102-550. 8 The existing LRRP regulations require entities that perform renovation, repair and painting work for 9 compensation in buildings covered by the rule to become certified by EPA, ensure that their employees 10 are trained as either renovators or workers, and use lead-safe work practices when disturbing lead-based 11 paint. 12 Past use of lead-based paint has resulted in contamin ation that continues to pose human health hazards. 13 While intact lead-based paint is not likely to contri bute to such hazards, the deterioration of a structure 14 over time or acute environmental stresses, such as are commonly present during renovation activities, has 15 been found to create lead hazards. Since many buildin gs constructed before 1978 have lead-based paint, 16 it is likely that renovation activities in pre-1978 buildings will contribute to lead hazards unless 17 appropriate containment and cl ean-up practices are employed. 18 The proposed LRRP Clearance Rule includes the fo llowing changes to the LRRP program: (1) a 19 requirement to perform dust wipe testing for a sub set of renovation activities, and (2) a requirement to 20 perform dust wipe testing and achieve clearance for a second subset of renovation activities where the 21 quantity and characteristics of the dust make it hard to clean up. 22 

### 1.1 Purpose of the LRRP Rule Revisions 23 The LRRP rule requires certification of entities th at perform renovation, repa ir and/or painting in 24 buildings covered by the regulations. This includes c onstruction contractors (inc luding sole practitioners) 25 as well as landlords and other build ing owners (such as school districts) that may perform RRP activities 26 using their own staff. It does not, however, cover renovation, repair and painting (RRP) work performed 27 by homeowners on their own homes. The certified en tity must ensure that all persons performing RRP 28 activities on behalf of the entity in buildings covered by the rule are either renovators who have received 29 formal training in EPA-approved work practices from an EPA-accredited course or workers who have 30 received on-the-job training in these approved work prac tices. In addition, the rule requires the use of 31 these approved work practices to ensure that proper cleanup has occurred. 32 The proposed rule will require renovation firms to pe rform dust wipe testing after certain types of 33 renovation activities and to provide copies of the test r esults to the owners and occupants of the renovated 34 buildings. These requirements will se rve to inform the owners and o ccupants of the remaining post35 renovation lead-dust levels. In instances when clearan ce must be achieved, owne rs and occupants would 36 be provided with the information th at the renovated areas met lead-dust level standards after cleaning. 37 The increased information provided to owners and o ccupants of renovated buildings will further protect 38 individuals (including children under age 6 and pregna nt women), who visit, move into, or live adjacent 39 to target housing or COFs renovated under the ex isting LRRP requirements, from exposure to lead 40 hazards due to renovation activities. 41 

### 1.2 Goal of the Economic Analysis 42 The purpose of this report is to analyze various opt ions for the LRRP rulemaking revisions. The report 43 addresses the requirements for economic analysis of Executive Order 12866 – Regulatory Planning and 44EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 1-2 Review ; the Regulatory Flexibility Act (RFA) and the Small Business Regulatory Enforcement Fairness 1 Act (SBRFA); Executive Order 12898 – Federal Actions to Address Envi ronmental Justice in Minority 2 Populations and Low-Income Populations ; Executive Order 13045 – Protection of Children from 3 Environmental Health Risks and Safety Risks ; the Unfunded Mandates Reform Act; Executive Order 4 12875 – Enhancing the Intergovernmental Partnership ; and the Paperwork Reduction Act (PRA). 5 This economic analysis considers various regulatory options. The three primary options considered in 6 this analysis only differ in the size thresholds that trigger the rule’s requirements when performing certain 7 renovation activities. Table 1-1 summarizes the options c onsidered in this analysis; they are described in 8 more detail below. 9
1. Low Threshold Option 10

 All event types requiring dust wipe testing where the amount of lead-based paint 11 disturbed is larger than 6 square feet. 12

 Clearance is required for: 13

- high-speed machine removal of paint larger than 6 square feet, and 14

- plaster removal using destructive means, larger than 6 square feet. 15 2. Proposed Threshold Option 16

 Dust wipe testing is required for: 17

- cabinet and trim events larger than 40 square feet, 18

- scraping of paint larger than 60 square feet, 19

- heat gun removal of more than 6 square feet 20

- Window frame or door frame removal events 21

 Clearance is required for: 22

- high-speed machine removal of paint larger than 6 square feet, and 23

- plaster removal using destructive means, larger than 6 square feet. 24 3. High Threshold Option 25

 Dust wipe testing is required for: 26

- cabinet and trim events larger than 80 square feet, 27

- scraping or heat gun removal of paint larger than 120 square feet, and 28

- window frame or door frame removal events. 29

 Clearance is required for: 30

- high-speed machine removal of paint larger than 60 square feet, and 31

- plaster removal using destructive means, larger than 60 square feet. 32 33 There are three alternative options in addition to the three primary options: (1) an option where third party 34 dust wipe testing and clearance is required, (2) an opti on where dust wipe testing is required in lieu of the 35 clearance required under the proposed option, (3) an option where clearance is required in lieu of the dust 36 wipe testing required under the proposed option. 37EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 1-3 Table 1-1: Options Included in Economic Analysis
Option Size Threshold Dust Wipe Testing and Clearance Third Party Requirement

Low Threshold Option Size thresholds are lower or equal to proposed rule No

Proposed Rule Size thresholds are as proposed No

High Threshold Option Size thresholds are higher or equal to proposed rule Dust wipe testing is required for: 1. cabinet and trim events 2. scraping of paint 3. heat gun removal of paint 4. Window frame or door frame removal events
Clearance is required for: 1. high-speed machine removal of paint 2. plaster removal using destructive means No

Third Party Sampling Option Same as Proposed. Dust wipe testing and clearance are required in the same instances as proposed but dust wipe sampling must be performed by a third party. Yes

Dust Wipe Testing Only Option Same as Proposed. Dust wipe testing is required in instances where dust wipe testing or clearance is required under the proposed option. No

Clearance Only Option Same as Proposed. Clearance is required in instances where dust wipe testing or clearance is required under the proposed option. No

1 

### 1.3 Organization of this Report 2 Chapter 2 profiles the RRP industry, as well as non-profit and governmental suppliers of childcare 3 including family daycare providers. It examines th e supply of and demand for renovation, remodeling and 4 painting services. Using data from a variety of sour ces, including the U.S. Economic Census, the chapter 5 discusses the size of the RRP industry and characteris tics of its firms, as well as the organizational 6 structure and competitiveness of the industry. Th e demand for RRP services is characterized and the 7 factors that affect demand are di scussed. Other affected industries (e.g. training providers, property 8 owners and managers) are also profiled in this chapter. 9 Chapter 3 characterizes the lead contamination probl em to be addressed under the proposed rule. It 10 discusses how incomplete information and external cost s have resulted in inefficient levels of lead 11 contamination resulting from renovation activity, an d introduces regulation as a reasonable solution for 12 these market failures. The chapter also reviews state and local regulations that affect RRP activities and 13 demonstrates that these are not sufficient to address the problem. 14 Chapter 4 describes in detail the methods used to calculate costs of the various regulatory options 15 considered. It describes the data sources used and the methodology for es timating the two general 16 categories of costs incurred under the proposed rule: dust sampling technician training costs, and dust 17 wipe testing and clearance costs. The last section of the chapter estimates the costs of each option over a 18 50-year period and presents annualized costs at both 3 percent and 7 percent. 19EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 1-4 Chapter 5 describes the benefits of the proposed rule in qualitative terms, including potential benefits to 1 adults. Estimates of the number of children and a dults who may experience reduced lead exposures due 2 to the dust wipe testing and clearance requirements are also presented. 3 Chapter 6 presents findings of distributional analy ses relevant to specific rule-making requirements, 4 including small business impacts, environmental just ice, protection of children and unfunded mandates. 5EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-1 

## 2. Lead, Renovation, Repair, and Painting In dustry Profile 1 The LRRP rule for target housing and child occupied facilities (COFs) was promulgated in 2008 (73 FR 2 21692) and is codified in Part 745 of Title 40 of the Code of Federal Regulations (CFR). The rule was 3 promulgated under the authority of §402(c) of the To xic Substances Control Act (TSCA). Section IV of 4 TSCA was established by the Residential Lead-Based Paint Hazard Reduction Ac t of 1992, also known 5 as Title X of the Housing and Community Devel opment Act of 1992, Public Law 102-550. 6 The existing LRRP regulations apply to entities that perform renovation, repair and painting work for 7 compensation in target housing or child occupied facilities, including building owners or managers who 8 use their own staff to conduct RRP activities. These entities must become certified by EPA, ensure that 9 their employees are trained as either renovators or workers, and use lead- safe work practices when 10 disturbing lead-based paint. 11 On October 28, 2009, EPA issued a proposed rule to expand the coverage of the 2008 Lead Renovation, 12 Repair and Painting Rule. The new rule proposed to eliminate a provision that exempted some housing 13 from the rule’s requirement that contractors be trained and certified and use lead-safe work practices 14 when renovating, repairing or painting a pre-1978 home. 15 The proposed LRRP Clearance Rule in cludes additional revisions to the LRRP program, including: (1) a 16 requirement for dust wipe testing for a subset of re novation activities, and (2) a requirement for dust wipe 17 testing and clearance for a subset of renovation activi ties in which the quantity and characteristics of the 18 dust make it difficult to clean up. 19 Target housing is defined in section 401 of the Toxic Substances Control Act (TSCA) as any housing 20 constructed before 1978, except housing for the elde rly or persons with disabilities (unless any child 21 under age 6 resides or is expected to reside in such housing) or any 0-bedroom dwelling. 22
A COF is defined under the rule in Title 40 of the Code of Fede ral Regulations (CFR) §745.83, as: 23 Child-occupied facility means a building, or por tion of a building, cons tructed prior to 1978, 24 visited regularly by the same child, under 6 years of age, on at least two different days within any 25 week (Sunday through Saturday period), provided th at each day’s visit lasts at least 3 hours and 26 the combined weekly visits last at least 6 hours, and the combined annual visits last at least 60 27 hours. Child-occupied facilities may include, but are not limited to, day care centers, preschools 28 and kindergarten classrooms. Child-occupied facilitie s may be located in target housing or in 29 public and commercial buildings. With respect to common areas in public and commercial 30 buildings that contain child-o ccupied facilities, the child-o ccupied facility encompasses only 31 those common areas that are routinely used by children under age 6, such as restrooms and 32 cafeterias. Common areas that children under age 6 only pass through, such as hallways, 33 stairways, and garages are not included. In a ddition, for public and co mmercial buildings that 34 contain child-occupied facilities, the child-occupi ed facility encompasses only the exterior sides 35 of the building that are immediately adjacent to the child-occupied facility or the common areas 36 routinely used by children under age 6. 37EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-2 The term renovation is defined in 40 CFR §745.83 to encompass a wide variety of construction activities: 1 Renovation means the modification of any existing structure, or portion thereof, that results in the 2 disturbance of painted surfaces, unless that activity is performed as part of an abatement as 3 defined by this part (40 CFR § 745.223). The term renovation includes (but is not limited to): the 4 removal, modification or repair of painted su rfaces or painted components (e.g., modification of 5 painted doors, surface restoration, window repa ir, surface preparation activity (such as sanding, 6 scraping, or other such activities that may ge nerate paint dust)); the removal of building 7 components (e.g., walls, ceilings, plumbing, wi ndows); weatherization projects (e.g., cutting 8 holes in painted surfaces to install blown-in in sulation or to gain access to attics, planing 9 thresholds to install weather-stripping), and in terim controls that disturb painted surfaces. A 10 renovation performed for the purpose of converting a bu ilding, or part of a building, into target 11 housing or a child-occupied facility is a renovation under this subpart. 12 Thus, renovation includes repair work as well as painti ng work involving sanding, scraping, or other paint 13 removal. Renovation activities are conducted without th e intent of removing lead, but may disturb it in 14 the process. Lead abatement activities, on the other ha nd, are conducted with the intent to remove lead15 based paint or otherwise permanently eliminate a l ead-based paint hazard. Depending on the reason they 16 are undertaken, many activities, such as replacing windows, can be either renovation or abatement. 17 Because the rule will address renovation, rather than abatement activity, this profile characterizes the 18 renovation industry as opposed to the abatement services industry. 19 The industry profile is categorized into eight sections . Section 2.1 discusses the supply of contractor20 provided renovation services. Section 2.2 presents in formation on the numbers and types of child care 21 facilities and schools. Section 2.3 presents inform ation on the number and sizes of non-residential 22 property owners and managers likely to be affected by the rule. Section 2.4 focuses on the demand-side 23 of renovation by identifying the quantity of renova tion activities performed. Section 2.5 discusses the 24 overall market organization for the renovation industry . Section 2.6 describes the residential property 25 owner and manager industry. Section 2.7 discusses trai ning providers. Section 2.8 provides an overview 26 of the structures that would be affected by the revisions to the LRRP rule. 27 

### 2.1 Contractors that Supply Renovation Services 28 Data from the U.S. Economic Census were used to identify the North American Industry Classification 29 System (NAICS) industry groups that may provide re novation, repair and painting work (U.S. Census 30 Bureau 2004a). An establishment is assigned to a NAICS group based on the activities from which it 31 derives the greatest share of its revenues. These activ ities may or may not make up the majority of work 32 (i.e. labor hours) performed by the establishment, whic h may also be involved in a variety of other related 33 (or unrelated) lines of work. The analysis identified 8 NAICS codes that are likely to include the vast 34 majority of construction-related establishments that will be affected by the rule. Affected industry groups 35 include two building construction sectors (NAICS 236118 – Residential Remodelers; and NAICS 236220 36 – Commercial and Institutional Building Construction) and six specialty trade contractor sectors. 37 The number of contracting establishments affected is al so discussed in Chapter 4. This profile examines 38 the financial and employment characteristics of c onstruction establishments likely to provide renovation 39 work in child-occupied facilities. 40 NAICS sectors likely to perform projects regulated unde r the LRRP rule, as well as examples of the work 41 they perform, are presented in Table 2-1. 42EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-3 Table 2-1: Contractor Sectors li kely to be affected by the rule 2002 NAICS Examples of Work Performed 236118 - Residential Remodelers • Addition, alteration and renovation of single-family homes

• Addition, alteration and renovation of multifamily buildings

• Home improvement (e.g., adding on, remodeling, renovating) 236220 - Commercial Building Construction • Addition, alteration, maintenance and repair of commercial and institutional buildings

• Commercial and Institutional building general
contractors 238210 - Electrical Contractors • Electrical wiring contractors

• Lighting system installation

• Electrical power control panel and outlet installation 238220 – Plumbing and HVAC Contractors • Heating equipment installation

• Plumbing fixture installation

• Plumbing and heating contractors 238310 – Drywall and Insulation Contractors • Panel or rigid board insulation installation

• Mineral wool insulation installation

• Plastering (i.e., ornamental, plain) contractors 238320 – Painting and Wall Covering Contractors • House painting

• Paint and Wallpaper Stripping

• Paperhanging and removal contractors 238340 – Tile and Terrazzo Contractors • Ceramic tile installation

• Mantel, marble or stone, installation

• Mosaic work 238350 – Finish Carpentry Contractors • Door and window, prefabricated, installation

• Millwork installation

• Paneling installation Source: U.S. Census Bureau 2004a 1EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-4 2.1.1 Number of Establishments with Employees 1 The U.S. Economic Census tracks businesses with paid employees (employer establishments) and non2 employer establishments (self-employed contractors) separately. 1 This discussion deals with employer 3 establishments only; non-employers are addressed in the next section. 4 Table 2-2 presents both the number of establishmen ts and the number of employees in each NAICS group 5 of interest. The number of establishments “includes all establishments that were in business at any time 6 during the year are included. Construction establishments that were inactive or idle for the entire year 7 were not included” (U.S. Census Bu reau 2006a). Table 2-2 also presents the average per-establishment 8 employment numbers by NAICS code. The average employment numbers are small for all affected 9 sectors. Overall, Commercial Building Construction contractors have the largest number of employees 10 per establishment (19.2 people), while Residential Remodelers have the smallest (3.9 people). 11
12 Table 2-2: Number of Employer Esta blishments and Employees by NAICS Code
NAICS Industry Establishments Number of Employees Average Size 236118 Residential Remodelers 82,750 320,208 3.9 236220 Commercial building construction 37,208 715,896 19.2 238210 Electrical contractors 62,586 771,184 12.3 238220 Plumbing and HVAC contractors 87,501 974,368 11.1 238310 Drywall and insulation contractors 19,598 311,077 15.9 238320 Painting and wall covering contractors 38,943 234,562 6.0 238340 Tile and terrazzo contractors 8,950 60,001 6.7 238350 Finish Carpentry contractors 35,087 179,476 5.1 Total, All sectors 372,623 3,566,772 9.6 Source: U.S. Census Bureau 2005c 13 Table 2-3 presents the total number of employees and the number of construction workers in each 14 identified industry. The number of employees “incl udes all full-time and part-time individuals on the 15 payrolls of construction establishments during any pa rt of the pay period which included the 12th of 16 March, May, August, and Novemb er” (U.S. Census Bureau 2005m) . The number of construction 17 workers “includes all payroll workers (up through th e working supervisory level) directly engaged in 18 construction operations, such as painters, carpent ers, plumbers, and electricians... journeymen, 19 mechanics...truck drivers and helpers.” Non-cons truction employees include “payroll employees in 20 executive, purchasing, accounting, ...and routine office functions” (U.S. Census Bureau 2005m). 21 Because construction workers form the vast majority of the people who require training under the rule, 22 their role in the composition of each sector’s labor fo rce provides an indication of the extent to which 23 each sector will be affected by the regulations. 24 In total, about 3.6 million people work for the 372 ,623 establishments in the potentially affected 25 industries. About 74 percent of these employees are cons truction workers. The affected sectors differ in 26 terms of the composition of their labor force. For example, construction workers make up 84 percent of 27

1 Data at the firm level were not available for th ese NAICS groups when the analysis was performed.EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-5 employees in the Drywall and Insulation contractor sector. In the Residential Remodelers sector, 1 however, construction workers make up only 65 percent of the labor force (U.S. Census Bureau 2005c) 2

3 2.1.2 Number of Non-Employer Establishments 4 As mentioned above, the U.S. Ec onomic Census tracks non-employer establishments separately from 5 establishments with employees. Data on the number of non-employer establishments were available from 6 the U.S. Small Business Administration. A non-employer firm “is defined as one that has no paid 7 employees, has annual business receipts of $1,000 or more ($1 or more in the construction industries), 8 and is subject to federal income taxes” (U.S. Sm all Business Administration 2006a). Essentially, non9 employers are self-employed contractors. Because little financial and operational data is available for 10 non-employers, the vast majority of this profile focuses on establishments with employees. This 11 subsection discusses the number of non-employers in the affected industry sectors and the receipts of 12 these establishments. 13 The U.S. Small Business Administration did not provide data on the number or revenues of non-employer 14 establishments in each of the 6-digit level NAICS i ndustries addressed in this profile. Data on the 15 number of such establishments was available for Plumbing and HVAC contractors (NAICS 238220) and 16 Electrical contractors (NAICS 238210) only; for the remaining industries, data was provided at the more 17 general 4-digit NAICS level. In total, ther e are over 1 million self-employed contractors. 18 To estimate the number of non-employer establishments in each of the 6-digit sectors, it was assumed that 19 the distribution of non-employer establishments in each 4-digit NAICS code is the same as the 20 distribution of establishments with payroll in the same 4-digit group. Similarly, to estimate the revenues 21 of these establishments, it was assumed that the distribu tion of receipts in each 4-digit NAICS code is the 22 same as the distribution of revenues of payroll establishments in the same 4-digit industry. 23 Table 2-4 presents the estimated number and revenues of non-employer establishments in each of the 8 24 sectors affected by the rule. 25
26 Table 2-3: Number of Employer Establishments, Total Employees and Employees involved in Construction

NAICS Description Total Number of Employees Number of Construction

Workers Construction Workers as Percent of Total Employees 236118 Residential Remode lers 320,208 207,637 65% 236220 Commercial Building Construction 715,896 478,923 67% 238210 Electrical Contractors 771,184 606,403 79% 238220 Plumbing and HVAC Contractors 974,368 712,452 73% 238310 Drywall and Insulation Contractors 311,077 261,239 84% 238320 Painting and Wall Covering Contractors 234,562 184,328 79% 238340 Tile and Terrazzo Contractors 60,001 44,729 75% 238350 Finish Carpentry Contractors 179,476 129,888 72% Total 3,566,772 2,625,599 74% Sources: U.S. Census Bureau 2005cEO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-6 Table 2-4: Number and Annual Revenues of Non-Employer Establishments in Affected Sectors

NAICS Description Number of Non-Employer Establishments Revenues of NonEmployer Establishments (000) 236118 Residential Remodelers 194,182 $6,187,917 236220 Commercial Building construction 74,255 $4,784,817 238210 Electrical contractors 102,219 $3,834,347 238220 Plumbing and HVAC contractors 110,183 $5,920,986 238310 Drywall and Insulation contractors 103,398 $8,798,899 238320 Painting and Wall Covering contractors 205,462 $4,823,217 238340 Tile and Terrazzo contractors 47,220 $1,684,174 238350 Finish Carpentry contractors 185,118 $5,254,955 Sources: U.S. Census Bureau 2005h, U.S. Census Bureau 2004q, U.S. Census Bureau 2005i 1

2.1.3 Financial Profile 2 In this section, Census data is used to examine ke y financial indicators for the renovation industry. The 3 indicators include net value of construction (val ue of construction less value of construction 4 subcontracted out to others) and labor costs. Net valu e of construction work is used instead of the total 5 value of construction work because it is a measure of the work actually performed by the establishment. 6 Table 2-5 presents the average per establishment net value of construction work (NVCW) for each 7 industry sector. The table also presents labor costs as a percent of the net value of construction for each 8 of the affected NAICS codes. 9

10 Table 2-5 shows the wide range of values of cons truction work per establishment across all NAICS codes 11 of interest. The average estab lishment in the Residential Remode ler industry (NAICS 236118) has the 12 smallest net value of construction work ($370,000), followed by the Finish Carpentry contractors industry 13 Table 2-5: Financial Summary for Contractor Sectors Affected by the rule

2002 NAICS

code Industry Name Annual Net Value of Construction Work (000) Number of Establishments Net Value of Construction

Work per Establishment (000) Total Payroll (000) Payroll as % of Net Values of Construction Work 236118 Residential Remodelers $30,627,850 82,750 $370 $8,703,503 28 236220 Commercial Building construction $108,229,283 37,208 $2,909 $29,210,092 27 238210 Electrical contractors $77,671,846 62,586 $1,241 $29,324,486 38 238220 Plumbing and HVAC contractors $105,323,163 87,501 $1,204 $35,942,262 34 238310 Drywall and Insulation contractors $27,046,301 19,598 $1,380 $9,766,997 36 238320 Painting and wall covering contractors $15,316, 726 38,943 $393 $6,005,447 39 238340 Tile and Terrazzo contractors $5,639,641 8,950 $630 $1,834,890 33 238350 Finish Carpentry contractors $15,640,544 35,087 $446 $4,711,739 30 Total, all industries $385,495,354 372,623 $8,573 $125,499,416 33 Source: U.S. Census Bureau 2005cEO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-7 ($446,000). Meanwhile, the average establishment in the Commercial Building Construction industry 1 (NAICS 236220) has the largest net value of construction value ($2,909,000), with the Drywall and 2 Insulation contractors industry netting the second largest value ($1,380,000). It should come as no 3 surprise that the Commercial Building Construction industr y’s net value of construction is so much larger 4 than the Residential Remodeler industry’s net value of construction work given that commercial building 5 construction projects tend to be substa ntially larger in scope and size than residential remodeling projects. 6 As demonstrated in Table 2-5, while labor constitut es about 33% of net value of construction for all the 7 industry sectors, the composition varies across industry sectors. The Painting and Wall Covering 8 contractor (NAICS 238220) industry is most dependent on labor, with an overall labor cost to net value of 9 construction ratio of 39 percent. The Commercial Building Construction industry, with an overall labor 10 cost to net value of construction work ratio of 27 pe rcent, is the least dependent of the 12 sectors (U.S. 11 Census Bureau 2005c). It is worth mentioning that labor (as measured by payroll) is a relatively small 12 percentage (27% to 39%) of total net value, reflec ting the fact that a large percent of revenues go to 13 covering the cost of materials and profit. 14
2.1.3.1 Establishment Size by Revenue Bracket 15 The Small Business Administration (SBA) defines a small business in both the Residential Remodeler 16 and Commercial Building Construction industries as one that has revenues of $33.5 million dollars a year 17 or less. The small business definition for the ten sp ecialty contractor industries is $14 million per year 18 (U.S. Small Business Administration 2008). The SBA size standards apply to firms rather than 19 establishments; at the time the analysis was perform ed, revenue data in the 2002 Economic Census was 20 only available at the establishment level. Sin ce a firm may consist of one establishment, a few 21 establishments or even a very large number of estab lishments, by using establishment rather than firm 22 data, this analysis overestimates the number of small businesses in the affected industry. 23 The remainder of this section examines the number of establishments, number of employees, net value of 24 construction work and value of business done 2 distributed by establishment revenue bracket. These data 25 were available from the 2002 Economic Census at th e NAICS code level only. Establishments were 26 classified into two revenue categories based on the to tal value of business done – those with revenues less 27 that $10 million and those with revenues greater th an $10 million. Because the Census groups all 28 establishments with revenues of $10 million or more into one revenue bracket, it is not possible to 29 determine what percentage of Residential Remodeler nor Commercial Building Construction 30 establishments have revenues of less than $33.5 milli on. Note, however, that nearly 100 percent of 31 Residential Remodeler establishmen ts have revenues of less than $1 0 million per year. The same cannot 32 be said for Commercial Building Construction establis hments, as 12 percent have revenues greater than 33 $10 million per year. The percent of establishments, employees and net value of construction contributed 34 by establishments in each revenue br acket is presented in Table 2-6. 35
36

2 Value of business done is defined by the U.S. Census Bureau as including “ the sum of value of construction work and other business receipts. Value of business done is the su m of receipts, billings, or sales from establishments of construction business activities plus receipts from other business activ ities” (U.S. Census Bureau 2004d ).EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-8 Table 2-6: Small and Large Establishments as Percent of Industry

NAICS NAICS Percent of Establishments Percent of Employees Percent of Net Value of Construction Percent of Value of Business done 236118 Residential Remodelers 236118 Revenues < $10 million 100% 95% 92% 91% 236118 Revenues > $10 million 0% 5% 8% 9% 236220 Commercial Building Contractors 236220 Revenues < $10 million 88% 41% 30% 24% 236220 Revenues > $10 million 12% 59% 70% 76% 238210 Electrical Contractors 238210 Revenues < $10 million 98% 68% 61% 60% 238210 Revenues > $10 million 2% 32% 39% 40% 238220 Plumbing and HVAC Contractors 238220 Revenues < $10 million 98% 70% 63% 61% 238220 Revenues > $10 million 2% 30% 37% 39% 238310 Drywall and Insula tion Contractors 238310 Revenues < $10 million 97% 64% 60% 60% 238310 Revenues > $10 million 3% 36% 40% 40% 238320 Painting and Wall Covering Contractors 238320 Revenues < $10 million 100% 92% 88% 88% 238320 Revenues > $10 million 0% 8% 12% 12% 238340 Tile and Terazzo Contractors 238340 Revenues < $10 million 100% 91% 86% 86% 238340 Revenues > $10 million 0% 9% 14% 14% 238350 Finish Carpentry Contractors 238350 Revenues < $10 million 100% 86% 84% 83% 238350 Revenues > $10 million 0% 14% 16% 17% Total Total Revenues < $10 million 98% 68% 49% 58% Total Revenues > $10 million 2% 32% 51% 42% 100 percent = establishments in this reve nue category make up over 99.5 percent, but less than 100 percent of establishments in the industry. Source: U.S. Census Bureau 2004c,d,e,f,g ,h,i,j,k,l,m; U.S. Census Bureau 2005m 1
The distribution of the number of establishments for all eight NAICS codes is greatly skewed toward 2 smaller establishments. In four out of eight indus try sectors, over 99.5 percent of establishments have 3 revenues below $10 million. For the remaining sectors, establishments with revenues greater than $10 4 million make up less than 5 percent of establishments in any sector (with the exception of the Commercial 5 Building Construction industry where 12% of establis hments earn more than $10 million in revenues 3 ). 6 Thus, about 98 percent of all establishments in the affected industries have revenues well below the SBA 7 definition of small business. 8 Establishments with revenues of less than $10 milli on account for between 41 and 95 percent of total 9 employment for each sector, and about 68 percent of employment overall. The distribution of the net 10

3 Once again, this difference arises beca use of the larger size of a majority of Commercial bu ilding construction projects. Regardless, if only 12% earn revenues greater than $10 million, it can easily be assumed that a much smaller percentage of establishments in this industry earn revenues greater than the SBA cutoff of $33.5 million.EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-9 value of construction work and the total value of business done is skewed toward smaller establishments 1 in a manner similar to the distribution of employees. Establishments with revenues of less than $10 2 million account for between 30 and 92 percent of the net value of construction work and between 24 and 3 91 percent of the total value of business done in each sector. It is worth mentioning that if the 4 Commercial Building Construction industry is removed, the lows in the previously cited categories jump 5 to 55 percent. Overall (across all industry sectors) small businesses contribute about 60 percent of the net 6 value of construction work and 60 percent of th e total value of business (U.S. Census Bureau 7 2004c,d,e,f,g,h,i,j,k,l,m; U.S. Census Bureau 2005m). 8

2.1.3.2 Labor and Material Costs as a Per centage of Total Value of Business Done 9 In order to better understand the potential impacts of th e rule on the affected industries, and particularly 10 on small businesses, it is important to observe whethe r establishment costs as a percentage of the total 11 establishments’ total revenues differ for small and larg e establishments. Figure 2-1 examines labor and 12 material costs, as well as the cost of construction work subcontracted out as a percentage of the total value 13 of business done for the twelve affected sectors. While the rule will increase the cost of material slightly, 14 the major impact will be on labor costs, including th e training of staff. Each of the sectors was broken 15 down into two size categories by revenue bracket: le ss than $10 million and $10 million and more. The 16 cost of labor, of materials, and of construction wo rk subcontracted out was summed across the 12 industry 17 sectors for large and for small establishments. These va lues were then compared to their total value of 18 business. 19 Labor costs, material costs, and the cost of constr uction work subcontracted out as a percentage of total 20 value of business done are presented in Figure 2-1. Regardless of size of establishments, material costs 21 tend to be a slightly larger percentage of total reve nues than do labor costs. Labor costs make up about 25 22 percent of revenues for small establishments and a bout 16 percent for large establishments. Based on 23 Census data, large establishments subcontract out a much larger percentage of their work than do small 24 businesses. 25EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-10 Figure 2-1: Labor and Material Costs as % of Total Value of Business Done 1

Labor Cost as % of Total Value of Business Done M aterial Costs as % of Total Value of Business Done Cost of Construction Work subcontracted out as % of Total Value

of Business Done 0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Type of Cost Establishments with value of Business Done of: < $10 million

Establishments with Value of Business Done of: $10 million+

2 Source: U.S. Census Bureau 2005a 3 4 

### 2.2 Child Care and Schools: Child Occupied Facilities 5 For the purposes of analysis, COFs are divided into the following categories 4 : 6

 Kindergartens and Pre-Kindergartens in Schools: Located in public and private schools; 7

 Daycare centers: Organized (licensed) facilities located in public and commercial buildings; 8

 Family daycare: Organized (licensed) daycare facilities located in the provider’s home; and 9

 Informal daycare: Informal (i.e. not licensed) day care providers, including relatives and non10 relatives. Some of these providers may be paid for their services. 11 There is a great deal of diversity and complexity in the childcare industry. The formal childcare sector 12 consists primarily of two types of facilities – center-based care and family daycare. Daycare centers are 13 typically located in commercial or educational bui ldings, including schools and university campuses. 14 They include private for-profit and non-profit facilities that can operate as independent centers or as part 15 of chains. For-profit facilities can be found in office buildings, factories, other workplace settings, or in 16 stand-alone facilities. Non-profit facilities may be found in YMCAs or other community centers, 17 churches, college and university campuses, as well as in office or stand-alone buildings. Government 18

4 The analysis is limited to kindergartens, pre-schools, dayc are centers, family daycare, and informal daycare. Due to a lack of data, it does not include other facilities that may qualify as COFs under the rule.EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-11 education and human services agencies also provide da ycare through programs such as Head Start, as 1 well as through kindergarten and pre-kinde rgarten programs at local schools. 2 Unlike center-based care, family daycare is typically offered in the home of the caregiver. Family 3 daycare facilities tend to serve smaller groups of chil dren and have a smaller child-to-caregiver ratio 4 (KeepKidsHealthy 2001). In addition to formal car e provided by daycare centers, schools, and family 5 daycare, children may also be cared for informally by relatives, family friends, or other acquaintances. 6 Informal care may be paid or unpaid, and usually ta kes place at the home of either the child or the 7 provider. 8 Table 2-7 summarizes the types and numbers of faci lities and childcare providers in this universe, 9 grouping them by the age of their construction. It shows that the rule would apply to 1,656,000 child10 occupied facilities, of which 1, 559,000 are in target housing. 11
12 Table 2-7: Total Number of Childcare F acilities in the United States, Number of Child-Occupied Facilities Potent ially Affected by the Rule Number by Date of Construction b,c,

Type Total Childcare Facilities in the United States a All Pre-1978 All Pre-1960(1) Schools with prekindergartens and/or kindergartens 79,000 46,000 25,000

(2) Pre-schools and daycare centers located outside of schools 88,000 51,000 28,000

(3) Childcare in target housing 2,398,000 1,559,000 823,000

Total 2,565,000 1,656,000 876,000

a. The Total Childcare Facilities in the United States count includes facilities constructed both before and after 1978. Facilities constructed after 1978 are not regulated under the rule. b. Not all facilities in the table have lead-based paint.

c. The number of facilities by date of construction is inclusive (pre-1960 is a subset of pre-1978). Sources: Center for the Childcare Workforce an d Human Services Policy Center 2002; U.S. Bureau of Labor Statistics 2006; U.S. Department of Education 2004; U.S. Department of Energy 2003; Wilder Research Center 2001, Wilder Research Center 2005. 13 2.2.1 Daycare Centers and Family Daycare 14 Establishments involved in the provision of day care of infants or children are classified under NAICS 15 624410 – Child Day Care Services. This industry cove rs child day care centers (including those located 16 in the provider’s home), pre-school centers, nursery schools and pre-kindergarten centers (except as part 17 of elementary schools). In 2002, Census reported th at this industry included over 55,000 firms that 18 employed nearly 752,000 people (U.S. Census Bur eau 2005d). Furthermore, Census reports 618,947 19 non-employers in the industry (U.S. Census Bureau 2005k). 20EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-12 While Census covers both family and center-based childcare under NAICS 624410, there is reason to 1 believe that Census undercounts the number of employer fi rms in this industry. This is likely to occur for 2 two reasons. First, it is likely that the number of firms reported by Census primarily includes centers, 3 since care provided solely by one person (as occurs at many family daycare establishments) would be 4 classified under non-employer statistics. Second, Ce nsus classifies a business into NAICS 624410 if its 5 primary line of business is the provision of child day care services; it is likely that many facilities have 6 alternate primary lines of business (YMCAs and churches, for example). The number of non-employers, 7 on the other hand, is likely to include care providers such as nannies or babysitters that do not constitute 8 formal care, but that cannot be disentangled from the total count. 9 In light of the limitations of the Census data, an alte rnative data source is used for this analysis. In 2005, 10 the National Association for Regulatory Administra tion (NARA) in conjunction with the National 11 Childcare Information Center (NCCIC) conducted a stud y on the number and licensed capacity of daycare 12 centers and family daycare establishments in the 50 U.S. states. Based on these data, there are 13 approximately 115,000 licensed daycare centers in the United States. Because licensing requirements 14 differ from state to state, this count includes 105, 444 facilities licensed as daycare centers, as well as 15 about 10,000 facilities such as Head Start, religious daycare, and other similar establishments, which are 16 required to obtain a license in some states, but mu st only be registered or certified in others. 17 According to the Department of Housing and Urban Development’s (HUD) First National Health Survey 18 of Childcare Centers , about 22 percent of licensed daycare centers are located in elementary schools. 19 Since throughout this analysis, schools are analy zed separately from daycare centers, the number of 20 daycare centers was reduced by 22 percent, bringing the total number of centers to 89,260. According to 21 NCES data on public and private schools, however, an additional 1,421 schools without kindergartens 22 have a pre-kindergarten program (S ee Section 2.2.2.1). These 1,421 centers are also excluded from the 23 total center counts to avoid double-counting, bringing the number of centers to 87,840. 24 In addition to the 115,000 centers , NARA reported a total of 166,514 licensed small family childcare 25 homes and 47,452 large family childcare homes. 5 With the addition of about 16,000 family daycare 26 homes that are reported as certified, not licensed, NA RA reports a total of 229,875 family daycare 27 facilities. 28 Because some states either completely exempt family daycare with fewer than a certain number of 29 students from licensing requirements, or offer voluntary registration, the family daycare numbers reported 30 by NARA are likely to underestimate the total family daycare universe. As such, to estimate the number 31 of family daycares, this analysis relied on a 2002 re port by the Center for th e Childcare Workforce, which 32 provides data on family childcare providers caring fo r unrelated children in their own homes. Based on 33 these data, it is estimated that there are a total of 591,071 family daycare facilities in the United States. 34 Table 2-8 summarizes the size of the formal (center and family daycare) childcare universe. 35

5 Here large and small refer to the number of children enrolled. It is not the same as the large and small definitions used by SBA.EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-13 Table 2-8: Number of Daycare Centers and Family Daycare Facilities in the United States Daycare Centers (excluding schools) Total Family Daycare

Number of facilities 87,840 591,071
Sources: NARA 2006; Center for Childcare Workforce 2002

1 2.2.1.1 Daycare Center and Family Daycare Outlook 2 Figure 2-2 plots changes in the numbers of li censed child-occupied facilities between 1995 and 2004 3 using information compiled from the Childcare Licen sing Studies published annually by the Children’s 4 Foundation and the National Association for Regulatory Administration (NARA). 6 These data give larger 5 counts than the data above because they include fac ilities in Puerto Rico, Guam and the Virgin Islands. 7 6 But the trends displayed in this data are likely to be present in the smaller data set. The number of 7 licensed Childcare Centers has grown gradually over time, from 92,000 in 1995 to 120,000 facilities in 8 2004. The number of Large/Group Family Childcare Ho mes grew in a similar manner, before tapering 9 off in 2004. Over the time period specified, the num ber of Small Family Childcare Homes declined from 10 276,000 to 256,000, while exhibiting much more vari ation from year to year than the other two 11 categories. Here, as noted earlier, large and small re fer to the number of children enrolled, not the SBA 12 definition of a large or small entity. 13

6 When the Children’s Foundation closed in 2005, NARA assumed sole responsibility for collecting licensing information through the annu al study. However, because the methodol ogy was altered with the new leadership, data from the 2005 Childcare Licensing Study were not included into Figure 2-2

.

7 While the rule would apply to Puerto Rico, Guam and the Virgin Islands, they are not included in this analysis for reasons of consistency since some of the major data sour ces used elsewhere in the analysis were limited to the 50 states and the District of Columbia. Holding all other things equal, by not including COFs in Puerto Rico, Guam, and the Virgin Islands, the analysis underestimates the costs and benefits of the rule.EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-14 Figure 2-2: Number of Licensed Child -Occupied Facilities: 1995-2004 1

0 50,000 100,000 150,000 200,000 250,000 300,000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
TimeNumber

Small Family Child Care Homes Child Care Centers Large/Group Family Child Care Homes 2 Sources: National Childcare Information Center 2005 3 The market for lead-safe renovation activities in CO Fs is dependent on the number of care providing 4 facilities. Figure 2-2 indicates that while there have been some fluctuations in the underlying components 5 of the overall market, when considered over the en tire time frame, the number of licensed COFs has been 6 relatively stable. 7 While there wasn’t significant growth in childcare over the 1995-2004 timeframe, a study forecasts 8 growth in the demand for childcare labor. Fueli ng the future demand for childcare services is the 9 expected increase in the amount of children below 5 between 2004 and 2014. A dding to this growing 10 demand will be an increased female labor force partic ipation rate, forcing families to find alternate care 11 options for their children. Furthermore, many stat es will be implementing their own care programs for 3- 12 and 4- year old children in the coming years. Th e government also plans to increase subsidies for low13 income families attending day care programs (Bureau of Labor Statistics 2005). While trends point to 14 increased demand for childcare labor, it is difficult to assess whether this will be accompanied by an 15 increase in the number of facilities, and to what ex tent these new facilities will be located in pre-1978 16 buildings. 17
2.2.1.2 Informal Daycare 18 Informal daycare is provided by unlicensed provi ders, including relatives, friends, and others. 19 Calculations determining the number of informal da ycare providers are based on figures and percentages 20 found in a report on the number of paid re latives and non-relatives providing childcare entitled 21 “Estimating the Size Components of the U.S. Childcare Workforce and Caregiving Population: Key 22 Findings from the Childcare Workforce Estimat e” (Center for Childcare Work Force 2002). 23
Target Housing COFs 24 Family daycare and informal daycare take place in target housing. Renovation events in some target 25 housing COFs would be regulated un der the 2008 LRRP rule regardless of their status as a COF; for 26 example, if they are owner-occupied units where a chil d under the age of six or a pregnant woman resides 27EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-15 or if they are rental units. For a detailed explana tion of the methodology used to estimate the number of 1 target housing COFs, please see Section 4.2 of EPA ( 2009). Section 2.8 presents the estimated numbers 2 of target housing COFs affected by the rule. 3
2.2.2 Public and Private Schools 4 This section describes the number and size of public and private schools with kindergartens and pre5 kindergartens. 6

2.2.2.1 Number of Schools 7 According to the National Center for Education St atistics, during the 2004-2005 academic year, there 8 were 93,295 public schools with students in the United States. In total, these schools served 48.8 million 9 students (NCES 2006a). The rule will apply only to those portions of schools that meet the COF 10 definition. Thus, the rule is expected to prim arily impact schools that have kindergarten or pre11 kindergarten programs. According to the NCES’s P ublic Elementary and Secondary School Universe 12 Survey, which collects data on all operational public schools in the United States, in 2004-2005, 52,129 13 of the 93,295 U.S. public schools (roughly 56 percent) provided either pre-kindergarten or kindergarten 14 services. 8 Of these 52,129 schools, 20,885 offered both pre-kindergarten and ki ndergarten and 29,884 15 schools provided kindergarten services only. Only 1,400 schools offered pre- kindergarten, but not 16 kindergarten services; this group of schools includ es standalone preschools operated by local school 17 boards, as well as daycare centers lo cated in public middle schools, high schools, and ungraded schools 18 (See Table 2-9). Note that these figures are not limited to schools with pre-1978 buildings. 19
20 Table 2-9: Number of Public Schools, by Type Type of Public School Number of Schools Total number of public elementary and secondary schools 93,295 Number of schools with pre-kindergartens and kindergartens 20,885 Number of schools with pre-kindergartens but no kindergartens 1,400 Number of schools with kindergartens, but no pre-kindergartens 29,844 Total number of schools with pre-kindergartens 22,285 Total number of schools with kindergartens 50,729 Total number of schools with pre-kindergartens or kindergartens 52,129 Source: NCES 2006a,b 21 As shown in Table 2-10, in 2004-2005 a total of 99 0,421 pre-kindergartners and 3,543,554 kindergartners 22 were enrolled in pre-kindergartens and kindergartens offered at public schools, respectively. Given the 23 number of programs described above, this means that there are roughly 44 pre-kindergarten students per 24 school and 70 kindergarten students per school. 25

8 A school was considered as having a pre-kindergarten if a) pre-kindergarten enrollment was greater than zero students, or b) the school reported that the lowest grade offered was pre-kindergarten, but enrollment data were not provided. Similarly, a school was considered as having a kindergarten if a) kindergarten enrollment was greater than zero, or b) the school reported that the lowest grade offered was pre-kindergarten or kindergarten, but did not report kindergarten enrollment.EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-16 Table 2-10: Enrollment in Public Pre-kindergarten and Kindergarten Program Statistics Number of Schools offering program Number of Students Served Average Students Served per School Pre-kindergartens in public schools 22,285 990,421 44 Kindergartens in public schools 50,729 3,543,554 70 Source: NCES 2006a,b 1

Number of Public School Districts 2 Public schools in the United States are operated by local education agencies (LEAs), organizations 3 “responsible for providing free public elementary/sec ondary instruction or education support services.” 4 The National Center for Education Statistics collect s data on LEAs through its Common Core of Data 5 (CCD) fiscal and non-fiscal surveys. NCES desi gned the Common Core of Data system to 6 “accommodate the many and varied organizational struct ures used in the provision of public elementary 7 and secondary education.” As such the CCD cont ains records that represent “administrative and 8 operating units that are unlike typical public schools and school districts – for example, regional 9 administrative service centers without students.” 10 According to the CCD Local Education Agency Universe Survey, in 2004-2005, 17,647 LEAs operated 11 in the 50 contiguous states and the District of Colu mbia. Of these 17,647 agencies, 14,473 operated at 12 least one school that offered pre-kindergarten or kindergarten services and may thus be affected by the 13 rule. 14 Of the 14,473 local education agencies responsible for schools with pre-kindergarten and kindergarten 15 programs, just under 13,200 are typical public school districts (usually county or town agencies 16 responsible for providing education services in that location). An additional 949 agencies are charter 17 school organizations. The remaining 333 agencies re present regional, state, and federal institutions, as 18 well as supervisory union administrative centers. 9 Table 2-11 presents a detailed breakdown of the 19 number of education agencies by agency type, as well as counts of schools with pre-kindergartens and/or 20 kindergartens operated by each agency. 21

9 Supervisory union administrative centers operate schools only in Massachusetts, Vermont, and Virginia.EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-17 Table 2-11: Number of Local Education Agenci es Operating Schools with Kindergartens or Pre-Kindergartens, by Agency Type

Type of Local Education Agency Number of Agencies Number of Schools with Pre-K or Kindergarten

Programs Average Number of Pre-K or K

Schools
Local School District 13,191 50,386 3.8
Supervisory Union Administrative Office 85 159 1.9
Regional Education Services Agency 167 308 1.8

State Institution 54 75 1.4

Federal Institution 27 188 7.0
Other Agency (Primarily Charter Schools) 949 1,013 1.1
Total 14,473 52,129 3.6
Source: NCES 2006b,c

1 The NCES collects data on the revenues and expenditu res of local education agencies through its CCD 2 School District Finance Survey. Table 2-12 presents the total revenues, average revenues, and percent 3 revenues derived from federal, state, and local funds for education agencies operating schools with pre4 kindergarten and/or or kindergarten programs. All figures are based only on agencies with available data; 5 for each agency type, the table indicates the percent of LEAs represented in the totals. Note that financial 6 data were not available for any federal ins titutions, nor for most state institutions. 7EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-18

Table 2-12: Total Revenues, Average Revenues and Percent of Revenues by Source for Local Education Agencies Operating with Pre-Ki ndergarten and/or Kindergarten Programs

Revenues Percent of Revenues by
Revenue Source

% LEAs with Data Total Revenues, (Millions of $) Average LEA Revenues ($) Federal State Local
Local School District 99% $440,444 $33,560,173 8% 47% 45%
Supervisory Union Administrative Office 91% $1,269 $16,481,935 8% 41% 52%
Regional Education Services Agency 95% $7,612 $48,180,367 24% 35% 41%
State Institution 7% $8 $2,115,250 12% 54% 34%

Federal Institution 0% n.a. n.a n.a n.a n.a
Other Agency (Primarily charter schools) 81% $2,074 $2,683,282 11% 68% 21%
All LEAs 98% $451,408 $31,933,217 9% 46% 45%

Source: NCES 2006b,c,d

1 Table 2-13 presents the total and average expenditures of local education agencies. Total expenditures 2 are composed of total current expenditures for elementary/secondary education, as well as other 3 expenditures. Elementary/secondary education current expenditures include expenditures for instruction 4 (e.g. teacher salaries), support services (including, bu t not limited to, administrative, maintenance, and 5 operations costs), and other expenses, such as tran sportation and food services. Other expenditures 6 include spending not related to elementary/secondary education, such as expenditures for community 7 service, or adult education, capital outlay expenditur es, payments to other government and educational 8 entities, and debt interest payments. In Table 2-13 current expenditures are split out by type, while the 9 remainder (capital and non-educational) are comb ined and labeled as “all other” expenditures. 10EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-19 Table 2-13: Total Expenses, Average Expenses, and Percent of Expenditures by Expenditure Type for Local Education Agencies

Expenses Percent of Expenditures by Expenditure Type

% LEAs with Data Total Expenses (in Millions of $) Average Expenses Instruc. Support Service Other Current All
Other
Local School District 99% $451,464 $34,399,846 52% 28% 3% 17%
Supervisory Union Administrative Office 91% $1,203 $15,628,805 57% 32% 3% 8%
Regional Education Services Agency 95% $7,154 $45,278,905 28% 33% 1% 38%
State Institution 7% $7 $1,759,000 49% 39% 0% 11%

Federal Institution 0% n.a. n.a. n.a. n.a. n.a. n.a.
Other Agency (Primarily charter schools) 81% $2,023 $2,616,922 47% 41% 3% 9%

All LEAs 98% $461,851 $32,671,971 51% 29% 3% 17%

Sources: NCES 2006b,c,d

1 For most LEAs, the majority of expenditures (51 percent on average, across all LEAs) are spent on 2 instruction. In aggregate, the category containi ng maintenance costs (i.e. support service) makes up 3 around one-third of all expenditures. Lastly, the “a ll other” expenditures category makes up a significant 4 percentage of the expenditures for regional education services agencies. 5 Under the Regulatory Flexibility Act, public school districts are considered large if they serve a 6 population of more than 50,000. Table 2-14 presents the number of LEAs that operate schools that have 7 pre-kindergartens and/or kindergartens, by agen cy type and the size of the population served. 8EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-20 Table 2-14: Local Education Agencies that operate schools with Kindergartens and/or Pre-Kindergartens, by Agency Type and Size of Population Served

Type of Local Education Agency Total Number of LEAs with Pre-K

or K Programs Number of LEAs Serving < 50,000 a Small LEAs as % of all LEAs with Pre-K or K Programs
Local School District 13,191 12,130 92% Supervisory Union Administrative Office 85 84 99% Regional Education Services Agency 167 167 100%
State Institution 54 0 b 0%
Federal Institution 27 0 b 0% Other Agency (Primarily charter schools) 949 949 100% All LEAs 14,473 13,330 92%

a. Local districts, supervisory union offices, regi onal education agencies and charter school

districts for which no population data were av ailable were assumed to serve a population of fewer than 50,000.
b. Assumes that all state and federal agencies are large. Source: NCES 2006b,c,e,g
1

Private schools 2 In 2003-2004, the National Center for Education Statistics conducted a survey of private schools in the 3 United States. NCES’s Characteristics of Private Sc hools in the United States: Results From the 2003- 4 2004 Private School Universe Survey (2006) presents a summary of survey results, including numbers of 5 schools currently in operation, the number of stude nts enrolled, and teachers employed. Table 2-15 6 presents summary statistics on national private schools, including a total count of all private schools, 7 enrollment and teachers, as presented in NCES’s report. 8
9
Table 2-15: Enrollment and Teacher Statistics for Private Schools

Entity Number of Schools Total Enrollment Total Teachers Average Enrollment Average Teachers Private Schools 34,681 5,212,992 441,384 150.3 12.7 Sources: NCES 2006e 10 According to the NCES data, in 2003-2004 there were 34,681 private schools in the U.S., enrolling a total 11 of just over 5.2 million students, with a total teachi ng staff of over 441,000. On average, there were 150 12 students enrolled in a private school and 13 teacher s per school. These figures must be interpreted with 13 caution however, since they encompass elementary school s, secondary schools, etc. which, by definition, 14 include different numbers of classes. 15EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-21 While the NCES report provides some data on the number of private schools by grade level, it does not 1 provide data on grades offered by each individual school in the survey. In order to identify schools with 2 kindergartens only, pre-kindergartens and kindergarten s, and pre-kindergartens only, this analysis relied 3 on the Excel database underlying NCES’s 2003-2004 repor t. This database, which contains records for 4 29,907 of the estimated 34,461 private schools in the Un ited States, specifies the highest and lowest grade 5 offered at each school, as well as the number of student s enrolled in each grade. The database, however, 6 does not include sampling weights used to adjust some of the survey results to generate final numbers 7 presented in NCES’s report. In order to most accurately estimate the number of schools offering each 8 combination of kindergarten or pre-kindergarten programs, as well as the number of children enrolled in 9 these programs, this analysis: 10
3⁄4 used the underlying database to identify schools with pre-kindergartens only, kindergartens only, 11 and both kindergartens and pre-kindergartens, then 12
3⁄4 inflated these counts to account for the 4,500 schools that were not included in the database. The 13 numbers of schools offering each combination of programs was inflated using the ratio of the 14 number of schools presented in the published re port to the number of schools included in the 15 database. Similarly, the number of children in each school setting, estimated based on the 16 underlying data, was adjusted using the ratio of the number of kindergartners presented in the 17 published report to the number of kind ergartners reported in the database. 10 18 Table 2-16 breaks down the totals from the previous table to provide a count of the number of private 19 schools with pre-kindergartens and/or kindergartens. 20
21 Table 2-16: Number of Private Schools, by Type

Type of Private School Number of schools Total number of private elementary and secondary schools 34,681 Number of schools with pre-kindergartens and kindergartens 19,305 Number of schools with pre-kindergartens and no kindergartens 21 Number of schools with kindergartens but no pre-kindergartens 7,205 Total number of schools with pre-kindergartens 19,326 Total number of schools with kindergartens 26,510 Total number of schools with pre-kindergartens or kindergartens 26,531 Source: NCES 2006e 22 Of the 34,681 private schools counted in the 2003-20 04 survey, 26,531 provided either pre-kindergarten 23 or kindergarten services. 11 Furthermore, of these 26,531 priv ate schools, 19,305 provided both pre24 kindergarten and kindergarten services. Only 21 pr ivate schools provided pre-kindergarten but not 25

10 In its report, NCES tracks schools where kindergarten is the highest grade offered separately from regular elementary, middle and high schools. As such, when inflating counts obtained from underlying data, the analysis calculated two sets of ratios for the numbers of schools and numbers of children enrolled – one for regular, and another for kindergarten-terminal schools.

11 A private school was identified as having a pre-kindergarten or kindergarten in the same fashion as a public school was in Section 2.2.1.EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-22 kindergarten services 12 ; while 7,205 private schools offered ki ndergarten but not pre-kindergarten 1 services. Note that these figures are not limited to schools in pre-1978 buildings. 2 Table 2-17 presents a count of the number of pre-kind ergarten and kindergarten students served in private 3 schools, as well as the average number of students served per school. 4
5 Table 2-17: Total Number and Average Kindergarten and Pre-Kindergarten Students Served Per School Number of Schools offering Program Number of Students Served Average Students Served per School Pre-kindergartens in private schools 19,326 863,542 45

Kindergartens in private schools 26,510 555,531 21 Source: NCES 2006e
6 According to Table 2-17, there are 26,510 private sc hools with kindergartens, enrolling a total of 555,531 7 kindergarteners. Also, there are 19,326 private sc hools with pre-kindergartens, enrolling 863,542 pre8 kindergarten students. The average number of privat e pre-kindergarten students per school (45) is more 9 than double the average number of kindergarten students (21). Whereas public schools displayed nearly 10 the opposite ratio with on average 44 pre-kindergar ten students and 70 kindergarten students per school. 11 Non-profit organizations, including private schools, are defined as small under the Regulatory Flexibility 12 Act if they are independently owned and operated and not dominant in their field. While determining 13 whether a school meets this definition is difficult, it is useful to present some st atistics describing the size 14 distribution of private schools. Table 2-18 shows the distribution of private schools by the number of 15 students they serve. This represents the total numbe r of students served, and not just the number of 16 kindergarten and pre-kindergarten students. 17
18 Table 2-18: Schools with Kindergarten or Pre-Kindergarten programs, by Number of Students in the School Number of Students Served <100 100-499 a 500-999 1000-1499 >1500 Total % Total % Total % Total % Total %

Number of Private School 10,862 41% 13,951 53% 1,519 6% 161 1% 38 0% Note: schools that did not report the total number of st udents were considered as having less than 100 student a. Includes all schools with missing to tal student data. These schools are assumed to have student enrollment equal to the average school with over 100 students, or 285.

Source: NCES 2006e
19 The distribution of private schools in the U.S. is h eavily skewed toward smaller schools, with 94% of 20 private schools serving less than 500 students and 99% of private schools serving less than 1000 students. 21

12 Beginning in 1995, the definition of school employed by the Private School Survey was expanded to include schools whose highest grade was kindergarten. Theref ore, these statistics are lik ely to include some prekindergartens that are more likely also classified as pr eschools in other sources (NCES 2006e). Later sections explain how the calculations avoid doub le-counting. However, because this is a small figure, it is almost negligible.EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-23 However, these data do not indicate whether the sc hools are affiliated with or part of a larger 1 organization. 2 

### 2.3 Nonresidential Commercial Property Owners and Managers 3 Nonresidential commercial property owners and managers will be affected by the rule if they rent space to 4 daycare facilities or other COFs in buildings construc ted prior to 1978. The number and size of firms in 5 this industry is described below. 6 2.3.1 Industry Definitions and Characteristics 7 Firms involved in the leasing of nonresidential build ings (except Miniwarehouses) are classified under 8 NAICS 531120 – Lessors of nonresidential buildings (e xcept Miniwarehouses). In 2002, this industry 9 included 28,426 firms that employed 154, 725 people (U.S. Census Bureau 2005b). 10 Firms involved in the management of non-residential properties are classified under NAICS 531312 – 11 Nonresidential property managers. In 2002, this indus try included 10,506 firms that employed 125,616 12 people (U.S. Census Bureau 2005b). 13 Table 2-19 includes only firms with employees. The U.S. Census 13 Bureau does not differentiate between self-employed i ndividuals that lease or manage commercial real 14 estate as opposed to residential buildings. This an alysis assumes that non-employers primarily lease 15 residential buildings, rather than commercial propert y. As such, non-employer establishments are not 16 included in this profile, or in the remainder of the analysis. 17
18 Table 2-19: Summary Statistics for NAICS 531120 and NAICS 531312

NAICS Code and Description Firms Annual Revenues (000) Annual Payroll (000) Employees 531120 - Lessors of nonresidential buildings (except miniwarehouses) 28,426 $51,778,431 $5,384,512 154,725

531312 - Nonresidential property managers 10,506 $12,297,703 $5,521,674 125,616

Total 38,932 $64,076,134 $10,906,186 280,341 Sources: U.S. Census Bureau 2005j 19 The 2008 LRRP rule economic analysis (EPA 2008) indi cated that a total of 17,705 daycare centers rent 20 space in pre-1978 buildings. Because daycare centers are only one of many types of establishments 21 renting non-residential space, and b ecause the rule applies only to centers in buildings cons tructed prior to 22 1978, the analysis also assumes that each property manager or lessor firm owns only one regulated 23 building. As such, the number of affected lessor/ma nager firms is equivalent to the number of daycare 24 centers renting space, or 17,705. 25 2.3.2 Establishment Size and Industry Environment 26 The U.S. Small Business Administration indicates that to qualify for small business status, a firm in 27 NAICS 531120 must have revenues of less than $7 m illion, while firms in NAICS 531312 must have 28 revenues of less than $2 million (U.S. Small Business Administration 2008). Average revenues in these 29 NAICS codes are significantly below the small business designation threshold (Table 2-20). 30

13 Firms involved in the leasing and/or management of residentia l buildings are already covered under the residential lead RRP rule.EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-24 Table 2-20: Summary Statistics for NAICS 531120 and NAICS 531312 (Per Firm)

NAICS Code and Description Average Annual Revenues ($) Average Annual Payroll ($) Paid Emplo y ees Per Firm 531120 - Lessors of nonresidential buildings (except miniwarehouses) $1,821,517 $189,422 5.4

531312 - Nonresidential property managers $1,170,541 $525,573 12.0
Sources: U.S. Census 2005j 1 Census data are not specific enough to report revenues at either the $7 million dollar or $2 million dollar 2 cutoff; Table 2-21 presents the percent of firms in NAICS 531120 and NAICS 53 1312 that have revenues 3 below $5 million and $1 million respectively. Consequently, the figures in Table 2-21 are all 4 underestimates of the true percentages of firms that qualify as small businesses. 5

6 Table 2-21: Small and Large Firms as Percent of Industry

NAICS Code: Description Percent of Firms by Revenue Bracket Percent of Industry Revenues by

Revenue Bracket Percent of Industry Emplo y ees b y Revenue Bracket 531120 Lessors of nonresidential buildings (except mini-warehouses) Firms with Revenues < $5 million 96% 32% 73% Firms with Revenues of $5 million+ 4% 68% 27% 531312 N onresidential property managers Firms with Revenues < $1 million 81% 19% 26% Firms with Revenues of $1 million + 19% 81% 74% Sources: U.S. Census 2005j
7 Based on 2002 data, 96 percent of NAICS 531120 fi rms and 81 percent of NAICS 531312 firms have 8 revenues below $5 million and $1 million, respectively. In the Lessors of Nonresidential Buildings 9 industry, these firms contribute 32 percent of the industry revenues while employing 73 percent of the 10 workforce. The revenue and employment distributi on is more skewed in the Nonresidential Property 11 Managers sector. Small firms in this industry contribute only 19 percent of the revenues, while 12 employing only 26 percent of the workforce. 13 

### 2.4 The Demand for Renovation Services 14 The demand for renovation is responsive to changes in the overall economic conditions. The same factors 15 that stimulate economic growth, such as low unemplo yment, high consumer confidence and low interest 16 rates, also stimulate the demand for renovation activiti es. For both residential and nonresidential building 17 projects, the U.S. Census Bureau tracks information on the “value of construction put in place,” a figure 18 composed of some of the variables previously discussed in this chapter such as labor and material costs 19 (while also including other variables such as the c ontractors profit, the cost of architectural and 20 engineering work, etc). Although the definition of construction includes renovations, alterations, 21 additions, and other improvements, it does not include “maintenance and repairs to existing structures or 22 service facilities” (U.S. Census Bureau 2006d), two co mponents of primary interest to this rule. 23EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-25 Using this Census data, Figure 2-3 illustrates the relationship between the value of construction put in 1 place for private preschools (a term that includes childcare and day-care centers, nurseries, and 2 preschools), state and local elementary school build ings, private primary and secondary educational 3 buildings, and real GDP (U.S. Census Bureau 2006b,c). 14 Both real GDP and the value of state and local 4 construction of elementary school buildings substantially increased over the previous 12 years. 5 Meanwhile, the value of private preschool constructio n and private primary and secondary educational 6 buildings construction have seen more moderate growth, peaking around 2001 and then gradually 7 tapering off. 8 Figure 2-3: Annual Value of Construction Put in Place Compared to GDP 9

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
YearMillions of Dollars

7,000,000 7,800,000 8,600,000 9,400,000 10,200,000 11,000,000 11,800,000

State and Local Construction of Elementary School Buildings - Read Left-Hand Vertical Scale for Values in Millions of Dollars Private Preschool Construction - Read Left-Hand Vertical Scale for Values in Millions of Dollars
Private Primary and Secondary Educational Building Construction - Read Left-Hand Scale for Values in Millions of Dollars Real Gross Domestic Product in millions of chai ned 2000 dollars - Read Right-Hand Vertical Scale for Values in Millions of Dollars 10 Source: U.S. Census Bureau 2006b,c; U.S. Department of Commerce 2006 11 12 Construction is a term that encompasses not only th e creation of new buildings but renovations to older 13 structures as well. While the Census tracks this breakdown between re novation and new building 14 construction for residential construction, it does not for non-residential construction. The U.S. Census 15 Bureau, however, did compile statistics for the expe nditures of non-residential improvements in 1986, 16 1989, and 1992. The U.S. Census defines im provements as “additions, alterations (renovations, 17

14 State and Local Construction of Elementary School Buildings is meant to give an indication of public kindergarten construction, while Private Primary and Secondary Educational Building Construction is meant to give an indication of private school kindergartens. Since the variables shown in Figure 2-3 are more broadly defined than the variables of interest, they overes timate the value of cons truction put in place.EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-26 remodeling, etc.) and major replacements.” While not being able to collect data on the number or extent 1 of the individual projects, the Census was able to make some estimations in the non-residential domain, 2 concluding that “about 23 percent of all buildings had some improvement work, while about 71 percent 3 had some expenditures for repair” (U.S. Census Bure au 1999). The collected data, however, were not 4 specific enough to capture improvement expenditures on COFs. Thus, Table 2-22 presents improvement 5 expenditures as the percentage of the total value of non-residential educational building construction put 6 in place in each of the three years for which im provement expenditure data were available. 7
8 Table 2-22: Improvement Expenditures as a Percentage of the Value of Construction Put in Place for Non-Residential Educational Buildings Type of Construction 1986 1989 1992 Private Non-Residential Educational Buildings 40% 46% 19% State and Local Non-Residential Educational Buildings 58% 35% 41% Source: U.S. Census Bureau 1999, U.S. Census Bureau 2006b,c 9 As shown in Table 2-22, expenditures on improvement s as a percent of the total value of educational 10 building construction put in place vary year to y ear. Expenditures on improvement made up between 35 11 and 58 percent of the total value of construction pu t in place in either private or state and local non12 residential buildings in the three selected years, with the data moderately variable. These figures indicate 13 that a substantial amount of non-residential educati onal building expenditures are for activities that might 14 disturb lead-based paint. The high frequency of th ese improvement activities points to the importance of 15 schools in this rule. 16 17 

### 2.5 Renovation Industry Market Structure 18 The previous sections focused on the supply and de mand for renovation services. This section discusses 19 the overall market structure of the renovation industry. 20 Firms and consumers interact in markets for goods and services with the results of these interactions 21 depending on the competitive characteristics of th e market. Competitive mark ets are characterized as 22 markets with a large number of buyers (e.g., cons umers) and sellers (e.g., firms) and relatively 23 homogeneous goods. In competitive mark ets, neither firms nor consumers can influence the price of the 24 good by altering their supply or demand decisi ons. Oligopolistic, monopo listic and monopsonistic 25 markets are markets where either firms or consumers ha ve market power and exhibit strategic behavior to 26 change the price of the good sold. The competitive natu re of an industry can be estimated by examining 27 the following market characteristics. 28
3⁄4 Number of establishments; 29
3⁄4 Specialization of establishments; 30
3⁄4 Number of consumers; 31
3⁄4 Barriers to entry; 32
3⁄4 Availability of substitutes; and 33
3⁄4 Homogeneity of the good/service. 34EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-27 The data in Section 2.1 indicate that there are a larg e number of firms in the construction industry. Using 1 data for the twelve NAICS codes, there are appr oximately 394,365 establishments with employees in 2 construction sectors potentially affected by the ru le. Of these establishments, only 2.3 percent have 3 annual revenues of $10 million or more. In addition, there are about 1.2 million self-employed contractors 4 in these industries, all of which are, in all likelihood, considered small by SBA standards. Given the large 5 number of small establishments, it is unlikely that any one firm exhibits substantial market share in the 6 overall market for renovation services. It is possible in some geographic areas for a small number of 7 firms or a single firm to establish a market niche, but overall the market for renovation services appears to 8 be quite competitive on the supply side. 9 The relatively low barriers to entry in the renovation industry enhance the competition taking place within 10 it. Much of the work covered by this rule does not require particularly unusual or high levels of skills. 11 Renovation work has traditionally attracted recent immigr ants because a lack of English is not important 12 (Farzad 2005). While any training required as part of th is rule will increase the skill level, the cost of the 13 training is expected to be relatively low. 14 There are also a large number of consumers in the i ndustry. As such, no single consumer of renovation 15 services is expected to exhibit infl uence over the price of these services. 16
There are three sources of substitutes for renovation se rvices. First, consumers can substitute from one 17 contractor to another. Second, consumers can s ubstitute away from professional renovation and into DIY 18 work. This is less likely to occur fo r COFs than for residential RRP work. Operators of COFs must be 19 certified and have their employees trained in order to do covered RRP in the fac ility. Third, consumers 20 can reduce the scope of the project or forgo renovation a ltogether. However, that is unlikely as the cost of 21 the rule is a relatively small share of the cost of a re novation. Again, this is less likely to occur for COFs 22 than for residential RRP work. Many states require annual inspections in COFs that assess the amount of 23 chipped or peeling lead-based paint and dictate that appropriate measures must be taken to alleviate the 24 risk that it imposes. 25
Additional characteristics of the RRP market resu lt in reduced demand elasticity. First, some 26 differentiation in RRP services does exist. Contractor s can provide services at a higher price if they can 27 convince consumers that their services are better or distin ctly different from their competitors. This is an 28 important factor in anticipating the impact of the RRP requirements on contractors. The costs of safely 29 renovating or repairing target housin g and COFs are expected to be higher than traditional methods. If 30 the consumer is indifferent between safe- or unsafe-l ead work practices, then th ose companies that choose 31 not to use lead-safe work practices may have a compe titive advantage in the market due to lower costs. 32 However, if the consumer recognizes that higher qual ity renovation jobs are those jobs completed with 33 lead-safe work practices, then firms may be able to comply with the re gulation and charge a higher price. 34 Under such a scenario, the consumer’s marginal bene fit for an additional unit of safe renovation may be 35 higher than for an additional unit of unsafe renovation. The consumer who has a preference for lead-safe 36 work practices would choose to do lead-safe renovation as long as the incremental cost of the lead-safe 37 renovation is less than the incremental benefit of su ch a renovation. Also, the market for RRP services is 38 fragmented and there are substantial costs involve d in getting prices. Getting bids from various 39 contractors takes time and consumers need to co mpare prices across services that differ along many 40 dimensions. These difficulties make it easier for firm s to increase their prices to cover the costs for the 41 new requirements. 42 The combination of a large number of firms, a large number of consumers, low barriers to entry, and 43 available substitutes indicate that the renovation industry is likely to have a relatively high price elasticity 44 of supply. The price elasticity of demand, however, may be small in absolute value. 45EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-28 

### 2.6 Residential Property Owners & Managers 1 Property owners and managers also will be affected by the rule if they choose to perform their own RRP 2 projects rather than hire an outside contractor or if their renovation and maintenance costs rise as a result 3 of the regulations. 4 Property owners and managers may have in-house crew s that perform RRP activities. If this is the case, 5 then the property owners and managers will directly b ear the costs of training and certifying their workers 6 as well as the cost of safe work practices. Furthe rmore, because all firms that perform regulated RRP 7 projects will experience an increase in costs due to trai ning of supervisors and workers and the use of safe 8 work practices, it is assumed that costs to property ow ners and managers who hire outside contractors will 9 increase. 10 2.6.1 Industry Definitions and Characteristics 11 Establishments involved in the leasing of apartments and other residential units are classified under 12 NAICS 531110 - Lessors of Residential Buildings and Dwelli ngs. This industry, in turn, is divided into 13 two sub-sectors, NAICS 5311101—Lessors of Apartm ent Buildings and NAICS 5311109—Lessors of 14 Dwellings Other than Apartment Buildings. According to the 2002 U.S. Economic Census data, together 15 these industries include a total of 61,787 establishments that employ 292,405 people (U.S. Census Bureau 16 2004b). 17 Establishments involved in the management of residential properties are classified under NAICS 18 531311—Residential Property Managers. In 2002, th is industry included 26,233 establishments that 19 employed 289,870 people (U.S. Cens us Bureau 2004b). Table 2-23 pr esents summary statistics for the 20 businesses in NAICS 531311 as well as NAICS 531110 and its sub-sectors. 21
22 Table 2-23: Summary Statistics for NAICS 531110, NAICS 5311101 and NAICS 5311109 NAICS Code and Description Establishments Annual Revenues (000) Annual Payroll (000) Paid Employees 5311101 - Lessors of Apartment Buildings 51,502 $51,708,553 $5,831,398 257,624 5311109 - Lessors of Dwellings other than Apartment Buildings 10,285 $5,263,795 $748,821 34,781 531311 - Residential property managers 26,223 $19,988,344 $8,193,831 289,870 Total 88,010 $76,960,692 $14,774,050 582,275 Source: U.S. Census Bureau 2004b 23 2.6.2 Establishment Size and Industry Environment 24 The U.S. Small Business Administration indicates that to qualify for small business status, a firm in 25 NAICS 531110 must have annual revenues of less th an $7 million, while establishments in NAICS 26 531311 must have revenues of less than $2 million (U.S. Small Business Administration, 2004). 27 Although data on the number of firms by revenue bracket were not available from the 2002 U.S. 28 Economic Census when this analysis was performed , the average revenues of establishments in these 29 NAICS codes are significantly below the small business designation threshold (Table 2-24). 30EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-29 Table 2-24: Summary Statistics for NAICS 531110, NAICS 5311101 and NAICS 5311109 (Per Establishment)

NAICS Code and Description Average Annual Revenues ($) Average Annual Payroll ($) Paid Emplo y ees per Establishment 5311101 - Lessors of Apartment Buildings $1,004,011 $113,227 5.0 5311109 - Lessors of dwellings other than apartment buildings $511,793 $72,807 3.4 531311 - Residential property managers $762,245 $312,467 11.1 Source: U.S. Census Bureau 2004b 1 In 1997, 98.7 percent of the then 51,572 establishments in the Lesso rs of Residential Buildings and 2 Dwellings sector had annual revenues below $5 million and about 85 percent of the 19,000 establishments 3 in NAICS 531311 had revenues less than $1 million (U.S. Census Bureau 2000a). 15 Because 2002 data 4 on the number of establishments by revenue bracket was not available at the time the estimates were 5 developed, 1997 data was used to estimate the percen t of establishments in each industry that qualify for 6 small business status. Table 2-25 presents the percent of NAICS 531311 and NAICS 531110 7 establishments that have revenues below $1 million and $5 million, respectively. The table also presents 8 the percent of industry revenues and employment that can be attributed to these establishments. 9
10 Table 2-25: Small and Large Establishments as Percent of Industry

NAICS

Code Description Percent of Establishments b y Revenue Bracket Percent of Industr y Revenues by Revenue Bracket Percent of Industr y Employees by Revenue Bracket 531311 Residential Property Managers Establishments with Revenues < $1 million 85 35 40 Establishments with Revenues of > $1 million 15 65 60 531110 Lessors of Residential Buildings and Dwellings Establishments with Revenues < $5 million 99 82 86 Establishments with Revenues of > $5 million 1 18 14 Source: U.S. Census Bureau 2000a 11 Based on 1997 data over 85 percent of NAICS 531311 establishments, and about 99 percent of NAICS 12 53110 establishments have revenues below the sma ll business threshold defined by SBA. In the 13 Residential Property Manager industry, these establishm ents contribute only 35 percent of the revenues, 14 and employ only 40 percent of the workforce. The revenue and employment distribution is less skewed in 15 the Lessor of Residential Buildings and Dwellings se ctor. Small establishments in this industry 16 contribute about 82 percent of the revenues and employ 86 percent of the workforce (U.S. Census Bureau 17 2000a). 18 2.6.3 Industry Outlook 19 The market for lead-safe renovation activities will depend in part on the state of the rental housing 20 market—an increase in rents would provide resources to construct new housing a nd/or renovate existing 21

15 Includes establishments open year-round only.EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-30 housing. According to Harvard University’s Joint Cent er for Housing Studies (JCHS), “rents fell in 9 of 1 the 27 metropolitan areas tracked by the federal government [in 2003]. Nationally, real contract and gross 2 rents barely increased last year.” The JCHS indi cates that both the weak labor market and increased 3 home ownership contributed to the softening of the rental market (JCHS 2004). 4 At the same time as rents fell, the nation-wide rental vacancy rate increased from 8.9 percent in 2002 to 5 9.8 percent in 2003. The vacancy rate was slightly above 10 percent during the first three quarters of 6 2004 (U.S. Census Bureau 2004e). None-the-less, the JCHS predicts a strengthening of the rental market 7 over the next ten years due to the influx of immigran ts and the aging of the “echo baby-boom generation.” 8 The strengthening of the market may also come fro m overall economic growth and a stemming of home 9 ownership growth due to rising inter est rates and/or house prices (JCHS 2004). 10 

### 2.7 Training Providers 11 Impacts of the rule will be felt beyond the constr uction industry. Certified renovators will need 12 accredited training. Both initial and refresher trai ning courses will be required for certified renovators. 13 2.7.1 Definitions and Industry Characteristics 14 It is likely that lead-based paint training courses will be provided by establishments categorized as 15 NAICS code 611519: Other Technical and Trad e Schools. Census defines NAICS 61159 as 16 “establishments primarily engaged in offering job or career vocational or technical courses (except 17 cosmetology and barber training, aviation and flig ht training, and apprenticeship training). The 18 curriculums offered by these schools are highly struct ured and specialized and lead to job-specific 19 certification” and these establishments are believed to currently provide training for lead abatement 20 professionals (U.S. Census Bureau 2004p). 21 According to the 2002 Economic Census, there are a total of 3,323 establishments in the U.S. certified as 22 Other Technical and Trade Schools (see Table 2-26). On average, each establishment employs 15.3 23 people. A striking characteristic is that about 19% of these establishments are exempt from the Federal 24 Income Tax (FIT). Exempt establishments include n on-profit organizations a nd educational institutions 25 such as colleges or universities. 26
27
Table 2-26: Number of Establishments in NAICS 611519 Industry Number of Establishments Total Number of Employees Average Number of Employees

NAICS 611519 - Other Technical and Trade Schools 3,323 50,709 15.3

Source: U.S. Census Bureau 2004n 28
Table 2-27 summarizes available financial inform ation for establishments categorized under NAICS 29 611519. These include total revenues for the sector , average annual revenues per establishment, annual 30 payroll for the sector, and payroll as a percent of re venue. As Table 2-27 indicates, for Other Technical 31 and Trade schools, annual payroll is equal to about 35 percent of establishment revenue. 32EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-31 Table 2-27: Summary Statistics for NAICS 611519

Industry Number of Establishments Annual Sector Revenue

(000) Average Revenue per Establishment (000) Avera g e Pa y roll per Establishment (000) Labor Cost as percent of Revenue NAICS 611519 - Other Technical and Trade Schools 3,323 $4,118,995 $1,240 $429 35 %

Source: U.S. Census Bureau 2004n 1 According to the U.S. Small Business Administration, in order to qualify as a small business, a firm 2 categorized under NAICS 611519 must have annual reve nues of $7 million or less (U.S. Small Business 3 Administration 2006a). 16 The 2002 Economic Census provided data on the number of firms by revenue 4 bracket. In 2002, 94 percent of the then 2,274 firm s classified as Other Technical and Trade Schools that 5 were in operation for the entire year had revenues under $5 million (U.S. Census Bureau 2005f). This 6 figure indicates that a large percentage of firms had revenues under the $6.5 million threshold and thus 7 qualified for small business status. 8 2.7.2 Number and Type of Training Establishments 9 As mentioned in Section 2.7.1, there are over 3, 000 establishments in the Other Technical and Trade 10 school industry. It is likely that only a small por tion of these establishments are involved in lead based 11 paint-related training. To help characterize the lead training segment of the training provider industry, a 12 random sample of firms that offer one or more of the courses required for EPA lead abatement 13 certification were identified as part of the economic analysis of the 2006 proposed LRRP target housing 14 rule (EPA 2006). The goal was both to collect tuition data for currently offered lead abatement training 15 courses and to learn what types of institutions (p rivate establishments, non-profits, unions, etc.) offer 16 these classes. 17 The sample consisted of 83 establishments selected from the Lead Listing 17 directory of 194 training 18 providers. 18 Data were collected from company web sit es (when available) and/or over the phone. 19 Information was obtained from 68 training providers; a total of 15 training providers could not be 20 reached. Seven of the 68 contacted providers no longer offered lead abatement training courses. 21 There were five types of training providers in th e sample: private for-profit establishments, non-profit 22 establishments, educational institutions, trade unions a nd public/government training institutions. Trade 23 unions provide tuition-free training to their members. Public/government providers train state employees 24 and workers who qualify for financial assistance th rough government programs. They do not offer 25 training to the general public. 26

16 Effective July 31 st , 2006.

17 The Lead Listing ( www.leadlisting.org ) website was run for the U.S. Department of Housing and Urban Development’s Office of Healthy Homes and Lead Hazard Control that contained a directory of lead service providers. It is no longer in operation (as of late 2004).

18 The sample included all the establishments on the list th at are certified to offer a Pr oject Designer course (42 total), as well as a random sample of 41 establishments th at were not certified to offe r this class. The data were weighted by the inversed probability of selection into the sample (P=1 for providers that offer a ProjectDesigner course and P=.270 for providers that do not offer this class). It was assumed that there was no nonresponse bias.EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-32 Table 2-28 summarizes the number of private establishm ents, educational institu tions, non-profits, unions 1 and public government providers that appeared in the sample. The table also presents the estimated 2 national number of providers that fall into each of th ese categories. More than a third of lead hazard 3 reduction training providers are private, for-profit estab lishments. The next largest group of providers is 4 labor unions, followed by educational institutions (c olleges and universities). None of the unions, 5 however, are certified to offer the Project Designer cour se. About 13 percent of certified providers either 6 do not offer training at this time, or have permanently stopped offering lead courses. 7 More than half of the privately owned, for-profit establishments in the samp le (19 out of 35) offer 8 environmental consulting services in addition to training. Thirteen of the 35 privately-owned providers 9 specialize in training and do not offer other services. All of these 13 firms offer both lead and asbestos 10 training courses, as well as, in most cases, OSHA safet y, HAZ-MAT and/or mold classes. Although there 11 was not enough information to determine the services provided by the remaining three companies, these 12 findings indicate that lead-based paint training provide rs generally participate in several lines of business. 13
14 Table 2-28: Estimated Number of Training Providers National Estimates Type of Provider Number in Sample Total Percent Private Providers 35 74 38 Educational Institutions 11 27 14 Non-Profit 4 19 10 Union 9 42 22 Pub/Gov Providers 2 6 3 No Longer Offer Training 7 26 13 Total Companies 68 194

a. Adjusted for non-response assuming no non-response bias and weighted based on the probability of selection into the sample Source: U.S. Environmental Protection Agency 2006
15 

### 2.8 Summary Characteristics: Number s of Structures in the Regulated 16 

### Universe 17 This section provides summary information about the numbers of target housing and public or 18 commercial building COFs that form the basis for th e analyses presented in the subsequent chapters of 19 this report. Each tally is then subdivided into cate gories based on the age of the building and the type of 20 structure. After each table, there is a discussi on of how the numbers presented in that table were 21 calculated. 22 Table 2-29 provides counts of the number of buildings by type and vintage of building. There are 78.0 23 million structures that would be covered by the LRRP rule if the proposed LRRP Opt-Out and 24 Recordkeeping rule is finalized. These units incl ude 77.9 million target housing units and 0.1 million 25 COFs in public or commercial buildings. About 40.2 million target housing units would be added to the 26 regulated universe due to the elimination of the opt-o ut provision. Table 2-29 also shows the regulated 27 universe under the existing 2008 LRRP rule (37.7 milli on target housing units and 0.1 million public and 28 commercial buildings). 29EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-33 Table 2-29: Number of Structures, by Type and Age of Construction Type All Pre-1960 All Pre-1978 Target Housing where LLRP rule is applicable assuming opt-out provision removal 41,040,000 77,888,000 Target Housing where LRRP program was applicable under 2008 LRRP Rule: Rental, COF, or where a child <6 or pregnant woman resides) 20,321,000 37,665,000 Rental where a child <6 or pregnant woman resides 2,187,000 4,130,000 Rental where no child <6 or pregnant woman resides 14,180,000 26,289,000 Owner-Occupied where a child <6 or pregnant woman resides 3,529,000 6,422,000 Owner-Occupied COF where no child <6 or pregnant woman resides 424,000 824,000 Target Housing COFs 823,000 1,559,000 Renter-Occupied COF where a child <6 or pregnant woman resides 33,000 62,000 Renter-Occupied COF where no child <6 or pregnant woman resides 214,000 397,000 Owner-Occupied COF where a ch ild <6 or pregnant woman resides 152,000 276,000 Owner-Occupied COF where no child <6 or pregnant woman resides 424,000 824,000 Target Housing Universe affected by elimination of the opt-out provision (Owner-Occupied where no child <6 or pregnant woman resides that is not a COF) 20,719,000 40,222,000 Public or Commercial Building COFs 54,000 97,000 Daycare Centers* 29,000 52,000 Schools* 25,000 45,000 Kindergarten Only 12,000 21,000 Kindergarten and Pre-Kindergarten 13,000 23,000 Note: Counts include buildings with and without lead-based paint. * There are 800 pre-1978 schools that have pre-kindergartens but no kindergarten. In this table and in the cost and benefits analysis in Chapters 4 and 5, they are accou nted for as daycare centers. In the small entity impact and Unfunded Mandates Reform Act an alyses in Chapter 6 these buildings are accounted for as schools. 1 2.8.1 Target Housing 2 This section provides a brief discussion of the estimates of the number of the target housing units 3 presented in Table 2-29. Estimates of the number of housing units by tenure of occupant (owner or 4 renter), age of occupants, and pregnancy status of occupants were estimated using the 2003 American 5 Housing Survey, which is described in more detail in Section 4.2 of the Economic Analysis for the LRRP 6 Opt-Out and Recordkeeping Proposed Rule (EPA 2009). EPA (2009) also provides a detailed 7 explanation of the estimated number of target housing un its that are defined as COFs. The COFs in target 8 housing include family daycare providers and the hom es of family, friends, and neighbors who regularly 9 care for someone else’s children. These estimates include care provided for pay and not for pay, and rely 10 primarily on estimates of the size of the childcare workforce as published by the Center for Childcare 11 Workforce, 2002. This report includes data on the number of: (1) family childcare providers caring for 12 unrelated children, (2) paid relatives and non-relativ es providing childcare, and (3) unpaid relatives and 13 non-relatives providing childcare. Based on data provid ed by the Center for Ch ildcare Workforce, a total 14 of just under 2.4 million caregivers provide care outside of the child’s home for more than six hours per 15EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-34 week. As described in detail EPA ( 2009), these data are used to estimate the number of COFs in target 1 housing. These numbers are further reduced to estimate the number of pre-1960 and pre-1978 housing 2 units based on American Housing Survey data. 3
2.8.2 Childcare Centers 4 In 2006, the National Association for Regulatory Ad ministration (NARA) released a report entitled “The 5 2005 Childcare Licensing Study” providing counts of all the licensed childcare centers and family 6 childcare homes in the United States. The NARA report indicated that there were approximately 115,000 7 licensed childcare centers, 66,700 of which are est imated to be built before 1978 according to 8 Commercial Building Energy Consumption Suevey (CBECS) data (DOE 2003). According to HUD's 9 First National Health Survey of Childcare Centers (HUD 2003), approximately 24 percent of licensed 10 centers are located in elementary schools. These 15,753 centers are assumed to be included in the 11 estimated 40,190 elementary schools with pre-schools and kindergartens. Thus, there are a total of 12 50,947 pre-1978 daycare centers located outside of elementary schools. According to NCES data on 13 public and private schools, however, an additional 824 pre-1978 schools without kindergartens have a 14 pre-kindergarten program, which brings the total numbe r of buildings accounted for as daycare centers to 15 51,771 (EPA 2008). 16

2.8.2.1 Public Schools 17 The National Center for Education Statistics (NCES) reported that during the 2004-2005 academic year, 18 there were more than 93,000 public schools in the United States. Of these 93,295 public schools, 52,129 19 had either a pre-kindergarten (PK) or kindergarte n (K) program. The Common Core of Data Public 20 Elementary/Secondary School Universe Survey data w as used to calculate the number of private schools 21 with PK or K programs. Using this data, a school was considered as having a pre-kindergarten if a) pre22 kindergarten enrollment was greater than zero students, or b) the school reported that the lowest grade 23 offered was pre-kindergarten, but enrollment data were not provided. Similarly, a school was considered 24 as having a kindergarten if a) kindergarten enrollment w as greater than zero, or b) the school reported that 25 the lowest grade offered was pre-kindergarten or kind ergarten, but did not report kindergarten enrollment. 26 Again, the educational building age distribution fo und in CBECS and HUD (2003) was applied to the 27 total counts, resulting in the estimated 17,000 pre-1960, and 30,000 pr e-1978 public schools. 28

2.8.2.2 Private Schools 29 This analysis used NCES’s Results from the 2003-2 004 Private School Universe Survey report and the 30 underlying dataset to estimate the number of private sc hools with kindergartens and/or pre-kindergartens. 31 A school was considered as having a pre-kindergarten if a) pre-kindergarten enrollment was greater than 32 zero students, or b) the school reported that the low est grade offered was pre-kindergarten, but enrollment 33 data were not provided. Similarly, a school was considered as having a kindergarten if a) kindergarten 34 enrollment was greater than zero, or b) the school reported that the lowest grade offered was pre35 kindergarten or kindergarten, but did not report kind ergarten enrollment. The previously cited CBECS 36 and HUD educational building age distribution was th en applied to the private school universe to 37 calculate the number of private schools by age of construction. This adjustment yielded 9,000 pre-1960, 38 and 15,000 pre-1978 private schools. 39 For the purpose of the total cost analysis, privat e and public schools were categorized according to 40 whether they offered kindergarten only, kindergarten and pre-kindergarten, and pre-kindergarten only. 41
Table 2-29 uses information drawn from Table 2-9 an d Table 2-16 to obtain the total number of schools 42 with each combination of programs. Table 2-9 and Table 2-16 indicate that there are 29,844 public 43 schools and 7,205 private schools with kindergarten progr ams only, for a total of 37,049 such schools. 44EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-35 Table 2-9 and Table 2-16 also indicate that there are 20,885 public schools and 19,305 private schools 1 with both pre-kindergarten and kindergarten programs. Finally, there are a total of 1,400 public and 21 2 private schools with pre-kindergarten, but no kindergar ten, which are accounted for as daycare centers for 3 the purposes of the analysis. Table 2-29 presents the total number of schools with kindergartens, 4 kindergartens and pre-kindergartens, and pre-kindergar tens only by age of construction. Information 5 about the age distribution of buildings was taken fro m CBECS and HUD and applied to the data to give 6 estimates of the number of schools by the age of the building. 7EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-36 

### References 1 Bureau of Labor Statistics. 2005. “Child Day Care Services.” Available at: 2 http://www.bls.gov/oco/cg/cgs032.htm#outlook . (Accessed: 12/12/2006) 3
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January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-37 National Childcare Information Center. 2005. “Number of Licensed Facilities: 1991-2004.” 1 http://www.nara-licensing.org 2 U.S. Bureau of Labor Statistics. 2006. “Current Population Survey: Basic Monthly Survey.” January 3 2006. 4 U.S. Census Bureau. 1999. “Expenditures for Nonr esidential Improvements and Repair Statistics.” 5 Available at: http://www.census.gov/const/www/nrsupndx.html (Accessed 12/8/2006). 6
U.S. Census Bureau. 2000a. Establishment and Firm Size (Including Legal Form and Organization). 7 1997 Economic Census: Subject Series for Real Es tate and Rental and Leasing. Subject Series. 8 EC97F53S-SZ. 9
U.S. Census Bureau. 2004a. North American Indus try Classification System – Revisions for 2002. 10 Available at: http://www.census.gov/ep cd/naics02/ (Accessed 12/4/2006). 11 U.S. Census Bureau. 2004b. “Sector 53: Industry Series: Summary Statistics for the US: 2002.” 12 American Fact Finder. Available at: 13 http://factfinder.census.gov/servlet/EconSectorSe rvlet?caller=dataset&s v_name=*&_SectorId=53 14 &ds_name=EC0200A1&_lang=en&_ts=1417 36463723 (Downloaded 8/3/2005). 15
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U.S. Census Bureau. 2004d. 2002 Economic Census: I ndustry Series: Drywall and Insulation Contractors 19 ECO2-231-238310. Available at: http:// www.census.gov/prod/ec0 2/ec0223i238310.pdf 20 (Accessed 11/18/2006). 21
U.S. Census Bureau. 2004e. 2002 Ec onomic Census: Industry Series: Electrical Contractors ECO2-231- 22 238210. Available at: http://www.cens us.gov/prod/ec02/ec0223i238210.pdf (Accessed 23 11/18/2006). 24
U.S. Census Bureau. 2004f. 2002 Economic Cens us: Industry Series: Finish Carpentry ECO2-231- 25 238350. Available at: http://www.cens us.gov/prod/ec02/ec0223i238350.pdf (Accessed 26 11/18/2006). 27 U.S. Census Bureau. 2004g. 2002 Economic Census : Industry Series: Glass and Glazing Contractors 28 ECO2-231-238150. Available at: http:// www.census.gov/prod/ec0 2/ec0223i238150.pdf 29 (Accessed 11/18/2006). 30
U.S. Census Bureau. 2004h. 2002 Economic Cens us: Industry Series: Other Building Equipment 31 Contractors ECO2-231-238290. Available at: 32 http://www.census.gov/prod/ec02/ec0223i238290.pdf (Accessed 11/18/2006). 33
U.S. Census Bureau. 2004i. 2002 Economic Cens us: Industry Series: Other Building Finishing 34 Contractors ECO2-231-238390. Available at: 35 http://www.census.gov/prod/ec02/ec0223i238390.pdf (Accessed 11/18/2006). 36 U.S. Census Bureau. 2004j. 2002 Economic Cens us: Industry Series: Painting and Wall Covering 37 Contractors ECO-231-238320. Available at: 38 http://www.census.gov/prod/ec02/ec0223i238320.pdf (Accessed 11/18/2006). 39EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-38 U.S. Census Bureau. 2004k. 2002 Economic Census : Industry Series: Plumbing, Heating, and Air1 Conditioning Contractors ECO2 -231-238220. Available at: 2 http://www.census.gov/prod/ec02/ec0223i238220.pdf (Accessed 11/18/2006). 3
U.S. Census Bureau. 2004l. 2002 Economic Cens us: Industry Series: Siding Contractors ECO2-231- 4 238170. Available at: http://www.cens us.gov/prod/ec02/ec0223i238170.pdf (Accessed 5 11/18/2006). 6
U.S. Census Bureau. 2004m. 2002 Ec onomic Census: Industry Series: Tile and Terrazzo Contractors 7 ECO2-231-238340. Available at: http:// www.census.gov/prod/ec0 2/ec0223i238340.pdf 8 (Accessed 11/18/2006). 9
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January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-39 http://www.census.gov/econ/census02/data /us/US000_23.HTM (Accessed 8/3/2005). 1 U.S. Census Bureau. 2005j. “Sector 53: Real Estate and Rental and Leasing: Subject Series - Estab & 2 Firm Size: Revenue Size of Firms for the United States: 2002.” American Fact Finder. Available 3 at: http://factfinder.census.gov/servlet/IBQTa ble?_bm=y&-geo_id=&-fds_name=EC0200A1&- 4 _skip=100&-ds_name=EC0253SSSZ4&-_la ng=en. (Downloaded 12/19/2006). 5 U.S. Census Bureau. 2005k. “Nonemployer Statisti cs – Heatlh Care and Social Assistance – United 6 States.” http://www.census.gov/epcd/nonempl oyer/2002/us/US000_62.HTM. (Downloaded 7 3/24/2007). 8
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U.S. Census Bureau. 2006d. “Definitio ns of Construction.” Available at: 19 http://www.census.gov/const/C30/defin itions.pdf (Accessed 2/15/2006.) 20 U.S. Department of Commerce. 2006. Table 1.1.6. R eal Gross Domestic Product, Chained Dollars. Last 21 revised: November 29, 2006. 22 U.S. Department of Education, Institute of Education Sciences. 2004. “Full-day and Half-day 23 Kindergarten in the United States: Findings fro m the Early Childhood Longitudinal Study, 24 Kindergarten Class of 1998-99” June 2004. 25 U.S. Department of Education, National Center for Education Statistics. Kindergarten Teachers: Public 26 and Private School Teachers of the Kindergart en Class of 1998–99, NCES 2004–060, by Elvira 27 Germino-Hausken, Jill Walston, and Amy H. Rathbun. Project Offi cer: Elvira Germino-Hausken. 28 Washington, DC: 2004. 29 U.S. Department of Energy. 2003. Commercial Bu ildings Energy Consumption Survey (CBECS). 30 U.S. Department of Housing and Urban Development (HUD). 2003. Firs t National Environmental Health 31 Survey of Childcare Centers. 32 U.S. Environmental Protection Agency. 1996. “Lead; Requirements for Lead-Based Paint Activities in 33 Target Housing and Child-Occupied Fac ilities; Final Rule.” Federal Register. 34 http://www.epa.gov/docs/fedrgstr/EPA-TOX/1996/ August/Day-29/pr-24181DIR/pr-24181.pdf 35 (Accessed 12/8/2006). 36 U.S. Environmental Protection Agency. 2009. “Economic Analysis for the Lead Renovation Repair, and 37 Painting Program Opt-Out and Recordkeeping Pr oposed Rule for Target Housing and Child 38 Occupied Facilities.” 39
40EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 2-40 U.S. Environmental Protection Agency. 2006. “Econo mic Analysis for the Renovation, Repair and 1 Painting Program Proposed Rule”, February 2006. 2
U.S. Small Business Administration. 2006a. “Firm Size Data.” Available at: 3 http://www.sba.gov/advo/research/data. html. (Accessed 11/30/2006). 4
U.S. Small Business Administration. 2006b. “Small Bu siness Size Standards matched to North American 5 Industry Classification System.” Available at: 6 http://www.sba.gov/services/contractingopportunities/sizestandardstopics/tableofsize/SERV_TA 7 BLE_HTML.html (Downloaded 11/24/2006). 8
U.S. Small Business Administration. 2008. “Small Bu siness Size Standards matched to North American 9 Industry Classification System.” Available at: 10 http://www.sba.gov/idc/groups/public/documen ts/sba_homepage/serv_sstd_tablepdf.pdf 11 (Downloaded 7/29/2009). 12
Wilder Research Center. 2001. “Staff recruitment and retention in early childhood care and education and 13 school-age care.” April 2001. 14 Wilder Research Center. 2005. “Family, Friend and Ne ighbor Caregivers: Results of the 2004 Minnesota 15 statewide household childcare survey.” December 2005. 16EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

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## 3. Problem Definition: Residentia l Lead-Based Paint Hazards and the 1 

## Justification for Regulation 2 The purpose of this chapter is to provide backgroun d information on the existence of residential lead3 based paint hazards and present an overview of the ec onomic justifications for federal regulations to 4 address these problems. Section 3.1 characterizes the residential lead contamination problem and 5 discusses various sources of exposure. In Section 3.2, the regulatory background associated with 6 residential lead-based paint hazards is presented. Section 3.3 discusses how market failure due to 7 incomplete information and external costs result in in efficient levels of lead containment and control in 8 renovation activities, requiring regulatory intervention. Section 3.4 describes how the proposed rule will 9 address these market failures. 10 

### 3.1 Lead Contamination Problem 11 Despite recent reductions in air, water, and food contamination, important sources of lead exposure 12 remain, due largely to the widespread presence of lead -based paint. Exposure to lead results in increased 13 blood lead levels associated with various adverse he alth effects, including reductions in IQ and other 14 negative cognitive effects, particularly in children. In addition, exposure to lead can result in a variety of 15 adverse health effects in adults. 16 3.1.1 Exposure Sources 17 As described in Chapter 5, lead ma y cause adverse health effects in any individual, exposed at any stage 18 of life ( in utero through adulthood) (U.S. EPA 2005c). However, young children are particularly 19 susceptible to lead hazards because their central nervous systems are rapidly developing, and because 20 their behavior is likely to result in greater exposur e to lead than older individuals experience. 21 Currently, the most significant high-dose source of l ead exposure in children under school age is lead22 based paint. Through the 1940's, paint manufacturers used lead as a primary ingredient in many oil-based 23 interior and exterior house paints. During the 1950's and 1960's, the usage gradually decreased as new 24 paints were developed, and in 1978 the Consumer Product Safety Co mmission (CPSC) ruled that paint 25 used for residences, toys, furniture, and public areas mu st not contain more than 0.06% lead by weight. 26 Nevertheless, about 50 percent of housing units and public and commerc ial buildings constructed before 27 1980 still contain lead-based paint (U.S. HUD 2000). Ch ildren’s exposure to lead from lead-based paint 28 is likely to be high when the paint is in a deteriorat ed state or is found on accessible, chewable, impact, or 29 friction surfaces, making the lead paint available to child ren who ingest paint chips. This “pica” behavior 30 appears to be rare, but is the likely cause of many of the highest blood lead levels observed in children. 31 Renovation activities can create lead-based paint h azards for children by making paint chips more 32 accessible for ingestion. These h azards can occur both within and outside the building unit being 33 renovated. 34 In addition to being a source of di rect exposure, lead-based paint can be the source of lead contamination 35 in soil and dust. Children are exposed to lead from so il or dust in their homes as a result of typical hand36 to-mouth activities. Lead-contaminated dust and soil are the major pathway through which most young 37 children are exposed to lead from lead-based paint hazards. Renovation activities increase the level of 38 lead dust in the facility and in th e soil, thereby increasing the risk of lead ingestion in young children. 39 While occupational exposure is the primary exposure pathway to lead for adults, other common exposure 40 pathways for teenagers and adults include gardeni ng, housework, drinking water and certain hobbies such 41 as creating objects from stained-glass and making pottery. Individuals (children, teenagers and adults) are 42 also exposed to a variety of other lead sources, some of which are localized in nature. 43EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 3-2 Airborne lead is present in emissions from lead sm elters, battery manufacturing plants, and solid waste 1 incinerators. The phase-out of lead ed gasoline has substantially reduced airborne lead. Drinking water 2 may become contaminated with lead after it leaves the treatment plant. Although lead levels in drinking 3 water generally do not have a statistically significant effect on blood-lead concentrations as a result of 4 regulations stemming from the 1986 Safe Drinking Wate r Act, water is still considered an important 5 localized exposure source where lead solder and/or brass plumbing fixtures are present because of the 6 high absorption rate of lead in water. Lead exposur e through food ingestion has declined greatly due to 7 the phase-out of lead-soldered food cans and public education. With these improvements in exposure 8 from air, water, and food, lead-based paint remains as the largest widespread source of lead exposure. 9

3.1.2 Lead from Renovation Activities 10 EPA exposure data (EPA 1997) indicate that renovatio n activities potentially increase both short-term and 11 long-term lead exposure levels. Lead concentrations are greatest in the area where the renovation work is 12 performed, but lead does settle into other areas of the building and potentially the surrounding area, 13 causing longer-term exposure. The study found that , with the exception of carpet removal and drilling 14 into plaster, all renovation activities examined deposite d significant amounts of lead onto the floors in the 15 area where the work was being performed, ranging fr om 480 micrograms per square foot for sawing to 16 15,500 micrograms per square foot for paint removal. This lead may be ingested or inhaled by occupants 17 if proper containment and clean-up practices are notused. The study found that sweeping and shop18 vacuum clean-up, considered to be standard practi ce in the industry, reduced the total amount of lead 19 available to occupants. However, as the distance from the activity increased, the cleanup left a higher 20 percentage of the lead behind so that lead hazards remained following cleanup. These findings 21 demonstrate that these practices do not adequately reduce risks from lead dust generated by renovation 22 activities. Lead dust settled in carpeted areas or in soil is the most difficult to remove with simple broom 23 and vacuum clean-up and thereby creates the longest lasting exposure pathway for facility occupants. 24 EPA conducted a field study in 2007 (Characterization of Dust Lead Levels af ter Renovation, Repair, and 25 Painting Activities) (the ‘‘Dust Study’’) to character ize dust lead levels resulting from various renovation, 26 repair, and painting activities (EPA 2007). This study was designed to compare environmental lead levels 27 at appropriate stages after various types of renovati on, repair, and painting preparation activities were 28 performed on the interiors and exteriors of target housing units and child-occupied facilities. All of the 29 jobs disturbed more than 2 square feet of lead-based paint, so they would not have been eligible for the 30 minor maintenance exception. The renovation activiti es were conducted by local professional renovation 31 firms, using personnel who received lead safe work pr actices training using the curriculum developed by 32 EPA and HUD, ‘‘Lead Safety for Remodeling, Repa ir, and Painting’’ (EPA 2003a). The activities 33 conducted represented a range of activities that woul d be permitted under the 2006 Proposal, including 34 work practices that are restricted or prohibited fo r abatements under 40 CFR 745.227(e)(6). Of particular 35 interest was the impact of using specific work pr actices that renovation firms would be required to use 36 under the proposed rule, such as the use of plastic to contain the work area and a multi-step cleaning 37 protocol, as opposed to more typical work practices. 38 In the Dust Study, 12 different interior and 12 diffe rent exterior renovation activities were performed at 7 39 vacant target housing units in Columbus, Ohio, a nd 8 vacant target housing units (including four 40 apartments) in Pittsburgh, Pennsylvania. Three differe nt interior and three different exterior renovation 41 activities were conducted at a building representi ng a child-occupied facility, a vacant school in 42 Columbus. The presence of lead-based paint was confir med by laboratory analysis before a building was 43 assigned a particular renovation activity or set of activ ities. Before interior renovation activities were 44 performed, the floors and windowsills in the work area and adjacent rooms were cleaned. In most cases, 45 pre-work cleaning resulted in dust lead levels on floors of less than 10 μg/ft 2 ; nearly all floors were less 46EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 3-3 than 40 μg/ft2 before work started. Most windowsills that would be used for later sampling were cleaned 1 to dust lead levels less than 250 μg/ft2. In th e few cases where that level was not achieved on a 2 windowsill needed for sampling, dust collection trays were used. Interior renovation activities included 3 the following jobs: 4
3⁄4 Making cut-outs in the walls. 5
3⁄4 Replacing a window from the inside. 6
3⁄4 Removing paint with a high temperature (great er than 1100 degrees Fahrenheit) heat gun. 7
3⁄4 Removing paint with a low temperature (less than 1100 degrees Fahrenheit) heat gun. 8
3⁄4 Removing paint by dry scraping. 9
3⁄4 Removing kitchen cabinets. 10
3⁄4 Removing paint with a power planer. 11 To illustrate the impact of the containment plastic and the specialized cleaning and cleaning verification 12 protocol that would be required by the 2006 Proposal, each activity was performed a minimum of four 13 times: 14
3⁄4 With the plastic containment described in the 2006 Proposal followed by the cleaning protocol 15 described in the proposal. 16
3⁄4 With the plastic containment described in the 2006 Proposal followed by dry sweeping and 17 vacuuming with a shop vacuum. 18
3⁄4 With no plastic containment followed by the cleaning protocol described in the 2006 Proposal. 19
3⁄4 With no plastic containment followed by dry sweeping and vacuuming with a shop vacuum. 20 Dust samples were collected after the renovation work was completed, after cleaning, and after cleaning 21 verification. If a building was being used again for th e same job under different work practices, or for a 22 completely different job, the unit was recleaned and re tested prior to starting the next job. All buildings 23 were cleaned and tested after the last job. 24 For the exterior jobs, plastic sheeting was placed on th e ground to catch the debris and dust from the job, 25 in accordance with the requirements of the proposed rule. Additional plastic sheeting was laid out beneath 26 and beyond the ‘‘proposed rule’’ plastic. Trays to collect dust and debris we re placed on top of and 27 underneath the ‘‘proposed rule’’ plastic. Trays were al so placed just outside of the ‘‘proposed rule’’ 28 plastic to assess how far the dust was spreading. A ve rtical containment, as high as the work zone, was 29 erected at the end of the additional plastic. 30 The use of the ‘‘proposed rule’’ plastic as a ground c overing captured large amounts of leaded dust. For 31 all job types except removing paint with a torch, ther e was a substantial difference between the amount of 32 lead captured by the ‘‘proposed rule’’ plastic a nd the amount under the ‘‘proposed rule’’ plastic. The 33 2008 final LRRP rule was supported by the Dust Study discussed above. Therefore, EPA conducted a 34 peer review in accordance with OMB’s Final Info rmation Quality Bulletin for Peer Review. EPA 35 requested this review from the Clean Air Scientific Advisory Committee (CASAC) Lead Review Panel. 36 The CASAC, which is comprised of seven members appointed by the EPA Administrator, was 37 established under the Clean Air Act as an independen t scientific advisory co mmittee. The CASAC’s 38 comments on the Dust Study, along with EPA’s responses, have been placed into the public docket for 39 this action. More information on the CASAC cons ultation process, along with background documents, is 40 available on EPA’s website at http://www.epa.gov/ lead/pubs/casac.htm. 41EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 3-4 According to the peer review report, the CASAC Panel found 1 “. . .that the [Dust Study] was reasonably well- designed, considering the complexity of the 2 problem, and that the report provided information not available from any other source. The study 3 indicated that the rule cleaning procedures reduced the residual lead (Pb) remaining after a 4 renovation more than did the baseline cleaning pr ocedures. Another positive aspect of the Dust 5 Study was that it described deviations fr om the protocol when they occurred. “ 6
The CASAC Panel also contended that the limited da ta from residential housing units and child-occupied 7 facilities included in the Dust Study, most likely do no t represent a statistically valid sample of housing at 8 the national level. They noted that there are aspects of the study that would underestimate the levels of 9 lead-loadings while other aspects of the study would overestimate the loadings. EPA agrees that the Dust 10 Study is not nationally representative of all housing. EP A notes that there are several reasons why this is 11 the case, including the fact that all of the housing studied was built during 1925 or earlier, and a large 12 number of the floors were in poor condition. A major purpose of the Dust Study was to assess the 13 proposed work practices. A statistically valid sample of housing at the national level is not needed to 14 assess the work practices. If anything, the Dust Study is conservative with respect to the age of housing 15 because it studied older houses and therefore is appr opriate for assessing the effectiveness of the work 16 practices. 17 

### 3.2 Regulatory Background 18 This section outlines the extensive hist ory of lead-based paint regulations at the federal level. Childhood 19 lead exposure continues to be a major public health problem among young children in the United States. 20 Most children with blood lead levels in excess of CD C’s current level of concern have been exposed to 21 lead in non-intact paint, interior settled dust, and dust and soil in and around deteriorating older housing 22 (CDC 2004). The nature and extent of the problem s associated with lead-based paint in housing units 23 have been thoroughly investigated. Approximately 40% of all U.S. housing units (about 38 million 24 homes) have some lead-based paint. Use of lead safe work practices during renovation can advance the 25 goal of primary prevention of lead poisoning (CDC 2004). 26 3.2.1 The Federal Lead-based Paint Program 27 Title X and the Federal goal 28 Primarily in response to the persistent health threat posed by lead-based paint, in 1992 Congress enacted 29 Title X. Congress found that low-level lead poi soning was widespread among American children, 30 affecting, at that time, as many as 3 million childre n under age 6; that the ingestion of household dust 31 containing lead from deteriorating or abraded l ead-based paint was the most common cause of lead 32 poisoning in children; and that the health and de velopment of children living in as many as 3.8 million 33 American homes was endangered by chipping or p eeling lead paint, or excessive amounts of lead34 contaminated dust in their homes. Congress determined that the prior Federal response to this crisis was 35 insufficient and established, in Title X, a nationa l goal of eliminating lead-based paint hazards as 36 expeditiously as possible. Congress decided that the Fe deral government would take a leadership role in 37 building the infrastructure necess ary to achieve this goal. 38 The stated purposes of Title X are: 39
3⁄4 To develop a national strategy to build the infr astructure necessary to eliminate lead-based paint 40 hazards in all housing as expeditiously as possible. 41EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 3-5 3⁄4 To reorient the national approach to the presence of lead-based paint in housing to implement, on 1 a priority basis, a broad program to evaluate and reduce lead-based paint hazards in the Nation’s 2 housing stock. 3
3⁄4 To encourage effective action to prevent chil dhood lead poisoning by establishing a workable 4 framework for lead-based paint hazard evaluati on and reduction and by ending the current 5 confusion over reasonable standards of care. 6
3⁄4 To ensure that the existence of lead-based paint hazards is taken into account in the development 7 of Government housing policies and in the sale, rental, and renovation of homes and apartments. 8
3⁄4 To mobilize national resources expeditiously, through a partnership among all levels of 9 government and the private sector, to develop th e most promising, cost-effective methods for 10 evaluating and reducing lead-based paint hazards. 11
3⁄4 To reduce the threat of childhood lead poisoning in housing owned, assisted, or transferred by the 12 Federal Government. 13
3⁄4 To educate the public concerning the hazards a nd sources of lead-based paint poisoning and steps 14 to reduce and eliminate such hazards (Resid ential Lead-Based Paint Hazard Reduction Act of 15 1992). 16
EPA’s lead-based paint program 17 Under Title X, EPA is directed to take actions that can be divided into 4 key categories: 18
3⁄4 Establishing a training and certification program for persons engaged in lead-based paint 19 activities, accrediting training providers, estab lishing work practice standards for the safe, 20 reliable, and effective identification and elimina tion of lead-based paint hazards, and developing a 21 program to address exposure to lead-based pa int hazards from renovation and remodeling 22 activities. 23
3⁄4 Ensuring that, for most housing constructed before 1978, lead-based paint information flows from 24 sellers to purchasers, from landlords to tenants, and from renovators to owne rs and occupants. 25
3⁄4 Establishing standards for identifying dangerous levels of lead in paint, dust and soil. 26
3⁄4 Providing information on lead hazards to the pu blic, including steps that people can take to 27 protect themselves and their families from lead-bas ed paint hazards. Each of these categories is 28 discussed in more detail in the following sections. 29 a. Training and certification, accred itation, and work practice standards. Title X added a new title to 30 TSCA entitled ‘‘Title IV Lead Exposure Reduction.’’ Mo st of EPA’s responsibilities for addressing lead31 based paint hazards can be found in this title, w ith section 402 being one source of the rulemaking 32 authority to carry out these responsibilities. TSCA sec tion 402(a) directs EPA to promulgate regulations 33 covering lead-based paint activities to ensure persons performing these activities are properly trained, that 34 training programs are accredited, and that contr actors performing these activities are certified. These 35 regulations must contain standards for performi ng lead-based paint activities, taking into account 36 reliability, effectiveness, and safety. 37 On August 29, 1996, EPA promulgated final regula tions under TSCA section 402(a) governing lead38 based paint inspections, lead hazard screens, risk asse ssments, and abatements in target housing (U.S. 39 EPA 1996). TSCA section 401 defines ‘‘target housin g’’ as any housing constructed prior to 1978, 40 except housing for the elderly or persons with disabiliti es (unless any child who is less than 6 years of age 41 resides or is expected to reside in such housing for the elderly or persons with disabilities) or any 0- 42EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 3-6 bedroom dwelling. These regulations also apply to ‘‘child-occupied facilities,’’ which are defined at 40 1 CFR 745.223 as buildings constructed before 1978, or portions of such buildings, where children under 2 age 6 are regularly present. TSCA section 402 define s lead-based paint activities in target housing as 3 inspections, risk assessments and abatements. The 1996 regulations cover lead-based paint abatement 4 activities in target housing and child-occupied faciliti es, along with limited screening activities called lead 5 hazard screens. The regulations also established an accreditation program for training providers and a 6 certification program for individuals and firms perfo rming these activities. Training providers who wish 7 to provide lead-based paint traini ng for the purposes of the Federal l ead-based paint program must be 8 accredited by EPA. Implementing regulations at 40 CFR 745.225 describe in detail the requirements for 9 each course of study, how training programs mu st be operated, and the process for obtaining 10 accreditation. Training programs must have a trai ning manager with experience or education in a 11 construction or environmental field, and a principal in structor with experience or education in a related 12 field and education or experience in teaching adults. Training programs must also have adequate facilities 13 and equipment for delivering the training. To become accredited, an application for accreditation must be 14 submitted to EPA on behalf of the training program. The application must either include the course 15 materials and syllabus, or a statement that EPA mode l materials or materials approved by an authorized 16 State or Tribe will be used. The application mu st also include a description of the facilities and 17 equipment that will be used, a copy of the test blue print for each course, a description of the activities and 18 procedures that will be used during the hands-on sk ills portion of each course, a copy of the quality 19 control plan, and the correct amount of fees. If EPA finds that the program meets the regulatory 20 requirements, it will accredit the training program for 4 years. To maintain accreditation, the training 21 program must submit an application and the correct amount of fees every 4 years. 22 Individuals and firms that perform inspections, lead hazard screens, risk assessments, or abatements in 23 target housing or child-occupied facilities must be cer tified. Certification requirements and the process 24 for becoming certified are described in 40 CFR 745.226. A firm that wishes to become certified must 25 submit an application, along with the correct amount of fees, attesting that it will use only certified 26 individuals to perform lead-based pa int activities and that it will follow the work practice standards in 40 27 CFR 745.227. An individual who wishes to become cer tified must take an accredited training course in at 28 least one of the certified disciplines: Inspector, ri sk assessor, project designer, abatement worker, and 29 abatement supervisor. The risk assessor, project d esigner, and abatement supervisor disciplines have 30 additional requirements for educa tion or experience in a construction or environmental field. The 31 inspector, risk assessor, and abatement supervisor disciplines also require the applicant to pass a 32 certification examination administered by a third party. 33 The regulations at 40 CFR part 745, subpart L, also contain work practice standards for performing 34 inspections, lead hazard screens, risk assessments and abatements in target housing and child-occupied 35 facilities. The regulations contain specific re quirements for conducting paint sampling during an 36 inspection and specify information that must be gathered and samples that must be taken as part of a lead 37 hazard screen or risk assessment. The requirements for abatements are also set forth in the regulations. 38 When conducting abatements, an occupant protection plan must be prepared by a certified supervisor or 39 project designer; certain work practices such as open -flame burning, machine sanding or abrasive blasting 40 without high-efficiency exhaust control, dry scraping, and heat guns at high settings are prohibited; and a 41 visual inspection and dust clearance sampling must be pe rformed after the abatement is finished to ensure 42 that the area is ready for re-occupancy. Any sampl es collected during any of these regulated lead-based 43 paint activities must be analyzed by a laboratory r ecognized by EPA as being capable of analyzing paint 44 chips, dust, and soil for lead. Requirements for in spection, lead hazard screen, risk assessment or 45 abatement reports are also described in this section 46EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 3-7 Recognizing the importance of States and Territories in achieving the goal of eliminating lead-based paint 1 hazards in housing, Congress specifically directed EPA to establish a model State program and a process 2 for authorizing States to operate such programs in lie u of the Federal program. Concurrently with the 3 subpart L rulemaking in 1996, EPA codified, at 40 CFR part 745, subpart Q, a model training and 4 certification program and a process for enabling States, Territories, and Tribes to apply for authorization 5 to administer their own lead-based paint activity prog rams. Providing Indian Tribes with this opportunity 6 is consistent with EPA’s Policy for the Admi nistration of Environmental Programs on Indian 7 Reservations (U.S. EPA 1984). EPA also provides gran ts under TSCA section 404 to States, Territories, 8 and Tribes to assist them in developing and administering these programs, as well as programs 9 implementing TSCA section 406(b). On June 9, 1999, the subpart L regulations were amended to include 10 a fee schedule for training programs seeking EPA accreditation and for individuals and firms seeking 11 EPA certification (U.S. EPA 1999). These fees were estab lished as directed by TSCA section 402(a)(3), 12 which requires EPA to recover the cost of admini stering and enforcing the lead-based paint activities 13 requirements in unauthorized States. The most rece nt amendment to the subpart L regulations occurred 14 on March 20, 2009 (U.S. EPA 2009). 15 In addition, Congress directed EPA, in TSCA section 405, to establish protocols, criteria, and minimum 16 performance standards for analysis of lead in paint, dust, and soil. TSCA section 405 further directed 17 EPA, in consultation with HHS, to develop a program to certify qualified laboratories. The National Lead 18 Laboratory Accreditation Program (NLLAP) provides the public with a list of laboratories that have met 19 EPA requirements and demonstrated the capability to accu rately analyze paint chip, dust, or soil samples 20 for lead. All laboratories recognized by NLLAP must pass on-site audits conducted by one of the two 21 accrediting organizations currently participating in N LLAP, the American Industrial Hygiene Association 22 (AIHA), and the American Association for Laboratory Accreditation. Recognized laboratories must also 23 perform successfully on a continuing basis in the En vironmental Lead Proficiency Analytical Testing 24 (ELPAT) Program established by NIOSH, AIHA, and EPA. 25 The LRRP rule for target housing and COFs was prom ulgated in 2008 (73 FR 21692) and is codified in 26 Part 745 of Title 40 of the Code of Federal Regula tions (CFR). The rule was promulgated under the 27 authority of §402(c) of the Toxic Substances Contro l Act (TSCA). Section IV of TSCA was established 28 by the Residential Lead-Based Paint Hazard Re duction Act of 1992, also known as Title X of the 29 Housing and Community Development Ac t of 1992, Public Law 102-550. 30 The 2008 LRRP regulation requires entities that pe rform renovation, repair and painting work for 31 compensation in buildings covered by the rule to become certified by EPA, ensure that their employees 32 are trained as either renovators or workers, and use lead-safe work practices when disturbing lead-based 33 paint. 34 b. Lead-based paint information for purchasers, re nters, owners, and occupants of target housing. 35 Another of EPA’s responsibilities under Title X is to requi re that purchasers and tenants of target housing, 36 as well as occupants of target housing and parent s of children in COFs undergoing renovation are 37 provided information on lead-based paint and lead-b ased paint hazards. As directed by TSCA section 38 406(a), CPSC, HUD, and EPA, in consultation with CD C, jointly developed a lead hazard information 39 pamphlet entitled ‘‘Protect Your Family From Lead in Your Home’’ (‘‘PYF’’) (U.S. EPA et al 2003b). 40 This pamphlet was designed to be distributed as pa rt of the disclosure requirements of section 1018 of 41 Title X and TSCA section 406(b), to provide home purch asers, renters, owners, and occupants with the 42 information necessary to allow them to make informed choices when selecting housing to buy or rent, or 43 deciding on home renovation projects. The pamphlet c ontains information on the health effects of lead, 44 how exposure can occur, and steps that can be taken to reduce or eliminate the risk of exposure during 45 various activities in the home. 46EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 3-8 Pursuant to the authority provided in section 1018 of Title X, on March 6, 1996, HUD and EPA jointly 1 promulgated regulations requiring persons who are selling or leasing target housing to provide the PYF 2 pamphlet and information on known lead-based paint and lead-based paint hazards in the housing to 3 purchasers and renters (HUD and U.S. EPA 1996). These joint regulations, codified at 24 CFR part 35, 4 subpart A, and 40 CFR part 745, subpart F, describe in detail the information that must be provided 5 before the contract or lease is signed and require that sellers, landlords, and agents document compliance 6 with the disclosure requirements in the contract to se ll or lease the property. Title X does not provide for 7 these requirements to be administered by States or Trib es in lieu of the Federal regulations. Therefore, 8 HUD and EPA are responsible for administering and enforcing these disclosure obligations. 9 TSCA section 406(b) directs EPA to promulgate regulations requiring pe rsons who perform home 10 renovations for compensation to provide a lead hazard information pamphlet to owners and occupants of 11 target housing being renovated. Th ese regulations, promulgated on June 1, 1998, are codified at 40 CFR 12 part 745, subpart E (U.S. EPA 1998). The term ‘‘re novation’’ is defined, at 40 CFR 745.83, as the 13 modification of any existing structure, or portion of a structure, that results in the disturbance of painted 14 surfaces. Lead-based paint abatement projects are spec ifically excluded, as are small projects that disturb 15 2 square feet or less of painted surfaces, emergenc y projects, and renovations affecting components that 16 have been found to be free of lead-based paint, as that term is defined in the regulations, by a certified 17 inspector or risk assessor. Like the regulations regarding disclosure during sales or leases, these 18 regulations require the renovation firm to documen t compliance with the requirement to provide the 19 owner and the occupant with the PYF pamphlet. One important difference from the disclosure 20 requirements in section 1018 of Title X is that TSCA section 404 allows States to apply for, and receive 21 authorization to administer, the TSCA section 406(b) requirements. Two States are currently authorized 22 to operate this program. 23 c. Standards for lead in paint, dust, and soil. Another responsibility assigned to EPA by Title X is the 24 development of standards for identifying dangerous levels of lead in pain t, dust and soil. These standards, 25 promulgated pursuant to TSCA section 403 on January 5, 2001 and codified at 40 CFR part 745, subpart 26 D, provide various Federal agencies, including HUD, and State, local and Tribal governments with 27 uniform benchmarks on which to base decisions on reme dial actions to safeguard children and the public 28 from lead-based paint hazards (U.S. EPA 2001b). These st andards also allow certified inspectors and risk 29 assessors to easily determine whether a particular s ituation presents a lead-based paint hazard and whether 30 to recommend remedial actions such as lead-based paint abatement, cleaning of dust, or removal of soil. 31 The standards define lead-based paint hazards in targ et housing and child-occupied facilities as paint-lead, 32 dust-lead, and soil-lead hazards. A paint-lead hazar d is defined as any damaged or deteriorated lead33 based paint, any chewable lead-b ased painted surface with evidence of teeth marks, or any lead-based 34 paint on a friction surface if lead dust levels undern eath the friction surface exceed the dust-lead hazard 35 standards. A dust-lead hazard is surface dust that cont ains a mass-per-area concentration of lead equal to 36 or exceeding 40 micrograms per square foot ( μ g/ft 2 ) on floors or 250 μ g/ft 2 on interior windowsills based 37 on wipe samples. A soil-lead hazard is bare soil that contains total lead equa l to or exceeding 400 parts 38 per million ( μ g/g) in a play area or average of 1,200 parts per million of bare soil in the rest of the yard 39 based on soil samples. 40
d. Public outreach and education . Among other things, TSCA section 405(d) directs EPA, along with 41 the Agency for Toxic Substances and Disease Registry (ATSDR) and HUD, to sponsor public education 42 and outreach activities to increase public awareness of the health effects of lead, the potential for 43 exposures, the importance of screening children for elev ated blood lead levels, and measures that can be 44 taken to reduce or eliminate lead-based paint hazards . Accordingly, EPA has worked to provide the 45 public with information and increase public awareness of such matters. To date, these activities have 46EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 3-9 included web site management, deve lopment of public outreach strategi es, development of partnership 1 agreements, distribution of materials, participation in national conferences and exhibits, and developing 2 hazard information documents (and other media, such as videos), as necessary to implement Title X. EPA 3 has collaborated closely with other Federal agencies a nd its State, Tribal, and local government partners 4 in developing outreach campaigns. EPA has also been involved in developing mode l tool kits of various 5 educational tools to provide to part ners, such as slogans and graphic ma terials for public buses, trains, and 6 mass transit stations. 7 TSCA section 405(e) further directs EPA to establis h, in connection with HUD, CDC, other Federal 8 agencies, and State and local governments, a clear inghouse for information on lead-based paint and a 9 hotline for the public to use for questions and requ ests for information on lead-based paint. This 10 clearinghouse, the National Lead Information Center , handles approximately 50,000 calls per year, and 11 disseminates up to 500,000 documents per year to the public. 12
Lead-based paint programs at other Federal agencies 13 In addition to EPA, other Federal agencies have impor tant roles in achieving the goals of reducing or 14 eliminating lead-based paint hazards in housing. Other agencies specifically assigned tasks in Title X 15 include HUD, CDC, and OSHA. 16 The Federal agencies have long realized that they mu st work together to deve lop and implement Federal 17 strategies for addressing lead-based paint hazards in or der to be efficient and effective. In 1989, HUD 18 and EPA formed an inter-agency task force to wo rk through issues associated with lead-based paint 19 abatement. The Federal Interagency Lead Based Pa int Task Force has remain ed active throughout the 20 years and continues to meet on a quarterly basis. Participating agencies include the Department of 21 Defense, the Veterans Administration, the National Institute of Standards and Technology (NIST), the 22 U.S. Public Health Service, the National Aer onautics and Space Administration (NASA), the United 23 States Department of Agriculture (USDA), the Gove rnment Accountability Office (GAO), the National 24 Institute for Environmental Health Sciences (NIE HS), ATSDR, CDC, CPSC, NIOSH, OSHA, HUD, and 25 EPA. This Task Force serves as an important forum for coordinating the strategic plans of the Federal 26 agencies who have responsibilities under Title X or who have responsibilities for maintaining and 27 disposing of property that ma y contain lead-based paint. 28 Title X assigned certain responsibilities to HUD. One of HUD’s functions is the administration of the 29 Lead-Based Paint Hazard Control Grant Program establishe d by the Act. This program provides grants of 30 $1 million to $3 million to State and local government s for control of lead-based paint hazards in 31 privately owned, low-income owner-occupied and rent al housing that is not receiving federal assistance. 32 These grants are also designed to stimulate the de velopment of a trained and certified hazard evaluation 33 and control industry. Evaluation and hazard control work funded by the program must be conducted by 34 either contractors who are certified by EPA or an EPA-approved State or Tribal program, or by 35 contractors trained in lead-safe work practices, in the case of interim controls. Through these 36 requirements, HUD hopes to create infrast ructure that will last beyond the life of the grant. In awarding 37 grants, HUD promotes the use of cost-effective approaches to hazard control that can be replicated across 38 the nation. Since 1993, approximately $971 million has been awarded to over 200 local and State 39 jurisdictions across the country. The work approved to date will lead to the control of lead-based paint 40 hazards in more than 70,000 homes where young childr en reside or are expected to reside. Other HUD 41 lead grant programs include the Lead Hazard Reduc tion Demonstration program, the Lead Elimination 42 Action Program (LEAP), the Lead Outreach program and the Lead Technical Studies program. 43 HUD was also given regulatory authority over some asp ects of lead based paint hazard control. As noted 44 previously, on March 6, 1996, HUD and EPA jointly pr omulgated regulations requiring the disclosure of 45EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 3-10 lead-based paint information during sale or lease transactions involving target housing. The HUD 1 disclosure regulations are codified at 24 CFR part 35, subpart A. Subparts B through R of 24 CFR part 2 35 are known as the ‘‘Lead Safe Housing Rule,’’ in itially promulgated on September 15, 1999, and 3 updated in June 2004 (HUD 2004b). Th is rule was designed to protect young children from lead-based 4 paint hazards in target housing that is being sold by the Federal government or receives financial 5 assistance from the government. The requirements ge nerally depend upon the level of assistance being 6 provided, and may include such things as inspections, risk assessments, abatement, paint stabilization, or 7 interim controls, which are temporary measures to reduce potential exposure to lead-based paint hazards. 8 The emphasis is on reducing lead-based paint hazards, so, after paint is disturbed, a visual assessment for 9 surface dust, debris, and residue and dust clearance testi ng is required to ensure that no dust lead hazards 10 were created or left in the work area or, for rehabilitation projects of m oderate or substantial scope, in the 11 entire housing unit. More information on the Lead Sa fe Housing Rule is available on the HUD website at 12 http://www.hud.gov/offices/lead. 13 Section 1017 of Title X required HUD to issue ‘‘guide lines for the conduct of federally supported work 14 involving risk assessments, inspections, interim controls , and abatement of lead-based paint hazards.’’ In 15 response to this directive, HUD completed the Guide lines for the Evaluation and Control of Lead-Based 16 Paint Hazards in Housing (Guidelines), in June 1995 (HUD 1995). The Guidelines provide detailed, 17 comprehensive, technical information on how to iden tify lead-based paint hazards in housing and how to 18 control such hazards safely and efficiently. 19 Other core activities of HUD’s lead-based paint progr am include providing technical assistance to 20 housing authorities, nonprofit housing providers, local a nd State agencies, other Federal agencies, housing 21 developers, inspectors, real estate professionals, cont ractors and financiers, and public health authorities; 22 evaluating the hazard reduction methods used in the gr ant program to measure their effectiveness, cost 23 and safety; and maintaining a community outreach program in coordination with the other Federal 24 agencies involved in lead-based paint hazard reduction. 25 CDC also provides significant funding for the prevention of childhood lead poisoning. CDC provides 26 funding to support State, city and county programs in the areas of primary prevention, case management 27 and screening, surveillance, strategic partnerships , and program evaluation. Since 2002, CDC has 28 recommended that a blood lead level of 10 micrograms per deciliter ( μ g/dL) be used as a threshold for 29 individual intervention (CDC 2002). Additional CDC r ecommendations address the type and intensity of 30 individual intervention strategies that should be undert aken, depending upon the child’s blood lead level. 31 These strategies range from nutritional and educational interventions, along with more frequent testing, 32 for a child with a blood lead level of 10–14 μ g/dL, to medical and environmental interventions for 33 children with blood lead levels above 45 μ g/dL (CDC 2002). CDC has established a national surveillance 34 system for children with elevated blood lead leve ls. In addition, CDC works with HUD and EPA to 35 coordinate outreach and education campaigns. 36 OSHA is another agency with regulatory authority under Title X. As directed by the Act, OSHA 37 promulgated an interim final standard on May 4, 1993, which regulates lead exposures in the construction 38 industry (OSHA 1993). This standard, codified at 29 CFR 1926.62, limits worker exposures to 50 39 micrograms of lead per cubic meter of air averaged over an 8–hour workday. Employers must use a 40 combination of engineering controls and work practices to reduce employee exposure as much as 41 possible, using appropriate respiratory protecti on where necessary to achieve the exposure limit. 42 Employees must receive training on the health effect s of lead and how to limit exposure through proper 43 work practices and personal prot ective equipment. Exposure monitoring and medical monitoring, 44 including blood lead testing, are also required. Th is standard remains in effect and OSHA retains the 45 authority to protect workers from occupational exposure to lead. 46EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 3-11 Many Federal agencies have been working to reduce or eliminate lead-based paint hazards in housing and 1 to end lead poisoning. EPA, HUD, and other Federal agencies have been working for many years on the 2 problem of lead-based paint hazards that can be created during renovation and remodeling activities in 3 housing and child-occupied facilities. This rulemaking is an important component of the Federal strategy 4 for eliminating lead poisoning. 5 

### 3.3 Justification for Federal Regulati ons of Lead Exposure during Renovation 6
3.3.1 Market Failure 7 A necessary condition for an economic justification for a regulation is the existence of an inefficiency in 8 the allocation of resources. This inefficiency is co mmonly known as a market failure since the market is 9 the mechanism used to allocate resources efficiently. Market failures can result when one or more of the 10 following conditions are met: 11

• poorly defined property rights (such as negativ e externalities, common property resources, and 12 public goods); 13

• imperfect markets for trading property rights (becau se of a lack of perfect information or of 14 contingent markets; 15

• monopoly power; 16

• distortionary taxes and subsidies and other inappropriate government regulations); and 17

• the divergence of private and social discount rates. 18 The occurrence of any of these conditions justifies furt her inquiry into the need for government regulation 19 to reduce inefficiencies in the allocation of society’ s resources. This section considers whether any of 20 these conditions are linked to lead exposures resulting from renovation in target housing and public or 21 commercial building COFs. If so, u nderstanding the nature of the inefficiencies involved facilitates the 22 design of more effective regulations. The specific re gulatory approach considered here involves requiring 23 dust sampling and clearance testing following certain renovation activities. 24 Economic efficiency suggests that in the absence of regulation dust sampling and clearance testing 25 following renovation will occur as long as the property owners’ willingness-to-pay for reduced lead risks 26 exceeds the cost of reducing these risks. If the pr operty owners are aware of the risks and of the 27 availability and costs of reducing these risks, then argua bly they might be able to accurately trade off risk 28 and cost without the aid of government regulation. However, there are two arguments for why individual 29 property owners may not trade off risk and cost effici ently: (1) because externali ties exist, and (2) because 30 of inadequate information. 31

Externalities and Public-Good Characteristics of Lead-Safe Renovation 32 One potential cause of market failure for dust sampling and clearance testing following renovations stems 33 from externalities. An efficient outcome is achieved when the marginal willingn ess-to-pay for a service is 34 equivalent to the marginal cost of providing that ser vice. In the case of renovation in a rental unit, the 35 primary beneficiaries of lead-safe renovation are the occupants; however, the decision about whether or 36 not to pay for dust sampling or clearance testing is made by the property owners or managers who have 37 an insufficient incentive to take the benefits to their occupants into account when making this decision. 38
Externalities also exist in the case of renovation ev ents in owner-occupied homes. Because dust sampling 39 and clearance testing following renovation in an owne r-occupied unit is likely to benefit not only the 40 consumer of the renovation (the homeowner and his or her family members) but also residents of adjacent 41 properties, future occupants, visitors, and child ren receiving child care on the premises; lead-safe 42EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 3-12 renovation services are, in part, a public good. As su ch, even with perfect information, the maximum 1 amount that the individual consumer of the renovation w ould be willing to pay for lead-safe work is likely 2 to be lower than the total amount that that particul ar consumer plus the other beneficiaries (tenants, 3 neighbors, future occupants, etc.) would be willing-to-p ay for the service. For example, a future occupant 4 of a housing unit for sale may experience an increased exposure to lead if a renovation that creates a lead 5 hazard is performed before they move in. While a fu ture occupant might be willing to pay to reduce or 6 eliminate this exposure, they would not be consulte d by the property owner making the decision. As 7 another example, children cannot express their willingn ess-to-pay for risk reduction and rely on their 8 parents’ or the property owners’ willingness-to-pay. Ev en if other parties were consulted, the transaction 9 costs of reaching an agreement would be high, leading to an inefficient process. 10 Another example of an externality is associated with an owner’s decision regarding which contractor to 11 hire to perform renovation in his or her housing unit. Contractors that perform dust sampling or clearance 12 testing following a renovation are likely to charge more for their work than establishments that do not 13 perform this testing. This testing may also incr ease the duration of the project because dust wipe testing 14 takes time, and because contractors may need to perfo rm additional cleaning. Since the property owner 15 pays for the renovation, but not necessarily for the con sequences of all the resulting lead exposure, he or 16 she is faced with powerful short-term incentives (lower cost and a faster turn-around) to hire a contractor 17 that does not perform dust sampling or clearance testing. Other parties (such as tenants, future occupants, 18 visitors, and children receiving child care and their pa rents) pay for the consequences of lead exposures, 19 not the property owner. This externality results in the socially inefficient outcome of too little dust 20 sampling and clearance testing services being purchased. 21 Inefficiencies also exist on the supply side of this market. Renovators that perform dust sampling or 22 clearance testing incur higher costs than other cont ractors who are faced with incentives to keep their 23 costs as low as possible. Similar to property owne rs, contractors may not incur the costs of consumer 24 lead exposure resulting from unsafe renovation work. 25 Because the legal system is not perfect, the contr actor’s financial responsibilities (in terms of liability 26 costs related to customer lead exposure) are not cl ear and consistently enforced. The same situation 27 occurs with respect to a property owner’s responsibiliti es to tenants, future occupants, visitors, and child28 care customers. This situation is likely to result in an inefficient outcome of too little dust sampling and 29 clearance testing services being consumed. 30
Inadequate Information 31 Another cause of market failure associated wth lead-safe work practices is due to inadequate information. 32 Correct information is an important prerequisite to the demand for dust sampling or clearance testing 33 following renovation projects. In deciding whether du st sampling or clearance testing are worth the extra 34 cost, the property owner must know whether there is lead in the work area, what risks are implied by 35 having renovation done in areas with lead-based pain t, the significance of these risks, what can be 36 accomplished in reducing those risks, a nd how much these risk reductions cost. 37
Misinformation can lead to inefficient outcomes. Without knowing there is a lead problem, or how 38 renovation might create lead hazards, the owner w ill have too low a demand for dust sampling or 39 clearance testing and may be unwilling to pay additional costs for contractors to perform the testing. 40 Furthermore, a great deal of uncertainty can exist if the consumer is unsure about the quality of lead-safe 41 renovation services being purchased and their likely be nefits. If consumers do not have any guarantee 42 that contractors are qualified to identify and contro l lead-based paint hazards, demand for these services is 43 likely to be lower than in the presence of such a guarantee. On the supply side, contractors may be 44 unaware of the risks they are creating and the methods they can use to reduce risks of lead exposure. 45EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 3-13 The proposed LRRP Clearance Rule provides additional information to two groups: (1) renovation firms 1 and their employees, and (2) owners and occupants of renovated structures. The proposed rule will 2 provide additional information to renovation firms and their employees about the effectiveness of the 3 containment and cleaning practices they are employing. Specifically, dust wipe test results that exceed 4 dust hazard levels indicate that the containment and cleaning practices employed were inadequate while 5 results showing no dust-lead hazards indicate that the containment and cleaning practices employed were 6 adequate. Renovation firms can be expected to impr ove their effectiveness and efficiency for achieving 7 dust wipe test results below dust-lead hazard levels as they receive feedback on the effectiveness of their 8 work practices. Property owners a nd occupants will also be provided with additional information under 9 the proposed rule such as information about whether or not lead dust hazards exist after renovation work 10 has been performed. This information will provide owners and occupants w ith a greater understanding 11 and awareness of dust-lead hazards, which has valu e because it provides owners and occupants with a 12 greater ability to make further risk management decisions. 13
Impacts of the Regulation on Demand for Lead-Safe Renovation Services 14 A consumer’s demand for renovation services is a function of the price of these services, the 15 characteristics of the services (e.g., quality, lead safety et c.), and consumers’ own characteristics. For the 16 purpose of illustration, assume that all renovation ser vices are identical except that some are performed 17 using lead-safe containment and clean-up practices wi th dust sampling and some are not. Further assume 18 that there is only one consumer and one supplier in the market. Of the services that are performed 19 without lead-safe practices, some are done by th e supplier, while others are do-it-yourself projects 20 performed by the consumer. The general market failu re relationships discussed above are illustrated in 21 Exhibit 3-1 as three markets for close substitutes. Figure (a) represents the market for lead-safe 22 renovation projects, Figure (b) represents the professiona l market for “standard practice” renovations that 23 do not use lead-safe work practices, and Figure (c ) represents the do-it-yourself market for “standard 24 practice” renovations. In each market, S 0 represents the supply of renovation services and D 0 represents 25 the demand for renovation services in the baseline with incomplete information. Note that, moving from 26 left to right, each supply curve is lower than the pr ior one, corresponding to the lower cost in terms of 27 materials and time combined. The area under the dema nd curve in each market represents the consumer’s 28 willingness-to-pay for renovation services. 29
30EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 3-14 Exhibit 3-1: Impact of Regulation on Markets for Renovation/Remodeling Services

S 0

D 1

Work Practices Figure (b) Professional Market with “Standard” Work Practices Q Lead-Safe Q Standard Professional P Lead-Safe P Standard Professional

D 0 S 0

Q Standard Do-it-yourself 

## ?

Figure (c) Do-it-Yourself Market with “Standard” Work Practices P 0

P Standard Do -it-yourself

D 0 S 1

D 0 D 1 S 0 S 1

Q 1 Q 0 P 0 P 1

Q 0 P 0 P 1

Figure (a) Market with Lead-Safe Q 1 Q 0 S 0

D 1

Work Practices Figure (b) Professional Market with “Standard” Work Practices Q Lead-Safe Q Standard Professional P Lead-Safe P Standard Professional

D 0 S 0

Q Standard Do-it-yourself 

## ?

Figure (c) Do-it-Yourself Market with “Standard” Work Practices P 0

P Standard Do -it-yourself

D 0 S 1

D 0 D 1 S 0 S 1

Q 1 Q 0 P 0 P 1

Q 0 P 0 P 1

Figure (a) Market with Lead-Safe Q 1 Q 0

1 The proposed LRRP clearance rule alters the nature of these three markets by providing additional 2 information to the consumer and contractor about the risk associated with lead-based paint renovation 3 activities and by requiring that clearance standa rds are met following certain renovations. The 4 implementation of the LRRP program will help to es tablish a more structured market for lead-safe 5 renovation services. Prior to the LRRP program, consumers of renovation services generally had no 6 guarantee that a contractor who claimed to provide lead-safe renovation services would actually perform 7 the project in a lead-safe manner. The im plementation of work practice standards and 8 training/certification requirements is likely to incr ease consumer confidence in the quality of the work 9 provided by certified contractors. The proposed LRRP clearance rule requires that additional information 10 is provided to consumers and renovato rs in order to enable consumers to more accurately judge the 11 quality of the work provided by certified contractors. 12 EPA’s targeted outreach program is also likely to increase demand for lead-safe renovation services by 13 raising consumer awareness about the dangers of unsafe work. Although contractors that currently 14 provide well-trained staff and perform lead-safe work practices are expected to find it in their vested 15 interest to provide the kinds of information cited a bove, this possibility has not closed the information 16 gaps for the public. One impediment may be public uncertainty about the reliability of information that 17 contractors themselves provide. Their information may be considered unreliable because consumers are 18 not fully competent to assess the lead contaminati on and what needs to be done, because the businesses 19 are subject to moral hazard (which occurs, for exam ple, because businesses have a financial interest in 20 minimizing their work practice costs), or both. Since many property owners may lack easy access to 21 independent sources of information to motivate their d ecisions, doing nothing may be the likely response. 22 The increased demand discussed above is shown by an upward shift of the demand curve in Figure (a) 23 from D 0 to D 1 and an associated increase in price. Simu ltaneously, the demand for “standard practice” 24 renovation services decreases with an associated d ecrease in price. Given scarce resources for 25 enforcement, it is expected that some “standard practice” professional work will continue, even in 26 properties where there is the potential for lead exposure. The effect of the regulation on the do-it-yourself 27EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 3-15 market is ambiguous. Some propert y owners that might have hired a professional to perform “standard 1 practice” renovation work in the baseline may decide to perform this work themselves rather than pay the 2 additional costs for lead-safe work practices. This action would shift the supply curve back up. On the 3 other hand, with increased information, property owners that would have performed do-it-yourself 4 “standard” practice” renovation in the baseline may decide to either for go renovation altogether or hire a 5 lead-safe professional, thus reducing do-it-yourself demand. 6 Impacts of the Regulation on the Supply of Lead-Safe Renovation Services 7 The proposed LRRP clearance rule will increase both the cost of supplying lead-safe services and 8 standard services. In Figures (a) and (b), S 1 represents the supply of services with the regulations. Many 9 firms performing lead-safe renovations will incur additi onal costs associated with having third party dust 10 sampling performed (or training dust sampling techni cians and performing their own dust sampling), and 11 may incur costs for re-cleaning where clearance is required. A contractor that continues to provide 12 standard (not lead-safe) renovation services will have higher costs of operation due to potential 13 enforcement actions and potentially higher liability. The relative size of the shifts in the two submarkets 14 will affect the final changes in quantity and price of both lead-safe and standard renovation services. 15 The net impact on the quantity of renovation projects pe rformed is also ambiguous. If all property owners 16 are willing to pay the full amount for lead-safe work pr actices, then the total quantity performed across all 17 three markets will remain constant but the average pri ce will rise. However, if some property owners are 18 not willing to pay for the risk reduction they may c hose to forgo renovation services altogether, resulting 19 in a net decline in renovation services provided after regulation. 1 20

Conclusions 21 As demonstrated in this section, due to inadequate information and the existence of externalities, the 22 quantity of lead-safe RRP services currently provided is likely to be inefficiently low. Failure in the 23 market for lead-safe RRP services is significant in both qualitative and quantita tive terms. Childhood 24 lead exposure continues to be a major public health problem among young children in the United States. 25 From 1999 to 2002, approximately 310,000 children aged 1 to 5 years, had blood-lead levels greater than 26 10 μg/dL, despite the removal of l ead from gasoline and a ban on lead -based paint in 1978 (CDC 2005). 27 Most children with blood-lead levels in excess of CD C’s current level of concern have been exposed to 28 lead in non-intact paint, interior settled dust, and dust and soil in and around deteriorating older housing 29 or other buildings where they spend time. Acco rding to the Center for Disease Control (CDC), 30 “renovation and remodeling activities that disturb lead-b ased paint can create substantial amounts of lead 31 dust in the home; such dust can then be inhaled or ingested by children” (CDC 1997). An insufficient 32 number of lead-based paint interventions have occu rred to remove the dangers posed by uncontrolled 33 renovation activities; renovation activit y thus continues to pose a significant risk of lead exposure. 34 3.3.2 Justification for Regulation at the Federal Level 35 In the Residential Lead-Based Paint Hazard Reduc tion Act of 1992 (Title X), the United States Congress 36 stated that the elimination of lead-based paint hazards was a national goal. Under §402, Congress 37 directed EPA to promulgate regula tions governing lead-based paint activ ities to ensure that individuals 38 are properly trained, that training programs are accred ited, and that contractors engaged in such activities 39 are certified; and to promulgate guidelines for th e conduct of such renovation and remodeling activities 40

1 The amount by which price and quantity change in each of th ese markets is a function of both the amount by which the supply and/or demand functions shift and the relative elasticities of the two functions. See Appendix 3A for a discussion of how these factors affect the price of renovation services and the quantity provided by the market. Appendix 3B presents price elasticity estimates for construction and RRP.EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 3-16 which may create a risk of exposure to dangerous le vels of lead. Accordingly, the 2008 LRRP rule 1 established training, certification and accreditation requirements as well as work practice requirements for 2 renovation work in target housing and COFs. 3 The proposed rule revises the LRRP program by requiring dust wipe testing and clearance testing 4 following certain renovations. Since both of these prov isions revise the existing Federal RRP regulation, 5 it is appropriate that the changes be made at the Fe deral level, instead of the state or local level. 6 

### 3.4 Approaches for Reducing Lead Ex posure Resulting from Renovation 7 This section examines how the information provision and the mandatory training and work practice 8 requirements in the proposed rule address the mark et failures discussed in the previous section. 9

3.4.1 Information Provision 10 Information provision will occur in several ways under the LRRP program in conjunction with other 11 sections of Title X. Consumers will be directly informed about lead-based paint hazards and risks 12 associated with renovation work through educational programs, expanded notification requirements, and 13 quantitative information about dust-lead hazards provide d after dust wipe testing and clearance. The aim 14 of these programs will be to educate the property owne r about the risks associated with lead-based paint 15 and lead-based paint hazards and having renovation wo rk done in areas where these are present, the 16 significance of these risks, and how specific work practi ces can reduce those risks. In addition, requiring 17 training of professionals who carry out renovation pr ojects and perform dust wipe testing will provide 18 these individuals information about the hazards of lead exposure and the use of appropriate procedures to 19 reduce exposure during their work. Similarly, the firm certification process will act as an indirect form of 20 information provision to the consumer by assuring them that the services they are purchasing will reduce 21 or eliminate lead exposure. 22 The proposed rule addresses market failure due to inade quate information in two wa ys. First, it provides 23 owners and occupants with more co mplete information about dust lead standards which will improve their 24 ability to make further risk management decisions . Second, it provides a feedback mechanism for 25 renovation firms that is expected to result in improve ments in the effectiveness and efficiency of their 26 containment and cleaning practices. Both of these in formation provision activities are described below. 27
Effect of Dust Wipe Testing and Clearance Requirements 28 The objective of requiring dust wipe testing and clearance following certain renovations is to reduce 29 exposure to lead dust generated by renovation projects and thereby protect children and adults from the 30 health hazards posed by lead. Due to the nature of th e problem, uncertainty currently exists on the part of 31 consumers about the quality of lead-safe renovation services and their likely benefits. The lack of 32 information regarding the benefits of and the l ack of confidence in the quality of a good or service 33 generally leads to a lower demand and a lower willi ngness-to-pay for that good or service. Thus, if 34 consumers of renovation services are not aware of the dangers posed by l ead dust generated during 35 renovation, or if they are not confident that a contr actor who claims to use lead-safe work practices has 36 been properly trained, they may not be willing to pa y the additional costs of contractors who voluntarily 37 abide by these work practice standards. Requiri ng dust wipe testing and clearance following renovations 38 will provide consumers with complete information a bout the effectiveness of the lead safe work practices 39 that were. An example of the market failure ste mming from inadequate information is presented in the 40 previous section and is shown graphically in Exhibit 3-1. 41EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 3-17 Exhibit 3-1: Impact of Regulation on Markets for Renovation/Remodeling Services

S 0

D 1

Work Practices Figure (b) Professional Market with “Standard” Work Practices Q Lead-Safe Q Standard Professional P Lead-Safe P Standard Professional

D 0 S 0

Q Standard Do-it-yourself 

## ?

Figure (c) Do-it-Yourself Market with “Standard” Work Practices P 0

P Standard Do -it-yourself

D 0 S 1

D 0 D 1 S 0 S 1

Q 1 Q 0 P 0 P 1

Q 0 P 0 P 1

Figure (a) Market with Lead-Safe Q 1 Q 0 S 0

D 1

Work Practices Figure (b) Professional Market with “Standard” Work Practices Q Lead-Safe Q Standard Professional P Lead-Safe P Standard Professional

D 0 S 0

Q Standard Do-it-yourself 

## ?

Figure (c) Do-it-Yourself Market with “Standard” Work Practices P 0

P Standard Do -it-yourself

D 0 S 1

D 0 D 1 S 0 S 1

Q 1 Q 0 P 0 P 1

Q 0 P 0 P 1

Figure (a) Market with Lead-Safe Q 1 Q 0

1 The proposed rule will provide additional informatio n to renovation firms and their employees about the 2 effectiveness of the containment and cleaning practi ces that they are employing. This feedback 3 mechanism is likely to result in more effective and efficient containment and cleaning practices. 4 If renovators were not mandated to provide this info rmation to consumers, responsible renovators might 5 theoretically provide it voluntarily (although renovators who are not as responsible are unlikely to provide 6 this information voluntarily). But there is no eviden ce that even responsible renovators are doing this. 7 The failure of the marketplace to provide this inform ation on its own means that owners and occupants 8 may not be able to react appropriately to a void or prevent risks from lead-based paint. 9
10 3.4.2 Mandatory Training and Work Practice Requirements 11 The information provision described above will aid in reducing the extent of the market failure that 12 currently exists for lead-safe renovation services. Howe ver, relying solely on information provision is 13 unlikely to be sufficient to correct the market failure because of the natu re of the lead paint problem. The 14 lead in lead-based paint cannot be seen on visual in spection, therefore, the owner and occupant do not 15 know if lead is present and whether a lead exposure ha zard exists. Likewise, the adverse health effects 16 are not noticeable for several years and the source may not be recognized. In such situations, education 17 may not be sufficient and other mechanisms are needed to ensure that if a potential risk exists, it is 18 suitably addressed. The LRRP program introduces othe r mechanisms for the elimination of lead-based 19 paint hazards during renovation work. These include training requirements for personnel engaged in 20 renovation work, dust wipe testing, and clearance. Work practice requirements include the use of 21 standard practices for the containment and cleanup of lead dust and debris generated during the project, 22 the prohibition or restriction of cer tain high-hazard techniques, and the use of standard requirements for 23 performing dust wipe sampling and clearance. 24EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 3-18 

## Appendix 3A: The Role of Elastici ties in Determining the Impacts of a 1 

## Rule 2 EPA is often faced with deciding on a regulatory policy in the absence of good information about the 3 likely effects of the policy on consumers and producers. In particular, data on the own-price elasticity of 4 supply and demand often are uncertain. This appe ndix provides background information on the likely 5 effects of own-price elasticity of demand and supply on the outcomes of EPA’s regulatory efforts. The 6 bulk of the discussion focuses on the case of perfect competition, not because the majority of markets 7 EPA is likely to affect will exhibit competitive behavi or, but simply because the theory is clearly defined 8 in this case. However, this appendix also exam ines the likely impacts of relaxing the assumption of 9 perfect competition. It focuses on two general classe s of regulatory options: re gulations that alter the 10 market outcome by imposing additional costs upon produ cers, and regulations that alter the market by 11 providing information to consumers. 12 

### 3A.1 Elasticities of Supply and Demand 13 The market equilibrium for a commodity (e.g., pu rchasing renovation, remode ling or painting (RRP) 14 work that uses lead-safe work practices) is determin ed by the intersection of the aggregate demand and 15 supply curves. The aggregate demand curve depicts cons umer behavior and is ba sed on consumer income 16 and preferences. Likewise, the aggregate supply curve describes the behavior of producers in the market, 17 and is dependent upon the costs of production. At market equilibrium, the price is referred to as market 18 clearing. In other words, at this price, the qua ntity demanded by consumers and supplied by producers 19 are equal and neither the consumer nor producer has an y incentive to move away from this steady state as 20 long as current demand and supply conditions prevail. 21 However, when demand and supply conditions do change, for example when new information causes 22 consumers to adjust their preferences and thus shift the demand curve, or changes in input prices affect 23 costs of production and shift the supply curve, the market gravitates to a new equilibrium. This new 24 equilibrium is represented by a new combination of ma rket clearing price and quantity. The magnitude of 25 the change in price and quantity is dependent not only upon the extent of the shift in the demand or supply 26 curve, but also on the own-price elasticity of demand and supply for the commodity. 27 The own-price elasticity of demand is defined as the ra tio of the percent change in quantity demanded to 28 the percent change in price, and is reflected in the slope of the demand curve, similarly for the own-price 29 elasticity of supply. By determining the level of ch ange in price and quantity, the elasticities of the two 30 curves also determine the distribution of the burde n or benefit between the consumer and producer 31 resulting from a change in equilibrium conditions. Analyzing changes in consumer and producer 32 surpluses provides a means for quantif ying such distributional changes. 33 Figure 3A-1 below provides a hypothetical example of how the effects of regulation may impact 34 consumer and producer surpluses. In the base line, the supply curve is represented by S 1 , and producers 35 supply Q 1 at a price P 1 . On all the inframarginal units supplied, producers receive a price above the cost 36 of production. The difference between the price a nd the cost of production represents the producer 37 surplus resulting from supplying Q 1 at price P 1 (triangle P 1 CD). Similarly, in the baseline consumers 38 demand quantity Q 1 at price P 1 . For all the inframarginal units de manded, consumers would be willing to 39 pay more than that price and thus receive a surplu s. The difference between what consumers are willing 40 to pay as measured by the height of the demand curve, and what they have to pay is the consumer surplus 41 (triangle ACP 1 ). 42 So what are the effects of regulation? In Figur e 3A-1, the upward shift in the supply curve to S 2 (say 43 from a rise in production costs due to the implementation of the RRP rule which requires use of the more 44 costly lead-safe work practices) results in a new equilib rium at the point B, with a new market price of P 2 45EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 3-19 and quantity of Q 2 . Note that producer surplus decreases from P 1 CD to EBP 2 and the consumer surplus 1 also decreases from ACP 1 to ABP 2 . Thus, in the arbitrary case drawn in Figure 3A-1, the social costs of 2 the regulation are born by both consumers and prod ucers of the pollution-generating good. This result 3 turns out to be a function of the way the supply and demand curves have been drawn, and the distribution 4 of costs between consumers and producers depends on the slope (elasticity) of the demand and supply 5

curves. 6
7 Figure 3A-1: Effect on consumer and producer surplus due to a supply curve shift

A

B C

D E

Q 1 Q

2 P 1 P 2 S 2

S 1

D

8 In general, for a given production cost increase, the more elastic the demand curve, the greater the 9 inability on the part of the producers to pass the add itional costs of production on to the consumers. As 10 shown in Figure 3A-2 (a) and 3A-2 (b) below, th e differing slopes of the demand curve lead to 11 differential impacts on the consumer and producer su rplus. In Figure 3A-2 (a) demand for the good is 12 relatively price elastic, while in Figure 3A-2 (b) the good has a relatively inelastic demand. Notice that 13 when demand is less elastic, the price increase resulti ng from a shift in supply is greater and consumers 14 bear a greater share of the loss in consumer surplus. On the other hand, with a more elastic demand, the 15 overall price increase is smaller and the share of total costs born by producers is larger. 16
17EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 3-20 Figure 3A-2(a): Effect of a change in input prices when demand is elastic Figure 3A-2(b): Effect of a change in input prices when demand is inelastic

S2

S1

D

Q2 Q1 P1 P2

Q2 Q1 P1 P2

D S1 S2

1 The elasticity of demand is determined in genera l by the existence of suitable substitutes for a 2 commodity. If several commodities exis t in the market that are consider ed to be close substitutes for each 3 other, then a consumer is likely to have a great deal of choice available to him while making his 4 consumption decision. This being the case, if the pri ce of the commodity that he is presently consuming 5 happens to rise, he is easily able to reduce his cu rrent consumption level of that commodity and switch 6 over to consuming more of one of the substitutes. This flexibility limits the ability of the producer to pass 7 on the burden of the cost increase on to the consumer . Thus, the availability of close substitutes in the 8 market explains why the demand curve for a commod ity will be relatively elastic, and why the rise in 9 price will be relatively small. On the other hand, if substitutes are lacking for a commodity that 10 experiences a price increase (and it is not a luxury good ), then the consumer has little choice but to carry 11 on consuming similar quantities of the same product. T hus, in this situation he will have to shoulder a 12 larger share of the increased costs by paying a much higher price, and this rigi dity in his consumption 13 behavior explains the inelastic nature of the demand curve for that commodity. 14 Recognizing that most markets are not perfectly co mpetitive, product differentiation allows firms to 15 charge prices higher than marginal costs and charge different prices for similar goods. The degree to 16 which producers can pass on the cost of production depends heavily on the degree to which they can 17 convince consumers that their product is different from ot her products. In its limit this argument is just a 18 restatement of the fact that markets with lower elasticities of demand will experience higher price 19 increases. If “market demand” is defined to be the demand for a single brand of good, then the number of 20 substitutes for the good affects its demand elasticity a nd thus affects the degree to which the producer can 21 pass on cost increases. If the firm can convince cons umers that the product is distinct then it in essence 22 lowers the elasticity of demand for its product. 23 The own price elasticity of supply, on the other hand, is dependent on the degree of specialization of 24 inputs. If the inputs are highly specialized or firms ar e locked into long-term contracts then firms in this 25 industry can be left with substantial sunk investment s creating high transition costs which are reflected in 26 an inelastic supply curve. However, if supply is high ly elastic then firms can easily switch production to 27EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 3-21 other uses and minimize the effect of the demand shoc k. In essence the elasticity of supply measures the 1 amount of resources lost or tied up indefinitely when consumption patterns change suddenly. 2 The EPA seeks to reduce hazards from lead-based pain t by two separate pathways of regulatory impact. 3 First, it hopes to reduce exposure to lead-based pain t by regulating the “method of production” of RRP 4 work in opt-out housing by establishing standards fo r such activities and through requiring certifications 5 and/or training. This is likely to result in an in crease in the “costs of production” of RRP work thereby 6 affecting the supply curve for such activities. Second, th e rule will provide information to consumers. In 7 this case EPA is likely to alter the market outcom es by changing the demand for products (lead-safe and 8 non lead-safe work practices). To the extent that the demand and supply of RRP work will be affected by 9 the rule, one must consider the price elasticities involve d to determine the distributive impact of the rule 10 on consumers and producers. 11 An important factor on which the price elasticity will depend is the number of substitutes that exist for the 12 RRP service that is sought in the market. As previous ly explained, the greater the number of available 13 substitutes, the more elastic the demand and lesser the burden of a production cost increase likely to fall 14 on the consumer. Under this rule three classes of substitutes may be said to exist for RRP services. These 15 are (1) professionals using lead-safe work practices, (2) professionals using non lead-safe work practices, 16 and (3) the do-it-yourself jobs. Thus, a certain amount of flexibility is available to the consumer when it 17 comes to hiring RRP services. 18 Currently a sizeable number of RRP firms may not necessarily be following lead-safe work practices 19 thereby limiting the size of the class of firms that do so . However, with the implementation of the rule, a 20 much larger number of firms are expected to adhere to these practices in the future, thus enlarging the size 21 of this class. In addition, this increase in the numbe r of professionals using lead-safe work practices will 22 also have a geographical impact. Presently, the limited number of professionals who use lead-safe work 23 practices are concentrated in a select number of locati ons where state and local regulations have fostered 24 their development. As a result, in many parts of th e country the choice of hiring “lead-safe” professionals 25 currently does not exist. But this situation will chan ge as a larger number of firms switch to lead-safe 26 work practices once the rule come into effect. 27 However, if the increase in production costs from the ru le is extremely high such a large transition of 28 firms from using lead-unsafe to lead-safe work pr actices may not occur. This is because the cheaper 29 option of using non-certified (non lead-safe work prac tice using) RRP workers or doing the work yourself 30 will limit the ability of the certified (lead-safe work pr actice using) professional to charge the consumer 31 for all or a large portion of this significant cost incr ease. In this situation a large number of lead-unsafe 32 firms may remain in existence. Thus, one may assu me that as long as an appreciable difference exists 33 between “costs of production” of lead-safe and non lead-safe work practices, firms of both types will 34 continue to exist. The continued existence of fi rms using non lead-safe practices also depends on the 35 extent and effectiveness of enforcement activities. Th e greater the cost differential between lead-safe and 36 non lead-safe practices, the greater th e need for enforcement activities. 37 In addition to the number of substitutes, the closeness of substitutes in their ability to replace one another 38 needs to be judged. The important question is whet her RRP work done by uncertified professionals and 39 the do-it-yourself efforts are substantially less safe th an the services of certified professionals. To the 40 extent an appreciable difference ex ists between the quality of service (in terms of preventing or reducing 41 lead-based paint hazards) provided by the two groups, th ey will not be perceived as close substitutes for 42 each other and their demand curves will not be as elastic as they would have been if they were considered 43 close substitutes. In such a situation, consumers f eel that a sufficiently differentiated product is being 44 offered by the two groups, and thus their choice is limited. 45EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 3-22 This judgment on the degree of closeness of substitute s will to some extent depend upon the importance 1 that lead safety holds with the property owner compared to other priorities. To the extent that the priority 2 assigned to lead exposure is relatively small, the uncertified professionals and do-it-yourself jobs will 3 tend to be seen as closer substitutes for certified pr ofessionals, than if lead-based paint hazards are 4 perceived as a larger threat by the property owner. Thus, the elasticity of demand will also vary according 5 to owner priorities, and in this rega rd, the informational aspect of the rule may in fact assist in raising 6 more awareness, resulting in lead safety being assigned a higher priority. 7 Of a related nature, the firm certification aspect of the rule is likely to increase consumer ability to 8 differentiate between the services being offered by the three classes of substitutes. The certification 9 process will create a distinct divide which will permit the property owner to get a better appreciation of 10 the varied benefits to be gained from the alternatives at hand. This is likely to reduce to some extent the 11 perceived closeness of the substitutes and thereby ma ke the demand more inelastic for each class of RRP 12 service. 13EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 3-23 

### 3A.2 How Price Elasticity of Demand Affects the RRP Rule 1 As discussed above, EPA foresees tw o separate pathways by which th e rule will take effect; increasing 2 costs of production leading to a shift in supply and provision of information to consumers leading to a 3 shift in demand. The way these two effects will play out and the role that price elasticities will play in the 4 adjustment of prices and quantities under the two scenarios is discussed below. 5 3A.2.1 Effect of Rule on the Cost of Production (Supply Shift) 6 EPA seeks to reduce exposure to lead-based paint hazar ds by the introduction of lead-safe work practices 7 during RRP work. These practices involve the use of in creased precautions in situ ations where lead-based 8 paint hazards may potentially be created during RRP wo rk, and as a result costs of RRP work are likely to 9 increase above current levels. Since producers seek to maximize profits and in the baseline will produce 10 goods using the lowest-cost combination of inputs, a rule requiring producers to change their input mix 11 will necessarily increase the cost of production. Thus, one impact of the rule will be to increase the 12 production costs, leading the supply curve to shift upward and to the left. 13 Figures 3A-2(a) and 3A-2(b) demonstrate the distributiona l affects of such a hypothetical shift in supply 14 in markets with different elasticities of demand. Th e price increase is much higher (P1 to P2) and the 15 decrease in quantity demanded is much lower (Q1 to Q2) with a given shift in supply when demand is 16 less elastic (as shown in Figure 3A-2(b)) as compared to the elastic demand scenario in Figure 3A-2(a). 17 Thus, the consumers bear a higher share of the tota l social cost from the regulation (represented by the 18 relatively larger decrease in the consumer surplus compar ed to that in the produ cer surplus). On the other 19 hand, Figure 3A-2(a) shows that the higher the elas ticity of demand, the lower the overall price increase, 20 the larger the reduction in quantity demanded, and thus the larger the share of total costs to be born by 21 producers (represented similarly by the larger decrease in producer surplus as compared to the consumer 22 surplus). 23 3A.2.2 Effect of Rule on the Provision of Information to Consumers (Demand Shift) 24 The alternative regulatory approach is to provide in formation to consumers in the hopes that they will 25 make more environmentally friendl y consumption choices. In this case EPA alters the market outcomes 26 by changing the demand for products. Figures 3A-3(a) a nd 3A-3(b) depict such a hypothetical example. 27 In these cases the commod ity in question (non lead-safe work practices) has negative environmental 28 effects (byproducts). By educating consumers about these byproducts and alterna tive products that have 29 lower levels of adverse effects (lead-safe work practices), EPA can change consumer preferences and 30 shift demand for the “bad product” inward and to the left. This lower demand curve would more 31 accurately reflect the true “social” margin al benefits of consuming the product. 32 What are the likely distributional and efficiency effect s of this type of regulatory policy? Figures 3A-3(a) 33 and 3A-3(b) reveal that under both scenarios (for an elastic and inelastic supply curve), the downward 34 shift in the demand curve will lead to a decrease in price and quantity demanded of the commodity. 35 However, in the case of an elastic supply curve when the transition costs associat ed with switching to the 36 production of other products is relatively low, the de crease in price of the commodity is smaller and the 37 decrease in quantity demanded larger, as compared to the changes in the case of an inelastic supply curve 38 involving high transition costs. Restated in terms of changes in producer and consumer surpluses, the 39 producer surplus is reduced under each scenario, but th e elastic supply curve causes a relatively smaller 40 burden to fall on the producer than the inelastic supply curve. Similarly, the consumer receives a 41 reduction in social benefit under each scenario; however , the magnitude of this reduction is larger under 42 the inelastic supply curve case. 43EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 3-24 1 Figure 3A-3(a): Effects of a regulation-induced change in demand when supply is elastic Figure 3A-3(b): Effects of a regulation-induced change in demand when supply is inelastic

D1

D2 S

Q1 Q2 P1 P2

Q1 Q2 P1 P2

D2 D1 S

2 3A.2.3 Application to Renovation 3 In the rule, EPA is both affecting production and pr oviding information. The likely effects of the 4 regulation on prices and welfare are difficult to discu ss without more accurate information on the supply 5 and demand elasticities. However, some general observations are warranted. 6 The welfare effects of the regulation will likely be driv en by the supply side rather than the demand side. 7 This is because the elasticity of supp ly for RRP services is likely to be re latively higher than the elasticity 8 of demand. Supply elasticities are expected to be relatively high because there are relatively few barriers 9 to entering or leaving this industry. Little capital equipment or specialized labor skills are needed for 10 RRP work, and what is needed is easily transf erred from non-compliant renovation to “lead-safe” 11 projects. On the demand side, there are two primary categories of RRP events – those of a maintenance 12 character and those of an improvement character. Maintenance activities usually cannot be postponed 13 and thus are not particularly sensitive to price. Improvement projects, however, can more easily be 14 postponed and thus tend to be more price elastic. Complicating matters, however, are the existence of 15 different categories of purchasers. Some place a hi gh premium on quality and ti meliness, while others 16 actively seek low prices. Appendix 3B discusses some of the empirical evidence on elasticities of 17 demand and supply. 18 However, the analysis does not suggest that the educa tion factor is unimportant. If the regulation is not 19 accompanied by education efforts and enforcement, then EPA could unintentionally drive up demand for 20 non-compliant renovation projects creating additional we lfare losses. These loss es are the result of the 21 fact that if consumers were aware of the lead pa int issues their true marginal valuation for the non22 compliant projects is lower than the price of these proj ects. Thus, if enforcement is not perfect, education 23 is essential. EPA can compensate fo r the fact that it is raising the costs of lead-free renovation on the 24 supply side by educating consumers on the environm ental effects of non-compliant renovations thereby 25 making these cheaper, non-compliant projects less attractive. 26EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

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## Appendix 3B: Elasticities of Demand and Supply for Housing / 1 

## Renovation Services 2 As described in Chapter 3 and Appendix 3A, the im pact of increases in the cost of RRP services on 3 demand for RRP will depend on both the size of the cost increase and the elasticity of demand for these 4 services. Likewise, the impact on the supply of RRP services will depend on both the size of the cost 5 increase and the elasticity of supply for these services. These impacts are expressed in terms of changes 6 in price and in the quantity of services purchased. Chapter 4 estimates the cost increases due to the 7 requirements of the various regulatory options, b ased on the increased labor and materials costs of 8 complying with the containment and clean-up requireme nts, as well as the training and certification costs 9 imposed by the requirements. This appendix revi ews the existing literature on residential demand 10 elasticities. 11 Unfortunately, RRP has received relatively little atten tion by housing economists. While there are many 12 studies that estimate elasticities for new constructi on, these studies have only limited applicability to 13 renovation and remodeling. The income elasticity of demand for housing is generally estimated to be 14 somewhat inelastic (in the 1.0 to 0.8 range). Th is is consistent with housing being a necessity – 15 expenditures on housing do not increase as rapidly as income (Green and Malpezzi 2003). Demand for 16 housing is also considered to be somewhat price in elastic, with generally accepted values either in the 17 range of -0.5 to -1.0 or -0.75 to -1.2 (Mayo 1981, Malpezzi and Maclenna n 2001, Ellwood and Polinski 18 1979). One study is available that estimated a renovation demand elasticity (Gyourko and Saiz 2003). 19 This study found renovation demand to be very inel astic, with an elasticity estimated to be –0.28. 20 On the other hand, housing supply a ppears to be very elastic – cons istent with the highly competitive 21 nature of the residential construction market and the large number of small contractors. Because it is very 22 easy to enter (and to leave) the construction business, supply is very responsive to changes in prices, 23 especially in the long run. 2 Based on the literature surveyed, estimates of housing supply elasticities tend 24 to range from 1.0 to 4.0, but a couple of studies found elasticities as high as 13 or higher (DiPasquale and 25 Wheaton 1994, Topel and Rosen 1988, Blackley 1999, Malpezzi and Maclennan 2001). No elasticity 26 numbers specific to the supply of renovation services could be found. 27
Several characteristics of RRP tend to make its dema nd more price elastic than the demand for housing in 28 general. For example: 29
3⁄4 The existence of close substitutes to compliant RRP. These substitutes include: 30

à Do-It-Yourself RRP –owners of buildings ma y be tempted to do their own RRP work 31 without proper training and certification. 32

à Firms that do not complying with the regulati ons. These regulations may be difficult to 33 enforce against contractors, particularly the large number of small contractors who may 34 be hard to identify and monitor. 35

à Reductions in the scope of the projects, or postponement of the projects, to compensate 36 for the price increase. Purchasers can reduce other RRP-related costs by substituting 37 lower-priced fixtures/finishes and/or less extensive remodeling. 38
3⁄4 Many RRP projects are discretionary. The price elasticity of discretionary projects is likely to be 39 higher than replacement projects (e.g. new roof). For discretionary RRP projects, it is relatively 40 easy for the purchaser to reduce the scale/scope of the project, postpone the project, or never do 41 it. 42

2 Note – stock adjustment models give lower elasticities than flow mode ls. Malpezzi and Maclennan (2001).EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 3-26 Offsetting these characteristics that foster higher elasticities of demand, are ones that foster lower 1 elasticities. The major one is that the product pur chased cannot be separated from the firm providing the 2 product, which is true of all services. In addition to the various RRP events analyzed in the subsequent 3 chapters, RRP firms themselves are relatively diffe rentiated. Some firms specialize in high-end, 4 complicated projects (e.g. elaborate new kitchens) while other firms specialize in performing small 5 routine tasks (repainting apartments at tenant turn-ove r). Some firms only work in historic or Victorian 6 homes, while others will work on an y type of home. Some firms do only one type of project (e.g. 7 replacing siding) while other firms will do any and all ty pes of RRP work. This differentiation results in 8 lower demand elasticities, because producers may not be considered particularly close substitutes. 9
3⁄4 To the extent that lead-safe work can be di stinguished from non-lead-safe work, a higher price 10 can be charged for it. 11
3⁄4 Many contractors already employ lead-safe practices (or at least control the dispersion of dust and 12 clean well before leaving). The regulations will serve to reduce this differentiation. 13 Second, the nature of RRP projects may also reduce pr ice competition. For relatively small jobs, property 14 owners frequently will not get multiple bids – the assumed cost of the job does not warrant the effort. In 15 this case, the compliance cost can be passed on without fear of losing the work. In the case of large jobs, 16 where owners will get bids, compliance costs will make up a relatively small proportion of the total cost 17 and, again, passing on the costs may be easy. 18 Characteristics of the purchaser of the RRP services may also affect their demand price elasticity. High19 income purchasers are likely to be less price sensitive th an low-income purchasers. In addition, owners of 20 rental properties may be more price sensitive than owner occupants because they have different objective 21 functions. Owner-occupants operate so as to maximize their utility (their enjoyment of the house) and 22 asset growth is likely to enter their decision as a seconda ry factor. Owners of rental housing, on the other 23 hand, are assumed to be maximizing their profits. It is reasonable to expect that the optimal level of 24 capital of an absentee landlord’s rental building is lowe r than that of an owner-occupier’s house, since the 25 landlord’s marginal rent revenue from renovations is likely to be less than the homeowner’s marginal 26 utility. 27 Because of the lack of detailed price elasticity estimat es for RRP, the analysis in Chapters 4, 5 and 6 does 28 not incorporate any reduction in professional RRP ac tivities in response to th e cost increases resulting 29 from the regulation. 30

31
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## References 1

2 Center for Disease Control. 1997. “Children with Elevated Blood Lead Levels Attributed to Home 3 Renovation and Remodeling Activ ities -- New York, 1993-1994.” Morbidity and Mortality 4 Weekly Reports . 45(51&52);1120-3. Available at: 5 http://www.cdc.gov/mmwr/preview/mmwrhtml/00045033.htm. 6 7 Center for Disease Control. 2002. Managing El evated Blood Lead Levels Among Young Children 8 (March). 9 10 Center for Disease Control. 2004. Preventing Lead Exposure in Young Children: A Housing Based 11 Approach to Primary Prevention of Lead Poisoning: Recommendations from the Advisory 12 Committee on Childhood Lead Poisoning Prevention (October). 13 14 Center for Disease Control. 2005. “Blo od Lead Levels --- United States, 1999—2002.” Morbidity and 15 Mortality Weekly Reports. 54(20);513-516. Available at: 16 http://www.cdc.gov/mmwr/preview/mmwrhtml/mm5420a5.htm#tab1. 17
18 Residential Lead-Based Paint Hazard Reduction Act of 1992, Pub. L. no. 102-550. 106 Stat. 3672 19 (1992). 20 21 U.S. Department of Housing and Urban Development (HUD). 1990 . Comprehensive and Workable Plan 22 for the Abatement of Lead-Based Paint in Privately Owned Housing: Report to Congress

. 23 Washington, DC, February. 24
25 U.S. Department of Housing and Urban Development (HUD). 1995. Guidelines for the Evaluation and 26 Control of Lead-Based Paint Hazards in Housing (June). 27 28 U.S. Department of Housing and Urban Development (HUD). Data as of August, 2000. National Survey 29 of Lead and Allergens in Housing. Office of Healthy Homes and Lead Hazard Control, 30 Washington, DC. 31 32 U.S. Department of Housing a nd Urban Development (HUD). 2004b. Requirements for Notification, 33 Evaluation, and Reduction of Lead-based Paint H azards in Housing Receiving Federal Assistance 34 and Federally Owned Residential Property Being Sold (Lead Safe Housing Rule); Final Rule, 35 Conforming Amendments and Corrections. Federa l Register (69 FR 34262, June 21, 2004). 36 37 U.S Department of Housing and Ur ban Development (HUD) and U.S. EPA. 1996. Lead; Requirements 38 for Disclosure of Known Lead-Based Paint and/or Lead-Based Paint Hazards in Housing; Final 39 Rule. Federal Register ( 61 FR 9064, March 6, 1996) 40 41 U.S. Department of Labor, Occ upational Safety and Health Administration (OSHA). 1993. Lead 42 Exposure in Construction; Interim Final Rule. Federal Register (58 FR 26590, May 4, 1993). 43 44EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 3-28 U.S. Environmental Protection Agency (EPA). 1984. EPA Policy for the Administration of 1 Environmental Programs on Indian Reservations (November 8). 2 3 U.S. Environmental Protection Agency (EPA). 1995 . Lead Hazard Information Pamphlet; Notice of 4 Availability. Federal Register (60 FR 39167, August 1, 1995). 5 6 U.S. Environmental Protection Agency (EPA). 1996. Lead; Requirements for Lead-Based Paint 7 Activities in Target Housing and Child-Occupied Fa cilities: Final Rule. Federal Register (61 FR 8 5778, August 29, 1996). 9 10 U.S. Environmental Protection Agency (EPA). 1997 . Lead Exposure Associated with Renovation and 11 Remodeling Activities: Environmental Field Samp ling Study (EFSS). EPA 747-R-96-007, May 12 1997. http://www.epa.gov/lead/pubs/r96-007.pdf 13 14 U.S. Environmental Protection Agency (EPA). 1998 . Lead; Requirements for Hazard Education Before 15 Renovation of Target Housing; Final Rule. Fede ral Register (63 FR 29908, June 1, 1998). 16 17 U.S. Environmental Protection Agency (EPA). 1999 . Lead; Fees for accreditation of Training Programs 18 and Certification of Lead-based Paint Activities Cont ractors; Final Rule. Federal Register (64 FR 19 31092, June 9, 1999). 20 21 U.S. Environmental Protection Agency (EPA). 2001b. Lead; Identification of Dangerous Levels of 22 Lead; Final Rule. Federal Register (66 FR 1206, January 5, 2001) 23 24 U.S. Environmental Protection Agency (EPA). 2003a. Lead Safety for Remodeling, Repair, And 25 Painting. Joint EPA/HUD Renovation Training Curriculum (EPA 747-B-03-001/2, July 2003). 26 27 U.S. Environmental Protection Agency (EPA). 2003b. Protect Your Family From Lead in Your Home. 28 U.S. Environmental Protection Agency, U.S. C onsumer Product Safety Commission, and U.S. 29 Department of Housing and Urban Devel opment, (EPA 747-K-99-001, June 2003). 30 31 U.S. Environmental Protection Agency (EPA). 2004a. Lead; Notification Requirements for Lead-Based 32 Paint Abatement Activities and Training; Final Ru le. Federal Register (69 FR 18489, April 8, 33 2004) 34 35 U.S. Environmental Protection Agency (EPA). 2004b. Targeted Grants to Reduce Childhood Lead 36 Poisoning; Notice of Funds Availability. Federal Register (69 FR 69913, December 1, 2004). 37 38 U.S. Environmental Protection Agency (EPA). 2005c. Air Quality Criteria for Lead (First 39 External Review Draft). EPA/600/R-05/144aA-bA. December. 40 http://cfpub2.epa.gov/ncea/cfm/recordisplay.cfm?deid=141779 41 42 U.S. Environmental Protection Agency (EPA). 2007. Characterization of Dust Lead Levels After 43 Renovation, Repair, And Painting Activities . November 13, 2007. 44 45 U.S. Environmental Protection Agency (EPA). 2008. Renovate Right: Important Lead Hazard 46 Information for Families, Child Care Provide rs and Schools (EPA 740-F-08-002, March 2008). 47EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 3-29 1 U.S. Environmental Protection Agency (EPA). 2009 . Lead; Fees for Accreditation of Training Programs 2 and Certification of Lead-based Paint Activiti es and Renovation Contractors. 74 FR 11863, 3 March 20, 2009. 4EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-1 

## 4. Costs of the Lead, Renovation, Repair, and Painting Rule 1 

## Revisions 2 The proposed LRRP Clearance Rule includes the fo llowing changes to the LRRP program: (1) a 3 requirement to perform dust wipe testing for a sub set of renovation activities, and (2) a requirement to 4 perform dust wipe testing and achieve clearance for a second subset of renovation activities where the 5 quantity and characteristics of the dust make it hard to clean up. In particular, the proposed LRRP 6 Clearance Rule would require dust wipe testing on uncarpeted floors and on window sills and troughs 7 after the following types of renovations that disturb lead-based paint: use of a heat gun at temperatures 8 below 1100 degrees Fahrenheit 1 ; removal or replacement of window or door frames; scraping 60 ft 2 or 9 more of painted surfaces; or removing more than 40 ft 2 of trim, molding, cabinets, or other fixtures. 10 Renovations using machines that remove lead-based paint through high speed operation (such as power 11 sanders or abrasive blasting), or involving demolition or rem oval of plaster walls with lead-based paint 12 through destructive means will require firms to demonstr ate – through dust wipe testing – that they have 13 met clearance standards before the re novation will be considered complete. 14 The costs of the proposed LRRP Clearance Rule were estimated under a baseline scenario where the opt15 out provision of the 2008 LRRP rule has been el iminated, as was proposed in October 2009 (74 FR 16 55506). This choice for the baseline scenario has the advantage that the cost impacts estimated in the 17 Economic Analysis of the proposed Opt-Out Rule (EPA 2009) and those estimated in this analysis can be 18 added together to estimate the combined impact of both rules. 2 However, because there has not been a 19 determination as to whether the opt-out provision will ultimately be eliminated as proposed, the costs of 20 the proposed LRRP Clearance Rule are also estimated for the alternative base line scenario where the opt21 out provision has not been eliminated (see section 4.7). 22 The costs associated with the revisions to the §4 02(c) Lead, Renovation, Repair, and Painting (LRRP) 23 Rule are divided into three categories for the purposes of this analysis: (1) dust wipe testing costs, (2) 24 clearance costs, and (3) training costs. The general approach of the analysis is to first estimate the 25 number of affected activities or entities and then estim ate the incremental regulatory cost per-activity or 26 entity affected. Next, the incremental costs and the number of affected activities and entities are 27 combined to estimate the total costs. The analysis estimates the total co sts associated with the first and 28 second years of regulation and then extrapolates to the costs of the regulation over a fifty year period— 29 estimated with three and seven percent discount rates. See Figure 4-1 for an illustration of the general 30 approach used to estimate the costs of the proposed LRRP Clearance Rule. 31
32

1 Under the 2008 LRRP rule at 40 CFR 745.85(a)(3)(iii), operatin g a heat gun on lead-based paint is permitted only at temperatures below 1100 degrees Fahrenheit.

2 Note that the two analyses differ in th e current dollars that are used. In addition, both analyses use 50-year time horizons, but the Opt-Out analysis time period starts in 2010 and this rule’s time period starts in 2011 – in a combined analysis they would have the same time horizon.EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-2 Figure 4-1: General Approach to Cost Analysis

1 The chapter is organized as follows: Section 4.1 defin es the regulatory options considered in this analysis; 2 Section 4.2 presents estimates of the number of re gulated renovation, repair, and painting events where 3 dust wipe testing or clearance will be required under the various regulatory scenarios; Section 4.3 presents 4 the estimated costs of performing dust wipe testing and clearance, including the associated paperwork and 5 recordkeeping costs; Section 4.4 presents the estimated number of Sampling Technicians seeking training 6 and certification; Section 4.5 presents the costs of tr aining Sampling Technicians; Section 4.6 presents the 7 total costs of the proposed regulatory options. Section 4.7 presents the total costs of the proposed rule 8 with an alternative baseline that excludes Opt-Out housing and also pr esents the costs of the rule under 9 additional alternative options. 10

11 

### 4.1 Definitions of Options 12 This economic analysis considers various regulatory options. The three primary options considered in 13 this analysis only differ in the size thresholds that trigger the rule’s requirements when performing certain 14 renovation activities. The three threshold opt ions considered in this analysis are: 15
1. Low Threshold Option 16

 All event types requiring dust wipe testing where the amount of lead-based paint 17 disturbed is larger than 6 square feet. 18

 Clearance is required for: 19

- high-speed machine removal of paint larger than 6 square feet, and 20

- plaster removal using destructive means, larger than 6 square feet. 21 2. Proposed Threshold Option 22EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-3  Dust wipe testing is required for: 1

- cabinet and trim events larger than 40 square feet, 2

- scraping of paint larger than 60 square feet, 3

- heat gun removal of more than 6 square feet 4

- Window frame or door frame removal events 5

 Clearance is required for: 6

- high-speed machine removal of paint larger than 6 square feet, and 7

- plaster removal using destructive means, larger than 6 square feet. 8 3. High Threshold Option 9

 Dust wipe testing is required for: 10

- cabinet and trim events larger than 80 square feet, 11

- scraping or heat gun removal of paint larger than 120 square feet, and 12

- window frame or door frame removal events. 13

 Clearance is required for: 14

- high-speed machine removal of paint larger than 60 square feet, and 15

- plaster removal using destructive means, larger than 60 square feet. 16 17 Section 4.7 considers three alternative options in addition to the three primary options: (1) an option 18 where third party dust wipe testing (including dust-wi pe testing for clearance) is required; (2) an option 19 that requires dust wipe testing for all of the renovatio n events covered by the proposed rule but does not 20 require clearance for any of them; and (3) an option where clearance is required for all renovation events 21 covered by the proposed rule. 22 All the primary and alternative options are analy zed under the baseline scenario where the opt-out 23 provision of the 2008 LRRP rule has been elim inated as proposed. Sin ce the the proposed LRRP 24 Clearance Rule was developed before the LRRP Opt-Ou t Rule was finalized, section 4.7 also presents the 25 estimated costs for the proposed LRRP Clearance Ru le under an alternative baseline using the regulated 26 universe under the 2008 LLRP Rule (which excludes opt-out eligible housing from the universe). Table 27 4-1 summarizes the options presented in the economic analysis. 28EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-4 Table 4-1: Options Included in Economic Analysis
Option Size Threshold Dust Wipe Testing and Clearance Third Party Requirement Baseline

Low Threshold Option Size thresholds are lower or equal to proposed rule No 2008 + Opt Out

Proposed Threshold

Option Size thresholds are as proposed No 2008 + Opt Out

High Threshold Option Size thresholds are higher or equal to proposed rule Dust wipe testing is required for: 1. cabinet and trim events 2. scraping of paint 3. heat gun removal of paint 4. Window frame or door frame removal events
Clearance is required for: 1. high-speed machine removal of paint 2. plaster removal using destructive

means No 2008 + Opt Out

Third Party Option Same as Proposed Dust wipe testing and clearance are required in the same instances as proposed Yes 2008 + Opt Out
Dust Wipe Testing Only Option Same as Proposed Dust wipe testing is required in instances where dust wipe testing or clearance are required under the proposed option No 2008 + Opt Out

Clearance Only Option Same as Proposed Clearance is required in instances where dust wipe testing or clearance are required under the proposed option No 2008 + Opt Out

Proposed Option with Alternative

Baseline Same as Proposed Same as Proposed No 2008

1 

### 4.2 Number of Events with Dust Wi pe Testing or Clearance Requirements 2 Two requirements of the clearance rule that will have cost implications are: (1) a requirement for dust 3 wipe testing for a subset of renovation activities, and (2) a requirement for dust wipe testing and clearance 4 for a second subset of renovation activities where the qua ntity and characteristics of the dust make it hard 5 to clean up. In order to estimate the full extent of these costs, it is necessary to determine the total 6 number of renovation events that will be affected by e ither of these additional requirements. This section 7 identifies the event types where either dust wipe testing or clearance will be required, describes the 8 methodology for estimating the frequencies of these even ts, and then presents the resulting estimates. 9 The events with additional requirements under the clear ance rule are only a subset of the types of RRP 10 events identified in EPA’s analysis of the 2008 LRRP rule (EPA 2008). This analysis relies both on 11 secondary sources and primary data collected from fe wer than 10 firms to estimate the frequencies of 12 these dust wipe testing and clearance events. Table 4- 2 and Table 4-3 describe the events requiring dust 13 wipe testing or clearance in the context of the 20 08 event definitions and discuss the methodology used 14 for estimating event frequencies. 15
16EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-5 Table 4-2: Proposed Dust Wipe Testing Renovation Events

Clearance Rule Events Events Within Category from EPA 2008 (and building types events occur in) Event Frequency Estimation Method

Interior Painting with Heat Gun

Interior Painting with Scraping Interior Painting (TH & PCCOF The results from a survey of <10 painting firms are used to estimate the frequency with which paint removal practices are used and the distribution of job sizes.

Bathroom Cabinet Replacement (TH)

Kitchen Cabinet Replacement (TH) 1997 AHS data and HUD’s 2001 NSLAH da ta are used to estimate the frequency of cabinet repl acement. 58% of Kitc hen renovations involve cabinet replacement (AHS 1997). Base d on the number and size of cabinets according to HUD (2001), 100% of kitchen cabinet jobs are > 6 sq. ft., 89.5% > 40 sq. ft., and 62% > 80 sq. ft., and 42% of Bathroom renovations involve cabinet replacements, w ith an assumed 100% of these cabinet jobs greater than 6 sq. ft. and less than 40 sq. ft. Removal of Trim, Molding, Cabinets, or Fixtures Trim/Molding replacement during: Bathroom, Kitchen, Wall-Disturbing, Addition, or Interior Painting Event (TH & PCCOF) Based on survey of 6 carpentry firm s and 3 general contractors about what type of jobs they are performing when they replace trim or molding (e.g., kitchen remodeling ) and how frequently they do this during these job types.

Removal or Replacement of Windows or Door Frames Window/Door Event (TH & PCCOF) Based on survey of 6 carpentry firm s and 3 general contractors about how often doors and windows are replaced without replacing the frames.
EPA 2008 = Economic Analysis for the TSCA Lead Renovation, Repair, and Painting Progr am Final Rule for Target Housing and Child-Occupied Facilities, March 2008. TH = Target housing PCCOF = Public or Commercial Building COF 1EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-6 Table 4-3: Proposed Clearance Renovation Events

Clearance Rule Events Events Within Category from EPA 2008 (and building types events occur in) Event Frequency Estimation Method Bathroom (TH)
Kitchen (TH) Wall-Disturbing (TH & Pub/Com COF) Plaster – Demolish, or Remove through Destructive Means (e.g., sledgehammer, etc.)

Addition (TH) 1997 AHS data is used to estimate the frequency of repairing/replacing/rem oving plaster walls. The percentage of plaster wall repair/replacement/rem oval jobs, by size, that involve demolishing them with destructive means is estimated from a survey of 9 carpentry and general contractor firms.

Interior Painting with HighSpeed Machine Paint Removal Interior Painting (TH & Pub/Com) The results from a survey of <10 painting firms are used to estimate the frequency with which paint remova l practices are used and the distribution of job sizes

EPA 2008 = Economic Analysis for the TSCA Le ad Renovation, Repair, and Painting Program Final Rule for Target Housing and Child

Occupied Facilities, March 2008. TH = Target housing PCCOF = Public or Commercial Building COF 1 4.2.1 Event Frequencies Based on Primary Data Collections From Fewer Than Ten 2 Firms 3 This section includes the descriptions of the four qu estionnaires used to collect primary data from fewer 4 than 10 firms. Following the survey descriptions, th e survey results are presented along with the resulting 5 estimated dust wipe testing and clearance event frequencies. 6 The four primary data collections include: (1) one ques tionnaire for nine painting contractors that is used 7 to determine the frequency of inte rior painting jobs of various sizes that use certain paint removal 8 techniques, (2) one questionnaire for six carpentry fi rms for determining: (a) the frequency of trim and 9 molding removal, and (b) the frequency of window a nd door frame replacement, (3) one questionnaire for 10 three general contractors that includes all the questions asked to carpenters in addition to questions that 11 are used to estimate the frequency of destructive rem oval of plaster walls, and (4) one questionnaire for 12 six general contractors used to estimate the fre quency of destructive removal of plaster walls. 13
4.2.1.1 Contractor Firms Sample Universe 14 A geographically diverse sample of nine firms for eac h questionnaire was developed. First, nine states 15 were randomly selected while limiting the sample to no more than one state per EPA region. Once the 16 nine states were selected, lists of painting firms (for the paint removal survey), carpentry firms (for the 17 carpenter survey), and general contractor firms (fo r the third and fourth survey) were obtained through 18 Salesgenie.com, an online directory of businesses search able by state and SIC code. The simple averages 19 of the responses for each questionnaire were calculated in order to estimate the necessary parameters. For 20 the interior painting questionnaire, which was admini stered to firms in SIC code 172101 (Painters), the 21 following states were selected: Louisiana, West Virgin ia, Alabama, Maine, Idaho, Hawaii, Kansas, Utah, 22 and Indiana. For the plaster questionnaire, which was administered to firms with SIC codes 152103, 23 152105, 152115, and 152139 (General Contractors, Home Improvements, Handyman Services, and 24 Remodeling & Repairing Building Contractors), th e following states were selected: Texas, Iowa, 25 Michigan, Maine, California, Idaho, Alabama, Co lorado, and New York. The carpentry questionnaire 26EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-7 used the same random set of states as the plaster surv ey as necessitated by the use of a combined survey 1 for three of the firms. For six of the firms, entities with SIC codes of 175102, 175105, and 175110 2 (Carpenters, Window Replacement, and Doors - Hangi ng and Cutting), were asked the same carpentry 3 questions. 4
4.2.1.2 Interior Painting Primary Data Collection (<10 Firms) 5 Interior Painting Survey Instrument 6 The script presented in Figure 4-2 was used to ad minister the phone interviews of representatives from 7 nine interior painting firms. The introduction served to familiarize contractors w ith the objectives of the 8 survey and the nature of EPA’s analysis. Informa tion collected from questions (2) through (5) was used 9 to estimate the frequency of interior painting events of differing sizes using a scraper for paint removal. 10 Responses to questions (6) through (8) provide data on the frequency of heat gun usage for paint removal, 11 and responses to questions (9) thro ugh (11) give simila r data on the frequency of high-speed machine 12 usage. Questions (12) and (13) sp ecifically ask about alternatives to high-speed machine paint removal 13 and the costs of such alternatives. And finally, in formation collected from questions (14) through (16) 14 was used to estimate the frequency of removal of trim and molding (of various sizes) during interior 15 painting jobs. 16

17 Figure 4-2: Interior Painting Survey Instrument Introduction: Hello, I’m _________, calling from Abt Associates. We’re an independent research firm that is doing contract work for the Environmental Protection Agency (EPA). We’d like to ask you a few questions in order to better unders tand how often different paint removal practices are used. Your responses will be treated as confidential and your name will not be provided to the EPA. There are 16 questions in our survey and we expect it to take about 5 minutes.

If asked why: EPA will be proposing to requi re dust sampling and/or clearance testing after certain paint removal practices are used where lead-based paint ma y be present. We will use the responses to our survey to estimate how costly these requirements would be.

1. Do you perform interior painting work in buildings built before 1978 for pay?

⁭ Yes ⁭ No (end if no) 2. When you perform a painting job in a residence bu ilt before 1978, what percentage of the time do you use a hand scraper to remove old interior paint? _______ % of the time. 3. When you use a hand scraper to remove old inte rior paint in a building built before 1978, what percentage of the time do you scrape more than 6 square feet per job of a painted surface? _______ % of the time. 4. When you use a hand scraper to remove old inte rior paint in a building built before 1978, what percentage of the time do you scrape more than 60 square feet per job of a painted surface? _______ % of the time. 5. When you use a hand scraper to remove old inte rior paint in a building built before 1978, whatEO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-8 Figure 4-2: Interior Painting Survey Instrument percentage of the time do you scrape more than 120 square feet per job of a painted surface? _______ % of the time. 6. When you perform a painting job in a residence bu ilt before 1978, what percentage of the time do you use a heat gun to remove old interior paint? _______ % of the time. 7. When you use a heat gun to remove old interior pa int in a building built before 1978, what percentage of the time do you remove more than 6 square feet of paint per job of a painted surface? _______ % of the time. 8. When you use a heat gun to remove old interior pa int in a building built before 1978, what percentage of the time do you remove more than 60 square feet of paint per job of a painted surface? _______ % of the time. 9. When you perform a painting job in a residence bu ilt before 1978, what percentage of the time do you use a high speed machine such as a power sander, gri nder, or planer to remove old interior paint? _______ % of the time. 10. When you use a high speed machine to remove old interior paint in a building built before 1978, what percentage of the time do you remove more than 6 sq uare feet of paint per job of a painted surface? _______ % of the time. 11. When you use a high speed machine to remove old interior paint in a building built before 1978, what percentage of the time do you remove more than 60 s quare feet of paint per job of a painted surface? _______ % of the time. 12. If you could not use high speed machines to remove old interior paint in a building built before 1978, what alternative paint removal technique would you use instead?

_________________________________. 13. On average, how much would using this alte rnative to high speed machine paint removal increase the cost of the job? $______________. 14. What percentage of your interior painting jobs i nvolve removing or replacing more than 6 square feet of trim or moldings? _______ % 15. What percentage of your interior painting jobs involve removing or replacing more than 40 square feet of trim or moldings? _______ % 16. What percentage of your interior painting jobs involve removing or replacing more than 80 square feet of trim or moldings? _______ %EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-9 Interior Painting Survey Responses and Summary of Results 1 Table 4-4 presents the individual responses from firm s contacted from each state for the entire interior 2 painting questionnaire. For practices for which both an overall frequency question and relative size3 specific frequency questions were asked of firms, the percentage with which each respondent used a 4 surface preparation practice for a certain size thres hold was imputed, and then the average was taken 5 across respondents. In other cases, the simple averages of the freque ncies are used for estimating the 6 number of events affected by the proposed rule. Summary statistics are calculated in Table 4-5 to show 7 the central tendency and range of work practice frequencies reported by respondents. 8EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-10 1 Table 4-4: Individual Responses to Interior Painting Firm Questionnaire by State Question LA WV AL ME ID HI KS UT IN 2. Use scraper (%) 50.0% 5.0% 0.0% 0.0% 0.0% 0.0% 1.0% 1.0% 0.0% 3. Scrape > 6 ft 2 (%) 10.0% 100.0% NA NA NA NA 0.0% 1.0% NA 4. Scrape > 60 ft 2 (%) Rarely 3 Don’t Know NA NA NA NA 0.0% 0.0% NA 5. Scrape > 120 ft 2 (%) 0.0% Don’t Know NA NA NA NA 0.0% 0.0% NA 6. Use heat gun (%) 1.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 7. Heat gun > 6 ft 2 (%) 100.0% NA NA NA NA NA NA NA NA 8. Heat gun >

60 ft 2 (%) 0.0% NA NA NA NA NA NA NA NA 9. Hi-speed machine (%) 100.0% 0.0% 0.0% 0.0% 0.0% 1.0% 1.0% 0.0% 0.0%
10. Machine > 6 ft 2 (%) 0.0% NA NA NA NA 100.0% 0.0% NA NA
11. Machine >

60 ft 2 (%) 0.0% NA NA NA NA 50.0% 0.0% NA NA
12. Alternative

to hi-speed

machine Chemical Stripper NA NA NA NA Chemical Stripper Take off chips and prime over NA NA

13. Cost of alternative At least 15% more

per day NA NA NA NA $1500 or $2000 a day Don’t Know NA NA

14. Trim/ moldings > 6 ft 2 (%) 10.0% 0.0% 5.0% 0.0% 0.0% 30.0% 0.0% 0.0% 1.0%

15. Trim/ moldings > 40 ft 2 (%) 2.0% 0.0% 0.0% 0.0% 0.0% 30-50% 0.0% 0.0% 0.5%

16. Trim/ moldings > 80 ft 2 (%) 1.0% 0.0% 0.0% 0.0% 0.0% 10.0% 0.0% 0.0% 0.3%
Imputed Practice Frequencies, by Size Threshold Total scrape >

6 ft 2 (%) a 5.0% 5.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Total scrape >

60 ft 2 (%) b 0.5% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Total machine

> 6 ft 2 (%) c 0.0% 0.0% 0.0% 0.0% 0. 0% 1.0% 0.0% 0.0% 0.0% Total machine

> 6 ft 2 (%) d 0.0% 0.0% 0.0% 0.0% 0.0% 0.5% 0.0% 0.0% 0.0%

a. Calculated as the product of respons es to Question 2 and Question 3. b. Calculated as the product of respons es to Question 2 and Question 4.

c. Calculated as the product of respons es to Question 9 and Question 10. d. Calculated as the product of respons es to Question 9 and Question 11.

2

3 This firm’s answer of “rarely” was input ted as 1% for calculations of summary statis tics. This approach was used because two other firms, when prompted to assign a percentage value to their response of “r arely” to questions both estimated 1% frequency.EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-11 1 Table 4-5: Summary Statistics for Interior Painting Questionnaire Question Average Median Mode Minimum Maximum 2. Use scraper (%) 6.3% 0.0% 0.0% 0.0% 50.0% 3. Scrape > 6 ft 2 (%) 27.8% 5.5% None 0.0% 100.0% 4. Scrape > 60 ft 2 (%) 0.3% 0.0% 0.0% 0.0% 1.0% 5. Scrape > 120 ft 2 (%) 0.0% 0.0% 0.0% 0.0% 0.0% 6. Use heat gun (%) 0.1% 0.0% 0.0% 0.0% 1.0% 7. Heat gun > 6 ft 2 (%) 100.0% 100.0% None 100.0% 100.0% 8. Heat gun > 60 ft 2 (%) 0.0% 0.0% None 0.0% 0.0% 9. Hi-speed machine (%) 11.3% 0.0% 0.0% 0.0% 100.0% 10. Machine > 6 ft 2 (%) 33.3% 0.0% 0.0% 0.0% 100.0% 11. Machine > 60 ft 2 (%) 16.7% 0.0% 0.0% 0.0% 50.0% 12. Alternative to hi-speed machine None None None None None 13. Cost of alternative N one None None None None 14. Trim/ moldings > 6 ft 2 (%) 5.1% 0.0% 0.0% 0.0% 30.0% 15. Trim/ moldings > 40 ft 2 (%) 4.7% 0.0% 0.0% 0.0% 40.0% 16. Trim/ moldings > 80 ft 2 (%) 1.3% 0.0% 0.0% 0.0% 10.0% Imputed Practice Frequencies, by Size Threshold Total Scrape > 6 ft 2 (%) a 1.1% 0.0% 0.0% 0.0% 5.0% Total Scrape > 60 ft 2 (%) b 0.1% 0.0% 0.0% 0.0% 0.5% Total Machine > 6 ft 2 (%) c 0.1% 0.0% 0.0% 0.0% 1.0% Total Machine > 6 ft 2 (%) d 0.1% 0.0% 0.0% 0.0% 0.5%

a. Calculated as the product of individual state responses to Question 2 and Question 3. b. Calculated as the product of individual state responses to Question 2 and Question 4.

c. Calculated as the product of individual state responses to Question 9 and Question 10. d. Calculated as the product of individual state responses to Question 9 and Question 11.
2 Frequency of Interior Painting Events Requiring Dust Wipe Testing or Clearance 3 The results from the Interior Painting Firm Questionnair e can be used to estimate the frequency of events 4 affected by the LRRP Clearance Rule. The frequency of interior painting with scraping are approximated 5 from the responses to questions (2) through (5). Resu lts from questions (6) through (8) are used to 6 determine the frequency of interior painting events using a heat gun. Responses from questions (9) 7 through (11) are used for estimation of the frequency of interior painting events involving use of a high8 speed machine for paint removal. Responses from qu estion (14) through (16) regarding removal or 9 replacement of trim or moldings are used in comb ination with the two other questionnaires in order to 10 establish overall trim/molding event frequency, but these questions represent the frequency of painting11 specific trim or molding removal. Table 4-2 su mmarizes the survey-based estimation methodologies for 12 interior painting event frequencies a ffected by the Clearance Rule. The results of two different methods 13 are displayed: (1) estimating the job-size frequency as a percentage of the assumed practice frequency in 14 the 2008 analysis, and (2) estimating the job-size frequency as a percentage of the average practice 15 frequency reported in responses to the Interi or Painting Questionnaire (See Table 4-6). 16EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-12 Table 4-6: Estimation of Dust Wipe Testing and Clearance Event Frequencies for Interior Painting Practice Definition Calculation Description Total Number of Events

Dust Wipe Testing Events Interior Painting with Scraping Average of responses to question 2. 6.3% of Interior Painting
Interior Painting with Scraping > 6 Square Feet Average of responses imput ed from questions 2 and 3. 1.1% of Interior Painting

Interior Painting with Scraping > 60 Square Feet Average of responses imput ed from questions 2 and 4. 0.1% of Interior Painting

Interior Painting with Scraping > 120 Square Feet Average of responses imput ed from questions 2 and 5. None

Interior Painting with Heat Gun Average of responses to question 6. 0.1% of Interior Painting
Interior Painting with Heat Gun > 6 Square Feet Average of responses imput ed from questions 6 and 7. 0.1% of Interior Painting

Interior Painting with Heat Gun > 60 Square Feet Average of responses imput ed from questions 6 and 8. None

Removal of Trim or Molding > 6 Square Feet Average of responses to question 14. 5.1% of Interior Painting
Removal of Trim or Molding > 40 Square Feet Average of responses to question 15. 4.7% of Interior Painting
Removal of Trim or Molding > 80 Square Feet Average of responses to question 16. 1.3% of Interior Painting

Clearance Events Interior Painting with Use of High-Speed Machine for Paint Removal Average of responses to question 9. 11.3% of Interior Painting

Interior Painting with Use of High-Speed Machine > 6 Square Feet Average of responses imput ed from questions 9 and 10. 0.1% of Interior Painting

Interior Painting with Use of High-Speed Machine > 60 Square Feet Average of responses imput ed from questions 9 and 11. 0.1% of Interior Painting

1 4.2.1.3 Carpentry Primary Data Collection (<10 Firms) 2 Carpentry Survey Instrument 3 The following script was used for administering phone interviews of six carpentry and three general 4 contractor firms. The introduction served to familiari ze contractors with the objectives of the survey and 5 the nature of EPA’s analysis. Information collected from questions (1) through (4) was used to estimate 6 the frequency of window replacement jobs that also involved window frame replacement. Responses to 7 questions (5) through (12) provide data on the fraction of trim or molding removal activities that exceed 8 various size thresholds in bathroom or kitchen remo deling jobs. The results of questions (13) and (14) 9 provide insight into what other renovation events might result in removal of trim or molding. 10EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-13 1 Figure 4-3: Carpentry Survey Instrument Introduction: Hello, I’m _________, calling from Abt Associ ates. We’re an independent research firm that is doing contract work for the Environmental Protection Agency (EPA). We’d like to ask you a few questions in order to better unders tand how often different practices that sometimes disturb lead-based paint are used. Your respon ses will be treated as confidential and your name will not be provided to the EPA. There are 14 ques tions in our survey and we expect it to take about 5 minutes.

If asked why: EPA will be proposing to require dust sampling and/or clearance testing after certain renovation practices are used that may dist urb lead-based paint. We will use the responses to our survey to estimate how costly these requirements would be.

1. Do you ever perform window replacement work in buildings built before 1978 for pay?

⁭ Yes ⁭ No (if no skip to Q3)
2. What percentage of your Pre-1978 window replacement jobs involve replacing the window frame?
________ %. 3. Do you ever perform door replacement wo rk in buildings built before 1978 for pay?

⁭ Yes ⁭ No (if no skip to Q5)
4. What percentage of your Pre-1978 door re placement jobs involve replacing the door frame?
________ %. 5. Do you perform kitchen remodeling work in buildings built before 1978 for pay?

⁭ Yes ⁭ No (if no skip to Q7)
6. What percentage of your Pre-1978 kitchen re modeling jobs also involve removing or replacing more than 6 square feet of trim or moldings?
________ %. 7. What percentage of your Pre-1978 kitchen re modeling jobs also involve removing or replacing more than 40 square feet of trim or moldings?
________ %. 8. What percentage of your Pre-1978 kitchen re modeling jobs also involve removing or replacing more than 80 square feet of trim or moldings?
________ %. 9. Do you perform bathroom remodeling work in buildings built before 1978 for pay?

⁭ Yes ⁭ No (if no skip to Q11)EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-14 Figure 4-3: Carpentry Survey Instrument 10. What percentage of your Pre-1978 bathr oom remodeling jobs also involve removing or replacing more than 6 square feet of trim or moldings?
________ %. 11. What percentage of your Pre-1978 bathr oom remodeling jobs also involve removing or replacing more than 40 square feet of trim or moldings?
________ %. 12. What percentage of your Pre-1978 bathr oom remodeling jobs also involve removing or replacing more than 80 square feet of trim or moldings?
________ %. 13. Do you ever replace interior trim or moldings for Pre-1978 jobs that do not also include interior painting, kitchen rem odeling, bathroom remodeling, or wall removal, replacement, or repair?

⁭ Yes ⁭ No (end survey if no)

14. a. Please describe these jobs that require interior trim or molding replacement without interior painting, kitchen remodeling, bathroom remodeling, or wall/repair replacement.
1. ________________________________________________________
2. ________________________________________________________
3. ________________________________________________________
4. ________________________________________________________ b. When performing a Pre-1978{1st type described in 15a} job, what percentage of the time do you remove trim or moldings?
________ %. c. When performing a Pre-1978{2nd type described in 15a} job, what percentage of the time do you remove trim or moldings?
________ %. d. When performing a Pre-1978{3rd type described in 15a} job, what percentage of the time do you remove trim or moldings?
________ %. e. When performing a Pre-1978{4th type described in 15a} job, what percentage of the time do you remove trim or moldings?
________ %.EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-15 Carpentry Survey Responses and Summary of Results 1 Below, individual responses from firms contacted from each state are presented for the entire 2 questionnaire in Table 4-7. Also, summary statistics are calcula ted in Table 4-7 that show the central 3 tendency and range of work practice frequencies re ported by respondents. The averages of the 4 frequencies will be used for estimating the number of events affected by the proposed rule. 5
6

Table 4-7: Individual Responses to Carpentry Questionnaire by State Question TX IA MI ME CA ID AL CO NY 2. Window frame (%) 100% 15% NA 100% 90% NA 20% 80% 1% 4. Door frame (%) 100% 60% 100% 80% 60% 10-20% 20% 98% 100% 6. Kitchen trim/molding > 6 ft 2 NA 15% NA 50% 60% >75% 100% 90% 100% 7. Kitchen trim/molding > 40 ft 2 NA 0% NA 10% 20% >75% 100% 50% 100% 8. Kitchen trim/molding > 80 ft 2 NA 0% NA 5% 10% >75% 100% 25% 10% 10. Bath trim/molding > 6 ft 2 0% 40% NA 50% 60% 100% 100% 80% 100% 11. Bath trim/molding > 40 ft 2 0% 0% NA 10% 20% >50% 50% 60% 5% 12. Bath trim/molding > 80 ft 2 0% 0% NA 5% 10% 40% 30% 40% 0%
14a. Alternative trim/molding jobs NA NA NA NA NA Replace b aseboards or interior

casings NA Restoration of past remodeling Paneling or sheet rock in living rooms 14b. Trim/ molding removal (%) NA NA NA NA NA 10% each NA 2% 100% In the following states, firms with SIC codes of 175102 (Carpenters), 175105 (Window Replacement), and 175110 (Doors – Hanging & Cutting) were randomly sample d: Texas, Iowa, Michigan, Maine, Idaho, and New York. In Colorado and California, firms with SIC codes of 152103 (General Contractors), 152105 (Home Improvements), 152115 (Handyman Services), and 152139 (Remodeling & Repairing Build ing Contractors), were randomly sampled. 7EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-16 1

Table 4-8: Summary Statistics for Carpentry Questionnaire Question Average Median Mode Minimum Maximum Number Responses 2. Window frame (%) 58.0% 80.0% 100.0% 1.0% 100.0% 7 4. Door frame (%) 70.3% 80.0% 100.0% 15.0% 100.0% 9 6. Kitchen trim/molding > 6 ft 2 70.0% 75.0% 100.0% 15.0% 100.0% 7 7. Kitchen trim/molding > 40 ft 2 50.7% 50.0% 100.0% 0.0% 100.0% 7 8. Kitchen trim/molding > 80 ft 2 32.1% 10.0% 10.0% 0.0% 100.0% 7 10. Bath trim/molding > 6 ft 2 66.3% 70.0% 100.0% 0.0% 100.0% 8 11. Bath trim/molding > 40 ft 2 24.4% 15.0% 0.0% 0.0% 60.0% 8 12. Bath trim/molding > 80 ft 2 15.6% 7.5% 0.0% 0.0% 40.0% 8 14a. Alternative trim/molding jobs None None None None None 3 14b. Trim/ molding removal (%) 37. 3% 10.0% None 2.0% 100.0% 3 2
Frequency of Removal or Replacement of Window or Door Frames and Trim or Molding 3 Replacement 4 The results from the Carpentry Questio nnaire are used to estimate the fre quency of events affected by the 5 LRRP Clearance Rule. The results from question (2) in th e survey are used to estimate the frequency of 6 removing or replacing the frame during window remova l/replacement events. Similarly, responses from 7 question (4) are used to determine the frequency of door removal/replacement events also requiring 8 removal of the door frame. The remainder of respon ses from the Carpentry Survey are used to estimate 9 the frequency of removal of trim or molding in bathroom and kitchen rem odeling jobs (for each size 10 threshold). Table 4-9 summarizes the survey-based estimati on methodologies for window and door event 11 frequencies affected by the Clearance Rule, and Table 4-10 describes the methodology for estimating 12 bathroom and kitchen events involvi ng removal of trim or molding. 13
14

Table 4-9: Estimation of Frequency of Removal or Replacement of Window or Door Frames Practice Definition Frequency of Practice Ratio of Window or Door Events to Total Events a Total Number of Dust Wipe Testing Events

Removal or Replacement of Window Frame 58.0 % (Question 2) 75.0% Windows 58.0% * 75.0% = 43.5% of Window/Door Events Removal or Replacement of Door Frame 70.0% (Question 4) 25.0% Doors 70.0% * 25.0% = 17.6% of Window/Door Events a. The ratio of window events to door events was derived from data from the 1997 American Housing Survey; for public and commercial building COFs it is assumed that windows and doors are replaced at the same time, and therefore it is assumed that frame replacement occurs 70 percent of the time, the higher of the two frame replacement rates. 15EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-17 Table 4-10: Estimation of Dust Wipe Testing Event Frequencies for Trim or Molding Removal in Kitchen and Bathroom Events

2008 Event Category Practice Definition F requency of Practice Total Number of Dust Wipe Testing Events Removal of Trim or Molding > 6 Square Feet 70.0% (Question 6) 70.0% of Kitchen Removal of Trim or Molding > 40 Square Feet 50.7% (Question 7) 50.7% of Kitchen Kitchen Removal of Trim or Molding > 80 Square Feet 32.1% (Question 8) 32.1% of Kitchen Removal of Trim or Molding > 6 Square Feet 66.3% (Question 10) 66.3% of Bathroom Removal of Trim or Molding > 40 Square Feet 24.4% (Question 11) 24.4% of Bathroom Bathroom Removal of Trim or Molding > 80 Square Feet 15.6% (Question 12) 15.6% of Bathroom
1
4.2.1.4 Plaster Primary Data Collection (<10 Firms) 2 Plaster Survey Instrument 3 The following script was used for administering a phone survey of nine general contractor firms. The 4 introduction served to familiarize contractors with th e objectives of the survey and the nature of EPA’s 5 analysis. Information collected from questions (1) through (4) is used to estimate the frequency of 6 window replacement jobs that also involved window frame replacement. Responses to questions (5) 7 through (12) provide data on the fr action of trim or molding removal activities that exceed varying size 8 thresholds in bathroom or kitchen remodeling jobs. The results of questions (13) and (14) provide insight 9 into what other renovation events might result in rem oval of trim or molding. The purpose of questions 10 (15) through (19) was to determine how frequently trim or moldings are removed in wall-disturbing 11 events. And finally, responses to questions (20) through (23) serve to estimate the frequency of 12 destructive removal of plaster walls in different size increments. 13
14EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-18 Figure 4-4: Plaster Survey Instrument Introduction: Hello, I’m _________, calli ng from Abt Associates. We’re an independent research firm that is doing contract work for the Environmental Protection Agency (EPA). We’d like to ask you a few questions in order to better understand how often diff erent practices that sometimes disturb lead-based paint are used. Your responses will be treated as conf idential and your name will not be provided to the EPA. There are 23 questions in our survey and we expect it to take about 10 minutes. If asked why: EPA will be proposing to require dus t sampling and/or clearance testing after certain renovation practices are used that may disturb lead-based paint. We will use the responses to our survey to estimate how costly these requirements would be. 1. Do you perform wall removal, wall replacement or wall repair work in buildings built before 1978 for pay?

⁭ Yes ⁭ No (if no, end) 2. What percentage of your Pre-1978 wall removal, wall replacement or wall repair jobs also involve replacing more than 6 square feet of trim or moldings? ________ %. 3. What percentage of your Pre-1978 wall removal, wall replacement or wall repair jobs also involve replacing more than 40 square f eet of trim or moldings? ________ %. 4. What percentage of your Pre-1978 wall removal, wall replacement or wall repair jobs also involve replacing more than 80 square f eet of trim or moldings? ________ %. 5. What percentage of your Pre-1978 wall removal, wall replacement or wall repair jobs involve removing all or part of a plaster wall? ________ %. 6. What percentage of the time do you use destruc tive means, such as a sl edgehammer, when you are removing all or part of a Pre-1978 plaster wall? ________ %. 7. When removing all or part of a Pre-1978 plaster wa ll using destructive means, what percentage of the time do you remove more than 6 s quare feet of plaster wall? ________ %. 8. When removing all or part of a Pre-1978 plaster wa ll using destructive means, what percentage of the time do you remove more than 40 square feet of plaster wall? ________ %. 9. When removing all or part of a Pre-1978 plaster wa ll using destructive means, what percentage of the time do you remove more than 60 square feet of plaster wall? ________ %.

1
Plaster Questionnaire Responses and Summary of Results 2 Below, individual responses from firms contacted from each state are presented for the entire 3 questionnaire in Table 4-11. For practices for which both an overall frequency question and relative size4 specific frequency questions were asked of firms, the pe rcentage with which each respondent used a work 5EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-19 practice for a certain size threshold was imputed, and then the average was taken across respondents. In 1 other cases, the simple averages of the frequencies are u sed for estimating the number of events affected 2 by the proposed rule. Summary statistics are also calc ulated in Table 4-12 to show the central tendency 3 and range of work practice frequencies reported by respondents. For practices which do not require 4 combining overall and relative size- specific frequencies as described a bove, the simple averages of the 5 frequencies will be used for estimating the number of events affected by the proposed rule. 6
7

Table 4-11: Individual Responses to Plaster Questionnaire by State Question TX IA MI ME CA ID AL CO NY

2. Wall trim/ molding > 6 ft 2 (%) 30% 40% <5% 50% 40% 100% 100% 100% 10- 15% 3. Wall trim/ molding > 40 ft 2 (%) 10% 40% 0.5% 20% 30% 50% 0% 80% 8-12%
4. Wall trim/ molding > 80 ft 2 (%) 10% 10% 0% 5% 10% 10% 0% 50- 60% 2-3% 5. Plaster wall (%) 30% 2% 1% 5% 0% 0% 0% 100% 70% 6. Destructive means (%) 10% 100% 1% 5% NA NA NA 30% 100%
7. Destructive plaster > 6 ft 2 (%) 100% Don’t Know 100% 30% NA NA NA 100% 90%

8. Destructive plaster > 40 ft 2 (%) 100% Don’t Know 10% 15% NA NA NA 80% 90%

9. Destructive plaster > 60 ft 2 (%) 0% Don’t Know 1% 10% NA NA NA 70% 90% Imputed Practice Frequencies, by Size Threshold Total destructive plaster > 6 ft 2 (%) a 3.0% 0.0% 0.0% 0.1% 0. 0% 0.0% 0.0% 30.0% 63.0% Total destructive plaster > 40 ft 2 (%) b 3.0% 0.0% 0.0% 0.0% 0. 0% 0.0% 0.0% 24.0% 63.0% Total destructive plaster > 60 ft 2 (%) c 0.0% 0.0% 0.0% 0.0% 0. 0% 0.0% 0.0% 21.0% 63.0%

a. Calculated as the product of indi vidual state responses to Question 5, Question 6, and Question 7. b. Calculated as the product of indi vidual state responses to Question 5, Question 6, and Question 8.

c. Calculated as the product of indi vidual state responses to Question 5, Question 6, and Question 9. For all states, firms with SIC codes of 152103 (General Contractors), 152105 (Home Improvements), 152115 (Handyman Services), and 152139 (Remodeling & Repairing Build ing Contractors), were randomly sampled.
8EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-20 1 Table 4-12: Summary Statistics for Plaster Questionnaire Question Average Median Mode Minimum Maximum 2. Wall trim/ molding > 6 ft 2 (%) 53.1% 40.0% 100.0% 5.0% 100.0% 3. Wall trim/ molding > 40 ft 2 (%) 26.7% 20.0% 10.0% 0.0% 80.0% 4. Wall trim/ molding > 80 ft 2 (%) 11.4% 10.0% 10.0% 0.0% 55.0% 5. Plaster wall (%) 23.1% 4 2.0% 0.0% 0.0% 100.0% 6. Destructive means (%) 41.0% 20.0% 100.0% 1.0% 100.0% 7. Destructive plaster > 6 ft 2 (%) 84.0% 100.0% 100.0% 30.0% 100.0% 8. Destructive plaster > 40 ft 2 (%) 59.0% 80.0% None 10.0% 100.0% 9. Destructive plaster > 60 ft 2 (%) 34.2% 10.0% None 0.0% 90.0% Imputed Practice Frequencies, by Size Threshold Total destructive plaster > 6 ft 2 (%) a 10.7% 0.0% 0.0% 0.0% 63.0% Total destructive plaster > 40 ft 2 (%) b 10.0% 0.0% 0.0% 0.0% 63.0% Total destructive plaster > 60 ft 2 (%) c 9.3% 0.0% 0.0% 0.0% 63.0%

a. Calculated as the product of indi vidual state responses to Question 5, Question 6, and Question 7. b. Calculated as the product of indi vidual state responses to Question 5, Question 6, and Question 8.

c. Calculated as the product of indi vidual state responses to Question 5, Question 6, and Question 9. Frequency of Plaster Wall Removal Using Destructive Means 2 Responses from the Plaster Survey are used to estim ate the frequency of events affected by the LRRP 3 Clearance Rule. Table 4-13 displays the plaster qu estionnaire results from above being used to calculate 4 event frequencies for the removal or replacement of pl aster wall using destructive means. Frequencies are 5 estimated for various job sizes: greater than 6 square feet, greater than 40 square feet, and greater than 60 6 square feet. 7
8

Table 4-13: Estimation of Frequency of Plaster Removal Using Destructive Means Practice Definition Calculation Des cription Total Number of Clearance Events Removal or Replacement of Plaster Wall > 6 Square Feet Using Destructive Means Average of responses imputed from questions 5, 6, and 7. 10.7% of Wall Removal/Replacement

Removal or Replacement of Plaster Wall > 40 Square Feet Using Destructive Means Average of responses imputed from questions 5, 6, and 8. 10.0% of Wall Removal/Replacement

Removal or Replacement of Plaster Wall > 60 Square Feet Using Destructive Means Average of responses imputed from questions 5, 6, and 9. 9.3% of Wall Removal/Replacement

9 Since wall removals and replacements are only a sub set of all wall-disturbing (and other renovation) 10 events, it is necessary to convert the frequencies above into overall proportions of 2008 LRRP Events. 11 See Table 4-14 for this conversion. 12

4 This value is consistent with data from HUD’s 2001 National Survey of Lead and Allergens in Housing, which reports that 31% of painted walls in pre-1978 housing are plaster. Since not all wa ll repair jobs require removing all or part of the wall, the fraction of such jobs rem oving plaster walls will be less than the percentage of houses with plaster walls.EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-21 Table 4-14: Estimation of Event Frequencies for Remo val or Replacement of Plaster Walls Using Destructive Means 2008 Event

Category Frequency of Wall Removal or

Replacement 1 Practice Definition Frequency of Practice Total Number of Clearance Events

Removal/ Replacem ent of Plaster Wall > 6 Square Feet Using Destructive Means 10.7% * 20.0% = 2.1% 2.1% of Kitchen
Removal or Replacement of Plaster Wall > 40 Square Feet Using Destructive Means 10.0% * 20.0% = 2.0% 2.0% of Kitchen Kitchen 20% (AHS, 1997)
Removal or Replacement of Plaster Wall > 60 Square Feet Using Destructive Means 9.3% * 20.0% = 1.9% 1.9% of Kitchen
Removal or Replacement of Plaster Wall > 6 Square Feet Using Destructive Means 10.7% * 21.0% = 2.2% 2.2% of Bathroom
Removal or Replacement of Plaster Wall > 40 Square Feet Using Destructive Means 10.0% * 21.0% = 2.1% 2.1% of Bathroom Bathroom 21% (AHS, 1997)
Removal or Replacement of Plaster Wall > 60 Square Feet Using Destructive Means 9.3% * 21.0% = 2.0% 2.0% of Bathroom
Removal or Replacement of Plaster Wall > 6 Square Feet Using Destructive Means 10.7% * 25.0% = 2.7% 2.7% of Additions
Removal or Replacement of Plaster Wall > 40 Square Feet Using Destructive Means 10.0% * 25.0% = 2.5% 2.5% of Additions Additions 25% (AHS, 1997)
Removal or Replacement of Plaster Wall > 60 Square Feet Using Destructive Means 9.3% * 25.0% = 2.3% 2.3% of Additions
Removal or Replacement of Plaster Wall > 6 Square Feet Using Destructive Means 10.7% * 10.0% = 1.1% 1.1%of WallDisturbing Removal or Replacement of Plaster Wall > 40 Square Feet Using Destructive Means 10.0% * 10.0% = 1.0% 1.0% of WallDisturbingWallDisturbing 10% (AHS, 1997)
Removal or Replacement of Plaster Wall > 60 Square Feet Using Destructive Means 9.3% * 10.0% = 0.9% 0.9%of WallDisturbing The frequency represents the share of instances for an event cat egory where a wall is removed or replaced according to American Housing Survey data. For example, a wa ll is removed or re placed in 20% of kitchen renov ations and 21% of bathroom renovations. In the case of wall-disturbing events, 10% involv e removing or replacing a wall, and the remaining 90% involve less extensive work, such as cutting a hole in the wall.
1 Frequency of Removal of Trim or Molding Replacement During Wall Repair/Replacement 2 The results from the Plaster Questionnaire can be u tilized to estimate the frequency of wall removal or 3 repair events affected by the trim and mold ing specifications of the LRRP Clearance Rule. 5 The 4 frequency of removal of greater than 6 square feet of trim or molding in proportion to 2008 total events 5 can be approximated from question (2) of the plaster su rvey; the frequency of removal of greater than 40 6 square feet of trim or molding can be estimated from question (3); and the frequency of removal of 7 greater than 80 square feet of trim or mold ing can be estimated from question (4). Table 4-15 summarizes 8

5 These are separate from the trim and mold ing replacements during kitchen and bathr oom renovation events th at were estimated using the Carpentry Questionnaire.EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-22 the survey-based estimation methodologies for the even t frequencies of wall removal or repair requiring 1 removal of trim or molding. 2

3 Table 4-15: Estimation of Frequency of Removal of Trim or Molding for Wall Replacement/Repair Events Practice Definition Frequency of Pr actice Total Number of Dust Wipe Testing Events Removal of Trim or Molding > 6 Square Feet 53.1% (Plaster Survey, Question 2) 53.1% of Wall Replacement/Repair
Removal of Trim or Molding > 40 Square Feet 26.7% (Plaster Survey, Question 3) 26.7% of Wall Replacement/Repair
Removal of Trim or Molding > 80 Square Feet 11.4% (Plaster Survey, Question 4) 11.4% of Wall Replacement/Repair

4 As in the estimation of the frequency of removal or demolition of a plaster wall using destructive means, 5 wall removals and replacements repr esent only a subset of all wall-di sturbing (and other renovation) 6 events. Therefore, it is necessary to convert th e frequencies above into overall proportions of wall7 disturbing events and additions. This calcula tion is demonstrated in Table 4-16 below. 8

9 Table 4-16: Estimation of Final Event Frequencies for Removal of Trim or Molding 2008 Event

Category Frequency of Wall Removal or

Replacement 1 Practice Definition Frequency of Practice Total Number of Dust Wipe Testing Events Removal of Trim or Molding > 6 Square Feet 53.1% * 25.0% = 13.3% 13.3% of Additions Removal of Trim or Molding > 40 Square Feet 26.7% * 25.0% = 6.7% 6.7% of Additions Additions 25% (AHS, 1997) Removal of Trim or Molding > 80 Square Feet 11.4% * 25.0% = 2.8% 2.8% of Additions Removal of Trim or Molding > 6 Square Feet 53.1% * 10.0% = 5.3% 5.3% of WallDisturbing Removal of Trim or Molding > 40 Square Feet 26.7% * 10.0% = 2.7% 2.7% of WallDisturbingWallDisturbing 10% (AHS, 1997) Removal of Trim or Molding > 80 Square Feet 11.4% * 10.0% = 1.1% 1.1% of WallDisturbing 1. The frequency represents the share of instances for an event category where a wall is removed or replaced according to American Housing Survey data. A wall is re moved or replaced in 25% of additions In the case of wall-disturbing events, 10% involve removing or replacing a wall, and the remaining 90% in volve less extensive work, such as cutting a hole in the wall.
10 4.2.2 Event Frequencies Based on Secondary Data Sources 11

4.2.2.1 Cabinet Removal 12 For cabinet replacement events – which under the pro posed Clearance Rule result in additional dust wipe 13 testing requirements – no primary data collection was used to estimate event fre quencies. According to 14 the 1997 American Housing Survey, 58% of kitc hen renovations and 42% of bathroom renovations 15 involve cabinet replacement. According to HUD (2001) data, 10.5% of kitchen’s have cabinets with an 16 aggregate area larger than 6 square feet and less than 40 square feet, 27.5% have between 40 and 80 17 square feet, and 62 percent have mo re than 80 square feet. It is assumed that all bathroom cabinet 18 removal is between 6 and 40 square feet. In order to calculate the exact frequency for each cabinet job 19 size, the following frequencies are multiplied: th e percentage of renovations involving cabinet 20EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-23 replacement, and the percentage of these jobs of a given square footage size threshold. These 1 computations are presented in Table 4-17 below. 2

3 Table 4-17: Estimation of Frequency of Removal of Cabinets 2008 Event Category Practice Definition F requency of Practice Total Number of Dust Wipe Testing/ Clearance Events Removal of Cabinets > 6 Square Feet 58.0% * 100.0% = 58.0% 58.0% of Kitchen Removal of Cabinets > 40 Square Feet 58.0% * 89.5% = 51.9% 51.9% of Kitchen Kitchen
Removal of Cabinets > 80 Square Feet 58.0% * 62.0% = 36.0% 36.0% of Kitchen Removal of Cabinets > 6 Square Feet 42.0% * 100.0% = 42.0% 42.0% of Bathroom Removal of Cabinets > 40 Square Feet 42.0% * 0.0% = 0.0% None Bathroom
Removal of Cabinets > 80 Square Feet 42.0% * 0.0% = 0.0% None
4 4.2.3 Summary of Event Frequencies 5 Table 4-18 and Table 4-19 summarize the frequency es timation methodology for all dust wipe testing and 6 clearance events affected by this revision to the 200 8 LRRP Rule, including options for different job size 7 thresholds. 8EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-24 Table 4-18: Dust Wipe Testing Renovation Events

Clearance Rule Events Event Freq uency Event Estimation Method Interior Painting With Scraping 6.3% of Interior Painting Based on Pr imary Data Collection from <10 Firms

(>6 sq. ft. per job) 1.1% of Interior Painti ng Based on Primary Data Collection from <10 Firms (>60 sq. ft. per job) 0.06% of Interior Painti ng Based on Primary Data Collection from <10 Firms (>120 sq. ft. per job) None Based on Primary Data Collection from <10 Firms Interior Painting With Heat Gun 0.1% of Interior Painting Based on Pr imary Data Collection from <10 Firms (>6 sq. ft. per job) 0.1% of Interior Painting Based on Pr imary Data Collection from <10 Firms (>60 sq. ft. per job) None Based on Primary Data Collection from <10 Firms Removal of Trim or Molding

(> 6 sq. ft. per job) 5.1% of Interior Painting; 70.0% of Kitchen Renovations; 66.3% of Bathroom Renovations; 13.3% of Additions; 5.3% of Wall-Disturbing Events. Based on Primary Data Collection from <10 Firms

(> 40 sq. ft. per job) 4.7% of Interior Painting; 50.7% of Kitchen Renovations; 24.4% of Bathroom Renovations; 6.7% of Additions; 2.7% of Wall-Disturbing Events. Based on Primary Data Collection from <10 Firms

(> 80 sq. ft. per job) 1.3% of Interior Painting; 32.1% of Kitchen Renovations; 15.6% of Bathroom Renovations; 2.8% of Additions; 1.1% of Wall-disturbing Events. Based on Primary Data Collection from <10 Firms

Removal of Cabinets

(> 6 sq. ft. per job) 58.0% of Kitchen Renovations 42.0% of Bathroom Renovations Based on data from the 1997 American Housing Survey and HUD’s 2001 National Survey of Lead and Allergens in Housing.
(> 40 sq. ft. per job) 51.9% of Kitchen Renovations Based on data from the 1997 American Housing Survey and HUD’s 2001 National Survey of Lead and Allergens in Housing.
(> 80 sq. ft. per job) 36.0% of Kitchen Renovations Based on data from the 1997 American Housing Survey and HUD’s 2001 National Survey of Lead and Allergens in Housing. Removal or Replacement of Windows Frames 43.5% of Window/Door Events Based on Pr imary Data Collection from <10 Firms Removal or Replacement of Door Frames 17.6% of Window/Door Events Based on Pr imary Data Collection from <10 Firms
1EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-25 Table 4-19: Clearance Renovation Events

Clearance Rule Events Event Freq uency Event Estimation Method Plaster – Demolish, or Remove through Destructive Means

(> 6 sq. ft. per job) 2.1% of Kitchen Renovations; 2.2% of Bathroom Renovations; 2.7% of Additions; 1.1% of Wall-Disturbing Events. Based on Primary Data Collection from <10 Firms

(> 40 sq. ft. per job) 2.0% of Kitchen Renovations; 2.1% of Bathrooms Renovations; 2.5% of Additions; 1.0% of Wall-Disturbing Events. Based on Primary Data Collection from <10 Firms

(> 60 sq. ft. per job) 1.9% of Kitchen Renovations; 2.0% of Bathroom Renovations; 2.3% of Additions; 0.9% of Wall-Disturbing Events. Based on Primary Data Collection from <10 Firms

Interior Painting with High-Speed Machine Paint Removal 11.3% of Interior Painting Based on Pr imary Data Collection from <10 Firms

(> 6 sq. ft. per job) 0.1% of Interior Pa inting Based on Primary Data Collection from <10 Firms (>60 sq. ft. per job) 0.1% of Interior Pa inting Based on Primary Data Collection from <10 Firms 1 4.2.4 Total Number of Dust Wipe Testing and Clearance Events 2 This section describes the methodology for applying the event frequencies described above to the 3 numbers of events estimated for the economic analysis of the 2008 LRRP rule in order to estimate the 4 number of dust wipe testing and clearance events. 5
4.2.4.1 Threshold Options for Amount of Painted Surfaces Disturbed 6 Under the proposed rule, dust wipe testing or clear ance would be required after performing certain types 7 of RRP events where the total amount of painted surf aces disturbed is larger than a specified threshold 8 (measured in square feet). This analysis in cludes an analysis of three threshold options: 9
4. Low Threshold Option 10

 All event types requiring dust wipe testing where the total job size is larger than 11 6 square feet. 12

 Clearance is required for: 13

- high-speed machine removal of paint larger than 6 square feet, and 14

- plaster removal using destructive means, larger than 6 square feet. 15

 16 5. Proposed Threshold Option 17

 Dust wipe testing is required for: 18

- cabinet and trim events larger than 40 square feet, 19

- scraping of paint larger than 60 square feet, 20

- heat gun removal of more than 6 square feet 21

- Window frame or door frame removal events 22

 Clearance is required for: 23

- high-speed machine removal of paint larger than 6 square feet, and 24

- plaster removal using destructive means, larger than 6 square feet. 25 6. High Threshold Option 26EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-26  Dust wipe testing is required for: 1

- cabinet and trim events larger than 80 square feet, 2

- scraping or heat gun removal of paint larger than 120 square feet, and 3

- window frame or door frame removal events. 4

 Clearance is required for: 5

- high-speed machine removal of paint larger than 60 square feet, and 6

- plaster removal using destructive means, larger than 60 square feet. 7 For units undergoing regulated RRP activities, the number of events requiring either dust wipe testing or 8 clearance was estimated. Table 4-20 presents these even t types, the areas in which they occur, the type of 9 cleaning verification required, and th e size thresholds relevant to each. 10
11

Table 4-20: Event Types Requiring Dust Wipe Testing and Clearance by Size Threshold

Event Area Threshold Event Type Bath Kit Add Wall WD Paint Activity Low Proposed High Cabinet Removal X X DWT 6 40 80 Trim/Molding Removal X X X X X DWT 6 40 80

Window / Door Frame Removal X DWT n/a n/a n/a Painting w/ Scraping X DWT 6 60 120 Painting w/ Heat Gun X DWT 6 6 60
Paint Removal w/ High-Speed Machine X DWT & C 6 6 60

Plaster Removal w/ Destructive Means X X X X DWT & C 6 6 60

Bath = Bathroom renovation; Kit = Kitchen renovation; A dd = Addition; Wall = Wall disturbing event; WD = window frame or door frame event; Paint = Interior Painting DWT = Dust Wipe Testing C = Clearance 12 As shown in the table, window and door frame remova l events do not have size thresholds associated with 13 them. It is assumed that any window or door frame removal event will require dust wipe testing, though 14 the necessary amount of dust wipe testing will be depe ndent on the number of rooms in the work area. 15 For bathroom cabinet removal events, all such events were assumed to disturb between 6 and 40 square 16 feet of cabinetry. 17
4.2.4.2 Estimating the Number of Dust Wipe Testing and Clearance Events 18 Three pieces of information were necessary to estim ate the number of dust wipe testing and clearance 19 events for each option: (1) the probability that an even t occurs above the specified size threshold, (2) the 20 mutually exclusive probability that an event only occurs in a single room within a unit and where no 21 other event occurs within that unit, and (3) the joint probabilit y that either an event occurs in multiple 22 rooms within a unit or with any combination of other events within the unit. The determination of 23 mutually exclusive and joint events has two component s: (1) the event type (e.g., cabinet removal), and 24 (2) the room in which the event takes place (e.g., bath room). A mutually exclusive event is defined as a 25EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-27 single event type occurring only in a single room within a unit, given that no other event types occur. 1 Conversely, a joint event could be any combination of event types occurring within the same unit, or any 2 combination of a single event type occurring in multip le rooms within the unit. The probabilities that 3 events occur above different size thresholds are descr ibed in sections 4.2.1, 4.2.2, and 4.2.3 4
Avoiding Double Counting 5 Calculating the mutually exclusive and joint proba bilities for all event typ es was necessary to avoid 6 double counting. For example, it was estimated that cabinets and trim are replaced during 32.8% and 7 66.3% of bathroom remodeling events, respectively. Simply multiplying the number of bathroom 8 remodeling events by the sum of these probabilities (99. 1%) to estimate the number of dust wipe testing 9 events due to cabinet or trim replacement will do uble count instances where cabinets and trim were 10 replaced at the same time. In cases such as this, two ev ent types occur in the same room of a single unit. 11 The unit should therefore only be counted once. Othe r joint events consist of one or more event types 12 occurring in multiple rooms of a single unit. For example, a bathroom cabinet removal event and a 13 kitchen trim removal event may occur during a singl e job. As in the previous example, simply 14 multiplying the probabilities of a bathroom cabinet re moval and of a kitchen trim removal by the number 15 of units where bathrooms and kitchens are remode led would count such multiple-event jobs twice. 16 To avoid double counting multiple-eve nt units, the probability of a unit having a mutually exclusive event 17 is added to the probability of a un it having joint events. In the simp lified case of two events types, E 1 and 18 E 2 , with probabilities that each occur, p 1 and p 2 , respectively, the total number of affected units can be 19 calculated as follows: 20 (1) Probability of each event occurring by itself: 21 Probability of E 1 only : p 1 (only) = p 1 * (1 – p 2 ) 22 Probability of E 2 only : p 2 (only) = p 2 * (1 – p 1 ) 23 24 (2) Probability of both events occurring together: 25 Probability of E 1 and E 2 : p 1,2 (joint) = p 1 * p 2 26 27 (3) Total number of units where E 1 and/or E 2 occur: 28 Affected units = u * ( p 1 (only) + p 2 (only) + p 1,2 (joint) ) 29 30 Where: 31 u = the number of units where E 1 or E 2 could occur 32 Although this example has two event types, the methodology can be extended to determine the number of 33 affected units for any number of event types and rooms in which events o ccur. Note that for these 34 calculations the analysis relies on the simplif ying assumption that these joint probabilities are 35 independently distributed. In reality, these activities ar e more likely to occur together. Therefore, this 36 simplifying assumption introduces an upward bias to estimates of the number of dust wipe and clearance 37 events, but the magnitude of this bias is unknown. 38
Grouping Events into Options by Size 39 This analysis evaluates three threshold options for triggering the dust wipe testing and clearance 40 requirements of the rule. The proposed clearance rule sets thresholds that are specific to the entire job (as 41 opposed to being a component-specific threshold). T hus, it is possible that two smaller renovation tasks 42 occurring in the same unit could trigger the rule’s re quirements, even if the tasks would not exceed the 43 threshold when being performed in isolation. The t asks defined in this analysis that may contribute 44 toward the same threshold requirements are as follows: 45EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-28 • Removing more than 40 square feet of trim, molding, cabinets, or other fixtures 1

o Replace kitchen cabinets 2

o Replace bathroom cabinets 3

o Replace kitchen trim 4

o Replace bathroom trim 5

o Replace trim during painting 6

o Replace trim during addition 7

o Replace trim during other wall disturbing event 8

• Demolition, or removal through destructive means, of more than 6 square feet of plaster and lath 9 building component 10

o Destructive removal of plaster and lath building component during kitchen remodel 11

o Destructive removal of plaster and lath building component during bathroom remodel 12

o Destructive removal of plaster and lath building component during an addition 13

o Destructive removal of plaster and lath building component during another wall14 disturbing event 15 Thus, in order to calculate whether an entire job ex ceeded the applicable threshold it was assumed that the 16 average size for a particular task is the midpoint between consecutive size thresholds. For example, an 17 average size of 23 square feet was assumed for a bath room cabinet removal event, the midpoint between 6 18 and 40 square feet. 19 Based on this assumption, the amount of painted surf aces disturbed was combined for multiple-event jobs 20 to determine whether the events exceed the thresholds. For example, suppose a unit undergoes both 21 bathroom cabinet and kitchen cabinet removal events th at are between 6 and 40 square feet. Because the 22 estimated total job size is greater than 40 square feet (23 plus 23 equals 46), this job is assumed to exceed 23 the proposed threshold option. 24
Determining Maximum Room Area Size 25 As in the estimation of work area sizes for the 2008 LRRP rule, the size of the work area requiring dust 26 wipe testing after a multiple-event job is assumed to be equal to the maximum work area size of the 27 individual events. This assumption accounts for the overlap of different renovation activities occurring 28 within the same unit (for example, replacing cabinets and re-painting a kitchen). Bathroom and kitchen 29 events are exceptions because they are separate rooms within a unit and thus cannot overlap; the sum of 30 their work areas is compared to other event sizes. For example, if the sum of a bathroom and kitchen 31 event is 208 square feet and a 112 square foot paintin g event is also occurring in the same unit, it is 32 assumed that the painting was performed in the bathroom and kitchen; therefore, the event size would be 33 208 square feet. 34
4.2.4.3 Total Number of Dust Wipe Testing and Clearance Events 35 The analysis calculated the probabilities for all possi ble combinations of event types and sizes. These 36 probabilities were then applied to the estimates of un its performing events compliant with the 2008 LRRP 37 rule and 2009 proposed opt-out rule requirements . The resulting data included the number of units 38 requiring dust wipe testing or clearance for each size threshold option. 39EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-29 These data were then grouped by the maximum work ar ea sizes to determine the appropriate allocation of 1 dust wipe testing or clearance costs. 6 Testing costs are dependent on work area size, as larger work areas 2 require more dust wipe tests and more re-cleaning when necessary. 3 Testing costs also depend on the probability that a floor is carpeted because the proposed rule only 4 requires dust wipe tests for uncarpeted floors. As the probability that a floor is carpeted differs for 5 bathrooms and kitchens compared to events perform ed in other rooms, it was necessary to distinguish 6 between bathroom, kitchen, and othe r events. In addition, firms performing RRP work in renter-occupied 7 property will incur different paperwork costs than firms performing work in owner-occupied buildings 8 under the proposed LRRP clearance rule, because the dus t wipe testing report must be provided to both 9 the owner and the occupant. 10 Table 4-21 through Table 4-24 present the resulting number of events for dust wipe testing and clearance. 11 Events are presented by building tenu re, building type, work area size, and occurrence of a bathroom or 12 kitchen event. Note that events in public and co mmercial building COFs are always assumed to exceed 13 the highest size threshold option. Table 4-25 presents the total number of dust wipe testing and clearance 14 events for by the type of activity triggering th e dust wipe testing or clearance requirements. 15

6 The work area sized utilized in this an alysis were estimated for EPA’s analysis of the 2008 LRRP rule, and are shown below in Table 4-40 through Table 4-49.EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-30 Table 4-21: Target Housing Events (thousands): First Year, Low Threshold Option Dust Wipe Testing Clearance Total Size SF-O MF-O SF-R MF-R SF-O MF-O SF-R MF-R SF-O MF-O SF-R MF-R Total Events Excluding Kitchen or Bathroom Bath 34 2 21 21 7.8 0.4 4.8 4.7 41 2 26 25 94 Kit 102 6 33 31 1.5 0.1 0.2 0.2 104 6 33 31 173 Bath+Kit 1 0 0 0 0.3 0.0 0.0 0.0 1 0 0 0 2 S-Paint 53 3 25 38 1.3 0.1 0.5 0.8 55 3 25 39 122 M-Paint 28 2 14 24 0.5 0.0 0.2 0.4 28 2 14 25 69 L-Paint 26 1 13 23 0.4 0.0 0.2 0.4 26 2 14 24 65 S-WD 96 5 32 30 0.3 0.0 0.1 0.0 96 5 32 30 163 L-WD 101 6 32 31 0.6 0.0 0.1 0.1 101 6 32 31 171 Subtotal 441 25 170 199 12.6 0.6 6.2 6.6 453 25 176 205 860 Events Including Kitchens or Bathrooms Bath 97 4 149 89 3.7 0.2 5.8 3.3 101 4 155 93 353 Kit 116 7 141 149 4.5 0.2 4.5 4.7 121 7 145 154 427 Bath+Kit 35 4 87 31 2.7 0.3 6.3 2.1 37 5 93 33 168 S-Paint 4 0 6 3 0.2 0.0 0.3 0.2 5 0 6 4 15 M-Paint 5 0 4 5 0.3 0.0 0.2 0.3 5 0 4 6 15 L-Paint 2 0 5 2 0.2 0.0 0.4 0.1 2 0 5 2 9 S-WD 6 0 5 0 0.2 0.0 0.2 0.0 6 0 5 0 11 L-WD 16 1 10 5 0.8 0.0 0.4 0.2 17 1 10 5 33 Subtotal 281 17 405 285 12.7 0.8 18.1 10.8 294 18 423 296 1,030 All Events Total 722 42 574 483 25.3 1.4 24.3 17.4 747 43 599 501 1,890 The following abbreviations are used: SF-O indicates si ngle-family owner-occupied; MF -O indicates multi-family owner-occupied; SF-R indicates single-family renter-occupied; MF-R indicates multi-family renter-occupied; Bath indicates a bathroom size event; Kit indicates a kitchen size event, Bath+Kit indicates an event the size of a bathroom and a kitchen combined; S-Paint indicates a small painting sized event; M-Paint indicates a medium painting sized event; L-Paint indicates a large painting sized event; S-WD indicates a small wind ow/door sized event; L-WD indicates a large window/door sized event.

A “bathroom size” or “kitchen size” indicates the event size , not the event type . In addition to bathroom and kitchen events, other event types having these size definitions are: Bathroom size: wall-disturbing events, addition events Kitchen size: wall-disturbing even ts, addition events, wi ndow/door replacements Bathroom + kitchen size: wall-disturbing events, addition events

“0” and “0.0” indicate more than zero but fewer than 500 and 50 events respectively.

Events excluding kitchens or bathroom s are calculated separately from even ts including kitchens and bathrooms, because kitchens and bathrooms have a different probability of being carpeted than the rest of the house, and dust wipe samples are only taken on uncarpeted floors. 1
2EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-31 Table 4-22: Target Housing Events (thousands): First Year, Proposed Option Dust Wipe Testing Clearance Total Type SF-O MF-O SF-R MF-R SF-O MF-O SF-R MF-R SF-O MF-O SF-R MF-R Total Events Excluding Kitchen or Bathroom Bath 17 1 11 10 8.1 0.4 5.3 4.9 25 1 16 15 58 Kit 104 6 35 32 1.7 0.1 0.3 0.3 106 6 35 32 179 Bath+Kit 1 0 0 0 0.3 0.0 0.1 0.0 1 0 0 0 1 S-Paint 42 2 19 30 1.2 0.1 0.5 0.8 43 2 20 31 96 M-Paint 22 1 11 19 0.5 0.0 0.2 0.4 22 1 11 19 54 L-Paint 20 1 10 18 0.4 0.0 0.2 0.4 21 1 11 19 51 S-WD 101 6 34 31 0.3 0.0 0.1 0.0 101 6 34 31 172 L-WD 104 6 35 32 0.6 0.0 0.1 0.1 105 6 35 32 178 Subtotal 410 23 155 173 13.2 0.6 6.9 6.9 424 24 162 180 789 Events Including Kitchens or Bathrooms Bath 52 2 80 48 3.5 0.2 5.5 3.1 56 2 86 51 195 Kit 102 6 124 133 4.4 0.2 4.6 4.8 106 6 128 137 379 Bath+Kit 35 5 87 31 2.6 0.3 6.1 2.0 38 5 93 33 169 S-Paint 4 0 5 3 0.2 0.0 0.2 0.1 4 0 5 3 12 M-Paint 4 0 3 4 0.2 0.0 0.1 0.2 4 0 3 5 12 L-Paint 2 0 4 1 0.1 0.0 0.3 0.1 2 0 4 1 8 S-WD 3 0 3 0 0.2 0.0 0.2 0.0 3 0 3 0 6 L-WD 13 1 7 4 0.8 0.0 0.4 0.2 13 1 8 4 26 Subtotal 215 14 313 224 12.1 0.8 17.4 10.5 227 15 331 234 807 All Events Total 625 37 468 397 25.3 1.4 24.3 17.4 650 39 493 414 1,596 The following abbreviations are used: SF-O indicates si ngle-family owner-occupied; MF -O indicates multi-family owner-occupied; SF-R indicates single-family renter-occupied; MF-R indicates multi-family renter-occupied; Bath indicates a bathroom size event; Kit indicates a kitchen size event, Bath+Kit indicates an event the size of a bathroom and a kitchen combined; S-Paint indicates a small painting sized event; M-Paint indicates a medium painting sized event; L-Paint indicates a large painting sized event; S-WD indicates a small wind ow/door sized event; L-WD indicates a large window/door sized event.

A “bathroom size” or “kitchen size” indicates the event size , not the event type . In addition to bathroom and kitchen events, other event types having these size definitions are: Bathroom size: wall-disturbing events, addition events Kitchen size: wall-disturbing even ts, addition events, wi ndow/door replacements Bathroom + kitchen size: wall-disturbing events, addition events

“0” and “0.0” indicate more than zero but fewer than 500 and 50 events respectively.

Events excluding kitchens or bathroom s are calculated separately from even ts including kitchens and bathrooms, because kitchens and bathrooms have a different probability of being carpeted than the rest of the house, and dust wipe samples are only taken on uncarpeted floors. 1
2
3EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-32 Table 4-23: Target Housing Events (thousands): First Year, High Threshold Option Dust Wipe Testing Clearance Total Type SF-O MF-O SF-R MF-R SF-O MF-O SF-R MF-R SF-O MF-O SF-R MF-R Total Events Excluding Kitchen or Bathroom Bath 7 0 5 4 7.5 0.4 5.0 4.5 15 1 9 9 34 Kit 108 6 37 33 1.7 0.1 0.3 0.3 109 6 37 33 186 Bath+Kit 0 0 0 0 0.3 0.0 0.2 0.0 1 0 0 0 1 S-Paint 12 1 5 8 0.5 0.0 0.3 0.4 12 1 6 9 27 M-Paint 6 0 3 5 0.2 0.0 0.1 0.2 6 0 3 5 14 L-Paint 5 0 3 5 0.2 0.0 0.1 0.2 5 0 3 5 13 S-WD 106 6 37 33 0.3 0.0 0.1 0.0 107 6 37 33 182 L-WD 107 6 37 33 0.5 0.0 0.1 0.1 108 6 37 33 184 Subtotal 351 20 126 121 11.3 0.5 6.1 5.7 363 20 132 127 642 Events Including Kitchens or Bathrooms Bath 25 1 38 22 3.0 0.1 4.8 2.7 28 1 43 25 97 Kit 84 5 102 110 3.7 0.2 4.2 4.2 87 5 106 114 312 Bath+Kit 32 4 80 29 2.1 0.3 4.8 1.6 34 4 85 30 154 S-Paint 3 0 4 3 0.1 0.0 0.2 0.1 4 0 5 3 11 M-Paint 4 0 3 4 0.2 0.0 0.1 0.1 4 0 3 4 12 L-Paint 2 0 4 1 0.1 0.0 0.2 0.1 2 0 4 1 8 S-WD 2 0 1 0 0.2 0.0 0.1 0.0 2 0 1 0 3 L-WD 10 1 6 3 0.7 0.0 0.4 0.2 10 1 6 3 20 Subtotal 161 11 238 172 10.0 0.7 14.7 9.0 171 12 253 181 617 All Events Total 512 31 364 293 21.4 1.2 20.9 14.6 534 32 385 307 1,258 The following abbreviations are used: SF-O indicates si ngle-family owner-occupied; MF -O indicates multi-family owner-occupied; SF-R indicates single-family renter-occupied; MF-R indicates multi-family renter-occupied; Bath indicates a bathroom size event; Kit indicates a kitchen size event, Bath+Kit indicates an event the size of a bathroom and a kitchen combined; S-Paint indicates a small painting sized event; M-Paint indicates a medium painting sized event; L-Paint indicates a large painting sized event; S-WD indicates a small wind ow/door sized event; L-WD indicates a large window/door sized event.

A “bathroom size” or “kitchen size” indicates the event size , not the event type . In addition to bathroom and kitchen events, other event types having these size definitions are: Bathroom size: wall-disturbing events, addition events Kitchen size: wall-disturbing even ts, addition events, wi ndow/door replacements Bathroom + kitchen size: wall-disturbing events, addition events

“0” and “0.0” indicate more than zero but fewer than 500 and 50 events respectively.

Events excluding kitchens or bathroom s are calculated separately from even ts including kitchens and bathrooms, because kitchens and bathrooms have a different probability of being carpeted than the rest of the house, and dust wipe samples are only taken on uncarpeted floors. 1EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-33 1 Table 4-24: Public and Commercial Building COF Events: First Year, All Options Building Type Dust Wipe Testing Clearance Total Kindergarten (Public) 158 35 192 Kindergarten (Large Private) 23 5 27 Kindergarten (Small Private) 27 6 32 Pre-K + Kindergarten (Public) 123 27 150 Pre-K + Kindergarten (Large Private) 67 15 82 Pre-K + Kindergarten (Small Private) 34 7 41 Daycare Center (Renter-Occupied) 171 37 208 Daycare Center (Owner-Occupied) 117 26 142 Daycare Center (Non-Profit who performs some of own RRP) 149 32 181 Daycare Center (Non-Profit who uses contractors) 55 12 67 Daycare Center (In Public School) 8 2 10 Daycare Center (In Large Private School) 0 0 0 Daycare Center (In Small Private School) 0 0 0 All Events 930 203 1,134 Note: A zero indicates that fewer than one event is performed annually. 2 Table 4-25: Total First Year Events by Event Type Low Threshold Proposed Threshold High Threshold

Event Type Target Housing Public and Com.

Bldg. COF Total Target Housing Public and Com.

Bldg. COF Total Target Housing Public and Com.

Bldg. COF Total Dust Wipe Testing Events Heat gun, < 1000 degrees 3,633 1 3,635 3,799 1 3,800 - 1 1 Window/door frame removal 483,244 663 483,907 512,852 663 513,515 543,863 663 544,526 Scraping 39,964 89 40,053 2,089 89 2,179 - 89 89 Trim, molding, cabinet removal 687,319 176 687,495 436,450 176 436,626 206,915 176 207,092 Multiple activity events a 607,308 - 607,308 572,232 - 572,232 449,293 - 449,293 Subtotal, dust wipe testing 1,821,468 930 1,822,398 1,527,422 930 1,528,353 1,200,071 930 1,201,002 Clearance Events High speed paint removal 3,633 160 3,793 3,799 160 3,959 2,027 160 2,187 Plaster demolition through destructive

means 21,097 43 21,140 28,703 43 28,746 31,094 43 31,137 Multiple activity events a 43,704 - 43,704 35,932 - 35,932 24,959 - 24,959 Subtotal, clearance
events 68,434 203 68,637 68,434 20 3 68,637 58,079 203 58,283 Total, All Event Types 1,889,902 1,134 1,891,036 1,595,856 1,134 1,596,990 1,258,151 1,134 1,259,284

a Multiple event types occurring during th e course of a single job (e.g., a reno vation with both window frame removal and trim removal). Because the probability of multiple-activity events varies w ith the size threshold, the number of events for single-event activities is not consistent across size thresholds.EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-34 1 

### 4.3 Costs of Dust Sampling and Clearance 2 Two requirements of the proposed LRRP Clearance Ru le that have cost implications are: (1) a 3 requirement to perform dust wipe testing for a subset of RRP activities, and (2) a requirement to perform 4 dust wipe testing and achieve clearance for a second s ubset of RRP activities where the quantity of lead 5 dust and the characteristics of the dust make it hard to clean up. Figure 4-5 presents a summary of the 6 dust wipe testing and clearance requirements. 7 This section outlines a methodology for estimating th e costs of these requirements under the proposed 8 LRRP Clearance Rule and presents the resulting total cost s. First, the cost of using a third party to 9 perform dust wipe testing services following certain RRP ev ents is estimated. Next, firm costs associated 10 with dust wipe testing when the firm’s own dust samp ling technician is used are described. Re-cleaning 11 cost estimates and clearance failure rates for different surfaces are also presented. Finally, these costs are 12 combined to determine the total cost of dust wipe testing and clearance requirements for all applicable 13 events. 14EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-35 Figure 4-5: Summary of Required Activities for Performing Dust Wipe Testing and Clearance

1EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-36 4.3.1 Costs of Renovation Firm and Third Party Dust Wipe Testing 1 In order to estimate the costs of conducting dust wi pe testing following RRP activities, EPA administered 2 a questionnaire to nine lead evaluation firms that incl uded questions about what the firms would charge to 3 perform dust wipe testing and what the labor require ments and laboratory costs would be for performing 4 the testing. The sampling procedure for lead ev aluation firm selection is discussed below. The 5 questionnaire and a description of the purpose of each question are also provided. The final section 6 outlines the results of the survey. 7
4.3.1.1 Lead Evaluation Firm Sample Universe 8 To draw the sample of lead evaluation firms, ni ne states were randomly selected while limiting the 9 sample selection to no more than one state per EPA regi on. In addition, states were selected such that at 10 least one and no more than two states would have lead abatement and evaluation programs administered 11 by EPA. 7 The nine states selected according to these crite ria were: Minnesota, Idaho, Georgia, Maine, 12 Colorado, Oklahoma, Virginia, Kansas, and New Jersey. Idaho was the state sel ected with a lead-based 13 paint program administered by EPA. 8 14 Once the nine states were selected, lists of lead evaluation firms from state program websites were 15 obtained and contractors were randomly called until a fi rm from each selected state agreed to complete 16 the questionnaire. One outlier response was removed fro m the analysis. This was the first firm that 17 completed the questionnaire, and the survey instrument completed by this firm asked about the cost for 18 taking dust wipe samples, analyzing them, and provi ding a short report. This firm reported extremely 19 high costs and a substantial amount of the costs were re lated to providing the repo rt. Because the firm 20 appears to have erroneously concl uded that an exhaustive report would be required, the wording of the 21 questionnaire for subsequent respondents was changed from “short report” to “one-page report.” The cost 22 estimates provided by the subsequent respondents were an order of magnitude lower than those from the 23 first respondent. Since the first firm’s estimates appear to be uncharacteristically high due in part to this 24 difference in wording, their responses were dropped fr om the analysis. Simple averages were calculated 25 for each question across the eight remaining responses in order to estimate the necessary parameters. 26
4.3.1.2 Script for Lead Ev aluation Firm Questionnaire 27 Figure 4-1 presents the script used in the survey of lead evaluation firms. The introduction served to 28 familiarize firms with the objectives of the survey an d the nature of EPA’s proposed rule revision. 29 Information collected in question (1) provides a basis fo r estimating the costs of third party testing. Third 30 party testing may be used in some cases – even if it is not required – because it will be less expensive for 31 renovation firms that perform RRP events infrequently enough that the cost of certifying a dust sampling 32 technician is not justified. Information collected in questions (2) and (3) allow estimation of the costs of 33 dust wipe testing by the renovation firm. The cost is the labor time multiplied by the renovator wage rate, 34 plus lab fees, plus the cost of materials, plus th e cost of shipping samples to the lab. Information 35 collected in questions (4) and (5) provide informati on about the amount of lead time currently needed 36 before conducting a third party inspection and the amount of time it takes to get test results back after dust 37 sampling, but these questions were not used in this cost analysis. 38
39

7, 8 24% of all states have a lead-based paint certification program administered by the EPA.EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-37 Figure 4-6: Lead Evaluation Firm Survey Instrument Introduction: Hello, I’m _________, calling from Abt Associat es. We’re an independent research firm that is doing contract work for the Environmental Protection Agency (EPA). We’d like to ask you a few questions in order to better unde rstand how much it might cost to perform dust clearance testing after renovation activities. EPA will be proposing to require dust sampling and/or clearance testing after certain renovation practices are used that may disturb lead-based paint. We will use the responses to our survey to estimate how costly these requirements would be. Your responses will be treated as confidentia l and your name will not be provided to the EPA. There are 5 questions in our survey an d we expect it to take less than 5 minutes.

Screen Q1: Does your firm perform lead evaluation such as dust sampling? ⁭ Yes ⁭ No (end survey if no)

Screen Q2: Are you knowledgeable about the costs of performing some of these services? ⁭ Yes {Skip to (1) if Yes.} ⁭ No

Screen Q3: Is there someone there I could sp eak with who is knowledgeable about the costs of performing some of these services? ⁭ Yes {re-read intro and skip to (1)} ⁭ No

Screen Q4: Is there another time I could call back to speak with someone who is knowledgeable about the costs of performing some of these services? ⁭ Yes: __________________________ ⁭ No (end survey)


### (1) What would you charge to take four dust wipe samples (one window trough, one window sill, and two floor samples), have th em sent in and analyzed by the lab, and provide a 1-page report to the contractor? $________. a. How much extra would it cost per additional dust wipe sample? $________. b. How much would it cost for only tw o dust wipe samples (window sill and trough)? $________. (2) What would the lab porti on of the above costs be? $________. (3) Excluding travel time, how much labor time would be required to take four samples, send them to the lab, and pr ovide a report to the contractor? ____ hours. (4) How much time would it take between sampling and receiving the lab results? ____ days. (5) How much lead time would your firm n eed to get an inspector to the site? ____ days.
1EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-38 4.3.1.3 Lead Evaluation Firm Responses and Summary of Results 1 Individual survey responses are pr esented by state in Table 4-1. The table also presents summary 2 statistics showing the average and range of dust wipe testing cost responses. 3
4

Table 4-26: Summary of Responses to Lead Evaluation Firm Questionnaire by State (1) (1a) (1b) (2) (3) (4) (5) Individual Responses Colorado $250-$350 $20 $180-$200 $20/sample 2 hours 24 hours 2 hours - 1 day Georgia $500 $25 $425-$450 $25/sample 5 hours 3-5 business days 1-2 business days Idaho $1800-$2000 $150 $1500-$1800 $50/sample 8-15 hours 10 working days 1 day-1 week Kansas $450 $20 $400 $135 total ($20/sample) 3 hours 3 days 2 days
Maine $225 $20 $190 $20/sample 20 minutes 48 hours 24 hours Minnesota $175-$200 $45 $85-$100 $15 plus $5/sample 2 hours 1 day 1-2 business days New Jersey $175 $20 $135 $20/sample 10 minutes 4-5 business days 1-2 days
Oklahoma $110 $8.50 $92 $8.50/sample 1 hour 3 days 1 hour Virginia $150 $50 “Just different lab costs” Don’t Know 30/40 minutes - 1 hour 1 week “several days”
Summary Statistics Median $225 $20 $190 $20/sample 2 hours 3 days 1.5 days
Mean 1 $262 $26 $220 $19/sample 1 hour, 45 minutes 3 days 1.5 days Mode N.A. $20 $190 $20/sample 2 hours 1 day 1.5 days Minimum $110 $9 $92 $9/sample 10 minutes 1 day 1 hour Maximum 1 $1900 $150 $1650 $50/sample 12 hours 7 days 4 days Maximum 2 $500 $50 $438 $25/sample 5 hours 5 hours 4 days 1. Excludes the response from the firm in Idaho that was provided before the questionnaire was reworded. 5 4.3.2 Costs of Third Party Dust Wipe Testing and Clearance 6 Responses to question 1 are used to estimate how much it would cost renovation firms to hire third-party 7 lead evaluation firms to perform dust wipe testing in order to comply with the LRRP Clearance Rule. 8 The total cost of collecting, analyzing, and reportin g four dust wipe samples as well as the marginal cost 9 per additional sample were estimated. As shown in Table 4-27 below, third-party dust wipe testing costs 10 are split into fixed and variable costs. 11
12

Table 4-27: Fixed and Variable Costs of Dust Wipe Sampling
Total Cost for Four Dust Wipes Additional Cost per Wipe Fixe d Costs of Dust Wipe Testing
$262 (Question 1) $26 (Question 1a.) $262 minus four times $26 = $158
13 Using the information on fixed and variable costs of dus t wipe sampling, the costs of third-party lead dust 14 wipe testing is estimated, as illustrated in Table 4-28 Error! Reference source not found.

. 15
16EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-39 Table 4-28: Summary of Per-Event Costs for Events with Third Party Dust Wipe Testing

Event Type (A) Fixed Cost Per Event (B) Number of Samples a (C) Marginal Cost Per Sample (D) Re-cleaning Costs Total

Dust Wipe Testing Events Estimated as the sum of:

• third party dust wipe testing costs ($158 from Question 1 and Question 1a)

• photocopy costs

• shipping costs ($4.95 per occupant or owner for priority mail)

• shipping labor (5 minutes) Estimated as the sum of: (1) the number of windows multiplied by two samples, (2) the number of rooms multiplied by thelikelihood of noncarpeted floors, and (3) one sample outside the work area. $26 third party dust wipe testing costs (Question 1a) None The sum of: the fixed event cost (A), and the estimated number of samples (B) times the marginal cost (C).

Clearance Events Estimated as the sum of:

• third party dust wipe testing costs ($158 from Question 1 and Question 1a) multiplied by the expected number of clearance tests

• photocopy costs multiplied by the expected number of clearance tests

• shipping costs ($4.95 per occupant or owner for priority mail)

• shipping labor (5 minutes) Estimated as the sum of: (1) the product of the number of windows, two samples per window, and one plus the combined first and second failure rate, (2) the product of the number of rooms, thelikelihood of noncarpeted floors, and one plus the combined first and second failure rates, and (3) one sample outside the work area. $26 third party dust wipe testing costs (Question 1a) The sum of the following costs: floor labor and material re-cleaning costs times the floor clearance failure rate; sill labor and material re-cleaning costs times the sill clearance failure rate; trough labor and material re-cleaning costs times the trough clearance failure rate; travel costs times the combined clearance failure rate. The sum of: the fixed event cost (A), the estimated number of samples (B) times the marginal cost(C), and recleaning costs (D).

a For events in schools where there are more than four rooms affect ed, dust wipe samples are assumed to be taken from only four r ooms.

For clearance events where there are more than four rooms affe cted (10.3 classrooms for schools w ith kindergartens and 13.2 cla ssrooms for schools with kindergartens and pre-kindergartens), the initial dus t wipe samples are assumed to be taken from only four rooms. If all dust wipe samples show results below clearan ce levels, there is no re-clean ing. If any sample of a given type (i.e., sill, trough, or flo or) fails the clearance test, the failed surface must be re-cleaned, and all other surfaces of the same type in the untested rooms are assumed to be re -cleaned. In the event of a first-round failure, exactly four dust wipe samples of the type(s) that failed are assumed to be taken. They will i nclude the failed surfaces plus additional samples as necessary to get to a total of four samples of the same type. If any sample of a given typefails the secondround clearance test, the failed surface will be re-cleaned, and all other surfaces of the same type (i.e., sill, trough, floor ) in the remaining untested rooms will be re-cleaned. 1 4.3.3 Cost Estimation for Renovation Firms Performing Dust Wipe Testing and 2 Clearance 3 The costs of dust wipe sampling for a renovation firm can be split into: (1) dust sampling material costs, 4 (2) renovation firm labor costs, (3) shipping of samples, (4) lab costs, (5) report paperwork costs, and (6) 5 shipping of results. 9 The methodology used to estimate the direct costs of dust wipe testing is presented 6 in Table 4-29. The costs associated with dust sampling technician training are presented in sections 4.4 7 and 4.5. 8 Dust wipe testing costs are expected to vary accordin g to the number of samples that are required, which 9 will vary depending upon the number of rooms where samp les must be taken and whether or not carpet is 10

9 Most renovation firms are assumed to have a renovator become trained and certified as a Dust Sampling Technician, instead of hiring a third party firm to take the sample (see Section 4.4). These firms can take the samples and send them to the lab themselves. Because the staff are already at the renovation site, there ar e not travel costs associat ed with dust wipe testing for these events.EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-40 present. For a typical one-room renovation event, fo ur samples would be required (window sill, window 1 trough, workroom floor, adjacent room floor). For a renovation event where both the renovated room and 2 the adjacent room are carpeted, only two samples would be required (window sill and window trough). 3 Each additional room inside the work area will add 2- 3 dust wipes depending on whether or not the room 4 is carpeted (and whether or not there are windows in the work area), however sam ples are not required for 5 more than 4 rooms in a unit’s work area. 6 Labor time in the lead evaluation firm questionnaire w as defined as “the amount of labor time, excluding 7 travel time, required to take four dust wipe samples, send them to the lab, and provide a one page report 8 to the contractor.” Although use of this question for es timating the labor cost for events that require more 9 or less than four samples may be limited, responses to question 1a regarding the cost of taking additional 10 samples can be used to estimate the additional labor necess ary per sample (See column C of Table 4-29). 11EO 12866 Review Draft: Economic Analysisfor the LRRP Clearance Proposed RuleJanuary 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute4-41Table4-29: Summary of Dust Wipe Testing Costs (2008$)(A) Number of Samples (B) Lab andMaterial CostPer Sample(C) Marginal LaborCost Per Sample(D) Shipping Costs (E) Report PaperworkCosts Per Event(F) Fixed LaborCosts(G) TotalDust-Sampling-Only Events:Estimated as the sum of: (1) thenumber of windows multiplied bytwo samples, (2) the number ofrooms multiplied by the likelihoodof non-carpeted floors, and (3) onesample outside the work area.Estimated as the sum of:•$4.95 for shipping samplesto the lab•Costs of shipping results toowners and occupants($4.95 for each recipient)•$0.56 for ten minutes oflabor time (at the renovatorhourly wage rate of $34.92).Estimated as $0.36 tomake one copy of thefour-page report for theproperty owner.cForrental properties,estimated as $0.72 tomake two copies (forboth the owner andoccupant). It is assumedthat public orcommercial buildingCOFs will also make 2copies of the report.Estimated to be 0.83hours: calculated as1.75 hours (the totalfrom Question 3) lessthe variable labor(0.76 hours or 0.19per sample shown incolumn C) lessshipping labor (0.16hours shown incolumn D).Clearance Events:Estimated as the sum of: (1) theproduct of the number of windows,two window samples, and one plusthe combined first and secondfailure rate, (2) the product of thenumber of rooms, the likelihood ofnon-carpeted floors, and one plusthe combined first and secondfailure rates, and (3) one sampleoutside the work area.Estimated as$19 per samplefor lab fees(Question 2)plus $0.25aforthe dust wipe.The cost of anadditional samplewas estimated to be$26 for third partytesting (Question 1a).This includes $19 forlab fees (Question 2)plus $0.25afor thedust wipe, implyingthat the cost of themarginal labor perdust wipe is $6.75.Assuming a loadedwage of $34.92/hour,this implies that themarginal labor persample is about 0.19hours.Estimated as the sum of:•The expected number ofclearance tests multipliedby (1) $4.95 for shippingsamples to the lab and (2)$0.28 for 5 minutes of labortime (at a renovator wagerate)•Costs of shipping results toowners and occupants($4.95 for each recipient or$15.68bfor each recipientfor events affecting accessto the kitchen andbathroom)•$0.28 for five minutes oflabor time (at the renovatorwage rate).Estimated as the specificper-report costsdescribed for dust wipetesting events abovemultiplied by theexpected number ofclearance tests per event.Estimated to be 0.83hours calculated asabove multiplied bythe expected numberof clearance tests.Estimated as thesum of (D), (E)and (F) plus thenumber of unitsfrom (A)multiplied by thesum of the costsof (B) and (C).aThe cost of a 200 pack of Ghost Wipes (ASTM approved wipes for lead dust testing) divided by 200.b$15.68 is the average of USPS, FedEx, and UPS overnightrates for a package of 1⁄2 lbin distance zone 1 or 2cThe report is assumed to be four pages on average, this accounts for a one page job description, one page of lab results, onepage for a diagram of sample locations, and one additional pageis assumed to account for the instances where more than three pages might be necessary.EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-42 4.3.4 Likelihood of Clearance Failure 1 In order to approximate the frequenc y that dust wipe testing will result in floor or window re-cleaning 2 activities, a clearance failure rate must be estimat ed separately for each component. Post-cleaning 3 verification lead dust levels from EPA’s Dust St udy can be used to estimate what proportion of 4 renovation events will fail the first (or both the first and second) round of clearance. Table 4-30 describes 5 the methodology for estimating the failure rate using tw o different rates of floor sample failure for work 6 areas with floors in “poor” condition and work areas with floors in “fair” or “good” condition. The Dust 7 Study demonstrated that poor floor condition is posit ively correlated with post-cleaning-verification dust 8 lead levels and it is likely that more floors in the dust study were in poor condition compared to those in 9 the regulated housing stock. Therefore, this analysis estimates different clearance failure rates depending 10 on floor condition in order to reduce the upward bias on fa ilure rates that would result if the analysis did 11 not account for floor condition in the failure rate estimates. 12 The Dust Study included window sill dust wipe tests, but did not include window trough dust wipe tests. 13 However, in many instances in the Dust Study the wi ndow sills were in such poor condition that sampling 14 trays were placed on the sills and the dust wipe samp les were taken from the sampling trays. Since these 15 sampling trays are likely to be easier to clean than the average window sill that may be in fair or poor 16 condition, this analysis uses the floor failure rate as a proxy for the sill and trough failure rate. The 17 estimated average floor failure rate is 13.8 percent, wh ich is higher than the 13.3 percent failure rate for 18 window sill tests observed in the Dust Study. 19
20

Table 4-30: Window Sill, Window Trough, and Floor Sample Clearance Failure Rates Formula Failure Rate Description/Comments Floors Overall: (Poor-condition floor failure rate)*(percentage of floors not smooth/cleanable) + (fair/good-condition floor failure rate)*(percentage of floors smooth/cleanable) 13.8% The average clearance failure rate of floors, weightedby the proportion of uncarpeted floor surfaces in pre1978 housing that are descri bed as smooth/cleanable (98.08%) versus not smooth/ cleanable (1.92%) from NSLAH data. Sample weights were used.

Poor-Condition Floors: (Number of post-verification floor samples in Phase I experiments > 40 μg/ft2)/(total number of floor samples in Phase I experiments) 78.6% Clearance failure rate of floors for experiments in Dust Study that used plastic containment and rule cleaning practices, with pre-work floors in poor condition. There were 22 samples in this group that failed out of a total of 28 samples from 7 experiments. Fair/Good-Condition Floors: (Number of post-verification floor samples in Phase I experiments > 40 μg/ft2)/(total number of floor samples in Phase I experiments) 12.5% Clearance failure rate of floors for experiments in Dust Study that used plastic containment and rule cleaning practices, with pre-work floors in either fair or good condition. There were 4 samples in this group that failed out of a total of 32 samples from 8 experiments. Window Sills and Troughs n.a. 13.8% Assumed to be the sa me as the floor failure rate. 21
The overall floor failure rate was estimated as a weighted average of the poor-condition floor and 22 fair/good-condition floor failure rates. HUD’s (2001) National Survey of Lead and Allergens in Housing 23 (NSLAH) data was used to calculate the percenta ge of pre-1978 housing with floors that are non 24 smooth/cleanable – a proxy for poor condition floors. The overall floor clearance failure rate was 25 estimated as the frequency of not smooth/cleanable floors (1.92%) multiplied by the poor-condition floor 26EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-43 failure rate (78.6%), and the fre quency of smooth/cleanable floors (98.08%) multiplied by the fair/good1 condition floor failure rate (12.5%). Thus, the weighted average clear ance failure rate for floor surface 2 samples is 13.8%. 3 This analysis makes the simplifying assumption th at following a single clearance failure and the 4 necessary re-cleaning activities, the sample will have an equal probability of failing clearance the second 5 time around. This assumption is made because no current studies provide information about the 6 likelihood of a second clearance failure for lead dust wipe tests. Therefore, the second failure rate can be 7 estimated as the first failure rate squared – that is, the likelihood of one failure multiplied by the 8 likelihood of another failure given the first failure. Th e combined failure rate is the sum of this value and 9 the original failure rate calculated in Table 4-30. These combined component failure rates are presented 10 below in Table 4-31. 11
12

Table 4-31: Combined First and Second Clearance Failure Rates Sample Component Formula Combined 1 st and 2 nd Failure Rate Window Sill (0.138) + (0.138) 2 15.70% Window Trough (0.138) + (0.138) 2 15.70% Floor (0.138) + (0.138) 2 15.70% 13 4.3.5 Costs of Re-Cleaning After a Clearance Test Failure 14 This section presents the methodology used for estima ting re-cleaning costs when a clearance failure has 15 occurred. The re-cleaning methods prescribed by the LRRP Clearance Rule are the same as the initial 16 cleaning methods from the 2008 LRRP Rule: thus, these co sts are estimated following the 2008 analysis 17 methodology. 18
4.3.5.1 Costs of Re-Cleaning 19 Table 4-32 lists the potential re-cleaning activiti es associated with clearance and describes how to 20 determine costs per square foot for these activities. It is important to note that for events that only require 21 dust-wipe testing (use of a heat gun, removal or repl acement of windows or door frames, scraping an area 22 of 60 sq. ft. or greater, or removal of over 40 sq. ft. of trim or molding), no re-cleaning or re-testing is 23 required by the rule. For clearance events (use of a high-speed paint removal machine or demolition or 24 destructive removal of over 6 sq. ft. of plaster), re-cleaning and re-sampling are necessary only for a 25 subset of events in which any surface fails the first or second round of clearance. In the event of a failed 26 clearance test, only the components that failed the test s must be re-cleaned. For example, if the window 27 sill sample failed clearance but the window troughs and the floors passed, the window sill must be re28 cleaned but the window troughs and the floors do not need to be re-cleaned. 29
30EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-44

Table 4-32: Material Cost and Labor Hours per Square Foot Required for Re-Cleaning Activities (2008$) Cost Type Material Cost/ Sq.Ft. Labor Hours/ Sq.Ft. Rule Text & Estimation Method

(1) HEPA Vacuum and Wet Wipe/Mopping (Floors) $0.022 0.005 HEPA vacuum: Thoroughly vacuum all remaining surfaces and objects in the work area, in cluding furniture and fixtures, with a HEPA vacuum.
Wet Wipe/Mopping: Mop uncarpeted floors thoroughly, using a mopping method that keeps the wash water separate from the rinse water, such as the 2-bucket mopping method, or using a wet mopping system.
Likelihood of uncarpeted floor s times 110% of the square footage of the work area. (2) HEPA Vacuum and Wet Wipe/Mopping (Window Sills) $0.022 0.005 HEPA vacuum: Thoroughly vacuum all remaining surfaces and objects in the work area, in cluding furniture and fixtures, with a HEPA vacuum.
Wet Wipe/Mopping: Wipe all remaining surfaces and objects in the work area, except for carpeted or upholstered surfaces, with a damp cloth.

The number of windows times size of windowsill (3 HEPA Vacuum and Wet Wipe/Mopping (Window Troughs) $0.022 0.1 HEPA vacuum: Thoroughly vacuum all remaining surfaces and objects in the work area, in cluding furniture and fixtures, with a HEPA vacuum.
Wet Wipe/Mopping: Wipe all remaining surfaces and objects in the work area, except for carpeted or upholstered surfaces, with a damp cloth.

The number of windows Assumptions: Labor and material costs were derived from RS Means data for the activity: “Asbestos Abatement Work Area, pre-cleaning, HEPA vacuum and we t wipe, flat surfaces”; cleaning of 110% of the total square footage accounts for additional horizontal surfaces that may require cleaning, such as floor space outside the perimeter of the work area; cleaning a window trough is more labor-intensive than other surfaces and thus it is assumed that this requires 6 minutes per square foot of vacuuming and cleaning. 1
Labor Hours Per Square Foot 2 The labor hours per square foot required for HEPA vacuuming and wet wiping that was estimated for the 3 2008 analysis was derived from RS Means data for the activity: “Asbestos Abatement Work Area, pre4 cleaning, HEPA vacuum and wet wipe, flat surfaces,” which specified 0.005 labor hours per square foot. 5 Since following clearance failure the firm must return to the renovation work location to perform re6 cleaning and re-testing, travel costs must be included in the total cost of re-cleaning. According to the 7 2008 LRRP Rule, either a certified renovator or a wo rker supervised by an on-site certified renovator 8 must carry out cleaning activities. 10 Because estimated labor time for re-c leaning is under an hour for the 9 majority of events, the analysis assumes that only the renovator will travel to re-clean the work area 10 following clearance failure. Travel cost de tails are provided in Table 4-33 below. 11
12

10 Re-cleaning must be performed following the cl eaning procedures prescribed by the 2008 rule.EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-45

Table 4-33: Travel Costs for Re-Cleaning (2008$) Required Persons Round Trip Mileage Travel Cost/Mile Traveling Time Value of Time/Hr. Total Travel Costs for Re-Cleaning

1 renovator 30 mi. $0.545 a 0.75 $34.92 (30 mi * $0.545) + (0.75 hr * $34.92) = $42.54 Assumptions: The worker or renovator responsible for re-c leaning the work area will travel approximately 15 miles (roughly 20 minutes) each direction to the job; a loaded hour ly wage of $34.92 is used (from construction supervisor wage rates, BLS 2008); since re-cleaning jobs usually require only an hour or less of labor time, only one person travels to perform re-cleaning. a. This mileage cost reflects the average standard mileage rate from 2008 wh ich is used for co mputing deductible costs of operating an automobile for business purposes (IR S 2008). This average value is computed as a simple average of the rate applicable from January 1 - June 30, 2008 and the rate applicable from July 1 – December 31, 2008. 1 The example presented in Table 4-34 – estimating costs for a small interior painting job with a high-speed 2 paint removal machine in single-family owned housin g– shows the cost of re-cleaning after failing a 3 clearance test. The proposed rule requirements indicate that if the residual lead level in a particular dust 4 sample equals or exceeds the applicable clearance leve l, the components represented by the failed sample 5 shall be re-cleaned or re-tested. Since the thr ee dust wipe samples obtained from the work area are one 6 each from the floor, interior window sill, and window tr ough, whichever sample fails will result in the re7 cleaning of only that surface area. Therefore, for both window failed clearance and floor failed clearance, 8 three estimation steps are required: summary of requi red units, cost per unit, and total activity cost. 9
10

Table 4-34: An Example of Re-Cleaning Cost Es timation – Interior Painting with HighSpeed Machine Paint Removal (2008$)

Event Cost Component (A) Summary of Required Units (B) Cost Per Unit (C) Total Cost Per Activity

Floor HEPA Vacuum and Wet Wipe/Mopping: 48% * 110% * 112 sq.ft.] = 59.136 sq. ft. $0.022 + (0.005) * $34.92) = $0.197 59.136 sq. ft. HEPA vacuum * $0.197 = $11.63

Window Sill HEPA Vacuum and Wet Wipe/Mopping: 1 window * 0.667 sq. ft. = 0.667 sq. ft. $0.022 + (0.005 * $34.92) = $0.197 0.667 sq. ft. HEPA vacuum * $0.197 = $0.13Small OwnerOccupied Single Family Interior Painting with High-Speed Machine Paint Removal: Window Trough HEPA Vacuum and Wet Wipe/Mopping: 1 window * 0.667 sq. ft. = 0.667 sq. ft. $0.022 + (0.10 * $34.92) = $3.514 0.667 sq. ft. HEPA vacuum * $3.514 = $2.34

Assumptions: A small interior painting event in a single fa mily owned property has a work area of one room and 112 square feet; the likelihood of carpet is 52%; the labor cost uses a mean loaded wage rate of $34.92 based on average construction supervisor hourly wages (BLS 2008).
11 Because prescribed re-cleaning activities are determined by which dust wipe in a given work area fails, 12 the method for estimating costs is presented in three di fferent tables (Table 4-35, Table 4-36, and Table 13 4-37) for three different possible situations: a fl oor sample failing clearance, a window sill sample failing 14 clearance, and a window trough sample failing clearan ce. If more than one component were to fail 15 clearance, all material and labor costs from the tables could simply be combined, except for travel (since 16 the firm would not need to travel twice to re-clean two separate components). 17EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-46 Table 4-38 shows several examples of the estimated cost breakdown among materials, labor, and travel, 1 for each possible combination of failed work area co mponents for a small interior painting event in 2 single-family owner-occupied housing. Overall, for a single event type such as small interior painting, 3 the variance of total re-cleaning costs is small – th is is because the bulk of re-cleaning costs comes from 4 the travel expense portion. 5
6 Table 4-35: Costs Per Re-Cleaning – Floor Sample Clearance Failure Material Units Labor Hours HEPA Vacuum Wet Wipe / Mopping Travel Mileage HEPA Vacuum Wet Wipe Travel Time Total Costs

(1-carpet likelihood) * 110% square footage (1-carpet likelihood) * 110% square footage 30 miles 0.0025 hrs. * (1-carpet likelihood) * 110% square footage 0.0025 hrs. * (1-carpet likelihood) * 110% square footage 0.75 hrs. $0.011*vacuum and wet wipe units + $0.545 * mileage + $34.92* total labor hours Note: For kitchen events, 125% square footage wi ll be used in place of 110% square footage. 7 Table 4-36: Costs Per Re-Cleaning – Windo w Sill Sample Clearance Failure Material Units Labor Hours HEPA Vacuum Wet Wipe / Mopping Travel Mileage HEPA Vacuum Wet Wipe Travel Time Total Costs

0.667 square feet * number of windows 0.667 square feet * number of windows 30 miles 0.0025 hours * 0.667 square feet * number of windows 0.0025 hours * 0.667 square feet * number of windows 0.75 hrs. $0.011*vacuum and wet wipe units + $0.545 * mileage + $34.92* total labor hours Note: For kitchen events, 125% square footage wi ll be used in place of 110% square footage. 8 Table 4-37: Costs Per Re-Cleaning – Window Trough Sample Clearance Failure Material Units Labor Hours HEPA Vacuum Wet Wipe / Mopping Travel Mileage HEPA Vacuum Wet Wipe Travel Time Total Costs

0.667 square feet * number of windows 0.667 square feet * number of windows 30 miles 0.05 hours * 0.667 square feet * number of windows 0.05 hours * 0.667 square feet * number of windows 0.75 hrs. $0.011*vacuum and wet wipe units + $0.545 * mileage + $34.92* total labor hours Note: For kitchen events, 125% square footage wi ll be used in place of 110% square footage. 9EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-47 Table 4-38: Costs Per Re-Cleaning Example – Owne r-Occupied Single-Family Small Interior Painting Event Failed Component Materials Cost Labor Cost Travel Cost Total Floor $1.30 $10.33 $42.54 $54.17 Sill $0.01 $0.12 $42.54 $42.67 Trough $0.01 $2.33 $42.54 $44.88 Floor, Sill $1.32 $10.44 $42.54 $54.30 Floor, Trough $1.32 $12.65 $42.54 $56.51 Sill, Trough $0.03 $2.45 $42.54 $45.02 Floor, Sill, Trough $1.33 $12.77 $42.54 $56.64 1 In order to estimate average per-event re-cleaning costs, the likelihood of clearance failure for each 2 sample type must be accounted for (see Section 4.3.4). The analysis makes the simplifying assumption 3 that sample failures are not correlated (e.g., a fl oor sample failure would not make a window trough 4 sample failure any more likely). In order to calculate the average re-cleaning co sts for a clearance failure 5 event, the likelihoods of each component failure are multiplied by their respective component cleaning 6 costs, and these values are summed. Travel, which is not a component-specific re-cleaning cost, is 7 estimated as the flat travel cost above multiplied by the likelihood of any clearance failures. The cost 8 example of a small interior painting event presented in Table 4-38 above is extended below in Table 4-39 9 to show the average expected re -cleaning costs. While Table 4-38 shows the costs per re-cleaning for the 10 different scenarios where it would be required, Table 4-39 presents the average expected re-cleaning 11 costs, over all jobs, accounting for the instances wh ere no re-cleaning is required because clearance is 12 achieved after the initial cleaning. Averaging the re-cl eaning costs across all jobs (i.e., those that require 13 re-cleaning and those that do not) simplifies the calcula tions by allowing the calculation of a total cost per 14 event that applies to all jobs. 15 16 17 Table 4-39: Example of Average Expected Re-Clean ing Costs: Owner-Occupied Single-Family Small Interior Painting Event Floor Re-Cleaning Sill Re-Cleaning Trough ReCleaning Travel

Material Labor Material Labor Material Labor Mileage Value of Time Total

Average Costs for a ll Clearance Events
$0.20 $1.62 $0.002 $0.02 $0. 002 $0.37 $5.77 $9.24 $17.22 Methodology Floor failure rate * 110% uncarpeted square footage * $0.022 Floor failure rate * 110% uncarpeted square footage * 0.005 * renovator wage rate Sill failure rate * total window surface area * $0.022 Sill failure rate * total window surface area * 0.005 * renovator wage rate Trough failure rate * total window surface area * $0.022 Trough failure rate * total window surface area * 0.1 * renovator wage rate Expectednumber of recleanings* 20 miles * $0.545 Expectednumber of recleanings* 0.5 hours* renovator wage rate Re-cleaning material costs + re-cleaning labor costs + travel costs

In order to calculate a total cost per event that applies to all jobs, the average re-cleaning costs are calculated across all jobs (i.e., those that require re-cle aning and those that do not). 18 4.3.6 Summary of Dust Wipe Testing and Clearance Costs Per-Event 19 Each type of event will incur a different set of cost s based on the number of dust wipe samples required, 20 whether clearance is required, whether it is in target housing or a public or commercial building COF, and 21EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-48 other event characteristics. Table 4-40 through Ta ble 4-49 below summarize the cost components for all 1 event possibilities considered in this analysis. 2
3 Table 4-40: Dust Wipe Testing Per-Event Costs Summary : Single-Family Owner-Occupied Target Housing

Size of Work Area for the Event 1 Number of Dust Wipe Samples 2, 3 Lab Costs 3 Dust Wipe Testing Labor Costs 3 Dust Wipe Testing Material

Costs 3 Total Shipping 3 Report Paperwork 3 Total PerEvent Cost 3 Events Excluding Kitchens or Bathrooms Bathroom Size (48 ft 2 ) 2.96 $56.24 $48.39 $0.74 $15.72 $0.36 $121.45 Kitchen Size (160 ft 2 ) 2.96 $56.24 $48.39 $0.74 $15.72 $0.36 $121.45 Bath + Kitchen Size (208 ft 2 ) 5.44 $103.36 $64.84 $1.36 $15.72 $0.36 $185.64 Small Painting Size (112 ft 2 ) 2.96 $56.24 $48.39 $0.74 $15.72 $0.36 $121.45 Medium Painting Size (308 ft 2 ) 3.63 $68.96 $52.83 $0.91 $15.72 $0.36 $138.78 Large Painting Size (504 ft 2 ) 5.64 $107.13 $66.16 $1.41 $15.72 $0.36 $190.78 Small Window Door Size (63 ft 2 ) 2.96 $56.24 $48.39 $0.74 $15.72 $0.36 $121.45 Large Window Door Size (640 ft 2 ) 7.03 $133.52 $75.37 $1.76 $15.72 $0.36 $226.73 Events Including Kitchens or Bathrooms Bathroom Size (48 ft 2 ) 3.78 $71.82 $53.83 $0.95 $15.72 $0.36 $142.68 Kitchen Size (160 ft 2 ) 3.78 $71.82 $53.83 $0.95 $15.72 $0.36 $142.68 Bath + Kitchen Size (208 ft 2 ) 6.67 $126.73 $73.00 $1.67 $15.72 $0.36 $217.48 Small Painting Size (112 ft 2 ) 3.78 $71.82 $53.83 $0.95 $15.72 $0.36 $142.68 Medium Painting Size (308 ft 2 ) 4.27 $81.04 $57.05 $1.07 $15.72 $0.36 $155.23 Large Painting Size (504 ft 2 ) 6.16 $117.08 $69.63 $1.54 $15.72 $0.36 $204.33 Small Window Door Size (63 ft 2 ) 3.78 $71.82 $53.83 $0.95 $15.72 $0.36 $142.68 Large Window Door Size (640 ft 2 ) 7.50 $142.51 $78.51 $1.88 $15.72 $0.36 $238.98

1 Event sizes were estimated for EPA’s 2008 LR RP Rule Analysis and represent the work area size and not necessarily the amount o f lead-based paint disturbed. A “bathroom size” or “kitchen size” indicates the event size , not the event type . In addition to bathroom and kitchen events, other event types having these size definitions are: bathroom size: wall-disturbing events, addition events kitchen size: wall-disturbing events, addition events, window/door replacements bathroom + kitchen size: wall-disturbing events, addition events 2 The average number of required samples is presented. One sample is required outside the work area and three samples are requi red per room in the work area: (1) floor sample, (2) window sill sample, and (3) win dow trough sample. However, floor samples are not required on carpeted floors (so the minimum number of required samples may be as low as two if the work area is one room and all floors are carpeted). The estimate d numbers of rooms affected and the probability that floors ar e carpeted were estimated following the methodology developed for the 2008 LRRP rule analysis.
3 See section 4.3.3 and Table 4-29 for a description of how these costs are calculated.
Events excluding kitchens or bathrooms are calculated separately from events including kitchens and bathrooms, because kitchens and bathrooms have a different probability of being carpeted than the rest of the house, and dust wipe sa mples are only taken on uncarpeted floors. 4EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-49 Table 4-41: Dust Wipe Testing Per-Event Costs Summary : Single-Family Renter-Occupied Target Housing

Size of Work Area for the Event 1 Number of Dust Wipe Samples 2, 3 Lab Costs 3 Dust Wipe Testing Labor Costs 3 Dust Wipe Testing Material

Costs 3 Total Shipping 3 Report Paperwork 3 Total PerEvent Cost 3 Events Excluding Kitchens or Bathrooms Bathroom Size (48 ft 2 ) 2.96 $56.24 $48.39 $0.74 $20.67 $0.72 $126.76 Kitchen Size (120 ft 2 ) 2.96 $56.24 $48.39 $0.74 $20.67 $0.72 $126.76 Bath + Kitchen Size (168 ft 2 ) 5.44 $103.36 $64.84 $1.36 $20.67 $0.72 $190.95 Small Painting Size (96 ft 2 ) 2.96 $56.24 $48.39 $0.74 $20.67 $0.72 $126.76 Medium Painting Size (232 ft 2 ) 3.11 $59.07 $49.38 $0.78 $20.67 $0.72 $130.61 Large Painting Size (368 ft 2 ) 4.65 $88.28 $59.58 $1.16 $20.67 $0.72 $170.41 Small Window Door Size (55 ft 2 ) 2.96 $56.24 $48.39 $0.74 $20.67 $0.72 $126.76 Large Window Door Size (480 ft 2 ) 5.94 $112.78 $68.13 $1.48 $20.67 $0.72 $203.79 Events Including Kitchens or Bathrooms Bathroom Size (48 ft 2 ) 3.78 $71.82 $53.83 $0.95 $20.67 $0.72 $147.99 Kitchen Size (120 ft 2 ) 3.78 $71.82 $53.83 $0.95 $20.67 $0.72 $147.99 Bath + Kitchen Size (168 ft 2 ) 6.67 $126.73 $73.00 $1.67 $20.67 $0.72 $222.79 Small Painting Size (96 ft 2 ) 3.78 $71.82 $53.83 $0.95 $20.67 $0.72 $147.99 Medium Painting Size (232 ft 2 ) 3.73 $70.81 $53.48 $0.93 $20.67 $0.72 $146.61 Large Painting Size (368 ft 2 ) 5.16 $97.96 $62.96 $1.29 $20.67 $0.72 $183.59 Small Window Door Size (55 ft 2 ) 3.78 $71.82 $53.83 $0.95 $20.67 $0.72 $147.99 Large Window Door Size (480 ft 2 ) 6.38 $121.30 $71.11 $1.60 $20.67 $0.72 $215.39

1 Event sizes were estimated for EPA’s 2008 LR RP Rule Analysis and represent the work area size and not necessarily the amount o f lead-based paint disturbed. A “bathroom size” or “kitchen size” indicates the event size , not the event type . In addition to bathroom and kitchen events, other event types having these size definitions are: bathroom size: wall-disturbing events, addition events kitchen size: wall-disturbing events, addition events, window/door replacements bathroom + kitchen size: wall-disturbing events, addition events 2 The average number of required samples is presented. One sample is required outside the work area and three samples are requi red per room in the work area: (1) floor sample, (2) window sill sample, and (3) win dow trough sample. However, floor samples are not required on carpeted floors (so the minimum number of required samples may be as low as two if the work area is one room and all floors are carpeted). The estimate d numbers of rooms affected and the probability that floors ar e carpeted were estimated following the methodology developed for the 2008 LRRP rule analysis.
3 See section 4.3.3 and Table 4-29 for a description of how these costs are calculated.
Events excluding kitchens or bathrooms are calculated separately from events including kitchens and bathrooms, because kitchens and bathrooms have a different probability of being carpeted than the rest of the house, and dust wipe sa mples are only taken on uncarpeted floors. 1EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-50 Table 4-42: Dust Wipe Testing Per-Event Costs Summary: Multi-Family Owner-Occupied Target Housing

Size of Work Area for the Event 1 Number of Dust Wipe Samples 2, 3 Lab Costs 3 Dust Wipe Testing Labor Costs 3 Dust Wipe Testing Material

Costs 3 Total Shipping 3 Report Paperwork 3 Total PerEvent Cost 3 Events Excluding Kitchens or Bathrooms Bathroom Size (48 ft 2 ) 2.96 $56.24 $48.39 $0.74 $15.72 $0.36 $121.45 Kitchen Size (80 ft 2 ) 2.96 $56.24 $48.39 $0.74 $15.72 $0.36 $121.45 Bath + Kitchen Size (128 ft 2 ) 5.44 $103.36 $64.84 $1.36 $15.72 $0.36 $185.64 Small Painting Size (84 ft 2 ) 2.96 $56.24 $48.39 $0.74 $15.72 $0.36 $121.45 Medium Painting Size (184 ft 2 ) 2.96 $56.24 $48.39 $0.74 $15.72 $0.36 $121.45 Large Painting Size (284 ft 2 ) 3.95 $75.09 $54.97 $0.99 $15.72 $0.36 $147.13 Small Window Door Size (45 ft 2 ) 2.96 $56.24 $48.39 $0.74 $15.72 $0.36 $121.45 Large Window Door Size (320 ft 2 ) 4.40 $83.57 $57.93 $1.10 $15.72 $0.36 $158.68 Events Including Kitchens or Bathrooms Bathroom Size (48 ft 2 ) 3.78 $71.82 $53.83 $0.95 $15.72 $0.36 $142.68 Kitchen Size (80 ft 2 ) 3.78 $71.82 $53.83 $0.95 $15.72 $0.36 $142.68 Bath + Kitchen Size (128 ft 2 ) 6.67 $126.73 $73.00 $1.67 $15.72 $0.36 $217.48 Small Painting Size (84 ft 2 ) 3.78 $71.82 $53.83 $0.95 $15.72 $0.36 $142.68 Medium Painting Size (184 ft 2 ) 3.54 $67.26 $52.24 $0.89 $15.72 $0.36 $136.46 Large Painting Size (284 ft 2 ) 4.38 $83.30 $57.84 $1.10 $15.72 $0.36 $158.31 Small Window Door Size (45 ft 2 ) 4.81 $91.41 $60.67 $1.20 $15.72 $0.36 $169.37

1 Event sizes were estimated for EPA’s 2008 LR RP Rule Analysis and represent the work area size and not necessarily the amount o f lead-based paint disturbed. A “bathroom size” or “kitchen size” indicates the event size , not the event type . In addition to bathroom and kitchen events, other event types having these size definitions are: bathroom size: wall-disturbing events, addition events kitchen size: wall-disturbing events, addition events, window/door replacements bathroom + kitchen size: wall-disturbing events, addition events 2 The average number of required samples is presented. One sample is required outside the work area and three samples are requi red per room in the work area: (1) floor sample, (2) window sill sample, and (3) win dow trough sample. However, floor samples are not required on carpeted floors (so the minimum number of required samples may be as low as two if the work area is one room and all floors are carpeted). The estimate d numbers of rooms affected and the probability that floors ar e carpeted were estimated following the methodology developed for the 2008 LRRP rule analysis.
3 See section 4.3.3 and Table 4-29 for a description of how these costs are calculated.
Events excluding kitchens or bathrooms are calculated separately from events including kitchens and bathrooms, because kitchens and bathrooms have a different probability of being carpeted than the rest of the house, and dust wipe sa mples are only taken on uncarpeted floors. 1EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-51 Table 4-43: Dust Wipe Testing Per-Event Costs Summary: Multi-Family Renter-Occupied Target Housing

Size of Work Area for the Event 1 Number of Dust Wipe Samples 2, 3 Lab Costs 3 Dust Wipe Testing Labor Costs 3 Dust Wipe Testing Material

Costs 3 Total Shipping 3 Report Paperwork 3 Total PerEvent Cost 3 Events Excluding Kitchens or Bathrooms Bathroom Size (48 ft 2 ) 2.96 $56.24 $48.39 $0.74 $20.67 $0.72 $126.76 Kitchen Size (80 ft 2 ) 2.96 $56.24 $48.39 $0.74 $20.67 $0.72 $126.76 Bath + Kitchen Size (128 ft 2 ) 5.44 $103.36 $64.84 $1.36 $20.67 $0.72 $190.95 Small Painting Size (84 ft 2 ) 2.96 $56.24 $48.39 $0.74 $20.67 $0.72 $126.76 Medium Painting Size (184 ft 2 ) 2.96 $56.24 $48.39 $0.74 $20.67 $0.72 $126.76 Large Painting Size (284 ft 2 ) 3.95 $75.09 $54.97 $0.99 $20.67 $0.72 $152.44 Small Window Door Size (45 ft 2 ) 2.96 $56.24 $48.39 $0.74 $20.67 $0.72 $126.76 Large Window Door Size (320 ft 2 ) 4.40 $83.57 $57.93 $1.10 $20.67 $0.72 $163.99 Events Including Kitchens or Bathrooms Bathroom Size (48 ft 2 ) 3.78 $71.82 $53.83 $0.95 $20.67 $0.72 $147.99 Kitchen Size (80 ft 2 ) 3.78 $71.82 $53.83 $0.95 $20.67 $0.72 $147.99 Bath + Kitchen Size (128 ft 2 ) 6.67 $126.73 $73.00 $1.67 $20.67 $0.72 $222.79 Small Painting Size (84 ft 2 ) 3.78 $71.82 $53.83 $0.95 $20.67 $0.72 $147.99 Medium Painting Size (184 ft 2 ) 3.54 $67.26 $52.24 $0.89 $20.67 $0.72 $141.77 Large Painting Size (284 ft 2 ) 4.38 $83.30 $57.84 $1.10 $20.67 $0.72 $163.62 Small Window Door Size (45 ft 2 ) 4.81 $91.41 $60.67 $1.20 $20.67 $0.72 $174.68

1 Event sizes were estimated for EPA’s 2008 LR RP Rule Analysis and represent the work area size and not necessarily the amount o f lead-based paint disturbed. A “bathroom size” or “kitchen size” indicates the event size , not the event type . In addition to bathroom and kitchen events, other event types having these size definitions are: bathroom size: wall-disturbing events, addition events kitchen size: wall-disturbing events, addition events, window/door replacements bathroom + kitchen size: wall-disturbing events, addition events 2 The average number of required samples is presented. One sample is required outside the work area and three samples are requi red per room in the work area: (1) floor sample, (2) window sill sample, and (3) win dow trough sample. However, floor samples are not required on carpeted floors (so the minimum number of required samples may be as low as two if the work area is one room and all floors are carpeted). The estimate d numbers of rooms affected and the probability that floors ar e carpeted were estimated following the methodology developed for the 2008 LRRP rule analysis.
3 See section 4.3.3 and Table 4-29 for a description of how these costs are calculated.
Events excluding kitchens or bathrooms are calculated separately from events including kitchens and bathrooms, because kitchens and bathrooms have a different probability of being carpeted than the rest of the house, and dust wipe sa mples are only taken on uncarpeted floors. 1EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-52 Table 4-44: Dust Wipe Testing Per-Event Costs Summary: Public and Commercial Building COFs

Size of Work Area for the Event 1 Number of Dust Wipe Samples 2, 3 Lab Costs 3 Dust Wipe Testing Labor Costs 3 Dust Wipe Testing Material

Costs 3 Total Shipping 3 Report Paperwork 3 Total PerEvent Cost 3 Kindergarten (Public; 13,560 ft 2 ) 11.30 $214.70 $103.72 $2.83 $20.67 $0.72 $342.64 Kindergarten (Large Private; 13,560 ft 2 ) 11.30 $214.70 $103.72 $2.83 $20.67 $0.72 $342.64 Kindergarten (Small Private; 13,560 ft 2 ) 11.30 $214.70 $103.72 $2.83 $20.67 $0.72 $342.64 Pre-K + Kindergarten (Public; 15,674 ft 2 ) 11.30 $214.70 $103.72 $2.83 $20.67 $0.72 $342.64 Pre-K + Kindergarten (Large Private; 15,674 ft 2 ) 11.30 $214.70 $103.72 $2.83 $20.67 $0.72 $342.64 Pre-K + Kindergarten (Small Private; 15,674 ft 2 ) 11.30 $214.70 $103.72 $2.83 $20.67 $0.72 $342.64 Daycare Center (Renter-Occupied; 2,400 ft 2 ) 9.41 $178.82 $91.19 $2.35 $20.67 $0.72 $293.75 Daycare Center (Owner-Occupied; 2400 ft 2 ) 9.41 $178.82 $91.19 $2.35 $20.67 $0.72 $293.75 Daycare Center (Non-Profit who performs some of own RRP; 2,400 ft 2 ) 9.41 $178.82 $91.19 $2.35 $20.67 $0.72 $293.75 Daycare Center (Non-Profit who uses contractors; 2,400 ft 2 ) 9.41 $178.82 $91.19 $2.35 $20.67 $0.72 $293.75 Daycare Center (In Public School; 2,400 ft 2 ) 9.41 $178.82 $91.19 $2.35 $20.67 $0.72 $293.75 Daycare Center (In Large Private School; 2,400 ft 2 ) 9.41 $178.82 $91.19 $2.35 $20.67 $0.72 $293.75 Daycare Center (In Small Private School; 2,400 ft 2 ) 9.41 $178.82 $91.19 $2.35 $20.67 $0.72 $293.75 1 Event sizes were estimated for EPA’s 2008 LR RP Rule Analysis and represent the work area size and not necessarily the amount o f lead-based paint disturbed. 2 One sample is required outside the work area and three samples are required per room in the work area: (1) floor sample, (2) w indow sill sample, and (3) window trough sample. However, floor samples are not required on carpeted floors (so the minimum number of required sample s may be as low as two if the work area is one room and all floors are carpeted). The estimated numbers of rooms affected were estimated following the methodology developed for the 2008 LRRP rule analysis
3 See section 4.3.3 and Table 4-29 for a description of how these costs are calculated. 1 2EO 12866 Review Draft: Economic Analysisfor the LRRP Clearance Proposed RuleJanuary 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute4-53Table4-45: Average Clearance Costs Per-Event (Averaged Across Eventsthat Pass and Fail Clearance): Single-Family Owner-Occupied Target HousingSize of Work Area for theEvent1AverageNumber ofDust WipeSamples2AverageLabCosts3,5AverageDust WipeTestingLaborCosts3,5AverageDust WipeTestingMaterialCosts3,5AverageTotalShipping3,5AverageReportPaperwork3,5AverageReCleaningMaterial4,5AverageReCleaningLabor4,5AverageReCleaningTravel4,5AverageTotal CostsPer-Event5Events Excluding Kitchens or BathroomsBathroom Size (48 ft2)3.35 $63.64 $61.11 $0.84 $18.49$0.49 $0.09 $1.08 $15.00 $160.75Kitchen Size (160 ft2)3.35 $63.64 $61.11 $0.84 $18.49$0.49 $0.30 $3.08 $15.00 $162.96Bath + Kitchen Size (208 ft2)6.22 $118.16 $87.46 $1.55 $20.49$0.58 $0.39 $4.16 $25.81 $258.61Small Painting Size (112 ft2)3.35 $63.64 $61.11 $0.84 $18.49$0.49 $0.21 $2.01 $15.00 $161.79Medium Painting Size (308 ft2)4.12 $78.36 $68.29 $1.03 $19.05$0.51 $0.57 $5.22 $18.02 $191.05Large Painting Size (504 ft2)6.45 $122.52 $89.43 $1.61 $20.61$0.58 $0.94 $8.81 $26.47 $270.97Events Including Kitchens or BathroomsBathroom Size (48 ft2)4.23 $80.44 $68.41 $1.06 $29.61$0.50 $0.17 $1.67 $17.11 $198.98Kitchen Size (160 ft2)4.23 $80.44 $68.41 $1.06 $29.61$0.50 $0.55 $5.06 $17.11 $202.75Bath + Kitchen Size (208 ft2)7.58 $143.98 $98.56 $1.89 $31.79$0.60 $0.72 $6.74 $28.90 $313.17Small Painting Size (112 ft2)4.23 $80.44 $68.41 $1.06 $29.61$0.50 $0.38 $3.39 $17.11 $200.91Medium Painting Size (308 ft2)4.82 $91.50 $74.01 $1.20 $30.09$0.53 $0.90 $7.82 $19.69 $225.73Large Painting Size (504 ft2)7.03 $133.52 $94.15 $1.76 $31.58$0.59 $1.26 $11.39 $27.77 $302.031A “bathroom size” or “kitchen size” indicates the eventsize, not the eventtype. In addition to bathroom and kitchen events, other event types having these size definitions are:bathroom size: wall-disturbing events, addition eventskitchen size: wall-disturbing events,addition events, window/door replacementsbathroom + kitchen size: wall-disturbing events, addition events2One sample is required outside the work area and three samplesare required per room in the work area: (1) floor sample, (2) window sill sample, and (3) window trough sample. However, floorsamples are not required on carpeted floors (sothe minimum number of required samples maybe as low as two if the work area isone room and all floors are carpeted). The estimatednumbers of roomsaffected and the probability that floors are carpeted were estimated following themethodology developed for the 2008 LRRP ruleanalysis3See section 4.3.3 and Table 4-29 for a description of how these costs are calculated.4See section 4.3.5 for a description of how these costs are calculated.5These costs vary by the size and type of the event because ofvarying clearance failure rates; estimated clearance failure rates are more likely for events where more samples are required. In addition,shipping costs are higher for clearance events where a kitchen orbathroom is inside the work area because renovators are assumed to use overnight shipping in order to allow occupants to access thework area sooner.Note: In order to calculate a total cost per event that applies to all jobs, the average re-cleaning costs are calculated across all jobs (i.e., those that requirere-cleaning and those that do not).Events excluding kitchens or bathrooms are calculated separately from events including kitchens and bathrooms, because kitchensand bathrooms have a different probability of being carpeted than therest of the house, and dust wipe samples are only taken on uncarpeted floors.EO 12866 Review Draft: Economic Analysisfor the LRRP Clearance Proposed RuleJanuary 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute4-54Table4-46: Average Clearance Costs Per Event (Averaged Across Eventsthat Pass and Fail Clearance): Single-Family Renter-Occupied Target HousingSize of Work Area for theEvent1AverageNumber ofDust WipeSamples2AverageLabCosts3,5AverageDust WipeTestingLaborCosts3,5AverageDust WipeTestingMaterialCosts3,5AverageTotalShipping3,5AverageReportPaperwork3,5AverageReCleaningMaterial4,5AverageReCleaningLabor4,5AverageReCleaningTravel4,5AverageTotal CostsPer-Event5Events Excluding Kitchens or BathroomsBathroom Size (48 ft2)3.35 $63.64 $61.11 $0.84 $23.44$0.97 $0.09 $1.08 $15.00 $166.18Kitchen Size (80 ft2)3.35 $63.64 $61.11 $0.84 $23.44$0.97 $0.23 $2.51 $15.00 $167.74Bath + Kitchen Size (128 ft2)6.22 $118.16 $87.46 $1.55 $25.44$1.16 $0.32 $3.58 $25.81 $263.49Small Painting Size (84 ft2)3.35 $63.64 $61.11 $0.84 $23.44$0.97 $0.18 $1.77 $15.00 $166.96Medium Painting Size (184 ft2)3.52 $66.91 $62.71 $0.88 $23.57$0.99 $0.43 $3.96 $15.68 $175.12Large Painting Size (284 ft2)5.30 $100.71 $79.10 $1.33 $24.82$1.10 $0.69 $6.52 $22.46 $236.72Events Including Kitchens or BathroomsBathroom Size (48 ft2)4.23 $80.44 $68.41 $1.06 $45.29$1.01 $0.17 $1.67 $17.11 $215.16Kitchen Size (80 ft2)4.23 $80.44 $68.41 $1.06 $45.29$1.01 $0.42 $3.99 $17.11 $217.73Bath + Kitchen Size (128 ft2)7.58 $143.98 $98.56 $1.89 $47.47$1.21 $0.58 $5.66 $28.90 $328.25Small Painting Size (84 ft2)4.23 $80.44 $68.41 $1.06 $45.29$1.01 $0.33 $2.96 $17.11 $216.61Medium Painting Size (184 ft2)4.19 $79.60 $68.23 $1.05 $45.32$1.01 $0.69 $6.06 $17.28 $219.25Large Painting Size (284 ft2)5.86 $111.34 $83.70 $1.47 $46.52$1.12 $0.95 $8.63 $23.78 $277.521A “bathroom size” or “kitchen size” indicates the eventsize, not the eventtype. In addition to bathroom and kitchen events, other event types having these size definitions are:bathroom size: wall-disturbing events, addition eventskitchen size: wall-disturbing events,addition events, window/door replacementsbathroom + kitchen size: wall-disturbing events, addition events2One sample is required outside the work area and three samplesare required per room in the work area: (1) floor sample, (2) window sill sample, and (3) window trough sample. However, floorsamples are not required on carpeted floors (sothe minimum number of required samples maybe as low as two if the work area isone room and all floors are carpeted). The estimatednumbers of roomsaffected and the probability that floors are carpeted were estimated following themethodology developed for the 2008 LRRP ruleanalysis.3See section 4.3.3 and Table 4-29 for a description of how these costs are calculated.4See section 4.3.5 for a description of how these costs are calculated.5These costs vary by the size and type of the event because ofvarying clearance failure rates; estimated clearance failure rates are more likely for events where more samples are required. In addition,shipping costs are higher for clearance events where a kitchen orbathroom is inside the work area because renovators are assumed to use overnight shipping in order to allow occupants to access thework area sooner.Note: In order to calculate a total cost per event that applies to all jobs, the average re-cleaning costs are calculated across all jobs (i.e., those that requirere-cleaning and those that do not).Events excluding kitchens or bathrooms are calculated separately from events including kitchens and bathrooms, because kitchensand bathrooms have a different probability of being carpeted than therest of the house, and dust wipe samples are only taken on uncarpeted floors.EO 12866 Review Draft: Economic Analysisfor the LRRP Clearance Proposed RuleJanuary 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute4-55Table4-47: Average Clearance Costs Per Event (Averaged Across Eventsthat Pass and Fail Clearance): Multi-Family Owner-Occupied Target HousingSize of Work Area for theEvent1AverageNumber ofDust WipeSamples2AverageLabCosts3,5AverageDust WipeTestingLaborCosts3,5AverageDust WipeTestingMaterialCosts3,5AverageTotalShipping3,5AverageReportPaperwork3,5AverageReCleaningMaterial4,5AverageReCleaningLabor4,5AverageReCleaningTravel4,5AverageTotal CostsPer-Event5Events Excluding Kitchens or BathroomsBathroom Size (48 ft2)3.35 $63.64 $61.11 $0.84 $18.49$0.49 $0.09 $1.08 $15.00 $160.75Kitchen Size (80 ft2)3.35 $63.64 $61.11 $0.84 $18.49$0.49 $0.15 $1.54 $15.00 $161.27Bath + Kitchen Size (128 ft2)6.22 $118.16 $87.46 $1.55 $20.49$0.58 $0.24 $2.62 $25.81 $256.92Small Painting Size (84 ft2)3.35 $63.64 $61.11 $0.84 $18.49$0.49 $0.16 $1.60 $15.00 $161.33Medium Painting Size (184 ft2)3.35 $63.64 $61.11 $0.84 $18.49$0.49 $0.34 $3.05 $15.00 $162.96Large Painting Size (284 ft2)4.50 $85.45 $71.73 $1.12 $19.31$0.52 $0.53 $4.80 $19.44 $202.90Events Including Kitchens or BathroomsBathroom Size (48 ft2)4.23 $80.44 $68.41 $1.06 $29.61$0.50 $0.17 $1.67 $17.11 $198.98Kitchen Size (80 ft2)4.23 $80.44 $68.41 $1.06 $29.61$0.50 $0.28 $2.53 $17.11 $199.94Bath + Kitchen Size (128 ft2)7.58 $143.98 $98.56 $1.89 $31.79$0.60 $0.44 $4.20 $28.90 $310.36Small Painting Size (84 ft2)4.23 $80.44 $68.41 $1.06 $29.61$0.50 $0.29 $2.64 $17.11 $200.06Medium Painting Size (184 ft2)3.98 $75.53 $66.27 $0.99 $29.50$0.50 $0.54 $4.66 $16.49 $194.48Large Painting Size (284 ft2)4.97 $94.41 $75.63 $1.24 $30.25$0.53 $0.72 $6.34 $20.58 $229.701A “bathroom size” or “kitchen size” indicates the eventsize, not the eventtype. In addition to bathroom and kitchen events, other event types having these size definitions are:bathroom size: wall-disturbing events, addition eventskitchen size: wall-disturbing events,addition events, window/door replacementsbathroom + kitchen size: wall-disturbing events, addition events2One sample is required outside the work area and three samplesare required per room in the work area: (1) floor sample, (2) window sill sample, and (3) window trough sample. However, floorsamples are not required on carpeted floors (sothe minimum number of required samples maybe as low as two if the work area isone room and all floors are carpeted). The estimatednumbers of roomsaffected and the probability that floors are carpeted were estimated following themethodology developed for the 2008 LRRP ruleanalysis3See section 4.3.3 and Table 4-29 for a description of how these costs are calculated.4See section 4.3.5 for a description of how these costs are calculated.5These costs vary by the size and type of the event because ofvarying clearance failure rates; estimated clearance failure rates are more likely for events where more samples are required. In addition,shipping costs are higher for clearance events where a kitchen orbathroom is inside the work area because renovators are assumed to use overnight shipping in order to allow occupants to access thework area sooner.Note: In order to calculate a total cost per event that applies to all jobs, the average re-cleaning costs are calculated across all jobs (i.e., those that requirere-cleaning and those that do not).Events excluding kitchens or bathrooms are calculated separately from events including kitchens and bathrooms, because kitchensand bathrooms have a different probability of being carpeted than therest of the house, and dust wipe samples are only taken on uncarpeted floors.EO 12866 Review Draft: Economic Analysisfor the LRRP Clearance Proposed RuleJanuary 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute4-56Table4-48: Average Clearance Costs Per Event (Averaged Across Eventsthat Pass and Fail Clearance): Multi-Family Renter-Occupied Target HousingSize of Work Area for theEvent1AverageNumber ofDust WipeSamples2AverageLabCosts3,5AverageDust WipeTestingLaborCosts3,5AverageDust WipeTestingMaterialCosts3,5AverageTotalShipping3,5AverageReportPaperwork3,5AverageReCleaningMaterial4,5AverageReCleaningLabor4,5AverageReCleaningTravel4,5AverageTotal CostsPer-Event5Events Excluding Kitchens or BathroomsBathroom Size (48 ft2)3.35 $63.64 $61.11 $0.84 $23.44$0.97 $0.09 $1.08 $15.00 $166.18Kitchen Size (80 ft2)3.35 $63.64 $61.11 $0.84 $23.44$0.97 $0.15 $1.54 $15.00 $166.70Bath + Kitchen Size (128 ft2)6.22 $118.16 $87.46 $1.55 $25.44$1.16 $0.24 $2.62 $25.81 $262.44Small Painting Size (84 ft2)3.35 $63.64 $61.11 $0.84 $23.44$0.97 $0.16 $1.60 $15.00 $166.77Medium Painting Size (184 ft2)3.35 $63.64 $61.11 $0.84 $23.44$0.97 $0.34 $3.05 $15.00 $168.40Large Painting Size (284 ft2)4.50 $85.45 $71.73 $1.12 $24.26$1.05 $0.53 $4.80 $19.44 $208.38Events Including Kitchens or BathroomsBathroom Size (48 ft2)4.23 $80.44 $68.41 $1.06 $45.29$1.01 $0.17 $1.67 $17.11 $215.16Kitchen Size (80 ft2)4.23 $80.44 $68.41 $1.06 $45.29$1.01 $0.28 $2.53 $17.11 $216.13Bath + Kitchen Size (128 ft2)7.58 $143.98 $98.56 $1.89 $47.47$1.21 $0.44 $4.20 $28.90 $326.65Small Painting Size (84 ft2)4.23 $80.44 $68.41 $1.06 $45.29$1.01 $0.29 $2.64 $17.11 $216.25Medium Painting Size (184 ft2)3.98 $75.53 $66.27 $0.99 $45.18$1.00 $0.54 $4.66 $16.49 $210.66Large Painting Size (284 ft2)4.97 $94.41 $75.63 $1.24 $45.93$1.07 $0.72 $6.34 $20.58 $245.921A “bathroom size” or “kitchen size” indicates the eventsize, not the eventtype. In addition to bathroom and kitchen events, other event types having these size definitions are:bathroom size: wall-disturbing events, addition eventskitchen size: wall-disturbing events,addition events, window/door replacementsbathroom + kitchen size: wall-disturbing events, addition events2One sample is required outside the work area and three samplesare required per room in the work area: (1) floor sample, (2) window sill sample, and (3) window trough sample. However, floorsamples are not required on carpeted floors (sothe minimum number of required samples maybe as low as two if the work area isone room and all floors are carpeted). The estimatednumbers of roomsaffected and the probability that floors are carpeted were estimated following themethodology developed for the 2008 LRRP ruleanalysis3See section 4.3.3 and Table 4-29 for a description of how these costs are calculated.4See section 4.3.5 for a description of how these costs are calculated.5These costs vary by the size and type of the event because ofvarying clearance failure rates; estimated clearance failure rates are more likely for events where more samples are required. In addition,shipping costs are higher for clearance events where a kitchen orbathroom is inside the work area because renovators are assumed to use overnight shipping in order to allow occupants to access thework area sooner.Note: In order to calculate a total cost per event that applies to all jobs, the average re-cleaning costs are calculated across all jobs (i.e., those that requirere-cleaning and those that do not).Events excluding kitchens or bathrooms are calculated separately from events including kitchens and bathrooms, because kitchensand bathrooms have a different probability of being carpeted than therest of the house, and dust wipe samples are only taken on uncarpeted floors.EO 12866 Review Draft: Economic Analysisfor the LRRP Clearance Proposed RuleJanuary 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute4-57Table4-49: Clearance Per-Event Costs Summary: Public and Commercial Building COFsSize of Work Area for theEvent1AverageNumber ofDust WipeSamples2AverageLabCosts3,5AverageDust WipeTestingLaborCosts3,5AverageDust WipeTestingMaterialCosts3,5AverageTotalShipping3,5AverageReportPaperwork3,5AverageReCleaningMaterial4,5AverageReCleaningLabor4,5AverageReCleaningTravel4,5AverageTotal CostsPer-Event5Kindergarten (Public; 13,560ft2)19.08 $362.56 $195.78 $4.77 $31.72 $1.73 $92.36 $832.67 $59.82 $1,581.41Kindergarten (Large Private;13,560ft2)19.08 $362.56 $195.78 $4.77 $31.72 $1.73 $92.36 $832.67 $59.82 $1,581.41Kindergarten (Small Private;13,560ft2)19.08 $362.56 $195.78 $4.77 $31.72 $1.73 $92.36 $832.67 $59.82 $1,581.41Pre-K + Kindergarten (Public;15,674ft2)19.08 $362.56 $195.78 $4.77 $31.72 $1.73 $119.49 $1,077.25 $59.82 $1,853.11Pre-K + Kindergarten (LargePrivate; 15,674ft2)19.08 $362.56 $195.78 $4.77 $31.72 $1.73 $119.49 $1,077.25 $59.82 $1,853.11Pre-K + Kindergarten (SmallPrivate; 15,674ft2)19.08 $362.56 $195.78 $4.77 $31.72 $1.73 $119.49 $1,077.25 $59.82 $1,853.11Daycare Center (Renter-Occupied;2,400ft2)10.79 $204.93 $125.36 $2.70 $27.52$1.35 $6.11 $55.06 $37.06 $460.08Daycare Center (Owner-Occupied;2400ft2)10.79 $204.93 $125.36 $2.70 $27.52$1.35 $6.11 $55.06 $37.06 $460.08Daycare Center (Non-Profit whoperforms some of own RRP; 2,400ft2)10.79 $204.93 $125.36 $2.70 $27.52$1.35 $6.11 $55.06 $37.06 $460.08Daycare Center (Non-Profit whouses contractors; 2,400ft2)10.79 $204.93 $125.36 $2.70 $27.52$1.35 $6.11 $55.06 $37.06 $460.08Daycare Center (In Public School;2,400ft2)10.79 $204.93 $125.36 $2.70 $27.52$1.35 $6.11 $55.06 $37.06 $460.08Daycare Center (In Large PrivateSchool; 2,400ft2)10.79 $204.93 $125.36 $2.70 $27.52$1.35 $6.11 $55.06 $37.06 $460.08Daycare Center (In Small PrivateSchool; 2,400ft2)10.79 $204.93 $125.36 $2.70 $27.52$1.35 $6.11 $55.06 $37.06 $460.081One sample is required outside the work area and three samplesare required per room in the work area: (1) floor sample, (2) window sill sample, and (3) window trough sample. However, floorsamples are not required on carpeted floors (sothe minimum number of required samples maybe as low as two if the work area isone room and all floors are carpeted). The estimatednumbers of roomsaffected were estimated following the methodology developed for the 2008 LRRP rule analysis2In order to calculate a total cost per event that applies toall jobs, the average re-cleaning costs are calculated across alljobs (i.e., those that require re-cleaning and those that do not).3See section 4.3.3 and Table 4-29 for a description of how these costs are calculated.4See section 4.3.5 for a description of how these costs are calculated.5The photocopy material and shipping costs vary by the size ofthe event because estimated clearance failure rates are more likely for events where more samples are required.EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-58 4.3.7 Total Dust Wipe Testing and Clearance Event Costs 1 Total costs are estimated by combining the total numbe r of events affected by the proposed Clearance 2 Rule from Section 4.2 and the per-event dust wipe testing and clearance costs from the tables above. 3 Table 4-50 through Table 4-52 present the final number of events, per-event costs, and total costs for dust 4 wipe testing and clearance. Costs are presented by building tenure, building type, work area size, and 5 occurrence of a bathroom or kitchen event. The di fferent size threshold options are displayed in three 6 separate tables: (1) the low threshold option, (2) the proposed option, and (3) the high threshold option. 7EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-59 Table 4-50: Total Target Housing First Year Costs: Low Threshold Option Events (thousands) Unit Costs Total Costs (millions) Type SF-O MF-O SF-R MF-R SF-O MF-O SF-R MF-R SF-O MF-O SF-R MF-R Total Dust Wipe Testing Events Ex cluding Kitchen or Bathroom Bath 34 2 21 21 $121 $121 $127 $127 $4.1 $0.2 $2.6 $2.6 $9.5 Kit 102 6 33 31 $121 $121 $127 $127 $12.4 $0.7 $4.1 $3.9 $21.2 Bath+Kit 1 0 0 0 $186 $186 $191 $191 $0.2 $0.0 $0.0 $0.0 $0.3 S-Paint 53 3 25 38 $121 $121 $127 $127 $6.5 $0.4 $3.1 $4.9 $14.8 M-Paint 28 2 14 24 $139 $121 $131 $127 $3.8 $0.2 $1.8 $3.1 $9.0 L-Paint 26 1 13 23 $191 $147 $170 $152 $4.9 $0.2 $2.3 $3.6 $11.0 S-WD 96 5 32 30 $121 $121 $127 $127 $11.6 $0.7 $4.0 $3.8 $20.1 L-WD 101 6 32 31 $227 $159 $204 $164 $22.8 $0.9 $6.6 $5.1 $35.4 Subtotal 441 25 170 199 - - - - $66.5 $3.3 $24.6 $26.9 $ 121.3 Dust Wipe Testing Events Incl uding Kitchens or Bathrooms Bath 97 4 149 89 $143 $143 $148 $148 $13.8 $0.6 $22.0 $13.2 $49.7 Kit 116 7 141 149 $143 $143 $148 $148 $16.6 $1.0 $20.8 $22.1 $60.5 Bath+Kit 35 4 87 31 $217 $217 $223 $223 $7.5 $1.0 $19.3 $6.9 $34.7 S-Paint 4 0 6 3 $143 $143 $148 $148 $0.6 $0.0 $0.9 $0.5 $2.0 M-Paint 5 0 4 5 $155 $136 $147 $142 $0.8 $0.0 $0.5 $0.7 $2.1 L-Paint 2 0 5 2 $204 $158 $184 $164 $0.4 $0.0 $0.9 $0.3 $1.6 S-WD 6 0 5 0 $143 $148 $0.9 $0.0 $0.7 $0.0 $1.6 L-WD 16 1 10 5 $239 $169 $215 $175 $3.8 $0.1 $2.1 $0.8 $6.9 Subtotal 281 17 405 285 - - - - $44.5 $2.8 $67.2 $44.6 $ 159.0 Clearance Events Excluding Kitchen or Bathroom Bath 8 0 5 5 $161 $161 $166 $166 $1.2 $0.1 $0.8 $0.8 $2.9 Kit 1 0 0 0 $163 $161 $168 $167 $0.2 $0.0 $0.0 $0.0 $0.3 Bath+Kit 0 0 0 0 $259 $257 $263 $262 $0.1 $0.0 $0.0 $0.0 $0.1 S-Paint 1 0 1 1 $162 $161 $167 $167 $0.2 $0.0 $0.1 $0.1 $0.4 M-Paint 0 0 0 0 $191 $163 $175 $168 $0.1 $0.0 $0.0 $0.1 $0.2 L-Paint 0 0 0 0 $271 $203 $237 $208 $0.1 $0.0 $0.1 $0.1 $0.2 S-WD 0 0 0 0 $161 $166 $0.1 $0.0 $0.0 $0.0 $0.1 L-WD 1 0 0 0 $325 $221 $288 $227 $0.2 $0.0 $0.0 $0.0 $0.2 Subtotal 13 1 6 7 - - - - $2.2 $0.1 $1.1 $1.1 $4.5 Clearance Events Including Kitchens or Bathrooms Bath 4 0 6 3 $199 $199 $215 $215 $0.7 $0.0 $1.3 $0.7 $2.7 Kit 5 0 4 5 $203 $200 $218 $216 $0.9 $0.0 $1.0 $1.0 $3.0 Bath+Kit 3 0 6 2 $313 $310 $328 $327 $0.9 $0.1 $2.1 $0.7 $3.7 S-Paint 0 0 0 0 $201 $200 $217 $216 $0.0 $0.0 $0.1 $0.0 $0.2 M-Paint 0 0 0 0 $226 $194 $219 $211 $0.1 $0.0 $0.0 $0.1 $0.2 L-Paint 0 0 0 0 $302 $230 $278 $246 $0.0 $0.0 $0.1 $0.0 $0.2 S-WD 0 0 0 0 $199 $215 $0.0 $0.0 $0.0 $0.0 $0.1 L-WD 1 0 0 0 $354 $248 $327 $264 $0.3 $0.0 $0.1 $0.0 $0.5 Subtotal 13 1 18 11 - - - - $3.0 $0.2 $4.7 $2.6 $10.5 All Events Total 747 43 599 501 - - - - $116.2 $6.4 $97.6 $75.2 $ 295.3 The following abbreviations are used: SF-O indicates single -family owner-occupied; MF-O indicates multi-family owneroccupied; SF-R indicates single-family renter-occupied; MF-R indicates multi-fa mily renter-occupied; Bath indicates a bathroom size event; Kit indicates a kitchen size event, Bath +Kit indicates an event the size of a bathroom and a kitchen combined; S-Paint indicates a small painting sized event; M-Paint indicates a small painting sized event; L-Paint indicates a small painting sized event; S-WD indicates a small wi ndow/door sized event; L-WD indicates a large window/door sized event. A “bathroom size” or kitchen size” indicates the event size , not the event type . In addition to bathroom and kitchen events, other event types having these size definitions are: (1) Bathr oom size: wall-distur bing events, addition events, (2) Kitchen size: wall-disturbing events, addition even ts, window/door replac ements, (3) Bathroom + kitchen size: wall-disturbing events, addition events. “0” and “0.0” i ndicate more than zero but fewer than 500 and 50 events respectively. Events excluding kitchens or bathrooms are calculated separately from ev ents including kitchens and bathrooms, because kitchens an d bathrooms have a different probability of be ing carpeted than the rest of the house, and dust wipe samples are only taken on uncarpete d floors. Clearance costs include the co st of associated dust wipe testing.EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-60 Table 4-51: Total Target Housing First Year Costs: Proposed Option Events (thousands) Unit Costs Total Costs (millions) Type SF-O MF-O SF-R MF-R SF-O MF-O SF-R MF-R SF-O MF-O SF-R MF-R Total Dust Wipe Testing Events Ex cluding Kitchen or Bathroom Bath 17 1 11 10 $121 $121 $127 $127 $2.1 $0.1 $1.3 $1.3 $4.8 Kit 104 6 35 32 $121 $121 $127 $127 $12.7 $0.7 $4.4 $4.0 $21.8 Bath+Kit 1 0 0 0 $186 $186 $191 $191 $0.1 $0.0 $0.0 $0.0 $0.1 S-Paint 42 2 19 30 $121 $121 $127 $127 $5.1 $0.3 $2.5 $3.8 $11.6 M-Paint 22 1 11 19 $139 $121 $131 $127 $3.0 $0.2 $1.4 $2.4 $7.0 L-Paint 20 1 10 18 $191 $147 $170 $152 $3.8 $0.2 $1.8 $2.8 $8.6 S-WD 101 6 34 31 $121 $121 $127 $127 $12.2 $0.7 $4.3 $4.0 $21.2 L-WD 104 6 35 32 $227 $159 $204 $164 $23.6 $0.9 $7.1 $5.3 $36.9 Subtotal 410 23 155 173 - - - - $62.6 $3.1 $22.9 $23.6 $ 112.1 Dust Wipe Testing Events Incl uding Kitchens or Bathrooms Bath 52 2 80 48 $143 $143 $148 $148 $7.5 $0.3 $11.9 $7.1 $26.8 Kit 102 6 124 133 $143 $143 $148 $148 $14.6 $0.9 $18.3 $19.6 $53.4 Bath+Kit 35 5 87 31 $217 $217 $223 $223 $7.6 $1.0 $19.4 $6.9 $34.9 S-Paint 4 0 5 3 $143 $143 $148 $148 $0.5 $0.0 $0.7 $0.4 $1.7 M-Paint 4 0 3 4 $155 $136 $147 $142 $0.6 $0.0 $0.4 $0.6 $1.7 L-Paint 2 0 4 1 $204 $158 $184 $164 $0.4 $0.0 $0.7 $0.2 $1.3 S-WD 3 0 3 0 $143 $148 $0.5 $0.0 $0.4 $0.0 $0.8 L-WD 13 1 7 4 $239 $169 $215 $175 $3.0 $0.1 $1.6 $0.6 $5.4 Subtotal 215 14 313 224 - - - - $34.6 $2.4 $53.5 $35.5 $ 126.0 Clearance Events Excluding Kitchen or Bathroom Bath 8 0 5 5 $161 $161 $166 $166 $1.3 $0.1 $0.9 $0.8 $3.1 Kit 2 0 0 0 $163 $161 $168 $167 $0.3 $0.0 $0.0 $0.0 $0.4 Bath+Kit 0 0 0 0 $259 $257 $263 $262 $0.1 $0.0 $0.0 $0.0 $0.1 S-Paint 1 0 1 1 $162 $161 $167 $167 $0.2 $0.0 $0.1 $0.1 $0.4 M-Paint 0 0 0 0 $191 $163 $175 $168 $0.1 $0.0 $0.0 $0.1 $0.2 L-Paint 0 0 0 0 $271 $203 $237 $208 $0.1 $0.0 $0.1 $0.1 $0.3 S-WD 0 0 0 0 $161 $166 $0.1 $0.0 $0.0 $0.0 $0.1 L-WD 1 0 0 0 $325 $221 $288 $227 $0.2 $0.0 $0.0 $0.0 $0.3 Subtotal 13 1 7 7 - - - - $2.3 $0.1 $1.2 $1.2 $4.8 Clearance Events Including Kitchens or Bathrooms Bath 4 0 5 3 $199 $199 $215 $215 $0.7 $0.0 $1.2 $0.7 $2.6 Kit 4 0 5 5 $203 $200 $218 $216 $0.9 $0.0 $1.0 $1.0 $3.0 Bath+Kit 3 0 6 2 $313 $310 $328 $327 $0.8 $0.1 $2.0 $0.7 $3.6 S-Paint 0 0 0 0 $201 $200 $217 $216 $0.0 $0.0 $0.1 $0.0 $0.1 M-Paint 0 0 0 0 $226 $194 $219 $211 $0.1 $0.0 $0.0 $0.0 $0.1 L-Paint 0 0 0 0 $302 $230 $278 $246 $0.0 $0.0 $0.1 $0.0 $0.2 S-WD 0 0 0 0 $199 $215 $0.0 $0.0 $0.0 $0.0 $0.1 L-WD 1 0 0 0 $354 $248 $327 $264 $0.3 $0.0 $0.1 $0.0 $0.5 Subtotal 12 1 17 11 - - - - $2.9 $0.2 $4.5 $2.5 $10.1 All Events Total 650 39 493 414 - - - - $102.4 $5.7 $82.0 $62.8 $ 253.0 The following abbreviations are used: SF-O indicates si ngle-family owner-occupied; MF -O indicates multi-family owner-occupied; SF-R indicates single-family renter-occupied; MF-R indicates multi-family renter-occupied; Bath indicates a bathroom size event; Kit indicates a kitchen size event, Bath+Kit indicates an event the size of a bathroom and a kitchen combined; S-Paint indicates a small painting si zed event; M-Paint indicates a small painting sized event; L-Paint indicates a small pain ting sized event; S-WD indicates a small window/door sized event; L-WD indicates a large window/door sized event. A “bathroom si ze” or kitchen size” indicates the event size , not the event type . In addition to bathroom and kitchen events, other event types ha ving these size definitions are: (1) Bathroom size: walldisturbing events, addition events, (2) Kitchen size: wall-disturbi ng events, addition events, window/door replacements, (3) Bathroom + kitchen size: wall-disturbing events, additio n events. “0” and “0.0” indicate more than zero but fewer than 500 and 50 events respectively. Events excluding kitchens or bathrooms are calculated separately from events including kitchens and bathroom s, because kitchens and bathrooms have a di fferent probability of being carpeted than the rest of the house, and dust wipe samples are only take n on uncarpeted floors. Clearance costs include the cost of associated dust wipe testing.EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-61 Table 4-52: Total Target Housing First Year Costs: High Threshold Option Events (thousands) Unit Costs Total Costs (millions) Type SF-O MF-O SF-R MF-R SF-O MF-O SF-R MF-R SF-O MF-O SF-R MF-R Total Dust Wipe Testing Events Ex cluding Kitchen or Bathroom Bath 7 0 5 4 $121 $121 $127 $127 $0.9 $0.0 $0.6 $0.6 $2.1 Kit 108 6 37 33 $121 $121 $127 $127 $13.1 $0.7 $4.7 $4.2 $22.7 Bath+Kit 0 0 0 0 $186 $186 $191 $191 $0.0 $0.0 $0.0 $0.0 $0.1 S-Paint 12 1 5 8 $121 $121 $127 $127 $1.4 $0.1 $0.7 $1.0 $3.2 M-Paint 6 0 3 5 $139 $121 $131 $127 $0.8 $0.0 $0.4 $0.6 $1.8 L-Paint 5 0 3 5 $191 $147 $170 $152 $1.0 $0.0 $0.5 $0.7 $2.2 S-WD 106 6 37 33 $121 $121 $127 $127 $12.9 $0.7 $4.6 $4.2 $22.4 L-WD 107 6 37 33 $227 $159 $204 $164 $24.3 $1.0 $7.5 $5.4 $38.2 Subtotal 351 20 126 121 - - - - $54.5 $2.6 $18.9 $16.7 $92.7 Dust Wipe Testing Events Incl uding Kitchens or Bathrooms Bath 25 1 38 22 $143 $143 $148 $148 $3.5 $0.2 $5.6 $3.3 $12.7 Kit 84 5 102 110 $143 $143 $148 $148 $11.9 $0.7 $15.1 $16.2 $43.9 Bath+Kit 32 4 80 29 $217 $217 $223 $223 $7.0 $0.9 $17.9 $6.4 $32.2 S-Paint 3 0 4 3 $143 $143 $148 $148 $0.5 $0.0 $0.7 $0.4 $1.6 M-Paint 4 0 3 4 $155 $136 $147 $142 $0.6 $0.0 $0.4 $0.6 $1.7 L-Paint 2 0 4 1 $204 $158 $184 $164 $0.3 $0.0 $0.7 $0.2 $1.3 S-WD 2 0 1 0 $143 $148 $0.2 $0.0 $0.2 $0.0 $0.4 L-WD 10 1 6 3 $239 $169 $215 $175 $2.3 $0.1 $1.2 $0.5 $4.1 Subtotal 161 11 238 172 - - - - $26.5 $1.9 $41.8 $27.6 $97.8 Clearance Events Excluding Kitchen or Bathroom Bath 7 0 5 5 $161 $161 $166 $166 $1.2 $0.1 $0.8 $0.7 $2.8 Kit 2 0 0 0 $163 $161 $168 $167 $0.3 $0.0 $0.1 $0.0 $0.4 Bath+Kit 0 0 0 0 $259 $257 $263 $262 $0.1 $0.0 $0.0 $0.0 $0.1 S-Paint 1 0 0 0 $162 $161 $167 $167 $0.1 $0.0 $0.0 $0.1 $0.2 M-Paint 0 0 0 0 $191 $163 $175 $168 $0.0 $0.0 $0.0 $0.0 $0.1 L-Paint 0 0 0 0 $271 $203 $237 $208 $0.1 $0.0 $0.0 $0.0 $0.1 S-WD 0 0 0 0 $161 $166 $0.1 $0.0 $0.0 $0.0 $0.1 L-WD 1 0 0 0 $325 $221 $288 $227 $0.2 $0.0 $0.0 $0.0 $0.2 Subtotal 11 1 6 6 - - - - $2.0 $0.1 $1.1 $1.0 $4.1 Clearance Events Including Kitchens or Bathrooms Bath 3 0 5 3 $199 $199 $215 $215 $0.6 $0.0 $1.0 $0.6 $2.2 Kit 4 0 4 4 $203 $200 $218 $216 $0.8 $0.0 $0.9 $0.9 $2.6 Bath+Kit 2 0 5 2 $313 $310 $328 $327 $0.6 $0.1 $1.6 $0.5 $2.8 S-Paint 0 0 0 0 $201 $200 $217 $216 $0.0 $0.0 $0.0 $0.0 $0.1 M-Paint 0 0 0 0 $226 $194 $219 $211 $0.0 $0.0 $0.0 $0.0 $0.1 L-Paint 0 0 0 0 $302 $230 $278 $246 $0.0 $0.0 $0.1 $0.0 $0.1 S-WD 0 0 0 0 $199 $215 $0.0 $0.0 $0.0 $0.0 $0.1 L-WD 1 0 0 0 $354 $248 $327 $264 $0.2 $0.0 $0.1 $0.0 $0.4 Subtotal 10 1 15 9 - - - - $2.4 $0.2 $3.8 $2.1 $8.4 All Events Total 534 32 385 307 - - - - $85.3 $4.8 $65.5 $47.4 $203.0 The following abbreviations are used: SF-O indicates si ngle-family owner-occupied; MF -O indicates multi-family owner-occupied; SF-R indicates single-family renter-occupied; MF-R indicates multi-family renter-occupied; Bath indicates a bathroom size event; Kit indicates a kitchen size event, Bath+Kit indicates an event the size of a bathroom and a kitchen combined; S-Paint indicates a small painting si zed event; M-Paint indicates a small painting sized event; L-Paint indicates a small pain ting sized event; S-WD indicates a small window/door sized event; L-WD indicates a large window/door sized event. A “bathroom si ze” or kitchen size” indicates the event size , not the event type . In addition to bathroom and kitchen events, other event types ha ving these size definitions are: (1) Bathroom size: walldisturbing events, addition events, (2) Kitchen size: wall-disturbi ng events, addition events, window/door replacements, (3) Bathroom + kitchen size: wall-disturbing events, additio n events. “0” and “0.0” indicate more than zero but fewer than 500 and 50 events respectively. Events excluding kitchens or bathrooms are calculated separately from events including kitchens and bathroom s, because kitchens and bathrooms have a di fferent probability of being carpeted than the rest of the house, and dust wipe samples are only take n on uncarpeted floors. Clearance costs include the cost of associated dust wipe testing.EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-62 Table 4-53: Total Public and Commercia l Building COF First Year Costs Events Unit Costs a Total Costs Building Type DWT Clearance DWT Clearance DWT Clearance Total Kindergarten (Public) 158 35 $465 $1,876 $73,449 $64,824 $138,273 Kindergarten (Large Private) 23 5 $465 $1,876 $10,481 $9,250 $19,730 Kindergarten (Small Private) 27 6 $465 $1,876 $12,412 $10,818 $23,230 Pre-K + Kindergarten (Public) 123 27 $465 $2,147 $57,383 $57,800 $115,183 Pre-K + Kindergarten (Large Private) 67 15 $465 $2,147 $31,351 $31,579 $62,931 Pre-K + Kindergarten (Small Private) 34 7 $465 $2,147 $15,780 $16,056 $31,836 Daycare Center (Renter-Occupied) 171 37 $416 $688 $71,004 $25,674 $96,678 Daycare Center (Owner-Occ upied) 117 26 $416 $688 $48,670 $17,598 $66,269 Daycare Center (Non-Profit who performs some of own RRP) 149 32 $416 $688 $61,873 $22,372 $84,245 Daycare Center (Non-Profit who uses contractors) 55 12 $416 $688 $22,771 $8,234 $31,005 Daycare Center (In Public School) 8 2 $416 $688 $3,256 $1,177 $4,434 Daycare Center (In Large Private School) 0 0 $416 $688 $16 $6 $22 Daycare Center (In Small Private School) 0 0 $416 $688 $32 $12 $44 All Building Types 930 203 -- -- $408,479 $265,399 $673,878 a. These unit costs for events in public and commercial building COFs are third party costs since the analysis assumes that non

residential contractors and operators of public and commercial building COFs will not perform en ough dust wipe testing or clearance events annually to make training an in-house dust sampling technician worthw hile. A zero indicates that fewer than 0.5 events are performed on average each year.EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-63 

### 4.4 Number of Sampling Technicians Seeking Training and Certification 1 The proposed LRRP clearance rule would require a ll entities that conduct certain RRP activities known to 2 generate high levels of lead dust to either hire a third party or use an employee trained as a dust sampling 3 technician to perform post-renovation dust sampling. A trained dust sampling technician is an individual 4 who has successfully completed a dust sampling technician course accredited by EPA or an EPA5 authorized State or Tribal program. It is expected that two types of construction businesses will perform 6 regulated RRP work – businesses with employees and non-employer, or self-employed, contractors. In 7 addition, rental companies are likely to perform some of the RRP work on the properties they manage 8 rather than hire an outside contractor. Likewise, schools and daycare centers are likely to perform some 9 or all of their RRP work with their own staff. De pending on the average number of events triggering dust 10 wipe testing or clearance requirements performed by an entity each year, it will be cost-effective for some 11 entities to use third-party dust sampling technici ans and others to train their own dust sampling 12 technician. The sections below present an analysis of which firms and entities would choose to train their 13 own dust sampling technician as well as an estimat e of the number of personnel requiring additional 14 training under the proposed LRRP Clearance Rule. 15 4.4.1 Residential Activities: Estimating the Number of Personnel Obtaining Training to 16 Meet the Demand for Dust Wipe Testing and Clearance Services 17

4.4.1.1 Firms Certified Under the 2008 LRRP rule and the 2009 Proposed Opt-Out Rule 18 This analysis utilizes the total estimated numbers of firms seeking certification from the economic 19 analysis of the 2008 LRRP rule (EPA 2008) and the ec onomic analysis of the 2009 proposed Opt-Out rule 20 (EPA 2009). The general approach used by EPA (2008, 2009) was to obtain Census estimates of the total 21 number of establishments in affected industries and ad just these estimates to account for the fact that not 22 all work performed in these industries is affected by th e rule. Note that Census data are only available for 23 establishments and not firms. These data are used as th e basis for estimating the number of firms that will 24 pursue training for a dust sampling technician. 25 The total numbers of establishments are adjusted in three ways: (1) according to the share of their 26 revenues that come from residential work, (2) to reflect the share of the housing stock that is affected by 27 the 2009 proposed Opt-Out Rule, and (3) to reflect a 75 percent compliance rate following previous 28 analyses (EPA 2008, 2009). These adjustments imply that there will be some degree of specialization in 29 regulated work. They do not, however, imply full sp ecialization in regulated work. For example, the 30 adjustments do not fully reflect the share of RRP work that does not disturb any painted surfaces or the 31 disproportionate amount of residential work that is related to new construction. Adjusting for these two 32 factors would imply more specialization and result in a lower estimate of the number of affected firms 33 and personnel. 34 The numbers of certified firms performing RRP in ta rget housing under the 2008 LRRP Rule and the 35 subsequent 2009 proposed Opt-Out Rule are estimate d in three segments: (1) residential construction 36 establishments with employees and (2) non-employer r esidential construction establishments (i.e., self37 employed contractors). Note that this analysis ex cludes the following construction and real estate sectors 38 expected to be affected by the 2008 LRRP rule but not the proposed LRRP Clearance Rule: (1) siding 39 contractors, (2) other building equipment contractors, (3) other building finishing contractors, (4) glass 40 and glazing contractors. 11 In addition, this analysis assumes that residential property managers and lessors 41 do not perform the RRP activities that would require dust wipe testing or clearance under the proposed 42

11 Renovators in these sectors are not expected to typically perfo rm the types of renovation events that require dust wipe testi ng or clearance under the proposed rule.EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-64 rule. These activities are primarily major renovations such as kitchen remodeling, bathroom remodeling 1 and window and door replacement. The more minor and routine RRP activities that would be expected to 2 be performed by property manager a nd lessor staff, such as re-painting a rental unit, would generally not 3 require using the paint removal practices that trigge r the proposed clearance rule requirements. To the 4 extent that property manager and l essors have staff that perform activ ities that would be covered by the 5 proposed LRRP Clearance Rule, this analysis may be slightly understating the costs of performing these 6 activities (by not including dust sampling technician training costs for these firms). Note that another 7 implication of this assumption is that the estimated small business impacts (presented in Chapter 6) on 8 construction firms are higher, since the costs associated with a larger number of events are attributed to a 9 smaller number of firms. Table 4-54 presents the estimated number of firms in each segment expected to 10 seek LRRP program certification under the 2008 LRRP rule and the 2009 proposed Opt-Out rule. 11
12

Table 4-54: Total Number of Residential RRP Fi rms Certified under LRRP Program in First Year

NAICS Description Number of Employer Estab. in Industry Residential Adjustment Factor: Residential Revenues as a Percent of Total Value of Construction Number of Estab., Adjusted by Percentage of Housing Stock Affected (65%), Residential Adjustment

Factor, and Assumed Compliance Rate (75%) Employer Construction Establishments 236118 Residential remodelers 82,747 56% 22,590 238350 Finish carpentry 35,087 50% 8,552 238340 Tile and terrazzo 8,950 28% 1,222 238220 Plumbing and HVAC 87,501 27% 11,517 238320 Painting and wall covering 38,943 25% 4,746 238210 Electrical contractors 62,586 23% 7,018 238310 Drywall and insulation 19,598 21% 2,006 Subtotal 335,412 35% 57,651 Non-Employer Construction Establishments 236118 Residential remodelers 194,182 56% 53,012 238350 Finish carpentry 185,118 50% 45,122 238340 Tile and terrazzo 47,220 28% 6,446 238220 Plumbing and HVAC 110,183 27% 14,503 238320 Painting and wall covering 205,462 25% 25,041 238210 Electrical contractors 102,219 23% 11,462 238310 Drywall and insulation 103,398 21% 10,586 Subtotal 947,7 82 36% 166,170 All Residential RRP Firms 223,821 Source: U.S. Census Bureau 2003; U.S. Census Bureau 2005d,i,j; U.S. Small Business Administration 2005; EPA Calculations 13EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-65 4.4.1.2 Estimating the Stock of Trained Dust Sampling Technicians Necessary to Meet Demand 1 for Dust Wipe Testing and Clearance Services in Target Housing 2 The proposed LRRP Clearance rule requires firms to en sure that dust wipe testing and clearance activities 3 covered by the rule are performed by certified dust sam pling technicians, inspectors, or risk-assessors. To 4 estimate the number of individuals that will seek dust sampling technician training, the analysis first 5 considered whether it would be more cost effectiv e for firms to: (1) obtain dust sampling technician 6 training for one of their employees, or (2) use a third pa rty to conduct dust wipe testing. Thus, a firm must 7 perform a minimum number of dust wipe testing or clearance events annually for the cost savings from 8 performing this activity with their own employee to ou tweigh the dust sampling technician training costs. 9 Following the analysis of the 2008 LRRP rule (EPA 2008), it is assumed that the number of events 10 performed per firm is proportiona l to the number of employees per firm. The average employment size 11 was calculated by dividing the number of construction employees by the number of establishments in 12 each industry (See Table 4-55). For non-employer firms, it is assumed that one person performs all the 13 RRP work. Table 4-55 presents both the number of dust wipe testing and clearance events for the 14 proposed option. 15
16

Table 4-55: Construction Employees and Annual Du st Wipe Testing and Clearance Events Per Establishment (Proposed Option)

NAICS Description Number of Certified Estab.

in Industry Number of Construction

Workers Employed by Certified Estab. Employees Per Estab. Annual Number of Dust Wipe Testing and Clearance Events Per Estab. Employer Construction Establishments
236118 Residential remodelers 22,590 56,684 2.5 8.5 238350 Finish carpentry 8,552 31,660 3.7 12.5 238340 Tile and terrazzo 1,222 6,106 5.0 16.9 238220 Plumbing and HVAC 11,517 93,776 8.1 27.6 238320 Painting and wall covering 4,746 22,465 4.7 16.0 238210 Electrical contractors 7,017 67,993 9.7 32.8 238310 Drywall and insulation 2,006 26,744 13.3 45.1 Non-Employer Construction Establishments
236118 Residential remodelers 53,012 n.a. n.a. 3.4 238350 Finish carpentry 45,123 n.a. n.a. 3.4 238340 Tile and terrazzo 6,446 n.a. n.a. 3.4 238220 Plumbing and HVAC 14,503 n.a. n.a. 3.4 238320 Painting and wall covering 25,041 n.a. n.a. 3.4 238210 Electrical contractors 11,461 n.a. n.a. 3.4 238310 Drywall and insulation 10,585 n.a. n.a. 3.4 All Residential RRP Firms 223,821 305,428 6.4 8.2 Source: U.S. Census Bureau 2005i,j; U.S. Small Business Administration 2005; EPA Calculations *Non-employer establishments by definition have no employees; it is estimated that these es tablishments are self-employed contractors which perform 2.8 Clearance Rule events per year, or the average number for one employee in an employer construction firm.
17 Given the average annual number of dust wipe testi ng and clearance events performed by each category 18 of firm, estimates of third party and in-house dust wi pe testing costs can be compared to determine the 19 most cost-effective approach to dust-wipe sampling. This comparison is presented in Table 4-56. Since 20EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-66 the firm category with the maximum number of annual dust wipe testing and clearance events only has an 1 average of 37.8 of these events annually (“Drywa ll and insulation contractors”), and each dust wipe 2 testing event requiring four samples only takes on aver age 1.75 hours, it is reasonable to assume that no 3 firm would need to train more than one dus t sampling technician for an annual maximum total of 66 hours 4 of work per year. 12 5 Given that the expected amount firms save by using their own dust sampling technicians is much greater 6 than the annualized cost of dust sampling technician training ($146) 13 for certified firms in all of the 7 sectors shown in Table 4-56, this analysis assum es that each establishment will choose to incur training 8 costs for one dust sampling technician. Note that this result also holds true for the alternative options 9 considered in this analysis (not shown in table). 10
11

Table 4-56: Cost Comparison for Third Party and In-House Dust Sampling Technicians (Proposed Option)

NAICS Description Annual Dust Wipe Testing and Clearance Events Annual Cost Per Firm for Third Party Services a Annual Cost PerFirm for InHouse Dust

Sampling Technician b Annual Savings Per Firm from

Using an InHouse Dust

Sampling Technician Employer Construction Establishments 236118 Residential remodelers 8.5 $2,529 $1,420 $1,109 238350 Finish carpentry 12.5 $3,731 $2,096 $1,635 238340 Tile and terrazzo 16.9 $5,037 $2,829 $2,208 238220 Plumbing and HVAC 27.6 $8,206 $4,609 $3,597 238320 Painting and wall covering 16.0 $4,771 $2,679 $2,091 238210 Electrical contractors 32.8 $9,766 $5,485 $4,281 238310 Drywall and insulation 45.1 $13,435 $7,546 $5,889 Non-Employer Construction Establishments 236118 Residential remodelers 3.4 $1,008 $566 $442 238350 Finish carpentry 3.4 $1,008 $566 $442 238340 Tile and terrazzo 3.4 $1,008 $566 $442 238220 Plumbing and HVAC 3.4 $1,008 $566 $442 238320 Painting and wall covering 3.4 $1,008 $566 $442 238210 Electrical contractors 3.4 $1,008 $566 $442 238310 Drywall and insulation 3.4 $1,008 $566 $442 All Residential RRP Firms 8.2 $2,431 $1,365 $1,065 a,b All costs are calculated using unrounded number of events; a 3 percent discount rate is used. 12 4.4.2 Public and Commercial Building Activities: Estimating the Number of Personnel 13 Obtaining Training to Meet the Demand for Dust Wipe Testing and Clearance 14

12 The average amount of labor time necessary for a dust sampling event with four required sample s was estimated using primary data collection of 9 lead evaluation firms. The specific results of this survey are available in Section 4.3.1.

13 This average cost is calculated by dividing the 50-year aver age dust sampling technician training costs ($29,563,881) by the 50-year average number of firms expected to se ek dust sampling technician training (202,745).EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-67 Services 1 This analysis compared the costs of using third part y dust sampling technicians with the costs of training 2 a dust sampling technician for those public and commer cial building owners that perform RRP using their 3 own staff. However, since this analysis estimates that staff in public and commercial building COFs will 4 perform activities requiring dust wipe testing or cl earance relatively infrequently, the per-event cost 5 savings from having a trained dust sampling technician on staff are not large enough to justify the dust 6 sampling technician training costs. The additional costs associated with using third party testing for a 7 dust wipe testing or clearance event in a public or co mmercial building is estimated to range from $149 to 8 $161, which is well below the estimated costs of obtai ning dust sampling technician training, $621. Thus, 9 the analysis assumes that public and commercial build ing COFs will use third party testing in lieu of 10 training their own dust sampling technician. 11 The economic analysis for the 2008 LRRP rule est imated that there would be 3,223 nonresidential 12 contractors seeking certification in the first year of the rule’s implementation, and that these contractors 13 would perform an average of 280,434 events per year (EPA 2008). However, since this analysis 14 estimates that non-residential contractors will perform only an average of 406 dust wipe testing or 15 clearance events annually, or one regulated event a bout every eight years on average, the additional costs 16 associated with third party testing, $155, are lo wer than the dust sampling training cost of $621. 14 , Thus, it 17 is assumed that these nonresidential building contractors will use third party testing rather than obtain 18 dust sampling technician training for one of their empl oyees. Note that although the analysis makes the 19 simplifying assumption that third party testing will al ways be used for dust wipe testing and clearance 20 events in public and commercial buildings, in realit y some firms with trained dust sampling technicians 21 may perform some of this work. These firms could be non-residential contractors specializing in dust 22 wipe testing and clearance work, or they could be fi rms that also perform dust wipe testing and clearance 23 in residential units. To the extent that third party t esting is not used, this analysis may be overstating the 24 costs of dust wipe testing and clearance for these structures. 25 4.4.3 Estimating the Number of Personnel Seeking Training Each Year Under the LRRP 26 Clearance Proposed Rule 27 The number of individuals seeking training in any give n year is estimated from the stock of firms and 28 individuals necessary to meet demand for dust wipe testing services. (B ecause training is valid for five 29 years, the annual number trained each year after the first year is a fraction of the total stock of trained 30 individuals and certified firms). 31 Note that many of the additional dust sampling tec hnicians that are expected undergo training because of 32 the proposed LRRP Clearance Rule are likely to seek training before the provision goes into effect. 33 However, this analysis utilizes the simplifying assu mption that any additional initial training takes place 34 over a 12 month period starting from the date of the expansion of the regulated universe. 35
4.4.3.1 Training after the Initial Years 36 Following the 2008 LRRP rule analysis (EPA 2008), th is analysis assumes a steady annual number of 37 individual trainings following the first year of re gulation with an annual decline of 0.41 percent. Note 38 that if all the individuals needed to meet the dema nd for clearance requirements were trained in the first 39 year, one might expect a drop in the level of training in the second year, followed by a spike in the fifth 40

14 This analysis assumes that private sc hools, public schools, and non-profit daycare centers which use in-house staff to perform RRP will perform all window/door carpentry wo rk in-house. Non-residential contractor firms will perform all other RRP. Non-residential contractor firms will perform all RRP events in owner-occupied daycare centers, daycare centers that do not perform all of their own RRP (i .e., contract some of it out ), and small private schools.EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-68 year. That is, one might expect a cyclical pattern of training to emerge. However, it is difficult to predict 1 how cyclical the training demand might be or how this cyclicality might diminish over time. Therefore, 2 this analysis assumes that a typical amount of traini ng occurs each year after the first year. Modeling a 3 cyclical component would add little to the analysis without being able to estimate the extent of any 4 cyclicality more precisely. 5 The analysis does account for trained individuals that exit the industry each year and are replaced by new 6 entrants. This analysis accounts for turnover in the regulated RRP industry by assuming a certain 7 percentage of trainings each year are initial trainings. Specifically, after the first year, 86.7% percent of 8 the dust sampling technicians seeking training are assume d to be seeking their initial certification. This 9 percentage is based on the relative number of Abat ement Supervisors applying for initial certifications 10 according to the Federal Lead-Based Paint Program (FLPP) database (EPA 2005). 15 11
4.4.3.2 Summary of Number of Individuals Traine d to Perform Dust Wipe Testing and Clearance 12 Table 4-57 presents a summary of the estimated stock of dust sampling technicians that will perform RRP 13 requiring dust wipe testing or clearance. The number of trained personnel are segmented by establishment 14 type: employer construction, non-empl oyer construction, and residential property manager and lessor. As 15 demonstrated in Section 4.4.2, no employees working in public and commercial bu ildings are expected to 16 seek dust sampling technician training. In year one, a total of 223,821 trained dust sampling technicians 17 will be necessary to perform dust wipe testing and clearance services for regulated residential RRP. As 18 described above, this number decreases by 0.41% eac h year to account for the decline in pre-1978 19 building stock. 20
21

Table 4-57: Estimated Stock of Trained Dust Sampling Technicians and Certified Firms to Perform RRP, by Year

Year Stock of Trained Dust Sampling Technicians Initial Trainings Refresher Trainings
Employer Construction Establishments Year 1 57,651 57,651 0 Year 2 57,415 9,952 1,531 Non-Employer Construction Establishments
Year 1 166,170 166,170 0 Year 2 165,489 28,685 4,413 All Establishments Year 1 233,821 233,821 0 Year 2 222,904 38,637 5,944 22 

### 4.5 Sampling Technici an Training Costs 23 Training costs include the cost of the time spent on training activities as well as the associated travel and 24 tuition costs. Note that tuition costs are assumed to include the costs associated with training provider 25 accreditation. In other words, it is assumed th at accredited training providers pass along their 26 accreditation fees and other administrative costs thro ugh their tuition. These accreditation fees and other 27

15 It was found in this study of a training certification program that last ed three years that in a given year, 52% of individual s seeking training were seeking initial training, and 48% were se eking refresher training. This percentage was adjusted to apply to a 5-year training cycle (86.7 %) by multiplying 52% by five-thirds.EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-69 administrative costs are estimated in the paperwork burden analysis but are only implicitly accounted for 1 (as part of tuition costs) in the estimates of the total cost of the rule. 2 4.5.1 Training Burden Per Individual 3 To estimate the incremental burden of training dust sampling technicians, several cost components are 4 calculated including tuition rates, wa ge rates, and travel and expense costs. Each certified dust sampling 5 technician will participate in 8 hours of formal initial training. Refresher dust sampling technician 6 certification training is required every five y ears; the refresher course is four hours. 7 Tuition for the initial certified dust sampling technician training class is estimated to be $205 and each 8 corresponding refresher course’s tuition is estimated to be $103. This estimate relies on the assumption 9 that the average hourly tuition is equal to the observed rates for the accredited lead abatement and 10 evaluation courses ($23.26/hr). This value is then converted to 2008 dollars. 16 Additional travel and meal 11 costs associated with training are assumed to be $134 (EPA 2006). 17 Digital photos of each certified dust 12 sampling technician are also added into the additiona l costs. The total cost for a one-time use digital 13 camera that takes 25 pictures is $14 ($0.56 per pictur e taken). The total time allotted to taking and 14 processing these photos is estimated at 3 minutes ($1.20), wh ich results in a total cost of $1.76 (or $2 in 15 2008 dollars). For a class size of 10 students, 3 minutes per student is equivalent to a total time of 30 16 minutes to take the digital photos, associate them with the appropriate students, and insert the photos onto 17 the training certificates. 18 The value of the time for certified dust sampling techni cians to receive formal initial training is $279 (8 19 hours at a loaded wage rate of $34.92/hour); for refresher training the value is $140 (EPA 2006). 20 Certified dust sampling technicians might be self-employed or employed by a larger company. Therefore, 21 the value of time is likely to represent a mix of lost wages and additional overhead to firms. As shown in 22 Table 4-58, the aggregated incremental cost of training is $621 for initial certified dust sampling 23 technician training and $378 for refresher certified dust sampling technician training. 24
25 Table 4-58: Dust Sampling Technician Training Costs Per Individual (2008$)

Tuition Value of Time Travel and Meals Digital Photo Total Initial Training $205 $279 $134 $2 $621 Refresher Training $103 $140 $134 $2 $378 Sources: BLS 2008, IRS 2008, EPA 2006 26 4.5.2 Total Training Costs 27 Table 4-59 presents the total training costs of the ru le for the first three years. The number of dust 28 sampling technicians seeking training is described in Section 4.4.3; the value of training time for dust 29 sampling technicians is described in Section 4.5.1. The average training cost per renovator varies in the 30 initial years of the regulation according to the relative number of initial and refresher trainings. After the 31 first year, 86.7 percent of contractors and public or commercial building renovato rs receive initial training 32

16 The average of the hourly tuition rate s are used rather than picking a sing le similar course because no single course is similar enough to the dust sampling technician course. For example, the initial courses are the only courses with hands-on training, but th ey are also longer than the technici an course. The refresher courses are more similar in length, but have no hands on requirements.

17 Travel costs include 2 hours of travel time ($70), meals ($10), and mileage costs (50 miles, $54).EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-70 (due to turnover in the industry) and the rest obtai n refresher training. Note that an individual who 1 received initial training and let their certification expi re must retake the initial training. The stock of 2 regulated structures declines by 0.41 percent annua lly which also reduces the demand for lead-safe 3 renovation services, the number of dust sampling technicians seeking training, and the undiscounted total 4 training costs. As shown in Table 4-59, total trai ning costs for Year 1 will be $138,993,017 and total 5 training costs for Year 2 will be $25,475,936. 6
7

Table 4-59: Total Dust Sampling Technician Training Costs (2008$) Year Type of Training Number of Dust Sampling Technicians Seeking Training Average Cost of Training Total Training Cost (2008$, before discounting) Year 1 Initial 223,821 $621 $138,993,017 Initial 38,637 $621 $23,993,345 Year 2 Refresher 5,944 $378 $2,246,868 8 

### 4.6 Total Incremental Costs of Proposed LRRP Clearance Rule 9 This section presents the total costs of the proposed LRRP Clearance Rule. Total costs are presented for 10 the first and second years of regulation, and total 50-ye ar and annualized costs are also calculated. The 11 total costs are calculated over a 50-year period using both 3 and 7 percent discount rates. Discounting 12 refers to the economic conversion of future costs (a nd benefits) to their present values, accounting for the 13 fact that society tends to value future costs or benef its less than comparable near-term costs or benefits. 14 Discounting is important when the values of costs or benefits occur over a multiple year period and may 15 vary from year to year. Discounting enables the accumulation of the cost and benefit values from 16 multiple years at a single point in time, accounting for the difference in how society values those costs 17 and benefits depending on the year in which the values are estimated to occur. 18 The 50-year costs were estimated by developing a pr ofile of the compliance costs associated with each 19 option over a 50-year period. (The 50-year period was c hosen to be consistent with the economic analysis 20 done for the TSCA Section 403 Lead-Based Paint Hazard Standards.) The profile of costs over time was 21 developed by estimating an annual decline in pr e-1978 housing stock of 0.41 percent per-year and 22 assuming that the regulated universe would decrease by th at rate every year. That rate was calculated 23 using the average annual compound rate of change in the pre-1980 housing stock using data from the 24 1990 and 2000 Decennial Census (U.S . Census Bureau 1990 a nd 2000c). This rate affects costs because 25 it decreases the number of events and number of workers trained every year. 26 As discussed above, first year dust sampling technician training costs account for the training and 27 certification of all dust sampling technicians require d to meet the demand for dust wipe testing and 28 clearance services in the first year. In subsequent ye ars, it is assumed that one fifth of the necessary stock 29 of individuals will obtain training each year (since refr esher-training and re-certification is required every 30 five years). 31 The total 50-year costs and the 50-year annualized cost s are discounted using rates of 3 and 7 percent. 32 These discount rate values reflect guidance from th e Office of Management and Budget regulatory 33 analysis guidance document, Circular A-4 (OMB, 2003). 34 The following formula was used to calculate the present value (PV) of the time stream of costs: 35
36EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-71 

### PV = ) 1 ( , 

### ) 1 (
− 

### + t t x


### r Cost 1

2 where: 3 Cost t = Costs in year t; 4 r = Discount rate (3 percent and 7 percent); and 5 t = Year in which cost is incurred. 6 7 This analysis also presents the 50-year annualized cost s of the rule. Conceptually, the 50-year annualized 8 cost is the level annual payment that one would have to make to pay off a debt equal to the present value 9 total 50-year cost for a given interest rate (the discount rate). 10 The following formula is used to cal culate the 50-year annualized cost. 11
12



### 1 ) 1 ( ) 1 (
) 50 ( 50



### − + + × × = r r r PV AC
r 13

14 where: 15 AC = Annualized 50-Year Costs; 16 PV r = Present Value Total 50-Year Costs assuming a discount rate of r; and 17 r = Discount rate (3 percent and 7 percent) 18 19 Table 4-60 presents the first year, second year, total 50-year and 50-year annualized incremental costs of 20 the proposed LRRP Clearance Rule. Total work practi ce costs are lower for the options with larger size 21 thresholds for triggering the rule’s requirements. As shown in the table, training costs are not assumed to 22 vary with the size thresholds. However, it should be noted that it is possible that fewer sampling 23 technicians may seek training if the universe of even ts changes, in which case the difference in costs 24 between threshold options would be larg er than estimated for this analysis. 25
26EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-72

Table 4-60: Total Incremental Costs of Proposed LRRP Clearance Rule (millions 2008$)

Option Year 1 Year 2 50-Year Total Annualized Total Work Practice

Costs Training Costs Total Work Practice

Costs Training Costs Total 3% 7% 3% 7% Target Housing Low Threshold $295 $139 $434 $294 $26 $320 $8,023 $4,629 $312 $335 Proposed Threshold $253 $139 $392 $252 $26 $278 $6,983 $4,035 $271 $292 High Threshold $203 $139 $342 $202 $26 $228 $5,753 $3,332 $224 $241 Public and Commercial Building COFs All Thresholds 1 $1 -- $1 $1 -- $1 $17 $9 $1 $1 All Structure Types Low Threshold $296 $139 $435 $295 $26 $321 $8,040 $4,638 $312 $336 Proposed Threshold $254 $139 $393 $253 $26 $279 $6,999 $4,044 $272 $293 High Threshold $204 $139 $343 $203 $26 $229 $5,769 $3,342 $224 $242
1 It is assumed that the number of events in Public and Commercia l COFs are not affected by the size thresholds, since the larger scale of the activities that are expected to occur in these structures are assumed to exceed all size thresholds. 1EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-73 Table 4-61 presents more detail on which types of even ts drive the total incremental work practice costs 1 of the rule. The table demonstrates that despite the relatively higher costs of clearance, dust wipe testing 2 accounts for the substantial majority of the total wo rk practice costs because of the higher frequency with 3 which it is required. 4 The largest contributor to total work practice costs under the low and the proposed threshold options is 5 from dust wipe testing multiple activity events, which represent the dust wipe testing events that trigger 6 more than one of the rule’s threshold requirements . These event types represent a smaller share of the 7 total costs for the larger size threshold options , since fewer renovation activities trigger the rule’s 8 requirements as the size threshold increases. For exam ple, dust wipe testing for an event where a door 9 and 10 square feet of trim was removed would be considered a mu ltiple activity event under the low 10 threshold option (since the trim removal and door removal both trigger the dust wipe testing 11 requirements). However, this would be categorized as a door removal event under the proposed option 12 (since the door removal is the only activity that tr iggers the rule’s requirements under the proposed 13 option). This example also illustrates why total window/door frame removal event costs are higher for 14 the higher threshold options even though the size th resholds for these activities do not vary by option. 15
16

Table 4-61: Total Incremental Annualized Work Practice Costs by Event Type (3 percent discount rate, thousands 2008$) Event Type Low Threshold Proposed Threshold High Threshold

Target Housing Public and Com. COF Total Target Housing Public and Com. COF Total Target Housing Public and Com. COF Total Dust Wipe Testing Events Heat gun, < 1000 degrees $481 $1 $481 $501 $1 $502 $0 $1 $1 Window/door frame removal $70,096 $278 $70,374 $74,407 $278 $74,686 $78,926 $278 $79,204 Scraping $5,287 $37 $5,324 $276 $37 $313 $0 $37 $37 Trim, molding, cabinet removal $93,051 $74 $93,125 $58,866 $74 $58,940 $28,238 $74 $28,312 Multiple activity events a $99,036 - $99,036 $93,575 - $93,575 $74,898 - $74,898 Subtotal, dust wipe testing $267,949 $390 $268,340 $227,625 $390 $228,015 $182,062 $390 $182,452 Clearance Events High speed machines $650 $200 $850 $678 $200 $878 $361 $200 $561 Plaster demolition through destructive means $3,474 $54 $3,528 $4, 924 $54 $4,978 $5,459 $54 $5,512 Multiple activity events a $10,191 - $10,191 $8,603 - $8,603 $6,132 - $6,132 Subtotal, clearance events $14,315 $254 $14,569 $14,205 $254 $14,459 $11,952 $254 $12,205 Total, All Event Types $282,265 $644 $282,909 $241,830 $644 $242,474 $194,013 $644 $194,658

a Multiple event types occurring during th e course of a single job (e.g., a reno vation with both window frame removal and trim removal).EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-74 1 

### 4.7 Alternative Baseline and Options 2 4.7.1 2008 LRRP Rule Universe (Excludes Opt-Out Eligible Housing) 3 This section presents the costs for the alternative b aseline scenario where the opt-out provision is not 4 eliminated as proposed in October 2009 (74 FR 55506). The primary cost estimates for the Proposed 5 LRRP Clearance Rule were estimated under a baseline scenario where the opt-out provision of the 2008 6 LRRP rule has been eliminated. However, becau se the proposed LRRP Clearance Rule was developed 7 before the LRRP Opt-Out Rule was finalized, the costs of the Propo sed LRRP Clearance Rule are also 8 estimated for the alternative base line scenario where the opt-out provision has not been eliminated. 9 Under this alternative baseline it is estimated that there would be fewer affected events and fewer 10 sampling technicians seeking training because opt-out elig ible housing units would be able to opt-out of 11 the requirements of the LRRP program, including th e proposed LRRP Clearance Rule. Opt-out eligible 12 housing includes owner-occupied housing units that ar e not COFs where no child under the age of six or 13 pregnant woman resides. 14 Table 4-62 presents the total estimated number of even ts and target housing work practice costs under this 15 alternative baseline scenario. The estimated number of events is 1,032,606 under this scenario compared 16 to 1,595,856 under the primary baseline scenario and th e total target housing work practice costs are $165 17 million under this scenario compared to $254 million under the primary baseline scenario (See Table 4-62 18 and Table 4-51). The public and commercial bu ilding COF universe and costs are the same under both 19 scenarios. 20EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-75 Table 4-62: Total First Year Target Housing Costs: 2008 Rule Universe (Excludes Opt-Out Housing) Events (thousands) Unit Costs Total Costs (thousands) Type SF-O MF-O SF-R MF-R SF-O MF-O SF-R MF-R SF-O MF-O SF-R MF-R Total Dust Wipe Testing Events Ex cluding Kitchen or Bathroom Bath 3 0 11 10 $121 $121 $127 $127 $0.4 $0.0 $1.3 $1.3 $3.1 Kit 19 1 35 32 $121 $121 $127 $127 $2.3 $0.1 $4.4 $4.0 $10.8 Bath+Kit 0 0 0 0 $186 $186 $191 $191 $0.0 $0.0 $0.0 $0.0 $0.0 S-Paint 7 0 19 30 $121 $121 $127 $127 $0.9 $0.0 $2.5 $3.8 $7.2 M-Paint 4 0 11 19 $139 $121 $131 $127 $0.5 $0.0 $1.4 $2.4 $4.4 L-Paint 3 0 10 18 $191 $147 $170 $152 $0.6 $0.0 $1.8 $2.8 $5.2 S-WD 18 1 34 31 $121 $121 $127 $127 $2.1 $0.1 $4.3 $4.0 $10.6 L-WD 18 1 35 32 $227 $159 $204 $164 $4.2 $0.1 $7.1 $5.3 $16.7 Subtotal 72 4 155 173 - - - - $11.0 $0.5 $22.9 $23.6 $57.9 Dust Wipe Testing Events Incl uding Kitchens or Bathrooms Bath 9 0 80 48 $143 $143 $148 $148 $1.3 $0.0 $11.9 $7.1 $20.3 Kit 20 0 124 133 $143 $143 $148 $148 $2.8 $0.1 $18.3 $19.6 $40.9 Bath+Kit 8 1 87 31 $217 $217 $223 $223 $1.8 $0.2 $19.4 $6.9 $28.4 S-Paint 1 0 5 3 $143 $143 $148 $148 $0.1 $0.0 $0.7 $0.4 $1.2 M-Paint 1 0 3 4 $155 $136 $147 $142 $0.1 $0.0 $0.4 $0.6 $1.2 L-Paint 0 0 4 1 $204 $158 $184 $164 $0.1 $0.0 $0.7 $0.2 $1.1 S-WD 1 0 3 0 $143 $148 $0.1 $0.0 $0.4 $0.0 $0.5 L-WD 3 0 7 4 $239 $169 $215 $175 $0.7 $0.0 $1.6 $0.6 $3.0 Subtotal 43 2 313 224 - - - - $7.1 $0.4 $53.5 $35.5 $96.4 Clearance Events Excluding Kitchen or Bathroom Bath 2 0 5 5 $161 $161 $166 $166 $0.2 $0.0 $0.9 $0.8 $2.0 Kit 0 0 0 0 $163 $161 $168 $167 $0.1 $0.0 $0.0 $0.0 $0.2 Bath+Kit 0 0 0 0 $259 $257 $263 $262 $0.0 $0.0 $0.0 $0.0 $0.1 S-Paint 0 0 1 1 $162 $161 $167 $167 $0.0 $0.0 $0.1 $0.1 $0.3 M-Paint 0 0 0 0 $191 $163 $175 $168 $0.0 $0.0 $0.0 $0.1 $0.1 L-Paint 0 0 0 0 $271 $203 $237 $208 $0.0 $0.0 $0.1 $0.1 $0.2 S-WD 0 0 0 0 $161 $166 $0.0 $0.0 $0.0 $0.0 $0.0 L-WD 0 0 0 0 $325 $221 $288 $227 $0.0 $0.0 $0.0 $0.0 $0.1 Subtotal 3 0 7 7 - - - - $0.5 $0.0 $1.2 $1.2 $2.8 Clearance Events Including Kitchens or Bathrooms Bath 1 0 5 3 $199 $199 $215 $215 $0.1 $0.0 $1.2 $0.7 $2.0 Kit 1 0 5 5 $203 $200 $218 $216 $0.2 $0.0 $1.0 $1.0 $2.2 Bath+Kit 1 0 6 2 $313 $310 $328 $327 $0.2 $0.0 $2.0 $0.7 $2.9 S-Paint 0 0 0 0 $201 $200 $217 $216 $0.0 $0.0 $0.1 $0.0 $0.1 M-Paint 0 0 0 0 $226 $194 $219 $211 $0.0 $0.0 $0.0 $0.0 $0.1 L-Paint 0 0 0 0 $302 $230 $278 $246 $0.0 $0.0 $0.1 $0.0 $0.1 S-WD 0 0 0 0 $199 $215 $0.0 $0.0 $0.0 $0.0 $0.0 L-WD 0 0 0 0 $354 $248 $327 $264 $0.1 $0.0 $0.1 $0.0 $0.3 Subtotal 2 0 17 11 - - - - $0.6 $0.0 $4.5 $2.5 $7.7 All Events Total 120 6 493 414 - - - - $19.1 $0.9 $82.0 $62.8 $164.8 The following abbreviations are used: SF-O indicates single-family owner-occupied; MF-O indicates multi-family owner-occupied; SFR indicates single-family renter-occupied; MF-R indicates multi-fa mily renter-occupied; Bath indi cates a bathroom size event; K it indicates a kitchen size event, Bath+Kit indi cates an event the size of a bathroom a nd a kitchen combined; S-Paint indicates a small painting sized event; M-Paint indicates a sm all painting sized event; L-Paint indicates a small painting sized event; S-WD ind icates a small window/door sized event; L-WD indicates a large window/door sized event. A “bathroom size” or kitchen size” indicates the event size , not the event type . In addition to bathroom and kitchen events, othe r event types having these size definitions are: (1) Bathroom size: wall-disturbing events, addition events, (2) K itchen size: wall-disturbing even ts, addition events, window/door replacements, (3) Bathroom + kitchen size: wall-disturbing events, a ddition events. A zero indicates a small positive number ro unded to zero in the table. . Events excluding kitchens or bathrooms are calculated separately from even ts including kitchens and bathro oms, because kitchens and bathrooms have a diffe rent probability of being carpeted than the rest of the house, and dust wipe samples are only taken on uncarpeted floors. Clearance costs in clude the cost of associated dust wipe testing.EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-76 1 Table 4-63 presents the estimated number of sampli ng technicians trained under the alternative baseline 2 scenario where the opt-out provision is not eliminat ed. The estimated number of sampling technicians 3 trained in the first year is 1 36,714 under this scenario compared to 233,821 under the primary baseline 4 scenario and the total first year training costs ar e $85 million under this scenario compared to $139 5 million under the primary baseline scenario (See Table 4-63 and Table 4-59). 6
7

Table 4-63: Total Dust Sampling Technician Training Costs: 2008 Rule Universe (Excludes Opt-Out Housing - 2008$)

Year Type of Training Number of Dust Sampling Technicians Seeking Training Average Cost of Training Total Training Cost (2008$, before discounting) Year 1 Initial 136,714 $621 $84,899,362 Initial 23,600 $621 $14,655,554 Year 2 Refresher 3,631 $378 $1,372,426 8 Table 4-64 presents a comparison of the costs of th e LRRP Clearance Proposed Rule for both the primary 9 baseline scenario and the alternativ e baseline scenario where the opt-out provision is not eliminated as 10 was proposed in October 2009. Under this alternativ e baseline it is estimated that there would be fewer 11 affected events and fewer sampling technicians seeki ng training, and Table 4-64 shows how much lower 12 these costs would be under this alternative baseline scenario. 13
14

Table 4-64: Total Incremental Costs of Clearance Rule (millions 2008$)

Option Year 1 Year 2 50-Year Total Annualized Total Work Practice

Costs Training Costs Total Work Practice

Costs Training Costs Total 3% 7% 3% 7% Primary Baseline Scenario: Universe includes Opt-Out $254 $139 $393 $253 $26 $279 $6,999 $4,044 $272 $293

Alternative Baseline Scenario: 2008 Rule Universe (Excludes Opt-Out) $166 $85 $250 $165 $16 $181 $4,535 $2,619 $176 $190

Percentage Difference -35% -39% -36% -35% -39% -35% -35% -35% -35% -35%

15 4.7.2 Mandatory Third Party Third Party Dust Wipe Sampling Option 16 This section presents the estimated costs under an a lternative option where dust wipe sampling must be 17 performed by a third party. Other requirements are the same as under the proposed option. 18 Table 4-65 presents the total estimated number of even ts and target housing work practice costs under this 19 alternative option. The estimated number of events is the same under this scenario compared to the 20 primary option and the total target housing work practice costs are $450 million under this scenario 21EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-77 compared to $254 million under the primary option (See Table 4-65 and Table 4-51). The public and 1 commercial building COF universe and costs are the same under both scenarios. 2
3EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-78 Table 4-65: Total First Year Target Housing Event Costs: Third Party Dust Sampling Option Events (thousands) Unit Costs Total Costs (thousands) Type SF-O MF-O SF-R MF-R SF-O MF-O SF-R MF-R SF-O MF-O SF-R MF-R Total Dust Wipe Testing Events Ex cluding Kitchen or Bathroom Bath 17 1 11 10 $243 $243 $248 $248 $4.2 $0.2 $2.6 $2.6 $9.6 Kit 104 6 35 32 $243 $243 $248 $248 $25.4 $1.4 $8.6 $7.9 $43.4 Bath+Kit 1 0 0 0 $308 $308 $313 $313 $0.2 $0.0 $0.0 $0.0 $0.2 S-Paint 42 2 19 30 $243 $243 $248 $248 $10.1 $0.6 $4.8 $7.5 $23.0 M-Paint 22 1 11 19 $261 $243 $252 $248 $5.6 $0.3 $2.8 $4.7 $13.4 L-Paint 20 1 10 18 $313 $269 $292 $274 $6.3 $0.3 $3.1 $5.0 $14.7 S-WD 101 6 34 31 $243 $243 $248 $248 $24.4 $1.4 $8.5 $7.8 $42.1 L-WD 104 6 35 32 $349 $281 $326 $286 $36.4 $1.7 $11.3 $9.2 $58.5 Subtotal 410 23 155 173

- - - - $112.6 $5.9 $41.8 $44.6 $204.9 Dust Wipe Testing Events Incl uding Kitchens or Bathrooms Bath 52 2 80 48 $265 $265 $270 $270 $13.8 $0.6 $21.7 $12.9 $49.1 Kit 102 6 124 133 $265 $265 $270 $270 $27.0 $1.6 $33.4 $35.8 $97.8 Bath+Kit 35 5 87 31 $340 $340 $345 $345 $11.9 $1.5 $30.0 $10.7 $54.1 S-Paint 4 0 5 3 $265 $265 $270 $270 $1.0 $0.0 $1.3 $0.8 $3.1 M-Paint 4 0 3 4 $277 $258 $268 $264 $1.2 $0.1 $0.8 $1.2 $3.2 L-Paint 2 0 4 1 $326 $280 $306 $286 $0.6 $0.1 $1.2 $0.4 $2.2 S-WD 3 0 3 0 $265 $270 $0.9 $0.0 $0.7 $0.0 $1.5 L-WD 13 1 7 4 $361 $291 $338 $297 $4.6 $0.2 $2.5 $1.1 $8.3 Subtotal 215 14 313 224

- - - - $60.8 $4.1 $91.7 $62.8 $219.4 Clearance Events Excluding Kitchen or Bathroom Bath 8 0 5 5 $325 $325 $331 $331 $2.6 $0.1 $1.7 $1.6 $6.2 Kit 2 0 0 0 $328 $326 $332 $331 $0.6 $0.0 $0.1 $0.1 $0.8 Bath+Kit 0 0 0 0 $454 $453 $459 $458 $0.1 $0.0 $0.0 $0.0 $0.2 S-Paint 1 0 1 1 $326 $326 $332 $331 $0.4 $0.0 $0.2 $0.3 $0.9 M-Paint 0 0 0 0 $364 $328 $342 $333 $0.2 $0.0 $0.1 $0.1 $0.4 L-Paint 0 0 0 0 $469 $380 $423 $386 $0.2 $0.0 $0.1 $0.1 $0.4 S-WD 0 0 0 0 $326 $331 $0.1 $0.0 $0.0 $0.0 $0.1 L-WD 1 0 0 0 $535 $404 $489 $410 $0.3 $0.0 $0.1 $0.0 $0.4 Subtotal 13 1 7 7

- - - - $4.6 $0.2 $2.3 $2.3 $9.4 Clearance Events Including Kitchens or Bathrooms Bath 4 0 5 3 $359 $359 $364 $364 $1.3 $0.1 $2.0 $1.1 $4.4 Kit 4 0 5 5 $363 $360 $367 $365 $1.6 $0.1 $1.7 $1.7 $5.1 Bath+Kit 3 0 6 2 $507 $504 $512 $510 $1.3 $0.2 $3.1 $1.0 $5.6 S-Paint 0 0 0 0 $361 $360 $366 $365 $0.1 $0.0 $0.1 $0.1 $0.2 M-Paint 0 0 0 0 $393 $353 $369 $358 $0.1 $0.0 $0.1 $0.1 $0.2 L-Paint 0 0 0 0 $493 $400 $446 $405 $0.1 $0.0 $0.1 $0.0 $0.3 S-WD 0 0 0 0 $359 $365 $0.1 $0.0 $0.1 $0.0 $0.1 L-WD 1 0 0 0 $557 $423 $509 $428 $0.4 $0.0 $0.2 $0.1 $0.7 Subtotal 12 1 17 11

- - - - $4.9 $0.3 $7.3 $4.2 $16.8 All Events Total 650 39 493 414
- - - - $182.9 $10.5 $143.1 $113.9 $450.4 The following abbreviations are used: SF-O indicates single-family owner-occupied; MF-O indicates multi-family owneroccupied; SF-R indicates single-family renter-occupied; MF-R indicates multi-family renter-occupied; Bath indicates a bathroom size event; Kit indicates a kitchen size event, Bath +Kit indicates an event the size of a bathroom and a kitchen combined; S-Paint indicates a small painti ng sized event; M-Paint indicates a small painting sized event; L-Paint indicates a small painting sized event; S-WD indi cates a small window/door sized event; L- WD indicates a large window/door sized event. A “bathroom size” or kitchen size” indicates the event size , not the event type . In addition to bathroom and kitchen events, other event types having these si ze definitions are: (1) Bathroom size: wa ll-disturbing events, addition events, (2) Kitchen size: wall-disturbing events, add ition events, window/door replacements, (3) Ba throom + kitchen size: wall-disturbing events, addition events. A zero indicates a small positive number r ounded to zero in the table. . Events excluding kitchens or bathrooms are calculated separately from events including kitche ns and bathrooms, because kitchens and bathrooms have a different probability of being carpeted than the rest of the hous e, and dust wipe samples are only taken on uncarpeted floors. Clearance costs include the cost of associated dust wipe testing.EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-79 Because this option assumes that all dust wipe testi ng and clearance events will be performed by third 1 party firms, the costs associated with dust sampling technicians are implicitly included in the additional 2 costs associated with third party testing. 3 Table 4-66 presents a comparison of the costs of th e LRRP Clearance Proposed Rule for both the primary 4 option and the alternative option where all dust sampli ng following target housing events is performed by 5 third party establishments instead of residential RRP fi rms. Under this alternative option it is estimated 6 that there would be the same number of affected events and higher overall costs. 7
8

Table 4-66: Total Incremental Costs of Clearance Rule (2008$): Mandatory Third Party Dust Sampling Option

Option Year 1 Year 2 50-Year Total Annualized Total Work Practice

Costs Training Costs Total Work Practice

Costs Training Costs Total 3% 7% 3% 7% Proposed Rule: In-house Dust Wipe Sampling Allowed $254 $139 $393 $253 $26 $279 $6,999 $4,044 $272 $293

Alternative Option: Mandatory Third Party Dust Wipe Sampling $451 $451 $449 $449 $11,095 $6,334 $431 $459

Percentage Difference n.a. 15% n.a. 61% 59% 57% 59% 57%

9 4.7.3 Dust Wipe Testing Only Option 10 This section presents the estimated costs under an a lternative option where only dust wipe testing is 11 required in all instances where either dust wipe testi ng or clearance is required under the proposed rule 12 (i.e., clearance is not required for any RRP events). 13 Table 4-67 presents the total estimated number of even ts and target housing work practice costs under this 14 alternative option. The estimated number of even ts is the same under the dust wipe testing option 15 compared to the primary option, although all events previously requiring clearance will now only require 16 dust wipe testing. The total target housing work practice costs are $249 million under this scenario 17 compared to $254 million under the primary option (See Table 4-67 and Table 4-51). The public and 18 commercial building COF universe and costs under the alternative option are presented in Table 4-68. 19EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-80 Table 4-67: Total First Year Target Housing Costs: Dust Wipe Testing Option Events (thousands) Unit Costs Total Costs (millions) Type SF-O MF-O SF-R MF-R SF-O MF-O SF-R MF-R SF-O MF-O SF-R MF-R Total Events Excluding Kitchen or Bathroom Bath 25 1 16 15 $121 $121 $127 $127 $3.1 $0.2 $2.0 $1.9 $7.2 Kit 106 6 35 32 $121 $121 $127 $127 $12.9 $0.7 $4.4 $4.1 $22.1 Bath+Kit 1 0 0 0 $186 $186 $191 $191 $0.2 $0.0 $0.0 $0.0 $0.2 S-Paint 43 2 20 31 $121 $121 $127 $127 $5.2 $0.3 $2.5 $3.9 $11.9 M-Paint 22 1 11 19 $139 $121 $131 $127 $3.1 $0.2 $1.5 $2.5 $7.2 L-Paint 21 1 11 19 $191 $147 $170 $152 $3.9 $0.2 $1.8 $2.8 $8.8 S-WD 101 6 34 31 $121 $121 $127 $127 $12.2 $0.7 $4.4 $4.0 $21.3 L-WD 105 6 35 32 $227 $159 $204 $164 $23.8 $1.0 $7.1 $5.3 $37.1 Subtotal 424 24 162 180 -- -- -- -- $64.4 $3.1 $23.8 $24.5 $115.7 Events Including Kitchens or Bathrooms Bath 56 2 86 51 $143 $143 $148 $148 $8.0 $0.3 $12.7 $7.5 $28.6 Kit 106 6 128 137 $143 $143 $148 $148 $15.2 $0.9 $19.0 $20.3 $55.4 Bath+Kit 38 5 93 33 $217 $217 $223 $223 $8.2 $1.1 $20.7 $7.4 $37.3 S-Paint 4 0 5 3 $143 $143 $148 $148 $0.5 $0.0 $0.7 $0.4 $1.8 M-Paint 4 0 3 5 $155 $136 $147 $142 $0.7 $0.0 $0.5 $0.7 $1.8 L-Paint 2 0 4 1 $204 $158 $184 $164 $0.4 $0.0 $0.8 $0.2 $1.5 S-WD 3 0 3 0 $143 $0 $148 $0 $0.5 $0.0 $0.4 $0.0 $0.9 L-WD 13 1 8 4 $239 $169 $215 $175 $3.2 $0.1 $1.7 $0.7 $5.7 Subtotal 227 15 331 234 -- -- -- -- $36.6 $2.5 $56.6 $37.3 $132.9 All Events Total 650 39 493 414 -- -- -- -- $101.0 $5.6 $80.3 $61.7 $248.7 The following abbreviations are used: SF-O indicates single-family owner-occupied; MF-O indicates multi-family owneroccupied; SF-R indicates single-family renter-occupied; MF-R indicates multi-family renter-occupied; Bath indicates a bathroom size event; Kit indicates a kitchen size event, Bath +Kit indicates an event the size of a bathroom and a kitchen combined; S-Paint indicates a small painti ng sized event; M-Paint indicates a small painting sized event; L-Paint indicates a small painting sized event; S-WD indi cates a small window/door sized event; L- WD indicates a large window/door sized event. A “bathroom size” or kitchen size” indicates the event size , not the event type . In addition to bathroom and kitchen events, other event types having these si ze definitions are: (1) Bathroom size: wa ll-disturbing events, addition events, (2) Kitchen size: wall-disturbing events, add ition events, window/door replacements, (3) Ba throom + kitchen size: wall-disturbing events, addition events. A zero indicates a small positive number r ounded to zero in the table. . Events excluding kitchens or bathrooms are calculated separately from events including kitche ns and bathrooms, because kitchens and bathrooms have a different probability of being carpeted than the rest of the hous e, and dust wipe samples are only taken on uncarpeted floors. Clearance costs include the cost of associated dust wipe testing. 1EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-81 Table 4-68: Total First Year Public a nd Commercial Building COF Costs: Dust Wipe Testing Option Building Type Events Unit Costs Total Costs Kindergarten (Public) 192 $465 $89,531 Kindergarten (Large Private) 27 $465 $12,775 Kindergarten (Small Private) 32 $465 $15,096 Pre-K + Kindergarten (Public) 150 $465 $69,908 Pre-K + Kindergarten (Large Private) 82 $465 $38,195 Pre-K + Kindergarten (Small Private) 41 $465 $19,259 Daycare Center (Renter-Occupied) 208 $416 $86,526 Daycare Center (Owner-Occupied) 142 $416 $59,310 Daycare Center (Non-Profit who performs some of own RRP) 181 $416 $75,398 Daycare Center (Non-Profit who uses contractors) 67 $416 $27,749 Daycare Center (In Public School) 10 $416 $3,968 Daycare Center (In Large Private School) 0 $416 $20 Daycare Center (In Small Private School) 0 $416 $39 All Building Types 1134 -- $497,774 a. These unit costs for events in public and commercial building COFs are third party costs since the analysis assumes that non-resident ial contractors and operators of public and commercial building COFs will not perform enough dust wipe testing events annually to make training an in-house dust sampling technician worthwhile. 1 Because under this option all residential construction est ablishments will still be expected to train an in2 house dust sampling technician, total training costs will be the same under both the primary option and 3 alternative option. Therefore – as under the primary option – the estimated number of sampling 4 technicians trained in the first year will be 233, 821 and training costs will amount to $139 million. 5 Table 4-69 presents a comparison of the costs of th e LRRP Clearance Proposed Rule for both the primary 6 option and the alternative option under which all events affected by the rule would only require dust wipe 7 testing. Under this alternative option it is estimated that there would be the same total number of affected 8 events, the same total number of sampling technician s and training costs, and lower average per-event 9 costs. 10
11

Table 4-69: Total Incremental Costs of Dust Wipe Testing Only Option (million $)

Option Year 1 Year 2 50-Year Total Annualized Total Work Practice

Costs Training Costs Total Work Practice

Costs Training Costs Total 3% 7% 3% 7% Proposed Rule: Dust Wipe Testing and Clearance $254 $139 $393 $253 $26 $279 $6,999 $4,044 $272 $293

Alternative Option: Dust Wipe Testing Only $249 $139 $388 $248 $26 $274 $6,888 $3,981 $268 $288

Percentage Difference -2% 0% -1% -2% 0% -2% -2% -2% -2% -2%

12EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-82 4.7.4 Clearance for All Events Option 1 This section presents the estimated costs under an a lternative option where clearance is required in all 2 instances where either dust wipe testing or cl earance is required under the proposed rule. 3 Table 4-70 presents the total estimated number of even ts and target housing work practice costs under this 4 alternative option. The estimated number of events is the same under this scenario compared to the 5 primary option, although all events previously only requiring dust wipe testi ng will now require achieving 6 clearance. The total target housing event costs ar e $351 million under this scenario compared to $254 7 million under the primary option (See Table 4-70 and Table 4-51). Public and commercial building COF 8 universe and costs under the alternative option are presented in Table 4-71. 9
10

Table 4-70: Total First Year Target Housing Costs: Clearance Option Events (thousands) Unit Costs Total Costs (thousands) Type SF-O MF-O SF-R MF-R SF-O MF-O SF-R MF-R SF-O MF-O SF-R MF-R Total Events Excluding Kitchen or Bathroom Bath 25 1 16 15 $161 $161 $166 $166 $4.1 $0.2 $2.6 $2.6 $9.5 Kit 106 6 35 32 $163 $161 $168 $167 $17.3 $1.0 $5.9 $5.3 $29.5 Bath+Kit 1 0 0 0 $259 $257 $263 $262 $0.2 $0.0 $0.0 $0.0 $0.3 S-Paint 43 2 20 31 $162 $161 $167 $167 $6.9 $0.4 $3.3 $5.1 $15.8 M-Paint 22 1 11 19 $191 $163 $175 $168 $4.2 $0.2 $2.0 $3.3 $9.7 L-Paint 21 1 11 19 $271 $203 $237 $208 $5.6 $0.2 $2.5 $3.9 $12.2 S-WD 101 6 34 31 $161 $161 $166 $166 $16.2 $0.9 $5.7 $5.2 $28.1 L-WD 105 6 35 32 $325 $221 $288 $227 $34.0 $1.3 $10.1 $7.3 $52.7 Subtotal 424 24 162 180 -- -- -- -- $88.6 $4.2 $32.1 $32.7 $157.7 Events Including Kitchens or Bathrooms Bath 56 2 86 51 $199 $199 $215 $215 $11.1 $0.5 $18.5 $11.0 $41.0 Kit 106 6 128 137 $203 $200 $218 $216 $21.6 $1.3 $28.0 $29.7 $80.5 Bath+Kit 38 5 93 33 $313 $310 $328 $327 $11.8 $1.5 $30.6 $10.8 $54.6 S-Paint 4 0 5 3 $201 $200 $217 $216 $0.8 $0.0 $1.1 $0.7 $2.5 M-Paint 4 0 3 5 $226 $194 $219 $211 $1.0 $0.0 $0.7 $1.0 $2.7 L-Paint 2 0 4 1 $302 $230 $278 $246 $0.6 $0.0 $1.2 $0.4 $2.2 S-WD 3 0 3 0 $199 $215 $0.7 $0.0 $0.6 $0.0 $1.3 L-WD 13 1 8 4 $354 $248 $327 $264 $4.7 $0.2 $2.6 $1.0 $8.5 Subtotal 227 15 331 234 -- -- -- -- $52.2 $3.5 $83.1 $54.5 $193.4 All Events Total 650 39 493 414 -- -- -- -- $140.8 $7.8 $115.3 $87.2 $351.1 The following abbreviations are used: SF-O indicates single-family owner-occupied; MF-O indicates multi-family owneroccupied; SF-R indicates single-family renter-occupied; MF-R indicates multi-family renter-occupied; Bath indicates a bathroom size event; Kit indicates a kitchen size event, Bath +Kit indicates an event the size of a bathroom and a kitchen combined; S-Paint indicates a small painti ng sized event; M-Paint indicates a small painting sized event; L-Paint indicates a small painting sized event; S-WD indi cates a small window/door sized event; L- WD indicates a large window/door sized event. A “bathroom size” or kitchen size” indicates the event size , not the event type . In addition to bathroom and kitchen events, other event types having these si ze definitions are: (1) Bathroom size: wa ll-disturbing events, addition events, (2) Kitchen size: wall-disturbing events, add ition events, window/door replacements, (3) Ba throom + kitchen size: wall-disturbing events, addition events. A zero indicates a small positive number r ounded to zero in the table. . Events excluding kitchens or bathrooms are calculated separately from events including kitche ns and bathrooms, because kitchens and bathrooms have a different probability of being carpeted than the rest of the hous e, and dust wipe samples are only taken on uncarpeted floors. Clearance costs include the cost of associated dust wipe testing. 11EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-83 Table 4-71: Total First Year Public a nd Commercial Building COF Costs: Clearance Option Building Type Events Unit Costs Total Costs Kindergarten (Public) 192 $1,876 $360,887 Kindergarten (Large Private) 27 $1,876 $51,496 Kindergarten (Small Private) 32 $1,876 $60,849 Pre-K + Kindergarten (Public) 150 $2,147 $322,609 Pre-K + Kindergarten (Large Private) 82 $2,147 $176,259 Pre-K + Kindergarten (Small Private) 41 $2,147 $88,878 Daycare Center (Renter-Occupied) 208 $688 $143,119 Daycare Center (Owner-Occupied) 142 $688 $98,102 Daycare Center (Non-Profit who performs some of own RRP) 181 $688 $124,713 Daycare Center (Non-Profit who uses contractors) 67 $688 $45,898 Daycare Center (In Public School) 10 $688 $6,564 Daycare Center (In Large Private School) 0 $688 $32 Daycare Center (In Small Private School) 0 $688 $65 All Building Types 1134

-- $1,479,470 a. These unit costs for events in public and commercial building COFs are third party costs since the analysis assumes that non-resident ial contractors and operators of public and commercial building COFs will not perform enough dust wipe testing events annually to make training an in-house dust sampling technician worthwhile. 1 Because under this option all reside ntial construction establishments w ill still be expected to train only 2 one in-house dust sampling technician, total training costs will be the same under both the primary option 3 and alternative option. Therefore – as under the primary option – the estimated number of sampling 4 technicians trained in the first year will be 233, 821, and training costs will amount to $139 million. 5 Table 4-72 presents a comparison of the costs of th e LRRP Clearance Proposed Rule for both the primary 6 option and the alternative option under which all events affected by the rule would require full clearance. 7 Under this alternative option it is estimated that ther e would be the same total number of affected events, 8 the same number of sampling technicians seeking traini ng and total training costs, and higher average per9 event costs. 10
11EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-84 Table 4-72: Total Incremental Costs of Clear ance for All Events Option ($ million)

Option Year 1 Year 2 50-Year Total Annualized Total Work Practice

Costs Training Costs Total Work Practice

Costs Training Costs Total 3% 7% 3% 7% Proposed Rule: Dust Wipe Testing and Clearance $254 $139 $393 $253 $26 $279 $6,999 $4,044 $272 $293

Alternative Option: Clearance for all Events in Proposed Rule $353 $139 $492 $351 $26 $377 $9,431 $5,432 $367 $394

Percentage Difference 39% 0% 25% 39% 0% 35% 35% 34% 35% 34%

1EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-85 

## References 1 Gilkeya, David; Jacob Hautaluomaa, Taslim Ahmeda, Thomas Keefea, Robert Herrona, Philip Bigelowb. 2 2003. Construction Work Practices and Conditions Improved After 2- Years’ Participation in the 3 HomeSafe Pilot Program. American Industrial Hy giene Association Journal, May/June 2003. 4
FedEx. 2009. “Get Rates and Transit Times.” Available at: 5 http://www.fedex.com/ratefinder/home?cc =US&language=en (Accessed 10/1/2009). 6 RS Means, 2005, Means CostWorks Repair & Remodeling Cost Data 2005 CD-ROM , 7th Edition 7 http://www.rsmeans.com/bookstore/detail.asp?sku=65045 8 Salesgenie.com. 2009. “Business to Bu siness Directory”. Available at: 9 http://www.salesgenie.com/SalesGenie/index. aspx?bas_vendor=99688 (Accessed 9/30/2009). 10 SKC Inc. 2009. “Ghost Wipes, For Surface Le ad/Dust Sampling, (200/Pkg).” Available at: 11 http://www.skcshopping.com/ProductDetails.asp?P roductCode=225-2414 (Accessed 10/1/2009). 12
UPS. 2009. “Zones and Rates.” Available at: 13 http://www.ups.com/content/us/en/shipping/ cost/zones/index.html?WT.svl=SubNav (Accessed 14 10/1/2009). 15
U.S. Bureau of Labor Statistics. 2005a. Occupational Employment Statistics Series. 16 U.S. Bureau of Labor Statistics. 2006. "Current Population Survey: Basic Monthly Survey." January 17 2006. 18 U.S. Bureau of Labor Statistics. 2008a. Occupationa l Employment Statistics Series. December 2008. 19
U.S. Bureau of Labor Statistics. 2008b. Consumer Price Index: All Urban Consumers. December 2008. 20
U.S. Census Bureau. 1990. "H025. Year Structure Built - Universe: Housing units." American Fact 21 Finder. Available at: http://factfinder.census.gov/ (Downloaded 10/26/2005) 22 U.S. Census Bureau. 1995. Property Owners and Managers Survey (POMS) 23
U.S. Census Bureau. 1997. American Housing Survey (AHS)

. 24
U.S. Census Bureau. 2000c. "H34. Year Structure Built [10] - Universe: Housing Units." American Fact 25 Finder. Available at: http://factfinder.census.gov/ (Downloaded 10/26/2005) 26 U.S. Census Bureau. 2003. American Housing Survey (AHS)

. 27 U.S. Census Bureau. 2005d. “Sector 23: Industry Seri es: Value of Construction for Establishments by 28 Type of Construction: 2002.” American Fact Finder. Available at: 29 http://factfinder.census.gov/servlet/EconSectorSe rvlet?caller=dataset&s v_name=*&_SectorId=23 30 &ds_name=EC0200A1&_lang=en&_ts=1417 35361508 (Downloaded 6/30/2005) 31
U.S. Census Bureau. 2005f. 2002 Ec onomic Census: Industry Series: Residential Remodelers EC02-23I32 236118 (RV). Available at: http://www.censu s.gov/prod/ec02/ec0223i236118.pdf (Accessed 33 8/3/2005). 34 U.S. Census Bureau. 2005g. American Housing Survey –Overview. Available at: 35 http://www.census.gov/hhes/www/housing/ahs/overview.html

. 36 U.S. Census Bureau. 2005h. Property Owners and Ma nagers Survey (POMS) – Overview. Available at: 37 http://www.census.gov/hhes/www/housing/poms/overview.html 38 U.S. Census Bureau. 2006. “American Housing Survey for the U.S. 2005.” Current Housing Reports

. 39EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 4-86 U.S. Department of Energy (DOE). 2003. Commercia l Buildings Energy Consumption Survey (CBECS). 1 U.S. Department of Housing a nd Urban Development (HUD). 2001. National Survey of Lead and 2 Allergens in Housing. 3 U.S. EPA. 1998. Economic Analysis of Toxic Subs tances Control Act Section 403: Hazard Standards. 4 May. 5
U.S. EPA. 2005. Federal Lead Based Paint Program (FLPP) Database. 6 U.S. EPA. 2006. Economic Analysis for the Renovatio n, Repair, and Painting Program Proposed Rule. 7 February 2006. 8 U.S. EPA. 2007. Draft Final Report on Characterizati on of Dust Lead Levels after Renovation, Repair, 9 and Painting Activities. January. 10 U.S. EPA. 2008. Lead; Renovation, Repair, and Painti ng Program; Lead Hazard Information Pamphlet; 11 Notice of Availability; Final Rule. 40 CFR Part 745, April 22, 2008. 12 U.S. EPA 2008. Economic Analysis for the TSCA Le ad Renovation, Repair, and Painting Program Final 13 Rule for Target Housing and Child -Occupied Facilities. April 2008. 14 U.S. EPA 2009a. Lead; Amendment to the Opt-Out and Recordkeeping Provisions in the Renovation, 15 Repair, and Painting Program. 74 FR 55506, October 28, 2009. 16 U.S. EPA. 2009b. Economic Analysis of the Proposed Opt-Out Rule. [Insert Month]. 17
U.S. EPA. 2009c. “Locate Certified Abatement Firms.” Available at: 18 http://cfpub.epa.gov/flpp/search.cfm?App licant_Type=firm (Accessed 9/20/2009) 19 U.S. Office of Management and Budget. 2003. Circular A-4. 20 U.S. Small Business Administration. 2005. “Non-Employer Statistics.” Firm Size Data. 21 http://www.sba.gov/advo/research/data.html. (Downloaded 8/3/2005). 22 U.S. Internal Revenue Service (IRS). 2007. Revenue Procedure 2007-70. Available at: 23 http://www.irs.gov/pub/irs-drop/rp-07-70.pdf (Accessed 12/16/2009). 24 U.S. Internal Revenue Service (IRS). 2008. Announc ement 2008-63: Optional Standard Mileage Rates. 25 Available at: http://www.irs.gov/pub/irs- drop/a-08-63.pdf (Accessed 12/16/2009). 26 U.S. Postal Service (USPS). 2009. “Prices: Curre nt prices for domestic and international service.” 27 Available at: 28 http://www.usps.com/prices/welcome.htm?fro m=home_mailandshipping&page=pricecomparison 29 s (Accessed 10/1/2009). 30 Whitestone Research. The Whitestone Building Main tenance and Repair Cost Reference 2006-2007. 31 11th Annual Edition. August 2006. 32EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 5-1 

## 5. Benefits of the Propo sed LRRP Clearance Rule 1 A great deal of information on the numerous adverse h ealth effects of lead is available from decades of 2 medical observation and scientific research. Inhaled or ingested lead is distributed throughout the body 3 and is toxic to many organ systems. As a result, its toxicity manifests itself in the form of impacts on 4 several organ systems. A reduction in lead exposur e resulting from the proposed rule would lead to a 5 reduction in these adverse health effects and the costs of treating them. Young children (from birth 6 through age five) are particularly sensitive to lead, which impairs a child’s neuropsychological 7 development (frequently measured by IQ change). This chapter presents a discussion of the benefits 8 associated with reducing lead exposure through revi sing the lead, renovation, repair, and painting (LRRP) 9 program regulations, by estimating the numbers of the populations expected to be affected. 10 The proposed LRRP Clearance Rule would require du st wipe testing after many of the RRP activities 11 regulated under the 2008 LRRP rule, and would require clearance after a smaller subset of RRP activities. 12 The clearance requirements of the proposed LRRP Cl earance Rule are expected to result in lower 13 exposures to dust lead by reducing the amount of dus t lead left behind after renovation, repair, and 14 painting (RRP). Two types of benefits are expected to be realized from the proposed dust wipe testing 15 requirements. The first type is the direct benefits of the information to the owners and occupants, which 16 includes the value of the information on dust lead levels remaining in the renovation work area. For 17 building owners and occupants, this information is likely to improve their understanding and awareness of 18 dust lead hazards. It will also greatly improve their ability to make further risk management decisions. 19 This information is particularly critical where dust lead levels approach or exceed the regulatory hazard 20 standards. The second benefit expected to be rea lized from the proposed dust wipe testing requirements 21 stems from changed behavior on the part of renovation fi rms. EPA believes that dust wipe testing results 22 will also provide valuable feedback to renova tion firms on how well they are cleaning up after 23 renovations. It is likely that the specific dust lead levels contained in dust wipe testing results will 24 increase renovation firm cleaning efficiency. Renovation fi rms will be incentivized to lower the dust lead 25 levels remaining after renova tion jobs, even if the levels are at or near the regulatory standards. Because 26 proper cleanup plays such a vital role in the minimi zation of dust lead hazards created by renovations, 27 providing information on dust lead levels remaining after renovations to buildin g owners and occupants 28 will serve as an incentive for firms to perform pos t-renovation cleaning efficiently and thoroughly, 29 reducing the amount of dust lead left behind after RRP. 30 An overview of the proposed LRRP Clearance Rule, as it applies to this benefits estimation, is provided 31 in Section 5.1. Section 5.2 presents the estimated number of children, pregnant woman, and adults who 32 reside in or occupy (i.e., attend school or receive chil dcare in) the structures affected by the proposed rule. 33 Finally, in Section 5.3, the human health and ecol ogical consequences of lead exposure are summarized. 34 This analysis does not quantify the value of the bene fits of the proposed rule, but presents estimated 35 numbers of some of the populations expected to be affected. 36 

### 5.1 Overview of Proposed LRRP Clearance Rule in Terms of Benefits 37 

### Estimation 38 The proposed LRRP Clearance Rule in cludes several revisions to the 2008 Lead Renovation, Repair, and 39 Painting Program (RRP) rule that established accreditation, training, certification, and recordkeeping 40 requirements as well as work practice standards for persons performing renovations for compensation in 41 most pre-1978 housing and child-occupied facilities. EPA is particularly concerned about dust lead 42 hazards generated by renovations because of the we ll-documented toxicity of lead, especially to younger 43 children. The proposed LRRP Clearance Rule includ es additional requirements designed to ensure that 44 lead-based paint hazards generated by renovation work are adequately cleaned after renovation work is 45EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 5-2 finished and before the areas are re-occupied. Speci fically, EPA is proposing to require dust wipe testing 1 after many renovations covered by the RRP rule. For a subset of jobs involving demolition or removal of 2 plaster through destructive means or the disturban ce of paint using machines designed to remove paint 3 through high-speed operation, such as power sanders or abrasive blasters, this proposal would also require 4 the renovation firm to demonstrate, through dust wipe tes ting, that dust-lead levels remaining in the work 5 area are below regulatory levels. 6 With regard to potential implications of lead eff ects on IQ, the Air Quality Criteria Document recognizes 7 the ‘‘critical’’ distinction between population and indi vidual risk, identifying issues regarding declines in 8 IQ for an individual and for the population. The Crite ria Document further states that a ‘‘point estimate 9 indicating a modest mean change on a health inde x at the individual level can have substantial 10 implications at the population level’’ (CD, p. 8–77). A downward shift in the mean IQ value is associated 11 with both substantial decreases in percentages achievi ng very high scores and substantial increases in the 12 percentage of individuals achieving very low scores (AQCD, p. 8–81). For an individual functioning in 13 the low IQ range due to the influence of developmenta l risk factors other than lead, a lead-associated IQ 14 decline of several points might be sufficient to drop that individual into the range associated with 15 increased risk of educational, vocational, and social failure (AQCD, p. 8–77). 16 Other cognitive effects observed in studies of child ren have included effects on attention, executive 17 functions, language, memory, learning and visuospa tial processing (AQCD, sections 5.3.5, 6.2.5 and 18 8.4.2.1), with attention and executive function eff ects associated with lead exposures indexed by blood 19 lead levels below 10 μg/dL (AQCD, section 6.2.5 and pp. 8–30 to 8–31). The evidence for the role of lead 20 in this suite of effects includes experimental anim al findings (discussed in AQCD, section 8.4.2.1; p. 8– 21 31), which provide strong biological plausibility of lead effects on learning ability, memory and attention 22 (AQCD, section 5.3.5), as well as associated mechanistic findings. 23 These cognitive and behavioral effects, discussed above , are strongly related to future productivity and 24 expected earnings (Salkever 1995). Based on Salkever’s coefficients, the estimated value of an IQ point 25 is $14,280 (2008 dollars). This IQ value is modeled as the present value of a loss in expected lifetime 26 earnings due to a one point IQ drop. The present value is calculated assuming that children would be 27 affected by lead at 3 years of age, the median of the range when children ar e most susceptible to lead 28 hazards; that while most people start working at ag e 18, average income in the early adult years is 29 reduced because some are still in school ; and that retirement occurs at the age of 67. This estimated value 30 of an IQ point is limited to reduced income, and does not include other potential impacts such as 31 additional education costs for special and remedial edu cation, and medical costs to treat very high levels 32 of lead. 33 Both epidemiologic and toxicological studies have show n that environmentally relevant levels of lead 34 affect many different organ systems (EPA 2006b, p.E-8). It appears that some of these effects, 35 particularly changes in the levels of certain bloo d enzymes and in aspects of children's neurobehavioral 36 development, may occur at blood-lead levels so lo w as to be essentially without a threshold (EPA 2004). 37 Epidemiologic studies have consistently demonstrated associations between lead exposure and enhanced 38 risk of deleterious cardiovascular outcomes, including increased blood pressure and increased 39 hypertension (EPA 2006b). A meta-analysis of numer ous studies estimates that a doubling of blood-lead 40 level (e.g., from 5 to 10 μg/dL) is associated with ~1.0 millimeter of mercury (mm Hg) increase in 41 systolic blood pressure and ~0.6 mm Hg increase in di astolic pressure. The evidence for an association of 42 lead with cardiovascular morbidity and mortality is limited but supportive (EPA 2006b, p. E-10). 43 The Criteria Document states ‘‘although an increase of a few mmHg in blood pressure might not be of 44 concern for an individual’s well-being, the same incr ease in the population mean might be associated with 45EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 5-3 substantial increases in the percentages of individuals with values that are suffici ently extreme that they 1 exceed the criteria used to diagno se hypertension’’ (EPA 2006b, p. 8–77). 2
Neurotoxic effects in children and cardiovascular effect s in adults are among those best substantiated as 3 occurring at blood-lead concentrations as low as 5 to 10 ug/dL (or possibly lower); and these categories of 4 effects are currently clearly of greatest public health concern (EPA 2006b, p 8-60). Other newly 5 demonstrated immune and renal system effects am ong general population groups are also emerging as 6 low-level lead exposure effects of potential pub lic health concern (EPA 2006b, p 8-60). 7 Some studies have examined the question of whethe r the neurological effects of exposures in early 8 childhood are ameliorated when blood-lead levels decline. The data are mixed on this issue. In a study 9 that treated lead-exposed children with a chelati ng agent, Ruff (1993) found that children whose blood10 lead levels had the greatest decline showed the most improvement in cognitive scores. In contrast, Rogan 11 (2001) found that treatment with a chelating agent lowered blood-lead levels in children but did not 12 appear to improve neurological function. Liu (2002) also found that chelation therapy at age 2, while 13 lowering blood-lead levels, did not improve neurological function in children at 5 years of age. While the 14 study did detect a relationship between declining bl ood-lead and improved neurological function, this 15 association was observed only in the untreated group, l eading the authors to speculate that some other 16 factor besides declining lead levels from chelation th erapy (such as greater parental involvement), led to 17 the neurological gains. Dietrich (2004) had similar findings in the same cohort of children at 7 years of 18 age. One study cited in ATSDR (1999) showed impair ed motor and cognitive function at a current mean 19 level of 2.9 μg/dL, about 20 years after exposure wh en blood-lead levels were 40-50 μg/dL (Stokes 1998). 20 The negative impact of lead on IQ and other neur obehavioral outcomes persist in most recent studies 21 following adjustment for numerous confounding factors including social class, quality of caregiving, and 22 parental intelligence. Moreover, these effects appear to persist into adolescence and young adulthood in 23 the absence of marked reductions in environmental e xposure to lead. (EPA 2006b, p. 6-76). This further 24 supports the concern that early exposures to lead ma y lead to irreversible damage and supports the 25 benefits of regulatory interventions to prevent and/or reduce lead exposure. 26 Renovation activities that disturb lead-based paint crea te high dust-lead levels which are not removed 27 through typical cleaning practices. EPA’s Dust Stu dy (EPA 2007) found that dust-lead levels created by 28 renovation activities ranged from 422 to 32,633 μg/ft 2 . While dry sweeping and the use of a regular shop 29 vacuum resulted in a reduction in these levels, a significant amount of leaded dust remained. All 30 residents of the household or occupants of the building can be exposed to this dust, regardless of age. 31 EPA’s Exposure Factors Handbook (EPA 1997) contai ns recommended soil and dust ingestion estimates 32 for adults, and EPA’s Child-Specific Exposur e Factors Handbook (EPA 2008a), which includes 33 recommended soil and dust ingestion estimates fo r children between the ages of 6 and 21. 34 5.1.1 Regulatory Options for Proposed LRRP Clearance Rule 35 The economic analysis presented in this report consid ers various regulatory options. The three primary 36 options considered in this analysis only differ in the size thresholds that trigger the rule’s requirements 37 when performing certain renovation activities. The thr ee threshold options considered in this analysis 38

are: 39
1. Low Threshold Option 40

 All event types requiring dust wipe tes ting where the total amount of lead-based 41 paint disturbed is larger than 6 square feet. 42

 Clearance is required for: 43

- high-speed machine removal of paint larger than 6 square feet, and 44

- plaster removal using destructive means, larger than 6 square feet. 45EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 5-4 2. Proposed Threshold Option 1

 Dust wipe testing is required for: 2

- cabinet and trim events larger than 40 square feet, 3

- scraping of paint larger than 60 square feet, 4

- heat gun removal of more than 6 square feet 5

- Window frame or door frame removal events 6

 Clearance is required for: 7

- high-speed machine removal of paint larger than 6 square feet, and 8

- plaster removal using destructive means, larger than 6 square feet. 9 3. High Threshold Option 10

 Dust wipe testing is required for: 11

- cabinet and trim events larger than 80 square feet, 12

- scraping or heat gun removal of paint larger than 120 square feet, and 13

- window frame or door frame removal events. 14

 Clearance is required for: 15

- high-speed machine removal of paint larger than 60 square feet, and 16

- plaster removal using destructive means, larger than 60 square feet. 17 This analysis considers three alternative options in addition to the three primary options: (1) an option 18 where third party dust wipe testing and clearance is required, (2) an option where dust wipe testing is 19 required in lieu of the clearance required under the pr oposed option, and (3) an option where clearance is 20 required in lieu of the dust wipe testing required under the proposed option. The number of individuals 21 affected under these alternative options are the sa me as those affected under the proposed option. 22 Therefore, separate estimates of affected populati ons are not presented for these alternative options. 23 All the primary and alternative options are analy zed under the baseline scenario where the opt-out 24 provision of the 2008 LRRP rule has been eliminated as proposed (the opt out provision allows owner25 occupied housing units where no child under the age of six or pregnant woman resides to opt out of the 26 rule’s requirements). Since the LRRP Opt-Out Rule is not a final rule, the analysis also presents 27 estimates of the populations affected by the proposed LRRP Clearance Rule under the alternative baseline 28 assuming the regulated universe under the 2008 LRRP Rule (which excludes opt-out eligible housing 29 from the universe). Table 5-1 summarizes the options presented in the economic analysis. 30EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 5-5 Table 5-1: Options Included in Economic Analysis
Option/Baseline Size Threshold Dust Wipe Testing and Clearance Third Party Requirement Baseline

Low Threshold Option Size thresholds are lower or equal to proposed rule No 2008 + Opt Out

Proposed Threshold

Option Size thresholds are as proposed No 2008 + Opt Out

High Threshold Option Size thresholds are higher or equal to proposed rule Dust wipe testing is required for: 1. cabinet and trim events 2. scraping of paint 3. heat gun removal of paint 4. Window frame or door frame removal events
Clearance is required for: 1. high-speed machine removal of paint 2. plaster removal using destructive means No 2008 + Opt Out

Third Party

Option Same as Proposed Dust wipe testing and clearance are required in the same instances as proposed Yes 2008 + Opt Out
Dust Wipe Testing Only Option Same as Proposed Dust wipe testing is required in instances where dust wipe testing or clearance are required under the proposed option No 2008 + Opt Out

Clearance Only Option Same as Proposed Clearance is required in instances where dust wipe testing or clearance are required under the proposed option No 2008 + Opt Out

Proposed Option with Alternative Baseline Same as Proposed Same as Proposed No 2008

1 

### 5.2 Residents and Occupants of Struct ures Regulated by the Proposed LRRP 2 

### Clearance Rule 3 The residents and occupants of the structures regulat ed under the proposed LRRP Clearance Rule include: 4 (1) children residing in target housing, (2) children receiving childcare in target housing, (3) children 5 attending daycare in a public or commercial buildin g, (4) children attending school in a public or 6 commercial building, (5) adults residing in target h ousing, (6) adults working in a public or commercial 7 building COF. This section presents the estimated numbe r of individuals who reside in or occupy these 8 regulated structures and presents the estimated number of these individuals residing in or occupying a 9 structure where dust wipe testing or clearance is expected to be performed. 10
Section 5.2.1 describes the methods and sources fo r these estimates and section 5.2.2 presents the 11 resulting estimated populations. 12 5.2.1 Methodology and Sources for Estimating Affected Populations 13 This analysis presents the estimated number of ta rget housing residents, children receiving childcare in 14 target housing, and children attending daycare or schools in public and commercial buildings. The 15 number of adults who work in a public or commercia l building COF was not estimated for this analysis, 16 but these individuals would also be expected to benefit from the proposed rule. 17EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 5-6 5.2.1.1 Estimating the Number of Target Housing Residents 1 The 2003 American Housing Survey (AHS) (U.S. Cens us, 2003) was used to estimate the number of 2 individuals residing in target housing where dust wi pe testing and clearance events occur. The AHS 3 includes household level microdata with informati on on the number and ages of housing occupants, 4 household-level renovation data, and ot her housing characteristics. Chap ter 4 of this report provides a 5 description of how EPA estimated the frequencies of dust wipe testing and clearance activities using AHS 6 data and questionnaires administered to fewer than 10 respondents. This methodology was used to 7 determine which respondent households in the AHS da ta were performing regulated renovation activities, 8 and therefore the number and demographics of the o ccupants residing in these households can easily be 9 determined since this is reported at the house hold level. For example, some households reported 10 remodeling their kitchen in the American Housing Su rvey, and a subset of these households are estimated 11 to trigger the dust wipe testing requirements associated with trim and cabinet replacement (as described in 12 Chapter 4). Since the American Housing Survey in cludes information on the number and ages of housing 13 occupants, the number and ages of individuals affected by the rule in these households can be estimated. 14
5.2.1.2 Estimating the Number of Childre n Receiving Childcare in Target Housing 15 EPA estimated the number of children receiving childcar e in target housing affected by the dust wipe 16 testing and clearance requirements in three steps: (1) the number of target housing unit COFs and the 17 frequency of regulated activities was estimated; (2) th e number of children receiving childcare in target 18 housing was estimated; and (3) the estimated frequenci es of the activities in target housing were applied 19 to number of children receiving childcare in these targ et housing units to estimate the number of children 20 affected by the proposed rule. 21
Step One: Estimate Number of Target Housing COFs and the Frequency of Regulated Activities 22 The estimate of the number of target housing units that are COFs was developed for the economic 23 analysis of the 2008 LRRP Rule. EPA (2008b) prov ides a detailed explanation of these estimates which 24 is summarized here. The COFs in target housing in clude family daycare providers and the homes of 25 family, friends, and neighbors who regularly care for someone else’s children. The estimates include care 26 provided for pay and not for pay, and rely primarily on estimates of the size of the childcare workforce as 27 published by the Center for Childcare Workforce, 2002. This report includes data on the number of: (1) 28 family childcare providers caring for unrelated child ren, (2) paid relatives and non-relatives providing 29 childcare, and (3) unpaid relatives and non-relatives providing childcare. 30 Based on data provided by the Center for Childcare Work force, a total of just under 2.4 million caregivers 31 provide care outside of the child’s home for more than six hours per week. As described in detail by EPA 32 (2008b), these data are used to estimate the number of COFs in target housing. These numbers are further 33 reduced to estimate the number of pre-1978 housing units based on American Housing Survey data. The 34 frequency of dust wipe testing and clearance is assu med to be the same in target housing COFs as 35 estimated for other target housing. 36
Step Two: Estimate Number of Childre n Receiving Childcare in Target Housing 37 Data from Table 2 of Mulligan et al (2001) were used to determine the number of children under six years 38 of age in Target Housing COFs. Population data from Mulligan et al (2001) for target housing includes 39 children in the care of relatives and non-relatives as well as the proportion (5 percent) of children in 40 centers identified as being in private settings (i.e., family care). 1 Other adjustments were made to exclude 41

1 This analysis assumes that all daycare centers are locat ed in public or commercial buildings (i.e., not in residential buildings). Due to differences in licensi ng requirements and survey questionnaire design, some sources used in this analysis categori ze children cared for in residential setti ngs as being in center-based care.EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 5-7 paid care by a non-relative (e.g., a nanny) in the child ’s home. Relative and non-relative care were further 1 classified into paid and non-paid care. Based on in formation presented in Mulligan et al (2001), the 2 following adjustments were made for each category: 3
1. Paid non-relative care not in the child’s home (i.e., family care): 4

a. 81 percent of non-relative care occurs in lo cation outside of the child’s home. 5 b. 5 percent of center-based care occurs in a private setting – assumed to be non-relative 6 care outside child’s home. 7

c. 90 percent of non-relative care is paid. 8 9 2. Unpaid non-relative care (not in the child’s home): 10

a. 81 percent of non-relative care occurs in lo cation outside of the child’s home. 11 b. 5 percent of center based care occurs in a private setting – assumed to be non-relative 12 care outside child’s home. 13

c. 10 percent of non-relative care is unpaid paid. 14 15 3. Paid relative care: 16

a. 28 percent of relative care is paid. 17 18 4. Unpaid relative care: 19

a. The difference between all relative care and paid relative care. 20 Step 3: Apply the Estimated Event Frequencies to the Estimated Populations 21 The frequencies of regulated activities described in st ep one are applied to the estimated populations to 22 estimate the number of children affected by th e dust wipe testing and clearance requirements. 23
5.2.1.3 Estimating Populations of Children Atte nding Schools in Public or Commercial Building 24 COFs 25 The population of children attending schools was estim ated from the Common Core of Data – Public 26 Elementary/Secondary School Universe Survey Data (NCES, 2006b). The building age distribution 27 percentages found in the CBECS data were used to calculate the number of children in pre-1978 buildings 28 (58 percent). See Chapter 4 of this report for a d escription of the how the frequencies of RRP, dust wipe 29 testing, and clearance were estimated for schools in public or commercial buildings. 30
5.2.1.4 Estimating Populations of Children Atte nding Daycare in Public or Commercial Building 31 COFs 32 Data from Table 2 of Mulligan et al. (2005) were used to determine the number of children under six 33 years of age in childcare centers. Center-based arrangements include day care centers, Head Start 34 programs, preschools, pre-kindergartens, and other early childhood programs. Table 4 of Mulligan et. al 35 indicated that 6,695,000 children were in center-based care. 36 To avoid double counting with other structures wher e childcare is provided, children in center-based 37 childcare reported to be in pre-kindergarten and ki ndergarten and target hous ing settings were removed 38 from the daycare center count. The following adjustments were made: 39 1. Subtract from childcare center population the proportion of children in pre-kindergarten and 40 kindergarten (27 percent) 41

Whenever possible, these daycare facilities and the childre n they serve were included in the family daycare, rather than in daycare center counts.EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 5-8 2. Subtract from childcare center population the proportion of children in private or target housing 1 settings (5 percent) 2 The building age distribution percentages found in the CBECS data were used to calculate the number of 3 children in pre-1978 buildings (58 percent). 4 5.2.2 Estimated Affected Populations 5 Table 5-2 through Table 5-5 present the number of indivi duals affected during the first year of the rule by 6 the proposed LRRP Clearance Rule under the three prim ary options considered in this analysis. (The 7 other three options – third party sampling, dust wipe testing only, and clearance only) protect the same 8 number of individuals as the proposed option, although the level of protection may differ.) The first row 9 of these tables presents the number of children who reside in or occupy (i.e., receive childcare or attend 10 school in) regulated structures during the first year of the rule. The number of children affected by dust 11 wipe testing and clearance activities is both presented separately and combined. In addition, the tables 12 break out the estimated populations according to whethe r or not the dust wipe testing or clearance applies 13 to windows only or to both windows and floors (becau se when floors are carpeted, the requirements only 14 apply to window sills and troughs). 15
16

Table 5-2: Number of Children Under the Age of Six Residing or Occupying Regulated Target Housing or Public or Commercial Building COFs by Type of Dust Wipe Testing or Clearance Activit y Performed: Low Threshold Option ( First Year, thousands ) Target Housing Public and Commercial Buildings Activity Performed Residents Daycare Attendees Daycare Attendees School Attendees Total Number of Children (<6)
All Occupants of Regulated St ructures 17,772 3,448 2,647 3,429 27,296 Dust Wipe Testing Window Tests Only 1 303 20 5 7 335 Window and Floor Tests 2 450 45 11 14 519 Subtotal 753 65 16 21 855 Clearance Window Clearance Only 1 5 1 1 1 8 Window and Floor Clearance 2 12 2 2 3 19 Subtotal 17 2 3 4 27 Dust Wipe Testing or Clearance Window Test/Clearance Only 1 307 21 7 9 343 Window and Floor Test/Clearance 2 463 46 13 17 538 Subtotal 770 67 19 25 882
1 These events are performed where floors are carpeted and therefore floors would not be subject to dust wipe testing or clearanc e requirements. 2 These events are performed where floors are not carpeted and therefore floors would be subject to dust wipe testing or clearance requirements.
Note: A zero indicates a positive number less than 500. 17EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 5-9 Table 5-3: Number of Children Under the Age of Six Residing or Occupying Regulated Target Housing or Public or Commercial Building COFs by Type of Dust Wipe Testing or Clearance Activity Performed: Proposed Threshold Option (First Year, thousands) Target Housing Public and Commercial Buildings Activity Performed Residents Daycare Attendees Daycare Attendees School Attendees Total Number of Children (<6)
All Occupants of Regulated St ructures 17,772 3,448 2,647 3,429 27,296 Dust Wipe Testing Window Tests Only 1 289 18 5 7 320 Window and Floor Tests 2 401 37 11 14 462 Subtotal 690 55 16 21 782 Clearance Window Clearance Only 1 5 1 1 1 8 Window and Floor Clearance 2 12 2 2 3 19 Subtotal 17 2 3 4 27 Dust Wipe Testing or Clearance Window Test/Clearance Only 1 294 19 7 9 328 Window and Floor Test/Clearance 2 413 39 13 17 481 Subtotal 707 57 19 25 809
1 These events are performed where floors are carpeted and therefore floors would not be subject to dust wipe testing or clearanc e requirements. 2 These events are performed where floors are not carpeted and therefore floors would be subject to dust wipe testing or clearance requirements.
Note: A zero indicates a positive number less than 500. 1

Table 5-4: Number of Children Under the Age of Six Residing or Occupying Regulated Target Housing or Public or Commercial Building COFs by Type of Dust Wipe Testing or Clearance Activity Performed: High Threshold Option (First Year, thousands) Target Housing Public and Commercial Buildings Activity Performed Residents Daycare Attendees Daycare Attendees School Attendees Total Number of Children (<6)
All Occupants of Regulated St ructures 17,772 3,448 2,647 3,429 27,296 Dust Wipe Testing Window Tests Only 1 260 15 5 7 287 Window and Floor Tests 2 342 29 11 14 395 Subtotal 602 44 16 21 682 Clearance Window Clearance Only 1 4 1 1 1 7 Window and Floor Clearance 2 10 1 2 3 17 Subtotal 14 2 3 4 24 Dust Wipe Testing or Clearance Window Test/Clearance Only 1 264 15 7 9 294 Window and Floor Test/Clearance 2 352 31 13 17 412 Subtotal 616 46 19 25 706
1 These events are performed where floors are carpeted and therefore floors would not be subject to dust wipe testing or clearanc e requirements. 2 These events are performed where floors are not carpeted and therefore floors would be subject to dust wipe testing or clearance requirements.
Note: A zero indicates a positive number less than 500. 2EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 5-10 Table 5-5: Number of Individuals Age of Six and Olde r Residing in Regulated Target Housing, by option (First Year, thousands) Low Threshold Option Proposed Option High Threshold Option Activity Performed Age 6 and Older 3 Pregnant Women Age 6 and Older 3 Pregnant Women Age 6 and Older 3 Pregnant Women All Occupants of Regulated Stru ctures 209,040 2,467 209,040 2,467 209,040 2,467 Dust Wipe Testing Window Tests Only 1 3,356 42 3,204 40 2,873 35 Window and Floor Tests 2 4,677 60 4,183 53 3,586 45 Subtotal 8,033 103 7,388 94 6,458 81 Clearance Window Clearance Only 1 46 1 48 1 39 1 Window and Floor Clearance 2 114 2 112 1 93 1 Subtotal 160 2 160 2 132 2 Dust Wipe Testing or Clearance Window Test/Clearance Only 1 3,403 43 3,252 41 2,912 36 Window and Floor Test/Clearance 2 4,790 62 4,295 55 3,678 47 Subtotal 8,193 105 7,547 96 6,590 83
1 These events are performed where floors are carpeted and therefore floors would not be subject to dust wipe testing or clearanc e requirements. 2 These events are performed where floors are not carpeted and ther efore floors would be subject to dust wipe testing or clearan ce requirements. 3 The Age 6 and Older columns also include pregnant women. Note: A zero indicates a positive number less than 500. 1 

### 5.3 Lead-Related Health E ffects and Ecological Effects 2 Lead exposure can cause many adverse health and ecological effects. This section supplements the 3 benefits chapter by providing a broader, qualitative discussion of lead-related effects (including adult 4 effects and ecological effects), based on EPA’s Air Quality Criteria for Lead. 5 The information provided in this section is an ex cerpt from the Executive Summary of the document Air 6 Quality Criteria for Lead (United States Enviro nmental Protection Agency, October 2006, EPA/600/R7 5/144aF, this document is available at http://c fpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=158823). 8 Specifically, the information provided in this secti on is directly from the following sections of the 9 Executive Summary: 10
11 E.4 Health Effects Associated with Lead Exposure 12 E.5 Human Population Groups at Special Ri sk and Potential Public Health Impacts 13
E.6 Environmental Effects of Lead 14
15 5.3.1 Background 16 The purpose of the 2006 Lead Air Quality Criteria document (AQCD) is to critically assess the latest 17 scientific information on lead. The final version of the revised Lead AQCD mainly assesses pertinent 18 literature published or accepted for p ublication through December 2005. 19 The First External Review Draft (dated December 2005) of the revised Lead AQCD underwent public 20 comment and was reviewed by the Clean Air Scientific Advisory Committee (CASAC) at a public 21 meeting held in Durham, NC on February 28-Ma rch 1, 2006. The public comments and CASAC 22 recommendations received were taken into account in making appropriate revisions and incorporating 23 them into a Second External Review Draft (dated May, 2006) which was released for further public 24EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 5-11 comment and CASAC review at a public meeting held June 28-29, 2006. In addition, still further revised 1 drafts of the Integrative Synthesis chapter and th e Executive Summary were th en issued and discussed 2 during an August 15, 2006 CASAC teleconference ca ll. Public comments and CASAC advice received 3 on these latter materials, as well as Second External Re view Draft materials, were taken into account in 4 making and incorporating further revisions into this final version of the Lead AQCD. 5 5.3.2 Health Effects Associated with Lead Exposure 6 Both epidemiologic and toxicological studies have show n that environmentally relevant levels of lead 7 affect many different organ systems. Research completed since the 1986 AQCD/Addendum and 1990 8 Supplement indicates that lead eff ects occur at blood-lead levels ev en lower than those previously 9 reported for many endpoints. Remarkable progress h as been made since the mid-1980s in understanding 10 the Pb effects on health. Recent studies have focused on details of the associations, including the shapes 11 of concentration-response relationships, especially at levels well within the ra nge of general population 12 exposures, and on those biological and/or socio-envir onmental factors that eith er increase or decrease an 13 individual’s risk. Key findings and conclusions regarding important outcomes of newly available 14 toxicological and epidemiologic studies of Pb health effects are highlighted below. 15
5.3.2.1 Neurotoxic Effects 16

• Neurobehavioral effects of Pb-exposure early in development (during fetal, neonatal, and later 17 postnatal periods) in young infants and children (< 7 years old) have been observed with 18 remarkable consistency across numerous studies involving varying study designs, different 19 developmental assessment protocols, and di verse populations. Negative Pb impacts on 20 neurocognitive ability and other ne urobehavioral outcomes are robust in most recent studies even 21 after adjustment for numerous potentially confoundi ng factors (including quality of care giving, 22 parental intelligence, and socioeconomic status). These effects generally appear to persist into 23 adolescence and young adulthood. 24

• The overall weight of the available evidence pr ovides clear substantiation of neurocognitive 25 decrements being associated in young children with blood-Pb concentrations in the range of 5-10 26 μg/dL, and possibly somewhat lower. Some newly available analyses appear to show Pb effects 27 on the intellectual attainment of preschool and sch ool age children at population mean concurrent 28 blood-Pb levels ranging down to as low as 2 to 8 μg/dL. A decline of 6.2 points in full scale IQ 29 for an increase in concurrent blood Pb levels from 1 to 10 μg/dL has been estimated, based on a 30 pooled analysis of results derived from seven we ll-conducted prospective epidemiologic studies. 31

• In the limited literature examining the effects of environmental Pb exposure on adults, mixed 32 evidence exists regarding associations between Pb and neurocognitive performance. No 33 associations were observed between cognitiv e performance and blood Pb levels; however, 34 significant associations were observed in relation to bone Pb concentrations, suggesting that long35 term cumulative Pb exposure may contribut e to neurocognitive deficits in adults. 36

• Animal toxicology data indicate that developm ental Pb exposures creating steady-state blood-Pb 37 concentrations of ~10 μg/dL result in behavioral impairments that persist into adulthood in rats 38 and monkeys. No evident threshold has yet been found; and Pb-induced deficits, for the most 39 part, have been found to be very persistent, ev en with various chelation treatments. However, 40 experimental studies indicate that environmenta l enrichment during development can partially 41 mitigate the effects of Pb on cognitive function. In rats, neurobehavioral de ficits that persisted 42 well into adulthood were observed with prenatal , preweaning, and postweaning Pb exposure. In 43 monkeys, such neurobehavioral deficits were obser ved both with in utero-only exposure and with 44EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 5-12early postnatal-only exposure when peak blood-Pb levels did not exceed 15 μg/dL and steady1 state levels were ~11 μg/dL. 2

• Learning impairment has been observed in anim al studies at blood levels as low as 10 μg/dL, 3 with higher level learning showing greater im pairment than simple learning tasks. The 4 mechanisms associated wi th these deficits include: response pr eservation; insensitivity to changes 5 in reinforcement density or con tingencies; deficits in attention; reduced ability to inhibit 6 inappropriate responding; impulsivity; and distractibility. 7

• Lead affects reactivity to the environment and social behavior in both rodents and nonhuman 8 primates at blood Pb levels of 15 to 40 μg/dL. Rodent studies also show that Pb exposure 9 potentiates the effects of stress in females. 10

• Auditory function has also been shown to be im paired at blood Pb levels of 33 μg/dL, while 11 visual functions are affected at 19 μg/dL. 12

• Neurotoxicological studies in animals clearly demonstrated that Pb mimics calcium and affects 13 neurotransmission and synaptic plasticity. 14

• Epidemiologic studies have identified genetic polymorphisms of two genes that may alter 15 susceptibility to the neurodevelopmen tal consequences of Pb exposure in children. Variant alleles 16 of the ALAD gene are associated with differences in absorption, retention, and toxicokinetics of 17 Pb. Polymorphisms of the vitamin D receptor ge ne have been shown to affect the rate of 18 resorption and excretion of Pb over time. These studies are only suggestive, and parallel animal 19 studies have not been completed. 20
5.3.2.2 Cardiovascular Effects 21

• Epidemiologic studies have consistently demons trated associations between Pb exposure and 22 enhanced risk of deleterious cardiovascular outcomes, including increased blood pressure and 23 incidence of hypertension. A meta-analysis of numerous studies estimates that a doubling of 24 blood-Pb level (e.g., from 5 to 10 μg/dL) is associ ated with ~1.0 mm Hg increase in systolic 25 blood pressure and ~0.6 mm Hg increase in diastolic pressure. Studies have also found that 26 cumulative past Pb exposure (e.g., bone Pb) may be as important, if not more, than present Pb 27 exposure in assessing cardiovascular effects. Th e evidence for an association of Pb with 28 cardiovascular morbidity and mortality is limited but supportive. 29

• Experimental toxicology studies have confirme d Pb effects on cardiovascular functions. Most 30 have shown that exposures creating blood-Pb levels of ~20 to 30 μg/dL for long periods result in 31 arterial hypertension that persists long after cessation of Pb exposure in genetically normal 32 animals. One study reported blood pressure increases at blood-Pb levels as low as 2 μg/dL in rats. 33 A number of in vivo and in vitro studies provide compelling evidence for the role of oxidative 34 stress in the pathogenesis of Pb-induced hypertensi on. However, experimental investigations of 35 cardiovascular effects of Pb in animals are unclear as to why low, but not high, levels of Pb 36 exposure cause hypertension in experimental animals. 37
5.3.2.3 Renal Effects 38

• In the general population, both circulating and cumulative Pb was found to be associated with 39 longitudinal decline in renal function. Effects on creatine clearance have been reported in human 40 adult hypertensives to be associated with gene ral population mean blood-Pb levels of only 4.2 41 μg/dL. The public health significance of such e ffects is not clear, however, in view of more 42EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 5-13 serious signs of kidney dysfunction being seen in occupationally exposed workers only at much 1 higher blood-Pb levels (>30-40 μg/dL). 2

• Experimental studies using laboratory animals demonstrated that the initial accumulation of 3 absorbed Pb occurs primarily in the kidneys. This takes place mainly through glomerular 4 filtration and subsequent reabsorption, and, to a small extent, through direct absorption from the 5 blood. Both low dose Pb-treated animals a nd high dose Pb-treated animals showed a 6 “hyperfiltration” phenomenon during the first 3 months of Pb exposure. Investigations into 7 biochemical alterations in Pb-induced renal toxi city suggested a role for oxidative stress and 8 involvement of NO, with a significant increase in nitrotyrosine and substantial fall in urinary 9 excretion of NOx. 10

• Iron deficiency increases intestinal absorption of Pb and the Pb content of soft tissues and bone. 11 Aluminum decreases kidney Pb content and serum cr eatinine in Pb-intoxicated animals. Age also 12 has an effect on Pb retention. There is higher Pb retention at a very young age and lower bone and 13 kidney Pb at old age, attributed in part to increased bone resorption and decreased bone accretion 14 and, also, kidney Pb. 15 5.3.2.4 Immune System Effects 16

• Findings from recent epidemiologic studies suggest that Pb exposure may be associated with 17 effects on cellular and humoral immunity. These include changes in serum immunoglobulin 18 levels. Studies of biomarkers of humoral immunity in children have consistently found significant 19 associations between increasing blood-Pb concentra tions and serum IgE levels at blood-Pb levels 20 <10 μg/dL. 21

• Toxicologic studies have shown that Pb targets immune cells, causing suppression of delayed 22 type hypersensitivity response, elevation of Ig E, and modulation of macrophages into a hyper23 inflammatory phenotype. These types of changes can cause increased risk of atopy, asthma, and 24 some forms of autoimmunity and reduced resist ance to some infectious diseases. Lead exposure 25 of embryos resulting in blood-Pb levels < 10 μg/dL can produce persistent later-life 26 immunotoxicity. 27 5.3.2.5 Effects on Heme Synthesis 28

• Lead exposure has been associated with disruption of heme synthesis in both children and adults. 29 A 10% probability of anemia (hematocrit <35%) is estimated to be associated with a blood-Pb 30 level of ~20 μg/dL at age 1 year. Increases in blood Pb concentration of about 20-30 μg/dL are 31 sufficient to halve erythrocyte ALAD activity an d sufficiently inhibit ferrochelatase to double 32 erythrocyte protoporphyrin levels. 33

• Toxicological studies demonstrated that Pb in toxication interferes with red blood cell (RBC) 34 survival and alters RBC mobility. Hematological parameters, such as mean corpuscular volume, 35 mean corpuscular hemoglobin, and mean cor puscular hemoglobin concentration, are also 36 significantly decreased upon exposure to Pb. These e ffects are due to internalization of Pb by 37 RBC. The transport of Pb across the RBC membrane is energy-independent and carrier-mediated; 38 and the uptake of Pb appears to be mediated by an anion exchanger through a vanadate-sensitive 39 pathway. 40

• Erythrocyte ALAD activity ratio (ratio of activat ed/non activated enzyme activity) has been 41 shown to be a sensitive, dose-re sponsive measure of Pb exposure, regardless of the mode of 42 administration of Pb. Competitive enzyme kinetic analyses in RBCs from both humans and 43 Cynomolgus monkeys indicated similar inhibition profiles by Pb. 44EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 5-14 5.3.2.6 Effects on Bones and Teeth 1

• Experimental studies in animals demonstrate that Pb substitutes for calcium and is readily taken 2 up and stored in the bone and teeth of animal s, potentially allowing bone cell function to be 3 compromised both directly and indirectly by expo sure. Relatively short-term exposure of mature 4 animals to Pb does not result in significant gr owth suppression. However, chronic Pb exposure 5 during times of inadequate nutrition has been shown to adversely influence bone growth, 6 including decreased bone density, decreased trabecular bone, and growth plates. 7

• Exposure of developing animals to Pb during g estation and the immediate postnatal period has 8 clearly been shown to significantly depress ear ly bone growth in a dose-dependent fashion, 9 though this effect is not manifest below a certain threshold. 10

• Systemically, Pb has been shown to disrupt mi neralization of bone during growth, to alter 11 calcium binding proteins, and to increase calcium and phosphorus concen tration in the blood 12 stream, in addition to potentially altering bone cell differentiation and func tion by altering plasma 13 levels of growth hormone and calciotropic hor mones such as vitamin D3 [1,25- (OH2)D3. 14

• Periods of extensive bone remodeling, such as o ccur during weight loss, advanced age, altered 15 metabolic state, and pregnancy and lactation ar e all associated with mobilization of Pb stores 16 from bone of animals. 17

• Numerous epidemiologic studies and, separately, animal studies (both post-eruptive Pb exposure 18 and pre- and perinatal Pb expos ure studies) suggest that Pb is a caries-promoting element. 19 However, whether Pb incorporation into th e enamel surface compromises the integrity and 20 resistance of the surface to dissolution, and ultim ately increases risk of dental decay, is unclear. 21

• Increased risk of dental caries h as been associated with Pb exposu re in children and adults. Lead 22 effects on caries were observed in populations whose mean blood-Pb levels were less than 10 23 μg/dL. 24 5.3.2.7 Reproductive and Developmental Effects 25

• Epidemiologic evidence suggests small associati ons between Pb exposur e and male reproductive 26 outcomes, including perturbed semen quality and increased time to pregnancy. There are no 27 adequate epidemiologic data to evaluate associ ations between Pb exposure and female fertility. 28 Most studies have yielded no associations, or w eak associations, of Pb exposure with thyroid 29 hormone status and male repr oductive endocrine status in highly exposed occupational 30 populations. 31

• New toxicologic studies support earlier conclusions , presented in the 1986 Lead AQCD, that (a) 32 Pb can produce both temporary and persisting e ffects on male and female reproductive function 33 and development and (b) Pb disrupts endocri ne function at multiple points along the 34 hypothalamic-pituitary-gonadal axis. Although there is evidence for a common mode of action, 35 consistent effects on circulating testosterone levels are not always observed in Pb-exposed 36 animals. Inconsistencies in reports of circulati ng testosterone levels complicate derivation of a 37 dose-response relationship for this endpoint. 38

• Lead-induced testicular damage (ultrastructural ch anges in testes of monkeys at blood-Pb >35 to 39 40 μg/dL) and altered female sex hormone release, imprinting during early development, and 40 altered female fertility all suggest Pb-induced re productive effects. However, Pb exposure does 41 not generally produce total sterility. Pre- and postnat al exposure to Pb has been demonstrated to 42 result in fetal mortality and produce a variety of sublethal effects in the offspring. Many of the 43EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 5-15 Pb-induced sublethal developmental effects occur at maternal blood-Pb levels that do not result in 1 clinical (overt) toxicity in the mothers. Terat ogenic effects resulting from Pb exposure reported in 2 a few studies appear to be confounded by maternal toxicity. 3 5.3.2.8 Effects on Other Organ Systems 4

• Lead impacts the hypothalamic-pitu itary-adrenal axis, elevating cor ticosterone leve ls and altering 5 stress responsivity. This may be a potential m echanism contributing to Pb-induced hypertension, 6 with further possible roles in the etiology of diabetes, obesity and other disorders. 7

• Studies of hepatic enzyme levels in serum suggest that liver injury may be present in Pb workers; 8 however, associations specifically with Pb e xposures are not evident. Children exposed to 9 relatively high levels of Pb (b lood Pb >30 μg/dL) exhibit depr essed levels of circulating 1,25- 10 dihydroxy vitamin D (1,25-OH-D). However, asso ciations between serum vitamin D status and 11 blood Pb were not evident in a study of calci um-replete children who had average lifetime blood12 Pb concentrations <25 μg/dL. 13

• Field studies that evaluated hepatic enzyme levels in serum suggest that liver injury may be 14 present in Pb workers; however, associations speci fically with Pb exposures have not been well 15 established. 16

• Simultaneous induction of the activities of phase II drug metabolizing enzymes and decreased 17 phase I enzymes with a single exposure to Pb nitrat e in rat liver suggest that Pb is capable of 18 causing biochemical phenotype similar to hepatic nodules. 19

• Newer studies examined the induction of GST-P at both transcriptional and translational levels 20 using in vitro systems and indicated a role for Pb-nitrate and Pb-acetate in the induction process. 21

• Lead-induced alterations in cholesterol metabolis m appear to be mediated by the induction of 22 several enzymes related to cholesterol metabolism and the decrease of 7 α -hydroxylase, a 23 cholesterol-catabolizing enzyme. This regulati on of cholesterol homeostasis is modulated by 24 changes in cytokine expression and related signaling. 25

• Newer experimental evidence suggests that Pb-i nduced alterations in liver heme metabolism 26 involve perturbations in ALAD activity, porphyrin metabolism, alterations in Transferrin gene 27 expression, and associated changes in iron metabolism. 28

• Gastrointestinal (GI) absorption of Pb is influen ced by a variety of factors, including chemical 29 and physical forms of the element in ingested medi a, age at intake, and various nutritional factors. 30 The degeneration of intestinal mucosal epithe lium leading to potential malabsorption and 31 alterations in the jejunal ultrastructure (possibl y associated with distortion of glycocalyx layer) 32 have been reported in the intestine of Pb-exposed rats. 33

• Nutritional studies that varied Pb, Ca, and vitami n D levels in the diet have demonstrated 34 competition of Pb with Ca absorption. Supplem entation with vitamin D has been reported to 35 enhance intestinal absorption of Ca and Pb . Physiological amounts of vitamin D, when 36 administered to vitamin D-deficient rats, resulted in elevated Pb and Ca levels. In the case of 37 severe Ca deficiency, Pb ingestion results in a marked decrease in serum 1,25 hydroxy vitamin D. 38 5.3.2.9 Genotoxic and Carcinogenic Effects 39

• Epidemiologic studies of highly exposed occupati onal populations suggest a relationship between 40 Pb and cancers of the lung and the stomach; how ever the evidence is limited by the presence of 41 various potential confounders, including metal coex posures (e.g., to arsenic, cadmium), smoking, 42EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 5-16 and dietary habits. The 2003 NTP and 2004 IARC reviews concluded that Pb and Pb compounds 1 were probable carcinogens, based on limited ev idence in humans and sufficient evidence in 2 animals. Similarly, Pb and Pb compounds would likely be classified as likely to be carcinogenic 3 to humans according to the new 2005 EPA Cancer Assessment Guidelines for Carcinogen Risk 4 Assessment, based on animal data even though the human data are inadequate. 5

• Studies of genotoxicity consistently find associ ations of Pb exposure with DNA damage and 6 micronuclei formation; however, the associations with the more established indicator of cancer 7 risk, chromosomal aberrations, are inconsistent. 8

• Pb is an animal carcinogen and extends our unde rstanding of mechanisms involved to include a 9 role for metallothionein. Specifically, the recent da ta show that metallothionein may participate in 10 Pb inclusion bodies and, thus, serves to prev ent or reduce Pb-induced tumorigenesis. 11

• In vitro cell culture studies that evaluated the pot ential for Pb to transform rodent cells are 12 inconsistent, and careful study of a time course of exposure is necessary to determine whether Pb 13 actually induces transformation in cultured rodent cells. There is increased evidence suggesting 14 that Pb may be co-carcinogenic or promotes the carcinogenicity of other compounds. Cell culture 15 studies do support a possible epigenetic m echanism or co-mutagenic effects. 16 5.3.2.10 Lead-Binding Proteins 17

• Proteins depending upon sulfur-containing side chai ns for maintaining conformity or activity are 18 vulnerable to inactivation by Pb, due to its strong sulfur-binding affinity. 19

• The enzyme, ALAD, a 280 kDa protein, is inducible and is the major Pb-binding protein within 20 the erythrocyte. 21

• The Pb-binding protein in rat kidney has been identified as a cleavage product of α -2- 22 microglobulin. The low molecular weight Pb-binding proteins in human kidney have been 23 identified as thymosin β 4 (molecular weight 5 kDa) and acyl-CoA binding protein (molecular 24 weight 9 kDa). In human brain, Pb-binding proteins include thymosin β 4 and an unidentified 25 protein of 23 kDa. 26

• Animal toxicology studies with metallothionein -null mice demonstrated a possible role for 27 metallothionein as a renal Pb-binding protein. 28 5.3.2.11 Human Population Groups At Specia l Risk And Potential Public Health Impacts 29

• Children, in general and especially low SES (o ften including larger proportions of African30 American and Hispanic) children, have been we ll-documented as being at increased risk for Pb 31 exposure and Pb-induced adverse health effects. This is due to several factors, including 32 enhanced exposure to Pb via ingestion of soil- Pb and/or dust-Pb due to normal hand-to-mouth 33 activity and/or pica. 34

• Even children with low Pb exposure levels (h aving blood Pb of 5-10 μg/dL or, possibly, 35 somewhat lower) are at notable risk, due to apparent non-linear dose -response relationships 36 between blood Pb and neurodevelopmental outcomes. It is hypothesized that initial 37 neurodevelopmental lesions occurring at blood- Pb levels <10 μg/dL may disrupt different 38 developmental processes in the nervous syst em than more severe high level exposures. 39

• Adults with idiosyncratic exposures to Pb th rough occupations, hobbies, make-up use, glazed 40 pottery, native medicines, and other sources are at risk for Pb toxicity. Certain ethnic and racial 41 groups are known to have cultural practices that involve ingestion of Pb-containing substances, 42EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 5-17 e.g., ingestion of foods or beverages stored in Pb-glazed pottery or imported canned food from 1 countries that allow Pb-soldered cans. 2

• Cumulative past Pb exposure, measured by bone Pb, may be a better predictor of cardiovascular 3 effects than current blood-Pb levels. African-A mericans are known to have substantially higher 4 baseline blood pressure than other ethnic groups, so Pb’s impact on an already higher baseline 5 could indicate a greater susceptibility to Pb for this group. 6

• Effects on adults of low-level Pb exposures also in clude some renal effects (i.e., altered creatinine 7 clearance) at blood-Pb levels <5 ug/dL. Lead exposure combined with other risk factors, such as 8 diabetes, hypertension, or chronic renal insufficien cy may result in clinically relevant effects in 9 individuals with two or more other risk factors. 10

• At least two genetic polymorphisms, of the AL AD and the vitamin D receptor gene, have been 11 suggested to play a role in susceptibility to Pb. In one study, African-American children were 12 found to have a higher incidence of being homozyg ous for alleles of the vitamin D receptor gene 13 thought to contribute to greater Pb blood levels. This work is preliminary and further studies will 14 be necessary to determine implications of genetic differences that may make certain populations 15 more susceptible to Pb exposure. 16

• What was considered “low” for Pb exposure levels in the 1980s is an order of magnitude higher 17 than the current mean level in the U.S. populatio n, and current average blood-Pb levels in U.S. 18 populations remain perhaps as much as two orde rs of magnitude above preindustrial “natural” 19 levels in humans. There is no leve l of Pb exposure that has yet been identified, with confidence, 20 as being clearly not being associated with possible ri sk of deleterious health effects. Some recent 21 studies of Pb neurotoxicity in infants have obser ved effects at population average blood-Pb levels 22 of only 1 or 2 μg/dL; and some cardiovascular, renal, and immune outco mes have been reported 23 at blood-Pb levels below 5 μg/dL. 24

• Public health interventions have resulted in declin es, over the last 25 years, of more than 90% in 25 the mean blood-Pb level within all age and gender subgroups of the U.S. population, substantially 26 decreasing the numbers of individuals at likely risk for Pb-induced toxicities. Nevertheless, 27 estimates of the magnitude of potential public hea lth impacts of Pb exposure can be substantial 28 for the U.S. population. For example, in estima ting the effect of Pb exposure on intelligence, it 29 was projected that the fraction of individuals with an IQ >120 would decrease from ~9% with no 30 Pb exposure to less than 3% at a blood-Pb level of 10 μg/dL. Also, the fraction of individuals 31 with an IQ >130 points was estimated as being likely to decrease from 2.25% to 0.5% with a 32 blood-Pb level change from 0 to 10 μg/dL. In a ddition, an estimate of hypertension-related risk 33 for serious cardiovascular events (coronary disease, stroke, peripheral artery disease, cardiac 34 failure) indicates that a decrease in blood Pb from 10 to 5 μg/dL could result in an annual 35 decrease of 27 events per 100,000 women and 39 events per 100,000 men. 36
5.3.3 Environmental Effects of Lead 37
5.3.3.1 Terrestrial Ecosystems 38 Methodologies Used in Terrestrial Ecosystem Research 39

• Electron probe microanalysis (EPMA) techniques provide the greatest information on metal 40 speciation. Other techniques, such as EXAFS (e xtended X-ray absorption fine structure) and 41 EXANES (extended X-ray absorption near edge sp ectroscopy), show great promise and will be 42 important in solving key mechanistic questions. 43EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 5-18 • In situ methodologies have been developed to lower soil-Pb relative bioavailability. These 1 amendments typically fall within the categori es of phosphate, biosolid, and Al/Fe/Mn-oxide 2 amendments. Some of the drawbacks to soil amendm ent include phosphate toxicity to plants and 3 increased arsenic mobility at high soil phosphate concentrations. The use of iron (III) phosphate 4 seems to mitigate arsenic mobility, however incr eased concentrations of phosphate and iron limit 5 their application when drinking water quality is a concern. 6 Distribution of Atmospherically Deli vered Lead in Terrestrial Ecosystems 7

• Total Pb deposition during the 20th century has been estimated at 1 to 3 g Pb m -2 , depending on 8 elevation and proximity to urban areas. Total cont emporary loadings to terrestrial ecosystems are 9 ~1 to 2 mg m -2 year -1 . This is a relatively small annual flux of Pb compared to the reservoir of 10 ~0.5 to 4 g m -2 of gasoline additive-derived Pb already deposited in surface soils over much of the 11 United States. 12

• Dry deposition can account for 10% to >90% of total Pb deposition. Because Clean Air Act 13 Legislation has preferentially reduced Pb associated with fine particles, relative contributions of 14 dry deposition have changed in the last few decades. 15

• Although inputs of Pb to ecosystems are cu rrently low, Pb export from watersheds via 16 groundwater and streams is substa ntially lower than inputs. Therefore, even at current input 17 levels, watersheds are ac cumulating anthropogenic Pb. 18

• Species of Pb delivered to terrestrial ecosystems can be inferred by emission source. For example, 19 Pb species emitted from automobile exhaust are dom inated by particulate Pb halides and double 20 salts with ammonium halides (e.g., PbBrCl, PbBrCl 2 NH 4 Cl), while Pb emitted from smelters is 21 dominated by Pb-sulfur species. Halides from au tomobile exhaust break down rapidly in the 22 atmosphere, via redox reactions in the presence of atmospheric acids. Lead phases in the 23 atmosphere, and presumably the compounds deliver ed to the surface of the earth (i.e., to 24 vegetation and soils), are suspected to be in the form of PbSO4, PbS, and PbO. 25

• The importance of humic and fulvic acids and hy drous Mn- and Fe-oxides for scavenging Pb in 26 soils was discussed in some detail in the 1986 Lead AQCD. The importance of these Pb binding 27 substrates is reinforced by studies repor ted in the more contemporary literature. 28

• The amount of Pb that has leached into mineral soil appears to be on the order of 20 to 50% of the 29 total anthropogenic Pb deposition. 30

• The vertical distribution and mobility of atmosphe ric Pb in soils was poorly documented prior to 31 1986. Techniques using radiogenic Pb isotopes have been developed to differentiate between 32 gasoline-derived Pb and natural, geogenic (nativ e) Pb. These techniques provide more accurate 33 determinations of the depth-distribution and pot ential migration velocities for atmospherically 34 delivered Pb in soils. 35

• Selective chemical extractions have been used extensively over the past 20 years to quantify 36 amounts of a particular metal phase in soil or sed iment rather than total metal concentration. 37 However, some problems persist with the selective extraction technique: (a) extractions are rarely 38 specific to a single phase; and (b) in addition to the nonselectivity of reagents, significant metal 39 redistribution has been found to occur during sequential chemical extractions. Thus, although 40 chemical extractions provide some useful info rmation on metal phases in soil or sediment, the 41 results should be treated as “operationally defined,” e.g., “H 2 O 2 -liberated Pb” rather than “organic 42 Pb.” 43EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 5-19 • Soil solution dissolved organic matter content a nd pH typically have very strong positive and 1 negative correlations, respectively, with th e concentration of dissolved Pb species. 2 Effects of Lead on Natural Terrestrial Ecosystems 3

• Atmospheric Pb pollution has resulted in the accu mulation of Pb in terrestrial ecosystems 4 throughout the world. In the United States, anth ropogenically-derived Pb represents a significant 5 fraction of the total Pb burden in soils, even in sites remote from smelte rs and other industrial 6 plants. However, few significant effects of Pb pollu tion have been observed at sites that are not 7 near point sources of Pb. 8

• Evidence from precipitation collection and sediment analyses indicates that atmospheric 9 deposition of Pb has declined dramatically (>95%) at sites unaffected by point sources of Pb, and 10 there is little evidence that Pb accumulated in so ils at these sites represents a threat to ground 11 water or surface water supplies. 12

• The effects of Pb and other chemical emissions on terrestrial ecosystems ne ar smelters and other 13 industrial sites decrease downwind from the Pb sour ce. Several studies using the soil burden as an 14 indicator have shown that much of the contamina tion occurs within a radius of 20 to 50 km 15 around the emission source. Elevated metal concentr ations around smelters have been found to 16 persist despite significant reductions in emissions. The concentrations of Pb in soils, vegetation, 17 and fauna at these sites can be two to three orde rs of magnitude higher th an in reference areas. 18 Assessing the risks specifically associated with Pb is difficult, because th ese sites also experience 19 elevated concentrations of other metals and because of effects related to SO2 emissions. The 20 confounding effect of other pollutants makes the assessment of Pb-specific exposure-response 21 relationships impossible at the whole ecosystem level. 22

• In the most extreme cases, near smelter sites, the death of vegetation causes a near-complete 23 collapse of the detrital food web, creating a terr estrial ecosystem in which energy and nutrient 24 flows are minimal. 25

• More commonly, stress in soil microorganisms and detritivores can cause reductions in the rate of 26 decomposition of detrital organic matter. Alt hough there is little evidence of significant 27 bioaccumulation of Pb in natural terrestrial ecosy stems, reductions in microbial and detritivorous 28 populations can affect the success of their predators. Thus, at present, industrial point sources 29 represent the greatest Pb-related threat to the main tenance of sustainable, healthy, diverse, and 30 high-functioning terrestrial ecosystems in the United States. 31 Terrestrial Species Response/Mode of Action 32

• Plants take up Pb via their foliage and through their root systems. Surface deposition of Pb onto 33 plants may represent a significant contribution to the total Pb in and on the plant, as has been 34 observed for plants near smelters and along roadsides. 35

• There are two possible mechanisms (symplastic or apoplastic) by which Pb may enter the root of 36 a plant. The symplastic route is through the cell me mbranes of root hairs; this is the mechanism of 37 uptake for water and nutrients. The apoplastic r oute is an extracellular route between epidermal 38 cells into the intercellular spaces of the root co rtex. The symplastic route is considered the 39 primary mechanism of Pb uptake in plants. 40

• Recent work supports previous conclusions that th e form of metal tested, and its speciation in 41 soil, influence uptake and toxicity to plants and i nvertebrates. The oxide form of Pb is less toxic 42 than the chloride or acetate forms, which are less toxic that the nitrate form of Pb. However, these 43EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 5-20 results must be interpreted with caution, as the c ounter ion (e.g., the nitrate ion) may also be 1 contributing to the observed toxicity. 2

• Lead may be detoxified in plants by deposition in root cell walls, and this may be influenced by 3 calcium concentrations. Other hypotheses put fo rward recently include the presence of sulfur 4 ligands and the sequestration of Pb in ol d leaves as detoxification mechanisms. Lead 5 detoxification has not been studied extensively in invertebrates. Glutathione detoxification 6 enzymes were measured in two species of spid er. Lead may be stored in waste nodules in 7 earthworms or as pyromorphite in the nematode. 8

• Lead effects on heme synthesis (as measured primarily by ALAD activity and protoporphyrin 9 concentration) were documented in the 1986 Lead AQCD and continue to be studied. However, 10 researchers caution that changes in ALAD and othe r enzyme parameters are not always related to 11 adverse effects, but may simply indicate exposure. Other effects on plasma enzymes, which may 12 damage other organs, have been reported. Lead also may cause lipid peroxidation, which may be 13 alleviated by vitamin E, although Pb poisoning may still result. Changes in fatty acid production 14 have been reported, which may influence immune response and bone formation. 15

• Insectivorous mammals may be more exposed to Pb than herbivores, and higher trophic-level 16 consumers may be less exposed than lower trophic- level organisms. Nutritionally deficient diets 17 (including low calcium) cause increased uptake of Pb and greater toxicity in birds. 18

• Interactions of Pb with other metals are inc onsistent, depending on th e endpoint measured, the 19 tissue analyzed, the animal speci es, and the metal combination. 20 Exposure/Response of Terrestrial Species 21

• Recent critical advancements reported in the curre nt Lead AQCD in understanding toxicity levels 22 relies heavily on the work completed by a multi-stak eholder group, consisti ng of federal, state, 23 consulting, industry, and academ ic participants, led by the EPA to develop Ecological Soil 24 Screening Levels (Eco-SSLs). 25

• Eco-SSLs are concentrations of contaminants in soils that would result in little or no measurable 26 effect on ecological receptors. The Eco-SSLs are in tentionally conservative in order to provide 27 confidence that contaminants that could present an unacceptable risk are not screened out early in 28 the evaluation process. That is, at or below these levels, adverse effects are considered unlikely. 29 Due to conservative modeling assumptions (e.g., me tal exists in most toxic form or highly 30 bioavailable form, high food ingestion rate, high so il ingestion rate) that are common to screening 31 processes, several Eco-SSLs are derived below the average background soil concentration for a 32 particular contaminant. 33

• The Eco-SSLs for terrestrial plants, birds, mamma ls, and soil invertebrates are 120, 11, 56, and 34 1700 mg Pb/kg soil, respectively. 35 5.3.3.2 Aquatic Ecosystems 36 Methodologies Used in Aq uatic Ecosystem Research 37

• Many of the terrestrial methods can also be a pplied to suspended solids and sediments collected 38 from aquatic ecosystems. Just as in the terrestrial environment, the speciation of Pb and other 39 trace metals in natural freshwaters and seawater plays a crucial role in determining their 40 reactivity, mobility, bioavailability, and toxicity. Many of the same speciation techniques 41 employed for the speciation of Pb in terrestrial ecosystems are applicable in aquatic ecosystems. 42EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 5-21 • There is now a better understanding of the potentia l effects of sampling, sample handling, and 1 sample preparation on aqueous-phase metal speciation. Thus, a need has arisen for dynamic 2 analytical techniques that are able to capture a metal's speciation, in-situ and in real time. 3

• With few exceptions, ambient water quality crite ria (AWQC) are derived based on data from 4 aquatic toxicity studies conducted in the laborat ory. In general, both acute (short term) and 5 chronic (long term) AWQCs are developed. Depending on the species, the toxicity studies 6 considered for developing acute criteri a range in length from 48 to 96 hours. 7

• Acceptable chronic toxicity studies should encomp ass the full life cycle of the test organism, 8 although for fish, early life stage or partial life cycle toxicity studies are considered acceptable. 9 Acceptable endpoints include reproduction, growth and development, and survival, with the 10 effect levels expressed as the chronic value. 11

• The biotic ligand model (BLM), which considers the binding of free metal ion to the site of toxic 12 action and competition between metal species and ot her ions, has been developed to predict the 13 toxicity of several metals under a variety of water quality conditions. However, there are 14 limitations to this tool in deriving AWQC becau se, currently, limited work has been conducted in 15 developing chronic BLMs (for any metals, let alone Pb) and the acute BLMs to date do not 16 account for dietary metal exposures. 17 Distribution of Lead in Aquatic Ecosystems 18

• Atmospheric Pb is delivered to aquatic ecosyste ms primarily through depos ition (wet and/or dry) 19 or through erosional transport of soil particles. 20

• A significant portion of Pb in the aquatic environm ent exists in the undissolved form (i.e., bound 21 to suspended particulate matter). The ratio of Pb in suspended solids to Pb in filtrate varies from 22 4:1 in rural streams to 27:1 in urban streams. 23

• The oxidation potential of Pb is high in slightly acidic solutions, and Pb 2+ binds with high affinity 24 to sulfur-, oxygen-, and nitrogen-containing ligands . Therefore, speciation of Pb in the aquatic 25 environment is controlled by many factors (e.g ., pH, redox, dissolved organic carbon, sulfides). 26 The primary form of Pb in aquatic environments is divalent (Pb 2+ ), while Pb 4+ exists only under 27 extreme oxidizing conditions. Labile forms of Pb (e.g., Pb 2+ , PbOH + , PbCO 3 ) are a significant 28 portion of the Pb inputs to aquatic systems from atmospheric washout. Lead is typically present in 29 acidic aquatic environments as PbSO 4 , PbCl4, ionic Pb, cationic forms of Pb-hydroxide, and 30 ordinary Pb-hydroxide (Pb(OH) 2 ). In alkaline waters, common species of Pb include anionic 31 forms of Pb-carbonate (Pb(CO 3 )) and Pb(OH) 2 . 32

• Lead concentrations in lakes and oceans were generally found to be much lower than those 33 measured in the lotic waters assessed by NAWQA . In open waters of the North Atlantic the 34 decline of Pb concentrations has been associated with the phasing out of l eaded gasoline in North 35 America and Western Europe. However, in estuari ne systems, it appears that similar declines 36 following the phase-out of leaded g asoline are not necessarily as rapid. 37

• Based on a synthesis of NAWQA data from the United States, Pb concentrations in surface 38 waters, sediments, and fish tissues (whole body) respectively range from: 0.04 to 30 μg/L (mean 39 = 0.66, median = 0.50, 95th %tile = 1.1); 0.5 to 12,000 mg/kg (mean = 120, median = 28, 95th 40 %tile = 200); and 0.08 to 23 mg/kg (mean = 1.03, median = 0.59, 95th %tile = 3.24). 41 Effects of Lead on Natural Aquatic Ecosystems 42EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 5-22 • Lead exposure may adversely affect organisms at di fferent levels of organization, i.e., individual 1 organisms, populations, communities, or ecosystem s. Generally, however, there is insufficient 2 information available for single materials in controlled studies to permit evaluation of specific 3 impacts on higher levels of organi zation (beyond the individual organism). Potential effects at the 4 population level or higher are, of necessity, extrapolated from individual level studies. Available 5 population, community, or ecosystem level studies are typically conducted at sites that have been 6 contaminated or adversely affected by multiple stressors (several chemicals alone or combined 7 with physical or biological stressors). Theref ore, the best-documented links between Pb and 8 effects on the environment are with effects on individual organisms. 9

• Natural systems frequently contain multiple me tals, making it difficult to attribute observed 10 adverse effects to single metals. For example, ma cro invertebrate communities have been widely 11 studied with respect to metals contamination and community composition and species richness. In 12 these studies, multiple metals were evaluated a nd correlations between observed community level 13 effects were ascertained. The results often indicate a correlation between the presence of one or 14 more metals (or total metals) and the negative effects observed. While, correlation may imply a 15 relationship between two variables, it does not imply causation of effects. 16

• In simulated microcosms or natural systems, e nvironmental exposure to Pb in water and sediment 17 has been shown to affect energy flow and nutrient cycling and benthic community structure. 18

• In field studies, Pb contamination has been show n to significantly alter the aquatic environment 19 through bioaccumulation and a lterations of community structure and function. 20

• Exposure to Pb in laboratory studies and simula ted ecosystems may alter species competitive 21 behaviors, predator-prey inter actions, and contaminant avoidan ce behaviors. Alteration of these 22 interactions may have negative effects on species abundance and community structure. 23

• In natural aquatic ecosystems, Pb is often found coexisting with other metals and other stressors. 24 Thus, understanding the effects of Pb in natural systems is challenging given that observed effects 25 may be due to cumulative toxicity from multiple stressors. 26 Aquatic Species Response/Mode of Action 27

• Recent research has suggested that due to the low solubility of Pb in water, dietary Pb (i.e., Pb 28 adsorbed to sediment, particulate matter, and fo od) may contribute substantially to exposure and 29 toxicity in aquatic biota. 30

• Generally speaking, aquatic organisms exhibit three Pb accumulation strategies: (1) accumulation 31 of significant Pb concentrations with a low rate of loss, (2) excretion of Pb roughly in balance 32 with availability of metal in the environment, and (3) weak net accumulation due to very low 33 metal uptake rate and no significant excretion. 34

• Protists and plants produce intracellular polypeptid es that form complexes with Pb. Macrophytes 35 and wetland plants that thrive in Pb-contaminated regions have de veloped translocation strategies 36 for tolerance and detoxification. 37

• Like aquatic plants and protis ts, aquatic animals detoxify Pb by preventing it from being 38 metabolically available, though their mechanisms for doing so vary. Invertebrates use lysosomal39 vacuolar systems to sequester and process Pb within glandular cells. They also accumulate Pb as 40 deposits on and within skeletal tissue, and some can efficiently excrete Pb. Fish scales and 41 mucous chelate Pb in the water column, and potentially reduce visceral exposure. 42EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 5-23 • Numerous studies have reported the effects of Pb exposure on blood chemistry in aquatic biota. 1 Plasma cholesterol, blood serum protein, albumin, and globulin concentrations were identified as 2 bioindicators of Pb stress in fish. 3

• Nutrients affect Pb toxicity in aquatic orga nisms. Some nutrients seem capable of reducing 4 toxicity. Exposure to Pb has not been shown to reduce nutrient uptake ability, though it has been 5 demonstrated that Pb exposure may lead to increased production and loss of organic material 6 (e.g., mucus and other complex organic ligands). 7

• Avoidance responses are actions performed to evad e a perceived threat. Some aquatic organisms 8 have been shown to be quite adept at avoiding Pb in aquatic systems, while others seem incapable 9 of detecting its presence. 10

• The two most commonly reported Pb-element in teractions are between Pb and calcium and 11 between Pb and zinc. Both calcium and zinc are essential elements in organisms and the 12 interaction of Pb with these ions can lead to adverse effects both by increased Pb uptake and by a 13 decrease in Ca and Zn required for normal metabolic functions. 14 Exposure/Response of Aquatic Species 15

• The 1986 Lead AQCD reviewed data in the contex t of sublethal effects of Pb exposure. The 16 document focused on describing the types and rang es of Pb exposures in ecosystems likely to 17 adversely impact domestic animals. As such, the 1986 AQCD did not provide a comprehensive 18 analysis of the effects of Pb to most aquatic primary producers, consumers, and decomposers. 19

• Waterborne Pb is highly toxic to aquatic organisms, with toxicity varying with the species and 20 life stage tested, duration of exposure, form of Pb tested, and water quality characteristics. 21

• Among the species tested, aquatic invertebrates, such as amphipods and water fleas, were the 22 most sensitive to the effects of Pb, with adverse effects being reported at concentrations as low as 23 0.45 μg/L (range: 0.45 to 8000 μg/L). 24

• Freshwater fish demonstrated a dverse effects at concentrations ranging from 10 to >5400 μg/L, 25 depending generally upon water quality parameters. 26

• Amphibians tend to be relatively Pb toleran t; however, they may exhibit decreased enzyme 27 activity (e.g., ALAD reduction) and changes in behavior (e.g., hypoxia response behavior). 28 5.3.3.3 Critical Loads for Lead in Terrestrial and Aquatic Ecosystems 29

• Critical loads are defined as threshold deposition ra tes of air pollutants that current knowledge 30 indicates will not cause long-term adverse effects to ecosystem structure and function. A critical 31 load is related to an ecosystem's sensitivity to anthropogenic inputs of a specific chemical. 32

• The critical loads approach for sensitive ecosystem s from acidification has been in use throughout 33 Europe for about 20 years. Its application to Pb and other heavy metals in Europe is more recent. 34 European critical load values for Pb have been developed but are highly specific to the bedrock 35 geology, soil types, vegetation, and historical deposition trends in each European country. To 36 date, the critical loads framework has not been used for regulatory purposes in the United States 37 for any chemical. Considerable research is n ecessary before critical load estimates can be 38 formulated for ecosystems extant in the United States. 39

• Speciation strongly influences the toxicity of Pb in soil and water and partitioning between 40 dissolved and solid phases determin es the concentration of Pb in soil drainage water, but it has 41 not been taken into account in most of the critical load calculations for Pb performed to date. 42EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 5-24 • Runoff of Pb from soil may be the major source of Pb into aquatic systems. However, little 1 attempt has been made to include this source in to critical load calculations for aquatic systems 2 due to the complexity of including this source in the critical load models. 3 In summary, due to the deposition of Pb from past prac tices (e.g., leaded gasoline, ore smelting) and the 4 long residence time of Pb in many aquatic and terr estrial ecosystems, a legacy of environmental Pb 5 burden exists, over which is superimposed much lower contemporary Pb loadings. The potential for 6 ecological effects of the combined legacy and cont emporary Pb burden to occur is a function of the 7 bioavailability or bioaccessibility of the Pb, which, in turn, is highly depe ndent upon numerous site 8 factors (e.g., soil organic carbon content, pH, wate r hardness). Moreover, while the more localized 9 ecosystem impacts observed around smelters are often striking, these perturbations cannot be attributed 10 solely to Pb. Many other stressors (e.g., other heavy metals, oxides of sulfur and nitrogen) can also act 11 singly or in concert with Pb to cause such notable environmental impacts. 12EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 5-25 

## References: 1 Agency for Toxic Substances and Disease Registry (ATSDR). 1999. Toxicological profile for lead. U.S. 2 Department of Health and Human Services, Public Health Service. 3 http://www.atsdr.cdc.gov/toxprofiles/tp13.html 4
Center for the Child Care Workforce and Human Se rvices Policy Center. 2002. "Estimating the Size and 5 Components of the U.S. Child Care Workforce and Caregiving Population: Key Findings from 6 the Child Care Workforce Estimate (Preliminary Report)," May 2002. 7 Clean Air Scientific Advisory Committee (CASAC) L ead Review Panel. 2007a. Letter to Stephen 8 Johnson. March 27, 2007. Available at: 9 http://yosemite.epa.gov/sab/sabproduct.nsf/ 989B57DCD436111B852572AC0079DA8A/$File/casac10 07-003.pdf 11 Clean Air Scientific Advisory Committee (CASAC) L ead Review Panel. 2007b. Letter to Stephen 12 Johnson. September 27, 2007. Available at 13 http://yosemite.epa.gov/sab/sabproduct.nsf/ 2DCD6EF49CDD37B285257364005F93E4/$File/casac14 07-007.pdf 15 Dietrich, K. M., et al. 2004. Effect of Chela tion Therapy on the Neuropsychology and Behavioral 16 Development of Lead-Exposed Children After School Entry. Pediatrics, 114(1): 19-26. 17 Knight, TE, and Kumar, MS. 2003. Lead toxicosis in cats-a review. J Feline Med Surg. October 5, 18 (5):249-55. 19 Kowalczyk, DF. 1976. Lead poisoning in dogs at th e University of Pennsylvania Veterinary Hospital. J 20 Am Vet Med Assoc., March 1, 168(5):428-32. 21 Liu, X., et al. 2002. Do Children with Falling Bl ood Lead Levels Have Impr oved Cognition? Pediatrics, 22 110(4): 787-791. 23 Mulligan, G.M., Brimhall, D., and West, J. (2005). Child Care and Early Education Arrangements of 24 Infants,Toddlers, and Preschoolers: 2001 (NC ES 2006-039). U.S. Department of Education, 25 National Center for Education Statistics. Wash ington, DC: U.S. Government Printing Office. 26 Needleman, H. L.; Riess, J. A.; Tobin, M. J.; Biesecke r, G. E.; Greenhouse, J. B. (1996) Bone Pb levels 27 and delinquent behavior. JAMA J. Am. Med. Assoc. 275: 363-369. 28 Rogan, W. J., et al. 2001. The effect of chelation therapy with succimer on neuropsychological 29 development in children exposed to lead. Ne w England Journal of Medicine, 344(19): 1421- 30 1426. 31 Ruff, H. A., et al. 1993. Declining blood lead leve ls and cognitive changes in moderately lead-poisoned 32 children. The Journal of the American Medical Association, 269(13): 1641-1646. 33 Salkever, D. S. 1995. Updated estimates of earni ngs benefits from reduced exposure of children to 34 environmental lead. Environmental Research, 70(1): 1-6. 35 Stokes, L., et al. 1998. Neurotoxicity in young adults 20 years after childhood exposure to lead: the 36 Bunker Hill experience. Occupational Environmental Medicine, 55: 507-516. 37 U.S. Bureau of Labor Statistics. 2006. "Current Population Survey: Basic Monthly Survey." January 38 2006. 39 U.S. Census Bureau. 2003. American Housing Survey (AHS). 40EO 12866 Review Draft: Economic Analysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft – Deliberative, Predecisional – Do not Quote, Cite, or Distribute 5-26 1 U.S. Department of Education. 2005. National Cent er for Education Statistics Early Childhood Program 2 Participation Survey (NCES 2006-075). Washington, DC. 3 (http://nces.ed.gov/nhes/dataproducts.asp#2005dp) 4 U.S. Environmental Protection Agency (EPA). 1997. Exposure Factors Handbook. Office of Research 5 and Development, National Center for Envir onmental Assessment. EPA/600/P-95/Fa, Fb, and 6 Fc. 7 U.S. Environmental Protection Agency (EPA). 2004. IRIS Database for Risk Assessment. Office of 8 Research and Development, National Center for Environmental Assessment. Updated July 8, 9 2004. http://www.epa.gov/iriswebp/iris/index.html 10 U.S. Environmental Protection Agency (EPA). 2006a . Economic Analysis for the Renovation, Repair, 11 and Painting Program Proposed Rule, February 2006. 12 U.S. Environmental Protection Agency (EPA). 200 6b. Air Quality Criteria for Lead (Final). 13 EPA/600/R-5/144aF. Office of Research and Development. October. 14 http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=158823 15 U.S. Environmental Protection Agency (EPA). 2007. Revised Final Report on Characterization of Dust 16 Lead Levels after Renovation, Re pair, and Painting Activities. Prepared by Battelle (Columbus, 17 OH) for the Office of Pollution Prevention and Toxics (Washington, D.C.). November 13, 2007. 18 U.S. Environmental Protection Agency (EPA). 2008a. Child-Specific Exposure Factors Handbook. Office 19 of Research and Development, National Centerfor Environmental Assessment. EPA/600/R20 0/096F. September 2008. 21 U.S. Environmental Protection Agency (EPA). 2008b. Economic Analysis for the TSCA Lead 22 Renovation, Repair, and Painting Program Final Rule for Target Housing and Child-Occupied 23 Facilities. April 2008. 24 Wilder Research Center. 2005. "Family, Friend and Nei ghbor Caregivers: Results of the 2004 Minnesota 25 statewide household child care survey." December 2005. 26
Wilder Research Center. 2001. "Staff recruitment and retention in early childhood care and education and 27 school-age care." April 2001. 28EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 1 

## 6. Estimated Impacts of the Lead, Renovation, Repair, and Painting 1 

## Rule Revisions 2 In addition to the cost and benefit analyses presented in Chapters 4 and 5 , several other types of impacts 3 are important to consider in evaluating the effe cts of a regulation. This chapter presents the incremental 4 impact of the proposed revisions to the Lead Renovation, Repair and Painting (LRRP) Rule on : 5

 P aperwork burden, as required by the Paperwork Reduction Act (PRA) 6

 F inancial condition of small entitie s, as required by the Regulatory Flexibility Act (RFA) 7

 W hether the regulation has a disproportionate effect on low

- income and or minori ty persons 8

 T he environmental health risk or safety risk to children due to the regulation, as required by 9 Executive Orde r 13045

– Protection of Children From Environmental Health & Safety Risks 10

 S tate, local, and Tribal governments, and the private sector
, as required by Executive Order 11 13175

– Consultation and Coordination w ith Indian Tribal Governments 12

 F ederalism, as required by Executive Order 13132

– Federalism 13

 T he relationship between the Federal government and the Indian tribes, or on the distribution of 14 power and responsibilities between the Federal government and Indian tribes 15

 E nergy effects, as required by Executive Order 13211

– Actions That Significantly Affect Energy 16 Supply, Distribution, or Use and 17

 W hether voluntary consensus standards are used in its regulatory activities

. 18
The p roposed LRRP Clearance Rule includes the following changes to the LRRP program: (1) a 19 require ment for dust wipe testing for a subset of renovation activities, and (2) a requirement for dust wipe 20 testing and clearance for a subset of renovation activities where the quantity and characteristics of the dust 21 make it hard to clean up. The demand for c ertified dust sampling technicians is predicted to increase as a 22 result of the implementation of the Clearance Rule provision, and therefore more individuals are expected 23 to seek dust sampling technician training. Additionally, a specific set of events al ready regulated under 24 the 2008 LRRP Rule will incur additional per

- event dust wipe testing and clearance costs. 25


### 6.1 Paperwork Reduction Act 26 The Paperwork Reduction Act of 1995 (PRA) (superseding the PRA of 1980) , as implemented by the 27 Office of Management and Budget (OMB)
, requires that agencies submit a supporting statement to OMB 28 for any information collection that solicits the same data from more than nine parties. The PRA seeks to 29 ensure that Federal agencies balance their need to collect information with the paperwork burden imposed 30 on the public by the collection. 31 The definition of “information collection” includes activities required by regulations such as permit 32 development, monitoring, recordkeeping, and reporting. The term “burden” refers to the “ti me, effort, or 33 financial resources” the public expends to provide information to or for a Federal agency, or to otherwise 34 fulfill statutory or regulatory requirements. PRA paperwork burden is measured in terms of annual time 35 and financial resources the pu blic devotes to meet one

- time and recurring information requirements (44 36 U.S.C. 3502(2); 5 C.F.R. 1320.3(b)). 37 Information collection activities may include: 38

 reviewing rule requirements; 39

 using technology to collect, process, and disclose information; 40EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 2  adjust ing existing practices to comply with requirements; 1

 searching data sources; 2

 recordkeeping; 3

 completing and reviewing the response; and 4

 transmitting or disclosing information. 5 Agencies must provide information to OMB on the parties affected, the annual repor ting burden, and the 6 annualized cost associated with responding to information collection requirements

. 7 The proposed LRRP Clearance Rule would result in additional paperwork

- related burden for the three 8 types of entities: 9
1. The dust sampling technician would be required to collect dust samples, prepare a dust wipe 10 testing report, and provide it to the renovation firm (Section 6.1.1 ). (In instances where the 11 renovator is also the dust sampling technician, this item and the following one would be 12 combined.) 13
2. Renovation firms would be required to provide copies of the dust wipe testing report to owners 14 and occupants. 15
3. Training p roviders would incur additional paperwork burden related to course accreditation and 16 notification (Section 6.1.2 ). 17

6.1.1 Paperwork Burden and Costs for Dust Wipe Testing Report 18 The proposed LRRP Clearance Rule would require the cert ified dust sampling technician to prepare a 19 dust wipe testing report and provide it to the renovation firm within three days of the date that the dust 20 wipe test results are obtained. If the dust wipe test results are to be determined by a fixed

- site labor atory, 21 the samples have to be sent to the laboratory within one business day of the date they are collected. The 22 dust wipe testing or clearance report would include the name and signature of each certified person 23 collecting the samples or performing the t esting, the name and address of each certified firm employing 24 the persons conducting the sampling or testing, the start and completion dates of the renovation, a brief 25 written description of the renovation, the results of the visual inspection, a detailed written description of 26 the specific sampling or testing locations or a detailed drawing that clearly identifies the location of each 27 sample or test, the name of the NLLAP

- recognized entity analyzing the results, the results of each sample 28 or test, and the clearance standard that is applicable to each sample or test. 29

6.1.1.1 Number of Firms Performing Dust Wipe Testing and Clearance Events 30 As discussed in Section 4.4, there are 223,821 entities performing events requiring dust wipe testing or 31 clearance in residentia l housing during the first year of the rule. It is estimated that firms working in 32 public and commercial building child

- occupied facilities will perform one event that requires dust wipe 33 testing or clearance per year. The number of child

- occupied facilit ies using in

- house staff to perform 34 these types of events is estimated to be 686 in the first year of the rule. There will be an estimated 448 35 events performed by non

- residential contractors in year 1. Table 6

- 1 presents the tot al number of firms 36 expected to incur paperwork burden and costs due to the proposed rule. 37
38EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 3 1

6.1.1.2 Paperwork Burden and Unit Costs 2 Two types of costs are estimated in this analysis: 3

 Labor c osts associated with collecting dust wipe samples, shipping samples to the lab, preparing 4 the dust wipe testing or clearance report, and providing reports to owners and occupants of 5 structures where dust wipe testing or clearance was performed. 6

 Material co sts associated with collecting, shipping, and analyzing dust wipe samples, and 7 photocopying and mailing the report. 8

Labor Costs 9 The lead evaluation firm survey of nine establishments described in Chapter 4 asked respondents how 10 much labor time would be nec essary for taking four dust wipe samples, sending them to the lab, and 11 providing a report to the contractor. The average response was 1.75 hours. Subtracting the estimated 12 marginal labor time for four samples (0.19 hours per sample; see Section 4.3.3) an d the assumed labor 13 time for shipping results (0.083 hours), the average labor time for writing a short report as described 14 above would be 0.9 hours, or 54 minutes. Thus, EPA estimates that dust sampling technicians will spend 15 an average of 0.83 hours dur ing each sampling event collecting samples (based on a typical time of 0.19 16 hours per sample), about 0.9 hours preparing the report, and renovators will spend about five minutes 17 shipping samples or reports, for an average renovation firm burden of 1.8 hour s per event. 18 The burden attributed to renovation firms includes the time required to perform the dust sampling, ship 19 the samples to the laboratory, and prepare and send a summary report to the necessary parties. All 20 renovation firms are required to provid e a copy of the dust wipe testing report to the owne r and if 21 different, the occupant of the building being renovated or the operator o f the child

- occupied facility. 22 EPA assumes that renovation firms working in residential housing will have certified dust s ampling 23 technicians on staff to perform the dust sampling and report preparation activities. Residential contractors 24 are estimated to perform an average of 7 renovations per year where dust wipe testing will be required, 25 with an average burden of 1.8 hour s per event. 26 Entities performing work in public and commercial building child

- occupied facilities are expected to hire 27 third

- party lead evaluation firms to perform dust sampling. Therefore, these entities will only incur a 28 labor burden of 5 minutes for shipping the dust sampling report to owners and occupants. The cost of 29 hiring a third

- party firm is accounted for as a material cost. 30

Material Costs 31 In addition to the time needed to collect dust wipe samples, ship them to the lab, and prepare and mail a 32 summary report , entities performing RRP events will al so incur the costs of the lab analysis, dust wipe 33 sample materials, shipping charges, and report materials

. Based on a survey of nine establishments, EPA 34 Table 6

- 1 : Total Number of Firms Performing Events Requiring Dust Wipe Testing or

Clearance Year 1 Y ear 2 Year 3 Number of Affected Firms Residential Contractors 223,821 222,903 221,989 Public and Commercial Building Operators a 686 683 680 Non

- Residental Contractors b 448 446 444 Total

- All Events 224,955 224,032 223,113 a. RRP is performed by t he owner of a public or commercial building where a COF is located

. b. RRP is performed by a contractor in a public or commercial building where a COF is located

.EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 4 estimates a lab cost of $19.00 per sample. EPA estimates the cost of the dust wipes to be $0.25 per wipe. 1 Based on per

- page photocopy costs, EPA estimates that a single copy of the dust wipe testing report 2 (assumed to average four pages in length, accounting for a one page job description, one page o f lab 3 results, one page for a diagram of sample locations, and one additional page to account for the instances 4 where more than three pages might be necessary, such as a renovation event occurring in multiple rooms) 5 costs $0. 36

. EPA estimates a shipping c ost of $4.95 based on the rate for Priority Mail using the U.S. 6 Postal Service. After events requiring clearance to be achieved, EPA assumes renovation firms will send 7 reports via overnight mail; EPA estimates the overnight shipping cost to be $15.68. 8

E PA assumes that renovation firms working in residential housing will have certified dust sampling 9 technicians on staff to perform the dust sampling and report preparation activities. Entities performing 10 work in public and commercial building child

- occupie d facilities are expected to hire third

- party lead 11 evaluation firms to perform dust sampling. Therefore, these entities will incur labor costs associated with 12 sending the dust sampling report to building owners and operators, whereas the cost of hiring a third

- party 13 firm is accounted for as a material cost. 14 Because the written report labor time, shipping labor time, and paper copy and shipping material costs of 15 clearance events are all dependent upon the expected number of clearance failures, per

- event p aperwork 16 burden estimates must be calculated separately for each size and type of event, as described in the cost 17 analysis in Chapter 4. Table 6

- 2 presents the average per

- entity burden and the total labor burden on 18 firms to comp ly with the proposed Clearance Rule. Table 6

- 3 presents the average labor, material, and 19 total per

- entity costs. 20
21

22 Table 6

- 2 : Total Paperwork Burden Year 1 Year 2 Year 3 Average Burden Hours per Response Residential Contractors 1.80 1.80 1.80 Public and Commercial Building Operators a 0.08 0.08 0.08 Non

- Resident i al Contractors b 0.08 0.08 0.08 All Firms 1.80 1.80 1.80 Total Burden Hours Residential Contractor s 2,878,970 2,867,166 2,855,411 Public and Commercial Building Operators a 57 57 57 Non

- Resident i al Contractors b 37 37 37 Total

- All Events 2,879,064 2,867,260 2,855,505

a. RRP is performed by the owner of a public or commercial building where a COF is located

. b. RRP is performed by a contractor in a public or commercial building where a COF is located

.EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 5 1

6.1.1.3 Total Paperwork Costs for RRP Establishments 2 The proposed LRRP Clearance Rule would apply to establishments affected by the 2008 LRRP rule and 3 to establishments predi cted to seek certification as a result of the proposed elimination of the opt

- out 4 provision. Under the proposed option, the entire stock of construction firms working in target housing 5 necessary to meet demand would incur dust wipe testing and clearance c osts starting in the first year. 6 Other entities doing RRP in public and commercial building COFs, such as public schools, private 7 schools, daycare centers, non

- residential property managers and lessors, and non

- residential contractors 8 would also be affect ed by the proposed LRRP Clearance Rule. Given the relative infrequency of dust 9 wipe testing and clearance events in public and commercial buildings
, entities working in public and 10 commercial building COFs are not expected to perform more than one activity requiring dust wipe testing 11 or clearance per year. Therefore, the number of affected entities is estimated as the number of buildings 12 with a renovation event requiring dust wipe testing or clearance in the first year. 13
Per

- establishment paperwork costs an d per

- establishment paperwork burdens (defined as the total number 14 of hours spent complying with paperwork requirements associated with the proposed rule) were estimated 15 by dividing the total costs and burden by the number of certified entities expected to be affected by the 16 proposed LRRP Clearance Rule. Table 6

- 4 through Table 6

- 6 present these final per

- entity values 17 separately for residential construction firms, non

- residential contractors, and entitie s performing RRP in 18 public and commercial building COFs. 19
20 Table 6

- 3 : Average Paperwork Cost Per Entity Year 1 Year 2 Year 3 Average Labo r Cost per Entity Residential Contractors $449.17 $449.17 $449.17 Public and Commercial Building Operators a $2.91 $2.91 $2.91
Non

- Resident i al Contractors b $2.91 $2.91 $2.91 All Firms $446.92 $446.92 $446.92 Average Material Cost per Entity Resident ial Contractors $674.30 $674.30 $674.30 Public and Commercial Building Operators a $493.35 $493.35 $493.35
Non

- Resident i al Contractors b $480.27 $480.27 $480.27 All Firms $673.36 $673.36 $673.36 Total Cost per Entity Residential Contractors $1,123.47 $1,123.47 $1,123.47 Public and Commercial Building Operators a $496.26 $496.26 $496.26
Non

- Resident i al Contractors b $483.18 $483.18 $483.18 Total

- All Firms $1,120.28 $1,120.28 $1,120.28 a. RRP is performed by the owner of a public or commercial bui lding COF

. b. RRP is performed by a contractor in a public or commercial building COF

.EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 6 1

2

3

6.1.2 Training Provider Paperwork Burden and Costs 4 EPA has also estimated the information collection burden imposed on t raining p roviders. Additional 5
t raining p roviders are estimated to become accredited as a res ult of the LRRP Clearance Rule; therefore, 6 there will be incremental paperwork burden for accreditation and r e

- accreditation

. Further, since the 7 proposed LRRP Clearance Rule implies an increase in dust sampling training course demand, it is 8 estimated that training providers would incur an incremental paperwork burden related to course 9 notification. T o comply with the 2008 L RRP rule, t raining p roviders must keep records on both the 10 courses they provide and the students they train. In addition, they must n otify EPA before offering each 11 course (to facilitate EPA’s enforcement activities) and after each course (so EPA has a record of the 12 individuals who have completed the course). 13 Table 6

- 4 : Residential Contractor Per

- Establishment Paperwork Costs, by Year

Total Paperwork Costs a Total

Paperwork Burden (hours) Num ber of

Certified Residential RRP Firms b Per

- Estab.

Paperwork Burden (hours) Per

- Estab

.

Labor Cost Per

- Estab

.

Material Cost Per

- Estab.

Total Paperwork Cost Year 1 $251,456,179 2,878,970 223,821 13 $449 $674 $1,123 Year 2 $250,424,833 2,867,166 222, 903 13 $449 $674 $1,123 Year 3 $249,397,982 2,855,411 221,989 13 $449 $674 $1,123

Table 6

- 5 : Public and Commercial Building COF Operator Per

- Entity Paperwork Costs, by Year

Total Pa perwork Costs Total

Paperwork Burden (hours) Number of

Certified Entities Per

- Estab.

Paperwork Burden (hours) Per

- Estab

.

Labor Cost Per

- Estab

.

Material Cost Per

- Estab.

Total Paperwork Cost Year 1 $340,434 57 686 0.08 $3 $493 $496 Year 2 $339,039 5 7 683 0.08 $3 $493 $496 Year 3 $337,649 57 680 0.08 $3 $493 $496

Table 6

- 6 : Non

- Residential Contractor Per

- Establishment Paperwork Costs, by Year

Total Paperwork Costs Total

Paperwo rk Burden (hours) Number of

Certified Entities Per

- Estab.

Paperwork Burden (hours) Per

- Estab

.

Labor Cost Per

- Estab

.

Material Cost Per

- Estab.

Total Paperwork Cost Year 1 $216,465 37 448 0.08 $3 $480 $483 Year 2 $215,577 37 446 0.08 $3 $480 $483 Year 3 $214,693 37 444 0.08 $3 $480 $483EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 7 6.1.2.1 Burden Associated with Course Accreditation 1 It is assumed that 168 training pro viders, the approximate number accredited to provide lead abatement 2 training, will be accredited to provide dust sampling technician training. As described in Section 2.9.1 of 3 the Economic Analysis for the Final Rule, 94 percent of firms in the Other Tech nical and Trade Schools 4 industry category are small businesses (EPA 2008). Therefore, it is assumed that 94 percent of the 168 5 training providers, or 158, are small. It is assumed that Training Providers will spend eight hours 1 6 familiarizing themselves w ith the rule and determining the rule’s applicability to their services in the year 7 that they receive initial accreditation. Training p roviders will spend an additional four hours of 8 professional time and two hours of clerical time completing the accredit ation statement in the year they 9 receive initial accreditation, and every three years thereafter for re

- accreditation. They will spend one 10 additional hour of clerical time each year on annual recordkeeping associated with accreditation. 11
Table 6

- 7 presents the estimation of t raining p rovider burden for accreditation. In year 1, it is assumed 12 that 168 training providers will seek initial accreditation . For each year thereafter, one quarter of the 13 necessary stock of training provid ers will seek accreditation . Based on EPA’s Federal Lead

- Based Paint 14 Program (FLPP) database, fifty

- five percent of that quarter will seek initial accreditation , and the 15 remainder will seek re

- accreditation . In addition, the necessary stock of training p roviders will diminish 16 by 0.41 percent, annually, to reflect the estimated housing demolition rate. 17
18

1 Time assumptions are based on information provided in EPA’s (2005) Supporting Statement for OMB Review under The

Paperwork Reduction Act: TSCA Sections 402/404 Training, Certification, Accreditation and Standards for Lead

- Based Paint Activiti es. (EPA ICR No. 1715.09, OMB Control No:2070

- 0155).EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 8

Table 6

- 7 : Training Providers: Accreditation Burden Estimates Number of Training Provider s Year 1 Year 2 Year 3 Receiving Initial Accreditation 168 23 23 Receiving Re

- Accreditation 0 19 19

Already Accredited 0 125 124

Total 168 167 166 Accreditation/Re

- Accreditation Burden

- Hours per Training Provider

Accreditation Year Re

Accredi tation Year Other Years Rule Familiarization 8 0 0 Accreditation Statement 4 4 0

Clerical Time

- Statement 2 2 0 Clerical Time

- Recordkeeping 1 1 1 Total 15 7 1 Total Accreditation Burden

- Hours

Year 1 Year 2 Year 3 Rule Familiarization 1,344 1 84 184 Accreditation Statement 672 168 168

Clerical Time

- Statement 336 84 84 Clerical Time

- Recordkeeping 168 167 166 Total 2,520 603 602 Sources: Economic Analysis for the Final Rule (EPA 2008). 1

6.1.2.2 Costs Associated with Course Accreditation 2 The load ed wage rate for training provider clerical staff is $25.56 per hour. The loaded wage rate for 3 professional training staff is $ 48.67 per hour. It is assumed that professional staff will familiarize 4 themselves with the rule and will prepare the accreditat ion statement. Material costs of accreditation 5 include one postage stamp ($0.42), one envelope ($0.02), and two copies ($0.18). Table 6

- 8 presents the 6 total costs associated with training provider course accreditation. 7EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 9 1

6.1.2.3 Burden Associated with Notification Requirements 2 It is assumed that the pre

- notification for each class requires an average of 0.15 hours and that each post

3 notification requires 1.54 hours. The post notifications are more time cons uming because the t raining 4 p rovider must send records pertaining to each student who attended the course. Approximately 12 5 percent of courses will also require a re

- notification, which is also estimated to take 0.15 hours. Th ese 6 activities add up to an a verage of 1.7 clerical hours per course. The number of courses offered per year 7 depends on the number of individuals who need to be trained. As the proposed 2009 LRRP Clearance 8 Rule would increase the demand for dust wipe testing and clearance services, 223,821 dust sampling 9 technicians are predicted to seek training in the first year and 44,581 in the second year. It is assumed 10 that t

raining p roviders would offer an extra 53 courses in the first year, or a total of 158 hours , for the 11 added dust sampling technician demand

. 2 It is assumed that each notification requires one photocopy, 12 one envelope, and one stamp; thus approximately two of each of these items are required per course. 13
Table 6

- 9 and Table 6

- 10 present the burden incurred by training providers due to the notification 14 requirements. 15

2 This assumes an average class size of 25.

Table 6

- 8 : Training Providers: Accreditation Cost Estimates Number of Training Providers

Year 1 Year 2 Year 3 Receiving Initial Accreditation 168 23 23 Receiving Re

- Accreditation 0 19 19

Alrea dy Accredited 0 125 124

Total 168 167 166

Accreditation/Re

- Accreditation Cost per Training Provider

Accreditation Year Re

Accreditation Year Other Years Rule Familiarization $389.34 $0.00 $0.00 Accreditation Statement $194.67 $194.67 $0.00

Cleric al Time

- Statement $51.11 $51.11 $0.00 Clerical Time

- Recordkeeping $25.56 $25.56 $25.56 Material Costs $0.62 $0.62 $0.00 Total Cost $661.30 $271.96 $25.56

Total Accreditation Cost

– 2008 Dollars

Year 1 Year 2 Year 3 Rule Familiarization $65,409 $8, 955 $8,955 Accreditation Statement $32,705 $8,176 $8,176 $8,586 $2,147 $2,147 Clerical Time

- Recordkeeping $4,294 $4,269 $4,243 Material Costs $104 $26 $26 Total $111,098 $23,572 $23,547 Sources: Economic Analysis for the Fi nal Rule (EPA 2008).EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 10 1

Table 6

- 10 : Training Providers: Notification Burden Estimates Year 1 Year 2 Year 3 Burden p er Training Provider 158 33 33 Number of Training Providers 168 167 166 Total Burden Hours 26,527 5,473 5,440 Note(s): Numbers may not calculate due to rounding. 2

6.1.2.4 Costs Associated with Notification Requirements 3 Clerical staff will prepare and mail noti fications and will perform recordkeeping activities. The loaded 4 wage rate for training provider clerical staff is $25.56 per hour. Training provider notification costs also 5 include $0.42 per postage stamp and $0.02 per envelope for mailing notifications a nd $0.09 per one page 6 copy of each notification for the firm’s records. Training providers are also required to take a digital 7 photo of each dust sampling technician receiving certification. The use of a one

- time digital camera costs 8 $20.58 per 25 photos 3 and takes approximately three minutes per photo or 1.25 hours per 25 photos. 9 Table 6

- 11 and Table 6

- 12 present the costs incurred by training providers due to the notification 10 requirements. 11
12

13

3 The analysis assumes a total cost of $2.00 per photo; adjusted for inflation, this equates to a material cost of $19.91 for 25

photos. Table 6

- 9 : Training Providers: Notification Burden

Events per Training Provider Category Year 1 Year 2 Year 3 Avg. Repor ting Hours/Event Recordkeeping

Hours/Event Total

Hours/Event Pre

- notification 53 11 11 25 0.15 0.01 0.16 Re

- notification 6 1 1 3 0.15 0.01 0.16 Post

- notification 53 11 11 25 1.54 0.01 1.55 Digital Photo 53 11 11 25 1.2 5 0.00 1.25 Annual Total 165 34 34 78 Note(s): Numbers may not calculate due to rounding.

Table 6

- 11 : Training Providers: Notification Cost per Event

Events per Training Provider Category Year 1 Y ear 2 Year 3 Avg. Reporting Cost/Event Recordkeeping

Cost/Event Materials

Cost/Event Total

Cost/Event Pre

- notification 53 11 11 25 $3.83 $0.26 $0.53 $4.62 Re

- notification 6 1 1 3 $3.83 $0.26 $0.53 $4.62 Post

- notification 53 11 11 25 $39.36 $0.26 $0.53 $40.14 Digital Photo 53 11 11 25 $31.94 $0.00 $19.91 $52.00 Annual Total 53 11 11 25 $3.83 $0.26 $0.53 $4.62 Note(s): Numbers may not calculate due to rounding.EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 11

Table 6

- 12 : Training Providers: Notification Cost Estimates Year 1 Year 2 Year 3 Burden per Training Pr ovider $5,158 $1,070 $1,070 Number of Training Providers 168 167 166 Total Burden Hours $866,487 $178,767 $177,696 Note(s): Numbers may not calculate due to rounding. 1

6.1.2.5 Total Paperwork Costs for Training Providers 2 As shown in Table 6

- 13 , the incremental cost to training providers in t he first year is approximately $1.0 3 million

. Costs to training providers would be approximately $0.2 million in years 2 and 3. 4
5

Table 6

- 13 : Total Cost Incurred by Training Providers Year 1 Year 2 Year 3 Accreditation Cost $111,098 $23,572 $23,547 Notification Cost $866,487 $178,767 $177,696 Total Cost $977,586 $202,339 $201,243 Note(s): Numbers may not calculate due to rounding. 6

6.1.3 Agency Burden and Cost 7 There are also government costs to administer the program. States, Tribes, and Territories are allowed, 8 but are under no obligation, to apply for and receive authorization to administer these requirements. EPA 9 will dire ctly administer programs for States, Tribes, and Territories that do not become authorized. 10 Because the number of States, Tribes, and Territories that will become authorized is not known, 11 administrative costs are estimated assuming that EPA will administe r the program everywhere. To the 12 extent that other government entities become authorized, EPA’s administrative costs will be lower. 13 States, Tribes, and Territories that choose to implement the rule themselves are expected to incur similar 14 costs on a per

- unit basis. 15 EPA will incur costs to process training provider accreditations and notifications for dust sampling 16 technician training. To reduce the burden on the regulated community, EPA does not require formal 17 certification for dust sampling technicians (this cost is implicit in the fee charged to renovation firms). 18 However, EPA will incur incremental costs of contractor support and database maintenance as a result of 19 the increase in dust sampling technician certification. 20 For the purpose of estimating c osts, it is assumed that EPA Regions will incur variable processing costs, 21 and fixed administrative and enforcement costs. Regional administrative activities include answering 22 phone inquires from the public regarding the LRRP program, following up on the status of applications, 23 providing information to other regions, coordinating with headquarters, and performing other customer 24 service activities. Enforcement activities include conducting audits of training providers and firms. In 25 addition, it is assumed that EPA Headquarters will incur fixed administrative costs related to coordination 26 with regions and maintenance of the central database and registry. EPA Headquarters will also support 27 enforcement activities. 28
Accreditation cost estimates are based on res ponses from a Time

- Motion Study conducted in support of 29 the 2009 Economic Analysis for the TSCA section 402 Lead

- Based Paint Program Accreditation and 30 Certification Fee Rule (i.e., the Fee Rule). In the Time

- Motion Study, data were collected from three 31 EP A Regions: Region 2, Region 4, and Region 9. Regions were asked to provide the number of hours 32 and personnel required to process applications under the TSCA section 402(a) Lead

- Based Paint 33EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 12 Activities program (i.e., the Abatement Rule). While TSCA section 402(a) defines training and 1 certification requirements for five different categories of lead abatement professionals, the type of 2 administrative activities associated with the TSCA section 402(a) rule are similar to those expected for 3 the Renovation, Repa ir and Painting Rule. See the 2009 Fee Rule for an in

- depth explanation of fee 4 structure methodology and calculations. 5

6.1.3.1 Agency Costs of Accrediting Training Providers 6 To estimate cost of processing accreditation applications for the LRRP rule, EPA followed the approach 7 used to estimate these costs for the Abatement rule. To estimate these costs, EPA first considered the 8 variable and fixed costs associated with each applicant type. The variable costs reflect the regional 9 processing costs for each applicatio n type. The fixed costs include the regional and headquarters 10 administrative and enforcement costs, which apply across all the applications. EPA divided the total 11 regional enforcement and administrative costs and the headquarters costs by the total estim ated number of 12 applicants over the five year projection period for the 2008 LRRP Rule. 13
Table 6

- 14 presents the Agency cost per training provider developed in the Economic Analysis for the 14 Fees Rule. 15
16 Table 6

- 14 : Fee Schedule for Accrediting Training Providers

Calculated Fee Actual Fee
Estimated Initial Accreditation $558 $560 Estimated Re

- Accreditation $398 $400 Sources: The Economic Analysis for the TSCA secti on 402 Lead

- Based Paint Program Accreditation and Certification Fee Rule (EPA 2009)
17
As described above, it is estimated that 168 training providers would become accredited in Year 1. In 18 Year 2, 42 training providers are expected to seek accreditation o r re

- accreditation, and in Year 3, 42 19 training providers are expected to be accredited or re

- accredited. As shown in Table 6

- 15 , based on these 20 estimates, it will cost EPA less than $0.1 million to process dust sa mpling technician notifications in Year 21 1. EPA’s costs for notification processing are estimated to approximately $20,500 in Years 2 and 3. 22
23 Table 6

- 15 : Total EPA Costs of Training Provi der Accreditations
Year 1 Year 2 Year 3 Initial Accreditation 168 23 23 Re

- Accreditation 0 19 19 Total Cost of Accreditation $94,080 $20,480 $20,480 Note(s): Numbers may not calculate due to rounding. Sources: Analysis for Clearance Pr oposed Rule (EPA 2010); The Economic Analysis for the TSCA section 402 Lead

- Based Paint Program Accreditation and Certification Fee Rule (EPA 2009) 24EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 13 6.1.3.2 Agency Cost of Processing Training Notifications 1 EPA will incur the cost of processing notifications subm itted by training providers prior to and following 2 each course session. It is assumed that EPA technical staff with a fully loaded hourly wage of $36.91 4 3 will spend an average of two minutes processing each notification. 4
It is estimated that there will be 18,876 training notifications in Year 1, 3,894 in Year 2, and 3,871 in 5 Year 3. As shown in Table 6

- 16 it will cost EPA $23,226 to process training notifications in the first year 6 of the rule, $4,792 in Year 2, an d $4,763 in Year 3. 7
8 Table 6

- 16 : Total EPA Cost of Training Notifications

– 2008 Dollars Year 1 Year 2 Year 3 Process Training Notification $23,226 $4,792 $4,763 Note(s): Number s may not calculate due to rounding. Sources: Economic Analysis for the Clearance Proposed Rule (EPA 2010); U.S. Office of Personnel Management: 2008 General Schedule

- Base Annual (OPM 2008). 9

6.1.3.3 Agency Costs of Certifying Dust Sampling Technicians 10 Under the 2008 LRRP Rule, dust sampling technicians are not required to apply to EPA for formal 11 certification. However, EPA Headquarters will incur administrative costs related to contract support and 12 maintenance of the central database and registry. EPA estim ates the contractor support cost to be $5 per 13 dust sampling technician notification. Central database maintenance, which is a fixed cost, is spread 14 across all dust sampling technicians. 15 To estimate the costs of processing notifications for the LRRP rule, EPA followed the approach used to 16 estimate the costs of processing notifications for the Abatement rule. To estimate these costs EPA 17 considered both the variable and fixed costs associated with each applicant type. The variable costs 18 reflect the regional processing costs for each application type. The fixed costs include the regional and 19 headquarters administrative and enforcement costs, which apply across all the applications. EPA divided 20 the total regional enforcement and administrative costs and the headquarters costs by the total estimated 21 number of applicants over the five year period that the training is valid. 22 Fixed costs for sampling technicians were estimated by dividing the headquarters administrative costs by 23 the total number of applicants o ver the five year period that the training is valid to obtain an estimated 24 cost of $6 5 . As sampling technicians are not required to obtain formal certification, their costs are 25 recouped by the fee charged to RRP firms. See the 2009 Fee Rule for an in

- dep th explanation of fee 26 structure methodology and calculations. Table 6

- 17 presents the Agency cost per dust sampling technician 27 developed in the Econom ic Analysis for the Fees Rule. 28
29

4 EPA used the Offi ce of Personnel Management’s General Salary Table 200 8

- GS to estimate government employee wage rates.

EPA used the wage for a GS

- 11, Step 1 employee and loaded the wage using the standard government multiplier of 1.6 to cover overhead and fringe benefits.

5 See Economic Analysis for the TSCA Section 402 Lead

- Based Paint Program Accreditation and Certification Fee Rule (EPA, 2009).EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 14

Table 6

- 17 : EPA Costs for Processing Dust Sampling Technician Notifications

Total Cost Estimated Cost Per Initial Training $6 Estimated Cost Per Refresher Training $6 Sources: The Economic Analysis for the TSCA section 402 Lead

- Based Paint Program Accreditation and Certification Fee Rule (EPA 2009) 1 It is estimated that 223,821 dust sampling te chnicians would become certified in Year 1. In Year 2, 2 44,581 technicians are expected to seek certification or re

- certificat ion, and in Year 3, 44,398 technicians 3 are expected to be certified or re

- certified. As shown in Table 6

- 18 , based on these estimates, it will cost 4 EPA $1.3 million to process dust sampling technician notification s in Year 1. EPA’s costs for 5 notification processing are estimated to be less than $0.3 million in Years 2 and 3. 6
7 Table 6

- 18 : Total EPA Costs of Dust Sampling Technician Notifications
Year 1 Year 2 Year 3 Number of Dust Sampling Technicians 223,821 44,581 44,398 Total Cost $1,342,926 $267,486 $266,388 Note(s): Numbers may not calculate due to rounding. Sources: Analysis for Clearance Proposed Rule (EPA 2010); The Economi c Analysis for the TSCA section 402 Lead

- Based Paint Program Accreditation and Certification Fee Rule (EPA 2009) 8

6.1.4 Total Paperwork Burden and Costs for RRP Firms and Training Providers 9 Table 6

- 19 presents the estimated total pape rwork burden and costs incurred by all RRP firms and 10 training providers in each of the first three years of the proposed revisions’ implementation. The Agency 11 estimated that approximately 224,200 entities would be affected by the proposed LRRP Clearance R ule 12 annually

. EPA estimated the total annualized burden of the information collection activities due to the 13 proposed rule at 2.9 million hours

. 14 For training providers, total notification and accreditation burden was estimated by multiplying the per

15 entity burden estimates in Table 6

- 8 and Table 6

- 9 by the number of training providers in each year. For 16 entities performing RRP in target housing and public and commercial building COFs, total reporting 17 burde n was estimated by multiplying the per

- establishment burden estimates by the number of 18 establishments affected in each year. For the rule requirements, a total event paperwork burden was first 19 estimated by multiplying the number of events discussed in Cha pter 4 by the total hours spent per

- event 20 complying with the paperwork requirements of the proposed Clearance Rule in each year. Next, the total 21 event paperwork burden was divided by the estimated number of certified RRP establishments in year 1 22 to produc e burden hours per entity. Finally, the estimate for the burden hours per entity in year 1 was 23 multiplied by the total number of entities in years 2 and 3, yielding the total paperwork burden. A similar 24 methodology was used to calculate total paperwork c osts. 25
26EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 15

Table 6

- 19 : Total Paperwork Burden and Costs Incurred by Training Providers and RRP Firms Year 1 Year 2 Year 3 Total Burden Hours Training Provider Accreditation 2,520 603 602 Trai ning Provider Notifications 26,517 5,473 5,440 RRP Firms 2,879,064 2,867,260 2,855,505 Total 2,908,101 2,873,336 2,861,547 Total Paperwork Cost Training Provider Accreditation $111,098 $23,572 $23,547 Training Provider Notifications $866,208 $178, 767 $177,696 RRP Firms $252,012,587 $250,978,569 $249,949,032 Total $252,989,894 $251,180,908 $250,150,274 Note(s): Numbers may not calculate due to rounding. 1
Table 6

- 20 presents the total paperwork costs estimated to be incurred by EPA under the proposed LRRP 2 Clearance Rule. 3

Table 6

- 20 : Total EPA Costs Year 1 Year 2 Year 3

Training Provider Accreditation $94,080 $20,480 $20,480 Training Provider No tifications $23,226 $4,792 $4,763 Dust Sampling Technician Notifications $1,342,926 $267,486 $266,388 Total $1,460,232 $292,758 $291,631 Note(s): Numbers may not calculate due to rounding. 

### 6.2 Regulatory Flexibility Act 4 The R egulatory Flexibility Act (RFA) of 1980, amended by the Small Business Regulatory Enforcement 5 Fairness Act (SBREFA) of 1996, requires regulators to assess the effects of regulations on small entities 6 including businesses, nonprofit organizations, and gover nments. In some instances, agencies are also 7 required to examine regulatory alternatives that may reduce adverse economic effects on significantly 8 impacted small entities. The RFA requires agencies to prepare an initial and final regulatory flexibility 9

a nalysis for each rule unless the Agency certifies that the rule will not have a significant economic impact 10 on a substantial number of small entities. The RFA, however, does not specifically define “a significant 11 economic impact on a substantial number” o f small entities. Sections 603 and 604 of the RFA require 12 that regulatory flexibility analyses identify the types and estimate the numbers of small entities to which 13 the rule will apply . It also requires a description of the rule requirements to which sm all entities will be 14 subject and any regulatory alternatives, including exemptions and deferral, which would lessen the rule’s 15 burden on small entities. 16
The 2008 LRRP Rule requires that all entities that perform renovation, repair and painting work for 17

com

pensation in target housing or public and commercial buildings with COFs become certified by EPA, 18 ensure that their employees are trained as either renovators or workers, and use lead

- safe work practices 19 when disturbing lead

- based paint, other than events that qualify for the minor maintenance exception. 20 This analysis considers the incremental impacts of the proposed LRRP Clearance Rule on small entities in 21 the affected construction, real estate, and child

- occupied facility industry sectors. The proposed LRRP 22 Clearance Rule requires dust wipe testing or clearance after certain renovation activities where the 23 quantity and characteristics of the dust make sufficient cleaning difficult. It is predicted that this 24 proposed rule would result in additional indiv iduals seeking dust sampling technician training. It also 25EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 16 would result in additional dust sampling, re

- cleaning, lab, and paperwork costs incurred by firms 1 frequently performing these types of high

- dust

- generating renovation activities. 2

T he refore, the pr oposed LRRP Clearance Rule affect s many of the same small entities affected by the 3 2008 LRRP rule: entities that provide childcare for compensation including private sector firms (e.g. 4 daycare centers and family daycare) ; small governments (particularly sc hool districts) and non

- profit 5 organizations; small construction

- related contracting firms that provide RRP services to residences or 6 public or commercial buildings containing COFs; and property managers and lessors who rent target 7 housing or lease space t o COFs and use their own staff to conduct RRP work in their buildings. 8 The impacts on training providers are not analyzed because the rule will result in an increased demand for 9 their services . Therefore training providers will incur positive rather tha n negative impacts

. Although the 10 rule may also result in additional costs for training providers (i.e. costs of additional recordkeeping and 11 submitting notifications), training providers are expected to recoup these costs via tuition fees. These 12 tuition fees are accounted for in the estimation of training costs that are incurred by the other entities 13 subject to the rule. 14

6.2.1 Definitions of Small Entity 15 The Regulatory Flexibility Act defines a small government as a government of a city, c ounty, town, 16 school district or special district with a population of less than 50,000. A small non

- profit organization is 17 defined as any not

- for

- profit enterprise which is independently owned and operated and is not dominant 18 in its field. The RFA relies on the definition of a “small business” found in the Small Business Act, 19 which authorizes the Small Business Administration (SBA) to develop definitions for “small business.” 20 For this analysis, EPA uses SBA’s definition of a small b usiness for each industry. 21 For many industry sectors, the SBA definition of a small business is based on revenues, where revenue 22 standards vary by industry. In establishing revenue standards, SBA considers a number of economic and 23 market characteristics t hat may allow a firm to exercise dominance in an industry. These standards 24 represent the maximum revenue that a for

- profit enterprise may have and still qualify as a small business. 25
Table 6

- 21 lists the eight NAICS codes of the g eneral and specialty contractors this rule will likely 26 impact . T heir respective SBA threshold s are also listed

. Table 6

- 21 also lists two NAICS codes for 27 residential real estate industries, two NAICS codes for nonresidential rea l estate industries, and one 28 NAICS code for child day care services that are also likely to be affected by the rule. Note that this 29 analysis excludes the following construction sectors expected to be affected by the 2008 LRRP rule but 30 not the proposed LRR P Clearance Rule: (1) siding contractors, (2) other building equipment contractors, 31 (3) other building finishing contractors, and (4) glass and glazing contractors. These contractors do not 32 typically perform the types of renovations covered by the propose d rule. 33
34EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 17

Table 6

- 21 : SBA Revenue Thresholds for Small Business by NAICS Code

NAICS Industry Description SBA Revenue Threshold (Millions $) General and Specialty Contractor Industries 236118 Residential remodelers $33 .5 236220 Commercial Building Construction $33.5 238350 Finish carpentry contractors $14 238340 Tile and terrazzo contractors $14 238220 Plumbing and HVAC contractors $14 238320 Painting and wall covering contractors $14 23 8210 Electrical contractors $14 238310 Drywall and insulation contractors $14 Property Owners and Managers 531120 Lessors of nonresidential buildings (except miniwarehouses) $7 531312 Nonresidential property managers $2 531311 Residential Property Man agers $ 2 531110 Lessors of Residential Buildings and Dwellings $ 7 Providers of Day Care Services, Pre

- Kindergarten and Kindergarten 624410 Child day care services $ 7 Source: U.S. Small Business Administration
, 2008 1
The RFA classifies small entities a s small businesses, small non

- profit organizations, or small 2 governments. Property managers and lessors, and construction

- related contractors, are all assumed to be 3 for profit operations. All daycare providers operating in individual homes (frequently re ferred to as 4 family daycare) are assumed to be for

- profit operations. Daycare centers can be operated by for

- profit or 5

non

- profit organizations. Kindergartens and pre

- kindergartens refer to facilities in either public schools 6 (governmental) or in private schools (assumed to be non

- profits). These classifications are summarized in 7 the following table. 8
9

Table 6

- 22 : Small Entity Classifications

Type of Entity Business Non

- Profit Governmental C onstruction

- Related Contractors X

-- -- Day Care Centers X X

-- Kindergartens and Pre

Kindergartens in Public Schools -- -- X

Kindergartens and Pre

Kindergartens in Private Schools -- X

--
Property Managers and Lessors X

-- --
10

6.2.2 General Assumptions an d Approach 11 This analysis measures the potential incremental impacts of the proposed LRRP Clearance Rule on small 12 businesses in terms of annual compliance costs as a percentage of annual revenues, referred to as the cost 13EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 18 impact ratio. 6 This approach is based on the premise that the cost impact percentage is an appropriate 1 measure of an entity’s ability to afford the costs attributable to a regulatory change. For purposes of 2 determining small entity impacts, comparing annual compliance costs to annual revenues provides a 3 reasonable indication of the magnitude of the regulatory burden relative to a commonly available and 4 objective measure of a company’s business volume. Where regulatory costs represent a very small 5 fraction of a typical establishment’s revenue, the impacts of a regulation are likely to be minimal. 6 This analysis considers seven different groups of entities: public school districts, private schools, daycare 7 centers, construction contractors (residential and non

- residential ), and property lessors and managers 8 (residential and non

- residential). The goal of this analysis is to evaluate the incremental impacts of the 9 proposed LRRP Clearance Rule on small entities in a typical year. In order to develop a realistic 10 portrayal of the long

- term effects of the rule on small entities, annualized costs of the rule, rather than 11 first

- year costs, are used to measure its impacts. Furthermore, when presenting the number of businesses 12 affected, the analysis presents the annual average num ber of businesses , rather than first or second year 13 estimates of affected businesses

. 14 The SBA size standards are measured at the firm or parent company level . C onceptually
, the small entity 15 analysis would also be conducted at that level. Due to data li mitations, this small entity analysis is 16 conducted at the establishment level rather than at the firm or parent company level for most sectors. 17 Census information was available primarily at the establishment level, making a firm or parent company 18 analysis unfeasible. The only sectors where firm

- level data are used are non

- residential managers and 19 lessors, and public schools. Because establishments, and not organizations, are analyzed, an assumption 20 is made that none of the small establishments are subsi diaries of larger organizations. This assumption 21 leads to an overestimate of the number of small independent establishments affected by the rule. 22 Furthermore, since organization

- level revenues of multi

- establishment businesses are higher than 23 establishme nt revenues, the use of es tablishment data may result in higher cost

- impact ratio s than actually 24 exist. 25
The cost

- impact ratios estimated for the non

- residential real estate industries (NAICS 531110, 531311, 26 531120, 531312) in this small entity analysis are based on employment and revenue data for employer 27 establishments only. It is assumed that the majority of non

- residential property lessors and managers are 28 businesses with employees. Further, the analysis assumes that a self

- employed lessor or manager i s likely 29 to hire a contractor to perform work on his property, particularly in a non

- residential building. 30

6.2.2.1 Costs Incurred by Small Establishments 31 To estimate the costs incurred by the small entities subject to the requirements of the rule, this analysis 32 calculates the number of dust sampling technicians trained and number of dust wipe testing or clearance 33 events performed by each of the small entities in a typical year. The renovation events using a heat gun 34 for paint removal, removing or replacing windo w or door frames, removing paint through scraping, or 35 removing trim or molding will only require dust wipe testing. Clearance (which includes dust wipe 36 testing) is only necessary for events using machines that disturb lead

- based paint through high

- speed 37 op eration or events involving demolition or removal of plaster through destructive means. Therefore, the 38 following analysis presents incremental costs for these events under the proposed LRRP Clearance Rule. 39
Average Annualized Unit Cost Estimates 40 Unit train ing costs were calculated by annualizing the total 50

- year costs of training dust sampling 41 technicians performing RRP projects in target housing or public or commercial building COFs , then 42

6 For private schools, where adequate revenue data were not available, costs are compared to annual expenditures.EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 19 dividing this total by the average annual number of dust sampling t echnicians trained by these 1 establishments. Similarly, the annualized total cost s o f complying with dust wipe testing and clearance 2 provisions were divided by the average annual number of events . This single set of average annualized 3 unit costs was used t o calculate total costs to small entities working in target housing and public and 4 commercial building COFs . The use of annual numbers of firms, individuals
, and events in calculating 5 average annualized costs takes into account the fact that the pre

- 1978 housing and building stock is 6 expected to decrease by 0.41 percent per year due to demolition of a portion of the building stock. 7 The numbers of events, individuals
, and firms were averaged over the 50 years covered in this analysis 8 using the following f ormula: 9
10 Annual Average = 11
Where: 12 A1 = First year number of events, individuals or firms 13 A2 = Second year number of events, individuals or firms 14 r = (1

– 0.41% demolition rate), or 0.9959 15 n = 50 years covered by the analysis 16
17
Table 6

- 23 presents these calculations and the resulting average annualized unit costs. Because the 18 different types of COF operators generally perform renovations with very different job sizes, per

- event 19 unit costs were calculat ed separately for each group doing RRP in public and commercial building COFs. 20
21

22

6.2.3 Residential Contractors 23 Establishments that perform RRP work in target housing will incur the costs of training
, as well as the 24 per

- event costs of dust wipe testing or clearance following c ertain renovation activities . In order to 25 distribute the total costs of the rule between small and large establishments, EPA assumed that the 26 compliance cost incurred by each establishment is a function of the number of regulated renovation 27 Table 6

- 23 : Average Annualized Unit Cost Calculations under the Proposed LRRP Clearance Rule

Unit Cost Total A nnualized 50

- Year Cost a 50

- year Average Number of

Individuals Trained or Events Performed Average cost per individual or event b

Dust Sampling Technician Training $29,563,881 202,745 individuals trained $146 Target Housing Event $241,830,056 1,445,580 events performed $167
Non

- Residential Contractor Event $244,690 406 events performed $603 Non

- Residential Lessor and Property Manager Event $74,336 152 events performed $490
Non

- Profit Daycare Center In

- House Event $64,776 132 events performed $490
Private School In

- House Event $63,586 81 events performed $789
Public School In

- House Event $196,762 257 events performed $766

a. These costs were estimated using a 3% discount rate. b. Averages may not equal numbers calculated from the totals in th e table because they are calculated from totals before rounding. [ A1+(A2*(1

- r n ))/(1

- r)] 50EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 20 events that th e establishment performs in a typical year. For each of the eight residential contractor 1 NAICS groups , EPA calculated the average annualized numbers of trained dust sampling technicians for 2 small entities and the number of proposed LRRP Clearance Rule eve nts being performed by small 3 entities. These averages were calculated separately for non

- employer and employer firms. Using the 4 average annualized unit costs, EPA calculated the average annualized total costs to small entities affected 5 by the proposed LR RP Clearance Rule . The use of annualized costs provides a more accurate 6 representation of the long

- term (typical year) impacts of the rule than would be provided by first or 7 second year costs. 8 The following six steps were used to calculate the cost

- impact ratios for the residential contractor 9 industries. To estimate the impacts of the proposed rule on small entities in the affected industries, the 10 following calculations were performed for each NAICS industry: 11 Step 1: Certified establishments were classifi ed as either small or large businesses depending on their 12

revenues. Non

- employer contractors were considered separately from s mall employer establishments and 13 therefore there are two small business categor ies for each residential contractor NAICS group

. 14
S tep 2: Census data were used to characterize a “typical” small establishment (in terms of revenues and 15 number of employees) in each of the affected industry sectors. 16 Step 3: The average number of regulated events performed by an establishment each year was estimated 17 by multiplying the ratio of regulated events to personnel by the establishment employment size. 18 Step 4: An average cost per event , and the training cost per dust sampling technician were calculated 19 using the total annualized 50

- year costs to ent ities working in target housing
, the 50

- year average number 20 of renovation events requiring dust wipe testing or clearance, and the 50

- year average number of dust 21 sampling technicians obtaining training

. 22 Step 5: For small entities performing regulated act ivities, total e stablishment compliance costs were 23 calculated by multiplying the number of events performed and the number of technicians trained by the 24 corresponding a verage annualized cost s

. 25 Step 6: Cost

- impact ratios were calculated for a typical smal l establishment in each industry sector by 26 dividing the average compliance costs incurred by each establishment (Step 5) by the establishment’s 27 revenues (Step 2). These cost impact ratios were calculated both for non

- employer and small employer 28 NAICS grou ps separately and combined. 29

6.2.3.1 Number of Small Residential Contractors and Real Estate Entities Affected by the 30 Proposed LRRP Clearance Rule 31 The data used in this analysis were drawn primarily from the 2002 U.S. Economic Census. As discussed 32 in Chapter 2, Ce nsus data were used to estimate the number of non

- employer establishments (self

33 employed contractors) in the affected construction industries. The 2002 Census also provides data on the 34 number, revenue and employment of establishments with payroll by reven ue bracket for each construction 35 industry sector affected by the rule. In Chapter 2, these data were used to classify construction 36 establishments into two main size classes

– establishments with annual revenues of less than $10 million, 37 and establishments with annual revenues of $10 million or more. The percent of establishments, 38 employees, net value of construction and total value of business contributed by establishments in each 39 revenue bracket can be found in Chapter 2. 40
Because 2002 Census data on the number of establishments by revenue bracket was not available at the 41 time the estimates were developed, 1997 Census data was used to estimate the percent of establishments 42 in each industry that qualify for small business status. These percentages, as well as the percent of 43EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 21 industry revenues and employment contributed by small and large establishments, are presented in 1 Chapter 2. 2
The Small Business Administration revenue thresholds for establishments in the construction sectors are 3 currently set at $33 .5 mi llion for R esidential Remodelers and at $14 mi llion for the seven specialty 4 contractor industries. However, in applying the U.S. Economic Census data to the SBA definition of 5 small business, it is not possible to estimate the exact number of construction establishments that have 6 revenues below the SBA threshold because the U.S. Economic Census groups all establishments with 7 revenues of $10 million or more into one revenue bracket. Applying the U.S. Economic Census data 8 therefore requires either under or o verestimating the number of small businesses affected by the rule. On 9 the one hand, using data for the entire industry would overestimate the number of small businesses 10 affected by the rule. It would also underestimate the rule’s impact on small business es because the 11 impacts would be calculated using the revenues of large businesses in addition to small businesses. On 12 the other hand, applying the closest, albeit lower, revenue bracket would underestimate the number of 13 small businesses affected by the ru le while at the same time overestimating the impacts. For example, 14 because the $10 million cut

- off is below the SBA threshold for the Residential Remodeler industry, using 15 the U.S. Economic Census data may lead to an underestimate of the number of small b usinesses in this 16 sector, although likely a small underestimate. 7 At the same time, using these data may lead to a slight 17 overestimate of the impacts of the rule, as the average revenues of small businesses will appear smaller 18 when larger establishments ( those with revenues of $10 to $33 .5 million) are left out. See Section 6.2.2 19 for a discuss ion of assumptions that may result in an overestimation of the number of affected small 20 businesses. Moreover, using da ta on all businesses regardless of size would defeat the purpose of 21 estimating impacts on small business. EPA has chosen to be more conservative in estimating the cost 22 impacts of the rule on small businesses by using the $10 million threshold for construc tion industry 23
sectors. 24 In order to estimate the number of certified small establishments with paid employees, EPA assumed that 25 the number of certified small employers is proportional to the total number of small employer 26 establishments in the industry. The total number of certified establishments in each industry (calculated 27 in Chapter 4) was multiplied by the percentage of establishments in that industry with revenues below the 28 revenue thresholds described above. For the e ight residential construction industry sectors, the resulting 29 number of small employer establishments was added to the total number of certified self

- employed 30 contractors to obtain the total number of small certified establishments. 31
Table 6

- 24 shows the 50

- year average number of small businesses affected by the proposed rule . The 32 number of affected businesses is predicted to decrease proportionally to the number of regulated events, 33 which in turn decline at an annual rate of 0.41 percent (see Chapter 4 for discussion). 34
35

36

7 Because 99.7 percent of Residential Remodeler establishments earn less than $10 million per year, any underestimate of the number of establishments is likely to be minimal.

Table 6

- 24 : 50

- Year Average Number of Small Residential Contractors Affected Non

- Employer Establishments a 150,522 Employer Establishments 51,715 Total Small E stablishments 202,237

a. Also referred to as “self

- employed” individuals. Source: EPA CalculationsEO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 22 6.2.3.2 Training Costs

– Small Residential Contractors 1

Number of Individuals Tr ained

– Residential Contractors 2 As described above, the number of certified small est ablishments with paid employees was estimated 3 assuming that the number of certified small employers is proportional to the total number of small 4 employer establishments in the industry. The total number of certified establishments in each industry 5 (calcul ated in Chapter 4) was multiplied by the percentage of establishments in that industry with 6 revenues below the revenue thresholds described above in section 6.2.3

. The number of small employer 7 establishments in each NAICS gro up expected to obtain certification is presented in Table 6

- 25 . Each of 8 these establishments is assumed to seek dust sampling technician training for one employee. 9
To estimate the number of employees of an average small establis hment in each affected industry, EPA 10 used U.S. Economic Census data to determine the portion of each industry’s employees that work for 11 small businesses. This percentage was applied to the estimated number of trained dust sampling 12 technicians and workers in each sector to calculate the number of trained dust sampling technicians and 13 workers employed by small certified establishments. For each of the construction and real estate industry 14 sectors, the total number of employees (including non

- employers) was divided by the total number of 15 small establishments to calculate an average small business employment size. 16
Table 6

- 25 presents the 50

- year average number of small certified employer firms, each of which is 17 assumed to employ one t rained dust sampling technician

. Only entities that would use their own dust 18 sampling technician for compliance with the proposed LRRP Clearance Rule would incur additional 19 training costs. As described in Chapter 4, it was found to be cost

- effective for a ll residential non

- employer 20 and employer construction firms to train their own dust sampling technician rather than use third party 21 dust wipe testing services. It was also shown that none of these establishments are expected to perform 22 enough dust wipe tes ting or clearance events annually to justify training more than one dust sampling 23 technician. 24EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 23 1 Table 6

- 25 : 50

- Year Average Number of Dust Sampling Technicians Trained

by Small Employer Establi shments

NAICS Description Annualized Number of Trained Dust Sampling Technicians, Small Establishments a 236118 Residential remodelers 20,408 238350 Finish carpentry contractors 7,717 238340 Tile and terrazzo contractors 1,101 238220 Plumbing and HVAC contractors 10,214 238320 Painting and wall covering contractors 4,288 238210 Electrical contractors 6,221 238310 Drywall and insulation contractors 1,766 Total, Small Employer Establishments 51,715

a. Since employer construction establishments are assum ed to have need for one trained dust sampling technician, the t otal number of trained employees working for small construction establishments is simply the sum of the number of certified small employers. Source: U.S. Census Bureau 2000d; U.S. Census Bure au 2004; U.S. Census Bureau 2005 b

- e,g,h; U.S. Small Business Administration 2005.

2 Table 6

- 26 presents the 50

- year average number of dust sampling technicians trained for non

- employer 3 residential contractor establishments. Sinc e non

- employer establishments consist of single individuals, 4 each self

- employed individual must obtain dust sampling technician training. 5EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 24 1 Table 6

- 26 : 50

- Year Average Number of Dust Sampling Te chnicians Trained

by Small Non

- Employer Construction Establishments

NAICS Description Annualized Number of Trained Dust Sampling Technicians, Small Establishments a 236118 Residential remodelers 48,020 238350 Finish carpentry contractors 40,873 238340 T ile and terrazzo contractors 5,839 238220 Plumbing and HVAC contractors 13,137 238320 Painting and wall covering contractors 22,683 238210 Electrical contractors 10,382 238310 Drywall and insulation contractors 9,589 Total, Non

- Employer Establishments 150,522

a. Since non

- employer construction establishments are assumed to have need for one trained dust sampling technician, the t otal number of trained employees working for small construction establishments is simply the sum of the number of certified sel f

- employed contractors. Source: U.S. Census Bureau 2000d; U.S. Census Bureau 2004; U.S. Census Bureau 2005 b

- e,g,h; U.S. Small Business Administration 2005.

2 Total Training Costs to Small Residential Contractor s 3 To estimate small residential contractor t raining costs, the numbers of individuals in Table 6

- 25 and Table 4 6

- 26 were multiplied by the average annualized costs of training a single certified dust sampling 5 technician from Table 6

- 23

. The resulting average annualized training costs are presented in Table 6

- 27

. 6
7

Table 6

- 27 : Average Annualized Training Costs for Small R esidential Contractors

Regulatory Option Annualized Number of Trained Dust Sampling Technicians Total Certified Technician Training Cost a Average Training Cost

Per Establishment

Proposed rule 202,237 $29,489,816 $146 a. A 3 percent discount rate is used for estimating total costs. 8

6.2.3.3 Dust Wipe Testing and Clearance Costs

– Small Residential Contractors 9 Number of Events Performed Annually by Small Residential Contractor s 10 As discussed in Section 6.2.2 and the beginning of this section, this analysis attributes the dust wipe 11 testing and clearance costs of the proposed rule to establishments on a per

- event basis. In order to 12 estimate the total number of events performed by establishments in each of the affected industries and in 13 order to distribute these events between small and large establishments, EPA assumed that the number of 14 events performed by each establishment is proportional to the number of people the establishment 15 employs. Furthermore , EPA assumed that the number of events performed by each trained employee will 16 be the same across all industries. If a certain industry perform s fewer events than estimated here, the 17 impacts on these establishments will be slightly smaller and the impact s on the other construction 18 industrie s will be slightly larger. 19EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 25 The number of events per small establishment in a particular industry was calculated as follows: 1
2
3
EPA estimated the 50

- year average number of events per employee by calculating the rat io of the total 4 number of regulated events to the total number of construction workers (using the 50

- year averages). 5 Because the number of establishments , as estimated in Chapter 4, was assumed to be proportional to the 6 regulated housing stock and the num ber of regulated events, the number of RRP events per employee 7 does not change over time

. 8 To estimate the average number of events performed by a small establishment in a given industry, the 9 establishment’s average employment size was multiplied by the av erage number of events per individual

. 10
Table 6

- 28 presents the 50

- year average estimated number of events per small establishment. 11
12

Table 6

- 28 : 50

- Ye ar Average Annual Number of Events performed by

Small Residential Contractors for the Proposed LRRP Clearance Rule

Regulatory Option Average Small

Employment Size Average Number

of Annual Events Per Employee Total Annual

Number of Events Per Small Establi shment Proposed rule 1.8 3.4 6.1 13

Total Clearance Rule Costs

– Residential Contractors 14 Table 6

- 23 presents the annualized average per

- event costs of the proposed rule. For affected entities, 15 these costs include the cost of performing dust wipe testing following certain renovation activities and 16 complying with the re

- cleaning and clearance requirements for another set of renovation practices. 17 Multiplying the average event cost per small establishment by the total 50

- year average number of small 18 entities ( see Section 6.2.3.1 ) yields the total incremental dust wipe testing and clearance costs of the 19 proposed LRRP Clearance Rule. These costs are presented in Table 6

- 29

. 20
21

Table 6

- 29 : Average Annualized Dust Wipe Testing and Clearance Costs for Small Residential Contractors Regulatory Option Avg. Number of

Events per Small Estab. Annualized

Average Per

Event Cost b 50

- year Avg.

Number of Small Estab. Total Event

Costs a Avg. Event Costs

per Small Estab

. Proposed 6.1 $167 202,237 $206,429,441 $1,021

a. Total costs are calculated using unrounded unit costs ; a 3 percent discount rate is used. b. Includes the cost of performing dust wipe testing for a subset of renovation e vents and dust sampling, re

cleaning, and clearance for a separate subset of renovation events. 22

6.2.3.4 Residential Contractors 23 Cost

- impact ratio analysis compares the cost of a regulation to an establishment’s total revenues, not just 24 to its revenues from the regulated activity. As such, for construction establishments, the costs of the rule 25 were compared to the total value of business done rather than just to the total value of construction work. 26 For real estate establishments, total revenues were used. Be cause no revenue data are available 27 Number o f Events (Events/Employee) X (Average Establishment Employment Size) =EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 26 specifically for establishments expected to seek certification under the regulations, EPA assumed that 1 average revenues of these businesses do not differ significantly from industry averages. 2
EPA calculated the revenues of a small certified construction business as a weighted average of small 3 employer and non

- employer revenues. The 2002 U.S. Economic Census presents data on the number and 4 total value of business done by construction establishments with total annual reven ues of $0 to $10 5 million and $10 million or more. To estimate the average revenues of small employers in each of the 6 affected construction sectors, the total value of business done by establishments in the $0 to $10 million 7 bracket was divided by the tota l number of establishments in that bracket. Since the Census presents 8 revenue figures in year 2002 dollars, the resulting average revenues were inflated to 200 8 dollars using 9 the Consumer Price Index. 8 Per

- establishment revenues for non

- employers were es timated for the cost 10 impact ratio analysis by dividing non

- employer revenues (inflated to 200 8 dollars) by the number of non

11 employer establishments in each industry. Average revenues of certified small establishments are 12 presented in Table 6

- 30

. Because 2002 data on the number of establishments by revenue bracket was not 13 available at the time the estimates were developed, 1997 data was used to estimate the percent of 14 establishments in each industry that qualify f or small business status. EPA also used 1997 Census data to 15 calculate the percent of industry revenues contributed by these establishments. These percentages were 16 then applied to the 2002 numbers of establishments and industry revenue figures to estimate the number 17 and revenues of small and large employers in each industry. Average small employer revenues 18 (calculated by dividing the revenues of establishments in each industry and revenue bracket by the 19 corresponding number of establishments) were inflate d to 200 8 dollars using the Consumer Price Index. 20 The resulting estimates are presented in Table 6

- 30

. 21
22

Table 6

- 30 : Average Revenues of Small Business es Affected by the

Proposed Clearance Rule

NAICS Industry Description Small Business Revenues (200 8 $) 236118 Residential remodelers $201,669 238350 Finish carpentry contractors $111,032 238340 Tile and terrazzo contractors $143,466 238220 Plumbing and HVAC contractors $476,976 238320 Painting and wall covering contractors $95,731 238210 Electrical contractors $387,707 238310 Drywall and insulation contractors $265,127 Total Average, Construction Establishments $ 214,391 Weighted average of employer and non

- employer revenues. Source: U.S. Census Bureau 2005b,d,e; U.S. Small Business Administration 2005; U.S. Census Bureau 2004; U.S. Census Bureau 2000d. 23

6.2.3.5 Impacts on Small Residential Contractors 24 Impacts of the rule on small residential contractors we re measured by comparing the costs of the rule 25 incurred by an establishment to the establishment’s revenues. The impacts on small residential contractor 26

8 Annual values from the CPI

- U series (All items, US city average, Series Id: CUUR0000SA0) were used to inflate dollar values

to 2008 dollars.EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 27 establishments were estimated by first taking the sum of the total annuali zed event and training cos ts 1 incurred by these entities and dividing these total costs by the number of establishments. Average costs 2 per establishment were then divided by average revenues to calculate a cost

- to

- revenue ratio. These 3 calculations, and the resulting cost

- to

- revenu e ratios, are presented in Table 6

- 31

. 4
5

Table 6

- 31 : Cost

- to
- Revenue Ratios for Small Residential Contractors Regulatory Option Total Affected

Small E ntities Total Cost of Rule

to Small Entities , Annualized a Average Cost of

Rule per Small Entity Estimated Average

Small Entity Revenues Cost

- to

Revenue Ratio Proposed rule 202,237 $235,919,257 $1,167 $214,391 0.544%

a. A 3 percent discount rate is used. 6
Table 6

- 32 presents the impacts of the rule on small residential contractors, by NAICS group, for non

7 employer and employer establishments both separately and combined. Impact estimates for non

8 employers should be interpreted w ith caution, as some non

- employers may have issues related to under

9 reporting of income, which would tend to exaggerate the average impact ratio for this class of small 10 entities. According to GAO, many sole proprietors underreport their income, with a sma ll proportion 11 accounting for the bulk of understatements (GAO 1994 and 2007). According to IRS estimates reported 12 by GAO, sole proprietors underreported their net income by 57 percent in 2001 (GAO 2007). The IRS 13 estimates address net income (i.e., revenu es minus expenses), while the small entity analysis compares 14 compliance costs to revenues. According to IRS figures, underreporting of gross income makes up at 15 least half of the misreporting of net income. A key reason for this underreporting is that the income of the 16 self

- employed is not subject to withholding and only a portion of that income is subject to information 17 reporting by third parties (GAO 2007). The IRS estimates that at least 61 percent of sole proprietors 18 underreported their income, and th e IRS recognizes that these are underestimates because detecting 19 underreported income is difficult, especially cash receipts (GAO 2007). Although at least 61 percent of 20 sole proprietors had understated taxes, the amounts were skewed with half of sole prop rietors understating 21 less than $903. 22
23EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 28 1

6.2.4 Non

- Residential Contractors 2 Non

- residential contractors (i.e., those working in public or commercial building COFs) are currently 3 regulated under the 2008 LRRP Rule. Jobs that are not performed in

- house by public and private schools, 4

non

- resident ial property managers/lessors , or daycare centers will be performed by general and specialty 5 contractors including painters, electricians, plumbers/HVAC specialists, and non

- residential buil ding 6 contractors. Under the proposed rule
, 448 establishments are expected to incur dust wipe testing and 7 clearance costs in the first year. Because different contractors are generally expected to work in public or 8 commercial buildings and target housing, this analysis considers impacts on these groups of 9 establishment s separately. 10 Because renovation events in public or commercial building COFs are generally larger compared to those 11 in target housing, t his analysis assumes that only contractors with employees will work on COFs in public 12 Table 6

- 32 : Cost

- to
- Revenue Ratios : Small Residential Construction Establishments (Proposed Option) NAICS Industry Description Number of Small Entities C osts a Revenues Cost

Impact Ratio Non

- Employers 236118 Residential remodelers 48,020 $34,185,929 $1,811,671,241 1.89% 238350 Finish carpentry contractors 40,873 $29,098,396 $1,373,680,993 2.12% 238340 Tile and terrazzo contractors 5,839 $4,156,563 $246,542,544 1.69% 238220 Plumbing and HVAC contractors 13,137 $9,352,522 $835,804,455 1.12% 238320 Painting and wall covering contractors 22,683 $16,148,118 $630,410,871 2.56% 238210 Electrical contractors 10,382 $7,391,113 $461,069,222 1.60% 2 38310 Drywall and insulation contractors 9,589 $6,826,244 $966,038,669 0.71% Total, Small Construction Establishments 150,522 $107,158,886 $6,325,217,995 1.69% Employers 236118 Residential remodelers 20,408 $30,592,288 $11,988,045,317 0.26% 238350 Finish carpentry contractors 7,717 $15,073,799 $4,021,354,972 0.37% 238340 Tile and terrazzo contractors 1,101 $2,999,533 $749,095,264 0.40% 238220 Plumbing and HVAC contractors 10,214 $35,242,942 $10,302,305,492 0.34% 238320 Painting and wall cov ering contractors 4,288 $11,192,013 $1,951,464,139 0.57% 238210 Electrical contractors 6,221 $24,619,776 $5,975,872,677 0.41% 238310 Drywall and insulation contractors 1,766 $9,040,021 $2,044,473,203 0.44% Total, Small Construction Establishments 51,715 $128,760,371 $37,032,611,063 0.35% Employers and Non

- Employers Combined 236118 Residential remodelers 68,428 $64,778,217 $13,799,716,558 0.47% 238350 Finish carpentry contractors 48,590 $44,172,194 $5,395,035,965 0.82% 238340 Tile and terrazzo contractors 6,940 $7,156,096 $995,637,808 0.72% 238220 Plumbing and HVAC contractors 23,352 $44,595,464 $11,138,109,947 0.40% 238320 Painting and wall covering contractors 26,970 $27,340,131 $2,581,875,010 1.06% 238210 Electrical contractors 16,603 $32 ,010,890 $6,436,941,899 0.50% 238310 Drywall and insulation contractors 11,355 $15,866,265 $3,010,511,872 0.53% Total, Small Construction Establishments 202,237 $235,919,257 $43,357,829,058 0.54% a. Total costs are calculated using a 3 percent discount rate.EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 29 or commercial buildings. 9 Furthe rmore, the types of jobs performed in public or commercial building 1 COF s are generally less varied than those in target housing. E vents in COFs are assumed to consist 2 primarily of painting, window/door replacement, and plumbing and electrical projects. A s such, it is 3 likely that most of these projects will be performed by painting, plumbing/HVAC, electrical
, and 4 commercial building contractors (NAICS 23 8 320, 2382 2 0, 238 21 0 and 236220, respectively). As 5 illustrated in Chapter 4, non

- residential contractor s will not typically perform enough dust wipe testing or 6 clearance events annually to make it cost

- effective for them to train their own dust sampling technician. 7 While non

- residential contractors are not expected to incur training costs, they are assumed to incur third 8 party dust wipe testing and clearance costs for the events in public and commercial buildings that they 9 perform. 10

6.2.4.1 Number of Small Non

- Residential Contractors Affected by the Proposed LRRP Clearance 11 Rule 12 To estimate the number of constructi on establishments working in public or commercial building COFs, 13 the number of affected jobs they perform
, and their average revenues, the following assumption s were 14 made : 15
 T he number of contractors in each sector is proportional to the number of jobs likel y to be 16 performed by each type of contractor. 17
 T hese currently regulated contractors are only assumed to perform projects in public or 18 commercial building COFs. In reality, however, these additional contractors may perform some 19 residential work and some commercial work, while contractors with employees that were 20 included in the residential contractor section of this analysis may also do some of the non

21 residential COF work. As such, to define the size and revenue of the average small firm working 22 in publ ic or commercial building COFs, the number s of certified non

- residential contractors with 23 employees were added to the pool of pre

- existing certified residential employer establishments in 24 the corresponding sectors

. The percent of small establishments in e ach sector, percent of workers 25 employed (and thus jobs performed) by these establishments, and percent of total value of 26 business earned by these establishments were calculated using 2002 Economic Census data on the 27 number of small establishments and emplo yees working for small establishments (U.S. Census 28 Bureau 2005a). Average revenues of small establishments were estimated by dividing the total 29 value of business earned by establishments with revenues below $10 million in each sector by the 30 total number o f establishments with revenues below $10 million in that sector. The results of 31 these calculations are presented for in Table 6

- 34 . Note that because only establishments with 32 employees a re assumed to work in public or commercial building COFs, average revenues of 33 small establishments in Table 6

- 34 are higher than the average revenues of residential 34 construction establishments, which include self

- employed contractors. 35
Table 6

- 33 presents the distribution of events by COF type
, shows the ratio of contractor to in

- house 36
events , and presents estimates of the total number of contractor events in the first year

. Table 6

- 34 37 displays the estimat ed number and characteristics of small non

- residential contractor firms affected by the 38 2008 LRRP Rule. Although 3,223 non

- residential property manager and lessor firms are regulated under 39 the 2008 LRRP Rule, only a fraction of these firms will perform re novation in public and commercial 40 building COFs requiring dust wipe testing or clearance in a given year. It is estimated that an average of 41 448 non

- residential contractors will be affected by the proposed rule in an average year. 42

9 In contrast, the analysis of target housing contractors assumes that both employer and non

- employer (i.e., self

employed ) contractors will work on COFs in target housing.EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 30 1

Table 6

- 33 : Estimated Number of First

- Year Non

- Residential Contractor Events

Type of COF Total Number of Events Percent of Events

Performed by Non

- Residential Contractors Total Number of

Contractor Events Public S chools
Kindergarten (Public) 192 20% 39 Pre

- K + Kindergarten (Public) 150 18% 28 Daycare Center (In Public School) 10 19% 2 Private Schools
Kindergarten (Large Private) 27 20% 6 Pre

- K + Kindergarten (Large Private) 82 18% 15 Kindergarten (Small Priv ate) 32 100% 32 Pre

- K + Kindergarten (Small Private) 41 100% 41 Daycare Center (In Large Private School) 0 19% 0 Daycare Center (In Small Private School) 0 100% 0 Daycare Centers
Daycare Center (Renter

- Occupied) 208 19% 40 Daycare Center (Owner

- Occup ied) 142 100% 142 Daycare Center (Non

- Profit who performs some of own RRP) 181 19% 35 Daycare Center (Non

- Profit who uses contractors) 67 100% 67 Total Jobs 1134 39% 448 This analysis assumes that private schools, public schools, and non

- profit daycare centers which use in

- house staff to perform RRP will perform all window/door carpentry work every year in

- house

. Non

- residential contractor firms will perform all other RRP. Non

- residential contractor firms will perform all RRP events in

owner

- occupied daycare centers, daycare centers that do not perform some of their own RRP, and small private schools. 2

Table 6

- 34 : Estimated Numbers and Characteristics of Small Non

- Residential Contractor s

NAICS Contractor Description Estab., Residential Estab.,

Non

Residential Est.,

Total Percent

Small Number

Small Percent

Workers at Small Estab. Average

Revenues of Small Estab. 238220

- Plumbing/ HVAC 11,200 1,482 12,681 97.9% 12,410 70.1% $850,881

23 8210

- Electrical
contractors 6,824 1,482 8,306 97.9% 8,132 67.9% $809,692

236220

- Commercial building contractors 0 105 105 88.1% 93 41.4% $1,750,332

238320

- Painting/ wall covering 4,615 155 4,770 99.7% 4,757 91.5% $380,165 Total/ Weighted Avg. Smal l Non

- Residential Contractor Firm 22,639 3,223 25,862 98.2% 25,391 69.2% $752,783EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 31 1

6.2.4.2 Dust Wipe Testing and Clearance Costs

– Non

- Residential Contractors 2 Number of Events Performed by Small Establishments

– Non

- Residential Contractors 3 O n average, 69 percent of the 448 non

- residential contractor dust wipe testing or clearance events in the 4 first year are performed by small businesses. Since the number of affected firms is defined to be the 5 number of firms performing a dust wipe testing or clearance event in the first year, the number of jobs 6 performed is equivalent to the number of establishments affected. Table 6

- 35 presents the total number of 7 small contractor establishments incurring event costs and the number of events in the first year. 8
9

Table 6

- 35 : First Y ea r Number of Small Non

- Residential Contractor Establishments

and Jobs Performed

Total, non

- residential COF contractor Small, n on - residential COF contractor Regulatory Option Estab lishments Events Estab lishments Events Proposed 448 448 281 281 10

T o estimate t ypical annual small businesses i mpacts, this analysis estimated the 50

- year average number 11 of certified firms and regulated events given th at the number of certified firms is expected to decrease 12 proportionally to the size of the regulated housing stock

. These estimates are presented in Table 6

- 36

. 13
14

Table 6

- 36 : 50

- Year Average Annual Number of Small Certified Establishments

and Jobs Performed
Regulatory Option Number of Firms with Clearance Rule Costs Number of Jobs Performed

Proposed rule 281 281 15

Total Clearance Rule Costs

– Non

- Reside ntial Contractors 16 To estimate total event costs incurred by small non

- residential construction establishments working in 17 public or commercial building COFs, the 50

- Year average annual number of events performed by these 18 establishments ( 1 per firm) was mult iplied by the average annualized per

- event cost ($ 603 ; see Table 6

- 19 23 ). Table 6

- 37 presents the resulting annualized total and average costs of the Clearance Rule to small 20

non

- residential construction establishments. 21
22

Table 6

- 37 : Average Annualized Dust Wipe Testing and Clearance Costs for Small Non

Residential Contractors

Regulatory Option Average Annual E vents Performed Annualized

Avg. Per

- Event Cost Total Event

Costs a Average Event

Costs per Small Establishment Proposed rule 281 $603 $169,235 $603 a. Total costs are calculated using unrounded unit costs of third party dust sampling services; a 3 pe rcent discount rate is used. 23EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 32 6.2.4.3 Impacts of the Proposed LRRP Clearance Rule on Non

- Residential Contractors 1 Impacts of the rule on small non

- residential contractors are measured by comparing the costs of the rule 2 incurred by an establishment to the establish ment’s revenues. The impacts on small non

- residential 3 contractors were estimated by first dividing the total dust wipe testing and clearance costs under the 4 proposed option by the number of establishments. Average costs per establishment were then divide d by 5 average revenues to calculate a cost

- to

- revenue ratio. These calculations, and the resulting cost

- to

6 revenue ratios, are presented in Table 6

- 38

. 7
8

9

6.2.5 Non

- Residential Property Lessors and Managers 10 Non

- residential property lessors and managers are currently regulated under the 2008 LRRP Rule. 11 Lessors and managers of pre

- 1978 public or commercial buildings that rent space to daycare centers and 12 perform regulated projects on their own properties will incur dust wipe testing and clearance costs under 13 the proposed LRRP Clearance Rule

. The analysis in Chap ter 4 demonstrated that non

- residential property 14 managers and lessors are not expected to typically perform enough dust wipe testing or clearance events 15 annually to justify obtaining dust sampling technician training for one of their employees. Instead, n on

16 residential real estate firms are assumed to incur only third party dust wipe testing costs for the dust wipe 17 testing events (and third party and re

- cleaning costs for the clearance events) in public and commercial 18 buildings that they perform. As discu ssed in Chapter 4, this analysis estimates that 13, 279 daycare 19 centers will rent space in pre

- 1978 non

- residential buildings in the first year. On average (over 50 years), 20 1 2
, 028 daycare centers are expected to rent space in pre

- 1978 buildings each year. Because daycare 21 centers are only one of many types of establishments renting non

- residential space and because the LRRP 22 Rule applies only to centers in buildings constructed prior to 1978, the analysis also assumes that each 23 property manager or lessor fir m owns only one non

- residential building containing a COF. As such, the 24 number of affected lessor/manager firms is equivalent to the number of affected daycare centers renting 25 space or 1 2
, 028 firms . Due to the lack of data on the extent to which these fi rms perform renovation 26 work in their own buildings, this analysis assumes that they will behave similarly to the operators of other 27 public or commercial buildings with child

- occupied facilities, namely that they will perform all of their 28 own painting and w indow/door carpentry projects. 29

6.2.5.1 Number of Non

- Residential Property Lessors and Managers Affected by the Proposed 30 LRRP Clearance Rule 31 Although 12,028 non

- residential property manager and lessor firms are regulated under the 2008 LRRP 32 Rule, only a fraction of these firms are operators of daycare center buildings which will undergo 33 renovation requiring dust wipe testing or clearance in a given year. It is estimated that an average of 1 52 34 daycare center buildings renting space will be affected by the proposed r ule in an average year. 35 Lessors and managers of non

- residential properties fall under NAICS 531120 and 531312, respectively. 36 In order to estimate the number of regulated firms in each of these sectors, it is assumed that the percent 37 of regulated firms in each industry is equivalent to the total percent of non

- residential real estate firms in 38 Table 6

- 38 : Cost

- to
- Revenue Ratios for Non

- Residential Contractors

Regulatory Option Total Small

Contractor Establishments Total Cost of Rule

to Small Contractor Establishments Average Cost of

Rule per Small Contractor Establishments Average Small

Cont ractor Establishment Revenues Cost

- to

Revenue Ratio

Proposed rule 281 $169,235 $603 $139,188 0.433%EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 33 that industry. In other words, since Lessors of Non

- Residential Buildings (NAICS 531120) make up 73 1 percent of establishments in NACIS 531120 and 53131 2 combined, 73 percent of the 12
, 028 2 lessor/manager firms affected by the proposed LRRP Clearance R ule are also assumed to fall in this 3 sector, while the remaining 27 percent are assumed to fall under NAICS 531312 (Calculated based on 4 U.S. Census Bureau 2005f). 5
As discu ssed in Section 2.4.2 of Chapter 2, 96 percent of Lessors of Non

- Residential Real Estate, and 81 6 percent of Non

- Residential Property Managers qualify for small business status under the SBA definition 7 of a small business in these sectors (U.S. Census Burea u 2005f). This analysis assumes that the size 8 distribution of regulated firms mirrors the size distribution of the entire non

- residential property lessor 9 and manager industry. Table 6

- 39 presents the resulting es timates of the number of small non

- residential 10 property lessors and managers affected by the proposed LRRP Clearance Rule in a typical year. 11
12

13

6.2.5.2 Dust Wi pe Testing and Clearance Costs

– Non

- Residential Property Lessors and Managers 14 Given the relative infrequency of dust wipe testing and clearance events, each affected property lessor or 15 manage r is assumed to perform no more than one event per year . Thus, t he estimation of costs incurred 16 by each regulated property lessor or manager establishment is based on the average dust wipe 17 testing/clearance costs per event. 18 The total number of regulated events was multiplied by the average annualized per

- event costs (see Table 19 6

- 23 ) to calculate these firms’ total annualized event costs. Table 6

- 40 presents these estimates, as well 20 as the average rule costs per small firm. 21
22

23 Table 6

- 39 : Average Annual Number of Small Non

- Re sidential Property Lessors and

Managers Performing RRP Events Requiring Dust Wipe Testing or Clearance A. Total number of firms leasing to daycare centers 1 52 B. Number of firms in NAICS 531120 (73% of A) 111 C. Number of firms in NAICS 531312 (27% of A) 41 D. Number of firms in NAICS 531120 that are small (96% of B) 106 E. Number of firms in NAICS 531312 that are small (81% of C) 33 Total Number of Regulated Small Firms (D+E) 140 Regulated Small Firms as % of All Regulated Firms 92%

Table 6

- 40 : Dust Wipe Testing and Clearance Costs of Small Non

- Residential Property Lessor and Manager Establishments

Regulatory Option Total In

- House Events a Annualized

Avg. Costs P er E vent Total Ev ent

Costs b Average Clearance

Costs per Small Firm Proposed rule 140 $490 $68,327 $490

a. This number was calculated as the average number of events per firm (1.0) times the number of small

non

- residential property lessors and managers. b. Total costs are calculated using unrounded unit costs of third party dust sampling services; a 3 percent discount rate is used.EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 34 6.2.5.3 Impacts of the Proposed LRRP Clearance Rule on Non

- Residential Property Lessors and 1 Managers 2 This small entity analysis measures the incr emental impacts of the proposed LRRP Clearance Rule on 3 small non

- residential property lessors and managers by comparing rule costs incurred by these firms to 4 the weighted average revenue of small firms in NAICS 531120 and 531312, calculated based on 2002 5 C ensus Data. The weighted average revenue figure of $111,460 was inflated to 2008 dollars using the 6 Consumer Price Index to obtain estimated revenues of $ 139,118 . The impacts on small non

- residential 7 property lessors and managers were estimated by first d ividing total event costs incurred by these entities 8 by the number of establishments. Average costs per establishment were then divided by average revenues 9 to calculate a cost

- to

- revenue ratio. 10 The average annual numbers of businesses affected, average annualized per

- business costs and revenues, 11 and the resulting cost

- to

- revenue ratio are presented in Table 6

- 41

. 12
13

Table 6

- 41 : Cost

- to
- Revenue Ratios for Non

- Residential Property Managers and Lessors

Regulatory Option Total Small

Lessor/ Manager Firms Total Cost of Rule

to Small Lessor/ Manager Firms Average Cost of

Rule per Small Lessor/ Manager Firm Average Small

Lessor/ Manager Firm Revenues Cost

- t o Revenue Ratio

Proposed rule 140 $68,327 $490 $139,188 0.352% 14

6.2.6 Daycare Centers (Small Non

- Profits) 15

6.2.6.1 Number of Small, Non

- Profit Daycare Centers Affected by the Proposed LRRP Clearance 16 Rule 17 As discussed in Chapter 2, there are an estimated 87,840 dayca re centers in the United States. These 18 daycare centers include facilities that provide day care outside of a residential home and outside of 19 schools. Assuming a 75 percent compliance rate, and adjusting the total number of centers for building 20 age using HUD data on the age of education buildings, an estimated 3 8
, 210 daycare centers would be 21 affected by the proposed rule in the first year. 10 As discussed in Chapter 4, because of their locations, for

22 profit daycare centers are expected to hire outside contr actors to perform their renovations and repairs or 23 to have their landlord handle these activities. The costs and impacts for these events are accounted for in 24 the sections of this chapter addressing contractors and landlords. 25

D aycare centers located in re ligious establishments such as churches or synagogues , however, frequently 26 use their own staff to perform some of their RRP events. According to the HUD survey of child care 27 centers (HUD 2003), approximately 73 percent of daycare centers located in church es and other religious 28 establishments use their own (or the religious organization’s) staff to perform painting projects. This 29 analysis assumes that, similar to public school districts and private schools, these establishments will also 30 use their own staf

f to perform all window/door carpentry work

. 31
The number of non

- profit daycare centers is estimated as the number of daycare centers located in 32 religious establishments , which are identified in the data from the HUD survey of child care centers 33 (HUD 2003). According to these data, 41 percent of all daycare centers are situated in churches or other 34 buildings owned by religious establishments (the US Census reports that about 35 percent of daycare 35

10 Based on 2003 HUD data, 58 percent of all education buildings were constructed before 1978, and 55 percent of

the pre

- 1978 buildings were constructed before 1960.EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 35 centers located outside of schools are non

- profits (U.S. Censu s Bureau 2005c))

. The other 59 percent of 1 daycare centers are assumed to use outside contractors for their RRP work rather than in

- house staff. 2 Because the estimate of centers that are in religious settings is relatively large and there is no independent 3 data on other non

- profits, this analysis estimates that about 30 percent of daycare centers 4 (0.73*0.41=.299) will perform their own renovation work and thus incur direct work practice and training 5
costs. 11 Because all of these establishments are treated a s though they are operated by religious 6 organizations, all daycare centers considered in the small entity analysis are considered to be non

- profit 7 organizations. As the RFA defines independently owned and operated not

- for

- profit enterprises that are 8 not d ominant in their field as “small organizations,” a ll the non

- profit organizations operating these 9 daycare centers are assumed to qualify as small entities. This assumption may overestimate the number 10 of impacted small non

- profits, since some of these non

- profit organizations may not be small entities. 11
Table 6

- 42 presents the number of daycare centers performing regulated activities in a typical year, the 12 total number of daycare centers operated by non

- profit organ izations (based on the number in religious 13 organizations), and the number expected to perform some renovation work in

- house. The estimation of 14 the annual average numbers of centers accounts for the fact that, after the first year, the number of 15 regulated daycare centers is expected to decrease by 0.41 percent per year due to building demolition. 16
17

18 Although 10,481 non

- profit daycare centers are reg ulated structures under the 2008 LRRP Rule, only a 19 fraction of these buildings will undergo renovation requiring dust wipe testing or clearance in a typical 20 year. It is estimated that an average of 132 non

- profit daycare center buildings doing RRP work in

- house 21 will be affected by the proposed rule in a typical year. 22

6.2.6.2 Dust Wipe Testing and Clearance Costs

– Non

- Profit Daycare Centers 23 The estimated dust wipe testing and clearance costs incurred by each daycare center are based on the 24 average per

- event cost of renovation events requiring dust wipe testing or clearance

. The analysis in 25 Chapter 4 demonstrated that daycare centers are not expected to typically perform enough dust wipe 26 testing or clearance events annually to justify obtaining dust sampling techn ician training for one of their 27 employees. Instead, daycare centers are assumed to incur only third party dust wipe testing and clearance 28 costs for the events that they perform. 29

Total Clearance Rule Costs

– Non

- Profit Daycare Centers 30 Staff in non

- profit daycare centers (such as those operated by religious establishments) are expected to 31 perform in

- house all painting and window/door carpentry work in their building. Each affected firm is 32 assumed to perform one event per year. 33

11 Given the small size of the HUD survey sample, and the difference between the HUD and Census figures, the

estimate m ay include some non

- profits operating daycare facilities that are not in religious settings but perform their own repair work. Other non

- profit daycare facilities may be hiring outside contractors, the same as for

profit daycare facilities are assumed to do. Table 6

- 42 : Average Annual Number of Non

- Profit Daycare Centers Performing their Own Work Regu latory Option (A) Total Number of Daycare Centers (B) Number of Centers in

Non

- Profit Organizations (41% of A) (C) Number of Centers Doing RRP Work In

house (73% of B) Proposed rule 34,612 14,339 10,481EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 36 As discussed in Section 6.2.2 , the average annualized cost per event in daycare center buildings is $4 90 1 (see Table 6

- 23 ). Multiplying this average cost by the total 50

- year average annual number of events in 2 daycare centers that perfo rm their own work yields the total annualized event costs incurred by these 3 centers in an average year. Since centers are assumed to perform no more than one event per year, the 4 annual number of events is equal to the number of centers performing dust wip e testing or clearance in an 5 average year . These average total and per

- center costs are presented in Table 6

- 43

. 6
7

Table 6

- 43 : 50

- Year Average Annuali zed Dust Wipe Testing and Clearance Costs for Small

Non

- Profit Daycare Centers

Regulatory Option Total In

- House Events Annualized

Avg. Cost p er E vent Total Event

Costs a Average DWT and

Clearance Costs per Small Center Proposed rule 132 $490 $64,776 $49 0 a. Total costs are calculated using unrounded unit costs of third party dust sampling services; a 3 percent discount rate is used. 8

6.2.6.3 Non

- Profit Daycare Center Expenditures 9 In analyzing impacts of the proposed LRRP Clearance Rule on an entity, the anal ysis conceptually should 10 compare rule costs to the revenues or expenditures of an entire organization. As such, costs of the rule to 11

non

- profit daycare centers should be compared to the revenues or expenditures of the parent organization 12 (such as the reli gious organization that operates them), rather than a single center. Due to a lack of data 13 both on the structure of these organizations and on their finances, such a comparison was not possible. 14 Instead , this analysis is based on daycare center revenues. Ten state childcare industry impact studies 15 were reviewed to obtain daycare center revenue data. 12 Nine of these studies did not differentiate between 16 revenues of non

- profit and for

- profit centers. The Virginia Economic Impact of the Child Care Industry 17 report (Voices of Virginia’s Children 2004), however, provided revenue data specific to religiously 18 affiliated daycare centers. The state reported annual total revenues of $236 million for its 929 religious 19 daycare facilities or average revenues (inflated to 200 8 $) of $ 317,062 (U.S. Bureau of Labor Statistics 20 2006). T his figure was used to measure the incremental impacts of the proposed LRRP Clearance Rule 21

on non

- profit centers. 22

6.2.6.4 Impacts on Non

- Profit Daycare Centers 23 The impacts on non

- profit daycare cente rs were estimated by first dividing total annualized costs incurred 24 by these entities by the number of centers. Average costs per center were then divided by average 25

revenues to calculate a cost

- to

- revenue ratio. These calculations and the resulting rati os are presented in 26 Table 6

- 44

. 27
28

12 Data were available for the following states: Oklahoma, New Jersey, Iowa, Hawaii, Ohio, Kansas, South Carolina,

West Virginia, Louisiana, Virginia, New York, South Dakota, Indiana, Maine and Massachusetts. Table 6

- 44 : Cost

- to
- Revenue Ratios for Non

- Profit Daycare Centers Regulatory Option Total Daycare

Centers Affected To tal Cost of Rule

to Daycare Centers Average Cost of

Rule per Daycare Center Estimated Average

Daycare Center Revenues Cost

- to

Revenue Ratio Proposed rule 132 $64,776 $490 $317,062 0.154%EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 37 1

6.2.7 Public Schools (Small Governments) 2 The RFA defines a small gove rnment jurisdiction as the government of a city, county, town, school 3 district or special district with a population of less than 50,000. This economic analysis relies on National 4 Center for Education Statistics (NCES) Common Core of Data (CCD) survey dat a to estimate the number 5 of school districts that have schools with pre

- kindergarten or kindergarten programs, the number of such 6 schools per district, and district revenues. 13 Furthermore, for most districts, a cross

- reference system with 7 the 2000 Decenni al Census provides a means for estimating the size of the population served by the 8 district. 9

6.2.7.1 Number of Small Public School Districts Affected by the Proposed LRRP Clearance Rule 10

Number of Small Public School Districts 11 As discussed in Chapter 2, there are approximately 18,000 public school districts in the United States. 12 Based on CCD data, 14,473 of these school districts have at least one school with a kindergarten or pre

- K 13 program; in total, these districts have 52,129 such schools (NCES 2006b,c). Of t he 14,473 school 14 districts, 13,330 serve a population of fewer than 50,000 people. These 13,330 districts have a total of 15 26,779 schools with kindergartens or pre

- kindergartens (NCES 2006b,c,g). These counts are not limited 16 to pre

- 1978 schools. 17
Since the Regulatory Flexibility Analysis is only concerned with the direct costs of regulation, this small 18 entity analysis only considers the costs that school districts will incur if they perform regulated 19 renovation, repair, or painting projects using their own maintenance staff instead of hiring a contractor. 20 Costs and impacts associated with work performed by a contractor are accounted for in the contractor 21 section of this analysis. 22 As discussed in Chapter 4, this analysis assumes that public schools will per form all painting and 23 carpentry events using in

- house staff. 14 Thus, small school districts that have at least one pre

- 1978 24 building may incur costs under the proposed rule

. 25
Number of Small Public Schools Affected by the Proposed LRRP Clearance Rule 26 The number of small school districts with at least one building regulated under the 2008 LRRP Rule was 27 estimated based on the number of school buildings in the district and the likelihood that any one of the 28 buildings is old enough to be regulated. Using 2003 HUD data, 58 percent of school buildings are 29 estimated to have been built before 1978, and 55 percent of the pre

- 1978 buildings are estimated to have 30 built before 1960 (U.S. HUD 2003). Thus, f or example, the probability that any particular school 31 buildin g was built after 1978 is 0.42 (1

- 0.58). The likelihood that a district has no pre

- 1978 buildings is a 32 function of the number of buildings and 0.42 as follows 15 : 33 (0.42)^X, where X is the number of schools with kindergarten or pre

- kindergarten in the distr ict 34

13 It is possible that government agencies also operate some of the childcare facilities included in the daycare center

counts throughout this economic analysis. Due to insufficient data, it was not possible to estimate the number of such government

- run faci lities
, or the number or size of the agencies that operate them. As such, this small government impact analysis is limited to public school districts.

14 The analysis assumes that all electrical, plumbing and HVAC work are contracted out.

15 It is assumed t hat the age of each building is independent of the age of all other buildings in the district. This may somewhat overestimate the number of districts that have at least one pre

- 1978 buildings. But data are not available to calculate the joint probabiliti es.EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 38 For example, a district with three buildings has a (0.42)*(0.42)*(0.42) = 0.074 probability of containing 1 no pre

- 1978 buildings. Using this approach , 92.6 percent of districts with three buildings are estimated to 2 have at least one building that is pr e

- 1978. To estimate the average number of pre

- 1978 buildings in a 3

- 3 building district with at least one pre

- 1978 building, the total number of buildings in 3

- building districts 4 was multiplied by the percent of all schools constructed before 1978 (58 perce nt) and divided by the 5 number of districts with at least one pre

- 1978 building

. 6
Table 6

- 45 presents the 50

- year average numbers of small school districts with at least one pre

- 1978 7 building and the average numbe r of buildings i n these districts. The use of 50

- year average, rather than 8 first or second year numbers accounts for the fact that, after the first year, the numbers of regulated 9 districts and pre

- 1978 schools are expected to decrease by 0.41 percent per year due to building 10 demolition. 11
12

13 Although 10,552 buildings in small public school districts are regulated under the 2008 LRRP Rule, only 14 a fraction of these buildings will undergo renovation requiring dust wipe testing or clearance in a typical 15 year. It is estimated that an average of 25 7 public school buildings (large and small) will be affected by 16 the proposed rule in a typical year. Based on the number of buildings in small districts relative to the total 17 number of public school buildings, 132 public school buildings in small districts are expected to be 18 affected by the rule in a typical year. Given the relative infrequency of dust wipe testing and clearance 19 events, each affected small public school district is assumed to perform no more than one event per year

. 20 Thus, 132 public schoo l districts are expected to be affected by the rule in a typical year. 21

6.2.7.2 Dust Wipe Testing and Clearance Costs

– Public Schools 22 Since each affected public school district is assumed to perform one event per year , t he estimation of 23 costs incurred by each affe cted district is based on the average costs per event. The analysis in Chapter 4 24 demonstrated that public schools are not expected to typically perform enough dust wipe testing or 25 clearance events annually to justify obtaining dust sampling technician tra ining for one of their 26 employees. Instead, public schools are assumed to incur only third party dust wipe testing and clearance 27 costs for the events that they perform. 28

Total Clearance Rule Costs

– Public Schools 29 As discussed in 6.2.2 , the average annualized cost per event in public schools is $ 766 (see Table 6

- 23 ). 30 Multiplying this average cost by the average annual number of events in small school districts yields the 31 total annualized event costs incurred by small districts in a typical year. These costs, and resulting 32 average costs per district, are presented in Table 6

- 46

. 33 Table 6

- 45 : Number of Regulated School Districts and Public School Buildings
Number of School Districts with at Least 1 Regulated Building a Total Number of Regulated Buildings in these Districts Average Number of Regulated Buildings per District

Total Districts 7,051 20,541 2.9 Small Districts 6,492 10,552 1.6

a. A regulated building is defined as having a kindergarten or pre

- kindergarten program.EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 39 Table 6

- 46 : Average Annualized Dust Wipe Testing and Clearance Costs for Public Schools in Small Districts

Regulatory Option Total In

- House Events Annualized

Avg. Clearance Cost per Event Total Event

Costs a Average Event

Costs per Small District Proposed rule 132 $766 $101,077 $766 a. Total costs are calculated using unrounded unit costs of third party dust sampling services; a 3 percent discount rate is used. 1

6.2.7.3 Public School Revenues 2 The impact of the proposed rule on small government jurisdictions is es timated by comparing the 3 estimated incremental costs of the proposed rule to the annual government revenues of small regulated 4 jurisdictions. Revenue data for school districts is available from NCES’s Common Core of Data “ Local 5 Education Agency (School Di strict) Finance Survey (F

- 33)” dataset (NCES 2006d). Small districts 6 include local school boards, supervisory unions, regional education agencies, and other agencies, which 7 primarily include charter schools. Revenue data are available for the vast majori ty of districts. Average 8 revenues for all small districts were estimated by a) calculating the average revenues of each type of 9 district based on available data, b) multiplying the average revenues by the total number of districts of 10 that type, then c) ca lculating the sum of the resulting total revenues and dividing by the total number of 11 small districts. This approach presumes that there is no non

- response bias among districts within each 12 category. 13
Table 6

- 47 p resents small district revenue calculations and resulting estimates. The total estimated 14 average revenues in column 7 ($15.5 million) are adjusted to 2008 dollars before being used to estimate 15
cost

- to

- revenue ratios in Section 6.2.7.4

. 16
17

18 Table 6

- 47 : Estimated Annual Revenues for Small Public School Districts (2005$)

District Type Total

Small Districts Small

Districts w/ Revenue Data Total Small

District Revenues Reported (Million $) Average

Reported Revenues (Million $) Estimated

Total Revenues (Million $) Estimated

Average Revenues (Million $) Local School District (A) a 10,930 10,868 $179,530 $16.5 $180,554 $16.5 Local School District (B) a 1,200 1,197 $13,9 26 $11.6 $13,961 $11.6 Supervisory Union 84 76 $1,186 $15.6 $1,311 $15.6 Regional Education Agency 167 158 $7,612 $48.2 $8,046 $48.2 Other (Charter School) 949 773 $2,074 $2.7 $2,546 $2.7 Total 13,330 13,072 $204,329 $15.6 $206,419 $15.5 a. There a re two different types of local school districts in NCES data

– independent districts and districts that are connected to a supervisory union office. These local school districts are combined in Chapters 2 and 4, but are treated separately in estimating w eighted average revenues.EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft

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- 40 6.2.7.4 Impact of the Proposed LRRP Clearance Rule o n Small Public School Districts 1 Table 6

- 46 presents the t otal annualized event costs incurred by small public school districts as well as the 2 average annuali zed costs per small district. Average annualized costs are then divided by annual district 3
revenues, as shown in Table 6

- 48
, to obtain a cost

- to

- revenue ratio

. 4
5

Table 6

- 48 : Cost

- to
- Revenue Ratios for Small Public School Districts (2008$)

Regulatory Option Total Affected

Small Districts Total Cost of Rule

to Small Districts Average Cost of

Rule per Small District Estimated Average

Small District Reven ues (Million $) Cost

- to

Revenue Ratio

Proposed rule 132 $101,077 $766 $17,071,289.68 0.004% 6

6.2.8 Private Schools (Small Non

- Profits) 7

6.2.8.1 Number of Small Private Schools 8 As discussed in Chapter 2, according to the 2003

- 2004 NCES Private School Universe Survey Data, there 9 are a total of 26,531 private schools with kindergarten or pre

- kindergarten programs in the United States 10 (NCES 2006e,f). Based on HUD data, 58 percent, or 15,387 of these schools were constructed before 11 1978. Because no data source providing the number of private schools at different revenue levels was 12 identified, all private schools are considered to be small entities. In other words, the analysis assumes that 13 each private school is independently run and is not part of a larger organization . As such, the analysis 14 may overestimate the number of affected non

- profit organizations and the impacts of the rule on these 15 entities. 16 Similar to public schools, private schools will only incur direct costs as a result of this rule if they use 17 their own maintenance staff to perform regulated RRP work. Schools that perform regulated jobs in

18 house will incur dust wipe testing and clearance costs as a result of the proposed rule . This analysis 19 assumes that private schools with fewer than 100 students will contract out all of their renovation and 20 repair work because of their small size , and costs and impacts associated with work performed by a 21 contractor are accounted for in the contractor section of this analysis . Private schools serving more than 22 100 stu dents are assumed to use their own staff to perform all painting and window/door carpentry work 23 and to hire contractors to perform all other regulated RRP activities

. 24 As discussed in detail in Chapter 2, based on NCES’s Private School Universe survey dat a, 41 percent of 25 private schools with a kindergarten and/or pre

- kindergarte n have fewer than 100 students. Table 6

- 49 26 presents the total number of private schools regulated in a typical year, the number of schools with fewer 27 than 100 students, and the number of schools with more than 100 students. The use of average annual 28 numbers accounts for the fact that after the first year, the numbers of pre

- 1978 schools are expected to 29 decrease by 0.41 percent per year due to building demolition. 30
31

Table 6

- 49 : Average Annual Number of Private Schools with Kindergarten or Pre

Kindergarten

Regulatory Option Total Number of Private Schools with Kindergarten or P re - Kindergarten Percent of Private Schools with <100 Students Number of

Private Schools with <100 Students Number of

Private Schools with >100 Students Proposed rule 10,454 41% 4,280 6,174EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 41 1 Although 6,174 private schools are regulated under the 2008 LRRP Rule, only a fraction of these 2 buildings will undergo renovation requiring dust wipe testing or clearance in a typical year. It is 3 estimated that an average of 81 private school buildings doing RRP work in

- house will be affected by the 4 proposed rule in a typical year. 5

6.2.8.2 Dust Wipe Testing and Clearance Costs

– Private Schools 6 Given the relative infrequency of dust wipe testing and clearance events, each affected private school is 7 assumed to perform one event per year. The analysis in Chapter 4 demonstrated that private schools are 8 not expected to typically perform enough dust wipe testing or clearance events annually to justify 9 obtaining dust sampling technician training for one of their employees. Instead, private schools are 10 assumed to incur only third pa rty dust wipe testing and clearance costs for the events that they perform. 11 Table 6

- 50 presents the total number of private schools regulated in the first year, the total number of 12 events performed in these school s, and the total annualized costs associated with these events. Total costs 13 are estimated by multiplying the average annual number of events by the average annualized c ost per dust 14 sampling or clearance event ($ 789 ; see Table 6

- 23 ). Average annualized costs per private school are 15 calculated by dividing total rule c osts by the number of affected schools. 16
17

18

6.2.8.3 Impact of the Proposed LRRP Clearance Rule o n Private Schools 19 Conceptually, impacts on non

- profit establishments such as schools might be measu red in terms of the 20 ratio of rule costs to annual operating expenses. Due to the scarcity of data on private school operating 21 expenditures (schools are excluded from the U.S. Economic Census, and NCES does not have a financial 22 data set for private schools ), annual private school expenditures are approximated based on estimated 23 operating expenses per student obtained from a 1995 study by NCES entitled Estimates of Expenditures 24 for Private K

- 12 Schools and information on the number of students enrolled at ea ch school as reported in 25 NCES’s 2003

- 2004 Private School Universe Survey data set. 26 Based on NCES data (1995), this analysis estimates that private school expenditures average about $3, 727 27 (200 8 $) per child per year. Appendix 6 A explains the derivation o f this estimate in detail. 28 To estimate average private school expenditures for schools with over 100 students operating pre

29 kindergarten or kindergarten program s , the average number of students per school meeting this criteria 30 was calculated based on 2003

- 2004 NCES survey data (NCES 2006f). Schools for which no total student 31 enrollment data was available were assumed to have the average enrollment at schools with more than 32 100 students where student data was provided. Using these assumptions, the average private school with 33 over 100 students was estimated to serve 283 students per year. As such, average expenditures for private 34 schools are estimated to be $3, 727 *283, or $ 1,054,684

. 35 Table 6

- 50 : Average Dust Wipe Testing and Cleara nce Costs for Private Schools

Discount Rate Number of

Private Schools w>100 Students Total Annual

Number of In

house Events Total Annualized

Event Costs a Average

Annualized Event Costs per School Proposed rule 81 81 $63,586 $789 a. Total costs are c alculated using unrounded unit costs of third party dust sampling services; a 3 percent discount rate is used.EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 42 Impacts on private schools were estimated by dividing the total annualiz ed dust sampling and clearance 1 costs incurred by these schools by the number of regulated schools. Average costs per school were then 2 divided by average expenditures to calculate a cost

- to

- expenditure ratio. These calculations and the 3 resulting ratio are presented in Table 6

- 51

. 4
5

Table 6

- 51 : Cost

- to
- Expense Ratios for Private Schools Regulatory Option Total Affected

Private Schools with > 100 kids Tot al Cost of Rule

to Private Schools Average Cost of

Rule per Private school Estimated Average

Small School Expenditures Cost

- to

Expenditure Ratio Proposed rule 81 $63,586 $789 $1,054,684 0.075% 6

6.2.9 Summary of the Proposed LRRP Clearance Rule Impacts on Sm all Governments, 7 Non

- Profit Organizations, and Small For

- Profit Businesses 8 The vast majority of entities in the industries affected by the proposed rule are small. As a result of the 9 proposed revisions, approxim ately 203,002 small entities would incur additional costs

. 10

6.2.9.1 Incremental Impacts of the Proposed Rule 11 The average annualized incremental cost of the proposed rule to a typical small entity is estimated to 12 range from $ 490 to $ 1, 928 depending on the number o f renovation, repair, and painting events undertaken 13 by a small entity in the industry sector involved. As shown in Table 6

- 52
, the incremental cost impact of 14 the proposed LRRP Clearance Rule on small currently regulated entities ranges from about 0

. 0 04 percent 15
to 1.0 59 percent of revenues, depending on the industry sector. 16
17

18 Table 6

- 52 : Typical

- Year Number of Small Entities with RRP Events

Description Entity Typ e Number of Small Entities Cost

- Impact

Ratio

Public and Commercial Building Child

- Occupied Facilities

Public School Districts Government 132 0.004% Private Schools Non

- Profit 81 0.075% Daycare Centers Non

- Profit 132 0.154% Non

- Residential Landlords B usiness 140 0.352% Non

- Residential Contractors (working in public or commercial building COFs) Business 281 0.433%

Residential Contractors (working in target housing)

Residential remodelers Business 68,428 0.469% Finish carpentry contractors Business 4 8,590 0.819% Tile and terrazzo contractors Business 6,940 0.719% Plumbing and HVAC contractors Business 23,352 0.400% Painting and wall covering contractors Business 26,970 1.059% Electrical contractors Business 16,603 0.497% Drywall and insulation co ntractors Business 11,355 0.527%
Total 203,002 0.516%EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 43 Table 6

- 53 presents the total number of small governments, non

- profit organizations, and small for

- profit 1 businesses, and the average cost

- to

- revenue ratio s for each category. It is estimated that a total of 20 3, 002 2 small entities would be affected by the program, including 20 2,657 small businesses with average impacts 3 of 0.5 4 4 percent, 213 small non

- profits with average impacts of 0.1 01 percent, and 132 sm all 4 governments with average impacts of 0.00 4 percent. 5

6
Table 6

- 53 : Aggregate Small Entity Impacts

Total Number of Small Entities Affected Average Impacts, All Small Entities Small Governm ents 132 0.004% Non

- Profit Organizations 213 0.101% Small For

- Profit Businesses 202,657 0.544% Total 203,002 0.516% 7 

### 6.3 Unfunded Mandates Reform Act (UMRA) 8 Title II of the Unfunded Mandates Reform Act of 1995, Pub. L. 104

- 4, establishes requirements for 9 F ederal agencies to assess the effects of their regulatory actions on State, local, and Tribal governments, 10 and the private sector. Under section 202 of the UMRA, EPA generally must prepare a written statement, 11 including a cost

- benefit analysis, for rules with “Federal mandates” that might result in expenditures by 12 State, local, and Tribal governments, in the aggregate, or by the private sector, of $100 million or more 13 (when adjusted annually for inflation) in any one year. 16 14 Before promulgating a regulation for which a written statement is needed, section 205 of the UMRA 15 generally requires EPA to identify and consider a reasonable number of regulatory alternatives and adopt 16 the least costly, most cost

- effective, or least burdensome alternative that achieves the objectives of the 17 rule. The provisions of section 205 do not apply when they are inconsistent with applicable law. 18 Moreover, section 205 allows EPA to adopt an alternative other than the least costly, most cost

- effective, 19 or least burdensome alternat ive if the Administrator publishes with the rule an explanation of why that 20 alternative was not adopted. Before EPA establishes any regulatory requirements that might significantly 21 or uniquely affect small governments, including Tribal governments, it mus t have developed under 22 section 203 of the UMRA a small government agency plan. The plan must provide for notifying 23 potentially affected small governments, enabling officials of affected small governments to have 24 meaningful and timely input in the developm ent of EPA regulatory proposals with significant 25 intergovernmental mandates, and informing, educating, and advising small governments on compliance 26 with regulatory requirements. This section identifies the government entities that may be affected by the 27 p roposed revisions to the 2008 LRRP rule

. 28

6.3.1 Affected Government Entities 29 The proposed revisions to the 2008 LRRP r ule will affect activities in publicly owned child

- occupied 30 facilities, specifically publicly owned housing and public schools

. 17 As with the p rivate sector, the 31

16 When the original $100 million UMRA threshold is adjusted for inflation from 1995 to 2008 dollars using an

implicit price deflator for gross domestic product, the result is a threshold of $130 million.

17 It is possible that government agencies also operate some of the childcare facilities included in the daycare center counts throughout this economic analysis. Due to insufficient data, it was not possible to estimate the number of such government

- run facilities, or the number or size of the agencies that operate them. As such, this Unfunded Mandates Reform Act discussion is limited to public school districts.EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 44 proposed LRRP Clearance Rule will increase the cost of operating these facilities by requiring dust wipe 1 testing or clearance after a subset of their in

- house renovation activities . Each school district that uses its 2 own in

- house staff to perform covered RRP activities in regulated buildings is required to comply with 3 the Clearance Rule provision s

. Since the cost comparison in Chapter 4 indicated that public schools are 4
not likely to choose to obtain training for an in

- house dust sampli ng technician , state and local 5 governments will only incur incremental costs of paying for third party dust wipe testing and clearance 6 services following the affected renovation events

. 7 While most of what is commonly referred to as public housing is owned by state or local governments 8 and provided for the benefit of low

- income and/or elderly households, other public entities (such as public 9 colleges and univ ersities) may provide housing regulated under the LRRP rule . As with the private 10 sector, the propos ed LRRP Clearance Rule will increase the cost of operating this housing by requiring 11 that dust wipe testing and clearance be performed. The increased cost is estim ated to be $ 167 on average 12 per renovation in Target Housing

. 18 13

6.3.2 Expenditures by State, Local, and Tribal Governments

– Public School Districts 14 State, local, and Tribal governments will incur the i ncremental costs imposed by the proposed revisions to 15 the 2008 LRRP rule when public school districts engage in certain RRP activities. 19 Based on availab le 16 data and the economic analysis presented in Chapter 4 and Section 6.1
, it is assume d that all public school 17 districts will perform all painting and window/door carpentry tasks themselves. Public schools are 18 assumed to hire third

- party contractors to perform the remainder of their RRP work. Since all public 19 school dis tricts are assumed to use their own staff to perform some of their RRP activities, all public 20 school districts would need to comply with the dust wipe testing and clearance requirements outlined in 21 Chapter 4. 20 Although 7,051 districts and 20,541 buildings were regulated under the 2008 LRRP Rule, 22 the very low expected number of dust wipe testing and clearance events in public and commercial 23 building COFs implies a lower number of affected entities. T he number of districts affected by the 24 proposed LRRP Clea rance Rule is estimated as the annual average number of buildings performing an in

25 house RRP event which would require dust wipe testing or clearance. Table 6

- 54 presents the estimated 26 total annualized incremental costs of the proposed rule that would be incurred by public school districts 27 under the proposed option

. 28

18 This average cost is calculated as the total target housing event costs in the first year divided by the total number

of target housing even ts in the first year.

19 As discussed in Chapter 4, states would be able to apply for, and receive authorization to administer these proposed requirements, but would be under no obligation to do so.

20 It is important to note that this analysis uses a 75 p ercent compliance rate. See Chapter 4 and the small entity analysis (Section 6.1 ) for a more comprehensive discussion of these cost estimates.EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 45 1
The cost to r evenue ratio for affected school distr icts is 0. 00 2 percent under the proposed option . These 2 calculations are summarized in Table 6

- 55

. 3
4

Table 6

- 55 : Cost

- to
- Revenue Ratios for Affected Pu blic Schools (2008$)

Regulatory Option Average

Annual Regulated Districts Total

Annualized Cost of Rule to Districts a Average

An nualized Cost of Rule per District Estimated

Average District Revenues (mil) Cost

- to

Revenue Ratio

Proposed 257 $196,762 $76 6 $35.2 0.002%

a. Total costs are calculated using un

- rounded unit costs; a 3 percent discount rate is used. 5 

### 6.4 Executive Order 13132

- Federalism 6 Executive Order 13132, entitled Federalism (64 FR 43255, August 10, 1999), directs federal agencies to 7 conside r whether a rule has federalism implications (i.e. whether it has substantial direct effects on the 8 states, on the relationship between the national government and the states, or on the distribution of power 9 and responsibilities among the various levels of government, as specified in Executive Order 13132). 10 As discussed in Chapter 4, st ates would be able to apply for and receive authorization t o administer these 11 requirements but would be under no obligation to do so. In the absence of a state authorization , EPA will 12 administer these requirements. While the cost analysis assumes that EPA will administer and enforce the 13 program in all places, it also assumes that states would incur similar costs if they administer and enforce 14 the regulation. To the extent t hat they operate target housing or child

- occupied facilities, states may incur 15 costs due to the requirement that dust wipe testing and clearance procedures be followed after certain 16 high

- dust

- generating renovation activities

. Given the low frequency of th ese event s, this rule is not 17 expected to have a significant impact on states. 18 

### 6.5 Executive Order 13175

- Tribal Implications 19 Executive Order 13175, entitled Consultation and Coordination with Indian Tribal Governments (59 FR 20 22951, November 6, 2000), directs federal agencies to consider whether a rule has tribal implications (i.e. 21 whether it has substantial direct effects on tribal governments, on the relationship between the Federal 22 government and the Indian tribes, or on the distribution of power and respons ibilities between the Federal 23 government and Indian tribes). 24 Table 6

- 54 : Total Annualized Incremental Costs to All Public School Districts

Regulato ry Option Average

Annual Number of Districts Affected a Average

Annual Number of Buildings Affected a Total Average

Annual Number of Events Average

Annualized Cost Per District (200 8 $) Total

Annualized Cost (200 8 $) b

Proposed option 257 257 257 $766 $19 6,762

a. In the first year, the proposed LRRP Clearance Rule is expected to affect 2 83 public school districts and buildings. Every year thereafter, the number of affected districts and schools is expected to decrease by 0.41 percent as older buildings are demolished. The use of 50

- year average numbers of districts and schools captures this annual decrease. b. Total costs are calculated using un

- rounded unit costs; a 3 percent discount rate is used.EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 46 Under the proposed LRRP Clearance R ule , Tribes would be able to apply for and receive authorization to 1 administer these requirements on Tribal lands, but Tribes would be under no obligation to do so. In the 2 absence of a Tribal authorization, EPA will administer these requirements. 3 To the extent that Tribes operate target housing or child

- occupied facilities, they may incur costs due to 4 the requirement that dust wipe testing and clearance proced ures must be followed after certain high

- dust

5 generating renovation activities. Given the low frequency of these event s, this rule is not expected to 6 have a significant impact on Tribal Governments

. 7 

### 6.6 Protection of Children from Environmental Health Risk an d Safety Risks 8 Under Executive Order 13045, a regulation must be reviewed if the regulatory action is economically 9 significant and concerns an environmental health risk or safety risk that may disproportionately affect 10 children. Since children are particu larly susceptible to the IQ loss and adverse health effects caused by 11 exposure to lead dust, a significant objective of the proposed revisions to the 2008 LRRP rule is the 12 protection of children’s health. Implementing the Clearance Rule provision protects children under the 13 age of six by ensuring that their homes, schools, or daycares, are truly free from lead hazards before a 14 child may re

- occupy the space

. This analysis summarizes the effects of the regulation on children under 15 the age of six in target h ousing units and in COFs in public or commercial buildings

. 16

6.6.1 Children Affected by the Proposed Clearance Rule Revision 17 The 2008 LRRP Rule included all COFs in public and commercial buildings, all rental units, plus all 18 target housing COFs, and all owner

- occ upied target housing units where a child under the age of 6 or a 19 pregnant woman resides within pre

- 1987 buildings. A target housing unit where a child visits regularly, 20 but spends fewer that 6 hours a week is not considered a child

- occupied facility , and will only be 21 regulated if the opt

- out provision is eliminated as has been proposed ( providing that there is no child 22 under the age of six or pregnant woman that resides in the unit ) . Thus, children visiting these housing 23 units may also benefit from the pr oposed LRRP Clearance Rule through a reduction in potential 24 exposures to lead dust during these visits. 25 It is expected that the proposed LRRP Clearance Rule will benefit children both located in target housing 26 and public and commercial building COFs. Incr easing the awareness of lead hazards through dust wipe 27 testing reports and ensuring elimination of hazards prior to re

- occupancy through clearance testing will 28 increase the health outcomes of these groups of children. In the first year of the proposed rul e , 1.1 million 29 children are expected to reside or occupy (i.e., receive childcare or attend school in) structures where dust 30 wipe testing or clearance was performed following a renovation that disturbed lead based paint. 31


### 6.7 Executive Order 13211

- Energy Effe cts 32 Executive Order 13211, entitled Actions Concerning Regulations that Significantly Affect Energy Supply, 33 Distribution, or Use (66 FR 28355, May 22, 2001), directs federal agencies to identify actions that will 34 have a significant adverse energy effect. Adverse effects are defined as: 35

 Reductions in crude oil supply in excess of 10,000 barrels per day; 36

 Reductions in fuel production in excess of 4,000 barrels per day; 37

 Reductions in coal production in excess of 5 million tons per year; 38

 Reductions in natur al gas production in excess of 25 million mcf per year; 39

 Reductions in electricity production in excess of 1 billion kilowatt

- hours per year or in excess of 40 500 megawatts of installed capacity; 41

 Increases in energy use required by the regulatory action tha t exceed any of the thresholds above; 42

 Increases in the cost of energy production in excess of one percent; 43

 Increases in the cost of energy distribution in excess of one percent; or 44EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 47  Other similarly adverse outcomes. 1 The regulations under consideration w ill not significantly reduce energy production nor significantly 2 increase energy costs. 3


### 6.8 National Technology Transfer and Advancement Act 4 Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (“NTTAA”), Public 5 Law No. 104

- 113, 12(d) (15 U.S.C. 272 note) directs federal agencies to use voluntary consensus 6 standards in its regulatory activities unless to do so would be inconsistent with applicable law or 7 otherwise impractical. Voluntary consensus standards are technical standards (e.g. , materials 8 specifications, test methods, sampling procedures, and business practices) that are developed or adopted 9 by voluntary consensus standards bodies. The NTTAA directs federal agencies to provide Congress, 10 through OMB, explanations when the Agency decides not to use available and applicable voluntary 11 consensus standards. 12 This proposed rulemaking does not involve technical standards. Therefore, EPA is not considering the use 13 of any voluntary consensus standards. 14


### 6.9 Executive Order 12898

– Environmenta l Justice 15 Under Executive Order 12898, when promulgating a regulation, EPA investigates whether there are 16 disproportionately high and adverse human health or environmental effects on minority and low

- income 17 populations. The LRRP regu lation requires that establishments , when undertaking certain types of 18 renovation activities in regulated facilities, reduce the risk of exposure to lead by using dust wipe testing 19 and clearance practices following cleaning verification to ensure the safet y of the work area prior to re

20 occupancy . This environmental justice analysis first summarizes a few important points to consider when 21 viewing the results. Next a summary of the impacts from the regulation on minority and low

- income 22 populations in target housing units and child

- occupied facilities is presented

. Racial minorities and low

23 income households stand to accrue benefits as a result of the proposed revision to the LRRP rule. 24

T he dust wipe sampling, laboratory testing, report

- writing, and re

- clean ing required by the proposed rule 25 will increase the costs for renovation, repair and painting activities that are already regulated under the 26 2008 LRRP rule and the subsequent proposed Opt

- Out rule . These additional costs may lead some lower 27 income homeow ners of properties in lower income neighborhoods to avoid using certified renovators or 28 recommended practices. When taking an average of costs to all residential RRP events in target housing 29 affected by the rule , t he incremental costs of the dust wipe tes ting and clearance requirement s would be 30 $ 160

. 21 These costs are likely to be a small part of the total cost of the major renovation, repair, and 31 painting projects that are affected by the proposed rule . EPA believes that these costs are unlikely to 32 resul t in significant changes in consumer behavior. 33

6.9.1 Target Housing Dust Wipe Testing and Clearance Events 34 This section evaluates the distribution of regulated renovation events in target housing units and the 35 individuals protected across three race and two inc ome groups. Although it would be preferable to 36 perform a joint environmental justice analysis for the race and income groups, relevant data are not 37 available to make these population inferences. Therefore, the analysis was performed separately for the 38

ra ce and income groups. 39

21 This average cost is calculated as the total target housing even t costs in the first year divided by the total number

of target housing events in the first year.EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 48 6.9.1.1 Low Income 1 EPA defines low income individuals as individuals whose income are below the level set by the federal 2 government’s official poverty definition. Based on data from the 2000 Decennial Census , 12.4% of 3 individuals were living below the poverty level (U.S. Census Bureau 2000a). The analysis evaluates 4 whether implementation of the LRRP Clearance Rule revision will have a disproportionately greater 5 effect on low income individuals. 6 For the purposes of the target housing portion of this analysis, EPA defines low income individuals as 7 individuals whose income are below the level set by the federal government’s official poverty definition. 8 Based on data from the 2000 Decennial Census , 12.4% of individuals were living below the pove rty level 9 (U.S. Census Bureau 2000a). It is therefore relevant to determine if the potential costs and benefits 10 resulting from the LRRP regulations will have a disproportionately greater effect on low income 11 individuals. 12 13 The data in Table 6

- 56 presents the numbers of households below t he poverty level that own or rent their 14 home. As a result of the proposed LRRP Clearance Rule revision, the likelihood of high levels of lead 15 dust remaining in residential housing post

- renovation d ecreases significantly, and occupants become more 16 aware of potential lead hazards. Only households built prior to 1978 would potentially be affected by the 17 proposed revisions. About 4.5 percent of pre

- 1980 owner

- occupied housing units have residents belo w 18 the poverty line. 19
20

Table 6

- 56 : Annual Number of Children that are Protected by the Clearance Rule Revision
Owner

- Occupied Housing Renter

- Occupied Housing

Year Housing Built Total Below Poverty Percentage of All Pre

2000 Owner Housing Below Poverty Total Below Poverty Percentage of All Pre

2000 Rental Housing Below Poverty

Pre

- 2000 4,371,712 6.26% 8,086,254 22.67% Pre

- 1980 3,133,302 4.49% 6,059,817 16.99% Pre

- 1960 1,765,185 2.53% 3,1 00,214 8.69% Pre

- 1950 1,167,604 1.67% 2,093,142 5.87% Source: U.S. Census Bureau 2000b. 21

6.9.1.2 Race: 22 This section of the environmental justice analysis considers the impacts of the proposed revisions across 23 three race categories. The data in Table 6

- 57 compares the percentages of owners and renters for three 24 categories of race, “White Alone,” “Black/African American Alone,” and “Asian Alone.” T he 2000 25 Census data shows that Black/African American households and Asia n households are almost as likely to 26 reside in owner housing as rental housing. 27
28EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 49 1

6.9.2 Conclusions 2 The proposed rule seeks to provide greater assurance that dust

- lead hazards created by renovations are 3 adequately cleaned up, primarily by requiring renovation firms to provide building owners and occupants 4 with information on dust lead levels remaining in the work area after many renovation projects, but also 5 by req uiring renovation firms to demonstrate that they have achieved regulatory clearance levels after 6 some of the dustiest renovations. As such, EPA concludes that the proposed revisions to the rule will not 7 lead to disproportionately high and adverse human he alth or environmental effects on minority and low 8 income populations in regulated target housing units. 9 Table 6

- 57 : Number and Percentage of Householders by Race by Tenure in 2000

Race Total Percentage Owner Perc entage Renter

White Alone 83,715,168 71.27% 28.73%

Black/African American Alone 11,977,309 46.33% 53.67%

Asian Alone 3,117,356 53.24% 46.76%

Source: U.S. Census Bureau 2000c.EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 50 

### APPENDIX 6 A

– Estimating average per

- pupil expenditures of private schools 1 This appendix outlines the methodology used to estimate total annual private school expenditures for the 2 small entity analysis. Total annual school expenditures were estimated based on per

- student operating 3 expense data and information on the number of students enrolled. This analysis used p er

- pupil 4 expenditure values for 1991

- 92, first calculated in a working paper published by the National Center for 5 Education Statistics (NCES) entitled “Estimates of Expenditures for Private K

- 12 Schools” (NCES 1995). 6 The two mean per

- pupil expenditure valu es (one for elementary schools and one for combined schools) 7 presented were combined into one value

- the private school per

- pupil expenditure value

- using selected 8 weights. Finally, this value was inflated to 2005 dollars using the CPI. The inflated va lue was used to 9 estimate the total expenditures of private schools with various sized student bodies. 10 The NCES working paper divided 1991

- 92 Private School Survey (PSS) data into 19 mutually exclusive 11 and exhaustive sectors of schools based on grade level (elementary, secondary, and combined ele mentary 12 and secondary), and religious or other affiliation. The paper relied on expenditure data collected by three 13 school associations (The National Catholic Education Association (NCEA), the Lutheran Church

14 Misso uri Synod (LCNS), and the National Association of Independent Schools (NAIS)) to calculate 15 average annual per

- student expenditures for their associated schools. Data from the three surveyed school 16 associations accounted for 45% of the total private school as presented in the PSS (NCES 1995). For the 17 remaining schools, NCES estimated two sets of per

- student expenditures using data obtained from 18 Catholic and Lutheran schools (referred to as the Catholic and Lutheran School Models, respectively). 19 Table 6 A

- 1 presents the number of schools and the annual per

- student expenditure s for the 19 sectors of 20 schools using the Lutheran school data to estimate missing expenditure values. 21EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 51

Table 6 A

- 1 : Estimated Per

- pupil Expenditures of Private Schools by School Level and School Type (Based on the Lutheran Model)
School Level and School Type Number of Schools Estimated Mean Per Pupil Expenditures
Elementary Schools

Catholic 7,645 $1,895 Lutheran 1,563 $2,003 NAIS Religious 124 $6,313 NAIS Non

- Sectarian 325 $8,807 Other Religious 5,240 $2,003 Other Non

- Sectarian 2,084 $2,003 Special Education 114 $8,807 All Schools 17,093 $2,125 Secondary Schools

Catholic 1 ,244 $3,909 Lutheran 87 $4,527 NAIS Religious 91 $16,523 NAIS Non

- Sectarian 208 $58,730 Other Religious 477 $4,527 Other Non

- Sectarian 342 $4,527 Special Education 171 $17,261 All Schools 2,620 $5,510
Combined Schools NAIS Religious 95 $9,052 NAI S Non

- Sectarian 346 $9,662 Other Religious 4,085 $4,527 Other Non

- Sectarian 943 $4,527 Special Education 817 $9,662 All Schools 6,285 $5,766
Sources: NCES 1995

1 The per

- student expenditure estimates presented are bas ed on the Lutheran School Model ra ther than the 2 Catholic School Model because, based on the evidence presented in NCES’s study, Lutheran school data 3 are likely to be more accurate. Specifically, w hen assessing the quality of the data, the working paper 4 authors express concern over potenti al non

- response bias and sampling error in the Catholic elementary 5 and secondary school data. In addition, a comparison of the total operating expenses of private 6 elementary and secondary schools generated by each model with an alternate estimate calculat ed annually 7 by NCES indicated that while that both the Catholic and the Lutheran School Model estimates are below 8 the alternative NCES estimates, the Lutheran School Model is the closer of the two. 22 Therefore the 9 Lutheran School Model was used in this ana lysis. 10 To estimate per

- student expenditures for schools likely to be affected by the proposed revisions to the 11 LRRP Rule, the school sectors most likely to contain schools with pre

- kindergarten and kindergarten 12

22 The NCES estimate inflates private school data collected in the late 1970’s.EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 52 programs were identified in the NCES study. Table 6 A

- 2 shows Table 6 A

- 1 with an additional column 1 indicating whether or not the estimated mean for that sector was included in the calculation for mean per

2 private

- sch ool

- pupil expenditure based on the assumptions made about the likelihood of that sector 3 containing a kindergarten or pre

- kindergarten program. An “x” indicates that the mean per

- pupil 4 expenditure value is included in the calculation. 5

6
Table 6 A

- 2 : Estimated Per

- pupil Expenditures of Private Schools by School

Level, School Type, and Inclusion in the Calculation (Based on Lutheran School Model)

School Level and School Type Number of Schools Est imated Mean Per

pupil Expenditures Included in the Calculation Elementary Schools Catholic 7,645 $1,895 Lutheran 1,563 $2,003 x NAIS Religious 124 $6,313 NAIS Non

- Sectarian 325 $8,807 Other Religious 5,240 $2,003 x Other Non

- Sectarian 2,084 $2,00 3 x Special Education 114 $8,807 All Schools 17,093 $2,125 Secondary Schools Catholic 1,244 $3,909 Lutheran 87 $4,527 NAIS Religious 91 $16,523 NAIS Non

- Sectarian 208 $58,730 Other Religious 477 $4,527 Other Non

- Sectarian 342 $4,527 Speci al Education 171 $17,261 All Schools 2,620 $5,510 Combined Schools NAIS Religious 95 $9,052 NAIS Non

- Sectarian 346 $9,662 Other Religious 4,085 $4,527 x Other Non

- Sectarian 943 $4,527 x Special Education 817 $9,662 All Schools 6,285 $5,766 S ources: NCES 1995 7 Of the 19 sectors, 6 are for secondary schools only. Since the working paper notes that secondary 8 schools 23 spend more than twice as much as elementary schools spend per pupil, and are the least likely, 9 by definition, to contain a COF, they are excluded from the calculation of the mean per

- pupil expenditure 10 value. 11

23 Defined as having a highest grade less than or equal to 12 th and a lowest gra de of greater than or equal to 6 th

.EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

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- 53 For elementary schools 24 , the $2,003 mean per

- pupil expenditure cost was selected. This value represents 1 8,887 of the 17,093 (52%) elementary schools presented in the working p aper. Though Catholic schools 2 represent approximately 45 percent of all elementary schools, their associated mean per

- pupil expenditure 3 estimate is not used due to the potential bias discussed above. The remaining elementary school per

- pupil 4 expenditure values are between 3 and 4 times larger than the ch osen value; however these means 5 represent schools unlikely to be affected by the LRRP rule. For example, the mean per

- pupil expenditure 6 values presented for NAIS schools (449 of the 561 remaining schools) are much higher since “a relatively 7 large proportion of NA IS schools are boarding schools and expenditures for dormitories are apparently 8 included in the total operating expenditures for these schools.” It is unlikely that a COF would be found in 9 a boardi ng school. The remaining 112 schools are special education elementary schools, which are more 10 costly because of their unique needs and are also less likely to contain a COF. Furthermore, as the 11 working paper notes, “preschool is probably less expensive t han other grades,” and therefore, it is likely 12 that the average across all elementary schools ($2,125) would overstate expenditures. 13 For combined schools, the $4,527 mean per

- pupil expenditure cost is used. 25 This value represents 5,028 14 of the 6,285 (80%) combined schools presented in the working paper. The other mean per

- pupil values 15 are roughly double this value, pulling the mean for all combined schools up to $5,766. This higher value 16 is not used as it most likely overstates the expenditures given that boarding schools and special education 17 schools are again included in the calculation. 18
In order to obtain one private school per

- pupil expenditure value, the previously discussed elementary 19 school and combined school data were weighted. The weights were b ased on the current proportions of 20 elementary schools and combined schools with either a pre

- kindergarten or kindergarten program. In 21 order to calculate the weights, this analysis used the data set underlying the National Center for Education 22 Statistics ( NCES) report entitled “Characteristics of Private Schools in the United States: Results From 23 the 2003

- 2004 Private School Universe Survey.” Note that it was assumed that per

- student expenditures 24 at K

- terminal schools were the same as in elementary schools. 26 25
In 2003

- 2004, there were a total of 18,289 private elementary schools and 4,338 private combined schools 26 with pre

- K or kindergarten programs. Thus, a weight of 0.81 (18,289/22,627) was attached to the mean 27 per

- pupil elementary school expenditure value and a weight of 0.19 (4,338/22,627) was attached to the 28 mean per

- pupil combined school expenditure value. This calculation yields a final private school per

29 pupil expenditure value of $2,426. 30 Because the study is based on 1991

- 1992 PSS data, it was assume d that expenditure values were in 1992 31 dollars. Taking into account inflation, $2,426 in 1992 dollars is equivalent to $3,377 in 2006 dollars (U.S. 32 Bureau of Labor Statistics 2006). 33

24 Defined as having a highest grade of less than or equal to 8 th

.

25 A combined school is defined as having a highest grade less than or equal to 12 th and a lowest grade less than or equal to 5 th

.

26 A K

- terminal school is defined as a school for which kindergarten is the highest grade. In the 2003

- 2004 PSS, K

terminals represented an estimated 22% of all private schools with either a kindergarten or pre

- kindergarten program.EO 12866 Review Draft: Economic An alysis for the LRRP Clearance Proposed Rule

January 20, 2010 Draft

– Deliberative, Predecisional

– Do not Quote, Cite, or Distribute 6

- 54 

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